The Law Commission

 


PART 4

ARE DAMAGES ALWAYS THE ANSWER?

INTRODUCTION

4.1      Sometimes a complainant may not want damages. Sometimes damages may not be the appropriate remedy on a principled basis. The courts themselves accept that sometimes an alternative remedy may be more appropriate.^[1] This Part examines the alternatives available and raises some questions about the relationship between damages available through the courts and other remedies.

4.2      It is important to bear in mind when considering the proper availability of damages and other remedies the current debates on the so-called "compensation culture". This was considered in a report by the Better Regulation Task Force in May 2004, which examined to what extent the compensation culture actually exists and what could be done to improve the current system for people with genuine claims for compensation.^[2] The Compensation Act 2006 received Royal Assent on 25 July 2006. Part 1 of the Act contains provisions about the law relating to negligence and breach of statutory duty. Part 2 relates to the regulation of claims management services.

HOW DO YOU MEASURE DAMAGES?

4.3      As a preliminary matter, it is worth noting that the idea of damages is not a unitary or simple one. The courts may use different methods of assessing damages depending on the type of action concerned. The measure of damages in tort is full compensation: the aim is to put the claimant back in the same position he or she would have been in had it not been for the tortious action. But what constitutes full compensation is determined by rules of law, and, where there is no direct relationship between the loss and money, by conventional measures, such as the calculus of general damages in personal injury cases.

4.4      As we have seen, the courts have decided that damages under the Human Rights Act 1998 are of a more limited nature.

4.5      The public sector ombudsmen are able to recommend the payment of compensation where they find maladministration. Most ombudsmen, if they decide to recommend the award of compensation, will do so on the basis that the complainant should be put back in the position that he or she would have been in but for the maladministration, possibly with additional compensation for distress. But the ombudsmen have a great deal of discretion, both over the amount of any award and in respect of how it will feature in a package of remedies. The Local Government Ombudsman's guidance on remedies suggests that they will award financial compensation as a last resort, and only if other remedies are not sufficient because of the passage of time or events that have occurred. The guidance states that in some circumstances an apology may be all that is necessary.^[3]

4.6      Tortious damages are all or nothing. A finding of negligence liability in the courts will lead to a public body paying the full measure of tortious damages. A finding of no liability means the claimant gets nothing. This has been argued to be inappropriate when public bodies and public actions are concerned.^[4] As noted, sometimes the measure of damages will be different, for example under the Human Rights Act, or where the ombudsman has made a recommendation for compensation. The substantive project must consider questions about the appropriate measure of damages where public bodies are concerned. But we must also consider what people want when they seek damages: do they always want the full measure of damages or do they sometimes just want a more nominal amount by way of recognition of what has happened? Or is the demand for money really standing in for some other desire, like that for a full explanation, or an assurance that the defect leading to the loss has been cured?

ALTERNATIVE REMEDIES: THE OPTIONS AVAILABLE

4.7      There are a number of alternative redress mechanisms to the courts. The relationships between these bodies and the courts and the relationships between these other bodies themselves, are not simple. Redress may be available through ombudsmen, tribunals, statutory compensation schemes or through ex gratia payments made by public bodies. Parties may be encouraged or required to attempt dispute resolution through alternative dispute resolution mechanisms such as mediation.

4.8      The substantive project will consider the interrelationship between these alternative redress mechanisms and the courts and the relationship between damages and alternative remedies and in particular, what principles should decide what remedy is most appropriate in any given case.

4.9      To help us answer this question, we will look at the purposes of each type of remedy, and what people want by way of remedy when they pursue any type of complaint or dispute against a public body. We have in this scoping paper taken damages through the courts as our primary focus, and cast other remedies as "alternatives". The substantive project will need to look at the extent to which other remedies are satisfactory alternatives to damages obtained through the courts. To what extent does each provide what people are really looking for by way of remedy?^[5]

4.10      These alternative routes to redress may sometimes allow for the award of monetary compensation. Often, however, the focus is on different types of remedy, for example apologies, specific remedial action or revision of a public body's practices and procedures.

4.11      Although the different redress mechanisms have been set out in categories below, it is notable that in fact they do not always neatly fit into categories. For example, complaints bodies exist that are not truly internal complaints mechanisms and do not fall within the criteria for ombudsmen as set out by the British and Irish Ombudsmen Association, but fall somewhere in between. To give another example, the Pensions Ombudsman in fact falls under the supervision of the Council on Tribunals and is different from other ombudsmen in that he can make binding recommendations. Different sectors have their own complaints structures; it is difficult to make many generalisations.

4.12      We have attempted to focus on "public sector" institutions, that is those that deal with complaints against public rather than private bodies. This is not a clear cut distinction. The Housing Ombudsman, for example, might be termed a "hybrid" ombudsman, in that he deals with complaints made against both Registered Social Landlords (which may or may not count as public bodies) and some private sector landlords.

The impact of the Administrative Justice White Paper

4.13      The government is in the process of reforming the administrative justice system. A White Paper was published in July 2004, which set out reforms to the tribunal system and created the idea of "proportionate dispute resolution", described in the White Paper as follows:

The aim is to develop a range of policies and services that, so far as possible, will help people to avoid problems and legal disputes in the first place and; where they cannot, provides tailored solutions to resolve the dispute as quickly and cost-effectively as possible.^[6]

A draft Tribunals, Courts and Enforcement Bill, following on from the White Paper, has now been published for consultation.^[7]

4.14      Our project will need to take these reforms into account and in particular consider what impact proportionate dispute resolution should have on any recommendations we make.

4.15      In our recently published issues paper "Housing: Proportionate Dispute Resolution"^[8] we attempted to develop ideas for a more proportionate system for solving housing problems and resolving housing disputes. Our work in this area was specifically highlighted in the government's Administrative Justice White Paper.^[9]

Public sector ombudsmen^[10]

4.16      There are a number of public sector ombudsmen who have jurisdiction to consider complaints about public bodies, principally the Parliamentary Commissioner for Administration; the Health Service Commissioner; and the Commissioners for Local Administration, commonly known as the Local Government Ombudsmen.^[11] In Wales, there is one Public Services Ombudsman. There are proposals to remove certain legislative restrictions to enable the three main public sector ombudsmen in England to work more closely together.^[12]

4.17      Each ombudsman service operates under its own rules; it is not possible to do more at this stage than make general statements about ombudsman services. Private sector ombudsman may provide useful comparisons in terms of when and how much compensation they will award and how they award other remedies, as well as their working practices in general. Although ombudsmen all operate separately, there is some linkage in their common membership of the British and Irish Ombudsmen Association.^[13]

4.18      The ombudsmen have a potentially wide jurisdiction to investigate complaints of maladministration by public bodies. There is no definition of what constitutes maladministration, but it has generally been given a wide definition and interpreted flexibly. By statute the ombudsmen cannot investigate matters for which a complainant could obtain a remedy through court proceedings, although it may be that this restriction is interpreted loosely by ombudsmen.^[14] The ombudsmen are intended in general to provide a cost-free and more informal method of dealing with grievances against the state. It has been said that the ombudsmen may in some ways be a better long-term complaints resolution mechanism where public bodies are concerned, on the grounds that they are more able to deal with the systemic nature of some public law disputes and are able to provide feedback to public bodies to enable them to improve their working practices and policies.

4.19      The ombudsmen can recommend an award of compensation if a finding of maladministration is made. The awards recommended by the public sector ombudsmen will often be more modest than awards awarded by the courts. Their recommendations are not legally enforceable (other than those of the Pensions Ombudsman), although in practice they are usually followed.

4.20      Ombudsmen can also make recommendations as to remedies other than monetary compensation. They often require public bodies to offer apologies, to take specific action to put the complainant back in the same position as before, or to take action to make sure that similar mistakes are not made in the future.

Independent complaints handlers

4.21      The Adjudicator and the Independent Case Examiner are both significant bodies in the resolution of complaints against public bodies. The Adjudicator deals with complaints about HM Revenue and Customs and other bodies. The Independent Case Examiner examines complaints against the Child Support Agency. Other similar bodies exist.

Tribunals

4.22      A large number of cases against public bodies are brought in tribunals rather than in the courts. Tribunals hear complaints in areas including social security and child support, immigration, education, and taxation.^[15] Like the ombudsmen, tribunals were intended to provide a more informal and less expensive alternative to the courts. The extent to which this is still true of practice in tribunals today varies between different tribunals. They are also intended to provide an expert dispute resolution service on areas of law and practice which can be complex and technical.

4.23      As with ombudsmen, tribunals differ widely in terms of their powers and procedures, size, degree of formality, workload and costs. Our project will consider primarily those that deal with disputes between public bodies and individuals. Some tribunals deal with disputes between individuals; where we can draw useful lessons from these tribunals we will do so.^[16] We will also take into account the reforms mentioned above, which are fundamentally reshaping the tribunals system, in particular the unified Tribunals Service which is now responsible for the administration of a large number of tribunals,^[17] as well as the impact of our housing disputes project.^[18]

4.24      Broadly speaking, tribunals tend not to award compensation. Although the precise outcome of a tribunal case will depend on the tribunal concerned, tribunals appear to award by way of remedy that which the claimant would have been entitled to if their case had been correctly decided by the original decision-maker at the outset. So, for example, the Social Security and Child Support Appeals Tribunal will rule on whether or not a claimant is entitled to the benefit in question, the remedy being that the claimant will be awarded the appropriate benefit.^[19]

Alternative Dispute Resolution

4.25      For many years there has been a focus on moving disputes away from the courts where possible by resolving disputes through alternative mechanisms. One of the key principles of the Access to Justice report was that litigation should be avoided wherever possible and that people should be encouraged to use the courts only as a dispute resolution mechanism of last resort.^[20] The Civil Procedure Rules impose a duty on the court to encourage the parties to a case to use alternative dispute resolution procedures and to facilitate the use of alternative dispute resolution.^[21] All the redress mechanisms discussed in this Part can be described as alternative dispute resolution in the sense that they are alternatives to the courts. We use the phrase here as it is often used to refer collectively to dispute resolution through mechanisms such as mediation, conciliation and arbitration. We focus here primarily on mediation.^[22]

4.26      There have been some moves towards acceptance of mediation in the public sector. The government made a pledge in 2001 to use alternative dispute resolution wherever possible, using court procedures as a last resort.^[23] A report commissioned by the Department of the Environment, Transport and the Regions (now the Department for Communities and Local Government) identified some advantages in mediation for certain types of planning disputes, although it said there would need to be incentives to achieve an increased use of mediation.^[24]

4.27      Our project will examine the extent to which methods of alternative dispute resolution, particularly mediation, are used in cases against public bodies. We will examine the extent to which mediation can be adapted to administrative law disputes that tend to involve multiple interests and a range of interested parties.^[25] Important advantages of mediation have been said to be the maintaining of long-term relationships and the ability to deal with multi-faceted problems: to what extent are these advantages important in the public law context?^[26] Is mediation, which takes place in private, a suitable vehicle for the resolution of disputes against public bodies that arguably ought to be made public?

Statutory Compensation Schemes and ex gratia payments

4.28      Statute can impose liability to pay compensation on public bodies. A good example of this is the duty to pay compensation for compulsory purchase.^[27] Compensation is also payable to victims of miscarriages of justice^[28] and for criminal injuries. When it was introduced in 1964, the Criminal Injuries Compensation Scheme was an ex gratia scheme. The scheme became statutory under the Criminal Injuries Compensation Act 1995. There is a tariff scheme whereby fixed payments are set for specific types of injury.^[29] The government has announced reforms to both the miscarriages of justice and criminal injuries compensation schemes.^[30]

4.29      Public bodies may also sometimes make payments on an ex gratia basis. Individual public bodies will have their own rules and procedures dealing with when they might make such payments. For example, HM Revenue and Customs' Code of Practice sets out when the department will make compensation payments or take other remedial steps. The Code states that HM Revenue and Customs will apologise, explain what went wrong, correct mistakes to put people back in their original position as far as possible, and learn from experience. Payments of up to £500 may be made for distress or mistakes made in dealing with the complaint.^[31] The Government Accounting manual provides guidance to public bodies on when to make ex gratia compensation payments and the principles that determine the amount of payments.^[32]

The NHS Redress Bill

4.30      The NHS Redress Bill provides for a scheme for dealing with low value claims arising out of NHS hospital treatment. The Bill gives effect to a proposal for an NHS redress scheme by the Chief Medical Officer.^[33] The details of the scheme are still to be decided: the Bill has not yet passed through Parliament and many of the details will be set out in secondary legislation.^[34] There have been criticisms of the proposed scheme.^[35] However, we consider the scheme envisaged by the NHS Redress Bill might be a useful one for study in our substantive project.

4.31      It appears that it is intended that claimants will use the NHS Redress scheme to obtain compensation and other remedies rather than pursuing an action through the courts, although claimants are not barred from taking court proceedings.^[36] The scheme is intended to provide for a mixture of remedies: compensation, the giving of an explanation or the giving of an apology.^[37] The government has stated that "it is intended that financial compensation offered under the scheme will be broadly equivalent to the level of compensation that would be provided in a successful claim before a court."^[38] As well as financial compensation, the Bill provides for compensation in the form of care or treatment.^[39]

HOW DO WE DECIDE WHICH REMEDIES ARE APPROPRIATE?

4.32      Even on a brief overview, it is apparent that there are a number of remedies available other than damages awarded by the courts. Our project will need to examine how it should be decided which remedies are appropriate in any given case or in different types of cases or at least principles which could inform the decision about which remedy is appropriate. We will need to consider what the purpose of redress is in any given situation.

4.33      A key factor will be what people want by way of remedy. It is often said that people do not necessarily want monetary compensation and may often want something else, for example an apology from the public body concerned.^[40] Our project will need to examine the socio-legal and other research on what people want as a remedy.^[41]

4.34      What people want from a remedy cannot be the only consideration. Remedies must be in the public as well as in private interests. They must not unduly burden public bodies. There are a large number of competing claims on public money, and public resources should not be used excessively to dispute claims or to make payments of compensation which are not justified in principle or in terms of quantum.

4.35      The question of what is an appropriate remedy also depends as a matter of principle and public policy on what is appropriate for the type of wrong that has been suffered. For example, when a legal right has been infringed, it could be argued that an apology will not suffice by way of remedy and that an award of damages is necessary. Some of the issues can be seen in the courts' recent attempts to delineate principles about appropriate remedies for breaches of the Human Rights Act.^[42]

THE RELATIONSHIP BETWEEN DIFFERENT ROUTES TO REDRESS

4.36      A complainant will often have more than one route to redress. Particular problems arise with the relationship between the ombudsmen and the courts.

4.37      The project will consider whether procedural reforms might make the system as a whole operate more smoothly and eliminate some of the current problems. One option to consider is whether there could usefully be some kind of power for the courts to be able to make references to the ombudsmen where appropriate, and vice versa. We may also consider reform of the rules that mean that the ombudsmen cannot investigate cases in which court proceedings are possible.

4.38      Before recommending any procedural reforms, we will need to look at the competing options of allowing people a choice of redress mechanisms versus making the choice for them, for example by allowing a court to refer a matter to the ombudsman. It is arguable that each redress mechanism is intended to provide a different means of dispute resolution and a different set of remedies, with different advantages and disadvantages to each, and that as long as people have sufficient information and advice, they should be able to chose how they want their dispute or complaint dealt with. An alternative view is that people should not be allowed to pursue inappropriate routes to redress or remedies, and that the courts or other bodies should have some measure of control over the dispute resolution process.

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Note 1    See Anufrijeva v Southwark LBC [2003] EWCA Civ 1406, [2004] QB 1124 and X (minors) v Bedfordshire CC [1995] 2 AC 633 (but note that the court’s reasoning on the availability of alternative remedies was rejected by the European Court of Human Rights in Z v UK (2002) 34 EHHR 3, who said that neither the Criminal Injuries Compensation Scheme nor the possibility of applying to the Local Government Ombudsman provided the claimants with an adequate alternative means of redress).     [Back]

Note 2    Better Regulation Task Force, Better Routes to Redress (May 2004).    [Back]

Note 3    The Commissioner for Local Administration in England, “Remedies: Guidance on good practice 6”, available on http://www.lgo.org.uk/pdf/remedies.pdf (last visited 18 September 2006). See paras 8 and 11. This document generally contains detailed guidance on the award of different remedies, including compensation, including in different factual situations.     [Back]

Note 4    See M Fordham, “Reparation for Maladministration: Public Law’s Final Frontier” (2003) 8(2) Judicial Review 104, at p 106, in which he argues that “a public lawyer’s problem cannot be solved with a private lawyer’s solution. Administrative law does not thrive using ‘on-off’ switches. It never has. It is of their essence that principles of public law are contextual and flexible.”     [Back]

Note 5    For research related to this question see H Genn, Paths to Justice: What People do and Think About Going to Law (1999), ch 6; also P Pleasance, Causes of Action: Civil Law and Social Justice (2nd ed 2006), ch 4.    [Back]

Note 6    Transforming Public Services: Complaints, Redress and Tribunals (2004) Cm 6243, para 2.2.    [Back]

Note 7    See http://www.dca.gov.uk/legist/tribenforce.htm (last visited 7 September 2006). The consultation period runs to 22 September 2006.    [Back]

Note 8    Housing: Proportionate Dispute Resolution (2006) Law Commission Issues Paper, available online at http://www.lawcom.gov.uk/housing_disputes.htm.     [Back]

Note 9    Transforming Public Services: Complaints, Redress and Tribunals (2004) Cm 6243, Annex D.    [Back]

Note 10    For a more detailed discussion of ombudsmen, see Housing: Proportionate Dispute Resolution (2006) Law Commission Issues Paper, Part 6, available online at http://www.lawcom.gov.uk/housing_disputes.htm.     [Back]

Note 11    There are also other “hybrid” ombudsmen which can hear complaints about public and private sector bodies, for example the Independent Housing Ombudsman Service.     [Back]

Note 12    Reform of Public Sector Ombudsmen Services in England: A Consultation Paper issued by the Cabinet Office, August 2005    [Back]

Note 13    See http://www.bioa.org.uk (last visited 18 September 2006). Among the objects of the Association are to formulate standards of best practice for ombudsmen and to hold meetings and conferences and other activities to encourage the efficiency and effectiveness of ombudsman services.     [Back]

Note 14    Local Government Act 1974 s 26(6), Parliamentary Commissioner Act 1967, s 5(2)(b); Public Services Ombudsman (Wales) Act 2005, s 9(1)(b).     [Back]

Note 15    For example Social Security and Child Support Commissioners decided 7,064 cases 2004 to 2005; Immigration Adjudicators decided 100,034 cases 2004 to 2005; the Immigration Appeal Tribunal decided 47,009 cases 2004 to 2005; School Admission Appeal Panels decided 59,901 cases in the school year 2003 to 2004; and General Commissioners acting under the Taxes Management Act 1970 s 2 decided 16,562 cases 2004 to 2005. These statistics are taken from the Council on Tribunals Annual Report 2004/05 Appendix G at pp 43 to 54.    [Back]

Note 16    Important tribunals that deal with disputes between individuals include the Employment and Employment Appeal Tribunals and the Residential Property Tribunal Service. The Residential Property Tribunal Service also has jurisdiction for some disputes between individuals and public bodies: see in particular the Housing Act 2004.     [Back]

Note 17    See Transforming Public Services: Complaints, Redress and Tribunals (2004) Cm 6243 and the Tribunals Service website at http://www.tribunals.gov.uk (last visited 18 September 2006).    [Back]

Note 18    Housing: Proportionate Dispute Resolution (2006) Law Commission Issues Paper, available online at http://www.lawcom.gov.uk/housing_disputes.htm.     [Back]

Note 19    Although the tribunal has no power to enforce its decisions.    [Back]

Note 20    Lord Woolf, Access to Justice Final Report (July 1996) Section 1 at para 9.    [Back]

Note 21    Civil Procedure Rules r 1.4(e).    [Back]

Note 22    See also the Law Commission’s Housing Disputes Issues Paper, Part 7, on mediation.    [Back]

Note 23    On 23 March 2001 the Lord Chancellor published a formal pledge committing Government departments and agencies to settle legal cases by Alternative Dispute Resolution techniques whenever the other side agreed to it, and to only go to court as a last resort. See DCA Report, Monitoring the Effectiveness of the Government's commitment to using Alternative Dispute Resolution (ADR) (July 2002) http://www.dca.gov.uk/civil/adr/adrrep_0102.htm part1 (last visited 18 September 2006) and the Government News Network website http://www.gnn.gov.uk/Content/Detail.asp?ReleaseID=24434&NewsAreaID= (last visited 18 September 2006) for more information.    [Back]

Note 24    Report commissioned by the Department of the Environment, Transport and the Regions from Michael Welbank, Mediation in the Planning System (August 1998).    [Back]

Note 25    There is already some research into this area, eg M Supperstone, D Stilitz and C Sheldon, "ADR and Public Law" [2006] Public Law 299; and for comparisons with experiences in other jurisdictions see: S Byron, "The Rise of Mediation in Administrative Law Disputes: Experiences from England, France and Germany" [2006] Public Law 320; T Buck, European methods of administrative law redress: Netherlands, Norway and Germany, DCA Research Series 2/04 (November 2004) http://www.dca.gov.uk/research/2004/2_2004.pdf (last visited 18 September 2006); and T Buck, Administrative justice and alternative dispute resolution: the Australian experience, DCA Research Series 8/05 (November 2005), http://www.dca.gov.uk/research/2005/8_2005_full.pdf (last visited 18 September 2006). The Public Law Project held a conference on ADR in public law on 23 April 2004. They hope to be able to carry out a research project into the viability of mediation in public law. More information is available from their website at http://www.publiclawproject.org.uk/policyres.html (last visited 18 September 2006).    [Back]

Note 26    For a discussion of the perceived advantages of mediation see Housing: Proportionate Dispute Resolution (2006) Law Commission Issues Paper, paras 7.16 to 7.20.    [Back]

Note 27    Under the Land Compensation Acts 1961 and 1973.     [Back]

Note 28    See the Criminal Justice Act 1988.     [Back]

Note 29    The tariff was revised in 2001.     [Back]

Note 30    See http://www.press.homeoffice.gov.uk/press-releases/miscarriages-justice and www.police.homeoffice.gov.uk/news-and-publications/news/new-compensation-arrangements, both visited on 18 September 2006. See also the Home Office’s consultation document Rebuilding Lives – Supporting Victims of Crime, published on 7 December 2005.     [Back]

Note 31    Information from HM Revenue and Customs leaflet “Putting things right – how to complain”, available on http://www.hmrc.gov.uk/leaflets/cop1.htm (last visited 18 September 2006).    [Back]

Note 32    Para 18.7. The manual is available at http://www.government-accounting.gov.uk (last visited 18 September 2006).    [Back]

Note 33    Making Amends (July 2003), available on http://www.dh.gov.uk (last visited 18 September 2006).    [Back]

Note 34    At the time of writing the Bill had been through the House of Commons on 14 July 2006, but it is not clear what will happen to the Bill if it does not pass through Parliament in the current session.     [Back]

Note 35    In particular the proposal for the scheme to be administered by the NHS Litigation Authority. The scheme has been the subject of comment in the House of Commons Constitutional Affairs Committee Report on the Compensation Culture (2005-06) HC 754.    [Back]

Note 36    Clause 1(1) of the Bill provides that a scheme may be established “for the purpose of enabling redress to be provided without recourse to civil proceedings…”. All references to the Bill in this scoping paper are to the Bill as amended in the House of Commons on 14 July 2006. It is not clear how the interface between the scheme and the courts will be affected by the availability of civil legal aid.    [Back]

Note 37    Clause 3(2).    [Back]

Note 38    Department of Health, NHS Redress: Statement of Policy (November 2005), para 35.    [Back]

Note 39    Clause 3(3)(a).     [Back]

Note 40    See for example, Better Regulation Task Force, Better Routes to Redress (May 2004), p 7.     [Back]

Note 41    For example L Mulcahy, Disputing Doctors: The Socio-Legal Dynamics of Complaints about Medical Care (2003); H Genn, Paths to Justice: What People do and Think About Going to Law (1999); and P Pleasance, Causes of Action: Civil Law and Social Justice (2nd ed 2006).    [Back]

Note 42    See Greenfield andAnufrijeva, discussed at paras 2.9 to 2.12 above.     [Back]