HC Deb 07 May 1971 vol 816 cc1868-78

Lords Amendment: No. 1, in page 1, line 8, leave out from "Where" to "pronounces" in line 9 and insert "a court".

1.48 p.m.

Mr. Ian MacArthur (Perth and East Perthshire)

I beg to move, That this House doth agree with the Lords in the said Amendment.

Mr. Deputy Speaker

It would, I think, be convenient to take at the same time Amendment No. 2, in page 1, line 16, leave out from "Where" to "court" in line 17 and insert "a", and Amendment No. 4, in line 21, leave out "that subsection" and insert "subsection (1) of this section".

Mr. MacArthur

I am grateful to you, Mr. Deputy Speaker, because Amendments Nos. 2 and 4 are consequential on Amendment No. 1.

None of the Amendments on the Paper alters the principle of the Bill as it was considered on Second Reading on 29th January. I mention that because these Lords Amendments look substantial. Indeed, in some ways they are substantial, but they do not alter the principle of the Bill. Their purpose is to strengthen the Bill by removing any doubt about its interpretation in the courts.

There has been some uncertainty about the precise nature of the law in this matter in Scotland. It is all the more important, if there is any doubt whatever about interpretation of the Bill, that that doubt should be removed.

These Amendments were moved on Report of the Bill in another place a few days ago by the noble Lord, Lord Balerno, and I should like to say how very grateful I am, as are the hon. Gentlemen who have sponsored the Bill with me, for the very great support which Lord Balerno gave to the Bill in another place where he so kindly acted as its sponsor. It is a happy chance that my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) is on the Government Front Bench today, and I am grateful to him for continuing an interest in this small but important Bill.

During the passage of the Bill through another place the noble and learned lord Lord Wheatley moved certain Amendments in Committee. All of these were designed, as he made very clear, not to weaken in any way or to change the principle of the Bill, but to underline it by removing doubt from certain points which he, in his great wisdom as a judge, felt might cause some misinterpretation of the intention of the Bill. The noble and learned Lord withdrew his Amendments on the understanding that these matters would be considered, and this Lords Amendment, and those which follow, were moved earlier this week by Lord Balerno in response to that understanding.

This first Lords Amendment is to remove a doubt which has been expressed as to whether the Bill applies to damages for breach of contract as well as to damages in actions of reparation. I am advised that it is the generally accepted view that the 1958 Act, the previous Act affecting interest on damages in Scotland, and which uses the words "in any action for damages", does apply to both these categories of action. That has never been challenged in the courts. On Second Reading, however, I referred to the case of Mcrae v. Reed and Mallik Ltd. in 1961, which has given rise to some questions about the interpretation of the 1958 Act. There are certain dicta in that case which might be raised as ques- tioning the applicability of the 1958 Act to actions arising from breach of contract. It seems to me that it might be said that the term "action for damages" could perhaps mean an action of reparation, and although this is a doubtful proposition, I submit that it is advisable to remove the reference to make it quite clear that the 1958 Act, as it is to be amended, applies to any action in which the court awards a sum of money as damages.

So while there could be some argument about whether or not the present state of the law needs amending, it seems to me clear from the most experienced sources that some doubt has been expressed about the state of the Bill, and I commend this Lords Amendment because it removes all shadow of doubt.

The Under-Secretary of State for Home Affairs and Agriculture, Scottish Office (Mr. Alick Buchanan-Smith)

I should like to congratulate my hon. Friend the Member for Perth and East Perthshire (Mr. MacArthur) on the way he has presented this Lords Amendment, and, since this is the first time I have come in direct contact with the Bill, I should like to congratulate him upon his success in carrying it as far as this stage.

As to this Lords Amendment, I would confirm what my hon. Friend said, that doubts have been expressed about whether the Bill applies to damages for breach of contract as well as to damages in actions of reparation, and, as he explained to the House, the Lords Amendment resolves these doubts. It was intended, as he said, that this Bill should extend to all actions in which the courts award a sum of money as damages. This Lords Amendment, and others which are consequential upon it, will ensure that the intention of the Bill is carried into effect. I am sure the House will agree that avoidance of uncertainty is a commendable object, and on behalf of the Government, I am glad to say that we support this version.

Question put and agreed to.

Subsequent Lords Amendment agreed to.

Lords Amendment: No. 3, in page 1, line 19, after "damages" insert "or solatium".

Mr. MacArthur

I beg to move, That this House doth agree with the Lords in the said Amendment.

Mr. Deputy Speaker (Miss Harvie Anderson)

It would be convenient to take at the same time Lords Amendments No. 5, in page 1, line 23, after "damages" insert "or solatium";

No. 6, in line 24, after "damages" insert "and on that solatium";

No. 7, in page 1, line 25, leave out "them" and insert "each";

No. 9, in page 2, line 2, leave out "of those damages" and insert "thereof";

No. 11, in page 2, line 5, leave out ""damages" includes solatium, and".

Mr. MacArthur

I am very much obliged to you, Mr. Speaker, because all of these Lords Amendments are consequential upon No. 3.

I explained to the House a moment ago that the noble Lord, Lord Wheatley raised in Committee on the Bill in another place a number of matters, and these Lords Amendments are to give effect to the undertaking which was given to him to consider whether or not the Bill, as it was when it left this House, might have entitled the courts to restrict unduly the elements of damages on which interest from a date before decree should be awarded, by enabling the court to invoke principles which are now inappropriate in the context of the extended power to award interest. In particular, the noble and learned Lord was concerned that the court might continue to hold it inappropriate to award interest from a date before decree on solatium on the grounds stated in the case of Mcrae v. Reed and Mallik Ltd. to which I referred a moment ago, that solatium is not a replacement for monetary loss Or money wrongfully withheld.

It might be for the general convenience of the House if I remind English Members that solatium means compensation for damaged feelings. Perhaps I use far too much the words of a layman, but I offer that explanation of what the word means. It is, in effect, compensation for pain and suffering.

These Lords Amendments are designed to ensure that, unless there are reasons special to the case why no award of interest should be given, the court will be obliged, by the new section to be inserted in the 1958 Act, to award interest from a date prior to the date of decree not only on part at least of the damages for personal injuries representing monetary loss, but also on part at least of the element for damages which consists of solatium for personal injury. That, I submit, is exactly in line with the intent of the House on Second Reading of the Bill. The group of Amendments reinforces the principle of the Bill and removes any question of doubt in interpretation.

Mr. Buchanan-Smith

We have looked closely at the arguments put forward by Lord Wheatley in the other place and we support this Amendment. The new wording will help a good deal because it puts the matter beyond doubt. To this extent it is worthy of the support of the House.

Question put and agreed to.

Subsequent Lords Amendments agreed to.

Lords Amendment: No. 8, in page 2, line 1, leave out "special reasons" and insert "reasons special to the case"

2.0 p.m.

Mr. MacArthur

I beg to move, That this House doth agree with the Lords in the said Amendment.

This Amendment meets a point raised by the noble and learned Lord, Lord Wheatley in Committee in the other place. It makes it clear that special reasons for not awarding interest under the Act cannot be reasons of law, which might enable the court to circumvent the obligation to award interest from a date before decree on at least part of both damages and solatium, but must be reasons special to the facts of the individual case, such as the fact that there had been undue delay or some abuse of process making it unreasonable that the particular pursuer should receive an award of interest. This Amendment should be particularly welcome to the House since this point was touched upon by one of my hon. Friends in Committee. I commend the Amendment to the House.

Mr. Buchanan-Smith

This Amendment again helps to clarify the matter, and I commend it to the House.

Question put and agreed to.

Lords Amendment: No. 10, in line 2, at end insert: "(1B) For the avoidance of doubt, it is hereby declared that where, in any action in which it is competent for the court to award interest under this Act, a tender is made in the course of the action, the tender shall, unless otherwise stated therein, be in full satisfaction of any claim to interest thereunder by any person in whose favour the tender is made; and in considering in any such action whether an award is equal to or greater than an amount tendered in the action, the court shall take account of the amount of any interest awarded under this Act, or such part of that interest as the court considers appropriate". () In section 2 of the said Act of 1958 there shall be inserted at the end the words "having regard to the provisions of the Interest on Damages (Scotland) Acts 1958 and 1971."

Mr. MacArthur

I beg to move, That this House doth agree with the Lords in the said Amendment.

All these Amendments are for the removal of doubt and reinforce the principle of the Bill. This Amendment is designed to provide clear guidance in the event of a conceivable turn of events in the course of an action. This point was again raised in Committee in another place and the question then asked was whether the Bill, as it left the House of Commons, would enable the pursuer to obtain the benefit of interest under the Bill in the case where the defender tendered a sum of money in satisfaction of the pursuer's claim in the course of the action.

In the earlier form of the Bill there was some doubt as to what would arise if a case were to be settled during the course of the action. It was suggested by Lord Wheatley that, since the tender would not state whether it included a sum representing interest, and since the court would not have heard evidence on the elements of damages and might be faced with conflicting averments by the parties on the amount of the damages, the court might refuse to award interest on the amount of the tender on the ground that there were special reasons why no interest should be awarded.

It was proposed in another place that it should be made clear that the court may award interest on the sum contained in a tender. I am advised, however, that this would raise certain difficulties. I shall not weary the House by setting out the whole of the details, but it is important that the argument should be clearly advanced. In particular, the court might still hold that, at least in a large proportion of cases involving tenders, it was nevertheless impracticable to award interest, notwithstanding the power to do so. Moreover, it would in any event be very difficult for the court to make a fair assessment of the interest which should be awarded in such a case, in view of the absence of evidence.

The approach embodied in the Amendment is somewhat different, and I am advised that it would avoid these difficulties. First, it makes it clear that a tender, unless otherwise stated, is in full satisfaction not only of the claim for damages, but also of any claim for interest under the Act. This leaves it to the parties to decide, in the light of their knowledge of the circumstances and it is they who have the best knowledge of the circumstances—whether the tender is adequate to cover both of these elements, rather than giving responsibility to the court, which does not have the necessary information because the evidence will not have been led in court.

Secondly, it is an essential feature of the procedure by tender that the ultimate incentive for the defender to offer by tender an amount adequate to meet the pursuer's claim in the action is that, if he does not do so and the pursuer proceeds to trial and obtains an award greater than the amount of the tender, the defender is normally liable for all the expenses of the action. Conversely, if the pursuer in the award which he obtains after trial does not "beat the tender", he, despite having been successful in the action, will normally be liable for all the expenses of the action subsequent to the date of the tender which, had he accepted it, would have given him an award greater than that which he obtained after trial.

Mr. T. H. H. Skeet (Bedford)

That is the result of paying money into court. If the appropriate sum is paid in, costs will be saved after that date.

Mr. MacArthur

Possibly so, but if my hon. Friend is patient I am coming to a specific example to explain the situation.

The second part of the subsection, therefore, makes it clear that in considering the question whether the pursuer has "beaten the tender" the court shall take account of the amount of any interest awarded under the Act or an appropriate part of that interest.

I will give an example to make the situation clear. Let us imagine a defender had tendered £1,000 immediately before the trial and the pursuer recovered at the trial £900, but obtained a decree for £200 of interest in addition the court would be entitled to hold that he had "beaten the tender", taking his award of damages and interest together. We must be fair to both the pursuer and to the defender and I think the Amendment achieves that aim.

The reference to taking account of an appropriate part of the interest is necessary where, for instance, the tender was made at the beginning of the action, say, two years before the trial. In that event, it would be unfair to the defender if account were taken of all the interest in deciding whether the tender had been beaten since most of the interest was for that period of two years, and, at the time when the tender was made, it was in effect greater than the amount eventually awarded at the trial. It can be argued that this merely restates the present law. However, I submit that doubt might exist and therefore it is right, in the interests of both parties, that this Amendment should be accepted to make the situation clear.

There is a second part of the Amendment with which I will try to deal briefly. This is in relation to Section 2 of the 1958 Act, which ensures that in an appeal to the Court of Session from an award in an action for damages heard by a sheriff and jury, the court may review the question of interest on the damages. Section 2 provides that upon any such appeal the court may make such order as to it seems just". The noble and learned Lord in another place criticised this wording on the ground that it might suggest that the court had a wider discretion in determining the interest in such an appeal than in a case going before it from the Court of Session. This is not the intention. The Amendment makes it clear that in determining what seems just, the court must have regard to the provisions of the 1958 Act and of the present Bill.

Mr. Buchanan-Smith

My hon. Friend has explained clearly the effect of the Amendment. It will appeal to the logicality of hon. Members that we should know exactly what these Amendments do so as to avoid any doubt when they come to be interpreted by the courts.

The problem of tenders is an important one and could give rise to difficulty if it is not dealt with properly. There are alternative methods of dealing with the problem. It can be dealt with by requiring the court to add interest to any award of damages where the decree follows minutes of tender and acceptance. The second alternative is to specify that the tender shall be deemed to include interest. That places on the litigants the onus of arriving at a fair and reasonable figure.

The latter course is preferred. Whilst the first alternative removes any uncertainty there might be about the respective rights of the parties and the powers of the court, it would leave the courts with the difficult task of assessing or calculating an appropriate figure for interest on the basis of possibly inadequate and conflicting evidence. It was precisely this difficulty to which attention was drawn in another place. The Amendment disposes of the difficulty by securing that, in effect, the defender, when making a tender, shall include interest therein and that the pursuer, in deciding whether or not to accept that tender, should make his calculations on the basis that the sum in the tender is offered in full satisfaction of his claim, including any interest thereon. Thus, where the tender is accepted, the court will not be required to make any further award in respect of interest. Where it is refused, the subsequent comparison between the tender and the final award, which has to be made in connection with any award of expenses by the court, should not present any difficulty. I support the additional Clause and commend it to the House.

The second part of the Amendment was clearly proposed ex abundanti cautela, which I am told is an important phrase meaning "from an abundance of caution", and this might make it slightly easier to understand.

Mr. Kenneth Lewis

Is it Gaelic?

Mr. Buchanan-Smith

I am not sure whether Gaelic is derived from Latin. My hon. Friend the Member for Perth and East Perthshire (Mr. MacArthur), who has great knowledge of these matters will be able to advise, the House.

Mr. MacArthur

My hon. Friend, flattering as always, is provoking me to make a long speech, which I will not do. The answer is "No".

Mr. Buchanan-Smith

I wished to give to my hon. Friend the opportunity to show to the House his knowledge of these matters. My hon. Friend has dealt with the Bill in a commendable way. I fear that my last remarks may have added

(1) A person shall not sell, by retail or otherwise, cigarettes packed in a packet containing one hundred cigarettes or less unless the packet bears the statement—
'Warning by H.M. Government Smoking can damage your health'
5 and the statement satisfies such requirements as are prescribed with respect to its place on the packet, size and colour and with respect to such other matters, if any, as are prescribed.
(2) A person shall not, except in prescribed cases, publish in a prescribed manner an advertisement for cigarettes unless the advertisement includes the statement—
10 'Every packet carries a Government health warning'
and the statement satisfies such requirements as are prescribed with respect to its place in the layout of the advertisement, size and colour and with respect to such other matters, if any, as are prescribed.
15 (3) Regulations may provide that subsection (1) or subsection (2) of this section shall 15 have effect with the substitution for the statement specified in that subsection of such other statement as may be prescribed.
20 (4) A person who contravenes the provisions of subsection (1) or subsection (2) of this section shall be guilty of an offence and liable on summary conviction or conviction on indictment to a fine which in the case of a summary conviction shall not exceed £400; but 20 regulations may provide that a person who publishes an advertisement in the course of his activities in a prescribed capacity shall not by virtue of this subsection be guilty of an offence in consequence of the publication.—[Sir G. Nabarro.]

Question again proposed.

2.15 p.m.

Mr. T. H. H. Skeet (Bedford)

On the last occasion we discussed a number of aspects of the Bill. It must be fairly clear to my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) that the British Medical Journal vindicates his claim for legislation—

Sir G. Nabarro (Worcestershire, South)

This is nothing new. I have said over and over again, ad nauseam, that the British Medical Association backed every claim I made about the Bill.

Mr. Skeet

I hope my hon. Friend will not get too excited. I merely wanted to

more doubt than enlightenment. I commend the Amendment to the House.

Question put and agreed to.

Remaining Lords Amendment agreed to.

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