HL Deb 01 April 1971 vol 316 cc1447-58

3.13 p.m.

LORD BALERNO

My Lords, I beg to move that this Bill be now read a second time. For the Scot, it is a small but by no means an unimportant Bill. It has come to us from another place, where it was a Private Member's Bill. There it was well discussed and amended in Committee. It was supported by the complete political spectrum and opposed by nobody. As the law of Scotland stands at present, the court has power to award interest on damages from the date of the decree back to the date of the beginning of the court action. The prime purpose of this Bill is to empower the court to award interest back to the date of the accident or other event which caused the action in the first place. Secondly, where the damages consist of or include damages for personal injuries, the court is obliged to exercise this power unless there are special reasons why interest should not be awarded. My Lords, the justice and the common sense of both these points is so obvious that I do not propose to take up the time of your Lordships in arguing the case. Nor will I cite the representations from law societies that have been made in favour of this action, both from Scotland and from England, where the law has already been amended.

There are three minor points. In the first draft of this Bill it was proposed that interest should be awarded only when the sum of the damages was £200 or over. That is the case in England. However, a full debate on this point took place in Committee in another place. The matter was well argued and the conclusion approved by all, including the Lord Advocate: it was that there should be no limit so far as Scotland is concerned. The next point is that Clause 1(2), in the interests of clarity, says. damages' includes solatium"— that is, compensation for pain and suffering; and, likewise, personal injuries' includes any disease and any impairment of a person's physical or mental condition". Clause 2(2) deals with the point of application at the moment the Act is passed. This is perhaps a little tricky. On the Committee stage there was considerable discussion again on this point, and again unanimous agreement was reached that the decisive point is the moment at which evidence is given. The Act therefore would not apply to any action in which the proof or trial has taken place at the time of its passing. Finally, my Lords, I draw your Lordships' attention to a probable "spin off" from the Bill in the acceleration of justice. Where one party to an action has a somewhat doubtful case, he will have to weigh carefully any advantage there may be in delay at any stage against the extra interest he will have to pay if he loses his case. To my untutored eye, this is a major reason for supporting the Bill.

My Lords, however it is conceived, a Private Member's Bill is born with a disadvantage: it is under-privileged. That this one has survived to reach your Lordships' House is evidence of how much it is wanted, of how good and how useful it is. With so much major legislation in hand in another place, the survival of this Bill is a token of the unanimous good will of all Parties. I beseech your Lordships to cherish it so that it may grow up into a useful and valuable Act. I beg to move.

Moved, that the Bill be now read 2a. —(Lord Balerno.)

3.18 p.m.

LORD HOY

My Lords, I can assure your Lordships immediately that I shall not detain the House for more than a couple of minutes. My job really is to signify the assent, and indeed the approval, of this side of the House to this particular Bill. We are greatly indebted to the noble Lord, Lord Balerno, for explaining what it does in such a concise way. As I understand it, persons awarded damages in Scotland are less favourably placed in the matter of interest payments than their counterparts in England, and as a result of differences between English and Scottish law a Scottish pursuer can claim interest for a shorter period than can an English person. I understand that that is what we are proposing to put right here. The only question I should like to ask is how the Scots ever allowed themselves to get into this position. Secondly, I noted with approval what took place in Committee in another place when the limit of £200 was dealt with. I then came to the conclusion that we were playing for safety; that we were ensuring that we should not be left behind in the race once more, and that that is why the change took place. With those words, I am delighted, on behalf of my noble friends and myself, to be able to say how much we approve this particular Bill.

3.20 p.m.

LORD WHEATLEY

My Lords, there is a feeling in certain quarters that the good intentions of Parliament are often frustrated by the narrow interpretation placed upon an Act of Parliament by the judges. It may be thought that my intervention at this stage was carrying the process into the legislative Chamber. So may I say, for the removal of doubt, that I entirely approve of the purpose of this Bill. The reason for this Bill is, I think, twofold. In the first place, as the noble Lord, Lord Hoy, pointed out, it brings the law of Scotland into conformity with the law of England. But, secondly, it is due to the fact that a narrow construction was placed by the judges in the Court of Session on the Act of 1958, a narrow construction which in the eyes of some people was deemed to run contrary to the intendment of that statute. It is in order to remove any doubts created as a result of that decision and to bring the law into conformity with what is conceived to be the justice and equity of the position that this Bill is produced.

I should not like it to be thought that the narrow interpretation placed upon the Act of 1958 was due to an over-rigorous application by the judges in the Court of Session, because the judges are under an obligation to construe what Parliament has enacted. The judges have to seek from the wording of the statute what must be deemed to have been the intention of Parliament. If their construction be a narrow one, the fault is not necessarily their's; the fault may be that of Parliament in so framing the legislation as to drive the Judiciary to that inevitable conclusion. Accordingly, while approving wholeheartedly of the purpose of this Bill, I want to raise a number of points in order to secure so far as possible that a similar fate does not befall this Bill, when it becomes an Act of Parliament, as befell its predecessor.

At the risk of wearying your Lordships may I. point out that the purpose of this small Bill is to deal with the matter of interest in actions for damages, and in so far as the different elements of damages may be constituted at different times it very properly makes provision for different rates of interest and, if need be, for different periods from the very date when the right of action arose until the decree has been granted in the courts. The proposed new subsection (1) makes that permissive; but in relation to actions for personal injuries the subsection, by way of a mandatory direction, requires the court to award interest at perhaps differential rates and for differential periods according to the constituent elements of the damages, subject to two reservations. It is particularly in relation to these reservations that I wish to raise a number of questions.

As your Lordships will observe, the proposed new subsection (1A) provides that the court will exercise its powers to award interest so as to include in the principal sum the "interest on those damages or on such part of them as the court considers appropriate". To what extent does that phrase, "as the court considers appropriate", qualify the otherwise mandatory power? In the decision which was thought to emasculate the provisions of the 1958 Act the court took the view that in deciding where and what interest should be awarded the court must have regard to certain legal principles. These legal principles were twofold: in the first place, that the award had to be selective in regard to the constituent elements of damages; and, secondly, that since interest is awarded not as compensation but to recoup the pursuer for the money he has been out of for a period after it fell due, any sum required to be liquidated—that is, properly assessed by the court—before it became a principal sum on which interest could run. It was on the basis of these principles that the very fine distinctions in the case to which I referred, of McRae v. Reed and Mallik Ltd. in 1961 were founded. It is to remove some of these difficulties that this Bill has been introduced.

I should like to ask whether, having regard to the phrase "as the court considers appropriate", the court would be entitled to regard as a relevant consideration and something which was appropriate observance of these self-same principles of law.

I now turn to the next phrase, because there is a further qualification: unless it is satisfied that there are special reasons why no interest should be given …". Again I pose the same question. Under that phrase, would it be a special reason for not awarding interest on damages that the constituent element in respect of which interest is sought is something which, by the existing law of Scotland, should not attract interest because it has not been a liquidated sum? If that be the case, it means that to all intents and purposes we are back to square one and back to the 1958 Act. Therefore, I would urge that those who are sponsoring this Bill and guiding it to its final destiny pay particular regard to that fact to see whether or not the Bill requires strengthening to avoid the pitfall into which its predecessor fell.

There are no guidelines—and perhaps I am now speaking in rather a syndicalistic way on behalf of my colleagues and myself—to guide the court as to how it should differentiate on this question of variable elements on which interest may be awarded. The wording in the Bill follows exactly the wording of the English Act as amended by the Act of 1969. There the court had to devise some sort of formula to meet this situation when Parliament had given no guide as to how it ought to be operated. In the case of Jefford v. Gee in 1970, the Court of Appeal in England, exercising a broad axe with a blunt edge, decided to lay down a certain code of practice as a guidance and not as a rule. I will not weary your Lordships with how it was worked out in regard to the different elements; but obviously it operated on the basis of the broad axe with a blunt edge.

I wonder whether the sponsors of this Bill expect Scottish courts to follow the same lines; because it is one thing for a court reviewing judgment to say it is a bad judgment because it offends against certain well-established principles; it is another matter for a review court to say it is a bad judgment because it offends against a proposed recommended code of practice. I am rather afraid, as the Bill stands, that even if the narrow interpretation cannot be put on, as well it may, the court is still left in a grave difficulty. If the solution be to allow the court to make these rather broad rules based on no guidelines, I wonder whether it is not really the responsibility of Parliament to say "In the interest of equity and justice we will undertake the obligation of making these broad distinctions and laying down these broad guidelines and let us not in due course blame the court for frustrating the intention of Parliament by ruling that the Act meant something different from what Parliament intended."

If I may, I will draw attention to two other matters which I think are of importance. The first of these relates to what might well be an inconsistency in this Bill with the parent Act. In the parent Act provision is made in respect of appeals from an interlocutor of the sheriff court in a jury trial to the Court of Session in order to make provision under the 1958 Act for an appeal on this question of interest. Accordingly, in Section 2 of the 1958 Act an additional ground of appeal in jury trials held in the sheriff court is provided for; namely, that no interest has been awarded, or that the interest awarded is either inadequate or excessive. Then the section goes on to provide that the Appeal Court can make such order regarding interest as to it seems just.

On what basis has the Appeal Court to consider such an appeal "as to it seems just"? Is it to interpret that "as to it seems just" having regard to the principles now to be embodied in the parent Act by this amending Bill? Or is it a general discretion given to the Appeal Court to decide the matter on the broad general principles of justice and equity? Because in that situation if you have the narrow interpretation of what is proposed in the Bill you are going to have two standards of appeal procedure operated under the same Act, and that is manifestly undesirable.

The last point I want to make is a very technical one, but I think it is a real one. It relates to what we call tenders. The proposed new subsection (1A) relates to an action for damages for personal injury. One way in which that action, having been brought into court, could be terminated is for the defender to lodge a judicial tender of a certain sum of money in satisfaction of the claim made against him, without prejudice to his denial of liability. If the pursuer accepts that, by a minute of acceptance, then the pursuer is entitled to move the court for decree in terms of the minute of tender as accepted, and decree would then pass; and that would be a decree for the damages in respect of personal injuries such as is envisaged in the proposed new subsection (1A).

But in such a tender the sum tendered is not broken up into constituent elements, and therefore the court is not in a position, as it would be after a proof or a jury trial, of having evidence on which the court might very well separate the constituent elements. This is merely a lump sum and under a tender of acceptance the court would have no means of knowing how to split up the constituent elements because no evidence has been laid. So in that situation it would seem that the court might be driven to the position where it could not award interest on damages where the action was settled by this procedure, and a manifest injustice might be done to people who settled by this means because they would be deprived of the benefit which the proposed new subsection intended to give them.

My Lords, I am very well aware of the fact that I have occupied too much of your Lordships' time, but may I finish on two points? I realise that those sponsoring this Bill are not lawyers and therefore they may not have the answers to the points that I have raised. I would not be disappointed; nay, I would not expect them to be able to answer these points at this notice. But having recorded the points I should like them to consider with the legal advisers, between now and a subsequent stage of the Bill, whether these points require to be considered.

Some of the points may not require anything; some might be met by minor amendment; others may be more radical, if it should be decided that it is Parliament who should undertake the responsibility of deciding how this formula should be worked out and it is not left to the courts, with all the elasticity that is envisaged in the Bill. And it may be thought that, having regard to the pressure of work in another place, and the large number of Private Members' Bills which may have to be referred back from here to another place, there would be danger of this Bill being lost if we were to amend it at all, since time could not be found for it in the other place.

May I urge your Lordships and those sponsoring this Bill not to accede to that argument because it would mean—and ex hypothesi of my argument it certainly would mean—that we would be passing an imperfect Bill which might give rise to a great deal of trouble and frustrate the whole purpose and the good intentions of those who brought the Bill before Parliament. I think it better not to have bad legislation than to seek half-baked legislation that might create as much damage as the good it undoubtedly proposes to do.

3.35 p.m.

THE MINISTER OF STATE, SCOTTISH OFFICE (BARONESS TWEEDSMUIR OF BELHELVIE)

My Lords, I am glad to be able to assure the noble Lord, Lord Balerno, that he certainly has the Government's support for this Bill; and indeed it appears that he has the support of the House and certainly of noble Lords on the Benches opposite as the noble Lord, Lord Hoy, has indicated. The noble and learned Lord, Lord Wheatley, gave, I think, his general support, but he also raised some very difficult questions of law. He was good enough to advise my noble friend Lord Balerno that he would probably speak on these points. Having to speak from this Bench, I have of course taken legal advice and perhaps I may make some comments on these matters. I will certainly undertake, as the noble and learned Lord asked, to consider the questions further between this and the next stage in the progress of the Bill because I agree with him that it is important that, so far as possible, Bills should be made to work.

My Lords, I will not repeat the purpose of the Bill except just briefly to describe to the House why the Government are very glad to support it, because it confers on the Scottish courts powers that are similar to those already vested in the English courts by the Law Reform (Miscellaneous Provisions) Act 1934. These were designed to ensure that, save in exceptional circumstances, a person who has suffered personal injury as the result of the negligence or wrongful act of another, shall be awarded interest on at least part of the damages awarded by the court from the date of the accident or other event which gave rise to the right of action.

My Lords, the noble and learned Lord, Lord Wheatley, asked particularly whether this Bill was so framed that there would be no chance of there being a narrow interpretation of its provisions by judges in the future, particularly in the Court of Session. I am advised that he had particularly in mind one case, that of McCrae v. Reed and Mallik Limited of 1961. The 1958 Act provided for payment of interest from a date not earlier than the commencement of the action if the circumstances warranted such a course, and in the case in question the court interpreted this to mean that the award of interest could be made only if there were special circumstances in the particular case. But there remained a presumption against such interest awards in the ordinary case. My Lords, the present Bill has taken account of this. It has tried to ensure so far as possible that the court will exercise power to award interest on damages from the date on which the right of action arose and that there should not be scope for the restricted interpretation which was put upon the 1958 Act by the case in question. The more positive wording of the new subsection (1A), for instance, omits the word, "if the circumstances warrant such a course", and refers to "the whole or any part of the period" instead of "a date not earlier than". Moreover, the new subsection (1A) raises a clear presumption in favour of paying instance, omits the word, "if the circumdate of action, and the definition of damages to include solatium makes it clear that the new and extended power to award interest from the earlier date does cover this element in the award. Special reasons for not awarding interest would have to be special to the particular case. But I am advised that the court could still hold that interest was inappropriate in principle on, for example, future wage loss.

The noble Lord, Lord Wheatley, raised the question of what he called guidelines. He feels that the Bill as drafted leaves too great an element of uncertainty and too much discretion to the courts in determining how the amount of interest to be awarded should be calculated. And I got the impression that the noble Lord would like to see detailed rules written into the Bill. I am advised that the Winn Committee on personal injuries litigation set out certain detailed suggestions for the guidance of judges in the calculation of interest on damages; but that Committee did not propose that these detailed rules should be incorporated in the recommended legislation. In refraining from making such a recommendation, the Committee were, I suspect, persuaded by the same considerations as those which led to the non-inclusion of such detail in the present Bill. These are that the rules set out in the Winn Report are, in some respects, too detailed to take account of the specialties of individual cases, and in other respects appear somewhat arbitrary.

In the case to which the noble Lord referred, Jefford v. Gee, the court, on the basis of statutory provisions similar to the present Bill, laid down guidelines for calculation of interest, but left a discretion in their application. It is to be expected that the Scottish courts will similarly lay down guide-lines for the operation of the present Bill. It is for this reason that we feel the Bill should not attempt to impose rigid rules in the way suggested.

The noble Lord also raised a question about the power of the Court of Session on appeals from the sheriff. On the point raised on Section 2 of the 1958 Act, although the Court of Session appears to be given a very wide discretion, I am advised that this will probably be interpreted as a discretion within the framework of the existing rules about interest in damages, including the provisions of the present Bill.

The last and very technical question which the noble Lord asked me concerned tenders. I am advised that with regard to the position where the defender makes a tender of money in satisfaction of the pursuer's claim, it is considered that it would be impossible to deal in detail with the problems raised by tenders. My understanding is that a tender will not in Scotland include an element representing interest on damages, but that when the court pronounces an interlocutor in terms of minutes of tender and acceptance, the pursuers will be entitled to move for interest, since the interlocutor is one decerning for payment of money as damages. Admittedly it may be difficult for the judge to assess the element of damages on which interest should be awarded, since there will normally have been no proof, but he will get some help from the written pleadings. To demand further specification could lead to dispute and expense.

My Lords, I have tried to give the first reactions to the difficult questions raised by the noble Lord, Lord Wheatley, and I should like to thank him for taking the trouble to ask them. If I may speak on behalf of the Government (I do not know what my noble friend Lord Balerno, who is in charge of this Bill will say) we will certainly see whether there is any way in which this Bill could be improved; but at first sight, on the advice I have been given, and for the reasons I have tried to explain to your Lordships, we feel that the Bill is best left as it is.

LORD BALERNO

My Lords, I should like to take this opportunity of thanking all noble Lords who have taken part in this debate. I am particularly grateful to my old friend—if I may call him that—Lord Hoy, who spoke on behalf of the Opposition. I said in my opening speech that this Bill had no enemies in another place, and I trust that it finds no enemies in this House. Naturally anything legal is always liable to require some i's dotted and some strokes put on to its t's, and we are indeed grateful to the noble Lord. Lord Wheatley, for putting his magnifying glass upon it and telling us the results. He is anxious that the Bill should be made to work. I cannot express too strongly my gratitude to the noble Baroness, Lady Tweedstmuir of Belhelvie, for taking the ball and hitting it back into the noble Lord's court. She did it extremely skilfully and it saves my having to take up your Lordships' time unduly. I am only too conscious of the fact that I am not an expert in legal matters. No one expects a poor farmer to dispute with a Senator of the College of Justice. But I should like to assure the noble Lord that I will consult my friends—in other words, I will do what he does occasionally and take it ad avizandum.

On Question, Bill read 2a, and committed to a Committee of the Whole House.