Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 2019

Lord Hope of Craighead Excerpts

Wednesday 10th April 2019 Lords Chamber

[The Parliamentary Under-Secretary of State, Northern Ireland Office and Scotland Office (Lord Duncan of Springbank) (Con)]

My Lords, it is necessary to bring forward this order to confirm the regulation-making powers of the Scottish Ministers under Section 2(2) of the European Communities Act 1972. This order is made under Sections 30 and 63 of the Scotland Act 1998 and seeks to confirm the powers of the Scottish Ministers regarding environmental impact assessments on certain public and private projects—I shall call these EIAs. These assessments are carried out in relation to renewable electricity generating stations located in the Scottish part of the renewable energy zone under regulations that implement an EIA directive.

The UK Government and the Scottish Government have agreed to take this order forward following an initial request from the Scottish Government. The order specifies functions which are to be treated as exercisable in or as regards Scotland and transfers these functions to the Scottish Ministers. While the generation, transmission, distribution and supply of electricity are reserved matters, since 1999 functions relating to electricity have been transferred to the Scottish Ministers. This order provides confirmation that the Scottish Ministers have EIA regulatory functions in respect of the Scottish part of the renewable energy zone, thus confirming that the UK meets its obligations to transpose the 2014 EIA directive.

The Government have worked closely with the Scottish Government at ministerial and official level to ensure that the order confirms the current legal position of the Scottish Ministers. On that basis, I beg to move.

[Lord Hope of Craighead (CB)]

My Lords, I do not think that anyone could possibly object to this order or indeed the order which the Minister will bring before us as the final business today. However, I should like to pay tribute to the procedures which have brought it before the House.

Some 21 years ago, I was dealing with the Committee and Report stages of the 1998 Scotland Bill in this Chamber. It was a very carefully drafted statute, and it is of great interest to me to see the way in which the various provisions in the latter part of that Act and in the schedules are brought together, both in this order and in the one that follows it, to allow necessary little corrective steps to be taken without any delay or disruption to the devolution system which was laid down.

We are told in the head note to this order that it is to be approved by the Scottish Parliament as well as by each House of the United Kingdom Parliament, and that is as it should be. However, it is worth paying tribute to the draftsmen of the 1998 Act that the procedures are available both for a draft statutory instrument as well as for an order to be laid under the other provisions which are referred to in the regulatory reform order that we will consider later. These are working out to the good of the system.

Beyond that, I welcome the order and I am glad that the Minister has been able to introduce it so briefly.

[Lord Bruce of Bennachie (LD)]

I echo what the noble and learned Lord, Lord Hope, has said. This is the way we hope things will work with a devolved Parliament and Administration but where there is shared decision-making. I have only one question, because the powers are concurrent. When the Minister responds, will he explain what happens in the unlikely event that there is a matter of dispute? It is territorial and this order effectively devolves the power to Scottish Ministers, but if “concurrent” means what it implies, in theory the Secretary of State in the UK Government could say, “I do not agree”. That is unlikely in the circumstances, but I wonder if the Minister can clarify what would happen.

Jurisdiction and Judgments (Family) (Amendment etc.) (EU Exit) (No. 2) Regulations 2019

Lord Hope of Craighead Excerpts

Monday 18th March 2019 Lords Chamber

[The Advocate-General for Scotland (Lord Keen of Elie) (Con)]

My Lords, this draft instrument forms part of the Government’s work to ensure there are functioning domestic laws in the event that the UK leaves the EU without a deal on cross-border co-operation on family law. The instrument relates solely to the Government’s no-deal exit preparations. Again, should we reach an agreement on our future relationship with the EU, the Government will review the instrument and amend or revoke it as necessary at the end of a transition period.

This instrument gives effect to a commitment that I gave on behalf of the Government during the debate on 29 January on the Government’s main no-deal family law instrument, the Jurisdiction and Judgments (Family) (Amendment etc.) (EU Exit) Regulations 2019. That family statutory instrument has now been made. It puts in place the arrangements in cross-border family law cases that will apply if we leave the EU without a deal. That instrument revokes the retained EU law in relation to Brussels IIa and the maintenance regulations and makes consequential changes to domestic law, including changes to ensure that the jurisdiction rules for cross-border maintenance matters are restored to their pre-EU form.

This small amending instrument addresses a technical issue raised by family law stakeholders. Some family law stakeholders have raised concerns that by the amendments to the Children Act 1989 and the Children (Northern Ireland) Order 1995 made by the main family instrument, we have inadvertently narrowed the jurisdiction of the court and the range of financial remedies that the court may order when compared to the position that currently exists under the EU maintenance regulation. That was not the Government’s intention. Without fixing this issue, the consequence would be that in some cases the court would be limited in terms of the financial remedies that it may grant. For example, the court would be able to make an order only for periodical payments and not for a lump sum or a property settlement or transfer. I extend thanks to the family law practitioners for bringing this issue to our attention.

While the existing approach is workable, the Government have decided to address those concerns to ensure that jurisdiction grounds and remedies are not reduced as a result of a no-deal exit because these are jurisdiction grounds and remedies that emerged after we had engaged with the relevant EU regulation. The instrument therefore amends the principal 2019 regulation so that, post exit without a deal, the courts in England and Wales or Northern Ireland will be able to order all types of financial remedies available under the Act or the Northern Ireland order in circumstances where either a parent, a guardian or the child is habitually resident or domiciled in England and Wales or Northern Ireland at the date of the application. The amendments also ensure that the court has jurisdiction to order a financial remedy in respect of a child where the parents are not married, in a similar way to when child maintenance is being considered ancillary to divorce.

The impacts of the Jurisdiction and Judgments (Family) (Amendment etc.) (EU Exit) Regulations 2019 were set out in an impact assessment published on 24 January 2019. This instrument amends those regulations so that the unintended impact of the amendments to the Children Act 1989 and the Children (Northern Ireland) Order 1995 on the court’s jurisdiction and remedies is rectified. As amended, the impact of the Jurisdiction and Judgments (Family) (Amendment etc.) (EU Exit) Regulations 2019 will be as described in the original impact assessment. In other words, we had assumed that they would operate in the way in which they now operate in light of this supplementary instrument.

As I said, the instrument addresses concerns raised by stakeholders. My officials met these stakeholders to discuss their concerns. A draft of this instrument was provided to the statutory Family Procedure Rule Committee. Its members include some of the family lawyers who raised these concerns about the amendments to the Children Act 1989 and they were invited to comment on the draft. Those comments were taken into consideration before the instrument was finalised and laid. In addition, my officials have spoken to officials within the devolved Administrations.

In these circumstances, I stress that this is a highly technical instrument, which is intended to take us to the point we believed we would get to with the principal instrument. I beg to move.

[Lord Hope of Craighead (CB)]

My Lords, the amendment which the regulation seeks to make is obviously highly desirable. However, I have a question for the Minister, because I cannot for the life of me see how it achieves its purpose in expanding the financial remedies available under domestic legislation. As far as I can see, the only passage which might possibly have a bearing is Regulation 2(2)(a), where we are told that the words,

“in relation to matters relating to maintenance”,

are being deleted. Without more context, it is extremely difficult to see whether this achieves what the regulation seeks to do. I am happy to take the Minister’s assurance that it does, or perhaps he can explain it a bit more. It is characteristic that these instruments are so economically worded that, without a whole lot of legislative material in hand, it is sometimes hard to make sense of them.

[Lord Thomas of Gresford (LD)]

My Lords, this is a necessary rectification of the earlier regulations. Subject to what has already been expressed, we have no objection to it.

Cross-Border Mediation (EU Directive) (EU Exit) Regulations 2019

Lord Hope of Craighead Excerpts

Wednesday 20th February 2019 Lords Chamber

[Lord Keen of Elie]

First, this instrument is not concerned with the role of the court: it is concerned with the role of mediation outside the court. Secondly, it is not usual to discover mediation as a form of resolving a child abduction case. The very nature of an abduction is such that the parties are not amenable to agreeing a voluntary mediation to resolve the matter. We have already made provision for civil orders in relation to child abduction.

With regard to criminal orders, it is impossible to replicate the existing provisions of EU law because, under the relevant provisions of EU law, an EU court would not recognise an order from a UK court in any event, and therefore it would give false hope to a party to grant them an order that was not enforceable. Overall, therefore, my answer to the noble Lord is that mediation does not impact directly on the sort of issue that has been raised. We recognise the importance of trying to ensure, as far as possible, that there are means of enforcing child abduction orders. The only qualification if we leave without a deal is that there would be no right of the originating court to make an order that trumps the order of the court in the country to which the child has been abducted. That is simply because in the absence of reciprocity, it is not possible to make such an order enforceable. Otherwise, my understanding is that we will be able to proceed.

[Lord Hope of Craighead (CB)]

I think I am right in saying that we are party to a treaty about child abduction that extends well beyond the EU. I have had experience of a case involving abduction where one of the parties was resident in Australia and the other one in Norway, which, of course, are outside the EU network. We have rules about the speed at which cases can be dealt with, but the basic treaty arrangements are unaffected.

[Lord Keen of Elie]

The noble and learned Lord is quite right. The Brussels convention on these matters reflects the terms of the Hague convention to a large extent. The one qualification is the element to which I referred about the trumping order, which is not available under the Hague convention. However, it works very effectively in respect of non-EU states and there is no reason it should not continue to operate. I believe that a week or so ago, I addressed these matters in this House when moving other regulations relating to exit, so I hope I have not contradicted myself since then.

Finally, although the confidentiality provisions in the EU directive will no longer be law in the context of mediation in England and Wales, it is usual for parties, when agreeing to mediation, to have an agreement on confidentiality as well. Indeed, even in the absence of such agreement, there is a provision from the High Court in the case Farm Assist Ltd in 2009, which says that such a confidentiality obligation would be implied in any event. It would, of course, be subject to the interests of justice, but we are not going to lose entirely the benefit of the confidentiality provisions if we leave without a deal. In these circumstances, therefore, I beg to move.

Mutual Recognition of Protection Measures in Civil Matters (Amendment) (EU Exit) Regulations 2019

Lord Hope of Craighead Excerpts

Tuesday 29th January 2019 Grand Committee

[Lord Hope of Craighead (CB)]

My Lords, about half-way down page 3 there is a reference to “participating Member State” and that it means “a Member State other than Denmark”. Am I right in thinking that, although it is dealt with specifically there, there is no change as far as Denmark is concerned because it does not participate in the EU regulations? Is it purely a matter of drafting that this provision appears?

[Lord Keen of Elie]

The position as I understand it —I mentioned this earlier—is that pursuant to Article 22 of TFEU, Denmark has an opt out from all of these issues but has a bilateral agreement with the EU in respect of them. I have been corrected. It does not have a bilateral agreement in respect of this one but it does with the others—I apologise—and that is why Denmark is excepted.

[Lord Hope of Craighead]

It is really a clarification in the drafting—it does not change anything. That is my point.

[Lord Keen of Elie]

That is entirely right.

Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019

Lord Hope of Craighead Excerpts

Tuesday 29th January 2019 Grand Committee

[Baroness McIntosh of Pickering (Con)]

My Lords, I rise to ask a question and I am grateful to my noble and learned friend Lord Keen for setting the scene. A theme seems to be developing in relation to practitioners and the recognition of court judgments with the Government’s proposed exit from the European Union. My noble friend has responded to some of my concerns as regards practitioners and trading in legal services, which I hope to address in the context of the Trade Bill.

My specific concerns relate to the remarks of my noble and learned friend and what is set out on page 5 of the Explanatory Memorandum, which sets out a number of the deficiencies that will arise if we crash out without a deal. I presume that this falls into the same category that services and the jurisdictions of courts fall into with the World Trade Organization and its General Agreement on the Trade in Services. My question is similar to that of the noble Lord, Lord Beith. What will be the status of this in those circumstances? However, I have a more direct question of my own. If this is being done on the basis of reciprocity and if the instrument before us today seeks to fill the gap so that court judgments will be recognised in this country, what measures are the Government and my noble and learned friend’s department taking to ensure that reciprocity will be respected in the circumstances of Britain leaving without a deal?

[Lord Hope of Craighead (CB)]

My Lords, could the Minister say something about the effect of what is being provided for here on the common-law principle of forum non conveniens? I am sure he knows very well that the doctrine of forum non conveniens was eclipsed, as regards membership of the EU, by the reciprocity principle and the rules that apply throughout the EU.

[Lord Foulkes of Cumnock (Lab Co-op)]

I am grateful to the noble and learned Lord, who is far more polite than someone else—I gather the Minister did not give way earlier on. Could he explain to non-lawyers exactly what he is talking about?

[Lord Hope of Craighead]

Yes, certainly. There is a principle, which originated in Scotland, by which a court can decline jurisdiction in a case brought in, let us say, Scotland, on the ground that it is not convenient because there is a better place for the case to be tried. It originated particularly in Scotland out of attempts to raise matrimonial proceedings in Scotland that had a far closer connection with England. The argument developed that if it had a closer connection, it was more convenient, and so the court would decline jurisdiction and you would be transferred to England. That principle is of long standing and has been regarded as very useful in our jurisdiction. However, one of the effects of joining the EU and being subject to the jurisdiction of the European Court of Justice arises from the particular case of Owusu, which the Minister may know about, which has laid down very strict rules that the forum non conveniens principle cannot apply.

Am I right in thinking that, because it is common law and not the subject of any statutory measure, it will be for the courts to work out whether the principle applies without the restrictions that currently apply so long as we are a member of the EU?

--- Later in debate ---

[Lord Marks of Henley-on-Thames]

I will simply respond to that, because in a sense it is an intervention on me. I accept that this is conditional in the sense that the noble Lord mentions. However, my fundamental point was that the importance of this aspect of no deal has been woefully underestimated in considering how dangerous the concept of no deal is. To that extent, I regard the points I have made in highlighting that danger as valid, because no deal is profoundly to be shunned.

[Lord Hope of Craighead]

In fairness there is an EU sub-committee chaired by the noble Baroness, Lady Kennedy of The Shaws—I cannot remember which sub-committee it is.

[Lord Marks of Henley-on-Thames]

Justice.

[Lord Hope of Craighead]

Thank you. The Justice Sub-Committee prepared a detailed report drawing attention to exactly what the noble Lord has referred to. There was an impassioned debate—I do not know whether the noble Lord was present—at which these points were made. The criticism is not against us, as it were, because in this House we have been taking our responsibilities seriously. However, I understand the point the noble Lord makes about the effect of leaving the EU and the distress he feels.

[Lord Beith]

There is one thing the Government have not made clear. The impact statement, brief as it is, is structured around there being two options—the other option being not to change retained EU law. As I understood it, that option implied that in a no-deal situation, if we did not have this instrument, the courts would be left behaving as they had previously and hoping that courts in other countries would do the same. One of the things that was not explained very well in the impact statement—perhaps the Minister can clarify this later—is what the other option the Government rejected was.

Services of Lawyers and Lawyer’s Practice (Revocation etc.) (EU Exit) Regulations 2019

Lord Hope of Craighead Excerpts

Tuesday 15th January 2019 Lords Chamber

[Lord Keen of Elie]

The terms of the instrument make it perfectly clear that it is to apply in the absence of a deal. My department is certainly well aware of the scope and application of the instrument, which is why I made it clear in opening that this instrument will apply in the event of there being no deal. However, in the event that there is a withdrawal agreement of some kind, clearly that would not be a situation in which the instrument would be required.

[Lord Hope of Craighead (CB)]

I do not want to cause any difficulty, but why does paragraph 1(2) refer to the transitional period? There will not be a transitional period if there is a hard Brexit and no deal.

[Lord Keen of Elie]

It does not refer to the transitional period as proposed in the withdrawal agreement: it refers to a transitional period that will apply for the purposes of this particular instrument in order to ensure that there is no immediate cut-off for EU lawyers in the United Kingdom. It is for that particular purpose that this particular regulation allows that, and it is considered that that is allowable under the GATS regime as well—in other words, we are allowed a period of time to transition to a point where European lawyers registered in the United Kingdom come to find themselves in the same position as third-party country lawyers.

Civil Liability Bill [HL]

Lord Hope of Craighead Excerpts

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

Moved by

[Lord Hope of Craighead]

1: Clause 10, page 9, leave out lines 3 to 5

--- Later in debate ---

[Lord Hope of Craighead (CB)]

My Lords, my amendment relates to the personal injury discount rate, which is the subject of Part 2 of the Bill. Clause 10(1) provides for new Section A1 of the Damages Act 1996. Two of its provisions are important to what I am about to say. One directs the court to apply a rate of return, as may, from time to time, be prescribed by an order made by the Lord Chancellor. The other, which I am concerned about, is new Section A1(2), which states:

“Subsection (1) does not however prevent the court taking a different rate of return into account if any party to the proceedings shows that it is more appropriate in the case in question”.


The Minister will recall that I raised this issue on Report when I moved what was then Amendment 50 on the Marshalled List. That amendment sought to tailor the wording of subsection (2) to address a problem that had been the subject—the result, I should say—of decisions in the Court of Appeal in the cases Warriner v Warriner and Warren v Northern General Hospital Trust, following the House of Lords case in Wells v Wells in 1999.

The problem that has arisen as a result of those cases in the Court of Appeal, which was expounded with some care by Lord President Carloway in his judgment in Tortolano v Ogilvie Construction Ltd in 2013, is that there is a very tight straitjacket on any use of subsection (2) in the Damages Act 1996, which is the predecessor of the provision in this Bill in cases where people seek a different rate of return from that prescribed due to the circumstances of the particular case.

Each of these three cases, the two from the Court of Appeal and the one from the Court of Sessions in Scotland, involved injuries of maximum severity—perhaps a prime example of cases where litigants would wish to have a more generous rate of return. However, in each of these cases, it was said that that could not be done on the ground that there had to be an exceptional case-specific factor before this could be achieved.

I was concerned that the provision in the Bill simply reproduces the language of the 1996 Act without any attempt to suggest that the approach the courts have mandated should be any different in this case. I was seeking a relaxation to allow a case where, if the court felt that the award was less than adequate after applying the prescribed discount rate, it could be altered to allow a better rate of return in recognition of the compensation needed to meet the loss incurred or to be incurred during the rest of the claimant’s lifetime.

The noble and learned Lord may recall that in our discussion on Report, reported in Hansard on 12 June, he said that he wished to give further consideration to the matter I had raised so that he could come to a view on whether something might be done to tailor the wording of the provision to address what he described as “the almost complete guillotine” that is in place as a result of the two Court of Appeal decisions. As he put it, there was a balancing act to be achieved and he undertook to look at that.

It is fairly plain from the fact that there is no government amendment on this issue at Third Reading that he and his team have not been able to come up with a form of wording that would address my point without undermining the policy that underpins the scheme which this part of the Bill seeks to lay down. I am grateful to him and his team for meeting me to go over this point last week so that I could understand the position he has adopted, which I fully appreciate. It is a very difficult issue on which to find a form of words that would achieve what I sought to achieve. In the course of that meeting, I suggested that in view of that position it might be better to delete this subsection from the Bill altogether, which is what my amendment would do.

To elaborate a little more on the reasoning behind the amendment, the phrase which the noble and learned Lord used—“almost complete guillotine”—describes the situation very well, although in rather brutal language. I do not criticise that, because the Court of Appeal in its decision was building on what this House said in Wells v Wells in 1999. In that case, we said that the aim of the solution that we adopted in finding an appropriate discount rate was to create as much certainty as possible. Lord Steyn said that only in exceptional circumstances should a party be entitled to reopen the debate. The idea was to close down the expensive and time-consuming business of trying to present a different rate of return from that laid down by the court, the House or the Lord Chancellor.

The problem is that what such exceptional circumstances might be nobody has been able to discover in almost 20 years of the provision’s existence. Any idea that they could be founded on the nature or gravity of the injuries seems to have been completely cut off by the Court of Appeal. My point is that it is very difficult to see what value, if any, can be achieved by retaining this provision if there is to be no change to its wording. It has been a dead letter for some time and it seems rather a pity to reproduce a dead letter in fresh legislation. Indeed, retaining it risks raising false hopes of achieving something that it cannot achieve—indeed, according to the Government’s policy, something it ought not to be able to achieve—which is altering the discount rate in these cases. My suggestion, which I made at our meeting last week, was that it might be better to face the fact now and to delete the provision. Having made that suggestion, I thought it right to table the amendment for discussion so that the Minister could at least report to the House on the view he now takes, having had time to think about my suggestion.

It is right to draw attention to the fact that the Association of Personal Injury Lawyers has circulated a briefing among some of your Lordships in which it indicates that it opposes the amendment. As I understand its letter, that is for two reasons. One is that a court should retain the ability to apply a different discount rate, particularly in cases of injury of maximum severity. That is an example of wishful thinking in view of the decisions I referred to. It is clear that any attempt to do that in that kind of case will not succeed, which is why I am so concerned about the repetition of this amendment in the Bill.

The other reason is rather more fundamental. If I might read what the association says, it puts it this way:

“The ability for a judge to apply a different discount rate is an appropriate safeguard against any abrupt changes in the financial market. While the proposed legislation provides for regular reviews of the discount rate, a scheduled review could be too late if there is a sudden change in the market. The discount rate could be too high, and it could be years until the next review when the rate could be corrected. In the meantime, injured people will be undercompensated, and will be in fear of what happens when their money runs out”.


As I understand the system that Part 2 of the Bill seeks to lay down, it is intended to have the process reviews carried out at regular intervals, with a view to having certainty between each review that the courts would be obliged to apply, subject to the provision I am concerned about. With respect, the Government have to consider very carefully whether the point the association raises is one they would be willing to accept—in other words, that it should be open ground for parties to seek to attack the prescribed discount rate between reviews because of changes in the market. We would get back to the kind of uncertain situation that we were so concerned about in Wells; we did our best in the reasoning in that case to address our seeking certainty and to have the matter addressed in only exceptional circumstances.

For what it might be worth, the wording of subsection (2) does not permit an across-the-board change to the discount rate because it talks about a different rate being taken if a party can show that it is,

“appropriate in the case in question”,

which suggests that one is taking a particular case out of the generality that deserves special treatment, rather than something across the board, which is what I think the Association of Personal Injury Lawyers is addressing.

I have said enough to indicate that there are reasons for concern as to why this provision is still in the Bill, and to ask whether it should still be there and possibly whether, as the Bill proceeds through the other House, further thought might be given to its wording or its presence in the clause. I beg to move.

[Lord Mackay of Clashfern (Con)]

My Lords, it is fairly plain that this phrase was used by me more than once around this time. One area in which it was used was fixed sentences in criminal cases, because there was a feeling that laying a particular sentence or assigning a particular rate tended to deprive judges of their inherent discretion.

In the two judgments referred to, the Court of Appeal indicated that it felt it was given no discretion. It was enough to get me through the difficulties that I had at that time. Therefore, whether it should remain is a question I find rather difficult. I am not keen to remove anything that gives the presiding judge in a particular case some degree of discretion. If the courts have held that such sentences do not give that, it is rather difficult. I cannot think of a better phrase; needless to say, it occupied my attention quite a lot at the time and was hotly debated. Obviously, my noble and learned friend the Minister has given the phrase consideration and I would be interested to hear what he has to say.

--- Later in debate ---

[The Advocate-General for Scotland (Lord Keen of Elie) (Con)]

My Lords, I am most obliged to the noble Lord, Lord Beecham, for his positive contribution to the debate, to all noble Lords and noble and learned Lords for their observations on this amendment, and to the noble and learned Lord for moving it.

From the very outset—I go back to the Law Commission’s 1994 report on structured settlements—it was intended that a provision of this kind to depart from a prescribed rate should be very much the exception rather than the rule. Clearly, it recognised that it would be both expensive and time-consuming if the prescribed discount rate could regularly be the subject of challenge on the basis that there might be another more appropriate rate for any number of reasons. That goes some considerable way to explaining the position of the Court of Appeal in the case of Warriner v Warriner.

As the noble and learned Lord, Lord Hope, observed, I referred to a guillotine, but I qualified it with the words “almost complete”—this is a deficient guillotine; it is not a complete guillotine. I said that because, for example, the decision of the Inner House of the Court of Session, the appeal court in Scotland, in Tortolano v Ogilvie Construction, indicated that there may be cases in which the power to depart from the prescribed rate can be applied—but I accept that they will be wholly exceptional. In Tortolano, the court suggested that there might, for example, be a need to take account of a claimant who had to pay tax in a foreign jurisdiction, and that impacted upon the valuation of the award.

These are wholly exceptional circumstances, but the provision in Section 1(2) of the Damages Act 1996, which would be preserved by the words in subsection (2) of the proposed new Section A1, would allow for those wholly exceptional circumstances where the judiciary would be entitled to exercise an inherent discretion in order to achieve justice between the parties. It is in these circumstances that I would resist the amendment; I recognise that there may be room for taking this further, although I have been unable to identify it so far, to ensure that we can perhaps more clearly identify circumstances in which the exception would be applicable.

As the noble Lord, Lord Beecham, indicated, the Bill will be considered in the other place, and I and my officials would be content to explore further with the noble and learned Lord, Lord Hope, if he wishes to do so, whether the provision might be improved in some way. However, I have difficulty with that because I am concerned that if we intrude too much into this quite exceptional discretion, there is a risk of encouraging unnecessary and expensive litigation over the appropriate rate in individual cases.

On that basis, and recognising the point that the noble and learned Lord makes, I invite him to withdraw the amendment.

[Lord Hope of Craighead]

My Lords, I am very grateful to all those who have taken part in this short debate. I am grateful in particular to the noble Lord, Lord Beecham, for his suggestion that this might be considered a little further when the Bill moves to the other place. It is a very difficult issue and, as the noble and learned Lord, Lord Mackay of Clashfern, has indicated, it is very hard to find another form of words which can address it.

I am concerned about putting into the Bill something which raises false hopes. The circular from the Association of Personal Injury Lawyers indicates that it was trying to find something in the wording which is not really what the Minister was talking about. We are not dealing with cases of exceptional injury within the domestic system, which is what the association was talking about. I take it from the Minister’s reply that he would not encourage people to have a go at changing the discount rate between reviews, which would be contrary to the idea of laying down certain rules for application while the reviews subsist.

It is a very tight issue as to whether there is a point in this provision at all. But having heard what has been said, and with particular thanks to the Minister for his reply today and for the way in which he has listened to me on two occasions, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Civil Liability Bill [HL]

Lord Hope of Craighead Excerpts

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

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, we come to a matter that we discussed at some length in Committee, so I will cut to the chase. An award of damages that will be paid out over a long period—for example, to provide care to someone previously injured in their 20s—is based on two very important assumptions: how long the person will live and what rate of return can be expected from the sum awarded. If the damages are awarded in the form of a lump sum, these two factors assume a particular and increased importance. The first of these factors, the length of time that a person is expected to live, is inevitably based on averages, so if the injured person lives beyond the expected average then there is a risk that the individual will spend the last few years of their life in financially straitened circumstances. As regards the second factor, if the investment performance falls below that which is anticipated then a similar outcome will result.

As we have already discussed, there is a way for the individual to avoid both the longevity risk and the investment risk. He or she can do so by taking the award in the form not of a lump sum but of a periodical payment order, a PPO. Under a PPO, part or all of the award can be paid weekly, monthly, quarterly or whatever to suit the injured party, and paid normally on an inflation-proof basis for the rest of a person’s life. Sadly, though, we have discovered that PPOs appear to be the poor relation as regards the methods of awarding damages. We discussed in Committee the various structural reasons why this was so—the preference of insurance companies for a swift solution and the capital required to back a PPO, the potentially seductive nature of a very large lump sum compared with the more modest amount of a periodic payment and so on.

My amendment is designed to tip the balance more in favour of PPOs, so that in cases where lump-sum damages exceed, say, £1 million and/or the award will be paid out over more than 10 years and/or the individual is of a risk-averse nature, the court should press for the award to be made in the form of a PPO. To be clear, the court should not compel; that would be completely inappropriate. If a person is determined to have a lump sum, a lump sum they must have. However, the court should certainly encourage PPOs. None of this appears to run counter to the wishes of the House of Commons as expressed by the Justice Committee in its report on the discount rate, nor indeed the thinking of the Government as expressed in their response to that report.

So how to achieve this desired result? Giving the Minister the power to make regulations in this area might interfere with judicial independence, so it appears that the only avenue remaining is the use of the Civil Procedure Rules of court, and that may perhaps be a clumsy way to proceed. If my noble friend cannot accept my amendment, and I fear he may be unwilling to do so, I hope he will be able to make a clear and unequivocal statement that the Government favour the increased use of PPOs in the sorts of cases that I have described so that, with the views expressed in your Lordships’ House today and previously in Committee and, no doubt, in due course in the other place, courts can be in no doubt about the will of Parliament in this important matter.

It may be worth while undertaking a review at some future date of whether the use of PPOs is increasing. That might be along the lines of Amendment 89 in the name of the noble Lord, Lord Beecham, to which I have no doubt he will speak fruitfully in a minute or two. In the meantime, though, I beg to move.

[Lord Hope of Craighead (CB)]

My Lords, I should like to say a word in support of Amendment 50, which is in my name and builds on an amendment tabled in Committee by the noble Lord, Lord Faulks, to which I put my name but to which I was unable to speak because at the very moment he rose to speak I was taken out of the Chamber for a business meeting, so I never got to say what I should like to say now.

I have proposed for the noble and learned Lord’s consideration an expanded version of his amendment, and I should like to explain the background to it a little more so that the point is firmly before the House. On page 7, line 32, subsection (2) of proposed new Section A1 provides that proposed new subsection (1), which talks about the duty of the court to take into account the rate of return prescribed by order by the Lord Chancellor,

“does not however prevent the court taking a different rate of return into account if any party to the proceedings shows that it is more appropriate in the case in question”.

At first sight, that is quite a reasonable provision which the courts might feel able to use from time to time, but, as case law has developed, the door has effectively been shut on any use of the provision in these terms in cases where it is most likely to be wanted, which is those of injury of maximum severity.

In Warriner v Warriner 2002, the Court of Appeal, drawing on points made in Wells v Wells, stressed that on policy grounds there was a need for negotiations to be conducted with reasonable certainty as to the result and to eliminate unnecessary costs and the leading of extensive evidence. Building on the principle stated in Wells, which I of course support, it refused to interfere with the rate of return prescribed. That point was repeated in subsequent cases and more recently in the Court of Session in Edinburgh, where the same principles apply. The Lord President, Lord Carloway, made it clear in the case of Tortolano v Ogilvie Construction Ltd in 2013—Court of Session Inner House Cases, page 10—that there must be something special or exceptional about the case and that the fact that the injuries were catastrophic, which puts the level very high indeed, was not a special or exceptional case factor that would justify departing from the specified rate.

My point is that the Bill repeats almost exactly the wording of the Damages Act 1996, on which the case law has been built. There is one tiny difference. The formula in the 1996 Act was “does not, however, prevent”. In the Bill, we find the slightly different words “shall not, however, prevent”. But the crucial wording, in particular the word “appropriate”, is still there. If the wording of the Bill remains as it is, my concern is that it is effectively a dead letter because the courts, following established case law in the Courts of Appeal both north and south of the border, will feel that there is no case for interfering at all, even in the most extreme cases, where, as I have suggested, the need for even more precision and care in the rate of return is most compelling.

There is reason to be a little more generous at this stage. As the noble and learned Lord is well aware, the basis on which the rate of return is to be struck is to be taken at a slightly different level from that on which Wells v Wells was based. In Wells, the House of Lords used a rate of return that was inflation-proof—adopting a relevant government bond which had that rate of return—to avoid any risk of losing touch with inflation. Now, instead of a very, very low level of risk, there is to be an assumption that more risk will be acceptable than a very low level of risk, although it is less risk than would ordinarily be accepted by a prudent and properly advised individual investor. So there is a change towards a slightly greater element of risk, although not that high. The point is that any change in the level of risk being contemplated raises the possibility that in these extreme cases, the level may fail to achieve what is needed to provide the injured party with what is necessary to compensate them fully for the loss and injury sustained.

Simply to repeat the same formula is unsatisfactory. I was grateful to the noble and learned Lord for agreeing to a meeting the other day at which I was able to explain the point. I think the meeting was left on the basis that an attempt would be made to find a form of words that would not undermine what the Government seek to do but would, at the same time, allow the courts to look afresh at the idea of departing from the rate—although one would of course not want them to do so as a matter of course or have any unnecessary delay or expense in going through these complicated cases just to achieve a different rate. It would have to be a case that really justified such attention.

Some points can be drawn from Wells that may be relevant to my point. First, I was looking at the award in the form of a capital sum—we are talking about that rather than what the noble Lord, Lord Hodgson, was talking about a moment ago—in which the income will not be reinvested. The ordinary investor would reinvest the income to keep the capital sum as inflation-proof as possible, but in our case the income would be used to meet the needs of the injured party. At the same time, the injured party would be drawing on the capital sum, because it is a diminishing fund, the idea being that at the end of the claimant’s lifetime, or when the injuries have finally resolved themselves, there will be nothing left. So we have the extraordinary situation of a sum of money where the income cannot be used to protect against inflation and, at the same time, the sum is reducing. As Lord Lloyd of Berwick pointed out in Wells, if you are having to draw on the capital to meet these costs because the income is not good enough, in a diminishing market, that runs the real risk that the market may not recover sufficiently to bring the award up to the level needed to sustain the injured party for the rest of the period during which that party needs to be sustained. There is a difficult area here: in some cases, particularly if you alter the level of risk, you run into the possibility of the injured party not being fully compensated.

I seek by the amendment to suggest for the noble and learned Lord’s consideration a slightly different formula of words in that critical proposed new subsection that would enable the court to escape from the straitjacket of existing case law in cases that justify a fresh approach. On that basis, I have expanded a little on the formula of the noble Lord, Lord Faulks, to draw attention to the need for this sum to be sufficiently large to meet the needs of the claimant for the rest of the period. It is in that context that I ask the noble and learned Lord to consider my amendment in deciding what best to do to avoid simply repeating a dead letter.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I shall speak to my Amendment 73. It is an attempt not to change anything in the Bill, just to avoid some very unfortunate, superfluous wording. At the foot of page 9, it would delete the words,

“who has different financial aims”.

The effect of that deletion is to leave intact the wording cited just now—without what I would say are the offending last words—by the noble and learned Lord, Lord Hope. It leaves intact the reference to an,

“assumption that relevant damages are invested using an approach that involves … less risk than would ordinarily be accepted by a prudent and properly advised individual investor”.

At that point I would put the full stop, as it is clear and sufficient to achieve the intended purpose. Adding on that this prudent and properly advised individual investor “has different financial aims” at best adds nothing, and at worst contradicts the earlier provisions about the basis for the rate of return, which appear in new paragraph 3(2).

Civil Liability Bill [HL]

Lord Hope of Craighead Excerpts

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

[Lord Judge (CB)]

My Lords, I have tabled Amendment 69 relating to the conduct of the review that we have been discussing, in particular in relation to Schedule A1. I wish to add one definite article and three words to this part of the Bill. That definite article and those three words are already part of the Bill in two places, and this afternoon the Minister indicated that there would be a third occasion when the words “the Lord Chief Justice” would appear.

This is a very dry debate, and therefore I remind the House that we are dealing with catastrophic cases, with injuries that are life-changing not only for the unfortunate man, woman or child who has suffered them but—let us not overlook it—his or her family: the wife, husband, parents or child. We are reflecting on family disaster.

Judges have to observe, day by day, year by year, the practical realities of the impact of the discount rate on claimants, defendants and, in particular, settlement proposals. I remind your Lordships that, in the case of children and those who need a guardian for the purposes of the conduct of litigation, a settlement can be acceptable only if it is presented to a judge, usually a High Court judge, to see whether he or she approves it and its satisfied by its reasonableness. In other words, there is a fund of experience constantly being refreshed by the litigation process. If the practical impact, the glitches and the nuances are not fully appreciated, the Lord Chancellor will be deprived of information that is vital to any decision relating to the review. The only way to make it fair and balanced is for there to be judicial input to it as a consultee, and therefore I invite the Minister to agree, as he did this morning in relation to Amendment 12, that the Lord Chief Justice should be made a consultee to this part of the Bill.

[Lord Hope of Craighead (CB)]

My Lords, I added my name to Amendment 69 and I support everything that my noble and learned friend has said. There is just one point that I would like to add. I draw attention to subsection (4) of the new Section A1, which is printed at page 7, lines 37 to the foot of the page. It refers to the content of the original order that the Lord Chancellor will have made, which is the background to the review process. The order not only talks about the rate but has to contemplate the possibility of descriptions of pecuniary loss, the length of the period during which pecuniary loss is expected to occur and the time when the pecuniary loss is expected to occur.

So one is not simply talking about the calculation of a rate of return in the abstract. It would be open to the reviewer to examine whether there should be some fresh approach to the matters that are contemplated in that subsection. It underlines the important point that my noble and learned friend has been making about the need for judicial input against the background of experience which everybody in the courts has drawn out of cases involving these very serious injuries. I support the amendment for that reason.

[Lord Faulks (Con)]

With some hesitation, I offer some slight doubt about the two contributions from the noble and learned Lords relating to the role of the Lord Chief Justice. I entirely accept the significance and appropriateness of the role of the Lord Chief Justice in the first part of the Bill, as the Minister accepted. I am more troubled about the suggestion in relation to the role which the Lord Chief Justice might play in the rate of return on investment. In essence, this is a quasi-mathematical function. The noble and learned Lord, Lord Judge, is quite right that judges regularly see and approve complex cases, and will be aware of the adequacy or otherwise of damages. However, with great respect, that is not quite the issue that the panel will be deciding.

I see a further problem and would be grateful for the Minister’s comments on it. The Lord Chancellor makes the rate determination—it has been accepted that this is essentially a political determination—must,

“give reasons for the rate determination”,

and,

“publish such information about the response of the expert panel established for the review as the Lord Chancellor thinks appropriate”.

If he or she has to give reasons in response to a judicial review—the Minister has said that the decision must be amenable to such review—presumably those reasons might include the advice that he or she has been given by the Lord Chief Justice. I am a little concerned that this puts the judiciary in an unfortunately political position, when it has been agreed that the role of the Lord Chancellor is pre-eminently a political one, albeit advised by the panel. So although I entirely accept the experience and wisdom of the judiciary, I wonder whether this is entirely the right role in this context.

[Lord Hope of Craighead]

Does the noble Lord agree that subsection (4), towards the foot of page 7, is not dealing with matters of mathematics? The matter of description of categories and so on is involved. It goes a little further than the noble Lord was contemplating in his brief remarks.

[Lord Faulks]

I entirely accept that it does, but ultimately the question of what the rate is is determined by experts, taking into account the factors which are, I agree, set out in the Bill. I shall listen with interest to what the Minister says, but it still seems to me that that is perhaps dangerously close to the judges getting involved in an area which might render them subject to criticism.

Northern Ireland: Supreme Court Ruling

Lord Hope of Craighead Excerpts

Thursday 7th June 2018 Lords Chamber

[Lord Duncan of Springbank]

I thank the noble Baroness. Abortion has been a devolved matter in Northern Ireland since long before the Executive. It is clear that the view across the communities in Northern Ireland when last tested in Stormont did not reach the position that she outlined. It is therefore important that we make progress in this matter on the basis of consent—that there is recognition within the communities of exactly what is going on. The idea that we would seek to act precipitately in this matter has wider constitutional implications. We need to spend a little more time considering the judgment, none the less recognising that elements within it need to be taken on board. I do not believe that a referendum is the way forward in this matter, particularly in the absence of the Stormont Executive and Assembly, but progress will need to be made. It is a question of how we do so.

[Lord Hope of Craighead (CB)]

My Lords, as the noble Baroness said, the judgment gives the appearance of being a non-judgment, but that is for a technical reason which is easily cured. There is no shortage of effective persons who could bring proceedings and, if they did, due to the way that judicial precedent works, the result would be perfectly obvious. Will the Government bear in mind very carefully the fact that the judgment is just a hair’s breadth away from a declaration of incompatibility at the instance of an effective person?

[Lord Duncan of Springbank]

The simple answer to the noble and learned Lord is yes.