I beg to move Amendment 150, in Clause 52, page 54, line 7, leave out ‘must’ and insert ‘may’.

With this it will be convenient to discuss Amendment 151, in Clause 52, page 54, line 13, leave out ‘must’ and insert ‘may’.

This Clause continues and exacerbates the problems caused by clause 51, which is to say that it lays down mandatory rules for the use of financial information. As we have pointed out, the Opposition believe that clause 51 is disproportionate and bureaucratic, and we think clause 52 will make matters worse. A court is already able, if it considers it appropriate, to consider financial information and award costs. The amendments that we have tabled to this part of the Bill would either introduce discretion or remove uncertainty. Amendments 150 and 151 would do the former.

I hope that the questions I pose to the Minister will be helpful and that, if he can answer them, they will clarify the position. We believe that the clause is designed to scare off financial backers and prevent them from supporting a judicial review action. What happens if a charity obtains a grant from a third-party organisation for the purposes of pursuing litigation, capped at £5,000? Will the court be capable of enforcing a cost order against the donor for any sum more than that amount? What about a solicitor’s firm or law centre that acts pro bono for a claimant who is unable to secure legal aid? Would family members who support litigation brought by a vulnerable or disabled relative seeking to challenge withdrawal of services be affected? None of those matters are clear in the Bill, so clarification would be helpful.

It appears that as the Bill stands, there is a mandatory requirement to consider resources. In an unsuccessful case there is also an ability and encouragement to seek to recover costs from whoever is involved in the litigation, however tangentially. If that is not the case, I wait to hear the Minister say so. Unless he says so clearly, we must assume that that is likely to be the case, or that there is at least such a possibility. That will have a chilling effect on litigation. The amendments would at least restore discretion to the court so that it could act in a sensible manner, which would be of comfort to prospective litigants.

I will deal with a couple of the points that the hon. Gentleman raised. Judges already have powers to award costs against non-parties. In their response to the consultation, the senior judiciary supported the proposal that it should be mandatory for claimants to provide details of how a case is funded in order to assist the court in considering cost orders against non-parties.

On the hon. Gentleman’s comment about the vagueness of the information, details will be set out in court rules. A claimant will be expected to provide the court with sufficient information for it to know the actual or intended sources of funding for the judicial review. That may include proof of income or assets of an individual or company.

The exact parameters of the information that will be required will be set out in court rules, but it is certainly not the intention that the court should carry out lengthy financial investigations. However, claimants will need to provide sufficient information to inform the court of the actual or intended sources of funding for the claim.

Clause 52 provides that when making costs orders, the court or upper tribunal must have regard to the financial information provided by an applicant pursuant to clause 51. It must also consider whether to order costs against any person identified in that information.

The existing principles of when a costs award against a non-party will be appropriate will continue to apply. An award will be made only where a non-party funding the proceedings either seeks to drive or benefit from the litigation. Simply providing pure funding will, as now, not be sufficient for someone to be liable for costs.

The amendments would remove the obligation for the court or upper tribunal to consider the information in question when awarding costs, in essence setting up discretion for the court to disregard it. The Government do not agree that courts should be allowed to disregard the information.

We are clear that the changes introduced by clause 52 should not in any way curtail the judiciary’s discretion to award costs. The clause will not make it mandatory for the court or upper tribunal to make costs orders against those providing funding to a claim. Whether it is appropriate to make a costs order against a person not party to a judicial review will remain a matter for the court or upper tribunal to determine, considering the facts of the case and the information before it.

Directing the courts and upper tribunal to consider the full picture of financial resources will strengthen the courts’ ability to apportion costs appropriately and ensure that those involved in judicial reviews face a fair level of financial risk, while maintaining appropriate judicial discretion in relation to costs. I therefore hope that the hon. Member for Hammersmith will withdraw the Amendment.

I am not persuaded, but I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

I beg to move Amendment 152, in Clause 52, page 54, line 12, at end insert—

‘(1) Where the information in subsection (2) includes confidential information about the financial position of a natural person the Court may to the extent necessary to protect the confidentiality of such information—

(a) sit in private, and

(b) impose reporting restrictions.’.

I need say no more than what is stated in the amendment. It takes an instance where there is confidential information, and that confidentiality may need, in the opinion of the court, and certainly in the opinion of the applicant, to be protected. It asks that that be dealt with in private. I introduce this as an example of where the Government have not thought the matter through correctly. The Government have said that their ambition is to perhaps save money, but we say their ambition is to discourage judicial review actions from bring brought, and there may be unintended consequences. A perfectly legitimate supporter and backer might not wish to reveal their financial circumstances—I am sure that is the case for a lot of people—but there are issues, if they are a corporate body or even a charitable body, of commercial confidentiality.

The amendment would deal with such circumstances. Perhaps the Minister will explain what the rationale—if there is any—of the process will be.

The Government’s ambition is to ensure that meritorious claims proceed, and that where there are unmeritorious claims it should be taken into account that ultimately it is the taxpayer who subsidises them, so we wish to discourage unmeritorious claims and applications. There must be accountability for hard-working taxpayers’ money.

What is the relationship between an applicant and their financial supporters and the merit of the claim?

Perhaps I can give the example of a shelf company. People can sometimes hide behind the veil of a limited company, purchased for a relatively small  amount, and then be free of liability in the event of costs being payable by them. We are trying to make sure that people think carefully before making applications for judicial review. We are trying to restore the balance to ensure that matters are proportionate when it comes to meritorious claims, and to ensure that costs are paid by those who seek to make unmeritorious claims.

Whatever the merits or demerits of off-the-shelf companies, what does that have to do with the merits of the claim?

The claim will speak for itself. We are concerned about people making unmeritorious claims in the knowledge that they will not end up having to pay the costs that they ought to, because the present system ensures that the taxpayer foots the bill. The Amendment provides that the court or upper tribunal may sit in private or impose reporting restrictions to protect the privacy of a person’s financial information, which is required to be provided under Clause 51. I appreciate the rationale behind the amendment, but I hope I can reassure hon. Members that the amendment is not necessary, given the court’s existing powers in this area.

The information before the court may well relate to the financial position of a natural person. However, under existing provisions and the civil procedure rules— rule 39.2, to be precise—the provisions set out in the amendment are already catered for.

Referring briefly to the detail of the rule, which sets up an exception to the general rule that a hearing is to be public, the exception applies if the hearing

“involves confidential information (including information relating to personal financial matters) and publicity would damage that confidentiality”.

The court may also impose reporting restrictions necessary to protect that confidentiality.

I am clear that the changes should not in any way impinge on an individual’s right to privacy, particularly where details of personal finances are disclosed to the court or upper tribunal. However, for the reasons I have set out, I do not agree that the provisions the amendment seeks to include are necessary in achieving that end.

In line with current practice, any information made available to the court or upper tribunal that concerns personal finances, or is otherwise confidential, would not be made publicly available. In my view, any additions to the clause repeating this here would be surplus to requirement. I hope the hon. Gentleman will consider withdrawing his amendment.

I fail to see how the provision will in any way discourage unmeritorious claims, save that it will discourage a whole swathe of claims, some of which may be unmeritorious. That is always the Government’s approach to dealing with litigation. Their approach in part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 on conditional fee agreements and after-the-event arrangements was to get rid of everything. Their approach to discouraging claims to employment tribunals was to set fees at a prohibitive level. In other words, if they cannot do something with finesse and skill, they try to depress the level of litigation.

I do not accept what the Minister said. The merit of claims can easily be divined in the paper application, the oral hearing or, if necessary, the full hearing. We gave some figures this morning about the good success rate in judicial review actions. That is where the debate about merit belongs. We should not have this hole in the corner way of dealing with costs.

To be clear, our intention is to ensure that when a weak claim is brought, those who control and fund it should not be able to hide from proper cost liability. We are not saying that any kind of funding arrangement equates to a weak claim.

What I am saying is that the courts already have ample power to award costs as they wish. The only purpose of adding the clauses to the Bill is to discourage claims. I have made my point, so I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

I beg to move Amendment 153, in Clause 52, page 54, line 16, leave out from ‘proceedings’ to end of line 16 and insert

‘and who has in fact provided such financial support.’.

As with clause 51, we say that if these clauses are to be introduced, they should be as clear as possible and should not leave contingent circumstances. The provision should therefore refer only to those who have provided financial support, not, as is in the clause, those who are

“likely or able to do so.”

That is clear and does not need to be explained again. I await what the Minister has to say.

Clause 52 provides that when making costs orders in a judicial review, the court or tribunal must have regard to information about the financing of proceedings provided by an applicant pursuant to clause 51. Subsection (3) means that when determining costs, a court or tribunal must consider whether to make an order against a person identified in the information provided under clause 51. That includes those who, although not party to the judicial review, are currently financially supporting the proceedings, or are likely to do so. Where an applicant is a body corporate unable to demonstrate that it is likely to be able to meet its liabilities, the court will be provided with information about its members and their ability to provide financial support.

The Amendment would limit the duty on a court or tribunal to consider making a costs award against a person who is not a party to the proceedings to those who have actually provided support. That means that the court would not have to consider making a costs order against those likely to contribute to the funding of the claim or against members of a body corporate who are able to meet the company’s liabilities. That includes those sheltering behind off-the-shelf companies created simply to avoid the proper measure of liability. As we previously debated, clauses 51 and 52 are collectively designed to ensure that those who choose to be involved in judicial reviews face appropriate cost consequences in doing so. The court should consider all the information before it when making costs awards.

The Government do not agree that those likely to provide funding towards a claim, or a member of a company who is able to meet the funding liabilities, should be excluded from the court’s consideration of costs awards. It is imperative that the court or tribunal is presented with a full, transparent account of a claim’s financial resources in order to exercise its powers to appropriately apportion costs. Let me assure the Committee that the changes do not affect the important principle that costs are a matter for the judiciary. As now, the court or tribunal will not make a costs award against a third party which is simply providing funding towards a claim. Crucially, the third party funder must also be controlling the claim or seeking to benefit from it for their behaviour to be sufficient to warrant costs liability.

In my view, it should not be possible to bring litigation in such a way as to circumvent proper costs exposure. The changes introduced by clauses 51 and 52 tackle precisely this issue, ensuring that those driving judicial reviews assume a fair and proportionate share of the financial risk. I hope the hon. Gentleman will consider withdrawing his amendment.

I hope that the Minister is right and that the administrative court continues to be as robust in the future as it was in the past at finding its way through the maze and traps that the Government have set for it. According to the evidence of Mr Fordham, that is what it will indeed do and that is something that it has done over decades if not over the centuries. However, the Minister is dealing with the wrong issue. We are talking about the effect not on a robust judiciary but on some probably fairly shakily funded supporters of judicial review actions whom this Government wish to deter.

I beg leave to withdraw the Amendment. We shall vote against Clause stand part.

Amendment, by leave, withdrawn.

Question put, That the clause stand part of the Bill.

The Committee divided: Ayes 10, Noes 6.

Question accordingly agreed to.

Clause 52 ordered to stand part of the Bill.