Defamation Bill

Baroness Hayter of Kentish Town Excerpts

Tuesday 5th February 2013 Lords Chamber

Moved by

[Baroness Hayter of Kentish Town]

2: After Clause 1, insert the following new Clause—
“Non-natural persons
(1) This section applies to an action for defamation brought by—
(a) a body corporate;(b) other non-natural legal persons trading for profit; or(c) trade associations representing organisations trading for profit.(2) The permission of the court must be obtained in order to bring an action to which this section applies.
(3) The court must strike out an application under subsection (2) unless the body corporate can show that the publication of the words or matters complained of has caused, or is likely to cause, substantial financial loss to the claimant.
(4) 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, after that excitement I rise to move Amendment 2 on behalf of my noble friend Lord Browne of Ladyton and the noble Lord, Lord Lester of Herne Hill. It would end the current position whereby individuals and organisations have identical hurdles to jump in an action for defamation.

Defamation is about someone’s reputation being trampled and seriously damaged by untrue statements made about them. Some commentators think that since only people and not organisations have feelings, only people should be able to sue. We do not go that far. We accept that organisations can be damaged by untrue allegations. Had horse meat not been in those burgers, or pork not in that halal food, such innocent information could have substantially and unjustifiably ruined a company’s reputation and caused untold financial harm. That would be the same if a small corner butcher, for example, was wrongly accused of having mice in the shop, if Perrier was falsely accused of being a purveyor of foul water or if a car manufacturer was said to have made a car with unsafe brakes.

Amendment 2 would allow such cases to be brought, provided that the allegations would cause substantial financial harm. The approach came from the Joint Committee. The amendment was moved in Committee on this Bill by its chair, the noble Lord, Lord Mawhinney, who cannot be in his place today. It is supported by Liberty, the Libel Reform Campaign, the Media Lawyers Association, Which? and the Commons Culture, Media and Sport Committee, which noted the mismatch of resources in a libel action between large corporations, for which money may be no object, and a small newspaper or NGO, which has had a stifling effect on freedom of expression.

In their response to the Joint Committee, the Government said that it was unacceptable that corporations were able to silence critical reporting by threatening or starting libel actions that they knew the publisher could not afford to defend but where there was no realistic prospect of financial loss.

This morning on the “Today” programme, John Humphrys, normally not afraid of anything, commented on a piece about branding and said that he dared not say anything derogatory about Coca-Cola because it would sue. John Humphrys may be powerful, but clearly not powerful enough to damage Coke’s profits. Even he knew the chill factor of a threatened action.

In Committee, our amendment was supported by my noble friend Lord Triesman and the noble Lords, Lord Faulks and Lord May of Oxford. It is no secret that the noble Lord, Lord McNally, shared this view until his then boss, Ken Clarke, took him into a quiet room, sat him down and, with the persuasiveness for which he is renowned, convinced him that corporations have reputations. The words are those used by the Minister in Committee on 17 December.

The cases that led to much of the pressure for libel reform were largely brought by corporations, using deep pockets and expensive lawyers to stifle criticism. An American corporation sued Dr Peter Wilmshurst, the British Chiropractic Association sued Simon Singh, Trafigura sued the BBC, manufacturers are for ever threatening Which?, and McDonald’s infamously and stupidly sued two individuals.

The Joint Committee on Human Rights called for the Bill to be amended so that non-natural persons would be required to establish substantial financial loss in any claim for defamation. Its report stated:

“Professor Phillipson … suggests that the failure to impose any restrictions on corporations’ ability to sue in defamation 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 Commons Culture, Media and Sport Committee also called for a requirement on a corporation to prove actual damage to its business before an action could be brought. Regrettably, the Government opposed this on the grounds that a corporation does have a reputation. Our amendment does not contradict that. It simply requires companies to obtain the court’s permission to sue by showing that it has been, or is likely to be, caused substantial financial loss. This has widespread support and we hope that the Minister will think again.

The second part of our amendment extends the bar on public authorities being able to take action to other organisations performing a public function. The Derbyshire principle is a legal precedent that a government authority cannot be sued for libel. There are good reasons for this. First, it is a body corporate and thus, under the first part of the amendment, it should be debarred since it cannot show financial loss, given that all of us must pay its levy, whether by income tax or rates. The second reason is the comparative resources of any government body compared with those of an individual. The third is that such an authority had a monopoly over education, street cleaning, social care, parking and myriad other services, so any damage to a its reputation would not dent its market, while publicity was a key driver of improved services or access to redress, since users were unable to take their custom elsewhere. That world has changed. We now have free schools in competition with those run by local authorities, while the voluntary sector and private companies run myriad services on behalf of public authorities and paid for by public funds.

First, users need to be able to comment on such services without fear of a defamation action. Secondly, ratepayers and taxpayers must similarly be able to comment without fear of action. Thirdly, since such services are won through competitive tendering, it seems extraordinary that in compiling their bids, private or voluntary sector organisations can say what they like about the local authority against which they are bidding, but could take action for defamation if the local authority or any of its service users said a critical word about them. Are these providers spending taxpayers’ money on services, including issues such as the Border Agency, adoption and care homes, really to be protected from criticism by hiding behind the threat of defamation? Surely we should be able to hear questions about standards, complaints or conduct without lawyers bullying commentators into silence.

Our amendment would cover only those parts of a corporation performing a public function. Thus, Virgin Care would lose its right to sue over its commissioned work but Mr Branson could still protect his brand’s name where Virgin’s profitability was at risk. In the Commons, the Government rejected this on the excuse that the court in Derbyshire had rejected it. However, that was 20 years ago, when outsourcing was a fraction of what it is today. Now we have one lot of bidders—public bodies—at a disadvantage compared with others because one side can sue for libel but not the other.

In Committee, the Minister, the noble Lord, Lord Ahmad, said that,

“legislation could remove the flexibility that exists under the common law for the courts to develop the Derbyshire principle … in the light of individual cases … it is better to allow the courts to do this rather than introduce … statutory provision”.—[Official Report, 17/12/12; col. GC 467.]

This is a decision that Parliament should take, not the courts. Why do a 2013 Government, pledged to update our defamation laws, feel bound by a 1993 ruling when new legislation is exactly the time to make good any shortfall in the law? The Derbyshire case upheld the right for uninhibited public criticism of public authorities. We should extend this to organisations carrying out those services which were once the monopoly of public authorities.

The amendment is not unfair to corporations. It allows them access to the courts to pursue a defamation case where there is a risk of substantial financial harm to their business. It would remove that right only from those providing public services, akin to the existing bar on public authorities. I beg to move.

[Lord Lester of Herne Hill]

My Lords, I have added my name in support of the amendment, which would reinstate a provision from my Private Member’s Bill preventing profit-making bodies from suing in defamation except where they can show substantial financial loss or the likelihood of it. As the noble Baroness, Lady Hayter, has indicated, it would extend the Derbyshire principle to bodies performing public functions. It does not seek to prevent companies from suing. It simply requires that they show harm where they feel it most—in the pocket. I do not believe that companies should not be allowed to sue for libel. They have no feelings but they and their shareholders are able to be hurt in their pocket book. If we were to bar companies altogether from suing, that would clearly violate the European Convention on Human Rights because it would be discriminatory.

That is why, in my Private Member’s Bill and in these amendments, I have supported the right of corporations and trading companies to sue provided that they can show actual, or the likelihood of, serious financial loss. As the noble Baroness, Lady Hayter, indicated, the Joint Committee on the draft Bill concluded:

“It is unacceptable that corporations are able to silence critical reporting by threatening or starting libel claims which they know the publisher cannot afford to defend and where there is no realistic prospect of serious financial loss. However, we do not believe that corporations should lose the right to sue for defamation altogether … we favour the approach which limits libel claims to situations where the corporation can prove the likelihood of ‘substantial financial loss’ … corporations should be required to obtain the permission of the court before bringing a libel claim. This would encourage robust and decisive action by the courts to prevent trivial and abusive litigation from being commenced at all”.

Before I turn to the second limb of the amendment, I wish to make it clear that there is nothing to stop the directors or officers of a company from suing in their own right; it simply hampers the ability of the corporate body, the trading body, to do so itself. So it is conspicuously moderate and balanced and I hope that it will be acceptable to the Government.

--- Later in debate ---

On the basis of the explanation that I have given, I hope that the noble Baroness will be prepared to withdraw her amendment.

[Baroness Hayter of Kentish Town]

My Lords, I thank noble Lords who have spoken, particularly those who have spoken in support—the most reverend Primate, the noble Lord, Lord Lester of Herne Hill, the noble Lord, Lord Marks of Henley-on-Thames, with whom I had the pleasure of serving on the Joint Committee, and the noble Lord, Lord Faulks, who raised an interesting question about small companies such as the ice cream vendor. In the Joint Committee, we went through the question of whether, as in the Australian situation, there could be very big internet companies with fewer than 10 people but enormous turnover. We felt that there was no way to cover that—although, as has been said, if someone is so identified, such as the well-known company Hayter and Hayter, I could probably take action in my own name.

I say two things to the Minister. I am disappointed by his response. The noble Lord, Lord Lester, said that this is moderate and balanced. I am slightly insulted by being called a moderate, but I can live with it occasionally. This is a moderate and balanced response. It is one that I should have thought the Government would accept. To put together the big issue of companies bullying and rich people bullying is not the right comparison. A few rich people do it. In our next amendment, we will come to a strikeout ability, which is the way to deal with those very few—and we know they are—who bully.

We are talking about, day after day, companies threatening anyone who says that they were not perfect with taking them to court, when they know that they can do that because of the depth of their pockets. On the Derbyshire principle, the Government are just wrong. If we want people exercising public functions but privileged to sue on their reputation, that does not give us the confidence for even more outsourcing of public functions. I think that the Government have taken the wrong call on that, and I would like to test the opinion of the House.

--- Later in debate ---

Moved by

[Baroness Hayter of Kentish Town]

3: After Clause 1, insert the following new Clause—
“Strike-out procedure
(1) The court must strike-out an action for defamation unless the claimant shows that—
(a) its publication has caused or is likely to cause serious harm to the reputation of the claimant; and(b) there has been a real and substantial tort in the jurisdiction.(2) For the purposes of subsection (1)(b), no real and substantial tort is to be regarded as having occurred in relation to the claimant unless the publication in the jurisdiction can reasonably be regarded as having caused serious harm to the claimant’s reputation having regard to the extent of publication elsewhere.
(3) Subsection (1) does not apply if, in exceptional circumstances, the court is satisfied that it would be in the interests of justice not to strike out the action.
(4) An order under subsection (1) may be made by the court of its own motion or on an application by any party to the action.
(5) Subsection (1) does not limit any power to strike-out proceedings which is exercisable apart from this section.”

[Baroness Hayter of Kentish Town]

My Lords, perhaps I can be very naughty and thank the House for its support on that Division.

The intention behind Amendment 3, which I move on behalf of my noble friend Lord Browne of Ladyton and myself, sets out a vital procedure—the ability of a court to strike out an action for defamation. This power is vital. Everything that the Bill seeks to achieve has been about reducing costs—which have completely distorted the law on defamation—by facilitating early resolution, as the Minister said in response to an earlier amendment. If the key issues can be decided early on—which the virtual ending of jury trials enables—then lawyers’ time is diminished and costs are brought down.

The costs in these cases, as we have heard, are such that they put the use of the law to protect reputation beyond the reach of all but the richest. The only others who have been able to make use of this law are those who have used no-win no-fee cases to do so—arrangements which are shortly to be ended. This law has been beyond the reach of most people. Virtually no defendant can contest a case, or claimants bring one, as they risk being crippled not just by their own legal costs but by those of the other side. I heard just today of a case involving one day in court which cost £40,000 on each side.

So costs are vital, as is early resolution. Up against a rich newspaper, no one without sizeable means can consider taking on a case. With a multimillionaire, an oligarch or a company even threatening an action, journalists, papers, NGOs or Which? will be reluctant to publish anything, no matter how true, that is going to tie them up in legal and financial nightmares.

The amendment is about the last part of the jigsaw. Having enabled early decision of most issues by clarity of the law and the reduction of the use of juries, we now need active case management and the clear authority of the court to strike out before trial actions that fail the test of serious harm based on a falsehood, or where other jurisdiction is more appropriate.

That clear ability of a court to strike out an action is what we want written into the Bill. It would allow either side to apply for this strike-out or for the judge to start the process. At one level, the amendment would write into the Bill what in effect exists in the Civil Procedure Rules but which will not be evident to the ordinary member of the public, be they a potential claimant or a defendant. Non-lawyers do not even know of the existence of the Civil Procedure Rules, much less what they say.

The Bill has aimed to provide for a lay person—an author or the defamed—a clear statement of what the law on defamation is, without recourse to a lawyer or a legal textbook. Our description of the power of a court to stop an action is clear. It would show to the claimant that unless they could show serious harm to their reputation, and a tort—that it was wrongful—then they should proceed no further. It would indicate to the defendant that they could go to the court and ask for such a strike-out when it was obvious to them either that the claimant had no relevant reputation here or that any such reputation had not been caused serious damage. This is clarity; it would add to the Bill a power that is already there, and it would be a signal that we want early case management so that as many of these issues as possible can be dealt with and, where appropriate, struck out. I beg to move.

[Lord Lester of Herne Hill]

My Lords, I cannot support the amendment. One of the difficult things about having a Bill like this is to decide what Parliament should be doing and what the courts should be doing. Parliament has put into Clause 1 this very important barrier of serious harm. In his important reply to the previous debate, the Minister helpfully indicated that serious harm—for example, with a corporate body—would include the likelihood of serious financial loss as one of the factors to take into account. Obviously this is a preliminary hurdle, and obviously the procedure rules, which are not in the Bill but will be in the Civil Procedure Rules, and case management will ensure that a party can come before the judge at the beginning and say, “Strike this out because the serious harm test is not satisfied”.

My first reason for not supporting this is that it deals with matters of procedure that will be dealt with, I think, by the Civil Procedure Rules themselves, a pre-action protocol and case management. The second reason is that the factors that are listed here,

“caused or is likely to cause serious harm … and … a real and substantial tort in the jurisdiction”,

are exactly the kinds of issues that one would expect the judge to have regard to, but the Government have very wisely decided to move against having a checklist—for example, in Clause 4. I think that our judges can be well trusted to be able to apply the serious harm test in Clause 1 without a checklist and without being fettered in any way.

I sympathise with the aim of the amendment, but it is an example of overreach. We should not be writing this kind of procedural detail into the Bill; we should leave it to the wise discretion of the judiciary.

--- Later in debate ---

Finally, I emphasise again what my noble friend Lord Ahmad said in the previous debate: that we are making progress in relation to our proposals on early resolution procedures. We will be bringing proposals before the Civil Procedure Rule Committee shortly to enable key issues to be brought before the court at the earliest possible stage. We will also be encouraging the courts to be more proactive in managing cases to ensure that a tight grip is kept on cases that proceed to trial. I assure noble Lords that we are committed to addressing these issues and will ensure that appropriate provisions are in place for when this legislation comes into force. I hope that on that basis and on the overwhelming arguments deployed from all sides of the House, the noble Baroness will withdraw this amendment.

[Baroness Hayter of Kentish Town]

I thank all noble Lords who contributed to this debate. I reassure the Minister that it was not just because they all feel so sorry for him about the last two votes that they all suddenly rallied to him. Theirs were genuine views, not sympathy.

All noble Lords who spoke are lawyers. They are very familiar with Civil Procedure Rules. Those of us who get caught up in defamation are not, so this amendment is less about the procedure than about signalling to people that they can apply for strike out. That is the essence of the amendment. It is because of that that I am cheered by the Minister’s response and his encouragement to courts to manage cases. That is undoubtedly half of it.

In Committee, the Minister spoke about new guidelines to go with the Bill. I hope that they will refer to the ability outside the Bill to get a strike out, because most people do not know about that but think the matter has to go to trial. That was the point we were really making. However, I know when I am not going to win a vote. I beg leave to withdraw the amendment.

Amendment 3 withdrawn.