Civil Liability Bill [HL]

Lord Judge Excerpts

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

[Baroness Berridge (Con)]

My Lords, I have added my name to the amendment in the names of the noble Lords, Lord Sharkey and Lord Marks. I agree with the comments of the chairman of the Delegated Powers Committee, although obviously I cannot comment on the legal qualifications of the person who telephoned him. As I outlined at Second Reading, I have practised in this area and have dealt with these claims, and I know that it has become something of a fashion to be quite derogatory about the role of advocates and lawyers. When I joined the Bar, it was one of the proudest moments of my life. People becoming lawyers and acting as advocates so that someone is not a litigant in person is an incredibly valuable part of our system, and as we discuss further amendments we should all bear that in mind. Having an advocate when you are an ordinary person—potentially with three part-time jobs on the London living wage—so that you do not have to deal with such calls is valuable, and I implore us to look at our lawyers in a better light than is often the case in our culture.

[Lord Judge (CB)]

Perhaps I may add a few words. Of course the definition of whiplash has to be made by doctors—that is how the world works—but we are engaged in legislation. This word must have a legal meaning and it must be enshrined either in a statute or in regulations. The Bill approaches the problem by putting the legislative cart before the legislative horse. If we are being asked to enact legislation in which we do not know precisely what the word means, we are being asked to do something that we should not be asked to do.

[Lord Marks of Henley-on-Thames (LD)]

My Lords, perhaps I may add to what the noble Baroness, Lady Berridge, has just said. I agree with her and stress that this is not just a case of racketeering lawyers. One problem that we need to grapple with at this stage of the Bill is that the cold-calling racket and the encouragement of claims comes from claims management companies as well, often from abroad. They can also come from those who offer free hire cars to those who will pursue claims, and they can add a personal injury claim. The same applies to people who repair cars. There is all that potential for racketeering to jack up these claims, and we accept that there is a very serious problem.

I come back to the point about the definition. I agree with all those speakers who have said that the definition has to be in the Bill. The noble and learned Lord, Lord Judge, very concisely just explained why it has to go in the Bill and why it is insufficient for it simply to be in draft regulations at this stage.

Perhaps I may say a word or two more about the Delegated Powers and Regulatory Reform Committee, chaired by the noble Lord, Lord Blencathra. I served on it for three years when my noble friend Lady Thomas of Winchester chaired it. The general practice then was for the Government to accept the recommendations of that committee. We took the responsibility of considering the delegated powers in every Bill that came through this House extremely seriously and in an almost entirely non-partisan manner. We were guided and assisted by clerks who were astute to ensure that their advice was based on precedent and on principles, and the principles were published.

Civil Liability Bill [HL]

Lord Judge Excerpts

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

[Lord Hope of Craighead (CB)]

My Lords, I want to draw attention to one or two other passages in the Government’s response, to which the noble Lord, Lord Hodgson, referred in his excellent introduction. Two features caught my eye. One is in paragraph 45. The Justice Select Committee had drawn attention to quite strong representation for the Civil Procedure Rules to make it a requirement that PPOs be offered; its advice was against that, because it was reasonably clear that not every case made a PPO appropriate—one has to be selective; some cases are better suited than others. The point of mentioning that is that one could adopt the approach of amending Section 100 of the 2003 Act, which is the basis for the award of PPOs, to toughen up the requirement that they be offered in every case, but that is not what is being suggested and, I think, rightly so.

The other question is whether rules of court are best equipped to deal with the problem. That is why I draw attention to what is said in paragraphs 50 and 51 of the Government’s response. In passages that are written out in heavy print and underlined, they undertake to,

“investigate the quality and effectiveness of the advice currently available”,

with a view to endorsing,

“guidance on standard practice to ensure that claimants are properly informed”.

Will the Minister expand a little on what the Government had in mind in that passage? Was it guidance rather than amendments to the Civil Procedure Rules, guidance to lie alongside the Civil Procedure Rules or guidance which will inform the committees responsible for the revision of those rules?

What comes through from that and the following paragraph is that further investigation is in the mind of the Government. A little more information may be needed before the rules are revised in the way that the noble Lord, Lord Hodgson, has in mind. If the Minister could expand a bit on that, it would be very helpful.

[Lord Judge (CB)]

My Lords, I apologise to the Committee that I was not here for the first 90 seconds of what the noble Lord, Lord Hodgson, had to say, but I came puffing in as quickly as I could.

In our discussions so far, which I entirely understand and support, one feature has not yet been mentioned: the advantage of the PPO in the process from the point of view of the unfortunate man or woman who has suffered serious or catastrophic injuries. Both at the Bar and as a judge, one thing that you have to look at is how long the unfortunate individual concerned will actually live. I am sorry to say so, but when you talk to your client and say, “We have to discuss how long you will live”, or to the parents of a child who has suffered catastrophic injuries, “We are discussing how long your little boy or your little girl will live”, you are treading on what is obviously deeply sensitive ground. The answer is that it has to be discussed if you are proceeding by way of lump sum, because the calculation of damages depends significantly on whatever the medical experts say the life expectation of the man, the woman, the little boy or the little girl is likely to be.

The medical experts I dealt with were men and women of the utmost integrity. They would do their best. They would say, “Well, the best I can do is X”, or Y or Z. What you discovered after a little while doing these sorts of cases was that, actually, what they were doing—and who can blame them?—was taking an average: “We have had so many patients aged between 21 and 25 who have suffered these sorts of injuries, and they have lived for so long and then they have died”. So in addition to the sensitivities that go into a discussion of how long will the victim—the plaintiff, as they used to be in those days—suffer, be alive, and how long will the damages have to cater for his or her interests, there is also the uncertainty of the medical evidence, because no doctor can tell you.

I still remember a very distinguished surgeon from Stoke Mandeville, who, when I asked him this question in a conference just before I became a judge, said, “Well, we are asked the most ridiculous questions. We do our best. We offer you the best. The truth is that we do not know when this man or this woman’s will to live will go. When the will to live goes, that is when they will die. Some will wish to live and will have the will to live for longer than others, so what we are offering you is the best we can do”. He did not say, and it would not be fair to say, that it is speculative: it is the best they can do but, inevitably, it is almost certainly not going to be right. The end result is that the damages will be too much or too little. The great advantage of the PPO system is that it caters for however long this unfortunate injured person actually lives. I support the idea behind this amendment.

[Lord Mackay of Clashfern (Con)]

My Lords, I am very interested and concerned in this matter because I was very concerned about it a long time ago. The problem, I think, is to know what you should say in the rules of court, assuming you are making new rules, about this. How do you commend the PPO, because, as has just been said, a PPO is more suitable in some cases than others? I would like to hear in due course what help we can get in that respect. How do you distinguish between the cases in which PPOs are going to be good and cases in which they are not? As the noble and learned Lord, Lord Judge, has just said, the difficulty of estimating life expectancy is extremely high; it is a very difficult thing to do. In a sense, whether or not a PPO is a good thing depends to a certain extent on how secure that estimate is. How you measure that is quite difficult.

As has been said, actuaries proceed on an average. The Ogden tables we used to have long ago were primarily actuarial tables which depend on averages. As the noble and learned Lord, Lord Judge, said, the one thing you can almost be certain about is that the particular case will not be average: it will either be less or more. How you determine that, unless you are a very shrewd prophet, is quite a difficult question. That is the difficulty that faces judges in these cases every day, particularly where the likelihood is that the injury will continue to have effects long into the future.

Not only do you have to consider the injuries and the effects of the injuries, but you also have to think a bit about what the noble Earl, Lord Kinnoull, pointed out, which is that what inflation is going to do to the costs of care may vary very considerably. So I appreciate the need to do what we can to encourage PPOs; on the other hand, I appreciate the difficulty of formulating the help that judges need.

Of course, ultimately this point will be determined by the judge in charge of the case, not by any rules that may be laid down in order to provide guidance. I am not very keen, I must say, on the Executive giving guidance to the judiciary. I honestly think that that is a dangerous line. I was not very keen on doing it for the magistrates. The Home Office tried to develop some way of doing that, which I did my best to discourage because I do not believe that it is for the Executive to give guidance to the judiciary. Their roles are completely different from and independent of one another. Let the Executive get on with their work, but let the judiciary alone get on with its work.

--- Later in debate ---

[Lord Sharkey]

My Lords, we have Amendments 60, 64, 67, 68 and 71 in this group. They all have the same purpose. All are aimed at bringing forward the date of the first review of the PIDR and I want to thank the MDDUS for its help in drafting.

Amendments 60, 64, 67 and 68 each bring forward, in the appropriate place in the Bill, the start date for the first review of the PIDR to 30 days from commencement, which now seems rather timid in light of the proposals put forward by the noble Earl, Lord Kinnoull, and the noble Lord, Lord Faulks. However, as things stand, the Bill specifies a 90-day period from commencement within which the first review must start. The likely timing for the new rate determination to take effect is set out on page 3 of the Minister’s letter to us of 30 April. He said:

“Assuming the Bill receives Royal assent this year and that the provisions are brought into force within two months, the statutory timetable means the first review would be completed before the end of 2019”.


That is to take too long. Specifically, the 90-day period from commencement to the start of the first review is too long, so is the 180 days from the review start to its conclusion, and so is the unsatisfactory commencement provision in Clause 11(1), which allows the Secretary of State to choose any commencement date that he likes.

Our Amendment 71, which I will come to an a moment, deals with the 180-day period and the noble Earl’s later amendment in this group, Amendment 94, to which he has already spoken, deals with the commencement date issue. For the moment, I will speak only to the amendments that deal with the period within which the rate review must begin after commencement. The Bill specifies 90 days. We see no reason why it should be as long as that and our amendments reduce that period to 30 days.

The protracted timetable imposed by the Bill is unnecessary and inflicts real damage. Most noble Lords would agree that the current PIDR is causing real commercial harm. It is also causing real and irreversible financial damage to the NHS. For each month that the current rate operates, the NHS must accrue an additional £300 million against future clinical negligence claims. Those are enormous sums that would be much better spent on front-line activity in the NHS.

Amendment 71 also aims to bring forward the date of the first review. It addresses the length of the consultation period, who must be consulted and the length of the whole review period. Amendment 71 replaces paragraph 2 in new Schedule A1, inserted into the Damages Act 1996 by Clause 8(2) of the Bill. Paragraph 2 as it stands sets out the various elements of the timetable for conducting reviews of the PIDR and the timetable applies to the first and subsequent reviews. New paragraph 2 also sets out who must be consulted in the course of the reviews. It stipulates that the determination of whether to change the rate must be within the 180-day review period. That period must start no later than 90 days following commencement, which is left entirely to the discretion of the Secretary of State.

Amendment 71 replicates new paragraph 2, except that it addresses itself only to the first review and makes the following changes: it shortens the review period from 180 days to 90 days; it shortens the 90-day consultation period to 60 days; and it restricts the consultation for the first review to the Government Actuary—or his deputy if the office is vacant—and the Treasury. In other words, there is no consultation with the expert panel defined in paragraph 5 of new Schedule A1. Actually, it follows the original proposal made in the September 2017 Command Paper. Amendment 71 then goes on to restore all the existing provisions of paragraph 2 so that they no longer apply to the first review but to every subsequent review.

Our amendments in this group, together with Amendment 94 of the noble Earl, Lord Kinnoull, would significantly bring forward the review. By the Minister’s estimate, the Bill would produce the first review by the end of 2019 if all goes well. Our amendments, taken together, would produce the first rate review by mid-2019, at least six months earlier. This is what we should do and I commend these amendments to the Committee.

[Lord Judge]

My Lords, if we are to establish an expert panel for the review, and the Lord Chancellor has not yet done so, might it be a good idea for him to decide whom he wishes to invite to join it? Unless something is done about that, just finding the panel will itself add to the time taken.

[Lord Hunt of Wirral (Con)]

My Lords, I declare my interest as set out in the register, particularly as a partner in the global commercial law firm DAC Beachcroft. I completely agree with the words of the noble Earl. I understand that it is a favourite expression of officials in the Ministry of Justice that they are proceeding “at pace”. This group of amendments and the important concept of a shadow process prior to Royal Assent at Amendment 89, which we will look at a little later, give the Minister a range of options from which to choose to demonstrate that he intends to do just that.

I will focus on and entirely support Amendments 58 and 94. The Bill allows a number of different periods, which could lead to delay. The amendments ask the Minister to consider better and more rigorous options. The idea of any delay between Royal Assent and commencement is of particular concern because it is open-ended and uncontrolled. As has been mentioned, in his letter of 30 April to noble Lords the Minister suggests that a period of two months may be needed, but there is no indication why. No regulations are needed. The decisions that need to be made to constitute the expert panel, as just mentioned by the noble and learned Lord, Lord Judge, are obvious ones, and even if they have not been made already, the Minister still has a few months before Royal Assent in which to consider them.

My concern is that there is nothing to keep it to two months; it could turn into two years or more. I recall that the Third Parties (Rights against Insurers) Act 2010 was an uncontroversial statute, so much so that it was first considered in this House under the accelerated procedures for Bills proposed by the Law Commission, and indeed I participated in those debates. It received Royal Assent on 25 March 2010 but was not brought into force until 1 August 2016, more than six years later. I am sure that that will not happen in this case, but it is an example of how open-ended periods can give rise to all sorts of uncertainty and problems.

I am personally attracted to the idea of removing any possible delay between Royal Assent and commencement or between the commencement of Part 2 and the start of the first review. I therefore earnestly encourage the Minister to find a way of accepting these two amendments.

Civil Liability Bill [HL]

Lord Judge Excerpts

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

[Viscount Hailsham]

My Lords, I shall comment on an amendment that has not been spoken to—Amendment 12, which I think will be articulated by the noble and learned Lord, Lord Judge—and, more precisely, on the proposed new clauses, spoken to so admirably by the noble and learned Lord, Lord Woolf.

Amendment 12 seems manifestly sensible. Of course the Lord Chief Justice should be consulted by the Lord Chancellor. That is particularly important when one bears in mind that many Lord Chancellors nowadays are not lawyers and will therefore be entirely dependent on the advice of their officials, who might themselves not be lawyers. Therefore, it seems admirable that we should put into statute a requirement that the Lord Chief Justice be consulted. If the Minister says, “But of course he will be”, all I can say is that Ministers sometimes have a curious habit of forgetting the obvious and their obligations. For example, I was rather surprised about three weeks ago when the noble Lord, Lord Callanan, during the debate on Brexit, said that Ministers had never used the phrase “meaningful vote”. That was a curious lapse of mind, and it may well be that Lord Chancellors will forget the obligation to consult the Lord Chief Justice. Therefore, I am all in favour of the amendment and I hope the Government will concede the point.

Perhaps I may move more directly to the proposed new clause in the name of the noble and learned Lord, Lord Woolf, and Amendment 18. I do not have the experience of the noble and learned Lord but for many years I practised as a personal injury lawyer. I do not do so any more, so there is no need for me to identify an interest, but I used to do a lot of work in personal injury law. Indeed, I was instructed by my noble friend Lord Hunt and I was very grateful for the briefs in those days. Back then, we were informed about the level of damages by the guidance of the Court of Appeal and by the reports, which in those days were available in the current law citator. There really was no difficulty in operating within the parameters set by the judiciary.

That takes me to my objections to what the Government are proposing. The first is a very deep-seated reluctance to see the Executive or Parliament interfering with essentially judicial positions. I am bound to say that that informed my real reservations about the determination of Parliament to impose tariffs in homicide cases, set out in a schedule to the Act. I deprecated that. This is another example which we should be very cautious about. We need to ask ourselves what the essential characteristic of justice is. It is to respond to the individual and varied cases that appear before the courts. The effect of imposing a cap of this kind is to prevent the trial judge being able to respond to the particular aspects of the case in front of him or her, and in my view that is, by definition, unfair.

There is a further point that I venture to intrude on the observations of the noble Lord, Lord Marks. It is perfectly true that the Bill provides for an uplift, but the uplift requirement is discretionary on the Lord Chancellor; it is not mandatory. The Lord Chancellor may provide for an uplift in regulations but he or she does not have to do so.

I am sorry to be pedantic about this, but your Lordships will know that on many occasions I have spoken in pretty derogatory terms about the statutory instrument process that we have. This is another example. Let me acknowledge at once that we are doing it by the affirmative procedure, which is a lot better than doing it by the negative procedure, but the cap will be determined by statutory instrument. Who, pray, is going to set the cap? I can tell you: it will be officials. Unless the Minister of the day is particularly well informed and/or intrusive, the cap will be determined by officials without interference. I am bound to say that I find that a very unpleasing prospect.

If, therefore, the noble and learned Lord, Lord Woolf, is minded to press his amendment and his proposed new clause and to test the opinion of the House, unless my noble and learned friend is even more persuasive than he customarily is, I anticipate that I will support the noble and learned Lord.

[Lord Judge (CB)]

My Lords, it is a great comfort to hear the noble Viscount, Lord Hailsham, say that he agrees with what I am going to say before he has heard it. Now, perhaps he will not mind hearing it.

We have to face the reality that there are a huge number of fraudulent claims for damages arising from alleged whiplash injuries sustained in road traffic accidents—far too many of them. We also have to remember that a large number of perfectly honest claims are made as a result of injuries suffered in road traffic accidents. We have to find a pragmatic solution to the problem of fraudulent claims, given that the cost of contesting them in court tends hugely to outweigh the amount of money that is at stake if the claim is not substantial. Whiplash injury cases, in the way that will now be defined in the Bill, are not cases that attract vast sums of money in damages. I particularly welcome the requirement of medical evidence, which provides some level of protection against the fraudulent. I welcome also the prohibition on cold calling, and I think there is something in the provision for uplift.

Can we be clear, though, that some claims absolutely reek of fraud? I suspect many of us know, for example, of a case where, at traffic lights with two cars in a line and none behind, the front car moves forward across the junction, not too fast, and is followed by the second car. Then, suddenly, the front car slams on its breaks for absolutely no reason, resulting in an impact. I am certainly aware of at least one case—perhaps we all are. It was not a case in court but was narrated to me by a friend, who was rather mortified to find that, after a small accident, the recipient of the injuries in the other car came out of the car saying, “Whiplash, whiplash!”, and had no other word of English to speak. He then found that his insurance company had received claims for no less than four people, when there was only one person in the car. As I say, these cases reek of dishonesty.

I hope that, if this part of the Bill is enacted, insurance companies will continue to remember that before a claim can be made for whiplash injuries, there has to be a claim and the claim should be contested as and when there is evidence of fraud. They cannot just sit back, otherwise they will find themselves paying out more and more. Some cases reek of fraud and they should be contested, and the easy way of doing nothing much more than that should be avoided. The police should be informed and the evidence should be handed to them so that at least they can investigate. I know that they have many other things to do, but a few knocks on doors and the word would go around the fraudulent area of this particular universe saying, “Hang on, there’s something going on here”. That too might discourage the odd dishonest claim.

What I cannot accept is a solution which means that a dishonest claim is handled in exactly the same way as an honest one. We cannot have dishonesty informing the way in which those who have suffered genuine injuries are dealt with. That is simply not justice. There should not be any idea that an honest claim for a whiplash injury made by the victim of a car accident should be less well compensated than an identical injury suffered by someone at work. There are all sorts of ways in which injuries can be caused; indeed, a slip in the street or a fall down the stairs can result in a whiplash injury, so there are many perfectly ordinary ways in which these injuries can be sustained. We need a process that produces the same result for the same victim who has honestly suffered the same consequences.

--- Later in debate ---

[Lord Monks (Lab)]

My Lords, I will add briefly to the points that have been made by my noble friends on Amendment 47. I declare an interest: I am associated with Thompsons Solicitors, one of the largest trade union solicitors in the country. In its current form, the Bill will deter claims for personal injury for many vulnerable, low-paid people. The inequality of arms which exists when someone tries to bring a case will be overwhelming for many people. I note from UNISON’s brief—which most noble Lords got—that it did a survey of people it had helped to get compensation. This found that 63% would not have taken the case if they had not had a guarantee of legal support and an opportunity to recover costs. There is an absence of good information about the effects of these changes, so that is probably as good as any. There will be a deterrent effect on this sector of personal injury.

When speaking to an earlier amendment, the noble Lord, Lord Hunt, was rather dismissive of the access to justice argument, which a number of lobbyists have drawn to the attention of those who follow this subject. The information supplied by UNISON and others shows that there will be a lot of people who will not take cases who otherwise would have done under the present limit. On this side of the House, we are looking to temper that kind of approach by the Government. The noble Lord, Lord Hunt, will know from his experience with the Transport and General Workers’ Union—to which he referred—that for low-paid and vulnerable people a period off work for an injury or illness is a big deal. It is not to be assumed that employers will automatically cover the cost. These people experience the cost of illness more than those of us in comfortable jobs.

Amendment 47 seeks to tie the Government to the recommendations made by Lord Jackson in his review of civil litigation costs. These said, in effect, that there should be an increase in the small claims limit only when inflation justifies it. The Justice Committee in the other place very much agreed with that in its recent report. That is what leads to the figure of £1,500, an increase based on changes in the CPI, rather than the £2,000 which the Government are pressing for. I note that the Justice Committee was deeply unimpressed by the inability of the Ministry of Justice to quantify the impact of raising the small claims limit for employer liability and public liability claims to £2,000. That is the crux of the issue addressed by the amendment. I hope that in light of these points, and those made so ably by my colleagues, the Minister will soften a little bit and look at the plight of the people at the bottom, the most vulnerable, those who are struggling, those who lose money when they are ill and off work, and so on. Without labouring it too much, I hope that the Government can see our point rather more clearly than they have done so far.

[Lord Judge (CB)]

My Lords, as it has not emerged that the amendment is the property of the Opposition, perhaps I may add a few words in support of Amendment 47.

Lord Justice Jackson’s report was a remarkable document. It exhaustively analysed the entire structure of our civil justice system. It would not have supported the present Government’s position. I would love to read out the Justice Committee’s report—but, if I did, we would be here awfully late and no one would want to hear it. However, can we briefly recognise that the Justice Committee report is not adverse to the Government’s proposal but deals a series of hammer blows, each one individually worth noting?

“We recommend the Government should not increase the small claims limit to … £5,000”.


Bang.

“There is no policy justification for including vulnerable road users within the reforms proposed”.


Bang.

“We recommend that they be excluded from any higher small claims limit that is imposed on other RTA PI claims”.


Bang.

“We are deeply unimpressed by the inability of the Ministry of Justice to quantify”.


Bang.

And so it goes on. This is not one of those reports with recommendations that obscure their meaning, and perhaps the Minister will consider that as an important feature of this debate.

[Lord Keen of Elie]

My Lords, I will not begin with a bang but I will address the points that have been raised.

I begin by pointing out, with great respect, that the noble Baroness, Lady Hayter, may not be entirely correct in some of the propositions she advanced. She said that the £1,000 limit had been with us since 1999. It has been with us since 1991. The small claims limit in respect of claims other than personal injury and housing claims is now £10,000 and operates effectively and efficiently at that level. That has to be borne in mind as well.

The noble Baroness spoke with her consumer hat on and referred to the small guy. Reference was made to the worker with limited ability to deal with his claim. The noble Lord, Lord Bassam, referred to workers being pitched out on their own with no help and alluded to a number of examples given by Thompsons solicitors—I shall come back to that in a moment—of where they were perplexed by the way in which claims were dealt with by insurers. The noble Lord, Lord Monks, said rather modestly that Thompsons solicitors were one of the largest firms of trade union solicitors in the country. They must be the largest by quite a long way. They are well established and have been for many years. Why do we refer to them as trade union solicitors in this context? It is because one of the great benefits of union membership for workers is the availability to them of legal advice and assistance when they require it in respect of a claim, particularly one arising in the course of their employment—which is why legal aid is not available in those circumstances. So, far from the little guy, the worker, being pitched out on their own without any help, they almost invariably have the assistance of probably the largest and most established firm of trade union and personal injury solicitors in the country.

I do not decry that—it is an immediate and obvious benefit—but the disbenefit of increasing the small claims limit is that the extent to which the union will recover its legal costs will be more limited, and that will have an impact on trade unions. I understand that and one has to take it into account in the overall scheme of these provisions.

Civil Liability Bill [HL]

Lord Judge Excerpts

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

So in substance we support the recruitment of an expert panel to assist the Lord Chancellor in ensuring an appropriate discount rate, a process for which, without such assistance, the Lord Chancellor will generally be uniquely unqualified, but the Bill as it stands fails to accord to the panel either the importance or even the role that its expertise and position under the legislation would logically demand for it. While we do not intend to press these amendments to a vote, I would hope that the Minister and his department might consider what is said on the subject of these reviews and, indeed, the consensus that has built up among Members of the House interested in these amendments during discussions on these topics hosted by the noble and learned Lord and the noble Baroness, for which we are very grateful, and then come back with some government amendments at Third Reading that reflect the concerns and the consensus that have been expressed.

[Lord Judge (CB)]

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

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

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

[Lord Hope of Craighead (CB)]

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

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

Civil Liability Bill [HL]

Lord Judge Excerpts

Ping Pong (Hansard): House of Lords
Tuesday 20th November 2018 Lords Chamber

[Lord Hunt of Wirral (Con)]

My Lords, I declare my interests, having now been chair of the British Insurance Brokers’ Association for the past five years and for the last 50 years having been a partner in the global legal firm DAC Beachcroft.

We need to remind ourselves that it is almost three years to the day that the then Chancellor of the Exchequer announced the coalition Government’s plans to reform whiplash claims. What a long journey it has been. In welcoming the amendments made in the other place, I join the noble Earl in impressing on all noble Lords the need to avoid any additional delay. The figures on the costs to the National Health Service just given by the noble Earl are stark and revealing, and we need to speed up.

I congratulate the noble Lord, Lord Sharkey, on the way in which he proposed that we should speed up the review process of looking at the discount rate, which is a vitally important part of the Bill. We also removed the prospect of any delay between Royal Assent and the start of the review timetable. I trust that my noble friend the Minister will understand when I stress again how imperative it is that we proceed to Royal Assent without any further delay. There is now no need to return this Bill to the Commons and no need to let any more time pass before Royal Assent. Further, there is no need to further delay the start of the review and the return to a more realistic, viable and normal discount rate.

I welcome the new clause on reporting, although I can understand how, as a non-lawyer, the noble Lord might think it complicated. But it covers the full picture exceedingly well. I congratulate all those both in Government and in the insurance industry who worked so hard on the wording over the summer. I know that it is not perfect, but it strikes an appropriate and judicious balance. It introduces the necessary rigour into reporting, but at the same time it is workable for those who have to provide the data.

One vital element to the industry—passing on cost savings to consumers—has been slightly forgotten in the heat of the debate at earlier stages. For insurers to be able to pass on the savings, there must first be savings. That is the primary purpose of this Bill. Only if the Bill is implemented, as it is now with a tariff of low damages for whiplash claims up to two years in duration and the other measures planned alongside this, including raising the small claims limit to £5,000, will there be any prospect at all of savings being realised and passed on to consumers. That will be in the best interests of all consumers and all citizens.

I add my praise to the Minister and the noble Baroness for their diligence and patience and for making themselves so readily available and accessible to all and any Members of this House to discuss various matters of concern. The Minister has made this a better Bill. Now let us speed it on its way.

[Lord Judge (CB)]

My Lords, in view of everything that has been said about the Minister, perhaps he does not need any help from me in addressing the concerns expressed by the noble Lord, Lord Hodgson, but I will offer him some comfort. Many people will want to make a contribution to the discussion with which the noble Lord, Lord Hodgson, has been concerned. They may not all have the same interest as the judiciary has in seeing that there is a fair balance between the way in which the whiplash injuries damages are to be assessed and the way that all other injuries are assessed—the process of assessing damages as it develops over the years.

I specifically asked that we should not have the concurrence of the Lord Chief Justice. We simply asked that he should be consulted. When he is consulted, like everyone else who has been consulted, he will be someone making a contribution to the final decision of the Lord Chancellor. As he will be merely consulted and not asked to concur, there is no danger that my successor many years down the line will find himself at the wrong end of a claim.

[Lord Beecham (Lab)]

My Lords, I refer to my interest as an unpaid consultant with my old firm. I begin somewhat unusually by congratulating the Minister on having improved a pretty flawed Bill since it left us. I assume that he has played a significant part in that. In particular, I strongly endorse the provisions of Amendment 1, which are an improvement on the original wording. However, we would still have preferred the retention of the existing system which allows judicial discretion on the level of compensation to be awarded based on judicial guidelines. To answer the noble Lord, Lord Hodgson, that is how the system operates and there seems to be no good reason why the assessment of damages for this kind of injury should be different in those terms from any other form of injury.

Of course, we also continue to be opposed to the increase in the small claims limit by an amount higher than inflation, in accordance with the review carried out by Lord Justice Jackson several years ago of civil litigation costs. In fact, the increase is something like 100%, although I take the noble and learned Lord’s point that that is not strictly within the scope of this Bill.

The Justice Select Committee warned that,

“increasing the small claims limit for PI creates significant access to justice concerns”.

The Government’s plans to increase the small claims limit will mean that more cases are allocated to the small claims track. That will leave tens of thousands of working people priced out of getting proper legal representation. These measures are a further gift to insurance companies which are already experiencing increased profits at the expense of people injured through no fault of their own.

What assessment have the Government made of the impact of the changes to the operation of the courts, given that increasingly claimants will be unrepresented? Within the last fortnight, the Permanent Secretary at the Ministry of Justice has told the Justice Select Committee that two of the main spending assumptions were fundamentally “unrealistic” and that even the Treasury recognised that the department was under “considerable strain”. In these circumstances, how confident is the Minister about the ability of the courts to deal with an increase in unrepresented claimants from 5% to 30%, as predicted in the whiplash impact assessment? That of course relates only to that particular area; there will be another shortfall in relation to other claims. How long do they anticipate will be the “long term” envisaged before the courts operate at cost recovery level, as suggested in the whiplash impact assessment? To be clear, whiplash impact for this purpose is on the system, not on the unfortunate claimant.

It is estimated that insurers will gain £1.3 billion a year. I hope that the noble and learned Lord’s confidence that the industry will ensure that those savings are passed on to policyholders will be proved correct. Why will it be six years before the Treasury reports to Parliament on the savings accrued to policyholders, as apparently will be the case? It seems an inordinately long time to assess the impact of this provision. Further, is it not ironic that the Government, who make so much of the need to protect policyholders from the impact of exaggerated or fraudulent claims, have themselves increased insurance premium tax four times in eight years, thereby currently collecting £2.6 billion a year more from the people they purport to be helping through this Bill?

While the commitment given at Third Reading in the Commons that vulnerable road users will be exempt from the changes is welcome, why are children and people injured at work not included in the exemption? Extending the change to those two groups would seem to be a reasonable move.

By sheer coincidence, today sees the publication of the report of the Constitution Committee. It is highly critical of the Government’s increasing reliance on secondary legislation. The committee supported the views of the Delegated Powers and Regulatory Reform Committee earlier this year that key measures should be included in the Bill and not left to secondary legislation. Also, most tellingly, it said that judges, not the Lord Chancellor, should set the new tariff and that the Lord Chancellor should not be granting powers to make provision for damages relating to minor psychological injury. This accords with amendments debated during the passage of the Bill through this House but not enacted.

I hope that a review of this measure will provide an opportunity to return to this issue and adopt that approach in due course. I repeat that the Bill comes back to us in better condition than it was, but I remain convinced that it is not in as good condition as it should be.