My Lords, I thank the noble Baroness, Lady Chakrabarti, and the noble Lords, Lord Beecham and Lord Marks, for allowing me to speak first to this amendment, which also relates to Amendments 17B, 18 and 30. I also record my gratitude to the Minister for the courteous manner in which he has promoted the Bill and for being prepared to discuss its contents with me.
I draw attention to my interest in the register. I also disclose that I have a son who is a QC practising in clinical negligence. What is most relevant so far as my own career is concerned is having chaired the access to justice inquiry and helped with the implementation of its recommendations, in my then capacity as Master of the Rolls. The recommendations included different tracks and procedures for disposing of civil claims.
The one that we are concerned with today is the disposal of small claims by what is known as a small claims court. As noble Lords would expect, this was designed to provide speedy and simple justice for litigants who are not usually represented. The assessment by a court of damages has always been accepted as a purely judicial responsibility in England and Wales, as far as I know, and that responsibility has been reflected in many decisions of the courts. The Personal Injury Bar Association published a paper that referred in this regard to the speech of Lord Blackburn in Livingstone v Rawyards Coal, 5 App Cas 25, at page 39—a decision as long ago as 1880. Lord Blackburn said:
“I do not think there is any difference of opinion as to its being a general rule that, where any injury is to be compensated by damages, in settling the sum of money to be given for reparation of damages you should as nearly as possible get at that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation”.
Another well-established legal principle is that if you are wrongfully injured, the wrongdoer has to take the victim as he finds them. The effect of whiplash injuries, with which we are concerned, can vary substantially according to the physical and mental sturdiness of the victim. This means that the appropriate amount of damages for a whiplash injury can vary substantially when applying the rule to which I referred. I suggest that they are not suited to a fixed cap, as proposed by the Government.
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Another principle of justice is that the court’s award should appear to be fair and just between different litigants. To assist in this, for some time now, the judiciary, through the Judicial College, has issued guidelines quoting levels of damages for different injuries. These guidelines are of great value in the task of assessing the appropriate level of compensation. Establishing the right level of damages is therefore a highly complex process of a judicial nature. The quality of the guidelines explains their acceptance by the
judiciary and the profession as a whole, and why they have been hugely important in the resolution of personal injury claims. There is a difference between guidelines and what the Government propose here. Guidelines are flexible and are, as the name suggests, only a guide. The Judicial College regularly revises the guidelines: the most recent issue is the 14th edition of 2017.
Turning to the amendments with which I am concerned, the most important is Amendment 18, which would delete Clause 2 and will be the focus of my attention. If the House is with me on the amendment, many of the other amendments will not be viable.
My contention is that the clause is an undesirable change from practice hitherto. It removes the judicial responsibility for the assessment of damages, and it imposes a fixed cap in place of flexible guidelines. It is unlikely that the cap will succeed in its commendable objective of preventing fraud, but will interfere with the small claims court process if tackled in the way proposed. It is being introduced before other steps have been taken or had time to demonstrate their worth. It offends an important principle of justice, because it reduces the damages that will be received by an honest litigant because of the activities of dishonest litigants.
Other initiatives in the Bill will assist and do not involve intervention in the role of the judiciary and, subject to what happens in today’s debate, I would support them. Here, the Lord Chancellor, without the accumulated experience of the Judicial College, proposes substantially to interfere with the Judicial College guidelines by substituting tariffs or a cap, which lack the flexibility of the guidelines.
Furthermore, he is motivated, at least in part, not by the normal principles of justice as I understand them but by saving insurers money, in the belief that this will result in a reduction in premiums for motorists who are insured when they come to pay for their insurance. It has to be borne in mind that if the Lord Chancellor interferes with part of the guidelines, as he now proposes, that can affect the integrity of the whole of the guidelines, because the guidelines for each injury contribute to the establishment of the whole. Here, the scale of the interference is significant.
My less important target is Clause 3. This will be necessary only if my complaints as to Clause 2 are not accepted by the House. Clause 3 proposes that the Lord Chancellor, by regulation, should have power to make regulations enabling a judge to lift the tariff under Clause 2 if the degree of pain and loss of amenity suffered by the victim of whiplash are exceptional. This device has been used elsewhere in an attempt to give relief against harsh statutory provisions. It failed elsewhere, including in the LASPO legislation. What are and are not exceptional circumstances can be very difficult to determine, and this can give rise to issues that are entirely unsuited to resolution through the limited procedures of the small claims court. Its exercise is to be subject to regulations and a permanent uplift is, I understand, likely to be limited to 20% of the cap.
The extent of the Government’s ambitions appear in a letter circulated recently by the Minister. For me, it demonstrates the extent of the proposed takeover of the normal role of the judiciary. The most relevant passage states:
“It is … the Government’s view that is wholly appropriate that regulations are used to set and amend the new tariff, and that it is the Lord Chancellor who retains control over the level of damages paid in whiplash claims … It is right that the Lord Chancellor should take control of the compensation process, and set tariffs which continue to provide a proportional amount of compensation, but which also act to dis-incentivise unmeritorious claims and reduce the costs associated with these claims for all motorists”.
There is no precedent for this intervention in the assessment of damages in civil proceedings. It may be suggested that this has happened in relation to criminal injury compensation, but this scheme is operated by an Executive agency and not the courts. I question whether the Lord Chancellor should be given the power he now seeks, and whether the department is qualified to perform this task. I challenge the validity of the statement that the guidelines are too high.
Sir Rupert Jackson, shortly before he retired recently from the Court of Appeal, was asked to review some of the issues I had previously considered in my Access to Justice report. His response to the proposals, as far as it is relevant, is:
“It is the function of judges (not Parliament) to set the tariffs for pain, suffering and loss of amenities in respect of different categories of personal injuries”.
Here, it is proposed that the Lord Chancellor, not Parliament, should do so. He continued:
“When, a few years ago, I recommended raising the level of general damages by 10%, it was judges—not Parliament—which gave effect to that recommendation”.
I accept that there is a problem with exaggerated claims being made, particularly for whiplash injuries. However, this can happen in a multitude of different proceedings that come before the courts. Whiplash is far from unique. As examples, I refer to holiday claims, industrial deafness claims, and so on. Steps are already being taken to try to deal with the specific problems relating to whiplash injuries. I suggest that in those cases, alternative methods should be given the chance to achieve what they can, before intervention of the sort proposed here, which, as I have described, is without precedent and would involve setting a precedent.
What is unfortunate is the publicity given to the steps that have been taken. The public need to be aware that fraudulent activities in seeking damages are harmful to their fellow citizens, whose insurance premiums can be increased. The courts have been using the powers they now have when fraud is detected to bring criminal proceedings and even punish by imprisonment those who seek to benefit in this way. The present legislation contains, as I have already indicated, other steps to which I raise no objection. I take as an example Clauses 4 and 5, which require a medical report to be obtained before settling a claim. That seems a simple and helpful suggestion which could be beneficial. I refer also to the Financial Conduct Authority, which is given power to intervene to enforce compliance by other bodies such as claims managers, whom I regard as possibly being part of the problem with the issues we are discussing.
In addition, the present proposals have the defect that they are unlikely to deter a dishonest claimant from making a false claim. All that he needs to do to achieve that purpose is to make a false claim that is outside the limits of the damages now proposed. Therefore,
the proposal will provide no assistance. Surely, before seeking to interfere with the normal role of the judiciary, we should await the information to which I have referred. The same is true of the Government’s intention to raise the limits of small claims—but I shall not deal with that matter today.
In any event, matters of legitimate concern cannot justify fixing damages in a manner which departs from that normally adopted in assessing the damages to which a claimant is entitled. Even when the amount involved appears to be modest, claimants are entitled to have the damages to which they would normally be entitled. To deprive them of this involves discrimination against legitimate claimants, irrespective of their means. The consequence is that they do not receive the compensation to which they would be entitled if the same pain or suffering was not caused by whiplash. This is not what a system of justice should do. Simply, it is unjust to do this—and for these reasons, I beg to move.