Response by the Law Society to the Ministry
of Justice consultation on the Civil Law Reform Bill
INTRODUCTION
The Law Society is the representative body for
over 100,000 solicitors in England and Wales. It negotiates
on behalf of the solicitors' profession, lobbies regulators, Government
and others. It also works closely with stakeholders to improve
access to justice for consumers.
We welcome the opportunity to respond to this
consultation. However, we must express our concern about the period
of time allowed for this response to have been made which is shorter
than the three month period generally recommended by the Cabinet
Office.
GENERAL COMMENTS
Damages
In 2007 the Government published a consultation
entitled "The Law of Damages". The issues raised in
that consultation had previously been highlighted in a series
of Law Commission reports which were published in the late 1990s:
Claims for Wrongful Death; Liability for Psychiatric Illness;
Damages for Personal Injury; Medical Nursing and Other Expenses;
Collateral Benefits; and Aggravated, Exemplary and Restitutionary
Damages.
When the Commission published its report "Claims
for Wrongful Death" it also published draft Bills proposing
to amend the Fatal Accidents Act 1976 and to amend the law
relating to damages in respect of gratuitous provision of services
in personal injury cases.
The 2007 paper concerned possible changes
to the substantive law on damages which would change the position
for claimants and for those who pay damages. The questions raised
were essentially those of public policy rather than legal practice.
In responding to the 2007 consultation the Law Society expressed
its regret that many of the recommendations made by the Law Commission
in 1998 and 1999 appeared to have been acknowledged
but not subsequently taken forward.
The Society also noted that no questions were
asked in respect of the paper on Psychiatric Injury which the
government had apparently put in the "too difficult"
box. The consultation paper raised major issues of public policy
regarding psychiatric injury which the courts had found very difficult
to resolve. Without expressing any view on the policy issues at
that stage, the Society questioned whether it was proper for government
not to take the legislative opportunity to address them.
Over 10 years has now elapsed since the
Law Commission published its reports in this area. The Government
has now chosen to take forward possible changes to the law in
respect of claims under the Fatal Accident Act 1976 (wrongful
death and bereavement damages), damages for gratuitous care plus
aggravated damages and restitutionary awards. However, it has
still failed to address other important public policy issues which
were raised by the Law Commission (eg liability for psychiatric
illness and damages for personal injury) and the Society urges
the Government to take this opportunity to do so now.
RESPONSE TO
QUESTIONS
PART 1 DAMAGES
Question 1: Do you have any comments on the
draft clauses of the Bill relating to the law of damages?
Clause 1—Extension of right of action
The provisions within the draft Bill reflect
the provisions recommended by the Law Commission in its draft
Fatal Accidents Bill (clause 2).
The Law Society welcomes the proposal to increase
the statutory list of those who are entitled to claim for financial
loss. However, as previously indicated in its response to The
Law on Damages consultation in July 2007, the Society sees no
reason why existing categories would need to remain. It is simpler
to have one class of claimant (ie any person who was being wholly
or partly maintained by the deceased immediately before death).
Simplifying the legislation in this way by defining only one category
of claimant will then leave it open for anyone who can establish
that they have indeed been wholly or partly maintained by the
deceased to make a claim.
The Society suggests that this clause should
be redrafted to amend section 1(3) of the Fatal Accidents Act
1976 by inserting a whole new section as follows:
(3) In this Act "dependant" means person
who was being wholly or partly maintained by the deceased at the
time of death.
Clause 2—Assessment of damages: effect of
remarriage etc.
Subsection 2
The Law Commission recommended that the fact
of remarriage etc. should be taken into account. The Society agrees
that it is appropriate to update legislation so as to ensure there
is as much certainty as possible about who can recover. The provisions
within the draft Bill reflect the provisions recommended by the
Law Commission in its draft Fatal Accidents Bill (clause 4 (3))
Subsection 3
The Law Commission's draft FAA Bill and the
original consultation proposed that remarriage should be taken
into account but the proposed provision actually gives discretion
to the court which is acceptable.
This is agreed on the principle of certainty (as
above). Clause 3—Assessment of damages: possibility of relationship
breakdown
Subsections 3 (c), (d), (e)
The Law Commission recommended that prospects
of a relationship breakdown should only be taken into account
where there is clear evidence to that effect (eg separation, petition
for divorce/judicial separation/nullity). Its draft Bill also
included living apart as one of conditions.
The Society argued in its consultation response
that the prospect of breakdown in itself should not be a factor
as the split in the relationship may only have been temporary
and proposed that the qualifying factor should be that some formal
proceedings had been commenced. The Law Society is pleased to
note that its views appear to have been accepted in the drafting
of this clause.
Clause 4—Assessment of damages; effect of
lack of right to financial support
The previous provision in section 3 (4)
of the FAA 1976 had been criticised for its lack of clarity
and its intrusive nature and the Society agreed with this proposal
in its response to The Law on Damages consultation in July 2007.
The Society therefore welcomes this proposal to repeal section
3 (4).
Clause 5—Damages for bereavement
These proposals generally reflect the recommendations
made by the Law Commission. However, the Commission recommended
that each award should be £10,000 but that the defendant's
liability should not exceed £30,000 (it would be £35,700 today)
for a single death.
The Law Society welcomes the extension of categories
and acknowledges that the bereavement award has previously been
increased from £10,000 to £11,900 which it
had been advocating for some time.
Whilst the award for a child is proposed at
50% there is no limit on liability for the defendant. It could
therefore be argued that there is no reason to reduce the award
for a child. There should be provision within the Bill for the
award to be increased annually in accordance with RPI and not
every three years as currently.
Clause 6—Minor amendment
This clause replaces the existing section 1(3)(b)
FAA 1976 by simplifying the wording but leaving the substance
unchanged. The Society fully supports this change and the draft
clause.
Clause 7—Damages for gratuitous services
Subsections (1) and (2)
These follow the recommendations of the Law
Commission and the Law Society welcomes it as a sensible way of
clarifying and simplifying a difficult area of common law..
Subsections (3) and (4)
The Law Commission stated in its 1998 report
"Claims for Wrongful Death"—"We therefore
recommend legislation which ensures that a defendant's liability
under the Fatal Accidents Act to pay damages to the claimant for
gratuitously provided services is unaffected by any liability
of the claimant on receipt of those damages to pay them (or a
proportion of them) back to the defendant as the person who has
gratuitously provided such services". However, no mention
appears to have been made that no damages can be recovered for
gratuitous services provided by the defendant before the date
of the award. Neither was this referred to in the Commission's
draft Bill. There was also no mention in the Commission's draft
Bill on gratuitous services.
The Society does not consider that there is
any justification for treating past and future losses differently.
Such a differential may lead to conflicts of interest as claimants
may feel impelled to rush a matter to trial to take advantage
of the benefit of this situation but where other aspects of the
claim are not ready to be finalised. The Law Commission did not
propose this particular condition and there would appear to be
no reasoning for it. Clause 7(4) should therefore be excluded
from the Bill.
Clause 8—Awards of damages under the Fatal
Accidents Act 1976
Subsections (3) and (4)
Clause 8(4) should be removed for the same reasons
as set out in our comments on clauses 7(3) and 7(4) above.
Clause 9 Power to award aggravated damages
etc
Subsection (1)
This supports the principle that the purpose
of the civil law is to provide compensation and not to punish
and that the function of exemplary damages is more appropriate
to criminal law. However, the Law Commission, who preferred the
phrase "punitive damages" considered that aggravated
damages should remain as part of the civil law on the following
conditions:
— exemplary damages should be an exceptional
remedy, rarely-awarded and reserved for the most reprehensible
examples of civil wrongdoing which would otherwise go unpunished
by the law.
— their availability (and assessment) must
be placed on a clear, principled basis(and be assessed by a judge
and not a jury).
— although flexibility is necessary, unnecessary
uncertainty as to the availability and assessment of the remedy
must be avoided.
— defendants must not be unfairly prejudiced.
— the impact on the administration and
funding of civil justice should not be adverse.
The Law Commission considered that there was
a good deal of confusion surrounding the terms exemplary damages
(which they considered to be punitive) and aggravated damages
which (they felt were compensatory for mental distress). To avoid
this confusion they recommended that statute should clarify that
aggravated damages were compensatory and not punitive and that
the term "compensation for mental distress" should replace
the term aggravated damages. The current proposal in the draft
Bill was agreed in the Society's 2007 consultation response
but there would appear to have been no move towards clarification
of exemplary/aggravated damages as recommended by the Commission.
Subsections (2) and (3)
The term additional damages, which only appears
in the Patents Act 1977 and the Copyright, Designs and Patents
Act 1988 has been the subject of criticism for uncertainty.
On the face of it this is a sensible and uncontroversial proposal.
However, it would appear to be anomalous to have the availability
of additional damages for flagrant breach of copyright and not
for other types of Intellectual Property.
Question 2: In particular, do you have any
views on how the concept of additional damages pursuant to the
2004 Directive should be expressed in terms appropriate to
Scots law?
No comment
Question 3: Do you agree with the impact assessment
on the proposed reforms relating to the law of damages at Annex
C?
Yes—based upon the current proposals
PART 2 INTEREST
Question 4: Do you have any comments on the
draft clauses of the Bill relating to the setting of pre—and
post-judgment interest?
Clause 10 Power to award interest on judgment
debts and damages
See below
Clause 11 Interest on judgment debt
See below
Clause 12 Rate of interest on debts and damages
See below
GENERAL COMMENTS
ON CLAUSES
10—12
The Act will put the usual interest rules under
one umbrella which is quite useful as they are contained in various
statutes at present.
The circumstances in which the courts may award
compound interest ought to be clearly stated because the current
power to do so is limited. Given the huge volume of claims through
the County Courts it is important that practitioners and judges
there have a clear set of rules to follow. If there is too much
discretion a new form of satellite litigation may develop along
the lines seen over the past few years in relation to costs.
The power to change interest rates annually
is useful but may cause difficulty if several different rates
have to be applied over the relevant period of calculation. The
Lord Chancellor appears to be given wide powers under clause 12 to
determine what interest rate applies, and whether it is compound
or simple. This causes the Law Society some concern, even though
the Court has power under section 5 to disapply or vary the
Lord Chancellor's order. A better proposal may be to apply a fixed
percentage (1% for example) above base rate.
There is no reference to the Late Payment of
Commercial Debts (Interest) Act 1998 which is available in
cases of supply of goods and services where both parties are acting
in the course of a business. It is assumed that this remains intact—it
ought to as it is a valuable weapon for the small suppliers against
a larger but slow paying customer.
Question 5: Do you agree with the impact assessment
on the proposed reforms relating to the setting of pre—and
post-judgment interest at Annex D?i#
Yes—based upon the current proposals
PART 3 DISTRIBUTION
OF ESTATES
Question 6: Do you have any comments on the
draft clauses of the Bill in relation to the distribution of estates
of deceased persons?
Clause 16—Disclaimer or forfeiture of a
gift under a Will
The Law Society would like to highlight that
the effects of the proposed amendments in relation to disclaimer
of an interest under a Will are potentially complex and depend
on the facts of each case and the drafting of the particular Will.
The Society notes that it is the view of some practitioners that
the change relating to disclaimers is not as necessary or desirable
as it is for forfeiture cases. In practice, the Society understands
that disclaimers are rarely undertaken without legal advice, and
as such the person disclaiming is unlikely to find they have caused
an unexpected result; and in many cases a deed of variation will
be available as an alternative approach to achieve the desired
result.
The Society would suggest that the drafting
of new clause 16(2)(4) merits some further consideration. Clause
16(2)(4) of the Bill:
"[Clause 16(2)(2)] is subject to any provision
in the will about how the devise or bequest is to take effect
in circumstances including those where the intended beneficiary
comes within subsection(1)(a) or (b)".
Assuming the Bill is passed as drafted; avoiding
the effect of the clause is likely to be achieved for professionally
drafted Wills by excluding clause 16, just as section 33 of
the Wills Act 1837 is currently sometimes excluded. However,
with homemade Wills, non-professionally drafted Wills and Wills
made pre-commencement, it will be necessary to construe the words
of the Will in conjunction with the statute (when in force).
The Society believes that the test of there
being a "provision in the Will about how the devise or bequest
is to take effect in circumstances including [disclaimer or forfeiture]"
sets the bar high. A testator is unlikely to contemplate specifically
either disclaimer or forfeiture in the words of the Will, but
the overall shape and terms of the Will may make it clear (particularly
in the case where the Will was drafted before the commencement
of the Act) that he did intend a default gift, and that it was
not for the share of the disclaiming person to pass to his or
her children as a matter of law.
By contrast, section 33 of the Wills Act
1837 is drafted to apply a test of "unless a contrary
intention appears by the will". The Law Society suggests
that consideration be given as to whether clause 16(2)(4) should
mirror section 33 of the Wills Act 1837 in this respect.
Clauses 15(3) and 16(3)—Safeguarding infant's
share
Clauses 15(3) and 16(3) give the court a discretionary
power to intervene to appoint a third party to hold the share
of a child's taking as a result of forfeiture by the child's parent.
The Society notes that it is currently possible to apply to a
court under section 116 of the Senior Courts Act 1981 to
pass over an unsuitable personal representative and make a grant
to someone else. However, the Society recognises that the proposed
new provisions would give the court the initiative to appoint
the Public Trustee, or such other person as the Public Trustee
recommends, or make such further orders or directions as is necessary.
Clauses 15(3)(1)(b) and 16(3)(1)(b) refer to
"an infant who is a child or remoter descendant of the offender"
in relation to the safeguarding of the infant's share. The Society
is concerned that these clauses are limited to a child or remoter
descendant, as there may be cases where court intervention is
needed where those inheriting are not children or a remoter descendants
of the killer. An example of this would be where X murders both
parents and has two siblings under 18 who inherit. The Society
suggests that these clauses apply wherever minors are taking (or
taking more) as a result of the application of the forfeiture
rule.
Commencement
The Law Society believes that the Bill should
expressly state the commencement position of the proposed provisions.
The Bill should make clear any effect the provisions will have
on existing Wills, and what the implications are of making, after
commencement, a codicil to a Will made before commencement of
the proposed legislation. There should be no uncertainty as to
how these amendments will impact on existing or future estates.
Unless the commencement position of the Bill
is spelled out practitioners may be left in a state of uncertainty—as
is currently the case, for example, in relation to the Perpetuities
and Accumulations Act 2009, where there has been much debate recently
on this point.
If the policy is that the Bill is not to apply
to Wills made before the statute comes into force then the Law
Society suggests that, as a formulation for that proposition,
the words in section 34 of the Wills Act 1837 should
be used as a guide.
If it is to apply to all Wills whenever made
consideration needs to be given to pre-commencement Wills which
will have been drafted on the assumption that, in the event of
disclaimer of forfeiture, the current law would apply. If this
is the case, consideration should be given to the discussion regarding
Clause 16 above, that it may assist in clarifying the intention
of a Will if clause 16(2)(4) mirrors section 33 of the Wills
Act 1837 to apply a test of "unless a contrary intention
appears by the will" as opposed to proposed test "provision
in the Will about how the devise or bequest is to take effect
in circumstances".
The Society supports the proposed commencement
of Part 3 being subject to a minimum delay of three months
from the date of Royal Assent. This delay will provide time for
solicitors to come to terms with the proposed amendments, and
allow people who may wish to execute codicils excluding or varying
the provisions of the proposed statute to do so.
Question 7: Do you agree with the Impact Assessment
on the proposed reforms relating to the law of succession at Annex
E?
The Law Society agrees that as outlined in the
impact assessment, solicitors will need to be informed and be
familiar with the proposed amendments. There is also the likelihood
that some testators may decide to amend their existing Wills to
align with the Bill. However, if the commencement position of
the amendments is made clear this will reduce any impact the amendments
will have on solicitors and their clients.
PART 4 RIGHTS
OF APPEAL
Question 8: Do you have any comments on the
provisions of the draft Bill relating to rights of appeal?
No comment
Question 9: Do you agree with the impact assessment
on the proposed reforms relating rights of appeal at Annex F?
No comment
February 2010
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