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Lord Bassam of Brighton moved Amendment No. 147:

(1) Amend the Proceeds of Crime Act 2002 (c. 29) as follows.
(2) In section 89 (procedure on appeal to the Court of Appeal), after subsection (3) insert—
"(4) Subject to any rules made under section 91, the costs of and incidental to all proceedings on an appeal to the criminal division of the Court of Appeal under—
(a) section 43(1) or (2) (appeals against orders made in restraint proceedings), or
(b) section 65 (appeals against, or relating to, the making of receivership orders),
are in the discretion of the court.
(5) Such rules may in particular make provision for regulating matters relating to the costs of those proceedings, including prescribing scales of costs to be paid to legal or other representatives.
(6) The court shall have full power to determine by whom and to what extent the costs are to be paid.
(7) In any proceedings mentioned in subsection (4), the court may—
(a) disallow, or
(b) (as the case may be) order the legal or other representative concerned to meet,
the whole of any wasted costs or such part of them as may be determined in accordance with rules under section 91.

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(8) In subsection (7) "wasted costs" means any costs incurred by a party—
(a) as a result of any improper, unreasonable or negligent act or omission on the part of any legal or other representative or any employee of such a representative, or
(b) which, in the light of any such act or omission occurring after they were incurred, the court considers it is unreasonable to expect that party to pay.
(9) "Legal or other representative", in relation to a party to proceedings means any person exercising a right of audience or right to conduct litigation on his behalf."
(3) Subsection (2) applies in relation to proceedings on appeals in respect of offences committed or alleged to have been committed on or after 24th March 2003.
(4) In section 91 (Crown Court Rules) after "Crown Court Rules" insert "or (as the case may be) Criminal Appeal Rules"."

The noble Lord said: My Lords, I shall be brief because the amendments are non-controversial. Amendment No. 147 would insert a new clause which closes a gap in the existing law. It would make 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 under the Proceeds of Crime Act 2002. Amendments Nos. 261 and 304 are consequential on Amendment No. 147.

Part 2 of the Proceeds of Crime Act 2002 provides a single consolidated scheme for the confiscation of benefit from all criminal conduct. That includes power to make a restraint order, freezing assets which might be used to satisfy a confiscation order and a power to appoint a receiver to manage or realise such assets. All restraint and receivership proceedings under the Act will take place in the Crown Court, which also has the power to make the confiscation order. That is a major change designed to improve efficiency. Under previous legislation, restraint and receivership proceedings were heard by the High Court. Consequently, appeals against restraint and receivership will now go to the Criminal Division of the Court of Appeal.

The Criminal Division has power to award costs in criminal cases, but not civil cases. It is unclear as a matter of law whether restraint and receivership proceedings are criminal or civil in nature. Therefore, it is not clear whether the Criminal Division can currently award costs in relation to the appeals which it hears. Amendment No. 27 would insert a new clause, which would put the position beyond doubt by amending the Proceeds of Crime Act so that there is explicit provision for the Criminal Division of the Court of Appeal to award costs in restraint and receivership appeals.

The new clause will be retrospective to the date of the commencement of the relevant part of the Proceeds of Crime Act, which was 24th March 2003. That will ensure that people whose cases are heard before the commencement of this clause will not be disadvantaged. Rules of court will be drafted to make provision for paying costs. Amendments Nos. 314 and 261 are consequential on Amendment No. 304.

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I apologise to your Lordships' House for the omission in the original legislation but I am sure that your Lordships will agree that this new clause is necessary and just in the circumstances. I beg to move.

Lord Goodhart: My Lords, I raise just one query. The Proceeds of Crime Act had separate parts relating to England and Wales, Scotland and Northern Ireland. I appreciate that this Bill relates only to England. What arrangements are being made to include equivalent provisions in Scottish or Northern Ireland legislation?

5.45 p.m.

Lord Bassam of Brighton: My Lords, I think that we are in a position to ensure that there is a follow through or read across to other pieces of legislation. However, the noble Lord has asked for an important point of clarification. Although I cannot give it from the Dispatch Box now, I am happy to clarify that later in correspondence and to share the fruit of that with others involved in the debate today.

On Question, amendment agreed to.

Clause 92 [Periodical payments]:

Lord Goodhart moved Amendment No. 148:

    Page 44, line 21, at end insert—

"( ) Periodical payments shall, unless the court otherwise directs, be increased or decreased in accordance with the Retail Price Index."

The noble Lord said: My Lords, this is the first group of amendments—it forms part of a series of groups—to deal with questions arising from the Government's decision to confer on courts the power to make orders for periodical payments in actions for civil damages. We on these Benches strongly welcome as, indeed, I think does the Conservative Party, the principle of periodic payments as an alternative to fixed sum damages. However, there are a number of issues to be considered.

Amendment No. 148 is similar although not identical to an amendment which we tabled in Committee. The earlier amendment made the inflation proofing of orders for periodical payments an absolute requirement. This amendment states that inflation proofing is to apply unless the court directs otherwise.

I believe that the need to inflation proof periodical payments is obvious. It is not clear on the face of the Bill that Clause 92 gives a power to order periodical payments of variable amounts which are uncertain at the time of the order because they are dependent on something which will happen later; namely, the rate of increase in the retail prices index. So, it seems to me that that needs clarification.

Amendment No. 149 raises a new issue. This would have been more appropriate for debate in Committee but I was not then aware of it. I raise it because the problem has been brought to my attention by Mr David Kemp QC, who is the editor of Kemp on Damages and therefore unquestionably one of the country's leading experts on the subject of damages. He feels very strongly about this particular problem.

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The problem concerns claimants who have suffered particularly serious injuries which mean that they will require long-term care and medical treatment. The costs of care and treatment have risen faster than the retail prices index and are likely to continue to do so. Therefore, it is not enough to order periodical payments of an amount sufficient to provide care and treatment today and simply index link them. Sadly, in a few years' time, even though index linked, those payments are likely to be inadequate to secure what are then regarded as the appropriate current standards of care and treatment.

This is undoubtedly a serious problem with the law of damages. I also recognise that it is a problem with which it is extremely difficult to deal. After all, periodical payments are similar to a form of annuity. Index-linked annuities are standard nowadays. They are available because the liability to pay the annuity can be met by index-linked government securities.

I believe it would be extremely difficult to produce a corresponding financial instrument which could be linked to the costs of care. It may well be that the only practicable way in which a periodical payments order could be linked to care costs would be for the Government to accept liability to cover the amount by which the increases in care costs exceed the increases in the RPI.

I accept that that would be a major step which would need careful prior consideration and would not be suitable for inclusion in the Bill. Therefore, I have no intention of pressing Amendment No. 149 today. However, at the same time it is an important issue and I should be interested to hear the Government's response. I beg to move.

Lord Hunt of Wirral: My Lords, as the noble Lord, Lord Goodhart, pointed out, in this group is not only Amendment No. 148 but also Amendment No. 149. Although I have the greatest respect for Mr David Kemp QC and those who would argue this case, perhaps I may point out to the Minister that I have considerable sympathy with what, undoubtedly, will be her response. The argument for higher indexation of future loss claims is currently being run in a number of claims for lump sum payments. The effect in one case I have seen is to reduce the discount rate which is used to calculate the effect of accelerated receipt in lump sum payments for future loss and was fixed by the noble and learned Lord the Lord Chancellor in 2001 at 2.5 per cent.

In the one case I have seen the effect would be to take that 2.5 per cent figure down to nil or close to it. One can well imagine the drastic effect of such an increase in future loss payments, not only for the insurance industry but especially for the National Health Service.

The noble Baroness will recall that she came to the Dispatch Box when a Motion to annul the order for 2.5 per cent was debated in November 2001. If claimants now seek another route to try to erode the discount rate by other means, that certainty which I believe the Baroness stressed on that occasion—there is a need for certainty for all parties to litigation—

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would be removed for the practitioners and the courts. I should explain that the discount rate already assumes the application of the retail prices index. Therefore, the courts and the Lord Chancellor are familiar with that.

A problem highlighted by the rising care costs returns us to a debate we had in Committee about the fact that at present courts are forbidden from considering what treatment will be available under the National Health Service. The Minister reminded us that we await the report of the Chief Medical Officer. I am not aware that it has yet been published.

However, when it is I hope that it will deal with this difficult anomaly whereby certain individuals are encouraged by those advising them to set up at home 24-hour nursing care just around themselves. That sometimes costs the National Health Service as much as it would to service and look after, say, six people in a private hospital ward. That is the extent of the money which is being spent to set up what are virtually private care hospitals. Further, because they are manned so as to produce 24-hour nursing care, the costs index looks seriously disadvantageous for the claimant. However, there is in reality always the National Health Service. But, at the moment, the courts are specifically forbidden from taking it into account. So we return to the periodical payments debate, referred to by the noble Lord, Lord Goodhart.

The Master of the Rolls' working party report Structured Settlements last year called for a broadening of the investments available. That needs to be looked at independently of this legislation. It is a far from simple process and one which will need to involve the insurance industry and its regulators at the Financial Services Authority as well as of course—and we have already mentioned it—the Treasury.

The debate as to indexation masks the fact that this legislation is about introducing a fairer system in order to avoid as far as is practicable either over or under compensation. As the Lord Chancellor concluded in 2001 in the order that set the 2.5 per cent rate, that is a balancing act. The noble and learned Lord was then criticised by those who sought to put forward a similar amendment. I think that this is effectively a further round of that kind of criticism, although I thank the noble Lord, Lord Goodhart, for giving us the opportunity to debate the matter.

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