HL Deb 17 May 1991 vol 528 cc1865-70

11.38 a.m.

The Lord Chancellor rose to move that the draft regulations laid before the House on 7th May be approved [19th Report from the Joint Committee].

The noble and learned Lord said: My Lords, these draft regulations mark another step in the intricate process of reforming the machinery of civil justice set in motion by the report of the Civil Justice Review Body in 1988, which was set up by my noble and learned friend Lord Hailsham of Saint Marylebone when he occupied the office which I presently have the honour to hold. Your Lordships will recall that the aim of the review body was to recommend ways of reducing delay, cost and complexity in civil litigation.

The Courts and Legal Services Act 1990 is now on the statute book. It provides the statutory framework for those of the review body's recommendations that must be based on primary legislation. The recommendation that we are concerned with today is that the same remedies should be available in the county courts as in the High Court—subject to safeguards. Section 3 of the Act gives effect to that recommendation by substituting a new Section 38 of the County Courts Act 1984. It empowers me to make regulations specifying what safeguards there should be and dealing with procedural matters.

Because the new Section 38 also empowers me to include in the regulations provisions amending or repealing legislation as may be necessary, known to some of your Lordships as a Henry VIII power, subsection (7) requires affirmative resolutions in both Houses before any draft regulations are made under Section 38. However, I can assure your Lordships now that I have not sought to use the Henry VIII power in the draft regulations now before this House.

Before I explain the provisions of these draft regulations, let me briefly set them in context. Your Lordships may recall debating some two months ago the first order under Section 1 of the Courts and Legal Services Act which establishes new arrangements for allocating proceedings between the High Court and the county courts. In addition to removing from 1st July this year most of the financial limits that have been placed on the jurisdiction of county courts, the High Court and County Courts Jurisdiction Order 1991 gives the High Court jurisdiction to grant injunctive relief in, or in anticipation of, county court proceedings where the county court has no jurisdiction to do so. I said in this House on that occasion that I intended to make regulations restricting the county courts' power to grant some of the more draconian remedies. These are the regulations I had in mind.

Let me then start at the heart of the matter with Regulation 3. With some exceptions, it precludes a county court from granting those remedies which the Civil Justice Review described as draconian. They are known as Anton Piller orders and Mareva injunctions and they are defined in Regulation 2 under the phrase "prescribed relief". An Anton Piller order, as many of your Lordships will know, enables a party to enter premises and seize property in order to preserve evidence. A Mareva injunction freezes the assets of a party, usually pending the determination of a dispute.

I return now to Regulation 3. Your Lordships will see that it precludes a county court not only from granting such relief, but also from varying or revoking the relief when granted by the High Court. Paragraph (2) deals with the first of the exceptions. A High Court judge or a judge of the Court of Appeal sitting in a county court is not precluded from granting, varying or revoking the prescribed relief. Nor is a judge of the Patents County Court, in view of the specialist nature of its work. That court is an important development. It is important that it should have that power.

The second group of exceptions is that given under Regulation 3(3). Here a county court may grant Mareva injunctions but not Anton Piller orders. Sub-paragraph (a) safeguards the present jurisdiction of county courts in granting Mareva injunctions to prevent the dissipation of family assets. Subparagraph (b) allows a county court to order a party not to dispose of property which forms, or may form, the subject matter of a dispute; for example, where there is a dispute about the ownership of the property. Sub-paragraph (c) allows a county court to grant a Mareva injunction after judgment has been given and when there is a risk that the defendant might remove the assets out of the court's jurisdiction. The basis for that last exception is that the matter in dispute has already been decided and a debt proven.

Paragraph (4) of Regulation 3 makes clear that the restrictions placed on county courts in respect of prescribed relief do not affect provisions in any statutes expressly empowering county courts to grant such relief. Paragraph (4) (b) adds a further exception to the restrictions; that is, that a county court may vary, but not grant or revoke, prescribed relief already granted where all the parties are agreed on the terms of the variation. This helps parties to avoid incurring the additional costs of making application to the High Court in those circumstances.

We now move on to important procedural matters which ensure that the safeguards provided by the regulations do not unnecessarily inconvenience the parties or delay proceedings. Where it is necessary to apply to the High Court for an Anton Piller order, Regulation 4 enables the matter to be dealt with in one go. By that I mean that it will not be necessary to apply separately for the proceedings to be transferred to the High Court, but that the application for relief will be deemed to include an application for transfer.

However, where the proceedings and not just the application are transferred to the High Court, Regulation 5(1) provides that they must be transferred back to the county court unless the High Court orders otherwise. That regulation applies not only in the case of proceedings transferred for the purpose of an application for an Anton Piller order, but also where actions have been started in the High Court when they should otherwise have been started in a county court. Apart from certain statutory exceptions, that will initially cover only personal injury actions for less than £50,000 which, under the jurisdiction order, should only be started in the High Court if they involve matters of complexity or raise important public issues. Otherwise, that order requires that they be started in a county court.

The final provision of these regulations is designed to prevent proceedings in the High Court being transferred to the county court before an application is fully disposed of. Regulation 5(2) addresses the case where prescribed relief is granted in the absence of the defendant and where the action has to be transferred to a county court. In such a case the transfer will not take effect until the party affected by the Anton Piller order has had an opportunity to apply to set aside or vary the order.

I commend these draft regulations to your Lordships as a necessary piece of the jigsaw constructed by the Civil Justice Review Body. They fit into the picture neatly between the allocation and transfer arrangements already approved in the jurisdiction order and the provisions for common remedies made in Section 3 of the parent Act. The draft before us today has benefited very considerably from the constructive comments received during the consultation period. I am, as ever, indebted to the judiciary and to members of the practising profession for their help in getting them correct. I beg to move.

Moved, That the draft regulations laid before the House on 7th May be approved [19th Report from the Joint Committee].—(The Lord Chancellor.)

11.48 a.m.

Lord Mishcon

My Lords, as usual, the noble and learned Lord has put together the pieces of the jigsaw puzzle in a clear way and explained them to your Lordships' House. I know that the legal profession will appreciate the words that he has used in thanking them for their co-operation in the negotiations that led up to the order now before the House.

In his remarks the noble and learned Lord mentioned personal injuries in a certain context. I am taking the opportunity to raise a question which is of great importance especially to "little people", if I may so call them, who suffer personal injuries. On 1st July an order will come into force which raises the limit of the small claims court from £500 to £1,000. If there is a reference to arbitration under the small claims procedure, under the county court rules there is the very inconvenient Order 19, Rule 6. That rule restricts the award of costs between party and party in respect of matters referred to arbitration, except for the cost of the summons, the cost of enforcing an award, and any further costs that the arbitrator may direct, but only where there has been unreasonable conduct on the part of the opposite party in the proceedings.

There are two dangers which face especially the little man who suffers personal injury. He may find that the claim below £1,000 makes its way to the small claims court. He will be faced with the difficulty of having to disburse very large sums if he is to fight his case. He will have to pay for the necessary police and medical reports and matters of that nature. It will be very difficult for him to raise the money. He will be unable to recover the costs because of the wording of the rule which I paraphrased for your Lordships.

There is another danger. The answer is that most of these cases are negotiated and they need not go to the small claims court. I am using careful language: insurance companies are not precisely known for paying more than they have to. The opportunity may well be taken by them, in the course of the negotiation of claims which are settled for under £1,000, to say, "If this claim had gone to the small claims court we would not have had to pay any costs. We are not going to pay costs in this case either. The amount that you would recover in a small claims court is £750, and that is it". I know there has been communication with the Lord Chancellor's Department showing this concern from the National Consumer Council and the Consumers' Association. So far there has not been a very helpful response. I ventured to raise this matter because of its importance way back in March of this year. On that day the noble and learned Lord said: The question of whether personal injuries cases should be included in the small claims jurisdiction, and if so whether special conditions should be made, is one that I am still considering. We shall be developing a small claims regime, and in that consideration I shall take account of the points made by the noble Lord tonight. As yet, I have not reached a concluded view".—[Official Report, 18/3/91; col. 492.] I appreciate that that was in March of this year and I am now talking in the early part of May. However, the matter is considered to be of great urgency and I wonder whether the noble and learned Lord would consider making an amendment forthwith while this consideration is taking place to Order 19 Rule 6 so that there could be an exemption to the no cost rule in respect of personal injury cases in excess, say, of £500. I hope these remarks will commend themselves to the noble and learned Lord and that we can have a helpful reply.

The Lord Chancellor

My Lords, on 1st July this year the limit for automatic reference to arbitration will be increased to £1,000. As claims for personal injuries are invariably unliquidated, plaintiffs will continue to have the option of bringing action for damages for more minor injuries either under a small claims arbitration procedure or to a court hearing. The question that the noble Lord has raised is whether, first, there should be compulsion to bring claims for personal injuries up to £1,000 into the small claims and, if so, whether the rule as to cost should be different in the small claims procedure for personal injuries from what it is at present generally.

Lord Mishcon

My Lords, the noble and learned Lord was good enough to have an inquiring look on his face which invited a reply. I mentioned two dangers; one that he absolutely correctly stated and the other that if this is not altered one does not get a court hearing; one does not get an arbitration in spite of the fact that there is an unliquidated claim. However, the insurance company answers by saying, "We would not have had to pay any costs if this had gone to the small claims court. We are not going to pay any costs now". That is of great disadvantage to the person concerned.

The Lord Chancellor

My Lords, I understand that as an anxiety, but I do not think it is separate from the issue I mentioned. The real problem is one that has two sides to it, as is so often the case. The object of the rule about costs in the small claims procedure is not only to give costs but also to protect against costs because the little person, as the noble Lord called him, is often anxious that if he takes a case to court he may have costs awarded against him.

That is an unpleasant situation that faces a person of moderate means. It is a highly important feature of going to court at all, as the noble Lord knows only too well. Therefore, there is an element of protection in the costs rule to the small plaintiff against the situation where he loses the claim and ordinarily would have to pay costs. It is not the easiest problem to resolve. I have some ideas as to how it might be done. However, it is quite difficult to do it in a way that is fair to both sides. If one specifies the kind of costs which a plaintiff would incur, but which a defendant might not incur, one might be able to assist to some extent. On the other hand, I have some doubt just how fair that is.

The problem is important and we shall keep it in mind. At present all we are doing is to increase the limit. The personal injury claim, as I have already said, does not come within the scope of an automatic reference to small claims unless the plaintiff voluntarily limits the claim to a sum of £500. When the sum of £500 was fixed in 1981 there was no special provision for costs for personal injury cases. The increase to £1,000 does no more than keep pace with inflation and it follows that there is no need at present for a separate cost provision for personal injury cases above £500.

The point is an important one and I certainly have it very much in view. Just the other day I issued a consultation paper in connection with claims up to £2,500 or thereabouts for minor road accidents with the proposal that we might be able to deal with that on a no fault basis. These are cases where the size of the legal costs incurred in determining whether or not there has been fault is large in proportion to the sum at stake. There seems sense—and this is what I have been trying to achieve—in diverting these legal costs from legal inquiries into contributions to damages. One can perhaps give a better service in that way than is presently available. On the other hand, when one gets to larger sums of damages the balance shifts and it is not so easy to achieve. Therefore, I have the problem of the small plaintiff and a personal injury action very much in mind. The noble Lord may take it that we shall not forget the problem which he has kindly again brought to my attention in the course of these proceedings.

Lord Mishcon

My Lords, I am most grateful to the noble and learned Lord.

On Question, Motion agreed to.