Compensation Act 2006
Encyclopedia
The Compensation Act 2006 (c 29) is an Act
of the Parliament of the United Kingdom
, introduced in response to concerns about a growing compensation culture
but conversely to ensure that the public received dependable service from claims management companies. In introducing the Bill
, Baroness Ashton
said that it was intended "to tackle perceptions that can lead to a disproportionate fear of litigation and risk averse
behaviour; to find ways to discourage and resist bad claims; and to improve the system for those with a valid claim for compensation."
The Act brought in specific changes to the law of liability
and damages
in negligence
and breach of statutory duty. It further introduced a scheme of regulation for claims management companies.
, the court may consider whether such steps, had they been performed, would prevent some desirable activity. For example, the court must consider whether precautionary and defensive measures might prevent something socially useful. Though this principle had often been observed by the common law
(see Miller v Jackson 1977, Denning's judgment), the Act places it on a statutory footing.
Section 2 stipulates that, in the event of an accident, an apology or offer or redress, such as paying for medical treatment, is not, of itself an admission
of liability.
Sections 1 and 2 came into force on royal assent on 26 July 2006 (s.16(1)).
Section 3 reverses the common law
on allocation of damages in various mesothelioma claims arising from unlawful exposure to asbestos
. In 2002, the House of Lords
had controversially ruled that, where several parties had unlawfully exposed the claimant to asbestos and risk of pleural and peritoneal mesothelioma
, all were liable for his injury, even though the claimant could not prove which individual party had provided the asbestos fibers
that cause the disease. However, in Barker v. Corus UK Ltd the House of Lords held that the parties who contributed to the risk were severally but not jointly liable. This meant that a single defendant could only be held liable for a fraction of any damages proportional to the exposure for which they were responsible and that a claimant could only recover all their damages if they succeeded in actions against all such contributors. Section 3 reverses the House of Lords decision by making all such parties jointly and severally liable for the damage so that a claimant could recover the totality of their damages, even from a subgroup of potential defendants.
Section 3 is "treated as having always had effect" (s.16(3)) and also extends to Scotland
and Northern Ireland
(s.17).
It is a crime
for an unauthorised person to provide or offer claims management services, or to pretend to be authorised. Offenders are punishable, on summary conviction, by a fine of up to level 5 on the standard scale
or 51 weeks' imprisonment
. If convicted on indictment
in the Crown Court
, offenders can be sentenced to an unlimited fine or two years' imprisonment (ss.7 and 11). Where a corporate crime
is committed, the offender can only be fined and not imprisoned. The Regulator may investigate unauthorised trading and seek an injunction
to prevent it or bring a criminal prosecution (s.8). It is a crime to obstruct the Regulator, punishable on summary conviction by a fine of up to level 5 on the standard scale (s.10).
Section 12 creates a Claims Management Services Tribunal to which a person may appeal
a decision of the Regulator about authorisation (s.13(1)). There is a further route of appeal to the Court of Appeal
(s.13(4)). The Regulator may also refer complaints or questions about the professional conduct of a claims management company to the Tribunal (s.13(2)).
Part 2 came progressively into force from 1 December 2006. , only section 13(2) (referrals to the Tribunal by the Regulator) remains to be brought into force.
Act of Parliament
An Act of Parliament is a statute enacted as primary legislation by a national or sub-national parliament. In the Republic of Ireland the term Act of the Oireachtas is used, and in the United States the term Act of Congress is used.In Commonwealth countries, the term is used both in a narrow...
of the Parliament of the United Kingdom
Parliament of the United Kingdom
The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body in the United Kingdom, British Crown dependencies and British overseas territories, located in London...
, introduced in response to concerns about a growing compensation culture
Compensation culture
"Compensation culture" describes a society in which it is acceptable for anyone who has suffered a personal injury to seek compensatory damages through litigation from someone connected with the injury...
but conversely to ensure that the public received dependable service from claims management companies. In introducing the Bill
Bill (proposed law)
A bill is a proposed law under consideration by a legislature. A bill does not become law until it is passed by the legislature and, in most cases, approved by the executive. Once a bill has been enacted into law, it is called an act or a statute....
, Baroness Ashton
Catherine Ashton, Baroness Ashton of Upholland
Catherine Ashton, Baroness Ashton of Upholland, , is a British Labour politician who in 2009 became the European Union's High Representative of the Union for Foreign Affairs and Security Policy...
said that it was intended "to tackle perceptions that can lead to a disproportionate fear of litigation and risk averse
Risk aversion
Risk aversion is a concept in psychology, economics, and finance, based on the behavior of humans while exposed to uncertainty....
behaviour; to find ways to discourage and resist bad claims; and to improve the system for those with a valid claim for compensation."
The Act brought in specific changes to the law of liability
Legal liability
Legal liability is the legal bound obligation to pay debts.* In law a person is said to be legally liable when they are financially and legally responsible for something. Legal liability concerns both civil law and criminal law. See Strict liability. Under English law, with the passing of the Theft...
and damages
Damages
In law, damages is an award, typically of money, to be paid to a person as compensation for loss or injury; grammatically, it is a singular noun, not plural.- Compensatory damages :...
in negligence
Negligence
Negligence is a failure to exercise the care that a reasonably prudent person would exercise in like circumstances. The area of tort law known as negligence involves harm caused by carelessness, not intentional harm.According to Jay M...
and breach of statutory duty. It further introduced a scheme of regulation for claims management companies.
Liability
Section 1 of the Act makes statutory provision that, in determining whether the omission of certain steps amounts to a breach of dutyBreach of duty in English law
In English tort law, there can be no liability in negligence unless the claimant establishes both that they were owed a duty of care by the defendant, and that there has been a breach of that duty...
, the court may consider whether such steps, had they been performed, would prevent some desirable activity. For example, the court must consider whether precautionary and defensive measures might prevent something socially useful. Though this principle had often been observed by the common law
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
(see Miller v Jackson 1977, Denning's judgment), the Act places it on a statutory footing.
Section 2 stipulates that, in the event of an accident, an apology or offer or redress, such as paying for medical treatment, is not, of itself an admission
Admission (law)
An admission in the law of evidence is a prior statement by an adverse party which can be admitted into evidence over a hearsay objection. In general, admissions are admissible in criminal and civil cases.At common law, admissions were admissible...
of liability.
Sections 1 and 2 came into force on royal assent on 26 July 2006 (s.16(1)).
Damages
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
on allocation of damages in various mesothelioma claims arising from unlawful exposure to asbestos
Asbestos and the law
This article concerns asbestos-related legal and regulatory issues. Litigation related to asbestos injuries and property damages has been claimed to be the longest-running mass tort in U.S. history...
. In 2002, the House of Lords
Judicial functions of the House of Lords
The House of Lords, in addition to having a legislative function, historically also had a judicial function. It functioned as a court of first instance for the trials of peers, for impeachment cases, and as a court of last resort within the United Kingdom. In the latter case the House's...
had controversially ruled that, where several parties had unlawfully exposed the claimant to asbestos and risk of pleural and peritoneal mesothelioma
Peritoneal mesothelioma
Peritoneal mesothelioma is the name given to the cancer that attacks the lining of the abdomen. This type of cancer affects the lining that protects the contents of the abdomen and which also provides a lubricating fluid to enable the organs to move and work properly.The peritoneum is made of two...
, all were liable for his injury, even though the claimant could not prove which individual party had provided the asbestos fibers
Asbestos fibers
Asbestos fibers are released from asbestos containing materials . Friable asbestos containing materials release fibers more readily than encapsulated asbestos containing materials.- Determining airborne asbestos fiber levels :...
that cause the disease. However, in Barker v. Corus UK Ltd the House of Lords held that the parties who contributed to the risk were severally but not jointly liable. This meant that a single defendant could only be held liable for a fraction of any damages proportional to the exposure for which they were responsible and that a claimant could only recover all their damages if they succeeded in actions against all such contributors. Section 3 reverses the House of Lords decision by making all such parties jointly and severally liable for the damage so that a claimant could recover the totality of their damages, even from a subgroup of potential defendants.
Section 3 is "treated as having always had effect" (s.16(3)) and also extends to Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...
and Northern Ireland
Northern Ireland
Northern Ireland is one of the four countries of the United Kingdom. Situated in the north-east of the island of Ireland, it shares a border with the Republic of Ireland to the south and west...
(s.17).
Claims management companies
Part 2 of the Act seeks to regulate the provision of claims management services. As of 23 April 2007, an individual or a corporation may not provide claims management services by way of business unless authorised, exempt or otherwise in receipt of a waiver (s.4(1)). The Act creates a Claims Management Services Regulator to authorise and regulate claims management companies and to (s.5):- Set and monitor standards of competence and professional conductLegal ethicsLegal ethics encompasses an ethical code governing the conduct of persons engaged in the practice of law and persons more generally in the legal sector.-In the United States:...
; - Promote good practice, in particular as to the provision of information about charges and other matters to users;
- Promote practices likely to facilitate competitionCompetition (economics)Competition in economics is a term that encompasses the notion of individuals and firms striving for a greater share of a market to sell or buy goods and services...
; - Ensure that arrangements are made for the protection of users, including complaints handling.
It is a crime
Crime
Crime is the breach of rules or laws for which some governing authority can ultimately prescribe a conviction...
for an unauthorised person to provide or offer claims management services, or to pretend to be authorised. Offenders are punishable, on summary conviction, by a fine of up to level 5 on the standard scale
Standard scale
The standard scale is a system whereby financial criminal penalties in legislation have maximum levels set against a standard scale. Then, when inflation makes it necessary to increase the levels of the fines the legislators need to modify only the scale rather than each individual piece of...
or 51 weeks' imprisonment
Imprisonment
Imprisonment is a legal term.The book Termes de la Ley contains the following definition:This passage was approved by Atkin and Duke LJJ in Meering v Grahame White Aviation Co....
. If convicted on indictment
Indictment
An indictment , in the common-law legal system, is a formal accusation that a person has committed a crime. In jurisdictions that maintain the concept of felonies, the serious criminal offence is a felony; jurisdictions that lack the concept of felonies often use that of an indictable offence—an...
in the Crown Court
Crown Court
The Crown Court of England and Wales is, together with the High Court of Justice and the Court of Appeal, one of the constituent parts of the Senior Courts of England and Wales...
, offenders can be sentenced to an unlimited fine or two years' imprisonment (ss.7 and 11). Where a corporate crime
Corporate crime
In criminology, corporate crime refers to crimes committed either by a corporation , or by individuals acting on behalf of a corporation or other business entity...
is committed, the offender can only be fined and not imprisoned. The Regulator may investigate unauthorised trading and seek an injunction
Injunction
An injunction is an equitable remedy in the form of a court order that requires a party to do or refrain from doing certain acts. A party that fails to comply with an injunction faces criminal or civil penalties and may have to pay damages or accept sanctions...
to prevent it or bring a criminal prosecution (s.8). It is a crime to obstruct the Regulator, punishable on summary conviction by a fine of up to level 5 on the standard scale (s.10).
Section 12 creates a Claims Management Services Tribunal to which a person may appeal
Appeal
An appeal is a petition for review of a case that has been decided by a court of law. The petition is made to a higher court for the purpose of overturning the lower court's decision....
a decision of the Regulator about authorisation (s.13(1)). There is a further route of appeal to the Court of Appeal
Court of Appeal of England and Wales
The Court of Appeal of England and Wales is the second most senior court in the English legal system, with only the Supreme Court of the United Kingdom above it...
(s.13(4)). The Regulator may also refer complaints or questions about the professional conduct of a claims management company to the Tribunal (s.13(2)).
Part 2 came progressively into force from 1 December 2006. , only section 13(2) (referrals to the Tribunal by the Regulator) remains to be brought into force.
Section 16 - Commencement
The following orders have been made under this section:- The Compensation Act 2006 (Commencement No. 1) Order 2006 (S.I. 2006/3005 (C. 107))
- The Compensation Act 2006 (Commencement No. 2) Order 2007 (S.I. 2007/94 (C. 5))
- The Compensation Act 2006 (Commencement No. 3) Order 2007 (S.I. 2007/922 (C. 36))