Lord Phillips of Sudbury
Main Page: Lord Phillips of Sudbury (Liberal Democrat - Life peer)Consumer Rights Bill
Lord Phillips of Sudbury Excerpts
Lord Phillips of Sudbury (LD)
My Lords, I will speak also to Amendments 76 and 79 in this group. I declare an interest as president of the Solicitors Pro Bono Group, or LawWorks as it is more normally known. I am afraid that the noble Lord, Lord Pannick, is prevented from being here today because he is abroad, but we strongly support the collective action provisions in the Bill, which represent a big increase in access to justice for people in situations where, but for a collective action allowance, there would be no real prospect of them getting redress.
Amendments 70, 76 and 79 are relatively technical and, I am afraid, somewhat complex, but we believe that they would represent a significant improvement in the workings of the arrangements in the Bill for pro bono action, and that they are non-contentious. I am grateful to the Access to Justice Foundation, which has been extremely helpful in framing these amendments.
On 11 March, the Minister in the other place, when introducing the amendments to the Bill of which my amendments are a refinement, ended by saying:
“The amendments are integral to ensuring that consumer bodies and bodies for small and medium-sized enterprises will be able to fund collective action cases. Without them, it would be difficult for consumer bodies to bring a case”.—[Official Report, Commons, Consumer Rights Bill Committee, 11/3/14; col. 588.]
In brief, Amendment 70 provides for the charity that was created in the Legal Services Act to make representations in hearings by the Competition Appeal Tribunal. I will say a word or two more about that in a minute.
Amendment 76 seeks to bring these limited advances in the Bill under the regime established by Section 194 of the Legal Services Act 2007. The whole gist of these three amendments is to make the present arrangements more practical and more consistent. I will just give a little more detail on that, although I hope not to labour the point with the Committee. Section 194 of the Legal Services Act 2007—which, incidentally, comes under the headings, “Miscellaneous provisions about lawyers etc” and “Pro bono representation”—takes up two pages of that Act and, in our view, is eminently suitable to regulate the arrangements which should prevail with regard to this small but important extension of pro bono rights under the Bill.
Amendment 79 is very straightforward. It would include the Competition Appeal Tribunal under the Section 194 regime for reasons, as I say, of consistency, clarity and simplicity. Secondly, it would extend the benefits of this part of the Bill to Scotland and Northern Ireland.
I shall say a word or two more because I recognise that these are not simple matters. The Legal Services Act 2007 allowed pro bono costs to be recovered, not for the benefit of pro bono lawyers but to be paid to a charity. The law, not surprisingly, provides that if you are acting for nowt you cannot get costs because you are not charging. That was thought to be unreasonable, so the 2007 Act provided that the costs that would have been recoverable had the advocate not been acting pro bono but normally should be payable to a charity nominated by the Lord Chancellor. Indeed, the Lord Chancellor nominated the Access to Justice Foundation, the four members of which, it is worth repeating, are the Law Society, the Bar Council, the Advice Services Alliance and the Chartered Institute of Legal Executives. Those four bodies govern the foundation, which is a charity. The funds that it receives from the 2007 Act and other sources go towards the alleviation of legal advice needs, which are more intense than they used to be by dint of cutbacks in the legal aid scheme.
The Bill allows damages paid under collective actions, which are themselves confined to issues of competition law, that are not claimed by those for whom the collective action is brought to be paid to the charity—the Access to Justice Foundation. It may be surprising that anybody would not claim damages but by the nature of collective actions it is not always possible to tell exactly who is or is not within the circumference of the collectivity. It is commonplace—the United States has had this arrangement for a long time—for substantial damages to be left in the pot, so to speak. As I say, this part of the Bill will allow the unclaimed damages to be passed on to the charity.
Amendment 70 is an amendment to subsection (6) of new Section 47C, which is headed,
“Collective proceedings: damages and costs”.
That new subsection was added in the other place. It was a government amendment and there was no opposition to it. It fills out new subsection (5), which stipulates that,
“where the Tribunal makes an award of damages in opt-out collective proceedings, any damages not claimed by the represented persons within a specified period must be paid to the charity”,
which is the one I mentioned—the Access to Justice Foundation. In our view, new subsection (6) could be more clearly defined. At present it states:
“In a case within subsection (5) the Tribunal may order that all or part of any damages not claimed by the represented persons within a specified period is instead to be paid to the representative”—
that is, the lawyer—
“in respect of all or part of the costs or expenses incurred by the representative in connection with the proceedings”.
Amendment 70 inserts,
“after giving the charity referred to in subsection (5) an opportunity to make representations”.
The issue of damages in these actions can be contentious and highly sensitive. I hesitate to say that it would often be, and indeed any lawyer acting pro bono is ipso facto likely to be extremely public-spirited and so on, but situations can arise where certain expenses—I am thinking particularly of after-the-event costs insurance premiums—and success fees, where it is a success fee case, mean that the representatives of either or both parties could be, let us say, lax in pursuing the full remedies so as to recover the costs and expenses where they are recoverable from the losing party, the defendant, which is usually a large company that has perverted the competition laws to the disadvantage of often thousands of individual citizen small claimants. We believe that the sorts of conflicts that can arise, including the clash of personal interests with the public interest, could be overcome or at least countered effectively by giving the charity that is to be the recipient of any unclaimed net sums the power to make representations at the tribunal hearing in order to test the rigour with which matters have been pursued up to that point.
For example, no action may have been commenced to recover costs from the losing defendant if that action could long-winded, expensive and, conceivably, uncertain, although that is unlikely. Because of the interests of those concerned, the money would simply be taken out of the unclaimed damages, thus reducing the sum that will eventually go to the claimant consumers. There are a number of scenarios which one can paint that would make the need for this amendment obvious. It does not require the charity to make representations other than in circumstances where it thinks or it is told that such a conflict or difficulty could arise. That is Amendment 70.
Baroness Neville-Rolfe
My Lords, I am grateful to my noble friend Lord Phillips for his support for this part of the Bill and for taking us so carefully through his various amendments. This is an unusual grouping in that it includes government amendments which meet some of the views expressed by noble Lords during the passage of the Bill.
In addressing my noble friend’s amendments, I emphasise that the Government recognise the important work undertaken by the Access to Justice Foundation. We are not against the Access to Justice Foundation receiving unclaimed damages for its good work. Indeed, pro bono costs are already awarded to the foundation in the Court of Appeal and the Supreme Court. Accordingly, the Bill makes provision for the CAT to award unclaimed damages to the Access to Justice Foundation.
However, we are trying to ensure that unclaimed funds are allocated in the most appropriate way and that certain contingencies are provided for. The Government want consumers to obtain redress for breaches of competition law, which, as my noble friend explained, is all that is at issue here. These cases may be costly. Accordingly, the Government consider that representative bodies which successfully represent consumers should have the opportunity of having some or all of their costs paid out of unclaimed damages so as to ensure that they bring actions on behalf of consumers. Therefore, the Bill grants the CAT discretion to award some or all of the unclaimed damages to the representative so that it may recoup some of its costs—on a case-by-case basis, obviously—and, at the same time, the CAT may also award unclaimed damages to the Access to Justice Foundation.
Similarly, with regard to Amendments 76 and 79, the Government wish to encourage consumers to seek redress for breaches of competition law. Consumers will require someone to represent them. Accordingly, the Government wish to encourage representatives—including, of course, those who act on a pro bono basis—and therefore the Bill provides that the CAT may sometimes award costs to a representative who acted on such a basis. The Government believe that if the opportunity for unclaimed damages to go to representatives who act on a pro bono basis is restricted, there could be negative consequences for the consumer. However, given this debate, I will look in Hansard at the detail that has been fully set out, and reflect on our discussions. I hope that my noble friend and the noble Baroness opposite will do the same.
I am moving five government amendments. Briefly, Amendment 71 commits that the body to receive unclaimed damages is a charity. We have accepted the Delegated Powers and Regulatory Reform Committee’s recommendation and so the exercising power will be amended to be affirmative. Our third amendment allows underlying claimants to incur costs if they make an application to have the representative removed and lose the application. This has two benefits: first, it aligns the costs with the wider “loser pays” principle that exists in domestic law; and, secondly, it should deter vexatious applications. The final amendment is minor and technical and follows an earlier government amendment.
I ask the noble Lord to withdraw Amendments 70, 76 and 79 and beg to move government Amendments 71, 73, 75, 77 and 78.
Lord Phillips of Sudbury
My Lords, I thank the noble Baroness, Lady Neville-Rolfe, for what she has said. I will willingly—indeed, avidly—take up her suggestion that we have a word about my three amendments outside this place because I do not think they in any way impinge upon the agreed objective of this part of the Bill of making access to justice better. I may be able to persuade her that there are matters that the Government should back and, on that basis, I am happy to withdraw the amendment.