Economic Crime and Corporate Transparency Bill

Debate between Lord Trevethin and Oaksey and Baroness Bowles of Berkhamsted

Committee stage
Tuesday 9th May 2023 Grand Committee

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I, too, added my name to this amendment, which is supported by these Benches. This issue gets us back to David versus Goliath, which we have mentioned in previous groups. Unfortunately, the culprits are Goliath, and our prosecutors are left having to face culprits with far deeper pockets than theirs. There are alternatives, such as creating larger budgets for prosecutors, that have already been dismissed.

Maybe within asset recovery there is some glimmer of attracting a better recompense, but that is not a perverse incentive because if the prosecuting authorities took actions improperly and overreached themselves, the safeguarding clause in this amendment would come into operation. In the way the amendment is drafted, there are not perverse incentives but good incentives to bring more actions that are presently not brought simply because they are unaffordable. It makes us a bit of a laughing stock that we have very strong laws in parts but cannot enforce them.

Everything else has been said. I commend this amendment and await with interest to see what excuses the Government come up with not to accept it when the precedent and the need are there and the amendment contains a safeguard and therefore it could be put into operation very effectively and swiftly.

[Lord Trevethin and Oaksey (CB)]

My Lords, I will say a few brief words in support of this amendment and place it in its proper legal context. When it was mentioned at Second Reading, the Government’s response was simply to say that the principle that the loser pays the costs of unsuccessful litigation or an unsuccessful application was regarded as a valuable principle and that they did not see sufficient reason to move away from it in this field. It is a salutary principle and it operates in civil litigation for the most part, but there are exceptions. There are already statutory precedents for a regime of the type that this amendment seeks to create, namely a regime in which the enforcement agency will not invariably have to pay the costs if an application is unsuccessful.

I will say a few words about a different, but quite closely related, area of law in which a regime of the type that this amendment contemplates has been created by the judges. In the field of professional discipline and professional regulation, there has been for some time a well-established principle that the regulator will not automatically have to pay costs merely because the application or prosecution that it has commenced has proved to be unsuccessful. It is known as the Baxendale-Walker principle and works perfectly well in practice.

I shall explain shortly how it works in practice. The proceedings are initiated and the respondent, being a professional person, is expected to engage properly and conscientiously with the regulator and to respond candidly, or with a reasonable degree of candour, to the points being made against him or it. If the regulator then continues unreasonably with the prosecution or disciplinary action and fails, it will be made to pay the costs of the matter. However, if the regulator at all times acts reasonably, the presumption will be that it will not be made to pay the costs of the matter.

The reason why the law has created that regime is precisely the reason that is contemplated by this amendment—namely, that it is strongly in the public interest that regulators and enforcement agencies should not be deterred from bringing proper proceedings by the risk of paying exorbitant costs bills to respondents who manage to successfully resist the application in question.

I think I have said enough to convey the point. I really do not understand why the Government are so reluctant to consider introducing a regime of this sort more widely across the field of economic crime. It already exists in relation to certain types of economic crime, and it works well in the field that I have mentioned. I would be very interested to hear the Minister’s response.