Northern Ireland (Executive Formation and Exercise of Functions) Bill

Lord Mackay of Clashfern Excerpts

2nd reading (Hansard): House of Lords
Tuesday 30th October 2018 Lords Chamber

[Lord Mackay of Clashfern (Con)]

My Lords, my intention is to speak about Clause 4 only and the legal situation which is the background to it. I am taking no position on the substantive issues which underlie the clause, but it is quite clear that the intention of those who promoted the Motion put to approve Clause 4 as an amendment in the House of Commons, on a free vote, was to bring the law on abortion in Northern Ireland into line with modern law on the other side of the Irish Sea. The position is that abortion has been made a devolved subject. Therefore, the only statutory authority with authority to alter the statutes and statutory instruments is the Legislative Assembly of Northern Ireland and Ministers of that Assembly. There is no power whatsoever in the United Kingdom Parliament to interfere with that while it is devolved.

The noble Lords, Lord Steel of Aikwood and Lord Bruce of Bennachie, mentioned that there is a border in the Irish Sea on this point. That is certainly true. There are borders between here and Scotland on a number of things, including, for example, free prescriptions in the health service. It is part of devolution that the law on one side of the devolved border may be different from the law on the other side. I am a little surprised that exponents of devolution found that surprising, but that is the fact. That is part of the background of the law on this matter. The devolved issue is one, as I say, for the Northern Ireland Assembly and Ministers acting as Ministers of that Assembly.

Where that is the law, the question of the Human Rights Act is important. Your Lordships will recollect that the Human Rights Act does not modify existing law. There is a power in the courts to declare a provision of British law—this would apply in Northern Ireland as well—incompatible with the convention provision in the Human Rights Act. That decision of the courts does not affect the law unless and until it is acted on by Parliament. Perhaps the best example of that was the relationship between the Westminster Parliament and prisoners’ voting rights. That was declared incompatible with the convention rights by a Scottish court many years ago and the English court followed it, saying it was not necessary to do it twice because there was nothing wrong with the way that the Scots had done it—which is a compliment that I always like to hear. Anyway, that is what happened, and it remained the law of the United Kingdom for a long time. There have been some slight modifications recently but the idea that the Human Rights Act changes existing statutes is wrong. It is part of the provision of the Human Rights Act that it does not do so.

Therefore, the only authority to alter the existing law and bring it into conformity with the Human Rights Act is the legislature in question, if it is a statute that is in issue. Therefore, there is no question that the Secretary of State could by guidance alter the law in this matter, which is to a considerable extent defined by statutes which are in existence and in force in Northern Ireland. The Secretary of State is mandated to do this—she must do this—but if she were to make an order, it would be immediately set aside because it is quite clear from the statistics that have been given that not everybody in Northern Ireland is of exactly the same mind in connection with abortion. If it were so, it might pass without any challenge but in Northern Ireland that is extremely unlikely. Therefore, if the Secretary of State were to make an order trying to escape the existing statutes of Northern Ireland relevant to this subject, she would be immediately struck down as doing something which she is not entitled to do. The fact that she would have been asked to do that by Parliament is an extraordinary situation.

I know that those who moved this amendment in the House of Commons did so with that in mind—that this might be a way forward—but in this House we must take the view that that is not possible. I tabled an amendment for Committee—the last one, which will presumably come fairly late this evening—about that. I am proposing to move the amendment so that discussion will be possible but I do not intend to press it to a Division because abortion has always been—rightly, because it is a matter of conscience—on a free vote. This amendment was passed on a free vote in the House of Commons and therefore I do not intend to press it here. There may be others who want to do that and the fact I have tabled the amendment makes that possible. I just make it clear that I am not going to do that because it would be completely ineffective in producing the result that the movers of it wanted.

Northern Ireland (Executive Formation and Exercise of Functions) Bill

Lord Mackay of Clashfern Excerpts

Committee: 1st sitting (Hansard): House of Lords
Tuesday 30th October 2018 Lords Chamber

[Lord Adonis]

My Lords, my response to the noble Lord, Lord Alton, is that of course the devolved institutions are not even sitting in Northern Ireland at the moment, so we face two issues in this respect. The first is that the Northern Ireland Assembly should be given an opportunity to address this matter. Clearly, it does not have that opportunity at the moment because it is not sitting. The Bill seeks to ensure that the Northern Ireland Assembly does sit and is sustaining an Executive by the end of next March. The second point concerns the situation if the Assembly is not, even when it is sitting, able to address this issue, I do not believe it is consistent with the poll that the noble Lord has just cited that the people of Northern Ireland would regard it as satisfactory for the Assembly in Northern Ireland not to address this issue of fundamental rights. One way or another, in a short time, this issue must be resolved. It will not be satisfactory either for the Assembly in Northern Ireland to fail to address this issue or for this Parliament to allow fundamental breaches of civil rights to take place in a substantial part of the United Kingdom. I beg to move.

[Lord Mackay of Clashfern (Con)]

My Lords, my Amendment 16 has the honour to be joined to the two amendments of the noble Lord, Lord Adonis, Amendments 10 and 11. It seems to me that Amendment 10 breaches a fundamental aspect of the constitution, namely that it is not right for anyone not connected with the prosecution to intervene to alter or to direct a prosecution decision. That is what Amendment 10 does. Amendment 11 again breaches the constitutional rule that our judiciary is not to be directed by departmental guidance. The Secretary of State for Northern Ireland has no authority whatever to direct the prosecuting authorities in Northern Ireland not to prosecute existing statutory provisions there, and certainly no authority to order the judiciary in Northern Ireland not to obey a part of the rule that is there already.

Amendment 16, which was passed in the House of Commons, is intended to deal with both matters as the noble Lord, Lord Adonis, has explained them. It seeks to get the Secretary of State to issue guidance, which will have effect as they wish, but the amendment is so drawn that it does not specify that the guidance has to be of a particular kind. It is obvious from the way it was introduced in the Commons that that is what they would like to see, but the amendment does not require the Secretary of State to do anything that is unconstitutional or wrong. That is why, as far as I am concerned, I shall not press the amendment. It is a matter that was decided on a free vote, on the issue of abortion—which is always subject to a free vote in both Houses of Parliament—and therefore I shall not press it to a Division. However, I thought it might be necessary to have further discussion on it. Having regard to the amount of discussion that took place at Second Reading, it may not be necessary to do more than introduce it and see whether anybody wants to speak.

As for the first two amendments, in the name of the noble Lord, Lord Adonis, these are quite unconstitutional. Indeed, the first, on interference in a prosecution, was a constitutional disaster in, I think, the 1920s, and as a result the constitution of the United Kingdom has not had the law officers be part of the Cabinet ever since. Decisions about prosecution are not Cabinet decisions; they are the responsibility of the law officers. In Northern Ireland, in the present situation, the Director of Public Prosecutions is the authority. Nobody has authority under our constitution to tell him what to do in relation to an existing law. The amendment is framed on the basis that this is still an existing law not to be enforced by the department. That is a completely unlawful order. The Secretary of State would be quite wrong to give guidance on that aspect in Amendment 10, and in relation to the judiciary in Amendment 11.

Amendment 16, which I have tabled, is the way that the House of Commons decided to deal with this same matter, which the noble Lord, Lord Adonis, will improve on with his amendments. The Commons agreed the amendment by a majority of about 100. As far as I am concerned, it can stand, because it does not direct the Secretary of State to do anything unlawful. It obviously hopes that the Secretary of State may manage to do something that the Commons had not quite thought of how to do itself. Anyway, that is the way it is. There is no attempt in Clause 4, as it is now as part of the Bill, to direct the Secretary of State to do anything that is necessarily unlawful.

--- Later in debate ---

[Lord Bruce of Bennachie]

My Lords, my noble friend Lord Alderdice has made a fairly constructive suggestion, which has already been replicated in the Republic, with quite dramatic results. But my question relates to the amendment in the name of the noble and learned Lord, Lord Mackay. I accept that the law is where it is and that if it is devolved, it is for the Northern Ireland Assembly, which does not exist, to change the law. However, the Supreme Court has already indicated that it questions whether or not the law in Northern Ireland is compatible with the European Convention on Human Rights, and has indicated that if an individual case was brought, it is likely to rule that it is not. In those circumstances, if a ruling was made that said that the law in Northern Ireland is not consistent with the convention, but there is no Assembly and no devolution, what is the mechanism by which the law can be changed to bring it into line with the European convention?

The issue on gay marriage could also move in that direction. It has not yet but given the acceptance of gay marriage more and more widely across the world, it may well become an issue where human rights law says that the right to gay marriage is a human right. If that became the case, somebody would need to change the law to bring it into line with the convention. In the absence of an Assembly—which would have to do it, whether it liked it or not, but is incapacitated because it does not exist—who would do it?

[Lord Mackay of Clashfern]

My Lords, the answer is that the Human Rights Act makes it absolutely plain that the declaration of incompatibility does not of itself change the law. If the law is to be changed, that has to be done by the appropriate legislature. In this case, because of the devolution, that would be the Assembly in Northern Ireland if it was functioning. Because of the devolution, that is the way it is: it is the Legislative Assembly that has the power to do this. There is no question of the Secretary of State being able to do it by guidance. That is out of the question. The Human Rights Act made that very plain.

There was quite an important discussion on this during the passage of the Human Rights Bill. Some people thought that the courts should be able to overrule existing statutes that were contrary to the human rights convention. But the politicians of that day, including Jack Straw, were very keen on the view that in our constitution Parliament should be supreme and the courts should not be able to overturn Acts of Parliament. That is a matter for Parliament itself. Of course, as I said at Second Reading, the great example of that in our arrangements recently has been the issue of prisoners’ voting rights because it was declared incompatible and yet Parliament decided not to change the law for some considerable number of years.

--- Later in debate ---

Tabled by

[Lord Mackay of Clashfern]

16: Clause 4, page 4, line 4, leave out from “State” to end of line 15 and insert “shall issue guidance to Northern Ireland departments on the exercise of their functions in a manner which is compatible with section 6 of the Human Rights Act 1998”

[Lord Mackay of Clashfern]

My Lords, I said earlier that I would move this amendment, but since it has been grouped with the amendment in the name of the noble Lord, Lord Adonis, I think we have had plenty of opportunity to discuss it, so I will not move it now.

Amendment 16 not moved.

Civil Liability Bill [HL]

Lord Mackay of Clashfern Excerpts

3rd reading (Hansard): House of Lords
Wednesday 27th June 2018 Lords Chamber

[Lord Hope of Craighead (CB)]

My Lords, my amendment relates to the personal injury discount rate, which is the subject of Part 2 of the Bill. Clause 10(1) provides for new Section A1 of the Damages Act 1996. Two of its provisions are important to what I am about to say. One directs the court to apply a rate of return, as may, from time to time, be prescribed by an order made by the Lord Chancellor. The other, which I am concerned about, is new Section A1(2), which states:

“Subsection (1) does not however prevent the court taking a different rate of return into account if any party to the proceedings shows that it is more appropriate in the case in question”.


The Minister will recall that I raised this issue on Report when I moved what was then Amendment 50 on the Marshalled List. That amendment sought to tailor the wording of subsection (2) to address a problem that had been the subject—the result, I should say—of decisions in the Court of Appeal in the cases Warriner v Warriner and Warren v Northern General Hospital Trust, following the House of Lords case in Wells v Wells in 1999.

The problem that has arisen as a result of those cases in the Court of Appeal, which was expounded with some care by Lord President Carloway in his judgment in Tortolano v Ogilvie Construction Ltd in 2013, is that there is a very tight straitjacket on any use of subsection (2) in the Damages Act 1996, which is the predecessor of the provision in this Bill in cases where people seek a different rate of return from that prescribed due to the circumstances of the particular case.

Each of these three cases, the two from the Court of Appeal and the one from the Court of Sessions in Scotland, involved injuries of maximum severity—perhaps a prime example of cases where litigants would wish to have a more generous rate of return. However, in each of these cases, it was said that that could not be done on the ground that there had to be an exceptional case-specific factor before this could be achieved.

I was concerned that the provision in the Bill simply reproduces the language of the 1996 Act without any attempt to suggest that the approach the courts have mandated should be any different in this case. I was seeking a relaxation to allow a case where, if the court felt that the award was less than adequate after applying the prescribed discount rate, it could be altered to allow a better rate of return in recognition of the compensation needed to meet the loss incurred or to be incurred during the rest of the claimant’s lifetime.

The noble and learned Lord may recall that in our discussion on Report, reported in Hansard on 12 June, he said that he wished to give further consideration to the matter I had raised so that he could come to a view on whether something might be done to tailor the wording of the provision to address what he described as “the almost complete guillotine” that is in place as a result of the two Court of Appeal decisions. As he put it, there was a balancing act to be achieved and he undertook to look at that.

It is fairly plain from the fact that there is no government amendment on this issue at Third Reading that he and his team have not been able to come up with a form of wording that would address my point without undermining the policy that underpins the scheme which this part of the Bill seeks to lay down. I am grateful to him and his team for meeting me to go over this point last week so that I could understand the position he has adopted, which I fully appreciate. It is a very difficult issue on which to find a form of words that would achieve what I sought to achieve. In the course of that meeting, I suggested that in view of that position it might be better to delete this subsection from the Bill altogether, which is what my amendment would do.

To elaborate a little more on the reasoning behind the amendment, the phrase which the noble and learned Lord used—“almost complete guillotine”—describes the situation very well, although in rather brutal language. I do not criticise that, because the Court of Appeal in its decision was building on what this House said in Wells v Wells in 1999. In that case, we said that the aim of the solution that we adopted in finding an appropriate discount rate was to create as much certainty as possible. Lord Steyn said that only in exceptional circumstances should a party be entitled to reopen the debate. The idea was to close down the expensive and time-consuming business of trying to present a different rate of return from that laid down by the court, the House or the Lord Chancellor.

The problem is that what such exceptional circumstances might be nobody has been able to discover in almost 20 years of the provision’s existence. Any idea that they could be founded on the nature or gravity of the injuries seems to have been completely cut off by the Court of Appeal. My point is that it is very difficult to see what value, if any, can be achieved by retaining this provision if there is to be no change to its wording. It has been a dead letter for some time and it seems rather a pity to reproduce a dead letter in fresh legislation. Indeed, retaining it risks raising false hopes of achieving something that it cannot achieve—indeed, according to the Government’s policy, something it ought not to be able to achieve—which is altering the discount rate in these cases. My suggestion, which I made at our meeting last week, was that it might be better to face the fact now and to delete the provision. Having made that suggestion, I thought it right to table the amendment for discussion so that the Minister could at least report to the House on the view he now takes, having had time to think about my suggestion.

It is right to draw attention to the fact that the Association of Personal Injury Lawyers has circulated a briefing among some of your Lordships in which it indicates that it opposes the amendment. As I understand its letter, that is for two reasons. One is that a court should retain the ability to apply a different discount rate, particularly in cases of injury of maximum severity. That is an example of wishful thinking in view of the decisions I referred to. It is clear that any attempt to do that in that kind of case will not succeed, which is why I am so concerned about the repetition of this amendment in the Bill.

The other reason is rather more fundamental. If I might read what the association says, it puts it this way:

“The ability for a judge to apply a different discount rate is an appropriate safeguard against any abrupt changes in the financial market. While the proposed legislation provides for regular reviews of the discount rate, a scheduled review could be too late if there is a sudden change in the market. The discount rate could be too high, and it could be years until the next review when the rate could be corrected. In the meantime, injured people will be undercompensated, and will be in fear of what happens when their money runs out”.


As I understand the system that Part 2 of the Bill seeks to lay down, it is intended to have the process reviews carried out at regular intervals, with a view to having certainty between each review that the courts would be obliged to apply, subject to the provision I am concerned about. With respect, the Government have to consider very carefully whether the point the association raises is one they would be willing to accept—in other words, that it should be open ground for parties to seek to attack the prescribed discount rate between reviews because of changes in the market. We would get back to the kind of uncertain situation that we were so concerned about in Wells; we did our best in the reasoning in that case to address our seeking certainty and to have the matter addressed in only exceptional circumstances.

For what it might be worth, the wording of subsection (2) does not permit an across-the-board change to the discount rate because it talks about a different rate being taken if a party can show that it is,

“appropriate in the case in question”,

which suggests that one is taking a particular case out of the generality that deserves special treatment, rather than something across the board, which is what I think the Association of Personal Injury Lawyers is addressing.

I have said enough to indicate that there are reasons for concern as to why this provision is still in the Bill, and to ask whether it should still be there and possibly whether, as the Bill proceeds through the other House, further thought might be given to its wording or its presence in the clause. I beg to move.

[Lord Mackay of Clashfern (Con)]

My Lords, it is fairly plain that this phrase was used by me more than once around this time. One area in which it was used was fixed sentences in criminal cases, because there was a feeling that laying a particular sentence or assigning a particular rate tended to deprive judges of their inherent discretion.

In the two judgments referred to, the Court of Appeal indicated that it felt it was given no discretion. It was enough to get me through the difficulties that I had at that time. Therefore, whether it should remain is a question I find rather difficult. I am not keen to remove anything that gives the presiding judge in a particular case some degree of discretion. If the courts have held that such sentences do not give that, it is rather difficult. I cannot think of a better phrase; needless to say, it occupied my attention quite a lot at the time and was hotly debated. Obviously, my noble and learned friend the Minister has given the phrase consideration and I would be interested to hear what he has to say.

Courts and Tribunals (Judiciary and Functions of Staff) Bill [HL]

Lord Mackay of Clashfern Excerpts

2nd reading (Hansard): House of Lords
Wednesday 20th June 2018 Lords Chamber

[Lord Mackay of Clashfern (Con)]

My Lords, I will immediately take up the point made by the noble Lord, Lord Beith, about consolidation. It is a rather important function of Parliament, but it is not a particularly attractive one. I served on the Consolidation Committee for some time. I remember that it is a committee of both Houses. We had the greatest difficulty in securing a quorum for the committee to proceed—and not because of the absence of Members of the House of Lords.

When I first looked at the Bill, what astonished me was that court staff were going to be authorised to advise judges on the law. I thought that that was rather strange. I thought that judges were supposed to know the law before they got to that position. Of course, when you look at it more carefully, the judges are judges of the family court and justices of the peace. There will be professional judges in the family court from time to time, as well as judges who are there effectively as magistrates. As I understand it—and certainly for all the time that I have known anything about it—justices’ clerks have always been responsible for giving legal advice to magistrates in magistrates’ courts. That was dispensed with only when the court had a stipendiary magistrate because he, being stipendiary, was thought to know the law and therefore not to require the advice of the justices’ clerk.

It is a sad day for me to see the justices’ clerk’s title being set aside in a schedule to a Bill in Parliament. The office of justices’ clerk is very old and very distinctive, but it will be replaced. Let me find the passage. Paragraph 7(a) of the Schedule says that,

“for ‘justices’ clerk’ substitute ‘designated officer for the court’”.

Apart from anything else, it seems a little longer, so it will take longer to type—but it is anything but a distinguished-looking title.

Seeing my noble friend Lord Baker of Dorking not far away reminds me of a fact about justices’ clerks that I learned long ago. It was the habit of the Lord Chancellor to attend the annual meeting of the justices’ clerks of England and Wales. To one of these I went and I was told by the president of the Justices’ Clerks’ Society, who had recently been at an international conference of their brethren, that he had been told by the people there that they were astonished that a court official as important as a justices’ clerk should be responsible to a Minister who was also responsible for prisons. Of course, in those days the justices’ clerks were the responsibility of the Home Office, and the Home Secretary certainly had the undoubted privilege of being the Minister for Prisons.

That encouraged me to think that it was time for a change, so we had an arrangement under which the justices’ clerks’ policy department moved from the Home Office to the Lord Chancellor’s Department. I regret to say that that very important judicial development has now been reversed, in that the justices’ clerks, with all the other court staff, are in the political area of the Ministry of Justice, which has, as one of its most important functions, looking after prisons. So the whole improvement has been reversed, which is what you may call progress. So far as I am concerned, I think it rather unfortunate that there needs to be change of this title—but perhaps more enlightened people can advise me whether there is any option.

Another provision in the Bill changes the names of some officers. One that I would like to suggest, which my noble and learned friend knows all about, is the district judge (magistrates’ court). That title was suggested instead of “stipendiary magistrate” because it was thought that reference to remuneration was not quite the right thing for somebody of that order. Therefore, this is what has happened. So far as I am concerned, after a good deal of time during which this has been running, it would be quite a good idea to forget the bracketed “magistrates’ court”. In the Bill we are talking about judges getting legal advice who are in fact lay people, whereas the district judge sitting in a magistrates’ court is quite a distinct officer, so the necessity for the rather long title has now been removed.

One other point I will mention is not in the Bill, but the Bill changes the names of judicial officers and some of the masters now have a different title. I was in Edinburgh last Thursday when the President of the Supreme Court gave a lecture. One of the important functions of the Supreme Court is that it is the Supreme Court for the whole of the United Kingdom. Apparently when it was created—I learned this on Thursday—the staff of the Lord Chancellor’s Department wrote to the Scottish authorities to say that the Supreme Courts of Scotland were now required to change their name to something else. Not entirely to my surprise, they got a letter back to say that they were proposing to do no such thing and there are Supreme Courts in Scotland still.

However, the great jurisdiction of England and Wales has no Supreme Court; it is the Senior Courts. I do not know whether there is a junior court—I do not think expressly so; no doubt the magistrates’ courts and possibly the family court are part of that section. Surely it is time to recognise that the Supreme Court of the United Kingdom is not a court of England and Wales. Therefore, there is no reason why we should not have the old names—the High Court and the Court of Appeal, as they were for a long time before the Supreme Court. I think that this suggestion probably comes within the Long Title of the Bill, but I would be glad to know whether it can be contemplated before I put down an amendment for that purpose.

Civil Liability Bill [HL]

Lord Mackay of Clashfern Excerpts

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

Should we leave this to the judges? I have the greatest respect for judges—the noble and learned Lord, Lord Woolf cited what Lord Justice Jackson said about the role of judges—but one of the problems is that judges rarely see these cases. This is the murky world of grubby claims preyed on by a number of parasitic organisations which have created an industry. We can go on agreeing that there is a problem and restating the problem but these reforms will not drive it away—it will spring up elsewhere—but if we wreck this part of the Bill we will be failing to acknowledge the racket and walking by on the other side. Premiums for our children and grandchildren will continue to rise and our necks, collectively, will remain the weakest in Europe.

[Lord Mackay of Clashfern (Con)]

My Lords—

[Lord McNally (LD)]

My Lords, I have some trepidation in speaking before a former Lord Chancellor does, but perhaps what I have to say will help. I am grateful to the noble Lord, Lord Faulks, for reminding the House that I was the Minister who took through the LASPO Bill and I have been watching the Labour Front Bench nodding in unison at every word that could possibly embarrass the Government. However, the origins of what we are doing now lie with the last Labour Government, who shared then the growing cross-party consensus that we were becoming a more litigious society, driven by a compensation culture and a determination to have our day in court—the noble Lord, Lord Faulks, referred to Jack Straw’s campaigning on whiplash—and the response to that was the setting up of the Jackson report under Sir Rupert Jackson.

It is interesting to note that one of the reasons for the setting up of the Jackson report under the Labour Government was that the costs in civil litigation were often disproportionate to the issues at stake. Lord Justice Jackson, who has just retired, spoke at the Cambridge law faculty on 5 March 2018 and, reflecting on his reforms, he said that the problem was that,

“Almost everyone perceives the public interest as residing in a state of affairs which coincides with their own commercial interests”—

he might have said professional interests as well.

My locus in this is not as a lawyer—I have told the House before that when I was a Minister I once said to a visiting distinguished American lawyer, “I must explain that I am not a lawyer”, and he said, “Then I shall speak very slowly”—and, given the array of legal advice and talent we have already heard, I tiptoe into this with trepidation. This is based partly on a family experience of a whiplash, which was clearly fraudulent but the insurers thought that the cost of defending was greater than simply settling. That left me with the experience of not only a fraudulent claim but a fraudulent claim which was sustained by the obvious collusion of both the solicitors and the doctor concerned. Therefore, the noble Lord, Lord Hunt, is right to talk about a racket in which many respectable professions are involved. Those overseeing those professions have a duty of care to root out those who are complicit in these frauds.

As I have said, there was a growing cross-party consensus that something must be done. I confess that seven years ago I answered a Question from the Dispatch Box assuring the House of the urgency with which the Government were dealing with the issue of whiplash. I say to my Front Bench and to the noble and learned Lord, Lord Woolf, for whom the affection and respect I have is overwhelming, that I worry his amendment is just another one kicking the problem down the road when everybody else who speaks on it recognises that there is a problem. This has been said on a number of occasions: we are dealing with not the kind of catastrophic life-changing injuries that the noble Lord, Lord Faulks, often refers to when we discuss medical negligence, but the very lowest level of claims where, as the noble Lord again said, many people would not even think of claiming if they were not spurred on by the claims management industry out of its own self-interest.

I fully endorse what my noble friend Lord Marks said about the need for others to take responsibility, not least the industry itself, for fighting fraud and making attempted fraud not worth while. I worry that the legislation says that we need a medical certificate. Somebody said, maybe in a private briefing, that there was one doctor who had a kind of Roneo of letters that he just signed. If you are going to have a medical check in this, you have to make sure that it is not part of the fraud because in the past it has been.

Nevertheless, it is rather sad that we have this collection of amendments. I look forward to the usual forensic dissection of them by the noble and learned Lord, Lord Keen. There are some good and some not so good ideas in there, but I do not want us to see something that becomes a wrecking amendment when we have waited for far too long for this. Perhaps because I am not a lawyer I do not share the fear from the noble and learned Lord, Lord Woolf, that we are setting some terrible precedent that will weaken the role of the judiciary. I do not see that at this very low end of the process. I hope that, in our usual way in this House, we can extract some of the good ideas that have been put forward but not lose the sense of urgency with which the Bill, at last, tries to address a real problem in a practical way.

[Lord Mackay of Clashfern]

My Lords, I will speak primarily about the amendments that my noble and learned friend Lord Woolf has proposed. This part of the Bill is concerned only with claims for pain and suffering. It has nothing to do with any other form of loss. Other forms of loss are easily quantifiable, but loss arising from pain and suffering is a development of the law that has very little in the way of structure.

When I was a junior at the Scottish Bar long ago these matters were often the subject of jury claims. Pain and suffering was an element in a jury claim. The judges were warned against suggesting a figure to the jury. You can imagine how difficult it was to provide a summing up that dealt with that. I remember well that one of the senior judges that I knew had a formula in which he said, “This is a sum to mark your sense of the pain and suffering that the claimant has suffered”. That was done by juries; it was before the time that judges were involved in this, and therefore it was a jury question. It has all the character of a jury question in the sense that there are no rules that I know of—none has so far been quoted—to determine the amount to be given. How has that been done? As my noble friend has just quoted from the judicial guidance, it has been done by collecting what others have decided in other cases. There is nothing specifically judicial about that. I think almost any of us could manage to deal with that; you do not need to be a very experienced judge to do that kind of calculation.

Civil Liability Bill [HL]

Lord Mackay of Clashfern Excerpts

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

[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 ---

[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.

[Lord Mackay of Clashfern]

Before my noble and learned friend sits down, I understood the noble and learned Lord, Lord Woolf, to have suggested that a PPO could be reviewed as the instalments were going ahead. That would be something of an innovation but it might be worth considering. I do not know whether my noble and learned friend has that in mind.

[Lord Keen of Elie]

We do not have that in mind. One of the concerns about such a proposal is the impact it would have on the insurers and their inclination to embrace PPOs. At present they are concerned about their reserving liability and their capital requirement on the basis of risk when it comes to a PPO. If we were to add to that equation the possibility of the PPO being revived at some indeterminate point in the future, I believe it would have a counteractive effect on the employment of PPOs by insurers. I have noted what the noble and learned Lord, Lord Woolf, said; I will take it away and consider it further, but my initial reaction is that it could act as a disincentive for the operation of PPOs.

--- Later in debate ---

I therefore wanted to ensure in this amendment that the Lord Chancellor could set differential rates for something wider than classes, according to my meaning of classes: on the basis of the number of years of future needs, thereby following the successful Hong Kong and Ontario discount rate regimes.

[Lord Mackay of Clashfern]

My Lords, I have Amendment 57A in this group, which would add the anticipated scale or amount of the sums in question. It is worth mentioning that the amount in question may affect the rate of return.

--- Later in debate ---

[Lord Faulks]

My Lords, the question of whether this should be a political decision or one taken by the panel is difficult. I thought carefully about this, as I am sure other noble Lords did. Ultimately, I respectfully submit that it should be a political decision taken by the Lord Chancellor. Of course, that decision will be critically informed by what the panel tells him or her. The provisions in the Bill provide that, when a Lord Chancellor makes a rate determination, he or she must,

“give reasons for the rate determination made, and … publish such information about the response of the expert panel established for the review as the Lord Chancellor thinks appropriate”.

My noble and learned friend will correct me if I am wrong, but, if the Lord Chancellor were to take a perverse view, ignoring all the advice or not giving sufficient reasons for it, he or she would potentially be liable for judicial review. Ultimately on the question of accountability, this is a political decision and a politician should be answerable for it.

Of course I yield to no one in my admiration for doctors—we have a number of distinguished doctors in your Lordships’ House, and they are the experts who can assist the House on questions of life expectation. However, with great respect, that is not quite the question that the panel is there to answer; it is there to answer the question of yield for investment having regard to an investor of reasonably cautious nature. While some doctors might have a view about this, I am not sure that questions of life expectation have anything to do with what is essentially an actuarial or financial calculation. Therefore, I am afraid that I am unable to support that suggestion.

[Lord Mackay of Clashfern]

My Lords, the Act which this Bill amends gave the Lord Chancellor this power. I suppose that, at that time, the Lord Chancellor had intimate relations with the judiciary—but he also had the responsibility of accounting to Parliament if there was a question about the matter. The connection between the Lord Chancellor and the judiciary has somewhat diminished since that time, but the Lord Chancellor still has a primary duty in relation to the judiciary that other members of the Government do not.

It is also important to have accountability in this matter. As my noble friend has just said, if the Lord Chancellor ignored the advice of the panel, he might have good reason for doing so, but it would be very difficult for him to explain it, because one would assume in this case that he or she would accept the judgment of the panel and he or she would be answerable to Parliament.

I share my noble friend Lord Faulks’s difficulty in relation to medical help. It is for the judge to decide on the length of time or the nature of the requirements for care, treatment and so on that a person may have. This particular exercise is primarily for those expert in the matter of investment.

I have perhaps interpreted the new schedule to which the amendment applies rather too generously. I assumed that there would be different rates of return fixed for different classes of case and that it might therefore be possible to change them on review—for example, to have no rate of return for a particular class or to enlarge the class that another rate of return applied to. It would be extraordinary if one could abolish this duty by the exercise of paragraph 8(2)(a). I do not think that that was intended—but my noble and learned friend may say that it was.

[Lord Hope of Craighead]

My Lords, perhaps I may add a footnote to the point made by the noble Lord, Lord Faulks, in favour of the Lord Chancellor having the decision. Paragraph 6(2) of the new schedule, on the way in which the panel is supposed to work, states:

“In the event of a tied vote on any decision, the person chairing the panel is to have a second casting vote”.


We then look at who is to chair the panel and see that it is the Government Actuary. I would much rather the Lord Chancellor assumed ultimate responsibility than the matter be determined in the event of a tied position by the Government Actuary. So the structure as set out supports the line taken by the noble Lord.

--- Later in debate ---

[Lord Cromwell]

In that case, I shall speak in support of Amendment 77 and cover Amendments 82A, 85A and 90A, which are tabled in my name as probing amendments.

I do not want to make a Second Reading speech, but will open with three points. The first is on the context of the amendments in my name, which is that we are talking about a one-off payment. It has to last the recipient the rest of their days, which is a pretty daunting prospect. Will it keep pace with inflation? Will the recipient die before or after the money runs out? Will the UK and global economies do any good in the next 10, 20 or more years? What returns will be achieved each year from now until the recipient’s death? No matter how clever the Lord Chancellor or expert the panel, these will remain unknowns or, at best, haphazard guesses.

The one thing we do know is that if the discount rates rise, which this Bill is intended to achieve, returns to recipients will fall. By raising the discount rate, we are saying that the investor must—they have no choice—take on more risk. We oblige them to do so. This calls into question the underlying principle of achieving 100% compensation.

Let us not take false comfort from the idea of an expert panel. This is a group of five people who will have to come up with a series of “best guesses” and then seek to arrive at a “best guess of those guesses” to suggest to the Lord Chancellor. The Lord Chancellor remains free to override them.

My concern is that, in its enthusiasm for reducing costs to the NHS and others, the panel will be encouraged in various ways to impose risk on recipients which they are not equipped to gamble with. If the panel does not do so, the Lord Chancellor may. I expressed my concerns about the make-up of the panel at Second Reading, so I will spare your Lordships a repeat of that. We should not forget that the Chancellor is acting for the Government in many of the highest-value cases. That seems a conflict of interest.

What should we do? If the panel is trying to determine a rate on which so much life-altering importance hangs and if we are allowing the Lord Chancellor potentially to vary that rate, we need to be assured that, as far as possible, the rate arrived at is the result of a transparent process and not some magic number produced from a black box and then applied.

My amendments seek to achieve three things: to oblige the Lord Chancellor to a greater extent than the Bill suggests to take account of the panel’s deliberations; to make the panel more transparent in its deliberations and conclusions; and to enable the panel to take into account the realities that the recipient will face in the real world—taxation, inflation and management charges. In the Bill, it is the Lord Chancellor who may take these things into account.

Anyone who has worked in investments knows that such costs are a key determinant of actual returns. With RDR and MiFID II, such charges—for example, management charges—are becoming far less opaque than they used to be. Surely the panel should present the Lord Chancellor with a fully baked rate, not a half-cooked one that has significant ingredients missing.

Turning to the specific amendments, Amendment 77, to which my name was added, obliges the Lord Chancellor to take proper account of the panel. It relates to Amendment 78 in a later group, but that requires matters not to be left simply to the Lord Chancellor’s opinion. I anticipate others speaking to Amendment 77, so I shall leave it there and speak to Amendments 82A, 85A and 90A which are in my name. On Amendments 82A and 90A, the expert panel are supposed to be the experts but they are denied the opportunity to consider the rate in the round, rather than give the Lord Chancellor the half-baked suggestion I referred to a moment ago. The Bill as drafted just provides the Lord Chancellor with opportunities to select his or her own rate. Amendments 82, 82A and 90A place the making of key assumptions where they belong: with the expert panel. Amendment 90A also requires a reasoned explanation by the panel of its decision. This is vital for transparency and understanding. It is also the basis, one hopes, for its voting and for discussion with the Lord Chancellor, including any override that he or she may choose to impose.

Finally, Amendment 85A in my name is again about transparency. Under the Bill as drafted, the Chancellor must give reasons for and publish,

“such information about the response of the expert panel … as the Lord Chancellor thinks appropriate”.

No, my Lords: the Lord Chancellor should publish what the expert panel advises and give a reasoned explanation if he or she departs from its advice. Echoing the point made by the noble Lord, Lord Sharkey, a few moments ago, just as the Bank of England publishes the voting pattern, so the voting pattern cast by this panel should be published. Only then will we have a clear basis for understanding how the rate has been suggested, whether the Lord Chancellor has altered it and, if so, why. The setting of the rate, we should remember, will have fundamental effects on the lives of people in very distressing circumstances. Surely, they and we have the right to an understanding of what has gone on. My amendment builds on what is already proposed in the Bill but will, I suggest, lead to clearer and more transparent outcomes that are therefore more meaningful, more useful and less open to the temptations of distortion.

[Lord Mackay of Clashfern]

My Lords, I want to say just one thing about the nature of the Lord Chancellor’s judgment in this case. The noble Lord, Lord Cromwell, said that the Lord Chancellor is acting on behalf of the Government, but that is not the nature of the decision: it is the Lord Chancellor’s decision as representing the Lord Chancellor himself. He has the responsibility of a personal decision in this matter, in the way this Bill is drafted. Certainly, when I had responsibility for these matters, it never occurred to me that I should consult the Cabinet about it.

[Lord Keen of Elie]

My Lords, I begin by acknowledging the point made by my noble and learned friend Lord Mackay of Clashfern. The Bill makes perfectly clear that this is a decision of the Lord Chancellor as Lord Chancellor, and it is in that context that it has to be seen and understood.

Amendment 61 would replace the proposed three-year maximum review cycle for the second and subsequent reviews of the rate with a system under which the need for the rate to be reviewed would be determined by the expert panel by reference to changes in returns on investment. Of course, there are then consequential and supplementary amendments. The effect would be to add a new and distinct responsibility to the role of the panel. It would in effect, as I believe my noble friend Lord Hodgson acknowledged, require a standing panel to be created. If more than a year had passed since the rate was reviewed, the expert panel would be required to assess the need for a review and then to advise the Lord Chancellor to review the rate if it considered that the nature of return on investment had changed enough to justify a review. If the panel decided that this condition had not been satisfied, it would have to report its reasons for this view to the Lord Chancellor.

The concept of a review based on changes in investment returns was canvassed as an alternative to a fixed review period in the Government’s 2017 consultation on how the rate should be set, and it was supported, let me be clear. However, basing the review requirement on changes in investment returns would, we believe, create more uncertainty and be less predictable than a regular fixed-date review. The introduction of a requirement for the panel to consider the need for a full review annually could further fuel such uncertainty.

I appreciate the concerns raised by the noble Lord and others at Second Reading about the potential for a fixed review period to prompt undesirable litigation behaviour and the possibility of what is sometimes termed the gaming of the system in anticipation of a change to the rate. However, this problem would not be avoided by the system which the amendment proposes. Litigants would still know when the panel would be required to consider whether the rate required reviewing. Indeed, such occasions would be more frequent under the amendment than under the three-year cycle proposed in the Bill. One can imagine a stop-start mentality emerging leading up to the time when the panel was expected to report.

A further consequence of the amendment would be that the expert panel would have, in practice, to exist independently of the review of the rate, rather than being convened by the Lord Chancellor for each review, as the Bill currently provides. In effect, a standing panel would be required, which would have to exercise judgment as to the timing of reviews, rather than confining itself to the technical matter of advising the Lord Chancellor on the factors that might be considered in the setting of the rate, which is the purpose of the expert panel. The amendment would therefore make a very significant change to the proposals in the Bill regarding when the rate should be changed. The Government’s proposals for a fixed-period maximum cycle for the review of the rate have, as I say, been developed through consultation and been the subject of pre-legislative scrutiny, and we consider that they provide a simple and certain method by which reviews can largely be predicted.

Amendment 74 would require the Lord Chancellor to adopt any recommendation from the expert panel as to whether the rate should be changed and, if so, what the rate should be. Clearly, such a change would diminish significantly the responsibility and accountability of the Lord Chancellor for any review outcome—indeed, it would essentially remove it. Amendment 74 would also remove the requirements on the Lord Chancellor, the panel and the Treasury set out in paragraph 2(6) and (7) of new Schedule A1 to comply with or to take into account the duties of the Lord Chancellor in relation to the setting of the rate that are set out in paragraph 3 of new Schedule A1. What we would have is the elevation of the panel from an advisory role to essentially an executive role. That would be a major change and clearly greatly alter and increase the role of the panel.

The creation of the expert panel to advise the Lord Chancellor is, of course, one of the most important changes introduced by Clause 8. The panel is central to the Government’s proposals for the way in which the rate is set, introducing new expertise and transparency. The panel will play a very important role in providing assistance to the Lord Chancellor in setting the rate, but it would not in our view be appropriate for the panel’s recommendations to bind the Lord Chancellor in deciding whether the rate should change and what it should be. The setting of the discount rate requires the weighing of different potential outcomes for individuals in relation to a range of possible rates. An element of value judgment will ultimately be required. It is important, therefore, that the decision-maker should be politically and publicly accountable for decisions on the rate. That is why the Lord Chancellor is, in our view, the appropriate person to make that choice. Indeed, this was recognised by the Justice Select Committee, which stated in its report that:

“Setting the discount rate has repercussions on the taxpayer through Government expenditure and also consumers through its impact on insurance premiums and inflation; therefore we think it is right that the decision to set the discount rate lies with the Lord Chancellor”.


We agree with that assessment.

In addition to being influenced by the pre-legislative scrutiny carried out by the Justice Committee, the proposals we have put forward have been developed through the public consultation process. In response to the question of by whom the rate should be set, the largest single group of support was for the rate to be set by the Lord Chancellor following advice from an expert panel. I note the support for that which has been given, in particular, by my noble and learned friend Lord Mackay of Clashfern, expressing his experience as Lord Chancellor and underlining the distinct role of the Lord Chancellor in this context.

Civil Liability Bill [HL]

Lord Mackay of Clashfern Excerpts

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

[Lord Beecham]

There surely has to be a medical definition—and where better to get it from? The medical profession deals with injuries that are labelled “whiplash injuries”. There may be some argument about the definition, but surely it can be decided only on the basis of medical skills.

[Lord Mackay of Clashfern (Con)]

My Lords, I thoroughly agree with the proposition that is highly desirable for the definition used as the basis for later provisions in this part of the Bill to be on the face of the Bill. The difficulty I have had so far is in identifying what we want to do. It is the area of exaggerated claims, or something of that sort, that underlies the Government’s proposals. I agree that it must be, ultimately, a medical definition, because a medical report saying that you have this injury is an essential requirement for you to come under this part of the Bill.

The difficulty, however, is that the doctors have to know where these exaggerations take place. I have been instructed by people who suggest that if you go for the back, and the rest, you are extending the thing beyond the real position. I have, therefore, some sympathy with the amendment restricting that, which I think is to be moved or spoken to later. I do not, however, profess to know exactly what the problem is, in the sense of the area of medical expertise that is being used by the claimant industry to exaggerate claims. That is their idea: to exaggerate these claims and ask for more than they are worth. As I said at Second Reading, I have some experience long past of the difficulty of actually quantifying the correct amount for these injuries, particularly if they are serious—and they can be quite serious, I think. This is my problem and I would be glad of help when the Minister comes to speak.

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

My Lords, I am obliged for all the contributions that have been made so far this morning. I observe that it appears to be generally recognised that the Bill is addressing a very real issue about which policy decisions have to be made and implemented. I quite understand the question raised about where the definition of whiplash injury should appear. The definition in the Bill seeks to limit injuries to those soft tissue injuries that affect the neck, back or shoulder and arise from road traffic accidents. The vires in the Bill are tightly drawn to enable regulations to be made by the Lord Chancellor that would apply only to a discrete number and type of injury.

It is interesting to see the diversity of amendments that have come forward this morning. That may underline the particular challenge we face in arriving at a suitable definition, be it in the Bill or in regulation. We have sought to address an issue that involves reconciling a legal understanding of this matter with a medical definition—one which covers both injury and the symptoms of injury. That involves us engaging with not only medical expertise but a degree of legal expertise. In addition, while I am not going to go through the detail of every amendment, because I understand what lies behind them, I will note this much. The noble Earl, Lord Kinnoull, set out three points for consideration, and in doing so underlined the very real problem that we need to address here. It was emphasised by the suggestion that if you go to a particular claims management site you are encouraged to believe that even if you have no symptoms you may still have a claim.

I was reminded of an incident some years ago where I was acting for an American pharmaceutical company. The US attorneys showed me a photograph of a genuine roadside sign that had been erected in the state of Mississippi. It said, “If you’ve taken drug X and suffered a fatal heart attack, telephone this number”. The lengths to which we lawyers will go know no bounds, and our belief in the Almighty is always there. There is a very real industry out there. I do not use the term “racket”, but others have—and with some justification.

Looking to the current position, the noble Lord, Lord Sharkey, correctly observed that the regulations that we have produced in draft to elaborate the definition of whiplash injury have only just appeared. I quite understand the need for noble Lords to consider those regulations in more detail. In turn, I will consider in more detail whether we should incorporate a more precise definition in the Bill. But I stress that, even if we were to take that step, it would be necessary for us to bear in mind the ability of government to proceed by way of regulations to support any definition in the Bill. We are well aware that flexibility will be required with regard to any final definition so that we can meet the way in which claims development occurs—the way in which this sort of market develops—in order to put limitations on claims.

At the end of the day, the detailed definition of whiplash injury will need to reconcile the current legal understanding with an accurate medical definition covering both injury and symptoms. Our aim is to achieve that objective, but to what extent we achieve it by incorporating the definition in the Bill is not a matter on which I would take a final position. I quite understand the suggestion that we should consider further the extent to which the definition can appear on the face of the Bill, and also allow noble Lords the opportunity to consider the scope of the draft regulation that has only recently been made available. In the light of that, and understanding that these are essentially probing amendments, I invite noble Lords not to press them at this time.

European Union (Withdrawal) Bill

Lord Mackay of Clashfern Excerpts

Report: 5th sitting (Hansard): House of Lords
Wednesday 2nd May 2018 Lords Chamber

I do not share in the opprobrium that has been heaped upon the Scottish National Party from time to time during the debates. Scotland is a proud country with a population larger than 10 of the current 28 states that form the European Union. The SNP seeks to take back control. It is prepared to take the risk of economic collapse to gain sovereignty—whatever that means, as someone once said—and it pursues a mirage of prosperity by leaving not the European Union, but the union of Great Britain and Northern Ireland. I would have thought that there are people in this House who might understand that. I understand its position, but I do not agree with it.

[Lord Mackay of Clashfern (Con)]

My Lords, it is appropriate that I should follow the noble and learned Lord, Lord Hope of Craighead, on the Scottish amendments. The First Minister took the unusual step of sending these amendments to the Lord Speaker. I do not think she expected him to put them before the House.

I narrated in Committee how I had been invited to accept some briefing from the Scottish Government through Michael Russell, with whom I have had very pleasant and genial talks and communications since. I should acknowledge that he kindly said in a statement to the Scottish Parliament that he was grateful for the help that the noble and learned Lord, Lord Hope, and I had given, as well as many people in other parts of the House. Relations between us have been extremely good. I have communicated with nobody about it except for Mr Russell and the Lord Advocate. I have not sought to involve anybody else in these communications, except, of course, the Government of the United Kingdom, with whom I was authorised, if you like, to negotiate. I have enjoyed the best possible approach of the Government of the United Kingdom in the Minister responsible and the Bill team. The officials responsible for the negotiations have been extremely helpful. Like many others I am sorry that the Scottish Government have not yet found it possible to agree with the arrangements that have so far been made.

I will take a word or two to explain what I understand the new government Amendment 89DA amounts to. If EU law is removed from the Scotland Act, all EU law comes immediately either to Scotland if it is a purely local country legislation, or, if it covers more than one of the countries of the UK, to the UK Parliament. That happens on Brexit day unless something is done. From what I understand, the proposed new section before us in the amendment will suspend the application of the new arrangements until arrangements are made for the single market—or the internal market—in the United Kingdom. There are, as all of us know, provisions in EU law for that single market. They might require amendment in light of the fact that the EU is no longer the authority for the law, but it is important to keep them in place until it is possible to get them amended in a way that is satisfactory to the United Kingdom, including the devolved Administrations —I include Northern Ireland in that phrase. Therefore, a power is given in the proposed new section to suspend that part of the immediate operation of the Brexit treaty so far as it affects the law.

It is important to see that proposed new subsection (2) says that that kind of restriction does not apply to any modification of EU law so long as it was, immediately before Brexit day, within the competence of the Scottish Parliament. That restricts it to the kind of provision relating to the common market. That is what the amendment proposes in that situation, in the light of the discussions set out in the agreement—the noble Lord, Lord Thomas of Gresford, spoke of that in a general way that applies to Scotland as well as to Wales. As far as I am concerned that is a reflection of the kind of amendment I proposed in Committee to try to get a better arrangement for negotiation. I am glad to know that such a memorandum of agreement has been accepted by the Welsh Government and, I hope, will be accepted by the Scottish Government.

Civil Liability Bill [HL]

Lord Mackay of Clashfern Excerpts

2nd reading (Hansard): House of Lords
Tuesday 24th April 2018 Lords Chamber

[Lord Mackay of Clashfern (Con)]

My Lords, this is an extremely interesting Bill for me, for reasons that I will explain in a moment.

I will not say much about the first part of the Bill and the types of injury it deals with. That is because long ago, when I was in practice in Scotland, the system was still that juries awarded damages in personal injuries cases. I acted for the defendant in a case of whiplash injury. The lady came to the jury to explain how bad her injuries were. We had put in an advance offer—as was usual—for what we understood, from the medical evidence, was a reasonable estimate of the worth of the injuries. At the jury trial the lady was very good at explaining how bad the whole thing was, and she got an award considerably above our offer. My reputation as an estimator was, therefore, adversely affected by that experience.

I had the great advantage, however, that the late Lord Fraser of Tullybelton—as he became—was the presiding judge. In those days the judge was not supposed to give much indication: it was a matter for the jury and he was not supposed to intervene to say it should be this or that. Lord Fraser—as those who knew him will remember—was an excellent judge who observed that requirement meticulously. He came to me afterwards and said that he thought I had been very badly treated by the jury, which shows how difficult it is to estimate genuinely on this type of injury. I have no doubt that there may be some question about precisely what the rate should be when the whole thing is lumped together as if it were a reasonably common experience, with reasonably common results.

However, I want to speak primarily about Part 2 of the Bill, because I am in the remarkable position of seeing that this part would amend a Bill that I introduced, and which became an Act, in 1996. My recollection of that—it is over 20 years ago, as your Lordships will quickly be able to observe—was that the judges were having a lot of difficulty in assessing damages, particularly for the whole of life, as some cases required. They were of course experiencing the benefit of actuaries and other people who ran investments, and so on. This involved a very large amount of work in the individual cases and the judiciary were anxious—I am subject to correction by members of the judiciary who may remember this situation—to avoid the necessity for this repeated excursion into financial administration. The other thing is that at that time, in 1996, the markets were probably a bit less volatile than they are now.

Eventually we passed that Bill, which required the Lord Chancellor to fix the discount rate. Fortunately, I had managed to retire before I had to do it so it fell to the noble and learned Lord, Lord Irvine of Lairg, to fix it, which I am sure he did to the best of his ability. He had to take the advice of the Government Actuary but he was not confined to that. He fixed the rate and that rate has lasted until 2017. The great thing about that matter is that if it changes after such a lapse of time, it is going to be quite a change and the effect on the estimates within various bodies, particularly public bodies such as the National Health Service, is terrific. I entirely agree that something more regular is required and that it is a difficult task, because the effects of the kind of injuries that may come before the court can vary tremendously, from those which will last for a lifetime to those which are much shorter.

I want to look at the assumptions that the Lord Chancellor is required to make under the Bill and I venture to suggest that they form a bit of a challenge. The Bill says in Part 2:

“The Lord Chancellor must make the rate determination on the basis that the rate of return should be the rate that, in the opinion of the Lord Chancellor, a recipient of relevant damages could reasonably be expected to achieve if the recipient invested the relevant damages for the purpose of securing that—


(a) the relevant damages would meet the losses and costs for which they are awarded”.


That is fairly easy to say on a day-to-day basis. But Part 2 then says that,

“the relevant damages would meet those losses and costs at the time or times when they fall to be met by the relevant damages”.

These will be years ahead in some cases, so it is quite an assumption that the Lord Chancellor has to make. The last provision is really crucial. It says that,

“the relevant damages would be exhausted at the end of the period for which they are awarded”.

When I chaired the Select Committee that looked into the Assisted Dying Bill, one thing we learned was that doctors had great difficulty in assessing the length of life. One of the great difficulties is to assess when the damages should be finished, because in the life cases, which are now a very substantial part of the damages that have to be paid by the National Health Service, life expectancy is very difficult to estimate. Even as you get near the end of life, life expectancy seems to be very difficult to estimate. When a baby is born and the results affect that baby for the rest of its life, you can imagine the difficulty of trying to determine that.

The Lord Chancellor has to go on, having made these assumptions, to assume,

“that the relevant damages are payable in a lump sum”.

He is not allowed to take account of the fact that you can now pay in instalments. The second assumption is,

“that the recipient of the relevant damages is properly advised on the investment of the relevant damages”.

That seems a fairly easy assumption to make. It is not so easy to know what the right advice would be. The third assumption is,

“that the recipient of the relevant damages invests the relevant damages in a diversified portfolio of investments”.

You would think that might be covered in proposed new subsection 3(b), but for clarity it has been separated out. Proposed new subsection 3(d) is the one I want particularly to draw attention to because we may want to look at it in some detail in Committee. It says:

“The assumption that the relevant damages are invested using an approach that involves … more risk than a very low level of risk, but … less risk than would ordinarily be accepted by a prudent and properly advised individual investor who has different financial aims”.


I assume these are different aims from the people who are investing the damages award for the injured party.

The assumptions that have to be made by the Lord Chancellor on this basis all seem very reasonable, but I think it would require the Lord Chancellor to have a certain element of the prophet about him or her to enable these assumptions to be taken with any degree of accuracy—we really need to look at this. I imagine that the promoters of this Bill have looked at this very carefully and if it is going to be accurate from the point of view of awarding damages, these conditions have to be fulfilled. The difficulty about it is how you satisfy yourself that that will be true. That is what I would like to hear a little about.

The expert panel included an actuary, but my understanding of actuarial science—it is a limited understanding—is that it is very much based on the statistical evidence on length of life. The trouble is that each case is separate; it is not the average, it is an individual case. How do actuaries go about doing this? I am interested to know. The Government Actuary has to do all that kind of thing and does it extremely well, but it is not by any means easy. Getting an expert panel to agree—it includes an actuary and investment people—will be very difficult.

The Bill deals with making fair the system of awards in civil liability. Two distinct aspects are covered in the Bill—the particular kind of injuries are dealt with in the first part and the discount rate in the second part, but the system is bigger than that. One of the important elements in the present system is an Act of 1948 in which Section 4(2)—I am sorry, Section 2(4); I had better get them in the right order—indicates that the damages are to be calculated on the basis that the medical attention is given on a private basis. I can see that in 1948, when the health service was very young, that might be appropriate, but I think modern times have crept up on that and it is rather doubtful whether that is a good basis.

There is another point in relation to that. One of the biggest areas of claim for the National Health Service is in obstetrics. The trouble with an obstetric injury is that it is likely to have effect for the rest of the person’s life and, as I say, you have to forecast what that is. My understanding is that the amount of private practice in obstetrics has almost disappeared for the reason that the premium for an operator in obstetrics is so large as not to be worth while; he is better to be in the National Health Service. I am not sure about that but it is what I understand to be the case. If so, it strengthens very much the need for a revision of a rule that requires you to assume what is not there as a basis for damages. Assessing damages is difficult enough without trying to assume what now is no longer practised.

European Union (Withdrawal) Bill

Lord Mackay of Clashfern Excerpts

Committee: 11th sitting (Hansard - continued): House of Lords
Wednesday 28th March 2018 Lords Chamber

[Lord Mackay of Clashfern (Con)]

My Lords, I understand that that political point can be shortly made and it would dispense with all our consideration of this Bill altogether.

I played quite a part in the 2011 Act—along with the noble Lord—in stating what the position in law was for EU law in this country. I was keen to point out that the treaty did not of itself have that effect. It became an argument later when the noble Lord, Lord Pannick, argued about these and other matters in the Supreme Court. However, the point was that the authority for EU law in our country is the 1972 Act. This House affirmed that and the House of Commons accepted it.

The important thing about the 2011 Act is that its repeal is consequential on the repeal of the 1972 Act and our departing from the European Union. Matters that are consequential are usually covered in schedules. If noble Lords wish to discuss purely consequential legislation, so be it, but it is not necessary. As the noble Lord, Lord Adonis, said, we have used it quite a few times and, given the amount of time we have spent on this Bill, it is appropriate that this provision repealing the 2011 Act should be in a schedule.

[Lord Adonis]

My understanding is that it is not consequential that the repeal of the 2011 Act under this schedule will take place when this Bill becomes law at a point determined by a Minister, whereas we only repeal the European Communities Act 1972 on Brexit day, 29 March next year, or later under Clause 14(4) if a Minister chooses to extend the date.

My understanding—it is important to tease out these issues because we are a revising Chamber—is that this is being done deliberately by the Government. They want to forestall any cases coming under the 2011 Act as soon as possible. I assume they have read the legal opinion which raised doubt about the interpretation of the 2011 Act and do not want them rumbling through the courts before the repeal of the European Communities Act 1972 takes effect.

[Lord Mackay of Clashfern]

That does not prevent the repeal of the 2011 Act being consequential on the main provision in this Bill.

[Lord Dykes]

My Lords, one has distinct memories of the European Union Bill and it then becoming an Act. The noble Lord, Lord Adonis, has done a great service by referring to it, although his objectives in so doing might be somewhat different from noble Lords in other parts of the House. That Bill was introduced at the beginning of the coalition period. I have always thought that the coalition was agreed too quickly. Both leaders, understandably, were keen to get going with it and some aspects of the agreement were left vague and unresolved. There was a great deal of excitement about the initial period of this unusual and first-time type of coalition. For those of us who pompously describe ourselves as good Europeans—rather than just fairly keen on the EU— this was a painful moment. Given the celerity of the agreement of the coalition at the beginning, the contents of the Bill were never properly gone into or discussed, despite the substantial vote in the House of Commons to which the noble Lord, Lord Adonis, referred. Again, that was because it was the beginning of the period of this new exercise of the interesting and fascinating coalition.

I believe David Cameron was not much interested in the legislation. He regarded it as a routine inclusion in the incipient contents of the coalition’s programme—not the things that appeared later on—but for the Liberal Democrats it was important. I remember it being described by a senior colleague who was then a member of the coalition representing the Liberal Democrat portion of it—I will not say who—as, “Just routine smoke and mirrors, old boy, don’t worry about it”. However, it was not easy for people to accept it in that sense and I remember vividly a substantial rebellion within the Liberal ranks in the Lords on this matter. There may have been a small one in the Commons as well—I cannot exactly remember those details—but in the Lords there was a substantial rebellion led by Baroness Shirley Williams and others in the team who were not members of the coalition Government because they objected strongly to the contents of the Bill.

The contents were elusive, vague and cynical, That is what put off people who regarded themselves as enthusiastic members of the European Union—members of the club—unlike some other people in Britain who were only half-hearted members of the club, including politicians. For example, a transfer of powers to Brussels had to be accompanied by a referendum and could take place only if the Government got the authority of Parliament to do so. However, the Government could suggest that something was too minor a matter to bother about and just leave it aside.

An extraordinary, ironical conclusion of one of the important items was that the enlargement of the Union would not be included in the Bill. In those days there was a rumour that Turkey was going to join at some stage—there were endless discussions about that possibility—and yet that would not have been part of the matter discussed in the democratic Parliament of the United Kingdom, particularly in the House of Commons. There were other anomalies which looked like opportunism. The rebellion was substantial among the Liberal Democrat ranks here, and the legislation was then forgotten and buried.

I always thought that rather than object to the repeal—I can understand why the noble Lord, Lord Adonis, is suggesting it—the infamous 2011 Act should be repealed as quickly as possible. That needs to be on the agendas of both the Lords and the Commons for the future. At the moment, therefore, I am torn between agreeing with the noble Lord, Lord Adonis, for the reasons he has enunciated, and saying that it would be a mistake and that this should be included in the total repeal list. After all, getting rid of that obnoxious legislation would not be a precursor to any other anticipated legislation following the same theme later on.

--- Later in debate ---

[Lord Adonis]

My Lords, I have always disregarded health warnings on the grounds that one would never eat anything at all if one proceeded down those lines.

The debate has been disappointing in that I do not think the two key points I made have been responded to. I have huge admiration for the noble Lord, Lord Pannick, and the noble and learned Lord, Lord Mackay of Clashfern, but they have not addressed the point that, in the way the Bill is framed, the repeal of the 2011 Act is emphatically not consequential on the repeal of the European Communities Act 1972. Rather, it is consequential on the enactment of the Bill and it will take place well in advance of Brexit day and the repeal of the European Communities Act 1972. If it was indeed consequential on the repeal of that Act, which I fully accept it should be because we would not be a member of the European Union at that point, I would have no difficulty at all with the repeal in Schedule 9. It is because it is being deliberately accelerated in advance that there is an issue.

[Lord Mackay of Clashfern]

It cannot happen until immediately after Parliament has passed a Bill fixing a date for leaving the European Union. The 2011 Act has no substance or content at all apart from the European Union treaty, so this idea that it has to be consequential in time is an extra. It is consequential in its subject matter. That is what is really important.

[Lord Adonis]

My Lords, we might not leave the European Union next year. We have not enacted the legislation to do so. At the moment there is no treaty. The 2011 Act would be repealed under the terms of the Bill. The two are clearly not consequential.