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The Earl of Clanwilliam: My Lords, if the noble Lord will allow me to intervene, in order to protect the good name of the noble Lord, Lord Kimball, my speech was referred to in Hansard under the name of the noble Lord, Lord Kimball. It was not the noble Lord, Lord Kimball, who said those words.
Lord McCarthy: My Lords, if I am not wrong, but Hansard is, I apologise on behalf of Hansard. That was the argument raised. Whoever's idea it was in the first instance, we cannot understand it. We cannot square the assertion with the victim's constant desire for the quantum. We are told that the victim wants the quantum. If that is all he or she cares about, he will see through the solicitor opening the can of worms. He will say, "Don't keep mucking about with the can of worms. I want the quantum." The picture of the victim painted by the noble Earl does not square with the picture of the naive victim playing the solicitor's game. We cannot understand that argument in the overwhelming majority of cases.
Having been given all that information--it will not be extensive; there are only a few heads in the schedule--a client may be led by the nose by the solicitor into wanting the information and holding up the process. But if that is what he wants, he is entitled to act in that way. If the client is obstinate, as the noble Earl views it, the only way to settle the matter is to give him the information. Let him have the quantum.
When we stress this point in debate the Minister falls back on the reply superior. The reply superior is often accompanied by a nod, a wink and the tapping of the nose. We are told that these obstinate people could find out the information anyway. If they read the rules, or had good solicitors who read the rules and regulations, they could work out for themselves what deductions there would be in the broad quantum. If I have it right, and Hansard has not let me down, that is what I believe the noble Lord, Lord Mackay, said at col. 992 in Committee.
We were told subsequently that one can ask the CRU on the telephone and it will give all kinds of details which it would not normally make available. We were
told that one can negotiate for a net amount. One can have an understanding that if the amount has to be adjusted subsequently that will be all right. We were told that in all sorts of ways one could get round the issue by operation of the old boy net, by nodding, winking and tapping one's nose, and that therefore the provision is not necessary.I find that argument even less impressive because the information so obtained is less than 100 per cent. reliable. The information depends on good will, upon whom one finds on the phone, and how he or she feels that day. It depends upon one's opponents telling one something and the good will of third parties. We do not believe that that is sufficient. We want full disclosure; we want it by law; we want it by right. I do not find such an argument conclusive.
If we press the argument, the Minister and his allies fall back on what I call the reply realistic. We are told that there may be something in what we say but that we are just creating a bureaucratic maze; that in the real world the Government know, their friends in the insurance industry having told them, that third parties come to these agreements, and have done so by the thousand, based upon ignorance; that people like ignorance and are used to ignorance; that they really do not want to know; and that if we give them this information we shall only make trouble because they will insist on their day in court and that they are better off ignorant.
The answer is that the Government cannot conceivably know that. That is the system we have at present; there is no other system. The poor plaintiff, the poor victim, has to proceed by ignorance. We do not know what they would do if they were offered the option of knowledge. Knowledge may be power. That may be why it is not so popular. But that is why I beg to move the amendment.
Earl Russell: My Lords, I am happy to confirm the recollection of the noble Earl, Lord Clanwilliam. I am happy to see in the Chamber not only the noble Earl but also the noble Viscount, Lord Chelmsford. That is what is called belt and braces--otherwise known as insurance.
In speaking to Amendment No. 2, I am extremely happy to support Amendment No. 1 in the name of the noble Lord, Lord McCarthy and the noble Baroness, Lady Hollis of Heigham. Ministers are familiar--some would say over familiar--with the concept of the wrecking amendment. As I see it, this is a saving amendment. I have said from Second Reading onwards that I strongly support the principle of the Bill and want to see it working. It is my opinion, and my judgment as far as I can form it, that without the amendment the Bill simply cannot operate. I argue here simply in terms of practicalities and of the real world.
The amendment deals only with out-of-court settlements. When people obtain an out-of-court settlement, they should know under which heads they receive the damages. They should know under which heads they are able to recoup. Unless they know that,
they simply cannot know how much they are receiving. It is like getting paid a sum and not knowing whether it is gross or net. It is a material point.The Minister seems to think that it is possible to exclude the effect of recoupment from the operation of settlements. When we considered the Bill on Report, he said:
- "The effect of either of the amendments would be to allow benefit recovery to affect the settlement process to an unacceptable degree".--[Official Report, 14/1/97; col. 134.]
It is not in issue--I hope that the Minister will not detain us arguing the point--that we want settlements to take place out of court wherever possible. It is not in issue that we do not want cases to drag on, building up a greater amount of benefit to be recouped. That is common ground between all parties. The point at issue is which way this desirable effect is to be obtained. But arguments about which way are not always without heat. As anyone knows who has seen a married couple arguing over a map in a car, that sort of argument can become very heated indeed. However, I hope that this one will not.
The Minister attempted to argue that the difficulty arises entirely because we are listening to different sets of advisers. It is true; we are. My advisers are telling me what I thought before they advised me--what indeed I have thought ever since we went through this business in 1989. I believe I am the only surviving veteran of the battles on the 1989 Bill. That said, it ought to be possible for advisers on both sides to reach an "out-of-court" settlement in Parliament as it is in the law. So I hope that this will not be the end of dialogue.
The question is: how do we set about it? The case that is argued by the Association of British Insurers, and by the Minister, is that if a breakdown of heads is needed in regard to a damages settlement, that is just one more matter about which the parties may argue. So far as it goes, that point is true: it is one more matter about which the parties may need to argue, and may therefore take a little time. It seems sensible to concede that at the outset. However, let us consider the alternative; namely, that the claimant simply does not know what he will receive unless he goes to court and has the whole thing out in public.
In those circumstances, I simply cannot see that it is in the interest of the claimant, or that of his solicitor, to settle the case at all. It takes two to settle, as Ministers in both Houses learn every day. If it is never in the interest of the claimant to settle, I do not see how the insurer can get a quick settlement.
If there are to be quick settlements, then the Minister's case must be one of two: either the claimants will settle against their own interest, or the superior
power will in practice prevail. I find the one unimaginable and the other unacceptable. I am rather interested to know which of those the Minister means.If the ABI loses this argument, it is not very much more work to disclose the figure, which must form part of its own calculations; it cannot make the calculations without it. So disclosure will not be particularly difficult. The claimant may object, but if there is a desire to settle, as I believe there often is, it should not be beyond the wit of man to find in the lawyers' equivalent of the Prince's Chamber some way of reaching agreement.
This is the point at which there is a tendency to say that "it is very difficult". It is an old argument. In a lighter moment over Christmas I happened to read some remarkable things that have been said in this House and elsewhere. Some included the great difficulties foreseen in this Chamber in the 1920s in relation to the introduction of a scheme of compulsory motor insurance. The late Lord Ullswater, who I understand was the great grandfather of the present Viscount, said:
- "I can understand a proposal that no motor should be insured against third party risk. That, I think, is an arguable case, because then every person driving would take special care not to inflict damage to life or limb ... but I can also understand the frame of mind of a man who ... says, 'Well, I am insured against all risks; it does not matter,' and he will go ahead for all he is worth and as likely as not will cause an accident".
At the end of that series of debates the Minister commented:
- "To carry out a general scheme of insurance would involve great difficulties. I do not believe it will be possible to come to an agreement with the insurance companies".
8 p.m.
Viscount Chelmsford: My Lords, I am not sure whether I am regarded as the belt or the braces. However, I do not think that the entire insurance industry (all two of us!) is particularly arguing for the insurance industry. In terms of the various points made by the noble Lord, Lord McCarthy, I should like to try a fourth and, I hope, factual reply. The amendments proposed are damaging for all parties, certainly in terms of time, whatever that is worth. I am grateful to the noble Earl, Lord Russell, for agreeing that point.
It seems quite clear that the one area of compensation which is not ring-fenced, and against which the Government can recover benefits, is loss of earnings. That must be agreed all round. Even this morning I received a copy of the TUC's booklet, Robbing the Victims--no excuse for delay. The answer is exactly the same; namely, that the Bill will mean,
- "special damages (awarded to injury victims for loss, such as loss of income or the costs of future care)".
So we now know that clawback can be operated against loss of earnings. Loss of earnings is finite. At the time a claim is agreed, the actual loss of earnings that has been incurred will be known. It is finite; there is no problem with it. In terms of what is being said on the other side of the House, it is a head of damages and
the finite amount is known. If the amount that has been paid out in benefits to the claimant is below that--and, after all, the amount paid out is known--that is the end of the matter. Everybody knows exactly where they stand. If the amount is above it--there may perhaps be some part of the total claim that includes a potential future loss of earnings after the date of settlement of a claim--then it seems very clear that Clause 6(1) of the Bill is invoked and the compensator pays the excess.
My representation is that the insurance industry has given in all round and has agreed all these points. If the compensator pays the excess, there is no need to identify the other heads of claim. The only reason why it seems to me to make sense for all parties not to spend time on it is precisely that it does waste time. Time is money, and lawyers will receive more money.
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