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New precedent to open floodgates?

David Pugh, partner in the disease team, explains what could be about to affect  NIHL claims

The 15th annual International Noise Awareness day took place last week – an event that aims to promote understanding of the dangers of long-term exposure to noise. This is an important issue as NIHL claims make up one of the biggest areas of disease litigation.

Traditionally, there is a view that as Britain moves away from heavy industry and towards a more services-led economy, the volume of deafness claims should begin to decrease. But current trends show that this is far from being the case.  In almost every area of disease litigation, there is a delay between the exposure that caused the claimant’s condition and the claim being brought, and industrial deafness claims are no exception. In fact, many of the claims being handled today relate to exposure dating back to as long ago as the 1970s.

The precedent that could potentially be set by a recent case – Baker v Quantum – is now threatening to substantially increase the volume of these historic claims.  The case concerned a 51-year-old woman, Stephanie Baker, who worked at a clothing factory for 20 years between 1971 and 1991. During that time, she was subjected to noise levels of between 85 and 90 decibels, a level of exposure that before 1990 was not thought to cause injury. For this reason, the claim was initially thrown out.  However, the claimant challenged the ruling, and the Court of Appeal surprised the industry by ruling that, under the Factories Act 1978, the employer had a duty to protect workers against hearing loss caused by exposure to noise of 85 decibels or above.

This is a substantial reduction – because the decibel scale is logarithmic, cutting the threshold from 90 to 85 decibels means reducing the safe intensity of exposure by a factor of three.  The case will be heard in the Supreme Court later in the year and, if the decision is upheld, the floodgates could potentially be opened to a very large influx of claims.

Entertainment industry

Another major concern on the horizon is the widespread lack of safety provisions in the hospitality and entertainment sectors.

In 2008, the Control of Noise at Work regulations came into force for employers in the music and entertainment industries. This requires that employees are given information and training if they are to be exposed to levels of more than 80 decibels and be provided with hearing protection for volumes of more than 85 decibels.

This level of exposure is regularly exceeded in nightclubs and concert halls, but the impracticality of bar staff wearing ear plugs means that the rules are routinely not being followed.

It is estimated that this lowering of the threshold has meant an additional 1.6 million workers are now exposed to levels of noise that are considered dangerous, an alarmingly large pool of potential future claimants.

Jackson Review

The overhaul of civil litigation costs proposed recently by Lord Justice Jackson could prove to be good news for those who handle NIHL claims.

The vast majority of claims for partial hearing loss are fairly low in value. The problem for insurers is that the total outlay per claim can increase dramatically once ‘after-the-event’ insurance premiums and success fees have been factored in.  If Jackson’s proposals are implemented, conditional fee arrangements where success fees are recovered from defendants will no longer be allowed. Instead, claimant solicitors’ fees will be deducted from damages at up to 25 per cent of their value.  To compensate claimants for this deduction, Jackson proposes a 10 per cent increase in awards for pain, suffering and loss of amenity in all claims across the board.

A further change proposed in favour of claimants is that they will not usually be required to pay defendants’ costs when they are unsuccessful, whereas insurers will still pay claimants’ costs if the claim is awarded. The rationale behind this is to allow those with valid claims to bring them without being deterred by the risk of adverse costs.
Despite this, taken as a whole the measures look set to reduce the cost to insurers of handling deafness claims, especially if the proposals for fast-track claims are implemented. Under the new  rules, claims worth up to £10,000 would be put into a computerised system that assesses the level of damages payable on a claim-by-claim basis and fixed costs would apply for all claims worth up to £25,000.

The proposed structure means that many deafness claims would fall into the regime, making it more difficult for claimant solicitors to profit from them and more cost effective for insurers to fight.

Timescales

Implementing the Jackson review in full could be a lengthy process, as some of the changes will require primary legislation. For example, Lord Jackson has not explained how the general damages increase is to be implemented. There is a good reason for this – there is no uniform baseline of awards against which a 10 per cent increase can simply be applied and implementation might require numerous test cases - a very lengthy process.

The fast track system, on the other hand, is one part of the review which could be implemented immediately and in isolation – a simple change in the Civil Procedure Rules is all that would be needed.

Insurers should push for this, because if the floodgates do open for deafness claims, the reduced costs will make the subsequent surge much less painful.

This article appeared in Post Magazine on 29 April 2010