spring 2014 issue 14 hilldickinson.com/retail >>> continues on page 2 The employers’ and public liability (EL/PL) claims portal, and accompanying low value personal injury EL/PL protocol, has been in action for six months now. Chris Old retail claims lawyer reports on the current state of playFears turned into reality? Unfathomed numbers of portal exits, pre-action disclosure applications, unsporting play, rule bending, deliberate misinterpretation… these were the fears bandied about as the new protocols were drafted and early versions released. However, save for where the actions of a small number of claimant firms have tried to get in the way, our portal and protocol experience, and that of our well-prepared compensator clients, is that these concerns are yet to be fully realised – not that we are complaining of course! The reality The issues we have seen are: • Claims notification forms - ‘drip-feeding’ The service and content of some claims notification forms (CNFs) remains an issue, as it was in the early days in both the motor and EL/PL portals. • Service We are still finding that our opponents choose to write to our clients direct! This is through ignorance or in the hope that a defendant fails to acknowledge the CNF via email within one working day so it falls out of the portal and they can recover additional costs. This is happening despite (i) many of our clients displaying clear and accessible content on their websites with the requisite detail of their insurers and/or appointed TPA; (ii) the defendant being listed as a compensator; and (iii) regardless of the fact that we have corresponded with known firms pre-portal reaffirming all of the above (in effect already satisfying a claimant’s obligation to make a ‘reasonable attempt’ to identify the insurer). let’s talk shop retail claims update Playing with procedure and the portal - the first six months The fraud index Page 3 Online gossip – offline risk Page 4 Q&A with Beth Butterwick, Bonmarché Page 6 The employers’ and public liability (EL/PL) claims portal, and accompanying low value personal injury EL/PL protocol, has been in action for six months now. Chris Old retail claims lawyer reports on the current state of play. Welcome to issue 14 of let’s talk shop. This edition includes the usual range of articles aimed at a wide variety of issues impacting retailers involved with, or affected by incident and claims management. We lead this month with a ‘state of play’ report, from Chris Old, on the first six months of the EL/PL claims portal. Our counter fraud group has recently produced its first annual claims and fraud index, so Ian Emery provides an overview of our findings and places the spotlight on the current motor claims fraud market. We also continue our ‘Focus’ series, but this year turn our attention to risk. In the first in the series we look at the issue of online gossip and how best to protect your customers’ data. The undocumented nuisance of no record incidents is highlighted by Luci Horton, meanwhile Paula Leece chats to Bonmarché CEO, Beth Butterwick, in our popular Q&A section. Thanks again to Beth for her valuable time and insight into great retailing practice. We have our usual calendar of upcoming events too, alongside a look at commercial rent arrears recovery – where we answer your questions. Enjoy the newsletter and hopefully we will see you at one of our events, or along the way soon. Best wishes, Andrew [email protected] Welcome >>> continued from page 1 • Backdating A small number of those who do locate the compensator correctly in the first instance, unfortunately then deliberatly backdate CNFs. • Public or employers’ liability? It’s obvious… isn’t it? Clear cut PL claims are being submitted as EL claims. This seems to be a deliberate attempt to reduce a defendant’s investigation time and recover enhanced costs. • Claims values – small claim or fast track? We correctly anticipated that we would see an increased number of claims valued below the £1000 threshold entering the portal. However, given the recently publicised Judicial College guidelines - which include the uplifted awards for general damages - it would be most difficult for a claimant to consider that even a minor injury is worth less than the small track limit and it is therefore difficult to blame them for submitting a claim via the portal. However, defendants beware! Whereas pre-portal, a claimant’s right to recover costs was dependent on the level of damages, as per Bromley -v- Hewson, a defendant must now take the measured step of explicitly exiting a claim from the portal in order to restrict the claimant to small track costs. Unless he does so, the claimant will recover fixed portal costs irrespective of the final damages figure. However, as it will rarely be economic for a defendant to challenge borderline small claims, such a step must be taken with upmost caution. Re-assign There has been incorrect use of the re-assign function in the portal. This facility should only be used to forward a claim to an associated brand or organisation. It should not be used to forward a claim to a party who might alternatively be liable for the accident - a negligent contractor for example. The result of this is that the newly assigned compensator, who previously had no knowledge of the claim, is then left with a significantly reduced amount of time to complete enquiries. Re-assigning a matter does not alter the CNF response date. The correct step in this situation is to accept the claim (i.e. that it has been sent to you correctly) and deny liability. Only if the claim has clearly been completely and obviously mis-directed, should the reject facility be used. Early outcomes While it is still relatively early days, settlement wise, a tangible number of settlement packs have now reached conclusion. Damages levels are unexceptional. We are yet to see a claim reach stage three, although we expect numbers to trickle through very shortly. In all, the portal has, so far, been a smooth ride for those who were equipped and were capturing claims as well as they should have been. It is, however, quite clear that claimant firms in a changing claimant market will continue to exploit any uncertainties within the rules until the court decides otherwise. In that respect, we will see what the next six months brings. So continue to watch this space! Christopher Old [email protected] 2 Coming up next time! • Latest news on the Christmas tree competition • The latest on the impact of the Enterprise and Regulatory Reform Act • CJR case law update What and how? The Hill Dickinson claims and fraud index was produced using our Netfoil data which we set against the context of wider claims data to examine trends. This enabled us to enhance our understanding of a problem which causes significant and ongoing financial loss for a wide range of individuals and businesses. It seems that sadly motor claims fraud remains a significant issue for those in the retail sector. Findings The index reveals a number of interesting trends and features in the UK claims fraud market. Some of the key findings include: • Professional fraudsters do not operate in a narrow sense by focusing exclusively on motor claims or indeed any other type of fraud alone. Data analysis confirms links to, for example, financial product and identity frauds, the latter of which is the most common fraud type currently affecting the UK. • Motor claims fraud, along with the associated costs, is still a vast problem. The fraud market continues to pose a serious threat to the livelihood and profitability of all legitimate businesses within the sector. • Multiple vehicle occupancy fraud claims remain prevalent. Looking across the last four years, Netfoil shows fraud cases to have more than double the number of allegedly injured parties than in non-fraud cases. • However building upon the previous point, it is important to recognise that not all frauds have the same profile. An example would be for induced collisions and low velocity impact (LVI) claims, where these frauds are represented by markedly different age groups. • There has been a gradual increase in the percentage of females featured in fraud claims, although this has been matched by a corresponding increase across non-fraud incidents. • Birmingham continues to be the most represented area for both fraud and non-fraud claims. Outside of this location, selected fraud types have seen gains in London and Manchester, as well as their conurbations. • Staged and contrived collisions are the most frequently occurring type of motor fraud, accounting for over 45% of all motor fraud claims. • Strategic data analysis shows that in the last four years, induced claims have increased significantly, particularly in London and its conurbations. • All the vehicles involved, in particular those over ten years old, feature more extensively in fraud claims than in nonfraud incidents. • The average repeat offender rate for motor claims fraud is 13.3%. • Ghost broking is a significant and growing threat to the insurance sector. This scam involves brokers either forging insurance certificates or providing insurers with inaccurate information to obtain a cheaper policy or any policy, without the policyholder’s knowledge, and then pocketing the premium difference. It leaves innocent policyholders uninsured and / or insurers dealing with claims they would not otherwise have had on their books. In one period of less than 30 days, a dedicated Netfoil analytical project in this area discovered eleven new fraud rings, relating to more than 105 policies. • The threat of fraudulent credit hire should not be underestimated. Intelligence suggests that this is already a significant and growing fraud area. Overall conclusions What is clear is that claims fraud, particularly motor claims fraud, is an area that continues to cost businesses in the retail sector a significant amount of money. The problem is not one that looks likely to go away in the near future, despite efforts at countering it by all affected. However, being aware of how and where fraud is impacting upon a business enables those operating on the roads in the retail sector are enabled to take appropriate steps to minimise costs. The full version of the claims and fraud Index can be viewed at hilldickinson.com/fraudindex2013. Ian Emery [email protected] The fraud index Hill Dickinson’s counter fraud group has produced its first annual claims and fraud index. This provides a detailed overview of the current motor claims fraud market, a pressing concern for many of our clients running fleets in the retail sector. Unfortunately, many of you have undoubtedly had your fleets targeted by organised fraudsters who see commercial vehicles as an easy target for an induced accident. They know that these vehicles will be insured and, given their size, are more difficult to stop. Here, Ian Emery provides an overview of our findings. Knowing what is happening will undoubtedly assist in developing strategies to avoid their potential impact on your bottom-line. 3 let’s talk shop issue 14 4 The Data Protection Act 1998 (the DPA) has far reaching implications for all businesses. It provides people with specific rights in relation to their personal information and in doing so places certain obligations on the organisations responsible for processing it. In the first of our 2014 series of articles focusing on risk, Magnus Boyd, reputation lawyer, reviews what retailers need to consider when using message boards, online forums or blogs (including customer review pages or complaints pages). Online gossip – offline risk Protecting your customers’ data Are you a data controller? The first question to consider is whether you are a ‘data controller’: ‘a person (either alone or jointly or in common with other persons) determines the purposes for which and the manner in which any personal data are to be, processed’. This means that if you process any contact information or other personal data about customers (users or subscribers) you will fulfil the definition of a data controller and will need to comply with the DPA. User-generated content The position is less clear in relation to any personal data that is posted on a site by third party subscribers, known as ‘usergenerated content’. If your site only allows posts subject to terms and conditions which cover acceptable content, and if you can remove posts which breach the site’s policies on such matters, then you will still, to some extent, be determining the purpose and manner in which the personal data is processed so you will still be a data controller. What must a data controller do? A data controller is responsible for taking ‘reasonable steps’ to check the accuracy of any personal data posted on its site by third parties and which is presented as a ‘matter of fact’. Expressions of opinion will not qualify as matters of fact. What are considered reasonable steps is very subjective; it will depend on the nature of the site and how active a role the data controller takes in selecting, allowing or moderating content. Top tips You should obtain tailored DPA advice in relation to any site that you operate to ensure that you do not fall foul of any of the rules on processing personal data. However making sure that the following guidelines are followed should help provide protection generally. You should ensure that you have: • clear and prominent policies available for users about acceptable and nonacceptable posts; • clear and easy to find procedures to follow to dispute the accuracy of posts and to ask for them to be removed; • the ability to respond to disputes about accuracy quickly, and have procedures in place to remove or suspend access to content, at least until such time as a dispute has been settled; and • appropriate polices to deal with: - complaints from people who believe their personal data may have been processed unfairly and unlawfully because they have been the subject of derogatory, threatening or abusive online postings by third parties; - disputes between individuals about the factual accuracy of posts; and - complaints about how the person or organisation running the site processes any personal data (such as contact details) given to it by its users or subscribers. If you would like any further information or advice relating to any of the issues discussed in this article, please do not hesitate to get in touch. Magnus Boyd [email protected] 01 FOCUS ON RISK A thorn in the side No record incidents have long been somewhat of a thorn in a retailer’s side and unfortunately one that the introduction of the portal does not seem to have deterred. When an incident is not reported, the retailer loses the benefit of any contemporaneous evidence to help refute the allegations made. The onus of proving that the incident occurred in the manner alleged falls onto the claimant which may, at first glance, seem advantageous to a defendant. However, in the absence of evidence to attack the claimant’s credibility it seems to have become enough for the claimant's solicitors to merely provide medical records showing that the claimant sought medical attention following the incident and rely on those to demonstrate that an incident occurred. More often than not, the record does not even refer to where or how the incident occurred. This approach arguably fuels a rise in fraudulent or exaggerated claims - as the incorrect message is portrayed to potential claimants. It is unfortunately often the case that it is harder to prove a negative. ‘Positive’ evidence of something having occurred, seems to trump the ‘negative’ lack of evidence held by the retailer swiftly accused of poor record keeping and assumed to have been at fault. That being the case, the question is what can be done by retailers to refute these claims and present the best possible defence? In recent times the number of claims brought against a retailer holding no record of an incident having occurred has risen. Luci Horton, retail claims lawyer, discusses the issues faced by retailers attempting to defend these claims and provides practical tips to consider when presented with them. 5 Tactical arguments and investigations 1. Fraud indicators Has the claimant brought any previous similar claims? Serial claimants should raise alarm bells and extra vigilance should be taken to put the claimant to strict proof that their word alone will not, and should not, suffice. Our unique Netfoil database makes screening for this easy. Was the claimant in a fraud 'hotspot'? Particular interest should be taken in locations where fraudulent activity is rife. This also applies to certain firms of claimant solicitors who are known to bring cases where no record of the incident is held. Locality generally? Where does the claimant live in relation to the store/area where the incident occurred? Fraudulent claims are less likely to be brought in areas local to the claimant. Documentation – can the claimant produce any documentation confirming they attended the store? A receipt from purchases made perhaps? 2. Severity of the injury If the claimant is alleging that they have sustained a particularly nasty injury, then common sense suggests that they would make an effort to ensure it was reported. It’s highly unlikely that an incident resulting in serious injury would occur without anyone in the area being aware, or being made aware, of it. The claimant's medical records will play an important part in determining whether or not this incident occurred but that does not ultimately prove that a breach occurred. Did the claimant attend a hospital or their GP following the incident? If not, questions need to be asked why not? 3. Inspection and maintenance records It is easy to become too focused on the fact that there is no record of an incident occurring. It is important to remember that there is still a case to answer and allegations which need to be addressed. Inspection and maintenance records will be key in such matters and can show that the allegations are unfounded not just on the basis that no incident seems to have taken place but also on the basis that the documents support that no negligence and/or breach could have occurred in any event. 4. Witness evidence from members of staff working on the alleged day in question If nothing is known to have happened, these statements will obviously not relate to the incident directly. However, statements might be obtained confirming that certain systems, checks or procedures were in place or when certain checks were conducted on the day of the incident and by whom. This will again help to refute and repudiate any allegations put forward by the claimant. 5. Previous incidents or complaints Consider whether the allegations made by the claimant are a known issue. Have there been many previous similar incidents prior to this or has the area in question been subject to multiple complaints from other customers or indeed staff members? If the answer to these two questions is no then this serves to strengthen the position and the denial being put forward. No record incidents the undocumented nuisance Taking a stance As incidents of this nature continue to arise, it is important to demonstrate that retailers will not simply roll over and deal with cases on the claimant's word alone. Rather, where there is doubt over whether an incident occurred, claimants should be put to strict proof and a strong denial maintained where possible. The message should be sent to claimants and claimant firms alike that this is an area of strong focus for retailers and not therefore the quick slam dunk they think it will be. Luci Horton [email protected] Q&A-feeling fabulous at Bonmarché Paula Leece speaks to Beth Butterwick, CEO of Bonmarché, about her working background, understanding retail and how it has stood her in good stead to take their business forward. 6 Who are you and what do you do? I am CEO of Bonmarché - one of the UK’s largest womens’ clothing, value retailers. Our noble cause is: ‘Making women of 50-years-plus feel fabulous about themselves, at fantastic prices’. Tell us a bit about the business… Bonmarché is over 30 years old, having been started by brothers - based in South West Yorkshire - in 1982. As a growing multi-channel business, we currently have 264 stores throughout the UK. We also sell through our website, catalogue, a call centre and Ideal World, the TV shopping channel. With 6.5 million customers on our database, we have a sizeable following and they tell us our brand represents good quality fashion at great prices and that our service proposition is excellent. We were voted ‘Best Clothing Retailer’ in the 2013 Which survey and currently work with David Emanuel… our customers love his collection! He is such a charismatic person and since his stint in ‘I’m a Celebrity’, he is gaining quite a young following. If you had not followed this career path, what would you like to have been and/or done? I have always loved fashion and people. Both are interesting things to watch and study, even more so in unison! Had I not had the fortunate opportunity to take up a career in retail, I would have most definitely pursued a career in fashion journalism. How did you start out in the retail business and what lessons have you learnt on your way up to the top? My first part-time job was at Jigsaw, earning extra income to support me living in London as a student. Not only is Jigsaw a beautiful brand to sell, but being a family business, the culture there was one of support and nurture. However, my ‘big break’ into retail came in 1989, when I was offered a place on the Marks and Spencer’s graduate training scheme and I rose up the ranks until I left in 2005. Over the sixteen years I worked there, I saw and experienced quite a bit of change within the business. I loved my career at M&S and definitely learnt things I still apply in my everyday work life now. First, engage with your customers obsessively, they are your silent, yet most powerful shareholders. Secondly, communicate the ‘business vision’ loudly and frequently throughout your organisation and there is no such thing as over-communication. Thirdly, set clear standards and deliver to this as if nothing else will do. Your customers will reward you. Finally, respect and nurture your staff and key external relationships as if they were your own family. A great culture drives a better return on investment. What is more important, profit or brand? Neither. They are both as important as each other. Profits are the value you create for your shareholders and the opportunity to re-invest in the business. However, your brand is what your customers, as external shareholders, measure you by. Ultimately, strong brand creation provides your business with the long term stability to prosper and grow. let’s talk shop issue 14 7 What do you see as your biggest challenges? Externally – sustained proof that the economy is on the road to recovery. There has been so much press coverage and statistics released that speak to the UK’s upturn, however, the general consumer is still cash-strapped and rightly cautious about their ‘real’ disposable income. Internally – that we deliver our business objectives on time. Over the next year we will be rolling out our expansion plan and my role will very much be about providing support, focus and energy to the exciting projects in-hand. With whom would you like to be stuck in a lift and why? Bill Gates: an incredibly inspiring leader! Not only is he a highly successful business magnate, but a creative inventor and philanthropist of both the people and worthy causes he supports too. I recently watched him speak at a televised conference and was amazed at how articulate he was speaking for an hour with no prompt or notes! What was your biggest mistake, why and what did you learn from it? My biggest career mistake occurred when I moved into a role where I was asked to ‘make good’ a dysfunctional team of people. However, in reality, the tension was down to a single person in the team. I wanted to make it work for the boss I respected, but the mistake I made was trying to make it work for too long. It is incredible how disenfranchised a team can become by a single person. My learning from that experience is that I should have taken the appropriate action earlier. What is your proudest achievement in your career to date? I have two proud career moments, both occurring whilst at Bonmarché. The first was taking the organisation out of administration in 2011. We were able to save a great business with great people, for wonderful customers. The second was more recent - our successful float on the London AIM stock market in November 2013. What qualities do you most admire and like to see in the people you work with? What I love about retail is the diversity across the many functions that make up the business. During my years as a leader, I have looked for a balance of entrepreneurialism, creativity, knowledge, energy and respect in the people I have worked with, teamed with a pragmatic eye for the detail. Used in unison across an organisation, these are great strengths to drive the required business growth. What does success look like from your business’ point of view? In the forthcoming years at Bonmarché, exceeding our customers’ expectations, delivering a high return to our shareholders and building a brand of longevity, where people and excellence is at the heart of everything we do. Paula Leece [email protected] From Paula: ‘I’d just like to thank Beth for taking the time to talk to us and share some sector insight that will help in continuing to protect our clients’ financial and reputational interests.’ Hill Dickinson launches marathon campaign across five countries Hill Dickinson has launched an ambitious health and wellbeing initiative across its eight offices in an effort to raise £60,000 for charity. Inspired by senior partner, David Wareing, who turns 60 this year, ‘60 at 60’ will see the firm promote health and wellbeing across the business whilst helping community based charitable projects to raise funds and spread the healthy living message far and wide. Throughout the campaign David and teams from across Hill Dickinson will be raising money for The Prince’s Trust and a variety of other local organisations, based in the locations in which the firm operates, supporting community based healthy living projects with a particular emphasis on young people. The races are as follows: Monaco 16 March 2014 Liverpool 23 March 2014 Sheffield 6 April 2014 Athens 4 May 2014 Singapore 1 September 2014 Manchester (Macclesfield) 28 September 2014 London 12 October 2014 Hong Kong date to be confirmed Commenting on 60 at 60, David said: ‘The 60 at 60 challenge is a first of its kind for Hill Dickinson as this is more than just a fundraising initiative supporting charitable projects. We are encouraging the whole firm to actively participate in order to improve health and wellbeing on an individual and collective level. If you would like to support our 60 at 60 challenge, we would appreciate any donations and involvement in fundraising opportunities which will help to provide moral support and take us closer to raising £60,000.’ If you are interested in getting involved, would like to make a donation, or to find out further information, please visit: 60at60challenge.com. Your support for the project throughout the year will be very much appreciated. Commercial rent arrears recovery: your questions answered Ralph Bullivant, retail property lawyer from our property litigation team, assesses the implications for retailers of the new Commercial Rent Arrears Recovery (CRAR) scheme. What? The new CRAR scheme is finally going to replace the landlord’s ancient common law remedy of distress. Since medieval times, the law of distress has allowed a landlord to simply send in the bailiffs without prior notice and seize the tenant’s goods as soon as a commercial tenant has failed to pay its rent... but that’s about to change. Why? Even 50 years ago, distress was referred to by the courts as ‘an archaic remedy’ and there have been regular calls to modernise the law over the years. Despite its undoubted popularity with landlords as an effective, cheap and speedy method of recovering arrears of rent, distress is perceived to be too draconian a remedy. Who? The abolition of distress and its replacement with CRAR will affect anyone with an interest in commercial property, whether as landlord or tenant. With the vast majority of shops occupied under leases, every major retailer will certainly be affected as tenant. And with most retailers also holding properties which are rented out to tenants or subtenants, they will also be affected as landlords. When? After several years on the back burner, the Taking Control of Goods Regulations 2013 were finally passed in July 2013, which will bring CRAR into force on 6 April 2014 and apply in both England and Wales. How? CRAR replaces the law of distress with a new statutory regime which requires the landlord’s ‘enforcement agent’ (i.e. bailiff) to serve a ‘notice of enforcement’ on the defaulting tenant, giving at least seven days’ notice before the enforcement agent can attend the premises and take control of the tenant’s goods. For large organisations such as retailers, the challenge will be to ensure that the notice reaches the correct person in time for them to take any necessary action within that seven day window. Another major change from distress is that, CRAR may only be exercised in respect of the principal rent. Landlords will need to explore other options to recover arrears of service charge and insurance rent, such as serving a statutory demand threatening to make the tenant insolvent or initiating court proceedings. The final major change is that CRAR is not available where the lease includes both commercial and residential premises, even if the residential part is self-contained and perhaps even sublet to a third party. This is relevant in the retail sector, with many shop leases also including the flat above, and significantly weakens the landlord’s position against defaulting tenants. Ralph Bullivant [email protected] hilldickinson.com/retail Liverpool Manchester London Sheffield Piraeus Singapore Monaco Hong Kong let’s talk shop issue 14 If you would like to know more about our retail claims services, or any other services we provide, then please visit our website or contact one of our retail team: Andrew Evans [email protected] Kari Hansen [email protected] Kendrah Graham [email protected] Paul Edwards [email protected] Paula Leece [email protected] Nerys Parry [email protected] Katie Mickleburgh [email protected] About Hill Dickinson The Hill Dickinson Group offers a comprehensive range of legal services from offices in Liverpool, Manchester, London, Sheffield, Piraeus, Singapore, Monaco and Hong Kong. Collectively the firms have more than 1350 people including 175 partners. The information and any commentary contained in this newsletter are for general purposes only and do not constitute legal or any other type of professional advice. We do not accept and, to the extent permitted by law, exclude liability to any person for any loss which may arise from relying upon or otherwise using the information contained in this newsletter. Whilst every effort has been made when producing this newsletter, no liability is accepted for any error or omission. If you have a particular query or issue, we would strongly advise you to contact a member of the retail group, who will be happy to provide specific advice, rather than relying on the information or comments in this newsletter. ® Date Event 27 March Hill Dickinson civil justice reforms seminar, Lloyds of London 2 April Hill Dickinson fraud conference – profile of a fraudster, London 29 April Hill Dickinson civil justice reforms seminar north west, Manchester May (date TBC) Hill Dickinson ladies’ business forum, venue TBC 8 May Insurance Times Awards 21 May FOIL Retail SFT, Hill Dickinson London 12 June - 13 July World Cup, Brazil 16 - 18 June Airmic conference, Birmingham 17 - 20 July The Open Events for 2014 Here are some of the events that we will be either hosting or attending through the next few months. We hope to see you there (except in Brazil)!