Legal Aid, Sentencing and Punishment of Offenders Bill

My Lords, we have, as the noble Lord, Lord Beecham, indicated, moved on to Part 2, but I open by saying that on my walk from Dover House to the House this afternoon, I, too, fell. I went over on my ankle on what I think was a crack in the pavement, so I have every sympathy with him and I trust that he will need neither medical nor legal assistance as a result. Indeed, I hope I will not either. Part 2 implements the Government's reforms to civil litigation funding and costs following, as has been discussed already in this debate, Lord Justice Jackson's recommendations. These reforms have a number of important components. Abolishing the recoverability of success fees and ““after the event””, or ATE, insurance is key to the Government's aim of returning a sense of proportion and fairness to the current regime. My noble friend Lord Thomas of Gresford talked about premiums going sky-high. I will return to these issues in more detail in the course of responding to specific amendments. As part of these reforms, the Government will introduce QOCS—qualified one-way costs shifting—for personal injury cases. This is an area of law where most claimants are individuals, acting under CFAs, and most defendants are insurers or other well-resourced organisations which can well afford to defend themselves. My noble and learned friend Lord Mackay of Clashfern asked a very specific question, to which I hope that by the time I conclude my remarks I can give him an answer, about those who are funding themselves and not acting under a CFA. The Government agree with Lord Justice Jackson that QOCS in these cases is the right way forward and strikes a fair balance between claimants and defendants. In particular, it means that in many cases claimants will no longer have to take out expensive ATE insurance. On ATE insurance, the noble Lord, Lord Beecham, asked what engagement there had been with the insurance industry on these matters. I am advised that insurance both ““after the event”” and ““before the event”” can certainly help. It is self evident that it could help with legal costs. The ““after the event”” insurance market has developed alongside the current CFA regime and, of course, there is substantial financial interest in seeing that regime continue. It is not surprising, therefore, that the ATE industry's public stance is to lobby hard against the proposals that we are bringing forward. Ministry of Justice Ministers and officials have met a significant number of different insurers as the proposals have been developed since Lord Justice Jackson's recommendations were published early in 2010. Although we acknowledge that some ATE insurance providers have said publicly that they will pull out of the ATE market if the changes go ahead, others have indicated that they will look positively at developing products which meet new market needs as the details of these proposals are finalised. We are also introducing a 10 per cent increase in damages for non-pecuniary loss, such as pain, suffering and loss of amenity, which is being taken forward by the senior judiciary. I accept that the 10 per cent uplift in general damages could be achieved through primary legislation. It is something that we considered and discussed with the senior judiciary. However, the Government have concluded that it would be appropriate for the senior judiciary to take this forward. We believe that this reflects the historic position that such damages are for the senior judiciary to determine, as set out, for example, in the Court of Appeal case of Heil v Rankin, a case, picking up the other point made by the noble Lord, Lord Beecham, regarding the Law Commission report on damages. Heil v Rankin was a Court of Appeal bench that was established very much to take forward the proposals of that Law Commission consultation paper in 1996, Damages for Personal Injury: Non-Pecuniary Loss. The House may wish to note that in his report Lord Justice Jackson listed recommendations which would require primary legislation to implement. Increasing damages was not one of them. Indeed, in his response to the Government's consultation, Lord Justice Jackson agreed with the Government's approach that this was for the senior judiciary to take forward. Lord Justice Jackson said at paragraph 4.2 of his response to the Government's consultation: "““Method of achieving the adjustment. The Consultation Paper states at para 97: 'adjustments to the level of general damages have hitherto been regarded as a judicial issue for the courts rather than the Government'. I agree and have not included this item in the list of reforms requiring legislation. It will be recalled that in so far as the Law Commission's recommendations for increasing personal injury damages were accepted, those increases were implemented by means of a guideline judgment handed down by a five member Court of Appeal, presided over by the Master of the Rolls: see Heil v Rankin ... The same procedure could be adopted for implementing any future increase in the level of general damages””." We also want to ensure that the increase in the level of damages does not, unlike the proposal in Amendment 136E, apply simply to personal injury but, where appropriate, to general damages for torts, of which pain, suffering and loss of amenity are examples. It is not practical to identify all of these in legislation and any formulation that is designed to be a catch-all provision runs the risk of excluding some. My noble friend Lord Faulks referred to the increase in bereavement damages under the Fatal Accidents Act. As he said, those damages are statutory and fall to be increased under the statutory process, whereas the general damages for non-pecuniary loss are different. However, I repeat what I said in an earlier debate—we are minded to increase these as well. QOCS and the 10 per cent uplift in damages do not need to be implemented through primary legislation and so have not been included in the Bill. We believe that the same legal effect will be achieved through other means. I know that this is a matter of considerable importance not only to my noble friend Lord Thomas, who has raised it with me on a number of occasions, but to the House in general. We certainly intend to introduce QOCS at the same time as the relevant provisions in Part 2 are implemented in April 2013. The noble Baroness, Lady Kingsmill, and the noble Lord, Lord Beecham, have tabled amendments that would seek to put QOCS in the Bill, rather than including it in the Civil Procedure Rules. Amendment 132A would also extend QOCS to areas of litigation other than personal injury. In Committee, I spoke about the reasons for including QOCS in the rules rather than in primary legislation. The Government do not believe that Amendments 132A, 136E, 141ZC and 151ZA are either necessary or proportionate. The rules are a much better mechanism than primary legislation for implementing a new costs regime. They provide flexibility and can be altered in the light of developments, as required. There is a risk in being too prescriptive in primary legislation, as it would prevent the development of QOCS in the rules. On the extension of QOCS to different types of cases, the Government believe that Amendment 132A is too broad and that it leaves itself open to possibly unintended interpretation. It is not difficult to imagine the potential consequences if the amendment were accepted. Perhaps I may give two examples, because I think that the circumstances in which it is proposed that QOCS might apply would be in cases of breach of contract. We could have a situation in which a premiership footballer pursued a claim for contractual damages at no financial risk, or a builder could sue an insured homeowner over a building contract at no financial risk to what might be one of the country's biggest building companies. We would be powerless to amend the rules to allow for some degree of financial risk for these claimants in such circumstances. We believe that Amendment 132A could become a speculative claimant's charter, and it goes against the principles of the reforms in Part 2, which are intended to reduce the scope for speculative litigation. The amendment would also restrict the future development of QOCS. Currently, any extension of QOCS to other areas of litigation beyond personal injury cases may be achieved through changes to the rules. Being too restrictive in primary legislation could restrict the scope for the expansion of QOCS in the rules. For example, while it may not be appropriate to have an initial financial means test for QOCS in personal injury cases, this is unlikely to be the case in, for example, defamation or privacy cases. To list in statute different types of cases where QOCS should apply would mean that any future expansion might also need to be effected through primary legislation, which could be a lengthy and complex process. The noble Lord, Lord Beecham, asked about the financial test for QOCS. We agree that, for personal injury cases, there should not be an initial financial means test. We are in discussion about whether there should be a financial contribution, although we recognise the arguments that there should not be. The Civil Justice Council, chaired by the Master of the Rolls, is helping the department on the way forward. We are in full consultation with stakeholders and very much appreciate the considerable support of the Master of the Rolls and the Civil Justice Council. My noble and learned friend Lord Mackay of Clashfern made a point about the applicability of QOCS in circumstances where a claimant raises his or her own funding. I recognise that it is fair to point out that there will be cases where someone cannot or is unwilling to obtain a conditional fee agreement. We have said that QOCS will apply in all personal injury cases, however funded. Although typically they are run under CFAs, different considerations may apply in other cases that we would need to consider carefully if the types of cases covered by QOCS were to be extended. As I indicated, we do not believe that it is appropriate to put these provisions in the Bill. There is a precedent for the 10 per cent uplift being taken forward by the senior judiciary, and we would look to that happening in this case. I also give an assurance that QOCS will be brought in at the same time as Part 2 of the Bill, so the flexibility that will go along with having it in the rules will certainly outweigh the advantages of having it in primary legislation. We also believe that the extent of the noble Lord's amendment is far too wide. For these reasons, I invite him to withdraw it.