HL Deb 01 November 1983 vol 444 cc434-9

3.17 p.m.

The Lord Chancellor (Lord Hailsham of Saint Marylebone)

My Lords, perhaps I ought to explain that in the earlier prints of the agenda for today it was suggested that I should move that the Order of Commitment be discharged and utter the ritual words. But since then an amendment has appeared, so the Motion I now move is that the House do now resolve itself into Committee on this Bill.

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

On Question, Motion agreed to.

House in Committee accordingly.

[THE LORD ABERDARE in the Chair.]

The Chairman of Committees

Clause 1 Amendment, Lord Mishcon.

The Lord Chancellor: On a point of order, there has been a change. The amendment is to Clause 2.

Clause 1 agreed to.

Clause 2: [Exceptions to s. 1]:

Lord Mishcon moved the following Amendment:

Page 2, line 23, at end insert— ("( ) Section 1 above shall not apply in any case where a defendant establishes that its application would cause undue hardship.")

The noble Lord said: I appear before the Committee blameless. I put down the amendment under Clause 2 and the printers unfortunately made an error. In regard to this amendment, I wonder if I may refer the Committee back to the objects of the Bill—with which I am sure the Committee will be in agreement, and certainly we are on this side of the Committee—as summarised with his usual clarity by the noble and learned Lord on Second Reading on 27th July. At column 1547 the noble and learned Lord said: The Law Commission's recommendation is that, where under our existing rules of private international law the substantive foreign law alone applies, the rule of the same foreign law which relates to limitation should also be applied, and not the English law of limitation. Subject to one or two qualifications and to certain exceptions recommended in the report, that scheme is that adopted in this Bill". The difficulty arises—and this is the reason for my amendment—in that many foreign limitation periods are extremely long. There are periods of 30 years in respect of actions for breach of contract in certain foreign laws, and indeed that period is not uncommon. There are cases where even longer periods or no periods at all exist. This means that where a bank bond, for example, or where a sale of goods contract is governed by a foreign proper law the threat of proceedings can be hanging over an English company for a completely unreasonably lengthy passage of time.

I do not have to remind the Committee that that means after a lengthy period of time that documents can be lost. It also means, in a country whose courts have oral testimony as being very much the procedure of trial, that witnesses may no longer live, and, indeed, if they are in existence their testimony is obviously weakened by the passage of time. I think it also material to the Committee to point out that there were relatively few comments received by the Law Commission on Working Paper No. 75 which they issued and, so far as I know, only two commercial organisations made representations. These were the Association of British Chambers of Commerce and the British Insurance Association.

However, I believe that I am right in saying that the question of concern that was felt at long periods of limitation was put forward by two of the authors of the memoranda submitted jointly by the Senate of the Inns of Court and the Bar and the Law Society. In the Commission's report itself that concern is actually expressed in paragraph 4.7 at page 15. With the Committee's permission, I will read what they say: Although we do not accept the suggestion that the limitation period of the lex causae should be applied only where it is shorter than the English period, we can foresee difficulty from the application of a limitation period of a foreign lex causae both where that period is longer, and where it is shorter, than the period prescribed by our law. As to longer periods, in some particular cases the limitation period of the lex causae may be very much longer than the relevant period laid down in our law, as for example, in French law where a period of 30 years is provided for some classes of action. Since the general rule which we propose would have no specific maximum period to qualify a long period laid down by a foreign lex causae, a defendant in our courts, sued upon a cause of action to which that lex causae applied, might have to try to find the evidence to meet allegations with reference to events long past. A claim brought up to 30 years after the happening of the facts in issue would be regarded in our courts as giving rise to great difficulty, if not impossibility, in so far as the establishment of the truth depends upon direct oral evidence. The Commission having said that in paragraph 4.7 at page 15—not unanimously but by a majority—thought that they had overcome this difficulty, which as I have said, they recognised, by relying upon a provision which is contained in their draft Bill and in turn is incorporated word for word in the Bill now before the Committee. That provision is that: a foreign limitation law would not be applied by the courts of England and Wales to the extent that it is in conflict with principles of public policy applied by those courts. In regard to that, I have to say this: there must be grave doubts as to the general applicability of the rules of public policy. Indeed one of the Law Commissioners, Mr. Brian Davenport, QC, considered that, the caution with which our courts apply the concept of public policy may, in the absence of a definition or of guidelines, cause foreign limitation periods of excessive length to be applied in circumstances where a defendant will be put in unfair difficulty by reason of delay. The Law Commission accepted that, The courts of England and Wales have not had to consider the concept of public policy in the context of foreign rules of limitation, and there is therefore no direct authority upon the matter. That is a quotation from paragraph 4.43 of the Commission's report.

While the rules of public policy may ensure that discriminatory periods of limitation are not enforced by the English courts, it is difficult to see that public policy would result in a refusal by the English court to enforce an extremely long but generally applicable foreign limitation period. I would suggest it is significant that the Scottish Law Commission doubt whether a Scottish court would be prepared, to decline to give a judgment against the defender on the grounds of public policy". In the report they expressed the view that, where there is no, or an excessively long, period prescribed under the lex causae the principle of the 'long negative prescription' at present applicable under the Scots internal law should be applied, subject to exceptions, to claims governed by a foreign law". The noble and learned Lord the Lord Chancellor, in answer to some observations by my noble and learned friend Lord Elwyn-Jones at Second Reading had some rather pertinent comments to make at col. 1550 of Hansard for 27th July, 1983. My noble and learned friend having raised the question of public policy and the vagueness possibly in regard to the way in which that might apply to certain problems which were inherent in the Bill, the noble and learned Lord the Lord Chancellor said: As regards public policy, it is, as some famous lawyer of the past said, a difficult horse to ride. I rode it very quietly in my opening remarks". The noble and learned Lord did ride it very quietly: but he rode it, if I may say so, with his usual skill. In this amendment I am asking him to ride the horse with equal skill over a fence which I hope in some way or other will be constructed upon this amendment.

I now come to the end of the story of this amendment by saying that the Law Commission accepted that there will be circumstances in which a claim should not be permitted to proceed before the English courts, notwithstanding that the long limitation period under the lex causae has not expired. Defendants before English courts, in my respectful submission, should be protected from such long periods of limitation. Furthermore, it is important that the Bill clearly lays down the relevant law in this regard; and the present Bill does not. In this amendment—and I promise the Committee that I have now reached the close of my remarks—I have tried to put forward one way in which this could be done; a guideline put down and a principle enunciated. That is, that the onus would be upon the defendant, if he were trying to defeat the period of limitation of the lex causae, to show undue hardship. It may be that I have found the wrong way to try and protect the position that I have attempted to describe to your Lordships. If I have found the wrong way or used the wrong words, I am hoping that the noble and learned Lord in his reply will be able to tell the Committee that the principle is accepted and if he does not accept the amendment now before the Committee then at Report stage he himself will be putting down an amendment to deal with this matter. I am sure that will be much more skilful than my amendment and much more acceptable to the House. I beg to move.

3.28 p.m.

The Lord Chancellor

I am grateful to the noble Lord, Lord Mishcon, for reverting to this subject, which I think is a difficult one. If I may invert the order of my speech and start at the end, what I am able to say to the noble Lord, Lord Mishcon, is that I would like to consider this matter further. I am not sure, for reasons which I will give, that I can undertake to put in an amendment by Report or even when the Bill goes through another place, because I am not sure that the problem he has raised is soluble by an amendment; and I will explain why. This is, so to speak, the peroration of my speech, beginning at the end.

The second thing is that, so far from being an improvement, I think the actual proposed words are worse than the draft which the Law Commission made in the text as it appears in the Bill. They did go through a long period of consultation. I shall not weary your Lordships by giving the whole line of argument by which they arrived at their conclusion. The words in the Bill were, in their view, the best or the least unsatisfactory words, again for reasons which will emerge as I go along.

But this was very carefully considered by the Law Commission and they considered that the words in the text were the best that they could do. I accept, of course, as I did on Second Reading from the noble and learned Lord, Lord Elwyn-Jones, that the rules of public policy are difficult to define and may be vague. I accept that Mr. Brian Davenport, whose talents are known to those of us who practise, had a considerable reservation about using them. I accept this criticism as a criticism of the Bill within limits which I shall shortly define.

But undue hardship is even vaguer than public policy. To begin with, what is hardship is difficult to define. Undue hardship is even harder to define, because it involves a conceptually difficult thought that there is a normal degree of hardship up with which people have got to put. I should have thought that that was very highly subjective and would be about as long as a judge's foot. Then, having discovered the normal or the due amount of hardship up with which the defendant has to put, to say "Well, anything above that and beyond a certain degree is undue hardship" will not do. On the other hand, I accept that there is a problem. I think that one must not lose sight of the context within which the problem arises, and in the remainder of this speech I shall try to define the scope of the wood, so that we shall not lose sight of the shape of the wood while we are examining the trees within it.

The purpose of the Bill was to get rid of an ambiguity in limitation law which arises when different countries have different periods of limitation, as they undoubtedly do. But the Bill changes the law only with regard to the applicability of limitation periods to the litigation of claims in England and Wales. It is very important to get that absolutely clear, because, in most cases, those who find claims made against them in England and Wales arising out of foreign circumstances would be more likely to find, especially if a shorter period were enacted in England and Wales, that the foreign claimant would sue them in the courts of the country where the relevant period of limitation—be it a great deal longer or not—would apply. So it is only claims in England and Wales that we are talking about.

The solution found by the Law Commision is that where the relevant limitation period—and here I must be a trifle technical: I am sorry to be a bit boring about this, but one cannot avoid technicalities in this sort of Bill—extinguishes the right, then it is the foreign period which applies. Where it simply bars the claim as a time limitation upon the period within which claims must be brought—this distinction will he familiar to professionals, but it is rather difficult to grasp for those who are not—while not extinguishing the right, then the lex fori, or the English and Welsh limitation period, will apply, and this has the great merit of simplicity.

It was recognised that the difficulty will be where, as very often happens, the foreign limitation period is a great deal longer than the English limitation period and operates to extinguish the right instead of barring the claim only; and there is a perfectly genuine anxiety among potential defendants in the commercial world that they might find themselves faced in English courts with claims which would have been barred under our period of, we will say, six years, but because of this Bill the claim in the English courts will not be barred by the six-year period but might be barred by the much longer period of 20 or 30 years. Of course, it could work in reverse. In English law there is one period of 60 years which operates, and it might operate over 100 years, and that is the enforcement of advowsons; but I do not think that the great pundits of the City will he very worried about that.

The point is that the purpose of all limitation periods is to achieve certainty, finality to litigation, and finality can always create a certain amount of injustice. On the other hand, there is an old Latin tag which recommends you to see that there is an end to litigation, and that is the purpose of limitation. You must have a cut-off point, more or less, of definite length. I find this a very difficult problem, having read through the literature which the Law Commission put forward on this. I have myself one or two ideas which I should like to try out both on the Law Commission and on the parliamentary draftsmen. I am not sure that this problem is soluble. What I am fairly certain of is that the Bill provided by the Law Commission is better than the status quo, provides a greater degree of certainty than the status quo and does the best it possibly can.

I would point out, since the noble Lord, Lord Mishcon, referred to the Scottish Law Commission's recommendation for the law of Scotland in the same field—and I must say that I should like the Scottish lawyers possibly to achieve a homogeneity with their English compatriots in this field, because it is a needless complication if they do not—that they go for the lex causae, the foreign limitation period, in circumstances analogous to this Bill, without any kind of exception at all, whereas we have drafted three exceptions on it so as to minimise the amount of hardship which might be caused.

But I have some ideas. I do not know whether or not they will work. I had rather discouraging news today that one idea that I put up was certainly not going to work; but I shall go on trying. I have had a very good suggestion from a very prominent firm of City solicitors which I shall not name, but I should like time to consider the problem again before Report or when the Bill goes through another place. Having said that, I would ask the noble Lord, Lord Mishcon, to withdraw his amendment at this stage—he is always at liberty to come back—and I myself will give the matter further consideration. I say frankly to the noble Lord that I am not sure that the problem, which I think is a relatively small one, is easily soluble, and therefore I make no promises.

Lord Mishcon

I do not have the slightest hesitation in agreeing to the suggestion that I should withdraw the amendment. In view of the noble and learned Lord's statement that he realises that there is a problem and that he is, in fact, exercising his very agile and learned mind on it, I can ask for no more, and I can do no more than to beg leave of the Committee to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 agreed to.

Remaining clauses agreed to.

House resumed: Bill reported without amendment.

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