HC Deb 07 July 1986 vol 101 cc120-33

Mr. Peter Thurnham (Bolton, North-East): I beg to move amendment No. 8, in page 4, line 19, leave out 'subsection' and insert 'subsections'.

Mr. Deputy Speaker (Mr. Harold Walker)

With this it will be convenient to consider the following amendments: No. 10, in page 4, line 20, after '(5)', insert 'Subject to subsection (6) below,'.

No. 11, in line 25, at end insert— '"(6) Where, in any action to which subsection (1)(b) above applies, the deliberate commission of the breach of duty referred to in subsection (2) above was performed by a servant or agent of the defendant (or any person through whom the defendant claims or his agent), such that the defendant neither knew nor had reason to know of the breach of duty at any time prior to the expiration of the fifteen year period referred to in section 14B of this Act, then section 14B of this Act shall apply to such action, notwithstanding the provisions of subsection (5) above.'.

Mr. Thurnham

The amendment concerns deliberate concealment, which we discussed in Committee on 24 June. Hon. Members will notice that Hansard refers to the date of the first sitting as 24 March, which can hardly be correct. As has been said on a number of occasions, the principles of the Bill are laudable. Its shortcomings lie in the proposed manner of implementation. Nowhere is that problem more acute than in the provisions regarding deliberate concealment. Regarding construction work, the provisions are such that, in the majority of cases involving latent defects, the 15-year cut-off will not apply. That is not because the defendant in a construction case has been guilty of some special misconduct; nor do those who support the amendment believe that the Law Reform Committee deliberately set out to victimise the construction industry.

Having studied my noble Friend the Lord Chancellor's responses in the debates in the other place, I feel less sure about his intentions. The Law Reform Committee commented on the matter in paragraph 4.20 of its report and recommended that where there had been fraud, deliberate concealment or mistake the defendant should not benefit by the 15-year cut-off. That lumping together was somewhat misleading, especially with the moral overtones involved, as neither fraud nor mistake is relevant to the Bill, as both would involve quite seperate causes of action.

The only element of relevance is "deliberate concealment". In that respect, I criticise the Law Reform Committee for entering a field where specialist knowledge is required. The definition given of "deliberate concealment" in the 1980 Act is such that most latent defects in construction will, by their very nature, automatically fall into that category. The Law Reform Committee probably did not realise that it was on difficult ground, but what it needed was careful discussion jointly with an engineer, an architect and a lawyer specialising in construction law. The matter could then have been sorted out. Unfortunately, that did not happen. Consequently, we have provisions in the Bill that will render the 15-year cut-off inoperative as regards most latent defects in construction.

Because the Law Reform Committee did not appreciate the practical problems inherent in the concept of deliberate concealment, it saw it only as a moral issue. As it said in its report, it considered that it would be wrong to allow someone to benefit from immoral behaviour that went beyond mere failure to comply with legal obligations. Expressed in those simple terms, its conclusion seems quite reasonable.

The Bill was criticised in that respect in the other place by the noble Lords Hacking and Wilberforce, who adduced careful argument to back the criticism. As in die case of many other matters concerning the Bill, my noble friend the Lord Chancellor did not address the arguments that had been put to him, and they still lie unanswered. I find that frustrating when the arguments were put by a Law Lord of the eminence of Lord Wilberforce, who is a Cross-Bencher and was not representing any outside interests. He was simply offering useful and constructive criticism, based on his wide experience in dealing with such cases. However, reason seems to have little relevance in effecting changes to the Bill.

In Committee in the House the arguments were presented again and were developed in more detail. In this instance, it is fair to say that my right hon. and learned Friend the Solicitor-General tried to deal with some of the points and undertook to consider them further. Had the Committee stage continued for two or three sittings, as would have been appropriate in view of the concern expressed in the House over the Bill, instead of being rushed through at great speed for no good reason, sufficient dialogue could probably have developed to enable the matter to be properly considered. Regrettably, however, with this Bill one has to do very much more than convince just my right hon. and learned Friend.

The criticism of the Bill in this respect has two branches —one concerning the drafting and the other a matter of principle, which is related to this. I shall take the drafting point first. Clause 2(2) has the effect of ruling out the 15-year cut-off where there has been deliberate concealment of any fact relative to the plaintiff's right of action. On the fact of it, this seems reasonable, until one finds that the Limitation Act 1980 defines "deliberate concealment" in such a way that the majority of latent defects in construction work by their very nature fall into that category.

In Committee, some 10 examples of latent defects in construction were given to illustrate that point and there is no need to repeat them now. When that matter was brought up on Second Reading by my hon. Friend the Member for Chipping Barnet (Mr. Chapman), my right hon. and learned Friend the Solicitor-General sought to answer him by saying that the situation would only arise where, in the wording of the 1980 Act, there had been a deliberate commission of a breach of duty and that most cases would not be of this category. That answer was opportune because, as I endeavoured to demonstrate in Committee, the situation will be the opposite because most cases of latent defects will arise through an employee not following his instructions. His act or omission will be deliberate and, as a consequence, by the principle of vicarious liability, his employer will be guilty of so-called deliberate concealment and the 15-year cut-off will not apply.

This means that, despite the Lord Chancellor and my right hon. and learned Friend the Solicitor-General introducing the Bill as giving a balance between the interests of plaintiffs and defendants and providing a long stop that will bar proceedings after 15 years, it does no such thing — at least it may for solicitors and accountants, but it certainly does not for architects, engineers and contractors. It is a myth. This Bill gives with one hand and takes away with the other. One has to put the question: is this the result that the Government desire?

I turn to the other branch—that of principle. The justification given by the Law Reform Committee for ruling out the benefit of the 15-year cut-off where there had been so-called deliberate concealment was that it would be unconscionable to allow some one to benefit from his immoral behaviour. But what further wrong has the employer done? He knew nothing of the act or omission and, if he had known of it, it is likely that he would have stopped it or had it rectified. What unconscionable thing has he done to lose the benefit of the 15-year cut-off? The answer is that he had done nothing and the Committee's argument just does not apply.

My right hon. and learned Friend the Solicitor-General attempted to give us some comfort at the end of the Committee stage by suggesting that there would be a difficult burden of proof upon the plaintiff to show deliberate concealment. I wish that that were so, hut, with all respect to my right hon. and learned Friend, it seems to me that the wording of the 1980 Act plus the normal circumstances of construction work add up to a situation where most latent defects will automatically fall into that category. The Act is too recent for case law to help, and cases based on the earlier Act endorse our misgivings.

It is clear that where a defendant might benefit from the 15-year cut-off, the plaintiff will go for deliberate concealment. I believe that he will have little or no difficulty in establishing this, but, if hon. Members doubt this point, they should consider the litigation that is likely to follow. There will be doubt and argument as to what "deliberate" means in the circumstances of the particular project. Many parties may have been involved, one way or another, with one defect and "deliberate" may apply to some employees and not to others. All this will be 15 years or more after the event, when people have dispersed, records no longer exist and memories are unreliable. As with arguments about the starting date, it reads like a lawyer's benevolent fund.

The proposed amendment was tabled in two alternative forms. The first, which was tabled as amendment No. 9, followed that of Lord Hacking in the other place and was my preferred amendment. It said simply that the provisions of the 1980 Act relating to deliberate concealment should not apply. Amendment No. 11 removes the unfairness that arises through vicarious liability and allows the defendant employer to benefit from the 15-year cut-off where he did not know of the breach of duty.

I shall be pleased to hear what my right hon. and learned Friend can say to help us in this matter. Does he believe that sufficient notice was given to my noble Friend the Secretary of State for Employment, whose duties include the promotion of enterprise and deregulation, of the burdens on business which are implicit in the Bill? Is he familiar with the documents "Lifting the Burden" and published last year, "Building Businesses not Barriers", which was published in May? This Bill has undone much of the good proposed in those White Papers.

Mr. Neil Thorne (Ilford, South)

My hon. Friend the Member for Bolton, North-East (Mr. Thurnham) has expressed well the anxieties of many people about this matter. I have given much thought to the clause, and today 1 had the good fortune to discuss it with my right hon. and noble Friend the Lord Chancellor, who satisfied me on several issues. The important point that he made was that the intention of the clause relates entirely to one's own agents and that it does not affect other people's agents. Therefore, it would go a long way towards exonerating other professional advisers from responsibility for the actions and behaviour of the servants of other interested parties. That is a considerable assistance.

I am reassured that inadvertence is not deliberate concealment, and that culpability must be beyond mere inadvertence. If that is the case, we can be reassured that engineers, architects, surveyors and others will not have problems erupting in their faces 10 or 15 years later. The problem is serious, because the contractors who are liable to be carrying out such work seem to go for company reconstruction about once every seven years. If the contractor no longer exists, the plaintiff is likely to look for other possible defendants. In those circumstances, it is natural that the professional advisers who were involved in any such scheme would be extremely worried, not only during their active lives, but during their retirement.

At present, the professional person is insured only for the year for which he pays the insurance premium. That is common in many policies that are approved by professional institutions. In future, professional bodies should ensure, through the insurance market, that it is possible for their members', to obtain insurance to cover subsequent claims on actions that take place during the year of the insurance. If a professional person retires and has to continue to pay for an insurance policy, which might cost about 10 per cent. of turnover, it will he a very heavy burden, particularly if, as I understand is the case after retirement, the cost could not be offset against tax.

10.45 pm

It would seem essential that the Government should stress to the professional bodies that they should reappraise insurance arrangements to ensure that such a burden would not descend on people at the time of life when they are least able to cope with it. I understand that even the estate of a deceased professional adviser could be affected and, if the estate had not been settled, his widow could be affected. That could lead to considerable press publicity and would not be a good advertisement for the Bill, which contains a number of definite advantages.

I have been given assurances by the Lord Chancellor, but, bearing in mind the anxieties eloquently outlined by my hon. Friend the Member for Bolton, North-East. I hope that my right hon. and learned Friend the Solicitor-General will give us further assurances on this important matter.

Mr. Nicholas Brown

I come to the debate without a professional axe to grind, which is something new. I cannot say that I come to it with an open mind, because I heard the arguments thoroughly trawled in Committee.

I have to tell the hon. Member for Bolton, North-East (Mr. Thurnham) that his arguments are no more impressive now than they were in Committee and that his briefs have not improved with time either. The engineering associations that have been briefing the hon. Gentleman have had since the Committee stage to amend their briefs —it was a grievance in Committee that there had not been enough time for hon. Members to he briefed—yet their arguments have not changed.

We must remind ourselves that we are considering how the law will affect deliberate concealment and whether a 15-year cut-off should advantage a person who is charged with deliberately concealing something that has disadvantaged someone who felt that he had a right to rely on that person's professional competence.

The hon. Member for Bolton, North-East argued in Committee that these cases were difficult in law. That may he so, but that is no reason to say that we should not make laws to deal with difficult cases, which seems to be the broad thrust of the hon. Gentleman's case. He is asking that people standing accused of deliberate concealment should be able to take advantage of a 15-year cut-off. That seems morally unfair.

Deliberate concealment might be difficult to prove in court, but that is what the courts are there for. That is what the case would be all about. A person who has done something that is obviously wrong should not be able to take advantage of a cut-off point. The whole Committee, with the exception of the hon. Member for Bolton, North-East, accepted that argument.

I take exception to the hon. Gentleman's claim that we rushed through the Committee stage. He was supplied—admittedly lately—with copious briefs from all sorts of professional associations that presumably did not have enough confidence in their members to feel that the Bill would not disadvantage them.

Mr. Neil Thorne

Is it not grossly unfair to say that professional associations cannot rely upon the competence of their members? After all, we heard from my hon. Friend the Member for Chipping Barnet (Mr. Chapman) that of the total paid out by way of damages, about 50 per cent. went in lawyers' fees. That is a strange situation, which would suggest to the layman that there were difficult cases to consider but that, nevertheless, the legal profession was benefiting far more than the person who was harmed.

Mr. Brown

Yes. I shall deal in a moment with whether one should resort to litigation. I am arguing at the moment that the option to go to law should be there for the party who feels injured. I shall come to whether the legal profession is the main beneficiary. My remarks about the confidence which professional associations have in their members was meant lightly and I hope that they are taken in that way. That was not a serious charge.

However, I do take exception to the charge that the measure has been rushed through Committee. If the hon. Gentleman had wished to hold the Committee up he had only to read his briefs a little more slowly and he could have kept us there for hours. Indeed, it is not unknown to the House for Members to detain Committees for hour upon hour. The Committee stage was not rushed through; because there was a broad consensus. That is why there was only one sitting. The hon. Gentleman was the only person to object, and he could have made his arguments at length. but he did not want to. His point about rushing through the Committee stage is rhetoric which is only for the record.

There is no more substance in that charge than in the charge that the Law Commission was composed of all lawyers and therefore has "fitted up" the report on which the Bill is closely based in order financially to advantage the legal profession. I asked in Committee how the gap between the 10-year period, wanted by the professional associations for which the hon. Gentleman is speaking, and the 15-year period, which the Law Commission recommended, could enormously advantage the legal profession.

Are we really being asked to believe that a retired Law Lord and other senior members of the legal profession would, when trying to strike a balance between the rights of plaintiff and defendant, somehow adjust the law solely to the financial advantage of lawyers, perhaps in other branches of the profession? The argument borders on the ludicrous. I am not a lawyer, and I do not see it as my role to speak for the profession. As I made clear in Committee, I see it as my role to speak for the consumers of legal services. Yet it is utterly unacceptable, and impossible to substantiate the charge that somehow the Law Commission has deliberately recommended legislation in order to advantage the profession.

Mr. Thurnham

The hon. Gentleman says that he speaks for consumers, but will he accept that the burden of the cost in the Bill will be imposed upon consumers in the prices that they are charged? That is why the construction industry is arguing. The cost here can only be carried by consumers.

Mr. Brown

I accept that these cases are complex and may be expensive, but the hon. Gentleman's remedy is that they should not be heard at all and that advantage can be taken of the longstop. That seems even more unfair than having an expensive law case. I am sorry that it is expensive, but to say that the solution is to have no remedy at all cannot be just, and that is what the hon. Gentleman is advancing.

The hon. Member for Ilford, South (Mr. Thorne) spoke of professional people retiring and having the threat of an action hanging over their heads for 10 or 15 years. As he probably realises, the difference between 10 and 15 years is a contentious issue. The Law Commission recommended 15 years as striking a balance between 10 and 20 and the professional associations representing engineering industry said that they would prefer 10. The parliamentary Liberal party has struck a balance between 10 to 15 and has said that it would prefer something between 12 and 13.

Mr. Alex Carlile


Mr. Brown

The hon. and learned Member for Montgomery (Mr. Carlile) says 12. The alliance veers towards the employers rather than the plaintiffs.

The House must consider seriously whether it wishes to reject a decision by the Law Commission and substitute something based on no more than splitting the difference or backing up the professional associations against the arguments put on behalf of the consumers. The consumers have rights too, and it worries me that all the arguments advanced from the Government side on Second Reading were on behalf of the professional association. Nobody said a word about the consumers, who would be the plaintiffs in such actions.

We did hear highly dubious and contentious theory that somehow it was not in the consumers' interests that the professions be disadvantaged by this legislation. That was the thrust of the argument, but not one Government Member said that the consumers' point of view is the right one and that the special pleading from the professional associations had to be resisted. No Government Member urged the Solicitor-General to resist that pleading, although the Opposition did.

The matter of professional insurance was raised in Committee, and the hon. Member for Ilford, South raised it in this debate. It is an important question, but why is it much more difficult to get professional insurance for 15 years than for 10 years? Nobody is saying that it is impossible to get it for 10 years. If it can be obtained for 10 years, it can surely he obtained for 15 years. I accept, based on an actuary's calculation, that it would be more expensive, but it is possible. Therefore, the argument rests solely on cost.

Mr. Neil Thorne

The hon. Gentleman has got the situation wrong. I said that when a person retires he gets no tax relief on his premiums. For that reason, the insurance should work in a different way and should be on the basis of when the work was carried out and not on the basis of when the defect is found. I am not arguing that there should not be insurance. There should be, but it should be on a different basis, and at present the professional institutions organise insurance for their members on the basis that it must be continued into retirement. That is wrong.

Mr. Brown

My right hon. and learned Friend the Member for Aberavon (Mr. Morris) whispers in my ear that, quite rightly, it depends on how the policy is framed. Nobody will be able to take out professional insurance after a cause of action has been discovered. I can see that and I am sure that the hon. Member for Ilford, South can see it. The professional indemnity is known to other professions and is usually arranged through professional associations, or arrangements are made for it. That has to include an indemnity to cover all forms of action which might arise in the period envisaged in law.

Actions can now be pursued in law. I find it difficult to understand that for the first time we are legislating for the concept of a longstop. This should put many retired people's minds at rest. They will know that there will come a time after they have ceased their professional activities when, unless they have done something really wrong, they are beyond the threat of actions of this sort. The Solicitor-General should be thanked for that and it should be welcomed by the profession. Instead of that, it is being resisted.

On Second Reading and in Committee the Opposition welcomed the Bill. We asked the Solicitor-General to resist amendments of the kind that have been moved this evening and that were also moved in Committee. We are grateful to the Solicitor-General for resisting that special pleading and for his even-handedness towards both the consumers and the professions, as the Law Commission asked him to be.

11 pm

Mr. David Crouch (Canterbury)

As there seems to be unanimity of thought on the two Front Benches, I wondered at one time whether the Bill was being presented by the Opposition or by the Government. My hon. Friends the Members for Bolton, North-East (Mr. Thurnham) and for Ilford, South (Mr. Thorne) have argued the case tonight very cogently. It was not very latent.

I am distressed by the way in which the Bill is being rushed through the House, compared with what happened in the other place. I have read every word of the proceedings in the other place, and I have been immensely impressed by the legal views that were advanced there. It distresses me that the Bill is being discussed so late in the day. The Committee stage lasted for two hours and it took place after midnight. I tried to obtain a copy of the Committee proceedings, but I did not succeed. It was impossible to obtain a copy from the Vote Office. I was abroad during the Committee proceedings, otherwise I should have liked to be on the Committee.

The Bill has been rushed through this House. The lawyers are trying to push it through, and we shall end up with bad law. [Interruption.] Oh, yes. The House is always packed with lawyers late at night, and somebody must say that the lawyers do not always make good law. The result is that we end up with bad legislation. I said this at Second Reading and I say it again now.

Both Front Benches have said tonight, although it was resisted a little by my hon. Friends on these Back Benches, that the Bill is designed for housebuilding. It will protect house purchasers against contractors who build houses, and I commend it for that reason, but at Second Reading I put it to my right hon. Friend and learned Friend the Solicitor-General that the Bill should not apply to massive contracts for the building of chemical and process plants. That is entirely different from the building of houses.

I must declare an interest at this point. I am a consultant, and have been for many years, to the British Chemical Engineering Contractors Association. (HON. MEMBERS: "Ah."] There is nothing "Ah" about that. It is a very interesting profession that makes a great deal of money for this country. There is a great deal at risk. If things go wrong in chemical or process plants, the damages can run into millions or billions of pounds. The contractors therefore need to be protected.

Mr. Deputy Speaker

Order. I hope that the hon. Gentleman will address himself to the specific amendments that are before the House.

Mr. Crouch

That is always very difficult for me, Mr. Deputy Speaker, at this hour of the night, particularly when I am seeking to make almost a Second Reading speech again, because my last Second Reading speech did not make as heavy an impact as it ought to have done.

Perhaps I have said enough already. It must go on record that the Bill does a good job, as far as it goes, for the housing construction industry, but it should not cover the massive activities of chemical process plant builders. That is an entirely different matter. That is why I sought to catch your eye tonight, Mr. Deputy Speaker, and not to get you on your feet.

Mr. Roger Moate (Faversham)

I do not know whether it can be said in truth that the Bill has been rushed through, but I think that there will be some surprise in later years when people look back at the proceedings in this House and find that it was passed after a fairly perfunctory debate. In years to come I believe that the Bill will give rise to very many complications and considerable controversy. I should have welcomed a fuller exchange and more flexibility and movement by the Government in response to many of the submissions.

The case that has been put forward by my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) merits far more consideration than has been given to it by the Government and the Opposition.

Mr. Nicholas Brown

We have had this in Committee and other debates. It is one thing for the hon. Gentleman to say that he does not agree with what has been said by the Opposition and Government Front Benches—that is what democracy is all about. It is another thing to say that proper consideration has not been given to the points of view. That point was made in Committee against the Law Commission, and it is now being made against the Opposition Front Bench, and presumably against the Solicitor-General. That is unfair.

Mr. Deputy Speaker

I remind the House that we are discussing specific and narrow amendments. We are not on either Second or Third Reading.

Mr. Moate

With respect, Mr. Deputy Speaker, I was addressing the particular point about deliberate concealment, as the hon. Gentleman was in his intervention. I am not an engineer or an architect, but we have read considerable submissions from people very learned in that sector, who have studied the law in that regard, and to dismiss out of hand, as seems to have been done, their belief that a vast number of construction claims could be described as having been caused by deliberate concealment by an employee, not by the principal, merited considerable concern. For any construction organisation or professional undertaking working today, the possibility of an unlimited time during which it might be held liable presents it with insuperable insurance problems.

On this as on all other amendments, with the exception of the technical amendments that were accepted earlier, and which I did not follow, the Government seem to have made no fundamental concession to the many professional and sincere submissions that have been made to them. I hope that my right hon. and learned Friend the Solicitor-General will reply on this point at greater length.

The hon. Member for Newcastle upon Tyne, East (Mr. Brown) has got it fundamentally wrong. Nearly every hon. Member who has spoken on this subject, throughout the debates on Second Reading and in Committee, was representing the interests of the consumer and the producer. The great test to be applied by the House and by the professionals is not the profitability of the contract or profession — that does not apply because most costs can be passed on — but the sheer practicality of legislation such as this. Many hon. Members have got this wrong. They believe that simply by extending the period, with a long stop in this case, they are helping the consumer. This is gesture politics which does not help the consumer. In practical terms it will not help, and it is delusion. We should have paid more attention and respect to those professionals whose job it is to build houses or give people advice because they are concerned with the practicalities.

Something fundamental was missed on Second Reading, and is being missed tonight. The consumer is not the house buyer, to whom my hon. Friend the Member for Canterbury (Mr. Crouch) referred, or the small man. Over a 15-year period, it is most unlikely that the small consumer or the house buyer will be in a position to sue the original cause of that error. It is most likely that this amendment to the statute of limitation will be used mostly by the big institutions. They will he able to calculate more precisely who caused the error 15 years or more before, if they can adduce wilful concealment.

In this case, the big buyers of products such as chemical plants, Government buildings and the like, are the Government or local government. They will most likely be able to harness the forces of law to prove their case. The big commercial organisations will be the biggest beneficiaries of the Bill if it becomes law. This is important, because if one is trying to protect the consumer who suffers through the purchase of a false product, or a house buyer, one does not look to legislation such as this to do it. One should look to more specific insurance.

Mr. Deputy Speaker

Order. The hon. Gentleman is addressing himself to a clause in the Bill rather than to the specific amendment. I hope that he will address himself to the amendment.

Mr. Moate

I apologise, Mr. Deputy Speaker. I was also making the mistake of responding to some points made earlier by Opposition Members.

In conclusion, I shall deal with a fundamental point about the practicality because many hon. Members——

Mr. Deputy Speaker

Order. The hon. Gentleman cannot do that. He must address himself to the group of amendments.

Mr. Moate

Indeed, Mr. Deputy Speaker, and the practicality is about these amendments. Many hon. Members have said that one would simply insure against the additional exposure that occurs as a result of the amendment. The amendment seeks to extend the period during which claims can be brought if individuals can be deemed to be guilty of wilful concealment. Often it is not practical to do what those hon. Members suggest because the whole insurance world is endeavouring to move from that type of coverage. In professional indemnity insurance cover is limited to policies under which claims must be made during that particular year. The insurance world is moving away from cover which can take one back over many years to the year in which the error first occurred. In the United States the old "claims occurring" basis is the basis of insurance and that has caused millions of pounds worth of claims today and has virtually caused that type of insurance to dry up.

If we seek to protect the consumer, it is important that we should be practical. Often in this debate we have lost sight of the practicalities. Therefore, I do not think that hon. Members, no matter how sincere, will achieve the objective which they seek.

The Solicitor-General (Sir Patrick Mayhew)

My hon. Friend the Member for Bolton, North-East (Mr. Thurnham), in moving these amendments on deliberate concealment, has provided the House with the opportunity to examine clause 2(2) and its effects, following earlier discussions on Second Reading and in Committee.

The intended effect and the effect of his amendments is to provide a defendant employer with a defence in the form of a time bar in negligence proceedings which arise from his vicarious liability for acts or omissions deliberately committed by an employee or agent so as to keep the plaintiff out of his knowledge of his right of action.

Without transgressing your ruling, Mr. Deputy Speaker, I must say a word about the allegation that this part of the Bill has been rushed through. I hope that it was not suggested — I do not think that it was — that I responded in Committee cursorily to the points fully made by my hon. Friend. I was worried that I might have taken rather too long. Although I took a generous time in response to each debate there was still a substantial amount of morning Session to run when our business was concluded. That cannot be laid at the door of the Government.

My hon. Friend the Member for Canterbury (Mr. Crouch) speaks of the Bill being rushed through and attributes it to the fact that lawyers always pack the Benches at this hour. I could see some force in that, were the number of lawyers so great that there was no room for anybody else, but on looking round I see that charge is not substantiated. The truth of the matter is that we have answered every point made, and if they have not been made over an extended period, it perhaps derives from the fact that the House as a whole and the Committee wished to see the recommendations of the Law Reform Committee implemented.

Clause 2(2) has a limited objective. It gives effect to the Committee's recommendation that the long stop should not apply in cases of deliberate concealment or deliberate concealment of a breach of duty. But the long stop will come into play in those cases of latent damage where there has been negligence by inadvertent or careless acts or omissions. That is the crucial distinction between inadvertence on the one hand and the deliberate commission of breach of duty on the other.

11.15 pm

Every point made by my hon. Friend the Member for Bolton, North-East was by implication answered by my hon. Friend the Member for Ilford, South (Mr. Thorne). I am grateful to him for his reference to his conversation with the Lord Chancellor, which he said had satisfied him on a number of matters. Those were the matters which my hon. Friend the Member for Bolton, North-East dwelt upon in moving these amendments, to which my hon. Friend the Member for Ilford, South had put his name.

The amendments would permit a defendant to plead the long stop — in other words, 15 years have gone by, therefore the action is time barred — in cases where unbeknown to him his agent had deliberately committed a breach of duty with the intention of putting a plaintiff out of his knowledge of his right of action. Therefore, the defendant would be able to rely on the law of limitation to avoid proceedings in respect of alleged negligence for which a defendant may be held vicariously liable.

The key to this debate lies in whether the House of Commons was or was not right when it passed section 32 of the Limitation Act 1980, because the provision in this Bill does no more than build upon section 32.

The ordinary rule of limitation in relation to actions for negligence is that one has six years in which to bring one's action. But because that was widely perceived to lead to injustice, the House of Commons most recently in section 32(1) said that if: any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant — the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake". That is the general rule in the 1980 Act. Parliament went on to legislate in the terms of subsection (2), which provides that: deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty". If it was right in 1980 to make that provision—which prevents a defendant from relying upon the time bar— how can we possibly justify allowing him to rely upon the new time bar of 15 years, which for the first time is introduced into the law by this Bill? Are we to allow the defendant to take advantage of it, notwithstanding the deliberate commission of a breach of duty which amounts to deliberate concealment of the facts involved? I cannot see how that can be justified.

The interesting thing is that when we consulted upon the recommendations of the Law Reform Committee, very few people indeed suggested that there should be any amendment to the provisions of section 32. That is the answer to this point. Of course I recognise the proper concern of my hon. Friends for the consumer who has to pay more in terms of the cost of additional insurance, but I do not agree that we have been neglectful of the interests of consumers. Time and again the Law Reform Committee and everyone who has spoken in the House has acknowledged that there is a conflict between the interests of the consumer of services, including the consumer of lawyer services—and I stress that point for the benefit of my hon. Friend the Member for Canterbury —because lawyers' opinions are caught by this as much as the constructor of some chemical plant.

Mr. Crouch

Like the rest of the House, I am listening to my right hon. and learned Friend because no one can explain these detailed points of law better than he can. However, on the point about the statutory period of limitation as it affects contracts in the process plant industry, where such contracts ensure that the liability of both parties is well defined and that the contractor's liability terminates absolutely — fraud apart — after a determined death defined period, usually of 12 months, after the successful conclusion of a performance test, we are considering a scientific and industrial world where that is the practice. Does my right hon. and learned Friend think that it is wrong that the statutory period is not a statutory period but and agreed period between the contractor and the purchaser or operator of only 12 months? Will that be overridden by the important Bill that we are debating tonight?

The Solicitor-General

I am grateful to my hon. Friend for his helpful intervention. However, it is all a matter of contract. It is a matter of what the two parties to an agreement have agreed upon. It is open to parties to extrude their own liability for their own negligence provided that they do so in absolutely explicit terms. They can agree between themselves to limit their liability in terms of time, provided that they do so in the most explicit terms. Where they have not done that, the law has for centuries imposed a period of limitation — and that period has varied over the years—for liability in relation to actions based upon negligence or other breach of duty.

That is the key to the debate. On the one hand, we must take proper care for justice and what we have called the consumer. Equally, the employer must be protected to a reasonable extent from stale claims. I hope therefore that my hon. Friend the Member for Bolton, North-East believes that I have not dealt summarily with his points. The Committee consulted extremely widely and so has my right hon. and noble Friend the Lord Chancellor. I hope that my hon. Friend the Member for Bolton, North-East does not seriously mean that reason has had little relevance to the way in which the Government have responded to various amendments to the Bill.

My hon. Friend the Member for Ilford, South made an important point about insurance and that is a matter for the industry. I am glad that these important matters are now being considered within the industry and with those who advise the industry on insurance matters.

My hon. Friend the Member for Faversham (Mr. Moate) felt that there had been no concessions in the Bill. I had hoped that I demonstrated that I had listened carefully to what was said about the lack of clarity in the Bill and the first two amendments that we have dealt with tonight represent my response to that. That response has been generally welcomed.

There is a good deal more to the concept of vicarious liability than the idea that that is simply a matter of social convenience as my hon. Friend the Member for Bolton, North-East described it upstairs in Committee. That lies far beyond the law of limitation in negligence cases involving latent defects with which the Bill is concerned.

I believe that the Bill represents a fair balance of the conflicting interests and I urge the House, although it has listened with the usual care to my hon. Friend the Member for Bolton, North-East on a matter in which he is deeply concerned and experienced, not to accept the amendment.

Mr. Thurnham

I am grateful to my right hon. and learned Friend the Solicitor-General for his courteous and attentive replies both in Committee and on Report. I am not a lawyer and I am advised that some of the issues about which there is doubt will have to be tested in law. Time will pass before these matters are resolved; in other words, we shall have to wait and see. Accordingly, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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