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My noble and learned friend Lord Wallace wrote to me and the noble Lord, Lord Wigley, on 7 February, partly explaining how QOCS would operate. Yes, it removes the need to fund an ATE premium to cover the risk of having to pay the defendant's solicitor's costs if the case is lost, but that is not the full story, as the noble Lord, Lord Alton, has reminded us. Given the high costs of disbursements in mesothelioma cases it would be right to extend the recovery of the ATE premium to mesothelioma claims as it is already in clinical negligence claims.
My noble and learned friend omitted to say also in the letter that the claimant is now going to forfeit not only the ATE premium, which is no longer recoverable, but the far higher amount of the success fee, for which the defendant is no longer liable. The claimant is effectively to be fined 25 per cent of the general damages he has been awarded, losing perhaps £15,000 or more from the amount that has been awarded by the court. It is certain that when this and the ATE liability is explained to mortally ill claimants, many of them will decide that it is not worth the hassle of pursuing the case.
My noble friend Lord Thomas suggests that the claimant should pay only half the success fee, but our case is that victims of mesothelioma should receive the whole of the amount they are awarded by the courts, as hitherto. My noble and learned friend Lord Wallace says that solicitors will compete on maximising the damages that claimants can keep, an expectation which is unlikely to materialise in some of the very complex cases to which we are referring. However, if our amendments are accepted, the right way to reduce the legal costs would be to regulate them further, such as by providing that a success fee is payable only in cases that come to court.
My noble friend says that he cannot believe that lawyers will be unwilling to take cases after the Bill becomes law, and of course they will, but, in the opinion of those advising us, they will take far fewer of these cases. We are also told, not as a matter of opinion but as a fact, that fewer claimants will decide to pursue their cases under this regime. As matters stand now, the victims of these painful diseases are often reluctant to bear the mental stress of dealing with solicitors and court proceedings. Almost unanimously they have said to Tony Whitston, the expert who advises us, that the prospect of losing thousands of pounds out of the award that they may receive would mean that many of them will not go ahead with their claims.
We are not talking only about another concession in the range of issues discussed in Committee, as the Minister put it, but one that engaged the support of every one of your Lordships, of all three parties and the Cross-Benches, who spoke in that debate. The Minister, who has personal experience through his family of the dreadful fate of the victims of mesothelioma, as we have heard, recognises that we are dealing with cases that are sui generis. They have at least as great a claim to be dealt with in a different way from the run-of-the-mill CFA claims as clinical negligence cases, and conceding this amendment would involve no costs to public funds.
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Lord Howarth of Newport: My Lords, as another co-signatory to the letter to which the noble Lord, Lord Alton, referred, I endorse the argument so ably put forward today by the noble Lord and the noble Lord, Lord Avebury. I do not need to add anything to what they have said. The speech of the noble Lord, Lord Alton, today follows the magisterial speech that he gave in Committee. These arguments are irrefutable. To trammel the access to justice of mesothelioma sufferers would be a terrible thing to do. I am sure the Minister, as a kind and good man, will agree with that.
Lord Thomas of Gresford: My Lords, I add my tribute to the noble Lord, Lord Avebury, for his 50-years' celebration of Orpington. It was life-changing for me because I joined the Liberal Party a fortnight afterwards. Therefore, in a fortnight's time it will be my 50th anniversary as a member of the party and, shortly after that, my 50th anniversary of failing to win a seat. That is how it goes.
The amendment seeks to retain the status quo in relation to one industrial disease-mesothelioma. Your Lordships will appreciate from what I said in Committee that these cases are terrible. I feel that completely. I told your Lordships about a lady who lives very close to me in Gresford. She came to this House and spoke, and no doubt a number of your Lordships will remember her vividly. Her husband died as a result of being exposed to asbestos in Brymbo steel works, which is perhaps three miles from where I live. But if you give mesothelioma a special, unique status, what about the people in my village who were in Gresford colliery-that has a certain resonance, as your Lordships may recall the disaster in 1934-or in Llay Main colliery, about two miles away, which was the deepest pit in the United Kingdom? I refer to those who suffer from pneumoconiosis, another industrial disease. How can I say, "I'm supporting that lady but I'm not supporting your claims to have the same treatment for pneumoconiosis"?
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However, you could widen that to all sorts of industrial diseases and add in the person who has suffered catastrophic injuries in a factory or road accident, or multiple injuries that have severely disabled them. Should mesothelioma be given an exceptional status? To an extent, it already has that status because under the Compensation Act 2006, there are very special provisions. Providing that you can prove that a person has been exposed to asbestos negligently in the past, you do not have to prove that the mesothelioma that arises 30 or 40 years later has derived from that particular act. The responsible person under the 2006 Act is liable to all the damages, and the person suffering from mesothelioma can recover accordingly.
Of course, there are special provisions about tracing the insurers of employers some 30 or 40 years back. The Government have a scheme to identify insurers. I hope that they take it a step further, so that when they cannot identify insurers of employers who have long since departed they introduce something similar to the Motor Insurers' Bureau. Your Lordships will recall that if you are injured in a car accident and either the driver cannot be traced or was driving uninsured, it is possible
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Furthermore, is the status quo for which this amendment argues the best model? I do not believe that it is. The model that the Government have adopted follows the Jackson proposals in part; it does not follow them entirely as it has left out some crucial caveats such as the retention of legal aid in all clinical negligence cases. The model adopted in this Bill is too crude and needs refinement. I have searched for a solution that would cover not just mesothelioma but pneumoconiosis and other industrial diseases, such as skin diseases in certain other employments, as well as the catastrophic and multiple injury cases. The model that I propose is not the status quo. As I said earlier, I have listened to so many people from all sorts and all sides, who have bombarded all of us with their briefs and submissions. The model that I argue for is this.
First, there is no rationale for paying claimants' lawyers success fees in cases where liability is admitted, either by way of settlement before proceedings are commenced or by formal admission in the defence that is filed initially to the claim. In those circumstances, where liability is admitted at an early stage, the lawyers conducting the case for the claimant are not at risk at all. They know that they are going to win and that their fees will be paid. My Amendment 132C deals with that situation.
Secondly, if liability is an issue and is denied in the defence, at that point lawyers are at some risk and claimants' lawyers may lose the case, but there comes a point in proceedings that is very important. Under part 26 of the rules of procedure, which deals with case management, a district judge allocates a case to a track; it is a formal stage in the proceedings. There is a small claims track for personal injuries of less than £5,000 and other cases less than £1,000, and some housing cases. Then there is a fast track, which is for claims up to £25,000-soon to be put up to a limit of £50,000, with no more than a day's hearing-and a multi-track. The multi-track cases, which include judicial review and all serious personal injury cases, involve mesothelioma, industrial diseases and multiple and catastrophic injuries, fatal accidents and environmental and civil liberties cases.
Thirdly, for small claims and fast-track cases, the Government's proposal is that the claimant should pay the success fee subject to a cap set at 25 per cent of the damages to date of trial, and he should be responsible. Of those cases-the small, whiplash cases that have bedevilled us, the RTA cases-70 per cent will come under that track. With damages at the top end of the scale of £50,000 in fast-track cases, the success fee could not exceed £12,500. That is all right; it means that the claimant's damages are less, but he would not have been able to bring the case if he had not had a conditional fee agreement. The argument that the noble and learned Lord, Lord Mackay, put way back in 1990 was whether litigation should be completely risk free.
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In multi-track cases, where there is so much more at stake, I consider that the success fee should be split 50:50 between the successful claimant and the losing defendant. It should be stressed that the success fee is a percentage uplift of the standard fees; the cap beyond which the uplift cannot go is a percentage of the damages that are awarded. The Government's model is that the success fee uplift should be capped at 25 per cent of the general damages and losses to the date of trial. In a large case, that award of damages to the date of trial can be a small fraction of the total damages, future care and loss being by far the greater proportion. Yet we have to recognise reality. There is a need to ensure that such potentially difficult and risky cases remain commercially viable and attractive to experienced litigation solicitors. Some solicitors on the high street will take a case on a one-off basis. Is that the best way? Do we not want to have some speciality and experience? Commercially viable litigation will keep the solicitors who currently do those cases taking those cases on.
My argument is, further, that the cap should be placed on the whole award of damages, and not damages to the date of trial where it is multi-tracked-with a serious award of damages-as the noble and learned Lord, Lord Mackay, originally proposed in his scheme. From the claimant's point of view, his share of the success fee cannot extend beyond 12.5 per cent of the damages, and that would be assisted by the proposed 10 per cent increase in the level of damages that we discussed in the course of the last amendment. To try to illustrate this, in a catastrophic case where the damages award might be £10 million, taking into account future loss, the claimant's solicitors and barristers will get their standard fees but they will also get a success fee. Such a fee, which is a percentage uplift of the standard fees, is never going to reach £2.5 million. It is going to be a lesser sum.
In a lesser case where the damages are £600,000, to illustrate a different proposition, a success fee might reach £150,000 but it could not go any higher. Under my proposed model, that would lead to the claimant losing £75,000 of their £600,000 award and the defendants paying £75,000 themselves. What are the consequences of this? It is complicated and we have heard so much about it. It would mean that the claimant has an interest in the amount of the success fee and that lawyers would compete for his business. It is not too much in cloud-cuckoo-land to suppose that a solicitor would advertise, "My success fee will be nil", or, "My success fee will be 5 per cent", in order to attract business.
As for the "after the event" insurance premiums, we have already agreed that one-way costs-shifting will be introduced where there are conditional fee agreements to remove the burden of heavy defendants' costs. One-way costs-shifting has operated in practice in legal aid cases since the inception of legal aid. I have tabled amendments which follow the amendments that we discussed last time. If one-way costs-shifting is introduced, the exorbitant "after the event" premiums to cover the risk of paying heavy defendants' costs are removed at a stroke. You do not have to insure against the defendant's costs because one-way costs-shifting means that the defendant will pay his own, even if
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Lord Bach: I must be under a misapprehension. I thought that this group was about the amendments that the noble Lord, Lord Alton, had so succinctly moved and about my own amendments to which I also hope to speak, perhaps even more succinctly in due course. I am listening carefully to the noble Lord, as I always do, but it seems that his amendments are part of the group that begins with his Amendment 132B. I am surprised that the noble Lord has not waited to speak to his group as it appears on the Marshalled List. Perhaps he can explain to the House why he is doing this.
Lord Thomas of Gresford: I am very happy to do that. I will speak to it further in due course. Frankly, I am anxious not to make the 31-minute speech that I made when we last discussed this particular issue and to relieve your Lordships of that burden. I am splitting what I intend to say, which I think is necessary to cover the whole field, so that it becomes a little more understandable. I take the noble Lord's rebuke in good part, but let me repeat that asking for the status quo in mesothelioma cases only is not the way to go forward.
Lord Alton of Liverpool: My Lords, I would draw the noble Lord's attention to the actual words in the amendment and indeed in the amendment of the noble Lord, Lord Bach, which is in this group. We have corresponded about this and he has been good enough to share with me prior to the debate some of the points that he has made eloquently this afternoon. I am grateful for that. However, this amendment goes slightly wider than he is suggesting in his remarks today and would cover, for instance, pneumoconiosis as well.
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Lord Walton of Detchant: My Lords, I support the amendments tabled by my noble friend Lord Alton. I do so as a doctor. I was brought up in a mining village in Durham County where as a youth I saw some of the ravages of industrial injury and the effects of pneumoconiosis on those who worked in the mines. Later, when I moved to industrial Tyneside, I had considerable acquaintance with industrial injuries of all kinds and industrial diseases caused by a variety of different agents. At an earlier stage of this Bill, I commented that I was asked not infrequently to make reports on people who had suffered neurological damage as a result of these agents. The noble Lord, Lord Beecham, responded by saying that when instructing me to give such reports he had been grateful for their nature and extent and also for the modest fees. Had I known that he took that view the fees might have not been quite so modest.
There is no doubt, as the noble Lord, Lord Thomas, has said, that industrial injuries of all kinds are prevalent in our society. Is there anything special about mesothelioma? There is indeed. It is a disease caused
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Baroness Butler-Sloss: My Lords, I apologise for not being present at the beginning of this debate. My name is on the letter and I want to underline my support for it. As a judge, I was involved with a number of these extremely sad cases, particularly at the Court of Appeal. The letter has been very helpful in setting out what is needed. I apologise to the noble Lords, Lord Alton and Lord Avebury, for not having heard most of what they said, but I have a shrewd idea that it was said extremely well.
Lord Wigley: My Lords, I support Amendment 132AA and wish to speak to the group which is associated with it, standing in the names of the noble Lords, Lord Alton and Lord Bach. I do so enthusiastically as I indicated in Committee. Whereas the noble Lord, Lord Thomas, may well have arguments in certain cases in relation to the legal processes that he outlined, I come to this from the point of view that compensation should be available in full to people, reflecting their suffering and the condition they have had, and that any legal fees should be other than the sum allocated as a response to that suffering. If this group of amendments is not accepted, the House will no doubt hear the noble Lord's proposals in a later group of amendments. The scope not only of Amendment 132AA but also Amendment 132AB, which goes wider and covers a number of other equally distressing and deserving conditions, means that they can be supported when it comes to a vote if it does indeed come to a vote.
These amendments would have the effect of exempting cases involving claims for damages for respiratory illnesses following exposure to harmful substances from the range of changes proposed in Clauses 43, 45 and 46 of the Bill. The case for doing so was covered extensively in Committee but, unfortunately, the Minister has not so far moved towards accepting the changes that we hoped he might accept at that stage. A couple of weeks ago, at a St David's Day dinner, I found myself sitting opposite a widow from my home area of Caernarfon. She had lost her husband to asbestosis six years ago. She described what he and they, as a family, had suffered. She received a modest sum of compensation. However, she told me that she had been following our debates in Committee and doubted that she would have got that compensation under the changes that are coming through. My goodness, if that is the effect that they will have on people who have suffered in that way, we have to make sure that the Bill is watertight and looks after people who have suffered as a result of the work that they have undertaken.
If Clause 43 is agreed unchecked, success fees under a conditional fee arrangement will no longer be recoverable from the losing party in all proceedings. Instead, in cases
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Many organisations, including the Association of Personal Injury Lawyers, have been at pains to make it clear that damages are awarded for the pain and suffering caused by prolonged and debilitating illnesses. As I said earlier, damages were never intended to pay towards legal costs. Making an insured person or their family suffer an erosion of the financial compensation to which they are entitled on top of the physical distress they have endured is neither just nor dignified. It is wrong that the Government are intent on ploughing ahead with these changes without making exceptions where they are due.
In Committee, the Minister spoke of the Government's overarching aim as being,
- "to create an architecture which squeezes inflationary costs out of the civil justice system".-[Official Report, 30/1/12; col. 1433.]
Those are grand words indeed but they cover a multitude of sins. As the noble Lord, Lord Alton, remarked, the only people who will be squeezed as a result of these changes are those who are already suffering from fatal diseases and their families. That does not sound like justice to me.
In Committee, the Minister also assured me that a number of possible routes of redress would be made available for individuals who had contracted diseases such as mesothelioma and asbestosis through schemes operated by the Department for Work and Pensions. We have heard reference to this but, as yet, I have seen no further detail on how these schemes may work. In the mean time, we should proceed on the basis that they are not there yet. However, I would welcome any clarification that the Minister might give and will listen carefully to what he has to say.
I support not only the group of amendments spoken to by the noble Lord, Lord Alton, but support very strongly Amendment 132AB in the name of the noble Lord, Lord Bach. It is relevant to a group of industrial diseases such as pneumoconiosis, silicosis and associated lung diseases, which are certainly of considerable importance to me and the community from which I come.
If these clauses are agreed unchecked, individuals who have suffered harm and distress will be dealt a further blow and access to justice will be severely undermined. It is perhaps futile to press the Government to agree to changes that they have already so utterly dismissed out of hand. However, I urge noble colleagues
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Lord Newton of Braintree: My Lords, may I briefly split up the Cross-Benchers, albeit in support of everything that they and most others have said? I have a couple of prefatory remarks. I cannot quite share the enthusiasm of the Liberal Democrat and former Liberal Democrat Benches for the anniversary of my noble friend Lord Avebury, although not because I do not have the highest regard for him. However, I was in the Conservative research department at the time and it was a major culture shock, which did not tempt me to join the Liberal Party. It could yet happen of course, but not today.
The Minister may be glad to hear my other prefatory remark. This will probably be my last foray on the Bill because, in general, I regard Part 2 as being above my pay grade. I have been reinforced in that view by the speech of the noble Lord, Lord Thomas of Gresford, which left me feeling-I hope he will not find this too rude-as though I had been enveloped in fog.
I spoke on this matter at an earlier stage and I do not intend to repeat myself. I simply endorse some points that have been made. In an earlier incarnation, when I was Minister for Disabled People, I was also the Minister for the Industrial Injuries Advisory Committee, so I know a bit about industrial diseases, including respiratory diseases such as this one. While they all have their problems and the scheme has its offerings, this disease is pretty unique for reasons that the noble Lord, Lord Alton, has outlined so clearly with his medical knowledge. This was reinforced by what the noble and learned Baroness, Lady Butler-Sloss, said about her experience of seeing and being involved in such cases. We cannot dismiss that.
I said earlier that we need to recognise that this disease is not only terrible but moves very fast. Someone gave the figure of nine months. To repeat something that I said earlier, we also need to acknowledge that this is one of those cancers-it is effectively a cancer-that is still growing. It is not diminishing. There is a long time fuse on exposure to asbestos. We have known about it for a long time and action has been taken; when asbestos is found, there is great expenditure on getting rid of it. However, there are still more cases to come than there have been because of that long fuse. One way or another, it is a pretty special case. I just do not like the idea that it can be dealt with only under CFAs, with the consequences that were so eloquently outlined by the noble Lord, Lord Alton.
This is not part of the mischief of exploiting whiplash injuries. It is very much sui generis and needs to be treated as such. The notion that someone who has just been told that they have nine months or less to live will engage in a lot of frivolous legal activity is far fetched in the extreme.
The noble Lord, Lord Thomas of Gresford, referred to all sorts of other ways of getting compensation, including schemes that the Government have and the possibility of a rival to the Motor Insurers' Bureau. We are talking about people with nine months to live. It will probably take nine months for them to find out
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Lord Faulks: My Lords, I agree with every speaker that this is a dreadful disease for which the sufferers deserve compensation. Just as importantly, they deserve compensation speedily. I am glad to say, as a practising barrister with some experience of cases of this sort, that the mechanisms and systems by which compensation can be achieved have greatly improved so that this can be done.
I agree that all these claims are thoroughly deserving. There can be no dispute about diagnosis. They are not the sort of cases that are covered by the much described "compensation culture". The real question, though, is simply this: will these cases still proceed if the Bill becomes law? There is no doubt that they will become less profitable for lawyers, but will they become so much less profitable that these very deserving cases will be denied justice? That is the real question, I suggest.
The reason why lawyers do not take cases on CFAs-this is perhaps particularly so in clinical negligence cases-is that there are real difficulties and they might lose the case. In a series of cases on mesothelioma and other cases deriving from exposure to asbestos, the courts have done a great deal to help in terms of the law on causation. Not just through the 2006 Act but in a series of cases in the Court of Appeal and in the House of Lords, they have circumvented the difficulties in proving liability, particularly the so-called "single fibre" theory, where it was difficult to establish which of a number of employers was responsible. That difficulty is largely overcome. As I say, the noble Lord, Lord Walton, has confirmed that diagnosis is rarely controversial, so we do not have the situation of doctors disagreeing. So what is the real difficulty about these cases? There is a great deal of experience out there, both on the claimants' and the defendants' side, in taking these cases forward. One of the problems is not being able to identify the appropriate defendant or the policy. We have heard from the noble Lord, Lord Thomas, that steps have been taken through the ABI and other bodies to keep proper records of these matters.
However, where I have real difficulties, in agreement with all noble Lords who have spoken, is on the question of damages. A recent decision of the High Court has dealt with the quantum of damages in these cases. They are very modest. That is not because judges are not profoundly sympathetic to the claims, but simply because they are claims for pain and suffering and loss of amenity and do not involve long-term care claims or loss of earnings claims. Thus they are modest. However, I find it unattractive in the extreme that there should be 25 per cent taken off these damages, albeit that will be increased by 10 per cent. I very much hope that the Minister's words are justified and that solicitors will not see fit-how could they?-to take a
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I suggest that Part 2 of the Bill is a very real and positive attempt by the Government to cope with what I have encountered as a disfiguring feature of the litigation world when inflated costs are involved and when cases become too much about lawyers' fees and interests and insurers' interests rather than the underlying dispute. This is a desperately sad series of cases. I share all noble Lords' concern that damages should be recovered as quickly as possible. However, I venture caution lest, in the wake of these cases, we lose the structure and the architecture that Lord Justice Jackson put forward.
Baroness Finlay of Llandaff: I support the comments made by my noble friend Lord Walton of Detchant. As a doctor, I look after these patients and have found repeatedly that they do not even want to seek compensation but are persuaded to do so. They do not seek it for themselves as they know that their lives are over, but because they want to leave something behind for their bereaved families who will have to live on after their death, facing a loss in pension.
As has been said, a common feature of mesothelioma and the other respiratory diseases mentioned in other amendments in this group is that diagnosis is clear. Histological diagnosis under the microscope shows the fibres and fragments of substance to which these people have been exposed, such as asbestos fibres and small amounts of substances such as beryllium and silica. Another feature of these respiratory diseases is that they form a discrete group. Protection of the respiratory tract has been around for a long time but workers have not always been adequately protected. Sadly, there was a time lag in that regard. Indeed, as regards these diseases, blue asbestos was thought to be the culprit. It took some time before all forms of asbestos were identified as being fundamental pathogens. We must put the interests of the people suffering from these diseases before any other interests. For those reasons, I strongly support these amendments.
Lord Mackay of Clashfern: My Lords, obviously, the people who fall into this category should have our sincere sympathy. I certainly feel strongly that they deserve that. However, I want to mention one or two matters. First, when this system of contingency fees-or whatever name you want to call it-was introduced, there was no special rule for such cases. I do not know to what extent the noble Lord, Lord Alton, or the noble Lord, Lord Avebury, have looked into the situation as it was when the system as I introduced it was working.
Secondly, it will not have escaped your Lordships that the next amendment of the noble Lord, Lord Alton, concerns industrial disease cases generally. The amendment we are discussing deals with respiratory cases; the next amendment deals with industrial disease cases. I particularly draw to your Lordships' attention the question of justice as between different claimants. I entirely accept what has been said by those highly medically qualified noble Lords who have spoken
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Long ago I was professionally involved in cases that concerned the National Coal Board. Pneumoconiosis cases were brought but other cases were brought involving people who had been injured while working underground. People who suffered those injuries were in terrible distress and eventually died. However, before they died they were in a very distressing situation. Therefore, one has to be careful about how one distinguishes between the different cases. Justice requires that similar cases be similarly dealt with.
If I understood him correctly, the noble Lord, Lord Alton, said that the cases in the group he was asking for should not be required to subsidise other cases. My understanding of this system is that you do not subsidise other cases: the success fee is dependent on the chances of success in your case. It is a factor which is dependent on a probability of success that works into the success fee. It is not dependent on other cases; it is dependent on the precise potential for winning that exists in the case that you have in hand. Therefore, I do not accept that this system in any way subsidises other cases across the board except in the sense that the probability of success in a particular case is what determines the success fee.
If the noble Lord, Lord Alton, wishes to press this amendment, I assume that he will not have the benefit of the 10 per cent uplift for his amendments in this group, which is on the way as a result of the undertakings given by the Government. There is also the question of the one-way shift. That would probably apply if it were done generally in respect of these cases, but the other may not.
This is a very difficult area. The sympathy of the whole House is with these people, and that is very much the case with me and my noble friend in particular, given his experience of this issue. However, justice requires us to do justice as between different claimants. Other claimants also have very difficult conditions. How do we say to X, "Your claim and the conditions to which you have been exposed are so bad, as distinct from the others, that we can justify treating you differently"?
I should perhaps have said that I of course associate myself with the congratulations offered to the noble Lord, Lord Avebury. I did not suffer from the difficulties that my noble friend Lord Newton of Braintree had.
Lord Alton of Liverpool: Perhaps I may put two points to the noble and learned Lord before he sits down. The system as it operated under his stewardship did not take funds away from the claimant when they were successful in litigation. That is surely the difference from the matter before your Lordships' House. When the noble and learned Lord oversaw the system, it was fair and just, and did not raid any of the funds that the
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As to exceptional circumstances, surely, if someone is terminally ill, they are exceptional or sui generis, as described by the noble Lord, Lord Newton, and my noble friend Lady Finlay in their interventions. If people in this group are terminally ill, that is surely what makes their cases exceptional.
Lord Mackay of Clashfern: My Lords, it is possible to describe other types of illness and the basis for claims in very much the same language as that used by the noble Lord, Lord Walton of Detchant, and the noble Baroness. So far as the first point is concerned, in the system as I introduced it the success fee would be payable by the claimant out of his or her damages.
Lord Bach: My Lords, we have had a powerful and emotive debate and I want to be very brief because the House wants to hear from the Minister, who is obviously sympathetic, as was demonstrated by what has been said about his visits made and meetings with noble Lords on this issue. I am proud to support the amendment in the name of the noble Lord, Lord Alton of Liverpool, also supported by the noble Lord, Lord Avebury. I am delighted that the noble Lord, Lord Alton, supports my amendments in this group that deal with other industrial diseases-Amendments 132AB, 132D and 141ZB. In response to the noble Lord, Lord Thomas of Gresford, I say that if he thinks that other diseases are also important to deal with, he should look carefully at the amendments I may move in due course.
I shall cut down appreciably on what I wanted to say. We know that asbestosis is not the only problem, but speeches have been made in this debate by experts who suggest that it is a problem out on its own that should be considered separately, as it will be this evening. It is because asbestosis is not the only problem that I tabled my amendment that deals with other serious industrial diseases. I do not need to go through the types of diseases that I am talking about, but they are the by-products of hard work. All these are inflicted on hard-working people who have spent their lives contributing to our society and economy, often in industries that no longer exist, and in heavy industry, manufacturing and public services. As has been said by many noble Lords, many of these diseases do not manifest themselves for years and are the legacy of coal mining, our proud tradition of manufacturing, steel making and other professions.
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I have here a letter received from the wife of a man who suffered from mesothelioma, to which the noble and learned Lord, Lord Davidson, referred in his Second Reading speech many months ago. The man was between 16 and 24 years old when he was exposed to asbestos as an apprentice lift engineer, erecting lifts on building sites. He stayed in that industry throughout his working life. He loved his job and most of his customers became his friends. His wife said:
"This disease has affected our lives in every possible way and stress levels have been extremely high for both of us".
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She went on to say many things that will move the House, and added that the stress and worry that go with what she described were unbelievable. Yet, she claimed, the Government were trying to make victims face additional stress and worry by making them decide whether they can afford to take out a civil action. She added:
"Compensation would be eroded by having to pay legal costs plus insurance to cover defendants' legal costs, plus the worry of having to pay some fees upfront. This is an insult and will discourage people from making a claim to which they are entitled. This Bill should be designed to stop the 'ambulance chaser' brigade who contact prospective clients and advertise constantly, not workplace victims whose lives were put at risk by exposure to asbestos".
Of course we are right to control the cost of litigation, but road traffic accidents and slip-and-trip accidents are quite separate and distinct. It is incongruous to somehow link them with what we have been talking about in this debate. It is unnecessary and rather cruel. It is with pleasure that I invite the Minister to accept the amendments in the name of the noble Lord, Lord Alton, and myself.
Lord McNally: My Lords, I should first say to the noble Lord, Lord Newton, that if he is thinking of joining the Liberal Democrats he would fit in very well.
This is not a debate about those who care about mesothelioma sufferers and those who do not. We all care, and many of us have been trying to address the problems associated with that dreadful disease. Indeed, the Department for Work and Pensions is working closely with all stakeholders to see what can be done to compensate people with mesothelioma and similar conditions who are unable to claim civil damages because their employer no longer exists and their insurer cannot be found.
It is true, as has been mentioned, that Governments of all parties have taken action to aid sufferers of industrial injuries and illnesses, and the legacies of our industrial past. However, it is also fair to put on record that legal aid was removed from this area of litigation by the previous Administration in 2000.
Before turning to the detail of these amendments, I wanted to say a few words about the importance of the changes we are introducing in Part 2. As we heard in the earlier debate, the changes we are proposing to no-win no-fee agreements were recommended by Lord Justice Jackson after his year-long review, and supported by the senior judiciary. The Lord Chief Justice said that the report addressed civil costs as a comprehensive, coherent whole. Our proposals were welcomed by the previous Lord Chancellor, Mr Straw, and by the opposition Front Bench in the other place when the current Lord Chancellor announced them on 29 March last year. The shadow Justice Minister said at Committee stage:
- "the intention of part 2 is perfectly sound, and it is one with which we have a great deal of sympathy".-[Official Report, 13/9/11; Commons, Legal Aid, Sentencing and Punishment of Offenders Bill Committee, col. 501.]
So there is broad agreement on the principles of our reform.
Part 2 addresses the way that the present system is-as I think that the noble Lord, Lord Faulks, described it-distorted. The agreement is perhaps not surprising given the high costs that have arisen under
14 Mar 2012 : Column 327
I remind the House of that, because I am concerned that in making the position fairer between claimants and defendants, as we seek to do, we should not make the position less fair between different classes of claimants, as some of the amendments would, as the noble and learned Lord, Lord Mackay, just reminded us. The current regime of recoverable success fees and insurance premiums allows for risk-free litigation from claimants and substantial additional costs for defendants.
Allowing exceptions, so that the regime continues in relation to certain cases only, would introduce unfairness for those claimants in an otherwise similar position where the exception does not apply. Allowing an exception for defamation claims, for victims of industrial diseases or for claims of corporate harm by multinational companies, for example, would introduce an advantage to claimants in those specific categories which would be unfair to those in otherwise similar positions whose claims fell into a slightly different category. Clauses 43 and 45 are a fundamental element of the Government's reform in ensuring proportionality and fairness across the board. That is why we resist any substantive amendments to them.
I will take Amendments 132AA, 132AB, 132D, 136, 141, 141ZB and 142 together, as they are intended to retain recoverable elements in claims dealing with respiratory diseases or industrial diseases caused by an employer's breach of duty to an employee. Amendments 132AA, 136, 141 and 142 would retain recoverability of success fees after the event, or ATE insurance payments and membership organisations' self-insurance costs for respiratory disease cases. Amendments 132AB, 132D and 141ZB would do the same for employers' liability claims relating to industrial diseases.
Although I will address all industrial disease claims in my response, I am aware of the keen interest of the noble Lords, Lord Alton and Lord Avebury, in mesothelioma in particular. They have been tireless and dedicated campaigners on behalf of sufferers of that fatal and tragic disease, and I commend them on that. Although we can agree on the tragic nature of the disease and its impact, I cannot agree that those cases should be exempted from our reforms. Noble Lords have argued that industrial diseases, including mesothelioma and other less serious conditions, are not part of the compensation culture. The Government accept that-I did so in Committee. There is no suggestion that those claims are brought improperly. Our reforms are intended to address high cost throughout civil litigation. This is not just about driving out fraudulent or exaggerated claims but about ensuring that legal costs are proportionate to the sums at issue. For that, wholesale reform is needed. To be effective, it must apply across the board.
Specifically on mesothelioma, I said in reply to an Oral Question from the noble Lord, Lord Alton, on 29 February that I am not aware of anything associated with those cases which makes them particularly expensive to bring. I have not heard anything since which persuades me that there is anything particular about the nature of those cases-the cases, not the disease-which makes
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Various legal changes over the past few years, including primary legislation such as the Compensation Act 2006, and judgments of the Supreme Court, have removed some of the hurdles for sufferers of respiratory diseases to bringing claims. The Department for Work and Pensions has undertaken various initiatives to make it easier for claimants to trace their employers' insurers. I understand that it can be difficult and expensive for those with what the noble Lord, Lord Wigley, I think, referred to as long-tail diseases, such as mesothelioma, to track down the liable insurer. In April 2011, the insurance industry set up the Employers' Liability Trading Office, or ELTO. Supported by the Government, the ELTO provides an online resource through which claimants and their representatives can search for the relevant policy, reducing time and costs for those involved in such searches.
The Department for Work and Pensions continues to work with stakeholders to see what can be done to compensate people with mesothelioma and similar conditions who are unable to claim civil damages because their employer no longer exists and their employer's liability insurer cannot be found. A response to the government consultation, Accessing CompensationSupporting People Who Need to Trace Employers' Liability Insurance, which reflects further on possible solutions, will be published in due course. I recently met the insurance industry to discuss ongoing work. I can tell the House that, as a result of this issue being raised in discussion on the Bill, I will be taking the matter up with my noble friend Lord Freud at the Department for Work and Pensions to discuss what progress is being made and how it can be advanced. As noble Lords will be aware, my noble friend told the Grand Committee yesterday that we will be increasing the mesothelioma lump-sum payments by 3.1 per cent from 1 April this year. I welcome my noble friend's statement and his commitment to working with interested parties to offer further help to sufferers who have difficulty in tracing their insurer.
Noble Lords have spoken of the prohibitive costs of bringing industrial disease claims against well resourced defendants. There is concern that claims will not be brought if claimants risk being liable for high defendant costs should they lose. In response, I remind noble Lords that in personal injury claims, including industrial disease, qualified one-way costs-shifting will apply-that is, a losing claimant will usually not be at risk of paying a defendant's costs. We discussed QOCS earlier in the debate.
We turn, then, to the claimant's own disbursements, which noble Lords have argued will be unaffordable
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Claims for industrial diseases are not unique in requiring expert evidence to show the nature and extent of the illness. The same is true of many personal injury cases, where there may be disputes, if not of the causation or liability, of the extent of the damage caused. It is not true to say that such reports will be unobtainable without a recoverable ATE premium, particularly as a claim may be brought on the basis of one report. A claimant may pay for reports through their own means; solicitors may decide to bear up-front costs themselves; or a claimant may take out ATE insurance and pay the premium themselves. In any of those instances, either the claimant or the solicitor will have a direct interest in the costs that are being incurred-which is one of the main principles underlying our reforms.
It should also be noted that general damages for non-pecuniary loss, such as pain, suffering and loss of amenity, will be increased by 10 per cent-a point emphasised by the noble and learned Lord, Lord Mackay, but not mentioned in other speeches when there was talk about a raid on damages. That will help claimants to pay any success fee that may be due once their claim has ended. I also point out that the proposed cap on success fees of 25 per cent of damages awarded is not compulsory. It is a negotiated amount and excludes those for future care and loss. We expect solicitors to compete for business by offering lower fees. We also expect those who specialise in this area to offer fair and realistic terms for their clients that take into account not only the risk of the case but also the needs of the individual claimants and their families at what, of course, will be a particularly traumatic time in their lives.
7 pm
I have previously explained the concerns of the Government around the current regime and the significant disadvantages it has for defendants, with no incentive for claimants to control costs. I must underline that those reforms in Part 2 are not about saving money for the public purse. Making savings is a benefit, of course, but that is not what Lord Justice Jackson was considering when he wrote his comprehensive report. The Government are determined to see more proportionate costs in civil litigation, with greater fairness in the risk borne by parties. Without our reforms, high and disproportionate costs in civil litigation will continue. Access to justice would not become more meaningful for all parties. If these amendments were accepted, claimants in these particular cases would have an advantage over others who may be suffering from equally debilitating conditions.
14 Mar 2012 : Column 330
As I say, I do not believe that this is a debate between those who want to help here and those who do not. It is about keeping the Jackson reforms in Part 2 in their place without producing a whole range of anomalies, and at the same time the Government taking forward with a sense of real urgency ways of giving practical help to those who suffer from this dreadful disease. I hope that the noble Lord, Lord Alton, in the light of that reply, will withdraw his amendment.
Lord Alton of Liverpool: My Lords, I am grateful to the Minister for the way in which he has addressed this issue this evening and, indeed, I reiterate my thanks to him for meeting the noble Lord, Lord Avebury, and me yesterday to discuss what more could be done to help this unique group of people-a point I shall return to in a moment. I am conscious that your Lordships want to come to a decision on this matter, so I promise that I will be brief.
There was no debate about this issue when it was before the House of Commons; there was no Division in the House of Commons. Your Lordships will be doing your job in scrutinising legislation by supporting these amendments this evening, because Members of the House of Commons will now, I think, welcome the opportunity to return to this question. I am told by my noble friend Lady Finlay of Llandaff, whom I spoke to earlier about this, that very small numbers of people other than mesothelioma victims would actually be caught by this amendment. However, if it should be that this is slightly extended from this exceptional group of people who are terminally ill and dying to one or two other groups, let us make this more generic and extend it to people who are terminally ill. That is the difference; that is why I disagree with the noble Lord, Lord McNally, when he says that this would be giving this category of people an advantage over others. This is a group of people who are entitled to an advantage. If you are diagnosed as terminally ill-if you are told that you only have nine months to a year to live-then you are not in the same category as others, and we have to do all we can to help.
The Minister said that his noble friend-in fact, it was the noble Lord, Lord De Mauley, yesterday, speaking on behalf of the noble Lord, Lord Freud, who was unwell-gave an assurance that there would be an increase in lump sum payments. That is extremely welcome but it has no bearing whatsoever, of course, on the litigation that we are talking about this evening, which people might embark upon to seek compensation. It is also welcome that there should be an uplift and I hope that no one is suggesting that that should not also be available to people who are terminally ill and dying as a result of mesothelioma.
14 Mar 2012 : Column 331
The Jackson proposals have been referred to a great deal during the debates in your Lordships' House, but we all know that they are a curate's egg-they are there in part. They have been chosen where it suits those who are proposing these new arrangements and, where it does not, they are set to one side: this is a very good example of where that has happened.
Let me reiterate: this is not about public money. Legal aid, as the Minister himself has said, has not been available for the past 12 years, so this is not about public money. Nor is it about the compensation culture; we are all agreed about that. It is about an exceptional group of people, but it is also more than that. The noble and learned Lord, Lord Mackay of Clashfern, said that it is about justice. I simply ask your Lordships how it can ever be just to raid the compensation that someone has been awarded because they have proven their case in court-to take up to 25 per cent of what they have been awarded to help them through the last days of their life. How can it ever be a matter of justice to do that? It is for that reason that I would like to seek the opinion of your Lordships' House.
7.05 pm
Contents 189; Not-Contents 158.
Aberdare, L.
Adams of Craigielea, B.
Adebowale, L.
Ahmed, L.
Alton of Liverpool, L. [Teller]
Anderson of Swansea, L.
Andrews, B.
Armstrong of Hill Top, B.
Avebury, L.
Bach, L.
Bakewell, B.
Bassam of Brighton, L.
Beecham, L.
Berkeley, L.
Best, L.
Bilston, L.
Blackstone, B.
Blood, B.
Boothroyd, B.
Borrie, L.
Bradley, L.
Brennan, L.
Brooke of Alverthorpe, L.
Brookman, L.
Brooks of Tremorfa, L.
Browne of Belmont, L.
Browne of Ladyton, L.
Butler-Sloss, B.
Cameron of Dillington, L.
Campbell-Savours, L.
Carter of Coles, L.
Clancarty, E.
Clarke of Hampstead, L.
Clinton-Davis, L.
Collins of Highbury, L.
Colville of Culross, V.
Corston, B.
Coussins, B.
Cox, B.
Davidson of Glen Clova, L.
Davies of Coity, L.
Davies of Oldham, L.
Donaghy, B.
Donoughue, L.
Doocey, B.
Dubs, L.
Elder, L.
Elystan-Morgan, L.
Evans of Parkside, L.
Evans of Watford, L.
Exeter, Bp.
Falconer of Thoroton, L.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Fellowes, L.
Finlay of Llandaff, B.
Ford, B.
Foster of Bishop Auckland, L.
Foulkes of Cumnock, L.
Freyberg, L.
Gale, B.
Gibson of Market Rasen, B.
Giddens, L.
Gilbert, L.
Golding, B.
Gould of Potternewton, B.
Grantchester, L.
Greenway, L.
Grenfell, L.
Grey-Thompson, B.
Grocott, L.
Hall of Birkenhead, L.
Hanworth, V.
Harris of Haringey, L.
Harrison, L.
Hart of Chilton, L.
Haskel, L.
Haworth, L.
Hayter of Kentish Town, B.
Healy of Primrose Hill, B.
14 Mar 2012 : Column 332
Hollis of Heigham, B.
Howarth of Breckland, B.
Howarth of Newport, L.
Howe of Idlicote, B.
Howells of St Davids, B.
Hoyle, L.
Hughes of Stretford, B.
Hughes of Woodside, L.
Irvine of Lairg, L.
Janner of Braunstone, L.
Jones, L.
Jones of Whitchurch, B.
Judd, L.
Kennedy of Southwark, L.
Kilclooney, L.
King of Bow, B.
King of West Bromwich, L.
Kingsmill, B.
Kinnock, L.
Kinnock of Holyhead, B.
Kirkhill, L.
Knight of Weymouth, L.
Layard, L.
Lea of Crondall, L.
Liddle, L.
Lister of Burtersett, B.
Lytton, E.
McAvoy, L.
McConnell of Glenscorrodale, L.
McDonagh, B.
Macdonald of Tradeston, L.
McFall of Alcluith, L.
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
Mackenzie of Framwellgate, L.
McKenzie of Luton, L.
Maginnis of Drumglass, L.
Martin of Springburn, L.
Massey of Darwen, B.
Maxton, L.
Meacher, B.
Mitchell, L.
Monks, L.
Morgan, L.
Morgan of Huyton, B.
Morris of Aberavon, L.
Morris of Handsworth, L.
Myners, L.
Newcastle, Bp.
Newton of Braintree, L.
Nye, B.
O'Neill of Clackmannan, L.
Palmer, L.
Pannick, L.
Patel of Blackburn, L.
Pendry, L.
Plant of Highfield, L.
Prescott, L.
Prosser, B.
Radice, L.
Ramsay of Cartvale, B.
Rea, L.
Richard, L.
Rogan, L.
Rooker, L.
Rosser, L.
Rowe-Beddoe, L.
Rowlands, L.
Royall of Blaisdon, B.
Saltoun of Abernethy, Ly.
Sandwich, E.
Sawyer, L.
Scotland of Asthal, B.
Sewel, L.
Sherlock, B.
Simon, V.
Smith of Basildon, B.
Smith of Finsbury, L.
Soley, L.
Stevenson of Balmacara, L.
Stoddart of Swindon, L.
Stone of Blackheath, L.
Symons of Vernham Dean, B.
Taylor of Blackburn, L.
Taylor of Bolton, B.
Temple-Morris, L.
Thornton, B.
Tomlinson, L.
Touhig, L.
Triesman, L.
Tunnicliffe, L. [Teller]
Turner of Camden, B.
Wall of New Barnet, B.
Walton of Detchant, L.
Warner, L.
Warnock, B.
Warwick of Undercliffe, B.
Watson of Invergowrie, L.
West of Spithead, L.
Wheeler, B.
Whitaker, B.
Whitty, L.
Wigley, L.
Williamson of Horton, L.
Wills, L.
Wood of Anfield, L.
Worthington, B.
Young of Old Scone, B.
Addington, L.
Ahmad of Wimbledon, L.
Alderdice, L.
Allan of Hallam, L.
Anelay of St Johns, B. [Teller]
Arran, E.
Ashton of Hyde, L.
Astor, V.
Astor of Hever, L.
Attlee, E.
Barker, B.
Bates, L.
Benjamin, B.
Berridge, B.
Bew, L.
Blencathra, L.
Bowness, L.
Bradshaw, L.
Bridgeman, V.
Brinton, B.
Brooke of Sutton Mandeville, L.
Brougham and Vaux, L.
Browning, B.
Burnett, L.
Buscombe, B.
Byford, B.
Caithness, E.
Cathcart, E.
Chalker of Wallasey, B.
Chidgey, L.
Clement-Jones, L.
Colwyn, L.
Cope of Berkeley, L.
Courtown, E.
Craigavon, V.
Crathorne, L.
Dannatt, L.
14 Mar 2012 : Column 333
Deben, L.
Dholakia, L.
Dixon-Smith, L.
Dobbs, L.
Eccles, V.
Eccles of Moulton, B.
Eden of Winton, L.
Elton, L.
Faulks, L.
Feldman of Elstree, L.
Fink, L.
Fookes, B.
Forsyth of Drumlean, L.
Fowler, L.
Framlingham, L.
Fraser of Carmyllie, L.
Freeman, L.
Garden of Frognal, B.
Gardiner of Kimble, L.
Gardner of Parkes, B.
Geddes, L.
German, L.
Glasgow, E.
Glenarthur, L.
Glentoran, L.
Goodlad, L.
Goschen, V.
Grade of Yarmouth, L.
Hanham, B.
Harris of Peckham, L.
Henley, L.
Heyhoe Flint, B.
Higgins, L.
Hill of Oareford, L.
Hodgson of Astley Abbotts, L.
Howard of Rising, L.
Howe, E.
Hunt of Wirral, L.
Hussein-Ece, B.
Inglewood, L.
James of Blackheath, L.
Jenkin of Kennington, B.
Jenkin of Roding, L.
Jolly, B.
Jopling, L.
Kirkham, L.
Kirkwood of Kirkhope, L.
Knight of Collingtree, B.
Kramer, B.
Lee of Trafford, L.
Lester of Herne Hill, L.
Lindsay, E.
Lingfield, L.
Linklater of Butterstone, B.
Lloyd of Berwick, L.
Loomba, L.
Luke, L.
Lyell, L.
McColl of Dulwich, L.
MacGregor of Pulham Market, L.
Mackay of Clashfern, L.
McNally, L.
Maddock, B.
Mancroft, L.
Maples, L.
Mar and Kellie, E.
Marks of Henley-on-Thames, L.
Mayhew of Twysden, L.
Montrose, D.
Morris of Bolton, B.
Neville-Jones, B.
Newlove, B.
Northover, B.
Norton of Louth, L.
Oppenheim-Barnes, B.
Palmer of Childs Hill, L.
Palumbo, L.
Phillips of Sudbury, L.
Popat, L.
Randerson, B.
Redesdale, L.
Risby, L.
Roberts of Conwy, L.
Roberts of Llandudno, L.
Sassoon, L.
Scott of Needham Market, B.
Seccombe, B.
Selkirk of Douglas, L.
Selsdon, L.
Shackleton of Belgravia, B.
Sharkey, L.
Sharp of Guildford, B.
Sharples, B.
Shaw of Northstead, L.
Sheikh, L.
Shipley, L.
Shutt of Greetland, L. [Teller]
Skelmersdale, L.
Spicer, L.
Stedman-Scott, B.
Stewartby, L.
Stoneham of Droxford, L.
Storey, L.
Stowell of Beeston, B.
Strasburger, L.
Strathclyde, L.
Taverne, L.
Taylor of Holbeach, L.
Teverson, L.
Thomas of Gresford, L.
Tope, L.
True, L.
Tyler, L.
Verma, B.
Wakeham, L.
Wallace of Saltaire, L.
Wallace of Tankerness, L.
Walmsley, B.
Wasserman, L.
Wilcox, B.
7.16 pm
132AB: Before Clause 43, insert the following new Clause-
"Exception for industrial disease cases
The changes made by sections 43, 45 and 46 of this Act do not apply in relation to proceedings which include a claim for damages for a disease, condition or illness (whether or not resulting in death) resulting from any breach of duty owed by an employer to an employee."
14 Mar 2012 : Column 334
Lord Bach: My Lords, I beg to move.
7.16 pm
Contents 168; Not-Contents 163.
Aberdare, L.
Adams of Craigielea, B.
Adebowale, L.
Ahmed, L.
Alton of Liverpool, L.
Anderson of Swansea, L.
Andrews, B.
Armstrong of Hill Top, B.
Bach, L.
Bakewell, B.
Bassam of Brighton, L. [Teller]
Beecham, L.
Berkeley, L.
Best, L.
Bilston, L.
Blackstone, B.
Blood, B.
Boothroyd, B.
Borrie, L.
Bradley, L.
Brennan, L.
Brooke of Alverthorpe, L.
Brookman, L.
Brooks of Tremorfa, L.
Browne of Belmont, L.
Browne of Ladyton, L.
Campbell-Savours, L.
Carter of Coles, L.
Clancarty, E.
Clarke of Hampstead, L.
Clinton-Davis, L.
Collins of Highbury, L.
Corston, B.
Coussins, B.
Davies of Coity, L.
Davies of Oldham, L.
Donaghy, B.
Dubs, L.
Elder, L.
Elystan-Morgan, L.
Evans of Parkside, L.
Evans of Watford, L.
Exeter, Bp.
Falconer of Thoroton, L.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Fellowes, L.
Finlay of Llandaff, B.
Ford, B.
Foster of Bishop Auckland, L.
Foulkes of Cumnock, L.
Freyberg, L.
Gale, B.
Gibson of Market Rasen, B.
Gilbert, L.
Golding, B.
Gould of Potternewton, B.
Grantchester, L.
Greenway, L.
Grenfell, L.
Grey-Thompson, B.
Grocott, L.
Hall of Birkenhead, L.
Hanworth, V.
Harris of Haringey, L.
Harrison, L.
Hart of Chilton, L.
Haskel, L.
Haworth, L.
Hayter of Kentish Town, B.
Healy of Primrose Hill, B.
Hilton of Eggardon, B.
Hollis of Heigham, B.
Howarth of Breckland, B.
Howarth of Newport, L.
Howe of Idlicote, B.
Howells of St Davids, B.
Hoyle, L.
Hughes of Woodside, L.
Janner of Braunstone, L.
Jones, L.
Jones of Whitchurch, B.
Judd, L.
Kennedy of Southwark, L.
Kilclooney, L.
King of Bow, B.
King of West Bromwich, L.
Kingsmill, B.
Kinnock, L.
Kinnock of Holyhead, B.
Kirkhill, L.
Knight of Weymouth, L.
Lea of Crondall, L.
Liddle, L.
Lister of Burtersett, B.
McAvoy, L.
McConnell of Glenscorrodale, L.
McDonagh, B.
Macdonald of Tradeston, L.
McFall of Alcluith, L.
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
Mackenzie of Framwellgate, L.
McKenzie of Luton, L.
Martin of Springburn, L.
Massey of Darwen, B.
Maxton, L.
Mitchell, L.
Monks, L.
Morgan, L.
Morgan of Huyton, B.
Morris of Aberavon, L.
Morris of Handsworth, L.
Newcastle, Bp.
Nye, B.
O'Neill of Clackmannan, L.
Pannick, L.
Patel, L.
Patel of Blackburn, L.
Pendry, L.
Prescott, L.
14 Mar 2012 : Column 335
Radice, L.
Ramsay of Cartvale, B.
Rea, L.
Richard, L.
Rogan, L.
Rooker, L.
Rosser, L.
Rowe-Beddoe, L.
Rowlands, L.
Royall of Blaisdon, B.
Saltoun of Abernethy, Ly.
Sawyer, L.
Scotland of Asthal, B.
Sewel, L.
Sherlock, B.
Simon, V.
Smith of Basildon, B.
Smith of Finsbury, L.
Soley, L.
Stevenson of Balmacara, L.
Stoddart of Swindon, L.
Stone of Blackheath, L.
Symons of Vernham Dean, B.
Taylor of Blackburn, L.
Taylor of Bolton, B.
Temple-Morris, L.
Thornton, B.
Tomlinson, L.
Touhig, L.
Triesman, L.
Tunnicliffe, L. [Teller]
Turner of Camden, B.
Wall of New Barnet, B.
Warner, L.
Warnock, B.
Warwick of Undercliffe, B.
Watson of Invergowrie, L.
Wheeler, B.
Whitaker, B.
Whitty, L.
Wigley, L.
Williamson of Horton, L.
Wills, L.
Wood of Anfield, L.
Worthington, B.
Young of Old Scone, B.
Addington, L.
Ahmad of Wimbledon, L.
Alderdice, L.
Allan of Hallam, L.
Anelay of St Johns, B. [Teller]
Arran, E.
Ashton of Hyde, L.
Astor, V.
Astor of Hever, L.
Attlee, E.
Barker, B.
Bates, L.
Benjamin, B.
Berridge, B.
Bew, L.
Blencathra, L.
Bowness, L.
Bridgeman, V.
Brinton, B.
Brooke of Sutton Mandeville, L.
Brougham and Vaux, L.
Browning, B.
Burnett, L.
Buscombe, B.
Butler-Sloss, B.
Byford, B.
Caithness, E.
Cathcart, E.
Chalker of Wallasey, B.
Clement-Jones, L.
Colwyn, L.
Cope of Berkeley, L.
Cormack, L.
Courtown, E.
Craigavon, V.
Crathorne, L.
Dannatt, L.
De Mauley, L.
Deben, L.
Dholakia, L.
Dixon-Smith, L.
Dobbs, L.
Doocey, B.
Eccles, V.
Eccles of Moulton, B.
Eden of Winton, L.
Elton, L.
Faulks, L.
Feldman of Elstree, L.
Fink, L.
Fookes, B.
Forsyth of Drumlean, L.
Fowler, L.
Framlingham, L.
Fraser of Carmyllie, L.
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Garden of Frognal, B.
Gardiner of Kimble, L.
Gardner of Parkes, B.
Geddes, L.
German, L.
Glasgow, E.
Glenarthur, L.
Goodlad, L.
Goschen, V.
Grade of Yarmouth, L.
Hamwee, B.
Hanham, B.
Harris of Peckham, L.
Henley, L.
Heyhoe Flint, B.
Higgins, L.
Hill of Oareford, L.
Hodgson of Astley Abbotts, L.
Howard of Rising, L.
Howe, E.
Hunt of Wirral, L.
Hussein-Ece, B.
Inglewood, L.
James of Blackheath, L.
Jenkin of Kennington, B.
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Jolly, B.
Jopling, L.
Kirkham, L.
Kirkwood of Kirkhope, L.
Knight of Collingtree, B.
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Lee of Trafford, L.
Lester of Herne Hill, L.
Lindsay, E.
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Linklater of Butterstone, B.
Lloyd of Berwick, L.
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Lyell, L.
McColl of Dulwich, L.
MacGregor of Pulham Market, L.
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McNally, L.
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8 pm
132ACBefore Clause 43, insert the following new Clause-
"Exception for international human rights cases
The changes made by sections 43, 45 and 46 of this Act do not apply in relation to proceedings which include a claim for damages for international human rights cases."
Baroness Coussins: My Lords, In moving Amendment 132AC, which was added as a manuscript amendment this morning, I shall speak also to Amendments 134, 135 and 138, which I believe are consequential to that first one and appear in the Marshalled List under my name and have the support of Members on all sides of the House. My amendments would ensure that in this country we retained effective access to justice in our courts for overseas victims of human rights abuses or environmental harm caused as a result of the operations of UK companies. These amendments would not involve any expenditure whatever from the public purse. I remind the House of my interest as a non-executive adviser on corporate social responsibility to various companies and I acknowledge the work of CAFOD, Amnesty, Oxfam and other organisations in the corporate responsibility coalition which strongly support these amendments.
I am grateful to the noble Lord, Lord McNally, and the noble and learned Lord, Lord Wallace of Tankerness, for meeting with me and others to discuss these amendments and for the subsequent letter the noble
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First, the Government are clear that the effect of Part 2 of this Bill should be, and I quote from the impact assessment,
- "a transfer of resources primarily from claimants and claimant lawyers to defendants. For many of the cases in scope, the defendant is a public body, funded by the taxpayer".
There is the critical difference. In the type of cases that I am referring to, the defendant is not a public body. It is not the NHS, for example. The defendants here are multinational companies, often with huge resources and large teams of their own very expensive lawyers. The claimants, by contrast, in past cases have included rural farmers from remote areas of Peru or Colombia, South African asbestos miners, or citizens of the Côte d'Ivoire, one of the poorest countries in the world. So my amendments are about an exceptionally different type of claimant from those this Bill is really about, and I think that that must be acknowledged.
Secondly, the Minister has said that damages-based agreements, or DBAs, are the answer, but in my view he has not backed this up with evidence as to how DBAs would work specifically for these types of cases. Without my amendments, lawyers' success fees would not come from the losing company; they would be taken out of the victim's damages. Shifting the burden of payment for fees and insurance costs from the defendant to the victim risks substantially reducing or even wiping out the damages that victims receive. In such situations it is hard to imagine it being financially viable to bring the case in the first place.
Thirdly, the Government acknowledge that a potential impact of the Bill's proposals is that fewer cases may be brought, especially where there is a lower probability of success or where cases involve highly disproportionate costs compared to the amount being disputed. That is exactly the case with these international corporate human rights abuse cases. This does not mean that such cases are not worth pursuing. It is still vital that vulnerable victims should get justice and at least some compensation. Companies need to know that they can be brought to account if they act irresponsibly. The proposed amendments to Clauses 43 and 45 would retain the current funding system for international human rights cases. I want to make it clear that creating this exception would not gut the overall aim of the Bill. It would not fundamentally undermine the Bill's purpose at all. The offending company would have to pay out only if the case met all the existing prescribed criteria to do with public interest.
Finally, other countries will be looking to the UK to follow our lead in working out how to implement the United Nations' guiding principles on business and human rights. What kind of example are we setting to other countries if we change our laws now to make it even harder for poor victims of corporate abuses to seek redress? I urge the Government to agree
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Lord Judd: My Lords, I strongly support and endorse this amendment. We have been reminded that a number of very significant organisations in this country which are working in the front line in the countries concerned feel passionately that this amendment is necessary. I declare an interest as a former director of Oxfam. All my experience during those years at Oxfam and since in my work with similar organisations has underlined the importance of this amendment. Not infrequently I found myself in a situation in which we were being asked to respond to need. In effect, by responding to need we were masking injustice because we were dealing with the consequences of what had happened instead of getting to the roots of what had happened. This seemed in a sense dishonest in that if we were serious about the issues that confronted us, we had to get to the underlying cause that had brought about the lamentable situation.
From that standpoint I reached a very firm conviction during my time at Oxfam and since that very frequently people in the Third World are not primarily asking for handouts or support, they are asking for justice. If they have not got justice, how on earth can they get themselves together to start self-generating progress and the rest because they are burdened by the consequences of what has happened to them as a result of abuse of one kind or another? That is fundamentally wrong. Of course, if people are desperate to start taking their situation forward themselves, we should ensure that that is possible and that they are not artificially and unnecessarily hindered.
I really do not know how a Government who set so much store by their commitment to the overseas aid programme-which is a great credit to them-in saying that it must be ring-fenced in the current economic situation do not see that the logic of that position demands that an amendment of this kind should be accepted. Failing to accept this amendment would be working against the very commitment of the Government. From that standpoint, I applaud the amendment and hope that the Government will feel able to take it seriously, even at this late stage.
Baroness Miller of Chilthorne Domer: My Lords, I have put my name to Amendment 134 in the belief that the Government are quite right, in general, on the principles in this part of the Bill but they are wrong not to have made an exception in this case. These are very modest amendments to allow exceptions to be made.
The noble Lord, Lord Judd, mentioned one reason why exceptions need to be made: DfID. This Government are working hard to follow the amount of aid that this country has committed-and I pay tribute to the Opposition. But it is not only DfID. The FCO realises that soft power is very important, and the Department for Business also realises that companies need to be socially responsible. Corporate responsibility has become a very important standard for this country.
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This is recognised across almost all of government, and I urge my noble friend and the Ministry of Justice to join the other departments in making sure that companies listed here that have the potential to cause enormous damage-the extractive industries, in particular, whose work is accelerating at an enormous rate, and also agribusiness as commodity prices go up; there are a number of businesses whose turnover and impact in the world is growing day by day at a rate that was quite unimaginable even a decade ago-that needs to be balanced by better access to justice, not worse. It is for that reason that I support these amendments.
The Lord Bishop of Newcastle: My Lords, I too support this amendment, which I think is really important. It is about the impact this Bill will have on access to judicial remedies for victims in host countries who are harmed by the activities of multinationals. Under the existing regime, it is already difficult for these kinds of cases to be brought in the UK. This Bill will change that system to make it virtually impossible for such cases to be brought in the future.
The cases in question are typically brought by poor victims who have had their livelihoods destroyed, their homes despoiled or their health gravely damaged by the UK or a UK-based company. As it stands, the Bill makes it economically unviable for both claimants and law firms to bring such cases due to the high financial risks. Provisions on success fees and insurance premiums mean that even if they were successful, claimants would have to pay such fees and costs out of their own damages.
This fundamental change is inappropriate, surely, because damages awarded would be typically too low to cover the costs involved. Damages in these particular cases are assessed according to developing country standards, whereas legal costs are incurred in the UK. As a result, as others have said, the Bill will create a practical barrier to justice and it is very unlikely that such cases will continue to be brought.
There would be no additional cost to the taxpayer if this amendment were accepted, but the benefits would be hugely significant in enabling poor communities to claim damages where they have been harmed and, just as importantly, in showing companies that they cannot act with impunity. I hope that the Government will reconsider this aspect of the Bill and move towards accepting this amendment.
Baroness Howe of Idlicote: My Lords, my name is not on this amendment but, having listened to the arguments, there seems to be absolutely no good reason why the Minister should not agree to it. It is not going to cost the taxpayer anything extra and it means that companies that have been the cause of this sort of damage should pay the proper price and the proper compensation. I certainly back the amendment moved by my noble friend Lady Coussins.
8.15 pm
Lord Brennan: My Lords, the arrival of globalisation as a world economic and human phenomenon, we hope, brings more benefits than disadvantages. However, reality tells us that globalisation produces serious adverse
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Amendment 134 in this group gives a power to the Lord Chancellor to provide regulations that would permit, in certain circumstances, our courts to deal with such cases. The numbers of cases that are likely to arise are few. Their cost and complexity is very large. To make provision for them would produce no consequence that would damage the Government's policy in this Bill to save money and introduce cost control. None of that would be affected.
In my professional experience at the Bar I have done several of these cases. I have two examples to illustrate what I consider to be the validity of my submission to your Lordships. The South African resource of asbestos was a major benefit to companies in this country for decades. The standards of working practices and protection of ordinary workers were extremely low. I will not reveal anything that is not in the public domain by saying that I represented the plaintiff African miners-7,000 of them-many of whom were women, who were being used to break asbestos rock against granite to free the asbestos fibres for collection and use while bearing on their backs newborn babies. It is difficult to imagine that anyone would not think that that called for some remedy, if proved.
The case was dealt with in this country in the 1990s and it took three years of hearings in the lower court, the Court of Appeal and the House of Lords Judicial Committee before the plaintiffs finally got an order that the case should be heard in this country. Not surprisingly, it was eventually settled, a settlement that included compensation to all those people who had had to produce their medical records, their X-rays, from the very difficult administrative circumstances of the young South Africa of the 1990s and of the Government of South Africa, who were given money by the defendant company to contribute toward the clean-up of asbestos residues at the mines where they had been produced. All of that produced a trust settlement. All of that cost a huge amount in expense, with top class lawyers. Can it seriously be suggested that, under any of the reforms proposed in this Bill, such services by lawyers would be given these days? It is an absurd proposition.
I will move on to describe the second case, and then I will briefly come to a conclusion. I was involved in the Ivory Coast case in its early stages and I went to Abijan. We had tens of thousands of claimants, all of whom had to fill in questionnaires and produce medical evidence-often in French, in Francophone Côte d'Ivoire -and then come to England to pursue their case. By the time of this case, a few years ago, the law had changed, and I invite the Minister and his staff to bear this in mind. The law of the European Union now states that plaintiffs like that must sue the company which is alleged to be at fault in the jurisdiction from
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Companies such as this are often either insured, with enormous excesses that give them a lot of influence on the conduct of the litigation, or they are self-insured, because they are so big and powerful. For two or three years the programme is one of the plaintiffs producing all their medical and expert evidence and then going to court, hearing after hearing, long before trial, and spending a fortune. However, there was legal aid for the South African case and a conditional fee agreement for the case I have just mentioned. It worked and justice was done. That is all that I am asking the Government to consider should be done for this class of case in the future. These people have to come here. They do not have elite lawyers, funding or local remedies. They come to our country for justice. They come to where the company was based and where it should face justice.
This is a state of affairs which I commend to the attention of the Government and the House. How could it be said that any such case was properly catered for by allowing the previous system that was used in the Côte d'Ivoire case to continue? How could that adversely affect all the domestic factors that figure for local people? How could it benefit this country? Will we leave the Chamber having voted in favour of this, with our heads held high because we represent a country in which justice still prevails and access for the poorest, from wherever, is still available, or do we hang our heads in shame over something that cannot possibly be justified?
There is a risk that if this kind of exception is not made grave injustice will follow and the reputation of our country and our courts for just civil proceedings will be seriously damaged. It is time to think.
Lord Stevenson of Balmacara: My Lords, I thank those noble Lords who have spoken in this debate, in particular the noble Baroness, Lady Coussins, who, with her usual fluency and clarity, made the case extremely well. My noble friend Lord Judd, with his lifelong commitment to human rights, also drew attention to the many organisations who have written to us and who have supported the case that has been made tonight. My noble friend Lord Brennan, who has just spoken, has direct experience of many of the cases which we are talking about today and left us with a very powerful message about the impact that could be effected if the Bill goes forward unchanged. I thank the noble Baroness, Lady Miller, for her support of our amendment, particularly for drawing attention to the wider soft-power aspects which are so important in this area, and the right reverend Prelate for bringing into play the inevitable impact on poor communities of the Rome II regulations. Those will of course limit the level of expenses that they can possibly receive, and therefore create a completely unbalanced playing field in this area.
To apply the test that was proposed by the noble Lord, Lord Faulks, in the previous group, it is clear that the widely held view around your Lordships' House is that once this Bill becomes law, it will not be possible
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In his letter to me and the noble Baroness, Lady Coussins, of last month, which has already been referred to, the Minister argued that corporate human rights cases could still be viable under the measures contained in the Bill, and he helpfully highlighted the opportunity to use damages-based agreements-DBAs. This line of argument derives from the much quoted Jackson report which, it is worth pointing out, did not specifically deal with the cases that we are highlighting today. I will not go into the detailed arguments, as they have been well covered, but neither of Lord Jackson's suggestions-under which the effect of lower damages recovery would be ameliorated, in his view-will work for typical corporate human rights abuse actions brought by claimants from developing countries.
We recognise, and indeed support in some ways, that one objective of this Bill is to reduce the costs of cases across the legal system as a whole, and one cannot be against that. Clearly there is a much better reason for this where these costs fall to be met in whole or part by the public purse but, as the Minister has already accepted, we are not dealing with this area in this part of the Bill. However, in the cases we have highlighted, not only is there no cost to the public purse, but there is already a system in place to decide whether the legal costs awarded are appropriate. Indeed, it was used in recent cases to significantly reduce the costs claimed by the winning side, although they did in fact settle.
It may be irritating to the department to have to create a carve-out in a Bill for such a small group of cases, but surely it is vitally important that vulnerable victims should get justice-and at least some compensation -for the trauma and harm that they have experienced, or for the loss of livelihood or even of life that has been caused by UK companies. It is equally important that companies need to know that they can be brought to account if they act irresponsibly. That is why we believe it is warranted to carve out an exception, so that the broader measures in this Bill do not close off justice in the UK for this small but very significant group of cases.
Our amendments would retain the current funding system in effect for human rights cases. Creating this exception would not be fatal to the overall aims of the Bill. The existing regime of success fees and "after the event" insurance premiums being paid by the losing company instead of coming out of the damages of the claimant are, in our view, the most sensible way of ensuring that these cases continue to be mounted. Moreover, it is unlikely to be more than a few cases a year, as stringent rules have to be met before such cases can be mounted.
In the debate last week, the noble and learned Lord, Lord Wallace of Tankerness, recognised that, in clinical negligence cases, removing the recoverability of ATE insurance premiums could create a real problem
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I hope we can find an accommodation here. In plain terms, all the evidence suggests that the approach being taken in this Bill will kill off the chances of mounting this very small group of special cases in future. How poignant it is that at the same time as we are debating this amendment, the Foreign Office is leading valuable cross-governmental work on how we implement the UN guiding principles on business and human rights adopted in June 2011, which the Ministers told us in our meeting with them that the Government support. We were one of the countries most closely involved in UN Special Representative John Ruggie's work. Indeed, the previous and the present Governments have been vocal in their support of the guiding principles and the present Prime Minister has committed publicly to implement them.
What sort of example are we setting and what message are we sending to UK companies if we now change our laws to make it hard for poor victims of corporate abuses perpetrated by UK companies to seek redress? They may be a small number of cases but they have had a direct impact on the lives of millions of people in the developing world. Each successful case has shone a harsh light on key areas of corporate misconduct in the developing world-from the dumping of pollutants in the water supplies of communities to appalling health and safety standards in mines and to direct corporate involvement in abduction and torture. Ultimately, it is surely important that businesses know that they cannot act with impunity. We do not want the majority of responsible UK businesses to be at a disadvantage because laggard companies get away with substandard, harmful business practices.
8.30 pm
Lord McNally: My Lords, the noble Baroness, Lady Coussins, said that making this exception would not "gut" the Bill. But I hope that noble Lords who sit through these debates or perhaps read Hansard will see the pattern. Clauses 43 and 45 are a fundamental element of the package of reforms recommended by Lord Justice Jackson to deal with the problems of disproportionate costs in civil litigation under CFAs. I have called that the central architecture of the Bill. The clauses seek to reform and remove the inflationary defects introduced into the system by the previous Administration, which is the central point.
The Jackson reforms look at a specific part of our civil justice system. Throughout the passage of the Bill, we have had claims for exceptions to the central architecture. Certainly, in debates an adopter stands
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In most of the examples that we have had so far, when one looks at what we are actually doing, they do not stand up to examination. It is of course always possible to make the case for an exception in a particular class of case, as noble Lords have done. But we believe that our changes must apply across the board. However, let me make it clear at the outset that we support claims arising from allegations of corporate harm in developing countries being brought and we support the protection damages for personal injury. No-win no-fee conditional fee agreements will continue on the same basis on which the noble and learned Lord, Lord Mackay of Clashfern, introduced them. Indeed, if the noble Lord, Lord Brennan, was referring to a case in the 1990s, it was probably brought under this regime, which is the basis on which it still operates in Scotland. We are also extending the availability of damages-based agreements, which are sometimes called contingency fees, to enable their use in civil litigation. Some of the objections to DBAs from the representatives of big business make me feel that they are a much more potent weapon than people give them credit for.
As I have said, we recognise how important these cases can be. We recognise also that, following the Rome II regulations, the damages in these cases can be relatively low. But the costs have been extremely high, as demonstrated in the now notorious Trafigura case, in which the Court of Appeal criticised the claimant lawyers for seeking costs of £100 million in a case which resulted in £30 million in damages. I should add that the defendant's costs were only approximately £14 million, which was about one-seventh of the costs claimed by the claimants.
The reforms in Part 2 are about making costs more proportionate, while allowing meritorious claims to be pursued. As has been recognised by the noble Baroness, Lady Coussins, I and my officials have met on several occasions with representatives of NGOs which support these cases but we are not persuaded that they cannot be brought when our changes are implemented. We have asked for examples of further details of costs. If noble Lords want to engage between now and Third Reading, I will be happy to do so.
However, I continue to come to this Dispatch Box to answer attacks on this legislation that do not stand up to examination of the reality. It often means that the Opposition cleverly erase their own record in these areas and immediately adopt whichever hard case is being brought forward as the exception that will not damage the whole architecture of the Bill. We believe that Jackson was right in his reforms. We do not believe that those kinds of cases-I think the number referred to is about 10 such cases in the past 15 years -will be prevented from being brought.
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We have listened carefully and we have sought to engage with relevant NGOs on this issue. As I said I would in Committee, I have now discussed this matter further with the Secretary of State but for the reasons that I have given we remain unconvinced that these cases cannot be brought under the new regime, as was suggested by the right reverend Prelate the Bishop of Newcastle.
Lord Brennan: The noble Lord is most gracious to give way. The points I was making were illustrated with cases. My principle point was that these cases are so expensive to run that you need a capital base which is not available to lawyers in this country. I should like the Minister to consider-if not now, later-in explaining to the House how it is that his advisers are telling him that lawyers in this country can raise £2 million, £3 million, £4 million or £5 million to run a case for three or four years. How will that be done?
Lord McNally: I will certainly take note of that. I realise the experience of the noble Lord, Lord Brennan, in these areas. When we asked the NGOs for hard facts and figures on costs, they were not forthcoming but perhaps there is time between now and Third Reading to re-engage. I also think that part of the problem is that whatever we have in civil law, conditional fee agreements or anything else, some of the problems raised by the noble Lord, Lord Brennan, in illustration will not be solved in British law courts or by changes in the British legal system. We are trying to reform what everyone who comes to the Dispatch Box acknowledges is a defect in our civil legal system and for which Lord Justice Jackson has produced a reform package that we are trying to put into law. Everyone agrees that we are right to do so, but for this, that and the other exception. Again, I am willing to discuss this further, but I do not think the case has been made-
Lord Martin of Springburn: My Lords-
Lord McNally: I am sorry, but I am not going to take questions. We are hard-pressed for time. I have offered to re-engage, but as I said before, the evidence we asked for has not been forthcoming and I do not believe the argument that without this amendment, it is going to be catastrophic for these particular cases; that is, for those which people want to take through our law courts. I ask the noble Lord to withdraw his amendment-
A noble Lord: The noble Baroness.
Lord McNally: I am sorry, the noble Baroness, Lady Coussins. I am happy to re-engage between now and Third Reading, but at this point we are not convinced.
Lord Judd: So the earth is flat.
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Baroness Coussins: My Lords, I thank all noble Lords who have contributed to this debate and I appreciate everyone's support. I particularly appreciated the powerful contribution made by the noble Lord, Lord Brennan, who helped us to envisage what these amendments would mean to real people in the real world rather than just considering the administrative and legalistic matters that are set down on paper. I also thank the Minister for his thoughtful, if disappointing, response. It is all very well to support something in principle, but if in practice you cannot get at it, that support becomes meaningless. However, I appreciate the Minister's offer to engage between now and Third Reading, and I can assure him that I will pursue that offer in order to look very carefully at what could be brought back at Third Reading. That is because if this Bill remains unamended, I fear that what we will end up with are poor, vulnerable people in developing countries who not only will be the victims of corporate human rights abuses, but the victims of the unintended consequences of this Bill. For now, however, I am content to withdraw the amendment.
Lord Thomas of Gresford: My Lords, this group of amendments sets out the refinements to the architecture of the Bill that I have previously suggested. Noble Lords heard from me at some length before and I do not propose to repeat everything I said. I would just remind your Lordships that the model I am suggesting is that lawyers' success fees should not be paid if the case settles or liability is admitted before proceedings are commenced. The reason for that is that there is no risk to the lawyers that they will not be paid. Noble Lords will recall that I quoted from my own speech back in 1998 when I indicated then that the question of risk was important, but had never been properly assessed. That is the first limb of my argument, and it is set out in Amendment 132C.
I went on to draw attention to the significance of the point of allocation within proceedings where a case is sent to the fast track of small claims or becomes one of the multi-track cases. In the multi-track cases, I suggested that the success fee should be paid, but split 50:50 between the successful claimant and the losing defendant. While in this area, I suggested that the claimant would have an interest in the amount of the success fee and that there would be the possibility of competition. Those points are set out in Amendments 132E, 133B and 133E.
That is the point I reached when the noble Lord, Lord Bach, suggested that I had gone on for too long, and no doubt I had. It is interesting because we are supposed to have these discussions about legislation on Report. The last time I spoke on this issue, the noble Lord, Lord Newton, said that he was in a fog and someone leant across to ask, "What on earth is he talking about?". That suggests that legislation on these
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8.45 pm
I want to make one or two points before I deal with the other matters. The first is ATE insurance premiums. The point has been made and accepted that one-way costs-shifting should be applied where there are conditional fee agreements. However, they should not only be applied in personal injury cases; rather, there should be a power along the lines proposed in my amendment to extend the areas of law to which one-way costs-shifting should be involved to when the Lord Chancellor thinks it is appropriate. Consequently I think there is far more flexibility, in the light of the experience available, in my Amendment 142B on one-way costs-shifting than was suggested by the noble Lord, Lord Beecham. It states:
"Rules of Court may provide that in proceedings of a description specified by order made by the Lord Chancellor",
so that the introduction of other areas of law could come in by stages. I think that that is the way to go forward.
I shall give two specific examples of areas of law proceedings which I suggest should be subject to the one-way costs-shifting regime. The first and most important is environmental cases. These cases bring additional complexities. The United Kingdom is a full signatory to the Aarhus convention, which includes the requirement that the costs of environmental proceedings should not be prohibitively expensive. The Aarhus principles are themselves embedded in a range of European legislation which has been incorporated into a range of United Kingdom law. Indeed, I could quote cases in which those principles have been discussed.
I addressed in Committee the point that the changes which are to be implemented will mean that this jurisdiction is not compliant with the underlying requirements of the convention. Protective costs orders are not an answer. Your Lordships who were here in Committee may recall that my noble friend Lord Lester raised protective costs orders. Now that I have had the opportunity to consider them, as opposed to having a swipe from behind, I can give some answers to his arguments. First, a protective costs order is not available to claimants who want an injunction in nuisance or private proceedings. The whole arrangement is too uncertain and discretionary to be a reassurance for claimants who are contemplating environmental proceedings. The procedure is stressful, time-consuming and expensive. All sorts of satellite litigation are involved. The prohibition on a private interest in proceedings is of uncertain application and scope. If you have the private interest, if the nuisance is affecting you, you cannot apply for a protective costs order, which is an enormous limitation on its usefulness. The cap on the defendant's costs of £30,000 may be sufficient in some cases, but there are certainly cases where a cap of £30,000 in a protective costs order will not be. It will ruin claimants, who will be put off taking proceedings. The application for a protective costs order has to be renewed at different stages of proceedings.
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One-way costs-shifting is needed to ensure compliance with Aarhus and the international obligations which we have accepted, and they require specific provision; that is Amendment 142BA. Amendment 142BB deals with matters that were raised by the noble Lord, Lord Ramsbotham; that is, actions against the police, false imprisonment and deaths in custody. Such actions are pursued by civil liabilities firms and should be within the area of one-way costs-shifting, because the defendant is the state-in this situation, a powerful state, whether it is a police force or a prison; those are the sorts of cases that I am referring to.
The amendments make it clear that one-way costs-shifting should apply where there is a claim which entails either the protection of the environment or civil liberties. The Bill should import a specific definition which ensures that the rule is engaged only where the convention applies.
The model, which I have outlined in my past two speeches and which is fully supported by the personal injuries Bar, although it is not the solution that it originally argued for, strikes the right balance. It builds the house with a structure which is fair and will last. The claimant whose case settles before issuing proceedings receives his damages in total, free of any success fee deduction. The claimant who settles after issuing proceedings will receive most of his damages and there will be a commercial interest in driving down success fees. Claimants with smaller claims, such as for whiplash, will pay a limited success fee out of their damages, but there is an incentive for insurers to admit liability early and settle. If the case is allocated to the multi-track, that opens up liability to the insurers for 50 per cent of the success fee. There is an incentive for lawyers to engage in difficult cases where liability is denied on the multi-track, because they can earn a significant success fee if they win. A claimant with a difficult case on the multi-track will pay only half the success fee out of his damages and not, as the Government now propose, 100 per cent of the success fee. One-way costs-shifting will break the excessive "after the event" market, and premiums for "after the event" cover merely for disbursements will be much lower. Even then, my amendment would divide up those ATE premiums between the claimant and the defendant, whereas the Government propose that, if there is a premium, it should be payable by the claimant only. This is a refinement of the Government's scheme. I know that the Minister is anxious to maintain the architecture of the Bill; my proposal does not destroy it but amends it in a way that is fair.
The reforms introduced by the noble and learned Lord, Lord Irvine, in 1999 were brought in in good faith but they were open to exploitation and abuse. I am not with those from the Opposition and Cross Benches who argue for simply taking their particular area of law out of the new arrangements. The current status quo has to be changed. It is no good saying that in this area, that area or another area we should maintain the status quo. It has to be reformed. We on these Benches pride ourselves as being the party of reform. It is in that spirit that I ask my noble and learned friend to continue the dialogue that we have had on these amendments and to come to some conclusions before Third Reading. I beg to move.
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Lord Beecham: My Lords, I thought the party of the noble Lord, Lord Thomas, was a party of conscience and reform. Conscience appears to have taken a back seat. I have a good deal of sympathy with most of the amendments to which he has spoken and I shall briefly comment on them.
Although we would prefer that the success fee were not deducted at all from a successful claimant, the noble Lord's proposal is clearly better than the Government's proposal. So, to the extent that the Government might be disposed to listen to him on this, we would support that in lieu of what we regard as an even better position.
The other amendments to which the noble Lord spoke largely depend on matters being determined by rules of the court, which would appear to have a discretion to make the necessary changes, for example, under Amendments 142B, 142BA and 142BB, with the Lord Chancellor, in the case of Amendment 142B, identifying the proceedings but not necessarily requiring the change to be made.
I entirely share the noble Lord's view about environmental claims, and a subsequent amendment in my name covers much the same territory. In Committee, I quoted at some length the legal opinions to which the noble Lord referred at that time and dealt with the point about the Aarhus amendment and the points made by his noble friend Lord Lester, which, I agree, misstate the position in respect of protective costs orders. The noble Lord, Lord Thomas, is absolutely right to say, as I said on that occasion, that they do not offer a sufficient defence, as it were, to those in that position.
I similarly agree in relation to the civil liberties claims and, again, we have tabled an amendment in somewhat similar terms, with the exception that under the opposition amendments the Lord Chancellor would effectively take the decision which would change the nature of the position in relation to those claims. As that would have to be, as the noble Lord implied at one point, through secondary legislation or affirmative resolution, it is a more accountable way of dealing with matters than simply leaving it to the courts to determine.
In these circumstances I apprehend that the Government will not be disposed to accept these amendments. Perhaps the Minister will be willing to undertake further discussions with his noble friend, if not with anybody else. If not, as the matter clearly will not be put to the vote tonight, I can only record our unfortunate disagreement with the position in which we will end up because it will not be satisfactory. I do not accept that it is undesirable and wrong to look at particular instances which might fall outside the general rules. The Government have acknowledged to some degree that this should be the case in relation to recoverability under clinical negligence. If they can do that in respect of clinical negligence, then they can equally extend a similar principle elsewhere. Having said that, we await the noble and learned Lord's response.
Lord Wallace of Tankerness: My Lords, I thank my noble friend for his amendments. It will come as no surprise to the House if I yet again echo what has been said on numerous occasions on Report: the architecture,
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The cumulative effects of Amendments 132B, 132C, 132E, 133B, 133E, 139D, 140A, 141ZA, 141ZB and 142B would be, as my noble friend said, a refinement on what has been proposed. When the noble Lord, Lord Beecham, talks about my party and my noble friend's party as being a party of conscience, it is because we feel that some of the fees that have been charged have been unconscionable under the existing scheme. That is why we wish to address the issue.
My noble friend wishes to introduce staged success fees. I am very grateful to him for his complex set of amendments; he has set out what the fees would be at different stages, on the multi-track approach. His proposals would introduce staged success fees in ATE insurance premiums, the cost of which would be split between the losing defendant and the successful claimant. Some recoverability of success fees in ATE insurance premiums would therefore remain.
I assure my noble friend and the House that we have given the amendments careful consideration, even at this late stage. They are proposed as a compromise and are supported by some but not all personal injury claimant representatives. It is fair to recall that these proposals are not entirely new. In his report, Lord Justice Jackson made primary recommendations that have essentially been adopted by the Government in Part 2. He also made an alternative set of recommendations which, while not identical, bear some considerable similarity to the proposals put forward by my noble friend.
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The Government consulted on both sets of proposals in their consultation. However, the respondents to the consultation expressed relatively little support for that alternative. Having given full consideration of all the responses, the Government announced almost a year ago their way forward in line with the primary recommendations of Lord Justice Jackson's report. The proposals, which the Government essentially endorsed, amount to a package of measures which are carefully balanced to be fair to claimants and defendants. They are based on the abolition of recoverable success fees and insurance premiums, but have some supporting features which are intended to balance the abolition of recoverability. These include a 10 per cent increase in the level of general damages and the introduction of qualified one-way costs-shifting, or QOCS, in personal injury cases. In addition, measures to improve the arrangements for offers to settle under Part 36 of the Civil Procedure Rules are also seen as part of the package. Although the detail of all these proposals has not yet been finalised, the essential architecture is in place and is there to be seen.
Our concern would be that revisiting these essential features, which would be the consequence of accepting my noble friend's proposals, would require us to reconsider the whole package, and in particular whether the balancing features, such as the Part 36 sanctions,
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In the same way, the "after the event" insurers argue for their insurance premiums to be paid by the other side. In some of the more serious cases, these amendments would see successful personal injury claimants paying an increased amount from their damages in legal fees. Again, part of the architecture that we have talked about is a cap to protect damages, which would mean that damages for future care and loss, which can run into millions of pounds in catastrophic injury cases, would not be taken into account and would be free from any claim in terms of the success fee. Our concern would be that these amendments would see some of those carefully calculated, necessary but often substantial damages going not to the claimant but as additional fees to lawyers. While I accept my noble friend's point that his amendments seek to limit recovery of success fees and ATE insurance premium at the point of allocation, we do not believe that this is right or fair. In particular, although we have no doubt that the amendments were moved with the best of intentions, they could lead to a continuation of the current problems by other means. They could see unnecessarily high costs for defendants, and a greater deduction from claimants' damages than we propose.
The Government have tried to weigh up all the arguments, and balance the respective interests, and we believe that the proposals that we have introduced achieve that balance. They were consulted on and have been set out in the Bill, and we are not persuaded at this stage that this fundamental change-it is not a narrow refinement-is justified.
With regard to some of the specifics on QOCS to which my noble friend referred, we intend to introduce them at the same time as the relevant provisions in Part 2 of the Bill, as they are implemented in April 2013. My noble friend also seeks to place QOCS in the Bill-we had a debate about that earlier this evening-and he sets out limited exceptions for fraud, vexatious claims and abuse of process. I indicated earlier why we believe that this matter should be done by way of the Civil Procedure Rule Committee and should not be in the Bill. I do not intend to rehearse these arguments again, but it may be that through these rules we can get a kind of flexibility which would allow at a later stage some of the other points to be raised, perhaps more than would be possible if the rules were set out in statute and would therefore require primary legislation.
We believe that the rules allow for sufficient accountability. The Lord Chancellor would remain accountable for the policy of QOCS, and that would be set out publicly by the Lord Chancellor so that he could be answerable to it. The rules themselves would be made by the Civil Procedure Rule Committee, which includes the Master of the Rolls, and are agreed by the Lord Chancellor. They come into effect by way of statutory instrument.
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Other types of claims have been mentioned. My noble friend mentioned, particularly, environmental claims. Amendments 139 and 140 in a later group will no doubt explore this further, but as he may have anticipated the Government still believe that the protective costs order ought to provide better cost protection in environmental judicial review cases. We hope that it will be clear from the outset what costs the claimant would have to pay if the claim was unsuccessful while ensuring that some contribution is made towards the costs of public bodies that have successfully defended a claim. The Government believe that this is the right approach, but we are considering how best to deliver this in the light of recent developments. The Government are currently consulting on proposals to codify the current case law on protective costs orders in relation to judicial review claims which fall under the Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters; it is much easier to say "the Aarhus convention". That consultation closed on 18 January this year and the Government will announce their way forward in the near future.
The reason we wish to make a distinction is that, while personal injuries have typical features which allow us to go down the road of QOCS at this stage, different considerations apply in other types of cases. "Before the event" legal insurance may be available for professional negligence cases. Legal aid is available in judicial review cases. We will keep this under review, and having the matter dealt with by the Civil Procedure Rule Committee but with the Lord Chancellor setting the policy subject to consultation, and no doubt subject to accountability to Parliament, will allow greater flexibility for these matters to be looked at in the future if a case is made to extend the QOCS system.
We are not persuaded that the refinements proposed by my noble friend would lead to a fair or workable solution. We believe that we have struck the right balances, abolishing the recoverability of success fees, and ATE insurance premiums will mean that claimants have an interest in the cost being curbed on their behalf, which will help to restore proportion and fairness in the current regime. We are also clear that special damages for future care and loss, which provide for necessary care and equipment, should be protected and not apportioned among those representing the claimant. I cannot accept that to change the overall package in this way at this time would lower the costs of civil litigation across the board. Against that background I urge my noble friend to withdraw his amendment.
Lord Thomas of Gresford: My Lords, I am not so much disappointed as hurt by my noble and learned friend's reply. I am hurt that he thinks that my amendments would increase the cost. The whole purpose of tabling these amendments was to come forward with a system
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The other matter that concerns me is that the Minister should suggest that I am in some way completely wrecking the architecture of the Bill. I am not; I am trying to make it better for one reason. The one factor that was missing from his response was whether litigation solicitors and barristers will take on difficult and risky cases under the regime that is now proposed. It is not about the Jackson proposals in toto, although various things are left out. This is the issue. Only time will tell. Will solicitors take these cases on when the success fee has been squeezed down in the way that is proposed?
I was suggesting that for one level-for settlements and so on-there should not be a success fee because there is no risk. That brings down the cost of litigation as a whole. However, where there are risky cases lawyers need a proper reward. That factor was not mentioned in my noble and learned friend's response. I hope to talk to him more about this matter before we finally dispose of the Bill but, for the moment, I beg leave to withdraw the amendment.
Amendments 132C to 132E not moved.
Lord Martin of Springburn: My Lords, I am pleased to move this amendment. I understand that the night is getting on and we have all been here for many hours. I say in the nicest possible way that, as the hour gets later, the noble Lord, Lord McNally, seems to get a bit more edgy or, as we say in Scotland-I do not know if the term is used south of the border-a wee bit crabbit. The noble Lord would not give way.
The Jackson report has been mentioned many times tonight, and it sounds as though it is a commendable report. However, I put it to the noble Lord, Lord McNally, that we are not here just to take a report and rubber-stamp it. That would be easy. It has to be debated and thought through. It would be very easy for our democratic institutions if we just got a report and passed it through, saying, "It's a good report". It has to be tried and tested. In that spirit, I am moving this amendment.
I declare an interest. I successfully took the Times to task on a no-win no-fee basis. Even on that basis, it was very daunting to be up against a large media organisation. I have been in politics for a long time and I feel as though we have all been hardened to what the media do and say. It must be even tougher for men and women who never expected to be in a situation in which their reputation was tarnished. It is a great loss that we are losing no-win no-fee for libel damages. My thoughts go to Mr Christopher Jefferies, the landlord in Bristol who was accused of all sorts of things because he was in the wrong place at the wrong time. It was very sad for the poor victim of that murder, but Mr Jefferies was also a victim.
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The media said all sorts of things about that poor man. He must have thought to himself that he must take them on, and he did so on a no-win no-fee basis. Mr Jefferies probably took them on knowing-or his lawyers would have known-that whereas he had one solicitor, every national newspaper has a whole team of solicitors. There is not a time in the day when a media editor does not have access to a solicitor. I do not need to reiterate the things that the media said about that poor man as your Lordships know what was said. I was appalled that when the editor-I believe it was the editor of the Mirror newspaper-spoke at the Leveson inquiry, his apology was so cold and unmoving that you would not have known from it that he had destroyed that poor man's very reputation.
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We all know that the media act as a pack. They have a pack mentality and when one of them went after the man, the others followed suit. I listened to that editor say, "I spoke to the night-shift lawyer and to the day-shift lawyer, and they both said that the story was all right to run. I therefore ran the story and I am very sorry about the difficulty that Mr Jefferies has had". I think you would have made more of an apology to a next-door neighbour if you had forgotten to take the strimmer back after borrowing it to use in the garden. That is how cold these people are. Anybody else from any other sector, knowing what had been said about that poor man, would have said, "My God, we have done a terrible thing. Let us make sure that we never, ever do it again". The fact that there was a night-shift lawyer and a day-shift lawyer indicates that the media have an absolute team of lawyers behind them, whereas the complainant gets a lawyer on a no-win no-fee basis.
Mr Jefferies is not the only victim of this: a lady in the Essex area sought damages, but not from the media. She was a local councillor and did her civic duty, which was recognised by the council which elected her as mayor. A very rich person who had more money than sense, as they say, decided that he would falsely allege that the lady was a shoplifter and was unfit to hold public office. He went to the extent of hitching a great banner to his private plane, and flew around Essex saying all sorts of things about this lady. That was not the only time that he had done that. He did the same thing to Christine Butler, a former MP. After the relevant lady had won her case, he said that she was falsely claiming incapacity benefits. The lady was seriously ill but she had to go to court again. At least with a no-win no-fee situation there is no concern about your mortgage or about any savings that you may have, and your lawyer will tell you whether your chances are good or bad.
We know about the things that some newspapers do because we have heard about phone hacking and the type of newspapers that were involved in that. However, I was disappointed in the Guardian as I have always found that newspaper to be very decent and reasonable. In my experience, its staff have not doorstepped people. If they want to make an inquiry or get a quote from you, they have done it through the usual channels or approached you directly in a reasonable way. However, somehow or other they got it wrong in the case of a
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It is getting late in the evening. I have referred to cases, particularly that of the lady councillor who was on disability benefit. The no-win no-fee arrangement would have taken a great worry away from her, as it certainly did in the case of the soldier. I have declared an interest; the salary that I was earning as a Speaker was on public record, but there is still a worry if you are going to court and you have to engage barristers and lawyers, and take witness statements. You say to yourself, "Am I at risk? Will my mortgage and finances be at risk?". I urge the Minister to think again. I know what he said about the Jackson report, but in this House and the other place you do not take a High Court judge's report-no disrespect to High Court judges-fling it on the table and say, "There you are; it is a good report. We'll all agree to it and go home". That is not what democracy is about. It has to be tried and tested; and if it needs changing, then we change it. I beg to move.
Lord Beecham: My Lords, in fairness to the Government, they did not do what the noble Lord, Lord Martin, suggested. They did not put the whole report on the table and say, "We will have it", but chose which bits suited them and left out the part of the report that dealt with legal aid, which we have debated at some length, among other matters. However, that is a little beside the point.
I support the noble Lord's amendment, if only because subsection (4), which it seeks to delete, effectively locks and bolts the door to any subsequent change to the provisions on success fees without primary legislation. That is a formidable obstacle. The subsection is unnecessary and the Government could have dealt with the matter in a way that would have allowed them or a subsequent Government to review the situation without primary legislation. The way that the Bill is drafted does not allow that, and for that reason, if no other, I support the noble Lord's amendment.
Lord McNally: Did the noble Lord, Lord Martin, say "crabby"? My goodness; I have always been thought of as a little ray of sunshine. Of course we have not accepted the Jackson report lock, stock and barrel. We have honed and polished it, and brought it to the House. We have of course accepted the proper role of this House, which is to revise and advise. I listened with a good deal of sympathy to the experience of the noble Lord, Lord Martin, although I have to say that I am not a lawyer, and I would have taken up the case of Christopher Jefferies, never mind anyone else. I think it was the Daily Mirror that accused him of being a Liberal Democrat, which would have been-I had better not say it.
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Lord Martin of Springburn: My Lords-
Lord McNally: The noble Lord has come to my aid, because I think these cases are still going on, and I had better say no more. Whenever I hear the Opposition on the wickedness of the press, I have to remind them that from those Benches more than a decade ago I proposed a minor amendment on press accountability, and was told from this Dispatch Box by the Labour Minister of the day that I was proposing the "slippery slope" to a state-controlled press. We know today what slippery slope we were actually on.
I say to the noble Lord, Lord Martin, as I have explained in dealing with other amendments, that abolishing recoverability of success fees and insurance premiums from the losing side will rebalance the CFA regime to make it fairer for defendants by reducing the substantial additional costs which they have to pay under the current regime. Amendment 133 would retain the recovery of success fees from the losing side in all cases. I am not sure whether Amendment 133ZA was spoken to, so I shall not refer to it, but the noble Lord, Lord Martin, made it sound as though we were abolishing CFAs. I emphasise that CFAs will still be available to fund the same cases as they were under the original arrangements introduced by my noble and learned friend Lord Mackay of Clashfern.
However, I understand the concerns of the noble Lord, Lord Martin, about the press. I am not sure that they are best dealt with in this Bill. As the noble Lord will know, I hope that parliamentary time can be found to introduce a defamation Bill. It is in that Bill that we will look at the question of the balance of arms between the individual and large media interests. I hope that we can do that reasonably soon. In the light of that and what I have explained, I hope that he will withdraw his amendment.
Lord Martin of Springburn: My Lords, I am very pleased that the noble Lord has said that he hopes to bring in a defamation Bill. That at least is something, because my worry is that there is a great imbalance. I will not detain the House any longer. I beg leave to withdraw the amendment.
133A: Clause 43, page 30, line 24, at end insert-
"( ) In section 58A of that Act, after subsection (6), insert-
"(7) A costs order may include provision requiring the payment of any fees payable under a conditional fee agreement which provides for a success fee in the following proceedings-
(a) proceedings in England and Wales by a company which is being wound up in England and Wales or Scotland;
(b) proceedings by a company which has entered administration under Part II of the Insolvency Act 1986;
(c) proceedings in England and Wales by a person acting in the capacity of-
(i) liquidator of a company which is being wound up in England and Wales or Scotland; or
(ii) trustee of a bankrupt's estate;
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(d) proceedings by a person acting in the capacity of an administrator appointed pursuant to the provisions of Part II of the Insolvency Act 1986.
(8) In subsections (7)(a) and (7)(c) "company" means a company within the meaning of section 1 of the Companies Act 2006 or a company which may be wound up under Part V of the Insolvency Act 1986."."
Lord Thomas of Gresford: My Lords, I return to a subject which we addressed in Committee: proceedings brought by a liquidator of a company, the trustee of a bankrupt's estate or an administrator appointed pursuant to the provisions of Part II of the Insolvency Act 1986 to recover the assets of a business or company which has gone into liquidation or has become financially insolvent.
The point is that insolvency practitioners who engage in that important work have to bring proceedings to recover the assets of the company, or money representing the assets of a company, from a company director or partner in the firm. They can be very expensive proceedings, because a lot of investigation has to be undertaken. Often, the director or partner who is in default has disappeared-or hopped it overseas-so it is not easy to bring those proceedings. The liquidators, and so on, cannot bring the proceedings themselves. They employ solicitors to do that and to carry out those investigations. From time to time, they are forced to go to court to try to get a court order against an individual. In so doing, a conditional fee agreement is entered into, and a success fee is part of that conditional fee agreement.
As all of us will know, one of the major creditors is Her Majesty's Revenue and Customs. Consequently, it seems a little silly to employ insolvency practitioners to recover all this money and then to have a reduction, contrary to the interests of the Revenue and Customs, from whatever has been recovered in order to pay the success fee. It seems to me that the success fee, when these proceedings are successful, should be paid by the person who is in default-the person who has hopped it. That is the current situation.
I mentioned earlier today that back in 1990 when the noble and learned Lord, Lord Mackay, introduced conditional fee agreements for the first time, there were three categories: personal injuries, insolvency proceedings and applications to the European Court of Human Rights. So from the very beginning, from the inception of this type of agreement, insolvency practitioners have had this protection for the proceedings that they have to bring. From the point of view of making sure that the defaulter pays and in the interests of the Revenue and Customs and perfectly decent creditors which may be a large firm or a small firm, it seems only sensible that the amendment should succeed. I beg to move.
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Lord Bach: I am happy to put my name to this amendment with the noble Lord, Lord Thomas of Gresford. I cannot think of anything he said that is not right on this. It seems an open-and-shut case-as it did in Committee, I have to say, when the noble and learned Lord, Lord Mackay of Clashfern, made the first speech in the debate on this subject. I have nothing
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Lord McNally: My Lords, the Government accept that insolvency proceedings are untypical of our reforms to CFAs in an important respect. Across many areas of law-for example, in clinical negligence cases against the NHS-the Government are on the sharp end of our dysfunctional CFA regime as it is the defendants bringing cases against claimants, sometimes speculatively. However, as the noble Lord, Lord Thomas, has said, insolvency stands apart because it is one of the few areas where CFAs sometimes work to the advantage of government departments; for example where an insolvency practitioner recovers moneys for the taxpayer and other creditors. So if these amendments were to be accepted, they would effectively constitute a carve-out for the key place where CFAs can be useful to the Government-this at a time when we are asking everyone else to adjust to a new, more sensible regime.
We debated insolvency proceedings in Committee and I said then that we were considering this issue within government. I can report that we have thought about it carefully, but we do not agree that an amendment along these lines is the right way forward. I do not believe it is acceptable to say that CFA reform is good for everyone else, but is not good for the Government.
Lord Bach: I am sorry to interrupt, but it is not so much that this is good for the Government-it is good for the taxpayer. Surely that should be one of the main considerations. If it is good for the Government, that is fine; but if it is the taxpayer who will benefit, because creditors get their money, as it were-the HMRC gets its money by taking advantage of the amendment-I cannot see why the Government are resisting this.
Lord McNally: As the noble Lord will know, the interests of the taxpayer and the Government are synonymous, because one is working for the other.
Lord Bach: Which one is working for whom?
Lord McNally: It is far too late in the evening for such repartee. As I say, we have reached agreement across government, in respect of insolvency proceedings, that new ways will be implemented to deal with these cases without recoverable success fees and insurance premiums. We are working on a programme of implementation and we will set out the details in due course.
As with other areas now subject to a new CFA regime, the effect will be that claims occur at more proportionate cost, as claimants will have a stake in the legal costs being incurred on their behalf. We believe that the exemption proposed by the amendments in respect of insolvency proceedings is unnecessary and would breach the basic rationale of our reform policy. I therefore urge my noble friend to withdraw his amendment.
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Lord Thomas of Gresford: Can my noble friend tell us when these proposals will be finalised and whether it will be during the currency of this Bill?
Lord McNally: I am trying to work out the vaguest reply that I can give to that. Discussions are going on and, as I said, we will make an announcement as soon as possible.
Lord Thomas of Gresford: I am very much enlightened by my noble friend's formulation. The noble Lord, Lord Bach, made a very good point. It is the taxpayer's money that we are talking about here, and not just the taxpayer but the worthy creditor, the small businessman or even the large businessman who has given credit to a firm that has gone into liquidation, sometimes through fraud and sometimes through incompetence. However, the taxpayer and the businessman are going to suffer because of this provision, unless my noble friend is saying that these proceedings are never going to be brought because there is some other way of doing it. The vagueness has left us all a little in the air. However, for the moment and subject to further discussions between now and Third Reading, I beg leave to withdraw the amendment.
Amendments 133B and 133C not moved.
133CA: Clause 43, page 30, line 25, after "proceedings" insert ", other than proceedings of a type listed in section 58(6A),"
Lord Beecham: My Lords, this amendment effectively deals with the position in which public authorities are the defendants to claims. In cases where the state is in fact the defendant-in other words, the converse of the previous situation that we discussed-the amendment would allow for success fees to be paid when a CFA is in place. To give a brief indication of the kinds of cases that might be involved, they would cover claims for assault, battery, false imprisonment, malicious prosecution, trespass to goods or land, and misfeasance in a public office, or claims in a judicial review or under the Data Protection Act and the Equality Act, negligence where there is a wider public interest in the claim being brought-a sort of localised Trafigura situation, one might imagine-or damages in respect of an act or omission by a public authority that involved a breach of convention rights.
Those are all potentially serious matters in which the state is, in one capacity or another, in the position of defendant. In those circumstances, it seems appropriate that the success fee position should not be that advocated for the rest of the legislation-although we have our differences about that too-but that the state should pay the success fee and not expect it to come out of whatever damages might be awarded to a successful complainant concerning acts that the state should never have committed. I beg to move.
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Lord McNally: My Lords, I hope that my reply to the previous debate has shown our gritty determination to keep to the central architecture of the Bill. As I have explained, abolishing the recoverability of success fees and insurance premiums from the losing side is a key government reform which will reduce the substantial additional costs paid by defendants under the current regime. The reforms are intended to apply across all areas of civil litigation, and the Government do not believe that any exemptions are necessary, fair or desirable. If the amendments were accepted, claimants in these types of cases would have no incentive to control their lawyers' costs. That cannot be right. Proposals to control legal costs should apply across the board. I urge the noble Lord to withdraw his amendment.
Lord Beecham: I decline the request to agree with the Minister. There is little incentive for the Government as a defendant to settle cases when they do not have the additional incentive of a success fee being awarded against them when they lose. However, in the circumstances I beg leave to withdraw the amendment.
Amendments 133D to 135 not moved.
135A: Clause 43, page 30, line 30, leave out from "not" to end of line 32 and insert "prevent a costs order including provision in relation to a success fee payable by a person ("P") under a conditional fee agreement entered into before the day on which that subsection comes into force ("the commencement day") if-
(a) the agreement was entered into specifically for the purposes of the provision to P of advocacy or litigation services in connection with the matter that is the subject of the proceedings in which the costs order is made, or
(b) advocacy or litigation services were provided to P under the agreement in connection with that matter before the commencement day."
Lord McNally: My Lords, the government amendments in this group are minor and technical and will ensure that changes to the recoverability of success fees and the insurance element will apply consistently to all conditional fee agreements, including collective CFAs. I wrote to all Peers last week about the amendment. A copy of the letter was placed in the Library of the House. I beg to move.
Lord Bach: My Lords, I am not getting to my feet just to be difficult. When the Minister moves government amendments and describes them as technical, usually I sit absolutely still in my place. However, on this occasion I have a couple of questions. If he does not know the answers tonight, he is welcome to write to me and to other noble Lords. Will he confirm that the effect of Amendment 135A will be that a success fee as part of a CFA under which work for the claimant commenced before the Bill's commencement day will still be recoverable from the defendant on exactly the same basis as it is now?
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The second question is similar but concerns collective CFAs. Will the Minister confirm that the effect of the amendment will be that a success fee as part of a collective CFA under which work for an individual claimant commenced before the Bill's commencement day will still be recoverable from the defendant on the same basis as it is now? I will not object to the amendment being agreed, but I would be grateful if in due course I could have answers to those questions.
Lord McNally: My Lords, I am sorely tempted to show that after months of total immersion in the Bill I can leap to the Dispatch Box and give the noble Lord a detailed response. However, as he knows, I did only one paper on English legal institutions in part 1 of my degree. Therefore, I will not pretend that I can give him a definitive answer. However, I firmly promise that a letter will go to him and into the Library of the House in response to those questions.
9.45 pm
136A: Clause 43, page 30, line 32, at end insert-
"( ) The amendments made by subsections (2) and (4) do not apply in relation to proceedings that include a claim for judicial review of a decision, or of a failure to decide, by a public body."
Lord Beecham: My Lords, Amendment 136A is in another group of amendments that seek to modify the Government's stance and I anticipate something short of a welcome from the Minister when he replies. Nevertheless, I want to raise these matters. The effect of Amendment 136A would be to permit the recoverability of ATE insurance in judicial review cases funded by a CFA. This is particularly relevant since at the moment there is no proposal to introduce QOCS for these cases. In addition, in any event claimants would have to fund their own disbursements via an ATE policy as well. Particularly in the absence of QOCS, recoverability remains an important issue in those cases.
Amendment 136B would effectively disapply the Bill's provisions for breach of an employer's duty leading to physical or psychological injuries-in effect, personal injury claims. I do not propose to repeat what was said in Committee or at Second Reading about the desirability of including personal injury cases within this proposal. The noble Lord will disagree but it strikes me as axiomatic.
Amendment 136C maintains the same approach in respect of professional negligence cases which can take a variety of forms, as we have said before, affecting members of the legal and other professions. The noble Lord will repeat the mantra that we should not be seeking to add to cases where the general principle is disapplied, but this is potentially important. In particular, the loss of money by professional negligence will be compounded by having to pay, potentially, a significant success fee out of damages, which does not seem at all reasonable.
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Amendment 136D would give a complete exemption for clinical negligence cases as opposed to the partial exemption which is currently proposed. Amendment 139C would require the Lord Chancellor to make regulations to provide for cost orders to require payment where the applicant has taken out an insurance policy against the risk of liability to pay their own costs within a pre-action protocol period or 42 days in the absence of such a period. This is a potential stumbling block. In an earlier debate I referred to the potential scale of the cost of premiums to cover the cost of disbursements-leaving aside road traffic cases where it will be fairly nominal-ranging from £900 through to a very high claim of around £11,000 in respect of clinical negligence.
I am not anticipating a favourable response at this hour. It is a matter which will have be returned to if not at Third Reading then in future as we see an accumulation of cases in which claimants are put at a disadvantage or alternatively in which many people are deterred from taking proceedings in the first place by the potential cost of organising their own "after the event" insurance to cover disbursements-estimated by the Access to Justice Action Group to be something like 25 per cent of cases, following an extensive trawl through some 69,000 cases. That would represent a significant reduction in the number of claimants actually able to bring their cases before a tribunal. I beg to move.
Lord Pannick: My Lords, I am sure the Minister will tell us again that the general regime for success fees and "after the event" insurance must apply to all cases and one cannot have exemption for this type of case. But have the Government given any thought to whether it might be desirable to include in Part 2 a provision similar to Clause 8(2) of Part 1, giving some form of discretion to the Lord Chancellor to exclude from the scope of Part 2, in the light of experience of how Part 2 operates, any categories of case in respect of which it becomes apparent after this Bill comes into effect that the system is not working very well and is causing practical problems about access to justice? It might then be more sensible to go back, in relation to particular categories of case, to the old system under which the unsuccessful defendant would have to pay the success fee. Will the Minister give some thought to whether a general power for the Lord Chancellor to that effect might not be a good idea? Things might look rather different in a year or two from how they look now.
Lord McNally: My Lords, we have reached the stage of the evening when the noble Lord, Lord Pannick, not only asks the questions but gives the answers as well-cutting out the middleman, which is me.
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