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Clause 1. — (Power to Award Costs Out of Legal Aid Fund.)

Orders of the Day — Legal Aid Bill – in the House of Commons at 12:00 am on 23rd January 1964.

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4.43 p.m.

Photo of Mr Robin Maxwell-Hyslop Mr Robin Maxwell-Hyslop , Tiverton

I beg to move, in page 2, to leave out lines 5 and 6.

There is very little to be said on this Amendment that has not already been said in debate on Second Reading. The principle is absolutely clear-cut and simple. If it is just and equitable in all circumstances that an order for provision of costs out of the Legal Aid Fund should be made, it naturally and necessarily follows that it is unjust and inequitable to deny that. There is no way round this proposition, because it is logically watertight. However, in the Bill as it stands, the court, having satisfied itself that it is just and equitable in all the circumstances that provision for those costs should be made out of public funds, also has to be satisfied that the unassisted party will suffer severe financial hardship unless an order is made.

I say, in parenthesis, that this governs the case where the plaintiff in a court of primary jurisdiction, not on appeal, is backed by the Legal Aid Fund and his case is rejected by the court, the defendant, who is not backed by the Legal Aid Fund is put to the cost of defending himself. It also covers the case where a person with a very indifferent case, but one which cannot be said not to exist at all, threatens to bring an action against another person who is not backed by legal aid and where the defendant's solicitors advise the defendant that although there is no good case against him he will be made to get costs against the legally-aided plaintiff and, therefore, the damages claimed would be less than the cost of defending himself, it would be cheaper and wiser to pay, although quite unjustly.

This is called by some people, such as myself, blackmail, and by others grey-mail, but it is precisely and exactly the same thing. The only argument of any substance advanced by the Attorney-General against the proposition embodied in this Amendment is that it would put a burden on the Exchequer. I quote from HANSARD of 6th December: This would cast a heavy burden on the taxpayer—possibly in the region of £340,000 a year—for the benefit of a small number of persons, and, ex hypothesi, for persons who would not the suffering any financial hardship and, in many instances, persons who would be covered by insurance companies and would expect to take risk, such as motorists and factory owners."—[OFFICIAL REPORT, 6th December, 1963; Vol. 685, c. 1595.] It is self-evident that the smaller the sum of money involved the easier it is for the Treasury to meet it, but the larger the sum of money involved the greater injustice there is in not making this provision.

My right hon. and learned Friend is on the horns of a proper dilemma, because if the sum is, in fact, considerably larger than £340,000, by precisely the same measure so is the injustice greater to the people unable to recover costs having successfully defended themselves against an action which the State has financed in part or in whole. If, on the other hand, the sum is £340,000 or even less, it is much easier for the Treasury to find that sum. Either way, whether the sum be larger or smaller in fact than my right hon. and learned Friend's estimate of £340,000, the case is stronger on one ground or the other for accepting this Amendment.

As I painted out on Second Reading on 9th December, the statement that ex hypothesi persons would not be suffering financial hardship is quite untrue. The question is not whether they would suffer any hardship, but whether they would suffer "severe financial hardship". This necessarily brings us to the second objection to these offensive lines, "severe financial hardship". No one knows what severe financial hardship means. No one knows how a court will interpret that. No solicitor faced with a not-very impressive claim for damages by a legally-aided plaintiff will be able with any certainty to advise his client whether, if he defends the action on the assumption that the advice is good advice, he will get costs or not.

Let us envisage a few hypothetical cases. Someone with a gross income of £2,700 a year with one child being privately educated, with a mortgage on a house, faces costs of £120. That certainly will not bankrupt the person concerned. It might or might not be said that that was "severe financial hardship", but who can say? It is not only a case of how High Court judges will interpret this. It may well be that there have been discussions with High Court judges, or it may be that my right hon. and learned Friend has watched very carefully what the attitude of the Queen's Bench has been in matters of costs.

I am no more concerned about the huge costs involved in High Court actions than the more modest, but nevertheless severe, costs which arise in county court actions which in the ratio of the wealth of the person concerned may be just as inconvenient, or impose just as much hardship even if it does not actually meet the test of "severe financial hardship".

I stress that on the ground of lack of definition and unpredictability the phrase "severe financial hardship" is not a good one to write into the Bill. It is likely not to prevent the continuance of the practice whereby people settle out of court, because the cost of defending themselves and getting a just dismissal of the action is greater than the damages claimed. That form of blackmail will inevitably continue in many cases unless this Amendment is accepted. It must be said that by definition no one can ever know how many of these cases there are each year, because by definition they are cases which do not come to court, although every solicitor I have spoken to about it has assured me that these cases are frequent rather than infrequent.

I therefore hope that my right hon. and learned Friend, even at this late hour, will be able to assure the Committee that the sum involved, difficult as it is to find any amount of money, is nothing like so important as the principle involved and the inconvenience, hardship and malpractice which our failure to accept the Amendment must inevitably involve. It is not often that we have a Legal Aid Bill before the House. The scheme was introduced 14 years ago. It has taken 14 years, during which time the Labour Party and the Conservative Party have been in office, to produce a Bill to get rid of some of the defects of the scheme. It is difficult to predict how many years will pass, if we do not take this opportunity now, before there will be another Legal Aid Bill to rectify the defects of this one. It would be much more sensible and just, apart from it being necessary, to accept the Amendment.

Photo of Sir Arthur Irvine Sir Arthur Irvine , Liverpool Edge Hill

The Committee may think that there is a good deal of logic behind the argument so ably advanced by the hon. Member for Tiverton (Mr. Maxwell-Hyslop). Applying simple logic, I agree that there is great force in his argument. It is odd that a successful unassisted litigant should recover his costs only on proof of severe financial hardship.

However, what I believe the Committee should bear in mind is that on matters of this kind the force of logic must be balanced by considering the need for reasonable restraint in the use of public funds. This is a very important factor for the Committee to bear in mind. When it becomes widely known, as it will, that in a large number of litigations both sides are, in effect, being financed out of public money—I do not object at all to this principle—there might follow as a consequence a dilution in the public mind of any enthusiasm they may feel towards the whole valuable concept of legal aid.

We do not want this to happen. We must be very vigilant to ensure that it does not occur. If the public becomes acquainted, as it gradually will, with the notion of both sides being, in effect, subsidised in their litigation, there may be consequences in terms of public opinion which neither the hon. Member for Tiverton nor I would welcome. The reaction of public opinion would be peculiarly unfavourable if one of the parties affected was a rich person or a, wealthy corporation.

It is because I give weight to this factor, which, perhaps, is not as strictly logical as the factors advanced by the hon. Member for Tiverton, that I would not wish to support the Amendment. I think it well that the matter should be left as a matter of discretion for the courts, and on the whole the definition of that discretion now appearing in the Bill appears to be adequate for the purpose.

Photo of Mr Robin Maxwell-Hyslop Mr Robin Maxwell-Hyslop , Tiverton

The hon. and learned Gentleman has legal experience. I have not. I should, therefore, be most grateful if he would explain to the Committee why the phrase "just and equitable in all the circumstances" does not cover the point he is making, whereas the words "severe financial hardship" do.

Photo of Sir Arthur Irvine Sir Arthur Irvine , Liverpool Edge Hill

Perhaps the Committee would prefer it if the hon. Gentleman and I pursued that matter elsewhere. I should be happy to do so.

Photo of Mr Norman Cole Mr Norman Cole , Bedfordshire South

I support my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop). The matter of the unassisted party has been a bone of contention for many years, since the purport of the first Legal Aid Bill began to have its effect. Many of us have felt great sympathy for the unassisted party. The hon. and learned Member for Liverpool, Edge Hill (Mr. A. J. Irvine) may be sure that any question of the dilution of the value of legal aid or its respectability, as it were, is more than well taken care of by those who administer it, by the careful consideration which takes place before they withhold it or grant it in cases which merit it.

The position could arise where an unassisted party brought what proved to be a legitimate action against an assisted party and won his case but was entirely eliminated from receiving legal aid by paragraph (a) of the Clause. He would, therefore, be already under a defect, although properly in his own view he brought an action. As the assisted party did not initiate the proceedings, the unassisted party, having initiated them, would not in any case receive any kind of costs. Over the years many people will come within this category, either because they do not apply for legal aid because they are too proud to do so or do not wish to, or because they are not entitled to receive legal aid. The fact remains that if they initiate proceedings and win the case they will not recover anything by way of costs.

I ask the Committee to consider the hypothetical case—perhaps it is not always so hypothetical—of a man who is on the borderline for entitlement to legal aid. He decides not to apply. He is not the initiating party. He fights the case and wins. I emphasise that he is not in receipt of legal aid. Possibly he would not qualify because of paragraph (b). If because of the nature of the action and his own financial position he were able to qualify as an assisted party and I ought an action brought by another party, although admittedly it might take it outside the conditions of the Bill, the inhibition contained in lines 5 and 6 would not apply to him, because he himself would be an assisted person.

Therefore, as the Bill stands it may have the result of encouraging a number of people, who at present are prepared to steam along on their own resources although they might just qualify for the receipt of Segal aid, to apply for legal aid. When they see the inhibitions under which they will suffer, in that even if they win they will not recover costs, they will try to put themselves into the privileged category, namely, apply for legal aid which, if granted, will mean that they will recover costs if they win. If they do not win the case, they will still be in receipt of legal aid. I believe that this is very dangerous. I can imagine people who are just as agile of mind as anyone in the House of Commons making use of lines 5 and 6 to get round the position.

I take a slightly different line from my hon. Friend the Member for Tiverton. If the case that has been mentioned of a man earning £2,700 a year would not come within the definition of the phrase "suffer severe financial hardship" cannot we find better words to cover such cases? There are many examples of what is, after all, a legal means test. The original Legal Aid Act must have contained some words to make this clearer. We may find a suitable definition of what is "just and equitable" to suit my hon. Friend the Member for Tiverton because there must be words that are more definite in meaning and application than "severe financial hardship".

5.0 p.m.

It must also be remembered about unassisted parties who, in the first instance, do not receive legal aid for the employment of their professional advisers or aid for any other reason that they are unassisted and that, if they are of sufficient means, they will not get any costs after the case, despite anything else

I suggest that there is a definite area of unfairness, an area which needs to be considered in detail and an unfairness which needs to be solved, even if it would cost £340,000 to £350,000 a year. That cannot be considered an enormous sum—if it is, I would be surprised—against the whole background of legal aid. As has been mentioned, this may be the last Bill of its kind for some years and we should, therefore, take this opportunity of not perpetuating what could be an unfair position

I hope that the Attorney-General will think about this again. If he cannot wholly accept the Amendment I hope that he will try to find another form of words which will pinpoint more closely the position of the man who cannot afford to stand his own costs, even though he has withstood action without having legal aid.

Photo of Mr Leo Abse Mr Leo Abse , Pontypool

Despite the persuasive arguments that have been presented, I doubt whether a logical result would come about if the Amendment were accepted.

We have heard about the dangers that could result if it became generally known that it was possible for two parties to obtain subsidies from the State. That already happens, possibly more frequently than it may be appreciated, when there is both a plaintiff and defendant who are assisted. That does not only happen in divorce cases, where it is so often the case, but in other cases.

If the hon. Member for Tiverton (Mr. Maxwell-Hyslop) is being logical, I cannot understand why it is, that although great thought and concern has been given to those who are well beyond the tests applied by legal aid—as to any possible hardship to them—if one really wants to have a logical end to all injustice surrounding this point, the assisted defendant is being excluded. Clearly, it is almost as possible for considerable and severe hardship to arise in the case of a successful assisted defendant as it would be in the case of an unsuccessful one.

I could see some logic if what was being moved was a suggestion that all the assisted and unassisted may be not subjected to as rigorous a qualification as the one now in the Bill. I can see no merit in accepting an Amendment which merely applies to persons who are better off and not to those who are not so well off.

The second argument suggested by the hon. Member for Tiverton—and each hon. Member brings to this subject his own experiences—referred to the dangers that could arise by way of blackmail in regard to an unassisted defendant in a comparatively small claim who may think that rather than risk the possibility of the costs, which he will inevitably not recover, he will make a settlement. Some hon. Members recall what happened before we had legal aid legislation. In those days it was, unfortunately, almost always the case that if one of us acting for a person with little or no means was making a small claim, particularly against an insurance company, one found that there would be no settlement because the insurance company banked on the fact that the potential plaintiff would never have the money to get going. Until legal aid legislation came into being the little man with a claim was blackmailed by the big insurance company.

I remember this only too well and when we now apply the reverse, as it were, of this argument—as has been suggested by the hon. Member for Tiverton—I ask what the possible consequences would be if a legal aid certificate had been obtained by a plaintiff for a claim which, after all, must have some merit. It has been rightly affirmed that legal aid works in such a way that certificates are not given frivolously, but with care, and that, therefore, there must be some merit in the case. What would happen if, in small claims in the county court where a legal aid certificate had been obtained by the plaintiff, insurance companies knew that they were able to recover their costs if they succeeded? From my experience I would answer thatby suggesting that there would be far fewer settlements. That must be clear. This Amendment could be an incitement to litigation, particularly in small claims.

A warning note, a caveat, was entered by my hon. and learned Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine) when he said that one must be careful to see that the public do not believe that any profession is exploiting the public purse. My hon. and learned Friend is correct and that must be borne in mind. At present, if an assisted person has his certificate in a county court claim solicitors are usually able, with most intelligent insurance companies, to settle it before it even gets into the barrister's hands.

Photo of Mr Norman Cole Mr Norman Cole , Bedfordshire South

I am sure that the hon. Member for Pontypool (Mr. Abse) of all people would wish above everything else to see justice done. I am also sure that he has not overlooked the fact that we are talking about the unassisted defendant winning. Thus, what he is saying is that at the present time, because no costs would lie to the successful defendant, settlements are made out of court. He implies, by the same implication, that if the case came to court then possibly the defendant would have won. Are we, therefore, arguing about money coming from the State or about justice being paramount?

Photo of Mr Leo Abse Mr Leo Abse , Pontypool

There would be a lot of gambling with State money because when a man has a legal aid certificate—indicating, therefore, that he has a case—and the other side would believe that they have a case there would be an encouragement to gamble with State money, particularly if they thought that they were not risking their own costs if they went in.

Photo of Mr Norman Cole Mr Norman Cole , Bedfordshire South

They are risking their money because if they lose the costs must be paid by them.

Photo of Mr Leo Abse Mr Leo Abse , Pontypool

But they now usually believe that they will get an equitable settlement without getting involved in too much costs. Lawyers must bring a little common sense to the question of how the legal aid scheme will work. They must not think only of getting their cases before the courts. Solicitors who are within the legal aid scheme try to think of ways of settling cases, not of pursuing them. This Amendment is likely to mean that we would be cluttering up the county courts with a lot of small cases that would otherwise be easily disposed of by a telephone conversation between two solicitors.

We need some sense of priorities. The Attorney-General has indicated that to accept the Amendment would cost £350,000 or £400,000. I know that there have previously been discussions about other needs, such as statutory legal aid at tribunals, and although I concede that there can be cases of injustice, we cannot legislate for every case, and if we are to keep a sense of priority we should be thinking about where we can do the greatest good.

The present legal aid scheme is not without its defects, but it is a good scheme. At the same time, it costs about £3½ million a year, and we should be thinking of how to use it in non- litigious claims. For instance, there is at present great public pressure about the cost of conveyancing—a property-owning democracy is in existence—as a result of which many young people purchasing their first houses are suffering great hardship. Apart from the Attorney-General's duty to look at the Land Registry to see whether there are enough funds to train people in order that the Land Registry system can spread—

Photo of Sir Harry Hylton-Foster Sir Harry Hylton-Foster , Cities of London and Westminster

Order. I am reluctant to interrupt the hon. Gentleman, but, surely, we are getting not only beyond the Amendment, but beyond the scope of the Bill.

Photo of Mr Leo Abse Mr Leo Abse , Pontypool

I suggest that in directing our minds to priorities it is high time to consider so applying the scheme that funds may be available towards people's conveyancing costs being available, as it were, on hire purchase. There are so many other priorities that when a plea is made on behalf of what are, for the most part, very rich insurance companies, and for a type of people who can insure themselves against these risks of litigation, I am not very impressed, and I am not particularly interested when I know that the assisted defendant is excluded.

For these reasons, amongst others, I should not like to support the Amendment.

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

The whole Committee should be grateful to the hon. Member for Tiverton (Mr. Maxwell-Hyslop) for putting down this Amendment. I confess that my principal interest in these proceedings was in another matter but, when confronted by this Amendment, I find myself wondering what its effect would be—and what, indeed, will be the effect of the Bill itself. I am not able to see how it will work, and I think that it may work somewhat unfortunately.

I say at once that in this matter I speak as a layman. I have no recent professional experience of the working of the legal aid system. My experience is to a Member of Parliament to whom individual constituents complain from time to time about the very high proportion of their income that has to be paid to secure legal aid. That is the first anomaly of the Bill, as I understand it.

I cannot quote figures offhand with any degree of accuracy, but a man with a certain income is granted legal aid conditional upon his contributing a very substantial sum. Very often, indeed—although my experience really goes back far too long—he is rather worse off in those circumstances than if there had been no legal aid at all, when he might very well have found a solicitor who thought that the man had a good case, and would accept a small sum to cover expenses and conduct the litigation. That used to be called doing it "on spec", but I never believed it. I think that solicitors honestly accepted a responsibility to conduct litigation where it was obviously in the public interest that it should be conducted.

5.15 p.m.

There used to be a system of poor person's divorce, and I found myself, as a singularly unprosperous solicitor at the time, very greatly out of pocket as a result of conducting a dozen or fifteen or twenty of these divorce cases. I must confess that I began to review my procedure when a lady asked for a poor person's divorce. When I asked her her occupation she replied, "I am a domestic servant employed by one of your rival, but very prosperous, solicitors, who does not take poor person's divorces."

Frankly, my reading of the matter has been somewhat perfunctory. A man earning, perhaps, £750 a year, who has had to contribute £75 to the costs of the case as a condition of getting part legal aid, may have the verdict given against him. We must remember that the unsuccessful litigant is not usually a scoundrel, but a man who has just not been able to obtain the necessary witness. He may have just failed to satisfy the court that his honest account of the circumstances is sufficiently corroborated to enable the court, with certitude, to give him the verdict. He has had to pay £75, but does a man getting twice as much as he earns have to pay £75, or does he get 100 per cent. grant of costs under the Bill? If so, it seems to be an anomaly.

My hon. and learned Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine) was asked about the words "just and equitable". My hon. and learned Friend could answer better than I, but I will give an answer. The court would say that the obvious meaning of the words was that the person had been faced with unnecessary litigation, and unnecessary, unjustifiable expense, and that it would be just and equitable that some contribution should be made from the public funds.

If the words "just and equitable" import the possibility of financial consideration, one comes up against a second aspect. A great deal of litigation is conducted on behalf of defendants by insurance companies, through their solicitors, but the defendant is still the defendant. Presumably, therefore, if a person is insured, the defendant will not be able to satisfy the terms laid down. It is not an easy matter. I do not hold a special brief for insurance companies, and they do not inspire in me a passionately sympathetic emotion, but they are, in the main, highly reputable concerns administering their affairs with due regard to the public interest. But I do not see why an insurance company should be exempted from the provisions of the Bill.

There is a third difficulty. We may say that we have to establish "severe financial hardship", and I must admit that I have great sympathy with what has been said about "severe". It seems to me to be a word with no possible definition, and one that it would be quite impossible to interpret without some sort of measuring standard. I do not think that the word has any judicial meaning of any kind or description. Is it "severe" if a man worth £1 million has to pay £1,000 unnecessarily? I do not know. One would have thought that it was if one had to pay £1,000 out of £2,000. It is severe on the unsuccessful plaintiff to have had to pay £75 out of an income of £10 or £12 a week. I may be wrong about the figures and I do not want to use figures which might convey a misleading impression.

Now we have a situation under the Bill as drafted in which a moderately-incomed person has succeeded. The comparatively poor plaintiff who has been assisted has paid his money by way of whatever contribution has been ordered. He has lost his case and the next test applied by the Measure is that the court will decide what contribution is to be made by the plaintiff. If the court decides what contribution is to be made by the plaintiff, that is presumably after that decision has been appealed against. Indeed, it excludes appeals anyhow.

It is obvious that the plaintiff is extremely unlikely to pay that money. What the successful defendant gets out of that is the future right to collect, by the sort of miserable process by which one tries to collect money before selling the debt to a collecting firm, and with the possibility of the plaintiff's going bankrupt anyhow. Therefore, already, by emphasising that, which seems an unnecessary provision in the Bill, we have hamstrung the successful defendant's chance of getting most of his costs.

I assume that in this matter the successful defendant has to make an application and has to satisfy the court. He has to be told that he must establish severe financial hardship. He has to give particulars to the court which will land his creditors on him the next day. It is not easy to establish severe financial hardship. The successful de- fendant is presumably, and certainly is for all practical purposes in this matter, a man of unblemished character against whom no judgment has been recorded and who has had to face unconscionable expense and worry in contesting litigation. A judge says that Parliament in its unforeseeable wisdom has said that the man must establish to the court that he will suffer severe financial hardship. The man says, "I am a bank manager but I owe £500 to a bookie and I do not want anybody to know." What do we do about that? Are the proceedings to be heard in camera? That would be undesirable because in that case anyone could get away with almost anything in a matter of this kind. One does not have to disclose one's possessions in the Bahamas.

The unfortunate man has to go to court and speak of circumstances which he may have been trying to disguise from everybody but his wife for a long time. I may be quite wrong about this. The Parliamentary draftsman has to foresee every possibility in vacuo, but he really seems to have produced here a set of circumstances in which the Bill does not seem likely to work.

The Explanatory Memorandum says that this provision will cost only £55,000 anyhow. I would be the last to suggest that that is a small sum. I wish that I had that much myself. But it is now a small sum in a House in which at one time Hume used to complain about the expenditure of half-a-crown. That, of course, was a different Hume and the name was spelled differently. We, of course, are in a House which can throw away £100 million. That is the unhappy difference in the state of our affairs.

If people feel that they cannot take advantage of the Bill without establishing their own poverty in public it does not seem to me a beneficial Measure. If fairly well-to-do litigants are to be reimbursed more than if they had applied for legal aid and had received a modest grant that seems to me a little inequitable too.

Photo of Mr Robin Maxwell-Hyslop Mr Robin Maxwell-Hyslop , Tiverton

In fairness to other parts of the Bill, it should be said that the provision which I find so offensive does not apply in appeal courts. The part of the Bill in reference to which the hon. Member talked about having to disclose one's poverty in public does not apply there, although I agree with what the hon. Member has said about courts of primary jurisdiction. It impairs what little machinery there is.

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

I appreciate that and I agree with it, but I say to the Attorney-General that, at least, this discussion has raised one or two questions in the minds of hon. Members, many of whom are more experienced in these matters than I am, which are worthy of being looked at. Before we place the Bill on the Statute Book, someone should consider just how it will work and whether it will work very happily.

Photo of Sir Frank Soskice Sir Frank Soskice , Newport (Monmouthshire/Gwent)

The hon. Member for Tiverton (Mr. Maxwell-Hyslop) moved the Amendment with great cogency and force. I would not be able to support the Amendment, for a reason which I will give in a moment, but I earnestly ask the Attorney-General to think further about the language which he has used in the Bill and take it back and perhaps reshape it.

I should like to say first why I should find it difficult to support the Amendment. My reason would be that if we take out the requirement that severe financial hardship should be established, we are thrown back, as the hon. Member for Tiverton pointed out, on the requirement that it should be just and equitable in the circumstances to offer the relief as the only requirement which has to be satisfied. It seems to me that that would not be a wholly satisfactory position.

Let us consider a defendant who may be the Prudential Assurance Company or the Westminster Bank or some large corporation. If a judge is asked to say, in circumstances in which that defendant has won an action brought against him, whether it is just and equitable that that defendant should have relief, it is an almost impossible task. There is no criterion by reference to which the judge can decide.

In the assumed circumstances, an action has been brought against a bank or an insurance company which was not justified, conceivably because the plaintiff could not muster up the evidence which nevertheless was available, or more probably because it was found when the evidence was examined that the action was one which was not sustainable. Therefore, to rely simply upon the test of whether it is just and equitable to grant the relief is not sufficient. No judge can reasonably enforce that, unless he is given some further guidance as to what circumstances he should take into account. I would find it difficult, for that reason, to support the Amendment, but, as my hon. Friend the Member for Oldham, West (Mr. Hale) has just said, I think that the discussion has made it clear that there is a considerable amount of disquiet in the Committee about the present wording of the Bill.

I accept wholeheartedly what the hon. Member for Tiverton said when he pointed out that the test of severe financial hardship is so very unpredictable. It is such an uncertain test. The object of the Bill is primarily to give a measure of relief to persons, I suppose with modest incomes or medium incomes, and to rescue them from the position in which they have to find out of their own pockets what may be to them a substantial sum of money. I do not believe that the language which the Attorney-General has chosen will achieve that purpose.

I take the example of a defendant whose gross income is £2,700 and I assume that he has won an action which has cost him £500 to defend. If he has to find £500 out of his own pocket, with a gross income of £2,700, is he then faced with severe financial hardship or is he not? It is very difficult to answer the question.

5.30 p.m.

If an action were brought against a Member of Parliament who had no other means than his Parliamentary salary, and the costs he was put to were £200 or £300, he would probably not be faced with bankruptcy, but his budget would be greatly disturbed. It would, I suppose, necessitate his changing, for some considerable number of months, his manner of life, affecting his summer holiday, or whatever it might be. Is that a situation in which he would be faced with severe financial hardship? Who on earth is to answer that question? Imagine any judge doing his best with that sort of test and trying to answer whether, in those assumed circumstances, a person of modest means was faced with severe financial hardship.

Considering the language which the Attorney-General has chosen, I should think that most judges, if they had to interpret it, would think that the financial hardship was not severe unless the successful defendant, having to find costs, were faced with something near bankruptcy, unless he had to find a sum of money the production of which would involve him, substantially, in insolvency. It seems, to me that most judges, if they had to say whether a debt faced a person with severe financial hardship, would say that the hardship was severe only if the circumstances were such that the finding of the money in question would, virtually, wreck the individual. Then, of course, it would be severe financial hardship, but in cases falling short of that the question is really impossible to answer.

I put it to the right hon. and learned Gentleman that, if he leaves the Bill as it it, it is likely that it will fail of its purpose. It is likely that very large numbers of people whose means are modest, with incomes within the range of, say, £2,500 and under, will, if they have the costs of an ordinary action to find out of their own pockets, just not get the relief which the Bill is undoubtedly intended to provide.

Although he may well feel difficulty in accepting the Amendment, my plea to the Attorney-General is that he should say to the Committee that he nevertheless recognises that the discussion has thrown up serious difficulties and has demonstrated that there is at least a doubt about whether the Bill, worded as it is, will achieve the purpose which he has in mind. Obviously, its purpose is a humane and sensible one and it would be a very great pity if the Bill, when operated in practice in the courts, were found to provide no relief in a large number of cases in which clearly the relief ought to be available.

The Attorney-General has further stages of the Bill which he can use for the purpose of introducing a change in the language. I do not think that he should just leave out lines 5 and 6, as the Amendment would, but I ask him to cast about, with Parliamentary counsel, to see whether he can find a formula which more nearly approximates to the position in which a person of moderate means finds himself when having to pay out of his own pocket a sum of money which will disturb his budget in a material way

I am not seeking to protect the large concern which really would not have to worry much over a debt of £500. I am seeking to protect the person of medium means who might well find it a grave inconvenience if he had to inflict upon himself and his family the obligation to cut down their living standards over a considerable number of months in order to find a sum of that sort. I know that the right hon. and learned Gentleman is sympathetic to appeals made to him when he thinks that they are reasonable. I make the earnest appeal to him that he should not commit us to this form of language but that he should take it away again and, before the Report stage or at a later stage, see whether he can improve upon it.

Photo of Sir John Hobson Sir John Hobson , Warwick and Leamington

Despite the persuasive arguments advanced by my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop), I must advise the Committee not to accept the Amendment. During the debate, we have ranged fairly widely and we have had a very useful discussion of many points and some most interesting observations on the Amendment itself.

The Amendment goes very much to the root and purpose of the Bill. If passed, it would remove the test of severe financial hardship as a necessary condition of help being given to the successful unassisted litigant at first instance, [f this gateway were removed, the result would almost certainly be that the vast majority of successful unassisted litigants, whatever their financial position, would look to the State and be entitled to have their costs guaranteed by the State if they could not get them out of their opponents. This would mean that the Bill had a very different purpose indeed.

As was explained on Second Reading, the purpose of the Bill is to try to deal with the anomalous situations which do arise in the course of the administration of the Legal Aid and Advice Act. It is not its purpose to put every citizen in a better position, by guaranteeing that he will be able to recover his costs from the State if he is successful, than he might otherwise be, but only to try to help

where State assistance to one party has caused hardship to the other. This is the difference between acceptance of the Amendment and its rejection by the Committee, which I suggest is the right course.

Photo of Mr Norman Cole Mr Norman Cole , Bedfordshire South

My right hon. and learned Friend will agree that the words he has just used—if I heard him aright—about a great number of successful litigants, whether plaintiffs or defendants, do not quite represent the true position. There is the carefully prepared qualification, which he put in at the end of his remarks, that the other party to the action must have been State-aided in the first instance for this to arise at all.

Photo of Sir John Hobson Sir John Hobson , Warwick and Leamington

That is quite right, of course. We are discussing only those who find themselves faced with a State-aided litigant. As the hon. Member for Pontypool (Mr. Abse) pointed out, for a great number of years, under the system of litigation which has existed in this country, impecunious plaintiffs have been assisted by someone else, quite properly, and, as the hon. Member for Oldham, West (Mr. Hale) said, with very great generosity, on many occasions. The defendant in those circumstances has had little chance of recovering his costs. It is proposed now, if the Amendment be accepted, that in the majority of such cases, because of the accident of State assistance rather than private assistance for the plaintiff, the happy defendant should be very much better off by having his costs guaranteed.

If the only limitation were that the courts would have to find that it was just and equitable that a successful unassisted litigant should have his costs, the court would, as has already been said, not really be embarking upon a financial examination of the situation at all. It would say only this: "Here is an insurance company, a very large corporation. It has been sued, and the plaintiff has failed. It will have to pay the costs. It will not get them out of the plaintiff. Therefore, it is just and equitable that it should have the money out of the State".

I submit to the Committee that there are other considerations which the court would not take into account but which the House ought to take into account on the general policy of giving assistance to those who are the unassisted opponents of legal-aided plaintiffs. Such considerations might very well not be in the minds of judges, who would be considering individual cases and not the general principles and consequences of taking a series of individual decisions.

As the right hon. and learned Member for Newport (Sir F. Soskice) said on Second Reading, it is very difficult for judges to apply a formula such as "just and equitable" if they have no signpost to indicate the circumstances which they should take into account. I suggest that it is right that Parliament should ensure that general principles and considerations of general policy about the way in which the legal aid fund should operate should be indicated by a signpost to the judges so that they know Parliament's intention.

We are not considering on this Amendment whether the phrase "severe financial hardship" is a happy one or the right one, or whether it can be improved. I will, with permission, say a word about the points raised on this matter by the right hon. and learned Member for Newport. All that we are considering is whether there should be no other qualification than that the judge should think it just and equitable or whether it is right that there should be some other test as to the circumstances in which a successful unassisted litigant should have his costs out of public funds. As I have said, the Amendment would leave the gateway wide open for the vast majority of successful unassisted litigants to be supported out of public funds.

I suggest the following reasons why we should give a signpost to the judges which is more narrow than to ask them to consider whether in the individual case before them it is just and equitable that the successful litigant should have his costs out of public funds. It is not right of my hon. Friend the Member for Tiverton to say that the only thing that the Government are interested in is the financial aspect. That is important, but I put it as the last consideration, and it is a travesty of my speech on Second Reading to suggest that that was the only argument advanced against the proposal in the Amendment.

The first reason why I suggest that we need a narrower formula is that the wide formula would involve the State in supporting both sides in numerous cases. Each side would be litigating in the certain knowledge that if it were successful it would be almost bound to recover its costs, which would be paid in full. It is true that there are many cases in which both parties are supported by the State, but they are cases in which both parties are within the limits which qualify them for legal aid, and, therefore, they are people who, according to the rules and regulations, need the support of public funds. Even in those circumstances it sometimes causes a good deal of comment to be made against the legal aid fund that, even though each needs support, two parties are litigating at public expense. But a situation in which one party was in need and the other party, who was not in need, knew that he had a guarantee of his costs provided that he was successful would be a very unhappy one and, as the hon. and learned Member for Liverpool, Edge Hill (Mr. A. J. Irvine) pointed out, it might bring the operation of the legal aid scheme into some disrepute.

The result certainly would be this. First, it would place all unassisted litigants in a far better position than they would have been had there been no legal aid scheme because, long before legal aid was introduced, impecunious plaintiffs could bring actions and defendants had no hope of recovering costs from them even though they were successful. That situation still obtains. Any plaintiff, even though impecunious, who does not need to proceed with legal aid can, and often does, prefer not to pay the charges which, as the hon. Member for Oldham, West pointed out, are frequently quite burdensome for poor people. He prefers to proceed more cheaply and can often do so through private practice. In those circumstances, the mere accident of whether he has chosen to take up his legal aid certificate or has preferred to pay a small sum to get the matter dealt with through a private solicitor would make a difference in the question of whether the defendant was certain to recover costs.

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

There is the reverse situation and I do not think the right hon. and learned Gentleman has dealt with it. Suppose that a comparatively poor person is partially legally assisted in his defence but has had to make a substan- tial contribution out of his own pocket to the funds of that defence. Under the Bill, will he be reimbursed the amount which came out of his pocket if he succeeds in his defence?

5.45 p.m.

Photo of Sir John Hobson Sir John Hobson , Warwick and Leamington

If an assisted litigant finds himself faced with a plaintiff who is unassisted, the Bill does not enable him to recover anything from public funds, and he cannot get his contributions back. He embarked on the basis that he would make the contribution to the legal aid fund and that, if successful, he would have such remedy as was available against the plaintiff. But, if the plaintiff turns out to be a man of straw, the Bill would not—

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

With respect, I think that the right hon. and learned Gentleman has misunderstood my point. I am talking about a partially assisted litigant who succeeds against an assisted litigant. Can he recover the contribution which he has made out of his very small income—because he is the worst off of all?

Photo of Sir John Hobson Sir John Hobson , Warwick and Leamington

A person is either legally assisted or not. He may be assisted for part of the proceedings and not for another part. The Bill deals with that situation, because, during the time that he is unassisted, he can treat himself as an unassisted person and benefit from the Bill.

Photo of Mr Leo Abse Mr Leo Abse , Pontypool

The point raised by my hon. Friend the Member for Oldham, West (Mr. Hale) is one which I sought to make. Is it not possible for severe financial hardship to follow on an assisted defendant who succeeds in his case? My hon. Friend uses the term "partially assisted". I take it that by that he means that the man has made some contribution. Since severe financial hardship could follow on an assisted defendant, why should he be excluded entirely, as he is, from this scheme?

Photo of Sir John Hobson Sir John Hobson , Warwick and Leamington

When considering the position of the assisted litigant, there is a very careful scale of regulations and an examination is made of his means by the National Assistance Board. Then there is an assessment and an award by the local committee of the amount that should be contributed. I think that, by and large, in making those assessments the arrange- ments for disregards of the house and assets and many of the other matters means that, while the amount which most people are asked to contribute to the legal aid fund while assisted can be quite a burden, it would not be an exceptional financial hardship because the scale of contribution by the assisted person is intended to be gauged to his capacity to pay and it is usually very closely allied to the reality of his situation. If he finds it too heavy, it is usually because something has gone wrong in the method of assessment or there has been a failure to take account of the disregards.

I return to the Amendment and to a consideration of the factors which should persuade the Committee to reject the Amendment and not to make the provisions of the Bill too widely available to successful unassisted litigants. The hon. Member for Pontypool made the point that settlements, particularly in small actions, would be greatly discouraged. It is in the public interest that there should be moderation in litigation, and it is very desirable that solicitors should, at an early stage in the proceedings, get on the telephone to each other and find out whether they can sensibly settle the case. I have no doubt that the consequences, particularly in certain types of litigation in which a man knows that, if successful, his client is bound to receive the whole of his costs, may greatly diminish the number of settlements in cases which should properly be settled.

There is a public interest, however harsh it may seem, that some pressure—not too heavy, but some—as to costs should be applied to induce people to settle and not litigate, particularly when both are doing so on the basis that whoever wins will get the whole of the stake.

Thirdly, it will encourage local committees to grant legal aid more freely in the expectation that, if a mistake is made, no harm will have been done because it will be certain that the successful opponent will get his costs from the State. I know that this will not operate consciously upon members of local committees, who will, of course, continue to give very careful attention to cases before granting certificates, but I think that, unconsciously, it might lead them to think that it does not mat- ter so much whether a certificate is granted because the defendant, if he succeeds, will be able to recover his costs from the Legal Aid Fund.

Photo of Mr Robin Maxwell-Hyslop Mr Robin Maxwell-Hyslop , Tiverton

What is not clear to me is why my right hon. and learned Friend assumes that the successful defendant will get the whole of his costs, because paragraph 1(1) says quite clearly …to the unassisted party out of the legal aid fund of the whole or any part of the costs incurred by him in those proceedings. It is not apparent to me why my right hon. and learned Friend assumes that the court will, in almost every case, grant the whole of the costs to the defendant when that provision specifically states: …the whole or any part of the costs…

Photo of Sir John Hobson Sir John Hobson , Warwick and Leamington

Of course, if any party has private funds, it is normal procedure to give half the costs, and the court can make an order that that half shall be paid out of public funds. There are many cases in which, for one reason or another, a party is not wholly successful. He will not, therefore, be in the position in which the courts would consider that he should have the whole of his costs met by the Legal Aid Fund.

The fourth reason which I suggest supports the view that a narrower construction should be applied is the one that involves the cost to the Exchequer. It would, indeed, involve a very heavy additional charge on public funds if we were to pass this Amendment. I said on Second Reading that it was estimated that the cost of the provisions of the Bill, if it remained unamended, would be about £55,000. This is, of course, a problematical figure and is best estimated by those connected with the Legal Aid Fund who know the number of cases, the rate at which they are successful and the general cost of litigation.

But in all these figures there is an imponderable, and £55,000 is the best total estimate that can be given. It might vary quite widely in any direction. For instance, if a case proved very expensive and an order was made under this Bill the total figure for that year might be more than double.

I also told the House on Second Reading that the cost, if this restriction were removed, would rise probably to about £340,000. I should explain that that was a figure that had been calculated some time ago. It has been reconsidered and some additional factors taken into account. It was thought at one time, as a result of the recalculation, that the cost might be very much higher but, as a result of certain set-offs—for instance, that divorce will be very largely the area in which the Bill will operate and that successful unassisted husbands in any event are not entitled to their costs—I think probably the estimate I gave is not far wrong. Again, however, I should not like to say whether it will be higher or lower because the calculation contains so many imponderables that it would be quite unreal to pretend to give anything like a precise figure.

The difference between passing this Amendment and rejecting it lies between £55,000 and over £300,000. That is a major consideration when one considers the rising cost of the Legal Aid Scheme and, as has been said, the very many purposes for which benefits could be given—perhaps more worthwhile purposes—under the legal aid scheme.

One must also remember that a substantial part of those affected, apart from those in the divorce division, will be defendants in the Queen's Bench Division and will include many large and prosperous companies to whom the amount of costs will be infinitesimal. There will also be many cases in which the nature of the action is either industrial injury or running down, and again these are cases where almost certainly the defendant will be insured.

Such persons have always been at risk of litigation from impecunious plaintiffs from whom no hope of any sums of money in costs may be expected. It is not right that the State should take over those risks as a special class of case, treated according to the sort of support which the plaintiff has, whether it is private or from the legal aid fund.

Photo of Mr Robin Maxwell-Hyslop Mr Robin Maxwell-Hyslop , Tiverton

Would it not be possible, in order to avoid both eventualities, to exclude bodies corporate from the benefits of these provisions in courts of first instance and bodies non-corporate—individuals—who have a contract of indemnity? Surely both these classes could be excluded by a suitably worded provision.

Photo of Sir John Hobson Sir John Hobson , Warwick and Leamington

I cannot understand why a person who has insured himself against a risk should be excluded from a benefit while someone who has had sufficient wealth to carry his own risk and his own insurance should benefit. I do not see why people who want to carry their own risks and can afford to pay should benefit while those who cannot afford it should not benefit.

We should be getting into very deep waters indeed if we went further in that direction. I do not think that we should consider divisions between one category of this sort and another. In these cases, which will form quite a large part of the total, the risk of the cost of litigation of this sort is generally spread throughout the community.

For instance, manufacturers generally insure against industrial injury costs while motorists are compulsorily insured against claims against them as motorists. Premiums for this are paid to the insurance companies and those who operate these activities run the risk of such litigation. It is not right that they should benefit from the taxpayer's money, especially since many of the taxpayers are not the slightest bit concerned either with motoring or motorists and have no interest in it. On the other hand, as regards a particular class of action, I should have thought it perfectly right that the risks should be continually spread over the community through insurance benefits.

I agree that small actions are also of great importance, and it is necessary to bear in mind that the Bill may bring help to the individual of small means who may not be insured. I should have thought that this was the type of person who would, in every instance, find it easiest to get through the gateway of "severe financial hardship." The more impecunious a person is the greater the burden of even a small quantity of costs may be. Even the moderate cost of defending a case of possession in a county court may be a severe financial hardship to many people who would be left to pay the costs if they could not recover them from an impecunious landlord.

6.0 p.m.

I ought also to point out that the restrictive words do not apply to appellate courts. It was considered that it is always an unduly severe financial burden to have to go to an appeal court to keep or get a verdict and take the risks of a second round of litigation. Therefore, the appellate courts will have the suggested wider discretion concerning the costs of the appeal.

It is the appellate court which will make the decision concerning the severe financial hardship, as on the costs of first instance, whatever may have been the provisional decision of the court of first instance. That court normally ought not to make a decision as to whether there has been severe financial hardship until it knows that there will be no appeal. If, however, it makes a provisional judgment on that issue before it knows whether there will be an appeal, and if a notice of appeal is put in and the appeal is pursued, it will be the appellate court which will take the decision as to severe financial hardship in regard to the costs incurred at first instance.

The hon. Member for Oldham, West raised an interesting point, which does not particularly arise, perhaps, under the Amendment, about how the costs would be assessed and whether he would want to disclose some of the financial debts that his clients had incurred in the lighter side of their lives. Why they should want to disclose those to their wives and to nobody else, I do not know. I should have thought that it would be the other way round.

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

The operative word is "commitments". I recall, as will the Attorney-General, the case of the gentleman who was shy about his commitments and said that he could not keep the obligation because of his commitments and who, finally, was compelled to disclose that he had a Rolls-Royce and a steam yacht on the hire purchase and mistresses on a day-to-day basis.

Photo of Sir John Hobson Sir John Hobson , Warwick and Leamington

That gentleman, no doubt, would be able to persuade the court that there were so many details that he did not need to detain the judge and that the judge had better remit the matter for the Master or Registrar to consider.

The Bill provides that these matters can be discussed before the Master or the Registrar. While the proceedings would not be in camera, they do not usually attract much publicity. After all, we conduct our litigation in public and this is, on many occasions, one of the disadvantages of having public litigation. Its advantages, however, are always thought to outweigh the disadvantages that from time to time arise.

The right hon. and learned Member for Newport and many others raised the question of how the Bill would work without the Amendment. To justify rejection of the Amendment, I ought to say a word about that. My noble Friend the Lord Chancellor has consulted the judges, including the judges of all the divisions of the High Court, and he has every reason to suppose that they will be able satisfactorily to operate the provisions of the Bill as they stand. It gives them a good deal of latitude. It is intended, and the Bill points clearly to the fact, that help should be given in the very hard cases. The phrase used is "severe financial hardship". That is what the Bill is intended to do.

It is exceedingly difficult to choose the right words. The right hon. and learned Member for Newport asked whether I would consider other words. Either one chooses other quite general words, which would create just the same difficulties and precisely the same problems as to how they would be applied by the judges, or one must lay down an elaborate code stating what are to be the disregards, what is to be allowed for each child and how to deal with capital, with income, with tax, with chattels, business and trust interests and every other sort of thing, and strike a balance in accordance with those regulations, then take a percentage of the balance and say whether somebody is one side or the other.

In view of the infinite variety of human circumstances, it would be impossible to devise a code which could be laid down with any satisfaction that would not create injustice. Therefore, it was thought better, while having what is, admittedly, some restraint or restriction, to have a phrase which, it was thought, the judges would be able to apply fairly satisfactorily. I do not want to descend to details, but I was asked what was the situation in regard to numbers of figures almost all of which were marginal. Some of them were plainly severe financial hardship, and there will always be an area in which it is plain that it would be a severe financial hardship. There are bound to be other cases where the matter would be marginal.

I would, however, think that any reasonable judge would have asked himself, "Suppose that my net income was that of the successful unassisted litigant and I was asked to put my hand in my pocket and produce that sum of money, would I call it a severe financial hardship?" On that test, I would imagine that it would soon become apparent from the practice of the judges that the phrase deals with the cases that should be dealt with.

I do not wish to descend to figures, and anything which I say would be only my own judgment and would have nothing whatever to do with the way in which the judges might approach the matter. I would, however, think that a man with a net income of £2,750 a year who had to find £500 from his pocket, particularly if he had a wife and family, would certainly suffer severe financial hardship and that almost anybody would have described it as a severe financial hardship. As I have pointed out, the smaller the income of individuals, the less margin they have for spare cash. The more likely they are, therefore, to succeed in persuading a court that it would be a severe financial hardship for them to meet any costs.

The right hon. and learned Member suggested that the right test was whether a person of moderate means was having his annual budget disturbed in a material sense. Although that is not written into the Bill, I accept it as a good test of the way in which the test of severe financial hardship should be applied and the way in which, I hope, the judges would apply it.

All I can recommend to the Committee is that we should not pass the Amendment. We should leave the phrase in the Clause and see how it operates, watch the practice and experience of the judges and the way in which they apply it and later, if it proves to be unsatisfactory, amend it.

Photo of Mr Robin Maxwell-Hyslop Mr Robin Maxwell-Hyslop , Tiverton

There are still a number of things about which I am unhappy. One which has not been mentioned is that there is, I understand, no appeal against an interpretation of "severe financial hardship" which differs greatly from that given by my right hon. and learned Friend the Attorney-General. If a county court judge interprets it completely differently, the successful defendant who is denied costs has no appeal from that. He or she has "had it".

Secondly, the test offered by the right hon. and learned Member for Newport (Sir F. Soskice) could much more correctly be described as a test of financial hardship than as a test of severe financial hardship. If the test which the right hon. and learned Member suggests is really a test of severe financial hardship, the word "severe" in that case is redundant.

In such cases as I have read, the courts often assume, with logic, that if a word is written in it is used for a purpose. If "severe" is added to "financial hardship", it is, presumably, included to accentuate the degree of hardship which has to be established before an order for even part of the costs can be made. It seems to me that potentially we would be opening the door to the same sort of criticism of allowances for costs as exists for the penalties imposed by differing benches for motoring offences, for example, It is generally agreed that this is an evil, but it is not quite so easy to see how one can overcome it.

I am particularly concerned with the private individual and just as concerned about him in the county court on a lower scale as someone of great financial substance in the High Court. My own view is that much too much emphasis has been given to the obsession with insurance companies. If one says that the reason that they should not get any benefit out of these provisions is that they are very wealthy, that is surely establishing; the principle of one law for the rich and another for the poor rather than endeavouring to diminish it. Without doubt, the original Legal Aid Act remedied a large range of injustices. What is also undeniable is that it produced another range of injustices, a much smaller range and injustices of less magnitude, but we must recognise that it did produce injustices which had not previously existed. The Bill is introduced in recognition of that with the objective of reducing as far as pos- sible the injustices which the Legal Aid scheme brought in as bedfellows to those which it had eliminated. The question therefore is whether the Bill without Amendment has eliminated as many of the possible injustices as it reasonably could.

I seem to be very much in the minority in believing that it has not and that it would be a much better Bill if the Amendment were accepted. Possibly because I am not a lawyer, I still do not understand why the words do not mean what they say when they say: An order may be made under this section in respect of any costs if (and only if) the court is satisfied that it is just and equitable in all the circumstances that provision for those costs should be made out of public funds. I am most interested to learn from gentlemen learned in the law that these words evidently do not mean and are not intended to mean what they say and that they are not intended to mean "just and equitable in all the circumstances", but only that if a party successfully defends an action, he can get costs.

If the interpretation of my right hon. and learned Friend and other learned Gentlemen, that that is all the words mean, is correct, in appeal actions and in actions before the House of Lords the Bill will not do what my right hon. and learned Friend thinks it will. If all he wanted it to do was to ensure that in an appeal action the successful defendant could get costs, the Clause could have been phrased with much greater simplicity. As it has been very carefully phrased as it has, presumably that has been done with some purpose. What my right hon. and learned Friend has not told us is what that purpose is.

Photo of Mr Charles Hale Mr Charles Hale , Oldham West

I sympathise very much with what the hon. Gentleman is saying, but he is being a little unfair about a remark which I think he is attributing to me and which I made about "just and equitable". I said that different tests were being made. Financial tests, clearly, cannot be made and he has just given his own argument when he says that unless Parliament says so, we cannot say that the rich man is not to have as much as a poor man would. "Just and equitable" might apply to the nature of the proceedings and to whether they were vexatious or unconscionably pursued and so on, rather than to hardship. This is what I said, rightly or wrongly.

Photo of Mr Robin Maxwell-Hyslop Mr Robin Maxwell-Hyslop , Tiverton

I agree, but surely that is a case of a conception which not everybody may have—that, by and large, if an action is successfully defended, the defendant should not have to stand the costs of that successful defence. This may well be a principle which is not universally held. However, I once had the curiosity to look into these matters when I discovered that there was something called "champerty and maintenance" which allowed people to get damages against another person who had supported a third party in an action.

I do not think that it is stressing things too far, except in the case of motoring, to say that in the circumstances which we are discussing the State is backing one litigant. If this were a private person doing so with intent to damage the defendant, I am told that the defendant would be entitled to recover damages, or, if not now, at some stage would have been, for champerty and maintenance—

Photo of Mr Robin Maxwell-Hyslop Mr Robin Maxwell-Hyslop , Tiverton

Maintenance in the non-matrimonial sense—against the person who backed the plaintiff.

Under the Legal Aid Scheme, the State has put itself into the position—I think quite rightly and I do not criticise this—of selecting certain of its subjects and backing them in a legal action against others of its subjects. The principle to which I strongly adhere is that if it does that and does not succeed in proving the case which it has backed, it should reimburse the successful defendant. If it is held that the reason that the case has been lost is that there was inadequate evidence to prove it, one of two propositions must be true: either the case should not have been brought in the first place, or greater diligence in securing witnesses should have been shown by counsel or solicitors for a legally-aided plaintiff. There is no third alternative which excludes the possibility that the defendant is also a subject and equally entitled to the protection of the State.

Having delivered myself of those observations, it seems to me to be obvious that they are not widely shared in this particularly thinly-populated Chamber, and, therefore, it would be purposeless to carry the Amendment to a Division, which I had every intention of doing. Nevertheless, I am still extremely unhappy about this. I am apprehensive not so much about how High Court judges will interpret this extremely offensive restriction as about how county court judges will interpret it. I know not whether there is any machinery by which advice on this matter can be given. If there is no such machinery, solicitors will be in the position of not knowing what advice to give to their clients when deciding whether to defend an action against a legally-aided person until a considerable volume of case law has been built up.

6.15 p.m.

Lastly, when it is said that insurance companies are rich, let us remember that if this proposition is true it is true only because they raise considerable premiums from very many people. This has caused something approaching hardship to very many not very well off people who have had to pay increased insurance premiums over the last year or 18 months. When it is said that insurance companies do not need the same kind of justice as other citizens pleading before the court, this also means that the people paying their annual premiums to insurance companies, as they have to do under the Road Traffic Acts, must be selected as the people to bear the burden in this case.

This proposition in a modified form was put by my right hon. and learned Friend when he said that the general body of motorists, rather than people who were not motorists, should finance the expenses of insurance companies when they successfully defended an action. Since whether one is a motorist or not is scarcely a function of wealth but much more of whether a car is needed to do one's job, this is a somewhat bizarre test which it is difficult to substantiate.

We come back to the original question of principle of whether the person who successfully defends an action brought against him with the maintenance—the assistance—of the State should be left to bear the whole of his own costs, unless he is also in receipt of legal aid. The debate has produced a much wider range of hard cases than I imagined when I tabled the Amendment.

I certainly had not in my mind the case of the legally aided defendant who also cannot get costs in this case. I must, therefore, express the hope that once we have seen how the Bill works in practice, and if it works in the way in which I fear it will work, both unpredictably and harshly—harshly because of the inclusion of the word "severe" in addition to hardship—it will not be 14 years, or even 14 months, before remedial action is taken.

I do not know what is the total cost to the taxpayer of getting a Bill through both Houses of Parliament, but I suspect that it compares very unfavourably with what would have been the cost of accepting this Amendment. With those words, and with what, I admit, is exceedingly ill-grace, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.

Clauses 2 to 6 ordered to stand part of the Bill.

Bill reported, without Amendment; read the Third time and passed.