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Baroness Barker: My Lords, I am sure with the minimum of three days I could get the hang of the procedure. I wish to ask the noble Baroness to clarify

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something she said. She talked about the reassessment happening within two weeks of discharge from hospital. I understood from her comments on an earlier amendment that the period was two weeks after someone had returned to their own home from intermediate care or another form of care and not just from an acute hospital.

I was being flippant earlier on, but actually I believe that is one of the most important parts of the Bill. It is its underpinning and the determination of whether it works in the best interests of older people. I am extremely serious.

I wish to pay tribute to the noble Lord, Lord Hunt. He approached the Bill, as he did many others, with a wonderful mixture of conviction, scepticism, charm, tolerance and occasional bewilderment at the antics of these Benches, for which I thank him. I congratulate the noble Baroness on the way that way she has taken over so effectively.

Finally, I want to put my thanks on record to the Bill team. We have made contributions to this Bill which have been far more of the real world than some of those made in another place. I believe it has been a combined effort by us all to make an unworkable Bill much more workable.

Baroness Andrews: My Lords, in response to the noble Baroness's question, I said that we would look at both discharge from hospital and discharge from other forms of care. But all those matters will the subject of consultation. I am sure that the noble Baroness will be able to join in that process.

Earl Howe: My Lords, I join the noble Baroness, Lady Barker, in everything she said about the helpful and constructive approach adopted by the noble Lord, Lord Hunt, and the noble Baroness, Lady Andrews. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Motion agreed to.


47After Clause 17, insert the following new Clause— "Duration

    (1) Subject to subsection (2), Part 1 of this Act shall cease to have effect at the end of five years beginning with the date on which it comes into force.

    (2) If the Secretary of State is satisfied that it is necessary for social services authorities to continue making payments in cases where the discharge of patients is delayed for reasons relating to the provision of community care services or services for carers, he may make an order providing that Part 1 of this Act shall continue in force for a further five years.

    (3) An order may not be made under subsection (2) unless a draft of that order has been laid before, and approved by resolution of, both Houses of Parliament."

    The Commons disagreed to this amendment for the following reason:

47ABecause the provisions of Part I should not be made to have only temporary effect.

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Baroness Andrews: My Lords, I beg to move.

Moved, that this House do not insist on their Amendment No. 47 to which the Commons have disagreed for their reason numbered 47A.–(Baroness Andrews)

[Amendment No. 47B not moved.]

On Question, Motion agreed to.

Courts Bill [HL]

5.40 p.m.

House again in Committee on Clause 92.

[Amendments Nos. 140ZA and 140ZB not moved.]

Baroness Scotland of Asthal moved Amendment No. 140ZBA:

    Page 45, line 24, leave out second "or"

On Question, amendment agreed to.

Baroness Scotland of Asthal moved Amendments Nos. 140ZBB and 140ZBC:

    Page 45, line 27, at end insert ", or

(d) the source of payment under the new method is a government or health service body." Page 45, line 33, at end insert—

"(1A) For the purposes of section 2(4)(c) and (7)(d) "government or health service body" means a body designated as a government body or a health service body by order made by the Lord Chancellor.
(1B) An order under subsection (1A)—
(a) shall be made by statutory instrument, and
(b) shall be subject to annulment in pursuance of a resolution of either House of Parliament."

On Question, amendments agreed to.

Baroness Scotland of Asthal moved Amendment No. 140ZBD:

    Page 45, line 37, leave out "or"

The noble Baroness said: I shall speak also to Amendment No. 140ZBE. In the event of the insolvency of an insurer funding periodical payments, new Section 4, inserted in the Damages Act 1996 by Clause 93, provides that the claimant's payments are fully protected under the Financial Services Compensation Scheme. In order to receive compensation under the scheme, it may be necessary for the claimant to assign his or her right to the payment to the scheme manager. Amendments Nos. 140ZBD and 140ZBE ensure that claimants can do so without having to seek the court's approval. I beg to move.

Lord Hunt of Wirral: I shall know these affectionately as the "zebedee zebedoo-dah" amendments. There must be a better way of listing amendments. The references 140ZBD and 140ZBE give much cause for merriment, but the Minister has moved the amendments with her usual clarity.

On Report, I shall seek to return to the question of whether "or" is disjunctive or conjunctive, and the extent to which throughout the Bill "or" appears

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where I believe that it should not appear and does not appear where I believe that it should. But that merriment lies ahead. In the mean time, I welcome the amendments.

On Question, amendment agreed to.

Baroness Scotland of Asthal moved Amendment No. 140ZBE:

    Page 45, line 40, at end insert ", or

( ) a person's power to assign a right to the scheme manager established under section 212 of the Financial Services and Markets Act 2000."

On Question, amendment agreed to.

Lord Hunt of Wirral moved Amendment No. 140ZC:

    Page 46, line 3, leave out from beginning to end of line 42 on page 47.

The noble Lord said: We now move to a very important debate on periodical payments. As I mentioned, they are much welcomed by a range of bodies, including the National Health Service Litigation Authority, the Medical Defence Union, the Medical Protection Society, the Association of British Insurers, the International Underwriting Association and various other bodies representing claimants and defendants.

That is the general welcome. The concern is that there is provision in the Bill for the structured settlement, involving a series of periodical payments, to be reviewed. That appears to be an open-ended situation. If the provision were implemented, there would be genuine concerns that the concept of reviewability would cause more litigation and endless uncertainty. I know that many people involved in work for and on behalf of people with disability believe that that could put claimants under constant scrutiny and that there would be financial instability for defendants, whether they were government departments, the National Health Service or insurers and re-insurers and their policy holders. There is a belief that it could be a fatal flaw.

One of the points made by the Minister that received a warm welcome was that she foresaw the widespread use of periodical payments. I agree that lump sums are unsatisfactory. To some extent, they place huge pressure on the people least able to cope. The Minister added that she did not want the reviewability provisions to jeopardise the new concept. I could not agree more. If the Bill is to allow reviewability in the way presently outlined, some provision must be inserted to restrict its use. The provision for review could pursue the adversarial system for the rest of a claimant's life and impose undue burdens on defendants. In certain cases, insurers might feel that a programme of surveillance was justified, to make sure that the claimant used the funds appropriately.

Several other issues arise from this group of amendments. I realise that it is not a matter for the Minister, but I must point out that seven amendments in my name have been grouped. I know that we are anxious to make progress on the Bill, but we will need

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time on Report to go into the matters in further detail. I want to hear what the Minister has to say about the amendments before deciding which issues to take forward in a wider debate.

Amendment No. 140ZC would leave out the provision for reviewability. Amendment No. 140C would lay it down clearly that, for reviewability to be allowed, it would have to be envisaged in the original court order that that variation would take place at some stage. The amendment would insert the following words:

    "provided that the original court order for periodical payments expressly permits a party to apply to a court for variation in those circumstances".

Amendment No. 141ZA is in the name of the noble Lord, Lord Goodhart, but I have tabled Amendment No. 141ZB, which is a similar amendment. It is a rather lengthy provision, but it would allow variation only if there had been serious deterioration or a substantial improvement. The change would have to be of some magnitude for variation even to kick in at any stage. I shall come back to Amendment No. 141A.

Amendment No. 141AA would delete the provision whereby the Lord Chancellor could take steps, even if those steps would be better taken by the civil justice rules committee. Amendment No. 141AB would omit lines 27 and 28 from page 46—the Henry VIII provision—which would leave out the opportunity for an order to be brought forward in any way that would amend the enactment. There is another amendment that would delete the words "or amend". Subsection (4) reads:

    "An order under this section may apply (with or without modification) or amend an enactment about provisional further damages".

That would create a tremendous uncertainty because it allows anything to be enacted.

Amendment No. 141C seeks to ensure widespread consultation. I do not want to descend into a debate on whether the wording should be "may" or "shall", but I hope that the Minister realises the imperative of consultation. Amendment No. 141D would leave out the opportunity for the Lord Chancellor to consult with,

    "such persons as he thinks appropriate",

but to consult,

    "as widely as is reasonable in the circumstances".

Perhaps that gives the noble Baroness an opportunity to comment on the extent of the consultation envisaged.

Amendment No. 141E is an important amendment which seeks to ensure that these provisions are not retrospective. Before dealing with Amendments Nos. 141EA and 148A, I shall pause to spend a moment considering retrospection.

The effect of uncertainty cannot be underestimated. Looking back over recent years, there have been many examples of the stockpiling of claims that are awaiting decisions on levels of damages, multipliers, interest rates and now costs. There are also many examples of the backdating of increases in damages and costs. Therefore, there are real concerns that the provision

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for possible retrospective effect would create a serious problem for all those involved in structured settlements.

To give an example: at the moment there are a number of structured settlements being entered into. That is being encouraged. They are being entered into with the consent of the parties. Will they be entered into when the parties to them realise that now these provisions could be retrospective? The structured settlement into which they are entering could be changed at some stage and reviewability imposed on an already existing agreement that does not allow for it. On the face of the Bill that would be possible. Any comments from the Minister would be much appreciated. Otherwise, I fear that we may see a sudden full stop to the evolution of structured settlements.

That demonstrates the dangers of variation. Although I spoke about the need to restrict the provision, I still return to the fact that most people to whom I have spoken outside this House regard the possibility of variation as a very serious flaw—perhaps even a fundamental flaw—in the development of structured settlements. It is a serious worry.

It is a worry not only to insurers, reinsurers and claimants, but I know that it is a particular worry to the National Health Service. I recall a very effective speech today made by the noble Baroness, Lady Finlay of Llandaff. She pointed out that the provision now for the National health Service has been increased so that the anticipated claims for clinical negligence now stand at 5.25 billion. That is an appalling figure. Of course, it takes into account the likelihood of settlement of all claims as determined by actuaries. But in 12 months the total liability has increased by 850 million.

One reason why it has increased so substantially is that there have been a number of retrospective changes to the law which have resulted in damages awards being revisited and increased substantially. As the noble Baroness pointed out, the total of 5.25 billion is not to be paid out in any one year. The actual sum paid out during the 2001–02 financial year amounted to 446 million. But that, in itself, was 31 million more than the amount paid in 2000–01.

Aside from the NHS Litigation Authority, which has made its views very clear, the two main organisations here are the Medical Defence Union and the Medical Protection Society. The MDU has made a strong case against reviewability which includes some of the points I have already made: lack of finality and certainty; difficulty in defining the circumstances that might give rise to review, in particular for the defendant; causation—to which I shall return in a moment; costs; the wishes of the parties and retrospective costs.

Causation is an interesting point. If a structured settlement is reached, but is open to review, in many medical negligence cases or cases involving allegations of medical negligence, it will be necessary to determine the extent to which a change in circumstances is related

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to the negligent act rather than, for example, the effects of an illness, old age or another reason unrelated to the original negligence. That would require revisiting the whole problem. I can well understand why the Medical Defence Union is so concerned about this aspect.

The Medical Protection Society has also demonstrated a point made by a whole range of defendants; namely, that the society needs to be able to close its books, as do insurers and reinsurers. Reviewability will create a continuing uncertain liability that would be extremely difficult to manage. For example, the bodies would need to increase their reserves to meet the possibility of an order for increased payments demanded, say, 10, 20, 30 or even 40 years after the initial settlement. Furthermore, the MPS has pointed out that, as a mutual organisation, it collects from its members the subscriptions needed to meet expected liabilities. The introduction of reviewable settlements introduces a huge degree of uncertainty about those future liabilities.

In many cases of clinical negligence a claim that reaches court may well relate to what had happened years earlier. However, the MPS provides indemnity on an occurrence basis; that is, provided that the doctor was in MPS membership at the time of the incident giving rise to the claim, he or she can apply for assistance even if they ceased to be a member long before the claim is made. So the introduction of rules applying to new claims is retrospective from the society's point of view because they apply to past subscription years. The society also makes the point that I have already put forward concerning claimants being spied on.

I shall end on the most serious point of all. Reviewability may inhibit rehabilitation. I believe that there is now a widespread consensus that what is most important in such claims is to ensure that, where appropriate, everyone's efforts concentrate on helping the individual to secure an early and prompt return to work or, in other circumstances, to an early and prompt return to the community. Later we shall address the question of future medical care, but surely the emphasis in all these structured settlements—we wish them well because a system of periodical payments is far better than the old lump sum damages system—should be that the interests of the claimant, the victim, are paramount.

Lastly, as I mentioned earlier, those involved with organisations promoting disability rights feel strongly that in all this, the central focus must be placed on getting an individual back into the work and back into the community. They fear that reviewability may well inhibit the process. I beg to move.

6 p.m.

Lord Goodhart: I shall speak to Amendments Nos. 141ZA, 141A and 141B in this group. This is part of a very important group of amendments. Clause 92 is probably the most controversial clause outside the provisions relating to the administration of the magistrates' courts. It certainly caused great concern to the insurance bodies such as the Association of British Insurers and the Medical Protection Society.

27 Mar 2003 : Column 1001

The right to re-open a claim for damages in very limited circumstances has existed for several years by virtue of Section 32A of the Supreme Court Act 1991, which was introduced by a later amendment. Basically, that provides that the original damages may be awarded on a provisional basis in very limited circumstances. Amendment No. 141ZA brings the restrictions on claiming provisional damages into the definition of the circumstances in which it will be possible to re-open an award which has taken the form of periodical payments.

What has to be shown before an order can be made is that in the original case it was proved or admitted that there was a chance at some definite or indefinite time in the future that the injured person would develop, as a result of the act or omission which gave rise to the cause of action, some serious disease or suffer some serious deterioration in his or her physical or mental condition and the court assessed the provisional damages on the assumption that the injured person would not develop the disease or suffer deterioration in his or her condition. That simply transposes those restrictions into periodical payments.

A right to re-open a case in those limited circumstances, whether it be provisional damages or periodical payments, seems justifiable. There are clearly cases where a condition may develop and there may be a serious deterioration in the condition, but it is simply impossible at the time of the hearing to determine. In the past, before it was possible to claim provisional damages, it led to the case being delayed as long as possible so it was possible to ascertain as accurately as may be done, whether the condition was likely to develop or not. Introducing provisional damages has made it unnecessary to delay the case in those circumstances.

There are cases where the damages cannot be easily assessed until a future date when it becomes clearer whether a condition will develop. If the court was forced to come to a final view at the original trial it might award a great deal too much in damages or a great deal too little. I entirely accept that in such circumstances a power of variation is needed both as regards provisional damages and periodical payments. I also believe that these are rare circumstances. I understand that few orders have been made for provisional damages.

Therefore, I agree with most, but not all, of what the noble Lord, Lord Hunt of Wirral, said. The issue on which I disagree is retrospectivity. From what I have said it is obvious that I do not agree that there should be no power of variation, but it should be at a limited level on the basis of the provisional damages limitation.

Amendment No. 141ZA would restrict variation to cases where the court, when making the original order, has expressly allowed the claimant to come back for further damages at a later date.

There are a number of reasons for this. First, if there were to be a general right to come back for damages, it would be likely to add substantially to the cost of insurance. It would also mean, for example, that

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medical records relating to any case where the claimant had been awarded damages—or periodical payments—would have to be kept for decades just in case further actions arose.

Despite that, if I thought that, in general, it would be for the benefit of claimants if they were allowed to reopen claims at a later date because of some change in their condition, I would support a general right. However, there is clear evidence—referred to by the noble Baroness, Lady Finlay of Llandaff—to show that a general right to reopen a claim for damages would not be in the interests of most claimants because of the importance of closure and the importance of the claimant, having received damages, being able to get on with his or her life.

Under proposed new Section 2B(1) of the Damages Act the Lord Chancellor may allow a variation of an order to be made in any circumstances that he specifies. As I understand it, the Government intend, at any rate initially, to restrict the circumstances in which an order for periodical payments could be reopened. But that would leave the power, which could be exercised by some future Lord Chancellor, to give a general right to reopen cases. I believe that that is inappropriate. Certainty is of great importance here. It is plainly undesirable that insurers should be faced with the risk that, at some time in the future, the Lord Chancellor might return to this legislation and widen the circumstances in which a variation could be made. I believe that we should place the same limits on the variation of periodical payments as apply in primary legislation to the variation of the order for provisional damages.

I turn to Amendment No. 141A. It is largely consequential on Amendment No. 141ZA. It seeks to remove paragraph (b) in proposed new Section 2B(3) of the Damages Act 1996. It would remove the provision under new Section 2B(3) that an order may make provision,

    "which has effect irrespective of the conditions or other terms of the court's order or of the agreement".

That wording is extremely wide. It is highly undesirable to allow existing orders or agreements to be overridden. That should not be allowed to happen. It is not clear, frankly, what is the purpose of new Section 2B(3)(b). It also appears to be in some conflict with the provision in new Section 2B(2)(b), which allows the courts to reopen a structured settlement only if the agreement for settlement expressly allows that to happen. Will the Minister explain in what circumstances the provision in new Section 2B(3)(b) can be used. It may have some legitimate purpose; but, if so, I believe that it could be contained in a narrower set of words.

I have also tabled Amendment No. 141B in this group. Its effect would be to remove the words "or amend" from subsection (4) of proposed new Section 2B. The noble Lord, Lord Hunt, referred to that. The subsection states:

    "An order under this section may apply (with or without modification) or amend an enactment about provisional or further damages".

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While it may be appropriate to allow consequential amendments, the power appears to go a long way beyond consequential amendments. It could be used to alter the existing primary legislation about provisional damages so as to extend the circumstances in which provisional damages could be awarded. That is a matter we have not discussed and will not discuss. It is highly undesirable that it should be possible to introduce the power by secondary legislation even if, as is provided by subsection (6), it has to be by the affirmative resolution procedure.

Finally, I refer briefly to the issue of retrospectivity. I am unable to agree with the noble Lord, Lord Hunt, on this part of his argument. There is already a power to award provisional damages. Where there is a power to award provisional damages by definition there must be a power to reopen that award; otherwise the damages would not be provisional. I cannot understand any real difference of principle which would require us to refuse to allow an order for periodical payments to be varied in circumstances where, if the order had been made for provisional damages, it could have been varied. I do not believe that the matter would have the serious consequences suggested by the noble Lord, Lord Hunt.

Subject to that, I entirely agree with the noble Lord's views on the issue. Therefore, I am happy to support in general what he said.

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