(11 years, 7 months ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
17:00 - Division on Motion B1 - Ayes: 197 / Noes: 275 - Motion B1 disagreed.
“Arbitration Service for defamation and related civil claims against members of Independent Regulatory Board
(1) The Lord Chief Justice shall establish a Defamation Recognition Commission.
(2) Schedule (Recognition Commission) makes provision relating to the Defamation Recognition Commission.
(3) The Defamation Recognition Commission shall certify bodies as Independent Regulatory Boards in accordance with the criteria in Schedule (Recognition Commission).
(4) An Independent Regulatory Board shall provide a recognised arbitration service as set out in Schedule (Specialist Arbitration Service).
(5) A court shall take into account when awarding costs and damages whether either party, claimant or defendant in a dispute has chosen not to use the recognised arbitration service of an Independent Regulatory Board.
(6) A court shall award costs under subsection (5) on an indemnity basis unless the interests of justice require otherwise.
(7) A court may order a successful party to pay all the costs of proceedings if such party has unreasonably refused to use an available recognised arbitration service.
(8) A court awarding in its judgment exemplary damages where a defendant is guilty of a flagrant breach of a defendant’s rights can also take into account whether—
(a) a claimant refused to use a recognised arbitration service;
(b) a defendant refused to use or join a recognised arbitration service.”
Commons disagreement and reason
The Commons disagree to Lords Amendments Nos. 1, 15 and 16 for the Reason set out at 16A.
“Schedule
Recognition Commission
1 This Schedule provides the method by which the Recognition Commission may be constituted for the purposes of this Act.
2 Appointments to membership of the Recognition Commission will be made by the Lord Chief Justice.
3 An individual may be appointed only if he or she has consented to act and is—
(a) a present or former Civil Service Commissioner;
(b) a present or former holder of high judicial office (within the meaning of Part 3 of the Constitutional Reform Act 2005); or
(c) a person who in the opinion of the Lord Chief Justice is suitable for appointment having regard to their reputation and experience and is independent of all political parties and all media organisations.
4 The Recognition Commission must consider whether an Independent Regulatory Board body has—
(a) sufficient guarantees of independence, including suitable independent, fair and transparent procedures for appointments and funding,
(b) suitable functions, powers, personnel and resources to ensure that it can fulfil its principal objectives effectively,
(c) an appropriate standards code,
(d) an arbitration service able to deal with defamation and related civil claims, effective processes for upholding standards,
(e) an efficient procedure for handling complaints, and
(f) is open to all news publishers.
5 The Recognition Commission must review a recognised regulator at least once during the period of two years beginning with the date of certification, and at intervals of not more than three years after that.
6 If having reviewed a body the Recognition Commission is no longer satisfied that it complies with paragraph 4, the Recognition Commission must consult the body and give directions designed to ensure that the body complies with paragraph 4 within a reasonable time.
7 If the body fails to comply with directions given under paragraph 6 the Recognition Commission must revoke the body’s certification.
8 The Recognition Commission shall not be involved in the regulation of any subscriber to an Independent Regulatory Board.”
Commons disagreement and reason
The Commons disagree to Lords Amendments Nos. 1, 15 and 16 for the Reason set out at 16A.
“Schedule
Specialist Arbitration Service
1 An Independent Regulatory Board must provide an Arbitration Service in relation to defamation and related civil legal claims drawing on independent legal experts on a cost-only basis to the subscribing member.
2 The arbitration rules must provide for a fair, quick and inexpensive process, which is inquisitorial and free for complainants to use (save for a power to make an adverse order for the costs of the arbitrator if proceedings are frivolous or vexatious).
3 The arbitrator shall have the powers set out in section 48(3) to (5) of the Arbitration Act 1996.
4 The arbitrator must be able to hold hearings where necessary or dispense with them where not necessary.
5 The process must include provision for frivolous or vexatious claims to be struck out at an early stage.”
Commons disagreement and reason
The Commons disagree to Lords Amendments Nos. 1, 15 and 16 for the following Reason—
Lord McNally
That this House do not insist on its Amendments 1, 15 and 16, to which the Commons have disagreed for their Reason 16A.
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, Amendments 1, 15 and 16 constitute a partial enactment in statute of a number of the recommendations made by Lord Justice Leveson in his report on the culture, practices and ethics of the press. The reasons given by the other place for disagreeing with these amendments reflect the fact that, as the House will be aware, on 18 March cross-party talks were resolved successfully and a draft royal charter was agreed as the vehicle by which the recognition body should be set up.
Detailed criteria by which self-regulators would be assessed were also agreed, and provisions to enact Lord Justice Leveson’s recommendations on incentives in costs and exemplary damages have subsequently been included in the Crime and Courts Bill. A further “no change” clause has also been included in the Enterprise and Regulatory Reform Bill as a safeguard against political intervention with the royal charter. These measures have cross-party support.
I take this opportunity to address an issue that I know is of concern to the noble Lord, Lord Puttnam, on how provisions are being taken forward to provide access to justice and cost protection for those of limited means. It may be helpful to provide the House with an update on the action we are taking. As noble Lords are aware, we asked the Civil Justice Council to report on the issue of cost protection by the end of March. It has done so, and recommended that the regime of qualified one-way cost shifting, or QOCS, should be adapted to defamation and privacy cases. A number of adaptations are necessary, given the rather different nature and variety of defamation and privacy proceedings compared with personal injury claims. We are now considering the CJC report, and as your Lordships will appreciate this is quite a complex area. While the report does not represent a blueprint of the new rules to be applied, it does set out the issues that need to be addressed, and makes recommendations on how to address them.
It will be for the Civil Procedure Rule Committee to make the rules on costs protection in due course, once the Government have set out the way forward. My officials will work with the Committee on this. I am conscious that the CJC has not consulted on this issue, and I believe that we need to consult before we finalise the proposals. Our aim is therefore to work with the Rule Committee in drafting appropriate rules, perhaps with alternatives, on which we can consult more widely over the summer.
I know that the noble Lord, Lord Puttnam, will be interested in that consultation, and I will ensure that he and other noble Lords with an interest in this area are included in the consultation. Depending on the outcome of that consultation, we then aim to implement a costs protection regime later in the year.
I hope that provides reassurances to the noble Lord, Lord Puttnam, and to others, about the promises I have made about cost protection at various stages of the Bill. During our debate on the Crime and Courts Bill provisions on 25 March, both the noble Lord, Lord Puttnam, and the noble and learned Lord, Lord Mackay of Clashfern, indicated that they were happy for the Bill to complete its passage without Amendments 1, 15 and 16. I hope that remains the case, and that noble Lords will agree to the removal of these amendments. I beg to move.
Lord Lester of Herne Hill
My Lords, first I would say that we often refer to Fox’s Libel Act. I hope that when this Bill becomes law it will be referred to as Lord McNally’s Libel Act, because he above all has had the energy to drive it forward. He said at one stage that he would not allow the Bill to be overwhelmed by what he called the tsunami of Leveson. The reason why I strongly support Motion A is because it provides a way of avoiding being overwhelmed by the tsunami of Leveson. It removes what I consider to be unnecessary hostage-taking in some amendments to the Defamation Bill. It has now been freed in the Commons, and therefore I strongly support it. I have some difficulty with the reason, in a sense, because it says that,
“the draft Royal Charter … and … the Crime and Courts Bill and the Enterprise and Regulatory Reform Bill will be sufficient to implement the recommendations in Lord Justice Leveson’s report”.
I think that is completely true. Whether Lord Justice Leveson’s report will eventually pass muster is quite another question, but that is not to be debated now.
Lord Mackay of Clashfern
My Lords, I am delighted to welcome this situation, and to see the Defamation Bill back on its ordinary course. I do not entirely agree with all that the noble Lord, Lord Lester of Herne Hill, has said about the amendments that were passed by this House, but now they are certainly unnecessary and I am delighted that the Defamation Bill can proceed.
Lord McNally
That this House do not insist on its Amendment 2, to which the Commons have disagreed for their Reason 2A, but do propose Amendment 2B in lieu.
“( ) For the purposes of this section, harm to the reputation of a body that trades for profit is not “serious harm” unless it has caused or is likely to cause the body serious financial loss.”
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, in speaking to this Motion, I shall speak also to Motions B1 and B2, tabled by the noble Baroness, Lady Hayter of Kentish Town, and Motion B3, tabled by my noble friend Lord Lester of Herne Hill.
Amendment 2 concerns two distinct but related issues which have already featured extensively in debates in both Houses during the passage of this Bill. These are whether there should be restrictions on the right of bodies corporate and other non-natural persons to bring an action in defamation, and whether any non-natural person which is performing a public function should be prevented altogether from bringing a claim in relation to a statement concerning that function. I shall focus my comments on government Amendment 2B and the other amendments that have been tabled, rather than on Amendment 2 in its original form.
Amendment 2B amends Clause 1 to make clear that a body trading for profit will satisfy the serious harm test only if it is able to show that the statement complained of,
“has caused or is likely to cause the body serious financial loss”.
In speaking to Lords Amendment 2 in the other place, the Government made it clear that although we were opposed to that amendment, we recognised the strength of feeling that exists on the issue of whether there should be a specific provision in the Bill requiring non-natural persons trading for profit to show financial loss, and that we would consider the point further. This amendment reflects the outcome of those considerations.
As I have explained at earlier stages of the Bill, we amended what was initially a “substantial harm” requirement to one of “serious harm” in order to raise the bar for bringing a defamation claim. The amendment therefore refers to “serious” financial loss to reflect that aim, and now links explicitly to the serious harm test. The use of the phrase “serious financial loss” makes it absolutely clear that the financial loss required to meet the serious harm test must itself be serious. By contrast, the reference in Lords Amendment 2 to “substantial financial loss” could inadvertently have had the effect of weakening what has to be shown to satisfy the test.
Secondly, the term that we have used to define those who will be subject to this requirement—
“a body that trades for profit”—
is a much clearer and simpler definition than that used in Amendment 2. These are the bodies that this House has expressed concern about, so we have phrased the amendment specifically and directly to meet those concerns. A vaguer formulation such as that in Amendment 2 would have risked inadvertently catching other bodies, such as charities, which are not the subject of concern. I believe that this effective and proportionate approach addresses the concerns that have been expressed in this House and elsewhere.
The Government are unable to accept Motions B1, B2 and B3. In relation to Motion B1, as noble Lords are aware, in the case of Derbyshire County Council v Times Newspapers, the House of Lords held that local authorities and central governmental bodies are already prevented from bringing actions for defamation. Motion B1 would add Amendment 2C, which seeks to extend that principle and put an absolute bar on any non-natural person performing a public function from bringing a claim in relation to a statement concerning that function. This would remove completely the right of a wide range of businesses and other organisations to protect their reputation. We consider that to deprive them of this right would be excessive and disproportionate. Although the amendment focuses on criticisms in connection with the exercise of a public function, that criticism could have a wider impact on the reputation of the business more generally. It is important to recognise that unjustified and defamatory allegations can cause considerable damage which affects all those connected to a business, including shareholders and employees.
Baroness Hayter of Kentish Town
As an amendment to Motion B, after “2B” insert “and 2C”.
“Non-natural persons performing a public function
Non-natural persons performing a public function do not have an action in defamation in relation to a statement concerning that function.”
Baroness Hayter of Kentish Town
My Lords, in moving Motion B1, I start with an extraordinarily warm welcome for government Amendment 2B. There is absolutely no doubt that, late conversion though it may have been by the Government to the arguments of our Benches and of this House, it is a most important and welcome clause. It owes much to the persuasive charms—or energy, in the words of the noble Lord, Lord Lester—of the noble Lord, Lord McNally. The McNally Bill will do us fine.
However, there are still some outstanding issues, not least the one of cost, to which the Minister has just referred. Despite his efforts, and indeed the CJC report on this which was published only last week, we have of course not received the sort of assurance that we had hoped to receive by the time this Bill was enacted, of having agreement on costs. There was clearly a lot of disagreement within the working group, and there is no clear answer in the report as to how, in the absence of CFAs following LASPO, most people will be able to either start or defend a defamation claim. Without resolution on this, the risk of substantial costs remains, which more or less makes either the taking or the defending of an action open only to the super-rich, as the Government have acknowledged.
I turn to the two issues passed by this House but overturned by the Commons, which the Government have not accepted. First, there is the right of public services to sue for defamation. Derbyshire, as the Minister has said, is really shorthand for the democratic principle that government bodies should be open to uninhibited public criticism and therefore have no right to sue for libel. I assume that arm’s-length bodies, such as the former Border Agency, English Heritage and the Health and Safety Executive, are already covered under Derbyshire. However, there is a wider and growing ring of organisations contracted or commissioned to provide public services, such as independent treatment centres, opticians, dentists and GP consortia, which are either treating or diagnosing NHS patients. There are private organisations providing care homes, school dinners, public transport, advice agencies, prison management, free schools and DWP assessments. These organisations deal directly with consumers, patients, travellers or users—call them what you will—and are spending taxpayers’ money to provide such services on behalf of the state.
Two issues arise if such private bodies can sue for libel. First, there is not a level playing field in tendering. Such organisations can criticise a local authority provider with which they are competing to provide a service completely free from the risk of being sued for libel by that local authority. However, the local authority can be stopped from speaking about a private body in competition with it for the provision of services by the receipt of a chilling letter. Secondly, consumers and users cannot comment on a service they are getting without the risk of that infamous chilling letter.
In a debate in the other place last week, Sir Peter Bottomley reported that Atos, which does disability checks for the DWP, had sent a legal letter which resulted in the closure of a forum for disabled people because of their comments on Atos’s performance. This is deeply worrying. It is quite wrong to deny users the right to discuss their experience of what is, after all, a public service paid for by taxpayers. It is this that most concerns me. Mid Staffs hospital patients and their families were able to go to the press and finally get something done, as were the Hillsborough campaigners who were aghast at the police’s actions and the coroner’s findings. For big effective monopolies, this is the only way of driving up standards or penalising poor services, as consumers cannot shop around for an alternative provider.
It is much the same for other big, albeit now private, providers of public services. Users must be free to voice their concerns. This is what Motion B1, which adds Amendment 2C, is all about. It is about uninhibited users’ criticism of their public services, whether their provider is a local authority or a private concern. In the other place, the Minister did not really disagree with the case that we made, only about whether an amendment was necessary. Worryingly—and this has been echoed by the Minister this afternoon—she said that rather than a statutory provision it would be much better for the courts to develop the Derbyshire principle as they consider appropriate and necessary in the light of individual cases. However, this runs completely counter to the whole thrust of this Bill, which has been to codify and set down in one place, rather than in umpteen legal judgments that are effectively unavailable to the layperson, the whole law on defamation, clearly accessible to all and according to the decisions of Parliament on each issue. That is what this Bill and indeed the Minister in working on it have sought to achieve. If we agree that private concerns delivering a public service should be treated as a public body with regard to libel, Parliament should so decide and should write it into law.
Lord May of Oxford
I wish to make a few remarks which may embarrassingly reveal my lack of full acquaintance with the legal arcana in this case but at the same time remind us of at least one of the major reasons why we are having these discussions. I thank the noble Lord, Lord McNally, for doing a good job extremely conscientiously in complicated circumstances with a lot of opinions swirling round him.
I remind noble Lords yet again of what prompted this action in the first place: libel tourism to this country to shut up people who wish to point out instances of malpractice in pharmaceutical companies in a variety of contexts. I come mainly from the science base, where there are interminable examples, about which I could go on for hours. I will inflict one example on your Lordships and then I will speak more briefly. It is a typical example, which raises many of the issues that still concern me despite the good job that is being done. It comes from a chap called Peter Wilmshurst, who wrote to me in an e-mail:
“I am a consultant cardiologist in Shrewsbury. A US medical device corporation, NMT Medical, sued me for libel and slander three times in the High Court in England. I was the principal cardiologist in research, which was conducted on UK citizens and used a cardiac device made by NMT. At a medical conference in the USA, I expressed concern about the findings of the research and some of my comments were reported on a US cardiology website. As a result NMT sued me in England over the website article and a subsequent article. The journalist and the website were not sued. When I spoke about what happened on the Today programme on Radio 4 I was sued again, despite the interview being pre-recorded so that the BBC’s lawyers could make sure that there was no risk of further litigation. NMT did not sue the BBC. Everything that I said was provably true, but that did not prevent NMT starting expensive claims with the expectation that the cost would stop me expressing concerns about the lack of safety and lack of efficacy of their device. I know that fear of being sued by NMT prevented other doctors expressing similar concerns. The libel cases lasted almost 4 years and my legal costs were £300,000”—
which is actually low compared to some of the incidents in mind. The journal Nature, for example, spent £1.5 million successfully defending one of these libel cases.
Peter Wilmshurst continued:
“The cases ended when NMT went into liquidation as information about the problems with their devices filtered out and cardiologists stopped using them”—
something I will come back to. He continued:
“During the years when NMT silenced doctors who had legitimate concerns, the ineffective and unsafe devices were implanted in patients in the UK and elsewhere. Some patients needed urgent cardiac surgery to have devices removed and some died. That was the true cost of the English defamation laws having no adequate public interest defence to prevent spurious claims by wealthy corporations. I believe that if Parliamentarians did not have absolute privilege when speaking in Parliament”—
and that is a comfort I have here, having once been silenced in a cowardly way—
“and they had only the same protections as ordinary citizens, they would ensure that there was an adequate public interest defence and protection from corporations using the defamation laws to silence whistleblowers and prevent freedom of expression”.
We did that way back.
I mention that example in particular because, as noble Lords will notice, the original action was effective. Ultimately, it caused this company to go bust. One of the amendments we are talking about asks for a way of preventing this sort of bludgeoning of people into silence by the power of the purse and the extraordinary extravagance of our legal procedures. It comes home to us very clearly that simply saying that a company must prove you are damaging them by what you are saying is not going to prevent many of these cases because the aim of what many people are saying when they provoke these actions is, indeed, to inflict damage. The aim is to point out bad and unsafe practice and unsound publications, and to damage the people responsible. I am not clear that simply saying that companies must show they are damaged would really cure the problem at all. I may be revealing my ignorance, but I wanted to say again that this is what provoked it. In what sometimes seemed to me interminable sessions in Grand Committee, in which I took a form of perverse enjoyment, the intense arcana of the legalisms occasionally seemed—to put it gently—to distract from the essence of the problem. My understanding, imperfect though it is, is that we are going a long way to addressing this problem but not all the way that, were I supreme dictator, we would go.
Lord Lester of Herne Hill
My Lords, I hope, in what will be a short speech, to deal with all the amendments together. In answer to the point just raised by the noble Lord, Lord May, corporations are not the same as private individuals. They cannot have hurt feelings but they can be seriously damaged by defamatory statements. I therefore share the view of many courts across the world that corporations should be able to bring libel proceedings but on certain conditions. The short answer to Dr Wilmshurst is that we now have, in what will be Clause 4, a public interest defence which, quite apart from the other provisions in his favour, he would be able to rely upon.
I begin by dealing with the question of damages. I do not want to crow about it, but it was actually in my own Private Member’s Bill that I required corporate bodies to have to prove the likelihood of financial loss or actual financial loss. That was commended by the Joint Committee on the draft Bill and by the Joint Committee on Human Rights on which I serve and, as a member, was able to inform its report. I think that the Government have made an important concession and I am delighted that the Opposition have recognised that and, indeed, have called for it themselves. It is, of course, extremely important that corporations are able to bring libel proceedings but, as I say, are able to do so if they are trading corporations by proving serious financial loss or the likelihood of serious financial loss.
All of that is now common ground, and what is left are the two important issues of the Derbyshire principle and the notion of a special procedural step to be taken, which is set out in Amendment 2D. It requires the permission of the court before a trading corporation can sue. I am persuaded by my noble friend Lord McNally’s way of dealing with that. It is a procedural point that will be dealt with by the early resolution procedure and by proper case management. It does not require a rigid rule to be inserted into the Bill, and therefore I would not support Amendment 2D.
What, then, about the Derbyshire principle? The House has the benefit of having as a Member of the House of Lords the judge who decided Derbyshire when he was even younger than he now is, my noble and learned kinsman Lord Woolf of Barnes, and I am sure that he will correct anything I am about to say. I want to say something about Derbyshire because I think that it has been misunderstood. It has been misunderstood by the Government because they seem to think that if one were to codify—I am now against codifying for a reason I shall come to—that would be in some way rigid and inflexible because it would prevent a body exercising functions of a public nature being able to vindicate its reputation. That is wrong because, as the Derbyshire case establishes and makes clear, unlike the position in the United States where no one can sue to vindicate the reputation of a government body, it is always open to a body exercising public functions through its officers or any individual who is defamed to bring their own defamation proceedings. It also makes it perfectly clear through Lord Keith of Kinkel in his speech for the House of Lords that there is also the tort of malicious falsehood. This means that if a government body can prove bad faith or reckless disregard for the truth, it can also bring proceedings. The Government are therefore mistaken in thinking that to codify in the way that the Opposition wish to do—with my support the last time round—would create a rigid and inflexible position. That is not so, but the question is whether we were right last time to try to codify the principle.
Since then, something has happened which has caused me to think again. It is the situation in Northern Ireland, and I hope very much that the noble Lord, Lord Bew, will say something about it. Since the last occasion, the governing authorities in Northern Ireland have decided in their wisdom that the Defamation Bill should not apply to the Province. NGOs, newspapers, broadcasters and citizen critics often convey information and ideas which are not confined to any particular part of the United Kingdom but extend to the whole of it.
What troubles me about codification is not what troubles the Government. What troubles me is that, were we to codify in the way that is now suggested, in Northern Ireland, Mr Paul Tweed, in particular, who is the king of libel suits in that part of the United Kingdom, would argue, “This is codified in England and Wales but it is common law in Northern Ireland and the way in which it is codified suggests that Parliament had serious doubts about what Derbyshire meant. Now we are going to seek to apply a narrower view than Derbyshire itself”. That has made me think about the whole issue in this context of codification versus common law.
Lord Faulks
My Lords, perhaps I may deal first with government Amendment 2B. Initially, I was very sympathetic to the idea of restricting a company’s right to sue because of the instances of bullying, which are now well known. I have become slightly more troubled by the restriction which is to be imposed in what I hope will not be impolite to call something of a volte-face by the Government in this respect. I understand the reasoning behind it but I seek from the noble Lord, Lord McNally, reassurance about what a company must establish to show that it has been, or is likely to be, caused serious financial loss.
In the well known case of Jameel v Wall Street Journal in 2007, the House of Lords considered, among others, the Derbyshire case. In particular, in his leading speech Lord Bingham said that he was satisfied that it was appropriate for a company not necessarily to prove special damage but to establish that a publication had the tendency to damage. I shall quote from paragraph 26 of his judgment:
“First, the good name of a company, as that of an individual, is a thing of value. A damaging libel may lower its standing in the eyes of the public and even its own staff, make people less ready to deal with it, less willing or less proud to work for it. If this were not so, corporations would not go to the lengths they do to protect and burnish their corporate images. I find nothing repugnant in the notion that this is a value which the law should protect”.
He went on to say:
“I do not accept that a publication, if truly damaging to a corporation’s commercial reputation, will result in provable financial loss, since the more prompt and public a company’s issue of proceedings, and the more diligent its pursuit of a claim, the less the chance that financial loss will actually accrue”.
What concerns me a little is that a company that has genuinely been damaged in its reputation will often find it very difficult to surmount this hurdle which is inserted in the Bill when it is not easy to produce by reference to a balance sheet an exact equivocation between the damage to a reputation and the damage to a company. It may be much more subtle than that, yet there is genuine damage to a reputation. Therefore, I would welcome some clarification from the Minister about what a company may need to establish short of producing a balance sheet, nevertheless having some evidence of real damage to the company.
There is a problem with the alternative tort of malicious falsehood in that the offer of a mens rea defence is not available. Of course, malicious falsehood requires proof of malice and is a somewhat unsatisfactory hurdle where a defamation action is, on the face of it, more suitable.
As to the amendment suggested by the noble Baroness, Lady Hayter, concerning non-natural persons, I entirely agree with my noble friend Lord Lester. I can add that the courts are currently considering a number of cases where they are patrolling the border, as it were, of the Derbyshire principle and deciding whether, on particular facts, the ratio decidendi of Derbyshire should be applied to a public role or public function having been performed by a particular body. I suggest that it is much better for the law to evolve, as the Minister said, rather than to codify it in this way. Of course, at the moment the courts are generally considering the question of public function in the context of the Human Rights Act and whether the obligations under the convention apply. There are many hybrid cases which are going to make these cases very fact-sensitive, and that is an indication that we should avoid trying to codify.
I strongly oppose Amendment 2D proposed in Motion B2. The initial requirement of seeking the permission of the court is going to add to costs. Largely thanks to the helpful intervention of the CPR—I see the noble and learned Lord, Lord Woolf, in his place—the courts have the flexibility to intervene on questions of meaning. They can strike out the whole or part of a case. In any event, I suggest that there is sufficient flexibility to make this initial hurdle supererogatory. It will be expensive and I fear that it will not in fact achieve what I understand lies behind this amendment, and so I strongly oppose that.
Lord Phillips of Sudbury
My Lords, I shall talk briefly to Amendment 2B and, in so doing, I echo what has been said about my noble friend Lord McNally. I do not know about McNally’s Bill but I certainly knew a Bill McNally, who was one of the finest poachers in Suffolk.
I am not happy with Amendment 2C, in the name of the noble Baroness, Lady Hayter of Kentish Town, but I have a lot of time for her Amendment 2D, supported by the noble Lord, Lord May of Oxford. As was said by my noble friend, there seems to be considerable anxiety around the bullying of corporations, which seems to get worse as time goes by. Some of the largest and wickedest of them are some of the most brutal in the way that they will abuse the law to silence critics.
I want to raise with my noble friend Lord McNally a point on Amendment 2B because this is potentially a Pepper v Hart occasion, where he could say in the most trenchant terms that my concern is misplaced. The amendment enlarges on Clause 1 of the Bill, headed “Serious harm”. It says:
“For the purposes of this section, harm to the reputation of a body that trades for profit”.
I am not absolutely clear that the phrase,
“a body that trades for profit”,
is beyond ambiguity. I am thinking particularly of charities, some of which trade for profit in the mainstream of the work that they do—for example, some schools, some hospitals and gymnasia. There are many areas where charities carry on a trade, but it is a charitable trade and it is, in one obvious and simple sense, for profit because it generates the wherewithal enabling them to run their hospital or whatever it is. I could have chosen language, I think, that would put the meaning beyond doubt, but we have to live with the wording that is here. As I understand it, there is no further opportunity to change the phrasing of this part of Amendment 2B. So I hope that my noble friend Lord McNally will assure me that this wording is specifically designed to exclude from its ambit the work of charities. Otherwise, I think we have a very large problem with this amendment.
Lord Bew
My Lords, I rise to speak to Amendment 2C. However, I feel I have to respond immediately to the words of the noble Lord, Lord Lester, which I have to say, on behalf of Northern Ireland as a region, makes me feel very uneasy.
The point about this Bill is that it is not just about enhancing press freedom but about public debate more generally, including academic freedom. I find it very disturbing that the region of the United Kingdom from which I come is opting for a more restrictive type of public debate and deciding not to engage in the wider freedoms that will now be available for public expression in the United Kingdom more generally. I find that is almost a self-mutilating act. The only thing I can say to the noble Lord, Lord Lester, is that I hope over time—but not too much time—the Northern Ireland Assembly will rethink its position. It was a position taken up when the tsunami of Leveson was sweeping over this Bill and it was not at all sure that this Bill would pass. It was a very surprising statement even in its timing. The best resolution of that would be for the Northern Ireland Assembly to reconsider, because innumerous anomalies will otherwise be created as regards the circulation of British media—not just newspapers but organs like the New Statesman and the Spectator—in Northern Ireland unless there is a rethink. I hope that there will be a rethink because otherwise it would leave us in a very unsatisfactory situation. It might be helpful in promoting that rethink if the leaderships of the parties in this House all indicated their unease with the situation in Northern Ireland. This Bill has all-party support and it might be useful to indicate a certain unease with the situation that we are facing.
Viscount Colville of Culross
I would like to express my relief that the Defamation Bill has finally been unblocked and returned to your Lordships’ House. I thank the noble Lords on both Government and Opposition Front Benches for their tireless efforts to make sure that the Bill reappeared in this place.
I strongly support government Amendment 2B. During my career I was a journalist, and I spent some time on small regional newspapers. There were a number of occasions when I felt the mighty weight of companies bearing down on my reporting. I am ashamed to say that on some occasions, even when I had a powerful and well supported case revealing wrongdoings by a company, the legal letters from the company’s representatives threatening libel action, and the uncertainly of the outcome under the present libel laws, meant that those articles were not published. We live in an era when business PR regards anything but abject praise as an attack on a company. It seems to me that an amendment which demands a threshold of serious financial damage to a company before it can sue for libel will allow a much greater atmosphere of transparency and openness when questioning its activities.
I support the amendment put forward by the noble Baroness, Lady Hayter, and I listened with great respect to the noble Lord, Lord Lester, as I always do. Why, if Northern Ireland is having such problems with this, should the rest of the United Kingdom suffer? Why should it not be allowed to have the benefits of the Bill? It extends the Derbyshire principle into statute rather than waiting for it to work through common law, as suggested. This amendment attempts to incorporate the Human Rights Act 1998 which says that a private company performing public functions should be considered as an organ of the state. The ever increasing expansion of private companies being subcontracted to run public services makes it ever more urgent that the Derbyshire principle should now be established to cover those companies as well.
I have a short example. Last year, the Guardian received evidence from whistleblowers about the company, Serco. The allegations stated that the private health care provider, Serco, which runs the GP out-of-hours service on behalf of the NHS in Cornwall, had not employed enough skilled staff to meet patients’ needs and that the company was altering performance data to show a more positive outcome. Throughout May of last year the solicitors, Schillings, on behalf of Serco, sent a series of letters to the Guardian threatening it with libel action if it went ahead and published the evidence. The Guardian ignored these threats and published a series of articles by Felicity Lawrence. Then in July 2012, a report by the Care Quality Commission found that Serco had indeed not employed enough qualified staff to meet the patients’ needs, and a National Audit Office report this year found that there was evidence that the performance data had been altered to overstate the service’s performance.
The Guardian is big enough to resist these libel threats, but a smaller paper or website might well not have been able to do so. Had the service been run by the NHS it could not have issued those threats, but under the present law Serco was able to do so. Why should a company carrying out public functions be able to threaten critics with libel—possibly using public money—while a public body itself carrying out those functions would not be able to do so? In considering how to vote, I ask your Lordships whether we should not provide a level playing field in this matter.
Lord McNally
My Lords, I am very grateful for the contributions that have been made. This is not the Bill that my noble friend Lord Lester introduced into this House just over two years ago. It is not the Bill that the Government produced in draft for pre-legislative scrutiny. I am proud that it is a Bill that has gone through every process of political and parliamentary procedure, from a resolution at a Liberal Democrat conference to being an Act of Parliament, if we are successful today. However, this means that people around the House and campaigning groups around the country have not got everything they wanted from this Bill. One of my political heroes was the late George Woodcock, the general secretary of the TUC, who once said that good trade unionism was a series of squalid compromises. I do not suggest that the compromises that we have arrived at thus far are squalid. Nevertheless, when looking at a Bill such as this, it is necessary to remember the various pressures—some of which have been reflected in the useful debate that we have had—before making a judgment about challenging the other place once more.
The noble Baroness, Lady Hayter, raised the matter of cost still being in doubt. I would personally like to have had a clearer position, but we are working through on this. I have given enough assurances that we will make sure that the cost issue is clearly dealt with before this Bill comes into force. There are enough indications of the way that Parliament, Lord Justice Leveson and the CJC want to go that I am pretty confident that we can get a cost protection measure in parallel with the Bill which will satisfy the wishes of this House.
Perhaps I may also deal with an issue that has been raised in a number of interventions, including by the noble Viscount, Lord Colville. We have a dilemma that has happened under successive Governments. It is that what was once a clear line between the public and private sectors is increasingly becoming blurred, wavy, or even dotted. It is not as clear as it once was. I personally believe that at some stage we are going to have to deal with the anomalies created by the blurring of those distinctions and the fact that far more private sector companies carry out public service duties. However, I hope from what my noble friend Lord Lester said, and I said, that there is sufficient argument to say that for the moment we should rest on common law to deal with this matter. I fear that if we try to push too hard to implement this into statute now we will not convince the other place.
On the workings of the Civil Procedure Rule Committee, another matter that the noble Baroness, Lady Hayter, mentioned, it is not true that we will have to wait two years for case management. We are hoping to have guidance on case management in place, as with the costs, by the time that the Bill comes into force later in the year.
Before I move on, I am pleased to see the noble Lord, Lord Browne, in his place. I want to put on record that the noble Lord, Lord Browne and the noble Baroness, Lady Hayter, are a model of constructive opposition in the way they have handled this Bill. I hope that does not ruin his reputation. He will never recover from that.
The noble Lord, Lord May, referred to Committee stage as being a perverse pleasure. I think I know what he means, but it was a pleasure and an honour to have so distinguished a scientist contributing to our deliberations. It is an area which, along with the academic freedom that the noble Lord, Lord Bew, referred to, has been among the things that I have been most concerned that this legislation should try to protect.
The noble Lord, Lord May, referred to the question of Dr Wilmshurst. Another name that has often been referred to has been Simon Singh. They have been the cause célèbre about the deficiencies in our law. I have constantly said to my officials, “How will it be different after our Bill becomes an Act?” It will be different in both those cases. People pursuing them would have to satisfy the serious harm test. The defendants would have the new public interest defence contained within Clause 4 of the Bill. Alongside the Bill we are introducing cost protection measures to provide additional protection to those with limited means. More generally, to support the scientific and academic debate, the Bill also creates a new defence against libel for peer-reviewed material in scientific and academic journals and extends qualified privilege to reports of scientific and academic conferences.
Although I am not sure that we will ever be able to protect everyone from the speculative chilling solicitor’s letter, I hope that people receiving that chilling letter will realise that the law has changed. It has changed to protect them and build in protection for the Dr Wilmshursts and Simon Singhs of the future.
Lord Lester of Herne Hill
I am grateful to my noble friend. Although my noble friend is not a lawyer, and has the great advantage of not being a lawyer, would he agree with me as a matter of common sense, that it cannot make the slightest difference whether it is the prison department or a private contractor managing the prison so far as the Derbyshire principle is concerned, because the Human Rights Act makes that quite clear?
Lord McNally
I have no doubt that my noble friend is right. What I would prefer to do, as we have been arguing throughout this, is to leave that matter to a judge and a court, when it comes before it. Where I do think there is a relevant question—not that my noble friend’s question was not relevant, it is just that I did not want to answer it—is on the question of charities. I can confirm to my noble friend Lord Phillips that it is not our intention to catch charities. We think that it is very unlikely that a court would find that a charity was a body trading for profit. There is a clear distinction between trading for profit and simply making a profit to reinvest as part of the more general purposes of the organisation. I hope that will give comfort to my noble friend.
He was another one that was concerned about bullying, and I have just made the point about balancing. I was pleased to hear about Bill McNally, not least that he was a successful poacher.
The points made by the noble Lords, Lord Bew and Lord Lester, about Northern Ireland are worrying, and I will take up the point about whether there can be some cross-party demarche to our fellow parliamentarians in the Northern Ireland Assembly, because it would be a great pity if Northern Ireland were to be out of step on this.
I understand why I am being asked to make definitions. However, the fault lines are moving and we will have to trust the courts with this strengthened Bill for them to make the right decision in this area. I take the point made by the noble Lord, which is very valid. Although I and Parliament have made clear our desire for a direction of travel here, there is a danger that the Derbyshire principle may be eroded because of this new configuration. However, trying to put the Derbyshire principle into statute at this time is not the way forward. The common law can be trusted to develop in the right direction. As I have said previously, no law on earth can prevent a speculatively threatening letter from a solicitor.
The Bill has been the work of many hands. If a piece of legislation were to be subject to a paternity test and DNA testing, this Bill’s DNA would be far more likely to be that of my noble friend Lord Lester than me. However, I have enjoyed—I think that that is the right word—taking the Bill through with the help of many hands and some very constructive contributions. I hope that the House’s last and most constructive contribution will be to accept the Government’s amendment and reject the amendment in the name of the noble Baroness, Lady Hayter.
Baroness Hayter of Kentish Town
My Lords, I am grateful to the Minister for making reference to my noble friend Lord Browne of Ladyton, who has just talked about surrogate parentage. Perhaps we can all claim a little of that. However, the contributions of the noble Lords, Lord May of Oxford, Lord Lester of Herne Hill, Lord Bew, Lord Faulks and Lord Phillips of Sudbury, and the noble Viscount, Lord Colville, actually reflected what was going on in Committee and on Report. The Minister used the tactful words, “development of thinking”; we are therefore not going to talk about u-turns, but simply welcome the development of thinking behind the new government clause.
I thank the noble Lord, Lord Bew. It sounds as if Northern Ireland in itself is a bad example, let alone the suggestion that this House or Parliament should make our laws on the basis of something decided in that Province. No matter how important that Province is, that is not the right way to make our laws here.
As regards two further issues, the first was on whether permission should be sought by corporates before they start an action. I am sure that the noble Lord, Lord Lester of Herne Hill, made a slip of the tongue, for which he is not renowned, when he said that in order to bring an action, companies would have to show serious financial loss. Of course, that is not right with the Bill at the moment. Corporates do not have to show financial loss in order to bring an action, but only to succeed in one. That is the crux of the matter in terms of whether permission should be given before they are able to start an action.
Lord Lester of Herne Hill
I am very sorry to intervene, but Clause 1 has to be read with what we are talking about.
Baroness Hayter of Kentish Town
It was the word “bring”. What we are trying to say regarding permissions is that permission of the court should be required in order to bring that action. In a sense, the most effective speech about permissions was, of course, made not by me but by the noble Lord, Lord May of Oxford. He discussed the case of Wilmshurst, which involved four years, £300,000, a risk to patients and actually of course no serious case at the bottom of it, because what he said was true. That is what we are trying to get rid of.
To turn to the main issue of Derbyshire, in a sense this is quite a simple judgment. It is a judgment about whether the noble Lords, Lord Faulks, Lord Lester and Lord McNally, are right that we should leave it to the courts and to judges to decide on whether the Derbyshire principle should now apply to other organisations providing public services, or whether we as Parliament want to take that decision. My fear about leaving it to the courts is how on earth users—patients, Travellers, people who are receiving those public services, the disabled who go to Atos—are to know what their rights are if we have to wait for the court to develop the Derbyshire principles. How are parties going to know? Who will fund the test cases? What message does it give to users and patients, and indeed to journalists wanting to report their complaints, if they must wait to know what the outcome is?
Lord Faulks
I am very grateful to the noble Baroness for giving way. I understand her desire not to encourage unnecessary litigation, but perhaps she could help me and the House with this. Even under the amendment it will be necessary for a court to decide whether a non-natural person is performing a public function. That of itself may be the question of a judicial decision, so even her amendment is not going to preclude any involvement of the judges.
Baroness Hayter of Kentish Town
It is interesting, but performance of public function will be under either a contract or a commission given out by the DWP or the local authority. They will be able to define that, because they do not simply stand up and say, “I am now providing a hospital”. A contract will exist with what used to be a PCT and is now a GP commissioning group. There will be a contract and it can be defined in that way. If that was the only problem and the Government wanted to concede other than on that, I would happily take that. No, the offer is not coming. I would like to conclude, if possible—
Lord Lester of Herne Hill
I am very grateful. The problem is that Section 6 of the Human Rights Act talks about functions of a private or public nature. That is fact-sensitive and cannot be codified, and has not been codified by Parliament in the Human Rights Act. That is why one cannot simply brush it aside and say, “Well, now Parliament must do so”, because Parliament has not done so in the Human Rights Act and cannot do so here. It has to be left to the courts to apply the test.
Baroness Hayter of Kentish Town
Parliament can decide that the organisations contracted to do those public functions should have the same restrictions on them, whether that be FOI or anything else, as a corporate body. That can be part of the contract. In a sense, it is a simple issue, and I mean this with absolute respect. I know that lawyers much prefer that these issues are decided in court. I think non-lawyers prefer it to be clear in law, and that is what we believe should happen. We do not want the Derbyshire principle to be eroded, in the words of the noble Lord, Lord Bew, by the threats continuing until a case is brought. For that reason we would like this to be in the Bill, and I would like to test—
Lord McNally
Before the noble Baroness sits down—no, she is absolutely right—and before she lures Lord May and others into her Lobby, would she confirm that what we are doing in this Bill would have significantly assisted both Simon Singh and Mr Wilmshurst? We have not left the situation as it was. We have made significant changes and built in significant protections, which should be taken into account before people decide which way to vote.
Baroness Hayter of Kentish Town
If they read my article, they would see that it says that this Bill has gone a long way towards what we want and it is only a shame that it is not perfect. As somebody who likes perfection, I am going to ask the House if, particularly on the first amendment, we should ensure that organisations carrying out a public service should not have the right to sue for libel.