Defamation Bill

Lord Faulks Excerpts

Tuesday 23rd April 2013 Lords Chamber

[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.

--- Later in debate ---

[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—