Defamation Bill

Baroness Hayter of Kentish Town Excerpts

Monday 17th December 2012 Grand Committee

[Lord Mawhinney]

As always, I am grateful to the noble Lord for his interjections. Let me cheer him up by assuring him that I was aware of that even before my noble friend said as much a little while ago. In fact, I remember being told that when we were holding our hearings. However, let me be plain about my difficulty here. This subject has been kicked into the long grass many times over the past 50 years, something my noble friend Lord Lester well knows because his was one of the balls that got kicked there. He is asking the Committee yet again to accept on faith a promise made by a Government Minister that there will be heaven tomorrow, but it falls just a little short. The truth is that while we will all await with interest what the judiciary decides would be an appropriate set of changes, if any, it is perfectly legitimate for Members of your Lordships’ House to ask the Government, “What changes do you think need to be made and what are you going to do about it?”. In essence, that is the question which lies behind the amendment, although it is in the framework for corporations.

While I am on my feet, perhaps I may say that so far as Amendment 8 is concerned, I thank the noble Lord, Lord Browne of Ladyton, and the noble Baroness, Lady Hayter of Kentish Town. It is extremely close to the wording used in our report, and in that I suspect that I am looking at the hand of the noble Baroness, Lady Hayter. I thank her for valuing it. I beg to move.

[Baroness Hayter of Kentish Town]

Before I speak to the amendment that has just been moved, and to Amendment 8 which is tabled in my name and that of my noble friend Lord Browne and the noble Lord, Lord Lester, perhaps I may also pay tribute to the noble Lord, Lord Mawhinney, for his work as chair of the Joint Committee. The Minister will recall, because he was at the Fabian Society even before I was, that we produced a book entitled The ABC of Chairmanship written by Walter Citrine. It was a brilliant book, but I have to say that I feel that a small codicil should have been added to it, having served under the chairmanship of the noble Lord, Lord Mawhinney, which is this: see how he does it because that is the best way to do it. I learnt a great deal from him.

As the noble Lord, Lord Mawhinney, has said, our recommendation comes from the Joint Committee and is broadly supported, including by Liberty, the Libel Reform Campaign, the Media Lawyers Association and Which?. As has been suggested, many of the cases which led to the pressure to reform of the law on defamation did not come from hurt individuals but from corporations, often using their deep pockets and access to lawyers to stifle public criticism of them or their products.

It was an American corporation that sued cardiologist Dr Peter Wilmshurst; the British Chiropractic Association sued Simon Singh; GE Healthcare sued Danish radiologist Professor Thomsen; Trafigura sued the BBC; manufacturers are forever threatening or trying to sue Which?; and McDonald’s infamously and, as it turned out, rather stupidly sued two individuals. Nature, the Lancet and the British Medical Journal—organisations that almost by definition exist for the public good—are no strangers to the threatening letters, mostly from corporations. Similarly, we heard in the Joint Committee from Mumsnet, which told us that it was very often the purveyors of baby foods and products, rather than individuals protecting their reputations as parents, which threaten to take action. It is often corporations which do not want negative reviews or sensitive information in the public domain that use this threat.

Yet the high cost of defending even a ludicrous claim brought by a corporation is an inequality of arms—or bullying, as the noble Lord, Lord Mawhinney, said. It is because a corporation can bring a claim where a defamatory statement is said to harm its trading or business reputation that a threat is all that is needed. The Joint Committee on Human Rights regretted the absence from the Bill of some reduction of the use of defamation proceedings by corporate claimants. Its view is that,

“businesses ought only to succeed where they can prove actual damage. The Bill should be amended so as to provide that non-natural persons are required to establish substantial financial loss in any claim”.

The report refers to the evidence of Professor Phillipson, who said that the failure to impose any restrictions on corporations’ ability to sue,

“renders the law on reputation inconsistent and incoherent. Defamation law and the protection afforded under Article 8 has developed on the basis that the protection of an individual’s reputation is a significant human rights issue. Corporate claimants have neither personal emotions nor dignity, and yet are treated as natural persons for the purposes of defamation”.

The report also quotes the Culture, Media and Sport Select Committee’s call for a new category of corporate defamation, by requiring a corporation to prove actual damage to its business before an action can be brought.

The Joint Human Rights Committee dismissed the MoJ’s refusal to countenance any change and concluded that,

“businesses ought only to succeed … where they can prove actual damage”.

Regrettably, as we know, the Government opposed a similar amendment to this in the Commons on the grounds that a corporation has a reputation, even where that does not affect its bottom line. We on this side accept that where damage to reputation affects the company's finances—for example, one can imagine an incorrect allegation that Perrier caused the current vomiting virus that is going around and that that affects the sales and the future of that company—redress should be possible in such cases.

Our amendment is modest. It does not seek to take away all rights for companies to sue, but would merely require them to show substantial financial loss before they were able to start an action.

[Lord Triesman]

My Lords, I have broad sympathy with this amendment and with Amendment 8, and I want to share a small amount of experience with the Grand Committee. I declare an interest as a former general secretary of the Association of University Teachers. One of the things that consistently caused difficulty, probably more in the scientific community than elsewhere but across a number of disciplines, was when people producing research documents and reports found themselves threatened to a point where they decided that they would not publish or where the journal to which they had submitted their article would not publish. In many cases, it had a direct impact on them, not just because the research was suppressed but because publishing in journals overseen by eminent academics is usually the way in which much of the opportunity for promotion and career advancement takes place. Refereed journals are one of the most fundamental routes to promotion to the most senior positions in academic life, so there was the loss of research credibility, the loss of often many years of painstaking research and a very significant barrier to career advancement.

It was one of the inspirations that led some of us to help in the drafting of the 1997 UNESCO normative instrument on academic freedom; I had the great privilege of taking part in this. It was intended to create for academics—although I understand why it should have a wider impact than just academics, that was who we were considering at the time—the entitlement to publish things that were accurate, truthful, based on solid research and, on occasion, unpopular or unfashionable as well. We none the less intended to make sure that all that could happen in the way that all of us would want because a world where people cannot publish or feel afraid of publishing serious academic research is a much impoverished world.

The reason I have such strong sympathy with what the noble Lord, Lord Mawhinney, said is because it is incredibly difficult. With whatever assurances are being given about separating out costs from matters of substance, it is difficult to see how any rational line of defence is available to people. I say with at least a modicum of respect for the lawyers here—and they will understand that I am merely a mathematician and do not have their formidable skills—that the issue that is of concern to many people who are not lawyers is that we have a legitimate view on these matters that is entitled to be heard. In this case, it becomes very important to see all the things clustered together in order to get the right result.

I shall conclude by making a point that I have made before in your Lordships’ House. The amendments deal with corporations. When corporations, particularly wealthy corporations, decide to become claimants, defendants cannot match their power with any equality of arms. It is also not at all infrequent that the claimant finds that they have no equality of arms with the defendant. If you find yourself contesting one of the major newspaper groups, it will tell you in pretty brusque terms that if you really want to bankrupt yourself, to see yourself and your family in penury for very many years, to lose your house or so on, just come on if you feel strong enough. The reverse of this is also true. I make that point because I would not want it lost.

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[Baroness Hayter of Kentish Town]

My Lords, although I am sure Lord Mawhinney will respond, as he moved this group, I shall make one point on the amendment standing in my name and that of my noble friend Lord Browne. If a company was attacked on its ethical role, that would also show in its share price—those of my generation might remember Barclays selling arms to South Africa. This would not necessarily affect sales, but it could still substantially affect a company’s financial position because its share price would be affected. There are other ways of measuring financial loss, and this is similarly the case with very small companies. If a very small shop of the kind found in Kentish Town was accused of having rats in the cellar, that would immediately lead to a drop-off in the number of people shopping there, and therefore I think that would count as substantial loss. Concerning the specific drafting, once the Minister has accepted that he will move his own amendment on the arguments we have given, I am sure his officials will make sure that the drafting is perfect.

[Lord McNally]

I have known the noble Baroness so long that I know when she is tempting me into sin. However, this has again been a very useful, very helpful debate. I confess that when I started out on this one of the things I wanted to do was to address the problems that have been faced by academics and others in making legitimate criticism and legitimate comments. Having listened to a large number of individuals and interested parties, there is no doubt in my mind that this law can have a chilling effect, and it is used very ruthlessly to stifle debate. I hope that we can do something to address this as we progress this Bill.

The noble Baroness, Lady Hayter, has obviously been very kind to me, because she did not point out that when I gave evidence to her committee I said that in my opinion corporations should not be allowed to sue. The then Lord Chancellor, Ken Clarke, took me into a quiet room, sat me down and, with the persuasiveness for which he is renowned, convinced me that corporations do have reputations and what the noble Lord, Lord Phillips, described as an ethical identity. This is a serious point, which has come out in the debate. As we go through the Bill, we are continually trying to get the balance between defending reputation and defending free speech. They are continually in our mind.

Regarding costs, I again point out to the noble Lord, Lord Mawhinney, although he clearly has doubts about the way these things are done in government—I do not know whether that comes from personal experience—that we have tasked the Master of the Rolls with the job of looking at this matter within a specific timescale: by next March. Since then, we have had a clear statement by the Prime Minister that the Government accept the recommendation by Leveson that there should be a cost-transferring system in defamation. Any powers of influence I have will be used to try to ensure that this is not go into the long grass. I am quite sure that the Master of the Rolls, Lord Dyson, will understand the urgency and the expectation that comes from the work with which he has been tasked.

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Moved by

[Baroness Hayter of Kentish Town]

9: After Clause 1, insert the following new Clause—
“Non-natural persons who perform a public or governmental function
Non-natural persons who perform a public or governmental function will not have an action in defamation, provided the statement complained of relates to that function.”

[Baroness Hayter of Kentish Town]

My Lords, there are good reasons for the amendment, which I think is probably one that the Minister, before he departs, is likely to agree to, even if he does not agree with our specific drafting.

The first reason draws on the Derbyshire case. While that matter concerned the propriety of certain investments made by the local authority from its superannuation fund, the House of Lords determined that a democratically elected body, including a local authority, and indeed any public authority or organ of central or local government, should be open to uninhibited public criticism and therefore should not have the right to take action for damages for defamation.

Thus, public authorities are barred from using libel by what is known as the Derbyshire principle—a precedent established in the case of Derbyshire County Council v Times Newspapers Ltd in1993, whereby a government authority cannot sue for libel. However, other authorities have sought to get out of that excuse, presumably because they were not elected. For example, the Olympic Delivery Authority appeared to be one such authority when it accused a citizen journalist of,

“serious, false and defamatory allegations”,

against it, perhaps because it was not elected.

However, elections apart, there are other good reasons why a public authority should not be able to sue. One, of course is that it is a body corporate and thus, under my earlier amendment should be debarred from such a course, unless it could show financial loss. However, that would not be possible for a public authority, given that all of us pay its levy, whether it is known as rates, the community charge or anything else. Another reason is the comparative resources of any government body compared with those of an individual—the “David and Goliath” situation that was referred to earlier. However, a third issue, which until recently was of central importance, given the number of services provided by local authorities, was that they were a monopoly—effectively for education, but actually for street cleaning, social care, parking, and a host of other services. Therefore, not only did any damaged reputation not dent their market, but publicity was really the only driver for improved care or access to redress because users could not take their custom elsewhere.

However, it will not have escaped the Committee’s notice that the world has changed. Not only do we have free schools in competition with those run by local authorities, but the voluntary sector runs many services on behalf of, and paid by, public funds. Increasingly, the private sector, driven by a profit motive, is also a big player in public service provision. Therefore, first, users need to be able to comment on those services without fear of action. Secondly, ratepayers and taxpayers must similarly be able to comment without fear of action. Thirdly, given that most such services are now won through competitive tendering, it seems extraordinary that, in compiling their bids, private or voluntary sector bidders can say anything about those against whom they might be bidding—in other words, the local authority—but are in a position to take action if the local authority, or indeed any of its service users, says a word about them that they do not like. If a local authority school, for example, is competing with a free school, the free school could say more or less anything it liked about the local authority school, and the local authority school could have an action taken against it.

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[Lord Ahmad of Wimbledon]

My Lords, listening to our debate with great attention means that one defines it almost along the line of whether or not you are a lawyer. I am also conscious that we have heard an array of accents, including both Scottish and Northern Irish. I will do my best to explain the Government’s position in whatever accent noble Lords believe mine to be.

As has already been said, and as I am sure noble Lords appreciate, this is an area where the law is still developing. In Derbyshire County Council v Times Newspapers, the House of Lords held that local authorities and government bodies are already prevented from bringing actions for defamation. My noble friend Lord Lester of Herne Hill said that he was involved in that case. Therefore, I speak with a degree of trepidation. However, I heard him express support for the position that I am going to outline. My noble friend referred to the Government’s consultation paper in which we sought views on the suggestion that this principle should be put in statute and on whether it should be extended to a wider range of bodies exercising public functions. A clear majority of the responses considered that wider statutory extension of the Derbyshire principle would not be appropriate and took the view that this would represent a significant restriction on the right of a wide range of organisations to defend their reputation. Indeed, my noble friend Lord Lucas expressed that view. We share that concern. We also consider that a statutory provision would be too rigid and could also lead to litigation and uncertainty over whether particular bodies and functions fell within its scope.

As I have said, the law in this area is still developing and legislation could remove the flexibility that exists under the common law for the courts to develop the Derbyshire principle as they consider appropriate in the light of individual cases. We believe that it is better to allow the courts to do this rather than introduce a rigid and restrictive statutory provision. On that basis, I hope that the noble Baroness, Lady Hayter, will agree to withdraw the amendment.

[Baroness Hayter of Kentish Town]

My Lords, I thank the noble Lord for that response. I also thank the noble Lords, Lord Lucas and Lord Lester, for their contributions. Like the noble Lord, Lord Ahmad, I quake when I hear the noble Lord speak who was the barrister in the case we are discussing. However, I am disappointed by the Minister’s response. To say that this matter is for the courts to decide seems to run counter to everything we are trying to do in this Bill, which is to provide people with a document that will inform them about these issues. Therefore, the noble Lord’s response is very regrettable. I also think it is out of time in that the increasing competition between providers puts one lot of people at a disadvantage compared with another because if a local authority is competing with someone else for the provision of a service, and one side can be sued for libel but not the other, that is a great inequality and it is not a level playing field. I dare say that cases will be brought on that basis. We shall need to return to this issue because there is inequality between different providers of services. However, for this evening, I beg leave to withdraw the amendment.

Amendment 9 withdrawn.