Official Referees (Hansard, 30 March 1984)

§ Mr. Sydney Chapman (Chipping Barnet)

I am grateful for the opportunity to raise what I believe is a serious issue that affects the construction industry—the status and number of official referees. As you will know, Mr. Deputy Speaker, this is not a sporting matter or anything to do with football. Official referees are judges who deal with the majority of civil engineering and building disputes. I am delighted that my right hon. and learned Friend the Attorney-General is here to reply. His presence shows the importance that the Government attach to the issue.

You will know, Mr. Deputy Speaker, that there has recently been an increase in the importance of construction industry litigation. I have only to mention recent judgments such as Sparham-Souter, Anns v. Merton (LBC), and Pirelli to send a chill down the spine of builders, architects and local authorities and, no doubt, a thrill of assured employment for lawyers. I am not a lawyer. The increasing importance of the industry's litigation led to the setting up of the official referees users committee with, I understand, the approval of the Lord Chancellor at the end of 1982 to advise him on means by which to improve procedures.

The users committee includes representatives of, for example, the Royal Institute of British Architects, the Royal Institution of Chartered Surveyors, civil engineers' organisations, the Building Employers Confederation, the Federation of Master Builders, the National House Building Council, local authority associations and members of the legal profession. It might be appropriate for me to declare a possible interest as a non-practising architect and a non-executive director of a construction company.

Until recently there were only three official referees —Sir William Stabb, the senior official referee, Judge Hawser and Judge Newey — but because of the increasing work load, and after pressure from the legal profession and the construction industry, Judge Smout was appointed as a fourth official referee last July. The official referee courts deal with the majority of legal disputes and they involve claims of between £50,000 and £500,000. However, several claims are in excess of £500,000. In one extreme case that is down for hearing in 1985 the damages involved are about £4.5 million.

Due to the pressure of the volume of building litigation, some cases notified today are being set down for trial as late as 1987. That increased delay in dealing with litigation is the main but not the only problem that I shall bring to the attention of the House. In an excellent article in the magazine Building on 19 August last year, Miss Rhona Wyles, who is the head of the legal services of the National House Builders Council, identified the problem of delay and confirmed that the long delays were occurring despite the fact that Official Referees adopt the practice of treble booking cases, ie each judge is allocated three cases to hear on the same day. This system works only if two out of the three cases settle before the trial date. Often this will happen, but if it does not, cases are adjourned — perhaps for months —because there is no judge to hear them. Such delays can increase the costs of litigation as costs may have been incurred in preaparing for trial, some of which may have to be incurred again later. Another problem is that 624 sometimes cases estimated to last, say, two weeks are not finished in time. They are then adjourned, sometimes for as long as a year. That puts in a nutshell the problem of the work load and the consequent delays.

In 1983, 140 cases were tried by the official referees. The average length of those cases was 12.5 days, while 59 cases were estimated to last more than three weeks. Cases brought before official referees are increasing in number and complexity, with the technological developments in the building industry, and increasing in value in the sense of the damages claimed, and on many occasions awarded.

To illustrate that, may I tell the House about three cases that are listed for trial before one official referee in May this year. They are estimated to last for more than three weeks, so doubtless the official referee will deal with other cases if he has the time. One case set down for 1 May is estimated to last for four to six weeks; another set down for 8 May is estimated to last for eight weeks; and the third, also set down for 8 May, is estimated to last for three weeks. I suggest that this is akin to trying to pour a gallon into a pint pot, and this at a time when the law on liability for latent defects in buildings is in a state of flux or, as some would say, in chaos.

I shall mention three cases in chronological order. To summarise the case of Sparham-Souter in 1976, the court held that a person was entitled to sue for up to six years after the date of discovery. In the case of Aims v Merton (LBC) in the following year, it was held that a person could sue up to six years from the health and safety of the occupier being threatened. That caused consternation in many local authority offices. More recently, the Pirelli case in 1982 overruled Sparham-Souter and held that a person could sue up to six years after the damage had occurred.

Of course I am aware, as the House will be, that the Lord Chancellor's law reform committee has been looking at the whole problem of the law of liability for latent defects, and we hope that it will report soon. Indeed, I think that that committee's report has been awaited with bated breath by local authorities and the construction industry since 1980. All that legal confusion may provide some comfort for lawyers, but it has bred considerable concern in the construction industry and extreme anxiety, among those affected. Delays in litigation affect not only large building companies or engineering concerns but, in a very real sense, ordinary householders.

I am told that concern about the unsatisfactory state of affairs is shared by the legal profession. I understand that 32 solicitors' firms representing the majority of such leading firms have expressed their interest in speeding up the whole process of building litigation. They point out that delays cause substantial prejudice to their clients. Large amounts of capital can be tied up. A building company facing damages of, say, £1 million would have to tie up that money for a considerable time even if it was subsequently successful in the court of the official referee. Many hon. Members may think, to adopt the old adage, that slow justice is indeed justice denied.

I invite my right hon. and learned Friend the Attorney-General to consider three suggesions—in other words. three things are required. First, at present there are four official referees and that number should be increased as a matter of urgency to six. I should like to think that the Lord Chancellor must have given that proposal of mine—although it did not come from my lips when he considered 625 it—tacit support, because he has allocated one circuit judge and one recorder to sit as deputy official referees. That is immensely helpful, but it is no substitute as a county court judge cannot become familiar with procedures in a business that has become very technical and technologically complicated in the past 20 years or so. Therefore, I hope that my right hon. and learned Friend will consider my first suggestion favourably.

Secondly, official referees should have High Court status. My right hon. and learned Friend will know that presently they enjoy only the status of circuit judges. They should have that heightened status because of the importance, complexity and value of the case that they are asked to determine.

I understand that there is a legal dimension. Official referees, by the very nature of their job, have to give authoritative judgments. It is essential that those judgments should be widely reported. I understand that, having only the status of circuit judges, official referees' judgments are not widely reported unless the cases go to the Court of Appeal. I am told further that not only are they not binding as legal precedents—perhaps my right hon. and learned Friend will touch on this point—but the whole matter concerns lawyers as well as the construction industry because they both need the greater access to official referee decisions so that the same points of law are not litigated time and again. Currently official referees have the jurisdiction and duties of a High Court judge, but they have only the status and salary of a circuit judge. Surely that cannot be right.

My third proposal is that official referees should have better court facilities. Many cases are international and have an international scope. Foreigners are sometimes quite amazed and disillusioned about the conditions that they find when they come to take part in such cases. We do not want foreigners, quite apart from anyone else, to be disillusioned about British justice.

I shall cite three cases that underline the inadequate facilities. In one case, 10 parties were involved and they were represented by no fewer than 23 barristers, not to mention the solicitors and other back-up staff. Because of the appalling lack of accommodation, I am told that the National Liberal Club's billard room had to be hired. I am sure that that is the most useful purpose to which that room has ever been put, but such a practice surely cannot be satisfactory.

Secondly, one official referee's court room can comfortably accommodate only six people. Thirdly, one court regularly used by an official referee in Kingsway, not far from here, until recently did not have even the facility of a telephone which, apart from anything else, is essential to enable members of the legal profession to take instructions.

I thank my right hon. and learned Friend for attending the debate. I appreciate his attendance very much. I hope that I have managed to persuade him, if persuasion be needs, that the issue is of public importance and affects the largest industry in Britain. The construction industry is the largest in the country, whether measured in terms of manpower or of output. Last year, in spite of the recession, the value of its output was no less than £22,000 million, and about 1 million people in the industry are directly affected. That excludes the hundreds of thousands of people who manufacture goods or provide services for the 626 industry. The construction industry's output represents 8 per cent. of the gross national product. From the legal aspect, this great industry is sorely discriminated against in the determination disputes. Surely it is also crucial that we should have a fairer and more expeditious way of dealing with building litigation if we are to uphold the quality of our system of justice and confidence in the law.

§ The Attorney-General (Sir Michael Havers)

I am grateful to my hon. Friend the Member for Chipping Barnet (Mr. Chapman) for providing this opportunity to say something about an important part of the administration of justice, although clearly one about which not much is known. I know the difficulties of which my hon. Friend spoke, and I understand that the Whips were seeking to persuade my hon. Friend the Minister responsible for sport to respond to this debate. I know of the interest of my hon. Friend the Member for Chipping Barnet in this subject, and I have great sympathy with the problems about which he has spoken. I hope that in the course of my reply I shall be able to satisfy him on some of the points that he has raised.

A little more of the history of this historic job could appropriately be dealt with now. Ever since the 18th century matters of scientific or other specialist knowledge could be referred to an expert for report, and, under the Act of 1874, cases involving accounts could be referred to a master of the Supreme Court for report. Those represented two exceptions to the usual procedure that civil actions under the common law were tried by judge and jury.

There was much criticism of trial by jury as a method of dealing with building and other complicated cases, so the Act of 1873, which first established the unified High Court, extended and formalised the old arrangements of unofficial or special referees by creating the office of official referee. The first were appointed in 1881. At first their jurisdiction was only to investigate and report facts, or to try particular issues of fact that were referred to them, but the Act of 1884 provided that whole actions could be referred to them for trial and empowered them to give judgments and make orders—for example, orders for costs. However, until 1982 they remained referees in the sense that cases had to be referred to them by the High Court. They had no original jurisdiction. However, by virtue of a change in rules of court, which took effect on 1 October 1982, a plaintiff can mark his writ or originating summons with the words "official referees' business", and no further reference by the High Court is required. This is a time-saving change.

One other aspect of the background that I should mention is that the Royal Commission on assizes and quarter sessions — better known as the Beeching commission—recommended in 1969 that there should be only two categories of judge below the level of the Court of Appeal and that the official referees should belong to the lower category—the circuit judges. The title "official referee" was in fact abolished by the Courts Act 1971, although the designation "official referees' business" was kept to describe the kind of work they do, and the Lord Chancellor was given power to nominate particular circuit judges to deal with that work. As in everyday parlance the title "official referee" is still applied to judges so nominated, I shall go on calling them by that name.

627 The kind of work that the official referees do is loosely defined in the relevant rule of court as any case which involves a prolonged examination of documents or accounts, or a technical, scientific or local investigation such as could more conveniently be conducted by an official referee; or for which trial by an official referee is desirable in the interests of one or more of the parties on grounds of expedition, economy or convenience or otherwise. Quite often, they would be better described as construction referees than as official referees.

In practice, the business consists largely of cases concerning civil or mechanical engineering works and building and other construction work, claims by and against specialised professionals, such as engineers, architects, surveyors and accountants, claims by and against local authorities relating to their statutory duties concerning the development of land or the construction of buildings, and proceedings between landlords and tenants in respect of breaches of repairing covenants.

Not all the work relates to bricks and mortar. Some of it consists of cases relating to the quality of goods sold or hired, claims in respect of work done, materials supplied or services rendered, and the examination of accounts, especially where they are complicated. But one common factor in all this is that complex questions of fact, often of a scientific or highly technical nature, usually have to be determined. The sums involved are often substantial — many cases running into hundreds of thousands of pounds and some into millions of pounds.

For many years, until last year, there were three official referees, all in London, though on occasions they try cases outside London. But since 1971, under the power given to the Lord Chancellor under the Courts Act, he has nominated additional circuit judges outside London to deal with official referees' business. These additional official referees do not deal continuously with this kind of work and do not get the additional salary paid to those based at the Royal Courts of Justice engaged in it full time. I take on board the need to have judges who are experienced in the technical work that they are bound to try.

The volume of the work of official referees has increased substantially in recent years. Some figures, in addition to those already given to the House, will illustrate 628 this. In 1973 there were 588 new cases in their lists in London. At the end of that year outstanding were 586. By 1983, the figure for new cases had risen to 989 and the outstanding cases figure was 1,537. According to the estimates of the parties, that represents about 6,000 judge-days of work. But it has to be remembered that a substantial majority of these cases are settled before they come to trial. Nevertheless, in view of this rising work load, the Lord Chancellor appointed a fourth official referee last year, and he has now authorised an increase in the establishment to six, though that figure will be reviewed when the next retirement of an official referee occurs. The Lord Chancellor is also reviewing the adequacy of the arrangements for dealing with official referees' business outside London.

Court and other accommodation is a problem. The fourth official referee is inadequately accommodated as it is, and more, of course, will be needed for the increased establishment. This is a matter that is being urgently looked into. But if we are to talk of putting a gallon into a pint pot, unfortunately the same applies when we come to find accommodation within the Royal Courts of Justice.

My hon. Friend asked about the status of the official referees. The Lord Chancellor is aware of suggestions that have been made from time to time that the official referees should be given the status of High Court judges, but he has at present no plans for altering the existing situation which, apart from the relatively small adjustment made by the Courts Act, has continued for 100 years. As regards salary, as I have indicated, the official referees have a small salary lead over other circuit judges; the size of that lead is at present under review by the Top Salaries Review Body as part of the general review of judicial relativities.

I end by paying tribute to all official referees for the huge amount of work that they do. If, for example, in their lists—even triple banked—all three cases are settled, they do not have a day off. They are usually sent cases from the High Court to try. I am sure that all of us in the House will wish to thank them for and congratulate them on the very important part that they play.