The Compensation Act 2006 (c 29) is an Act of the

Parliament of the United Kingdom The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body of the United Kingdom, and may also legislate for the Crown Dependencies and the British Overseas Territories. It meets at the Palace ...

, introduced in response to concerns about a growing

compensation culture "Compensation culture" (often shortened to "compo culture") is a pejorative term used to imply that, within a society, a significant number of claims for compensation for torts are unjustified, frivolous, or fraudulent, and that those who seek com ...

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 A lawsuit is a proceeding by one or more parties (the plaintiff or claimant) against one or more parties (the defendant) in a civil court of law. The archaic term "suit in law" is found in only a small number of laws still in effect today. ...

and

risk averse In economics and finance, risk aversion is the tendency of people to prefer outcomes with low uncertainty to those outcomes with high uncertainty, even if the average outcome of the latter is equal to or higher in monetary value than the more c ...

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 At common law, damages are a remedy in the form of a monetary award to be paid to a claimant as compensation for loss or injury. To warrant the award, the claimant must show that a breach of duty has caused foreseeable loss. To be recognized at ...

negligence Negligence ( Lat. ''negligentia'') is a failure to exercise appropriate care expected to be exercised in similar circumstances. Within the scope of tort law, negligence pertains to harm caused by the violation of a duty of care through a neg ...

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 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 (also known as judicial precedent, judge-made law, or case law) is the body of law primarily developed through judicial decisions rather than statutes. Although common law may incorporate certain statutes, it is largely based on prece ...

, 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 25 July 2006 (s.16(1)).

Damages

Section 3 reverses the

rule on allocation of damages in various mesothelioma claims arising from unlawful exposure to asbestos. In 2002, the

House of Lords The House of Lords is the upper house of the Parliament of the United Kingdom. Like the lower house, the House of Commons of the United Kingdom, House of Commons, it meets in the Palace of Westminster in London, England. One of the oldest ext ...

ruled in '' Fairchild v Glenhaven Funeral Services Ltd'' that, where several parties had unlawfully exposed the claimant to asbestos and risk of

pleural The pleural cavity, or pleural space (or sometimes intrapleural space), is the potential space between the pulmonary pleurae, pleurae of the pleural sac that surrounds each lung. A small amount of serous fluid, serous pleural fluid is maintained ...

and

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 provides a lubricating fluid to enable the organs to move and work ...

, 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) plc''
Barker v Corus (UK) plc (2006) UKHL 20
' see also wikipedia article the House of Lords took ''Fairchild'' further and held that the parties who contributed to the risk were severally but not jointly liable. This meant that any single tortfeasor was liable to compensate the loss that the claimant suffered from mesothelioma only to the extent that that tortfeasor was itself responsible for the increase in risk. E.g. if the tortfeasor that the claimant chose to sue was found to have only contributed 20% of the total increase in risk, then the claimant was awarded damages at 20% of the total loss that he is reckoned to have suffered as a result of the mesothelioma. This meant that if the claimant wanted to be compensated for his full loss, he had to separately sue all tortfeasors. Section 3 effectively reversed the House of Lords decision in ''Barker'' by making all tortfeasors

jointly and severally liable Where two or more persons are liable in respect of the same liability, in most common law legal systems they may either be: * severally liable, or * jointly liable, or * jointly and severally liable. Several liability In several or proportionat ...

for the mesothelioma so that a claimant can recover compensatory damages for their full loss from any individual tortfeasor that materially increased the risk of mesothelioma. If a claimant does so, then the sued tortfeasor has the right to claim a contribution from any and all other tortfeasors that also materially increased that risk, proportionate to the extent by which each tortfeasor increased that risk. To illustrate, if X gets mesothelioma from exposure at work, and he has worked for companies A Ltd., B Ltd., and C Ltd., each of which materially increased the risk of mesothelioma occurring in him, then X can choose any of the companies to sue. Suppose X sues C Ltd., then the court will award to X, and order C Ltd. to pay, damages totalling compensation for all of the loss he has suffered due to mesothelioma (i.e. 100%). Thereafter, C Ltd. can bring proceedings against A Ltd. and B Ltd., demanding from each a payment of a proportion of the total damages C was ordered to pay to X, corresponding to the proportion by which each company increased the risk of mesothelioma of the total increase in risk in X. Further, section 3 is "treated as having always had effect" (s.16(3)) and also extends to

Scotland Scotland is a Countries of the United Kingdom, country that is part of the United Kingdom. It contains nearly one-third of the United Kingdom's land area, consisting of the northern part of the island of Great Britain and more than 790 adjac ...

and

Northern Ireland Northern Ireland ( ; ) is a Countries of the United Kingdom, part of the United Kingdom in the north-east of the island of Ireland. It has been #Descriptions, variously described as a country, province or region. Northern Ireland shares Repub ...

(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 Compensation Act 2006 (Commencement No. 3) Order 2007
(SI 2007/922) 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 conduct Professional conduct is the field of regulation of members of professional bodies, either acting under statutory or contractual powers. Historically, professional conduct was wholly undertaken by the private professional bodies, the sole legal a ...

; *Promote good practice, in particular as to the provision of information about charges and other matters to users; *Promote practices likely to facilitate

competition Competition is a rivalry where two or more parties strive for a common goal which cannot be shared: where one's gain is the other's loss (an example of which is a zero-sum game). Competition can arise between entities such as organisms, indi ...

; *Ensure that arrangements are made for the protection of users, including complaints handling. It is a

crime In ordinary language, a crime is an unlawful act punishable by a State (polity), state or other authority. The term ''crime'' does not, in modern criminal law, have any simple and universally accepted definition,Farmer, Lindsay: "Crime, definiti ...

for an unauthorised person to provide or offer claims management services, or to pretend to be authorised. Offenders are punishable, on

summary conviction A summary offence or petty offence is a violation in some common law jurisdictions that can be proceeded against summarily, without the right to a jury trial and/or indictment (required for an indictable offence). Canada In Canada, summary offe ...

, by a

fine Fine may refer to: Characters * Fran Fine, the title character of ''The Nanny'' * Sylvia Fine (''The Nanny''), Fran's mother on ''The Nanny'' * Officer Fine, a character in ''Tales from the Crypt'', played by Vincent Spano Legal terms * Fine (p ...

of up to level 5 on the

standard scale The standard scale is a system in Commonwealth of Nations, Commonwealth law whereby financial Criminal law, criminal penalties (Fine (penalty), fines) in legislation have maximum levels set against a standard scale. Then, when inflation makes it nec ...

or 51 weeks'

imprisonment Imprisonment or incarceration is the restraint of a person's liberty for any cause whatsoever, whether by authority of the government, or by a person acting without such authority. In the latter case it is considered " false imprisonment". Impri ...

. If convicted on

indictment An indictment ( ) is a formal accusation that a person has committed a crime. In jurisdictions that use the concept of felonies, the most serious criminal offense is a felony; jurisdictions that do not use that concept often use that of an ind ...

in the

Crown Court The Crown Court is the criminal trial court, court of first instance in England and Wales responsible for hearing all indictable offences, some Hybrid offence, either way offences and appeals of the decisions of magistrates' courts. It is ...

, offenders can be sentenced to an unlimited fine or two years' imprisonment (ss.7 and 11). Where a

corporate crime In criminology, corporate crime refers to crimes committed either by a corporation (i.e., a business entity having a separate legal personality from the natural persons that manage its activities), or by individuals acting on behalf of a corpor ...

is committed, the offender can only be fined and not imprisoned. The Regulator may investigate unauthorised trading and seek an

injunction An injunction is an equitable remedy in the form of a special court order compelling a party to do or refrain from doing certain acts. It was developed by the English courts of equity but its origins go back to Roman law and the equitable rem ...

to prevent it or bring a

criminal prosecution In ordinary language, a crime is an unlawful act punishable by a state or other authority. The term ''crime'' does not, in modern criminal law, have any simple and universally accepted definition,Farmer, Lindsay: "Crime, definitions of", in Can ...

(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 In law, an appeal is the process in which Legal case, cases are reviewed by a higher authority, where parties request a formal change to an official decision. Appeals function both as a process for error correction as well as a process of cla ...

a decision of the Regulator about authorisation (s.13(1)). There is a further route of appeal to the

Court of Appeal An appellate court, commonly called a court of appeal(s), appeal court, court of second instance or second instance court, is any court of law that is empowered to Hearing (law), hear a Legal case, case upon appeal from a trial court or other ...

(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))

References

Bibliography

*
The Compensation Act 2006
as amended from the

National Archives National archives are the archives of a country. The concept evolved in various nations at the dawn of modernity based on the impact of nationalism upon bureaucratic processes of paperwork retention. Conceptual development From the Middle Ages i ...

.
The Compensation Act 2006
as originally enacted from the

.
Explanatory notes
to the Compensation Act 2006. {{English law types United Kingdom Acts of Parliament 2006 United Kingdom tort law United Kingdom administrative law Mesothelioma