Litigation Funding Agreements (Enforceability) Bill [HL]

Lord Trevethin and Oaksey Excerpts

2nd reading
Monday 15th April 2024 Lords Chamber

[Lord Trevethin and Oaksey (CB)]

My Lords, it is a pleasure to follow the noble Lord. I make precisely the same declaration of interest as did the noble Lord, Lord Wolfson. I occasionally advise funders and I quite frequently act in cases in which one party is funded and the other party is aggrieved by the existence of litigation funding.

I do not think anyone has spoken directly against the Bill, so I need not say too much, if anything, directly in support of it. I will just make one or two observations about the Bill and then, if I may, I will travel briefly off-piste and pick up some points made by the noble Lord, Lord Meston, about the DBA Regulations.

The reality, as a number of noble Lords have pointed out, is that there is no prospect of anything resembling a functioning legal aid system coming back into place. What follows from that is that there are very serious problems with access to justice in this country. Litigation funding unquestionably has its part to play.

In her very interesting—and, with respect, powerful—dissenting judgment in the Supreme Court PACCAR case, Lady Rose quoted an American judge:

“The realistic alternative to a class action is not 17m individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30”.


One could substitute $3,000 or even $30,000 for that sum; that is the reality. Without access to litigation funding, class actions or group actions—litigation of that type, which will sometimes be highly meritorious—simply cannot be brought.

One can test whether the practical consequences of the PACCAR decision are benign or malign by considering what probably would have happened if that decision had been handed down by the Supreme Court shortly before the litigation funders supporting Mr Bates and the other postmasters were going to take their case to trial, and shortly before a final decision had to be taken on the funding of that litigation. Almost certainly, the funders would have withdrawn. The Post Office, as one knows from what one has read about the history of that litigation and other matters, would have seized on that and sought to take advantage from it. Almost certainly, the proceedings would have been aborted. Mr Justice Fraser would never have handed down his masterful judgment and, to use the phrase of the noble Lord, Lord Arbuthnot, the doors would not have been blown off and the injustices which have horrified the country might have remained concealed. That suggests, I think, that the consequences of the PACCAR decision are not benign, and the Government are right to act in the way that they have.

I do not want to say any more about the merits of the Bill. I will make two points which involve travelling slightly off-piste. They build on what has already been said by the noble Lords, Lord Meston and Lord Sandhurst, about the 2013 DBA Regulations which were at the centre of the Supreme Court’s reasoning in the PACCAR case. Those regulations were put in place very shortly after the reforms founded on Sir Rupert Jackson’s report were enacted. Sir Rupert, in making significant changes to the conditional fee regime, strongly recommended that damages-based agreements should generally become lawful in this country. That recommendation was an important part of his overall approach to the reform of litigation in this country.

However, everyone, including the Ministry of Justice and just about every judge who has ever had to read the regulations, recognises that the 2013 regulations were badly drafted. In particular, they leave a very undesirable uncertainty about whether hybrid agreements involving an element of a damages-based agreement and an element of a more orthodox funding scheme are permissible. They leave a great deal of uncertainty as to what happens to the lawyers’ entitlement to remuneration if the client terminates the agreement in the course of the relevant litigation.

That is why the ministry instigated a review of the position, which led to the preparation of significantly better draft regulations by a group including Nick Bacon KC, a colleague of mine, who is a master in this field. There is no doubt that those draft regulations would represent a major improvement. If those draft regulations from 2019 had been put in place back then, we would not be having the current debate and there would be no PACCAR problem. Nick Bacon and his team spotted the difficulty that underlies the decision of the Supreme Court in PACCAR and drafted the new regulations to remove the relevant ambiguity and took litigation funding agreements outwith the scope of the DBA Regulations.

I am sorry to be mean to the Minister but, like the other Members of the House who spoke on the point, I would be very grateful if he were able to provide any further information or assurance as to the speed with which the ministry and the Government will move in the direction of reforming the DBA Regulations, as indicated.

My final point is a broader point about the way the Bill and the underlying regulations are structured. In this area, as in others, they operate in a completely binary way. They say that this agreement—a conditional fee agreement or a damages-based agreement—is either enforceable, if all the boxes and regulations have been ticked, or it is unenforceable. There is no middle ground whatever. There is nothing resembling the jurisdiction in the consumer credit legislation, which gives the court a power to hold that a consumer credit agreement is enforceable notwithstanding that there has been some technical non-compliance with the relevant regulations. Something of that sort would work well here because where there is the completely binary structure of enforceable or wholly unenforceable, there is trouble ahead: the stakes are raised much too high.

With this sort of structure, a party who shows that the relevant agreement is unenforceable stands to gain massively. A finding of that nature will close down the litigation and lead to a saving of millions, many of millions or hundreds of millions of pounds. You get very expensive, time-consuming, recondite satellite litigation which goes all the way to the Supreme Court and filters back down through the court system, causing judges to wrestle with difficult points. It is possible that all or most of that could be avoided if the scheme was structured so as to give the court the power to say, “Yes, this DBA or CFA is technically non-compliant with the regulations, but no detriment or prejudice has been caused and therefore we, the court, declare the relevant agreement to be enforceable”. That would be a better way forward.

Imprisonment for Public Protection Scheme

Lord Trevethin and Oaksey Excerpts

Thursday 13th October 2022 Lords Chamber

[Lord Trevethin and Oaksey (CB)]

My Lords, it is an honour to follow the noble and learned Lord. I read yesterday his judgment in the Roberts case in 2016, in which the Court of Appeal described the circumstances of various offences which had led to the imposition of IPP sentences in the relevant period. The court, for the reasons explained in its decision, had to reject the appeals because they were not good as a matter of law, but I was left reflecting that those individual offenders had committed offences that were certainly serious—they were not trivial—but far from being the most serious types of offence that come before the courts. Those offenders, if still in prison, and some may well be, would have been sitting in prison now for 15 years or so watching other offenders come and go. These other offenders who had committed markedly more serious offences and have since been released while they remain in prison, unable to obtain parole for a number of reasons powerfully and devastatingly set out in the House of Commons committee report.

Coming for the first time to understanding the detail of this shocking state of affairs, the reasons, it strikes me, include the following. First, an outrageous lack of resource was made available following the imposition of this new and strange regime. Secondly, the striking fact, as given in evidence by a number of prisoners, is that prison is sometimes not an easy place to demonstrate that one is of a peaceful disposition. It is sometimes a place in which it is unwise to make that claim to your fellow inmates. Thirdly, and most troubling of all, is the fact made so strikingly in this report that this regime, with its unfair and cruel imposition of potentially indeterminate imprisonment, has itself impaired the mental health of many of these prisoners in a way that has made it even more difficult for them to satisfy the Parole Board release test.

I think there are still around 3,000 IPP prisoners in prison. That is a shade over a third of all those subjected to these sentences in the first place. That is a lot of prisoners. Apart from the possibility of a resentencing exercise, which I can see will generate problems, but may well be inevitable—if it is going to happen, it should happen now—there is one possibility that I respectfully ask the Minister to consider in his response. It is that canvassed by the committee report, namely using the power under Section 128 of the LASPO Act 2012 to reverse the burden of proof for IPP prisoners when they make their applications to the Parole Board so that the burden rests on, as it were, the state to demonstrate that the relevant prisoner remains dangerous. That would reduce some of the current unfairness.

Parliament: Freedom of Speech and the Rule of Law

Lord Trevethin and Oaksey Excerpts

Thursday 23rd May 2019 Lords Chamber

[Lord Trevethin and Oaksey (CB)]

My Lords, it is a pleasure to follow the noble Lord, although I have the misfortune to disagree with his conclusion. My view, with respect to the noble Lord, Lord Hain, who obviously acted in what he considered was the proper way, is that this was not a proper use of parliamentary privilege. It might be instructive for me to say a little more than some other speakers have about the course of the relevant litigation with which the noble Lord’s comments were concerned because it might indicate, when one understands what happened in that litigation, just why it was inappropriate to use parliamentary privilege in effect to determine the outcome of that litigation when it was heading towards a speedy trial in the Court of Appeal, at which detailed arguments would be advanced to both sides by leading counsel who are eminent in the relevant field.

If the noble Lord had read the Court of Appeal’s judgment before saying what he said in this Chamber—we know that he did not because he said so to the commissioner—he would have learned the following things, among others, about the litigation. Five complainants were directly involved. At the court’s instigation they had been contacted. Two out of the five had said that they supported Sir Philip Green’s application, or his company’s, for an injunction. That is a striking fact that reminds one that NDAs can be regarded as beneficial by both parties to a settlement agreement, not merely by the party who is the subject of allegations of inappropriate behaviour.

Secondly, the judgment informs the reader that these NDAs permit legitimate disclosures, including any report that any complainant might wish to make to the police or other appropriate authority of criminal misconduct. That seems a relevant fact. The reader will also find that the Court of Appeal gives careful consideration to the statutory context and to the reasons given by the judge of first instance for permitting disclosure of relevant matters pending trial.

The reader will also find that the Court of Appeal, having lucidly and carefully explained why it doubted the correctness of the judge’s handling of the matter, ultimately decided that the disclosure should be prohibited pending speedy trial because:

“The Judge has ... left entirely out of account the important and legitimate role played by non-disclosure agreements in the consensual settlement of disputes”.


In coming to that conclusion, the Court of Appeal expressly made detailed reference to an instructive report by the House of Commons Women and Equalities Select Committee, which recognised the beneficial part NDAs can play in facilitating consensual settlement. Everyone, not only lawyers, knows that in general terms settlements are to be encouraged. They save money and time, and they avoid a great deal of harassment and distress. Of course, settlements and NDAs within them can be abused, but generally speaking they are to be encouraged.

The Court of Appeal made an interim order restricting or prohibiting disclosure, but also directed that the matter should move at speed towards a trial. At that trial detailed arguments would have been put by both sides of the case concerning the function of NDAs and whether, in the long term, it is desirable for there to be a general recognition that NDAs are worthless because they can be ignored with impunity. There would quite swiftly have been an authoritative judgment of great assistance not only to lawyers but to anyone concerned with this area. What in fact happened, of course, was that the noble Lord’s intervention, which was I think in breach of the sub judice rule, did not merely influence the outcome of the litigation, but in effect determined it.

Some further steps were then taken in the litigation that I will mention briefly, because time restricts me. There was a hearing before Mr Justice Warby at which Sir Philip Green’s lawyers made it clear that they were going to pursue the question of who disclosed his name and other matters to the noble Lord, Lord Hain. The judge did not dismiss that suggestion immediately. Instead, he took steps to bring it to the attention of the Lord Speaker so that he could, if he so chose, make representations on behalf of Parliament. The prospect came into view of a court having to consider an application for an order compelling the noble Lord, Lord Hain, to disclose his source on pain of being found in contempt of court. I suspect that that would not have happened, for all sorts of reasons, but the fact that that prospect came into view might indicate just how unfortunate it is for litigation to be derailed in this way.

Almost inevitably, there was then a discontinuance of the proceedings in circumstances in which there had been no adjudication. That left the judge with the very difficult task of having to sort out issues of costs without knowing who had won. All in all, if noble Lords read that sequence of three judgments, they will see that the litigation was derailed in a way that I think is fairly characterised as the course of justice being perverted.

There are clearly cases in which it would be appropriate for a parliamentarian to disclose matters that are subject to an injunction. Such cases would normally involve the parliamentarian giving careful and conscientious consideration to the course of the litigation and deciding that the course of justice had been perverted. I respectfully suggest that this was not one of those cases.

Civil Liability Bill [HL]

Lord Trevethin and Oaksey Excerpts

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

[Lord Faulks (Con)]

My Lords, I declare an interest as a racketeering lawyer, as my noble friend Lord Blencathra would have it, although it has been some time since I was involved in whiplash claims.

I accept that there are genuine whiplash claims and that some whiplash problems last for a considerable time and can cause difficulties that continue well beyond six months, 12 months or even two years. The majority do not. However, the legislation we are concerned with here ought to be clear—I agree with all noble Lords who have said this—which would mean a definition in the Bill. This has been a problem for this Government and previous Governments and we have to accept that we are dealing with a slippery and powerful opposition in trying to pin down this racket.

Whiplash injuries have an attraction for fraudsters because, as no doubt my noble friend Lord Ribeiro will confirm, they are difficult to prove or disprove on medical analysis—they do not show up on scans of any sort—and doctors have to rely on the veracity of the patient to satisfy themselves that they may or may not have whiplash symptoms.

We do not want to pin down a definition of whiplash injuries and the nation’s necks appear to improve, only for its lower backs to deteriorate, and suddenly we are invited to consider claims in which, as a result of some movement of the thorax, lumbar or cervical regions in an accident, all the symptoms are referable to the lower back, which is outside the definition and would be equally difficult to prove or disprove. I therefore counsel the House to use caution in saying that we must pin down the definition. As legislators that is of course desirable but we want to help the Government to deal with this problem.

A similar issue arose during consideration of the Psychoactive Substances Bill, when everyone in the House said that we must be clear as to what the substances are and put them in the Bill. However, the conclusion was that we should not do this because of the infinite adaptability of those who produce such substances. While I sympathise as a matter of principle with those who have spoken—I will listen with interest to what my noble and learned friend says—we should be careful not to do anything which may assist those who have perpetuated this racket.

[Lord Trevethin and Oaksey (CB)]

My Lords, I support everything that has been said by every lawyer who has spoken this morning. Clearly, the Bill needs a definition. However, I also agree with what the noble Lord, Lord Faulks, has said about the difficulty that has arisen in constructing the definition.

The House will not be able to tell whether the Bill will work as a matter of practical justice until we see the definition. It will need to be a broad definition for the reasons given by the noble Lord, Lord Faulks. It is easy to foresee that when the Bill passes into law, as it probably will, there will then develop heavy tactical warfare between those acting on the claimant’s side and those acting on the defendant’s side, which will be focused on the precise wording of the definition. If there is undue looseness in the definition, that warfare will clog up the courts and be generally undesirable.

In short—I do not disagree with anything I have heard this morning—it is clearly necessary for the Bill to contain a definition and for this House to consider the proposed definition in minute detail and with great care to ensure that the Bill works when it passes into law.

[Lord Hunt of Wirral (Con)]

My Lords, I agree with the noble Lord, Lord Trevethin and Oaksey, and my noble friend Lord Faulks. In doing so, I declare my interests as set out in the register.

I too have sympathy for my noble and learned friend the Minister. This is a good opportunity to remind ourselves why we need this legislation. Late last night, at a most inconvenient time, I received a call urging me to bring a claim. I do not know how many noble Lords have had the same but there is an industry out there. That is why working out a definition will be quite a challenge.

This problem needs urgent attention. Noble Lords may know that I have been pursuing this line of argument for 15 years. I have watched this claims industry grow and make life intolerable for so many people. In the last 10 years, the number of reported road accidents has gone down by 30%, but in the same period the number of injury claims has gone up by at least 40%. We have a problem.

I received copious briefings from vested interests who are completely opposed to any whiplash reform on the basis that it threatens access to justice for injured people, but a lot of these briefings come from companies with a commercial interest in the presentation of these claims. I think that the threat is more to their income and profits than they are prepared to admit. I want to quote Sir Rupert Jackson, albeit from seven years ago:

“There is currently far too much money swilling around in the personal injuries system and the beneficiaries are not the claimants, but usually the referrers and (when no referral fee is paid) the lawyers”.


He made that point in a different context but it is a good reminder that we are dealing with a pretty serious problem. Governments have tried before to reduce the cost of whiplash claims but the measures used, including the banning of referral fees, have not succeeded in bringing the number of claims in check.

Some noble Lords will try to argue to the contrary although they have not participated so far in the debate, but any reported decrease in the number of whiplash claims is probably because they are being described as something else. A neck injury becomes an injury to the spine or the shoulder or the back. As my noble friend Lord Faulks pointed out, this is a moving target. I have a great deal of sympathy for my noble and learned friend the Minister.

I suppose that this set of reforms is different from what has gone before. It is targeted specifically at reducing the number of claims. In view of the reduction in accident numbers, this must surely be the right target. That is why we have provisions such as a tariff set by the Lord Chancellor. This is a socio-political problem, not a medical or even a truly legal one. It needs a political policy steer, not just to be handed back to judges to exercise controls. Indeed, the Judicial College has acknowledged that this is not its role:

“We stress again that we do not attempt to prescribe what levels of damages ought to be awarded”.


In truth, judges assess very few of these low-value claims; when they do, it is usually because there is an unusual factor involved.

The industry—it is a commercial industry—that brings these claims is highly adaptive. I welcome the opportunity given to us by the noble Earl, Lord Kinnoull, and my noble and learned friend to look at the definition. The reforms in 2013 led to an early move by road accident solicitors into industrial deafness claims and clinical negligence claims, and the call that I received last night urged me to bring a claim because of some alleged sickness I had suffered on a holiday I never took. Let us not avoid the fact that we need to confront these waves of claims. There is time for more drastic action. Of course, I agree with the Delegated Powers and Regulatory Reform Committee. Noble Lords are well-versed in arguments about Henry VIII powers but in this case, with due respect to the committee, the concerns may be misplaced.

The action that the Government need to take must be radical but also fleet of foot. That is the key to understanding why the majority of the measures are subject to regulations. It is also essential that this Bill does not stray into narrow, overly medical or overly legalistic terms that are easily circumvented. Having said all that, I can hardly wait to hear what my noble and learned friend the Minister has to say.

--- Later in debate ---

[Lord Faulks]

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

[Lord Trevethin and Oaksey]

Before the Minister responds perhaps I may, in the probing spirit of the amendments, mention one point that has occurred to me in light of the noble Earl’s proposed deletion of the word “psychological” from various provisions in Clause 2. I completely understand what the Government are hoping to achieve by using the term “minor psychological injury” in those provisions. I imagine they have in mind the fact that in cases of the type we are considering, it did become routine, and probably still is routine, for claimants to be advised to get a supportive report from a psychiatrist that uses the term “post-traumatic stress neurosis” or something similar as a way of enhancing the eventual award. I can see that that is a problem that the use of the term “psychological injury” is directed at.

The noble Earl makes a significant point when he refers to the bruised or gashed knee of the claimant in this type of case. I am not sure how that type of case, where there is a whiplash injury but also some other injury that is outside the definition of whiplash injuries, will be satisfactorily addressed. I imagine that the tariff award for whiplash injury will be fairly low. I do not have the answer to this problem, but I am contemplating the position that will arise when a claimant has suffered a whiplash injury and is entitled to the tariff award, which may be only a few hundred pounds, but has also suffered a probably rather less serious injury to, say, his or her knee. A gashed or bruised knee might stop them from playing football, skiing or whatever it may be, and would be worth, I guess, a few hundred pounds—it might edge into £1,000. You might get an anomalous outcome that would involve claimants recovering more for very trivial injuries to the lower part of the body than they are entitled to recover, pursuant to the Bill, for the relevant whiplash injury. I do not know what the answer is, but it is a potential problem.

Bach Commission: The Right to Justice

Lord Trevethin and Oaksey Excerpts

Thursday 14th December 2017 Lords Chamber

[Lord Trevethin and Oaksey (CB)]

I, too, add my tribute to the work of the commission and will, in the time available, add a few short observations from the perspective of a practising barrister—I declare an interest in that respect.

I will start by adding a respectful coda to what the noble and learned Lord, Lord Judge, had to say about the problems posed by litigants in person. I have asked juniors in my chambers, and my son and his friends, who are starting out at the Bar, about their day-to-day experience at the Bar, and I hear one theme again and again. They say, “Well, it’s all right, I’m enjoying it and there’s a fair amount of work, but I’m against litigants in person 70% or 80% of the time”. Practising lawyers and judges all know what that means. It creates major problems. First, there is an honourable tradition at the Bar that, if you are against a litigant in person, you behave yourself, if I may put it that way; you give proper assistance, as you should anyway, to the court in relation to the relevant principles and facts, which is important.

The unfortunate side-effect in some cases is that your client begins to wonder whose side you are on, and that creates difficulties. Then the judge is placed in a difficult position, as the noble and learned Lord, Lord Judge, said, because the judge will find that he or she has to intervene in the cross-examination of witnesses and at other times in a way that gives rise to a perception of bias—and litigants are very swift to perceive bias, even when it is not there. My sources tell me that the consequence is that cases take two, three or four times as long as they should and that often they are being fought when they would not have been fought if access to legal advice had been provided to both sides at the outset. So that is a major problem with major, substantial, uncounted costs flowing from it, which has been greatly exacerbated by the reforms with which this debate is concerned.

I will just mention the criminal justice system, which has not received very much air time today. I talked to the ex-chairman of the Criminal Bar Association about the current position. He made many points to me, but I do not have time to relay them to the House. He made one point that was very striking and which chimes with something said by Sir Henry Brooke in one of his very readable and compelling appendices. He said that the junior Bar is shrinking—it has shrunk by something like 25% or 30% over the past five years—because publicly funded work is becoming very difficult to carry out in any satisfactory way.

The line in the report that caught my eye in that respect was an observation that the age profile, as Sir Henry put it, of criminal practitioners, is rising fast—that is, those doing crime on the solicitors’ side of the profession are getting older and older. The consequence is going to be that, in 15 or 20 years’ time, there will be a dearth of candidates to sit on the Crown Court bench, and the very high quality of Crown Court judges who dispose of criminal cases up and down the land will be diminished as a result of the shrinking of the publicly funded profession, in the way that I have mentioned, and which we all recognise is taking place.

I shall seek to put some flesh on the real problem about access to justice that now exists by mentioning three or four cases that I have come across in one way or another. I take first a case that a friend of my son mentioned to me. He was working for the Free Representation Unit and he came across the case of an employee who had been cynically short-changed by his employer over a number of months to the tune of about £500—a sum that he badly needed. His employment came to an end and he wanted to get that sum back. He had a clear right to get it back under the relevant legislation but, as a result of changes that were recently declared unlawful by the Supreme Court but which were operative at the time, he would have had to pay £900 to bring the proceedings that technically he was legally entitled to bring. That change to the fee system in the employment tribunals converted a real right into a pseudo-right or non-right, and it has now been declared unlawful—although the Minister’s response to the Supreme Court decision did not appear to me to recognise how serious the error that had been made was.

Secondly, I will cite a case in which a father was seeking access to his children and was accused of the sexual abuse of one of them. He was unable to afford representation. The Court of Appeal held that the judge had no power to direct that the state provide representation but recommended statutory change in May 2015—which statutory change has not yet occurred.

Thirdly—and finally, before time runs out—I will cite a case mentioned on page 59 of appendix 5, written by Sir Henry Brooke, which is very well worth reading. The case concerns the death of a child called Zane as a result of either carbon monoxide poisoning or of cyanide poisoning from a local landfill site. The child’s family appeared at the inquest against three QCs representing the Environment Agency, the local council and some other interested party, but they could not get legal aid and therefore had to resort to crowd funding to afford representation. These are very substantial problems.