Sumption deprecates fault-based liability for PI claims and predicts statutory damages

Sumption: No rational reason to distinguish between fault and no-fault

Supreme Court judge Lord Sumption has outlined his dislike of fault-based liability for personal injury claims but admitted it is unlikely to be replaced by a no-fault system.

However, he predicted that the principle of full indemnity would be abolished and replaced by a statutory measure of damages “with a view to achieving a better balance between public and private interests”.

In a speech to the Personal Injuries Bar Association last week that focused on claims arising from road traffic accidents, Lord Sumption argued that they represented a “substantial social cost”, in that liabilities were met by insurers or by the state and so “are effectively socialised across the population at large”.

Given this, “there is no rational reason to distinguish between personal injury which has been caused by some one’s fault, and personal injury which has occurred without fault.

“Equally, there is no rational reason why the victims of accidents, however caused, should necessarily recover a full indemnity as the law of tort presently requires.

“Since we are all paying for the tortiously inflicted injuries, we might as well treat it as a social service and make it respond to our collective social priorities rather than to the common law rights of individual claimants.”

Lord Sumption said he was sceptical about fault was needed to deter sloppy practices, saying the evidence, mainly from the US, did not appear to support this.

“The evidence tends to suggest that the prospect of liability in tort achieves nothing that would not be achieved anyway by the prospect of reputational damage or criminal sanctions.”

Further, the fact those at fault were often injured themselves in car accidents indicated that it had little effect.

Rather, he said, the public’s view was based on two “simple moral judgments”: that he who causes physical injury must make it good financially and that it is a proper function of the courts to find facts and distribute blame, simply as a satisfaction for victims or their relatives

“Personally, I would question whether there really is a moral case for imposing liability in damages on the ground of negligence. One might perhaps make an exception for professional failures where the defendant has undertaken to exercise an appropriate measure of care and the relationship with the victim, although not actually contractual, is equivalent to contract.

“Except in that situation, negligence is not morally culpable. It is a normal feature of human behaviour.”

The judge said the law has for some years been moving towards a system of strict liability, “or at any rate of stricter liability”.

He explained: “My own experience… is that even in areas where traditional notions of fault prevail in theory, the courts have in practice moved noticeably closer to strict liability, albeit very gradually and without acknowledging that they are doing it.

“This is because the whole forensic process of attributing fault is inherently biased in favour of the claimant. Once it is established that something has gone wrong that was caused by the defendant’s act, it can be very difficult to persuade a judge that it wasn’t the defendant’s fault.

“The law determines the standard of care which it imposes on individuals in advance. But the court finds fault in arrears with all the forensic advantages of hindsight.”

A no-fault system funded either from taxation or by compulsory insurance would be “a great deal less wasteful” by cutting investigatory and legal costs.

But he acknowledged that the additional coverage involved in dispensing with fault would “enormously increase the overall cost”.

“Perhaps most significant reason” why fault would survive, though, was that “it responds to widespread public notions about personal responsibility and the proper function of law. I do not myself share these notions, but I am in a minority on this”.

Lord Sumption concluded: “My prediction would be that fault will remain the touchstone of our law of personal injuries, but that the principle will be eroded at the edges by statutory intervention from one end and judicial hindsight from the other.

“The result will be to increase the overall cost of personal injury claims and, I suspect to provoke a legislative reaction as mounting insurance premiums and pressures on the NHS budget lead to calls to control the costs.

“The outcome is likely to be the abolition of the principle of full indemnity and its replacement by a statutory measure of damages with a view to achieving a better balance between public and private interests.

“I would expect this to take two forms. One is the imposition of value thresholds on personal injury claims, with a view to eliminating small claims. Small claims account for the great majority of claims and are disproportionately costly and cumbersome to administer.

“The second will be the capping or abolition of certain heads of loss. There is a case for abolishing damages for non-pecuniary losses, or at least limiting it to long-term pain and suffering and loss of amenity.

“There is a case for limiting damages for loss of earnings to the amount necessary to support a reasonable standard of living, rather than the superior standard of living which the richest accident victims might have expected if they had not been injured…

“What all of this means is that the officers of this association can rest easy in their seats. It is likely to be needed for a considerable time to come.”

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