London Pension Fund Authority (Miss Eaton) (Hansard, 29 November 1996)

§ Mr. Nick Raynsford (Greenwich)
I am very grateful to have the opportunity of this Adjournment debate to raise a constituency matter. I should at the outset declare an interest. Arising from the settlement of this complicated case, my constituent, to whose case I shall be referring, has made a financial contribution to the Greenwich and Woolwich Labour party. In accordance with the Nolan rules, it is right and proper that I should declare that, although I should make it clear that I acted throughout the case without any expectation of any financial gain, and, indeed, first sought this debate while the case was proceeding.
The experience of every Member of Parliament is that their constituency cases bring them into contact with individuals who suffer injustice when they are let down by the organisations that should be defending their interests. The case that I shall highlight falls into that category. My constituent, Miss Eaton, suffered a serious injustice and was badly let down by all those in authority who should have protected her interests. What is exceptional in her case is the extraordinary length of time that it took for her to gain redress and the inordinate expenditure of public funds that have been squandered in the mishandling of the case over many years.
I have been involved in Miss Eaton's case for about three and a half years, but that is less than a quarter of the total length of time during which my constituent has been seeking justice. Even during the three and a half years in which I have been involved, the volume of correspondence and paperwork has been quite extraordinary—far in excess of that which I have encountered in any other constituency case and, I believe, far in excess of that which any other Member of Parliament is likely to encounter.
The case arose from malicious, untrue and defamatory allegations made about Miss Eaton by a colleague at Avery Hill college in south-east London, where she worked as a lecturer. The outcome, or what might have appeared at the time to be the outcome, was a successful libel action in which my constituent was awarded 12,000 in damages as well as costs against the other lecturer who had wronged her. That should have been the end of the affair. She never benefited from that award because her former colleague resorted to the disreputable but nevertheless effective device of bankruptcy to avoid having to pay the sum or, indeed, the costs awarded by the court. That in itself is of concern, but not what I intend to concentrate on.
Despite winning the libel action, Miss Eaton found herself the subject of far greater wrongs in the following years, during which her career was irretrievably damaged and she was forced into further litigation in order to try to obtain some redress. While the colleague who had libelled her moved on to other employment at another college in the Inner London education authority area, Miss Eaton found herself being progressively penalised and, eventually, frozen out of doing her job. She was excluded from the college that had been the focus of her 645 working life. The innocent party turned out to be the victim and paid an appalling price in the impact on her life and career.
None of the official bodies responsible for the case over the past 16 years come out of it with any credit. Avery Hill college, the Inner London education authority, the London Residuary Body and, more recently, the London Pension Fund Authority all failed to deal promptly, expeditiously and fairly with Miss Eaton's case. I do not intend to tell the full story because it is long and complicated and we do not have the time in this short Adjournment debate to cover all the details. Suffice it to say that Miss Eaton has faced a herculean task in trying to obtain justice and her task has been made far more difficult by the conduct of the many official bodies with which she has had to deal.
Shortly before it was abolished, the Inner London education authority commissioned an internal inquiry into the case, which concluded: in administrative and personal terms the case has been handled disastrously. It continued: Miss Eaton's reputation and career have been fundamentally and irretrievably damaged by ILEA's unsuccessful and misguided handling of the case from 1980–1990. Because the ILEA was then abolished, it fell to the London Residuary Body to try to resolve the matter. Despite various meetings and further correspondence and litigation, no solution had been achieved by the time the LRB in turn handed over its responsibilities to the London Pension Fund Authority, which took over responsibility for the affair in April 1992. A year later, I became involved when Miss Eaton, frustrated at the continued failure of the responsible authorities to resolve her case, sought my assistance.
I wrote to the London Pension Fund Authority in April 1993 in the following terms. In my view the onus clearly lies on LPFA as the successor body to ensure that the very serious wrongs done to my constituent are remedied in full. I appreciate that LPFA is not itself responsible for the long chapter of incompetence and mismanagement which has led to the current position. However a failure to act properly now could well, in my judgment, leave LPFA open to public criticism for failing to remedy what is unquestionably a serious injustice. While I appreciate that various legal actions are proceeding, I am far from convinced that the courts will provide a proper speedy and satisfactory remedy, let alone a cost effective one. Past history does not suggest that litigation will provide a satisfactory solution from anyone's point of view and there is a serious risk that the matter which has already gone on too long will he further protracted. Sadly, the warnings that I spelt out in that letter proved to be entirely justified. It has taken more than three years from that time before the case was finally settled, not for a lack of trying, certainly on my part.
In order to try to facilitate a settlement, I offered to convene a meeting between Miss Eaton and representatives of the LPFA. A meeting duly took place in September 1993 and it was the first of three such meetings involving the parties that I convened to try to achieve a negotiated settlement and to avoid further costs and protracted litigation. On each occasion, I pressed the LPFA to offer a reasonable financial settlement and a full public apology to Miss Eaton. It became clear to me as the discussions dragged on throughout 1993, 1994 and 646 1995 that the major obstacle to a satisfactory resolution of the case was the influence—some would say, malign influence—of the lawyers advising the LPFA, who took a totally unrealistic view of the potential liability of their clients and who clearly advised time and again that their clients should pursue litigation against Miss Eaton, rather than resolve the matter through a negotiated settlement.
I am concerned about that on many grounds, not least because of the impact on my constituent, who had to face the rigours and difficulties of endless court proceedings when she should have been given justice and help by the body concerned. However, all of us must above all be concerned about the cost to the public purse of the protracted and expensive legal processes that continued month after month and year after year.
I shall come back to the issue of the costs in a moment. Suffice it to say that a serious issue involving the public interest arises when lawyers with a direct financial interest in protracted litigation give advice such as that which the LPFA continued to receive throughout the period—that it should continue to litigate, and should not offer Miss Eaton a reasonable settlement.
In September 1995 I wrote to the chairman of the LPFA to express my concern about its failure to act on the lines agreed at the third meeting that I convened between the parties, which had been held in August that year, and which I had hoped would produce a negotiated settlement.
In my letter I said: I have no doubt that you will seek to justify your position by reference to the advice by your lawyers who expect to secure a smaller settlement than that already offered. Having said that Miss Eaton's counsel is, I understand, equally emphatic that her claim merits a settlement in excess of the sums paid into court by the LPFA. Putting the matter to the test thorough what could well be a prolonged, difficult and expensive process of litigation—which incidentally will cause even more personal distress to Miss Eaton—hardly seems the most sensible way to proceed, other than from the point of view of the lawyers who, of course, stand to earn further substantial fees from the process. Nevertheless, a further nine months were to elapse before a settlement was finally agreed. That settlement, the terms of which may not be publicly disclosed, involved the LPFA's making a substantially larger payment than had previously been offered. Indeed, although I have not sought her comment on the subject, I suspect that the final settlement was larger than my constituent would have been willing to accept at an earlier stage, had a settlement been offered on reasonable terms at that time.
All that should give us pause for serious thought, especially about the validity of the advice tendered by the lawyers, who had a clear financial interest in protracted litigation. It should also trouble us that public and quasi-public authorities should have continued to use the excuse of listening to the advice of their lawyers as a reason for refusing to exercise their judgment and reach a settlement.
The total cost of the case to the public purse will probably never be known. Attempts that I made to establish how much was spent by the ILEA and the London Residuary Body drew a blank. The Minister for Local Government, Housing and Urban Regeneration wrote to me in August 1994 to say that the accounts for the relevant period were now held in the Greater London records office, and that even if they were retrieved they 647 would be of limited use, as they would not show what proportion of staff time and legal advice was spent on the case. I do not regard that as a satisfactory answer.
Concerning the costs incurred by the LPFA, which has been involved for only four and a half of the 16 years during which the case has been handled by a variety of public authorities, the evidence is clearer, but again far from satisfactory. Its chief executive wrote to me on 9 July this year to say: as the case has now been settled finally, I am able to say that the cost of legal services and advice to the Authority over the years is not likely to exceed £220,000 in total. That is a considerable sum but, as will shortly appear, it by no means tells the full story.
I wrote at the same time to the National Audit Office, and in his reply, dated yesterday—possibly prompted by the knowledge that there would be a debate today—Sir John Bourn says: we have identified that in defending the actions brought by Miss Eaton, the Authority incurred legal costs of £338,028 inclusive of Value Added Tax. That is 50 per cent. more than the organisation's chief executive had stated, three months earlier, was the maximum likely cost to the authority.
Even assuming there is a discrepancy concerning VAT—I have not had the chance to check whether there is—there is still a huge discrepancy. Something is clearly wrong when a body such as the LPFA is incurring expenditure on this scale with apparently so little idea of how much it is spending.
There is no question that Miss Eaton's case has been handled abominably by a large number of organisations that have been involved over the years. This has caused her incalculable grief and distress which cannot ever be fully compensated. It also reflects very poorly indeed on the judgment and the administrative capability of several public and quasi-public authorities. Although Miss Eaton eventually did receive a substantial financial settlement, and the fulsome public apology which she richly deserved, we should not conclude that the whole matter can now be closed and forgotten. There are, I believe, very serious issues of public concern raised by this case, and a full inquiry should now be carried out into the conduct of the various authorities and quangos involved and into the cost to the public purse.
The inquiries conducted to date by the National Audit Office have helped to identify some of the financial implications, but cannot be seen as a satisfactory investigation of the whole affair. They have revealed the extraordinary discrepancy in the estimates of the total legal costs incurred by the LPFA, to which I have referred. I hope, therefore, that the Minister will be able to give me an assurance that there will be a full and thorough investigation into this whole sorry episode.

§ The Parliamentary Under-Secretary of State for the Environment (Sir Paul Beresford)
I am grateful to the hon. Member for Greenwich (Mr. Raynsford) for bringing this case to the attention of the House. I do not very often say that in Adjournment debates, but I do so in this case. No donation was made to my constituency parlay to encourage me to say it. We have all picked up from the hon. Gentleman's comments that this is a sad, 648 long-running, complicated and difficult case, and there are some awkward questions that have been and will be raised about the various public bodies.
There has been a public apology from the LPFA, which accepts that it is an unhappy case. There is no doubt that Miss Eaton suffered distress and vexation for 16 years—an incredible length of time for such a case. Her circumstances deserve our sympathy, and there is no doubt that this situation went on for far too long. I can understand why the hon. Member for Greenwich wants the Government to identify those responsible for the distress, and wants them to explain why it took so long and cost so much not only financially, but personally. I can understand his feelings, and that he wants to nail the offenders—if that is the correct way to put it. It may be the way in which he would wish to put it.
I do not distance the Government in any way from the personal sympathy that I, and everyone who has heard the case, feel for Miss Eaton. However, as the hon. Member for Greenwich has accepted, the Government do not control directly the decisions of the sponsored bodies. We are responsible for the framework within which these bodies must operate, and we must not forget that Miss Eaton's case against her former employers was settled by the LPFA in June this year. This settlement follows the persistent failure of the previous bodies to settle Miss Eaton's case, either by discussion and agreement or through the courts.
This case was finally brought to a conclusion by the LPFA, a non-departmental public body responsible to the Secretary of State who, in turn, is accountable for the degree of independence that it must and does enjoy. It manages a pension fund worth some £2 billion and, from April 1992, it has administered contingent employer liabilities deriving from the Inner London education authority. It also inherited the mess that may or may not have been made previously in this case. The liabilities are now funded from a levy on the London boroughs which amounts to some £24 million in 1995–96. In addition to its pensioners, the LPFA also has a duty towards London council taxpayers, as well as a general duty of stewardship for the pension funds it administers.
General oversight of the responsibilities is assigned to a board appointed by the Secretary of State. Despite what he said about the legal profession, the hon. Member for Greenwich will understand that the conduct of litigation is a matter for the board and it must receive legal advice. As defendants, the board's actions were determined by whether Miss Eaton accepted an offer of settlement or whether she decided to take the authority to court. I have simplified that description, but the hon. Gentleman will understand. In making its decisions at each stage, the board had to balance its various stewardship duties, as well as its duties to Miss Eaton, and to take account of the advice that it was given by its legal advisers—the board must do that.
Whether the authority's assessment at each stage of the litigation contributed to the delay in reaching a settlement depends on a judgment as to the merits of the case. That could be settled only if the case ultimately went to court. Of course, this case was settled out of court, so no one can do more than second guess.
The decisions taken by the board were taken within the framework set up by the Secretaries of State and, 649 therefore, must be on the basis of legal advice. The NAO has considered the case and come up with a similar conclusion. I have also looked back at the case to consider some of the other points that have been made and at some of the predecessor bodies—the Inner London education authority and the London Residuary Body—and to ask questions.
The hon. Member for Greenwich said that it is extremely difficult to get to the bottom of the matter. One has to reflect that the LPFA inherited the case. I suspect, although again it is second guessing, that if it had had the case from the outset, it might have sorted it out sooner. It should have taken less than 16 years.
The LPFA has issued a public apology and made it clear that it undertook a full and intensive review of the documentation surrounding Miss Eaton's complaints. The LPFA was fully aware of the facts of her case dating back to the 1980s and of the damage to her professional reputation, career and status as well as the distress caused to herself and her mother. I recognise—I know that this is a repetition, but it is worth repeating—that no apology or compensation can ever properly make up for all that Miss Eaton has lost, but I do not see what useful purpose would be served to Miss Eaton or anyone else by reopening the case.
I suspect, however, that because the case has been brought to light and because of the efforts and questions of the hon. Member for Greenwich and the reference to the NAO, pressure has been applied. Those responsible will be aware of the considerable pressure.

§ Mr. Raynsford
I accept much of what the Minister is saying, but one of the key points that I was trying to make was that throughout the process—I have been involved only for the past three and a half years, but I suspect that it has gone on for much longer than that—the public bodies concerned have used the defence of legal advice as an excuse for not exercising a judgment. If authorities can 650 continue to do so and the lawyers who offer the advice have a direct interest in protracted litigation, public funds could be spent on a huge scale. I am not satisfied that that will end. I can see the same problem arising again and again. Does the Minister not share that concern?

§ Sir Paul Beresford
I do share that concern. I suspect that some people in the medical profession never cure their patients because they are a financial asset, although I am not naming anyone in particular. The essence of what the hon. Gentleman is saying is that one has that suspicion. The difficulty is that because the body concerned is using public funds from the local authority, it has to take legal advice, which it did in this difficult case.
I think that the hon. Gentleman will derive some hope from the fact that the Government are aware of the plight of the individual seeking access to justice. I understand that Miss Eaton has been pursuing a justified plea on the right move in that direction. The hon. Gentleman will be aware that the Government intend to respond to that.
On 31 October, my noble Friend the Lord Chancellor announced his strategy for implementing Lord Woolf's proposals on his review of access to justice. That points the way to securing easier and less costly access to justice for individuals in the future and will provide a sound way forward for the civil justice system into the next century.
The hon. Gentleman has highlighted an extremely difficult case—balancing lawyer opinion and the necessity to have that opinion to protect public funds, apart from anything else.
We have been discussing an extremely distressing and sad, but fortunately most unusual, case. It has reached a conclusion that is long, long overdue after well over a decade—in fact, getting on for two decades. At this stage we must reflect on it, and on the fact that, as Miss Eaton has had an awful time for a very long time, this might be an opportunity to draw a line under it rather than dragging the case on any longer.