Civil Liability Bill [HL]

Lord Woolf Excerpts

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

[Lord Woolf (CB)]

My Lords, we have had great help on this subject in the preceding speeches. Perhaps I should begin by giving my thanks to the noble and learned Lord, Lord Mackay, who is in his place, because many years ago he gave me the task of looking at civil justice with a view to producing a report on access to justice, which I did. Since that time the report has had a significant influence. However, when I wrote that report I could not possibly have anticipated the changes that would be needed as time went on, and what has just been said by the last speaker emphasises the fact that perhaps there are advantages in learning from experience.

There is no doubt in my mind about the problem that this Bill is intended to deal with, particularly in Part 1. Unfortunately, I could not take part in the discussion that took place on that part because I was not in the country at the time, but I shall try to avoid saying on Part 2 what I failed to say on Part 1 and thus use up the time of the Committee. However, to some extent one has to look at the whole of the situation in order to get the context. I would emphasise that although the Government’s motives here are good, they must appreciate that there are real dangers in interfering with the normal machinery used for dealing with questions around the assessment of damages which follow injuries. It is very important that justice is done in the case of small damages claims just as it is in large claims. One of the matters that I complain about in the whole of the Bill is that it is taking on responsibilities which are better dealt with elsewhere.

First, it is obvious that the assessment of damages has always been the responsibility and under the control of the judiciary. Indeed, following my report, it was initially felt that legislation was not required because the Civil Procedure Rule Committee and other methods existed which meant that changes could be made that were flexible. What one really has to do is get the culture right, and the culture is that those who are justly entitled—not those who make false claims—are given the proper award by what justice lays down for them on the circumstances of their case. I may well come back to this subject on Third Reading or on Report because Part 1 introduced principles that, as far as I saw it from what was said, were novel in so far as they distinguished between two people with very similar claims in the same circumstances by imposing artificial caps on damages. That leads to bad justice, I would say, in the sense of unfairness, as was said by other noble Lords when considering Part 1.

Coming on to what is being proposed—particularly by the noble Lord, Lord Hodgson, in his admirable remarks in support of his amendment—I want to make it clear that this matter is very important. Obviously, it is very desirable, as a matter of principle, for the courts to be given the power to make awards that will reflect the future. You cannot complain if the situation changes, so as to make the award of compensation either too low or too high, if it is able to be put right. As I understand it, the noble Lord, Lord Hodgson, has suggested machinery for doing that very thing, which is obviously a very significant change from what has happened so far in the courts. Therefore, leaving it to the courts to exercise flexibility and carry forward the principles that the legislation could support, as far as the detail in individual cases is concerned—so that they evolve with experience as well as with the change of facts—would be a very much better and more just result for the litigant. In fact, it would lead to economies in costs, which was one of the Government’s motives in the legislation.

If we have bad law, people will want to challenge it. They will argue against it and seek to lever the facts of their case into a situation that does not justify that approach. However, having a broad and wide approach that evolves in the way I said it should, and can—because of the intervention of either the rule committee or practice directions, which can be done by judges without the committee—is a much better way forward. In principle, we want to take what has been urged by the noble Lord, Lord Hodgson, and apply it. That would leave it to those who do the work day by day to do it in the best practical way.

[Lord Beecham (Lab)]

My Lords, it is a great pleasure to follow the noble and learned Lord, Lord Woolf. We very much look forward to his participation at this stage and on Report.

At the outset of our discussion on Part 2, I want to set out the underlying approach that we on these Benches are adopting. The Bill and the problem that it seeks to address in Clause 8 represent a challenge to two groups. The first comprises those who have suffered serious injuries that, in many cases, will have a lasting impact on their well-being and will engender financial loss, expense, pain and discomfort. The second group includes the first one, but it potentially extends to everyone who will require the services of the National Health Service at some point. We ought not to protect the second group at the expense of the first by artificially limiting the compensation payable to victims of negligence, whether by the NHS or other parties. We should look at ways to fund any liabilities incurred by the NHS for clinical negligence claims as part of society’s financial responsibility to maintain the service, rather than looking to victims to do so.

Periodical payments, to which noble Lords have already referred, clearly have an important future role and we would certainly wish to see them carried forward. The amendments before us touch on a number of issues. Amendment 92 calls for a review of periodical payment orders within a period of six months of this part of the Act coming into force. That might be too tight a timetable. The work certainly needs to be done, but that strikes me as potentially rather early.

--- Later in debate ---

[Lord Woolf]

There is an answer to the problem that the noble and learned Lord raises. It might have implications for the workload of the judiciary but I think that could be handled. We should get away from the idea that a judge should assess damages in appropriate cases only at one stage. There is no reason why you cannot have a system where the matter can be restored to a judge in a case of differences of opinion to take into account succeeding circumstances. If the power existed, the courts would find that in the majority of cases, litigants—properly advised, as they are in these big cases—would come back only when there was a real difficulty between the insurer in practice and the claimant. In that way, matters could be reviewed to reflect any differing circumstances. It was not a one-off assessment that I was advocating but the ability to change the assessment. That would apply to PPOs as it would to any other laws.

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

My Lords, I am obliged to my noble friend Lord Hodgson for setting out the background to this matter. His Amendment 55 would require what he referred to as new rules of court to be made that highlight features of periodical payment orders which may make them a more appropriate way for a person with a long-term injury to receive an award for damages for future care costs. I understand that Amendment 55 and the other amendments in this group are essentially probing amendments.

“Rules of court” in Amendment 55 means the Civil Procedure Rules. The purpose of the Civil Procedure Rules—and, indeed, all rules of court—is to govern the practice and procedure of the court and the parties in court proceedings. This may be a technical issue but that does not detract from the importance of ensuring that claimants who have suffered long-term serious injuries are well informed as to the implications of their choice between a lump sum payment of damages and a PPO. I am conscious of the point made by the noble and learned Lord, Lord Mackay of Clashfern, about the care that the Executive must always exercise in circumstances where it may be perceived that they are giving directions to the judiciary. I will explain why the Government therefore take a more modest approach to this issue but one which they feel will be effective.

Of course, some Civil Procedure Rules have been made in relation to the exercise by the court of its powers under Section 2(1) of the Damages Act 1996 to order that all or part of an award of damages in respect of personal injury is to take the form of a periodical payment order. These rules already require the court to consider all the circumstances of the case, as well as the preferences of the claimant and defendant and the reasons for them. I appreciate that there are instances in which PPOs may not be available; for example, a mutual insurer such as the Medical Defence Union would not be considered sufficiently well reserved to meet future liabilities. I appreciate also that there have been reservations among insurers about the use of PPOs because of the way in which they are required to reserve for them and the capital requirements related to that.

PPOs are certainly in principle considered a better form of taking compensation for future loss than a lump sum because they provide strong protection for claimants who may be concerned about the return on a lump sum. This Government certainly support their use. At the same time, we must keep in mind that the person behind a claim has a choice and is entitled to make one in such circumstances. We consider it important that claimants making a choice in these circumstances should be properly informed, irrespective of whether their particular case reaches such a stage that the court has to consider whether to order a PPO. Of course, not every case will reach the court; many will be settled before that and, at an earlier stage, claimants have to be properly informed as to which option they should adopt.

I note the point made by the noble and learned Lord, Lord Judge, with which I entirely agree. It is perhaps moot to say that no estimate of life expectancy is ever precisely accurate because they are just that—estimates—and one takes that out of the equation where you have a PPO.

The Government remain fully committed to ensuring that appropriate advice is available to claimants in all cases and stand by the commitments they made to action in their response to the Justice Select Committee. To pick up on the points made by the noble and learned Lord, Lord Hope of Craighead, the point made in paragraph 50 of the response to the JSC was a concern to ensure that guidance was provided to individual claimants. It is our intention to put in place appropriate guidance and to ensure that it is available. We aim to do that by the end of 2018. In addition, we are investigating whether current advice received by claimants on the respective benefits of lump sums and PPOs is effective, and whether there are other ways in which the use of PPOs could be increased within the present system. At present, we intend to complete this work by the summer of 2019.

I hope that goes some way to meeting the concerns expressed by the noble Earl, Lord Kinnoull, on these matters. He raised a further question on indexing and I think the noble Lord, Lord Monks, touched on this. The reason that the ASHE 6115 index is taken is that it is the specific care costs index. It may be that wage costs have not increased at the same rate as the wider RPI, which may explain the discrepancy the noble Earl pointed out. However, the ASHE 6115 index is a specific care costs index, which is why that has been employed in the past.

Amendment 92 would require the Lord Chancellor to conduct a review of the impact of setting a new discount rate on the extent to which PPOs are made by the courts, but within six months of the provisions in Part 2 of the Bill coming into force, and then to publish a report of the results within 18 months of commencement. As the noble Lord, Lord Beecham, hinted, that may be far too tight a timescale to produce an effective report. We certainly do not consider that a requirement to carry out a review of this nature at the time proposed would be particularly informative. That is because the first review of the rate under the Bill would probably not have been completed by the time at which completing the review under this amendment would be required. Effectively, that would mean that the review would have to focus on any impact that had resulted from the setting of the rate as of March 2017 under the present law, which was a rate of minus 0.75%. I suppose that such a review may, however, be of limited use given that the legal framework for setting the rate would have changed but I suspect that it would tell us only something about the past, not the future.

I also observe that the settlement of major cases can take some years to agree, whether or not they arrive at the door of the court, so it might be some time before there is sufficient evidence to draw meaningful conclusions about changes in claimant behaviour. We do not yet have the statistical information about the effect of the March 2017 change in the discount rate on the use of PPOs. We therefore do not know whether the lowering of the rate has diminished the take-up of PPOs, although there is certainly some anecdotal evidence to that effect. It is logical to assume that this would occur, given the size of the change that took place in March 2017.

The evidence from the previous four years does, however, suggest that the use of PPOs is concentrated in the most serious and long-term cases, with the propensity to use them increasing with the size of awards up to about £5 million. They are not really employed in cases where the award of damages is lower than £1 million. That is largely because the use of PPOs is concentrated on provision for future care costs—long-term care costs, generally in cases of catastrophic injury. That is why there is a large percentage of cases in which PPOs are not considered appropriate. The National Health Service pays out PPOs in about 70% of awards over £1 million, while the equivalent figure for insurers is only about 36%, and there may be further work to be done. That is why we are going to look at the question of further guidance in order to encourage their use. Certainly, the take-up is far from negligible in serious cases.

On the comment of the noble Lord, Lord Beecham, this is not just about funding clinical negligence claims by the NHS. It goes far deeper than that; it is about ensuring fairness between claimants and defendants in the difficult process of assessing damages, particularly damages awarded for future care. I do not accept the noble Lord’s general point that we are simply trying to move the cost of future care from victims to somewhere else. That is not what we are about; this is concerned with ensuring fairness between claimants and defendants.

I have spoken about the way in which the amendments would require some sort of review. Amendment 92A would also require such a review to assess whether the fact that a PPO may be uprated by reference to an inflation index other than the retail prices index is having an impact on the relative merits of PPOs versus lump sums in the context of a revised discount rate. That would go beyond a consideration of the impact of the discount rate to the overall level of damages award, and how individual elements may be indexed for inflation. At present, the index used for PPOs is a very specific care cost index rather than the RPI.

We will, as I have indicated, be taking forward a range of initiatives to encourage the use of PPOs and to ensure that claimants are properly advised when choosing the form of their award. We hope to have the first part of that process completed by the end of 2018 and the wider investigation completed by the summer of 2019. We believe that those practical steps will encourage the use of PPOs where appropriate—we will, of course, monitor that—and create a situation in which a review requirement, such as that envisaged by the amendments, will not be necessary. Indeed, it would be more appropriate to move in this direction rather than find ourselves in the somewhat invidious position of the Executive sending out directions to the judiciary about how it should approach the award and determination of damages in such serious cases.

With that explanation of the Government’s position, I hope the Committee will be reassured that we are committed to effective action to encourage the use of PPOs. On that basis, I invite the noble Lord to withdraw the amendment.