Compensation Culture – Myth or Fact?

September 22, 2011

You will no doubt have heard the phrase “Compensation Culture” bandied about lately by various politicians and high level executives in the insurance industry. From the context in which the phrase has been used, it is clear that the intention of the phrase is to cast a negative or even derogative view of the tendency for a person who has suffered an injury as a result of someone else’s negligence so seek compensation against that negligent party. So, do we live in a “Compensation Culture”?

A good place to start is with the fact that apart from procedurally, the area of law which governs personal injury claims, i.e. the tort of negligence, has not suddenly changed. The principle of someone being held accountable for breaching their duty of care owed to another person can be traced most significantly back to 1932 in the case of Donoghue v Stevenson.

In this case Miss Donoghue bought a bottle of fizzy drink which had been manufactured by Mr Stevenson, an aerated water manufacturer in Paisley. As Miss Donoghue, who had been drinking the fizzy drink, got to the end of the bottle it became apparent that the decomposing remains of a dead snail were at the bottom of the bottle. Miss Donoghue was later diagnosed with gastroenteritis and successfully claimed £500 in compensation against Mr Stevenson for the injuries she had suffered.

Prior to Donoghue v Stevenson a duty of care was only generally owed in certain circumstances, usually when there was a contract in place or where the product sold was dangerous or had been fraudulently misrepresented. However, the House of Lords Judgment in Donoghue v Stevenson established the founding principles of what we know today as the tort of negligence. In the leading Judgment, Lord Atkin stated as follows:

“The rule that you are to love your neighbour becomes in law you must not injure your neighbour; and the lawyer’s question: Who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law, is my neighbour? The answer seems to be – persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions that are called in question”

In other words with our every act or omission we owe a duty of care to anyone who could reasonably be affected by that act or omission.

As mentioned above, this is still the overriding principle which all personal injury claims arise out of today. For instance, drivers owe a duty of care towards other drivers on the road. A local authority owes a duty of care to people walking or travelling over their land. A teacher owes a duty of care towards their pupil, a doctor to their patient and so on. These duties are there to protect people and to ensure that the correct care is taken to avoid “acts or omissions which you can reasonably foresee would be likely to injure your neighbour” as so helpfully put by Lord Atkin above.
You will not find many arguments against the fact that a duty of care should be owed in the circumstances above, so why then is there such an apparent disregard for people seeking redress when that duty is breached?

It is important never to lose sight of the fact that all personal injury claims arise out of the same principle above no matter whether the negligent act or omission takes place on a road, in a school, in a hospital, in a department store and so on. This is a fact which is largely overlooked when personal injury claims come under criticism, especially in respect of claims arising out of road traffic accidents. Yes some soft tissue injuries, or whiplash-type injuries, are difficult to detect, but that is not to say that they do not exist or that they are not painful. I have lost count of the number of my clients over the years who have said something along the lines of “I had no idea how much whiplash hurt until I suffered from it”. Why should someone injured whilst in a car not be entitled to seek the same redress as someone who is injured whilst in a workplace?

One of the perceived problems which add to the so-called “Compensation Culture” is the increasing problem of people attempting to bring fraudulent claims or exaggerating or inventing their symptoms in order to obtain compensation.

When compared to the total number of personal injury claims per year only a small percentage are fraudulent. Whilst there is an increasing problem with suspected fraudulent personal injury claims being made, this is not a reason to punish genuine victims of negligent acts and limit their ability to seek restitution. People who bring fraudulent or misrepresented claims are criminals and should be (and are) dealt with under the criminal law.

It has also been suggested that compensation claims have become the new “Get rich quick” schemes. When considering this idea it is important to remember that the tort of negligence only provides for a claimant to be placed back into the position they would have been in had the negligent act or omission not occurred. In other words you cannot seek damages over and above what you have lost or suffered.

In the case of financial losses such as a loss of earnings claim or a claim for physiotherapy charges, this is fairly self-explanatory. If you are out of pocket by £200.00 you are entitled to claim £200.00 in compensation for that particular loss. Anything more would be classified as “Betterment” and would not be allowed by the Court. In relation to a personal injury claim itself it is often easier to lose sight of this principle as it involves placing a financial value upon the pain, suffering and loss of amenity suffered by the Claimant. For example, if someone is awarded £3000.00 in damages for their pain suffering and loss of amenity it is likely that they will have suffered either more serious injuries or injuries which lasted longer than someone who is awarded £1500.00.

Following on from this, although the typical claimant does receive a lump sum “Payout” at the end of a claim, this sum is directly proportionate to the pain, suffering and loss of amenity they have suffered i.e. it is not free money.

It may well be that more personal injury claims are being made but this does not mean that this is due to a “Compensation Culture”. Could it just be that people are far more informed and aware of their right to claim compensation from increased exposure to media such as satellite/cable TV, the Internet and social networking sites? Could it also be that people and organisations are not taking their duty of care seriously enough and are simply not avoiding acts or omissions which will cause loss or injury? Surely if people were more careful and took their duty of care more seriously this would bring the number of claims down exponentially. By making it more difficult for people to bring a claim when they have suffered a loss or injury, is it not simply the equivalent of leaving the snail in the bottom of Donoghue’s bottle?

For free, quality advice on your potential claim, call Lamb & Co Solicitors on 0151 632 2213 or text ‘claim’ to 80809. Alternatively, visit the website at