Legal Aid, Sentencing and Punishment of Offenders Bill

We will come to increased damages. Damages are totally to one side in this. The point I was making was about the difference between claimants’ costs and defendants’ costs. For example, in clinical negligence cases in the period 2005 to 2010, claimants’ costs paid increased by 45 per cent while the NHS Litigation Authority’s legal costs declined by about 30 per cent. That reflects Sir Rupert Jackson’s findings that claimants’ costs are substantially higher than defendants’ costs. That is one of the things that we seek to address. It might be helpful if I indicate at this stage our current timetable for the implementation of Lord Justice Jackson’s proposals in Part 2—subject, of course, to parliamentary approval. We believe that these are important measures and we want to implement them as soon as possible in order to control the costs of civil litigation. However, I will reflect on some of the specific issues that were raised by my noble friend Lord Thomas. These proposals will require the making of new regulations and changes to the Civil Procedure Rules. We wish to make sure that we get the details of these regulations and rules right, and that will inevitably take some time. We are also conscious that stakeholders will need appropriate notice of when the changes will be implemented and how the details will affect them. We have already announced that the legal aid provisions in Part 1 will be implemented in April 2013, subject to parliamentary approval. For these reasons, I can inform the Committee that, subject to parliamentary approval, the Government intend to implement the Jackson provisions in Part 2 in April 2013 as well. As I have outlined, Amendment 127, tabled in the name of the noble Lord, Lord Martin, if allowed to stand, would allow continuation of the current regime of recoverable success fees—which, for the reasons I have indicated, we are determined to tackle. Therefore, we will resist that amendment. I turn to Amendments 118 to 120. The Government have said that in personal injury cases there will be a cap on the amount of damages that may be taken as a success fee. It is important to remind ourselves that the cap of 25 per cent in personal injury cases is a maximum in order to protect claimants’ damages. Lawyers do not have to charge a success fee of 25 per cent of damages. Indeed, in many personal injury cases where there is little risk of difficult legal issues arising, it may well properly be the case that a zero success fee, or a much smaller success fee, would be appropriate. Indeed, there is no need to claim a success fee at all. As my noble friend Lord Thomas said, an element of competition will start to emerge, and no doubt some firms of solicitors will get a reputation for taking on cases with very modest or no success fees, whereas other firms prepared to take on more risky litigation would have higher success fees. The cap will be set at 25 per cent, but that is intended in personal injury cases only and is to protect claimants’ damages. In particular, it will not apply to damages for future care and loss, which can be very substantial. I do not accept that the amendments tabled by my noble friend are necessary, because he mentioned some non-personal injury cases where that 25 per cent cap will not apply, albeit that the fee under the Bill would refer to a percentage of damages. Obviously, in non-personal injury cases, the 25 per cent rule would not apply. Amendment 118 would allow lawyers to increase the notional fee and overall costs, whereas the policy intention is to reduce these costs. Therefore, we do not believe that Amendments 118 to 120 are necessary or appropriate. Amendments 131 and 133 seek to exempt certain types of claim from our package of reforms to the existing CFA regime. We cannot accept these amendments as they undermine the Government’s reform of civil litigation funding and costs. Under our reforms, people will still be able to bring cases on CFAs in areas where they are currently used. We are also making improvements that will help claimants wishing to fund claims on a CFA that were not available previously, and we are protecting claimants’ damages. I just referred to the 25 per cent cap; as has also been recognised, there will be a 10 per cent increase in non-pecuniary general damages such as those for pain, suffering and loss of amenity. This change is being taken forward by the senior judiciary. Amendment 131 proposes that the success fee should be recoverable where, "““the defendant has been unreasonable (in whole or in part)””." This relates to the recoverability of success fees from the defendant, which we do not believe should be the case. To allow for recoverability where the defendant is alleged to have been unreasonable, at least to some extent, is a recipe for satellite litigation and even more costs being generated. It will introduce uncertainty and the opportunity to allege unreasonable behaviour in every case—one can see the certain incentive to do so—which would not be acceptable. I will return later to the point made by the noble Lord, Lord Martin, but we are introducing changes that will require defendants to behave properly in relation to offers. The changes to Part 36 of the Civil Procedure Rules—Offers to Settle—are touched on in Clause 53 and the amendments that have been moved in relation to that. The changes will incentivise defendants to make earlier and better offers; otherwise, they will suffer increased financial penalties. With regard to Amendment 133 and the question of funding of appeals, the same general arguments apply as for unreasonable behaviour by the defendants. The Government are not persuaded that any special provisions need to be made in respect of appeals, and appeals can be funded on the same basis as cases in the first instance. As has been acknowledged in this debate, in personal injury cases we are introducing a system of qualified one-way cost-shifting—QOCS—which will protect losing claimants from having to pay the defendant’s costs. Although these measures are being taken forward outside of the Bill, including through the Civil Procedure Rules, they are an important feature of the overall package. To maintain a level playing field, these changes should apply equally and to all categories of cases. Otherwise, in cases covered by these amendments, the losing party will still be liable to pay not just the winning party’s ordinary costs but all the additional costs associated with CFAs, without any justification. The effect of Amendments 137B and 137C is almost identical, the difference lying only in the amounts they suggest. I have spoken about the changes we are making to CFAs. As part of his package of reforms, Lord Justice Jackson recommended that the level of general damages in tort cases such as for pain, suffering and loss of amenity should be increased by 10 per cent. The Government have accepted this recommendation, and the increase will apply to all cases, however they are funded. However, Amendment 137B seeks to make this increase part of primary legislation by incorporating it into the Bill. Amendment 137C specifies that the increase should be 33 per cent. I believe that an increase of 33 per cent would be an overcompensation. As well as exceeding the level of the proposed cap on success fees, it would be a substantial windfall for claimants not on CFAs, who would not be liable for any success fee. It would also increase the burden on defendants, which goes against the grain of these reforms. I understand that noble Lords wish to see a commitment to a 10 per cent increase in the Bill. However, we have given the matter much thought and we do not believe that to do so is either necessary or practical. The level of general damages has historically been for the judiciary to decide. This was so in the Court of Appeal case of Heil v Rankin, which increased the level of such damages. Again, we believe it would be appropriate for the senior judiciary to take this increase forward, as indeed it is. It may also be helpful at this stage if I deal with a question raised with me by my noble friend Lord Faulks at Oral Questions on 20 December. He asked whether bereavement damages awards would also be increased. This award is payable to certain close relatives of a deceased person in the event of a fatal accident caused through another person’s negligence. The level of the award is set by the Lord Chancellor under the terms of the Fatal Accidents Act 1976. I am happy to confirm to the Committee that the Lord Chancellor has agreed that the bereavement damages award should be increased by 10 per cent, in line with the increase in general damages for non-pecuniary loss. This increase will be made in due course by order under the negative resolution procedure, so that the increase can come into effect at the same time as these other measures. I will now turn to Amendment 137D, which seeks to insert a new clause in Part 2 of the Bill, with the intended effect of extending the scope of one way costs shifting in other areas of civil proceedings. The burden of costs would remain solely with the defendants and the culture of risk-free litigation by claimants would continue. We believe that this is neither acceptable nor conducive to a package of reforms to no-win no-fee conditional fee arrangements. Amendment 138 would limit the effect of Clause 45 to areas of law where qualified one-way costs shifting operates. As the Government indicated in response to their consultation, this will initially apply in personal injury cases only. If Amendment 138 was accepted, the recovery of ATE insurance would continue in all areas of civil litigation except personal injury. My noble friend Lord Thomas raised an important issue, namely whether QOCS should be included in the Bill. We have obviously considered this. We believe, however, that it should be implemented by means of an amendment to the Civil Procedure Rules once we have finalised the policy details on how the rules should be drafted. The Civil Procedure Rules are made under the Civil Procedure Act 1997 and have the overriding objective of enabling the court to deal with cases justly. They set out the rules which govern how civil cases should be conducted, including, for example, the costs sanctions that should apply in certain circumstances. They are made by the Civil Procedure Rule Committee and agreed by the Master of the Rolls and the Lord Chancellor, coming into effect by way of statutory instrument. We will, however, continue to work with stakeholders on the detail of a QOCS regime for personal injury cases. We acknowledge and are grateful for the expert stakeholder contributions that have been received. That work will resume in earnest once the details of this Bill are finalised. However, there are some difficult issues which we are addressing, and which need to be got right for the hundreds of thousands of personal injury cases dealt with each year: what does ““unreasonable behaviour”” mean? How can we balance certainty for the claimant with the need for the claimant to face at least some litigation risk, the absence of which is a major flaw in the current regime? How can we ensure fairness to all sides, and reduce the scope for satellite litigation? We all recognise that these are important, but nuanced, issues and we believe that they are best resolved by the Civil Procedure Rules. We cannot, as I have indicated, finalise a policy on the rules until we know, for example, the primary legislation as set out in this Bill, but I can say that there does appear to be broad agreement that it should not be a primarily financial threshold in personal injury cases, although that would not necessarily apply were, at some future date, QOCS to be extended to other categories.