Civil Liabilities Bill – further update

Since my last update, the Civil Liabilities Bill has completed its way through the House of Lords, concluding this part of the process on 27 June 2018. As you know, the bill originated in the House of Lords, where it was proposed by Lord Keen of Elie, and therefore is yet to be debated in the House of Commons. The bill underwent its first reading on 28 June 2018, where it was not debated, and is now awaiting a date for the second reading in the House of Commons where the debate will commence.

In the House of Lords’ third reading, two of the amendments debated are noteworthy.

First, the amendment proposed by Lord Hope of Craighead, regarding the discount rate, which is the subject of Part 2 of the Bill. Clause 10(1) of the bill provides for new Section A1 of the Damages Act 1996. One provision directs the court to apply a rate of return as set by the Lord Chancellor and the second, section A1(2), states, “subsection (1) does not however prevent the court taking a different rate of return into account if any party to the proceedings shows that it is more appropriate to the case in questions”. It is this second provision that Lord Hope of Craighead was concerned with, because he thought that a simple regurgitation of the wording in the 1996 Act inhibited any true discretion of the courts to set a different discount rate where appropriate. This is because this provision in the 1996 Act has been interpreted very indeed by the House of Lord in Wells v Wells (1999). Indeed, so strict are the criteria, Lord Hope of Craighead noted in the debate, that nobody had discovered a situation in 20 years that allows a judge’s discretion to set a different discount rate.

Lord Hope of Craighead’s reasoning for requesting that the section A1(2) be removed was either that the wording be changed to expand its scope so that it provides some actual discretion to judges, which had not been done, or it be deleted as it raises false hopes of achieving something that it cannot achieve nor that the government wants it to be able to achieve.

A point raised more than once during the debate was the fact that the Bill is yet to be debated in the House of Commons, where a further review will take place and the wording may well be adapted. Following this discussion, Lord Hope of Craighead was content to remove his proposed amendment and, thus far, section A1(2) remains within the bill. It is of note that the Association of Personal Injury Lawyers opposed the amendment.

The withdrawal of this removed proposed amendment might be considered a small victory, since there is still scope for judicial discretion in the bill. However, having read the debate in the Lords, one wonders if this is rather more a pyrrhic victory, where section A1(2) simply restates the law as it was before; ostensible judicial discretion with no practical effect, which the Lords have no intention of widening.

The second proposed, and accepted, amendment of note was to extend the period of review of the discount rate from three years to five years. One of the reasons for this, as mentioned in the Lords’ debate, was to discourage litigation practitioners from trying to game the system, which does seem to be a reasonable point though lengthens the time for which an unsatisfactory discount rate might remain in force. The amendment, of course, will also be the subject of review in the House of Commons.

Finally, the Ministry of Justice announced last week that the reforms for whiplash claims and increasing the small claims limit to £5,000 for personal injury claims will not come into effect until April 2020, rather than April 2019 as originally planned. A bit of breathing space for those firms most affected, but certainly not a change in tune for the reforms in principle.