My Lords, earlier in our Committee's proceedings today, the noble Lords, Lord Beecham and Lord Newton of Braintree, were good enough to provide a curtain raiser for the amendment that we are about to consider. Amendments 137A, 156A and 156B fall in Clauses 43, 45 and 46 and happily enjoy all-party support from all parts of your Lordships' House. I am grateful particularly to my noble friend Lord Wigley and the noble Lords, Lord Avebury and Lord Bach, as fellow signatories to the amendment. I should also say that the noble Lord, Lord Newton of Braintree, asked me to add that he, too, is a firm supporter of the amendment, as are my noble and learned friend Lady Butler-Sloss and my noble friend Lord Martin of Springburn. The noble Lord, Lord Walton of Detchant, was also in the Chamber briefly earlier, and he asked me to say that he, too, has acute anxieties about the negative impact of these new arrangements on people suffering from mesothelioma. I think that the Minister would agree that this demonstrates that there is concern from all parts of your Lordships' House, which I hope he will take seriously.
At the outset, I would like to pay tribute to the Asbestos Victims Support Group Forum UK and especially to Mr Tony Whitston, who took the trouble to come to Westminster to meet my noble friends Lord Wigley, Lord Avebury and myself-I know that he has also briefed the noble Lord, Lord Bach-and to set out the concern of mesothelioma victims, which he did with great clarity and with passion.
As the Bill currently stands, these mesothelioma sufferers, whose life expectancy is nine to 12 months from diagnosis, will be required to surrender 25 per cent of general damages-the damages average about £65,000-in success fees. These amendments would permit those suffering from an asbestos-related illness or other respiratory diseases to recover success fees and "after the event" insurance from a defendant in a successful claim for damages. However, I would like to split my remarks this evening into mentioning something about the background to this issue; secondly, something about the effects of these amendments; and, finally, four reasons why I hope that the amendments will commend themselves to the Committee and to the Government.
Up until 1995, when conditional fee agreements were introduced, most mesothelioma sufferers, along with many personal injury claimants of modest means, used legal aid to seek justice in the courts. In 1949, an estimated 80 per cent of the population satisfied the income criteria for legal aid, but by 1990 only 48 per cent qualified. As middle-income claimants were increasingly denied access to justice and given the Government's determination to cut the cost of legal aid, in 1995 CFAs were introduced. Between 1995 and 2000, the success fee and "after the event" insurance were paid by claimants, take-up of CFAs was understandably limited and, wherever possible, mesothelioma cases were still run under legal aid. Trade unions then stepped in to provide additional support for many victims.
When the Access to Justice Act 1999 became effective, on
Without doubt, access to justice was certainly improved for everyone, including mesothelioma sufferers, under the new CFA regime from 2000 onwards. Put bluntly, solicitors and barristers were willing to take on riskier cases because the rewards were greater. Be that as it may, the important aspect is that those potential litigants who, due to their lack of funds, were hitherto prevented from accessing our courts were empowered by the new arrangements and able to bring their case. This is a conclusion with which the Ministry of Justice itself agrees. Its consultation paper, CP 13/10, Proposals for Reform of Civil Litigation Funding and Costs in England and Wales, states:
"There is general consensus that CFAs have increased access to justice for those who might otherwise not have been able to afford to bring a claim since they became enforceable in 1995, and particularly after the Access to Justice reforms which made CFAs an especially attractive funding method for claimants".
It is against this background of change that we are considering the Government's proposals on legal aid, success fees and "after the event" insurance and, in particular, how the new dispensation, as set out in Clauses 43, 45 and 46 will impact on those who suffer from mesothelioma; and why these amendments, tabled with all-party support, deserve the support of the Committee. I hope that the Government, at least in these particular circumstances, despite what the Minister said earlier-that he was inclined to reject any derogation at all from that which has been laid before the Committee-will be prepared to think again.
As currently drafted, Clause 43 provides for success fees to be paid by the winning claimant, not the losing defendant. A success fee is not, as is frequently implied, a bonus for winning the case, or a serendipitous stroke of luck like an unexpected windfall or a win on the lottery. The award of a success fee represents two things. First, on an obvious but important point, it says that the claimant has succeeded in winning their case. The claim is found to be justified in its inception and vindicated in proceeding through its course. Conversely, by extension, the defendant is found to have been wrong as regards the substance of the claim; wrong to seek to defend the claim; and wrong to pass over the opportunity to settle the case at some point in the proceedings-a point which my noble friend Lord Martin made earlier. Their conduct is penalised by having to pay the claimant's costs. Secondly, the granting of a success fee is a reward for the risk that those acting on the claimant's behalf have borne in pursuing the claim. The success fee underlines the importance of giving the claimant financial support at some of the most difficult times in people's lives-and times do not come much more difficult than when you are diagnosed as having a disease that will give you just nine months more to live.
Success fees are calculated as a percentage of base costs. Hitherto, CFAs have enabled meritorious but difficult cases to be investigated and pursued. Most importantly, this meant that test cases, many of which are launched by defendants, may be properly contested. Our common law system that is so cherished depends upon such cases. It is worth reflecting on how many cases over the past decade and more have come before not only the High Court, but the Court of Appeal and Supreme Court under CFA arrangements. These funding arrangements serve to advance and develop case law, but, most of all, ensure that the claimant has access to justice in the highest courts, as well as at the lower end of the justice system. It is precisely when test cases and appeals are brought or responded to, upon professional advice, that CFAs are most crucial.
It would be iniquitous if in future claimants are to pay the success fee and will have to underwrite the investigations into cases that are not pursued, or cases which are lost. As a matter of justice, it is fairer that wealthy insurers, more able to spread the risk, should fund a system whose purpose is to ensure access to justice, without which solicitors would be too risk-averse and many cases not undertaken.
At Second Reading, I cited the experience of the President of the Liverpool Law Society, Mr Norman Jones, and a benchmark case which he pursued to the Supreme Court. Hugely significant in the development of the common law concerning mesothelioma, the judgment has given hope to many thousands of asbestos victims who probably would not been entitled to compensation had the Supreme Court appeal by the defendants not been dismissed. The judgment in Sienkiewicz and Greif (UK) Ltd was given in the Supreme Court on March 2011. Mr. Jones handled the action under a conditional fee agreement. There were CFAs for the county court proceedings, the Court of Appeal and the Supreme Court. Norman Jones told me:
"Without the 100 per cent success fee payable under the CFAs the risks of handling this case would have been totally beyond my firm".
He said that had the new regime been in place and the case had been lost, putting it bluntly,
"my firm may have been facing bankruptcy!".
Under the new dispensation, lawyers such as Mr Jones would simply not be prepared to act on behalf of asbestos victims. All the dice would be loaded against them.
The second of my amendments is to Clause 45, which provides for "after the event" insurance to be paid by the winning claimant, not the losing defendant. ATE costs are currently paid by the defendant if the claimant wins a case. ATE premiums increase as a case progresses, especially where defendants push a case to trial. Respiratory disease cases are complex cases, and most of them involve asbestos-related diseases. The average ATE cost for mesothelioma is around £2,300. Under these arrangements, claimants will simply not be able to afford the risk of challenging inadequate offers, as the ATE cover of going to trial would simply be prohibitive. Also, the incentive for defendants to make reasonable offers will be diminished. It will become unaffordable to fight test cases run by defendants, or for claimants to run a test case. ATE insurance keeps unmeritorious claims out of the system, at no cost to the defendants, as cases are risk-assessed by the ATE insurer. My amendment would preserve the status quo, which works well.
My third amendment is to Clause 46. The effect of Clause 46 is to prevent the recovery by membership organisations, such as trade unions, of insurance premiums from a losing party. The majority of respiratory disease cases are occupation-related and many are assisted through trade unions. Just as it is wrong to penalise an individual claimant, so it is wrong to jeopardise cases run on behalf of trade union members or to discourage their involvement in championing the cases of sick or terminally ill members.
I hope that the Government will consider the following four questions as they reflect on these amendments: the nature of these respiratory diseases; the argument about costs; the winners and losers; and the impact on justice. Anyone who has served as a constituency Member of Parliament will have met desperate victims of asbestos exposure, and will have assisted bereft widows only months later. The life expectancy of a worker diagnosed with mesothelioma is a shocking nine to 12 months from diagnosis to death. Before their cases can be laid before a court, stringent medical reports and exhaustive investigations will be required, especially as most respiratory diseases are long latent diseases-a point made by the noble Lord, Lord Newton of Braintree, in his earlier intervention.
Asbestos disease is primarily found in the trades associated with construction, and silicosis, or Potter's Rot, among tunnellers and masons. It is known among many miners as the widowmaker. In 2010, asbestos-related diseases accounted for 93 per cent of all industrial injuries disablement benefit payments for respiratory disease. Mesothelioma accounts for 52 per cent of asbestos disease. It is a matter of official record that nearly 50 per cent of respiratory disease claimants paid IIDB suffer from mesothelioma and will die within approximately one year of diagnosis. Most people who develop mesothelioma have worked in jobs where they inhaled asbestos or were exposed to asbestos dust and fibres in other ways. There is also some evidence, as the noble Lord, Lord Beecham, pointed out in his earlier intervention, that even things such as washing the clothes of a family member who worked with asbestos increases their risk of developing mesothelioma.
Symptoms or signs of mesothelioma may not appear until 20 to 50 years, or more, after exposure to asbestos. Shortness of breath, coughing and pain in the chest due to the accumulation of fluid in the pleural space are often symptoms. Other symptoms include weight loss and cachexia, and, in cases of peritoneal mesothelioma, abdominal swelling and pain occurs due to a build-up of fluid in the abdominal cavity. Other symptoms may include bowel obstruction, blood-clotting abnormalities, anaemia and fever. If the cancer has spread beyond the mesothelium to other parts of the body, symptoms may include pain, trouble with swallowing or swelling of the neck or face. It is a wretched disease-a death sentence with fatal consequences.
All over this country, men and women were exposed for decade after decade to toxic substances, mostly at work, which ruined their lungs and cost many their lives. In the Greater Manchester area last year alone there was an increase of 38 per cent in the number of victims, up to 117 from 85 the year before. It is expected that mesothelioma deaths will peak in 2016, but recent studies suggest that they may peak earlier. Nor is the suffering caused by this tragic legacy of exposure over yet. According to the latest projections, about one in 70 of all British men born in the 1940s will die of mesothelioma, while one in 10 carpenters born in the 1940s, with 10 years' working experience before the age of 30, will die of mesothelioma or asbestos-related lung cancer.
To date, over 30,000 people in the United Kingdom have died from mesothelioma and over 60,000 more are yet to lose their lives due to past exposure. Let us not forget that the vast majority of respiratory diseases are contracted at work. Sufferers sacrificed their health and often their lives working to pay for their families and contributing to the wealth of this country. It seems iniquitous that such people should have to bear the costs of litigation.
I shall illustrate the sort of situation that I have in mind. While I was a Member of another place during the 1980s, the then Member of Parliament for Leeds West, Mr John Battle, raised in the House of Commons the Armley asbestos disaster, which involved the contamination with asbestos dust of an area of around 1,000 houses. The contamination was the result of the activities of a local asbestos factory, part of the Turner and Newall group, often referred to by the name of its founders, JW Roberts Ltd, and occurred between the end of the 19th century and 1959 when the factory eventually closed. At least 300 former employees are believed to have died from asbestos-related illnesses, and I was struck that when the new Member for Leeds West, Rachel Reeves, made her maiden speech after the most recent general election, this was one of the issues that she mentioned.
I turn to the argument about costs. As currently drafted, the Bill misses the point. It purports to tackle a compensation culture, fraudulent and frivolous claims and disproportionate costs. Ministers have acknowledged that there is only the perception of a compensation culture, but, that aside, the Bill does nothing to tackle the identified problems such as fraudulent whiplash claims, which I am told total a staggering £2 billion annually, while it highlights issues such as this one. Mr Nick Starling, the director-general of the Association of British Insurers, giving evidence to the Bill Committee in the House of Commons, made the point that the Bill is tackling the wrong target; it should be about the £2 billion of whiplash claims, by far the greatest in Europe, not,
"people who have been injured or they are ill and it is not their fault".
It is cases such as mesothelioma, he said, that need,
"speedy and correct redress".-[Official Report, Commons, Legal Aid, Sentencing and Punishment of Offenders Bill Committee, 14/7/11; col. 148.]
Why then do these three clauses shoot the wrong fox, a metaphor used earlier by the Minister, and put at risk litigants who have, as Mr Starling said, genuine claims and have been injured or are ill? Furthermore, the Law Society has estimated that these changes will not save the Exchequer money but will result in a net loss of some £70 million. When all the cases that would have gone forward under the current system no longer proceed-perhaps as many as 50,000-the Exchequer will be unable to recover, for example, the lump sums that it has received via the Pneumoconiosis etc. (Workers' Compensation) Act 1979 and the 2008 diffuse mesothelioma scheme. The Treasury recovered over £16 million mesothelioma lump sum payments in 2010-11 alone. Much of that recovery, plus the recovery of benefits, will be lost to the Government. Where are the savings to the public purse?
Incidentally, prior to the Government recovering lump sum payments in 2008, the insurance industry in effect recovered the payments by taking those payments into account when paying compensation. Over a 10-year period prior to 2008, insurers gained a windfall of at least a staggering £100 million. Nor should we forget the widely acknowledged advances that Senior Master Whitaker has made in the case management of mesothelioma claims, speeding up the resolution of those claims in the Royal Court of Justice and, through his practice direction, improving the management of claims in other courts. Much has been done to reduce litigation costs and much continues to be done in fixing costs, which does not and need not add to government costs and punish asbestos victims.
There are winners and losers here. The winners will be the insurance industry in particular. I refer the Minister to the report that appeared in today's Guardian newspaper under the headline,
"Insurance lobbyists were briefed by mandarins over legal reform", where Desmond Hudson, the Law Society's chief executive, said:
"This looks like being legislation for the insurance industry, by the insurance industry".
I am sure the noble Lord will want to disabuse us all of the idea that that might be so. However, he will understand that while there are issues such as this one before the House tonight, it is easy to see why such headlines might be written. The Moritz and Gavan report shows that there will not be a saving to government as a result of the proposals in the Bill. Claimants will also be the losers. Public liability and employer liability claimants will lose compensation under the proposals.
Lastly, what will be the impact on justice? If these amendments are not accepted, Parliament will make responsible for litigation costs those who have suffered grievously and require them to surrender a quarter of the compensation awarded to assist them and their families. It would be a tragedy and a profound injustice if, without serious objection, we did not seek to rectify that injustice.
When he was Lord Chief Justice, Lord Bingham said that,
"the laws of our country exist for the benefit of the poor as well as the rich; that equality before the law is a pretence if some citizens can assert and protect their rights and others cannot; that the rule of law, to be meaningful, must ensure that justice is available to all".
If that principle is not to be extended to victims of mesothelioma, to whom is it to apply? There are key questions which the Government need to answer. How would it be possible to bring a fraudulent mesothelioma case? How would it be possible to bring a frivolous mesothelioma case? The Minister knows the answers as well as I do. The answers are self-evident, which is why, as a matter of basic natural justice, I hope that the Government will be persuaded to accept these amendments and that noble Lords will give them their support. I beg to move.