Meeting of the Parliament 26 April 2018
It is difficult to admit that we got it wrong, but I think that that is exactly what all of us on the committee did at stage 2. There are mitigating circumstances to be considered for the bill, and undoubtedly the issue that we are discussing, as Daniel Johnson intimated in his opening remarks, was one of the most sensitive that we had to wrestle with during our scrutiny of the bill. The bill is, after all, about increasing access to justice, and doing so for those who have been most grievously harmed or wronged carries particular significance. However, I am now convinced that ring fencing future losses, as happens in England and Wales and as we voted to support at stage 2—motivated by the best of intentions—would have the perverse consequences that were graphically set out by Sheriff Principal Taylor in his letter to the committee post stage 2.
Sheriff Principal Taylor recommended that damages for future loss be included in success fees if, and only if, the
“future element ... is to be paid in a lump sum”.
If the future element is to be paid by periodical payment, those damages are not to be included. Going over the account in the Official Report of the stage 2 proceedings, I was struck by what the minister said when she pointed to the change to the discount interest rate and the provisions in the forthcoming damages bill. She said that
“it seems to be much more likely that, in the future, the element of damages payment relating to future loss will be made by means of a periodical payment order.”—[Official Report, Justice Committee, 27 February 2018; c 32.]
It is also worth bearing in mind that, if the future element is more than £1 million, the court will have to agree that it is in the client’s best interests for that to be paid in a lump sum; and if it is agreed by settlement, an actuary would be involved in that decision. There is no getting away from the fact that damages-based agreements have proven to be popular even where success fees of anything up to 60 per cent are being charged. As Sheriff Principal Taylor pointed out, without Daniel Johnson’s proposed amendments, the bill as amended at stage 2 could pose an “existential threat to DBAs”. Surely it would be better to cap those fees at 2.5 per cent, as is proposed.
As I said, it is not easy to admit that we got it wrong. I have had the experience of speaking against an amendment that I had lodged, so there are degrees of discomfort. However, I believe that ring fencing future losses might indeed work against the interests of the very people whom we are seeking to protect and provide access to justice for, so for that reason the Liberal Democrats will support Daniel Johnson’s amendments 1 to 3.