My Lords, I rise to speak to Amendments 63FDA to 63FFA. I do so with some diffidence because, in part, I disagree with my noble friend Lord Hunt. After the humorous and intelligent way in which he introduced his amendment, and given that I agree with a great deal of the sentiment he expresses, I am concerned about the extent to which I disagree with him.
I agree with my noble friend that there has been a culture of “going for it”. There has been an outbreak of “compensation-itis” that we no doubt acquired, in part, from the United States and which has bitten particularly deep into the culture of people who have had motoring accidents. I greatly agree that something needs to be done. The question is whether the clause does what needs to be done in the way it needs to be done.
As my noble friend explained, Clause 45 deals with claims for damages in personal injury cases where the claimant is guilty of fundamental dishonesty in the prosecution of his claim. Clause 45(2) provides that,
“The court must dismiss the primary claim”—
that is, the claim for damages—
“unless it is satisfied that the claimant would suffer substantial injustice if the claim were dismissed”.
The question I seek to pose is how far subsection (2) would leave judges free to do justice.
In my view, the subsection works against the interests of justice, or certainly risks doing so, in two ways. The first is by imposing a presumption in favour of dismissal, subject to a modest saving provision that, frankly, is difficult to understand. I am not sure I agree with my noble friend Lord Hunt that the word “fundamentally” adds nothing, but I certainly am of the view that the saving subsection,
“unless it is satisfied that the claimant would suffer substantial injustice if the claim were dismissed”,
is very difficult to understand. On one view of justice, and the view of justice which appears to be intended by the proponents of the clause, if there is dishonesty, it is not unjust for the whole claim to go. If that is the meaning, how does the saving provision come in at all? If, on the other hand, it means that the interests of justice seem broadly to require the claimant still to get some of his damages, does that amount to a duty to dismiss or is it merely a power to dismiss, which is what my amendments are directed to?
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The second area where I believe there is a risk that justice will not be done is that the clause as it stands allows for no middle course—no way of allowing a judge to reduce the damages rather than dismiss the claim, where a reduction in damages is really what is required to do justice between the parties.
I am not sure whether my next point constitutes a declarable interest, but it is in the register. Over the years, I have conducted many personal injury claims on both sides—for claimants and for defendants. In more recent years, some of those have been very substantial indeed. Regrettably, many of those claims are marked by dishonesty. Such dishonesty can arise from relatively minor exaggeration, such as happens in any number of insurance claims in the experience of all of us. However, it can range to entirely fraudulent claims, where whole elements of the claim are simply made up or fabricated by the claimant.
I suspect that the word “fundamentally” is intended by the drafters of the clause to limit the provision to those cases where the dishonesty goes to the heart of the whole claim, or certainly to a very important element of it. I agree with my noble friend Lord Hunt that it is difficult to see exactly what it means, although it cannot refer to aspects of dishonesty that are on the margins and refer only to exaggeration. He is right technically to say that being dishonest is dishonesty; it is attempting to obtain money to which the claimant is not entitled. However, if that refers to making out a claim for five bus fares when one bus fare was, in fact, incurred, is that enough to tell the judge he should allow for not just no bus fares but no damages at all to a seriously injured claimant?
I have long believed that judges are presently far too limited in what they can do to reflect dishonesty in disallowing dishonest claims. It is right to consider what they can do. They can reflect the dishonesty, of course, by cutting out the dishonest part of the claim. They can also reflect the dishonesty in their award of costs by disallowing costs to the claimant on certain issues and allowing costs to the defendant—indeed, in a serious case, allowing all the costs to the defendant. Occasionally, a judge might send the papers to the Crown Prosecution Service or the Director of Public Prosecutions for him to consider prosecution for perjury, but in practice, as anyone who practises in this field well knows, prosecutions for perjury arising out of this sort of case are very unusual indeed.
I believe that judges should have the power to disallow claims, just as the clause proposes. However, I believe that should be a discretionary power of the courts and that there should be no presumption one way or another. The exercise of the power should be governed by the overriding objective of dealing with cases justly, which was introduced into the Civil Procedure Rules proposed by the noble and learned Lord, Lord Woolf. I submit that that is a proper and sensible way of approaching this. I also believe that the courts ought to have the power to reduce an award of damages not merely relative to the area where there has been dishonesty but, if necessary, relative to the whole case, so that they can disallow a dishonest claim and parts of the rest of the claim if they wish.
There may be many cases where dishonesty in presentation is so significant in relation to the whole claim as to make it just to dismiss the lot, but there should be no general rule to that effect. I put before the Committee the hypothetical example of a middle-aged middle manager who is severely injured in a road accident which renders him tetraplegic. He has 10 years
left or thereabouts of his working life. He therefore has a claim for loss of earnings of about £500,000. However, he has a whole life claim for full-time residential care of, say, £4 million. He has a claim for medical help, for adjusted housing and for incidentals of about another £1 million. He has a claim for general damages for pain, suffering and loss of amenity of about £200,000 to £250,000. All in all, his claim is worth about £6 million. This claimant, in a way that is fundamentally dishonest, suppresses the fact that a week before the accident he had received notice that he was to be made redundant. He is unlikely, because of his age and limited skills, to get any further work. His loss of earnings claim, far from being worth £500,000, is worth a residual £20,000 to £30,000 at most. Is that fundamental dishonesty? Of course it is.
What would the outcome be under Clause 45? It may well be that somebody could say that that is so dishonest that it would not offend against justice for the claim to be dismissed. Furthermore, the saving provision requires the claimant to suffer “substantial injustice”. However, in the example that I have given, the National Health Service would be given the task of caring for the claimant, while social services would be meeting a lot of his social service needs, such as his adjusted housing and so forth and the care needs that he may have at home. The people who would be let off the claim if Clause 45 was applied would be the defendant’s insurers, and the public purse would bear the cost of that. It is not the claimant who suffers the substantial injustice in that case, so Clause 45 would be applied and the whole claim dismissed. However, I suggest that most judges and most lawyers would think that the right result would be that his general damages should be removed and that his loss of earnings claim should of course fall. The defendant’s insurers would nevertheless be left with the cost of his care claim and his medical claim—he is, after all, a tetraplegic.
I agree with my noble friend Lord Hunt on his other amendment, Amendment 63FE, that subsection (5) lacks sense. I would be tougher and suggest that the Committee invite the Government to be tougher than the proposers of the clause. As my noble friend Lord Hunt rightly pointed out, subsection (5) would give a dishonest claimant credit for the damages he had forfeited against the costs that he would otherwise have to pay the defendant. I simply do not agree that there is any reason for that. To take an example of a small claim, where he would have got £10,000 for an injury that has been exaggerated, under subsection (4) that sum of £10,000 would be recorded but his claim would be dismissed. The costs he ought to pay to the defendant come to, say, £30,000. Under subsection (5), he would only have to pay £20,000. Why, in a case where a dishonest claim is dismissed, he should get credit for the damages that he has forfeited, I cannot tell. The only answer I can think of is that the defendant would not have to pay the £10,000, but the claimant might not have brought that claim for £10,000 anyway so the defendant would not have to pay it.
Finally, Amendment 63FG, which is the amendment in the names of the noble Lords, Lord Beecham and Lord Kennedy of Southwark, effectively reverses the
point so that if a defendant is dishonest, the defence will be struck out and judgment will be entered. There is a difficulty about that. It is superficially attractive because it proceeds on the basis that what is sauce for the goose is sauce for the gander. However, unless the amendment goes only to the defence on liability, it is bound to be wrong because the judgment that should follow is a judgment only for damages to be assessed. It cannot be right that the defendant cannot put forward a counterschedule of damages, and that the claimant will get a windfall in damages of an amount to which he cannot possibly be entitled, because of the fact that the defendant is precluded from defending the claim. While I see the attraction of the way that the noble Lords have put it, I would not support that amendment.