Debated in Parliament on 11 Nov 2013.
Order for Second Reading read.
Mdm Speaker, I beg to move, "That the Bill be now read a Second time".
The Public Trustee presently administers motor accident compensation monies in respect of accidents causing death or bodily injury under the Motor Vehicles (Third-Party Risks and Compensation) Act.
Under the current Act, the Public Trustee performs three main roles. First, reviewing adequacy of out-of-court compensation settlements in all cases of motor accidents involving death or injury. Second, receiving and holding compensation monies arising from motor accidents on trust for all victims
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before distributing these monies to entitled persons. And third, reviewing reasonableness of fees charged by solicitors acting for the victims.
These roles were introduced in 1960. The aim was to protect uneducated or lowly-educated motor accident victims from rogue or "ambulance-chasing" lawyers, who would exploit such victims for their gain. These lawyers often engaged in touting practices to solicit and obtain accident claims cases and retained excessive portions of compensation received as legal fees for themselves, thus depriving innocent victims of their rightful share of the compensation monies.
The situation is somewhat different today. In general, the population, including victims, therefore, also have higher levels of education and better access to information and are better informed of their legal rights. There is a developed body of case law with established precedents on compensation amounts that are commensurate with the injury sustained. The standards of the legal profession have also improved over the years. And the Legal Professional Conduct Rules expressly prohibit lawyers from soliciting and touting motor accident cases. The Act contains a similar prohibition. These safeguard against "ambulance chasers".
In view of the significant changes in the social and economic landscape as well as the legal profession in Singapore since the 1960s, it is timely to review the roles of the Public Trustee under the Act.
We considered, in particular, whether the three roles ought to be relinquished and we took feedback from industry stakeholders, including the Law Society of Singapore, the General Insurance Association (GIA) and the Courts.
We concluded that updates to the Public Trustee's existing roles under the Act are necessary. The Bill seeks to update the roles in respect of two main things. First, it relinquishes the Public Trustee's role of reviewing adequacy of compensation settlements under certain circumstances. And second, it relinquishes the Public Trustee's role of holding compensation monies in trust for victims of motor accidents except under certain circumstances.
The Bill, however, leaves in place Public Trustee's role of reviewing the reasonableness of the fees charged by solicitors acting for the victims. So, no changes will be made in this respect.
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I will now take the House through the main amendments of the Bill.
First, reviewing the adequacy of compensation settlements. Currently, the Public Trustee assesses the adequacy of compensation agreed upon between parties to a claim where the compensation sum exceeds $5,000.
Under clause 5 of the Bill, the Public Trustee will relinquish the role of reviewing the adequacy of compensation where the motor accident victims are represented by lawyers. A lawyer is under a legal duty to act in his or her client's best interests. This includes ensuring that the compensation amount received by the victim is commensurate with the injuries sustained from the motor accident and that it is adequate.
The Public Trustee is not involved at any stage of the compensation process. So, where parties are represented, therefore, the Public Trustee's oversight role would be superfluous. Victims who are dissatisfied with the conduct of lawyers may lodge a complaint with the Law Society, so, the victims will have redress.
The percentage of unrepresented victims is also relatively low today. In 2008, 23% of 2,798 compensation cases were out-of-court settlements. By 2012, only 16% of the 3,221 compensation cases were out-of-court settlements. In the same five-year period, the percentage of unrepresented motor accident victims per year hovered between 1% and 2%. Victims who cannot afford legal representation can also obtain assistance from the Legal Aid Bureau if they pass the means test.
Where the victim has no legal representation, however, the Public Trustee will continue the oversight role to ensure that the rights and interests of unrepresented victims continue to be protected.
Accordingly, under clause 5, where victim is unrepresented, motor vehicle owners or insurers must first obtain approval for the compensation amount from the Public Trustee or the Court, if the Public Trustee considers the compensation to be manifestly inadequate. Only after the approval is obtained will the motor vehicle owner or insurer pay the compensation monies to the Public Trustee, who will then ensure that these monies are paid to the victim.
I move on now to the role of the Public Trustee in holding compensation monies in trust for the victims.
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Currently, under the Act, compensation monies above $5,000 are not paid directly to persons entitled to these monies. Instead, the Public Trustee receives and holds such monies on trust for the motor accident victims, before distributing them to entitled persons. This is to ensure that the victims actually receive the compensation.
This role arose as a corollary to the Public Trustee's role in assessing the adequacy of out-of-court compensation and the reasonableness of fees charged by lawyers.
This role of the Public Trustee holding on to the monies before the compensation is paid out has become unnecessary for the same reasons as those pertaining to the relinquishing of the oversight role of compensation.
Accordingly, clauses 5 and 6 will relinquish the Public Trustee's role in this regard for most victims, save for victims who are unrepresented, unable to receive compensation monies at the time of payment, for example, victims in detention or subject to a quarantine order, or, in appropriate cases, minors; or persons lacking mental capacity under the Mental Capacity Act. In all other cases, compensation will be paid directly to persons entitled to compensation, by either the insurer or owner of the motor vehicle.
Notwithstanding the amendments, therefore, the rights and interests of motor accident victims who are in need of protection will still be protected.
In the course of the review, the Government considered whether the Public Trustee should continue assessing the reasonableness of fees charged by lawyers. The feedback from the industry stakeholders is that they would like the Public Trustee to have a continued oversight role in this regard. This is to ensure that the lawyers' fees remain reasonable and do not encroach into compensation sums and, conversely, that the lawyers are fairly remunerated for services rendered. We have taken the feedback onboard and have decided to retain this role.
I now move on to some other amendments. The Bill splits the administration of the motor accident framework between the Ministry of Law and MOT. The Ministry of Law shall assume responsibility for the parts of the Act which pertain to the administration of the motor accident compensation framework.
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Clause 4 of the Bill introduces a new section 5A pertaining to composite settlement agreements. Under section 5A, it provides that where two or more persons are entitled to compensation under a settlement agreement, the settlement agreement must state the amount of compensation and costs, where applicable, that each of the persons is entitled to.
Clause 8 of the Bill introduces a new section 18A, which empowers the Public Trustee to obtain any document or information for the purposes of his duties, functions and powers under the Act.
In conclusion, therefore, Madam, let me say that the aim of the amendments is to update the roles of the Public Trustee under the Act, so that these roles will be relevant in today's context; and so that the Public Trustee may better focus resources safeguarding the interests of those motor accident victims who require protection. Madam, I beg to move.
Question proposed.
[Deputy Speaker (Mr Charles Chong) in the Chair]
Sir, I have some concerns about clause 5 of the Bill which will reduce the Public Trustee's role as the guardian of victims of motor accidents in cases where the claim is settled out of Court.
Under clause 5, section 6 of the Act will be amended in two key ways.
Firstly, for claimants who are represented by lawyers, settlement sums offered by the defendants or their insurers would no longer need to be approved by the Public Trustee. This means that it will be left to the claimants' lawyers to be the gatekeepers to ensure that their clients get adequate compensation for their injuries and losses. On the one hand, we would expect lawyers to obtain a fair settlement for their clients as it is their duty to do so. This is also logical as there is generally a link between the compensation obtained and the fees lawyers will be entitled to charge. On the other hand, there is the risk of lawyers who may occasionally settle matters quickly due to workload or other considerations. It should be remembered that the clients we are talking about in such accident cases include persons who may not know their rights and rely entirely on professional advice. The current situation of having the Public Trustee as the gatekeeper of compensation adequacy has
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always added a layer of comfort and protection for such accident victims.
From the lawyer's standpoint, too, there is an advantage: retaining the Public Trustee's approval on settlement sums protects lawyers from unjustified complaints that their claimants were short-changed. With the amendments in this Bill, are we not compromising on these aspects?
Secondly, under the amendments, the Public Trustee will longer be receiving and disbursing compensation sums and legal costs whether the claimant is represented by a lawyer. Instead, the insurer or the owner of the vehicle who caused the accident will directly pay to the claimant the compensation sum due to him and will also directly pay the legal cost to the claimant's lawyer. The Public Trustee who used to receive and make the payments will no longer be involved. This bypassing of the Public Trustee theoretically carries with it the increased risk that the payments meant for the victim and his lawyer may not be received, for example, where the vehicle owner or insurer fails to effect the payment accordingly or delays the payment. Does the Ministry intend to put in place any safeguards to minimise the risk of non-payment or delayed payment?
Sir, the Member has raised two issues: firstly, whether with relinquishing the oversight role, there will be an increased risk to the victims in terms of the compensation amount and, secondly, whether the Ministry intends to put in any safeguards with respect to the timing of the payment by the owner or the insurer.
With respect to the first issue, as I indicated earlier, the relinquishment of the role will only be with respect to those who are represented. As the Member has pointed out, a lawyer is expected to safeguard the client's interest. As a general rule, because the lawyer's duty is to look after the client's interest and to ensure that the client gets an adequate settlement, we think that that role can be played adequately by a lawyer but, at the same time, also in recognition of what the Member had said about the linkage between the lawyer's fees, we have retained the oversight role on the reasonableness of the fees. We feel that these amendments actually strike the correct balance. We arrived at this conclusion after taking in industry feedback and it was felt that the way that the amendments were done would be sufficient to take care of the adequacy of the compensation.
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I would add that if there is concern as to whether the lawyer has performed the lawyer's role properly, the victim does have redress. So, when you balance these things and take them into account, we feel that what the amendments do is that they strike the correct balance.
With respect to the second question as to whether the Ministry will put in place a specific framework, the answer is that we do not think it is necessary for these reasons: with respect to those who are unrepresented, there is no change. So, the Public Trustee will continue to perform that oversight role and, if the amount of the compensation has been determined and it is not forthcoming, the Public Trustee will chase up in the normal way.
For those who are represented, the victim still does have the protection of the lawyer because it is actually part of the lawyer's duty to then chase and ask for payment. That is the same for any other form of settlement under any other form of claim or contract. So, it is for the victim's lawyer to pursue or chase up with the owner or the insurer to make sure that payments are made in time.
*Question put, and agreed to.*
*Bill accordingly read a Second time and committed to a Committee of the whole House.*
*The House immediately resolved itself into a Committee on the Bill. – [Ms Indranee Rajah].*
*Bill considered in Committee; reported without amendment; read a Third time and passed.*
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