UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 300-iii

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

JUSTICE COMMITTEE

 

 

DRAFT CIVIL LAW REFORM BILL: PRE-LEGISLATIVE SCRUTINY

 

 

Tuesday 23 February 2010

MUIRIS LYONS, NICK STARLING and DOMINIC CLAYDEN

Evidence heard in Public Questions 122 - 148

 

 

USE OF THE TRANSCRIPT

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Oral Evidence

Taken before the Justice Committee

on Tuesday 23 February 2010

Members present

Sir Alan Beith, in the Chair

Mr David Heath

Alun Michael

Julie Morgan

Mrs Linda Riordan

Dr Alan Whitehead

________________

Witnesses: Muiris Lyons, Association of Personal Injury Lawyers, Nick Starling, Association of British Insurers, and Dominic Clayden, Director of Technical Claims, Aviva, gave evidence.

 

Chairman: Nick Starling from the Association of British Insurers, Dominic Clayden from Aviva and Muiris Lyons from the Association of Personal Injury Lawyers, welcome. We are glad to have you with us this afternoon. We have been looking at the Draft Civil Law Reform Bill and the pre-legislative scrutiny of it, and I will ask you in the latter part of our discussion whether there are points that we have not raised with you that you think are important, so do not worry about it, I will give you that opportunity, but in the meantime I will ask Dr Whitehead to begin.

Q122 Dr Whitehead: Could I ask you for your initial thoughts about the widening of the definition of entitlement to claim dependency damages under the 1976 Act? The new category of claimant for dependent damages following a fatal accident states that the claimant was being maintained by the deceased immediately before the death. Are there any particular difficulties that may arise from this revised definition?

Nick Starling: We think that the current list is too restrictive and we do have a situation where, because of the change in relationship structures in families and so forth, it needs to be brought up to date. We think that the categories of claimant that the Law Commission have highlighted are almost certainly the right ones. We also recognise that in the future there may need to be revisions because society is always changing, but we think that there should be a mechanism for allowing Parliament to do that so that, as society changes and categories of claimant change, that can change in the future.

Dominic Clayden: I wonder if it would be useful if I gave a bit of background as to why I am here. I am the Technical Claims Director at Aviva. We are the largest insurer in the UK, so we see an awful lot of fatal claims, sadly, and one of the overarching messages we would like to send is to try and make the process as painless as possible for people who have to claim, and indeed for our staff, because they are not easy claims to deal with. The specific concern we would have about the proposed amendment is that it does not give certainty. If there is no definition, it would lead to quite significant enquiries being needed to be carried out by my claims staff to ascertain whether or not there is that dependency. The other feature is that there is no real definition as to how long that dependency needs to have existed. It could be a day, et cetera, and certainly I feel and we feel that the two-year limit gives a good grounding and enables permanency and I see the need to broaden the categories. We believe the two-year dependency gives certainty and allows for that permanence.

Muiris Lyons: Can I comment on that, if I may. APIL as an organisation represents the interests of those who are injured here.

Q123 Chairman: You people are normally at odds with each other, are you not?

Muiris Lyons: In the most cordial way, I hope. Our starting point is that this is about access to justice for those who are either injured or bereaved in these particular circumstances and the categories of dependency, we think, are too narrow, so we welcome the Law Commission's proposals to extend the categories of dependents, but we would urge you to go further than that. We look at the system in Scotland and think it is far more favourable for those who are injured or families that are bereaved because it has a wider category of those who qualify, those who are eligible. We would urge you to look at the Scottish system alongside the English system. It is more generous in terms of who is compensated under that, and our written response to you includes some information on that.

Q124 Chairman: Is that determined by residence or location of the incident?

Muiris Lyons: I think it is in respect of the jurisdiction in which the claim is brought, so, generally speaking, I imagine somebody injured in Scotland who brings a claim in Scotland will fall under the Scottish system. I must confess I am not an expert on Scottish law, but I do look rather enviously at the system they have in place for dealing with bereaved families where it is a more generous system, so that is the first point I would like to make.

Q125 Julie Morgan: When you talk about the wider category, could you just explain that a bit more, please?

Muiris Lyons: Yes. We adopt the Law Commission's proposals so far as they go, but in our submission you will see that we would welcome the Government revisiting the categories further. For example, we advocate that the parent of the deceased should be able to bring a claim, not just for children who are under 18. Somebody could be 21 and killed and the parents are unable to bring a claim. We say that just that difference in age is unfair and the loss of a child is the loss of a child. It is quite clear that you should not outlive your children and it is a tragic bereavement to anybody regardless of the age of the child, so we strongly advocate that it should be payable in respect of the death of any child. We also say in respect of the death of parents that it should be children under 18 or children living at home because again somebody living at home who may be 19 or 20 is going to be equally bereaved as somebody who is perhaps 17. Those sorts of arbitrary age cut-offs, we think, are quite unfair, particularly with the modern societal changes we see in terms of people living at home more. We also think siblings should be covered. At the moment it is a very difficult conversation to have when a family comes in to see you and you say to somebody that their brother has died and that is not recognised in the law. They do not get a bereavement award, no matter how close their relationship may have been. These are all areas that the Scottish system embraces and ours does not and so, if there is going to be reform, we suggest it is sensible to look at that as a starting point.

Q126 Dr Whitehead: Could I just pursue the question of dependency. There is a distinction between what the Law Commission recommended for the new category of claimant, which was "any person ... who was being wholly or partly maintained by the deceased immediately before the death or who would, but for the death, have been so maintained at a time beginning after the death". The draft Bill, as alluded to, merely states "any person ... who was being maintained by the deceased immediately before the death". Who would be particularly disadvantaged by that change between the two definitions?

Muiris Lyons: I think the first point is that we lose the "wholly or partly" which was originally there and which has not made it through into the Bill and I think that is quite a helpful clarification because it embraces the fact that there does not have to be a full dependency, a whole dependency; it can be a partial dependency. We also suggest a slight revision to that clause of the Bill because we are slightly anxious that specifying that the dependency must meet a reasonable need could create satellite, unwanted litigation about what is a need, reasonable or not. It seems to us that, if someone can satisfy a judge on the evidence that they are a dependent, they should receive the appropriate payments. They should not have to go one step further and establish that it is a reasonable dependency. The example we give is the question of perhaps an uncle or a godparent who is paying towards the maintenance of somebody at university and they pay £400 towards their rent or something. We do not want to get involved in arguments about is that a reasonable dependency. It is a simple dependency. It is not necessarily a huge one, but it is something that is of very big significance to perhaps that godchild at university, and under this extended provision they would now be able to establish that dependency and make a claim.

Q127 Dr Whitehead: So that is the difference between "wholly or partly maintained" and "maintained"?

Muiris Lyons: I think "wholly or partly" is to avoid any doubt that it can be partial.

Q128 Dr Whitehead: But the draft Bill does not have that in?

Muiris Lyons: It does not have that in, and so I would suggest that the Law Commission recommendation should be adopted.

Q129 Dr Whitehead: When the Bar Council gave evidence to us, they suggested that there should be a definition of "person" put in so that it should exclude cats' homes and dogs' homes and homes for retired donkeys and various things that could claim dependency damages as a sort of corporate person. Do you think that would add clarity or do you think that is an unnecessary addition?

Muiris Lyons: We do not have a strong view on that particular point. Our organisation is all about injured people and their families, so any amendment on that would not affect them. Whether or not it adds clarity I am not sure, but I think it would be an interesting argument for a cats' home to advance that they were dependent on somebody. If somebody wants to support a cats' home, they can make a will of course and leave a legacy.

Q130 Dr Whitehead: But presumably, if someone was previously supporting a cats' home on a regular basis ---

Muiris Lyons: It seems the clarity should come from a will, leaving a legacy to the cats' home, rather than court action to try and establish a dependency but, as I say, the Association does not have strong views on that point because it does not affect our approach.

Q131 Chairman: Does the industry?

Nick Starling: Yes, we have strong views. We think it is a very sensible suggestion by the Bar Council.

Q132 Alun Michael: Can I ask about the issue of assessment of dependency damages in relation to remarriage. The draft Bill provides that remarriage or new co-habitation of more than two years must be taken into account by the court when assessing damages for a surviving adult and may be taken into account when awarding damages for a bereaved child. Do you agree that that is the right emphasis and, if not, why not?

Dominic Clayden: For my part the subtle difference would be to change "may be taken into account" to "shall be taken into account". "May" is something which has significantly more discretion sitting there. We believe the circumstances should be taken into account. It does not mean it is absolutely determinative of the outcome, but we believe it is right that, if a judge is directed to take that issue into account, he can.

Q133 Alun Michael: Are you saying that "must" means that it has to affect the outcome, but that "shall" means it has to be considered but may not affect the outcome?

Dominic Clayden: Yes.

Q134 Alun Michael: Why should that be different in relation to a bereaved child and a surviving adult?

Dominic Clayden: The feature for us here is that, to a degree, this is entirely a question of policy. Ultimately, the further we expand the categories of payments then, of course, the greater the cost to society as a whole. One has to be careful to avoid potentially quite unsavoury aspects of discussions around compensation, but the reality is that, if there is somebody else maintaining the child, you get an element of double compensation almost occurring. The important element is: is the child being taken care of? That is the primary issue here, not, "Well, actually, this child comes with some sort of additional funding". We would like to see the primary concern across the piece being: is the child being taken care of? If somebody else is providing support, that should be taken into account from a social policy point of view.

Muiris Lyons: It may not surprise you to know that we do not accept that. We see this very much as about core principles affecting society. It is not just about the impact on insurance premiums and we are great advocates, as I think most people are, for "the polluter pays" here. What you have got is a situation where somebody, through their negligence, has caused this loss, this bereavement, and created the need for the dependency. The fact that somebody 18 months or two years down the line may be trying to get over their grief and get on with their life and meets somebody else we do not think should be a factor affecting their need or dependency. It is all about the polluter paying here. If there is a need it should be met. The damages should be paid regardless of whether somebody is fortunate enough to be able to go on rebuilding their lives, and we think it would be a great shame if people felt unable to move forward after such a tragedy because they were worried that any claim they might be bringing that could perhaps take two or three years to resolve could be adversely affected by them trying to move forward, so we say let the dice fall. If the insured causes the damage then he should pay for it and you should not take into account the fact that somebody may or has come along.

Q135 Alun Michael: There has been some debate about whether an engagement should be considered a sufficiently certain prospect of remarriage that the court should be required to take it into account. It sounds a bit dated in some ways. What is your view on that?

Nick Starling: We do not think it should be. As you say, it is dated. I do not think an engagement is a contractual obligation of any sort.

Muiris Lyons: We do not think it should apply in any event, so whether you have a test of evidence for it is not something we think is necessary.

Q136 Chairman: Can you repeat what you said?

Muiris Lyons: Let me take a classic example. I am going home tonight in my car, thinking how have I done today in front of this Committee, and somebody breaks through a red light and runs me over and I am killed. It could take several years for that claim to be resolved - liability issues, how much is the claim worth, what do I earn, all those sorts of issues. I would like my wife to feel that if she met somebody else who was going to provide a good home for her, a father for my children, she could not not move forward with her life because it might adversely affect the claim for my loss of earnings. It should not get wiped out simply because she is fortunate enough to meet somebody else, and so whether she is engaged to him or living with him or co-habiting with him or seeing him twice a week in the restaurant we think is completely irrelevant.

Dominic Clayden: I think we run the risk of duplication here. Our concern is making sure that the child is taken care of rather than the practical reality of whether someone is contributing to the financial needs of that child. The important bit is to make sure that there is that balance and we think it should be taken into account.

Muiris Lyons: We do not think it is right that the burden should pass from the person who caused it to somebody else. If that relationship were to break down two years later --- there are all sorts of ramifications, so we just think it is not a very progressive move.

Q137 Julie Morgan: What about unmarried fathers with parental responsibility?

Muiris Lyons: We feel that if parental responsibility is granted and is being exercised that is the test. One of the things that the consultation paper makes clear is that as well as trying to keep things as clear as possible we should try to avoid intrusive investigations into people's personal lives, and we think that is right. If somebody has parental responsibility then they should be entitled to make a claim.

Dominic Clayden: The reality is that the world has moved on and parental responsibility is a fact of life for a lot of relationships and a lot of children. We absolutely see that that is an acceptance of a responsibility and takes a defined step. It is not something people do lightly. You generally have to court or you have to sign for it. We are quite comfortable with that.

Q138 Chairman: Can we turn to gratuitous care? Why should claimants be accountable to people who have provided free care to them in respect of damages for future free care?

Muiris Lyons: In respect of future care I think there is agreement that it should not be a factor. I think this is in respect of past care and that is where the law bites. The example is a husband and wife are driving in a car, the husband negligently drives off the road, and the wife is severely injured. The husband then chooses to look after his wife. Normally, the wife would be able to make a claim for the gratuitous cost of the care, so if the mother comes round for six hours a week that can be recovered, but the way the law applies at the moment is that any care the husband would provide you cannot claim for because he is the tortfeasor, and Hunt v Severs says the tortfeasor cannot provide the care and then have to pay for it twice. We say that cannot be right. If somebody chooses to have the husband providing their care they should be entitled to make the same claim for gratuitous care as if it was the mother or the sister or the aunt. What they then do with the money --- really, again, we say keep it simple: it is not about intrusive investigations as to who accounts to whom. The Law Commission have already said that. They have tried to modify the current system which sets up a trust and have said let us have a simple legal obligation, but we say making a legal obligation makes the situation even more complicated and it risks prying into what happens afterwards - "Have you accounted for this? Have you paid for that?" We just think it is simpler to say, "Don't worry about what happens. You are entitled to claim it in the first instance". It is a legitimate head of claim. It should be paid and thereafter it is a matter for the claimant and whoever provided the care to decide how best they want to deal with that.

Q139 Chairman: Aviva, I think, in the consultation said "... past gratuitous care damages should not be awarded where the care is provided by the tortfeasor. It would go against public policy to allow such an award, and there is no justification for excluding this area from a principle which is applied elsewhere in personal injury law". It still holds to that position?

Dominic Clayden: Yes. There is, if I might point out, a bit of a gap in Mr Lyons' approach where the "polluter pays" principle is advanced, except where, of course, the polluter then goes on, it is proposed, to receive a payment for providing care. Our concern is that as an insurer we provide an indemnity against the tortfeasor. We would then be paying our own policyholder to put right his own act of negligence and we are concerned about the broader principle that that would apply.

Q140 Chairman: Is this really the right principle to apply in motor insurance where, for example, a perhaps quite elderly husband is driving the car and the wife sustains very serious injury which necessitates a great deal of care? She does not really blame the husband for the fact that it happened. Perhaps his reactions were not as quick as they would have been when he was younger, but for her not to pursue the damages aspect and seek the insurance company's assistance, effectively, in providing for her future care would be obviously foolish of them. They were insured to provide for such a situation. It is not a situation in which, as far as the wife is concerned, the husband is fundamentally at fault and therefore ought to be punished by the money not being available to him if he gives up his job to look after her.

Dominic Clayden: I think the reality is, of course, that hopefully in that scenario he would be benefiting from being in retirement if his reactions were that slow -----

Q141 Chairman: Yes, that is right.

Dominic Clayden: --- so it is not a loss of earnings. We are talking about the provision of gratuitous care. We do not object to the provision of care generally. That is something which we do every day of the week pay for. This is: should the tortfeasor be paid for providing gratuitous family care, making a cup of tea, generally being around to supervise? It is that kind of payment that we would be looking at and it would add a potentially significant additional cost because, sadly, the reality is statistically that the person who is at fault on a lot of occasions is closely related to the person who suffers an injury. We are here providing indemnity to the person who has committed the tort and we would be nervous and uncomfortable making a payment to that person as well, providing money to enable that person to provide the service.

Muiris Lyons: I think the legal principle on this is one that the tortfeasor should not benefit. There should not be a windfall to the tortfeasor as a result of their tort. The fact that you are negligent should not reward you and we would broadly endorse that, but we just do not think it is applicable in these circumstances.

Q142 Chairman: Just more generally, what do you think the financial impact of the Bill on insurers will be and therefore presumably on policyholders?

Nick Starling: Very low, I think.

Dominic Clayden: The financial impact assessment suggests, from memory, about 50% of claims are made. My personal experience is that that has gone up. It is probably north of three-quarters of fatal accident claims are now made. That being said, I think the assessment made was, say, 12 million a year or 14 million - I cannot remember the precise amount. If you doubled that in the scheme of the amount of motor claims in a year, it is not a huge impact, the changes as currently proposed. I would stress that we endorse the vast majority of the proposal. We think it does need updating in this area.

Nick Starling: There is a principle here that we think it is for courts and society in general to decide levels of damages. You need to be aware of course that, even though in this case the costs are very low, they do inevitably feed through eventually into premiums, but it is society that decides what damages are payable. I think that is quite clear, and insurers price for that.

Q143 Chairman: Are there any other issues which you particularly want to draw to our attention?

Muiris Lyons: I am happy to field that initially. Yes, in our response you will see that we say it is great that the Government is bringing forward these particular Law Commission recommendations, but actually we feel very strongly that it is a real missed opportunity to bring forward the rest of the Law Commission recommendations. In 1999 the Law Commission said that damages were too low for people who were injured or bereaved and something needed to be done about it and, if the courts did not act, the Government should. That was in 1999 and there has been very little change since then, so we would urge you as a Committee and the Government to look at those further outstanding Law Commission recommendations. We recognise that they cannot go into this Bill, but we would urge the next Government to look seriously at a further reform Bill that brings on the rest of the Law Commission recommendations.

Q144 Chairman: You might not agree with that.

Dominic Clayden: I suspect we may differ. There is one issue I would like to raise. It is the question of the proposal that the prospect of breakdown of a relationship should be disregarded unless there are divorce proceedings instituted. By coincidence, my wife was a divorce solicitor for 17 years, so I had a lot of kitchen conversations on the subject. The reality of the situation is that often the formal process of filing divorce proceedings is just a procedural one. People can be with lawyers, relationships have absolutely broken down, long before the actual formal, "Let's tick the box towards proceedings". You will often have the Courts Service involved in sorting out access arrangements for children. You will have the financial arrangements sorted out between lawyers and finally you will tick the box to say, "Let's go through the formal divorce". We think simply saying that you could exclude it until such time as divorce proceedings would fly in the face of the reality of what the position between two parties would be; the relationship or civil partnership would have broken down. We believe the courts should have discretion to look at the reality of what is going on there.

Q145 Chairman: But does that not put you in the position of being very intrusive, as Mr Lyons was saying earlier, the insurance company knocking on the door to check whether the relationship shows any signs of potentially breaking down?

Dominic Clayden: The issue for us in reality is: are solicitors involved? If someone has formally reached the point of having solicitors involved and there is the unfortunate ding-dong going on, that is not hugely intrusive. The parties are already at that point and you are simply getting involved in what was a difficult divorce in any event. The reverse is that you would be defying the reality of what has been going on and providing a financial support which would not have been there before.

Q146 Chairman: But how do you know, as the insurer, that something is "going on", as you put it?

Dominic Clayden: Generally speaking, there is knowledge from your insured. It is a local community. It is not an intrusive question to simply ask the solicitor on the other side because it is something that is done by a request normally through the solicitor. The vast majority of people who bring fatal accident claims are represented by solicitors. It is a request to the solicitor to say, "Look, have they started the process of divorce?" It is a yes or no through the solicitor rather than a process of knocking on doors and enquiring that way. You simply will ask the solicitor in the vast majority of cases and, frankly, most solicitors will answer the question.

Muiris Lyons: You have my point on it being very intrusive. I can see every time that a married couple are involved the question is being asked how strong is their relationship. I think it would be very intrusive. Again, if we are looking at anecdotal evidence, one of my divorce partners is constantly bemoaning the fact that he gets instructed in divorces and then six months later the couple are back together again, so the fact that lawyers ---

Q147 Chairman: You should be pleased!

Muiris Lyons: In fairness to him, family lawyers these days are all about mediation and counselling and trying to encourage constructive results, not just divorce, so I think just because lawyers have been consulted, the law for APIL should be about being clear and consistent and simple and whether a divorce petition has been applied for, whether a divorce petition has been granted. It is nice, it is clear, it is simple, it is consistent, and it avoids murky, unwanted intrusions into people's private lives.

Q148 Chairman: So we have got both sides of the case set down there.

Nick Starling: I can add another point, Chairman, and I assure you I do not know any divorce lawyers, so I am not going to make any disposition on that. You asked whether there are things in the Bill which we think should be there. Broadly speaking, apart from that point, no, but, in the spirit of the way Mr Lyons has said there is a missed opportunity to raise general damages, I think I would say that we have an overall concern in this area as the system becomes more streamlined, more efficient, cheaper and quicker for people to deal with. I think you will be aware from our previous appearances that that is our overall view and there is a lot to be done in this area. This Bill is welcome. I think it is doing a good job, it is clearing things up, but there is plenty more that could keep this Committee busy for some time in the future.

Chairman: Gentlemen, thank you very much indeed. We are very grateful.