Memorandum submitted by the Ministry of
Justice
I am very sorry that I was unable to give evidence
to the Justice Committee on 10 March, due to illness. I am, however,
very grateful to the Committee for its scrutiny of the draft Bill
and look forward to seeing a copy of its report. In the meantime,
I am pleased to provide written replies to the technical questions
raised by the Committee. As he promised, the Justice Secretary
is himself replying separately to you to provide a fuller response
to the question you asked him on 10 March concerning the time
that it has taken to bring the damages provisions in the draft
Civil Law Reform Bill before Parliament.
DEPENDENCY DAMAGES
1. Why has the Ministry of Justice rejected
the Law Commission's proposal that dependency damages should be
available to persons who would have been maintained by the deceased
but for his or her death?
As we stated in our 2007 Consultation Paper,
we believe that eligibility for dependency damages should not
be extended to persons who were not maintained by the deceased
immediately before the death, but who would, but for the death,
have been maintained by the deceased at some time in the future.
We consider that to make such an extension would meet no significant
need, be too open-ended and could encourage loosely framed and
speculative claims which would be difficult to prove or disprove.
We acknowledge that the exclusion of this class
could mean that some people who might potentially have been able
to receive dependency damages under the Law Commission proposal
would not be able to do so. However, on balance, we consider it
fairest to make dependency damages available to all those who
were actually dependent on the deceased while avoiding the possibility
of speculative claims based on possible future dependency. We
think that our approach is supported by the consensus of opinion
as it was supported by the majority of those who replied to our
2007 consultation and only a small minority of those who commented
on clause 1 of the draft Bill in reply to the 2009 consultation
expressly supported the Law Commission's recommendation.
2. Is there a case for giving the court a
wider discretion in a case involving an adult so that the court
could decide not to take the remarriage etc into account?
We do not think so. It seems to us that the
Bill strikes the right balance between opposing views. On one
extreme, there are those, typically perhaps those who represent
claimants, who argue that nothing that occurs after the event
that caused the death should be taken into account. On the other
end of the scale, there are those, typically perhaps insurers,
who argue that everything that occurs after the event should be
taken into account. And of course there are people arguing for
points in between. The proposal in clause 2 of the draft Bill
is intended to provide a clear set of provisions, fair to both
parties and avoiding as far as possible the need for intrusive
enquiries.
In our view, the fact of marriage or remarriage,
entering a civil partnership or passing the second anniversary
of a relevant cohabiting relationship as defined in clause 2 of
the Bill are clear and material events in the claimant's life,
which ought to be taken into account. It is of course for the
court to decide how great the effect of this should be on the
award of damages in any particular case. This approach was supported
by the majority of those who commented on this subject in response
to our 2007 and 2009 consultations.
The balance to be struck is different where
the claimant is a child of the deceased. Here, following comments
received on consultation in 2007 pointing out that any new partner
of the deceased would not have the same obligation as a deceased
parent to maintain a child, the draft Bill provides that where
the claimant is a child of the deceased the court may take into
account a remarriage and so on of a surviving parent (see clause
2(3)). This allows the court to take the new fact into account
if it thinks it is right to do so in the circumstances of the
case.
BEREAVEMENT DAMAGES
3. What is the Ministry of Justice's definition
of the function of bereavement damages?
Bereavement damages under the Fatal Accidents
Act 1976 were introduced in 1982. The then Lord Chancellor, the
late Lord Hailsham, said that it was impossible to quantify or
provide adequate financial compensation for the grief felt at
the loss of a loved one. As Parliament intended therefore bereavement
damages constitute a token payment in acknowledgement of grief
and are not intended to reflect the value of a life or to inflict
a punishment for causing a death.
4. The Law Commission recommended that the
function of bereavement damages should be explained in the Explanatory
Notes. Why isn't it? Is there another way that the function could
be explained?
In general terms, the Explanatory Notes published
with a Bill are intended to assist the reader in understanding
the Bill, but they are not a tool for explaining wider policy
issues. On this basis, in preparing the notes to the draft Bill,
we took the view that including an explanation of the underlying
function of bereavement damages would not be appropriate.
In 2007 consultees who commented on this recommendation
of the Law Commission made various suggestions as to how the purpose
of bereavement damages could be explained to the public. These
included agreeing a standard explanation for solicitors to use
with their clients; providing information in booklets or leaflets;
and placing information on websites. We are grateful for all these
suggestions. We would add that many consultees generally doubted
that such an explanation would in any event make much difference.
We will continue to consider how the limited
purpose of bereavement damages can best be explained. However,
we consider that it must be recognised that any explanation is
unlikely to prevent people in these tragic circumstances from
feeling that the award is inadequate.
5. What is the rationale/principle underlying
the inclusion of the categories that have been included in the
class of persons eligible to claim bereavement damages?
Bereavement damages are currently available
to the wife, husband or civil partner of the deceased; and where
the deceased was a minor who was never married or a civil partner,
his or her parents, if he or she was legitimate; and his or her
mother, if he or she was illegitimate.
The intention is that bereavement damages should
be available to those who are most likely to be closest to and
most affected by the death of a loved one, whilst recognising
the need to keep the award within finite limits. At the same time,
we want the system to be as simple and straightforward to operate
as possible and to avoid the need for intrusive enquiries into
the closeness of the relationship or the extent of a person's
grief. In addition, keeping classes of person finite and limited
also ensures that the award is less likely to be diluted among
what could in some situations be quite a significant number of
claimants.
Of course, no one can predict where grief and
loss will be most felt and the question of where to draw the line
is a very difficult one, but, from time to time, as society changes,
it is appropriate to reconsider whether the class of eligible
persons is still appropriate. Clause 5 of the draft Bill is the
result of such an exercise. Of course, we accept that there will
be different views as to where the new boundaries should be drawn
but we consider that the balance struck by clause 5 of the draft
Bill is appropriate.
6. What is the rationale for the limits within
categories of persons that further restrict eligibility for bereavement
damages?
The draft Bill extends those eligible to claim
bereavement damages to include:
— any person who had been living with
the deceased as the deceased's husband or wife or civil partner
for a period of at least two years ending with the date of the
death (new subsection (2)(aa)); and
— any child of the deceased, who was
under the age of 18 at the time of the death (new subsection (2)(ab)).
— a father with parental responsibility
(within the meaning of the Children Act 1989) in relation to the
death of an illegitimate child under 18 who was not married or
in a civil partnership.
The same principles have been applied to setting
limits on eligibility to claim within a broader category of persons
as have been applied to defining the broader category itself as
discussed in response to question 5. We think that the proposals
in clause 5 of the draft Bill create a clear and straightforward
system and strike a reasonable balance between all those affected.
7. Why are bereavement damages not being
extended to parents for the death of a child over 18? [ie parents
will only be able to claim bereavement damages for the death of
a child under the age of 18].
The death of a child before a parent is always
a tragedy, and we accept that grief and loss cannot be neatly
analysed by the age of majority. We also accept that restricting
bereavement damages to children under the age of 18 is bound to
be particularly difficult to accept where there are siblings killed
whose ages straddle that boundary. However, an open ended extension
allowing parents to claim bereavement damages for the death of
any child, however old, would be a very significant extension
of the present class and would increase the possibility that claimants
would in fact not be particularly close to the deceased.
This would increase the need for intrusive enquiries
into the closeness of the relationship, which we wish to avoid,
and would undermine the simplicity and clarity of the present
scheme.
We note that suggestions have been made to the
effect that the cut off point should be at the age of 21 or 25.
These would limit the scope of the extension, albeit to a lesser
extent than a cut-off at the age of 18, but difficult borderline
cases would still inevitably arise.
18 years of age is the age of majority recognised
by the law as the dividing line in a range of different circumstances
and, given that an open ended class is not acceptable, we consider
that restricting eligibility to claims in respect of children
under the age of 18 is the most appropriate and practical limit.
The same arguments broadly apply to the provision
proposed in clause 5 of the draft Bill restricting eligibility
to claim bereavement damages in respect of the death of a parent
to children under the age of 18 rather than to children generally.
8. The Law Commission proposed that where
two or more children qualified for bereavement damages each should
have a full award subject to an overall cap.
MoJ has proposed that each child should receive
half the standard award without a cap. What is the rationale for
that limit?
The Law Commission proposed that there should
be a finite limit on the total amount of bereavement damages for
which a defendant could be liable in an individual case. It suggested
a figure of £30,000 (three times the then award). Within
this cap the Commission proposed that every claimant would receive
an equal share. Thus, in the case of a husband who was killed
leaving a wife and five minor children, each would have received
£5,000 (at the rate of award then applicable). If, say, all
the deceased's children over the age of 18 or the deceased's siblings
were also included the award would be reduced further. We considered
that this approach was capable of diluting the award too much
and that the amount payable should not be so contingent on the
number of eligible claimants.
In general we take the view that the award to
those in the closest categories of relationship to the deceased
should not be diluted. However, it is currently the position that
where two parents of the deceased are eligible the award is shared
between them. In accordance with that approach we considered that
it was appropriate to award half of the full award to each child
of the deceased, regardless of the number of children involved.
We therefore proposed in 2007 that a surviving
spouse, civil partner or qualifying co-habiting partner (see clause
5(2) of the draft Bill) should receive the full award (then £10,000)
and the children half the award each (then £5,000).
There was a lack of consensus on this point
among the consultees who replied to the 2007 consultation. Responses
ranged from those who argued for a full award to be made to each
eligible child and those who argued for a single award to be divided
between however many children were eligible. The point did not,
however, attract much comment from those who replied to the 2009
consultation.
We accept that different views may reasonably
be held, but consider that our approach strikes a fair balance
between those opposed viewpoints.
For completeness, I should mention that we have
increased the sum payable for bereavement damages from £10,000
to £11,800 in respect of causes of action arising on or after
1 January 2008. On this basis children would therefore each receive
£5,900 under the draft Bill.
DAMAGES FOR
GRATUITOUS CARE
9. Why should claimants have to account to
the carer in respect of damages awarded for future care?
There seems to be a consensus that damages should
be capable of being awarded for gratuitous care—at least
where the carer is not the wrongdoer.
Under the present law claimants have to hold
damages received in respect of the loss to another person (the
carer) of providing gratuitous care to them in trust for the carer.
This is a cumbersome approach. Both the Law Commission and the
Government agreed that it should be simplified and that the claimant
should instead be under an obligation to account to the carer
for the money received. The Law Commission, however, considered
that the duty to account should only apply to damages received
in respect of past gratuitous care.
At present, we are not persuaded that damages
for past and future should be distinguished in this way. In receiving
money for future gratuitous care the recipient is receiving money
for services that will be rendered by someone else. It seems to
us to be reasonable that the provider of the services should be
able to have the benefit of these payments when the services have
been performed. This could, in a small way, encourage carers.
We do, however, acknowledge that there is some
force in the arguments that have been made and will give further
consideration to the exact nature of the obligation on the claimant
to account to the carer.
10. What is the rationale/justification for
the distinction between the treatment of gratuitous care provided
by the wrongdoer before and after the date of the award of damages?
The present law does not allow the court to
award damages to the claimant in respect of gratuitous care provided
by the wrongdoer in any circumstances. As this is primarily likely
to arise where the wrongdoer is a member of the family, it is
clearly a controversial rule on which strongly held differing
views are put forward.
Clauses 6 and 7 of the draft Bill allow the
court to award damages in respect of future gratuitous care to
be provided by the wrongdoer but not for gratuitous care which
has already been provided by him or her before the date of the
award of damages. A majority of the responses to the 2007 consultation
supported this approach. However, the responses received in 2009
were more mixed.
The advantage of awarding damages for future
care in respect of a wrongdoer is that it may enable the claimant
to receive gratuitous care that would otherwise have to be procured
at commercial rates, increasing costs and possibly inconvenience
all round. A number of responses suggested circumstances in which
the payment of damages for past gratuitous care by the wrongdoer
might be appropriate but we consider that it would be very difficult
to differentiate between the appropriate and inappropriate cases
in legislation.
We therefore conclude that in light of these
considerations and bearing in mind that such claims are not possible
at present, the present rule should continue in relation to past
gratuitous care only. Nonetheless, we recognise that this is a
difficult issue and we greatly respect the concerns that have
been expressed. We will be giving the problem further consideration.
11. The Committee notes that under the Bill
the court cannot award damages to the claimant in respect of the
gratuitous care provided by the wrongdoer to the claimant before
the date of the award of damages. One concern appears to be that
these damages (if payable) would be paid by the wrongdoer to the
claimant, who would then be under an obligation to account to
the wrongdoer for them. How is this argument affected by the practical
reality that damages are almost invariably paid by an insurer?
Clauses 6 and 7 of the draft Bill do not allow
the court to award damages in respect of gratuitous care provided
by the wrongdoer before the date of the award of damages. This
follows the existing law. Certain responses to the 2007 consultation
took the view that the implementation of the Law Commission's
recommendation that damages should be payable for gratuitous care
provided by the wrongdoer before the date of the award would appear
inappropriate, as the money could simply be returned immediately
to the wrongdoer under the duty to account. Others have argued
that this circularity is more apparent than real because the money
paid to the claimant comes from the wrongdoer's insurer rather
than the wrongdoer.
We accept that in practice most awards of damages
in relation to personal injury and fatal accident claims are paid
out by an insurer, but the insurer is indemnifying the wrongdoer
as a result of premiums paid. The fact that the monies are likely
to be paid by an insurer does not therefore fundamentally alter
the nature of the transactions. We will consider this issue further
but are not convinced at present that the provisions in clauses
6 and 7 of the draft Bill are inappropriate.
12. There seems to be a tension between the
notion that paying a wrongdoer damages is contrary to public policy
and the view that paying such damages supports a public policy
objective of encouraging the provision of care within the family.
Where does MoJ stand on this? Is gratuitous care viewed as preferable
to commercial care services? Does the law encourage carers and
persons they are caring for to enter into commercial arrangements
to circumvent restrictions on damages?
Clearly, the overall object of awarding damages
is to compensate the claimant not to benefit the wrongdoer.
However, the provisions in clauses 6 and 7 of
the draft Bill allow damages to be paid to the claimant in respect
of gratuitous care to be provided to him or her in the future
by the wrongdoer and for the claimant to be under a duty to account
to the wrongdoer for such damages when the care has been provided.
We accept that it might therefore be argued that the wrongdoer
is, albeit indirectly, benefiting from the award of damages. On
the other hand, the existence of the duty to account could well
encourage the provision of care in the future. Further, the wrongdoer
may be a pillar of support for the victim and care for that victim,
perhaps to a better standard- and certainly cheaper- than a commercial
carer. Thus, as so often in civil law policy, a balance has to
be struck between competing demands. In this case, we note that
the Law Commission supported the payment of damages in respect
of gratuitous care and consider that the balance struck by the
Bill is appropriate. This position was adequately supported on
consultation.
Whether commercial or gratuitous care is to
be preferred in any individual case will depend upon its circumstances.
It is not an issue on which a single general rule applies. What
is needed is a pragmatic workable approach that strikes the right
balance between victim and carer and society at large.
We are aware of suggestions that carers enter
into contracts for the provision of care with persons who would
otherwise provide gratuitous care to avoid the present prohibitions
on claims for damages in respect of gratuitous care. We are, however,
not aware of any widespread practice of this kind. Whether or
not it is appropriate for persons in individual cases to enter
commercial agreements is a matter for them to decide in the circumstances
of the case. If such agreements are a sham, they may well be challenged
and thereby result in extra costs and fail in any event. Under
the draft Bill, damages will be recoverable for past and future
care provided by persons other than the wrongdoer and in respect
of future care provided by the wrongdoer. The temptation to enter
into sham agreements should therefore be greatly reduced. We do
not consider that the possibility there may be such sham agreements
undermines the case for maintaining a bar on damages for past
gratuitous care by the wrongdoer.
INTEREST
13. The Committee notes that the interest
provisions are largely an enabling power allowing the Lord Chancellor
to specify the pre- and post-judgment interest rates. Why hasn't
a conclusion been reached on the use of the powers?
The interest provisions in the draft Bill are
indeed largely enabling provisions. They give the courts power
to decide whether to award interest and the Lord Chancellor power
to specify what the rate of interest should be. The Lord Chancellor's
power is intended to be flexible. These provisions provide a possible
legal framework in which the policy set out in the Government's
2008 response to the Law Commission's recommendations in its 2004
report on Pre-judgment interest on Debt and Damages (HC
295) could be developed. The details of how the power to set interest
rates will be exercised remain to be settled. The response to
the 2009 consultation forms part of that process and we will consider
carefully the comments received. Our intention is to consult widely
before any decisions are taken as to how the powers will be used.
GENERAL
14. Do you agree that it is for society,
or Parliament acting on its behalf, to set parameters for who
is eligible for what and how much in personal injury damages cases
and for the insurance industry to price its products accordingly?
The setting of levels of damages and the determination
of the circumstance in which they should be awarded has largely
been the role of the courts under the common law. We believe that
it is important the courts should retain that role in order to
do justice in individual cases and to develop the law to meet
changing situations. Nonetheless, it is of course clearly for
Parliament to legislate when the need arises.
In the main area covered by the damages related
provisions in the draft Bill, that of damages for fatal accidents,
a statute already exists. It is over 30 years old. It is important
to ensure that it is amended where it is no longer clear or no
longer reflects the needs of modern society.
Of course, there are inevitably a link between
the levels of compensation payable and the affordability of insurance.
So, once again, a balancing exercise is necessary because compensation
should be adequate and insurance affordable. The Government believes
that the central principles which must continue to govern these
considerations are that claimants with valid claims should receive
fair compensation to meet their needs and that responsibility
for this compensation should rest with the person who has caused
the injury and, through them, their insurer.
15. What assessment was made of the impact
of the different costs of the different possible solutions in
relation to such damages?
The impact assessments outlining the estimated
costs and benefits of the reforms proposed in the draft Bill were
published in the 2009 consultation paper. Those on damages had
also previously been the subject of our consultation in 2007,
and the views of those responding to that consultation were taken
into account in producing the impact assessment accompanying the
draft Bill. We will be considering the comments made on costs
carefully in preparing the final impact assessment in relation
to the draft Bill.
I hope that the Committee finds these answers
helpful.
Bridget Prentice MP
Parliamentary Under-Secretary of State
March 2010
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