Legal Aid, Sentencing and Punishment of Offenders Bill
Lord Thomas of Gresford Excerpts(13 years, 3 months ago)
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Lord Thomas of Gresford
My Lords, conditional fee agreements—no-win no-fee arrangements—were first permitted by the legislation introduced by the noble and learned Lord, Lord Mackay, in 1990. In the beginning they were limited to personal injury cases, insolvency cases and cases before the European Court of Human Rights. They were a radical breach with the principle that a lawyer ought not to have a financial interest in the outcome of a case, and drew at the time much opposition from Law Lords and the Law Commission. Your Lordships are familiar with the way this system now works. If the case is lost, the lawyer receives no fees and therefore he needs to win or to settle to earn a living. To recompense him for the risk of losing, he is paid a success fee when he wins, a percentage uplift of his standard fees, which in theory recompenses him for those completely unrelated cases he has taken on and lost. He recovers the standard fees, which are payable by the losing defendants, but the initial concept was that the winning claimant should pay the success fee—the uplift—out of his damages. When the scheme was initially introduced, the uplift was limited to 20 per cent of standard fees. That was increased in 1995 to 100 per cent uplift to cover the most unlikely case—that was how it was introduced—where the risk of losing was 50:50.
Under the normal costs-shifting rules, the losing claimant was open to pay the tax costs of the defendants. He was not protected, as he would have been under a legal aid certificate, from the costs that the defendants had incurred in defending the case. Under legal aid an order was very often made that a losing plaintiff—as he then was—should pay the costs of the defendant. However, it was almost never enforced, so effectively he was not at risk of paying the defendant’s costs; but if he was, he could not pay. In answer to a query from Lord Hailsham, who was concerned that defendant insurers were left out of pocket even when they won, the noble and learned Lord, Lord Mackay, said:
“I understand that the Law Society is in the final stages of organising a form of insurance policy to protect clients against a costs order under a conditional fee agreement … If that is implemented it will be a complete answer to the anxiety to which my noble and learned friend has just referred”.—[Official Report, 18/7/94; col. 5.]
So “after the event” insurance was born to protect the losing claimant against the defendant’s costs.
There are further matters to which I may refer later such as caps on damages, but in 1999 the noble and learned Lord, Lord Irvine of Lairg, as Lord Chancellor, extended conditional fee agreements to all civil proceedings except family law. However, the most radical change he introduced was that the success fee and the “after the event” insurance premium should then be paid by the losing defendant. In a debate on 23 July 1998 he resisted Lord Ackner’s amendment that success fees should be capped. I said on that day:
“There has been no research as to whether solicitors overestimate the risk in order to justify an excessive uplift of the fees. There may be a doubling of fees now that 100 per cent. uplift is permitted. But the solicitor who is charging the fees, who determines that uplift, has to justify that uplift, assessing the risk himself. Is he doing it properly?”.—[Official Report, 23/7/98; col. 1112.]
Even then, in 1998 when I was speaking, the evidence suggested that the cherry picking of risk-free cases was occurring. I was a teller for Lord Ackner on that amendment, which was, unfortunately, lost. I hope that your Lordships will forgive me for quoting my own speech but it indicates that I was involved at an early stage in the discussions that were taking place in 1999.
Lord Wallace of Tankerness
My Lords, this may not be quite what the noble Lord was thinking about, but in some cases, as my noble friend Lord Faulks indicated, if there is a question of a claim following a bereavement, we have indicated that we intend that there should be an uplift in these cases.
On the question of why we are not introducing QOCS for judicial review claims—this may be the circumstance to which the noble Lord was referring—the responses to the consultation indicated that conditional fee agreements were less commonly used outside the area of personal injury and were not frequently used in judicial review proceedings.
Lord Thomas of Gresford
I hope my noble and learned friend will forgive me for mentioning that I have tabled an amendment dealing with precisely that point. It is for debate at a later time and proposes that QOCS should apply in cases where, for example, there is a death in custody—and to other matters referred to by the noble Lord, Lord Ramsbotham.
Lord Wallace of Tankerness
I am grateful to my noble friend. Debate on his amendment might allow a better exploration of the important point raised by the noble Lord, Lord Ramsbotham.
Lord Howarth of Newport
My Lords, as another co-signatory to the letter to which the noble Lord, Lord Alton, referred, I endorse the argument so ably put forward today by the noble Lord and the noble Lord, Lord Avebury. I do not need to add anything to what they have said. The speech of the noble Lord, Lord Alton, today follows the magisterial speech that he gave in Committee. These arguments are irrefutable. To trammel the access to justice of mesothelioma sufferers would be a terrible thing to do. I am sure the Minister, as a kind and good man, will agree with that.
Lord Thomas of Gresford
My Lords, I add my tribute to the noble Lord, Lord Avebury, for his 50-years’ celebration of Orpington. It was life-changing for me because I joined the Liberal Party a fortnight afterwards. Therefore, in a fortnight’s time it will be my 50th anniversary as a member of the party and, shortly after that, my 50th anniversary of failing to win a seat. That is how it goes.
The amendment seeks to retain the status quo in relation to one industrial disease—mesothelioma. Your Lordships will appreciate from what I said in Committee that these cases are terrible. I feel that completely. I told your Lordships about a lady who lives very close to me in Gresford. She came to this House and spoke, and no doubt a number of your Lordships will remember her vividly. Her husband died as a result of being exposed to asbestos in Brymbo steel works, which is perhaps three miles from where I live. But if you give mesothelioma a special, unique status, what about the people in my village who were in Gresford colliery—that has a certain resonance, as your Lordships may recall the disaster in 1934—or in Llay Main colliery, about two miles away, which was the deepest pit in the United Kingdom? I refer to those who suffer from pneumoconiosis, another industrial disease. How can I say, “I’m supporting that lady but I’m not supporting your claims to have the same treatment for pneumoconiosis”?
Lord Bach
I must be under a misapprehension. I thought that this group was about the amendments that the noble Lord, Lord Alton, had so succinctly moved and about my own amendments to which I also hope to speak, perhaps even more succinctly in due course. I am listening carefully to the noble Lord, as I always do, but it seems that his amendments are part of the group that begins with his Amendment 132B. I am surprised that the noble Lord has not waited to speak to his group as it appears on the Marshalled List. Perhaps he can explain to the House why he is doing this.
Lord Thomas of Gresford
I am very happy to do that. I will speak to it further in due course. Frankly, I am anxious not to make the 31-minute speech that I made when we last discussed this particular issue and to relieve your Lordships of that burden. I am splitting what I intend to say, which I think is necessary to cover the whole field, so that it becomes a little more understandable. I take the noble Lord’s rebuke in good part, but let me repeat that asking for the status quo in mesothelioma cases only is not the way to go forward.
Lord Alton of Liverpool
My Lords, I would draw the noble Lord’s attention to the actual words in the amendment and indeed in the amendment of the noble Lord, Lord Bach, which is in this group. We have corresponded about this and he has been good enough to share with me prior to the debate some of the points that he has made eloquently this afternoon. I am grateful for that. However, this amendment goes slightly wider than he is suggesting in his remarks today and would cover, for instance, pneumoconiosis as well.
Lord Thomas of Gresford
My Lords, this group of amendments sets out the refinements to the architecture of the Bill that I have previously suggested. Noble Lords heard from me at some length before and I do not propose to repeat everything I said. I would just remind your Lordships that the model I am suggesting is that lawyers’ success fees should not be paid if the case settles or liability is admitted before proceedings are commenced. The reason for that is that there is no risk to the lawyers that they will not be paid. Noble Lords will recall that I quoted from my own speech back in 1998 when I indicated then that the question of risk was important, but had never been properly assessed. That is the first limb of my argument, and it is set out in Amendment 132C.
I went on to draw attention to the significance of the point of allocation within proceedings where a case is sent to the fast track of small claims or becomes one of the multi-track cases. In the multi-track cases, I suggested that the success fee should be paid, but split 50:50 between the successful claimant and the losing defendant. While in this area, I suggested that the claimant would have an interest in the amount of the success fee and that there would be the possibility of competition. Those points are set out in Amendments 132E, 133B and 133E.
That is the point I reached when the noble Lord, Lord Bach, suggested that I had gone on for too long, and no doubt I had. It is interesting because we are supposed to have these discussions about legislation on Report. The last time I spoke on this issue, the noble Lord, Lord Newton, said that he was in a fog and someone leant across to ask, “What on earth is he talking about?”. That suggests that legislation on these detailed points should not be on the face of the Bill but should be dealt with in secondary legislation following negotiations between interested parties. This system builds in a form of solidity that it is very difficult to remove.
Lord Thomas of Gresford
My Lords, I am not so much disappointed as hurt by my noble and learned friend’s reply. I am hurt that he thinks that my amendments would increase the cost. The whole purpose of tabling these amendments was to come forward with a system that squeezes the excess costs of litigation out of the system. This is one area where he is wrong to make that suggestion.
The other matter that concerns me is that the Minister should suggest that I am in some way completely wrecking the architecture of the Bill. I am not; I am trying to make it better for one reason. The one factor that was missing from his response was whether litigation solicitors and barristers will take on difficult and risky cases under the regime that is now proposed. It is not about the Jackson proposals in toto, although various things are left out. This is the issue. Only time will tell. Will solicitors take these cases on when the success fee has been squeezed down in the way that is proposed?
I was suggesting that for one level—for settlements and so on—there should not be a success fee because there is no risk. That brings down the cost of litigation as a whole. However, where there are risky cases lawyers need a proper reward. That factor was not mentioned in my noble and learned friend’s response. I hope to talk to him more about this matter before we finally dispose of the Bill but, for the moment, I beg leave to withdraw the amendment.
“( ) In section 58A of that Act, after subsection (6), insert—
“(7) A costs order may include provision requiring the payment of any fees payable under a conditional fee agreement which provides for a success fee in the following proceedings—
(a) proceedings in England and Wales by a company which is being wound up in England and Wales or Scotland;(b) proceedings by a company which has entered administration under Part II of the Insolvency Act 1986;(c) proceedings in England and Wales by a person acting in the capacity of—(i) liquidator of a company which is being wound up in England and Wales or Scotland; or(ii) trustee of a bankrupt’s estate; (d) proceedings by a person acting in the capacity of an administrator appointed pursuant to the provisions of Part II of the Insolvency Act 1986.(8) In subsections (7)(a) and (7)(c) “company” means a company within the meaning of section 1 of the Companies Act 2006 or a company which may be wound up under Part V of the Insolvency Act 1986.”.”
Lord Thomas of Gresford
My Lords, I return to a subject which we addressed in Committee: proceedings brought by a liquidator of a company, the trustee of a bankrupt’s estate or an administrator appointed pursuant to the provisions of Part II of the Insolvency Act 1986 to recover the assets of a business or company which has gone into liquidation or has become financially insolvent.
The point is that insolvency practitioners who engage in that important work have to bring proceedings to recover the assets of the company, or money representing the assets of a company, from a company director or partner in the firm. They can be very expensive proceedings, because a lot of investigation has to be undertaken. Often, the director or partner who is in default has disappeared—or hopped it overseas—so it is not easy to bring those proceedings. The liquidators, and so on, cannot bring the proceedings themselves. They employ solicitors to do that and to carry out those investigations. From time to time, they are forced to go to court to try to get a court order against an individual. In so doing, a conditional fee agreement is entered into, and a success fee is part of that conditional fee agreement.
As all of us will know, one of the major creditors is Her Majesty’s Revenue and Customs. Consequently, it seems a little silly to employ insolvency practitioners to recover all this money and then to have a reduction, contrary to the interests of the Revenue and Customs, from whatever has been recovered in order to pay the success fee. It seems to me that the success fee, when these proceedings are successful, should be paid by the person who is in default—the person who has hopped it. That is the current situation.
I mentioned earlier today that back in 1990 when the noble and learned Lord, Lord Mackay, introduced conditional fee agreements for the first time, there were three categories: personal injuries, insolvency proceedings and applications to the European Court of Human Rights. So from the very beginning, from the inception of this type of agreement, insolvency practitioners have had this protection for the proceedings that they have to bring. From the point of view of making sure that the defaulter pays and in the interests of the Revenue and Customs and perfectly decent creditors which may be a large firm or a small firm, it seems only sensible that the amendment should succeed. I beg to move.
Lord Thomas of Gresford
Can my noble friend tell us when these proposals will be finalised and whether it will be during the currency of this Bill?
Lord McNally
I am trying to work out the vaguest reply that I can give to that. Discussions are going on and, as I said, we will make an announcement as soon as possible.
Lord Thomas of Gresford
I am very much enlightened by my noble friend’s formulation. The noble Lord, Lord Bach, made a very good point. It is the taxpayer’s money that we are talking about here, and not just the taxpayer but the worthy creditor, the small businessman or even the large businessman who has given credit to a firm that has gone into liquidation, sometimes through fraud and sometimes through incompetence. However, the taxpayer and the businessman are going to suffer because of this provision, unless my noble friend is saying that these proceedings are never going to be brought because there is some other way of doing it. The vagueness has left us all a little in the air. However, for the moment and subject to further discussions between now and Third Reading, I beg leave to withdraw the amendment.
“Third party litigation funding
(1) A third party litigation funding agreement which satisfies all of the conditions applicable to it by virtue of this section shall not be unenforceable by reason only of it being a third party litigation funding agreement; but any other third party litigation funding agreement shall be unenforceable.
(2) A third party litigation funding agreement is an agreement under which a third party (“the funder”) agrees to fund (in whole or in part) the provision of advocacy or litigation services to another person (“the litigant”) by a person other than the funder in exchange for remuneration.
(3) For the purposes of subsection (2), “remuneration” includes—
(a) a payment or any other transfer of value representing or calculated by reference to the value of a judgment or settlement; and(b) an assignment of the proceeds (in whole or in part) of any judgment or settlement.(4) The following conditions are applicable to a third party litigation funding agreement—
(a) it must be in writing;(b) it must not relate to—(i) proceedings which by virtue of section 58A(1) and (2) of the Courts and Legal Services Act 1990 cannot be the subject of an enforceable conditional fee agreement;(ii) a multi-party action, representative action or any proceedings which are the subject of a group litigation order; or(iii) any other proceedings of a description prescribed by the Lord Chancellor;(c) it must comply with such requirements as shall be prescribed by the Lord Chancellor.(5) Regulations under subsection (4)(c) may—
(a) require any person which enters into a third party funding agreement with a litigant to first obtain a license from a licensing body to be designated by the Lord Chancellor; and(b) set out conditions to be satisfied in order to obtain such a license.(6) In this section “advocacy services” and “litigation services” are as defined in section 119 of the Courts and Legal Services Act 1990.”
Lord Thomas of Gresford
My Lords, the amendment raises the issue of third party litigation funding. I made a lengthy contribution in Committee which I do not propose to repeat. The basis of the amendment is to bring under government control third party litigation funding. Your Lordships may recall that a voluntary code has been entered into by those who are concerned in third party litigation funding and I suggested in Committee, and I repeat, that it is far better that the Lord Chancellor should take a look at this and bring in something along the lines of what I have suggested in my amendment. I beg to move.
Lord McNally
My Lords, I have said before that we are grateful to my noble friend for raising this issue. It is a possible problem and a number of noble and learned Lords and lawyers outside have given warning signals. At the moment we are looking at how voluntary regulation is working in the area. However, my right honourable friend the Lord Chancellor is very aware of the situation and is keeping it under review. We do not think that statutory regulation through this Bill is either the right place or the right time but we welcome the fact that my noble friend has put this issue on the political radar. Both lawyers and legislators will have to follow the matter closely to see whether we will need to return to it at some future date. In the mean time, I ask my noble friend to withdraw the amendment.
Lord Thomas of Gresford
On this occasion I am grateful to my noble friend for his reply. My purpose was to highlight the insidious advance of third party litigation funding. It is essentially an American concept that has advanced into this country. So far it has reached commercial litigation, with which I have no quarrel. It has also got into family law and I shall be extremely concerned if it were to get into personal injury cases. The fact that the Lord Chancellor now has it on his agenda and will monitor the way in which the voluntary code operates is of great comfort to me and it is on that basis that I beg leave to withdraw the amendment.
“Third party offers to settle
It shall be an offence for a third party insurance company to solicit a claimant who has a cause of action for personal injuries against its policy holder, to make an offer to settle that cause of action unless—(a) it has obtained adequate medical evidence of the personal injury and has disclosed it to the claimant; and(b) the claimant is advised when the offer is made of his right to obtain legal advice; and(c) the offer is in full and final settlement of the cause of action.”
Lord Thomas of Gresford
This amendment concerns the third party insurance company, which approaches a prospective claimant and offers to settle without there being adequate medical evidence, without the claimant being informed that he has a right to legal advice and without the offer being in full and final settlement of the cause of action. In Committee, I hesitated to suggest that it should be a criminal offence, and suggested that the best way of dealing with the matter should be that such settlements would be void, which would enable a claimant who subsequently discovered that he was in a far worse condition than he had thought to reopen the matter and to claim damages for the injuries that he received. That is a practice that has crept in. It means that people accept settlements without proper advice or evidence of what is wrong with them and without a proper calculation of their losses. It seems to me that a lot of people are vulnerable to that type of approach. That is one side of the problem. The other side is that it encourages people with no basis for a claim at all to make one and accept a sum of money that means that, over a large range of cases, the insurance company benefits. That is just as bad as that people should be incited to put forward fraudulent claims.
My noble friend’s answer in Committee was that the FSA rules are sufficient to cover the matters of which I complain. That immediately makes me ask who enforces the FSA rules. What control is there over the employee of a third-party insurance company who, quite clandestinely, makes offers of this sort to settle cases that are perfectly valid and which he knows to be valid? So at this stage I put forward the suggestion that it should be a criminal offence for people to engage in this type of behaviour. That may be going a step further. Perhaps my original concept that the alleged settlement obtained should be void was the right way to go. But certainly there is an abuse going on and I expect the Government to do more than to refer to FSA rules when there is no one to enforce them. I beg to move.
Lord Bach
The Minister would be well advised to give serious consideration to the amendment proposed by the noble Lord, Lord Thomas of Gresford. This is not one that he moved in Committee—he has moved it for the first time today. The House knows that he has become an expert in this field of litigation over the months that he has spoken to me about it. He may well be right that it is no good the Government taking a position that looks like it may take some time to develop. It is something that needs to be done and thought about pretty promptly. Therefore, as far as we can, we support the amendment.
Lord McNally
My Lords, I think it was the noble Lord, Lord Martin, who talked about the proper role of the House of Lords. Although the hour is late, my noble friend Lord Thomas has demonstrated one of the benefits of this House in bringing to the Government’s attention an area where there already is or could be a malpractice that will have to be dealt with. As he explained, this is a practice where an insurer approaches a claimant directly, usually immediately after a road traffic accident, with a view to settling the claim, where an insurer’s own policyholder is at fault in a car accident. As I understand it, claimant representatives refer to this practice as third party capture, whereas defendant representatives call it third party assistance. As I indicated in Committee, I shall continue to refer to this practice as third party contact.
Amendment 142D would make it an offence for an insurer to make such an unsolicited approach to a potential claimant in a personal injury case. The amendment also specifies those requirements which must be met before an insurer may make an offer to settle such a claim. This includes a requirement to obtain adequate medical evidence of injury and to advise the claimant of their right to obtain full legal advice before accepting the offer and making it clear to the claimant that the offer to settle is full and final.
It is unclear what my noble friend means when he says that this practice should be an offence. If he refers to this as being a criminal offence, I do not believe that a criminal sanction is appropriate or proportionate. You would have to prove beyond reasonable doubt that something amounted to an unsolicited approach. As I explained in Committee, the Financial Services Authority regulates the insurance industry and requires insurers to treat their customers fairly at all times and that this covers third party claimants.
Third-party contact does not in itself cause detriment to the consumer and may be to their advantage, as a claim can often be resolved quickly. In addition, this practice can allow insurers to reduce the legal costs associated with handling a claim and this in turn reduces costs for all policyholders. However, I am aware of the concerns around the potential risk of conflict of interest and the need for the claimant to have independent legal advice before any settlement is agreed. This matter was looked at by the FSA in its review of third-party contact during 2009-10 and it did not find conclusive evidence that unrepresented third parties could have achieved higher compensation had they obtained independent legal representation.
Following the FSA’s review, the Association of British Insurers published a code of practice in June 2010. The code contains specific guidance for insurers on contacting claimants. This limits unsolicited contact. For example, and I quote:
“Insurers will not make unsolicited visits to an unrepresented claimant at their current address, including hospitals”.
The code also requires that claimants are informed of their right to seek independent legal advice and other options available for them to resolve their claim.
Most of the issues which this amendment seeks to address in respect of the handling of third-party contact claims are already covered by existing regulation. The FSA rules require that insurers fully inform third party claimants of their legal rights, including to independent legal advice and alternatives to settling directly with the insurer. The Government do not believe it is right or appropriate to introduce further sanctions or regulation in this area, especially when a scheme already exists to monitor insurers’ activities. That said, I can reassure my noble friend that if a serious concern arises in the future in this area—and we will keep it under review—we will not hesitate to take this up with the Treasury and with the FSA.
I am therefore grateful to my noble friend for raising this issue with us, but for the reasons that I have mentioned I hope that he will agree to withdraw the amendment.
Lord Thomas of Gresford
My Lords, I am grateful to my noble friend. I am glad that some publicity has been give to this practice which I believe to be fairly widespread and causing a great deal of concern. As long as the Government keep their eye on this area, I shall be satisfied. I beg leave to withdraw the amendment.
Legal Aid, Sentencing and Punishment of Offenders Bill
Lord Thomas of Gresford Excerpts(13 years, 3 months ago)
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“(c) that it is in the interest of justice generally”
Lord Thomas of Gresford
My Lords, we have finally clawed our way out of Schedule 1 and back into the body of the Bill to meet immediately a difficulty—what is meant by an exceptional case determination under Clause 9. The problem that lawyers see immediately on seeing the word “exceptional” is that when it is normally used in proceedings it means that out of a cohort of cases one stands out because of some exceptional peculiarity. However, that cannot be the meaning of what we see in Clause 9, because an exceptional case determination is defined in subsection (3), which says:
“For the purposes of subsection (2), an exceptional case determination is a determination”,
and then describes what type of determination it is: first,
“that it is necessary to make the services available … because failure to do so would be a breach of … the individual’s Convention rights … or … enforceable EU rights, or”,
secondly,
“that it is appropriate to do so, in the particular circumstances of the case, having regard to any risk that failure to do so would be such a breach”.
That is it; that is what exceptional case determination is.
My mind immediately goes to the sort of issues that we discussed earlier in relation to appeals, from the First-tier Tribunal to the Upper Tribunal and beyond, where a litigant in person is seeking to cope with a government legal team that appears on the other side to argue what must necessarily be issues of law, otherwise it would not be up in that area. That immediately rings the bell of equality of arms in a very serious way, and I cannot imagine that any of these cases would not fall within the definition of an exceptional case determination as set out in Clause 9(3), which I have already read out. In one sense it is a very narrow definition, but in another it introduces all the rights that are available under the European convention. Yet there must be other cases where the European convention is not engaged.
The purpose of my amendment, and I note amendments in the name of other noble Lords, is to widen the ambit of an exceptional case determination to the point where the director of legal aid services considers,
“that it is in the interest of justice generally”.
I appreciate that is a very wide definition, but unless the director of legal aid services has a wide discretion, how can he cope with the multifarious applications that will be made to him on the basis of their being exceptional cases? I am not going to spell out any, because these things come out of the woodwork. All of a sudden a case will obviously require, in the interests of justice, to be supported by legal aid because of the wider interest that is involved or because of the public points that have been made, and so on. One can envisage all sorts of circumstances. Although the words here seem modest, they are asking for a wide discretion, and that is the purpose of my amendment. I beg to move.
Lord Avebury
My Lords, when we were discussing the first amendment this afternoon it was said that some immigration cases are determined on straightforward questions of fact. However, what we did after that Division, unfortunately, was to lump them all together so that the routine immigration matters that were referred to in the Minister’s letter, which was quoted by the noble Lord, Lord Pannick, are being integrated with issues of extreme legal complexity which, as we have heard, go all the way up to the Supreme Court. We heard the noble and learned Lord, Lord Woolf, say that a sizeable proportion of the Supreme Court’s diet was immigration cases. It will be interesting to hear from my noble and learned friend how the person who starts off as a litigant in person and gets part way up the ladder towards the Supreme Court would be able to gain representation when it became appreciated that the case was one of extreme legal complexity; or is this litigant supposed to go all the way up to the Supreme Court dealing with the case himself?
The intention of the amendment is to provide scope for exceptional funding to be made available in these complex immigration cases. In such cases, the individual will be without legal representation by reason of the restriction on non-legal professional provision of immigration advice and services, the individual being unable to afford legal representation and the general exclusion of immigration from the scope of legal aid. The Bill removes most non-asylum immigration matters from the scope of legal aid. One of the main arguments used by the Government is that legal advice is not needed in a whole variety of cases, of which immigration cases are one example, and that instead those currently receiving advice and representation under legal aid will be able to look to general advice agencies, particularly the non-for-profit sector, for assistance, as we have heard. This rationale fails to address the provisions dealing with immigration advice and services in Part 5 of the Immigration and Asylum Act 1999, which say that only a person who is registered under the regulatory scheme run by the office of the Immigration Services Commissioner can provide those services. That scheme includes some not-for-profit organisations but very few of them are permitted to undertake work in key areas of immigration law. None is permitted to do judicial review work. Only those at the higher levels of the scheme, levels 2 and 3, are permitted to work on family reunions, appeals—representation at which is restricted to the highest level, level 3—removals and deportations, applications outside the rules, and illegal entrants and overstayers.
Level 1 advisers, who constitute the vast majority of the not-for-profit organisations, are excluded altogether from these key areas for which legal aid is currently provided but will not be provided in future, save where an asylum claim is being pursued. Therefore, the suggestion that general advisers can fill the gap left by the withdrawal of legal aid simply does not work in immigration cases because of the regulatory scheme. Yet the scheme is an important safeguard against the exploitation of migrants by unqualified persons who offer themselves as immigration advisers, of which there used to be hundreds. The scheme was introduced with support across the political parties in response to serious concerns about such exploitation.
I shall give a couple of examples of the sort of immigration cases that I envisage being far too complex for the individual to cope with. First, there is the case of a British overseas citizen of Malaysian origin, about whose plight my right honourable friend Simon Hughes and I had an interview, along with representatives of the Malaysian BOC community, with the Minister, Damian Green, a couple of weeks ago. It would not be necessary to trouble the Minister with cases that did not warrant representation by legal professionals.
My second example is of a Kuwaiti Bidoon who has indefinite leave to remain in this country but whose wife and children, having left Kuwait clandestinely, found themselves in Damascus, where there was no provision for them to establish their identity as relatives of the head of the family in England. They have been stranded there for months, separated from him, because of the difficulty in getting permission to come here. Do they not need legal aid? Is it really the case that a family reunion of this sort can be dealt with by non-professionals, or even with the assistance of Members of Parliament? As I said, we expect Members of Parliament to be deluged with requests for advice and help in such cases.
Lord Wallace of Tankerness
The noble Baroness acknowledged that I referred to some of the issues about unaccompanied children, but I will certainly draw her remarks and the point that she made about the Refugee Council to the attention of my honourable friend the Parliamentary Under-Secretary of State.
Lord Thomas of Gresford
My Lords, one of the comforting sayings at the Bar, which I have found over 50 years to be absolutely true, is that when one door shuts another opens. It seems to me that, if he has heard of that saying north of the border, the noble and learned Lord will be aware that he has set out in his reply the basis of innumerable applications for judicial review of the decisions made by the director of legal aid services. It is impossible for there not to be a challenge to the statement made by the noble and learned Lord because almost anything can be brought within the ECHR rules, generally speaking, if you really try. We have heard reference to Articles 2, 6, 7, 8 and 14 tonight, which gives us five articles to play with.
I can assure the noble and learned Lord that the legal profession will look forward to testing his description and the ambit of the clause for a considerable period—case after case. It would be so much simpler if a broad discretion were given to the director of legal aid services, coupled with guidance that we could look at, in order that there would be some ambit to it. If the formulation of the noble and learned Lord, Lord Mackay, which was found to be so seductive last time, were adopted with guidance, that could prevent an awful lot of future litigation. With that very pleasant prospect in mind, I beg leave to withdraw my amendment.
“( ) For the purposes of subsection (1), “financial resources” shall include all the realisable property of the individual subject to a restraint order under section 41 of the Proceeds of Crime Act 2002 (restraint orders).
( ) The Proceeds of Crime Act 2002 is amended as follows.
( ) In section 41, omit subsections (4) and (5) and substitute—
“(4)(a) A restraint order may be made subject to an exception for the provision of reasonable legal expenses in criminal proceedings in the Crown Court, whether or not they relate to an offence mentioned in Section 40(2) or (3), subject to conditions—(i) an application for the release of such expenses shall be made by the alleged offender to the Court where the offence for which they are required is to be tried,(ii) notice shall be given of the application to the prosecutor or the Director, (iii) the application shall be supported by a costs budget verified by the solicitor to the alleged offender,(iv) the budget shall be calculated on the basis of current legal aid rates,(b) The Court shall not make an order prejudicial to a co-defendant.(5) The Court shall supervise the course of an order made under subsection (4) above and may from time to time review the order on the application by the prosecutor or the Director, or by or on behalf of the alleged offender.””
Lord Thomas of Gresford
My Lords, Amendment 105A is in substitution for Amendment 105, which was drafted in identical terms to the amendment that I moved in Committee. As your Lordships will recall, my concern is that a person who has had his assets frozen should have those assets counted as financial resources when his application for legal aid is considered. At this time of night I do not think that a large exposition of that concept is needed, but I point to the differences between this amendment and the amendment moved in Committee. It was suggested by the Minister that you cannot easily unfreeze the assets of a person who is a criminal. I decided that I would do my best to show how simply it could be done by including in the Bill the conditions that could be applied. Amendment 105A states:
“A restraint order may be made subject to an exception for the provision of reasonable legal expenses in criminal proceedings in the Crown Court”—
I am not referring to the magistrates’ court—whether or not they relate to the offence for which the person has been arrested, subject to certain conditions. Those conditions are an application to be made to the court,
“where the offence for which they are required is to be tried”.
Further,
“notice shall be given of the application to the prosecutor or the Director”—
of Public Prosecutions—
“the application shall be supported by a costs budget verified by the solicitor to the alleged offender”.
Further,
“the budget shall be calculated on the basis of current legal aid rates”.
We are not suggesting that frozen assets should be released so that a locked-up defendant’s lawyer can drive around in a Rolls-Royce. He should receive remuneration as if it was a legal aid case but it would not come out of public funds—it would come out of the restrained assets. If such an order were made, it is very important that it should not be prejudicial to a co-defendant. One would not wish to see a defendant gaining an advantage by employing the leading Silk in the field of fraud in which he may have been engaged whereas his co-defendant was not able to do so.
Finally, the amendment states:
“The court shall supervise the course of an order … and may from time to time review the order on the application by the prosecutor or the Director, or by or on behalf of the alleged offender”.
It seems to me that this is a straightforward, simple code that could be introduced to permit the frozen assets of an alleged offender to be unfrozen for the purposes of his defence. I hope that the Government will accept this or something like it. I beg to move.
Lord Thomas of Gresford
My Lords, I am very grateful to my noble friend for saying that, and I am pleased that there are investigations. That is nothing to do with me but perhaps more to do with a person who was named in the Evening Standard the week before last as having received £5 million in legal aid. When one considers the sort of concessions that we and certainly the Opposition have been looking for for civil legal aid, providing £5 million to one person in a criminal case, when he is living in his wife’s seven-bedroom Mayfair mansion, surely stimulates the Ministry of Justice far more than anything that I might say. I look forward to the work that the noble Lord referred to and, for the moment, I beg leave to withdraw the amendment.
Lord Thomas of Gresford
My Lords, I move the amendment in a probing manner. I am concerned about a statement made by the noble Lord, Lord McNally, in Committee that involves setting up a supplementary legal aid scheme with a proposed deduction of 25 per cent from the damages of people who are supported by legal aid.
So much time has been spent in the course of the Bill in fighting to get areas of litigation back into scope that it is ironic that if those efforts were to succeed and damages awarded in any particular case, they would be immediately subject to a 25 per cent deduction for the purposes of setting up a fund from which other people would receive legal aid. It is a tax on their damages.
The noble Lord, Lord McNally, said in Committee that that was in order to make it no more attractive to have legal aid than to have damages subject to a success fee payable by a successful claimant limited to 25 per cent of his damages to date of trial. There is a difference. The whole purpose of changing the success fee, the burden of payment in conditional fee agreements, from the defendant to the claimant, and for it to be a charge on his damages, was so that there would be competition between solicitors for the business of the claimant at the outset. A solicitor might say, “There will be no success fee payable with me”, or, “My success fee will be limited to 12.5 per cent of the damages, not 25 per cent”. That is a better position than that of a legally aided person, who will have a whole 25 per cent taken out of his damages in any event. When is the supplementary legal aid scheme likely to come into being? I know that there was similar provision in the Access to Justice Act 1999, but under the previous Government it was never brought into effect.
The other matter that concerns me is that the provision could be brought in by secondary legislation under the negative procedure. That would mean that it would be subject to no or very little debate in Parliament and imposed on us. My second concern is to ensure that if such a scheme is to be introduced in future, it should properly be brought under the affirmative procedure so that we have a chance to debate and consider it before it comes before the House for approval.
Those are the reasons why I have tabled the amendment, and I await enlightenment. I beg to move.
Lord Beecham
My Lords, this is another case of déjà vu. In Committee, I congratulated the noble Lord, Lord Thomas, on his amendment. He was absolutely right then; he is absolutely right tonight. I hope that, having heard the noble Lord again, the Minister will acknowledge that he has made a very powerful case on both limbs—the principle and the procedure to which his amendments are addressed. I hope that the Minister can give a satisfactory reply that will not lead to those deductions being made, still less by the defective procedure, which, as the noble Lord has amply demonstrated, would be quite inappropriate.
Lord McNally
Very good. On the specific issue at hand, we hope to bring in the scheme with the rest of the Bill in 2013 and it will be subject to the affirmative order, so my noble friend will have other opportunities to discuss this matter. As he has now acknowledged, the Explanatory Notes to the Bill make it clear that we intend to use the power in subsection (3) to establish a supplementary legal aid scheme. The scheme will apply to damages cases where the successful party has been legally aided.
As we also said in our response to the consultation on legal aid reform, under the regulations that we will make, 25 per cent of certain damages successfully claimed by legally aided parties will be recovered by the Legal Aid Fund. The relevant damages are all those other than damages for future care and loss. I had better stop there and say that I have just had a message that the procedure will be negative, not affirmative.
Lord Thomas of Gresford
It is negative in the Bill. My amendment would make it affirmative.
Lord McNally
The noble Lord did say that we were allowed to change our mind.
The power at subsection (3) is not new. Section 10(2)(c) of the Access to Justice Act 1999 explicitly allows for regulations to provide that a legally aided person can make a payment exceeding the cost of the services received. When we consulted on the legal aid reforms, we specifically consulted on introducing such a supplementary legal aid scheme.
As well as creating an additional source of funding for civil legal aid, the supplementary legal aid scheme will address the interrelationship between legal aid and the proposed reforms to the costs of civil litigation put forward by Lord Justice Jackson, which are reflected in Part 2 of the Bill. We want to ensure that as far possible the recovery level of damages by the supplementary legal aid scheme complements the Jackson reforms so that conditional fee agreements are no less attractive than legal aid. The recovery level of 25 per cent of all damages, other than those for future care and loss, is therefore based on the success fee cap for a conditional fee agreement in a personal injury case.
Under the Jackson proposals, there will also be an increase of 10 per cent in non-pecuniary general damages, such as damages for pain and suffering and loss of amenity in tort cases. This will help claimants to pay their conditional fee agreement success fee or a 25 per cent portion of the relevant damages, if legally aided.
There has been a suggestion that it is unfair for successful claimants to be asked to help to underwrite the cost of the legal aid scheme in the way proposed. We do not see it as unfair. A claimant who wishes to proceed in a civil action with the aid of public funding is asking the taxpayer to take a risk on his or her behalf. Where that risk bears fruit in the form of what may be a very substantial sum of money, it is perfectly reasonable for a share of that to go back into the public pot so that the continued taking of such risks can more easily be sustained.
In sum, the power to make a supplementary legal aid scheme has now been sought by successive Governments. It has previously been approved by Parliament. Financial constraints are now such that we believe that it would be wrong not to exercise it in the way that we have clearly proposed and consulted on. Omitting to do so would also be out of step with the wider reforms to civil litigation that we are making. In light of my explanation, I hope that the noble Lord will agree to withdraw the amendment.
I now turn to Amendment 130, which would make any regulations made under Clause 22 subject to the affirmative resolution procedure, necessitating a debate and approval of a resolution by both Houses before the regulations could be made. We believe that this amendment is specifically related to Clause 22(3), although it goes much wider. As I have explained, we intend to use the power in Clause 22(3) to make regulations to establish a supplementary legal aid scheme. We believe that this amendment is aimed at ensuring that the details of the supplementary legal aid scheme are subject to the affirmative resolution procedure. An equivalent regulation-making power is contained at Section 10(2)(c) of the Access to Justice Act 1999. That power is subject to the negative resolution procedure. Our starting point is therefore, why should that change?
I am aware that there has been some suggestion that the Government have not been sufficiently clear about their intentions with regard to the use to which they intend to put the power in Clause 22(3). Nothing could be further from the truth. The proposal to introduce a supplementary legal aid scheme was clearly stated in the,
“Summary of the legal aid reform programme”,
contained in Reform of Legal Aid in England and Wales: The Government Response. That paper also contained a five-page annex explaining the proposal in the light of the response to the preceding consultation.
Paragraph 168 of the Explanatory Notes to the Bill also made our intended use of the Clause 22(3) power perfectly clear. Both Houses have now had an opportunity to debate the clause in the light of explanations that we have given. Clause 22(3) was specifically debated both in Committee in the other place and in Committee in your Lordships’ House. We believe that all that, combined with the negative resolution procedure in respect of the regulations, allows adequate public and parliamentary scrutiny in relation to the supplementary legal aid scheme.
The Delegated Powers Committee of the House considered the delegated powers of this Bill and did not comment on the application of the negative resolution procedure in relation to Clause 22(3). The Government’s memorandum to the committee explicitly highlighted our intended use of Clause 22(3). This amendment is therefore unnecessary.
I should also point out that the amendment goes much wider than just Clause 22(3) and would require the affirmative resolution procedure for any regulations under Clause 22. That would be undesirable and disproportionate. The powers under Clause 22 are those that will be used to set out the detailed rules regarding payment of contributions and case costs in respect of both criminal and civil legal aid. The negative resolution procedure is clearly the most appropriate for the type of highly detailed and technical provisions envisaged here, which will require variation from time to time. In those circumstances, I invite my noble friend to withdraw his amendment. I regret the confusion in my note reading halfway through that explanation.
Lord Thomas of Gresford
I think it was Champerty rather than maintenance where a third party takes a chunk of the damages that a litigant obtains in court. It is curious how far we have come to defeat these very ancient principles of English law. You can see the Magna Carta barons around the Chamber looking down on us; you can see them trembling as they listen to my noble friend putting forward this proposition. It is true that it was in the Access to Justice Act, but I do not believe that it was ever brought into force. It is also true that it was mentioned in the consultation document, which I read. In a document of some 150 pages, it covered one-third of a page; one paragraph related to it. It certainly was not highlighted either in the House of Commons or in this House that there should be such a deduction from the damages that are obtained by a legally aided person. I regret that.
A supplementary legal aid scheme could have been an alternative to support for conditional fee agreements—an argument that was made a long time ago—and it is true that a supplementary legal aid scheme has been adopted successfully in Hong Kong for people who do not qualify for legal aid. However, to have it in addition to the other provisions of the Bill is regrettable. For the moment—well, for all time—I beg leave to withdraw the amendment.
Legal Aid, Sentencing and Punishment of Offenders Bill
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Lord Thomas of Gresford
My Lords, I am sure that the noble and learned Lord, Lord Lloyd, and the noble Lord, Lord Newton, will appreciate the importance of the concessions which the Liberal Democrats have negotiated—namely, that there should be a power in the Lord Chancellor to put areas of law back into scope because they may very well be right. It may be that these alterations will be more expensive than the Government think at this time. I very much welcome Amendment 68 which keeps birth injuries within the scope of legal aid. The reason for being concerned about cases claiming damages for personal injury arising out of medical negligence is that they currently receive legal aid as an exception to the previous Government’s removal of legal aid in personal injury cases.
Of course, four out of five claims fail or are withdrawn. Unlike a car accident or a factory accident, it is very difficult to appreciate negligence where negligence happens without the highly specialised and expensive investigation to which my noble friend Lord Faulks has referred. Although I have some experience of medical negligence cases, I defer to his very great experience and expertise. He raises the question, which I think is on everyone's mind: if you make an exception for birth injuries, what about the rest? It does not mean that claimants will be denied access to justice. If at the moment 80 per cent of clinical negligence cases are handled by conditional fee agreements, a greater proportion of these cases will simply be added to that route for funding.
In the course of the reforms that are set out in this Bill, it is essential that one-way cost shifting occurs in relation to cases that are brought under conditional fee agreements. That means that, win or lose, the defendant insurers will pay their own costs. The reason for the huge rise in insurance premiums, to which the noble and learned Lord, Lord Lloyd, referred, is the huge increase in the costs of the defendants. If four out of five claims fail, a claimant is very much without insurance; after-the-event insurance is very much at risk of being ruined by bringing an action. If, as the Government propose, one-way cost shifting is applied in this area, the unsuccessful claimant will have to carry only the costs of the disbursements. In medical negligence cases, as has been pointed out, such costs can be very high. It was for that reason that, in the Commons, the Government, recognising the problem, amended the Bill so that the cost of the premium of ensuring the disbursements, the costs of the medical expert reports, will be passed over to an unsuccessful defendant and will be absorbed, in the usual way, by the insurance company if the claim does not succeed. The insurance premium, instead of being at the dramatic size that it is at the moment, will be very much reduced and the risks under conditional fee agreements of unsuccessful claimants paying a great deal of money will be very much reduced.
The whole area of medical negligence needs to be looked at. Although we have been talking about high-cost cases, in fact the majority of these cases attract damages of less than £20,000. They are for negligent treatment for minor injuries perhaps. We are not always talking about catastrophic injuries in relation to medical negligence. Therefore, I have been arguing for an NHS redress scheme, such as that which was introduced in Wales within the past two years. The Government have said that they regard that scheme, which deals with cases up to a value of £20,000, as a pilot and, depending on how the scheme goes, will consider introducing it into England.
But the power already exists. The previous Government passed the NHS Redress Act in 2006 and Wales grasped the opportunity, as did Scotland. They grasped the opportunity of introducing a scheme with fixed fees for lawyers and fixed fees for expert reports to satisfy the problem that exists with low-value medical negligence cases. If we could progress that a little further in England, it would do a great deal to relieve the concerns that have been expressed here today.
I hope that my noble and learned friend Lord Wallace will be able to make some favourable noises in relation to an NHS redress scheme. The Opposition could not object: they brought in the Act in 2006, though they never thought that the people of England deserved it being implemented. On the other hand, the people of Wales took a different view. All reports so far on how its scheme is going suggest that it works well, reduces legal fees and provides solutions for people who have been injured. I hope that the Minister will tell us that something along those lines will be considered in this very difficult area.
Baroness Hamwee
My Lords, perhaps I may ask a short supplementary question following the queries made by my noble friend Lord Carlile about Clause 9. I was intending to raise it on a later amendment but will do so now if my noble friend is going to deal with it.
The natural meaning of “exceptional cases” suggests to me something very unusual about either the claim or the claimant. I am troubled that claimants might fall foul by virtue of being part of a cohort. Can the Minister help me with what is meant by “enforceable EU rights”, which, along with convention rights, bring one within the exceptional determination provision?
Lord Thomas of Gresford
Although the organisation questions, it is hardly saying something that is contrary to what I have said. I have said that if everything went wrong and worst-case scenarios arose, the amendment accepted by the Government, which would permit bringing these matters back into scope, would be extremely important.
Lord Beecham
It would be extremely important if the Government acted on it. We do not know that they will. While the noble Lord claims credit for the amendment, he was not quite so enthusiastic when it was being debated in Committee at the instigation of this side, but that is a little beside the point. The litigation authority states clearly:
“Overall, we are strongly in favour of retaining legal aid for clinical negligence cases using current eligibility criteria”.
In that phraseology, it echoes the words of Lord Justice Jackson.
Welcome as the government amendment is, they anticipated some discussion about it because they also questioned whether the scheme would cover only cases of the most severe brain damage or whether it would extend also to claims for moderate brain damage and shoulder dystocia, or to children whose mental faculties are spared but who have serious physical disabilities. We know that we are dealing only with a limited number of perinatal cases, as movingly explained by the noble Baroness, Lady Eaton. Again, it would seem that, on balance, the litigation authority, although it welcomes no doubt the progress made so far, would not be content with leaving the situation as it stands.
Of course, the case of Sophie Tyler was very moving. It is interesting that her solicitor said:
“This is an important case which has allowed our client to access justice and secure the lifetime of future care she needs but it would not have been possible without the support of legal aid”.
That is a very important observation. However, there are many other kinds of claim which arise out of different types of clinical negligence and with different effects. While the number of adverse incidents has now risen to 1.15 million, there are some 2,500 clinical negligence claims in what is a called a “serious category”. Of those, 12.5 per cent result in death; 17 per cent lead to unnecessary operations or amputations; 8 per cent lead to damages to nerves or senses; and 2.9 per cent lead to cancer. So 50 per cent of six major categories overall are not of the kind that would be covered by the government amendment.
In these circumstances, it is quite clear that a substantial number of people will not be able to access legal aid. Despite the assertions of the noble Lord, Lord Thomas, it must be questioned whether the conditional fee system would be an answer to that and, in particular, whether that would not in itself increase the costs to the National Health Service.
Lord Thomas of Gresford
Perhaps I may point out to the noble Lord, and my noble friend the Minister will confirm this, that I raised the issue of increasing the powers of the Lord Chancellor before Second Reading. If he would like to consult the record, he will see that my amendment, to bring areas back into scope, was tabled on the very first day that amendments could be put down. The amendments put down by the Labour Party were many days after that.
Lord Beecham
My Lords, some nerve damage is being sustained by the noble Lord. Let us, however, concentrate on the issue, which is rather more important than claiming credit for amendments; namely, the future of patients who undergo clinical negligence and who have claims. We have heard much talk about equality of arms in litigation. I fear that what the Sophies of this world may face is more akin to a farewell to arms. That is the danger we face if legal aid is not extended.
There is a hierarchy of amendments before us tonight. Of course I endorse the Government’s amendment, as far as it goes. Equally, we support the amendment of the noble and learned Lord, Lord Lloyd. However, for us the best amendment—because it effectively embraces both the others—is that tabled by the noble Baroness, Lady Grey-Thompson. We wish her well should she decide to test the opinion of the House at an appropriate moment.
Legal Aid, Sentencing and Punishment of Offenders Bill
Lord Thomas of Gresford Excerpts(13 years, 3 months ago)
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Baroness Butler-Sloss
My Lords, I am sorry that yet another lawyer is speaking, but I want to make a very brief point. In 1215, King John was persuaded to put his name to the Magna Carta, which had a very clear definition of access to justice. We have now, in 2012, nearly reached another centenary of Magna Carta. It would be helpful if current legislation made the definition equally clear. The provision, as it stands in Clause 1, lacks the clarity of the amendment in the name of the noble Lord, Lord Pannick. I cannot understand why, in these straitened times, the Government think that this measure will cost them any more money. It would act as a beacon and a pointer to what should be done in less straitened times when money is available to make this provision. I support the amendment.
Lord Thomas of Gresford
My Lords, I am surprised to hear the noble and learned Baroness, Lady Butler-Sloss, suggest that the Bill should abolish Magna Carta.
Lord Thomas of Gresford
Perhaps that is putting it a little too high. However, ever since Magna Carta, access to justice has been a fundamental constitutional principle, and the Bill has nothing to do with changing that principle. My objection to the amendment is simply that it is completely otiose and unnecessary to have statements of principle that have been with us since 1215 restated in this way. The noble Lord, Lord Pannick, said that he does not intend to trump Part 1 and asked whether a statement of legislative purpose was necessary. The noble Baroness, Lady Mallalieu, said that she was against vague statements of principle at the beginning of a Bill, but seemed to suggest that this Bill was a different case. The Bill is not about abolishing access to justice but about rebalancing it in certain ways.
I have been involved in the legal profession for nearly 50 years and in my experience the greatest change to legal aid occurred when the previous Government abolished it for personal injury cases, and against the principles of maintenance and champerty, about which I have bored your Lordships many times, decided to introduce conditional fee agreements with associated insurance. The Bill follows that line by emphasising the ability of litigants to take what is now a well used way—I accept that—of obtaining access to justice. Nothing in the Bill stops people bringing actions. Legal aid may not be available but the Bill makes it clear that there are other ways of approaching the court.
The success fees introduced in 1999, which have no relation whatever to the risk solicitors run in taking on no-win no-fee cases, have increased, along with the dreadful increase in the size of ATE premiums. When the noble and learned Lord, Lord Irvine of Lairg, who I am pleased to see in his place, introduced the concept in 1999, he was talking about ATE insurance premiums of £100 or £300—I have seen that in Hansard—as opposed to today’s £50,000, £80,000 or £100,000 premiums. The cost of litigation in this country has escalated to a disgraceful level. The Bill increases access to justice by squeezing out of the system unnecessary costs and expense, which have gone to lawyers and insurance companies. We will debate in detail the respective provisions and where we can do better. However, it must be recognised that even at this stage the Government have made significant and substantial concessions to improve various aspects of the Bill. I am sure that they will continue to do so in responding to some of the amendments for which we on these Benches will argue. Therefore, I regard this amendment as a statement not of principle but of unnecessary verbosity that should not enter the statute.
Lord Bach
My Lords, there is very little left for me to say from the opposition Front Bench, except that we are, as we were in Committee, completely in favour of the amendment of the noble Lord, Lord Pannick. It adds considerably to the Bill and is a very important statement of principle that should be there.
I have to say that I was surprised by the speech of the noble Lord, Lord Thomas of Gresford. There was a change in his attitude between Committee and this stage. I remember very well—
Lord Thomas of Gresford
No, that is not the case. As the noble Lord will recall, I opposed this amendment in Committee in very much the same terms.
Lord Bach
Not quite in the same terms. As I understood it, the noble Lord and some others in Committee opposed it on the basis that it did not go far enough, not that it was unnecessary. I recall very well the noble Lord saying:
“I entirely agree. I think that the Government are making a mistake in welfare law and that cutting legal advice and assistance for people at the bottom end of society will cause more problems than it solves; it will not achieve the savings that the Government think it will”.—[Official Report, 20/12/11; col. 1708.]
I should be interested to see whether the noble Lord repeats those comments when we come to a later stage. All that I can say is that it is my feeling—
Lord Thomas of Gresford
The comments were not said in the context of Amendment 1, and we will deal with the other matters when we come to them.
Lord Bach
Indeed—I fully concede that; but I have to say that I do not concede the point that I am about to make, which is that if the noble Lord were in opposition and a Bill such as this was brought in by a Government whose party was not his party, he would oppose the Bill with all the great force and passion that he could and support the amendment 100 per cent.
Some noble Lords in Committee thought that the amendment did not go far enough and did not follow the words of the Constitution Committee. This is a very modest amendment that could have gone further. We think that it catches the right note, does not try to go further than it should and is very much in the context of Part 1. If it is the position of some noble Lords that the amendment does not go far enough, that is surely an argument in the context of this debate to vote for the amendment, because its position is closer to their position than if they were against it. If the view is that the Bill should reflect the Constitution Committee’s opinion and nothing else, this is certainly the amendment to vote for.
There is nothing wrong at all with this statement of principle occurring at the start of a major Bill that if passed in its present form will transform the legal aid system, particularly as it affects the very poorest, who rely on civil justice in order to get their rights. It is therefore important that we set off in the right way. The right reverend Prelate the Bishop of Exeter—if I may say so, with respect—caught the mood absolutely correctly when he talked about the function of the law, which is to look at worst-case scenarios. He is absolutely right; the Bill does not do that. It takes a very rosy view of what will happen when, for example, there is no legal aid for social welfare law. What will happen then? I know that we will debate that in the days ahead, but it is a matter that we should consider in relation to the amendment.
I have gone on for longer than I had intended. We support the amendment completely and we very much hope that the House will, too.
Baroness Butler-Sloss
My name is on this amendment so perhaps the noble Lord, Lord Thomas of Gresford, will permit me to speak after the noble and learned Baroness. I will speak briefly to underline the points because she made them so well that it is not necessary for me to speak at any length.
I know very well that the Government recognise the seriousness of the impact of domestic violence, which as we all know is a serious scourge in family life. It is worth remembering that it is not only a serious scourge for the victims, because so many of these women and men—and there certainly are some men—have children. It is the children who probably suffer most, not only short term but long term, in their ability to cope with life. Consequently, if the women—it is mainly women—are unable to get to court with the appropriate help, they are not the only ones who suffer, because their children suffer also. I find it difficult to understand why the Minister cannot accept the ACPO definition. There is not much wrong with the Government’s definition but it is not quite as broad as the ACPO one. I have never understood the police to be unduly generous or overenthusiastic in their approach to these issues.
I underline what the noble and learned Baroness said on Amendment 43. If Amendment 43 is not accepted, either by the Minister or this House, a large number of victims will fall through the net. I find it hard to understand why that would be in circumstances where a doctor identifies domestic abuse or a judge or magistrate have found it by, for instance, the perpetrator admitting it and giving an undertaking that he will not do it again, so there is not a court order. I have professional experience of endless cases of domestic violence where it was much easier to get the man—usually the man—to promise not to do it again and to leave the house rather than having a battle over the individual events which he was not prepared to accept. It was absolutely understood in the court that he had done it, yet that will not now be acceptable for receiving legal aid.
There is also no shortage of credible witnesses suggested under new sub-paragraph (k), proposed in Amendment 43,
“from a counsellor, midwife, school or witness”.
That credible, documentary evidence from a responsible person would be acceptable to a court but will not initiate that particular victim getting the help that he or she deserves. I ask the Minister to look again at this absolutely effective group of circumstances in which victims tell their story. It should get to court with the appropriate help.
My last point, briefly, is on the 12 months. Again, as the noble and learned Baroness said, a lot of women take a very long time—some men take even longer—to get to the point of disclosing what happened. Sometimes they get away and do not disclose it until after 12 months. That does not mean that it does not exist or that they are not at risk. To have this arbitrary period of 12 months is, for those who do not get there before then, another real obstruction to the Government’s declared objective to try to stamp out domestic violence. For those reasons, I strongly support the noble and learned Baroness.
Lord Thomas of Gresford
My Lords, Amendment 39 is in the names of my noble friend Lord Macdonald of River Glaven and me. I am very sorry that he is not able to be with us at this particular point because he made a thoughtful and memorable speech in Committee that those who were present will recall. It was based upon his experience. As I recall it, the thrust of his speech was that we need to get up to date on the issues of domestic violence and not deal with them as we did 10 years ago.
I very much welcome Amendment 42 in the name of my noble friend Lord McNally. It has been criticised as being a narrower definition than that in the name of the noble and learned Baroness, Lady Scotland. I do not see it that way. What is omitted is,
“any incident or repeated incidents of threatening behaviour”.
The simpler and more concise words “threatening behaviour” are there instead. Anybody knows that just one incident of threatening behaviour could, for example, land someone in court. The other words that are omitted are,
“and including acts of neglect, maltreatment, exploitation or acts of omission”,
which must surely come within the definition of abuse of an emotional kind.
I turn to our Amendment 39, as opposed to Amendment 43 tabled by the noble and learned Baroness, Lady Scotland. There are certain differences between the two; for example, my noble friend Lord Macdonald and I suggest that domestic violence,
“will be presumed on an application for civil legal services”.
Lord Phillips of Sudbury
I am sure that I am not the only one who wonders about the point eloquently made by the noble and learned Baroness, Lady Butler-Sloss, about informal undertakings given in magistrates’ courts, for example. Can I presume that that is covered in heading (iv) of his Amendment 39?
The Lord Bishop of Exeter
As the noble and learned Baroness, Lady Scotland, indicated, my friend the right reverend Prelate the Bishop of Leicester has his name down to amendments in this group and regrets that he cannot be in his place because of other duties in connection with your Lordships' House. His views have been fully set out, together with those of other leaders of faith communities, in a letter that has been circulated to your Lordships. For that reason, I do not want to repeat everything that has been said there—but for the record, it is worth quoting from the heart of that letter. It says:
“Legal aid is nothing short of essential for many victims of domestic abuse to escape the horrendous circumstances that they face. Without this support they would be unable to secure recourse in relation to fundamental issues such as injunctions, housing or access to children, potentially trapping them in a cycle of mistreatment and fear. It is clear that legal aid frequently allows for the resolution of domestic abuse cases before they escalate, in some cases avoiding serious injuries or even loss of life. We welcome the government’s decision, reflected in the Bill, to protect the provision of legal aid in many cases where domestic abuse is involved. Yet, by deviating from the standard definition of domestic abuse utilised across government departments and police forces, the Bill risks restricting the overall number of cases entitled to support, and consequently causing harm to many individuals and families. Similarly the proposed list of ‘objective evidence of domestic violence’, required in order to qualify for legal aid, appears restrictively narrow”.
At heart, this group of amendments is about the balance of risk. I fully understand that the Government are concerned with the risk of abuse of the legal aid system and the risk that people will make false claims under the guise of domestic violence claims, but there is an opposing risk of harm—indeed, possibly of death—to the victims of domestic violence. Were even one or two people to be harmed or to lose their lives as the result of not being able to access legal aid through there being an inadequate agreed definition and because of a too narrow evidential base, that would be unacceptable. I listened carefully to the noble Lord, Lord Thomas of Gresford. I welcome the amendment that stands in his name, and if push comes to shove I would probably support it, but Amendments 41 and 43 really are to be preferred.
I spoke earlier today about a basic principle in legal drafting being to spot worst-case scenarios well ahead of time. That point comes into play here but there is another important principle in working out the impact and the implications of any fully enacted law: it should defend the weak against the misuse of power by the strong. I am not convinced that, without the kind of definitions and evidential base that these two amendments call for, we would have got that entirely right. I am looking to the Minister to give some very strong comfort in that direction.
Lord Thomas of Gresford
Does the noble and learned Baroness accept that my noble friend Lord Macdonald tabled Amendment 39? Paragraph (b) of that amendment is wider than her definition because it can include matters other than the circumstances that she has set out, which are suitable for immigration matters and can include matters that come to the Lord Chancellor’s notice at a later date that could easily be inserted into these regulations, if appropriate. Does she accept, with that presumption and that wider ambit, that my amendment, which, as the Minister has said, will be the template for these regulations, is a better amendment than her own?
Baroness Scotland of Asthal
I regret that I do not. Let me explain why. The framework included in our amendments is the framework that currently works and is in use by all practitioners. If the Minister wished to add a provision that could add to those criteria, I would be more than happy. As it stands, I hope the noble Lord will accept that our amendment is broader in terms than his and has the degree of specificity that enables victims to have the assurance that that which is currently used as the evidential base can still be used as the evidential base in future.
Lord Thomas of Gresford
It is the specificity of her amendment that I complain about because it puts into the Bill in stone what is required, whereas the amendment tabled by my noble friend Lord Macdonald, given what he said in his speech, which the noble and learned Baroness quoted with approval, is wider in that it leaves open other circumstances to be considered.
Baroness Scotland of Asthal
My Lords, I do not accept that. I accept that it sets in stone the minimum criteria and that additional matters can be added. I am looking at the minimum. I say that because today UKBA uses this definition. It has used it since 2004, and there has been no suggestion in the eight years that it has been applied that it has been improperly used or does not meet the needs of the case. My contention is that if it ain’t broke, why are we seeking to fix it?
Baroness Stowell of Beeston
I think the noble Lord knows what I was about say. We are on Report.
Legal Aid, Sentencing and Punishment of Offenders Bill
Lord Thomas of Gresford Excerpts(13 years, 3 months ago)
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Lord Faulks
We have heard a great deal, and very helpfully, about the role of experts in family proceedings. I defer to those with much greater knowledge than I have about the various inadequacies in the arrangements that exist there. But this amendment is not, in fact, peculiar to family experts but covers the whole range of experts that assist the court.
Although all is not perfect in the litigation system, it is worth recording that considerable steps have been taken by the courts in the approach to expert evidence, particularly the various changes brought about by the noble and learned Lord, Lord Woolf, that have resulted in the timely exchange of reports, experts’ meetings and even the exciting developments known as “hot-tubbing”, which your Lordships may not be familiar with, involving experts in court at the same time and exchanging views in order to provide a synthesis for the judge in an effective way.
So, the courts themselves are providing a great deal of control over the way that expert evidence is given. The judges and the consumers of experts are in a position to judge the quality of the product, which itself provides a certain discipline that is relevant in deciding which experts are retained and how much use they are. Those of us who practise in the courts are familiar with judges expressing the view that there is no need for expert evidence on this or that case, which helps considerably.
Early directions, timely interventions by judges and the proper application of expertise by the lawyers can result in the provision of expert evidence being satisfactory. The only caveat that I would give from my experience with experts’ evidence, which relates essentially to professional negligence, is that in legal aid cases there is a continuing concern, just as there is in the context of family proceedings, that the rates for expert witnesses is so low that the best experts may not be available.
Subject to that, I am slightly concerned that this is rather outside the province of the Lord Chancellor in terms of accessibility and the quality of expert advice. The courts are making progress and will continue to do so. Nevertheless, I defer to what has been said about the family courts by the noble and learned Baroness, Lady Butler-Sloss.
Lord Thomas of Gresford
My Lords, I would like to illustrate the usefulness of experts. This came from a case that I did three or four years ago. There had been family proceedings in relation to a little child of 11 months old who was found dead but with no visible injury. The case for the adoption of other children took about three weeks, with something like three experts on both sides. As a result, the judge held that the father was culpable but was not going to say that he had actually caused the injuries that the child had sustained. Shaken baby syndrome was alleged, but I discovered that there was a huge divide between experts on that issue.
I advised the instruction of a biomechanical expert and the Legal Services Commission found one from Detroit, who had gained his expertise in car accidents. He was able to manufacture a doll that was of the same size and weight as the 11 month-old child. He demonstrated that, as the child was at the age of feeling around the furniture and pulling himself up on to his legs, not even yet climbing on the sofa, if the child fell over, his back hit the ground and his head followed, that would generate sufficient force to cause precisely the injuries that he had sustained. There had been no history of any previous child abuse; there were no marks, the skull was intact and nothing was broken. As a result of that evidence, the prosecution dropped the murder case that it had brought against the father following the judge’s previous decisions.
That indicates how an expert can make all the difference in a case like that, but expensively. It is to the credit of the Legal Services Commission that it was prepared to fund a report like that which ultimately led to a proper conclusion to the case, but one has to think of all the experts who had been involved in the argument about shaken baby syndrome before the judge. It is vital that experts are properly instructed and funded when they are required but I am sure that there are times when far too many experts are employed, and I accept what the noble Earl, Lord Listowel, has said previously on that point.
Lord Thomas of Gresford
If the noble Lord does not move his amendment perhaps I may move my Amendment 10 in the same group.
Lord Bach
I was not sure whether the Government were minded to adjourn the House now, it being 10 o’clock. Clause 8 has always taken a considerable amount of attention from those inside and outside the legal profession. People are very struck by the fact that it was very much a one-way ticket; namely, that the Lord Chancellor would have the power to take extra matters out from legal aid by regulation but not have the power to put them back in. Many people felt that that was very unsatisfactory.
The solution was to do it the other way around; namely, that he could put things into legal aid but could not take them out by regulation. But we see the virtues of the amendments, which are not quite the same in wording but come to the same thing, in the names of the noble Lord, Lord Thomas, and my noble friend Lord Hart. Although I will move my amendment, I would be more than happy to accept either of their amendments. I very much hope that the Government will be happy to accept one of their amendments. I beg to move.
Lord Thomas of Gresford
My noble friend will know that I have been urging this course upon him since the Bill was first drafted and I am delighted with the undertaking he has given.
Lord Bach
It is only a question for me to decide whether to put my amendment to a vote, but I do not intend to do so. I can see one or two faces opposite looking anxious—or perhaps they look confident. It is only graceful from this side to thank the Minister for arranging this concession by the Government. It is much appreciated and we look forward to seeing the draft amendment when it comes forward. In the mean time, I seek the leave of the House to withdraw my amendment.
Legal Aid, Sentencing and Punishment of Offenders Bill
Lord Thomas of Gresford Excerpts(13 years, 4 months ago)
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Lord Thomas of Gresford
I congratulate the Government on the amendments that they are introducing into the Bill, which are the culmination of years of campaigning by my noble friend Lord Dholakia—within, and with the support of, the Liberal Democrats—to modernise the law.
Amendment 185FAA, in my name, was suggested by the Howard League, of which my noble friend Lord Carlile is president—unhappily, he cannot be with us tonight. Its purpose is to recognise that children may change in a shorter time than adults, something that the Minister has already recognised in his remarks today. The amendment affects a significant proportion of children with the opportunity to wipe the slate clean upon reaching 18 years of age. It refers to the question raised in the Green Paper that has been referred to: that the Rehabilitation of Offenders Act 1974 be amended so that children convicted of non-serious offences have a clean slate on reaching their majority. Paragraph 117 of the Green Paper says:
“We would welcome views on how we might do more for young offenders as we are aware that some people are, for example, finding their path to higher education blocked on the basis of juvenile convictions. ‘Wiping the slate clean’ once the offender reaches adulthood is a possible approach for all but the most serious offences”.
There is no reference to this suggestion in the Government’s response to the consultation, and I do not know whether any of the respondees actually dealt with the question that was asked.
Wiping the slate clean would have a big impact on the future employment prospects of young offenders. It is obviously intended to apply only to non-serious offences and the public will not be at risk of any harm. Clearly, the usual suite of public protection arrangements will continue to apply to jobs that involve working with children and vulnerable people. If this provision were adopted, it would be a powerful incentive for young people to rehabilitate as responsible adults in their communities. Such an incentive is important at a time when youth unemployment is at a record high and there is a risk of both crime and detention rates spiralling further.
The amendment has been crafted to ensure that rehabilitation periods are not spent before a young person completes their sentence. That does not mean that those who would otherwise be required to wait a long time before their conviction is spent would suddenly find themselves without any rehabilitation period at all, simply due to having committed an offence close to their 18th birthday. It would exempt those still serving their sentence at 18, including the licence period of that sentence, from the “wipe the slate clean” provision. In other words, if a young person committed a theft aged 17 and is sentenced to three years in detention, he would attract a rehabilitation period of three and a half years, commencing on the completion of his sentence at the age of 20. Therefore, the conviction would not be spent until he reached 23 years of age. However, if he committed a theft at the age of 14 and was sentenced to three years’ detention, instead of waiting until the age of 21 for the conviction to be spent his sentence would expire when he was 17 and his conviction would automatically become spent on his 18th birthday. This provision deals with the possible criticism that a person who commits an offence aged 17 years and 11 months would have his conviction wiped clean on his 18th birthday. That would clearly be unacceptable and is most certainly not the intention of this amendment.
The Government raised the question in the Green Paper but we have not had an answer. I would welcome a response from my noble friend.
Lord Ramsbotham
My Lords, briefly, I support the government amendments that have been tabled and echo the many warm things that have been said about the noble Lord, Lord Dholakia, for his persistence in pursuing this matter.
I merely mention that in 2001 I was invited to inspect the young offender institutions in the Caribbean. In Barbados, I found a system in which, at the age of 18, every child automatically had their convictions looked at and the slate wiped clean of all except those that it was deemed in a schedule should be carried forward. I brought that information back and fed it into the team studying Breaking the Circle at that time. Given all the points that have been made by the noble Lords, Lord Dholakia and Lord Thomas, it seemed particularly important that this should apply to young offenders so that they were not hampered, particularly in their further education, by crimes that they had committed as children.
Legal Aid, Sentencing and Punishment of Offenders Bill
Lord Thomas of Gresford Excerpts(13 years, 4 months ago)
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Lord Blair of Boughton
My Lords, I am probably the only person currently in the House who has actually carried out murder investigations. When you knock on the door and say you are investigating a burglary, nobody takes much interest. When you knock on the door and say you are investigating a murder, the reaction is very different. I am fully in support of the noble Lord, Lord Carlile, because murder is different. It is not just any other crime. In my opinion, it is actually the crime by which the public judge the criminal justice system.
I find myself somewhat surprised to be arguing against the noble and learned Lord, Lord Lloyd, but I think that the combination he used of sentences for murder and indeterminate sentences does not, in this argument, add up, because this is about murder. I am fully in support of almost everything the noble Lord, Lord Carlile, has said. I had expected to speak for longer; I came to the House to speak to this amendment. In fact, the noble Lord, Lord Carlile, has said almost everything that needs to be said—except for this emphasis that I would place before your Lordships’ House that murder is different. I believe that Parliament has a right—indeed, a duty—to set the tariffs from which judges then make their decisions about sentencing.
Lord Thomas of Gresford
My Lords, lest there should seem to be unanimity on these Benches, I support the noble and learned Lord, Lord Lloyd, in his amendment.
When I started out at the Bar, people did not plead guilty to murder at all. It was a throwback to the time when hanging was the only sentence that could be passed and therefore guilty pleas were sometimes simply not accepted and a person was told to plead not guilty so that the case could be properly proved. We have moved very far from that, to the present situation, which I find mechanistic. The gap between the 15-year starting point and the 30-year starting point is far too great, in my view. It is mechanistic in that once you get your starting point, you start to deduct for this and add for that, and at the end of the day, after this complicated arithmetic, you guess at what might possibly be the sentence and advise your client accordingly.
I do not find that a very helpful way of going about things. Today there are provisions for obtaining some guidance from the judge as to the sort of sentence he would pass in certain circumstances, and that is a better way of going. These artificial starting points of 15 years and 30 years have been laid down by people with no experience of how the courts work or how cases are brought to court, and with no personal contact with clients or anything of that sort, and are not the way we should be conducting our sentencing policy. I agree with everything that the noble and learned Lord, Lord Lloyd, has said.
Lord Thomas of Gresford
My Lords, I have Amendment 179ZA in this group. The Minister can surely take pride in the abolition of IPP sentences and in the fact that he and this Government are leading public opinion in this area. The Minister suggested earlier that the Government were not given enough credit for leading public opinion, but here they most certainly are.
There were many weaknesses to the IPP regime. It was imposed in far more cases than was ever expected when the regime was introduced, but a major weakness was that a defendant, a convicted person or a prisoner had to prove a negative: that it was no longer necessary for the protection of the public that he should be confined. That was the great weakness. When he tried to prove that he could safely be released, all he could he do was produce certificates that he had completed courses from programmes that were offered to him in prison, but the second great weakness was that those programmes might not be available or a prisoner would be transferred in the middle of completing a course from one prison to another and would have to start again. That is the basic reason why people have been kept after the expiry of their tariff.
The new provision for extended sentences unhappily retains the necessity for a prisoner to prove that it is no longer necessary for the protection of the public that he be confined, so that great weakness in the existing system is being continued in the system of extended sentences.
I propose in this amendment that the whole system should be tightened up in relation to those who are beyond their tariff date and are serving at the present time. It should be tightened up to the point of becoming, for the first time, a fair system. In subsection (1) of my amendment, there is a duty on the Secretary of State to “immediately refer” the case of a prisoner who has served the entirety of his tariff to the Parole Board. That should not be a discretion; he must do it immediately. Then it is the duty of the Secretary of State—not a discretion—to release the prisoner,
“on license as soon as the Board has directed his release under this section”.
Subsection (3) attacks most directly the weakness that I described to your Lordships:
“The Board must direct P’s release unless the Board is satisfied, on the basis of clear and compelling evidence which post-dates P’s conviction, that there is a strong and immediate probability that P will commit a serious violent or sexual offence on release”.
If the tariff is 10 years, the Parole Board should look not at what happened 10 years earlier but the current situation and what sort of risk the prisoner now threatens the public with. What is the evidence that he will commit a serious, violent or sexual offence if he were released? At the moment, we ask the Parole Board to make that judgement without evidence, relying merely on certificates of programmes completed and so on. A judgment without evidence is otherwise called a guess. A person’s liberty should not be decided by how the Parole Board guesses the future.
Subsection (4) suggests that,
“where the Board has declined to direct release,”
the Secretary of State must—it is his duty to— demonstrate,
“that provision has been made for P to undergo relevant programmes”.
He must also,
“refer P’s case … at 6 monthly intervals until such time as the Board directs P’s release”.
In other words, P will not be left languishing with no programmes presented to him for an indefinite period of time. I happen to know that someone I represented has done all his programmes and got all the certificates but he is still being kept in. On what evidence has that been decided? It is just the way that the Parole Board guesses he will behave if he is released.
Most importantly, subsection (5) contains a limit—or final stop, or buffer—which means that if a person has been in prison for five years after his tariff expired he must be released in the case of specified violent offences, or after,
“8 years post-tariff custody in the case of a specified sexual offence”.
That limit for existing prisoners serving IPP sentences is based on the limit contained in the new provisions for an extended sentence. That limit—or final stop, or buffer—is put into Clauses 115 and 116.
Grouped with this are my Amendments 179BZA and 179BZB, which attempt to amend Clause 116 to introduce, again, the need for,
“clear and compelling evidence … that there is a strong and immediate probability that P will commit a serious violent or sexual offence on release”,
for the Parole Board to refuse to allow him to be released when his tariff has been fulfilled. Similarly, Amendment 179BZD indicates exactly the same provision.
This is an extremely important matter. More than 3,000 prisoners are still held after the expiry of their tariff. We cannot abolish IPP sentences and allow them to remain in prison indefinitely.
Lord Ramsbotham
My Lords, I entirely agree with what the noble Lord, Lord Thomas, said about congratulating the Government on introducing change. I have to admit that, along with many others, I have hated IPPs ever since they were introduced by the Criminal Justice Act 2003.
Of course there are people from whom the public must be protected, some of whom have been awarded sentences of natural life. I freely admit that all is not well with the release of prisoners about whose risk of committing violent or sexual offences prison governors feel uneasy. Yet I knew of the inability of the Prison Service to provide sufficient offending behaviour programmes for those who require them. Also, 60 per cent of lifers serving determinate sentences are already one year over tariff, mainly because of the inability to satisfy what the Parole Board requires before sanctioning release, so I simply could not see that such an ill thought through introduction could result in anything other than the prison population being needlessly increased by a steadily increasing number of those whose release date was deliberately made uncertain.
Cynically, having become used while Chief Inspector of Prisons to Home Office Ministers and officials living in a virtual criminal justice system and being unwilling to accept objective advice based on facts, I feared that no notice of any outsider warnings would be taken—and how right I was. Since then, attempts have been made in this House to alleviate the IPP problem by raising the minimum tariff threshold, but the numbers of those above the original ministerial forecast and those who have exceeded their tariff already have continued to grow.
I was therefore delighted to hear the Secretary of State announce that IPPs were to end and see that confirmed in Clause 113. However, as the noble Lord, Lord Thomas, has stated, the Government have not said that they intend to alter the arrangements for those currently serving IPPs to earn their release, which will mean that such prisoners will continue to clog up the overcrowded prisons for years to come unless something is done. My amendments, and those to which I have added my name, are designed to end this situation as quickly as possible, in line with the Government’s aim of reducing the size of the prison population.
Before I speak to the amendments, I beg the indulgence of the House while I say something about some of the residual effects of indeterminate sentences, because they must not be disregarded when any meaningful consideration of the problem is taken. Prisons are fragile places in that, to work effectively, they depend on relationships of mutual trust, if not affection, between staff and prisoners. Let those break down and you are in trouble, which is precisely why it is so important that numbers of prisoners are kept as low as possible and that our understaffed and overcrowded prisons are looked at very carefully. As chief inspector, I introduced what I called the healthy prison test, in which I asked whether everyone felt and was safe, whether prisoners were treated with respect as fellow human beings, were enabled to improve themselves by access to purposeful activity and were enabled to prepare for release and maintain contact with their families.
IPPs fail every test on every account. The uncertainty that they introduce has encouraged too many of those awarded IPP sentences to take their own lives, and has also brought on much mental distress. It is inhuman to award anyone a sentence of 99 years, which is how indeterminate sentence length is described on the internet, when the prisoner does not know how or when he may qualify for release. It is patently wrong for release to be dependent on courses and programmes that simply are not available. I have lost count of the numbers of letters of complaint that I have had from families who simply do not know when their relative or loved one can qualify for release. In other words, IPPs have been an obscene, inhuman and expensive disaster.
My amendments are in two parts. Amendment 180 links with Amendment 179, tabled by my noble friend Lord Wigley, in that it seeks to establish a proper end game to the issue through a statement from the Secretary of State that individual plans have been made for the release of all those currently serving IPPs. I am not suggesting that all IPP prisoners should be released in three months, but that plans should be made in that period. For them all to qualify for that release, plans must ensure that those qualifications are both available and satisfied. Urgent plans must be made for the release of the 3,750 prisoners who are already over their tariff, which I accept will demand much detailed work, and probably resources.
However, urgent remedial action is required to put right a situation that should have never been allowed to develop, before it costs the taxpayer yet more millions of pounds. In saying this, I am conscious that the Parole Board, under its excellent chairman Sir David Latham, is already under extreme pressure, and that any alteration to current arrangements, such as the introduction of six-monthly reviews, would need to be very carefully considered because, at present, it would be unworkable. I know that Sir David is sympathetic to any proposal intended to produce release as soon as possible after tariff expiry, but it must be realistic. In the best interests of the Parole Board, therefore, and of enabling the Prison Service to better direct the use of its limited resources towards protecting the public by preventing reoffending, there is all the more reason for coherent planning of this release process.
Lord McNally
I am sure that my noble friend’s comments will be noted in the proper places, particularly at reshuffle time.
There will always be debates about whether or not sentences are deterrent. I am not usually in favour of mandatory sentencing and deterrent sentencing, but it is hard to deny that deterrent sentencing could have an effect. It is not just a matter of some barrack-room lawyer; a hardened criminal would know the consequences of reoffending. I share a lot of the concerns about putting declaratory sections into Bills, but sometimes they have their place.
This clause introduces a new mandatory life sentence for an offender who has committed a second very serious sexual or violent offence. Both offences must be so serious as to merit a determinate sentence of 10 years or more. The offence must also be contained in Schedule 15B to the Criminal Justice Act 2003, which is inserted by Schedule 16 to this Bill. Schedule 15B contains the particularly serious offences that were in Schedule 15A to that Act. Previous Schedule 15A convictions make offenders eligible for IPPs and EPPs even if they have not reached the two-year tariff threshold. Schedule 15B also includes further child sex and specific terrorism offences, and the offences of causing or allowing the death of a child or vulnerable adult.
The new mandatory life sentence will affect only those who have committed, on separate occasions, two very serious sexual or violent crimes deserving a custodial sentence of 10 years or more. That is a small number of offenders, but this provision is intended to provide reassurance to the public that very serious repeat offenders of this type can expect to be held indefinitely in prison.
Lord Thomas of Gresford
Perhaps the Box can have the chance to deal with this question. Has any analysis been carried out as to how many people would be liable to a life sentence for committing an offence that is not subject to a life sentence at the moment? It seems that they would be liable to a life sentence if the maximum was only 10 years. Has an analysis been carried out of how many offences in the schedule do not carry a life sentence?
Lord McNally
My Lords, an impact assessment was made and I think they were talking about 20 cases a year.
Lord Thomas of Gresford
That is not quite the point that I am making. It may be that only 20 people would be sentenced to life imprisonment, but would they be sentenced to life imprisonment under this clause, when for the actual offence that they had committed, they could not receive a life sentence? In other words, many serious offences carry life sentences; some do not. I would be grateful for an analysis as to how many would not have a life sentence were it not for this clause.
Lord McNally
As far as I understand it, the second serious offence would carry a life sentence.
Lord Thomas of Gresford
That is not what it says, as I understand it—perhaps the Box can help him.
Lord McNally
That is as I understand it, but I will write to the noble Lord if I am wrong. The other point that has been made—but of course if you try to be reasonable, you are derided—is that the courts are exempted from imposing the mandatory life sentences where they believe it is unjust to do so in all circumstances. It is the policy intention that offenders who have committed two serious offences not carrying life sentences will be liable to the mandatory sentence. However, we cannot at this moment assess the likely numbers that would be affected by that.
As I said before, we have a sense of schizophrenia about this. Perhaps I may finish with a quote from Sadiq Khan:
“Through their “two strikes” policy, the Government absolve themselves totally of any responsibility to identify the serious, violent offenders who are most likely to reoffend. That should be done at the time when the first sentence is handed down for the commission of a heinous crime”.—[Official Report, 1/11/11; col. 796.]
There is not much sense of rehabilitation or reform there. We have to deal with a serious set of reforms and what we get is headline-grabbing attacks on the basis that we are going to let out violent criminals and the rest of it. That is why I hope that some of the unity that was shown earlier about penal reform will resolve itself around support for the Government as we try to manage these proposals through the House.
Lord McNally
My Lords, if Clause 117 is to stand part of the Bill, Amendments 179C to 179F will ensure that the Secretary of State’s power to amend by order the release test that the Parole Board must follow when considering the release of prisoners applies consistently to all categories of determinate sentence prisoner whose release is determined by the board. Currently, the clause applies to the release test for IPP and extended sentence prisoners but there are some other types of determinate sentence which also include a period of parole eligibility and are subject to the same release test. We think the order-making power to change the test should apply equally in those cases. These amendments therefore propose to extend the order-making power to the other categories of determinate sentence to which it does not currently apply. These are: first, the 1991 Act prisoners serving four years or more who are parole eligible between the half and two-thirds points of sentence; and, secondly, the 2003 Act extended sentences imposed before 14 July 2008, when release between the half and end points of the custodial period is at the discretion of the Parole Board. This is simply about ensuring the order-making power in this clause is applied consistently to all determinate sentences when the same release test is used. I beg to move.
Lord Thomas of Gresford
Your Lordships will recall that in connection with an earlier amendment I referred to the existing test—which will continue to apply under this Bill—for the Parole Board to apply in considering whether a person should be released. The existing test is that the board is satisfied that it is no longer necessary for the protection of the public that the prisoner should be confined. Your Lordships will recall the criticisms that I made of that. In his reply, the Minister said that Clause 117 gives power to the Lord Chancellor to change that test. I am a little bit puzzled, and I ask my noble friend to explain why that power to change the test is in there. Furthermore, I am very pleased that it is, because I think that the present test is neither fair nor just. The power to change the test is in subsection (1), where,
“the Parole Board … must direct the prisoner’s release if it is satisfied that conditions specified in the order are met, or … must do so unless it is satisfied that conditions specified in the order are met”.
I know that my noble friend, as he earlier confessed, is a follower of Blackpool football club, but at the weekend he may have had the opportunity of watching the Wales versus Ireland rugby match at Lansdowne Road. An incident there perfectly illustrates the situation. There was a pile-up over the line and the referee, instead of making the decision and awarding the try which Wales had so clearly scored, called in the TMO and said, “Has the try been scored—yes or no?”. Immediately, that illustrious and brilliant commentator Jonathan Davies, a brilliant player in his own day, said, “He’s asking the wrong question. The question he should ask is: ‘Is there any reason why this try should not be awarded?’”. By asking it as, “Has he scored it—yes or no?”, the referee was pushing the decision over to the TMO; but if he were to ask the second question, he would be taking responsibility by saying, “I am going to award the try unless you tell me that there is a reason why I should not”.
Applying the same approach to the release of a prisoner, the Parole Board should not be asking whether the prisoner has complied with this or that test; it should be asking: “Is there any reason why we should not release this prisoner? Is evidence being produced for us to look at in reaching a conclusion on whether this prisoner can be safely returned to the community?”.
That is the reason why I support Clause 117—in the hope that the second alternative, in subsection (1)(b), is adopted, and that the Lord Chancellor will then very quickly see the necessity of changing the Parole Board’s test to one that is far fairer: “Is there any reason why, after serving the period of the tariff that the judge has imposed”—which is supposed to be what the judge would have awarded by way of a sentence had he taken that course—“this person should not be released?”. I commend this clause and suggest that the power should be exercised very quickly.
Lord Ramsbotham
My Lords, I gave notice of my intention to oppose that the clause stand part in order to be consistent with my now failed hope that the Government would accept the earlier amendments on the IPP. As they did not, it is obviously irrelevant now to say that the clause should not stand part. I shall therefore not oppose it. For all the reasons that the noble Lord, Lord Thomas, outlined, the clause contains some very important measures which provide the Secretary of State with tools to bring about many of the things that we hope will happen to the IPP sentence.
Legal Aid, Sentencing and Punishment of Offenders Bill
Lord Thomas of Gresford Excerpts(13 years, 4 months ago)
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Lord Clinton-Davis
I rarely disagree with the noble Baroness, Lady Howe, but I do on this occasion. I do not think that there is any evidence that women prisoners are dealt with more harshly than men. That is a point which should not have been made because it is irrelevant. In my experience as an advocate, quite the reverse is true.
On the amendments, I largely agree with what the noble Lord, Lord Wigley, has said, but they would not add very much to the present practice. The probation service always gives a social history—whatever that may mean—of the offender, and it goes into great depth. It also considers the effect of sentencing on dependants. Both those points, which are relevant for debate, are irrelevant as far as the law is concerned.
We have heard a great deal about stalking today. Stalking is a very serious offence and we ought to consider the report, but this is not the occasion to do so.
It is essential that whatever the probation officer has to say in a case is taken seriously and in my view, it invariably is. However, that goes to show that offenders must be represented if that provision is to take effect. All too often, the offender is not represented; by and large, it is important that the points which are made in the amendments are taken into account. So I urge that, wherever possible, the defendant is represented.
Lord Thomas of Gresford
I have some sympathy with Amendment 175. Listening to the noble Lord, Lord Clinton-Davis, I was taken back into the past. He said that probation reports go into great depth on the effects of sentencing on the offender. The noble Baroness, Lady Howe, spoke about reports looking into the background of offenders. That used to be so, but in a serious case in which I was involved within the past 12 months, when a verdict by the jury of murder was reduced to manslaughter, I was shocked to discover that the probation service simply interviewed my client over a video link while he was in Belmarsh prison. He was given no notice; he was spoken to for about half an hour; and the ensuing report was simply a question of assessing the risk for the purposes of an indeterminate prison sentence.
Lord Thomas of Gresford
It was put before the court, and the request was made for an adjournment for a probation report to follow as it used to, with relatives being interviewed and the court being given some idea of the person’s background and some concept of why he could have committed the offence. However, I am very concerned that at the moment the pressure on the probation service is such that it is forced to take these shorthand approaches of video links with a person you have never met before, carried out by someone much younger who makes no attempt to look into the background. In my view, it is a denial of justice in the individual case.
Baroness Farrington of Ribbleton
My Lords, I seldom disagree with my noble friend Lord Clinton-Davis. However, on this occasion I have heard accounts directly from individuals who have been the victims of stalking. One common thread appears throughout these accounts. Individual instances are taken into account but the severity and length of the offences that currently fall under “harassment” are not always fully taken into account. Even looking at the best case, what happens is that incidents may be looked at as a group or a collection.
Some of the victims of stalking have been victims of the same stalker for years. Like many other noble Lords, I have heard the woman who is conducting the campaign that has been set up on this subject. She is a former senior police officer who has said that repeatedly a joke is made when the woman first complains to the police. We need quite a large change in attitude. The joke that was referred to this morning on the radio was, “Don’t you feel flattered that somebody is attracted to you?”, when the victim went to the police.
On Amendment 176, spoken to in my noble friend’s absence by the noble Lord, Lord Wigley, it is extremely important that we look at the circumstances of the offence. I cite repeated shoplifting as an example. In my experience, there are two different sorts of repeated shoplifting. There are people who go on shoplifting sprees, sometimes in groups, in order to resell goods for profit. There are other people who shoplift to get tins of baked beans for their children’s tea. The fact that it is a repeat offence should not necessarily mean that those children are deprived of their mother if there are other means of tackling the issue. I hope that the Minister will give a positive response to this set of circumstances in which women might be incarcerated and say that it is an example where, even though we may be dealing with different sums of money, funding projects that help give women self-esteem, and do not separate them from their families, is a more cost-effective and socially effective means of tackling many of the circumstances of these women.
Lord McNally
I could not agree more with the noble Baroness. That was very much the thrust of the Corston report and of what the Government are trying to do in carrying through their justice reforms, particularly in the treatment of women offenders.
Lord Thomas of Gresford
I am concerned about the instructions given to probation officers who carry out pre-sentence reports. Will my noble friend look into the matter before Report and find out in what circumstances it is acceptable for a probation officer to fashion a pre-sentence report based simply on a videolink and ticking boxes on a form on the other side? When is that permitted and what particular guidance is given to probation officers in those circumstances?
Lord McNally
One of the reasons why I am always at a disadvantage when dealing with my noble friend is because he usually has some recent case in which he has personally participated that proves the case he is making. I have noted what he said and will check whether that is regular practice. As I said, the Appeal Court has made it very clear that if reports are not asked for or are deficient, that in itself could be grounds for an appeal.
Legal Aid, Sentencing and Punishment of Offenders Bill
Lord Thomas of Gresford Excerpts(13 years, 5 months ago)
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Lord Thomas of Gresford
My Lords, Part 2 of the Bill has its complexities, but all sides are agreed on two principles.
Baroness Anelay of St Johns
My Lords, I am aware that the noble Lord, Lord Thomas of Gresford, is hesitating so that he may have the Minister’s ear.
Lord Thomas of Gresford
All sides are agreed on two principles—access to justice must be maintained and undue cost must be squeezed out of civil litigation. The issue is what the best framework is for achieving these ends. Unlike with Part 1 of the Bill, public money is not directly involved in supporting the litigation that we are referring to in Part 2.
All sides recognise the unforeseen and unintended consequences of the Access to Justice Act 1999, which threw the burden of the success fee and the ATE insurance premium on to losing defendants and removed from the claimant any interest in the amount of the success fees and premiums that they were only theoretically obliged to pay. Save for the recent changes introducing fixed fees in Road Traffic Act litigation, lawyers have been able to charge 100 per cent success fees, whether or not they undertake other, riskier cases. Insurers have fixed levels of premiums with which not even the costs judges on taxation are able or willing to quarrel.
This policy may have helped claimants by allowing them to retain the full amount of the damages awarded to them. However, the removal of the restraint of competition as to the size of success fees and ATE premiums has put an undue burden of fourfold cost on defendant insurers. Ultimately, this is not in the public interest, because insurers take their profit and pass the burden on in increased premiums for motoring, household, employers and public liability insurance. Self-insured large companies and public bodies such as the NHS and public authorities that are funded from the public purse generally carry the burden themselves.
The Bill proposes to shift the burden. The claimant will pay the success fee, which will be limited to 25 per cent of his damages for pain, suffering and loss of amenity and loss of earnings and expense to the date of trial. He will also carry the burden of the ATE premium to an amount that is not limited. The champagne corks will indeed be popping in the City by relieved liability insurers and in NHS trusts, town halls and board rooms all over the country. If these defendants win, all their own costs will be paid by the ATE insurers—assuming, of course, that there is still an ATE market and that the premium is affordable—unless a regime of one-way cost shifting that I talked about on Monday last is introduced at the same time, which will require defendants, win or lose, to pay their own costs.
The Jackson report, which sets out all the consultations that Lord Justice Jackson undertook, demonstrates that insurers and public bodies are up for it and accept that one-way cost-shifting, a system that has operated in legal aid cases since 1949, is a fair price for removing from them their present liability for uncontrolled success fees and uncontrolled “after the event” premiums. If one-way cost-shifting is introduced, at a stroke a claimant will lose the fear of having to pay the defendant’s costs if he loses the case, costs that might ruin him and remove the roof from over his head. At a stroke, the “after the event” insurance premium, which is currently in place largely to cover the defendant’s costs, will be savagely cut back. A claimant will have to cover only the risk that if he loses he will be responsible not for the defendant’s costs but for his own disbursements, court fees, expert and medical fees. Just as it is conceivable that in competing for business a solicitor might advertise that he will not charge a success fee, a solicitor with a large standard practice might well be prepared to absorb disbursements in the cases that he loses. We shall have to see whether that happens.
All this is by way of introduction to my amendments, which deal with a discrete area of litigation—environmental law, involving public law and private claims and the tort of nuisance. Public law cases are judicial review claims brought mainly by individuals concerned by inappropriate development—for instance, whether planning permission has made proper allowance for the effect on local flora and fauna by a particular development or whether a waste dump is in the right place. Private nuisance has enjoyed a real renaissance through the help of independent solicitors since the access to justice scheme came into being. A private nuisance is an interference to land or to rights associated with land caused by the unreasonable conduct of the defender. It is the last resort for local residents who need injunctive relief from a polluter who will not run his enterprise with proper concern for his neighbours, and where the regulator is unable or unwilling to take steps to abate the problem.
I am indebted to Stephen Hockman, Queen's Counsel, a former chairman of the Bar, Stephen Tromans, Queen's Counsel, named as environment/planning Silk of the Year at the Chambers Bar Awards 2011, and Gordon Wignall, a barrister specialising in nuisance cases and editor of the third edition of the Law Society’s Guide to Conditional Fees. I have circulated copies of their joint opinion on the impact of the Aarhus convention on costs and funding rules that are applicable in environmental cases.
The Aarhus convention is concerned with access to justice in environmental matters and was ratified by the United Kingdom in February 2005 at the same time that it was ratified by the European Community. The relevant text is set out in the opinion, but the effect is that the United Kingdom is bound to provide “adequate and effective remedies” in this area,
“including injunctive relief as appropriate, and be fair, equitable, timely and not prohibitively expensive”.
The convention applies both to judicial review claims in the administrative court and to private law actions in nuisance. The Supreme Court, in a recent case, has referred the question as to the test to be applied in order to determine whether proceedings are “prohibitively expensive” to the European Court of Justice. In one case that is quoted in the opinion, for example, a defendant’s costs amounted to well over £3 million. Is that prohibitively expensive?
Since the Minister and others already have a copy of the full opinion, I will simply put the conclusions of the learned counsel on the public record. First, the current costs rules run contrary to the international treaty obligations of the United Kingdom, which the United Kingdom voluntarily accepted. Problems arise largely out of the insistence on the “costs follow the event” rule, which tends to lead to inconsistency with the aims of participating in environmental justice and results in a claimant’s liability to pay prohibitively expensive costs.
Secondly, the compliance committee’s last deliberation in the ClientEarth case required the United Kingdom to review its costs rules and recommended rectification. Thirdly, two detailed reviews relevant to environmental proceedings in England and Wales have subsequently been undertaken and presided over by members of the Court of Appeal. The learned counsel are referring to the Jackson report, which we have been discussing, and to the report of Lord Justice Sullivan on access to environmental justice. These have been endorsed by the senior judiciary, and the primary recommendation was that the use of qualified one-way cost-shifting in environmental cases would have a dramatic inroad into the “costs follow the event” principle.
Fourthly, by withdrawing the recovery of “after the event” premiums, the size of which cannot be met by claimants or their legal representatives, without providing at the same time for one-way cost shifting as a replacement in environmental claims, the Government have elected to retreat from the full proposals of the Jackson report and the Sullivan report, which were conducted by those eminent Lords Justices. Fifthly, the consequence is that the United Kingdom, already in breach of its convention obligations, is diverging from rather converging with its own environmental expectations and those of the international community.
Sixthly, the further consequence is that claimants who wish to protect the environment and participate in environmental justice are even less likely to be able to do so than at present. This is predominantly because of the risk of incurring a liability for defendant’s costs that may well be prohibitively and grossly expensive in any event, but also because of the uncertainty that claimants face about their liability for those costs, which under the Government’s proposals will be known only once the litigation, whether public or private, has been concluded.
Claimants in environmental cases do not want damages; they want relief from the consequence of poor decision-making by public bodies or protection from the degradation of their environment. Even in multiparty actions, damages-based agreements are not a solution. My amendments would enable the Government to honour their international environmental obligations rather than turn their back upon them.
Amendment 147 would provide in subsection (2A) that in an environmental claim the losing defendant would pay the premium in respect of disbursements by way of fees for expert reports paid by the claimant. In subsection (2B), the losing defendant would pay the premium on the costs insurance policy if he had agreed to do so prior to the commencement of the proceedings. There are occasions when a defendant will agree to pay the claimant’s premium for “after the event” insurance whether he wins or loses, because if the defendants succeed then they will get all their costs from the ATE insurers.
Amendment 150 defines “environmental claim” by the same definition as is contained in the Aarhus convention. The use of this definition would ensure that only nuisance cases that were truly environmental in nature would be within the scope of my amendment. Insurance recovery claims and private nuisance—for tree-root subsidence, for instance—would not get the amendment of the amendment.
Amendment 157 would introduce qualified one-way cost-shifting in both environmental claims and other claims. The amendment was drafted before I had refined my own views, which I explained at small length on Monday last on this topic. The word “unreasonably” therefore appears in the amendment but I repeat my objections to the vagueness of the word “unreasonable” and reiterate the necessity for clarity by expanding what is unreasonable, as Lord Justice Jackson did, into the familiar expressions of “fraud”, “frivolous and vexatious conduct” and “abuse of the process of the court”.
Why should we single out environmental law for different treatment from other areas of litigation? Essentially, I am not. In the amendments I am arguing for one-way cost-shifting as a precondition for change and for the premium for cover for disbursements—a far lesser amount than the current premiums recovered against the potential defendant’s cost liabilities—to be recovered from the losing defendant. That is very similar to what I was saying on Monday, when I suggested that there are positive benefits in dividing liability for these lesser premiums between the claimant and the defendant in a staged way. In any event, the issue is far more urgent in environmental cases because of our obligation to comply with the Aarhus convention.
A tidy mind might try to bring every aspect of litigation into one structure, one piece of architecture—the word that the Minister used on Monday—but litigation is not like that. Time and again the Jackson report emphasises that one size does not fit all. I quote from page 44:
“many submissions during the Costs Review have emphasised that ‘one size does not fit all’. The Bar Council, for example, states: ‘What is abundantly clear, from Jackson LJ’s Preliminary Report and from the Bar Council’s review, is that “One size does not fit all.” Particular types of litigation give rise to particular issues, be they funding issues, case management issues or otherwise”.
That is a recurring theme in the Jackson report and every practising lawyer will agree.
Lord Carlile of Berriew
I apologise for interrupting my noble friend. Before he sits down, will he help us on this matter in relation to his narrower point on the Aarhus convention? He was kind enough to circulate the learned opinion of Mr Hockman and others, including, as I understand it, to my noble friend the Minister. Will my noble friend tell the House whether he has had a response to the opinion of Mr Hockman and others? If not, does he agree with me that it might shorten the debate if, after he has sat down, the Minister were to indicate whether or not the Government accept the premise of the Hockman opinion?
Lord Thomas of Gresford
I am most grateful to my noble friend for interrupting me with one paragraph to go, which would have relieved your Lordships a great deal. The opinion has only recently been produced to me and the Bill team has had it only for a day, so I could hardly expect an immediate response. I hope that my noble friend the Minister will be able to deal with some of the issues that are raised and the issues that I am raising in my remarks.
To conclude, that one size does not fit all is a recurring theme in the Jackson report. Every practising lawyer will agree with that. Proof of the issues that arise in litigation—sometimes liability, sometimes causation, sometimes quantum, and so on—gives rise to different risks and therefore to different solutions. This very Bill, for example, proposes different statutory instruments making different provision for different types of case. I look forward to hearing my noble friend’s response in due course. I beg to move.
Lord Lester of Herne Hill
My Lords, I must choose my words carefully because I do not wish what I say to be taken to be outright opposition to my noble friend’s amendments, although I have a certain degree of agnosticism, if not scepticism. I suggest that those who are interested in this area might read the New Yorker article of a couple of weeks ago, which described the abuse of power by the claimant lawyers in the Exxon South American environmental litigation case. That indicates the need for very careful safeguards, even in an environmental setting.
The only reason I speak at all is because it occurs to me that there is a less radical solution to some of the problems that has been fashioned by the courts themselves without any legislative intervention: namely, the protective costs order. I see that the noble Lord, Lord Beecham, shakes his head. I shall explain what I am talking about. The problem with English cost rules is, of course, the winner-takes-all rule, which can, as my noble friend has indicated, have a seriously chilling effect on the ability to bring public interest litigation. It is the fear of claimants and their advisers of having to pay the legal costs of the defendant that has a chilling effect.
I was involved in the Corner House case for a small NGO that was seeking to challenge the lack of proper consultation by the Secretary of State in relation to anti-corruption provisions in the export guarantee area. This was not an environmental matter but it did concern public law. The problem was that the little NGO had absolutely no funds to pay for me but, more importantly, the department. The department would not give an assurance in advance that if it succeeded, it would not ask for the whole of its costs against the NGO. Therefore, the puzzle was how the NGO could bring the public interest proceedings not simply by dealing with the claimant’s position but dealing with the other side.
Sir Henry Brooke, to whom I pay tribute and who throughout has led thinking on this issue within the judiciary, advocated the use of a protective costs order, which enabled us to go before the court and say, “Even if we lose, can we please have a protective order that protects us against the risk of having to pay the other side’s legal costs in advance, so that we know that the worst thing that could happen to the Corner House NGO would be if it had to pay its own costs?”. I am glad to say that that was what was eventually decided and the result was that the Corner House was able to litigate.
I am embarrassed to say that I signed a 100 per cent success fee agreement without realising the consequence, which was that I actually profited from what I had thought to be a public-spirited case. I did not return the money, since it was being paid by the Government. I am against 100 per cent success fees and I would never do it again—ever.
However, the point I am making is not about success fees, but that if one develops through the courts, on a case-by-case and flexible basis, a way of softening the winner-takes-all rule in appropriate cases—not just environmental but all cases—that would enable the weak and impecunious to avoid the effect of that rule. The Constitutional Court of South Africa has decided that the winner-takes-all rule should never apply in important constitutional cases, and that in a proper public-interest case each side should at least bear its own costs and, in some circumstances, the Government should be required to pay the claimant’s costs, or give an undertaking in advance to give that protection.
This is a slightly long-winded way of saying that there are other means that perhaps are to be encouraged by the legislature, or perhaps not. There are other means that the courts themselves have been developing that can deal with some of the points made by my noble friend without something quite as radical as the proposals suggested in his amendments.
Lord Lester of Herne Hill
Actually, I cannot agree, because the Court of Appeal’s decision was a kind of precedent and it has been followed. There have been arguments about what limits there should be on claimants—whether they should be like an NGO or otherwise—but it would be perfectly possible for a rule to be made by the Lord Chancellor expressly empowering the courts to apply protective costs orders on a more general basis. This was not just a one-off decision; it applied in a line of cases and has been developed since.
Lord Thomas of Gresford
I am sure that my noble friend would agree, however, that protective costs orders are matters of discretion for the judge who hears an application, and that the threshold is extremely high. In his particular case, he obviously advanced matters of considerable public interest that were much wider than only the issues in the litigation that affected his clients. So a protective costs order can be applied for in such cases. However, I was involved in the case following the flooding of houses at Aberfan that occurred as the result of the spoil banks placed there after the disaster. In that sort of case, where individual householders were affected, protective costs orders would not have met that threshold.
Lord Beecham
My Lords, at the risk of being accused of unqualified one-way sycophancy, I must again congratulate the noble Lord, Lord Thomas, on the clarity of his presentation of this complex issue. Although I somewhat dissociate myself from the preamble to the substantive part of his speech, I entirely concur with his amendments. At this stage, I should also express my thanks to the learned counsel whose advice has instructed me in a matter about which, hitherto, I knew nothing. Aarhus meant absolutely nothing to me up till now. It seems that I may have shared that failing with Her Majesty's Government. We shall see from the Minister’s reply whether that is a correct inference or not.
The noble Lord referred to the ClientEarth case in which the Aarhus Convention Compliance Committee observed that the cost rules pertaining in the United Kingdom placed it in systemic breach of Article 9.4 of that treaty. The committee concluded that we had not as a country adequately implemented our obligation to ensure that procedures are not prohibitively expensive. Counsel's opinion, to which the noble Lord referred, identified two particular issues. The first is that of uncertainty. The second is the sheer amount of the defendant’s costs that might fall on unsuccessful claimants. The noble Lord referred to the case of Barr and Biffa waste company, which arose from a complaint about odours emanating from a landfill site, where the costs were indeed nearly £3,250,000.
Lord Justice Jackson has much to say about those issues. His remedy is, as the noble Lord pointed out, a move to qualified one-way cost shifting. He gave six reasons for his conclusions, which are germane to the thrust of the amendments. He said:
“This is the simplest and most obvious way to comply with the UK’s obligation under the Aarhus Convention in respect of environmental judicial review cases”.
He continued:
“For the reasons stated by the Court of Appeal on several occasions, it is undesirable to have different costs rules for ... environmental judicial review and... other judicial review cases”.
His third reason was that the requirement for permission,
“is an effective filter to weed out unmeritorious cases. Therefore two way costs shifting is not generally necessary to deter frivolous claims”.
They simply do not arise. His fourth point was that,
“it is not in the public interest that potential claimants should be deterred from bringing properly arguable judicial review proceedings by the very considerable financial risks involved”.
He pointed out that:
“One was costs shifting in judicial review cases has proved satisfactory in Canada”.
His final point, which goes to the issue raised by the noble Lord, Lord Lester is that the protective costs order regime,
“is not effective to protect claimants against excessive costs liability. It is expensive to operate and uncertain in its outcome. In many instances the PCO decision comes too late in the proceedings to be of value”.
So with respect to the noble Lord, the protective costs order regime is not, in the view of Lord Justice Jackson, an answer to the difficulty.
Lord McNally
I am not sure that I am able to commit to anything as rash as following up a recommendation that is a mere 62 years old. As always with interventions by my noble friend, I will take that away, but I should also make the point, given that this is the last of a series of amendments chipping away at—to use the term that I used the other night—the central architecture of the reforms that we are trying to introduce, that we have consulted on these matters. We have indicated the idea that PCOs may be a way forward in our commitment under the Aarhus convention. I will certainly make sure that the learned counsel’s opinion is fully studied. As I have explained, the Government’s view is that the best way forward is within the rules rather than within legislation, but this has given a good airing to the issue. The whole House is now more familiar with the Aarhus convention—I understand it is a Danish town—and we are the better for that debate. I therefore ask my noble friend to withdraw his amendment.
Lord Thomas of Gresford
My Lords, it is a relief to know that the Ministry of Justice, like New York, never sleeps. No doubt the opinion will be pored over and there will be further discussions before we get to Report.
I invite my noble friend to do this now. He says that the proper way to proceed is for one-way cost-shifting to be introduced by tailored Civil Procedure Rules. Your Lordships will recall that on Monday the noble and learned Baroness, Lady Butler-Sloss, and I made the point that there should be guidance from Parliament, not simply a discussion between the Executive and the Civil Procedure Rule Committee, about the parameters of those rules and what the boundaries and structure are to be. I would be grateful to know from the Minister the position on this particular point. He is shifting the burden of the success fee and the ATE premium over to the successful claimant. Is that going to be co-ordinated and timed to come into effect at the same time as one-way cost-shifting? That is the key issue. If you do not have one-way cost-shifting, you are shifting to the claimant the liability for the defendant’s entire costs, if he should lose, and consequently an enormous premium. We heard of premiums of £900,000. I am familiar with a premium of £80,000. I think that the standard is in thousands for any sort of claim. If, on the other hand, one-way cost-shifting comes in and the defendants’ costs are paid by the defendants win or lose, we will be concerned with a premium for a much smaller thing, which is the disbursements of the claimant, should he lose. The risk is that much smaller.
Lord Bach
We on this Front Bench agree absolutely with the question that the noble Lord, Lord Thomas of Gresford, has asked the Minister. It is crucial. To broaden the point slightly, the great danger in the Bill is that we are changing the current arrangements, but the way that they will work in practice is subject to regulations of which there is no sight at present. We need from the Government a statement about how they intend to implement this part of the Bill if they get it through. We have no idea at all. The example that the noble Lord gave is the best one of all. It is critical, but there are other examples where a great deal relies on regulations that are to be made at a later stage, sometimes to be passed by affirmative resolution, sometimes by negative resolution. It is not really a satisfactory way of changing the civil law in such a fundamental way. I would be grateful if the Minister, in his reply to the noble Lord, Lord Thomas of Gresford, would deal with the general point as well.
Lord McNally
The pained look with which the noble Lord, Lord Bach, comes to the Dispatch Box and implies that the Government is the first Government in the world to bring forward legislation with further consultations needed about specific regulation is a bit rich. The implications of this Bill will come into force in April 2013. We have a period of time for such consultations. As I said before, I take the point that there has to be a synchronisation in these matters. I do not think we are doing anything unusual by legislating in this way, but we take on board the points made in this debate.
Lord Thomas of Gresford
I am grateful to my noble friend for saying there will be synchronisation. The scales of justice have been tipped against defendants by this fourfold cost that they have been calling for over a period of time. The purpose of this Bill is to even the scales of justice up. If there is any period between shifting from that side to this side the success fee and the ATE insurance without providing one-way costs as the balance, the scales will go completely in the opposite direction, and it is the suffering claimants who will come out the worst in a situation like that.
I cannot resist coming back to the question of protective costs orders, having heard my noble friend Lord Lester. Protective costs orders are applied for in public interest cases. I am not concerned simply with public interest cases. These could be the private individual, the householder whose house is flooded, in the example that I gave—
Lord Thomas of Gresford
It is as my noble friend says. Lord Justice Jackson examined it and he came to the conclusion that the noble Lord, Lord Beecham, referred to. There is much more discussion to be had. I shall take my noble friend outside—as I once said in relation to one of the Ministers in the previous Government—and have a discussion with him there. For the moment, I withdraw this amendment.
“Third party litigation funding
(1) A third party litigation funding agreement which satisfies all of the conditions applicable to it by virtue of this section shall not be unenforceable by reason only of it being a third party litigation funding agreement; but any other third party litigation funding agreement shall be unenforceable.
(2) A third party litigation funding agreement is an agreement under which a third party (“the funder”) agrees to fund (in whole or in part) the provision of advocacy or litigation services to another person (“the litigant”) by a person other than the funder in exchange for remuneration.
(3) For the purposes of subsection (2), “remuneration” includes—
(a) a payment or any other transfer of value representing or calculated by reference to the value of a judgment or settlement; and(b) an assignment of the proceeds (in whole or in part) of any judgment or settlement.(4) The following conditions are applicable to a third party litigation funding agreement—
(a) it must be in writing;(b) it must not relate to—(i) proceedings which by virtue of section 58A(1) and (2) of the Courts and Legal Services Act 1990 cannot be the subject of an enforceable conditional fee agreement;(ii) a multi-party action, representative action or any proceedings which are the subject of a group litigation order; or(iii) any other proceedings of a description prescribed by the Lord Chancellor;(c) it must comply with such requirements as shall be prescribed by the Lord Chancellor.(5) Regulations under subsection (4)(c) may—
(a) require any person which enters into a third party funding agreement with a litigant to first obtain a license from a licensing body to be designated by the Lord Chancellor; and(b) set out conditions to be satisfied in order to obtain such a license.(6) In this section “advocacy services” and “litigation services” are as defined in section 119 of the Courts and Legal Services Act 1990.”
Lord Thomas of Gresford
My Lords, in June 2007, the Civil Justice Council—a body headed by the Master of the Rolls and comprising members of the judiciary, the legal professions, civil servants and lay people with knowledge of consumer affairs, CABs, businesses and employers—published advice to the Lord Chancellor recommending the proper regulation of third-party funding; that is, investment by an external party otherwise unconnected to a claim in a lawsuit in order to gain a maximum return upon its investment. In this country, it used to be called maintenance and champerty, and it was both a crime and a civil tort. In 1641, maintenance was described by the jurist Coke in his Institutes as:
“A taking in hand, a bearing up or upholding of quarrels or sides, to the disturbance of the common right”.
“Champerty” is the “maintenance” of a person in a lawsuit on condition that the subject matter of the action is to be shared with the maintainer. It was abolished as a crime in the United Kingdom in 1967 but as recently as July 2009 a solicitor in Hong Kong, where the offence still exists and carries a maximum sentence of seven years, was sent to prison for some 15 months. It remains illegal also in New Zealand but not in the United States.
As the practice has spread across the water into this country, specifically targeted at claim by small and medium business enterprises against large corporations, the Civil Justice Council formed a working party to consider the issue further. Consultations took place in February and July 2008 when a draft code of conduct for a third-party funding, which the working party had produced, was considered.
Following Lord Justice Jackson’s recommendations —he obviously considered this as well as conditional fee agreements—the draft code of conduct was revised. In February 2010, the Civil Justice Council held another stakeholder event to consider the revised code. The working party, under the chairmanship of the very eminent solicitor and Queen’s Counsel Michael Napier, chairman of Irwin Mitchell, which is essentially a leading claimants’ firm, produced a voluntary code of conduct for litigation funders, which was published on 23 November 2010. This voluntary code sets out standards of practice and behaviour to be observed by funders who are members of a newly founded Association of Litigation Funders of England and Wales. Without in any way impugning the very hard work of the members of the working party or the motivation of the new association, I am not at all content that this development in litigation funding should be subject to a voluntary code without any parliamentary debate, approval or control—of course I appreciate that it was put together under the auspices of the Civil Justice Council.
Lord McNally
My Lords, I am sure that that postscript will be studied by the Lord Chancellor, and he will carefully study this debate. As I was saying in my concluding remarks, I thank my noble friend Lord Thomas for introducing this subject and noble Lords for expressing a variety of views on it. The Lord Chancellor would like further time to reflect and I ask my noble friend to withdraw the amendment.
Lord Thomas of Gresford
My Lords, I am most grateful to all noble Lords who have spoken. I accept that the opposing view, put forward by the noble Lord, Lord Davies, was certainly an arguable one. I have not suggested that third-party funding should be banned but that it should be subject to statutory regulation, as opposed to the voluntary code.
I could not help reflecting on my rugby days and the occasional game in which the leader of the forwards, an extremely formidable person, would observe the scrum-half dropping the ball and say to us in the pack, “Boys, they’ve had their chance. We’re not going to give it to them again”. Consequently, everything changed and we adopted a different tactic.
Here, a voluntary code has been brought in. They have had their chance. In formulating the voluntary code, they did not include what Lord Justice Jackson rightly set out as the essential needs of such a code. They decided not to do that. When approached by the industry to say that they should limit themselves to commercial litigation, they decided not to do that. A two-page code has been produced of nine clauses which gives the broadest possibilities to the funders for the way in which they operate. I am not satisfied with that. I am most grateful to the noble and learned Lord, Lord Mackay, and the noble Lord, Lord Boswell, for their support. There is a perception of a genuine problem arising.
I look forward to further discussion with my noble friend and, perhaps, the Lord Chancellor, and we will see whether we can take forward this matter for Report but, for the moment, I beg leave to withdraw the amendment.
“Third party’s insurance company
(1) A third party’s insurance company may not solicit a claimant who has a cause of action for personal injuries against its policy holder, to settle that cause of action where to the knowledge of the insurance company, the claimant is legally represented either under legal aid or a conditional fee agreement.
(2) A third party’s insurance company may not make an offer to settle in circumstances not prohibited by subsection (1), unless—
(a) it has obtained adequate medical evidence of the personal injury and has disclosed it to the claimant; and(b) the claimant is advised when the offer is made of his right to obtain legal advice; and(c) the offer is in full and final settlement of the cause of action.(3) Any settlement made in breach of subsections (1) and (2) shall be void.”
Lord Thomas of Gresford
I apologise for wearying your Lordships once more. The amendment would ban the practice of third-party capture life insurance companies. Third-party capture is something with which many people, including many insured people, will not be familiar, but I have heard about it. Frankly, it is a nefarious practice.
The amendment would ban an insurance company—we are talking about banning in this amendment, not regulation—from directly contacting third parties who have been involved in accidents. That is currently commonplace behaviour following road traffic accidents. An accident happens, two drivers exchange with their details, driver A submits full details to his or her insurer and that insurer contacts driver B and offers an early settlement, usually at a much lower rate than would be achieved through due legal process. Insurers frequently make offers to accident victims that are far lower than the claim is worth, denying a person who has suffered an injury caused by someone else the redress that they deserve. They frequently make settlement offers without proper medical examination to ascertain the full extent of the injury, again denying the accident victim real evidence-based representation.
In this way, insurers seek to close off a claim without offering accident victims the opportunity to seek independent legal advice. There is obviously a conflict of interest. Insurers are acting both for the defendant, their policyholder, and the accident victim. Given that the insurers’ primary objective is to minimise the level of payments, they have little interest in securing a fair deal for accident victims.
There is another, equally unpleasant practice carried out by insurance companies where they contact a third party who has been injured in an accident with one of their policyholders and suggests that he or she makes a personal injury claim through their legal services arm. Other insurers simply refer the case details on, at a price—we will be dealing with referral fees shortly—to an independent personal injury lawyer. That is a major revenue stream for insurance companies, but it overrides common sense and is a substantial conflict of interest for insurers.
Since I tabled the amendment, I have been approached by the Association of British Insurers. It has kindly sent me its code of practice. The ABI code of practice for third-party assistance occupies some 11 pages, unlike the two-page code I was referring to in the previous amendment, and presents advice for insurers on how to contact unrepresented claimants, what they are to say to them about the injuries that they have received, how they are to deal with the damage to their vehicles and how to hire other vehicles. A section headed “Managing the Relationship” says:
“This section sets out how the insurer will manage the relationship with the unrepresented claimant where they have agreed on a provision of services, and covers where a claimant goes from unrepresented to represented”.
It sets out the policy, how to arrange medical treatment and so on. I suppose that in one way this could be said to be good practice. If the insurer is to be allowed to interfere with the other side in this way and to make offers of settlement, it is good practice to advise him to get a proper medical report and so on, as the ABI code says. However, there is absolutely nothing to enforce it. An insurer—and there are many insurance companies—may have a copy of the ABI code of practice but there is nothing to require him to adhere to what it says. Therefore, not only can the insurer ignore the provisions of his own code of practice but he can directly approach the other side. That is what my amendment seeks to prevent. I beg to move.
Lord Dubs
My Lords, I should like to speak to Amendment 164ZA in my name and give my support to Amendment 164, which has just been moved by the noble Lord, Lord Thomas of Gresford.
The Bill contains a series of proposals that attempt to dent access to justice for people who have suffered harm. It reduces their damages quite dramatically by taking away the recoverability of success fees and “after the event” insurance premiums. The referral fee ban may go some way to curbing the abuses of some claims management companies, but it will also sweep up many organisations, including important victims’ charities and membership organisations, that do a lot of good hard work in ensuring access to justice, and it will do nothing to curb some of the abuses that have inhibited access to justice.
The noble Lord, Lord Thomas, referred to third-party capture. What is it and why is it so controversial? Perhaps I may quote from the Financial Services Authority’s guidelines on third-party capture:
“Third-party capture (or third-party assistance) is when an insurer deals directly with a person who has a potential claim against their policyholder, in order to investigate and settle the claim. Typically, an insurer offers a compensation payment to settle the claim directly to a third party, rather than settling through a legal representative for that party. This is mainly used for third-party motor claims. But sometimes it’s used in other types of insurance, such as employers’ liability.
Concerns have been raised by industry bodies and consumer groups that this practice could mean third parties do not receive fair and reasonable treatment and compensation.
The handling of all insurance claims by insurers—including third-party claims—is regulated under the Financial Services and Markets Act 2000. This means that an insurer’s conduct towards third parties must comply with our Principles for Businesses and, where relevant, the claims handling rules in chapter eight of our new Insurance Conduct of Business Sourcebook ... Complying with our Principles for Businesses includes acting with integrity, due skill, care and diligence and observing proper standards of market conduct”.
The trouble is that that is not how it works in practice, as the noble Lord, Lord Thomas of Gresford, has clearly shown.
The system is used by insurers, in their drive to maintain and increase profits, to collect premiums but reduce the amounts they pay out. In short, the insurers want to be their own judge and jury. The system should protect legitimate claimants who may have suffered great harm and be in great mental anguish and who are therefore susceptible to an approach that undermines their rights but ends the process quickly. They should receive what the law says they are entitled to, not what the insurance company says it is prepared to pay, and there is a big difference between the two. In the old days, it was not unusual for the same solicitor to represent both purchaser and vendor in a conveyancing transaction. Of course, there were clear conflicts of interest and major problems as a result. Thankfully, that practice no longer occurs.
Third-party capture has the same risks to consumers attached to it. The insurer, who has a responsibility for paying out on a claim, also decides how much to pay, more often than not on the basis of no, or inadequate, medical evidence and without the claimant having the benefit of legal advice. There could not be a clearer conflict of interest between a big insurance company playing the numbers and an unrepresented, unadvised claimant, but the great irony is that insurers end up actively encouraging claims with the direct approach of offering to settle quickly without the purported inconvenience of a medical examination.
A further irony is that the idea of putting forward a whiplash claim can be put in the mind of a claimant when they had not originally thought of claiming. Of course, the newspapers are full of such behaviour. The insurers are, in some respects, playing the numbers. They think that if they can buy off 10 whiplash cases for, say, £1,000 or so—even if some of them are, dare I say, fraudulent—it will cost them less than paying out the correct compensation to properly advised claimants on, say, four or five of them. That benefits insurers significantly. It can be no surprise that that has led to an increase in low-value whiplash claims and the undersettlement of more serious claims.
The insurance industry and the personal injury industry have been playing games for too long at each other’s expense. The result has been that genuine victims of harm lose out—and lose out significantly. Third-party capture is a damaging practice and I urge the Minister to accept either this amendment or the other one.
Lord McNally
The noble Lord says he speaks from very long experience. As this Bill progresses, I have found that quite often noble Lords on all sides of the House who have more experience than me of the legal profession tell me that there is often a gap between what is written down and the reality of the day-to-day practice.
Third-party contact does not, in itself, cause detriment to consumers and may be to their advantage as a claim can often be resolved quickly. In addition, this practice can allow insurers to reduce the legal costs associated with handling a claim, and this in turn reduces costs for all policyholders. However, I am aware of concerns around the potential risk of conflict of interest and the need for the claimant to have independent legal advice before any settlement is agreed. The FSA undertook a review of third-party contact during 2009-10 and did not find conclusive evidence that unrepresented third parties could have achieved higher compensation had they obtained independent legal representation.
Following the FSA’s review, which was referred to by the noble Lord, Lord Thomas, the Association of British Insurers published a code of practice, to which he referred, in June 2010. The code contains specific guidance for insurers on contacting claimants. This limits unsolicited contact. For example:
“Insurers will not make unsolicited visits to an unrepresented claimant at their current address, including hospitals”.
I know we will be returning to some of this later. The code also requires that claimants are informed of their right to seek independent legal advice and of other options available to them to resolve their claim. As I have indicated, the practice was reviewed in 2009-10 but was not found, overall, to be disadvantageous to claimants.
In summary, most of the issues that these amendments seek to address in respect of the handling of third-party contact claims are already covered by existing regulation. The FSA rules require that insurers fully inform third-party claimants of their legal rights, including to independent legal advice, and of alternatives to settling directly with the insurer. In the light of this, we do not believe it is necessary to go along the lines of the noble Lord’s amendment, and I ask him to withdraw it.
Lord Thomas of Gresford
I am disappointed with that response. I do think it adequately addresses reality as it exists today in the approaches by insurers to accident victims.
In answer to the noble Lord, Lord Neill of Bladen, subsection (1) of my amendment prohibits the third party’s insurance company soliciting a claimant,
“where to the knowledge of the insurance company, the claimant is legally represented”.
Subsection (2) refers to a situation where that is not the case: the claimant is not legally represented or the insurance company does not know that he is legally represented. It sets out three terms: that the offer to settle can be made only when the insurance company,
“has obtained adequate medical evidence … and has disclosed it to the claimant; and … the claimant is advised when the offer is made of his right to obtain legal advice; and … the offer is in full and final settlement of the cause of action”.
The sanction that I have quite deliberately put into this amendment is not that it is an offence or anything of that sort but that a settlement made in breach of those subsections shall be void, which means, in effect, that if a person has been bought off for a small sum, he can reopen the matter without any problems. He can go to a solicitor, get proper advice, get a proper medical report and come back. To my mind, that appears to be the right way forward.
Lord Neill of Bladen
Another sanction would be that if a settlement has been made, the money is irrecoverable. Under a void agreement, insurers might get their money back again, but you could have a provision expressly about “money paid by way of settlement”, because a claimant may not find out until later that he has been swindled.
Lord Thomas of Gresford
I am very grateful to the noble Lord for that suggestion.
This problem will become more and more obvious as time goes on. As I said, I am disappointed with my noble friend’s reply, but for the moment, I beg leave to withdraw the amendment.
Lord Thomas of Gresford
My Lords, before the noble Lord does what he is going to do with his amendment, I just make one comment. He said that the Minister was on his own. When I was a young solicitor, I would have given my eye teeth to secure some union work. I did some at the Bar, but it was very difficult in a small firm to compete with a large firm, as I am sure the noble Lord will agree. If I thought I had to pay money to the union to get their work, that would have made it considerably worse. The money that is paid to the union by the lawyer is ultimately reflected in the hourly rate that the lawyer charges to his client—it eventually falls on the client, or on another client. It is not just disappearing or being absorbed by the large firm.
Lord Beecham
Not all firms are large firms, and it will not surprise Members to know that my firm was not—and is not—a large one. However, we have had that kind of relationship. The profitability of firms conducting litigation of this kind is not high in any event, even without the question of referrals. I do not think that there are the kind of consequences that the noble Lord assumes to be the case. Equally, organisations with members seeking to derive the best service that they can for their members ought to be free to do that. I repeat that I do not think this Bill is at all on the right lines in what it is seeking to do. I again respectfully direct the Minister’s attention to the peculiar circumstances that subsection (8) proposes.
I was going to finish by commending again the amendment tabled by the noble Lord, Lord Pannick, about solicitor-to-solicitor arrangements. He made a very strong case there, and I regret that the Minister seems to have just dismissed it out of hand. Certainly—
Lord Carlile of Berriew
My Lords, I want to say a few words in support of these clauses and indeed of all the amendments that my noble friends have spoken to. One of the most unwelcome trends in litigation in recent years has been its commoditisation, and if this is not stopped I see the development of litigation futures as a commodity that will be traded, just like potato futures and metal futures.
I do not know whether any of your Lordships has had an experience like mine a few months ago. I was involved in a road traffic accident as a rear-seat passenger in a vehicle on a country road in Northern Ireland at about 11 o’clock one morning. I came back by air to Heathrow the same afternoon. I had not been injured in the accident, although it was quite unpleasant. As I was standing on the Heathrow Express platform, coming back into central London, I received a text message from a claims-farming business that referred to the accident I had had the same morning. Now if it happened to me, it must be happening to an awful lot of other people. I suggest that Amendment 165 nails this problem for that kind of activity. That kind of low-level claims farming, but on a very large scale, is putting up insurance premiums and the cost of litigation. Perhaps worst of all, it is encouraging people to make claims that they otherwise would not have made, and which may in the end cost them if not money, a great deal of anxiety.
Lord Thomas of Gresford
Does my noble friend not agree that in the instance that he described and in which he was involved there could have been an element of corruption with people being paid when they gave information about that accident?
Lord Carlile of Berriew
There is certainly that possibility.
I wanted to add something else about hospitals. When I was a Member of another place, I often visited a celebrated orthopaedic hospital in the next county. At that time—I cannot say whether it is the case now—at the end of a long corridor in that hospital there was a solicitor’s office. That was an unusual arrangement but one that no doubt brought some rent to the hospital. I have real reservations about that kind of arrangement. I am all in favour of general advertising and it is right that solicitors’ firms should be able to advertise in local and national newspapers so that people are aware of the kinds of specialist services that they provide. But we must take this opportunity to reject anything that smacks of ambulance-chasing.
Legal Aid, Sentencing and Punishment of Offenders Bill
Lord Thomas of Gresford Excerpts(13 years, 5 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
“(b) the maximum limit must be expressed as comprising either or both of the following—(i) a percentage of the descriptions of damages awarded in the proceedings that are specified in the agreement; or(ii) a percentage of the amount of fees which would be payable to the person providing legal services including advocacy if they were not acting under a conditional fee agreement,”
Lord Thomas of Gresford
My Lords, I have to apologise for the length of my opening remarks, but as your Lordships will have seen, this is a very large group of amendments and it covers some three discrete topics.
Clause 43 deals with the conditional fee agreement—a CFA or no-win no-fee agreement—under which the successful claimant wins from the defendant both damages and costs to pay his lawyer’s fees. The fees under a CFA include a success fee, an uplift of the basic fees by an agreed percentage. The rationale behind the success fee is that it is not the lawyer’s prize for winning his case but his insurance; an uplift on his fees when this client wins covers the value of his time and effort when another client loses and he receives no fees at all. If the claimant loses, he does not have to pay his own lawyer’s fees, because it is no-win no-fee, but he is liable for the money paid out on his behalf for court fees, expert and medical reports, and witnesses’ expenses.
The Government’s purpose in Clause 43 is to amend the current position under the Courts and Legal Services Act 1990 to provide that the success fee payable to the successful claimant should no longer be payable by the unsuccessful defendant but should be paid instead by the successful claimant out of the damages he receives. All the losing defendant will pay by way of costs is the claimant’s lawyer’s base fees and his own costs.
When the 1990 Act, led on in this House by the noble and learned Lord, Lord Mackay, was originally enacted by the Conservative Government to provide relief for the MINELAs—middle income not eligible for legal aid—it was expressly provided by Section 58 that the costs payable by a losing defendant to a successful claimant should not include the success fee payable under a CFA. At the beginning, no success fee was paid by defendants, but in 1999 the Act was amended by Labour so that the success fee was recoverable from the losing defendant, along with the claimant’s base costs. Labour’s policy at that time was to abolish the grant of legal aid to all—the impoverished as well as the MINELAs—in all personal injury cases save clinical negligence. The carrot was that defendant insurance companies would pay the success fee instead of the claimant. The proposals in this Bill seek to return to the original concept of the noble and learned Lord, Lord Mackay, in 1990.
The 1990 Act did not change the general rule that the losing party pays the winning party’s costs; costs follow the event. Therefore, if a claimant lost his case, he did not have to pay his own lawyer’s fees—no-win no-fee—but under the principle of costs following the event, he was liable to pay the successful defendant’s costs, which could be a very considerable sum. To cover this possible liability, an insurance market quickly grew up whereby the claimant would insure himself against the risk of losing; that is, “after the event” insurance, or ATE. The original 1990 Act said nothing about the cost of the insurance premium for such cover and accordingly a claimant was responsible for the premium.
Section 29 of the Access to Justice Act 1999 expressly provided that the premium paid by a successful claimant who had insured himself against the risks of losing was recoverable as well as the success fee. The policy was that an injured claimant would recover his damages in full without any deduction, so the losing defendant—usually an insurance company or a company so large that it was self-insured—paid four times over: the damages to the claimant, the base costs of the claimant’s solicitors, the success fee, and the ATE insurance. As it happens, I raised the issue of the extension of CFAs and its impact on insurance in a dinner-time debate some 14 years ago, on 9 March 1998, before the 1999 Bill was introduced. I was very much against the abolition of legal aid in personal injury cases and at that time was promoting the CLAF scheme that is so successful to this day in Hong Kong and fully supported by the Bar Council. Two particular matters stand out from that debate. My late noble friend Lord Kingsland—and I do mean friend—then the leader of the Conservative Benches in this area, said he applauded the long, hard look the noble and learned Lord, Lord Irvine, was taking at legal aid. He said:
“In his overall review of legal aid, the Opposition applaud particularly his desire to extend legal aid into areas such as the provision of social welfare, immigration and other areas where preventive legal advice will save so much money by avoiding ensuing litigation. All that is to be greatly applauded”.—[Official Report, 9/3/98; col. 93.]
In that debate, the noble and learned Lord, Lord Irvine, said:
“Premiums for personal injury proceedings, in which conditional fee agreements have been allowed since 1995, are typically £100 to £150. For many of those who will gain access to justice, which they are denied now, that is not an excessive sum”.—[Official Report, 9/3/98; col. 96.]
The legislation was passed in the context that the noble and learned Lord, Lord Irvine, believed that insurance premiums for ATE insurance were £100 to £150. The past 11 years have witnessed the unintended consequences of the 1999 Act and the urgent need for reform.
It was emphasised in the Jackson report that the maxim “once size fits all” is certainly not the way to go. In personal injury cases, the defendant who caused the injury will have acted negligently, not deliberately. In defamation or breach of privacy cases, the harm is quite deliberate, usually with the motive of selling newspapers. Personally, I am intensely relaxed about the newspaper that libels an individual or breaches their privacy having to pay the lot—the injured party’s success fee and ATE premium—although I am afraid that neither the Mirror nor the European Court of Human Rights would agree with me. The defendant does not, in a libel case, have to pay for future care or future loss of earnings, and the damages award is usually small. Therefore, different concerns apply in different categories of cases.
Lord Thomas of Gresford
Before my noble and learned friend leaves this issue, he knows that my concern is that this amounts to a dialogue between Government and the Civil Procedure Rule Committee, with no input from Parliament whatever, and no guidance to the Civil Procedure Rule Committee on how it should proceed and what the parameters are. What I was seeking to do, in broad terms, with my amendment was to introduce certain specific things—for example, that the word “unreasonable” should not be used in these procedure rules, but we should revert to familiar territory, such as “frivolous”, “vexatious”, “abusive of process” and “fraudulent claim”, actually spelling out where a judge should have a discretion and where he should not. “Unreasonable” has such a broad meaning that it would put any litigant off if he were to be told by his solicitor, “We will take this case forward, but you have got to appreciate that, at the end, the judge may look at it and say that your conduct is unreasonable”. What does that mean?
As I endeavoured to show in my remarks, in explaining that concept in the report Lord Justice Jackson used the term “fraudulent, frivolous”, although he did not use “vexatious”. I am seeking clarity. The Civil Procedure Rules will come out of the air from somewhere and will not have any proper parliamentary scrutiny. They will have been drawn up as a result of discussion between the Executive and the Civil Procedure Rule Committee, which is entirely made up of judges and lawyers. I would have thought that there would be a constitutional position. It is more serious than anything else in the Bill.
The Civil Procedure Rule Committee should have guidance, as elsewhere in this Bill it does. Over and over again in the Bill, we come across regulations being made by the Lord Chancellor. There is specificity about that. But this position is highly unsatisfactory. If the Minister cannot put something in the Bill in the way in which he has described, what assurances will Parliament have that the Civil Procedure Rule Committee will act in accordance with certain principles?
Lord Beecham
I absolutely agree with everything that the noble Lord has just said. This is a fundamental change in the way in which litigation is to be conducted. It should not just be referred to a wholly unaccountable, although no doubt extremely worthy, group of people on the rules committee. Obviously, they are very eminent but they are not accountable, in the sense that the normal framework would be, to approve changes of this significance. Perhaps, as he develops his reply, he would deal with the point of restricting this significant change to personal injury cases when Lord Justice Jackson advocated it across the piece. Perhaps he would care also to reflect on a point made when colleagues and I met the Association of British Insurers no less, which, for example, said that it did not support means testing for qualified costs shifting at all. But, as I understand it, that is to be part of the scheme—if that is what presumably the rules committee, since it will not be part of the Bill, will say.
The noble Lord is absolutely right to raise these issues and I hope that the Minister will take this back and think again about how matters are to be progressed given the significance of the change.
Lord Wallace of Tankerness
My Lords, it is very evident from the three interventions that this matter is clearly exercising the Committee. I certainly note from the experience of the noble and learned Baroness, Lady Butler-Sloss, having chaired a rules committee that perhaps we are going into territory which we may not have been in before. As to what my noble friend has said, I sometimes hesitate to put things on the face of the Bill because, as we all know, once there, they limit what a rules committee might be able to do if faced with an obvious set of circumstances where it does not believe there should be one-way costs shifting, and it can inhibit that. However, I take the point that unreasonableness could be going too far towards the other extreme in terms of its lack of clarity.
My noble friend asked: if it is not possible to put something in the Bill, what assurances could be given? That is something we shall certainly want to reflect on when considering these contributions. I am sure that we shall have an opportunity to address this again at the next stage of the Bill, and if there are assurances that can be given, I would hope that we would be able to do so. Perhaps I may leave it at that for the moment. We recognise the importance of the points that have been made.
I should restate that there already appears to be broad agreement that there should not be a primary financial threshold in personal injury cases for QOCS, although that would not necessarily apply were QOCS to be extended at some later date to other categories of personal injury. I hope that reassures my noble friend on that particular point.
Amendments 143 and 144 seek to replace the Lord Chancellor’s discretionary power under Clause 45(2) with a duty to make regulations in respect of the recovery of “after the event” insurance premiums relating to expert reports in clinical negligence cases. I can give the Committee the assurance that we intend to allow for this recoverability so that poor people can get expert reports in clinical negligence cases without having to pay for them upfront. However, we have deliberately kept a degree of flexibility around the drafting of the regulations.
The effect of Amendments 144A to 144D is to extend the recoverability of ATE insurance premiums to all civil cases. Unlike the current exception for clinical negligence, the proposed exception is intended to apply to ATE insurance which covers the risk of paying opponents’ costs as well as funding expert reports.
Lord Thomas of Gresford
My Lords, with great respect, I advanced the amendments in the context that one-way cost shifting will go through, as the Government say it will, in which case the defendant’s costs are immaterial. The only ATE insurance that will be required will be for the disbursements of the claimant himself, which would not otherwise be covered. That is the area to which I am referring in those amendments.
Lord Wallace of Tankerness
My Lords, we believe that the package of proposals seek to end ATE insurance premiums being charged to the defendant with the specific exception of clinical negligence cases. To start unpicking it in such an important respect would not retain integrity of the proposals as a whole. I hope that I am not misinterpreting what he said, but my noble friend has suggested that it might be possible to split or share the recoverability of success fees or ATE insurance premiums. Indeed, I think that the Bar Council has suggested that some success fees or ATE insurance premiums should be payable by the losing side with the remainder payable by the claimant. Lord Justice Jackson made alternative recommendations on partial recoverability of success fees and ATE insurance premiums in the event that his principal recommendations were not accepted. But the Government had a full public consultation on both the primary recommendations and the alternatives and gave careful consideration to the responses. We decided to take forward the primary recommendations—abolishing the recoverability of success fees and ATE insurance premiums—as the best way of restoring proportion and fairness to the CFA regime.
It has been suggested, as referred to in Amendment 146, that the market may not provide for or adjust itself sufficiently to take account of these. The amendment requires the Lord Chancellor to,
“have regard to the financial and commercial viability of the insurance market”,
in making regulations under Clause 45(2). I accept that the changes the Government are seeking to implement are fundamental, but we expect the insurance market to respond positively to them. It is easy to say ahead of an event that all sorts of appalling things will happen, but after 1999 the market certainly adjusted to the opportunities with ATE premiums, and it is not surprising that those who wish to maintain the status quo are making substantial representations to that effect.
Lord Wallace of Tankerness
I think I understand what the noble Lord is saying and I think I gave an indication on that point. Let me just try to find that—
Lord Thomas of Gresford
May I help by saying that my Amendment 162 goes directly to that point?
Lord Wallace of Tankerness
As I said in response to my noble friend Lord Thomas, we do not believe that that is necessary because it is the Government’s intention that such matters would be included in the definition of non-monetary benefit awarded to the claimant in any event should the additional penalty be calculated in that way. Clause 53 gives us the flexibility to do that so that the rules can be made across all categories of law. It is our intention that they should be. However, perhaps I may put that in writing, in a letter to the noble Lord that I will circulate to other Members of the Committee, to explain the matter in more detail.
Lord Thomas of Gresford
My Lords, I am most grateful to all noble Lords who have spoken in this debate and, in particular, to the noble and learned Baroness, Lady Butler-Sloss, for her support on the issue—which I regard as having constitutional significance—about whether the Civil Procedure Rules should be formulated without Parliament having any input into them at all. It seems to me that it is for us to decide, one way or the other, what the particular parameters should be.
Let me just pick up on two points. First, should the means of the claimant come into it at all? The insurance industry does not want that, but the proposal in the Bill is that the claimant’s means should be taken into consideration. What about the meaning of “unreasonable”? The meaning is so broad that it should really be narrowed down. On that issue, I want to hear further from my noble and learned friend and I shall be talking to him about it between now and Report. I will take the issue further if necessary.
Secondly, on the question of splitting the burden of the insurance premium, it seems to me that that is a sensible way to go forward. The corks from the champagne bottles will be popping down in the City when people read my noble and learned friend’s response that the premium will fall entirely upon the claimant. Why should it not be split? There would be advantages both ways in splitting the premium: first, there would be an incentive for the claimant to ensure that premiums are not too high and are not, as at the moment, left completely in the air; on the other hand, if you split the premium in the staged way that my amendment proposes, there would be a great incentive on the defendants to settle. The course that I have suggested includes advantages beyond the mere way in which the liability falls. I would like to hear a little bit more about why the Government prefer Lord Justice Jackson’s first proposal, as opposed to his alternative proposal, which I am not persuaded is the better one. I shall certainly return to that matter again.
I remind my noble and learned friend that, on this side, I have accepted that the success fee should be paid by the claimant from his damages, subject of course to a limitation of up to 25 per cent. I agree with him—in fact I made the point earlier—that the probability is that solicitors involved in non-risk litigation will advertise, “No success fee payable here”. Those bigger firms that get involved in the riskier litigation will do a very determined assessment of what risks they are prepared to carry in advertising their own services subject to a success fee. I see that there is an advantage in that. I shall read and study what the Minister has said and, I hope, discuss the matter further with him and come back on specific issues at Report. At the moment, I beg leave to withdraw my amendment.
Lord Thomas of Gresford
My Lords, I must move this amendment, since it is in the names of the noble and learned Lord, Lord Mackay, of myself and of the noble Lord, Lord Bach. It is an alliance of all three parties.
Lord Thomas of Gresford
Yes, or the other place.
The noble Lord, Lord Bach, pointed out something that I think should not be overlooked: in the 1995 order that introduced CFAs, insolvency litigation was recognised specifically, along with personal injury litigation, as a category to which CFAs should apply. The one principle—perhaps it is not so much a principle as a rule—that underpins the Jackson report is that no cap fits all, whereas the Government’s approach seems to be that they have a package that applies to everything, regardless of what it is. That is not the approach of Lord Justice Jackson, who was very careful to distinguish between various areas in his report. Insolvency litigation is a category that should be considered because of the particular features that affect it.
What is insolvency litigation? Insolvency practitioners undertake litigation on behalf of creditors against company directors or third parties whose actions have caused serious harm to a business. This includes taking money out of the business for personal use, concealing assets and committing fraud. In some cases, these actions—of directors and third parties—have led to the business’s failure. The insolvency practitioner, who is brought in to deal with the disaster that has occurred, has a legal duty to maximise the returns to creditors. In cases where directors have acted improperly, this may involve undertaking litigation to return money rightfully owed to creditors, including the business community and Her Majesty’s Revenue and Customs. Without the use of litigation, directors could get away with dishonest practices and businesses would lose money.
In insolvency situations, a company by definition has no money. Consequently, there are no funds available to the insolvency practitioner, who is trying to clear up the mess, to pay the legal costs involved in pursuing litigation. The creditors’ only realistic hope of recouping money owed to them is for the insolvency practitioner to engage solicitors on a conditional fee arrangement. In addition to this, insolvency practitioners may be personally liable for costs incurred as a consequence of litigation and therefore require protection with “after the event” insurance. As the system currently exists, the success fees under a CFA and the ATE insurance premiums are recoverable from the defendant if a judge, on the merits of the case, considers them to be liable.
What are the impacts of this? First, let us consider the impacts on the business community. The current system is particularly helpful in insolvency litigation because it allows insolvency practitioners to maximise the assets available for distribution to creditors. If the success fee and ATE insurance premium were instead to be borne out by the insolvent estate, it would substantially reduce the amount of money returned to creditors. So the proposals here would mean that the defaulting directors or fraudulent third parties who caused the failure of the business would escape the burdens of success fees and insurance premiums, and that would reduce the funds available to pay the genuine creditors of the insolvent company. At a time when businesses are struggling, it would seem counterproductive to implement measures which would reduce their returns.
In addition to lost revenue, the business community would also suffer, as the Government’s proposals would discourage an insolvency practitioner from taking action against a delinquent director. Given the considerable risks involved in insolvency litigation, an insolvency practitioner will only commence litigation on advice and once satisfied that it is economically justifiable for the creditors. Generally speaking, these people are not carrying out risky litigation; insolvency practitioners are going after the people who owe money or who have defrauded the company for which they were acting. The trade body for insolvency professionals analysed a sample of 23 case studies where insolvency practitioners undertook litigation against a director or third party, using CFAs and ATE insurance. The trade body’s assessment was that, if the Government’s proposals were to go ahead, the total impact on creditors in the 23 cases analysed would be a loss of £3.6 million—a 47 per cent reduction in returns to creditors. That would be the effect on the business community.
Her Majesty’s Revenue and Customs is the largest unsecured creditor in formal insolvencies in England and Wales. It is the single largest beneficiary of the ability of an insolvency practitioner to avoid dilution of returns to creditors by the recovery of success fees and ATE premiums from unsuccessful and fraudulent directors in litigation. So it benefits the Revenue to keep the current system in place, and it is counterproductive to implement measures that will remove this revenue.
The present system is a real and tangible benefit to society and to the business community. Not only does it ensure that delinquent directors do not get away with sharp practice, it also increases the returns available to creditors, including the Revenue and business community.
Amendment 135, which is the main amendment that we have put down, seeks an exclusion from the general rule so that a cost order may include provision requiring the payment of fees payable under a conditional fee agreement, which provides for a success fee in proceedings by a company being wound up or entered into administration; proceedings brought by a person acting as liquidator or trustee of a bankrupt’s estate; and proceedings by a person acting as an administrator under the Insolvency Act. This is a benefit to the business community and to the Revenue, and I wait to hear why the Bill proposes to take away those advantages for no apparent gain. I beg to move.
Lord McNally
They are ongoing. I admit that sounds like that song “Reviewing the Situation” from “Oliver!” but I have no doubt that the good relations between the MoJ and Her Majesty's Revenue and Customs will produce a satisfactory result, which I will report to the House at the earliest possible moment. In the mean time, I request the noble Lord to withdraw his amendment.
Lord Thomas of Gresford
While I am most grateful to my noble friend for that reply, it would be helpful for these negotiations to complete before we have to vote on this matter on Report—as we undoubtedly will, along with the people who have signed it. Can I suggest to my noble friend that he talks to whoever he has to in order to get a move on? It seems a no-brainer to me that this amendment should be accepted and the quicker it is resolved, certainly before Report, the better.