My Lords, we share the Government’s objective of reducing fraudulent whiplash claims, but we do not agree that the proposed arbitrary reduction in damages for all claimants, fraudulent or genuine, coupled with removing judges from the assessment of damages, is a proper way in which to address it. For that reason, I shall concentrate on supporting Amendment 18, so eloquently and comprehensively spoken to by the noble and learned Lord, Lord Woolf, with his strong appeals to principle.
We welcome banning cold calling, whether by claims management companies, car hire companies, car repair companies, solicitors or anyone running a calling operation for any of them. Section 35 of the Financial Guidance and Claims Act makes a start in banning cold calling, but its main weakness is that it does not outlaw the use in this country of information obtained by cold calling, often from abroad, and the definition of claims management services in that Act looks to me insufficiently broad. By amendments in the fourth group, we try to address the use of information from cold calling.
We welcome prohibiting settlement of whiplash claims without medical reports from properly accredited clinicians. So those provisions on cold calling and medical reports are targeted on reducing or eliminating fraud. However, the proposed radical reduction in the level of damages to the Government’s very low tariff is a blunt instrument that would indiscriminately cut to the bone compensation for genuine claimants as well as for fraudulent ones. The purpose of general damages in personal injury cases has, as the noble and learned Lord, Lord Woolf, explained, always been to compensate claimants, so far as money can, for the injuries they have suffered as a result of the negligence of defendants. Clause 2 abandons that principle in whiplash cases. If Amendment 18 is carried, Clause 3 would be meaningless, so we would expect the Government to accept Amendment 30 in the name of the noble and learned Lord, Lord Woolf.
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For the Government, the Minister has more or less accepted in the past that the Bill discriminates against genuine whiplash claimants covered by the Bill in favour of the Government’s proposal to cut fraudulent
whiplash claims. Genuine claimants would lose out as against road accident claimants with other injuries; or as against claimants who sustain whiplash injuries in accidents not covered by the Bill, such as cyclists and motorcyclists; or as against claimants who suffer injuries of whatever type in other circumstances—for example, as a result of the negligence of their employers or local authorities. This is not just, fair or principled.
The Government have simply not established the evidence base for such a radical departure from principled law-making. There is insufficient evidence of the incidence of fraudulent as against genuine claims, and there is no evidence on the comparative effectiveness of reducing all damages as against banning cold calling or insisting on credible medical reports before settlements. Little or no pressure has been put on insurers to get tougher on claimants rather than settling low claims about which they may have suspicions with scant inquiry, because such claims are cheaper to settle than to contest.
To take an example, imagine a non-negligent driver and her partner, who have both been injured in an accident. The driver has a painful whiplash, which is likely to last just short of six months. On the Government’s proposed tariff, her damages would be £470. Her partner, the passenger, who was not wearing a seatbelt in this case, fractures his wrist as he hits the dashboard—a relatively minor injury, the effects of which will last for only a short period. His damages will be in the range of £2,300 to £3,125, and even after docking them 25% for his own contributory negligence in not wearing a seatbelt, he recovers between three and a half and five times his partner’s damages. Where is the justification for that?
These results, proposed to address an inadequately defined problem on questionable evidence, are offensive to justice. The proper ways to address fraudulent claims are to stamp out cold calling, to enforce a requirement for genuine medical reports, to encourage insurers to test the validity of claims before they settle them, and to come down hard on those caught making fraudulent claims, not to abandon basic principles of fairness and justice.
I will speak briefly to two of the other amendments in this group, particularly our Amendment 10, which proposes a tariff that would represent the damages actually awarded by the courts, based on judicial college guidance. That, and other amendments, are alternatives, tabled in case the principled amendment in the name of the noble and learned Lord, Lord Woolf, does not succeed.
I make only one further point. The provision in the Government’s proposals for an uplift in exceptional circumstances only, and limited to 20%, is far too restrictive. Exceptional circumstances have been regularly held by the courts to require a set of circumstances that takes a case well outside the norm—