Arbitration Service for defamation and related civil claims against members of Independent Regulatory Board

Business without Debate – in the House of Commons at 6:13 pm on 16th April 2013.

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Photo of Nigel Evans Nigel Evans First Deputy Chairman of Ways and Means

With this it will be convenient to discuss the following:

Lords amendment 2, and Government motion to disagree.

Lords amendment 3, and amendment (a) thereto.

Lords amendments 4 to 14.

Lords amendment 15, and Government motion to disagree.

Lords amendment 16, and Government motion to disagree.

Photo of Helen Grant Helen Grant The Parliamentary Under-Secretary of State for Women and Equalities

I am delighted that the Defamation Bill has returned to this House for us to consider the amendments made in the other place. Lords amendments 1, 15 and 16 constitute a partial enactment in statute of several recommendations made by Lord Justice Leveson in his report on the culture, practices and ethics of the press. In particular, they create a press recognition body and require the creation of an arbitration service within recognised self-regulators for defamation and related civil claims. However, the requirements set out in these amendments for the press recognition body do not specify fully or clearly Lord Justice Leveson’s requirements for the self-regulator.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

Is the hon. Lady aware that these amendments have been overtaken by events and will not be pressed? We only have one hour in which to discuss all the amendments to the Defamation Bill? Before she launches into a long speech, will she take account of this and perhaps conclude her remarks relating to past events so that we can move on?

Photo of Helen Grant Helen Grant The Parliamentary Under-Secretary of State for Women and Equalities

I am very aware of time scales and if the hon. Gentleman could bear with me for 30 seconds longer, we might be able to move from this section to the next section.

Moreover, the amendments were tabled at a time when cross-party talks were well under way to identify an agreed response to Leveson’s recommendations, including careful efforts to develop a set of workable criteria for the self-regulatory body. The amendments before us pre-empted the outcome of those talks. As the House will be aware, on 18 March cross-party talks were resolved successfully and a draft royal charter was agreed as a vehicle by which the recognition body should be set up. Detailed criteria by which self-regulators would be assessed were also agreed, and provisions to enact Lord Justice Leveson’s recommendations on incentives in costs and exemplary damages have subsequently been included in the Crime and Courts Bill. Further, a “no change” clause has been included in the Enterprise and Regulatory Reform Bill as a safeguard against political intervention with the royal charter.

I note that my hon. Friend Sir Peter Bottomley has tabled a motion to agree with amendment 16, which introduces a requirement for an independent regulatory body to provide an arbitration service. I should like to reassure my hon. Friend and this House that the recognition criteria contained within the agreed draft royal charter include just that. To retain amendment 16 in the Bill, alongside the provisions within the royal charter, risks creating duplication and uncertainty around these requirements. The package of measures identified to enact Lord Justice Leveson’s recommendations have cross-party support. As Lord Puttnam, who tabled these amendments, said:

“Nothing in the world will delight me more than to see the Defamation Bill pass in its original form.”—[Hansard, House of Lords, 25 March 2013; Vol. 744, c. 880.]

On that basis, I hope that the House will agree to the removal of Lords amendments 1, 15 and 16.

I also ask the House to disagree with Lords amendment 2. A motion to that effect has been tabled by my hon. and learned Friend Sir Edward Garnier. The amendment concerns two distinct but related issues, which have already featured extensively in debates in both Houses during the passage of the Bill.

Photo of Julian Huppert Julian Huppert Liberal Democrat, Cambridge

I thank the Minister for giving way so early in her speech. She is presumably aware that the Joint Committee on the draft Defamation Bill, on which I served, said that it favoured the approach that limits libel claims to situations where the corporation can prove the likelihood of substantial financial loss. Does she understand the reasons behind that, and can she give us any reassurances on that?

Photo of Helen Grant Helen Grant The Parliamentary Under-Secretary of State for Women and Equalities

I fully understand those reasons, and if the hon. Gentleman will bear with me and allow me to progress on to an explanation of those amendments, I hope that all will be revealed to him.

The separate but related issues are whether there should be any restrictions on the rights of bodies corporate and other non-natural persons to bring an action in defamation and whether any non-natural person, which is performing a public function, should be prevented altogether from bringing a claim in relation to a statement concerning that function. In relation to the first issue, the amendment would mean that in order to bring a claim, a non-natural person would first have to obtain permission of the court. The court would be required to strike out any such application, unless the claimant could show that the publication of the statement complained of had caused, or was likely to cause, substantial financial loss. We believe that a permission stage for this purpose would create unnecessary duplication and additional costs for both parties.

If the claimant was required to show substantial financial loss in order to satisfy the permission requirement, it would in effect mean that the claimant would satisfy the serious harm test introduced by clause 1. We have asked the civil procedure rules committee to consider rule changes to support a new early resolution procedure under which either party could apply at the outset of proceedings for the court to decide certain key issues, including whether the serious harm test is satisfied. The addition of a permission stage would therefore add little or nothing, because any case where the existence of serious harm was disputed could have that issue resolved at a very early stage in any event.

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West

I am grateful to the Minister for taking us through this matter. The problem comes when a body—not a person—sends a threatening letter to an ordinary member of the public. Were I to go to a pop concert and be abused by security staff, and then tell my friends not to go to anything organised by those people, and if they then issued and served a writ, what chance would I have, with no money? Do I go straight to court and say, “They’ve shown no loss. Cut it out. They are not a person. They’ve got no feelings. They should not be allowed to do it.”?

Photo of Helen Grant Helen Grant The Parliamentary Under-Secretary of State for Women and Equalities

If my hon. Friend will bear with me, I will deal with that specific point. If I do not, I am sure he will come back.

Photo of Helen Grant Helen Grant The Parliamentary Under-Secretary of State for Women and Equalities

No, in a moment. I want to make some progress first.

If the claimant succeeded at the permission stage, an early resolution hearing would often still be needed to enable the court to give a ruling on other key aspects of the claim—in particular, what the meaning of the words complained of was and whether they were statements of fact or opinion. This would mean that two sets of applications and hearings could often be needed, whereas under our proposals one would be sufficient. We have consistently made it clear that we are fully committed to taking action to help reduce the cost of defamation proceedings. The amendment would have precisely the opposite effect.

In addition to the early resolution proposals, the Civil Justice Council has recently submitted to the Secretary of State its recommendations for cost protection in defamation and privacy proceedings. We are considering these carefully, with a view to introducing measures to give protection to parties with limited means when they are faced by an opponent with substantially greater resources. The amendment would undermine these initiatives and in many cases create unnecessary additional costs for both claimants and defendants.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

I thank the Minister for her generosity in giving way. The amendment would be the only place in the Bill that provides for an early strike-out procedure. One of the problems has been that we have not seen the changes to the civil procedure rules throughout all this. How, then, can we be confident that what is promised will happen? In the case that Sir Peter Bottomley will no doubt refer to in due course—of Peter Wilmshurst and NMT—an early strike-out procedure was necessary to prevent one company from abusing our libel laws. It was an example of libel tourism and all the worst excesses. The amendment would be the only place in the Bill providing for early strike-out.

Photo of Helen Grant Helen Grant The Parliamentary Under-Secretary of State for Women and Equalities

I hear what the hon. Gentleman says, but the early resolution procedure will not fix the problem of the chilling effect and equality of arms that he is obviously concerned about. It is one of many measures and although I fully accept that the chilling effect is an issue, we also have to recognise that companies must have the right to protect their reputation. One therefore has to consider not just our request for an early resolution procedure, but the serious harm test and our proposals on cost protection and exemplary damages and costs. Altogether, all those things will, I hope, ensure that defamation proceedings are not manipulated by the party with considerably more financial needs against the party with less financials means.

Photo of Sadiq Khan Sadiq Khan Shadow Minister (London), Shadow Lord Chancellor and Shadow Secretary of State for Justice

I am grateful to the Minister for giving way—I know she wants to get into the flow of her speech—but she misunderstands what clause 1 will do. A trial judge will be able to decide whether serious harm has been caused only at the final trial, after costs have been expended, as indicated by her hon. Friend Sir Peter Bottomley. The purpose of the clause introduced in the Lords is to allow the issue to be resolved at an early stage, before the defendant has faced too much cost and stress. What has she got against that?

Photo of Helen Grant Helen Grant The Parliamentary Under-Secretary of State for Women and Equalities

I have just explained that we have requested that an early resolution procedure should be looked into, and if we have an early resolution procedure, we do not need a permission stage. As I have explained, having a permission stage and an early resolution procedure would create far too much delay and cost, which is not what anyone wants. I would have thought that the shadow Minister, having been a solicitor, would know the effect that can have on claimants.

Photo of Helen Grant Helen Grant The Parliamentary Under-Secretary of State for Women and Equalities

I would also like to make the point—I can hear that there are concerns about this issue—that I am, however, aware of the strength of feeling that exists on this matter and on whether the Bill should contain a provision requiring non-natural persons trading for profit to show substantial financial loss. As we have made clear at earlier stages in the Bill, in order to satisfy the serious harm test, such bodies are likely in practice to have to show actual or likely financial loss anyway. However, I can confirm that we are prepared to consider actively that aspect of the Lords amendment further, and we will listen carefully to the views expressed in both Houses.

Photo of Edward Garnier Edward Garnier Conservative, Harborough

I listened with care to what the shadow Secretary of State said just now. Although it is true that clause 1 might be a retrospective application, the ordinary rules of strike-out and the ordinary rules of court that police abusive cases are not altered. If the court is faced with an abusive claim by a company, it will be dealt with. One does not need legislation to police the administration of such proceedings.

Photo of Helen Grant Helen Grant The Parliamentary Under-Secretary of State for Women and Equalities

I am grateful to my hon. and learned Friend, who makes a very good point indeed.

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West

Just two names: Peter Wilmshurst and the hundreds of thousands of pounds by a corrupt organisation, a company that had not allowed clinical research to be published properly; and Dr Simon Singh and the half a million pounds of costs over £5,000 of damages, and the court could not find a way of dismissing the case. That is the problem: such cases should not be allowed to start.

Photo of Helen Grant Helen Grant The Parliamentary Under-Secretary of State for Women and Equalities

As I intimated earlier, fixing the problem of fairness and creating the right balance between the claimant and defendant is not just about an early strike-out procedure. It is about a package of proposals that create fairness, are proportionate and allow for freedom of expression while protecting the reputations of individuals.

Photo of Simon Hughes Simon Hughes Deputy Leader, Liberal Democrats

Before my hon. Friend leaves this issue and following the intervention by our hon. Friend Sir Peter Bottomley, will she say whether the implication of what she said a few minutes ago is that she and the Government are willing to look at how we reflect the Lords amendment, but in a different way, to deal with corporate actions against vulnerable individuals, which is clearly a concern on both sides of the House?

Photo of Helen Grant Helen Grant The Parliamentary Under-Secretary of State for Women and Equalities

In relation to serious financial harm—that aspect and that aspect alone at the moment.

I now turn to the second element of the Lords amendment. In the case of Derbyshire county council v. Times Newspapers, the House of Lords held that local authorities and government bodies were already prevented from bringing actions for defamation. The amendments seek to extend that principle and prevent claims by any non-natural person performing a public function. We do not consider that appropriate, as it would remove completely the right of a wide range of businesses and other organisations to protect their reputation. Although the provision focuses on criticisms in connection with the exercise of public functions, that criticism could of course have a wider impact on the reputation of the business more generally.

Our view is that a rigid, restrictive statutory provision that would remove the right to claim from a wide range of bodies does not represent a proportionate approach. We consider it much better to allow the courts to develop the Derbyshire principle, as they consider appropriate and necessary in the light of individual cases. The removal of the amendment will not affect the Derbyshire principle, which will continue under the common law as it does now. I hope that the House will therefore agree to reject Lords amendment 2.

I shall now turn to the remaining amendments, all of which are Government amendments that I ask the House to support. Amendments 3 to 7 relate to the defence of publication on a matter of public interest. Hon. Members will recall that, before the Bill left this House for the other place, my right hon. Friend the Justice Secretary and I gave a commitment that the Government would look again at clause 4. As a result of those considerations, we tabled amendments in the other place to recast the defence in a number of respects. Amendment 3 would replace the requirement for the defendant to show that he had acted responsibly in publishing the statement complained of with a requirement to show that he reasonably believed that publishing the statement complained of was in the public interest. Considering whether the defendant has demonstrated his reasonable belief will involve a subjective element—namely, what the defendant believed at the time—and the objective element involving the question of whether that belief was reasonable for the defendant to hold.

My hon. Friend Sir Peter Bottomley has tabled an amendment proposing that the test should be whether the defendant had reasonably decided that publication was in the public interest. That point was debated in the other place, and I believe that the concern underlying his amendment might be that the current wording, “reasonably believed”, could make the test too subjective and result in arguments about the defendant’s motive. I can give him a clear reassurance that we do not consider these amendments to be justified. The defendant’s belief and his motive are not the same thing.

The courts have made it clear in cases such as Flood that considerations about motive are usually irrelevant, so it is highly unlikely that they would entertain them if any such arguments were to arise. We are satisfied that our wording accurately captures the essence of the Flood judgment. In addition, the emphasis that the Government have placed—in debates, and which I reiterate today—on our intention to reflect Flood will leave the courts in no doubt that that is the case.

Amendment 5 removes the list of factors that the clause previously invited the court to consider, which had led to concern being expressed in this House and elsewhere that a checklist approach would be taken by the courts. Amendment 7 requires the court, in considering whether a defendant’s belief is reasonable, to make such allowance for editorial discretion as it considers appropriate. Amendment 6 brings together two previous subsections of the clause reflecting the doctrine of reportage, without changing their effect. Amendment 4 requires the court to have regard to all the circumstances of a case when reaching a judgment. We believe that these amendments to clause 4 reflect the current law as articulated in the case of Flood, and that they will avoid an over-prescriptive approach while maintaining an appropriate balance between the interests of the claimant and those of the defendant.

I shall move on to amendments 8 to 11, which make a number of changes to points of detail in respect of clause 5. Amendment 11 provides that the defence in the clause is defeated if the claimant shows that a website operator has acted with malice in respect of publishing a statement. This responds to concerns raised in the other place that situations could arise in which a website operator had acted maliciously—for example, by inciting the poster to make the posting, or by otherwise colluding with him. Although we believe that these situations are likely to be rare, we consider that in circumstances where a website operator acts maliciously, it is right that the defence should be defeated.

Amendments 8 and 9 are technical amendments to the regulation-making powers and amendment 10 provides that regulations made under this clause will be subject to the affirmative resolution procedure in Parliament. This will of course ensure that these receive thorough parliamentary scrutiny.

Amendment 12 relates to clause 6 and clarifies, for the avoidance of doubt, that the defence of qualified privilege for peer-reviewed statements in scientific or academic journals extends to journals that are published in electronic form.

Amendment 13 extends the qualified privilege that is available under clause 7 in respect of fair and accurate copy of extracts or a summary of any document circulated to members of a listed company that relate to the appointment, resignation, retirement or dismissal of directors of the company to material relating to the appointment, resignation, retirement or dismissal of company auditors. This is a response to a concern raised in the other place and is in line with the more general Government policy to increase the transparency of interactions between companies and their auditors.

Finally, amendment 14 amends clause 13 to enable the claimant who has been successful in a claim against the publisher of defamatory material to obtain an order for a secondary publisher, such as a bookseller, to stop distributing, selling or exhibiting materials containing the defamatory statement. Without such a provision, the effect of clause 10 might be that an action could not be brought against the secondary publisher who refused to remove the material from circulation even though they knew it was defamatory.

I believe that the Government amendments made during the Bill’s passage through the other place assist in achieving the Government’s aim of striking the correct balance between freedom of expression and protection of reputation. To conclude, I urge the House to support amendments 3 to 14 and to disagree with amendments 1, 2, 15 and 16.

Photo of Sadiq Khan Sadiq Khan Shadow Minister (London), Shadow Lord Chancellor and Shadow Secretary of State for Justice 6:30 pm, 16th April 2013

At the last general election, all three main parties were committed to reform our defamation laws. The Bill before us is a step forward in modernising our outdated defamation legislation. I shall shortly explain that it is not perfect—I believe that the House must decide on a number of crucial issues today—but it will lead to a much-needed updating of the law.

I begin by thanking colleagues in the other place, including Lord Browne of Ladyton and Baroness Hayter of Kentish Town, for championing improvements to the Bill, many of which are before us today, and Lord McNally for his handling of the Bill in the other place. A number of the points addressed in the amendments were raised by Labour in the House of Commons and in Committee in the Lords. We welcome the fact that the Government have taken them on board. I hope the House will endorse the improvements made to the provisions on public interest defence, the operators of websites and the electronic publication of peer-reviewed academic and science journals. All those will contribute to improving our defamation legislation.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

I thank my right hon. Friend, who referred to the efforts of Baroness Hayter, particularly in respect of amendment 2 on non-natural persons or corporates. Will he also pay tribute to Lord Lester of Herne Hill of the Liberal Democrats and Lord Mawhinney of the Conservative party, as this truly was an amendment with cross-party support in the Lords?

Photo of Sadiq Khan Sadiq Khan Shadow Minister (London), Shadow Lord Chancellor and Shadow Secretary of State for Justice

My hon. Friend will be pleased to know that I thank them later in my speech, but I will do it now. I thank Lord Lester for beginning the process of his private Member’s Bill, which followed the working party; and I thank Lord Mawhinney who chaired the excellent Joint Committee. I thank, too, the Select Committee on Culture, Media and Sport, ably chaired by another Conservative, Mr Whittingdale.

On the rules on a corporation’s ability to pursue defamation against an individual, however, the broad consensus breaks down. We were led to believe that this afternoon the Government would make concessions that would buy off the Liberal Democrats and us, but that did not happen. What the Minister has said is inadequate, and gives the lie to the word “concession”.

The Government, and Sir Edward Garnier, seek the House’s support for the overturning of Lords amendment 2. The amendment would bring equality to an area of law that is currently characterised by a large degree of inequality and that has had a chilling effect. Corporations have used their financial and legal might to intimidate their critics, which in many cases has led to their silence.

Let me quote from the excellent report of the Joint Committee.

“It is unacceptable that corporations are able to silence critical reporting by threatening or starting libel claims which they know the publisher cannot afford to defend and where there is no realistic prospect of serious financial loss. However, we do not believe that corporations should lose the right to sue for defamation altogether ...we favour the approach which limits libel claims to situations where the corporation can prove the likelihood of ‘substantial financial loss’.”

Opposition Members support that statement.

If the Government are successful today, they will undo a key improvement that was made in the other place, and this House will send the message that it is acceptable for corporations and institutions to silence their critics by using the threat of defamation in a battle that is inherently unequal. The Bill, as amended, will not prevent corporations from pursuing defamation actions against individuals; it merely introduces an initial hurdle before that stage is reached. A court must be satisfied that the likelihood of substantial financial harm has been proved before the action can proceed. That last point is important, as it relates to the size of the company and thus takes into account the particular challenges facing smaller businesses.

Sir Peter Bottomley mentioned Dr Simon Singh, the science writer who led the libel reform campaign—a campaign for reform of our defamation law—after being sued for criticising the “bogus treatments” offered by some alternative medicine providers. He pointed out that if the Government were successful today, people such as him who made similar statements would still be given no protection. As Members may know, he was sued by the British Chiropractic Association, which is registered as a company.

Dr Simon Singh said today:

“My own case is not atypical. Lots of cases which people think are unfair and unreasonable have involved large companies suing individuals and corporations. The only clause in the Bill that would have helped me would have been if the British Chiropractic Association had had to demonstrate financial loss, because that would have been impossible for them. Corporations have huge influence on society and that’s why we need to tip the balance in favour of free speech.”

Photo of Simon Hughes Simon Hughes Deputy Leader, Liberal Democrats

As the right hon. Gentleman knows, I am very sympathetic to the point he is making, and I certainly agree that the case of Dr Singh exemplifies the wrong that we seek to redress. It is simply a matter of the tactics that we use to achieve the result that we want. The Minister has expressed her willingness to consider tabling another amendment, and it seems to me that, in procedural terms, the only way in which we can do that is by ensuring that the Commons disagrees with the Lords so that negotiation can take place in the other place over the next few days.

Photo of Sadiq Khan Sadiq Khan Shadow Minister (London), Shadow Lord Chancellor and Shadow Secretary of State for Justice

I am terribly sorry, but the Minister did not say that. She alluded to the civil procedure rules and to the Civil Justice Council, but she did not say that she would go away and table an amendment in lieu of the previously amended clause 2. If she had agreed to table, next week, a new amendment containing subsections (1), (2), (3), but not (4)—for the reasons that she articulated—that would be an argument in the right hon. Gentleman’s favour.

This is the tactic. The right hon. Gentleman can vote with us. Members of his party, plus ours, defeat the Government, and we succeed in ensuring that the amended clause 2 is in the Bill.

Photo of Sadiq Khan Sadiq Khan Shadow Minister (London), Shadow Lord Chancellor and Shadow Secretary of State for Justice

I will in a moment, but I want to make some progress first. We have only an hour in which to debate the amendments because of the way in which the Government programmed the debate.

Sadly, publishers are routinely threatened with libel proceedings by corporations who do not want negative coverage. The Lords amendment would make that more difficult.

In addition, the Lords new clause aligns the law with the so-called Derbyshire principle. This principle rightly prevents public bodies from bringing defamation actions, and the amendment will mean that private companies delivering public functions are similarly restricted. In the original case of Derbyshire County Council v. Times Newspapers in 1993, Lord Keith of Kinkel’s judgment makes clear the importance of “uninhibited public criticism” of democratically elected and public bodies. The principle is very important, because it means that local authorities—or, indeed, any public authority or organ of central or local government—should be open to uninhibited public criticism and therefore do not have the right to make a claim for defamation for damages.

Photo of Sadiq Khan Sadiq Khan Shadow Minister (London), Shadow Lord Chancellor and Shadow Secretary of State for Justice

I will give two examples, and then I will give way to the hon. and learned Gentleman, as I know he has an interest in this matter.

Let us look at some of the consequences for the Ministry of Justice, the Minister’s Department. The Government amendment means that anyone, including a whistleblower, who wants to criticise the way a private company runs a prison using taxpayer money could face the threat of an action for damages, whereas he or she would not for criticising a public sector prison. This should be about protecting the reputation of the justice system, rather than big corporations. It would also mean that someone wanting to raise concerns about a danger to public safety caused by a private company managing, for example, medium risk offenders, once the Government’s plans for privatising our probation service have been implemented, would face the threat of defamation.

Do the Government really want this unlevel playing field—which the Liberal Democrats will support in about 20 minutes? I remind the House that these are private companies undertaking public functions at taxpayer expense. At a time when the Government are handing over more and more of our public services to private and voluntary groups in education, health care and crime and justice, less and less of taxpayer spend will be subject to the uninhibited public criticism Lord Keith identified as so fundamental.

Photo of Edward Garnier Edward Garnier Conservative, Harborough

First, may I make it perfectly clear to the ignorant person who tweeted about me this afternoon that I have, in fact, declared my interest in relation to this matter on the amendment paper?

Is the right hon. Gentleman aware that in the Derbyshire county council case, while Lord Keith held that the council should not be able to sue, he confirmed that corporations should be able to sue to protect their trading reputation? The heart of the right hon. Gentleman’s argument is that this is about inequality of arms. He thinks rich, very large and hugely well-resourced companies are bullying less resourced individuals, but the same criticism could be made of immensely rich private individuals who bring claims. Robert Maxwell used his millions—perhaps they were other people’s millions—

Photo of John Bercow John Bercow Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons

Order. I am sure the hon. and learned Gentleman will have an opportunity to catch my eye and make his own speech in due course, but we do not have all that long for this debate and we have got the gist of his point.

Photo of Sadiq Khan Sadiq Khan Shadow Minister (London), Shadow Lord Chancellor and Shadow Secretary of State for Justice

Thank you for rescuing me from that speech, Mr Speaker.

First, we are not saying corporations cannot sue at all. We are saying, “If you’ve suffered serious financial loss relative to the size of your company, you can sue.” Also, directors can sue, which is especially relevant to a small company suffering harm.

All in all, we believe that the provisions in Lords amendment 2 are measured and sensible, and modernise our existing defamation laws in a proportionate manner. They enjoy wide support, too. They are supported by the Libel Reform Campaign, the House of Commons Culture, Media and Sport Committee and the Joint

Committee on the draft Bill, chaired, as we have been reminded, by former Conservative Cabinet Minister, Lord Mawhinney.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

Simon Hughes suggested in his intervention that the Government might make some changes in the Lords and gave the Minister the opportunity to intervene. Will my right hon. Friend invite the Minister to intervene, to make clear what might happen in the Lords if this measure is not pressed to a vote now?

Photo of Sadiq Khan Sadiq Khan Shadow Minister (London), Shadow Lord Chancellor and Shadow Secretary of State for Justice

My hon. Friend will be pleased to know that I think it is good manners and courtesy to take an intervention when someone on the Front Bench tries to make one, so if the Minister seeks to intervene I shall allow her to do so.

Photo of Sadiq Khan Sadiq Khan Shadow Minister (London), Shadow Lord Chancellor and Shadow Secretary of State for Justice

I shall give way to the hon. Gentleman in a moment.

I was talking about the huge amount of support for Lords amendment 2. It should also be supported by the Liberal Democrats, whose manifesto stated that they sought defamation reform that would require

“corporations to show damage and prove malice or recklessness”.

That is a far higher threshold than that in Lords amendment 2. If the Liberal Democrats stick to their manifesto and their principles and vote with us this evening, we can defeat this attempt to stifle free speech. I urge them and others to vote with us to support the retention of this crucial clause in the Bill.

I like to keep my promises, so I shall now give way to Sir Peter Bottomley.

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West

The right hon. Gentleman might get as far as I did by doing that.

Atos do disability checks for the Government and a number of disability claimants had a forum where they put their comments about that. Atos, I understand, sent a legal letter that closed it down because the threat was sufficient. The Government could not have done that and Atos should not, so the public function issue matters. There are plenty of other ways in which large corporations can defend their reputation, but using money and legal threats is not one of them.

Photo of Sadiq Khan Sadiq Khan Shadow Minister (London), Shadow Lord Chancellor and Shadow Secretary of State for Justice

The hon. Gentleman might have been in the House in 1993, when Lord Keith made his judgment, but the numbers of private companies undertaking public functions in ’93 were far fewer than they are in 2013. The hon. Gentleman knows that I have huge respect for him, but if his party has its way, with the support of the Liberal Democrats, even more public services will be tendered and will be run by private companies.

Large elements of the Bill show how Parliament should legislate. Political consensus on the overarching need to reform followed by detailed, expert debate on the substance in both Houses, all informed by a dedicated set of campaigners and non-governmental organisations, has helped to turn the original substandard Bill to a better set of proposals. I hope that today the House will agree with us one more time on the importance of retaining the key changes made to the Bill in the Lords. Do you know what? Defamation Bills do not come around very often—this is only the third since 1853. We must grasp the opportunity and deliver the modern, updated defamation laws warranted by our tradition of open and free speech.

Photo of Edward Garnier Edward Garnier Conservative, Harborough

There have been three defamation Bills in my lifetime; I do not know whether that helps Sadiq Khan

Photo of Edward Garnier Edward Garnier Conservative, Harborough

It does, and perhaps the right hon. Gentleman will allow me to—

Photo of John Bercow John Bercow Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Speaker's Committee on the Electoral Commission, Speaker of the House of Commons

Order. May I point out that I think the hon. and learned Gentleman was born not in 1853 but, if memory serves me, in 1952?

Photo of Edward Garnier Edward Garnier Conservative, Harborough

On 26 October, and I share a birthday with President Mitterrand and Hillary Clinton. Let us move on, however.

I have already declared my interest, so I hope I do not have to do so again. I want to say that this is not a question of being right or wrong. I am not saying that I am right, that my hon. Friend the Minister is right or that the right hon. Member for Tooting is wrong, but that this is a matter of judgment and opinion. We are perfectly entitled to have different views about how best to order the law on defamation.

It so happens that the right hon. Gentleman and I take a different view on Lords amendment 2 on non-natural persons. I happen to think that Lord Bingham was right in the Jameel case in 2007 to make it quite clear that he thought it was perfectly proper and right for corporations to be able to bring actions for libel without proof of special damage—without having to show money loss. I will not recite all that he said, as there is not enough time, but it is worth bearing it in mind when some of the more hyperbolic accusations are traded about companies that bring actions for libel to terrorise or use their financial muscle to inhibit the defence of those actions or to inhibit free speech.

Photo of Julian Huppert Julian Huppert Liberal Democrat, Cambridge

Does the hon. and learned Gentleman accept that there is a fundamental difference between non-natural persons and natural persons in terms of aspects to do with feelings, for example? Corporations of any size cannot have feelings that can hurt by defamatory action; there is a fundamental difference that the law should reflect.

Photo of Edward Garnier Edward Garnier Conservative, Harborough

That is not only fundamental; it is highly uncontroversial. Human beings can get damages for hurt to their feelings; companies cannot. One cannot libel a company by accusing it, for example, of adultery, whereas one can so libel an individual. There are plenty of obvious and not very surprising differences between the law relating to individuals and the law relating to companies, but there are examples of things which affect companies’ trading reputations, which should be susceptible to protection.

We should also bear it in mind that there are different types of company. There are not-for-profit companies which are not in the business of making money and which, if they were libelled, would not lose money. It may well be said in response to me that the amendment deals with that. They would get permission from the court to bring that action, but that just creates another hurdle, as the Under-Secretary of State for Justice, my hon. Friend Mrs Grant, made clear.

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West

I would be grateful if my hon. and learned Friend could advise briefly on two points. First, at which stage should the courts have said, “We are not going to go further with the claim against Dr Simon Singh or against Dr Peter Wilmshurst”? Secondly, with reference to loss, in 1950 two doctors said that tobacco is very bad for people’s health and asbestos is very bad for people’s lungs. That was not the general view. It was an insight, and the companies involved in selling tobacco and selling asbestos could have sued for loss. That should have been struck out as well. There should be no libel for such cases. How would my hon. and learned Friend stop that kind of thing without the proposed new clause?

Photo of Edward Garnier Edward Garnier Conservative, Harborough

I shall not unwind the case of Singh or the Wilmshurst case; they have been before the courts and have been dealt with. As it happens, the case of Simon Singh became controversial because it was an argument about whether the words complained of constituted allegations of fact or whether they were capable of constituting comment. That is the point on which it went to the Court of Appeal.

There was an action in South Africa brought by a tobacco company which sued and recovered damages on the allegation that its products promoted cancer. Things change. That is the advantage of having an organic system of law which enables the courts to deal with evidence and reach conclusions about whether a company or anyone else has been attacked inappropriately.

As I was saying to Dr Huppert, it is not all that hard to think of statements which seriously injure the general commercial reputation of trading and charitable organisations. An arms company—

Photo of Julian Huppert Julian Huppert Liberal Democrat, Cambridge

Will the hon. and learned Gentleman give way?

Photo of Edward Garnier Edward Garnier Conservative, Harborough

If the hon. Gentleman will forgive me, this debate stops at 7.13 pm.

Arms companies can be accused of bribing foreign officials. Oil companies can be accused of damaging the environment. International humanitarian agencies can be accused of wrongfully succumbing to Government pressure. Retailers can be accused of exploiting child labour, and so on. As the right hon. Member for Tooting said, the directors or the leading members of those companies may also have a parallel course of action, but the company itself should not be shut out from pursuing a course of action if that is available to it.

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 of its own staff and make people less ready to deal with it and less willing or less proud to work for it. If that were not so, corporations would not go to the lengths they do to protect and burnish their corporate images. There is nothing repugnant in the notion that this is a value which the law should protect, and it is not an adequate answer that the corporation can itself seek to answer the defamatory statement through press releases or public statements, as protestations of innocence by the impugned party necessarily carry less weight with the public than the prompt issue of proceedings which culminate in a favourable verdict by a judge or a jury.

Furthermore, why should one have to 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 issuing of proceedings, and the more diligent its pursuit of a claim, the less the chance that financial loss will actually accrue? It may be argued against me that all these matters will be dealt with in the permission hearing, but when is the permission hearing to take place? Will the corporation have to wait right until the end of the limitation period? Will it have to wait for weeks and weeks while the next set of accounts comes out, so that it can work out whether financial loss has occurred as a consequence of the libel? There might be any number of causes of a company suffering an economic downturn, particularly in a recession.

I return to the point I made about not-for-profit companies and charities.

Photo of Julian Huppert Julian Huppert Liberal Democrat, Cambridge

Has the hon. and learned Gentleman seen that the amendment that I hope the Government will bring forward specifically refers to trading-for-profit organisations, as the Joint Committee recommended? It specifically excludes charities.

Photo of Edward Garnier Edward Garnier Conservative, Harborough 7:00 pm, 16th April 2013

I am discussing the amendment to the Bill, not the one somewhere else that the hon. Gentleman was happy to talk about.

I agree with my hon. Friend the Minister in relation to subsection (4) of the new clause proposed in Lords amendment 2. It seems to me that procedurally we can only deal with the amendment as one; we cannot chop and change it. Subsection (4) states:

“Non-natural persons performing a public function do not have an action in defamation in relation to a statement concerning that function.”

It seems to me that the common law, as expressed through Derbyshire, is there. If we legislate, we will create sclerosis. Indeed, I think that there are some disadvantages in legislating to put the Reynolds defence into statute. We will no doubt make lots of work for our learned friends, but we will make the process of amending the law of libel, particularly in relation to public interest statements, all the more difficult as we lock it down into statute.

I urge the House to think carefully before deciding on whether to agree to their lordships’ amendment. I urge Members to give my hon. Friend the Minister and the Government the time and space to get this right with mature consideration and not to be seduced by the siren calls of the pressure groups, no matter how well motivated they might be, into producing what would be a deleterious and damaging end to this affair.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

I wish to speak briefly to Lords amendment 2, which would be a major change to the Bill, and to amendment (a) to Lords amendment 3, which stands in my name and that of Sir Peter Bottomley. I will curtail my remarks, because I want to give other Members the opportunity to speak.

Lords amendment 2 would be a major change. The issue here is not just about big corporations wanting to bully and intimidate the little people, as McDonalds did years ago, simply because they can. The Culture, Media and Sport Committee’s report highlighted a more recent case of almost flagrant abuse of our libel laws by a large corporation: Tesco’s libel action against The Guardian—some people’s favourite paper, and some people’s hate paper—in 2008. We can generalise from that case.

It has recently been in vogue to condemn aggressive and widespread tax avoidance, and that was what The Guardian story was all about. Itmade a mistake in that story and referred to the wrong tax. It turned out that Tesco was avoiding not only the wrong tax but the tax that it said it was not avoiding. The Guardian, as any newspaper would, apologised, made a clarification and offers of amends and ensured that it used all the procedures of the law, as set down the last time this House looked at reform of libel law, but Tesco was just not interested.

The reason Tesco turned everything down, stalled for time and racked up the costs was not just because it could, but because it, like so many corporations, wanted to chill. It wanted to take the newspaper and its journalists out of the game. It wanted to send a message. The Guardian—it could have been any newspaper—faced a bill of up to £5 million if the case went all the way to the House of Lords, or now to the Supreme Court, because the issue in libel is cost, not damages, so it settled for a nominal sum. The costs were massive.

Lords amendment 2 would have cross-party support not only in the Lords but here, if Members had a free vote. The only people who oppose it are those organisations that like to chill and those firms that make massive amounts of money out of the libel industry. The amendment would not stop companies suing; it just asks that they demonstrate significant damage when they can fight back by other means.

The Lords amendment also asks that the court approve a writ. Currently people can just go to court, a writ is rubber-stamped and then one is obliged to spend one’s time and money fighting it. The refusal of Rachel Ehrenfeld, an American, to go thorough that procedure led to the Americans introducing their laws to stop our libel judgments being enforced in the United States.

Photo of Edward Garnier Edward Garnier Conservative, Harborough

I ask the hon. Gentleman to have a look at new clause 2(3), which says:

“The court must strike out an application under subsection (2) unless the body corporate can show that the publication of the words or matters complained of has caused, or is likely to cause, substantial financial loss”.

What happens to a charity or non-profit-making company that is not in the business of making a financial gain or a financial loss if it is defamed? The case would have to be struck out under the clause.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

The hon. and learned Gentleman has forgotten that the proposal does not apply to non-profit-making organisations.

This is the only part of the Bill, until we see the civil procedure rules, that provides for early strike-out. That would have helped Peter Wilmshurst, sued by NMT, who could not ultimately pay the bills that he had racked up, leaving aside the worry for his family in putting everything on the line. The amendment would get around the distinction drawn in the Simon Singh case—the artificial discrimination between corporate bodies and non-incorporated bodies that allowed the British Chiropractic Association to sue him in the first instance.

The Lords amendment is sensible and proportionate. It would not prevent individuals in companies, particularly private companies, from suing if they felt defamed by an article that attacked their company. It would also, as the hon. Member for Worthing West said, extend the Derbyshire principle to contracted-out firms where they are providing public functions—Atos, for example. In short, it keeps up with the times.

I put my name to Lords amendment 3, tabled by the hon. Member for Worthing West, partly, again, on the grounds of reducing costs. Beliefs are very subjective and decisions are more objective if the courts interpret them sensibly. I also wanted to tease out from the Government why, having rejected all our concerns in the Bill Committee about having another tick list, as the Reynolds defence had proved so costly, they had so radically changed their mind. The Minister has not elucidated that. However, by virtue of the fact that the matter was uncontested in the Lords, I am happy that a court can consider all circumstances of the case. I hope that in a spirit of cross-party truce, my colleague the hon. Member for Worthing West will speak to his amendment.

Photo of Peter Bottomley Peter Bottomley Conservative, Worthing West

I want to make two points that were not those I intended to make originally. My third point is that I disagree with my hon. and learned Friend Sir Edward Garnier almost completely about this, so I will not put those arguments.

Tesco Lotus in Thailand sued a journalist for £1.9 million—perhaps it was dollars or something, but it was quite a lot—because it wanted an apology, and it eventually got an agreement to have a clarification of the words on an inside page. It later sued a former MP, a business journalist, in the same way.

Corporations such as Tesco, whether in joint venture overseas or in this country, should not be able to choose to sue an individual journalist; it simply should not happen. They have plenty of power, plenty of weight, plenty of thick skin and an umbrella, and they should not be able to do it.

I would have stopped corporations suing for libel at all.

I believe strongly that public functions should fall under the Derbyshire principle, irrespective of whether we want private businesses doing public jobs. Earlier I gave the example of a security guard at a pop festival. I regard security as a public function even if it is privately hired, and such people should not be able to sue for libel. The court should not issue the writ; it should not be allowed.

Let me make a point on behalf of Colin Channon, the editor of my local newspaper, the Worthing Herald, who says that were he to report that a group of unauthorised campers was in the constituency and he were then sued, he would have to pay £3,000 for initial advice before he got to a panel. We are in danger of our local newspapers being threatened.

As for people conspiring to say that the police would not confirm whether someone had been arrested, the idea that someone could sue for a libel that claimed they had been arrested but which had not been confirmed, even though true, makes the issue even worse. I am unhappy with most of this but I am particularly unhappy that the Government have not yet found a way of having new clause 2, in effect, there for all of us.

Photo of Julian Huppert Julian Huppert Liberal Democrat, Cambridge

It is a pleasure to follow Sir Peter Bottomley, with whom I have had many promising discussions on the issue. I am delighted that the Bill is back in the Commons. There was a period when, due to the actions of the Labour peer Lord Puttnam, there was a risk. I am glad that that risk did not eventualise and that it turned out not to be a problem.

This Bill will make a significant change to the costs of libel and to free speech and it will reduce libel tourism. I am particularly pleased about clause 6, which provides specific protection for peer-reviewed academic and scientific publications. That is something that I value greatly and I am delighted that we will be able to make those protections, because we have heard of too many cases of learned journals being silenced.

The issue remains, however, of corporations and non-natural persons. As I argued earlier, they are different. They do not have feelings. They are categorically separate and there should be different rules for what happens when they wish to bring libel actions. Significantly, we have heard that they can abuse power, as in the cases of Peter Wilmshurst and Simon Singh. I was going to talk more about them, but a number of speeches have covered them.

There is, largely, cross-party agreement, with the notable exception of Sir Edward Garnier.

Photo of Edward Garnier Edward Garnier Conservative, Harborough

Does the hon. Gentleman accept that “a body corporate” in subsection (1)(a) of the new clause proposed by Lords amendment 2 does not restrict it to money-making corporations?

Photo of Julian Huppert Julian Huppert Liberal Democrat, Cambridge

The hon. and learned Gentleman is correct. I understand that that is the intention and that is what was recommended. I eagerly anticipate a Government amendment and hope that it will address that issue. None of us wants to put constraints on charities. This relates to profitable or profit-making organisations, or at least those that are trying to make a profit.

I heard the Minister make a commitment to actively consider such amendments. My understanding is—I am still new to parliamentary procedure—that that is as far as a Minister is able to go at this stage. I would be grateful if it was not her intention to set high expectations for such an amendment being tabled in the Lords. She is welcome to clarify the issue now; otherwise, I am very happy with what she said and look forward to the amendment.

We will get cross-party agreement on corporations having to prove that they have suffered serious financial harm. Simon Singh has correctly said that that would have saved him. Such a provision is still missing from the Bill, but I believe that the Government have now said that they will address it. I trust the Government on that and I look forward to the amendment and to the Bill finally changing.

As John Kampfner, the former chief executive of Index on Censorship, said:

“When we launched the Libel Reform Campaign in 2009, only the Liberal Democrats backed change. Now the cause has cross party support.”

I look forward to seeing this Bill become an Act.

One hour having elapsed since the commencement of proceedings on Lords amendments, the debate was interrupted (Programme Order, this day).

The Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83F), That this House disagrees with Lords amendment 1.

Question agreed to.

Lords amendment 1 accordingly disagreed to.

The Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83F).

Motion made, and Question put, That this House disagrees with Lords amendment 2.—(Mrs Grant.)

The House divided:

Ayes 298, Noes 230.

Division number 209

See full list of votes (From The Public Whip)

Aye

No

Question accordingly agreed to.

Lords amendment 2 disagreed to.

Lords amendments 15 and 16 disagreed to.

Lords amendments 3, (a), and 4 to 14 agreed to.

Motion made, and Question put forthwith (Standing Order No. 83H), That a Committee be appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendments 1, 2, 15 and 16;

That Mr David Evennett, Robert Flello, Mrs Helen Grant, Dr Julian Huppert and Mr Andy Slaughter be members of the Committee;

That Mrs Helen Grant be the Chair of the Committee;

That three be the quorum of the Committee.

That the Committee do withdraw immediately.—(Mr Syms.)

Question agreed to.

Committee to withdraw immediately; reasons to be reported and communicated to the Lords.