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Howells, Geraint --- "Justifications for preferential adoption of no-fault accident compensation schemes" [2019] OtaLawRw 8; (2019) 16 Otago LR 127

Last Updated: 17 November 2022

Justifications for Preferential Adoption of No-fault Accident Compensation Schemes


Justifications for Preferential Adoption of No-fault Accident Compensation Schemes

Geraint Howells*

  1. Introduction
The United Kingdom accident compensation landscape comprises a patchwork of tort law and social security onto which islands of no- fault liability have been overlaid. This article’s main aim is to explore if there are valid justifications for preferential treatment of certain victims through these no-fault schemes. It calls for greater transparency about the rationales for no-fault liability so that any exceptional no-fault regimes can be defended with good justification. The validity of such justifications will also inform the debate about how to support and compensate accident victims more generally. Creating more instances of no-fault liability may be a pragmatic response, but if cracks in the existing system are papered over by a series of ad hoc solutions for particular hard cases this makes it less likely that the fundamental justifications will be evaluated.

The New Zealand Accident Compensation Scheme, of course, stands out as a universal compensation scheme that is not based on tort law. In a radical change New Zealand abolished tort actions for personal injury and replaced them by a state run compensation scheme.1 It promises to offer a more efficient means of dealing with the needs of injured parties. Costs associated with legal redress (lawyers, expert witnesses and insurers) can, in principle, be diverted to supporting accident victims. There have, at times, been criticisms that the scheme pay-outs were unduly modest and attempts have been made to circumvent the bar on tort litigation by claiming tort law compensation for nervous shock and punitive damages.2 However, the scheme has gained wide acceptance in New Zealand and has even become an object of national pride.3

* Professor of Commercial Law, University of Manchester.

  1. This was introduced by and was based on the report of Owen Woodhouse: Compensation for Personal Injury in New Zealand (Royal Commission to Inquire into and Report Upon Workers Compensation, 1967).
  2. John Smillie “Exemplary Damages for Personal Injury” [1997] NZ Law Review 140; Joanna Manning “Professor Smillie’s ‘Exemplary Damages for Personal Injury’: A Comment” [1997] NZ Law Review 17; Geoff McLay “Nervous Shock, Tort and Accident Compensation: Tort Regained?” (1999) 30 VUWLR 197; Richard Miller “An Analysis and Critique of the 1992 Changes to New Zealand’s Accident Compensation Scheme” (1992) 5(1) Canta LR 1; and Simon Connell “Justice for Victims of Injury: The Influence of New Zealand’s Accident Compensation Scheme on the Civil and Criminal Law” (2012) 25(2) NZULR 181.
  3. Grant Duncan “New Zealand’s Universal No-fault Accident Compensation Scheme: Embedding Community Responsibilty” in J Luetjens, M Mintrom and P `t Hart (eds) Successful Public Policy: Lessons from Australia and New Zealand (ANU Press, Canberra, 2019).

It is frequently commented that such universal schemes are too expensive. However, this seems a strange argument, because once an injury has occurred the costs exist. It is just a question of who bears them – the injured party, the party causing the harm or society generally through heath care, social security and no-fault schemes. Arguably a no-fault scheme may have less deterrence than a torts regime, but the evidence is equivocal as to a large extent insurance mitigates the impact of torts. In any event few people deliberately want to inflict harm.

There are important debates to be had about whether a tort based system, first party insurance4 or social security system is to be preferred.5 However, no country has followed New Zealand down the road of adopting a universal scheme despite reflections on the option in Australia6 and by the Pearson Royal Commission in the United Kingdom.7 No-fault schemes were only recommended by Pearson for industrial injuries and road accidents. A new social security benefit was also proposed for severely handicapped children. Strict liability was recommended for vaccines based on attribution of causation rather than needing to prove fault or even defectiveness.8 The Report was criticised by many academics for being unprincipled,9 but its impact was that for many years the notion of a universal no-fault scheme was off the agenda. Indeed, the United Kingdom Welfare State was itself shrinking in the face of neo-liberal economic policy. This remains still the mainstream position in the United Kingdom, though, recently Lord Sumption has noted the advantages of a no-fault scheme, whilst at the same time doubting it will be adopted because too many people are wedded to a liability regime based on personal responsibility.10

This paper is not about the general debate about adopting a universal scheme. Though it is salient to note that the debates about general

  1. Patrick Atiyah The Damages Lottery (Hart, Oxford, 1997).
  2. See discussion in Peter Cane and James Goudkamp Atiyah’s Accidents, Compensation and the Law (9th ed, Cambridge University Press, Cambridge, 2018) at 461- 465.
  3. Owen Woodhouse followed up his work in New Zealand with a report for the Australian Government, Report of the National Committee of Inquiry on Compensation and rehabilitation in Australia (1974).
  4. Lord Pearson Royal Commission on Civil Liability and Compensation for Personal Injury (Cmnd 7054, 1978) (Pearson Report).

8 At 69-72.

  1. D Harris, “An Appraisal of the Pearson Strategy” in David Allen, C Bourn and Jon Holyoak (eds) Accidents Compensation after Pearson (Sweet & Maxwell, London, 1979) 119; A Ogus, P Corfield and D Harris “Pearson: Principled Reform or Political Compromise?” (1978) 7 Indust L J 143; and Ruben Hasson “The Pearson Report: Something for Everyone?” (1979) 6 Brit J L & Soc’y 119.
  2. Lord Sumption “Abolishing Personal Injuries Law – A Project” (speech to Personal Injuries Bar Association Annual Lecture, London, 16 November 2017). Available at <> last accessed 22 May 2019.

schemes tend to be centred on efficiency arguments.11 Can the costs of compensating accident victims be reduced by cutting out the legal, insurance and administrative costs associated with tort claims? What impact will no-fault liability have on the total costs of accidents if they lead to more claims, or even more accidents, if tort law prevention incentives are removed? Of course an element of seeking fairness enters into the discourse related to ensuring victims do not fall through the cracks in the civil justice system due to barriers to access to justice and evidential or technical legal issues. However, any prospect of expanded coverage for victims often raises the question of trade-offs in the form of lower awards than under the tort system. Similar arguments can and have been used to support sectoral schemes. This is particularly a driver in sectors where compensation costs are high, such as medical negligence. The intriguing question is whether the impact of these costs provides justification for singling out certain activities for preferential treatment or if there are additional arguments to support sectoral schemes.

This article focuses on the reasons why certain sectors are singled out for the introduction of no-fault liability. Even in New Zealand there are current debates about the scope of the regime and questions raised as why accident victims are afforded preferential treatment over people with disability generally.12 In the United Kingdom pockets of no-fault liability exist (armed forces, criminal injuries, liability for nuclear installations,13 and certain types of industrial injuries, medical or pharmaceutical liability) or are being actively discussed (for medical negligence in general in Scotland and for automated vehicles). A special regime for birth defects is also being contemplated in England, but as we shall see, it is not likely to be a no-fault regime though it still suggests treating them in a preferential manner.

B Defining no-fault liability

First, however, it is necessary to discuss what is meant by no-fault liability. If it means simply liability based on lack of fault then certain tort law doctrines might also fall to be discussed under this heading – such as product liability and liability under the Animals Act 1971 (UK). However, some of these also have caveats as to the extent to which they have expunged fault. This is perhaps most obvious in the case of strict product liability under the Consumer Protection Act 1987 (UK) where the concept of defectiveness can contain elements that reflect the balancing

  1. Karine Fiore “No-fault Compensation Systems” in Michael Faure (ed) Tort Law and Economics (2nd ed, Edwards Elgar, Cheltenham, 2009) vol 1 406.
  2. Geoffrey Palmer “A Retrospective on the Woodhouse Report: The Vision, The Performance and the Future” (2019) 50 VUWLR 401.
  3. There is a right to claim for breach of statutory duty under the Nuclear Installations Act 1965 concerning the operations of nuclear sites without having to provide negligence. As there are special policy considerations in this area it is not considered further in this article.

of risks and benefits. As the United Kingdom allows the development risks defence,14 it is even closer to a fault based standard. Actually the same question about what justifies providing for preferential treatment under no-fault schemes might be raised for torts that make recovery not fully based on fault.

No-fault schemes bear some resemblance to strict liability. Liability is linked to the activity rather than any fault, but it tends to have less pre-conditions for compensation. If your injury is caused by a particular activity – in our examples from the United Kingdom, being the victim of a crime of violence, soldiering, taking a vaccine, having a blood transplant, working in coalmines – compensation becomes payable. There is no need to prove an additional element. Vaccine damage may illustrate the point. A strict product liability action under the Directive15 would require proof of defectiveness,16 whereas payments under the Vaccine Damages Payments Act 1979 merely require a link between the vaccine and the injury, but not proof the vaccine was defective.17

In addition, what makes no-fault schemes different is the measure of damages awarded and the procedure for awarding compensation. The New Zealand system provides compensation under a statutory scheme, which is typically lower than if private law damages had been awarded; and payment is made under an administrative scheme. For instance, weekly compensation is based on 80 per cent of lost earnings. Likewise most of the extant schemes considered here provide for sums of money that are not calculated on a tort law basis. Payments are typically awarded under an administrative scheme rather than by the courts. The compensation will often come from the state rather than the party taking part in the activity.

The no-fault schemes we are concerned with providing compensation based on a causal connection with specific activities rather than any notion of fault, often compensate by reference to tariffs rather than tort damages and are frequently administered through an agency.

C Rationales for preferential no-fault liability

The general debate about the desirability or otherwise of universal no-fault schemes, like the New Zealand model, has tended to focus on concerns about the overall efficiency of the system.18 When it comes to specific schemes this general debate might form part of the canvass

  1. Consumer Protection Act 1987 (UK), s 4(e).
  2. Directive 85/374/EEC on the Liability for Defective Products [1985] OJ L210/33.
  3. At art 4.
  4. Vaccine Damages Payments Act 1979 (UK), s 1(1).
  5. Simon Connell “Community Insurance versus Compulsory Insurance: Competing Paradigms of No-fault Accident Compensation in New Zealand” (2019) Legal Studies 499 at 508 notes that what is efficient for a compulsory insurance with respect to accidents may not be efficient for a wider regime covering illness.

supporting the introduction of no-fault liability. However, as these schemes are an exception to the general rules, there is a need to find exceptional justifications for certain victims’ preferential treatment. The general criticisms of the tort system may apply just as strongly in these contexts, but there is a need to explain why no-fault solutions can be justified for particular accident victims and not others. Such justifications are rarely forthcoming. The lack of rationale for providing preferential treatment to certain accident victims is well noted in the works of Atiyah.19 The rationales for special treatment may not always be clearly elaborated, perhaps because the exceptions are in truth not always easy to defend. Nevertheless, three broad justifications for promoting a preferential no-fault regime can be discerned. These are distinct from general arguments in favour of no-fault liability as they seek to explain why it is appropriate in some circumstances and not in others. Those based on efficiency or concern for particular victims have been frequently documented, but arguments that such a form of liability can enhance the activity by giving users confidence in the activity, or making victims more willing to share experiences to improve the activity, are perhaps less well known.

(i) Efficiency centred justifications

Some of the arguments for preferential no-fault are still efficiency centred. Reforms are sometimes more or less overtly triggered by attempts to reduce the amount of compensation paid out. This is typical in the area of medical negligence. However, simply reducing the damages would be unpopular and so lower damages are often linked to arguments that they will be balanced by greater ease of access to justice. The reduced costs associated with moving away from a lawyer led redress scheme is a more palatable way of selling the efficiency gains derived from moving to a no-fault regime. These gains, of course, could apply to any sector. It is the extent of the impact of liability on the activity that might justify the preferential treatment.

There may also be economic efficiency grounded arguments for providing no-fault compensation in particular circumstances. This might be where liability would be hard to enforce, such as against criminals. This is especially so where first party insurance is unlikely to provide a satisfactory solution.

(ii) Victim centred justifications

Another set of rationales for preferential treatments is victim centred. Victims may feel they have been let down by the system because they have difficulty in seeking redress or the amounts they receive are inadequate. Normally tort damages are pretty generous, but may be reduced if there is

  1. Cane and Goudkamp, above n 5, at 446-447. Indeed, Jane Stapleton “Compensating Victims of Disease” (1985) 5 J Legal Studies 248 at 257-260 also noted the “accident preference” accident victims have over those in similar circumstances due to disease.

bargaining in the shadow of the law or damages-based agreements with lawyers (commonly known as conditional or contingent agreements). These arguments of course can apply to all accident victims. Some victims may, however, be considered deserving of special treatment because of their status. This might apply, for instance, to members of the armed forces and victims of crime. However, justifying why precisely they should be given preferential treatment remains elusive and often turns on emotion. More cynically it can be seen as politically advantageous to favour certain groups for whom there is popular sympathy.

(iii) Enhancement centred justifications

Perhaps the most interesting justifications for preferential treatment are enhancement centred. Many traditional approaches to accident compensation focus on the consequences of harm and the best means of remedying the damage suffered. In contrast this approach shows how a no-fault liability regime can actually support broader social policy by promoting an activity to achieve societal goals. It might seem counter-intuitive that imposing liability can be a means of enhancing the environment for the activity and helping it to thrive. However, the assurance of compensation if harm occurs can encourage citizens to have the confidence to take part in an activity. This is exactly what has been suggested as regards automated vehicles. No-fault liability might be a means to promote confidence in automated vehicles. Standing behind the product and being liable for the costs of any harm a vehicle causes sends a very strong signal of the manufacturer’s belief in the quality and safety of the product. This applies to all activities, but some novel or potentially high risk activities may be more in need of this legal badge of confidence.

Liability can also be part of a social contract whereby certain risks are accepted in return for guaranteed compensation.20 Criminal injuries compensation and compensation for soldiers have been justified on this basis.21 No-fault liability enhances acceptance of policing and criminal justice and promotes a strong defence.

No-fault liability can also enhance the activity by making it easier to learn lessons from what went wrong and hence inspiring confidence that improvement and high standards are at the heart of the operation. If fault-finding is removed from the equation, those involved are likely to be more comfortable speaking openly, at an early stage, about the incident. This has been a particular concern behind promoting novel solutions for neonatal injuries.22

  1. “Help for Victims of Immunizations” [1973] 1(5856) Br Med J 758 at 759
  2. See below.
  3. A Rapid Resolution and Redress Scheme for Severe Avoidable Birth Injury: a Consultation (Department of Health, March 2017); Better Births. Improving Outcomes of Maternity Services in England (Report of the National Maternity Review, February 2016).

Islands of no-fault schemes exist in the United Kingdom legal system. They have grown up incrementally, but already play an important role – larger than many might imagine when the different instances are added up. This paper seeks to highlight the extent to which the United Kingdom legal system is already familiar with no-fault liability and is continuing to explore new potential areas. However, its real value lies in exploring the justifications that have been provided for these preferential no-fault regimes. After exploring the justifications for preferential treatment within the regimes an evaluation will be made as to whether these justifications are sound and this method of expanding opportunities for compensation should be encouraged.

D Criminal Injuries

(i) Introduction

A Criminal Injuries Compensation Scheme, administered by the Criminal Injuries Compensation Board, was established in 1964 on a non-statutory basis to provide compensation for victims of crime that suffered personal injury or death. The victim must have suffered harm directly attributable to a crime of violence, witnessed harm to a loved one or been injured when trying to prevent a crime or apprehend a criminal.23 Like vicarious liability the scheme is based on a party (the state) being liable for the wrongdoing of another.

At that time, the scheme administered by a Criminal Injured Compensation Board continued to compensate on the basis of the common law measure of damages. The Criminal Justice Act 1988, ss 108-117 would have placed the Scheme on a statutory footing. However, the government signaled its intention to move from a common law damages based assessment to one based on a tariff system in a 1993 White Paper.24 This made it impossible for the Secretary of State to place the tariff based Scheme under the statute as that was premised on common law damages. The proposal to introduce a tariff system was subject to a successful judicial review.25

As the government wanted to press ahead with the tariff reforms it enacted the Criminal Injuries Compensation Act 1995. This established the Criminal Injuries Compensation Authority and introduced a tariff scheme.26 This is now a pure no-fault scheme that does not rely on common law damages and is administrative in nature. The Scheme is very complex. There are lots of debates about the scope of coverage and size of tariffs. Indeed the Scheme was revised in 2012, by extending

  1. Criminal Injury Compensation Scheme 2012, paras at [4]-[9].
  2. Home Office, Compensating Victims of Violent Crime: Changes to the Criminal Injuries Compensation Scheme (Cm 2434, December 1993).
  3. R v Secretary of State for the Home Department, ex parte Fire Brigades Union

[1995] UKHL 3; [1995] 2 AC 513 (HL).

  1. Criminal Injuries Compensation Act 1995 (UK), s 2.

it to overseas terrorist incidents,27 but in other ways imposing more restrictions and being less generous. These details will not be explored, but rather the justification for singling out victims of crime for special treatment will be investigated.28 This is one area in which there has been rather a lot of debate on justifications for the preference given to victims of crime, but nevertheless the justification for such preferential treatment does not seem to be well established.

(ii) Efficiency centred justifications

It may seem contradictory to speak of an ex gratia scheme seeking efficiency savings when it is not premised on any legal liability. Indeed there have been consistent denials that the state has any legal obligation towards accident victims.29 However, the shift from a tort damages based scheme to a tariff scheme clearly was driven by a desire to rein in costs and the further reforms in 2012 were also intended to reduce the burden of the scheme on the tax payer.

It is sometimes argued that state compensation for victims of violent crimes is overall economically more efficient. Some consider compensation to victims as part of the price to be paid for accepting crime as endemic in society given the excessive cost of eradicating all crime.30 So expressed, it is part of the social contract theory discussed below. An alternative more practical justification might be that it makes sense for the state to take on this social insurance role as many criminals will be unable to pay compensation for the harm they caused and few people would take out first party insurance against being the victim of a crime of violence (as opposed to theft).

(iii) Victim centred justifications

(a) Social welfare needs31

Those injured by crimes will have social welfare needs and meeting them could be a justification for state compensation. However, welfare benefits are typically based on meeting identified needs often related to income

  1. The ex gratia scheme is called the Victims of Overseas Terrorism Compensation Scheme (VOTCS) and as Cane and Goudkamp, above n 5, at 308-309 note it is another example of ad hoc development of compensation policy.
  2. For more detail see David Miers State Compensation for Criminal Injuries (Blackstone Press, London, 1997). For a more recent account see Sonia Macleod, “Criminal Injuries Compensation Scheme” in Sonia Macleod and Christopher Hodges (eds) Redress Schemes for Personal Injuries (Hart, London, 2017) 501.
  3. For example, a Home Office Working Party could find “no constitutional or social principle on which State compensation could be justified” Home Office Compensation for Victims of Crimes of Violence (Cmnd 1406, June 1961) at [18]; and the White Paper, Home Office Compensation for Victims of Crimes of Violence (Cmnd 2323, March 1964) at [8] did “not accept that the State is liable for injuries caused to people by the acts of others.”
  4. Miers, above n 28, at 7.
  5. At 7.

replacement and medical and other social care needs. When the criminal injury compensation was damages based, its objective was to place the victim back in their original position. This could be far more than was needed to meet welfare benefit levels and also covered non-pecuniary damages for pain and suffering and loss of amenity. The tariff system is even less precise in mapping the award onto actual need. Even if social welfare provides a good excuse for compensating the victims of crime it does not explain why they are given a preference over other victims. Social welfare can also be equally affected by non-violent crimes that are not covered by the scheme.

(b) Populism

There has been little formal justification for compensating victims of crime.32 When the scheme was being introduced it was suggested there should be no attempt at “elaborate theoretical or philosophical speculation”33 and it was enough to rely on “public instinct”.34 There was said to be simply “universal self-congratulation on a good job well done”.35 Pearson merely noted that compensation “was morally justified as in some measure salving the nation’s conscience at its inability to preserve law and order” and that such provision was right.36 It is hard to resist the conclusion that compensation was based on emotion and sympathy for the victims.37 A cynic might argue there is also a degree of populism for as Edelhertz and Geis suggest it is “not the best kind of politics for an elected official to be seen as antagonistic to the interests of innocent victims of crime”.38 The extension of the scheme to cover victims of overseas terrorism also fits into this model of populist appeal to solidarity in the face of threats to social cohesion.39

(iv) Enhancement centred

Criminal justice is an important function that the state provides for its citizens. It is possible to see criminal injury compensation as a means of supporting the criminal justice process.

(a) Social Contract40

One approach is to view state compensation of criminal injuries as part of a deal struck between state and citizen, whereby citizens effectively

  1. See Cane and Goudkamp, above n 5, at 289-294.
  2. Lord Shawcross (3 December 1962) 245 GBPD HL 263.
  3. Above n 33.
  4. Peter Cane Atiyah’s Accidents, Compensation and the Law (8th ed, Cambridge, Cambridge University Press, 2013) at 293.
  5. Pearson Report, above n 7, vol 1 at 1588 and 1591.
  6. Peter Duff “Criminal Injuries Compensation: The Symbolic Dimension” (1995) 1 JR 102.
  7. H Edelhertz and G Geis Public Compensation of Victims of Crime (Pareger, New York, 1974) at 3.
  8. Cane and Goudkamp, above n 5, at 309 cite the Justice Minister at the time being reported as making reference to solidarity as a justification for introducing the scheme.
  9. Miers, above n 28, at 4.

give up their right to take self-help action against criminals and allows the state to be the main enforcer of the law. Compensation then becomes payable for harm that was not prevented. However, this does not seem to accord with history as compensation became payable only in recent times, whilst prior to that the state had, over a long time, gradually adopted increased police powers that were well established long before the Scheme was. In contractual language it was, at best, a clear case of past consideration.

A slightly broader approach might focus on the reality that society makes choices about investments in societal factors such as education, social welfare and housing as well as policing. The level of criminality might correlate with those choices. A certain level of crime is tolerated as being economically efficient and compensation to victims might be considered society’s way of spreading the risk.41 However, society is full of these types of trade-offs and it would be necessary to single out why risk spreading is justified in this instance and not others.

A contract implies a bargain and it would be unrealistic to suppose the state would agree to offer such a guarantee of total security that is impossible to achieve and thereby expose itself to the prospect of open ended liability. Indeed, when the first scheme was introduced in 1964 the Government was clear that it did “not accept that the State is liable for injuries caused to people by the acts of others”.42

Most citizens in fact gain security thanks to state law enforcement. There might be the right to challenge the fair distribution of resources if, for example, police funding was not distributed equitably. This right is not the same as granting a right to compensation for criminal injuries. The courts have been equally reluctant to impose such liability in tort against the police for criminal injury.43 Moreover, if the contractarian argument were adopted there would be no logical basis for excluding property damage.

(b) State’s Duty of Care

An alternative tort based approach would view crimes of violence as instances of the police having failed to fulfil their duty of care by preventing criminal activity. On this basis compensation legitimates the trade-offs inherent in modern policing and thereby supports the criminal justice system. The courts have, however, been extremely reluctant to impose negligence liability on the police.44 The almost blanket immunity granted by the English courts has been criticised by the European

  1. Andrew Ashworth “Punishment and Compensation: Victims, Offenders and the State” (1986) 6(1) OJLS 86 at 101
  2. Home Office Compensation for Victims of Crimes of Violence, above n 29,at

para 8.

  1. See below.
  2. Alexandrou v Oxford [1993] 4 All ER 328 (CA) and Osman v Ferguson [1992] EWCA Civ 8; [1993] 4 All ER 344 (CA). But see now the more liberal approach in Robinson v Chief Constable of West Yorkshire [2018] UKSC 4.

Court of Human Rights.45 However, this criticism is unlikely to lead to any great expansion of police liability. It might even just involve a reformulation of the test so it sounds less like an immunity.46 Negligence law requires a balancing of resources against objectives based on what is reasonable and does not provide a guarantee of security. Cases where liability has been potentially found to exist have involved the police assuming responsibility, as in the case of protecting an informer.47 A state compensation scheme can fill this gap in tort law. However, it seems unrealistic to hold the state to be under a duty to compensate for each and every crime even when it has not been at fault. Indeed, it could be argued that where crimes have been committed intentionally, the compensation obligation should fall on the wrongdoer (although there will obviously be problems of recovery in some circumstances).48 However, at least in the case of crimes someone is potentially liable to victims of crime. The state might be considered to have more responsibility to accident victims who in some circumstances may not be able to look to anyone for compensation. On the other hand, insurance is often a key background element informing liability decisions and as it is not normal to insure against personal injury caused by crime (as contrasted with theft) this might be considered a gap the state should fill. But some justifications for filling this gap for victims of violent crime, rather than other classes of victims need to be established.

(c) Supporting victims to bind them to the system

The previous two sections indicated indirect ways in which criminal injury compensation might support the wider criminal injury system. However, the role of the victim has become more important in recent times and victim support is a more overt way in which citizens’ faith in criminal justice is enhanced.49 Making victims of crime feel that the criminal justice system is on their side can have a positive impact on the system. Victims have been described as the gatekeepers to the system, who will be less likely to supply information to the police, or validate information supplied by the police, if they do not feel committed to the system.50 Ogus even sees the compensation as justified by the ‘demoralization costs” of victims who feel let down by the system and

  1. Osman v United Kingdom (1998) 29 EHRR 245, [1999] 1 FLR 193 (ECHR).
  2. Paula Giliker “Osman and Police Immunity in the English Law of Torts” (2000) 20(3) Legal Studies 372 suggests using the test of proximity to hold there should be no liability for omissions causing indirect harm by third parties.
  3. Swinney v Chief Constable of Northumbria (No.1) [1996] EWCA Civ 1322; [1997] QB 464, [1996] 3 WLR 968. But there was no liability as there had been no breach of the duty of care: Swinney v Chief Constable of Northumbria (No.2) QB 21 April 1999, [1999] 4 WLUK 160.
  4. Ashworth, above n 41, at 100.
  5. Paul Rock, Victimology (Aldershot, Dartmouth, 1994); Joanna Shapland Jon Willmore and Peter Duff Victims in the Criminal Justice System (Aldershot, Gower, 1985).
  6. Miers, above n 28, at 9.

which is particularly strongly felt by those who have had bodily injury inflicted.51

Victims of crime give rise to (and deserve) great sympathy. The justifications for granting them special consideration remain elusive although it seems to be linked to the goal of enhancing support for the criminal justice system (and acceptance of the inevitable trade-offs that it involves) and maintaining the support of victims within the system. Politicians will not want victims to be complaining about their poor treatment to compound the inevitable criticism about levels of crime.

E Armed Forces

The Armed Forces Compensation Scheme was established in 2005 under the Armed Forces Compensation and Pensions Act 2004 with the rules being set out in secondary legislation.52 It replaced the War Pensions Scheme and provides for, inter alia, lump sum payments and, for the most seriously injured, Guaranteed Income Payments. It is administered by Veterans UK within the Ministry of Defence.

The major drivers behind the scheme are a belief that the state has a duty to provide support for those who make a sacrifice serving the country and that the special nature of military service justified special treatment. There has been explicit recognition that the armed forces should be treated differently. This was an underlying theme of the report The Nation’s Commitment: Cross-Government Support to our Armed Forces, their Families and Veterans53 which noted:54

The demands of service in the Armed Forces are unique, notably the absolute requirement to follow orders whatever the danger. Servicemen and women have a legal liability to exercise lethal force, often in violent circumstances, and to accept without question the risk of harm and living with the consequences of their actions. These obligations set them apart from all others who serve and protect society. They must continue to stand apart and we must continue to be able to rely on them.

In the forward to Lord Boyce’s Review of the Armed Forces Compensation Scheme,55 the Secretary of State for Defence said:

... we have a responsibility to look after our Armed Forces. They must have confidence that when they are injured due to their Service, that they and their family will be fully cared for, right through from their

  1. Anthony Ogus “Do we have a general theory of compensation?” [1984] CLP 29 at 38. Discussed by Ashworth, above n 41, at 104-105.
  2. Armed Forces and Reserve Forces (Compensation Scheme) Order 2011 (UK). For a description of the scheme see Sonia Macleod “The Armed Forces Compensation Scheme” in Sonia Macleod and Christopher Hodges (eds) Redress Schemes for Personal Injuries (Hart, London, 2017) 485.
  3. Ministry of Defence The Nation’s Commitment: Cross-Government Support to our Armed Forces, their Families and Veterans (Cm 7424, July 2008).

54 At [1.3].

55 Ministry of Defence The Review of the Armed Forces Compensation Scheme

(Cmnd 7798, February 2010).

initial treatment to their long term convalescence. And they must have confidence that we will provide them with a fair and just compensation scheme as part of that support.

Although, it is clearly right that soldiers are well cared for, what might be questioned is whether injured armed forces should have any greater claim to compensation than the citizens they are serving to protect. Does a soldier’s sacrifice justify preferential treatment? If a soldier is willing to make sacrifices on the battlefield to protect civilians it seems incongruous that he or she want to take an unequal share of resources from other injured citizens?

The Boyce Report said comparisons with industrial injuries generally and with police and firemen in particular did not assist. It was not stated explicitly to be the case, but there were hints that the police and firemen may be considered to have more generous compensation schemes. It was commented that steps were being taken to reduce claims in those services and that the payments were only made to them on leaving service, whereas the armed force payments could be made in service.56 The police and fire service terms form part of their contract. The best way to view the Armed Forces Compensation Scheme may be to also consider it as part of the overall employment package.

Although the Armed Forces Compensation Scheme is victim centred with evident sympathy and support for the armed forces, the underlying goal is also to enhance the defence of the country by making the soldiers willing to serve and sacrifice. It may indeed be questioned whether the level is appropriate compared to the deal offered to staff in the other emergency services. It is certainly less than tort damages. A claim in tort can still be made in addition to claiming under the Scheme, but some injuries may not result from negligence. In other instances negligence may be difficult to prove, for example, if the injuries result from an explosion that destroys any evidence.

  1. Medical57
Medical negligence generates many high value claims. These often involve high legal costs, so there are strong incentives to reduce such expenditure. This explains why this sector has often been the focus for the development no-fault alternatives. Also, many such cases are hard to prove and the victims may benefit from a surer way of meeting their

56 At [2.68].

57 Voluntary schemes set up by corporations are not considered: see for example Sonia Macleod “Dow Corning Breast Implant Compensations and “Trilucent Breast Implants”, “ASR Hip Replacement Programme” in Sonia Macleod and Christopher Hodges (eds) Redress Schemes for Personal Injuries (Hart, London, 2017) 579. Likewise the fund established to support thalidomide victims is not considered: see Sonia Macleod “The Thalidomide Trust” in Macleod and Hodges (eds) Redress Schemes for Personal Injuries (Hart, London, 2017) 371.

needs, even if not at full tort law compensation levels.58 The United Kingdom has no general no-fault medical accident scheme, despite the idea having been floated on several occasions.59 Instead no-fault schemes have been responses to particular incidents.

(i) Blood

There have been a number of scandals involving blood contaminated with HIV and Hepatitis C. The United Kingdom government responded by setting up five schemes to compensate victims on an ex gratia basis under very complicated arrangements.60 In 1988 the MacFarlane Trust was set up to administer payments to haemophiliacs infected with HIV through blood transplants61 and in 1993 a similar scheme, the Eileen Trust, was set up for non-haemophiliacs. In 2010 the MacFarlane and Eileen Trust Ltd was established to administer non-discretionary lump sum and ongoing payments with the existing MacFarlane and Eileen Trusts continuing to be responsible for discretionary payments.

Some Hepatitis C contaminated victims won compensation in the courts in 2001,62 but for others the government finally set up the Skipton Fund in 2003. It paid one-off compensation to those infected; though since 2011 those most affected were able to obtain annual payments comparable to the HIV victims.63 Discretionary payments were made through the Caxton Foundation.64 These unwieldly schemes were reviewed and combined into one administered by the devolved governments.

In England NHS Business Services operates the England Infected Blood Support Scheme offering one off payments, annual payments and discretional income top-up and other discretionary payments. This now handles both Hepatitis C and HIV claims.

Legal liability was always contested in these blood infection cases. “Compassionate grounds” has been cited as a reason for providing the ex gratia support.65 As the payments are ex gratia economic efficiency

  1. Such no-fault schemes for patients have been introduced in Scandinavia, but there are also some examples from the US, especially concerning birth defects: see Part III Nordic States and Part IV US Schemes in Macleod and Hodges (eds) Redress Schemes for Personal Injuries (Hart, London, 2017) 160 and 180.
  2. See below at (v).
  3. Cane and Goudkamp, above n 5, at 95-96; and Sonia Macleod “Compensations Schemes for Hepatitis C and HIV” in Macleod and Hodges (eds) Redress Schemes for Personal Injuries (Hart, London, 2017) 557.
  4. A separate fund (Mcfarlane Special Payments Trust) was set up as part of an out of court settlement, however this fund is now closed: Macleod and Hodges, above n 60, at 565.
  5. A v National Blood Authority [2001] EWCA Civ 2048; [2001] 3 All ER 289 (QB).
  6. Macleod and Hodges, above n 60, at 563. 64 At 564.

65 Cane and Goudkamp, above n 5, at 95 cite this as the reason given for establishing Skipton Fund.

might not be thought to be a reason for introducing the schemes as they expended more money than was legally required. However, keeping control on resources has clearly been a factor as the maximum amount under the voluntary scheme of HIV victims was £20,000, whereas for the scheme that was part of a court settlement it was up to £60,500.66 In addition to compassion, a feeling that the Government should bear some responsibility for what happened seems to lie behind these schemes, although this is not stated explicitly. Providing such support might even promote confidence and loyalty to the National Health Service (NHS), if it demonstrates it is prepared to support those affected by accidents within its operation. There are increasing signs that the government accepts its responsibility to these victims and payments have recently been made more generous. This sympathy for the victims is, however, also matched by a political imperative to be seen to be responding to public concern as evidenced in the ongoing Infected Blood Inquiry.67 Providing compensation can take some of the heat off the government. However, unless the Government considers it is to some extent responsible for the infections (even if tort liability could not be established), it remains hard to justify special consideration on any grounds other than emotion, populism and a desire to have good public relations. The payments may be the right thing to do, but the special treatment for this group of unfortunate individuals cannot be rationally justified.

(ii) Creutzfeld-Jakob disease

Creutzfeld-Jakob Disease, a neurodegenerative disorder, was passed onto some children who were treated with infected cadavaric human growth hormone. These children later developed CJD and eventually succeeded in establishing negligence in litigation.68

Variant Creutzfeld-Jakob Disease (vCJD) is linked to bovine spongiform encephalopy (BSE), a cattle prion disease. In the 1990s the United Kingdom was affected by increases in vCJD linked to the consumption of infected beef.69 The government had originally considered “paying compensation on a no-fault basis would be enormously complicated, would not necessarily solve the problems that are being encountered, would be expensive and would have ramifications beyond the health service.”70 However, Lord Phillips’ BSE Inquiry found that “‘victims of

  1. Department of Health and Social Care Infected blood: Reform of Financial and Other Support (January 2016) at 1.5.
  2. This is a public inquiry launched to investigate why infected blood products were used to treate NHS patients prior to 1992. See: “Infected Blood Inquiry” <> .
  3. Robert Owen “The Human Growth Hormone Creutzfeld Jakob Disease Litigation” (1997) 65(2) Medico-Legal Journal 46.
  4. See The BSE Inquiry: The Inquiry into BSE and variant CJD in the United Kingdom (Report of the Inquiry, October 2000) available at: webarchive.
  5. (November 1998) 321 GBPD HC 187.

vCJD and their families have special needs which should be addressed” since “The unusual problems of the diagnosis, treatment and care of the early cases of vCJD meant that for some of the victims and their families the tragic horror of the disease was made the more difficult to bear by lack of the appropriate treatment, assistance and support.”71 This led to the establishment of a no-fault compensation fund.72 This suggests a victim centred approach, but the vague words of the BSE Report do not really explain why these victims deserve more sympathy than others who may be facing equally difficult problems.

The establishment of the scheme may also have had some efficiency motivations. This no-fault scheme pays damages on a comparable basis to tort law, and in some cases is even more generous.73 However, efficiency savings are gained by avoiding expenditure on litigation costs. The cost is also manageable as the numbers affected seem likely to be limited.74

The Secretary of State called it a “national tragedy”75 and this may explain both the sympathy for the victims and the resulting sense of responsibility for the government’s role in the tragedy as set out in Lord Phillips’ Report. There may also have been political motivations. There was an incentive for the new government to distance itself from the mistakes of the previous administration and not to become embroiled in similar litigation to the human growth hormone induced CJD litigation. Taking the moral high ground for compensating vCJD victims made political and economic sense, especially as the cost was limited. Farmers had been compensated for their economic losses and it would not look good if, in contrast, claims by the small number of victims harmed by their agricultural practices were left uncompensated.

(iii) Vaccine damage

The thalidomide tragedy had put the issue of pharmaceutical liability on the agenda in the 1960s and 1970s. When allied with a growing disability rights movement, this created the right environment for a no-fault compensation scheme for vaccine damage to be adopted by the Vaccine Damages Payments Act 1979 (UK).76 Undoubtedly, the Government reacted to the political pressure exerted by the effective pressure group (the Association of Parents of Vaccine Damaged Children) that worked

  1. The BSE Inquiry, above n 69, at 14.
  2. Sonia Macleod “Creutzfeld-Jakob Disease” in Macleod and Hodges (eds)

Redress Schemes for Personal Injuries (Hart, London, 2017) 572.

73 At 578.

  1. The funds allocated were based on no more than 250 victims: above n 72, at 574.
  2. Department of Health “Compensation Scheme for Variant CJD Announced” (Press Release, 1 October 2001 cited in Andrea Boggio “The Compensation of the Victims of the Creutzfeld-Jakob Disease in the United Kingdom” (2005) 7 Med Law Int 149 at 160.
  3. Sonia Macleod “Vaccine Injury Compensation Schemes” in Macleod and Hodges (eds) Redress Schemes for Personal Injuries (Hart, London, 2017) 381.

in unison with the All Party Group on Disability, led by Jack Ashley MP.77 The plight of innocent children justified a victim centred approach that played well with the general public in an era when disability rights were coming to the fore.

However, activity enhancement was also a key feature behind the adoption of the scheme as vaccines are a social good. Vaccination works because such programmes reduce the risk of infection, but it is easy to be a free rider and take the benefits of reduced risk without exposing oneself to the dangerous potential side-effects from the vaccine.78 As was written in the British Medical Journal:79

The moral justification for compensation ... is based on the social contract. National immunization programmes not only aim to protect the individual but also to protect society... If individuals are asked to accept a risk (even a very small one) partly for the benefit of society then it seems equitable that society should compensate the victims of occasional unlucky mishaps.

Certainly, when Prime Minister James Callaghan wrote to Lord Pearson asking that vaccine damage be considered in the Royal Commission into Personal Injury Compensation he cited restoring public confidence as a consideration.80 Concerns about low immunisation rates are topical currently with regards measles, for example, and fear is being voiced that anti-vaccination movements are putting public health at risk.81 Acceptance of any Covid-19 vaccine is currently a topic of crucial importance.

Efficiency arguments also underpin the scheme. Compensation levels were set at a low level (a single tax-free lump sum of £120,000) which compares unfavourably to tort damages and there is a threshold requirement of severe disability (originally set at 80 per cent and now 60 per cent of the industrial injuries’ compensation scheme). Causation still needs to be proved and success rates have been low.82 The Scheme is administered by the Secretary of State by the Vaccine Damages Payment Unit with a right of appeal to a first-tier tribunal. The scheme allows victims also to sue in tort, but it is doubtless hoped that cases will be

  1. Gareth Millward “A Disability Act? The Vaccine Damage Payments Act 1979 and the British Government’s Response to the Pertussis Vaccine Scare” (2016) 30(2) Soc Hist Med 429.
  2. Cane and Goudkamp, above n 5, at 94-95.
  3. “Help for Victims of Immunizations” [1973] 1(5856) Br Med J 758 at 759.
  4. Cited in Millward, above n 77, at fn 79. The Pearson Report, above n 7, vol 1 at [1398] favoured providing compensation.
  5. A Hussain, S Ali, M Ahmed and S Hussain “The Anti-vaccination Movement: A Regression in Modern Medicine” (2018) 10(7) Cureus, e2919. doi: 10.7759/cureus.2919; and Eve Dubé, Maryline Vivion and Noni MacDonald “Vaccine hesitancy, vaccine refusal and the anti-vaccine movement: influence, impact and implications” (2015) 14 Expert Review of Vaccines 99.
  6. Twenty-one per cent between 1977-2000 and only 8.5 per cent between 2006/7-2011/12: see, Macleod, above n 76, at 402.

diverted to the no-fault scheme that is less risky for victims. If claims are hard to win in tribunals they are even harder to win in the courtroom. In Loveday v Renton,83 Stuart-Smith LJ was unable to accept on a balance of probabilities that the pertussis vaccine (for whooping cough) caused brain damage in young children.84

A willingness to establish a no-fault scheme may have also been based on a suspicion that the government had not always met the best standards for vaccination care. The Parliamentary Commission for Administration had suggested better information could have been provided on adverse reactions to the pertussis vaccine and on how to spot contra-indications.85

With vaccine damages we see a mixture of sympathy, cost containment and perhaps a sense of government responsibility. However, undoubtedly there is an activity enhancement function, as inoculation is a benefit to society.

(iv) Neo-natal injuries

Serious defects to new born babies are some of the most distressing cases and also some of the most expensive. Drawn out tort litigation places a strain on the family and the NHS suffers increased litigation costs. The prospect of litigation means that medical staff may feel less able to be open about what went wrong and this may affect the ability to learn from the experience in order to enhance services going forward.

In England,86 as part of a wider push to enhance maternity services,87 discussion is ongoing about how to respond to the compensation needs of victims. Initially it was proposed that there be an insurance based Rapid Resolution and Redress Scheme that was not based on negligence, but rather on causation as to whether “the harm was the probable consequence of the treatment provided or not provided at birth”.88 It also suggested breaking away from tort based damages, though victims would remain entitled to bring civil actions.

Following further research,89 the next consultation on the Rapid Resolution and Redress Scheme for Severe Avoidable Injury at Birth90 moved away from a no-fault scheme. The Impact Assessment is very explicit that any costs saved through improved learning would not be

  1. Loveday v Renton [1990] 1 Med LR 117 (QB).
  2. See, Robert Lee “Vaccine Damage: Adjudicating Scientific Dispute” in G.Howells (ed) Product Liability, Insurance and the Pharmaceutical Industry (MUP, Manchester, 1991) 52.
  3. Parliamentary Commissioner for Administration Whooping Cough Vaccination (Sixth Report for Session 1976-77) at 17-18 and 22.
  4. Health is a devolved responsibility.
  5. Better Births. Improving Outcomes of Maternity Services in England (Report of the National Maternity Review, February 2016).
  6. At Annex D.
  7. DH birth injury compensation policy research (Report of the Ipsos MORI Social Research Institute, December 2016).
  8. A Rapid Resolution and Redress Scheme for Severe Avoidable Birth Injury: a Consultation (Department of Health, March 2017).

off set by the increase in compensation.91 Instead, it assumed a new scheme would award 90 per cent of tort damages for babies suffering an avoidable neurological injury at birth and would add on an “avoidable administrative eligibility” test. This might be either a reasonable care test that would equate with current negligence standards or a test based on what an experienced specialist would do.92 This latter test would be more favourable to victims. Although the current discussions are unlikely to produce a no-fault compensation scheme, it remains interesting to consider what is motivating this reform, which at least shares some objectives with no-fault schemes.

Efficiency is clearly a central driving factor. Making more effective use of NHS resources is one of the explicit objectives of the Rapid Redress and Resolution Proposal.93 It was estimated that compensation for negligence during maternity was costing the NHS £560 million per annum in 2016.94 Reducing these costs permeates the discussion and is a clear reason for rejecting a no-fault scheme. As the 90 per cent basis for the awards relates to current claims and there is likely to be more successful claims, then any savings must result from reduced legal costs under the new scheme or better practices resulting from increased learning from mistakes. Indeed if the experienced specialist standard is used it is likely that there will be more eligible claims than under the existing torts regime. If the reasonable care standard is retained there may be less incentive for victims to use the scheme unless it is easier to access than the courts, speedier or applies the test in a more victim friendly manner. It has been suggested that the reasonable care standard, if adopted, would take a system-level view rather than consider individual blame/fault.95 However, it is not clear how that will translate into success rates. As currently formulated, it is vague and its likely application is uncertain. Any of the schemes rules would be subject to interpretation and potential pressures to tighten up on awards may be exerted if too many claims are being upheld.

The proposed Scheme is victim centred to the extent it desires to improve the experience of families and children when harm has occurred.96 Perhaps the most important objective of the reforms from our perspective, because it seeks to enhance the activity, is the desire for “reducing the number of severe avoidable birth deaths by encouraging a learning culture”.97 This may be achieved if the agency awarding

  1. Rapid Resolution and Redress Scheme for Severe Avoidable Injury at Birth: Impact Assessment (Department of Health, March 2017) at [49].

92 At 11.

  1. Rapid Resolution and Redress Scheme for Severe Avoidable Injury at Birth: a consultation, above n 90, at 3.11-3.15.
  2. Better Births, above n 87, at 3.
  3. Rapid Resolution and Redress Scheme for Severe Avoidable Injury at Birth: a consultation, above n 90, at 27.
  4. Rapid Resolution and Redress Scheme for Severe Avoidable Injury at Birth: a consultation, above n 90, 3.6-3.10.
  5. Rapid Resolution and Redress Scheme for Severe Avoidable Injury at Birth: Impact Assessment, above n 91, at 5.

compensation has the confidence of the victims. This will be difficult to achieve if the Scheme retains something akin to a negligence standard, even as finessed to raise the expectations of the level of care to that provided by an experienced specialist. A no-fault scheme would enhance the chance of enhancing that learning experience, but the rejection of the no-fault option on the basis of cost makes it clear that this sub-set of cases has been chosen primarily because the litigation costs are a significant drain on the NHS.

(v) Medical negligence

In England, a general no-fault medical negligence scheme was considered by the Chief Medical Officer in 200398 and was supported by the House of Commons Select Committee on Patient Safety in 2009.99 The government rejected the idea of a general no-fault scheme, but said it would also await the outcome of the Scottish government’s review on the topic.100 The Scottish No Fault Compensation Review Group issued a report in 2011101 that favoured a no-fault compensation scheme that sat alongside the existing tort liability. It considered both the New Zealand and Swedish schemes against criteria it set out to test the benefits of systems seeking to compensate victims of medical injury. It favoured the Swedish system, though it noted their system built on a more generous social security system.102 The Report did not really explain why it had come to that conclusion. It did not, however, favour the Swedish avoidability test for establishing entitlement and preferred a scheme that described those injuries which would not be eligible under scheme.103 It gave the example of a risk that was known and consented to as an excluded risk, but did not expand on the conditions for that exclusion or hint at the criteria for further exclusions.104 It is clear that cost reduction was a factor, behind the Review, but a desire to provide fair compensation was also to the fore. The Scottish government is not likely to implement its proposals. This is not surprising as a move to a no-fault scheme risks incurring substantial additional costs. The argument for a no-fault scheme needs to be made out far more convincingly and in greater depth than in this brief Report.

  1. Making Amends: A consultation paper setting out proposals for reforming the approach to clinical negligence in the NHS (Report by the Chief Medical Officer, June 2003). It was ultimately rejected on costs grounds.
  2. House of Commons Health Committee Patient Safety Sixth Report of Session 2008-9 (18 June 2009).
  3. Simplified schemes for small value claims have been introduced in both

England under NHS Redress Act 2006 (UK) and The National Health Service (Concerns, Complaints and Redress Arrangements) (Wales) Regulations 2011 (UK).

  1. Sheila McLean No Fault Compensation Review Group Report and Recommendations (Scottish Government, Feburary 2011).
  2. At 7.11, Recommendation 1.
  3. At 7.11, Recommendation 2. 104 At 7.10.

G Industrial Injuries

(i) Historical background

Industrial injuries are a common target of no-fault schemes. The United Kingdom had in the past also moved in this direction when the Workmen’s Compensation Act 1897 provided compensation for accidents “arising out of and in the course of employment”.105 There was no requirement for employers to carry insurance, but most did. Nowadays, employers are required to have insurance,106 but the system of liability is based on the common law as workmen’s compensation legislation has been repealed. In practice many claims will be premised on breach of the so-called “six-pack” of health and safety regulations.107

Instead of a separate workmen’s compensation scheme, industrial injuries were given preferential treatment under the post-war social security system. Beveridge recognised the logic of the welfare system treating all needs in the same way, but nevertheless favoured preferential treatment for industrial injuries.108 The justifications were that (i) people should not be discouraged from doing dangerous work; (ii) the injury was suffered “whilst working under orders” and (iii) a more generous treatment in social security would allow common law actions to be limited to those for which the employer was “morally and in fact” responsible.109 These arguments are not very strong.110 Dangerous work may justify extra pay, but when harm occurs the employees are in no different position from anyone else with the same injury or disability. Moreover, the more generous benefits apply to all workers, not only those carrying out dangerous work. Working under orders suggests a lack of free choice about incurring the injury, but no one would want to suffer such a fate whether working or doing another activity. In many jobs the worker has a lot of discretion and the notion the employer controls the worker is becoming increasingly outdated. Finally, a trade off of benefits for reduced tort law damages may be a reasonable social choice, but in practice tort claims have continued.

(ii) Industrial preference in social security

Pearson was critical of the industrial preference, but rather than abolish it on principle found it easier on pragmatic grounds to recommend extending the preferential treatment to road accidents.111 This industrial

  1. Workmans Compensation Act 1897 (UK), s 1(1).
  2. Employers’ Liability (Compulsory Insurance) Act 1969 (UK).
  3. The Workplace Health, Safety and Welfare Regulations 1992 (UK); The Manual Handling Operations Regulations 1992 (UK); The Display Screen Equipment Regulations 1992 (UK); Provision and Use of Work Equipment Regulations1992 (UK); Personal Protective Equipment (PPE) at Work Regulations 1992 (UK); Management of Health and Safety at Work Regulations 1992 (UK).
  4. William Beveridge Social Insurances and Allied Services (Cmd 6404, 1942). 109 At 39 [81].
    1. Cane and Goudkamp, above n 5, at 314-315.
    2. The Pearson Report, above n 7, vol 1 at [289]-[291].

preference within the social security system remains in place today. The Industrial Injuries Scheme Benefits provides a range of benefits: Industrial Injuries Disablement Benefit, Constant Attendance Allowance, Exceptionally Severe Disablement Allowance, Reduced Earnings Allowance and Retirement Allowance. They are available for those injured by accidents at work or who undertake work that has been linked to one of 70 prescribed diseases which affect them.112

A number of injury specific no-fault schemes have been established.

(iii) Mesothelioma

Asbestos exposure has given rise to many instances of mesothelioma, a cancer that affects the lining of internal organs. In addition to civil claims, which themselves have generated novel law in relation to causation,113 there are several other no-fault routes to compensation.114 If Industrial Injuries Disablement Benefit is awarded a claim for a lump sum can be made under the Pneumoconiosis etc (Workers Compensation) Act 1979 (UK), where the employer has ceased to exist and no other lump sum has been claimed and no civil claim is brought.115 There is no rational explanation for the preferential treatment of this group of workers. Instead, it was a response to well organised pressure groups supporting slate quarrymen, who had the backing of the Welsh Nationalist Party. It was also their good fortune that Jim Callaghan PM needed their votes to prop up his minority government.116 As Atiyah points out: “ad hoc treatment of special groups can only lead to the abandonment of rationality in policy. Ad-hockery of this sort only benefits those disabled whose supporters are well organised and have loud voices.”117 It is an

  1. See: Department for Work and Pensions Industrial Injuries Disablements Benefits: Technical Guidance (9 December 2019) < government/publications/industrial-injuries-disablement-benefits- technical-guidance/industrial-injuries-disablement-benefits-technical- guidance>.
  2. Fairchild v Glenhaven Funeral Services [2002] UKHL 22, [2003] 1 AC 32 decided that where employees had been exposed by successive employers each was potentially liable for materially increasing the risk. Barker v Corus UK Ltd [2006] UKHL 20, [2006] 2 AC 572 held that each employer was only liable for their proportionate share of the harm, but this was overturned and joint and several liability was established by s 3 of the Compensation Act 2006 (UK).
  3. Sonia Macleod “UK Mesothelioma Compulsory Insurance Fund and Compensation Scheme” in Macleod and Hodges (eds) Redress Schemes for Personal Injuries (Hart, London, 2017) 520.
  4. Pneumoconiosis etc. (Workers Compensation) Act 1979 (UK), s 2 and see Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2013 (UK).
  5. Anthoy Ogus “Legislation, the Courts and Demands for Compensation” in R Matthews (ed) Economy and Democracy (Palgrave Macmillan, England, 1985) 151 at 157-8, cited in Nick Wikeley “The New Mesothelioma Compensation Scheme” [2009] 16 JSSL 30 at 33.
  6. Cited in Wikeley, above n 116, at 47.

example of victim-centred reform. This may have been populist, but was also motivated by the blatant political pragmatism of keeping a government in power.

In 2008, a Diffuse Mesothelioma Scheme was introduced to provide lump sums to those affected by asbestos otherwise than through employment. This covered the self-employed, exposure via a relative (eg by washing their clothes), exposure from the environment or unspecified exposure that was nevertheless in the United Kingdom. The preferential treatment of asbestos sufferers was therefore extended. It was introduced in the wake of concern to make recovery for asbestos related claims more simplified after legislative intervention had been needed to remedy a court decision on the apportionment of liability between successive employers.118 It was intended to be cost neutral in the long term with payments being recovered out of compensation payments made by defendants and insurers.119 Inevitably, though, there would be some burden on the state as not all recipients will be able to win civil cases and in any event the state bears the cost of administering the scheme.

The Mesothelioma Act 2014 established a separate scheme (known as the Diffuse Mesothelioma Payment Scheme) for those who had been affected by employment, but could no longer trace their employer or their employer’s insurer. Unlike the two schemes discussed above, this is not a no-fault scheme. A successful claim required exposure to asbestos due to negligence or breach of statutory duty.120 It was a response to market failure in the insurance industry where records of policies had been lost.121 It was also a pragmatic compromise as compensation was pitched at around 80 per cent of civil damages to provide some incentive for claims still to be brought where possible.

The response to asbestos seems to have been a pragmatic one that also served to assuage a well organised pressure group. However, as with the blood scandal there seems to be a hint of reacting to a national tragedy which the government may have felt it should take some responsibility for.

(iv) Coal miners

Specific schemes have also been set up for coal miners.122 A no-fault Coal Workers’ Pneumoconiosis Scheme was set up in 1974 to handle claims in lieu of common law claims with regard to respiratory illnesses, including pneumoconiosis. When the industry was privatised in 1994, the Government took on responsibility to meet outstanding personal injury

  1. Above n 113 and also Department for Work and Pensions Improving Claim Handling for Mesothelioma Cases (Consultation Report, 2006).
  2. Wikeley, above n 116, at 38-9.
  3. Messothelioma Act 2014 (UK), s 2(1).
  4. Nick Wikeley “The Diffuse Mesothelioma Scheme” [2009] Journal of Social Security Law 65.
  5. Sonia Macleod “Miners’ Compensation Schemes” in Macleod and Hodges (eds) Redress Schemes for Personal Injuries (Hart, London, 2017) 534.

claims. Following defeat in test cases concerning Vibration White Finger123 and lung diseases124 the government negotiated a Vibration White Finger (VWF) Agreement in January 1999 and a Chronic Obstructive Pulmonary Disease (COPD) Agreement in September 1999.125 These schemes seem driven by efficiency concerns to reduce administrative and legal costs in the face of legal liability. Of course they were also victim centred in so far as they assisted victims, who had public sympathy. Whereas the 1974 Scheme may have been a recognition of the moral responsibility towards miners, the last two schemes were established against the background of established legal liability.

H Road accidents

(i) Tort law continues to dominate despite reform proposals

Road accident victims have remained the largest category of victims in the United Kingdom covered solely by tort law and general social security. There have been academic calls for a special regime since the 1960s,126 though most publicity was given to a speech in 1965 by Lord Parker.127 There was a recognition of an urgent social problem as the number of road accidents increased and exposed failures in the existing law. Attention was also being drawn to innovative no-fault models such as the one introduced in Saskatchewan in 1946.128 Many continental legal systems also have a liability regime approaching no-fault by imposing liability and the insurance obligation on the keeper of the vehicle.

Most of the criticism in the 1960s was about general features of the tort system, though Payne notes a Select Committee had considered “the obligation to compensate innocent pedestrians ought to be regarded as a duty of the motoring community as a whole rather than of the individual motorist who causes damage”.129 Elliot and Street outlined a detailed reform proposal for road accident victims. They justified this by reference to public attitudes since:130

  1. Armstrong v British Coal Board Corporation Times 06-Dec-1996, [1996] EWCA Civ 1049, and Armstrong & Ors v British Coal Corporation CA (Civ), 31 July 1998, [1998] EWCA Civ 1359.
  2. Griffiths v British Coal Corporation [1998] EWHC 2008 (QB).
  3. See, National Audit Office Coal Health Compensation Schemes: Report by the Comptroller and Auditor General (July 2007).
  4. Douglas Payne “Compensation the Accident Victim” (1960) 13 CLP 85 and H Grey, “Liability for Highway Accidents” (1964) 17 CLP 127.
  5. Lord Parker “Compensation for Accidents on the Road” (1965) 18 CLP 1. The prominence of this speech was considered remarkable as the judge had commented that the pressure of work had prevented him from giving “the thought and industry necessary to produce a really worth-while address”. Cited in Peter Bartrip “No-fault Compensation on the Roads in Twentieth Century Britain” (2010) 69 CLJ 263 at 270. Bartrip provides an excellent review of reform proposals.
  6. Automobile Accident Insurance Act 1946 (Saskatchewan).
  7. Payne, above n 126, at 94.
  8. Derek Elliot and Harry Street Road Accidents (Penguin, London, 1968) at 249.

Mankind has devised a swift-moving machine which is killing and maiming in ever-increasing numbers every second of the day and leaving its victims without financial support. Citizens demand that the law shall not allow this to happen.

Actually, Lord Parker just a few years earlier had complained about “a complete indifference amongst the community as a whole” to road casualties.131 Others criticised the excessive focus on road accidents. Atiyah argued in the first edition of Accidents, Compensation and the Law that: “What is surely needed is a single comprehensive system based on the existing social security system, but with benefits as adequate as society can afford.”132 Ironically, Atiyah later proposed a scheme of compulsory third party insurance for motor vehicles that would have in practice have introduced a no-fault scheme for road accident victims; whereas, for other victims he proposed abolishing tort actions and relying on voluntary first party insurance.133 Bartrip suggests this signified either a political drift to the right or a pragmatic acceptance that social welfare is far more likely to be reduced than expanded.134 Pearson had made proposals for a no-fault regime for road accidents135 that had effectively been ignored. However, we are now witnessing something rather dramatic in the context of automated vehicles.

(ii) Automated vehicles

In the Automated and Electric Vehicles Act 2018 the United Kingdom has used motor insurance as the vehicle for a establishing a regime that is in effect a no-fault regime from the perspective of accident victims. Insurers are liable for harm caused by automated vehicles. The insurer may then be able to recover from the negligent driver or the manufacturer if the car is defective.136 The expectation is that commercial practice will determine how liability is handled between insurer and manufacturer. It is anticipated that manufacturers will have an incentive to reach a commercially sound practice in order to avoid their products becoming difficult to insure.

The motivation for this radical departure is clearly to promote the development of automated vehicles. As the House of Commons Briefing Paper explains:137

  1. Parker, above n 127, at 10.
  2. Patrick Atiyah Accidents, Compensation and the Law (Weidenfeld and Nicolson, London, 1970), at 603-15, cited in Peter Bartrip “No-fault Compensation on the Roads in Twentieth Century Britain” (2010) 69 CLJ 263 at 273.
  3. See, Atiyah, above n 4; and Bartrip,above n 132, at 285-286.
  4. Bartrip, above n 132, at 286.
  5. The Pearson Report, above n 7, at vol 1, ch 18.
  6. Automated and Electric Vehicles Act 2018 (UK), pt 1.
  7. Louise Butcher and Tim Edmonds Automated and Electric Vehicles Act 2018 (House of Commons, Briefing Paper CBP 8118, 15 August 2018). See also Department for Transport, Pathway to Driverless Cars: Insurance for Automated Vehicles (Centre for Connected and Autonomous Vehicles, Impact Assessment Report IA DfT00366, October 2016).

The intention behind the legislation is to emphasise that if there is an insurance ’event’ (accident) the compensation route for the individual remains within the motor insurance settlement framework, rather than through a product liability framework against a manufacturer. The Government believes that answering the insurance questions sooner rather than later will encourage manufacturers to develop transport technology in the UK with the confidence that they can exploit market opportunities.

This is a very clear example of no-fault liability being used to enhance the activity. There was certainly an appreciation that there may be a gap in cover if drivers are disengaged from the process of driving in an automated environment and therefore could not be found negligent. Compensation to victims via this insurance scheme is desirable, but seems to be a by-product of the primary concern to encourage the development of the automated vehicle sector. It may seem counter- intuitive that increasing liability is supportive of the sector, but this links back to economics and signaling theory. If you are prepared to guarantee the safety of your products this gives a strong signal that consumers can trust in their safety since the business will suffer financial loss if too many accidents occur. This explains why Volvo offered to take responsibility for its automated cars and Mercedes and Google followed suit.138 There can also be societal gains from this development as automated cars are expected to help reduce overall accident levels. Debate can, of course, be had, about whether the keeper of the vehicle or the manufacturer is best placed to be required to carry the insurance.139

No-fault liability for autonomous vehicles has also recently been floated in a policy document at the European level; the policy driver in that context seems to be grounded mainly in a desire to fill gaps in existing legislation and thereby reduce divergences between legal orders.140 However, mention is also made to “facilitating consumer trust in the new technologies”.141

I Conclusions

Peter Cane and James Goudkamp argue that, given the political reality that comprehensive reform of the torts system is not feasible in the United Kingdom, lawyers should favour limited reforms in areas like road accidents and drug injuries. The aim is to wean the public mind off tort rights and onto the notion of no-fault liability.142 However,

  1. K Webb “Products Liability and Autonomous Vehicles: Who’s Driving Whom?” (2017) 23 Rich JL of Tech 1 at 45.
  2. Maurice Schellekens “No-fault Compensation Schemes for Self-driving Vehicles” (2018) 10 (2) Law, Innovation and Technology 314.
  3. Tatjana Evas, Charlene Rohr, Fay Dunkerley and David Howarth A Common EU Approach to Liability Rules and Insurance for Connected and Autonomous Vehicles (European Parliamentary Research Service, EP 67538 2018) at 31.

141 At 37.

142 Cane and Goudkamp, above n 5, at 465.

the picture is not currently one of a planned long march to a nirvana of a universal scheme. Instead the United Kingdom has a series of punctual no-fault schemes that need to be explained and justified. At the very least there needs to be transparency about the justification for preferential treatment in any given context. Ideally these justifications can help society understand why limited resources are shared out in a preferential manner.

Arguments by law reformers, such as Owen Woodhouse, and academic commentators, like Atiyah and Cane, have focused on general criticism of the torts system. It is seen as costly to administer and not always directing compensation on the basis of need. These efficiency-centred arguments also play a role in no-fault discussions. Concern about litigation costs lie behind the review of medical negligence in Scotland and the birth injury proposals in England (though the ultimate solution is no longer likely to be on a no-fault basis). Cost containment indeed lies behind many no- fault schemes. The Vaccine Damages Payments Act 1979 recognised the difficulties inherent in bringing such claims in torts, but offered a lower level of compensation under its alternative scheme. No-fault schemes often operate on a lump sum and tariff basis that is closer to a welfare benefits model than tort compensation that fully seeks to return the victim to her pre-accident position. No clearer example of this can be seen than the move to a tariff based compensation scheme for criminal injuries.

These efficiency concerns are often invoked to justify no-fault schemes. The vagaries of the tort system are an easy target and a valuable argument to support a more efficient system that ensures accident victims needs are met by a no-fault scheme. Attention is rarely paid to why efficiency arguments justify a no-fault scheme in any particular context. Can such efficiency centred arguments be defended as reasonable justifications for preferential treatment? It is indeed hard to see why criticisms that can apply to any context should be capable of justifying preferential treatment. One response might be that the scale of the problem in certain sectors means that it needs to be addressed urgently. This is most obviously a potential argument in the case of medical negligence and birth injuries where the costs can have significant impact on the ability to provide health services. Herein, may lie another rationale for differential treatment. In the United Kingdom most health care is provided by the state. If the NHS is subject to an inefficient personal injury compensation system, this directly affects the resources available within the NHS for healthcare. Where the costs are hidden in private insurance arrangements, as is the case for road accidents or drugs injury, the effects are less obvious. The price of driving or drugs might be inflated by high liability costs. This might in turn lead to some marginal reduction in consumption below the optimum level. But this can be considered a matter for the market to sort out.

The risk of falling through the cracks in the torts system may be particularly high for some victims, such as the children affected by side effects of vaccinations or who suffer brain injury at birth. This may

justify ensuring some easier route to compensation. However, it is hard to justify why they deserve special treatment more than other children in the same or similar distressing conditions. This brings us on to victim- centred arguments.

Some victims readily evoke public sympathy – injured soldiers and victims of violent crime come easily to mind as victims whom many simply assume should have special treatment. However, whilst it will be easy to find those who support looking after our wounded troops, the answer becomes more complex if the question is whether the injured soldiers deserve more resources than other innocent victims such as a child suffering a brain injury from birth or those suffering terrible diseases such as cancer. The image of the soldier fighting valiantly to protect the society back home does not fit easily with the same soldier then demanding an unequal share of resources. Many of the victim centred solutions seem to result from politicians wanting to gain good publicity or at least make sure the bad news stories are kept out of the news. Many no-fault schemes result from pressure groups being well organised. Some, such as the Welsh slate miners, were fortunate that their claim was agreed to for reasons of bare political expediency. These rationales for preferential treatment are not very convincing. Often some sense of government responsibility for the cause of the harm also seems to lie behind the adoption of no-fault liability. The coal miners COPD and VWF schemes followed findings of actual liability, but in many other instances there is a feeling that the government had some responsibility, even if it might not be legally liable: the 1974 scheme for coal miners with respiratory illnesses, asbestos, infected blood and BSE regimes might be explained on this basis. Another way of putting it is that these are national tragedies of limited scope, which are not ongoing, and so can be addressed by affordable no-fault schemes. Of course politics remains to the fore.

Perhaps the most novel and convincing justification for preferential development of no-fault schemes in some sectors is that they can be justified as enhancing a particular activity. When this is framed in very broad terms it is less convincing. Enhancement-centred arguments seem rather attenuated when it is suggested the criminal injuries compensation scheme supports the criminal justice system and its victims or that armed forces compensation ensures the army functions well. However, enhancement centred justifications have more force when backed up with convincing pragmatic arguments demonstrating a link between the availability of compensation and promotion of the activity. Vaccine damage payments can be seen as a tool to give parents the confidence to have their children inoculated. High inoculation rates are for the general good and are a potentially convincing argument for offering preferential treatment. Equally, no-fault liability aimed at giving consumers confidence in automated cars is another potentially valid reason justifying preferential treatment. Here, society can be said to gain from the preferential treatment by the encouragement of a desired activity that may lead to an overall reduction in the number of accidents. No-fault

schemes can also enhance activities by creating an atmosphere that assists the learning process about what caused the accidents. This was a key element of the English proposals on birth defects. That objective would be more likely to be obtained if the original no-fault proposal had been retained. However, it still needs to be explained why this learning effect is more pressing in a particular scenario than in other medical contexts.

There are several no-fault schemes in the United Kingdom legal landscape overlaid on top of the traditional canvas of tort liability and welfare schemes. They have often been introduced with limited justification for the preferential treatment they afford privileged groups. Many of the limited number of arguments put forward to explain the preferential treatment do not pass muster. Often political expediency seems to be a driving force. However, justifications seem more convincing when premised on special conditions that justify no- fault liability as a condition for encouraging and enhancing a particular activity. Transparency is the key word. Politicians need to be pressed to articulate their reasoning and justify preferential treatment. Preferential treatment of sympathetic cases is not a simple win for those campaigning for victims’ rights. It is not a gain for accident victims if narrow interest groups can gain privileges, whilst the majority continue to be poorly served by the legal system. It risks undermining the dynamics that might drive more fundamental reform. If politicians are forced to articulate their reasoning, they may come to appreciate that many of the arguments apply to accident victims in general (as well as the disabled) and start to address the broader issues of how the welfare state should equitably meet the needs of those suffering injury or disability.

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