My Lords, I am extremely grateful to my noble friend Lord Hunt for bringing these amendments before the Committee and for his explanation of some of the problems that have beset our legal system and our society more generally. They are problems of which the Government are extremely aware and on which they have taken, and are taking, various steps to try to improve the situation. For example, the compensation culture, such as it is, was certainly fed by the cost incentives identified by Sir Rupert Jackson in his report. The reforms have made the costs of litigation much more controlled and your Lordships approved Part 2 of the LASPO Bill, which has resulted in a much more moderate personal injury claims litigation scene.
Noble Lords will be well aware of the dishonesty that sometimes besets personal injury claims. The Government are bringing forward provisions in the Criminal Justice and Courts Bill whereby, if a claimant is fundamentally dishonest, even if some element of the claim is genuine, he or she will not be able to recover any damages at all. We are also acutely aware of the problems with claims management, referral fees and the like. I am glad to say that claims management firms are reducing in number very considerably as they find this a less profitable field in which to plough their furrow. They are now much better regulated and fines of a considerable order are imposed on them if they act in a way which contravenes the law, so all these measures are going in the right direction.
Furthermore, the Government are setting up a regime to deal with whiplash claims. The noble Lord, Lord Walton, identified the difficulty of diagnosis in whiplash cases, which I think is well acknowledged in the medical profession. Although some people undoubtedly genuinely suffer the consequences of whiplash injuries, these injuries are not easily detectable objectively through scans or the like. Thus there is the temptation for claimants to bring claims, often egged on by third parties. It is often easier for insurance companies to pay out sums of money, even though they know that these claims may well be false, because the cost of fighting them is prohibitive.
All of this is a most unattractive landscape. My noble friend Lord Hunt is quite right to bring all those issues to the attention of the Committee. Before I move on to the amendments I should also say that it was as a result of my noble friend’s contribution to the Compensation Act 2006—to which he referred—regarding the provision on apologies not being an admission of liability that has helpfully altered the conduct of some litigation. Indeed, I can declare an interest, having relied on that section in one case.
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Amendments A1 and A2 would widen the scope of the Bill so that in addition to applying when the court is considering claims in negligence or for breaches of relevant statutory duty, it would also apply when the court is determining whether to pay damages to the claimant in respect of injuries suffered in a road traffic accident. Amendment 7A would make it clear that the court may decide not to award damages in circumstances where the injury entails a loss of function of 15% or less, or where the defendant has funded, or agreed to fund, treatment for the claimant’s injuries.
The focus of the Bill is on factors a court must consider when assessing whether a defendant was negligent, rather than the things it must take into account in determining an award of damages—in other words, as we lawyers put it, liability rather than quantum. I know, as does the Committee, that my noble friend has a long-standing interest in controlling the costs of litigation and avoiding unnecessary claims. I do not share the view of the noble Lord, Lord Beecham, that it is somehow a doubtful advantage to seek to reduce insurance premiums: it is in all our interests. This is certainly one way of doing that. The market, too, will often mean that lower insurance premiums have to be reflected in other insurance companies’ lowered premiums, notwithstanding what he said about insurance companies’ profits.
I am sure, furthermore, that all noble Lords share the desire to encourage appropriate and early settlement of claims. There are of course important issues about the nature and purpose of damages and the place for non-monetary offers of treatment or rehabilitation that may merit further consideration, particularly in relation to minor injuries suffered in road traffic accidents. My noble friend said he was not particularly wedded to 15% but was indicating some form of de minimis provision.
We have dealt, as I told the Committee, with fraudulent and grossly exaggerated claims which have in the past increased insurance premiums. They also eat up the valuable resources of local and public authorities and employers, which could otherwise be used for the benefit of business and providing services to the public. My noble friend supported the provisions in the Criminal Justice and Courts Bill and I fully understand why he sees these amendments as an important piece of the jigsaw in lowering insurance premiums. However, I am sure that he will appreciate that the Government need to consider these issues in much more detail than is possible in the context of this Bill for all their implications to be fully assessed. Therefore, while I well understand what lies behind these amendments, we very respectfully do not think that they should form part of the Bill. I hope that on that basis my noble friend will be persuaded to withdraw his amendment.