Clause 8

HC Deb 19 October 1982 vol 29 cc283-92

SERVICES RENDERED TO INJURED PERSON

Mr. Donald Dewar (Glasgow, Garscadden)

I beg to move amendment No. 11, in page 8, line 14, leave out from 'then' to 'the' in line 15.

Mr. Deputy Speaker (Mr. Bernard Weatherill)

With this we are to take the following amendments:

No. 8, in page 8, line 14, after 'agreed', insert 'in the knowledge that an action for damages has been raised or is in contemplation.' No. 12 in page 8, line 25, at end add 'and no claim in delict in respect of such services shall be made by the injured person without the written consent of the relative'. No. 13, in clause 10, page 9, line 12, after 'payable', insert 'for loss of earnings'.

No. 14, in page 10, line 7, leave out clause 11.

Mr. Dewar

It is appropriate that we should take these amendments together, as they all deal roughly with the same area of law, although they are not especially closely interrelated. I should therefore like to sub-group them for the purpose of my remarks, beginning with amendments Nos. 11, 12 and 8, in which I rather generously offer alternative solutions to a real problem that was canvassed at some length in Committee, as reported at columns 12 to 20 of the Official Report.

I make no more than a passing reference to the fact that it is difficult to give proper consideration to these matters in Scottish terms when there is a Scottish insert, if that is the proper way to describe it, in an English law reform measure. Obviously, the number of Scottish Members who served on the Committee was limited—the cynic may say that they are rather limited in the Chamber tonight—but we are dealing with matters of some moment and we must detain the House for a few minutes to discuss them.

This is very much an argument about the technicalities of how to achieve a common goal. Clause 8 produces a new head of claim, whereby an injured person may sue for the services rendered to him by a relative. The bill provides that the action may proceed for that head of claim unless the relative had expressly agreed that no payment should be made for the services. There has been a lengthy argument about the meaning of the wording in that provision and whether it is a practicable form of words to have in a statute. The question that worries me is what an express agreement means. The Solicitor-General may say that the courts must consider the facts and make their decisions. However, we agree that we do not want too many inquiries where a relative is put into the witness box to extract from him an admission that when the services were rendered he had no thought of pecuniary compensation, but had provided the services out of love, respect, devotion or family duty.

The present form of words will raise the possibility that someone will undertake services for an injured person with the explicit understanding that no payment will be made. People often say "You are injured. You will be in financial difficulties and I would not dream of taking payment." However, when it becomes clear that liability may be established against a third party, it may be proper to recover the loss su-7fered by the relative—for example, loss of earnings. It is undesirable to establish a situation in which the initial basis on which the services were given can be prayed in aid as a bar to the head of claim.

We discussed the matter briefly in Committee. The Solicitor-General dwelt on the position of a husband and wife team. He said: The wife, for example, might say in the witness box 'Yes. I have looked after m:v husband throughout his illness. I gave up my job. I did not have in the forefront of my mind any prospect that I might be remunerated for that.' That is one thing. In those circumstances a husband would still be entitled to make a claim under clause 8." —[Official Report, Standing Committee A, 6 July 1982; c. 15-16.] There is a significant difference between that position and one where the husband and wife have agreed, either in writing or by orally expressed admission in the witness box, that the wife should receive no payment for that service. The Solicitor-General thought that the court would not consider that to be an express agreement. Such difficulties may be :-emote in the case of husband and wife, because it is unlikely that anyone will know of the conversation. The wife is unlikely to admit that she rendered a service on the express agreement that she would not be paid. As the income of a husband and wife is usually pooled, such circumstances are unlikely to arise.

The second set of circumstances would be the aunt-nephew relationship, to which the Solicitor-General did not address himself in Committee. The nephew may have been involved in a serious road accident, and the aunt gives up her job to nurse him. At the beginning of the arrangement the aunt may explicitly say "Don't you worry about a thing. I should not dream of taking any of your money. You will be back on your feet in a few months and we can manage." That may raise a presumption that if, in the witness box, the aunt admitted that she had said that, the head of claim would be defeated and struck out, on the form of words to which the Solicitor-General is thirled. That would be socially unjust. That position might be cured by perjury, by the aunt denying the basis of the arrangement. We should not encourage that position by the form of words in the statute.

I wish to suggest a solution to the problem. The problem is not one that has been conceived only in my mind and no one else's. The issue is of considerable anxiety to the Law Society of Scotland. In Committee I moved an amendment which the Law Society favoured. I suggested that the ground of action should be allowed unless the court was satisfied that the relative was unwilling. I do not say that the amendment was derided by the Solicitor-General—that would be too strong—but he dismissed it on the ground that there would have to be an inquiry by the court, which had to be satisfied that the relative was unwilling. Conversely, it had also to be satisfied that the relative was willing. Inevitably, the relative would have to enter the witness box to establish the state of mind. The Solicitor-General properly said that that was an impractical solution which would bring more problems than it would solve.

I was glad to withdraw that suggestion, and I now generously offer the Solicitor-General a choice of solutions. My first choice is incorporated in amendments Nos. 11 and 12. They would remove the words unless the relative has expressly agreed that no payment should be made in respect of those services from clause 8(1). We would insert at the end of clause 8(2) the words and no claim in delict in respect of such services shall be made by the injured person without the written consent of the relative. I am attracted to that suggestion. It is not put forward in a frivolous manner. In Committee we often put forward frivolous suggestions, because Oppositions have to be seen to oppose. That hostage may be quoted to me on some future occasion. The suggestion is simple. It provides that the head of action shall be argued within the claim. Therefore, the relative concerned must give a written consent and confirm that he has seen the claim and accepts that it reasonably quantifies his loss. The only challenge could be that the consent was fraudulent, forged or that the court was being misled. If the written consent of the relative was lodged we would end the possibility of evidence, tricky cross-examination and the attempt to extract from a person an admission which was not in his interests.

There is another advantage. Written into clause 8(2) is a duty for the injured person to account to the relative for any damages recovered under the head of claim. That is a deviation from the wishes of the Law Society. That right to account dovetails very well with what I am suggesting, which is the written consent to put in the head of claim in the action for damages.

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Thirdly, this is a fair proximation of what was stated in paragraph 31 of the 1978 Scottish Law Commission report, which stated: A simpler and broader solution to the problem would seem to be called for, which at the same time adequately protected the interests of the relative. We consider that, in any proceedings, the injured person should not be able to make a competent claim under this head unless he lodges in process a statement which specifies the services and is signed by the relative. Such a formality shall not be required unless and until an action for damages is raised. The provisions of amendments Nos. 11 and 12 are broadly in line with what the Scottish Law Commission recommended. They have the advantage of ensuring that there will not be unnecessary evidence or the unpleasant formality of the relative going into the box. I hope that the Solicitor-General will look at this reasonably sympathetically. When he dealt with this matter in Committee, he said: When we consider the Scottish courts and rules of court, that issue"— that is, the issue of signed consent— will have to be discussed. But it is separate from the issues raised by the amendment." —[Official Report, Standing Committee A; 6 July 1982, c. 19.] I do not understand that. I do not think that it is separate from the issues raised by the amendment. It is a sensible way of attempting to safeguard the position as I have outlined it. I therefore hope that the Solicitor-General will look reasonably carefully at amendments Nos. 11 and 12.

If, however, they do not find favour with him, I offer the alternative of amendment No. 8. That is also a useful improvement on the form of words contained in the Bill. This is an attempt to establish that the specific agreement that no compensation shall be received by the relative should be made at a time when the relative had knowledge that there was a possibility of recovery by an action for damages in the court. In other words, it gets us away from the situation where a relative, perhaps in an excess of duty and feeling anxiously that he should be doing the selfless thing, agrees to help the injured party and says "I will not take any of your money". That excludes the possibility of that being founded upon by the defendant, although it was said and meant at the time. The person concerned might have no idea that a liability might be established and that a genuine action for damages to recover costs and losses might be proper and competent.

This is a straightforward amendment. If we insert the words in the knowledge that an action for damages has been raised or is in contemplation to make it clear that the express agreement to take nothing should be in that state of knowledge, that will simplify the situation and remove the possibility of some form of injustice resulting from a well-intentioned and useful reform in clause 8.

I offer the Solicitor-General those two possible solutions. I like the first, but I understand that there may be technical difficulties. In that case, I hope that amendment No. 8 will find favour with him.

The Solicitor-General for Scotland (Mr. Peter Fraser)

It is worth going back to the origin of the clause and the part of the proviso to which the hon. Member for Glasgow, Garscadden (Mr. Dewar) referred. Report No. 51 of the Scottish Law Commission, on which this clause is based, says in the explanatory note: To preclude any argument that the relative must be deemed to have tacitly waived any right to remuneration or repayment of his expenses, the subsection provides that the right arises unless the relative has expressly agreed that no payment should be made. I am not sure whether it will help the House if the hon. Gentleman and I swap examples of domestic dialogue in Scotland and concoct sets of circumstances in which agreement may or may not have been given. I accept that there is a need to improve the wording of the clause to clarify what is envisaged. In the circumstances, I am more attracted to amendment No. 8, which inserts the words: in the knowledge that an action for damages has been raised or is in contemplation. The hon. Gentleman cited the example of the fond aunt looking after the disabled nephew. If she said "I do not expect anything for doing this", I do not think that she would be trapped if the wording of amendment No. 8 were introduced, because such an offer would not necessarily have been made in the knowledge that an action for damages has been raised or is in contemplation". That is a more attractive and sensible arrangement than the scheme envisaged in the other two amendments.

I have looked at what the Scottish Law Commission said in its report. I do not think that it is dealing with the point that the hon. Gentleman seems to think. My broader concern about the proposals in amendments Nos. 11 and 12 relates to the written consent. I do not want to concoct elaborate examples, but it is not difficult to envisage in the aunt-nephew relationship that the aunt may have incurred considerable expense but is not in a mental state to give her written consent or, alternatively, has died.

I do not think that the hon. Gentleman thought that it was proper that the claim should not be transmissible to her estate after her death. If the suggested wording were adopted, it would effectively preclude the claim being transmissible if for one reason or another the aunt had not given her written consent before she died. The Scottish Law Commission envisaged that the written consent would occur not just when litigation was in contemplation but possibly when it had reached an advanced stage—when the head of claim had been calculated and the amount of the claim had been sorted out. I hope that by indicating to the hon. Gentleman that I am prepared to accept amendment No. 8 he will be prepared to withdraw the other two amendments. In any event he is bound to withdraw one of the two groups.

Mr. Dewar

I am quite happy to do that. I am not entirely sure that the Solicitor-General is right. The claim is made by the injured party or the injured person, not by the relative. I can see that the injured party's right under clause 8 might go if he did not have the written consent of the relative. Therefore, that might be a technical difficulty with amendments Nos. 11 and 12. As I am delighted to have achieved an improvement with amendment No. 8, I shall not stick obstinately by amendments Nos. 11 and 12. I put them up as alternatives and it would be churlish to complain when one of my propositions has found favour with the Minister.

I hope I shall not strain your patience too much, Mr. Deputy Speaker, but I did elaborately say at the beginning that we were taking the three amendments that we have dealt with plus amendments Nos. 13 and 14. I then very carefully did not say anything about amendments Nos. 13 and 14 when I made my opening remarks. With your permission, Mr. Deputy Speaker, I would like briefly to mention them so that we can have the Solicitor-General's views upon them.

Mr. Deputy Speaker

It is very unusual. I must thank the hon. Member for mentioning that they were grouped with amendment No. 11. However, I think perhaps he should proceed.

Mr. Dewar

I must apologise because I spoke at length on the first three amendments in the group and forgot that we were dealing with amendments Nos. 13 and 14 at the same time. I should like to have the Solicitor-General's views on amendment No. 13. It is an important amendment and one that has been argued very strongly to me by various members of the legal profession in Scotland. The amendment refers to clause 10 which states: Subject to any agreement to the contrary, in assessing the amount of damages payable to the injured person… It then goes on to say what can be deducted and what cannot be deducted from those damages. Amendment No. 13 inserts the words "for loss of earnings".

It may be that this is unnecessary because that is what is intended, but my understanding of the present law of Scotland is that deductions can be made from damages that are awarded—for example, for benefits. I shall come to the way it is done in a moment. That can happen only if there is a loss of earnings element in the damages that are being awarded. Let us take as an example someone who has been awarded damages for solatium only and, as is commonly the case, has received industrial injury benefit. There would be no deduction in respect of that industrial injury benefit from the solatium. The deduction would take place only if, in the award of damages, there was an element for loss of earnings.

I may be misinformed about this as I cannot claim to be a reparations expert, but that is my understanding of the law. It has been out to me clearly by a number of firms which specialise in this field that unless the words "for loss of earnings" are inserted into the Act in the way that I am trying to do, it may be that the classes of benefit which are referred to as being possible deductions from damages may be deducted where there is no loss of earnings factor but where we are considering purely and simply solatium.

This is not uncommon these days because with the growth of sickness payment from firms it is common to have a substantial sum of solatium awarded, but no actual loss of earnings, because other benefits and so on have obliterated the wage loss. But that person might still be receiving industrial injury benefit because that is a statutory right. I hope that the Minister will accept that this is a matter of substance on which I should like his guidance.

The possible deductions that may be taken into account are earnings from employment, unemployment benefit, and any benefit referred to in paragraph (c) above payable in respect of any period prior to the date of the award of damages. All those would fall clearly as categories that would be appropriate to deduct from loss of earnings. Clause (iv) worries me, and it may be that I have come to the crux of the difficulty. It states: any payment of a benevolent character made to the injured person or to any relative of his by the responsible person following on the injuries in question". I am not clear what this payment is. It is presumably a case where someone will go to his injured employee and say "I am sorry that this has all happened. I know you have considerable difficulties. Here is £500 to see you through your troubles." That is the payment of a benevolent character. That again would be fairly only taken into account in terms of deduction where there was a loss of earnings element.

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I do not want to be ungracious about clause 10. On the whole, it is a good and useful clause and an important one for the reasons I have outlined. I hope that the Solicitor-General for Scotland will be able to answer a technical question about it. I am concerned with the deductions which are possible under paragraph (iii) and which can be taken into account. It reads: any benefit referred tc in paragraph (c) above payable in respect of any period prior to the date of the award of damages". It seems to suggest that in Scotland at the moment if there is a damages award, it is possible to make a deduction of 100 per cent. of the benefits referred to in paragraph (c) up to the date of the award of damages. As I understand it, that is a very substantial change in the present practice of the Scottish courts. I understand that at present they refer to or rely on section 2(1) of the Law Reform (Personal Injuries) Act 1948, which allows deduction not of 100 per cent. of benefit but 50 per cent. of benefit.

The really important words are one half of the value of any rights which have accrued or probably will accrue to him therefrom in respect of…the five years beginning with the time when the cause of action accrued. Does clause 10, in effect, obliterate section 2 of the 1948 Act in relation to Scotland? The section in the 1948 Act is not specifically repealed in the Bill, perhaps because it applies to England as well. It is not repealed specifically in regard to Scotland.

It is a good pursuer's point, for although under the new arrangement there will be a 100 per cent. set-off, it is 100 per cent. of the benefit only to the date of award of the damages. That will be a considerable advantage to the pursuer, for at the moment the deduction is only 50 per cent. of the benefit, but it is the benefit for a five-year period. If a man is getting benefit at the rate of £2,000 a year —he could be getting that as a result of several allowances such as the special hardship allowance and the industrial injury allowance—50 per cent. of it is £1,000, and for five years it will be £5,000, so we are looking at a very substantial reduction to offset against any potential loss of earnings under the present system.

I may be chasing a non-issue but it is important to understand exactly what is envisaged. Am I right in thinking that the powers in section 2 of the 1948 Act are to be overtaken and ruled out in Scotland? If they are not to be ruled out, what is the position? The Solicitor-General is indicating that he will explain the point, so I will not pursue it further. It is an important point. My other point concerns the loss of earnings, dealt with in the specific amendment now before the House.

Amendment No. 14 is an invitation to the House to take out clause 11. Clause 11 was not debated in Committee, and I take my share of responsibility for that. It reads: In an action for damages for personal injuries…any saving to the injured person which is attributable to his maintenance wholly or partly at public expense in a hospital, nursing home or other institution shall be set off against any income lost by him as a result of the injuries. I can envisage considerable problems as to how the clause will work and how it will be possible to quantify the savings that an individual has made. I presume that the point of clause 11—there is an English equivalent in clause 5, as has been pointed out already—is that someone may be permanently in hospital and in an almost vegetable state as a result of his injuries, so that the money will be held in trust and will ultimately go to his dependants and relatives. It might fairly be said that that should be taken into account in deciding the size of the damages.

Suppose, for example, that Mr. X has had a bad motor accident for which he will get damages. He is in traction in hospital for three months. Are we to be in a position in which it may be argued "We have to offset against his loss of earnings or income the fact that he was not being fed out of the family budget, he was being cared for by the State, therefore we ought to examine what he spent in his house in the normal week on food and take 25 per cent. of that figure and aggregate that up and set it off against his income." Should the fact that he is not running his car and using petrol be considered? The possibilities are endless. There are real difficulties. One of the senior partners of a well-known Edinburgh law firm that specialises in this work writes to me: The mind boggles as to how this section will be interpreted 'and how it will be possible to assess any saving". He tells me it may cause many problems and a great deal of difficulty for judges in settling actions. I hope that the Solicitor-General for Scotland can help me on these important matters.

The Solicitor-General For Scotland

I shall first deal with the general purpose of clause 10 and the hon. Gentleman's proposal to include the words "loss of earnings". If the hon. Gentleman did not appreciate the main point originally, he did at the end of his speech when he concentrated on what is set out in clause 10(4). It relates to payment of a benevolent character made to the injured person or any relative by the responsible person following the injury, where the payment is made directly. In those circumstances, the payment that is or might be made is not necessarily for loss of earnings.

The case in Scotland where the issue arose most sharply followed the disaster at Ibrox football ground where the members of the public donated money to help those who had been injured or the families of those who had died. Rangers football club also made a contribution. In making such contributions the people concerned were not doing so solely for those who had sustained loss of earnings. The payment might simply be for solatium, injuries that they had suffered—for example, payment to a child for limbs that had been broken.

I should have thought that the hon. Gentleman would agree that it was a matter of public policy and in the public interest that such payments should be made in advance of a court action. It was understood that if no provision were to be made for the payment to be deducted at a later date in court in the event of an award of damages being made, wrongdoers might be dissuaded from participating in such schemes or from making payments directly to those injured.

Although the hon. Gentleman rightly perceives that generally the items to be deducted are sums that are to be set against that head of claim, which is loss of earnings, it is not exclusively so, as paragraph (iv) shows. A payment might rightly be made to someone who has not suffered any loss of earnings, but who may nevertheless have a very good claim for the personal injuries that he or she has sustained.

Mr. Dewar

I suspected that paragraph (iv) presented a difficulty, as the Solicitor-General for Scotland rightly guessed. It might reasonably be set against both solatium and the loss of earnings element in a total damages award. What worries me is that the hon. and learned Gentleman seems to be saying that because of the way the paragraphs have been drafted, the first three relating to earnings, unemployment benefit and benefit up to the date of the award of damages, which have always been recognised and are specifically stated in the 1948 Act to be sums which could be set against any loss of earnings or profits, can now be set off against solatium. Is that the position? If it is not, my worry largely flies off.

The Solicitor-General for Scotland

The hon. Gentleman's anxiety is unfounded. The purpose of a claim for damages is to put the injured person into the position that he would have been in if he had not sustained the injuries. Separate heads make up the total claim for damages. One may be loss of earnings and another could be the compensation due for the loss of a limb or whatever. The hon. Gentleman is unnecessarily anxious.

I resist the inclusion of the proposed words because they would make a nonsense of subsection (4). I hope that I have reassured the hon. Member for Glasgow, Garscadden (Mr. Dewar) that his anxiety that there could be a setting off against another head of damages is unfounded.

The hon. Gentleman referred to section 2(1) of the Law Reform (Personal Injuries) Act 1948. If he had looked at my amendments he would have noticed that provision is made to clarify the point that worried him. I shall explain the matter when we reach amendment No. 3. It should cause no difficulty.

Amendment No. 14 seeks to leave out clause 11. Clause 5 in part I of the Bill contains the same provision for England, Wales and Northern Ireland. Clause 11 provides that in any action under Scots law for damages for personal injuries, any saving to the injured person, attributable to his maintenance wholly or partly at public expense in a hospital, nursing home or other institution, shall be set off against any income lost by him as a result of his injuries.

There is no question of offsetting the full cost of the maintenance, but only the saving to him—the element of his living expenses which no longer has to be met out of his own pocket while he is being looked after in a public institution.

That provision is exactly the same as that made in clause 5. The hon. Member for Garscadden seems to think that it will cause great difficulties. That remains to be seen, but I do not believe that it should cause problems. The way that clause 5 was accepted for England, Wales and Northern Ireland shows that the provision is broadly acceptable for the rest of the country.

Mr. Dewar

I am not happy about what the Solicitor-General for Scotland has said. The fact that the English have a similar clause to clause 11 is not necessarily a persuasive argument. It is important if it is necessary for the law of England and Scotland to be on all fours for practical reasons, but that argument does not apply here. The fact that my right hon. and learned Friend the Member for Warley, West (Mr. Archer) and his colleagues did not raise questions on clause 5 does not preclude arguments in the Scottish context.

It is all very well for the Solicitor-General for Scotland to say that he does not think that there will be much difficulty and that it is just a matter of calculating the savings. Minds more ingenious that his or mine will spend much time worrying about how to quantify the savings in a family budget that result from the breadwinner being in hospital. I could hold up the House for many a happy hour by constructing various possibilities. I shall spare hon. Members that, but I regard the Government's proposal as unsatisfactory. It is a piece of pettifogging legislation which has little to do with the practicalities of the law of damages in Scotland.

As to amendment No. 13, I accept reluctantly that the phrase "for loss of earnings" must be removed because of the example of the Ibrox disaster. It would be futile of me to insist on those words, given the present forces in the House. However, I am not clear about amendment No. 13. If a public fund is set up, as in the Ibrox disaster, it might be appropriate that the proceeds divided among the injured persons should be offset against a solatium figure. The public may not realise that they are donating money not to injured persons but to the insurance company that will withstand the loss. The Solicitor-General argues that that is not so, but it is inescapable.

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The first three headings are appropriate to be earmarked for offset against loss of earnings. However, once the proposal is on the statute book, if someone is receiving unemployment benefit and we decide that the 100 per cent. deduction up to tie award of damages is a substantial point, will it be possible to offset that against solatium if there is no award for loss of earnings? If the answer is "No", that is fair enough.

Mr. Deputy Speaker (Mr. Paul Dean)

Does the hon. Gentleman wish to withdraw his amendment?

Mr. Dewar

I had hoped that the Solicitor-General would clarify the point. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 8, in page 8, line 14, after 'agreed', insert 'in the knowledge that an action for damages has been raised or is in contemplation. '—[Mr. Dewar.]