Co-author by Alexandra Dearn
The far-reaching impact of the COVID-19 pandemic is already evident in the day-to-day handling of personal injury claims. However, the effects are expected not only to be extensive in terms of the types of claims affected, and how they are brought and defended, but also in relation to the complications that will influence causation. In turn, this will impact the level and quantification of damages, in what is likely to be a significant period of economic uncertainty.
Recovering damages
The very basic rule in the law of damages is that a claimant can only recover damages for actual loss sustained as a result of the wrongful act of a defendant. Even if a defendant admits breach of duty, if a claimant cannot prove (on the balance of probabilities) that the breach was an effective cause of loss to the claimant, then it will not be possible to recover damages.
Aside from causation, a claimant must also prove that an alleged loss is not too remote (i.e. that a loss is of a foreseeable nature) and also prove the extent of the loss by demonstrating that it is quantifiable. Each of these aspects are likely to be heavily affected by the severe impact the pandemic is expected to have on the UK and global economies.
There may be difficulties in a claimant proving on the balance of probabilities that certain economic past or future losses were caused by any breach on the part of the defendant, rather than the pandemic. There is, and will continue to be for some time, a sharply increased risk of redundancy across numerous sectors, with large swathes of the national workforce currently furloughed or accepting reduced wages in the short-term.
Impact of COVID-19 on causation
This begs the question: is the pandemic, and the impact on the economy, sufficient to allow a defendant to argue that certain financial losses were unforeseeable, or that the pandemic broke the chain of causation in respect of certain heads of damage?
For example, an employer defending an employer's liability claim, which includes future loss of earnings brought by an injured employee who has subsequently been made redundant due to the pandemic and who cannot currently find similar employment within a chosen industry, cannot possibly have foreseen the extent to which replacement employment would be limited to such a severe extent in 2020, and that certain sectors would be placed in to such emergency measures.
It will be strongly arguable that this global pandemic is of such a magnitude that it will nullify any continuing financial effects arising out of the employer's original breach, in which case the employer's liability for ongoing remuneration and pension damages should cease at the moment the economic impact of the pandemic supervened any legitimate original curtailment of the claimant's ability to work.
In this regard, it is important to remember that the Court will often deal with the issue of foreseeability of damage and the chain of causation on a public policy level. The Court will look to apply the rules to allow damages to be awarded where it is considered just and equitable to do so. It is therefore likely that litigation arising out of or affected by the COVID-19 pandemic will be involved in part in an assessment of the role and impact of public policy.
The economic measures currently in place will certainly make it more difficult to quantify certain heads of loss, including past and future loss of earnings, disability awards, pension losses, and loss of chance claims. It is arguable that such economic uncertainty could justify incremental and perhaps significant reduction of awards in respect of these types of losses.
Conclusion
Most if not all industry has been affected, but different roles and industries will be affected to different extents. In considering the issues set out above, the travel, transport and tourism industries will have been the most severely impacted, alongside sectors such as retail and manufacturing. As with all looming recessions, there will also be certain industries that will benefit from economic downturn, such as auditors and insolvency practitioners, but for the majority of health and care workers impacted by injury the scope of available jobs within alternative industries will be greatly restricted. Individual claims will have to be considered on a fact sensitive basis to try and determine what losses flowed from the employer's breach of duty as opposed to those unforeseeable losses which have been caused by the economic downturn. The situation will be even more complex for former employees bringing claims who are now self-employed. It is very likely that evidence from employment experts and forensic accountants will become necessary in a wider range of cases in the future.
It will also be important to consider the potential for increase in fraudulent and exaggerated claims, which would appear to be a feature of threatened societal economic downturn. During previous downturns there have been increases in the frequency of such claims which will result in part from an inclination towards seeking more extensive levels and heads of damage. This is often based upon a potential over emphasis of the general impact of any crisis upon any individual claimant without proper regard for those features of the losses which are either unsupported and unmerited or which could have resulted in any event in the absence of that crisis.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
