High Court defeat for Chris Grayling over cancer damages reform

The High Court has today ruled that the decision by the UK Government to take substantial sums from cancer sufferers’ damages, saving the insurance industry millions of pounds, was unlawful.

The Asbestos Victims’ Support Groups Forum UK, represented by law firm Leigh Day, brought the legal action against the Government after it announced that mesothelioma sufferers should pay up to 25% of their damages for costs previously paid for by insurers.

The Forum successfully argued that by including victims of mesothelioma within the reforms in the Legal Aid Sentencing and Punishment of Offenders Act (LASPO), without a review of the likely effects on mesothelioma claims, the Government were acting unlawfully.

The Association of British Insurers intervened into the Court action in support of the Government.

In today’s judgment The Honourable Mr Justice William Davis said:

“The issue is whether the Lord Chancellor conducted a proper review of the likely effect of the LASPO reforms on mesothelioma claims…I conclude that he did not.” [Para. 37]

“…it is now for the Lord Chancellor to carry out a proper review of the likely effects of the LASPO reforms in whatever manner he concludes will permit him reasonably to achieve the required purpose.” [Para. 41]

Today’s judgment, which follows a two day hearing in July 2014, is seen as a ‘humiliating’ defeat for the Lord Chancellor, Chris Grayling.

In August 2014 The Justice Select Committee severely criticised the Government over its approach to compensation for sufferers of mesothelioma, and urged the coalition to hold a fresh consultation.

In its critical report the Committee said the coalition's approach to these claims had been "maladroit" and that a promised review into the effects of LASPO had not been conducted in an even handed manner.

MPs also expressed surprise over a secret heads of agreement document between the Government and the insurance industry, which was not disclosed to other parties.

The secret document, headed ‘Mesothelioma Heads of Agreement’ between Her Majesty’s Government and the Association of British Insurers (ABI), is dated 13 July 2012.

It begins: “This document is confidential and remains the property of the Association of British Insurers (ABI). Neither the contents of this paper nor the document itself may be disclosed to a Third Party, including under a request under the Freedom of Information Act, without written consent from the ABI.”

According to industrial disease specialist Harminder Bains from Leigh Day, who submitted evidence to the Court in support of the Forum at the hearing:

“This document exposes the shameful private deal which the Government had done with the ABI.

“As part of the deal, the Government undertook to make a number of changes to the way mesothelioma sufferers’ claims would be handled, which all benefit the insurance industry to the detriment of victims”.

Richard Stein from the Human Rights Department at Leigh Day, who brought the judicial review against the decision, said:

“This Government is seemingly intent on doing what it is told by the insurance industry against the best interests of those suffering from the negligent behaviour of the insured.

“This is the second time we have fought and won on behalf of mesothelioma sufferers. After our threat of legal action in December 2013, the Government backed down from implementing a series of measures such as a Mesothelioma Pre-Action Protocol, a Fixed Recoverable costs regime and an Electronic Secure Mesothelioma Gateway, which would have benefitted only the insurers.

“Today’s judgment should send a clear message to the Government that it has to conform with the laws of the land and cannot ride roughshod over the interests of mesothelioma sufferers and their families to benefit the insurance industry.”

Tony Whitston, Chair of the UK wide Forum of Asbestos Support Groups, called on the Government to: “see this judgment as an opportunity to take a new approach based on justice for victims and not the profits of big financial institutions. The old plans were rooted in a culture of secret deals with insurers and flawed consultations, which excluded the victims of asbestos. Now is the time for a change”. 

Background

Following the introduction, on the 1st April 2013, of the Legal Aid Sentencing and Punishment of Offenders Act (LASPO), victims of personal injury cases now have to use part of their damages to pay their legal costs and insurance premiums under sections 44 and 46 of the Act.

However, prior to LASPO coming into force, the House of Lords insisted that the Government exclude claims from people suffering from the asbestos-related cancer mesothelioma from those changes.

The Lords successfully insisted that a statutory obligation (s.48) was included in the Act, which provided that before these changes were applied to mesothelioma victims the government would be required to carry out a review of their likely effects on mesothelioma claims, and to publish a report of the findings of the review.

The Asbestos Victims’ Support Groups Forum UK argued that no such review has taken place.

However, in a Written Ministerial Statement, the Parliamentary Under-Secretary of State for Justice Shailesh Vara, announced on 4th December 2013 that the Government: "has concluded that it intends to apply sections 44 and 46 of the LASPO Act to mesothelioma cases".

The Government argued in court that the required review had been carried out as part of the consultation ‘Reforming Mesothelioma Claims’ which took place between July and October 2013 and the responses to the consultation.

In its report responding to the consultation, on 6th March 2014 the Government concluded that sections 44 and 46 should now be brought into force.

Leigh Day, the lawyers for the Forum argued that the decision to apply sections 44 and 46 of LASPO in relation to mesothelioma claims was taken without having carried out a proper review of the likely effects as required by s48 of LASPO and is therefore unlawful.

The impact of the changes brought about by LASPO could not have been assessed properly at this stage given that the LASPO reforms only came into force on 1st April 2013.