Civil Liability Bill [HL]

Debate between Lord Faulks and Lord Beecham

3rd reading (Hansard): House of Lords
Wednesday 27th June 2018 Lords Chamber

[Lord Faulks (Con)]

My Lords, either there is a realistic power to vary the rate—I can see that there are some arguments in favour of that, which found favour with Mr Sumption, as he then was, when sitting in Guernsey—or it does not have any real meaning, as is the case following the decisions of the Court of Appeal. Although flexibility is desirable, if it is meaningless and if we as a legislative body decide that we are not going to overrule any decisions of the Court of Appeal, the noble and learned Lord, Lord Hope, is absolutely right about being accurate in the way that we legislate.

[Lord Beecham (Lab)]

My Lords, I hesitate to take either side of this argument, given the wisdom and experience of both noble and learned Lords, who have given conflicting views. I am therefore perfectly content, for once, to allow the Minister to indicate the Government’s attitude. After all, this Bill is not ending here; it is going to another place and there will be time for people with greater acumen than mine to look into the arguments advanced by the noble and learned Lord. It will be interesting to see what the Minister makes of them, but, of course, it is not the end of the day and perhaps this elevated discussion can take place with a more useful result than we are likely to see today.

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[Lord Faulks]

My Lords, I return to a group of amendments concerned with the regularity of the review of the discount rate. I raised this matter at Second Reading, in Committee and on Report, so I will not weary the House by going over the arguments again. Suffice it to say that I entirely agree with what the Bill does in providing for the obligation to have regular reviews at a certain juncture, although the Lord Chancellor has the right to have an earlier review if necessary. My argument, which I am glad to say the noble Earl, Lord Kinnoull, supports, as I think others in the House do, is that it is important that the reviews be regular and there would be an obligation to hold them, but that they do not have to take place too frequently. Why is that? Because those involved in litigation, on both sides, will inevitably seek effectively to guess—however well informed that guess might be—what the discount rate will be after it has been determined.

If there is to be a change every three years, the period leading up to the moment of change is likely not to result in settlements or to result in adjournments—in other words, in perfectly legitimate gaming of the system. This will happen inevitably whenever a review is about to take place, but it will happen less often if it is five years than if it is three years. This will, I think, help to produce more settlements. There are always uncertainties in litigation, but this is a particular uncertainty in large cases, where the discount rate can have such an effect on the quantum of damages. My submission is that five years, for the reasons I have already advanced, remains a better provision than three years. I accept that any provision is arbitrary, but I hope that the Government will listen to me today, will take into account all the evidence they have obtained and decide that, after all, five years might be a better period than three years. I beg to move.

[Lord Beecham]

My Lords, I am slightly puzzled at the effect of amendment as moved by the noble Lord, because the Bill prescribes that the rate of return must be started within a period; not every three years, or every five years, but within that period. So potentially, it seems to me—perhaps the noble and learned Lord will either correct me or confirm that I am right—that you could have a review at less than five years, depending on the circumstances. If, for example, there were a crash, as in 2008, which affected rates of return and so on very significantly, you would not have to wait up to five years to deal with it; you could have that review within the period. In effect, any time within that five years could mean a three-year review, a shorter review or something with a maximum of five years. If that is the case, is that acceptable to the Government?

[Lord Keen of Elie]

My Lords, I am obliged to my noble friend Lord Faulks and to other noble Lords who raised this matter in Committee and on Report. On the point raised by the noble Lord, Lord Beecham, it is indeed the case that we are talking about a maximum period for review, and therefore it can be at any time within that period. What we are concerned to avoid is the situation that arose in the past where many years passed before a review was carried out.

The choice between the two periods, three years and five years, is essentially a pragmatic one, I suggest. The arguments for the two options appear to me to be quite evenly balanced. A number of noble Lords have made the point that there would be less likelihood of a gaming of the system if that period were extended to five years. It was a point made in particular by the noble Lord, Lord Marks, on Report, when he indicated that he would prefer a five-year period over a three-year period.

Following discussions with several of your Lordships after Report, we have given further consideration to the question of the length of the review cycle and we accept that a five-year maximum period could help to reduce the effect of the litigation practice of trying to game the system, as distinct from a three-year period. In light of the arguments that have been made, the Government propose to accept these amendments.

Civil Liability Bill [HL]

Debate between Lord Faulks and Lord Beecham

Report stage (Hansard): House of Lords
Tuesday 12th June 2018 Lords Chamber

[Lord Faulks]

My Lords, I could not hope to better that very compelling speech and I will not try to add any confusion to the analysis. I agree with what my noble friend Lord Hodgson said about the desirability of periodical payments, but all is not gloomy on that front. I regularly act for the NHS in settlements involving periodical payments even now, when it is probably less attractive for periodical payments than it has ever been, having regard to the change in discount rate. Nevertheless, the desirability for periodical payments is a point that the House is generally agreed upon and I entirely accept what my noble friend has said.

However, it has to be said—my noble and learned friend the Minister will confirm it—that the courts have power to order periodical payments by virtue of Section 100 of the Courts Act 2003, which built on the original Act—the Damages Act 1996. The fact that they do not is usually because both sides are advised at a reasonably high level, having regard to the size of the claim and the complexity of injuries, so on the whole the courts will stand back and not seek to impose on or insist against somebody’s periodical payments. None the less, it is something that all advisers will be very much bearing in mind, and I do not disagree with the suggestion that the rules of the court may well be useful to ensure that as far as possible these are considered by the courts, the parties’ advisers and the parties themselves.

I turn to the amendment tabled by the noble and learned Lord, Lord Hope, which, as he kindly said, built on something that I put down in Committee. He puts it much better in his amendment than I did. Of course, the variation in rate is something that was explored, as I said in Committee, by Jonathan Sumption QC, as he then was, in a case in Guernsey, when he decided that it would be appropriate in certain cases to have a different discount rate. As the noble and learned Lord, Lord Hope, said, the amendment makes the scope of the power clearer. There is much in what he says.

I look forward to what will apparently be a fruitful analysis by the noble Lord, Lord Beecham, when he comes to address his amendments. The review that he suggests in Clause 89 troubles me a little because, although all noble Lords are concerned to encourage periodical payments, I am not quite sure how that will work. There are all sorts of reasons why people may or may not have periodical payments. Certainly by changing the discount rate in an upward direction from, say, 0.75% to 1% or 2%, it is much more likely that they would go for periodical payments. However, there are a plethora of reasons why they will or will not seek periodical payments. It is quite a difficult thing for that review to provide the sort of clarity that I am sure the amendment is seeking to achieve. I look forward with interest to the explanation behind it.

[Lord Beecham]

My Lords, I shall attempt to provide some sort of explanation. The amendment seeks a review of what is actually happening in the light of the changing circumstances; it does not prescribe a particular solution. It offers precisely the opportunity for the professions to contribute to ensuring that the arrangements for periodical payments suit the client, particularly those who have suffered significant injuries and may be looking for lifetime support. It is very much an open request, and the expertise of the noble Lord—and others, of course—is very welcome in dealing with it.

Amendment 73A in my name also seeks a different review on the assumptions on which the discount rate itself is based and how investors have dealt with that over time. As will be seen, the review should, I hope, indicate whether the assumptions on which the discount rate is based need to be changed, and set out any recommendations.

This is entering new territory, and it is reasonable to have a report within a reasonable time—three years is probably long enough—to allow a proper examination of the impact of the new arrangements. For that matter, there is a question of course about how often there should be such a review. It would be difficult to prescribe, because interest rates and returns on investments change. We have been living in a fairly good period in terms of returns, but that may not last. So periodic reviews should be very much part of the agenda.

On the amendment proposed by the noble Lord, Lord Hodgson, I strongly support the position that he takes and hope that the Minister will feel sympathetic to it and to the other amendments in this group.

Civil Liability Bill [HL]

Debate between Lord Faulks and Lord Beecham

Committee: 2nd sitting (Hansard): House of Lords
Tuesday 15th May 2018 Lords Chamber

[The Earl of Kinnoull]

I am sorry if I have confused the noble Lord. I am merely saying that once the review has been sparked off by the Lord Chancellor’s decision—it does not matter what the periodicity is; I was very interested in the arguments advanced by the noble and learned Lord—it should take place at a reasonable pace, because somebody is suffering if it is done slowly. That is the purpose of trying to trim the rates. This is not difficult; one discount rate has been set by a group of people who will have exactly the right sort of skills. I therefore think it can be done a bit quicker but, as I said, it is probably best discussed not in the Chamber but with the Minister.

[Lord Beecham]

I am not really persuaded by the logic of the amendment of the noble Lord, Lord Faulks. It is not as if all claims will be faced with a five-year period. If a case is brought two years before a review, the courts will be dealing with a more recent determination than if it had been five years. I do not see the advantage of the noble Lord’s proposition. There will be some cases that will obviously be closer to that date than others.

[Lord Faulks]

May I help the noble Lord? When you are coming up to a review period, whenever that is—whether of three years or five—there will be an element of one party or another seeking to guess the outcome. My point is that you do not come up to that cliff edge so often if it is five years rather than three.

[Lord Beecham]

Yes, but if you bring your case a year or two before a review, whether it is a three-year or a five-year review, your position is not changed, is it? I just do not see the logic of the amendment, and I will not be supporting it.

Civil Liability Bill [HL]

Debate between Lord Faulks and Lord Beecham

Committee: 1st sitting (Hansard): House of Lords
Thursday 10th May 2018 Lords Chamber

[Lord Beecham (Lab)]

I must apologise to the noble Lord for delaying his expectations slightly, and declare my interest as an unpaid consultant in my old firm of solicitors.

It is clear that we must have a proper definition. It is equally clear that the definition ought to be provided by a medical source. The groupings of this rather long day are such that the recommendation that I shall be making in the next group is relevant to this first group, in that the responsibility for defining a whiplash injury should be on the Chief Medical Officer and the definition incorporated into primary or secondary legislation. That takes the decision away from politicians. I disagree with the noble Lord—I do not think that the definition should be a political decision: it should emanate from the medical profession and be embodied in legislation. An amendment to that effect on Report would perhaps be helpful.

It is clear that there are problems; nobody denies that. There is an argument about the extent to which the current system is being abused, but any abuse is unacceptable and reflects on innocent people who have suffered genuine injury. Their cases need to be dealt with properly. So there has to be change. However, with due respect to those who tabled these amendments, who may well have drawn on medical advice, we should at some point incorporate a requirement for that medical advice to emanate from a medical source—I have suggested the Chief Medical Officer but it could be another source—rather than be determined by politicians.

[Lord Faulks]

The term “whiplash” is pretty loose. What is the noble Lord inviting medical experts to do to interpret a term that is not really medical?

[Lord Beecham]

There surely has to be a medical definition—and where better to get it from? The medical profession deals with injuries that are labelled “whiplash injuries”. There may be some argument about the definition, but surely it can be decided only on the basis of medical skills.

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[Lord Faulks]

I am grateful for that intervention. My point is that if someone has been genuinely injured, whether in the course of employment or not in the course of employment, they are entitled to make a claim, and nothing should preclude that, regardless of whether they receive a message in the current form or in an amended form. It seems to me that it would be inappropriate to make a distinction between the circumstances in which you may or may not suffer a whiplash injury. My point was simply that if there is an amendment to the law, those seeking to encourage not the genuine claimants—of which there are certainly some—but those who are not genuine may revise their message to take into account the revision that we make in the law. Of course I am not against genuine claims. On the amendment tabled by the noble Earl, Lord Kinnoull, and my noble friend Lord Hodgson, although I understand the disaggregation that lies at the heart of their amendment, I am not for the moment persuaded that this is not a matter that is catered for under Clause 2(3) and (4). I shall listen with interest to what my noble and learned friend says.

[Lord Beecham]

Perhaps I may invite the noble Lord to refer to the provisions that refer to MedCo. He talked about doctors’ reports as if they could be made by rather unscrupulous doctors at the behest of a client. Would not use of the MedCo system pretty well ensure that the reports would be valid and authentic?

[Lord Faulks]

The MedCo system has contributed very considerably to the improvement in the standards of medical reporting. For those of your Lordships who are not familiar with it, it was a system to prevent what was undoubtedly an abuse of the system by some doctors, to allow the random allocation of medical experts to deal with whiplash injuries. It is certainly an improvement. My point is that there is still a risk in certain cases of there not being reliable medical evidence.