Be you never so high the law is above you

The title of this post made famous in modern times by Lord Denning derives originally from the writings of Dr Thomas Fuller in 1733 and remains one of those pithy aphorisms which will continue to echo through legal history, for as long as the rule of law endures. Even the lawmakers are subject to the law.

This month the Lord Chancellor and Secretary of State for Justice suffered a defeat in the High Court which found that he had failed to conduct a meaningful review of the likely consequences of the removal of the recoverability of additional liabilities by receiving parties in mesothelioma claims.

This in turn meant that his decision to bring the costs position of mesothelioma claims into line with personal injury claims generally was unlawful. The decision was reported as R on the application of Whitston.v.The Secretary of State for Justice and the Association of British Insurers [2014] EWHC 3044 (Admin).

The background to the judicial review challenge is summarised succinctly in the opening two paragraphs of the judgment of Davis J:

The Claimant is the Chairman of the Asbestos Victims Support Groups Forum, an unincorporated association which represents ten different asbestos victims support groups throughout the United Kingdom. The Forum acts as a representative body for those afflicted with asbestos related diseases in respect of legal and political issues arising from such diseases. The most pernicious asbestos related disease is diffuse mesothelioma, a rare form of cancer. The cancer usually develops in the outer lining of the lungs. It generally does not become apparent until many years after exposure to asbestos, a feature which at least in the past has led to real problems when mounting a claim against those responsible for the exposure. Once the cancer does become symptomatic its progression is rapid. Most sufferers survive for less than 12 months from the onset of symptoms. Yet the effects of the disease over the period from the onset of symptoms to death are hugely painful and debilitating. This combination of factors means that litigation in relation to mesothelioma is unusual in comparison with many other types of litigation involving personal injury or industrial disease.

On the 1st May 2012 the Legal Aid Sentencing and Punishment of Offenders Act 2012 (“LASPO”) was given Royal Assent. The Act dealt inter alia with the awarding ofcosts in civil proceedings. The provisions with which this claim is concerned –Sections 44 and 46 of LASPO – came into force on the 1st April 2013 in respect of almost all types of civil proceedings. Those provisions prevent the recovery of success fees and insurance premiums paid by successful claimants from unsuccessful defendants. How that was different from what had obtained prior to the 1st April 2013and the context of the changes made to the costs position in civil proceedings will be considered hereafter. However, the provisions were not to apply at that point to proceedings relating to any claim for damages in respect of diffuse mesothelioma.

Section 48(1) of LASPO provided as follows:

“Sections 44 and 46 may not be brought into force in relation to proceedings relating to a claim for damages in respect of diffuse mesothelioma until the Lord Chancellor has (a) carried out a review of the likely effect of those sections in relation to such proceedings, and (b) published a report of the conclusions of the review. ”

What duty did this impose on the Lord Chancellor? Davis J applied what might be thought to be the normal approach to statutory construction:

In Pepper v Hart [1993] A.C. 593 the House of Lords identified the circumstances in which the rule excluding reference to Parliamentary material as an aid to statutory construction could be relaxed. Three conditions had to be met. First, the legislation was ambiguous or obscure or would lead to absurdity. Second, the material relied on consisted of statements by a Minister or promoter of the Bill together with other material necessary to understand those statements. Third, the statements relied on were clear. These conditions were discussed by the House of Lords in R v Secretary of State for the Environment Transport and the Regions ex parte Spath Holme [2001] 2 A.C. 349. I have been referred to two passages in particular. First, Lord Bingham of Cornhill at page 392:

“Unless the first of the conditions is strictly insisted upon, the real risk exists, feared by Lord Mackay, that the legal advisers to parties engaged in disputes on statutory construction will be required to comb through Hansard in practically every case (see pp. 614G, 616A). This would clearly defeat the intention of Lord Bridge of Harwich that such cases should be rare (p. 617A), and the submission of counsel that such cases should be exceptional (p. 597E).”

Second, Lord Nicholls of Birkenhead at page 399:

“This constitutional consideration does not mean that when deciding whether statutory language is clear and unambiguous and not productive of absurdity,the courts are confined to looking solely at the language in question in its context within the statute. That would impose on the courts much too restrictive an approach. No legislation is enacted in a vacuum. Regard may also be had to extraneous material, such as the setting in which the legislation was enacted. This is a matter of everyday occurrence.

That said, courts should nevertheless approach the use of external aids with circumspection. Judges frequently turn to external aids for confirmation of views reached without their assistance. That is unobjectionable. But the constitutional implications point to a need for courts to be slow to permit external aids to displace meanings which are otherwise clear and unambiguous and not productive of absurdity. Sometimes external aids may properly operate in this way. In other cases, the requirements of legal certainty might be undermined to an unacceptable extent if the court were to adopt, as the intention to be imputed to Parliament in using the words in question, the meaning suggested by an external aid. Thus, when interpreting statutory language courts have to strike a balance between conflicting considerations.

I am quite satisfied that the terms of Section 48 are not obscure or ambiguous within the meaning of the decision in Pepper v Hart (supra). At first sight it is an odd provision. It does not give any indication as to what should occur after the review has been concluded or whether the outcome of the review should determine the bringing into force of Sections 44 and 46 in relation to mesothelioma claims. However, Section 48 sets out in clear terms what is to be done by the Lord Chancellor. He must carry out a review of the likely effect of removing the recoverability from the unsuccessful party of success fees and ATE premiums in claims for damages for diffuse mesothelioma. Whilst the section does not inform the reader as to the intended consequence of the review, that is not something which is necessary for a proper understanding of what the Lord Chancellor has to do. The setting in which Section 48 was enacted is something to which I must have regard as explained in Spath Holme (supra). So it is that I have considered the history of civil litigation funding, the report of Lord Justice Jackson, the Government response to that report and the course of the Act through Parliament. But the meaning of Section 48 is sufficiently clear for any recourse to extraneous Parliamentary material to be unnecessary and unlawful. The precise nature of the review required is not set out in the legislation. That does not create an ambiguity. Rather, it leaves a discretion to the Lord Chancellor as to how he is to conduct the review. Implicit in the requirement placed on the Lord Chancellor is that the review should be a proper review sufficient to identify the likely effect of the LASPO changes on mesothelioma claims. All parties to these proceedings agree that this is the ordinary and natural interpretation of Section 48. It is inconceivable that Parliament would have required a Minister of the Crown to conduct a statutory review otherwise. Even if it were thought that recourse to Parliamentary material was necessary or appropriate to determine beyond that what was meant by “a review”, such recourse would not provide any assistance in relation to that determination. At no stage prior to LASPO being given Royal Assent on the 1st May 2012 did any Minister explain what form the review would take or its ambit. When Section 48 (as it now is) was introduced on the 24th April 2012 by Jonathan Djanogly he was asked what kind of review was anticipated. Mr Djanogly said that “we have not thought through the exact procedures of the review”. Lord McNally on the 25th April 2012 in the House of Lords said that “I cannot say much more at this early stage about the precise terms of the review but it will be a proper and appropriate one”.

The review mechanism that the government decided to adopt was to consult and the consultation and the responses which were received would constitute the review. At first blush it is difficult to see how this alone, devoid of empirical evidence and analysis, would enable the statutory duty to be fulfilled. But there were other more detailed flaws in the consultation process:

Paragraphs 66 to 71 of the consultation document set out the essence of Lord Justice Jackson’s reports and the subsequent legislative history in very summary form. I do not need to set out the content of those paragraphs here because it would be mere repetition of the much fuller discussion contained in this judgment. Paragraphs 74 to 76 of the consultation document rehearsed the position under Sections 44 and 46 as it applied to all other personal injury claims i.e. the increase in the level of general damages by 10%, the capping of success fees at 25% of damages for non-pecuniary and past financial losses and the system of qualified one way costs shifting. These paragraphs simply set out the funding position that would obtain were Sections 44 and 46 to apply to mesothelioma claims. Paragraphs 72 and 73 were the critical part of the review process. They were as follows:

“72 The Government believes that other changes set out in this consultation, andthe changes to the statutory framework for funding of litigation described above,together with the changes being introduced in the Mesothelioma Bill should make it possible, and appropriate, for sections 44 and 46 of the LASPO Act to be brought into force for mesothelioma claims at the same time as those other changes. The Mesothelioma Bill was introduced in Parliament on 9 May 2013,  and it is hoped that it will receive Royal Assent this year, with the relevant provisions coming into effect in 2014.

73 The Government is committed to ensuring that all the changes – set out in this consultation paper and in the Mesothelioma Bill – are considered in a synchronised manner, and that mesothelioma sufferers benefit from the changes and receive compensation in a speedy and efficient way. Views on the likely effects of sections 44 and 46 of the LASPO Act in relation to mesothelioma claims in the light of the other changes would therefore be welcomed.”

Two things follow from those two paragraphs. First, the objective reader/consultee would conclude that the proposal to apply Sections 44 and 46 to mesothelioma claims was linked to and affected by the other proposals in the consultation document.

Second, such a person would conclude that his or her views on the likely effect of Sections 44 and 46 were to be given on the assumption that all of those proposals were to take effect. The objective reader/consultee would then be fortified in his or her conclusions by the terms of the question posed pursuant to the review. It was as follows:

“15 Do you agree that sections 44 and 46 of the LASPO Act 2012 should be brought into force in relation to mesothelioma claims, in the light of the proposed reforms described in this consultation, the increase in general damages and costs protection described above, and the Mesothelioma Bill?”

Indeed the question of itself did not invite the objective reader/consultee to assess the likely effects of Sections 44 and 46 on mesothelioma claims. As the Defendant argues, an exercise such as this must be considered in its entirety and he is entitled to point to the final sentence of paragraph 73 of the consultation document. But that sentence itself refers to the likely effects “in the light of the other changes”. Viewed as a whole the consultation document objectively was not in such terms as would provide the Defendant with what he needed for his review.

The Defendant argues that, whatever the objective meaning of the consultation document and the question posed, at least some of those who responded understood that he was conducting his review of the likely effect of Sections 44 and 46 on mesothelioma cases. The Defendant notes that the Claimant himself responded to Question 15 by reference to the review. In fact his response was simply an observation that the suggestion that LASPO reforms and/or the other proposals in the consultation document mitigated the effects of Sections 44 and 46 was “simply recycling discredited arguments and adds nothing to the review of the effects of Sections 44 and 46”. The Claimant responded to the question in the context of the material set out in paragraphs 65 to 76 of the document. Many other responses made it clear that it was not considered that the consultation exercise fulfilled the requirements of Section 48. For instance, The Law Society of England and Wales concluded its response to Question 15 as follows:

“We do not consider that a single consultation question feeding into an otherwise closed review on removing these key protections for mesothelioma sufferers is likely to produce the detailed data and analysis required to make a satisfactory assessment of the impact on such sufferers of introducing the stated sections, as required by section 48 of the LASPO Act.”

There is some irony in the position impliedly taken by the Defendant i.e. the court must consider the review objectively but, if an objective view leads to the conclusion that the hypothetical consultee would not understand that the consultation was the Section 48 review, the court can look at how real consultees in fact responded. This might avail the Defendant if the overwhelming majority of the responses provided a view as to the “likely effect of Sections 44 and 46” so as to demonstrate that a proper Section 48 review could be and was undertaken. That is not the case.

There was considerable debate in the course of the hearing as whether the consultation document constituted an indivisible package or whether the Section 48 review as set out at paragraphs 65 to 76 was a discrete review. With respect to the competing arguments I consider that this debate was sterile. The issue is whether the consultation document could provide the Defendant with what he needed to conduct the review required by Section 48. For the reasons I have set out above I do not consider that it could. The consultation process as adopted did not enable a proper review of the likely effect of Sections 44 and 46 on mesothelioma claims.

A number of points fall to be considered as part of the context of the decision.

First, taking a cold hearted approach objectively it is difficult to see why mesothelioma victims fall to be treated more favourably in terms of the recoverability of additional liabilities than say a brain damaged child who has suffered catastrophic injuries in a road traffic accident. Hard cases usually make bad law. Mesothelioma claims will remain in an anomalous position to the vast bulk of personal injury claims for some while yet, but one suspects this decision simply represents a “stay in execution”.

Secondly although the bona fides of the consultation process appear not to have been called into question only its adequacy, an interesting part of the context is the House of Commons Justice Committee report on Mesothelioma Claims which noted the following:

 27. Following the oral evidence session, Mr Dalton wrote to us on 22 May 2014 appending a document entitled “Mesothelioma Heads of Agreement dated 13 July 2012: Her Majesty’s Government and the Association of British Insurers. This document described the proposals contained within it as an “indivisible package”, which included a number of action points for delivery by the industry, and a number for delivery by the Government, including a “commitment to conduct the review of the applicability of provisions of the Legal Aid, Sentencing and Punishment of Offenders Act to mesothelioma claims as soon as appropriated and in line with the whole of the mesothelioma packages. Mr Dalton said that there was no commitment from the Government to introduce any of the reforms to the process, and that, given the Ministry did not proceed with certain proposals in its consultation, “it cannot be argued, as some members of the Select Committee sought to do during the hearing, that the ABI and the insurance industry was provided any favourable treatment in relation to the…consultation paper.

28. Asked about the Government’s understanding of the status of this Heads of Agreement document, Lord Faulks conceded that the document was “somewhat unusual” and amplified his position as follows:

We have the Government agreeing to deliver certain things and the industry agreeing to deliver certain things. In fact, the Government did not deliver quite a few of the things in the bullet points in that section, so it is a slightly unusual agreement in the context of an agreement as one would normally regard it.

29. It is undeniably the case that although elements of this Heads of Agreement have been delivered by both sides, including the LASPO section 48 review, it has proved to be in no sense a binding contract: the “indivisible package” which it set out has proved to be eminently divisible. It might be better understood to be a memorandum of understanding or intent drawn up between the insurance industry and the Government. It is not however the precise status of the document, legal or otherwise, which is of primary concern to us. Nor are we surprised that the Government was discussing these matters in private with the insurance industry. We are concerned the government has been neither transparent nor open, either with us or with other interested parties, about the fact that its overall policy in relation to mesothelioma has been shaped in accordance with an “agreement”, however informal and elastic, which it had reached with employers’ liability insurers. It is hard to see how a balanced and informed public debate can take place when a prior agreement has been reached between two of the principal parties to that debate, and that agreement is not known to others participating in the debate, including victims.

Thirdly the decision has clear ramifications for the ongoing reforms in relation to whiplash injuries. Lawyers and others adversely affected by the reforms may well consider a public law claim to challenge the legality of the reforms. The first tranche of the reforms took effect on 1st October 2014: to what extent are the changes introduced to the Protocol liable to attack on the grounds of judicial review?

The second tranche of reforms, which would impose far reaching restrictions on solicitors firms including inter alia, on the ownership of medical reporting organisations are likely to prove even more controversial and will scrutinised even more anxiously.

 

 

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