HL Deb 25 February 1964 vol 255 cc1081-9

5.23 p.m.

Order of the Day for the House to be put into Committee read.

Moved, That the House do now resolve itself into Committee—(The Lord Chancellor.)

House in Committee accordingly.

[The LORD AILWYN in the Chair.]

Clause 1 [Power to award costs out of legal aid fund]:

LORD DOUGLAS OF BARLOCH moved, in subsection (3)(b), to leave out "severe" and to insert "undue". The noble Lord said: The purpose of this Amendment is to alter the phrase "severe financial hardship" to "undue financial hardship". As the Bill stands, it is a condition that the court must be satisfied that there is severe financial hardship before any order is made for the payment out of the Legal Aid Fund of costs to the unaided person who has been successful in defending a claim by a legally aided person. Some of us feel that the phrase "severe financial hardship" imposes a test of a very drastic character indeed, and that it will prevent the court from making an order except where it is demonstrated that the proceedings will otherwise have a drastic effect upon the financial position of the person concerned.

I venture to suggest that this is not the only circumstance which ought to be taken into account. For example, there might be cases in which it appeared that there was never any real merit in the claim made by the legally aided person. This is not, of course, a reflection upon those who consider applications for legal aid in the beginning: they have to act upon an ex parte statement. But that ex parte statement may have been totally untrue and misleading, and in that event the person who has successfully resisted the claim will have been put to expense which would never have been incurred otherwise and has been quite unjustly incurred. That is an example of the kind of case in which I feel that the power of the court ought to be somewhat widened, so that it can take into consideration, not only financial hardship, but also the circumstances in which legal aid was originally given. The court should not be limited to the drastic phraseology, "severe financial hardship", which looks, on the face of it, as if it would prevent this provision from being operated except in a small and negligible minority of cases.

I know that this is a difficult subject, but what is contained in the Bill is an entirely novel provision. It can be argued that public funds should never be involved in payment except upon the ground of avoiding a financial disaster to the person who makes the application for costs. But that seems to me to be unduly restrictive and to impair the power of the court to act fairly and justly in the matters which come before it. I beg to move.

Amendment moved— Page 2, line 6, leave out ("severe") and insert ("undue").—(Lord Douglas of Barloch.)

LORD SILKIN

I should like to say one or two words in support of this Amendment. There is no doubt, because my noble friend has made it quite clear, that the term "undue" is less restrictive than the word "severe", and the real purpose of this Amendment is to open the door a little wider. Some of us on Second Reading thought that it might be possible to leave out "severe" altogether and say simply that the court must be satisfied that financial hardship will be incurred unless the order is made. I think the noble and learned Lord, the Lord Chancellor, made it clear that this would not be acceptable because it might be opening the door too wide. I think the word "undue" instead of "severe" represents a halfway house between the two conceptions and would open the door to people who might otherwise suffer. I think my noble friend is quite right when he says that as the Bill stands, there is bound to be drastic hardship. It is, of course, a matter for the discretion of the court, but, as I understand it, the court would almost have to be satisfied that a person would be likely to be ruined financially before such an order relieving him of the costs would be made. The Amendment which my noble friend has moved would not involve so severe a test.

The estimated difference between the cost, as I understand it, is not a very serious matter. The estimated cost to the Legal Aid Fund of this provision, as it stands, is £40,000, and the estimated cost, if the door were opened completely, so that all successful unassisted persons were awarded costs out of the Fund, would be £340,000: this was the figure mentioned by the Attorney-General in another place. So that the difference between the two is of the order of £300,000. Nobody is suggesting that in all cases the successful unassisted person should be awarded costs. If, therefore, we assume that only in about half the cases or thereabouts would an order be made, if the Amendment were accepted, the amount involved (this is pure guesswork, but I think it is a reasonable assumption) would be about £170,000. That is not a serious matter, even if it comes wholly out of the Fund. I should have thought that this test which my noble friend is suggesting is a more reasonable test, and one which will relieve a good deal of hardship. I hope the Government will accept these words, or something like them.

5.30 p.m.

THE LORD CHANCELLOR (LORD DILHORNE)

I have listened carefully to the arguments advanced by the noble Lord, Lord Douglas of Barloch, and, indeed, that advanced by the noble Lord, Lord Silkin. The noble Lord, Lord Silkin, made it perfectly clear, as indeed is the case, that to accept this Amendment would be, as he put it, to open the door a little wider. It would not, I think, open the door as wide as the noble Lord, Lord Douglas of Bar-loch, thought it would, because instead of having the words "severe financial hardship" you would have the words "undue financial hardship". I do not think that would enable the court to say that they would award costs out of the Legal Aid Fund—that is to say to be paid by the taxpayer—because at the trial it emerged that the case brought against the unassisted person never had any real merit. I do not think that under either formula that kind of consideration would be relevant.

The adjective "undue" not only opens the door a little but it is, I would say, a little less precise as to its content. The noble Lord, Lord Silkin, interpreted the word "severe" as meaning "drastic", and went so far as to suggest that an order could not be made unless it appeared that the unassisted litigant was liable to be ruined. I do not go so far as that with him. The scheme under this Bill is to leave a wide discretion to Her Majesty's Judges. It will be for them to interpret, in the light of all the circumstances, whether in any individual case there is, or would be, severe financial hardship to the unassisted litigant if an order was not made. As the noble Lord, Lord Douglas of Barloch, will see, there is provision made under Clause 2 for inquiry as to his circumstances. The noble Lord ventured on the Second Reading debate to suggest that no one who had been refused assistance under the Legal Aid Act would qualify for an order for costs under this Bill against the Legal Aid Fund. There I thoroughly disagree with him, because one of the matters to be taken into account is the burden of costs which will fall on the unassisted litigant; and that will depend in some cases upon the length of the case.

I will tell your Lordships again, if I may, that the wording of this provision has been most carefully considered over months to try to find the appropriate formula. We have come to the conclusion that the present wording best expresses the intentions which the Government seek to secure the fulfilment of in this Bill. Therefore, I am sorry to disappoint the noble Lord, Lord Douglas of Barloch, and the noble Lord, Lord Silkin, but I must, if the matter is pressed to a Division, invite your Lordships to reject the Amendment.

LORD DOUGLAS OF BARLOCH

While I have had many disappointments in life, especially in matters of this kind, I do not propose to press this to a Division. It is a matter of emphasis. I hope it will work out in the way in which the noble and learned Lord thinks it will, but I have my doubts about it. Nevertheless, I will ask leave to withdraw the Amendment.

LORD SILKIN

Before the noble Lord withdraws it, may I say that there will be another stage to this Bill, and I think we should all of us think again. I accept what the noble and learned Lord said about the words in the Bill carrying out the intentions of the Government. What we were seeking to do under this Amendment was to change those intentions a little. The real question is whether our intentions are more reasonable than the present intentions of the Government. If our intentions are right and we want to enlarge the scope of the Bill a little, then are the words we have down right? I would hope that the noble and learned Lord would have a look at that again and consider whether it is not right to widen the scope a little.

THE LORD CHANCELLOR

I will say just this, if I may. Of course, I am always prepared to look at anything again and again, but I should not like that continuing look to lead to any inference that the view might be changed. As to whether the wording of the Amendment carries out the intention of the noble Lord, I would hesitate to express an opinion. It certainly lacks precision. It certainly opens the door to some extent, but to what extent is again very uncertain.

Amendment, by leave, withdrawn.

On Question, Whether Clause 1 shall stand part of the Bill?

5.37 p.m.

LORD SILKIN

I wish to say a word about Clause 1, not on the point we have just discussed, but on the words in subsection (2). That subsection provides that the court has to be satisfied that it is just and equitable in all the circumstances that provision for the costs should be made. Later on it says that they must also feel satisfied that severe financial hardship would be involved. The subsection goes on to say that, when they are considering whether it is just and equitable, they also have to consider whether the assisted person should be required to make a contribution towards the costs. As I read this subsection, it is only in those circumstances that the court has to consider whether the assisted person should be required to make a contribution. But as I understand the Legal Aid and Advice Act, they have to inquire into the position of the assisted person in all cases, and consider whether it is right that he should make a contribution. If I am wrong about that, it is only in these particular circumstances, if there is a question of the unassisted person being financially helped, that the court is required to make this inquiry as to the ability of the assisted person to contribute costs. It seems to me an odd provision to put into the Bill. As I understand it—I may be wrong—the court has to make this inquiry in all cases.

I was wondering why these words have been specifically brought into this Bill for this purpose. If two assisted persons commence proceedings, one against a defendant who is covered by insurance, the other against a defendant who is not, in the case of the former no inquiry apparently will be made (that is so, judging by the shaking of the head of the noble and learned Lord, but perhaps I am misinterpreting him) about his means; the court is not directed to inquire whether the assisted person can help. In the other case, where the unassisted person is not helped by an insurance company and may suffer severe hardship, and the court is required to consider whether it is just and equitable that he should be helped, then they do inquire into the assisted person's means. I wonder why there should be this distinction, when in actual practice the means of the assisted persons and the ability to pay may be exactly the same.

While on that point, I want to say one other thing which may or may not be strictly relevant. I understand that when the court does inquire into the ability of an assisted person to pay costs they take into account also the wife's earnings. That is a factor which strikes most people as being grossly unfair, and I wonder if the noble and learned Lord could say whether that is the case and whether it would be possible to look at this question and see how far it is really right to take into account the wife's earnings.

THE LORD CHANCELLOR

The noble Lord has raised two points, and I will deal with them to the best of my ability. With regard to the second point I think it is inherent throughout the Legal Aid Scheme, in connection with applications for legal aid, where the wife if not suing the husband or vice versa, that the wife's earnings—or indeed the husband's earnings—are taken into account. Speaking from memory, I think the reason for that is that while one takes those into account, one also takes into account the very large allowances which can be set against the earnings. It is a point which cannot be dealt with without legislation and without, I think, a review, probably, of the whole scheme of calculating what should be taken into account or disregarded for the purpose of determining the qualification for legal aid. I do not think that that arises in this Bill.

The first point the noble Lord made was with regard to the requirement in this Bill for the court to ascertain the potentiality of the assisted litigant to meet some part of the unassisted litigant's costs. The noble Lord, Lord Silkin, if I may say so, is not right in thinking that under the 1949 Act the court is required, where an assisted litigant loses, to consider his means in every case with a view to making an order against him. The court has power to make an order, but it is not required to examine his position in each case. The successful opponent may, of course, ask for an order, and then the matter will be gone into. But if an order is not asked for—and I think that in a large number of cases it is never asked for—then there is no inquiry.

What we thought was right in this Bill was to make it a condition precedent to the making of an order against the Legal Aid Fund (that is to say, against the taxpayer) for the unassisted party's costs, that consideration should be given to the possibility that the assisted litigant may be able to make some contribution. That is why we have provided it in that manner. It will be for the court to determine what, if any, contribution should be made. But I would submit to your Lordships that it is right to look to that first, the court already having power, under the 1949 Act, to make such an order, and it is right to require the court to look at that first to see to what extent, if at all, the assisted litigant can afford to pay some of the unassisted litigant's costs before the burden of paying those costs falls upon the taxpayers.

Clause 1 agreed to.

Clauses 2 to 5 agreed to.

Clause 6 [Short title, construction, citation and extent]:

THE LORD CHANCELLOR moved, after subsection (1), to insert: () Section 4 of this Act shall come into force on the passing of this Act, and the remaining provisions of this Act shall come into force, as regards England and Wales, on such day as the Lord Chancellor may by statutory instrument appoint and, as regards Scotland, on such day as the Secretary of State may by statutory instrument appoint.

The noble Lord said: On the Bill's coming into force, as your Lordships will see, regulations made by myself, and the Secretary of State for Scotland, as well as acts of sederunt for Scotland, will be required under Clause 2 for determining the proceedings which are or are not to be treated as separate proceedings for modifying provisions of the Bill for application to an unassisted party who is concerned in proceedings only in a fiduciary, representative or official capacity; and for regulating the procedure for dealing with applications for orders under the Bill and for references to masters, registrars and so forth.

There is no intention of postponing for longer than is necessary the time within which this Bill will come into force. I think your Lordships are aware, and I am certainly aware, of the general keenness that it should come into force as soon as possible, but a few weeks are needed for necessary consultations, which have not yet been completed, with the masters and registrars who will have to operate the arrangements. It is right that I should say that some complicated considerations arise, both in England and in Scotland, and it would be a mistake not to give adequate consideration to the difficulties involved, in both countries, in relation to the regulations and acts of sederunt.

Your Lordships will remember that when this Bill was first introduced to this House it did not make any provision for the special case of an unassisted party who was concerned in a fiduciary, representative or official capacity. The inclusion of such cases in this Bill in what I might call its second edition, is an improvement. Making regulations dealing with persons in that capacity is not an easy matter. The consideration of all that is involved is not quite complete, and therefore, with great regret, I have to move this Amendment, which will allow me a little more time to complete these matters. I beg to move.

Amendment moved— Page 4, line 18, at end insert the said subsection.—(The Lord Chancellor.)

Remaining clause, as amended, agreed to.

House resumed; Bill reported with the Amendment.