Criminal Justice and Courts Bill

Lord Hunt of Wirral Excerpts

Wednesday 23rd July 2014 Lords Chamber

Moved by

[Lord Hunt of Wirral]

63FD: Clause 45, page 46, line 17, leave out “fundamentally”

[Lord Hunt of Wirral (Con)]

My Lords, I declare my interest as a practising solicitor and partner in the international law firm DAC Beachcroft and as chairman of the British Insurance Brokers’ Association, and I have other interests recorded in the register.

The “have a go” culture has infected our civil compensation system for far too long. Claimants—and it is always claimants—see that there is no real penalty for trying on either that they have been injured at all or a deliberate exaggeration of the symptoms that they have suffered. The advertising by claims farmers and solicitors has undoubtedly played a part in this. The adverts for personal injury and for financial mis-selling continue to give the impression of free money. The starkest example that I can immediately recall was a full-page advert last November showing simply a bundle of £50 notes done up in Christmas ribbon. We all recall those original adverts saying, “Where there’s blame, there’s a claim, and it won’t cost you a penny”.

That is why I welcome Clause 45 as part of the Government’s initiative to tackle this. I certainly support its introduction. Measures are, of course, already available to tackle the completely fabricated claim, but I fully support the idea that a claimant with a genuine claim who then dishonestly exaggerates it should put their whole case at risk. That, after all, is what would happen if one was unwise enough to put in a consciously exaggerated claim to one’s own insurance company. Why should it be any different if one proceeds with the same intent against another person’s insurance company?

I would like to hear more from the Minister on the choice of the phrase, “fundamentally dishonest”. I recognise that my noble friend has great experience of the English language, and I should declare an interest as having been for six years chairman of the English-Speaking Union, but, with due respect for his grasp of the English language, it seems to me that dishonesty is one of those absolute concepts: either you are dishonest or you are not, in the same way that you cannot refer to something as “very unique” or to someone as “slightly pregnant”. I know that a similar phrase was used in the Civil Procedure Rules following the seminal—perhaps I should now call it the “fundamentally seminal”—review by Lord Justice Jackson of civil legal costs, but I am not aware that it has been tested or scrutinised by the Appeal Courts as yet. I would welcome clarification from the Minister about the thinking behind the choice of this phrase.

I have received, no doubt like other noble Lords, material from those representing claimant personal injury lawyers who have expressed concern that this measure might go too far. I cannot agree with that. If a claim is brought which contains a dishonest element—and dishonest always means that there is proof of a deliberate intent to deceive—then that behaviour should rightly put the whole claim at risk. The effect of this clause is clearly a deterrent one which, as I have already explained, I strongly welcome.

It might be helpful to point out to noble Lords that Clause 45 is not unique—not even slightly unique—because an analogous provision can be found in Ireland, in Section 26 of its Civil Liability and Courts Act 2004. There, any plaintiff, as they are still called in Ireland, who knowingly gives false or misleading evidence will find their claim dismissed in total. The test is simply one of dishonesty rather than fundamental dishonesty. If there is a fear that the power in Clause 45 would be abused by overzealous defendants, the experience of more than 10 years in Ireland proves otherwise: the courts are alert to any attempts to abuse a provision that is expected to apply in only a small number of cases, and of course if the clause truly has a deterrent effect, it should mean fewer cases coming to court in the first place.

Let me finish by illustrating the concern over “fundamentally dishonest” with a stark example that was recently brought to my attention. It was a case tried in Stoke-on-Trent County Court earlier this year. Mr Steven Cotton is a 31 year-old heating engineer who now lives in Swadlincote, Derbyshire. In December 2008, he sustained an injury to his neck and shoulder while at work. It was frankly a modest injury and he was able to go back to work the following month, in January 2009, before a disciplinary matter at work intervened. At that point, he decided to bring a claim against his employers and to include in that claim an allegation of a lower-back injury. Matters progressed and, just a few months before trial, he put in a claim schedule for in excess of £1 million, despite his solicitors, Woolliscrofts in Stoke, being aware of video surveillance evidence showing Mr Cotton as being much less disabled than he was making out. I understand that the insurers facing this claim, AXA Insurance, were not impressed. They rightly defended the case to trial and the judge agreed that Mr Cotton had invented the lower-back injury as a deliberate exaggeration of his genuine neck and shoulder injury. The judge awarded Mr Cotton just over £18,000 for the genuine injury, which was less than 2% of the amount that he had falsely claimed, plus some of his solicitor’s costs. One might think that this degree of exaggeration would be enough to knock out the entire claim but, sadly, it was not so. On the one hand, Mr Cotton’s case is a classic example of why the clause is badly needed. On the other hand, it raises a question in my mind as to whether the addition of a second injury to an already genuine injury would be seen by the courts as fundamentally dishonest. The court in Stoke stopped short of declaring that Mr Cotton’s lower back injury was not a genuine medical condition, despite the surveillance evidence. I have a real fear that Mr Cotton might still be awarded damages after the new clause comes in when all right-thinking people would agree that someone whose claim had already been knocked out to the extent of 98% not being allowed should not receive a penny.

I turn to the second amendment in my name: Amendment 63FE. To me, the meaning of subsection (5) of Clause 45 is unclear. Subsections (2) and (4), for example, impose obligations on the court to follow a particular line of conduct by use of the word “must”. In contrast, subsection (5) is different in tone and appears to offer more leeway. I hate once again to split linguistic hairs with the Minister, but I would like some clarification on whether subsection (5) is really intended to be a discretionary “may”. I reassure noble Lords that there is some substance behind the point I seek to make. Subsection (5) appears to limit the legal costs consequences of a claim being dismissed in its entirety under the clause by restricting the costs award that could be made to the defendant to a sum net of the damages that would have been awarded to the claimant if he had pursued an honest claim. I wonder whether there is even a risk that subsection (5) simply undoes the good work of the rest of the clause. The dishonest claimant who is found out ends up paying his opponent’s cost but is able to offset the money he has forfeited by his dishonesty. To return to the example of Mr Cotton, he would still, in effect, get credit for the £18,000 awarded for his genuine injury. Does that not encourage the likes of Mr Cotton to have a go at the expense of insurers, which is where I was when I started? I beg to move.

[Lord Marks of Henley-on-Thames]

My Lords, I rise to speak to Amendments 63FDA to 63FFA. I do so with some diffidence because, in part, I disagree with my noble friend Lord Hunt. After the humorous and intelligent way in which he introduced his amendment, and given that I agree with a great deal of the sentiment he expresses, I am concerned about the extent to which I disagree with him.

I agree with my noble friend that there has been a culture of “going for it”. There has been an outbreak of “compensation-itis” that we no doubt acquired, in part, from the United States and which has bitten particularly deep into the culture of people who have had motoring accidents. I greatly agree that something needs to be done. The question is whether the clause does what needs to be done in the way it needs to be done.

As my noble friend explained, Clause 45 deals with claims for damages in personal injury cases where the claimant is guilty of fundamental dishonesty in the prosecution of his claim. Clause 45(2) provides that,

“The court must dismiss the primary claim”—

that is, the claim for damages—

“unless it is satisfied that the claimant would suffer substantial injustice if the claim were dismissed”.

The question I seek to pose is how far subsection (2) would leave judges free to do justice.

In my view, the subsection works against the interests of justice, or certainly risks doing so, in two ways. The first is by imposing a presumption in favour of dismissal, subject to a modest saving provision that, frankly, is difficult to understand. I am not sure I agree with my noble friend Lord Hunt that the word “fundamentally” adds nothing, but I certainly am of the view that the saving subsection,

“unless it is satisfied that the claimant would suffer substantial injustice if the claim were dismissed”,

is very difficult to understand. On one view of justice, and the view of justice which appears to be intended by the proponents of the clause, if there is dishonesty, it is not unjust for the whole claim to go. If that is the meaning, how does the saving provision come in at all? If, on the other hand, it means that the interests of justice seem broadly to require the claimant still to get some of his damages, does that amount to a duty to dismiss or is it merely a power to dismiss, which is what my amendments are directed to?

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Subject to the possible improvement of the drafting in relation to subsection (5), we believe that this clause adopts a fair, measured and proportionate approach to a difficult problem. We believe that it will send a strong message to deter dishonest behaviour and give a greater incentive to defendants and insurers to investigate and challenge dubious claims. One of the problems is that defendants are often not incentivised to investigate claims properly and pay them out far too easily. I therefore hope that the noble Lords will be prepared not to press their amendments, and I beg to move that Clause 45 stand part of the Bill.

[Lord Hunt of Wirral]

My Lords, I thank my noble friend the Minister, in particular for his generous tribute to the way in which I introduced the amendment. However, I am gravely disappointed by the reaction of the noble Lord, Lord Beecham, whom I have always felt to be my noble friend, in seeking to categorise me in some way. Perhaps I should have declared an interest as a solicitor for many years for the Transport and General Workers’ Union, acting in many claims. Perhaps I should have declared an interest as acting for the child most seriously damaged by the thalidomide drug, in a lengthy court action against Distillers. Perhaps it is all my fault that he should have categorised me in the way that he did—but I regret it.

As to my noble friend Lord Marks, I think that we are more or less in agreement, and I thank him for what he said. All I would say is that I do not think that we should have just a discretionary power because, as my noble friend the Minister just said, we all surely want to combine to send a strong message from this House that dishonesty must never pay. That is the purpose behind this.

I say to the noble Lord, Lord Beecham, whom I still regard as my noble friend, that he ought to have a word with Mr Jack Straw, who has been fighting hard on behalf of genuine claimants and seeking to eradicate this tendency to exaggerate claims and to make us the whiplash capital of Europe.

I think that the Government are taking a step in the right direction. I am very grateful to the Minister for agreeing to look at certain aspects again. In the light of that, I beg leave to withdraw the amendment.

[Lord Beecham]

My Lords, I have clearly upset the noble Lord. It certainly was not my intention to do so. We have a very long association, going back to the time when we were involved in the inner city partnership in Newcastle. We have always got on very well. I intended no imputation whatever upon the noble Lord. I do think that the insurance industry, as an industry, has been overpersuasive with the present Administration, in particular with the Conservative Party.

However, that is no reflection on the noble Lord. I made it clear that he has behaved with complete propriety, as he always has. I am sorry if I have upset him; I can say no more than that. I apologise if that has been the effect—it was certainly not intended. I look forward to engaging in civilised conflict with him from time to time over this and other measures in the spirit that we have enjoyed hitherto. I certainly would not like him to leave the Chamber tonight feeling that I have cast any slur or imputation upon him. He is widely recognised as extremely able and a man who has devoted a great part of his life to public service. I would not wish in any way to detract from his record or his sincerity.

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Tabled by

[Lord Hunt of Wirral]

64A: After Clause 45, line 24, after “party” insert “, or
(e) whether the benefit is offered by the regulated person or by a third party”

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[Lord Hunt of Wirral]

In view of my noble friend’s comments, I do not wish to speak to this amendment but will return to the matter on Report.

Amendment 64A (to Amendment 64) not moved.