Legal Aid, Sentencing and Punishment of Offenders Bill

Lord Lester of Herne Hill Excerpts

Wednesday 1st February 2012 Lords Chamber

[Lord Thomas of Gresford]

I am most grateful to my noble friend for interrupting me with one paragraph to go, which would have relieved your Lordships a great deal. The opinion has only recently been produced to me and the Bill team has had it only for a day, so I could hardly expect an immediate response. I hope that my noble friend the Minister will be able to deal with some of the issues that are raised and the issues that I am raising in my remarks.

To conclude, that one size does not fit all is a recurring theme in the Jackson report. Every practising lawyer will agree with that. Proof of the issues that arise in litigation—sometimes liability, sometimes causation, sometimes quantum, and so on—gives rise to different risks and therefore to different solutions. This very Bill, for example, proposes different statutory instruments making different provision for different types of case. I look forward to hearing my noble friend’s response in due course. I beg to move.

[Lord Lester of Herne Hill]

My Lords, I must choose my words carefully because I do not wish what I say to be taken to be outright opposition to my noble friend’s amendments, although I have a certain degree of agnosticism, if not scepticism. I suggest that those who are interested in this area might read the New Yorker article of a couple of weeks ago, which described the abuse of power by the claimant lawyers in the Exxon South American environmental litigation case. That indicates the need for very careful safeguards, even in an environmental setting.

The only reason I speak at all is because it occurs to me that there is a less radical solution to some of the problems that has been fashioned by the courts themselves without any legislative intervention: namely, the protective costs order. I see that the noble Lord, Lord Beecham, shakes his head. I shall explain what I am talking about. The problem with English cost rules is, of course, the winner-takes-all rule, which can, as my noble friend has indicated, have a seriously chilling effect on the ability to bring public interest litigation. It is the fear of claimants and their advisers of having to pay the legal costs of the defendant that has a chilling effect.

I was involved in the Corner House case for a small NGO that was seeking to challenge the lack of proper consultation by the Secretary of State in relation to anti-corruption provisions in the export guarantee area. This was not an environmental matter but it did concern public law. The problem was that the little NGO had absolutely no funds to pay for me but, more importantly, the department. The department would not give an assurance in advance that if it succeeded, it would not ask for the whole of its costs against the NGO. Therefore, the puzzle was how the NGO could bring the public interest proceedings not simply by dealing with the claimant’s position but dealing with the other side.

Sir Henry Brooke, to whom I pay tribute and who throughout has led thinking on this issue within the judiciary, advocated the use of a protective costs order, which enabled us to go before the court and say, “Even if we lose, can we please have a protective order that protects us against the risk of having to pay the other side’s legal costs in advance, so that we know that the worst thing that could happen to the Corner House NGO would be if it had to pay its own costs?”. I am glad to say that that was what was eventually decided and the result was that the Corner House was able to litigate.

I am embarrassed to say that I signed a 100 per cent success fee agreement without realising the consequence, which was that I actually profited from what I had thought to be a public-spirited case. I did not return the money, since it was being paid by the Government. I am against 100 per cent success fees and I would never do it again—ever.

However, the point I am making is not about success fees, but that if one develops through the courts, on a case-by-case and flexible basis, a way of softening the winner-takes-all rule in appropriate cases—not just environmental but all cases—that would enable the weak and impecunious to avoid the effect of that rule. The Constitutional Court of South Africa has decided that the winner-takes-all rule should never apply in important constitutional cases, and that in a proper public-interest case each side should at least bear its own costs and, in some circumstances, the Government should be required to pay the claimant’s costs, or give an undertaking in advance to give that protection.

This is a slightly long-winded way of saying that there are other means that perhaps are to be encouraged by the legislature, or perhaps not. There are other means that the courts themselves have been developing that can deal with some of the points made by my noble friend without something quite as radical as the proposals suggested in his amendments.

[Lord Avebury]

My Lords, does my noble friend agree that the protective costs order that he was successful in obtaining in the case he mentioned was a one-off, that it was not a general rule of law but a matter of luck that his clients were indemnified against the likelihood that they would have to pay the other side’s costs, and that in the amendment that would be a general rule of law that would apply to all such cases?

[Lord Lester of Herne Hill]

Actually, I cannot agree, because the Court of Appeal’s decision was a kind of precedent and it has been followed. There have been arguments about what limits there should be on claimants—whether they should be like an NGO or otherwise—but it would be perfectly possible for a rule to be made by the Lord Chancellor expressly empowering the courts to apply protective costs orders on a more general basis. This was not just a one-off decision; it applied in a line of cases and has been developed since.

[Lord Thomas of Gresford]

I am sure that my noble friend would agree, however, that protective costs orders are matters of discretion for the judge who hears an application, and that the threshold is extremely high. In his particular case, he obviously advanced matters of considerable public interest that were much wider than only the issues in the litigation that affected his clients. So a protective costs order can be applied for in such cases. However, I was involved in the case following the flooding of houses at Aberfan that occurred as the result of the spoil banks placed there after the disaster. In that sort of case, where individual householders were affected, protective costs orders would not have met that threshold.

[Lord Beecham]

My Lords, at the risk of being accused of unqualified one-way sycophancy, I must again congratulate the noble Lord, Lord Thomas, on the clarity of his presentation of this complex issue. Although I somewhat dissociate myself from the preamble to the substantive part of his speech, I entirely concur with his amendments. At this stage, I should also express my thanks to the learned counsel whose advice has instructed me in a matter about which, hitherto, I knew nothing. Aarhus meant absolutely nothing to me up till now. It seems that I may have shared that failing with Her Majesty's Government. We shall see from the Minister’s reply whether that is a correct inference or not.

The noble Lord referred to the ClientEarth case in which the Aarhus Convention Compliance Committee observed that the cost rules pertaining in the United Kingdom placed it in systemic breach of Article 9.4 of that treaty. The committee concluded that we had not as a country adequately implemented our obligation to ensure that procedures are not prohibitively expensive. Counsel's opinion, to which the noble Lord referred, identified two particular issues. The first is that of uncertainty. The second is the sheer amount of the defendant’s costs that might fall on unsuccessful claimants. The noble Lord referred to the case of Barr and Biffa waste company, which arose from a complaint about odours emanating from a landfill site, where the costs were indeed nearly £3,250,000.

Lord Justice Jackson has much to say about those issues. His remedy is, as the noble Lord pointed out, a move to qualified one-way cost shifting. He gave six reasons for his conclusions, which are germane to the thrust of the amendments. He said:

“This is the simplest and most obvious way to comply with the UK’s obligation under the Aarhus Convention in respect of environmental judicial review cases”.

He continued:

“For the reasons stated by the Court of Appeal on several occasions, it is undesirable to have different costs rules for ... environmental judicial review and... other judicial review cases”.

His third reason was that the requirement for permission,

“is an effective filter to weed out unmeritorious cases. Therefore two way costs shifting is not generally necessary to deter frivolous claims”.

They simply do not arise. His fourth point was that,

“it is not in the public interest that potential claimants should be deterred from bringing properly arguable judicial review proceedings by the very considerable financial risks involved”.

He pointed out that:

“One was costs shifting in judicial review cases has proved satisfactory in Canada”.

His final point, which goes to the issue raised by the noble Lord, Lord Lester is that the protective costs order regime,

“is not effective to protect claimants against excessive costs liability. It is expensive to operate and uncertain in its outcome. In many instances the PCO decision comes too late in the proceedings to be of value”.

So with respect to the noble Lord, the protective costs order regime is not, in the view of Lord Justice Jackson, an answer to the difficulty.

[Lord Lester of Herne Hill]

I hesitate to disagree with the Lord Justice, but I do not understand that point, as one can apply at the very beginning, a very early stage, for a protective costs order—certainly in judicial review proceedings. I do not know why he thinks that it is too expensive or comes too late, because that has not been my experience.

[Lord Beecham]

I cannot answer for Lord Justice Jackson, but that is a subsidiary point. His point is that it is expensive to operate and uncertain in its outcome. Therefore, he regards it as an inadequate protection to the one-way costs shifting which the noble Lord, Lord Thomas, has rightly advanced as the best way to deal with these matters. Lord Justice Jackson’s approach was, as counsel’s opinion, to which the noble Lord and I have both referred, makes clear, endorsed by Lord Justice Sullivan’s working party, which was very clear in stating:

“An unsuccessful Claimant in a claim for judicial review shall not be ordered to pay the costs of any other party other than where the Claimant has acted unreasonably—

to go back to the noble Lord’s earlier point—

“in bringing or conducting the proceedings”.

--- Later in debate ---

[Lord McNally]

As I said, we are consulting. I shall return to the question of getting it right. The problem is that the noble Lord, Lord Beecham, is impetuous in so many ways, whereas this Government are determined to get things right—you can see the advice that I get on getting things right.

On Monday, we spent some time discussing QOCS and we heard the concerns of my noble friends and others that the matter should appear in the Bill. This afternoon, I do not want to repeat the more general arguments on these matters, but we need to get the details and the rules right to ensure that they are tailored properly in respect of the category of proceedings to which they apply. For example, in personal injury cases, it may well be that there should not be an initial financial test. However, the position is likely to be different for defamation, and perhaps for environmental cases too, which typically involve more than one claimant—sometimes many claimants. In such cases the costs involved can impact considerably on the ability of the public bodies that are under challenge to perform their general functions.

As the noble Lord, Lord Thomas, explained in moving his amendment on Monday, he was looking for specific words rather than words like “unreasonable”, which he said had such a broad meaning. Indeed, the noble and learned Baroness, Lady Butler-Sloss, added that the word “unreasonable” was liable to cause serious difficulties of interpretation and yet, as the noble Lord, Lord Thomas, has confessed, the word “unreasonably” is in Amendment 157.

It is precisely for those reasons that we are not yet ready to crystallise in statute, and ring-fence away from development in rules, words which are more properly left to the rules, where they can follow detailed discussions with stakeholders. They can be tailored and nuanced for the particular category of proceedings and, of course, the Lord Chancellor will remain accountable for the policy on these issues which is reflected through the Civil Procedure Rules.

Amendments 141, 147, 148, 149 and 150 deal with the recovery of ATE insurance premiums in respect of environmental claims under the Aarhus convention. Amendment 157 would introduce a new clause to provide for costs protection in the form of qualified one-way costs shifting—QOCS—for claimants in environmental claims and, it would appear, for all judicial review claims, whether concerning environmental issues or not.

The Government are, of course, conscious of their obligations under the Aarhus convention. Put simply, the convention requires us to ensure that parties have access to a procedure to challenge relevant environmental decisions that is, among other things, not prohibitively expensive. How we discharge those obligations has been a matter of debate for some time. It was addressed by Lord Justice Jackson in his report and was considered in a number of cases in the High Court and above. Amendments 141, 147, 148 and 149 seek to allow ATE insurance premiums to be recoverable from the other party in these cases. As I indicated in our debate on Monday, the Government's policy is that ATE insurance premiums should no longer be recoverable except in the particular instance of clinical negligence expert reports. Therefore, we do not favour this or any other extension of ATE premium recoverability.

Amendment 157 seeks to apply QOCS to environmental claims, subject to qualification in respect of unreasonable behaviour. The proposed clause would displace any rules of court in this area and provide for the Lord Chancellor instead to have the power to make regulations to extend QOCS to other areas in future. That seems to be something of a departure from the general principle that in civil proceedings, matters relating to costs are regulated in detail by rules of court. It is not clear why the departure would be beneficial.

As noble Lords are aware, the Government are introducing a regime of QOCS in personal injury cases to help balance the impact of the changes to no-win no-fee conditional fee agreements, and in particular as an alternative to “after the event” insurance. Claimants will continue to be able to take out ATE insurance if they wish, but they will pay the premium, which will be lower than the rolled-up premiums presently never paid by anyone other than a losing defendant. Although Lord Justice Jackson suggested that QOCS might be considered for use in some non-personal injury claims, the Government are not persuaded that the case for this has yet been made.

I noted the dispute between the noble Lord, Lord Beecham, and my noble friend Lord Lester about protective costs orders, which are also part of this consultation. As a matter of principle, the Government’s view is that protective costs orders can provide appropriate costs protection in environmental cases. Environmental organisations and the working group chaired by the then Mr Justice Sullivan, to whom noble Lords referred, expressed a preference for QOCS, having argued, including in a submission before the Aarhus Convention Compliance Committee, that an appropriate PCO regime could provide full compliance with the requirements of the convention. With a PCO, it will be clear from the outset what costs the claimant will have to pay if their claim is unsuccessful, while ensuring that some contribution is made toward the costs of public bodies that have successfully defended the claim. As I said, we have consulted on the issue.

The Ministry of Justice consultation Cost Protection for Litigants in Environmental Judicial Review Claims outlines proposals for a cost-capping scheme for cases that fall within the Aarhus convention. The consultation closed on 18 January and we will announce the way forward in due course.

[Lord Lester of Herne Hill]

I had not realised that there was a consultation, and I am delighted to hear that that has now been done. The issue seems to go beyond environmental litigation. Perhaps further thought might be given within the costs rules to a user-friendly procedure in all public interest cases whereby the individual can obtain an order quickly and at the beginning, as recommended by Lord Evershed’s committee in 1950. Lord Evershed recommended that the Attorney-General should be able to certify an issue of public interest where the costs rules would be displaced. I realise that this matter would be for the rules committee, but could consideration be given to that sensible procedure that would be not generalised but case based, on a user-friendly procedural basis, with the judge giving a decision so that people will know where they are from the beginning?

--- Later in debate ---

[Lord Thomas of Gresford]

I am grateful to my noble friend for saying there will be synchronisation. The scales of justice have been tipped against defendants by this fourfold cost that they have been calling for over a period of time. The purpose of this Bill is to even the scales of justice up. If there is any period between shifting from that side to this side the success fee and the ATE insurance without providing one-way costs as the balance, the scales will go completely in the opposite direction, and it is the suffering claimants who will come out the worst in a situation like that.

I cannot resist coming back to the question of protective costs orders, having heard my noble friend Lord Lester. Protective costs orders are applied for in public interest cases. I am not concerned simply with public interest cases. These could be the private individual, the householder whose house is flooded, in the example that I gave—

[Lord Lester of Herne Hill]

They are also applied for in private lawsuits.

[Lord Thomas of Gresford]

It is as my noble friend says. Lord Justice Jackson examined it and he came to the conclusion that the noble Lord, Lord Beecham, referred to. There is much more discussion to be had. I shall take my noble friend outside—as I once said in relation to one of the Ministers in the previous Government—and have a discussion with him there. For the moment, I withdraw this amendment.