Second Reading Speech by Senior Minister Of State For Law, Indranee Rajah SC, on the Motor Vehicles (Third-Party Risks And Compensation) (Amendment) Bill

11 Nov 2013 Posted in Parliamentary speeches and responses

Madam Speaker,

1. I beg to move, ‘That the Bill be now read a second time’.

Introduction

2. 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 (“the Act”).

3. Under the current act, the Public Trustee performs three main roles:
   1. Reviewing adequacy of out-of-court compensation settlements in all cases of motor accidents involving death or injury.
   2. Receiving and holding compensation monies arising from motor accidents on trust for all victims before distributing these monies to entitled persons.
   3. Reviewing reasonableness of fees charged by solicitors acting for victims.

4. These roles were introduced in 1960.

5. The aim was to protect uneducated or lowly-educated motor accident victims from rogue “ambulance-chasing” lawyers, who would exploit such victims for their gain. Those 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.

6. 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 and these safeguard against “ambulance chasers”.

7. In view of the significant changes in the social and economic landscape as well as the legal profession in Singapore since the 1960s, it’s timely to review the roles of the Public Trustee under the Act.

8. 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.

9. 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:
   1. It relinquishes the Public Trustee’s role of reviewing adequacy of compensation settlements under certain circumstances.
   2. It relinquishes the Public Trustee’s role of holding compensation monies in trust for victims of motor accidents except under certain circumstances.

10. The Bill however leaves in place the Public Trustee’s role of reviewing the reasonableness of fees charged by solicitors acting for the victims, so no changes will be made in this respect.

11. I will now take the House through the main amendments of the Bill.

Role of Public Trustee in reviewing adequacy of compensation settlements

12. Currently, the Public Trustee assesses adequacy of compensation agreed upon between parties to a claim where the compensation sum exceeds $5,000.

13. 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 victim is commensurate with injury 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.

14. 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 5-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.

15. Where the victim has no legal representation however, the Public Trustee will continue the oversight to ensure that the rights and interests of unrepresented victims continue to be protected.

16. Accordingly, under clause 5, where the 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.

Role of the Public Trustee in holding compensation monies in trust for victims

17. Currently, under the Act, compensation monies above $5,000 is not paid directly to persons entitled to these monies.

18. Instead, the Public Trustee receives and holds such monies on trust for the motor accident victims, before distributing them to entitled persons. This was to ensure that the victims actually received the compensation.

19. 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.

20. 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.

21. 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.

22. In all other cases, compensation will be paid directly to persons entitled to compensation, by either the insurer or owner of the motor vehicle.

23. Notwithstanding the amendments therefore, the rights and interests of motor accident victims, who are in need of protection, will still be protected.

Role of the Public Trustee in reviewing the reasonableness of fees charged by lawyers acting for victims

24. In the course of review, the Government considered whether the Public Trustee should continue assessing the reasonableness of the fees charged by lawyers.

25. The feedback from the industry stakeholders was that they would like the Public Trustee to have a continued oversight role in this regard. This is to ensure:
    • Lawyer fees remain reasonable and do not encroach into compensation sums; and
    • Conversely, that the lawyers are fairly remunerated for services rendered.

26. We have taken the feedback on board and have decided to retain this role.

Other Amendments

Division of responsibility for the Act

27. The Bill splits the administration of the motor accident framework between the Ministry for Law and Ministry for Transport.

28. Ministry for Law shall assume responsibility for the parts of the Act which pertain to the administration of the motor accident compensation framework.

Composite settlement agreements

29. Clause 4 of the Bill introduces a new section 5A pertaining to composite settlement agreements.

30. 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 are entitled to.

Public Trustee’s power to obtain information

31. Clause 8 of the Bill introduces a new s 18A, which empowers the Public Trustee to obtain any document or information for the purposes of his duties, functions and powers under the Act.

Conclusion

32. 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 motor accident victims who require protection.

33. Madam, I beg to move.

Last updated on 14 Nov 2013