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Baroness Scotland of Asthal: My Lords, I thank the noble Lord, Lord Hunt. He is right when he says that there has been a genuine attempt by all involved in the process to make periodic payments a workable alternative. He is also right to highlight the distasteful, and sometimes painful, assessment that must be made of how long a claimant might reasonably be expected to live. That does not come easily at all. I agree wholeheartedly with him that periodical payments are a consummation devoutly to be wished, and for which many people in this field have longed for a long time.

The amendment would remove Section 2B to prevent any variation of periodical payments. I understand the basis on which the noble Lord tabled it. We recognise that, in the majority of cases, a non-variable award is likely to be appropriate. Many foreseeable changes can be built into an annuity, and some are already. But, in cases where there is real difficulty in assessing the likelihood of a claimant developing a particular medical condition or overcoming a particular medical disability when the periodical payments order is made, the present method of compensation is unsatisfactory.

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Defendants and insurers usually provide for those eventualities by way of contingency payments. However, those payments often compensate for the chance that a future need may arise, rather than the need itself. If, for example, there is a 20 per cent chance of serious loss but the need never arises, the defendant or insurer would have made a payment unnecessarily. If the need arises, the claimant will be seriously under-compensated. In such cases, we believe that a variable order can provide the best solution. Defendants and insurers will not have to make payments for events that do not occur, but, if they do, claimants will receive the full compensation to which they are entitled.

During our debates on this clause, we have all agreed that rehabilitation is of central importance. We believe that the provisions for variation may help to support a programme of rehabilitation. Some specific improvements in the claimant's medical condition could result in a need, for example, to aid mobility. In those instances, our proposals for variation will be able to improve claimants' prospects of rehabilitation by providing the additional support needed to sustain improvement. In other circumstances, improvements may reduce the level of payments needed. We believe that the power to allow scope for variation in defined circumstances provides the fairest system of compensation for both claimants and defendants.

The noble Lord rightly asked about the timetable. I know that it is a matter of anxiety. I can give only my best estimate—I do not say "guesstimate". We will consult on the regulatory impact assessment of the proposed variation order in the autumn. We do not expect to implement the new powers before April 2004. We hope to have drafts of the order and the rules available at about the same time in the autumn. I do not know the precise timetable of when the Bill will go to another place and when it will come back, but we hope that the timing will be relatively robust.

We are currently consulting stakeholders on the content of the rules. Noble Lords will know that the stakeholders have been of great importance in their contributions. They have been able to help us with the practical consequences of how the system will work. We, too, very much want the periodical payment arrangements to work in a way that will benefit claimants overall.

I hope that that helps to clarify issues for the noble Lord. I understand why there is anxiety about the matter. I concur with the noble Lord that the last thing we wish to create is a system of satellite litigation, which would not be to the benefit of any of the parties, and that will involve the parties engaged in the process in expenditure that they could better use to do other things. I therefore invite the noble Lord to withdraw the amendment.

6.15 p.m.

Lord Hunt of Wirral: My Lords, I am very grateful to the Minister. I recognise that the timetable is not solely in her hands, but I am grateful to her for giving a reasonable indication. For me, autumn occurs around

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September. If it were around September, that would be a very good month in which to scrutinise the drafts. Were the noble Baroness able to conjure the drafts earlier for those of us who have taken a particular interest in the Bill, we could not be more delighted. We would never hold the noble Baroness to the wording of the drafts. Therefore, even if the drafts were quite crude, it is their delivery that is important, not the precise detail. We would assist, one would hope, in ensuring that they were grammatically correct, but they do not have to be exact. I know that officials may take that as an indication that perhaps we might have them a few weeks earlier than we might otherwise have done.

I warmly applaud the Minister's reference to rehabilitation. When the Chief Medical Officer's report is published, I very much hope that it will be right at the heart of the process. As the noble Lord, Lord Goodhart, other noble Lords and I know well, there is an inherent injustice in the damages system. A range of people who are just as seriously injured are not entitled to any additional compensation. The rehabilitation of all those who are injured or suffer disease must be at the heart of the National Health Service. Where appropriate, getting them back to work and into the community must be at the heart of any process. I look forward to the publication of the Chief Medical Officer's report, when, no doubt, we will further discuss the matter. In the mean time, I seek leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Goodhart moved Amendment No. 151:


    Page 46, line 19, at end insert—


"( ) But no order may be made under subsection (1) authorising an increase of periodical payments unless in the proceedings in which the payments were originally ordered—
(a) it was proved or admitted that there was a chance that at some definite or indefinite time in the future the injured person would, as result of the act or omission which gave rise to the case of action, develop some serious disease or suffer some serious deterioration in his physical or mental condition; and
(b) the court assessed the periodical payments on the assumption that the injured person would not develop the disease or suffer the deterioration in his condition."

The noble Lord said: My Lords, in moving the amendment, I shall speak also to Amendment No. 156. The amendments raise issues that, in many ways, overlap with those raised by the amendment that we have just debated. For some reason, they were de-grouped. I am not entirely sure why.

We accept the principle that there should be a power to vary an order for periodical payments after payment has begun. But Amendment No. 151 restricts that power by allowing variation only on the same basis as that which applies to the variation of lump-sum damages orders, which can be made under Section 32A of the Supreme Court Act 1981.

The closure of a damages claim without undue delay is very important. It is important for the defendants and their insurers. All professionals make mistakes; I certainly have done. The problem applies particularly

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to doctors, as their errors may lead to the severe physical disability of a patient; therefore, they fall within the category where variations are most likely to be made. Obviously, doctors who have made mistakes should be liable to pay damages. Once the case has been decided, its reopening should not hang over a defendant's head for life, without very strong reason. There are practical drawbacks, such as the need to keep medical records for the life of the claimant. Above all, as the noble Baroness, Lady Finlay of Llandaff, said in Committee, closure is plainly in the interests of claimants. It is of enormous psychological importance for claimants to put the trauma of an accident behind them and to get on with their lives.

Having said that, I recognise that there are exceptional cases. In some cases, it is extremely difficult to make a prognosis at the time of the court hearing; for example, where, if damages are awarded on the basis of the claimant's present condition, they may be too small, but, if it is assumed that the condition will worsen, and then it does not, the claimant could be overcompensated. In such exceptional cases, the best course may be to award damages on the basis of the claimant's present condition but to give leave to return to court for an increase.

Lord Clinton-Davis: My Lords, is there any reason why something of that kind should not be dealt with in regulations, rather than in the statute?

Lord Goodhart: My Lords, there is a case for dealing with it in regulations. However, in this case, certainty is of considerable importance with regard to the financial consequences, particularly from the point of view of insurance cover and the role of professional groups, such as the Medical Protection Society.

Lord Clinton-Davis: My Lords, would that not be equally the case if regulations, rather than the original statute, applied?

Lord Goodhart: My Lords, I accept that there would be some value in putting the matter into regulation. However, in this case, the requirement for certainty is sufficiently great and the need to give assurances to the people who are financially involved sufficiently important to make it desirable to have it in primary legislation and not in regulations, which can be changed at short notice and with relatively little debate.

To get the right balance, we should select a formula and give parties confidence that it will not be altered without good reason. The formula that now applies to provisional damages is correct and should be retained for periodical payments. The Bill simply allows an order for periodical payments to be varied in circumstances specified by the Lord Chancellor, although the fact that the affirmative resolution procedure will be required is welcome.

The intentions of the present Lord Chancellor, as outlined by the noble Baroness, are reasonable, but they are not binding on a future Lord Chancellor. Therefore, Amendment No. 151 would apply to the variation of periodical payments the same formula

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that applies to provisional damages and would exclude the power to vary the formula otherwise than by primary legislation.

Amendment No. 156 is the corollary of that. New Section 2B(4) of the Damages Act 1996 will allow the Lord Chancellor to make an order varying existing legislation on provisional damages. That would enable the power to award provisional damages to be widened. In the absence of any evidence that the system is working badly, it would be inappropriate to give a power to alter it by statutory instrument. I beg to move.


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