House of Commons - Explanatory Note
Courts Bill [HL] - continued          House of Commons

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Clause 93: Award of costs against third parties

261.     Clause 93 amends the POA 1985 to provide for magistrates' courts, the Crown Court and the Court of Appeal to have power to order a third party to pay the costs of parties to criminal proceedings that are wasted or incurred as a result of the third party's serious misconduct when the judge thinks it appropriate that the third party should pay the costs.

262.      The new section allows for regulations to specify types of misconduct that should not lead to a costs order and ensuring that the court can take account of other costs orders that have been, or will be, made in the case. Regulations may also provide that orders can be made at any time. The third party's conduct, and its effect on the costs in the case, may only come to light after the proceedings have ended. This provision would enable costs to be ordered against a third party where, for example, a verdict is set aside on later discovery that jurors were intimidated.

263.     It is intended that regulations will also provide for a third party to have an opportunity to be heard by the court before it makes an order. Third parties ordered to pay costs by a magistrates' court or the Crown Court will have a right of appeal to a higher court. This mirrors the provisions for appeal against wasted cost orders under section 19A.

Clause 94: Award of costs in appeals under Proceeds of Crime Act 2002

     264.     This clause amends the Proceeds of Crime Act making it clear that the criminal division of the Court of Appeal has the power to award costs in appeals relating to the making of a restraint order or the appointment of a receiver. Part 2 of the Proceeds of Crime Act provides a single consolidated scheme in the Crown Court for the confiscation of benefit from all criminal conduct. This includes the power to make a restraint order that freezes assets which might be used to satisfy a confiscation order, and a power to appoint a receiver to manage and realise such assets. It is unclear as a matter of law as to whether these proceedings are criminal or civil in nature, and on appeal the criminal division of the Court of Appeal can only automatically award costs in criminal cases. This amendment provides explicit provision to ensure costs can be awarded. The power is retrospective to the date of the commencement of the confiscation scheme, 24 March 2003.

Clause 95: Fixing fines: failure to furnish statement of financial circumstances

265.     Clause 95 amends section 128 of the Powers of Criminal Courts (Sentencing) Act 2000. Section 128 obliges a court, following conviction but before fixing the amount of any fine to be imposed on an individual, to take into account both the financial circumstances of the offender and the seriousness of the offence. Subsection (5) sets out the circumstances under which, if the court considers it has insufficient information to make a proper determination of the financial circumstances of the offender, it may make such determination as it thinks fit.

266.     Clause 95 amends section 128(5) so that where an official request has been made for financial information and a defendant has attended court without that information, if he is sentenced to a financial penalty, an inference can be drawn as to his means. "Official request" is defined in s20A of the CJA 1991 as a request which is made by the court for the offender to inform the court, in the event of conviction, of his financial circumstances for the purpose of determining the amount of any fine the court may impose.

267.     The intention is to ensure that the onus is on the defendant to provide information about his income and expenditure to the court, on request, before the court considers the case. If he fails to respond to an official request the court will be entitled to make assumptions about his ability to pay and fine accordingly. The provision is aimed at providing an incentive for the offender to co-operate so the court will be able to set any fine at an appropriate level (making it more likely to be paid).

Register of judgments etc. and execution of writs

Clause 96: Register of judgments and orders etc.

268.     A new register is set up by this provision to replace the county court register made under sections 73 and 73A of the CCA 1984. The new register expands the scope of the previous register, which was only concerned with county court judgments and orders. The new register is designed to incorporate judgments of the High Court and criminal court fines. This will bring defaults from all the civil and criminal courts under one register. In the case of civil proceedings all judgments and orders will be registered unless an exception applies. In the criminal courts only certain cases, decided on an individual basis, will be registered. The provision allows for the register to be kept in house or contracted out.

Clause 97: High Court writs of execution

269.     This clause will relieve High Sheriffs (being unpaid volunteers, appointed annually) of their legal obligations in connection with the enforcement of High Court judgments. The existing competence and probity of those actively engaged in High Court enforcement, currently in the names of the Sheriffs will be maintained.

270.     The High Court will continue to issue writs of execution - that is, in summary, writs for the enforcement of judgment debts, and writs to enforce judgments for the possession of land. England and Wales will be divided into enforcement districts defined by the Lord Chancellor. There will be a number of individuals authorised as High Court enforcement officers, either by the Lord Chancellor or by someone acting on his behalf. The Lord Chancellor (or his delegate) will assign at least one authorised enforcement officer to every district.

271.     The existing jurisdiction of the High Court in relation to writs of execution will not be removed. But these provisions will give the High Court a new, efficient and adaptable tool to enforce its judgments.

Schedule 6: High Court writs of execution

272.     Schedule 6 gives High Court enforcement officers the same obligations and powers that Sheriffs have under common law. The Lord Chancellor or his delegate must approve arrangements for the allocation of a writ where more than one enforcement officer could be obliged to execute it. In practice, those arrangements are likely to be based closely on the existing administrative arrangements under which writs directed to Sheriffs can be delivered to a single address in central London from which they are distributed. The constable's duty to assist an enforcement officer, adopts and brings up to date the comparable provision that applies to sheriffs under section 8 of the Sheriffs Act 1887 (SA 1887). Paragraphs 6 to 11 make the same provision, with the amendments needed to include enforcement officers, sections 138, 138A and 138B of the SCA 1981, which the Bill will omit. The Bill will, by consequential amendments under Schedule 6, make it a criminal offence to obstruct a High Court enforcement officer who is executing a writ.

Damages

Clause 98: Periodical payments

273.     Clause 98 replaces section 2 of the Damages Act 1996 with new sections 2, 2A and 2B for England, Wales and Northern Ireland and makes consequential amendments to s.329AA of the Income and Corporation Taxes Act 1988 (ICTA 1988) for the whole of the United Kingdom.

274.     The new section 2 gives courts the power to order, without the consent of the parties, that damages for future pecuniary loss (i.e. loss of future earnings and care costs) in personal injury cases are wholly or partly to take the form of periodical payments, and requires the court to consider in all cases whether periodical payments are appropriate. The power to make an order without the consent of the parties only relates to awards in respect of future pecuniary loss, and the new section preserves the current position in respect of other damages (i.e. non-pecuniary loss and past financial loss) by allowing the court to order periodical payments where the parties consent. The court must be satisfied that the continuity of the payments is reasonably secure before it makes a periodical payments order. The continuity of payments is deemed to be reasonably secure if it is protected by the Financial Services Compensation Scheme or a Ministerial Guarantee given under section 6 of the 1996 Act or where the source of the payments is a government or health service body (new section 2A enables the Lord Chancellor to specify in an order the bodies that will constitute "government and health service bodies" for this purpose). The court must also be satisfied as to the security of any subsequent changes to the way in which payments are funded, unless the new method is protected in one of the above ways.

275.     To ensure that the real value of periodical payments is preserved over the whole period for which they are payable, new section 2 provides that periodical payments orders will be treated as linking the payments to the Retail Prices Index (RPI). The timing and manner of adjustments to take account of inflation will be determined by, and in accordance with, Civil Procedure Rules. It is expected that, as now, periodical payments will be linked to RPI in the great majority of cases. However subsection (9) preserves the court's power to make different provision where circumstances make it appropriate.

276.     To avoid the possibility of claimants receiving less than the true value of the award as a result of their assigning their right to receive the payments in return for a lump sum, section 2 also prevents the assignment of the right to receive periodical payments unless the court is satisfied that there are special circumstances that make it necessary. This does not affect the claimant's ability to borrow against their future income. Unsecured loans will thus be allowed, but not secured loans that put the claimant's right to receive payments at risk.

277.     The new section 2A enables Civil Procedure Rules to specify matters which the court is required to take into account when considering whether to order a periodical payment or approve an assignment, and when considering the security of the payment. These could for example specify factors which might make a periodical payments order less, or more, appropriate than a lump sum order, such as the life expectancy of the claimant (where a short life expectancy might make a lump sum preferable but periodical payments might be more suitable for a longer life expectancy) and where there has been significant contributory negligence (which may mean that periodical payments would not be adequate to support the care required).

278.     The new section 2B gives the Lord Chancellor an Order-making power to enable the court to vary periodical payments under specified circumstances. A range of provisions which may be contained in such an Order are set out in subsection (3). An Order made under this power is subject to prior consultation by the Lord Chancellor and the affirmative resolution procedure. Following the recent consultation it is intended that the first Order will enable variation of periodical payments orders only where there is a significant medical deterioration or improvement in the claimant's condition which can be foreseen at the time of the original order and where the court provides for the possibility of variation in that order. Because of the potential overlap with the current system of provisional and further damages, the section allows an Order made by the Lord Chancellor to apply or vary the enactments governing these areas.

279.     The Clause also makes a number of consequential amendments to section 329AA of the ICTA 1988 to reflect the new provisions and ensure that all periodical payments made in respect of personal injury (including those made by the Motor Insurers' Bureau under the Untraced Drivers Agreement and the Uninsured Drivers Agreement) are exempt for income tax purposes however funded.

Clause 99: Periodical payments: security

280.     Clause 99 replaces sections 4 and 5 of the Damages Act 1996 with a new section 4. The purpose of this amendment is to ensure that protection under the Financial Services Compensation Scheme (FSCS) can apply to a wider range of options for funding periodical payments. It replaces the term "structured settlement" which is no longer apt given the court's power to order periodical payments. The clause also makes provision for the treatment of periodical payments in the event of the recipient's bankruptcy.

281.     At present, private sector defendants and insurers generally provide periodical payments under a "structured settlement", that is by the purchase of an annuity for the claimant. This is because payments under an annuity are secured against the failure of the Life Office under the statutory protection provided by the FSCS (the scheme created under section 213 of the Financial Services and Markets Act 2000).

282.     The FSCS currently provides protection in respect of 90% of the payments due under an annuity. Sections 4 & 5 of the DA 1996 override this limitation for annuities bought pursuant to a "structured settlement". Periodical payments for personal injury damages can be 100% protected under the FSCS by this route.

283.     Subsections (1) and (2) of the new section 4 have the same effect. They apply where a claimant has a right to receive periodical payments of damages for personal injury, and that right is protected under the FSCS - the claimant is the beneficial owner of an annuity (whether purchased by the defendant, the defendant's insurer or the Motor Insurers' Bureau).

284.     In future, periodical payments may be ordered rather than agreed. It is intended that defendants and their insurers should be entitled to fund these payments in whatever way they choose, provided the continuity of payment is adequately secure. Protection under the FSCS will be deemed to constitute adequate security. There are a number of options that may be relevant. For example, a general insurer may prefer to fund the payments directly rather than purchase an annuity, perhaps purchasing an annuity at a later date when annuity rates are more favourable. Or the insurer may wish to purchase an annuity in its own name, and then undertake to pass the periodical payments to the claimant. This may be attractive, for example, where there is a possibility of the payments being reduced on appeal or variation.

285.     At present, the FSCS would not operate effectively to protect the claimant's right to continue to receive the payments in the event of the failure of the underlying insurer. In the example of self-funding by the defendant's insurer, the defendant rather than the claimant would be the policy-holder, and it would be for him to pursue any claim under the FSCS. But if the defendant was a large firm, it would not be eligible to claim under the FSCS. And unless the general insurance policy in question was one of compulsory insurance (motor or employer's liability), the scheme would only protect 90% of the payments due. Similar issues arise where the insurer owns the annuity that is funding the periodical payments.

     286.     Subsections (3) and (4) of the new section 4 provide for recipients of periodical payments to have a direct claim under the FSCS, and for that claim to cover 100% of the payments, when any arrangement is put in place to fund periodical payments that attracts the protection of the FSCS - that is where it is underpinned by an annuity or a relevant general insurance contract (certain categories of general insurance are not protected by the FSCS). In these circumstances, subsection (4) gives the claimant a direct claim under the FSCS in respect of the full amount of the periodical payments, and extinguishes any other potential claim. It provides that the claimant shall be deemed to be protected by an arrangement of the same kind as the one that is actually in place, that is by an annuity or a relevant general insurance contract. (It is not intended to suggest that the claimant is deemed to have the same class of general insurance as that underpinning the actual arrangement - this would not make sense for example in the case of third party liability insurance.)

     287.     The new approach makes it unnecessary to replicate the other provisions contained in the current section 5 of the 1996 Act in order to retain their effect (for example the fact that enhanced protection for the claimant no longer turns on his being an annuitant means that the express provisions in section 5(5) for payments to be received and held on trust on behalf of an annuitant will no longer be necessary). The courts will retain full discretion to specify the period for and intervals at which the payments are to continue, to provide for specified future increases or adjustments (e.g. an increase when the claimant turns 18).

288.      Clause 99(2) makes consequential amendments to section 6(1) of the DA 1996 and the Schedule thereto to reflect the terms of the new section 2 (as inserted by Clause 98).

289.     Clause 99(4) and (5) protect the continuity of periodical payments in respect of future loss in the event of the recipient's bankruptcy. The effect of the provisions is that on bankruptcy, periodical payments do not automatically form part of the bankrupt's estate. They can only be claimed for the estate for the duration of the bankruptcy by way of an Income Payments Order, under section 310 of the Insolvency Act 1986. In order to fully protect any care cost element to the payments, the new section prevents an Income Payments Order being made in respect of any part of the payments identified as relating to expenditure likely to be incurred as a result of the injury.

290.     Subsections (1) to (3) of clause 99 will apply to the whole of the UK, although some of the funding arrangements envisaged are unlikely to be relevant in Scotland where the courts will not have power to order periodical payments (subject to any future legislation which may be passed by the Scottish Parliament). Subsections (4) and (5) of the clause apply to England, Wales and Northern Ireland only.

Provisions relating to Northern Ireland

Clause 100: Power to alter judicial titles: Northern Ireland

291.     This clause provides the Lord Chancellor with a power to amend the judicial titles listed (the list encompasses all of the judicial titles in the Supreme Court and county courts in Northern Ireland) in the future should the need arise. Some titles may need modernisation, to make them more helpfully explanatory to court users. The acceptance commanded by titles containing a presumption of male gender might also change. Such orders may only be made with consultation of the Lord Chief Justice of Northern Ireland. Clause 64 makes similar provision for England and Wales

Clause 101: Official Solicitor of Northern Ireland

292.     This clause removes the post of Official Solicitor to the Supreme Court in Northern Ireland from the list of statutory offices in Schedule 3 to the Judicature (Northern Ireland) Act 1978 (sub-section (1)) (J(NI)A 1978 ) as all the other statutory officers exercise judicial functions. This clause specifies the amendments to section 75 of the J(NI)A 1978 that relate to the position.

Clause 102: Alteration of place fixed for Crown Court trial: Northern Ireland

293.     This clause amends the J(NI)A 1978 to provide that an application for variation of the place fixed for Crown Court trial no longer needs to be heard in open court

Clause 103: Extension of time for criminal appeals to House of Lords: Northern Ireland

294.     Clause 103 amends the Judicature J(NI)A 1978 and the Criminal Appeal (Northern Ireland) Act 1980 to extend, from 14 days to 28 days, the time within which applications may be made for leave to appeal to the House of Lords.

Clause 104: Fees: Northern Ireland

295.     This clause provides for the insertion of a new subsection (1A) into section 116 of the Judicature (Northern Ireland) Act 1978. Section 116(1) of the 1978 Act provides for the Lord Chancellor, after consultation with the Lord Chief Justice and the Treasury, to fix the fees to be taken in the Northern Ireland courts and the Enforcement of Judgments Office.

     296.     The effect of the new subsection will be to allow any Order fixing fees to provide for the exemption from, or full or partial remission of, those fees.

PART 9: FINAL PROVISIONS

SUMMARY

297.     Part 9 contains minor definitions and qualifications referred to in the Bill, and states the parliamentary scrutiny to be employed for clauses allowing the Lord Chancellor to make rules, regulations and orders. This part also provides for the enactment of the consequential and repeal Schedules of the Bill and states that provisions in the Courts Bill extend only to England and Wales, subject to a few exceptions. Part 9 allows the Lord Chancellor to make transitional and consequential provision by order and also contains the short title of the Bill.

COMMENTARY ON CLAUSES: PART 9

Clause 105: Interpretation

Clause 106: Rules, regulations and orders

298.     Clause 105 contains definitions used throughout the Bill (e.g. 'judge'), and definitions of Acts referred to in the Bill. Clause 106 sets out the parliamentary scrutiny to be employed for clauses allowing the Lord Chancellor to make rules, regulations and orders.

Clause 107: Minor and consequential amendments, repeals etc.

299.     Clause 107 enacts the consequential and repeal Schedules of the Bill. Subsection (3) allows the Lord Chancellor to make an order for supplementary, consequential and transitional provisions, while subsection (4) makes it clear that such an order can, if necessary, amend or repeal other enactments. This type of clause is not unusual in Bills which reform existing statutory schemes and therefore require transitional provisions and/or which have a large number of consequential amendments, see for example the Adoption and Children Act 2002. A power to make transitional provision by order is essential, for example, to make provision for existing court security staff in the higher courts to be designated as court security officers and acquire the enhanced security powers in Part 4 or to ensure that information registered in the current register of judgments can be transferred to the new register of judgments and orders.

300.     Schedule 7 contains minor and consequential amendments arising from, among other things, provisions in this Bill removing magistrates' courts committees, the post of JCE, commission areas and petty sessions areas.

301.     Given the scale of these consequential amendments, the power to make consequential amendments by order is important both because further statutory references in need of amendment may come to light and because Bills in the current Parliamentary Session that contain references to, for example, petty sessions areas could be enacted or implemented before provisions in the Courts Bill, requiring consequential amendment.

Clause 108: Commencement

Clause 109: Extent

Clause 110: Short title

302.     Clause 109 provides for the Lord Chancellor to order commencement dates for provisions in the Bill. By virtue of clause 109, provisions in the Courts Bill extend only to England and Wales, subject to subsections (2) and (3) which contains exceptions. The Short title of the Act will be "Courts Act 2003", by virtue of clause 110.

EFFECTS OF THE BILL ON PUBLIC EXPENDITURE

303.     The Bill is expected to have an effect on public expenditure which is initially neutral and later a reduction. Additional preliminary costs arising from the re-organisation of the courts will be negated by possible savings to the Health Service through the move towards periodical payments and possible improvements in fine enforcement. Later the new courts organisation should lead to savings. The costs of the Bill will be accommodated from within departmental spending limits, using appropriate phasing and piloting as necessary.

Unified courts agency

304.     The current cost of running the magistrates' courts is £435m per annum. The Lord Chancellor currently funds 80% of the cost, with the remaining 20% covered by local authority funding (£85m). As a result of the Bill the Lord Chancellor will have sole responsibility for the funding of magistrates' courts and there will be an attendant transfer of funds within Government.

305.     There will be initial implementation expenditure on management of the transfer of pay and pension responsibilities, buildings and associated contractual obligations from Court Service, MCCs, Greater London Magistrates' Courts Authority (GLMCA) and Local Authorities to a new single agency.

306.     Once the new agency is established, the implementation costs (estimated to be in the region of £60m over three years) will be balanced by an organisation which represents better value for money and improves quality of service through the integration of courts administration at national and local level. This will enable economies of scale and more efficient and effective use of resources, better focussed on local needs.

Security

307.     The provisions on security will strengthen and ensure greater consistency in the existing court security regime. This will be achieved by giving the Lord Chancellor statutory responsibility for court security, and providing and defining in statute the roles of new court security officers with enhanced powers to control and maintain security in court precincts.

308.     The provisions in the Bill have no immediate financial implications since these provisions are enabling measures which will allow improvements to court security, as necessary, from within existing resources.

 
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Prepared: 21 May 2003