Consumer Protection Bill [H.L.]

HL Deb 09 March 1987 vol 485 cc840-78

4.11 p.m.

Consideration of amendments on Report resumed on Clause 1.

Lord Airedale moved Amendment No. 3:

Page 2, line 17, after ("which") insert ("other").

The noble Lord said: My Lords, perhaps we may take Amendments Nos. 3 and 4 together. I put down these amendments in Committee and it seemed that the Government were somewhat favourably disposed to them. Accordingly, I have ventured to put them down again. This is simply a matter of making the Bill more easily understandable to the reader. The subsection with which we are dealing refers to two separate categories of product. By inserting the word "other" in the two places indicated, the reader is enabled more easily to understand which category is being referred to each time in the subsection the word "product" appears. I beg to move.

Lord Denning

My Lords, I support the amendment because it leads to clarity, which is needed.

Lord Beaverbrook

My Lords, for the convenience of the House, I shall speak to Amendments Nos. 3 and 4 in the name of the noble Lord, Lord Airedale, and to Amendment No. 13 in the name of my noble friend.

At Committee stage, in moving Amendments Nos. 8, 9 and 10 the noble Lord, Lord Airedale, suggested that it would clarify Clauses 1 and 2 of the Bill if the word "other" was introduced into the appropriate places. It appeared to him that this would make it easier for the reader to appreciate that two separate sets of products were being referred to. I made it clear at the time that we did not consider that the noble Lord's Committee Amendment No. 10 should be accepted on the grounds that the Bill refers, to the producer of any product in which the product in question is comprised, and that for this reason they could not be the same product. However, I agreed to consider further whether the noble Lord's Committee Amendments Nos. 8 and 9 might indeed add a degree of clarity to Clause 2(3) of the Bill. Those amendments would have inserted "other" before "product" in that subsection. The two amendments are before the House again today as Amendments Nos. 3 and 4.

We have now had time to consider in detail the original amendments of the noble Lord and those he has proposed today. The conclusion we have reached is that it would be inappropriate for us to refer to a finished product as anything other than the sum of its components, and that to do so might create some confusion. First, it is clear that the manufacturer of the finished product is liable for defects attributed to components and we should not wish to throw any doubt on that. Indeed, Amendment No. 13 in the name of my noble friend is designed precisely to remove any such doubt. Secondly, I do not think we should suggest that there is any distinction to be drawn between components which are added to an identifiable product—perhaps the installation of a car radio into a car is a good example—and components which contribute to a substantial extent to the essential characteristics of the finished product—for example, the material from which a dress or a suit is made. On reflection we see no need to include the word "other" in Clause 1(3) of the Bill. Furthermore, by Amendment No. 13, we have taken the opportunity of removing the word "other" from Clause 4(1)(f).

We have also made some minor drafting amendments to make it quite clear that the other producer referred to in Clause 4 may well be the producer of the finished product as well as the producer of the other component to which, for example, the product in question is attached. For these reasons I hope that the noble Lord will withdraw his Amendments Nos. 3 and 4 and that the House will accept the need for Amendment No. 13.

Lord Airedale

My Lords, despite the fact that I have the support of the noble and learned Lord, Lord Denning, I do not want to divide the House on what is a drafting matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 4 not moved.]

Clause 2 [Liability for defective products]:

[Amendment No. 5 not moved.]

Lord Lucas of Chilworth moved Amendment No. 6:

Page 3, line 3, leave out ("apart from") and insert ("otherwise than").

The noble Lord said: My Lords, at the Committee stage, in moving Amendment No. 16, as it was then numbered, the noble Lord, Lord Morton of Shuna, proposed deleting subsection (6) of Clause 2 and inserting a new subsection which he suggested would be more easily understood. At that time, my noble and learned friend the Lord Advocate explained that a later amendment which had then been tabled by the noble Lord, Lord Airedale, would take out what he suggested might be described as the most infelicitous phrase in that subsection, and that if the infelicity were taken out, one would find that the subsection would better express what we thought the directive was seeking to achieve.

In response to the amendment of the noble Lord, Lord Airedale, which was then Amendment No. 18 and is now Amendment No. 6, my noble friend Lord Beaverbrook said that, although the amendment did little to alter the sense of the subsection, we believed that some improvement to clarity might be desirable. Having thought about it, we have come back to exactly where we were on 19th January. While not accepting the suggestion of the noble Lord, Lord Airedale, that the original draft contained three adverbs in a row, I believe that we now have an opportunity for the noble Lord to score the goal which he so narrowly missed at Committee.

Before formally moving the amendment, perhaps I may take the opportunity to thank the noble Lord, Lord Airedale, for his usual care and attention to the drafting of legislation. In particular, he drew our attention to the side note to Clause 5 which in the print that the House had before it at Committee stage referred to damages recoverable under Part I. The noble Lord pointed out to the House that Clause 5 defined "damage" and not "damages". We have therefore taken up his suggestion in the print before your Lordships this afternoon. The side note reads, damage giving rise to liability". I am most grateful to the noble Lord for his diligence, as I am to the noble Lord, Lord Morton, for the point that he put at that stage. I beg to move.

Lord Airedale

My Lords, I am very pleased to reciprocate all the gratitude that is being showered upon me.

On Question, amendment agreed to.

Clause 3 [Meaning of "defect"]:

Lord Cameron of Lochbroom moved Amendment No. 7:

Page 3, line 8, leave out ("shall include") and insert (", in relation to a product, shall include safety with respect to products comprised in that product and")

The noble and learned Lord said: My Lords, the House may recall that during the debate in Committee, on an amendment which was then Amendment No. 7 moved by the noble Lord, Lord Morton, the noble Lord expressed concern that we had not reflected the purpose of the directive, which was that if there is a defect in a component of a product, then the product as a whole is defective. I think the noble Lord mentioned the case of a car with a defective component such as a brake lining, a tyre or a windscreen wiper and asked whether the car itself is thereby made defective.

In Committee, I indicated that we would give consideration to the point and that if necessary an amendment would be brought forward to deal with the matter. On consideration, we have decided that, on balance, it would be preferable to put the matter beyond doubt by the amendment now before your Lordships. The amendment makes clear that safety in relation to a product includes safety with respect to products comprised within the product. I suggest to the House that this amendment provides a useful clarification and I accordingly beg to move.

Lord Morton of Shuna

My Lords, I think I should follow the example of the noble Lord, Lord Airedale, on the last amendment and add my thanks to the Government for accepting the purpose behind my previous amendment, which is an improvement to the Bill.

On Question, amendment agreed to.

Lord Airedale moved Amendment No. 8:

Page 3, line 12, after ("circumstances") insert ("reasonably ascertainable").

The noble Lord said: My Lords, subsection (2) operates very severely indeed. It is mandatory. It states: all the circumstances shall be taken into account, including … (c) the time when the product was supplied by its producer to another".

The example that I took in Committee was of a defective hairdryer which catches fire. The lady who purchased the hairdryer takes back the burnt-out remains to the shop. According to subsection (2) the court shall take into account the time when the product was supplied by its producer to another".

That means the time when it was supplied from the factory to the wholesaler.

The retailer from whom the lady purchased the hairdryer took it out of a carton. There were a dozen hairdryers in a cardboard carton. He has thrown the carton away by the time the lady returns because you cannot keep all the packaging material for any length of time. Therefore, he refers the matter to the wholesaler. The wholesaler received 25 cartons, all packed in a crate. Having undone the crate, he will have distributed the cartons to various retailers, out of which they supplied their customers and from which one hairdryer was supplied to the lady.

By now the wholesaler will have used the crate, or the remains of it, to light the boiler of his central heating. Therefore, he goes back to the manufacturer and says, "We have heard that a lady had a defective hairdryer and we want to know when you supplied it." What hope is there of ascertaining that information? There is not the vestige of a chance that the manufacturer can say that that hairdryer was supplied to the wholesaler on a particular date.

What is the use of having an Act of Parliament that says that the court shall take into account "all the circumstances" when we know that some of the circumstances are unascertainable and cannot be taken into account? Therefore, this amendment softens the subsection by amending it to read: all the circumstances reasonably ascertainable". I should have thought that makes sense. The subsection as drafted does not make sense. It cannot be complied with in every case as drafted. Therefore, I beg to move.

Lord Beaverbrook

My Lords, I accept, of course, that "all the circumstances" taken literally appears rather a tall order. Plainly it must be interpreted in the sense of the circumstances which might affect what people are likely to expect at the time which is relevant for considering whether the product is defective. Evidently if the circumstances are not reasonably ascertainable, in the sense that a given individual could not be expected to ascertain what they are, then for the most part they must be given very little weight. If I can put it another way, the extent to which anything could be ascertained would no doubt be, in itself, a matter which should be taken into account. But I would not like to say that it was conclusive.

For example, Clause 3(2)(c) reflects the directive in referring to the time of supply by the producer; and this is intended to reflect, in part, the obvious point that products must be expected to deteriorate when in use. Indeed, the noble Lord made the very point at an earlier stage of our deliberations. I should be very reluctant to agree that because the time of supply by the producer could not be reasonably ascertained, therefore the period which had expired since it left his hands should be disregarded. In spite of the noble Lord opposite's eloquent example, I am afraid that I must resist the amendment.

Baroness Phillips

My Lords, I usually agree with the noble Lord but I must say that I am amazed that he wants to introduce this dreadful word "reasonably". I recall that he has on other occasions objected to the word. We already have the ridiculous phrase, what might reasonably be expected to be done with or in relation to". That is going to be difficult enough to deal with, even in a court of law.

This always brings to mind the old story of the child who is asked to write about "reasonable" and who says that parents are sometimes reasonable, teachers are never reasonable and children are always reasonable. That gave me an indication of how the word can be used. Therefore, I cannot possibly support the noble Lord, Lord Airedale, and I am amazed that he should propose this dreadful phrase, particularly after our recent debate on the English language. I hope the noble Lord is not going to fall into this terrible trap of using the words "reasonably ascertainable". I can assure the noble Lord that the clause is bad enough without adding anything of that kind.

Lord Airedale

My Lords, I do not think there is anything between myself and the Government; the difference is between myself and the noble Baroness. Therefore, perhaps it would be better if I withdrew the amendment and tabled it again at Third Reading leaving out the word "reasonable" and simply leaving in the word "ascertainable". I might then have the support of the noble Baroness and perhaps win the day. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.30 p.m.

Lord Airedale: moved Amendment No. 9: Page 3, line 16, leave out ("the doing or) and insert ("doing or refraining from doing").

The noble Lord said: My Lords, once again, in Committee, I thought I had some sympathy from the Government Benches for an amendment in this form. I ventured to say that in the matter of safety of appliances the "don'ts" are just as important as the "dos". As an example I referred to an electric razor which was labelled "This machine works on 12 volts. Do not plug it into the mains". I should have thought that it stuck out a mile that if you are going to warn people about the doing of things you should equally warn them, and sometimes more emphatically warn them, about refraining from doing things like plugging a 12 volt machine into the mains. I should have thought that this amendment would be acceptable to the House. I beg to move.

Lord Williams of Elvel

My Lords, on these Benches, we have considerable sympathy with the noble Lord, Lord Airedale, in his amendment. In Committee, it was my understanding that he received a fairly favourable reception from the Government in principle. I thought that they were going to go away and think about the matter. He has made a fair and valid point. If my understanding of the tone of the Government's response in Committee was mistaken, I hope the tone of the Government's response may be more sympathetic this time around.

Lord Beaverbrook

My Lords, I am afraid that I am unable to give a favourable response to the amendment. I do not think that we gave it a favourable response in Committee. We agreed to look at the position. As the noble Lord, Lord Airedale, reminded us, the amendments are identical to those he moved in Committee. We agreed to look at the amendments because we thought that they might add some clarity to Clause 3. The noble Lord's amendments were withdrawn on the understanding that we would consider them and on the basis that if we thought it necessary we would bring forward suitable amendments at this time.

Having given the matter the thought that we undertook to give in Committee, we have come to the conclusion that what I said was correct; in other words, by using the word "doing" one must include the idea of not doing anything with, or in relation to, a product, both in the sense that a person is instructed to deal with a product in a particular way and that he is warned not to deal with it in any other way. I am grateful to the noble Lord, Lord Airedale, for reminding the House of that point, but I hope that he will understand that after fully considering the answer that I gave him in Committee, I do not see any reason to change it. I shall therefore have to resist his amendments today.

Lord Airedale

My Lords, I should have said that I was speaking also to Amendment No. 11, which is in identical terms. The Government's reply seems to be that "doing" includes refraining from doing. I do not agree with that. I do not think that the average reader of an Act of Parliament would agree either. Adding those few words would make it clearer to the reader that refraining from doing things—the "don'ts" are just as important, and may be more so, than the "do's". Since I have the support of the Official Opposition Front Bench, I think we should test this matter by a Division.

4.33 p.m.

On Question, Whether the said amendment (No. 9) shall be agreed to?

Their Lordships divided: Contents, 98; Not-Contents, 91

DIVISION NO. 2
CONTENTS
Ailesbury, M.	Rennet, L.
Airedale, L. [Teller.]	Kilbracken, L.
Amherst, E.	Kilmarnock, L.
Ardwick, L.	Kinnaird, L.
Attlee, E.	Kirkhill, L.
Aylestone, L.	Leatherland, L.
Banks, L.	Llewelyn-Davies of Hastoe, B.
Birk, B.	Lloyd of Kilgerran, L.
Blyton, L.	Lovell-Davis, L.
Bonham-Carter, L.	McGregor of Durris, L.
Bottomley, L.	McNair, L.
Broadbridge, L.	Manchester, D.
Brockway, L.	Mishcon, L.
Bruce of Donington, L.	Molloy, L.
Burton of Coventry, B.	Morris of Kenwood, L.
Campbell of Eskan, L.	Morton of Shuna, L.
Carmichael of Kelvingrove, L.	Munster, E.
Cledwyn of Penrhos, L.	Nicol, B.
Darcy (de Knayth), B.	Northfield, L.
David, B.	Ogmore, L.
Davies of Penrhys, L.	Oram, L.
De La Warr, E.	Phillips, B.
Dean of Beswick, L.	Pitt of Hampstead, L.
Denington, B.	Ponsonby of Shulbrede, L.
Diamond, L.	Porritt, L.
Donaldson of Kingsbridge, L.	Prys-Davies, L.
Drumalbyn, L.	Rea, L.
Elwyn-Jones, L.	Ritchie of Dundee, L.
Ezra, L.	Robson of Kiddington, B.
Falkender, B.	Rochester, L.
Falkland, V.	Ross of Marnock, L.
Fisher of Rednal, B.	Sainsbury, L.
Fletcher, L.	Seear, B.
Flowers, L.	Serota, B.
Gallacher, L.	Shaughnessy, L.
Galpern, L.	Silkin of Dulwich, L.
Graham of Edmonton, L.	Simon, V.
[Teller.]	Stallard, L.
Grey, E.	Stedman, B.
Hampton, L.	Stewart of Fulham, L.
Hanworth, V.	Strabolgi, L.
Hayter, L.	Taylor of Blackburn, L.
Heycock, L.	Taylor of Mansfield, L.
Houghton of Sowerby, L.	Tordoff, L.
Hunt, L.	Underhill, L.
Hutchinson of Lullington, L.	White, B.
Hylton-Foster, B.	Williams of Elvel, L.
Jeger, B.	Wilson of Rievaulx, L.
Jenkins of Putney, L.	Young of Dartington, L.
John-Mackie, L.
NOT-CONTENTS
Aldington, L.	Cullen of Ashbourne, L.
Alexander of Tunis, E.	Davidson, V. [Teller.]
Auckland, L.	De Freyne, L.
Bauer, L.	Denham, L. [Teller.]
Beaverbrook, L.	Denning, L.
Belhaven and Stenton, L.	Dormer, L.
Beloff, L.	Dundee, E.
Belstead, L.	Ellenborough, L.
Bessborough, E.	Elliot of Hanvood, B.
Biddulph, L.	Faithfull, B.
Blake, L.	Fraser of Kilmorack, L.
Blyth, L.	Gainford, L.
Borthwick, L.	Gibson-Watt, L.
Boyd-Carpenter, L.	Gormanston, V.
Bruce-Gardyne, L.	Gowrie, E.
Caithness, E.	Greenway, L.
Cameron of Lochbroom, L.	Gridley, L.
Campbell of Alloway, L.	Grimthorpe, L.
Campbell of Croy, L.	Hailsham of Saint
Carnock, L.	Marylebone, L.
Cottesloe, L.	Hesketh, L.

Hives, L.	Reay, L.
Home of the Hirsel, L.	Richardson, L.
Hood, V.	St. Aldwyn, E.
Killeam, L.	Saint Oswald, L.
Kimball, L.	Sanderson of Bowden, L
Lane-Fox, B.	Selkirk, E.
Lauderdale, E.	Shannon, E.
Layton, L.	Sharpies, B.
Lucas of Chilworth, L.	Skelmersdale, L.
Lyell, L.	Stanley of Alderley, L.
Malmesbury, E.	Strange, B.
Manton, L.	Strathcarron, L.
Marley, L.	Strathspey, L.
Merrivale, L.	Sudeley, L.
Mersey, V.	Teviot, L.
Molson, L.	Teynham, L.
Mottistone, L.	Thomeycroft, L.
Mowbray and Stourton, L.	Torrington, V.
Nugent of Guildford, L.	Tranmire, L.
Onslow, E.	Trefgarne, L.
Orr-Ewing, L.	Trumpington, B.
Pender, L.	Vaux of Harrowden, L.
Penrhyn, L.	Westbury, L.
Plummer of St Marylebone,	Wyatt of Weeford, L.
L.	Young, B.
Portland, D.

Resolved in the affirmative, and amendment agreed to accordingly.

4.42 p.m.

The Deputy Speaker (Lord Nugent of Guildford)

My Lords, before I call Amendment No. 10 I should explain to the Minister that Amendment No. 10 pre-empts Amendment No. 11. Perhaps the Minister will indicate how he intends to deal with it.

Lord Lucas of Chilworth moved Amendment No. 10:

Page 3, line 24, leave out subsections (3) and (4).

The noble Lord said: My Lords, I beg to move Amendment No. 10 which, perhaps noble Lords may agree, does not pose a difficulty to Amendment No. 11 since we are in effect going back to where we once have been before. The House may recall that we debated these two subsections at Committee stage. It was then that I undertook to see whether there was a clearer way to express what we wished to say.

From that earlier debate two factors stand out. The first was the difficulty and complexity of the drafting of the provisions as they stood. I tried to explain that we had spent considerable effort in trying to make the provisions clear. We have continued with that effort since our Committee stage on 19th January. However, it has to be recognised that the distinction we are trying to make is irreducibly complex. I am afraid that if the underlying concepts are complex, the drafting must inevitably be so. The second point was that most noble Lords thought that it was absolutely obvious, for example, that advice from an architect would not be covered by this Bill even though the manifestation of that advice was on a piece of paper which was in itself a product. It would be contrary to the whole purpose and spirit of the directive so to consider it.

I am ready to accept that the central proposition is fairly obvious. What is not so obvious is the precise dividing line between advice of that kind on the one hand and, for example, instructions for the use of goods on the other. That has proved enormously difficult to determine and was, I believe, the source of most concern expressed at Committee stage.

There is a balance to be drawn. Where there is serious doubt we obviously wish to make matters clear. To do so is valuable even if noble Lords opposite occasionally take us to task for it. Very often making matters clear is at the cost of introducing even more words and a greater complexity. That is very much the case with these two subsections which many, including some in this House and others outside, found very difficult to understand without any explanation. It was quite obvious at Committee stage that my explanation did not make it any the clearer.

Having studied the debate, and having listened to opinions and comments from many outside the House, I am now of the opinion that in this case our original assessment of the balance was not right. I suggest that the assessment of the balance by the noble Lord, Lord Morton of Shuna, was right. Since the proposition that we wish to establish seems to be essentially an obvious one about which there is no doubt the balance of advantage lies in not complicating the Bill by trying to solve a problem which, very largely speaking, does not exist.

As I said at the outset, we return from where we once have been, and with apologies to the noble Lord, Lord Morton of Shuna, for having spent such a lot of time at Committee stage, and to your Lordships this afternoon in taking further time on this. I beg to move.

Lord Somers

My Lords, I understand the difficulty over the wording. Will the noble Lord agree that there are circumstances where not doing anything could be harmful to the product? For instance, the seller of livestock could have omitted to feed them properly during their breeding period. That is not "doing anything"; it is omitting to do it. But it would have a harmful effect on the stock.

Lord Morton of Shuna

My Lords, I am most grateful to the Minister for the very gracious way in which he says that on reflection he thought that I was right and he was wrong. It could not have been put more pleasantly. Naturally, I support his amendment.

Lord Denning

My Lords, these two subsections as they stood were quite incomprehensible. It is a very good thing that they have been struck out. I also express my gratitude.

Lord Allen of Abbeydale

My Lords, as one who expressed an inability to understand either the subsections or the explanation, I am very grateful for the decision that the Government have taken.

On Question, amendment agreed to.

The Deputy Speaker

My Lords, Amendment No. 11 cannot be called.

Clause 4 [Defences]:

Baroness Burton of Coventry moved Amendment No. 12:

Page 4, line 11, leave out from ("such") to ("or") in line 14 and insert ("as to enable the existence of the defect to be discovered").

The noble Baroness said: My Lords, in rising to move this amendment it is certainly not necessary to remind the House that the problem of a development risks defence looms largely in this Bill. With many others I regretted that we were unable to make progress on this aspect during Committee stage. I hope for some improvement today on Report.

The purpose of this amendment is to alter the wording of the provisions of the Bill dealing with the development risks defence so that it follows exactly the wording of the directive. Article 7 of the directive says: The producer shall not be liable as a result of this directive if he proves … that the state of scientific and technical knowledge at the time when he put the product into circulation was not such as to enable the existence of the defect to be discovered.".

However, in the Bill the defence is worded somewhat more loosely. Noble Lords will see that Clause 4(1) says: In any civil proceedings by virtue of this Part against any person ('the person proceeded against') in respect of a defect in a product it shall be a defence for him to show … that the state of scientific and technical knowledge at the relevant time was not such that a producer of products of the same description as the product in question might be expected to have discovered the defect if it had existed in his products while they were under his control.".

We shall await what the Minister has to say, but there seems no obvious reason why the draftsman of the Bill has deviated from the wording of the directive. As in previous discussions today there have been several noble Lords supporting the proposition that we keep to the words of the directive and I shall hope for their support at a later stage.

However, whatever his reasons for modifying the wording, the draftsman has surely softened its demands upon UK producers. Instead of having to prove that the state of knowledge was not such as to enable the existence of the defect to be discovered at all, we find that more wishy-washy concepts are introduced. Clause 4(1)(e) states: might be expected to have discovered the defect if it had existed in his products while they were under his control".

There is nothing in the directive about that, nothing at all.

The consumers in this country, and many Members of your Lordships' House, feel that it is unfortunate to have the development risk defence at all. They feel that it is adding insult to injury for consumers to find that if we have to have this defence it is watered down from the version that was agreed in Europe. I am indebted to the Consumers' Association for its help on this matter. It has asked me to stress that it strongly opposes the wording adopted in the clause, and would like to know from the Minister why it is that the wording in the directive will not do. Indeed, it questions whether the Bill in its present form actually implements the directive. As far as it can see, such a deviation is not authorised by the directive itself or by community law. Doubtless the noble Lord, Lord Lucas, or his noble and learned friend will explain that point to us when they come to wind up. I agree with the Consumers' Association. I wonder whether in its present form the Bill actually implements the directive.

I think that it is correct to say that by introducing the concept of expectation into the formula, which is what the Bill actually does, rather than the plain, unvarnished concept of discoverability, the strict burden of proof on producers is reduced. We would say that it ceases to be a question of whether the defect was capable of being discovered at all. It becomes a question of whether this particular producer might be expected to have discovered the defect. The words at the end of the Clause 4(1)(e) which read: if it had existed in his products while they were under his control", do not add anything but only cause confusion and difficulty of comprehension.

In the view of the Consumers' Association, consumer organisations in general, certainly of myself and my noble friends on this side of the House and I would hope of noble Lords sitting elsewhere, the stark words of the directive are much to be preferred. We believe that they demonstrate much more clearly than the words of the clause that there is a strict burden on the producer who wishes to rely on this defence to prove in an objective and not a subjective way the non-discoverability of the defect.

If the Government say that there is no legal difference in the two formulations (which we would not feel able to admit) I think that even the Minister might accept that there could well be a difference in the psychological perception of the two approaches. In view of the Government's refusal to do anything at all about the development risks defence, I should like to ask the Government to agree that it is most important in the interests of consumers that the strict wording of the directive should be adhered to, if only to bring home to industry that it really is only in those cases where they could not possibly have known of the defect that they will be excused legal responsibility for compensating the victims of their defective products. I beg to move.

Lord Morton of Shuna

My Lords, I should like strongly to support this amendment. It is quite clear from the directive that what is being talked of in Article 7(e) is whether a defect could, as a matter of capability, be discovered. What is being talked about in Clause 4(1)(e) involves taking a producer (not the producer of the article but any producer) and finding out what he might expect to have discovered if it had existed. That is a wholly hypothetical idea and it raises also the difficulty of what happens if somebody is the only producer of the product. Where does he go to find a producer? If he has the patent on that product, he may well be the only producer. Is he the only person who is expected to have discovered the defect? It is easy for a sole producer to say, "I did not expect this. I might not be expected to know this". Surely it is better to keep to the directive, which is in words which can be understood. There does not seem to be much difficulty in interpreting the words in Article 7(e): was not such as to enable the existence of the defect to be discovered". They are all words which are fairly easy to understand.

Lord Denning

My Lords, I should also like to support the amendment. We come back to the fundamental point that the duty of the legislature is to implement the directive. By implementing the directive, it can clear up ambiguities but it cannot alter the objective or the meaning of the directive. The directive is perfectly clear. Article 7(e) states: that the state of scientific and technical knowledge at the time when he put the product into circulation was not such as to enable the existence of the defect to be discovered". That is perfectly simple and intelligible. Those words can be put into our statute. Instead, the words in the Bill as it stands have a different meaning; namely: a producer of products of the same description as the products in question". That limits the range. The words give the man a bigger defence than he ought to have. It would be much better and more correct, in accordance with the directive, to accept the amendment as it stands, thereby putting in exactly the words of the directive.

Lord Allen of Abbeydale

My Lords, this is a pretty radical departure from the directive. I am genuinely puzzled to know why in this respect the synthesis has strayed so far from the original. It has been pointed out that Article 7(e) of the directive lays down an objective test in simple, unambiguous terms. But to my mind the provision in the Bill imports a subjective element. I am not a lawyer but the drafting of the Bill seems to bear a distinct family likeness to the existing legal test in negligence. It would be all too easy to slip into the test of whether another similar producer might reasonably be expected to have discovered the defect. The introduction of this concept of expectation strikes me as being a distinct watering down of the clear and simple provision in the directive.

I agree with noble Lords who have some doubt as to whether this is complying with the directive and whether the European Court would hold that it had succeeded in so doing. I know that there the judges are pretty robust in their interpretation and they may take the line that all we were doing was to try to carry out in our own peculiar way the intentions of the directive. I wonder why we need raise any doubt, why we cannot just do it in the simple terms of the directive. As I say, I am puzzled by this provision.

There is one point on which I should like to have the Minister's views. It is not clear to me what the position would be if the injury were caused by a one-off product and there were no other products of the same description made by either that manufacturer or any other manufacturer. Perhaps when the Minister replies he could explain how the clause would bite in that circumstance. I am sure that the best solution is to substitute what is in the Bill with the words set out in the amendment.

5 p.m.

Lord Lucas of Chilworth

My Lords, put simply, the case for the amendment is that the exclusion it makes for development risks is narrower than the exclusion made by the words that we have used in the Bill. What we are really being asked is why we have not precisely implemented the directive.

My noble and learned friend the Lord Advocate and I have made clear that our purpose in Part I is to implement the product liability directive. We do not want to do any more and we most certainly do not want to do any less. However, I have also made clear that we have done what we can in Part Ito make clear those of its provisions which are cast in terms which are unfamiliar to our law or might otherwise give rise to debate.

We must accept that Community directives are drafted for the benefit of a number of member states and it is often not practicable to attain that degree of precision which our legislation is designed to achieve and with which our courts and practitioners are familiar. This is, of course, an argument that the noble and learned Lord, Lord Denning, put forward when we were discussing Amendment No. 2. When we were talking about the preamble being a guide to the intent of the directive, I made a note at that time that the noble and learned Lord said that if falls to the national companies to interpret the directive in accordance with their own laws and attempt to bring it near to that.

That is exactly what we are doing. I must confess that I am somewhat surprised that the noble and learned Lord should change tack on this particular amendment. Article 189 of the Rome treaty provides that directives are binding. They are binding as to the result to be achieved, but it leaves to the national authorities the choice of form and method. It must be made quite clear, in the course of the negotiations on this particular directive, that member states might need to complete a number of its provisions in the course of giving it effect in their law. I accept that this presents us with somewhat difficult choices and we have introduced different wording only when we have felt pretty sure of our ground. For example, in the case of the exception for primary agricultural products, we decided that we should not detail any further the class of products which are covered.

However, in this case we feel confident that we can and must introduce the necessary clarification. I say "must" because I accept that this provision is perceived by many as having an important impact on the scope of liability under Part I. So much is evident from our earlier debates. I say "can" because, in our view, the language we have chosen is implicit in the directive itself.

I assure noble Lords that that is a view which we have consistently maintained in the course of the negotiations. What can lead to confusion is that the directive speaks somewhat blandly, if I may say so, about "the state of scientific and technical knowledge". That in itself makes one think that there is some objective block of knowledge which is available to anyone at the press of a button and which would enable a producer to see immediately the risks of marketing a particular product.

Of course, it is not like that at all. In answer to the noble Lord, Lord Morton of Shuna, surely what we are dealing with—and I think that he would accept this—is a spectrum of information which may range from matters which are common knowledge such as perhaps the addictive effects of heroin. It might include experimental results that have been published or that are known. It might include mere speculation.

It is at this lower end of the spectrum where the risks of developing new products are likely to be significant. One can perhaps paint a scenario where in a given area, a speculative account, perhaps in some academic journal, might bear upon the potential effects of a given product. Does that mean that the practical implications must be thought through and tested by any producer of that product before he can properly put that product on the market? That is what the noble Lord's amendment must be designed to achieve. I suggest that it is a wholly implausible account of what the directive intends.

Given the information explosion which has occurred in our generation, the amendment would, I suggest, put any producer of a product in a wholly impossible position. Therefore the only plausible interpretation must be that the information which is available is such that any reasonable person, looking at the matter in an objective way, would say that the producer should carry out such-and-such investigations or should carry out such-and-such tests. It is the purpose of Clause 4(1)(f) to express that invitation. I believe that it does so correctly.

The noble Lord, Lord Allen, asked me about the producer of a unique product. That is quite easy if one considers what a hypothetical producer of products of that type would be expected to know and do. I have outlined a range of options to him. I point out to the noble Baroness that I do not believe that she intended to produce another effect. As I say, the only interpretation that I can place upon the amendment is that other effect. It is for that reason that I invite your Lordships to reject the amendment.

Lord Mottistone

My Lords, I support my noble friend. The noble Baroness suggested that there might be no legal difference between the two ways of putting this, but that there could well be a psychological difference. She went on to say that it was important in the interests of the consumer that the wording of the directive should be adhered to, or words to that effect.

I suggest to your Lordships that, first, if there is a possibility that there is no legal difference, it is not really right for us to bother about the psychology of the matter. That seems to me to be rather departing from what we are here to do. More important are the interests of the consumer. The whole point about the state of the art defence is to allow people to do the best they can in developing new products and new ways of doing things for the benefit of the consumer. That is the underlying principle of the state of the art defence. If one did not have such a defence or if one watered it down so much that it did not appear to people to be effective, they would not try so hard to develop new things for the benefit of the consumer. In this case, unlike the noble and learned Lord, Lord Denning, I take an opposite view from that which I took the last time we argued this point; and my noble friend has pointed out that he has changed his view. I believe that it is better to follow what the Government have in the Bill than slavishly to try to follow what is in the directive.

Baroness Burton of Coventry

My Lords, I listened very carefully to what the noble Lord, Lord Lucas, had to say. I tried very hard not to be side-tracked from the main objective by listening to the various points that he made because he really shifts his ground on whatever amendment is before the House or Committee, which I suppose is to be expected.

However, with regard to the comments of the noble Lord, Lord Mottistone, one of the complaints that we made and that I made on this amendment was that the draft as produced by the Government draftsman has indeed watered down what the amendment wishes to see done: it has watered down the words of the directive. We on this side of the House really believe that the provisions of this part of the Bill should follow exactly the wording of the directive. I am sorry that the Government do not feel able to agree and I feel that I must test the opinion of the House on this matter.

5.11 p.m.

On Question, Whether the said amendment (No. 12) shall be agreed to?

Their Lordships divided: Contents, 104; Not-Contents, 96.

DIVISION NO. 3
CONTENTS
Airedale, L.	Hutchinson of Lullington, L.
Allen of Abbeydale, L.	Hylton-Foster, B.
Amherst, E.	Jeger, B.
Ardwick, L.	Jenkins of Putney, L.
Attlee, E.	John-Mackie, L.
Aylestone, L.	Kennet, L.
Banks, L.	Kilbracken, L.
Birk, B.	Kilmarnock, L.
Blyton, L.	Kinloss, Ly.
Bonham-Carter, L.	Kirkhill, L.
Bottomley, L.	Leatherland, L.
Broadbridge, L.	Llewelyn-Davies of Hastoe, B
Brockway, L.	Lloyd of Kilgerran, L.
Bruce of Donington, L.	Lovell-Davis, L.
Buckmaster, V.	McNair, L.
Burton of Coventry, B.	Manchester, D.
[Teller.]	Molloy, L.
Campbell of Eskan, L.	Morris of Kenwood, L.
Carmichael of Kelvingrove, L.	Morton of Shuna, L.
Chitnis, L.	Munster, E.
Cledwyn of Penrhos, L.	Nicol, B.
Darcy (de Knayth), B.	Ogmore, L.
David, B.	Oram, L.
Davies of Penrhys, L.	Phillips, B.
Dean of Beswick, L.	Pitt of Hampstead, L.
Denington, B.	Ponsonby of Shulbrede, L.
Denning, L.	[Teller.]
Diamond, L.	Porritt, L.
Donaldson of Kingsbridge, L.	Prys-Davies, L.
Elwyn-Jones, L.	Ritchie of Dundee, L.
Ezra, L.	Robson of Kiddington, B.
Falkender, B.	Ross of Marnock, L.
Falkland, V.	Sainsbury, L.
Fisher of Rednal, B.	Seear, B.
Fitt, L.	Serota, B.
Fletcher, L.	Shaughnessy, L.
Flowers, L.	Shepherd, L.
Gallacher, L.	Silkin of Dulwich, L.
Galpem, L.	Simon, V.
Gladwyn, L.	Somers, L.
Graham of Edmonton, L.	Stallard, L.
Greenway, L.	Stedman, B.
Grey, E.	Stewart of Fulham, L.
Griffiths, L.	Strabolgi, L.
Grimond, L.	Taylor of Blackburn, L.
Hampton, L.	Taylor of Mansfield, L.
Hanworth, V.	Tordoff, L.
Hatch of Lusby, L.	Underhill, L.
Hayter, L.	White, B.
Heycock, L.	Wigoder, L.
Houghton of Sowerby, L.	Williams of Elvel, L.
Howie of Troon, L.	Wilson of Rievaulx, L.
Hunt, L.	Young of Dartington, L.
NOT-CONTENTS
Aldington, L.	Beaverbrook, L.
Alexander of Tunis, E.	Belhaven and Stenton, L.
Auckland, L.	Beloff, L.
Bauer. L.	Belstead, L.

Bessborough, E.	Lane-Fox, B.
Biddulph, L.	Lauderdale, E.
Blake, L.	Layton, L.
Blyth, L.	Long, V.
Borthwick, L.	Lucas of Chilworth, L.
Boyd-Carpenter, L.	Lyell, L.
Brabazon of Tara, L.	Malmesbury, E.
Bruce-Gardyne, L.	Man ton, L.
Caithness, E.	Marley, L.
Cameron of Lochbroom, L.	Merrivale, L.
Campbell of Alloway, L.	Mersey, V.
Campbell of Croy, L.	Molson, L.
Carnock, L.	Mottistone, L.
Coleraine, L.	Mowbray and Stourton, L.
Cottesloe, L.	Nugent of Guildford, L.
Craigavon, V.	Onslow, E.
Cullen of Ashbourne, L.	Orr-Ewing, L,
Davidson, V. [Teller.]	Pender, L.
De La Warr, E.	Penrhyn, L.
Denham, L. [Teller.]	Plummer of St Marylebone,
Drumalbyn, L.	L.
Dundee, E.	Portland, D.
Eccles, V.	Reay, L.
Ellenborough, L.	Renwick, L.
Elliot of Harwood, B.	St. Aldwyn, E.
Elliott of Morpeth, L.	Saint Oswald, L.
Faithfull, B.	Sanderson of Bowden, L.
Fraser of Kilmorack, L,	Sandford, L.
Gainford, L.	Selkirk, E.
Gibson-Watt, L.	Shannon, E.
Gowrie, E.	Sharpies, B.
Gray of Contin, L.	Skelmersdale, L.
Greenhill of Harrow, L.	Stanley of Alderley, L.
Gridley, L.	Strange, B.
Grimthorpe, L.	Strathcarron, L.
Hailsham of Saint	Strathspey, L.
Marylebone, L.	Sudeley, L.
Hesketh, L.	Teviot, L.
Hives, L.	Tranmire, L.
Home of the Hirsel, L.	Trefgarne, L.
Hood, V.	Trumpington, B.
Ingrow, L.	Vaux of Harrowden, L.
Killearn, L.	Westbury, L.
Kimball, L.	Whitelaw, V.
Kinnaird, L.	Young, B.

Resolved in the affirmative, and amendment agreed to accordingly.

5.19 p.m.

Lord Beaverbrook moved Amendment No. 13:

Page 4, line 15, leave out from ("the") to end of line 21 and insert ("defect—

1. (i) constituted a defect in a product ("the subsequent product") in which the product in question had been comprised: and
2. (ii) was wholly attributable to the design of the subsequent product or to compliance by the producer of the product in question with instructions given by the producer of the subsequent product.").

The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 3. I beg to move.

On Question, amendment agreed to.

Lord Allen of Abbeydale moved Amendment No. 14:

Page 4, line 21, at end insert ("provided that the defence in paragraph (e) above shall not be available in respect of any product for which a licence is required under the Therapeutic Substances Act 1956 or a licence or certificate is required under the Medicines Act 1968.").

The noble Lord said: My Lords, I beg to move the amendment standing in my name. Your Lordships will recall that the purpose of Part I of this Bill is to make producers strictly liable for defects without the need to prove negligence, and that the directive allows an exception to be made from that main purpose in respect of what have come to be known as development risks, and about which we have heard a good deal this afternoon already.

At the Committee stage the Committee decided to retain that exception in the Bill, and I am not today seeking to reopen that decision in its general application. What I am seeking to do is to provide that the defence of development risks should not be availabe for what, for brevity, I shall refer to as the manufacture of drugs.

It was the thalidomide tragedy which in part led to the setting up of the Pearson Royal Commission, and it was that tragedy which led West Germany to legislate specifically about drugs in 1978. That legislation removed the defence of development risks in their courts for drug manufacturers, and provided for a maximum of half a million deutsche marks compensation to be payable to an individual, and for a company to be liable for a maximum of 200 million deutsche marks or 12 million in one year. and required compulsory insurance to cover those amounts.

Anyone who has had concern for malformed or brain-damaged children is bound to pause and consider whether there is not good cause for treating specially products which, if things go wrong can have such a devastating effect on human life. Compensation can do only so much, but it can make a difference to the quality of life both of the victims and of their families. In our earlier discussions two main objections were raised to the proposition that the developmment risks defence should be removed altogether. First, that to do so would stifle innovation, and, secondly, that it would create great problems of insurance. I cannot myself see that either of these arguments is conclusive in respect of drugs.

On the first, there is precious little evidence that in the EC countries where this defence is not allowed either the domestic producers or those who import into those countries have been inhibited from innovation in this highly competitive but highly remunerative industry. There have been some marginal indications of this happening in the USA, but we have discussed often enough before why conditions there afford no parallel to what happens here.

On the second point, much of the harm—if indeed there be harm—has surely been done already. The Minister has rightly emphasised that with the reversal of the burden of proof the problems of establishing this defence of development risks are extremely formidable, and they are likely to succeed only very rarely, if ever. Therefore, if the insurance companies have studied the Bill and read their Hansard they will no doubt already be making their arrangements.

Although the Government expect that this defence will rarely be successfully used, they accept that it is impossible to say that another thalidomide type tragedy could never occur. The defences against the bringing into use of a drug with unforeseen tragic consequences are stronger than they were at the time the Pearson Commission was sitting. As I have said before, I doubt if we were writing now whether we would say that there was a gap here through which the victims of another thalidomide disaster could easily slip. We would I think delete "easily". But that there is a gap cannot be denied.

The precise circumstances of that earlier tragedy would obviously not be repeated, but it is a solemn thought that, as I recall, this was a drug which for a time was on sale in Germany without prescription, and in the early days there was no reason to suspect that, when taken during a pregnancy, it would have a devastating effect during a certain limited period of that pregnancy. I am certainly not competent to give an expert opinion; but my own amateur view is that I think it is quite possible that if these circumstances were to happen now this is one of the rare cases where the English suppliers might well be able to plead a defence successfully under the present provisions of this Bill.

This is not an issue where there is any prospect of there being unanimity of treatment throughout the EC countries, an issue which was thought important when we were discussing agricultural products. Article 15 of the directive allows for derogation in respect of the defence of development risks, and at the very least West Germany is likely to derogate in respect of drugs. There is a provision in the directive in that same article for a specific review of the whole defence of development risks in 10 years' time; but that is not an aspect I am pursuing this evening.

Concern was naturally expressed at an earlier stage about drugs for AIDS which might have distressing and possibly unknown side effects. But if there is a warning of the risks and the doctor and patient, in clear knowledge of those risks, decide, nevertheless, to go ahead in the hope that life will be prolonged, there is going to be no likelihood, as I see it, of a successful action under this amendment.

The drafting of the amendment may not commend itself to parliamentary counsel, particularly the draftsman of this Bill, but if necessary that can be taken care of later. What the amendment does is to raise directly whether the development risks defence should be allowed for drugs or whether it should not. For the reasons I have stated as briefly as I could manage, I suggest that it should not. I beg to move.

Lord Williams of Elvel

My Lords, in rising to support this amendment from the Opposition Benches I have no wish to repeat what the noble Lord, Lord Allen, has said in introducing his amendment. Nor indeed have I any wish to repeat the arguments that we went through in Committee on the general question of the development risks defence because I think that the noble Lord, Lord Allen, has wisely taken a rather more narrow point which is specifically the one relating to drugs or pharmaceuticals.

The position was fully set out in the Explanatory Memorandum to which the noble and learned Lord referred in Committee and to which my noble friend Lord Morton referred earlier. The Explanatory Memorandum related to the draft directive, and the draft directive included development risks. Perhaps I may quote one or two sentences from the Explanatory Memorandum; it seems to me to put in a nutshell exactly what the case is. The memorandum says: Liability irrespective of fault does not burden the producer to an unjustified extent. Normally he can divide the costs of damage passed on to him as a result of liability being made independent of fault among all users or consumers of products free of defects from the same range, or of his production as a whole, by including the expense incurred (payment of damages or payment of insurance premiums) in his general production costs and in his pricing of the goods. Thus all consumers bear the costs of the damage to a reasonable extent". It goes on to say that in the cases to which the noble Lord, Lord Allen, referred—where later scientific and technical knowledge made it abundantly clear that there should have been or might have been a defect in the product—if these extremely rare cases of damage were to be excluded from the producers' liability, the consumer would have to bear the risk of unknown defects. In other words instead of spreading it across the whole range of consumers it would be the person who actually suffers who has to bear the penalty.

The noble Lord, Lord Allen, referred to the work of the Pearson Commission, of which he was a distinguished member, and the conclusions that the commission came to. He told us that if the Pearson Commission were sitting today it might have been stronger in its recommendations. I regret that the Community in revising the draft directive omitted the development risks defence, as I said in Committee. Nevertheless, in concentrating on this narrow point of pharmaceuticals in support of the noble Lord, Lord Allen, I simply ask whether we as a Community will ensure that another thalidomide disaster cannot take place without a good, steady and clearly defined system of compensation, or will we not? That is the question before your Lordships' House.

5.30 p.m.

Lord Somers

My Lords, I should like to support the amendment very strongly. During the course of the past two years, while I have been making a translation of a French book on intensive farming, I have learned a great deal about some of the methods used. There is no doubt that a great many drugs and other artificial products are inserted into the artificial foods that these animals eat. For example, hormones are regularly given to calves and pigs, and since the animals, owing to their unnatural life, are in a very delicate state of health, antibiotics are given. We all know that some antibiotics are harmless while others do not agree with us. Other drugs are given, but the trouble is that so often drugs are used of whose side effects not even the scientists themselves are aware. But they are all there in the meat that one eats and one has no protection against them. Therefore, I would say that this amendment is most certainly very necessary to protect the customer from something he has no defence against.

Lord Auckland

My Lords, the intention of this amendment may be admirable, but I do not believe it would work in practice. I was in your Lordships' House and took part during the passage of the Medicines Act, as it now is. My understanding of the Medicines Act is that it was brought in to ensure that pharmaceutical products are tested more thoroughly than they were before the terrible thalidomide tragedy took place.

I do not believe that even this amendment would prevent another thalidomide tragedy in toto. Mistakes are made in the testing of any product, be it pharmaceutical or otherwise. The mandatory length of time during which a drug now has to be tested and patented has been increased. Therefore, I believe that if this amendment were accepted it would have a very harmful effect on the pharmaceutical industry. I have no financial or other interest to declare in the pharmaceutical industry, but it is an industry which is vulnerable to criticism and often very rightly so, or has been in the past. It is essential, if some of the malignant diseases that we presently have are to be tested and treated, that the Bill, with all the provisos it has in it, should stand as it now is.

Lord Denning

My Lords, this is a very difficult point. At an earlier stage I said that I had been converted. At first I thought that there should not be the development risks defence in these cases. Today I have come round and say that, in proper circumstances, there should be. This amendment will not allow that defence in the case of drugs, if I may put it as simply as that. It will alter the directive as it presently stands. I agree with what my noble friend Lord Allen said—that it can be done under the directive as it stands, because under Article 13 a member state may provide in its legislation that a producer shall be liable even if he proves that, the state of scientific and technical knowledge at the time when he put the product into circulation was not such as to enable", him to detect a defect in it. In other words, a member state can provide in its legislation for such a procedure as this—that is, it can say that in the case of a drug, as an example, the manufacturers shall be liable even though they were ignorant of the defect at the time.

A member state may derogate, but if it does that it has to hold the proposal in abeyance for nine months and it has to go to the Commission before the derogation takes effect. I would suggest that it is better not to implement this amendment at the moment, but to leave the legislation as it stands, to see whether any other member state will derogate in this way and then to go along with that. At the moment I feel it would be premature to agree to this amendment. I should prefer to see the Bill as it stands.

Lord Porritt

My Lords, I am bound to say that I was absolutely shocked when I saw this amendment down today, particularly to see that it had the support of such eminent noble Lords and noble Baronesses. I must declare a direct interest, as I am a director, very much a non-executive director, of a pharmaceutical company. But if, as there seems to be little doubt, the proposers of this amendment are suggesting a specific exclusion of the pharmaceutical profession from the possibility of using a defence that anybody else can use—the development risks defence—then I suggest to your Lordships that that is illogical, unfair, highly discriminating and very much against the benefit of the community. Those, I realise, are harsh words, but I mean them. I am not at all biased or on one side of the picture. In fact because I have made this statement I should like to put some words on the other side of the picture.

Your Lordships will realise that there are already the strictest possible regulations and years and years of intricate testing of every drug that goes on to the market. The Government also have a committee for the safety of medicines through which every drug has to go before it can get a licence and be put on the market. These are long, weary tests—12 years of them as a rule—and they can cost £100 million. These drugs are not just developed for fun: they are there for a definite purpose and it is only fair that one should say something about this continual criticism of the pharmaceutical industry.

There is not only a sense of apathy, but my feeling is that there is actually antagonism against the pharmaceutical profession and it is not limited to any one section of this House or of the community. As a matter of fact, the community appreciates the pharmaceutical industry much more than some other people—shall we say?—mentioning no names.

I should like to put forward just one or two points. First of all, we are talking about risks. It is a cliché to say that life without risks is not worth living, but it is true. It is infinitely more true to say that the risks of coming to any harm from a drug that goes on the market at the moment are infinitesimal compared with the risks of crossing a street—or the Channel.

That being so, it is quite unfair that the pharmaceutical industry should be excluded from the possibility—I repeat, the possibility—of using this defence, remembering that it puts the onus on the producer to prove that he has done nothing wrong. That is a new approach altogether. If I may refer for one moment to the European Community countries mentioned by the noble Lord, Lord Allen, they are not as interested as we are, for the simple reason that they are not innovative. West Germany produces a few new drugs but none of the others do at all. We are miles ahead of all the rest of them, and we are miles ahead of West Germany. That is a very important point. The pharmaceutical industry is very much an innovative industry. I should like to put to your Lordships just one or two points about this industry which is so unfairly criticised.

I ask your Lordships to look at the obstacles and restrictions that have been put in its way, in this House among other places, in the last few years: limited lists, a cut-down on possible profits, the new PPRS, so called, and the small but very important licence-of-right question in respect of which we still await an answer. These are all aimed at the pharmaceutical profession, which, if I may say so, is basically trying to find drugs and compounds which will cure human illness and alleviate the symptoms where the illness cannot be cured. It is a beneficent industry. It is not trying to kill people; it would be too ridiculous to think that. It is working first and foremost for the benefit of the community.

It also employs 75,000 people, most of them skilled. There are very few industrial troubles indeed in the industry. It is the fourth largest producer, through exports, as regards our balance of trade. This year it has gone up yet again to the fairly respectable sum of £850 million. It employs 5,000 graduate scientists at a time when we are getting a bit worried about a new brain-drain of scientists from the country. As I say, it employs 5,000 of them and also does a great deal to increase the prestige of this country abroad, to say nothing of attracting considerable capital from abroad as well as at home.

Here is an industry which is doing a great deal for the community, from the basis upwards with the idea of curing diseases that are still doing enormous harm to the community—not only AIDS, but cancer, high blood pressure and so on. I could quote a long list. The industry is working on these products for your Lordships' benefit and for the benefit of all patients. Therefore it needs support. I should have thought that a government would see that an industry as good as this needs support and not criticism.

Therefore I beg your Lordships to think seriously about this suggested amendment. It seems to me the cruellest thing to suggest that it should be excluded from the chance of saving itself from the most enormous damages, for which it is not at all responsible. It is quite impossible to cover every potential trouble. We know in this life that there are certain risks which are just totally unpredictable. That applies in every sphere and it applies equally to drugs. I do not think that a problem such as that with thalidomide is likely to occur again. The restrictions, the tests and the regulations are so strong. I trust that your Lordships will see that there is another side to the picture and will not accept this amendment.

5.45 p.m.

Baroness Robson of Kiddington

My Lords, before the noble Lord sits down, may I ask him a question? He mentioned in his speech that there are only two countries in Europe which are innovators in the drug field: Germany and this country. Am I mistaken in believing that drugs are not protected in Germany?

Lord Porritt

My Lords, with permission, let me say that drugs are not protected except that there is a ceiling, an upper limit, for which compensation can be given.

Lord Mottistone

My Lords, I should like briefly to endorse the splendid speech of the noble Lord, Lord Porritt, and to make just two or three points. The first is that the noble Lord, Lord Allen, rather dismissively referred to "that highly profitable industry", as though that was somehow a wrong thing to be. There is an underlying theme, if I may put it like that, that somehow wealth creation is bad. But wealth creation is essential to the survival of this country. We could have none of the good things that we want if we did not have wealth created by companies in big industries such as the pharmaceutical industry. Quite indepen-dently of everything else, they need to be encouraged to compete in the world market and that should be a thought underlying all our discussions in this House, because without that the country will not survive.

The second point is that my noble friend Lord Auckland pointed out to your Lordships that since the thalidomide disaster the regulations and legislation for the industry have been greatly tightened up. That surely in itself is enough of a special protection for that area.

My final point is this. Let us not get it wrong. People are not going to try to develop new products in any industry if the threat to them is too great. We must keep that as the underlying thought. As to the special pleading, if I may so describe it, of the noble Lord, Lord Allen, having been on the Pearson Commission and all that, I do not think that is applicable in this case at this time. I hope that your Lordships will not support this amendment.

Earl De La Warr

My Lords, I join my noble friend in congratulating the noble Lord, Lord Porritt, on his robust defence of the pharmaceutical industry. Let us all be quite clear that if we want research into such things as cancer, arthritis, AIDS and so on, we have to allow the industry to spend enormous sums of money on it. If we permitted this amendment to go through, we would by definition be saying, "You are not protected as in our opinion you should be".

At Second Reading we discussed the subject thoroughly, and the House came to a conclusion. I am quite sure that what was happening in the pharmaceutical industry was very much in our minds. To my mind, it seems ridiculous to have a risks defence and to exclude the pharmaceutical industry of all industries. They are the people probably doing more in the way of research than anyone else in this country.

Lord Lucas of Chilworth

My Lords, we discussed the inclusion of the development risks defence in Part I of the Bill at some length at Committee stage, and your Lordships will recall that after a Division, the amendment which aimed to remove that defence was disagreed to. It is quite apparent that before us we have an amendment which would remove the availability of that defence in respect of medicines and drugs covered by the relevant Acts. It is apparent from the form of the amendment that the noble Lord, Lord Allen, and other noble Lords opposite accept that the defence should be available generally. But I have to express real surprise that it should not be available to the manufacturers of drugs.

Of course, I am aware that the effect of one particular drug was the main reason why the noble Lord, Lord Allen of Abbeydale, made his objection at Second Reading and later at Committee stage. We discussed that case at length and, where the development risks defence would have been relevant in that case, the House agreed that it would be impossible to make a decision in that area.

I am not going to rehearse all the arguments for the retention of the development risks defence which we have debated previously. However, I should like to refer to a few points that have been made. The noble Lord, Lord Allen, referred to Germany and the introduction of thalidomide which was sold without prescription. He knows that since that time there has been a requirement to test for potential damage in pregnancy. In Germany, although there was evidence to suspect foetal damage, there was then no require-ment to test for that damage. As my noble friend Lord Auckland reminded us this afternoon, the Medicines Act brought in a far greater degree of supervision and of testing requirement. Here, as in the case of the EC pharmaceutical directives, the case that applied in Germany just does not apply.

The noble Lord, Lord Allen, touched upon, in particular, the drugs for AIDS. He suggested that the foreseen and unforeseen side-effects of an AIDS drug should be taken care of by warnings applied to the bottles or warnings given by physicians. But he stretches my imagination a little far. How on earth could a warning be given by anybody about unforeseen effects? The noble Lord, Lord Williams, majored on the question of compensation. He will know, and I am sure he will make the judgment, that the directive holds a balance between all the needs of the community, and compensation for the individual is, of course, one of them. However, I believe—and here I may disagree with the noble Lord—that this is outweighed by the need to have the ability to make important and technological advances.

The noble and learned Lord, Lord Denning, supported the inclusion of the development risks after changing his mind during the course of the Committee. He has no doubt given this further thought and he remains of that changed mind. He agreed that the imposition of strict liability without the defence for a drugs manufacturer may hamper valuable research and tests in regard to all drugs for the benefit of humanity as a whole. That is where I think he disagreed with the warning which the noble Lord, Lord Allen, mentioned. My noble friend Lord Bruce-Gardyne is concerned that we might make it impossible for drugs of the type which we are discussing to be available to the consumer.

Perhaps I may remind the House of what the noble Lord, Lord Hacking, said when we completed our Committee debate. He acknowledged the benefits which society has gained from the development of new drugs. He then went on to consider the impact of absolute liability, on the pharmacuetical industry and how it would affect that industry's research and development. As the noble Lord pointed out, how the industry itself will perceive that problem is important.

I do not believe that the noble Lord, Lord Porritt, in any way defended the industry. I acknowledge that his knowledge is a good deal greater than that of a non-executive director of a pharmaceutical company. He believed that some harsh, unjust and discriminating things were said and done about the industry. He pointed out, as a number of noble Lords have done on a number of occasions, the importance of that industry to this country in employment terms and in earnings terms but, more importantly, in the innovation that it carries out. It is by far the most innovative industry of its kind in the world. There is no doubt about that; it is a world leader.

I believe, as I think the noble Lord, Lord Porritt, said—and he was supported by noble Lords behind me—that if the industry were hindered in its research, we could very easily lose those many advantages which have been outlined. It is for just this sort of industry, which operates at the limits of scientific knowledge for the benefit of all, that the development risks defence is so important. At a time when all of us are conscious of the problems of AIDS, cancer, and so on, not only in this country but throughout Europe and the rest of the world, I find any proposal which would restrict research into possible cures for those diseases difficult if not impossible to accept.

That is my main argument. I should perhaps add that I have some doubt as to whether we can, under the provisions of the directive, make specific provision for any particular sector of industry. The main thrust of my argument, with which I am confident the House will agree, is that to restrict in any way the development of new drugs or medicines cannot be in the interests of anybody at all. I urge your Lordships to reject the amendment.

Lord Allen of Abbeydale

My Lords, I am grateful to the Minister and to those noble Lords who have taken part in this debate, including the noble Lord, Lord Porritt, for his spirited defence of an industry which is not under attack. I am grateful to the Minister and to the noble Lord for the eloquent way in which they expanded the point which I tried humbly to make about the improvements which have taken place since the Pearson Commission sat in the control and supervision of new drugs. The noble Lord, Lord Porritt, will be comforted by the fact that he sees the possibility of another tragedy being so remote as to be reflected in the small insurance premiums which the companies will no doubt be called upon to pay. I am sorry that the noble Lord the Minister dismissed so light-heartedly the validity of a warning about the unknown consequences of using drugs against AIDS, which I thought was a simple enough warning. I am sorry that he, in his view, no doubt, has been so inadequately supported from behind that he has had to quote the views of noble Lords who are not present this evening but who managed to convey their views at an earlier stage. I am under no such obligation.

I am told that it is ridiculous to talk about picking out drugs for special treatment. I am sorry that the West Germans behave in this ridiculous way. No doubt that is their concern. My noble and learned friend Lord Denning suggested that we should wait and see what other people did. I venture to suggest that Germany, at any rate, might get over the legal complications touched upon by the Minister and derogate in respect of drugs. For once in a way, I think that this country might set an example and not meekly follow in the paths of others.

There is talk about experiments with drugs. When we talk about experiments, I find it hard to forget the thalidomide children. When we divide, as we shall, let the House be fully aware of what it is deciding. The Government have accepted that it is impossible to say that another thalidomide-type tragedy could never occur, however fervently we hope that it never will. Those who know me know that I am the last person to be over-dramatic or over-emotional. However, if such a disaster should occur, is it fair and right that the victims should be left with the likelihood that they could not establish a claim to compensation, as the Bill at present provides? Or is there a case for putting on to the drug manufacturers, the stories of whose wealth and prosperity fill the headlines of our city pages, an obligation to carry their share of the responsibility, as this amendment proposes? I invite the House to decide.

6.3 p.m.

On Question, Whether the said amendment (No. 14) shall be agreed to?

Their Lordships divided: Contents, 95; Not-Contents, 110.

DIVISION NO. 4
CONTENTS
Airedale, L.	Banks, L.
Allen of Abbeydale, L.	Birk, B.
[Teller.]	Blyton, L.
Amherst, E.	Bonham-Carter, L.
Ardwick, L	Bottomley, L.
Attlee, E.	Brockway, L.
Aylestone, L.	Brooks of Tremorfa, L.

Bruce of Donington, L.	Leatherland, L.
Buckmaster, V.	Llewelyn-Davies of Hastoe, B
Burton of Coventry, B.	Lloyd of Kilgerran, L.
Campbell of F. skan, L.	Longford, E.
Carmichael of Kelvingrove,	Lovell-Davis, L.
Cledwyn of Penrhos, L.	McNair, L.
Darcy (de Knayth), B.	Manchester, D.
David, B.	Molloy, L.
Da vies of Penrhys, L.	Morris of Kenwood, L.
Dean of Beswick, L.	Morton of Shuna, L.
Denington, B.	Nicol, B.
Diamond, L.	Ogmore, L.
Donaldson of Kingsbridge, L.	Oram, L.
Donoughue, L.	Phillips, B.
Elwyn-Jones, L.	Pitt of Hampstead, L.
Ezra, L.	Ponsonby of Shulbrede, L.
Falkender, B.	[Teller.]
Falkland, V.	Prys-Davies, L.
Fisher of Rednal, B.	Ritchie of Dundee, L.
Gallacher, L.	Robson of Kiddington, B.
Galpern, L.	Ross of Marnock, L.
Graham of Edmonton, L.	Sainsbury, L.
Grey, E.	Seear, B.
Griffiths. L.	Serota, B.
Grimond, L.	Shepherd, L.
Hampton, L.	Silkin of Dulwich, L.
Hams of Greenwich, L.	Simon, V.
Hatch of Lusby, L.	Somers, L.
Hayter, L.	Stallard, L.
Heycock, L.	Stedman, B.
Houghton of Sowerby, L.	Stewart of Fulham, L.
Howie of Troon, L.	Strabolgi, L.
Hunt, L.	Taylor of Blackburn, L.
Hutchinson of Lullington, L.	Taylor of Mansfield, L.
Ingleby. V.	Underhill, L.
Jeger, B.	White, B.
Jenkins of Putney, L.	Wigoder, L.
John-Mackie, L.	Williams of Elvel, L.
Kilbracken, L.	Wilson of Rievaulx, L.
Kilmarnock. L.	Winterbottom, L.
Kirkhill, L.	Young of Dartington, L.
Lawrence, L.
NOT-CONTENTS
Aldington, L.	Ellenborough, L.
Auckland, L.	Elliott of Morpeth, L.
Bauer, L.	Erne, E.
Beaverbrook, L.	Erroll, E.
Belhaven and Stenton, L.	Fanshawe of Richmond, L.
Beloff, L.	Fraser of Kilmorack, L.
Belstead, L.	Gainford, L.
Bessborough. E.	Gibson-Watt, L.
Biddulph, L.	Gray of Contin. L.
Birdwood, L.	Greenhill of Harrow, L.
Blake, L.	Greenway, L.
Blyth, L.	Gridley, L.
Boardman, L.	Grimthorpe. L.
Borthwick, L.	Hailsham of Saint
Boyd-Carpenter, L.	Marylebone, L.
Brabazon of Tara, L.	Hesketh, L.
Bruce-Gardyne, L.	Hives, L.
Butterworth, L.	Home of the Hirsel, L.
Caithness, E.	Hood, V.
Cameron of Lochbroom, L.	Hooper, B.
Campbell of Alloway, L.	Hylton-Foster, B.
Campbell of Croy, L.	Ingrow, L.
Carnock, L.	Kaberry of Adel, L.
Coleraine, L.	Killearn, L.
Colwyn, L.	Kimball, L.
Cottesloe, L.	Kinloss, Ly.
Cross, V.	Kinnaird, L.
Cullen of Ashbourne, L.	Lane-Fox, B.
Davidson, V. [Teller.]	Lauderdale, E.
De La Warr, E.	Layton, L.
Denham, L. [Teller.]	Lindsey and Abingdon, E.
Denning, L.	Liverpool, E.
Dormer, L.	Long, V.
Dundee, E.	Lucas of Chilworth, L.
Eccles, V.	Lyell, L.
Eden of Winton. L.	Malmesbury, E.

Manton, L.	Sanderson of Bowden, L
Vlarley, L.	Sandford, L.
Vterrivale, L.	Selkirk, E.
VIolson, L.	Shannon, E.
VIottistone, L.	Sharpies, B.
Vlowbray and Stourton, L.	Shaughnessy, L.
Vlunster, E.	Skelmersdale, L.
Nugent of Guildford, L.	Stanley of Alderley, L.
Onslow, E.	Strange, B.
Orr-Ewing, L.	Strathcarron, L.
Pender, L.	Strathclyde, L.
Penrhyn, L.	Sudeley, L.
Plummer of St Marylebone,	Teynham, L.
L.	Tranmire, L.
Porritt, L.	Trefgarne, L.
Portland, D.	Trumpington, B.
Reay, L.	Vaux of Harrowden, L.
Renwick, L.	Westbury, L.
St. Aldwyn, E.	Whitelaw, V.
Saint Oswald, L.	Wise, L.

Resolved in the negative, and amendment disagreed to accordingly.

6.9 p.m.

Clause 5 [Damage giving rise to liability]:

Lord Morton of Shuna moved Amendment No. 15:

Page 4, line 36, leave out from ("itself") to end of line 38.

The noble Lord said: My Lords, the purpose of the amendment is to bring the Bill into line with the directive. Article 9 of the directive says quite simply: 'Damage' means: damage to, or destruction of, any item of property other than the defective article itself, with a lower threshold of 500 ECU. provided that the item of property".

The Bill says: A person shall not be liable under section 2 above in respect of any defect in a product for the loss of or any damage to the product itself or for the loss of or any damage to the whole or any part of any product which has been supplied with the product in question comprised in it".

In our view the last phrase, or for the loss of or any damage to the whole or any part of any product which has been supplied with the product in question comprised in it", does not comply with the directive, which is quite specific in relating the exclusion only to the defective product itself.

It is quite clear from the Bill and from the directive that a component part is itself a product. If nowhere else that is made clear in Amendment No. 13 to which we have just agreed. It refers to, a defect in a product ('the subsequent product') in which the product in question had been comprised".

It is quite clear, and is utterly clear from the terms of the directive itself, that a component is a product. The argument goes like this. If I happen to buy a defective tyre for my car and the car crashes because of the defective tyre, I can get damages because there is no doubt that the tyre is a defective product. But if I buy a car with a defective tyre, the defective tyre is a defective product but, according to the Government, I cannot get damages for that. There seems to be no logic there and quite apart from logic there seems to be nothing in the directive itself which says that. The directive says, other than the defective article itself".

At Committee stage the noble and learned Lord the Lord Advocate referred to the Explanatory Memorandum. There is a difficulty in referring to the Explanatory Memorandum because it was delivered with the draft directive on 9th September 1976. We are dealing with a directive which was passed by the Community in July 1985 and which in many material respects is different. It is a little difficult to see how an Explanatory Memorandum produced nine years earlier for a different directive can be held binding as to the intention of the directive, which says something different. Even if it is so, one finds in pargraph 7 of the Explanatory Memorandum: Article 2 defines the meaning of the term 'producer'. It covers all persons who were involved on their own responsibility in the process of producing the article. It is obvious that where there are several producers of component parts of an article, only those whose contribution was defective and therefore made the end product defective are liable".

That is quite specific. It says that the liability is to go to the person who made the defective component. Article 9 refers to, damage to, or destruction of, any item of property other than the defective product itself—

If I may return to my example of a defective tyre on a car, it is a strange idea that if one buys a car with a defective tyre, or a computer with defective software or a defective chip, one can sue the manufacturer for damage caused but one cannot recover the cost of the car or the cost of the computer. That is not what the directive says. Qne is entitled to choose as to whether the defective product is the component—because a component is within the definition of a defective product—or the article into which many hundreds of components may be built to make another article. In my submission it is quite clear that what is intended is not what is said in the Bill. I beg to move.

6.15 p.m.

Lord Denning

My Lords, I should like to support the amendment. We again come back to the directive. The directive is quite simple. Article 9(b) says: damage to, or destruction of, any item of property other than the defective product itself'. Therefore one cannot recover for the defective tyre but in the instance given by my noble friend, what about the motor car? According to the Bill a person is not liable, for the loss of or any damage to the whole or any part of any product which has been supplied with the product". In other words, he is not liable for the damage to the whole car. That cannot be right. The directive is perfectly simple and the Bill as it stands alters the directive which it ought not to do, and this might be interfered with by the European Court. The amendment is correct and the Bill ought to omit those two lines in subsection (2).

Lord Airedale

My Lords, I too had difficulty with this subsection and I managed to send a note to the Minister last week explaining my difficulty. My difficulty is with the last words of the subsection which refers to a product, which has been supplied with the product in question comprised in it". To take it shortly, if a car is supplied with a component and the component fails, the subsection applies because the component has been supplied with the car. If the component fails, is replaced subsequently and the replacement fails, the subsection does not apply because the component has not been supplied with the vehicle. I wonder whether the Government intended that result to flow.

I also took an example of a motor car. I was not thinking about tyres but about cigarette lighters. I was thinking of the manufacturer who says, "Now that people smoke less, I shall no longer supply cigarette lighters in the dashboards as standard fittings but I shall supply them as optional extras for those who want them". A customer orders a car with the cigarette lighter on the dashboard as an optional extra. The subsection applies because the component has been supplied with the car. Another customer orders a standard model and after a week or two he misses the cigarette lighter in his old car and orders one as an optional extra. The cigarette lighter jams in the "on" position and starts a fire in the wiring of the car and damages or destroys the car. In the first instance where it is supplied with the car, the subsection applies; but in the second case where it has been bought subsequently as an optional extra and the same disaster occurs, the subsection does not apply because the component has not been supplied with the car.

I am not very clever about the directive, but I cannot think that this different result in the two cases is what was intended when this subsection was drafted, and I believe for that reason that the subsection ought to be looked at again.

Lord Cameron of Lochbroom

My Lords, I did set out in Committee the reasoning behind this part of Clause 5. I then pointed out, and I do so again, that there is in the directive a clear distinction to be drawn between personal injuries or damage to other property caused by a defective product and self-destruction or lesser damage to the defective product itself. The former—that is to say, personal injury or damage to other property—is properly covered by the directive. The latter—that is, destruction or damage to the product itself—is a matter for legislation dealing with the quality of goods.

To use the example of the motor car, if I am supplied with a defective motor car we are agreed—indeed as a result of an earlier amendment to make this perfectly clear—that the producer of the motor car is responsible for the safety of all the parts in it.

Let us assume that the motor car runs into a building and damages the building and injuries the occupants of the building and the motor car. There is no difficulty with the directive: the property damaged is covered by the directive; the personal injuries to the occupants of the motor car and of the building are also covered by the directive. If, on the other hand, there is a defect in the motor car and, for instance, as has been suggested, the battery blows up and destroys the car, if that battery was in fact supplied with the car, then the destruction raises quite different considerations because that is a product which has destroyed itself. It was clearly not of merchantable quality and accordingly would be treated by the law which governs quality of goods rather than that governing their safety.

Accordingly, the directive and the first part of this subsection do not cover damage done by the product itself. That is something which is covered by an extensive and well-developed body of existing law. For that reason the words which this amendment seeks to remove are included in the Bill because the loss of the car would be covered by the ordinary law concerning the quality of goods. The owner of the motor car would not be left without a remedy; he could go to his supplier and pursue a claim under the Sale of Goods Act. No doubt he could also—if he could find out who the battery' had been manufactured by—pursue a claim under the ordinary rules of law.

Perhaps I may just refer, as I did in Committee, to the Commission's explanatory memorandum—and I accept that is was produced with the 1976 draft of the directive. This part of the directive has not been affected in any substantial sense since that time and I suggest that the Commission's explanatory memorandum is as helpful now as it was before in this matter.

What was said in paragraph 20 of the memorandum by the Commissioner was this: Claims for compensation in respect of damage to or the destruc-tion of the defective product itself are excluded. It goes on slightly later: Liability in respect of the quality of a newly-purchased article, its fitness of particular purposes, including its freedom from defects in the sense that it will not be damaged or destroyed in its entirety as a result of defects in part of it, is normally governed in the laws of all the Member States by the law relating to the sale of goods. This field is not affected by the directive. I have to say that this amendment does not accord with the directive, despite what the noble Lord opposite has said. The noble Lord, Lord Airedale, did raise a point expanding upon what I think the noble Lord, Lord Morton. had said earlier about the question of the tyre. Why, he asks, if a defective tyre is purchased separately and fitted to the motor car and causes an accident in which that motor car is destroyed, may I sue for destruction of the motor car whereas, if I have a motor car with a defective tyre already fitted to it, I may not do so?

This is because of the way in which the word "product" is used and, if one looks at Articles 8 and 9, for instance, one can sec that one is talking effectively about the product which is supplied to the person who is claiming damage in this case. One looks for instance at Article 8(2), where there is reference to a defect in the product and the fault of the injured person. Then one comes to Article 9(b): damage to, or destruction of, any item of property other than the defective product itself—. For instance, a manufacturer may supply a car with a defective radio in it and the radio may cause the car to he destroyed. So far as the directive is concerned, there is no claim against the car manufacturer for the product which he has supplied. That has always been clear. Neither is there a claim under the directive against the manufacturer of the radio in the car in which it was a component. If a similar defective radio were bought by a consumer and subsequently installed in an identical motor car and the radio destroyed the motor car, there would be different consequences. In that case the radio in the car would be regarded as a different product under the directive and, although one would not be able to claim for damage to the defective radio, one would be able in that case to claim for damage to the car.

I accept that there is a distinction—the one to which the noble Lord, Lord Airedale, has referred. It may perhaps appear to be an artificial distinction, but it does reflect the intention of the directive that the responsibility should be concentrated on the manufacturer of the finished product. It is for that reason that earlier this afternoon the House accepted an amendment which was put forward in the name of my noble friend to make that abundantly plain.

I believe that this is largely the reason why the directive is not fully worked out in relation to components and it is one of the areas that we have endeavoured to complete in Part I. I would add that the point which the noble Lord, Lord Airedale, raised was one which was expressly considered in the course of negotiations about the directive and it was agreed that the distinction was right as a matter of interpretation of the directive. For those reasons, which include the reasons I put forward earlier in Committee, I have to advise the House that the amendment is not in accord with the directive. therefore I cannot accept it.

Lord Morton of Shuna

My Lords, I am bound to say that I find the noble and learned Lord's explanation of the Government's position wholly unacceptable. Of course, Article 8 does not deal with products as opposed to components or finished articles as opposed to components; it deals with the right of contribution when someone else, even the consumer, is also at fault. I have already referred to Article 9, which states that, 'damage' means … damage to, or destruction of, any item of property other than the defective product itself—. That is all. It does not say anything about finished articles or about components. One then refers to Article 2 to ascertain what a product is, It reads: For the purpose of this Directive 'product' means all movables, with the exception of primary agricultural products and game, even though incorporated into another movable". Therefore, the tyre incorporated into the car—or the battery or cigar or cigarette lighter—is still a product. That is what Article 2 states. One then moves to Article 9, which reads: damage to or destruction of any item of property other than the defective product itself". If only the tyre is defective there is nothing in Article 9 that covers that. It would have been quite easy, if that is what the Council thought was required in the directive, to put in the words which are in Clause 5(2) and which I wish to take out. It would be quite easy to put in: for the loss of or any damage to the whole or any part of any product which has been supplied with the product in question comprised in it". All I can say is that if the Council had wanted that in Article 9 it could have included it in happier English; but perhaps that is a different point. However, this is a point on which I must seek the opinion of the House.

6.32 p.m.

On Question, Whether the said amendment (No. 15) shall be agreed to?

Their Lordships divided: Contents, 81; Not-Contents, 95.

DIVISION NO. 5
CONTENTS
Airedale, L.	John-Mackie, L.
Allen of Abbeydale, L.	Kjlbracken, L.
Amherst, E.	Kilmamock, L.
Ardwick, L.	Kirkhill, L.
Attlee, E.	Lawrence, L.
Aylestone, L.	Llewelyn-Davies of Hastoe, B
Birk, B.	Longford, E.
Blyton, L.	Lovell-Davis, L.
Bonham-Carter, L.	McNair, L.
Brockway, L.	Mishcon, L.
Brooks of Tremorfa, L.	Molloy, L.
Burton of Coventry, B.	Morris of Kenwood, L.
Carmichael of Kelvingrove, L.	Morton of Shuna, L.
Chitnis, L.	Mountevans, L.
Cledwyn of Penrhos, L.	Munster, E.
David, B.	Nicol, B.
Davies of Penrhys, L.	Ogmore, L.
Dean of Beswick, L.	Oram, L.
Denning, L.	Phillips, B.
Diamond, L.	Ponsonbv of Shulbrede, L.
Donoughue, L.	[Teller.]
Elwyn-Jones, L.	Prys-Davies, L.
Enroll, E.	Robson of Kiddington, B.
Falkender, B.	Ross of Marnock, L.
Fisher of Rednal, B.	Russell of Liverpool, L.
Gallacher. L.	Sainsbury, L.
Galpem, L.	Seear, B.
Graham of Edmonton, L.	Serota, B.
[Teller.]	Silkin of Dulwich, L.
Grey, E.	Simon, V.
Grimond, L.	Stedman, B.
Hampton, L.	Stewart of Fulham, L.
Hanworth, V.	Taylor of Blackburn, L.
Harris of Greenwich, L.	Taylor of Mansfield, L.
Hatch of Lusby, L.	Underhill, L.
Heycock, L.	White, B.
Hooson, L.	Williams of Elvel, L.
Houghton of Sowerby, L.	Wilson of Rievaulx, L.
Howie of Troon, L.	Winterbottom. L.
Hutchinson of Lullington, L.	Young of Dartington, L.
Jeger, B.	Ypres, E.
Jenkins of Putney, L.
NOT-CONTENTS
Aldington, L.	Dormer, L.
Ampthill, L.	Dundee, E.
Auckland, L.	Eccles, V.
Bauer, L.	Eden of Winton, L.
Beaverbrook, L.	Elliot of Harwood, B.
Belhaven and Stenton, L.	Elliott of Morpeth, L.
Belstead, L.	Erne, E.
Bessborough, E.	Faithfull, B.
Biddulph, L.	Fraser of Kilmorack, L.
Birdwood, L.	Gray of Contin, L.
Boardman, L.	Gridley, L.
Borthwick, L.	Hailsham of Saint
Brabazon of Tara, L.	Marylebone, L.
Brougham and Vaux, L.	Hesketh, L.
Bruce-Gardyne, L.	Hives, L.
Butterworth, L.	Home of the Hirsel, L.
Caithness, E.	Hood, V.
Cameron of Lochbroom, L.	Hooper, B.
Campbell of Alloway, L.	Hylton-Foster, B.
Campbell of Croy, L.	Ingrow, L.
Carnock, L.	Kaberry of Adel, L.
Coleraine, L.	Kimball, L.
Colwyn, L.	Kinnoull, E.
Cottesloe, L.	Lane-Fox, B.
Craigavon, V.	Lauderdale, E.
Cross, V.	Layton, L.
Cullen of Ashboume, L.	Lindsey and Abingdon, E
Davidson, V. [Teller.]	Liverpool, E.
De La Warr, E.	Long, V.
Denham, L. [Teller.]	Lucas of Chilworth, L.

Lyell, L.	Saint Oswald, L.
Malmesbury, E.	Sanderson of Bowden, L
Marley, L.	Sandford, L.
Merrivale, L.	Selkirk, E.
Mersey, V.	Shannon, E.
Mottistone, L.	Sharpies, B.
Mountgarret, V.	Skelmersdale, L.
Mowbray and Stourton, L.	Strange, B.
Onslow. E.	Strathcarron, L.
Orr-Ewing, L.	Strathclyde, L.
Pender, L.	Sudeley, L.
Penrhyn, L.	Swinfen, L.
Plummer of St Marylebone,	Tranmire, L.
L.	Trefgarne, L.
Reay, L.	Trumpington, B.
Renton, L.	Vaux of Harrowden, L.
Renwick, L.	Whitelaw, V.
St. Aldwyn, E.	Wise, L.
St. John of Bletso, L.

Resolved in the negative, and amendment disagreed to accordingly.

6.39 p.m.

Clause 6 [Application of certain enactments etc.]:

Lord Cameron of Lochbroom moved Amendment No. 16:

Page 5, line 26, leave out ("and")

The noble and learned Lord said: My Lords, with the leave of the House, I shall speak also to Amendments Nos. 17 and 18. It will be easier to explain the reasons for Amendments Nos. 16 and 17 if I begin by turning to Amendment No. 18. Amendment No. 18 ensures that Part H of the Administration of Justice Act 1982, which makes various provisions relating to damages for personal injuries in Scotland, applies in the case where a person is liable to pay damage under Clause 2 of the Bill. It makes it clear that the damage for which a person may be liable under Clause 2 will include damages for services rendered to the injured person by a relative or by the injured person to a relative and that provisional damages may be awarded in appropriate cases.

As for Amendment No. 16, when the Committee agreed to Amendment No. 53 moved by the noble Lord, Lord Morton, which is reflected in the prints of the Bill before the House, that resulted in a new paragraph (c) to Clause 6(1). It was also necessary to introduce the word "and" at the end of paragraph (b). At the same time, we should have removed the word "and" from paragraph (a). The purpose of this amendment is to remedy that omission.

The reason for Amendment No. 17 then becomes obvious. The "and" there is superfluous and falls to be removed. I beg to move.

On Question, amendment agreed to.

Lord Cameron of Lochbroom moved Amendment No. 17:

Page 5, line 30 leave out ("and").

The noble and learned Lord said: My Lords, I beg to move.

On Question, amendment agreed to.

Lord Cameron of Lochbroom moved Amendment No. 18:

Page 5, line 33, at end insert ("; and

1. (d) for the purposes of Part II of the Administration of Justice Act 1982 (damages for personal injuries, etc.—Scotland), by an act or omission giving rise to liability in that person to pay damages.")

The noble and learned Lord said: My Lords, I beg to move.

On Question, amendment agreed to.

Lord Cameron of Lochbroom moved Amendment No. 19:

Page 5, line 33, at end insert— ("(1A) Where—

1. (a) a person's death is caused wholly or partly by a defect in a product, or a person dies after suffering damage which has been so caused:
2. (b) a request such as is mentioned in paragraph (a) of subsection (3) of section 2 above is made to a supplier of the product by that person's personal representatives or, in the case of a person whose death is caused wholly or partly by the defect, by any dependant or relative of that person; and
3. (c) the conditions specified in paragraphs (b) and (c) of that subsection are satisfied in relation to that request,

this Part shall have effect for the purposes of the Law Reform (Miscellaneous Provisions) Act 1934, the Fatal Accidents Act 1976 and the Damages (Scotland) Act 1976 as if liability of the supplier to that person under that subsection did not depend on that person having requested the supplier to identify certain persons or on the said conditions having been satisfied in relation to a request made by that person.").

The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 1. I beg to move.

On Question, amendment agreed to.

Lord Cameron of Loch broom moved Amendment No. 20:

Page 5, line 37, after ("is") insert ("or has been").

The noble and learned Lord said: My Lords, with the leave of the House, I shall take Amendment No. 21 with this amendment. These two minor amendments concern the application of the Congenital Disabilities (Civil Liability) Act 1976, which gives a cause of action to a person born disabled as a result of an occurrence affecting a parent for which another person is answerable.

Under Clause 6(2), a person will be treated as answerable if he is liable under Clause 2 of the Bill. Amendment No. 20 adds "or has been". That is intended to prevent a claim under the 1976 Act, as applied, from being defeated by an argument that the person concerned was not sued in due time. Originally we did not think that it was necessary to spell that out, but there is a provision in Section 1 of the 1976 Act to deal with the point, and we considered that it would be safer to put the matter beyond doubt. Amendment No. 21 is purely consequential upon Amendment No. 20. I beg to move.

On Question, amendment agreed to.

Lord Cameron of Lochbroom moved Amendment No. 21:

Page 5, line 40, leave out ("had").

The noble and learned Lord said: I beg to move.

On Question, amendment agreed to.

Lord Cameron of Lochbroom moved Amendment No. 22:

Page 6, line 6, at end insert— ("(5A) It is hereby declared that liability by virtue of this Part is to be treated as liability in tort for the purposes of any enactment conferring jurisdiction on any court with respect to any matter.").

The noble and learned Lord said: In speaking to this amendment I will, with the leave of the House, speak also to Amendments Nos. 27, 100 and 101. This group of amendments arises from an amendment tabled by the noble Lord, Lord Morton, in Committee. At that time, as he said, he wished for a provision ensuring that for the avoidance of doubt liability under this part of the Bill would be a matter relating to tort, delict or quasi-delict. His main concern, as he made clear, was to attract to the Bill the provisions of the Civil Jurisdiction and Judgments Act 1982.

I undertook at that time to look at the matter, being well disposed to the general thrust of the amendment. These amendments are the consequence of that. Your Lordships will be aware that the amendment tabled by the noble Lord, Lord Morton, referred to the terms "tort", "delict" or "quasi-delict". Those terms are used in the 1982 Act. "Tort" is the expression used in English law to cover, broadly speaking, any civil right of action arising from the breach of a duty imposed by law. "Delict" is the term used in Scotland to cover obligations imposed by law to make reparation for any loss or damage caused by a legal wrong. "Quasi-delict" is the name given to some of those legal wrongs, although its use is not consistent.

I do not wish to go further into the use of those words. There is a host of erudite legal learning about them on both sides of the Border. It is fair to say that while the terms "tort" and "delict" cover virtually the same ground, there are certain conceptual differences in the way in which the two classifications have been arrived at which means that what is clearly a delict may not so clearly be a tort. The most striking conceptual difference is, briefly, that the Scottish law focuses on the nature of the obligation to make reparation, whereas English law is more concerned with the breach of duty involved.

I am advised that as a result of those differences, there is no doubt but that the liability imposed by Part I gives rise to an obligation to make reparation. and would therefore constitute delictual liability in Scotland. On the other hand, we accept that there is a legitimate doubt as to whether liability under Part I should be regarded as a liability in tort.

There are of course a number of provisions dealing with that area of the law still contained in the common law. That is partly, as I mentioned earlier, because they have largely been expressed in terms of breach of duty. There are of course a number of statutory provisions which either expressly or impliedly give civil rights of action to injured persons. Those are generally expressed in terms of breach of duty, and hence the term "breach of statutory duty" is frequently used to describe the right of action conferred. It is obvious that Part I is statutory, but, on the other hand, it is not expressed in terms of a duty, and that is the main cause of the doubt which arises with regard to English law.

There may be a question as to whether that classification is of any practical importance. The noble Lord, Lord Morton, rightly pointed out that the classification is used for the purpose of defining the courts' jurisdiction in a way which could have practical significance. In addition to the provisions which we have previously identified in Clause 6 and which relate directly to the subject matter of the directive, we have discovered two other provisions which may in certain circumstances be relevant. In addition, we have made slightly different provisions about Crown application.

Amendment No. 22 reflects the primary concern of the noble Lord, Lord Morton, by declaring that liability under Part I is a liability in tort for the purposes of any enactment conferring jurisdiction on a court. It will apply not only to the Civil Jurisdiction and Judgments Act 1982 but, for example, to the County Courts Act 1984, which confers jurisdiction on the county courts in contract and in tort within certain financial limits.

The other point that I should mention is that the provision is declaratory. The intention is to ensure that contrary arguments cannot be raised about other provisions for strict liability framed in a similar way. There are not many of those, but the Animals Act 1971 is an example.

Amendment No. 100 is of less practical significance. It deals with the Torts (Interference with Goods) Act 1977. That Act contains a number of common provisions governing actions for trespass to goods and other torts affecting goods which are compendiously referred to as "wrongful interference with goods". For example, it regulates the position where there are competing rights to goods which are the subject matter of the action. There is little doubt that liability under Part I of the Bill should be treated in the same way.

Amendment No. 101 deals with Section 16 of the Employment Act 1982 which places certain financial limits on the liability of trade unions in tort. Those limits do not, however, apply to any proceedings in negligence, nuisance or breach of duty resulting in personal injury or to proceedings for breach of duty in connection with the use of property.

The amendment makes clear that liability under Part I of the Bill will be treated in the same way as any breach of duties described there. I do not think that this provision should have any great practical importance in terms of the customary activities of trade unions, but we need to consider the possibility of those activities extending to the supply of products of one kind or another.

I am sure that noble Lords will be relieved that we have not found any other provisions which need to be dealt with. However, these specific amendments are required to be able to pin down the concerns expressed by the noble Lord, Lord Morton.

Amendment No. 27—to which I finally refer—is of a slightly different nature but is based on the same premise. The provisions which presently appear in Clause 9(2) and (3) of the Bill are precedented by similar provisions in other legislation. I cite, for example, Section 51 of the Civil Jurisdiction and Judgments Act 1982. However, in the present context, we think that they may create a doubt as to whether they override the provisions of the Crown Proceedings Act 1947 which deals with civil proceedings by and against the Crown and in particular the liability of the Crown in tort. We would again accept the principle of the proposal put forward by the noble Lord, Lord Morton, and the purpose of this amendment is accordingly to ensure that the limits of the Crown's liability under Part I of the Bill are the same as the limits of its liability under the 1947 Act. There are precedents for this alternative approach as well. I cite Section 16 of the Torts (Interference with Goods) Act 1977.

One further aspect of the matter to which I should draw attention is that Section 10 of the 1947 Act qualifies the rights of members of the armed forces to bring proceedings in tort against the Crown for death or personal injury, notably where it was suffered in consequence of the nature or condition of any equipment or supplies used for the purposes of those forces. This amendment will ensure that that qualification applies to any proceedings which might be brought under Part I.

However, noble Lords will be aware that there is a Bill which has received its Second Reading in another place and which received a warm welcome there. It provides for the repeal of Section 10 of the 1947 Act and will accordingly permit members of the armed forces to bring proceedings in the usual way. It also provides for the revival of Section 10 if it appears necessary or expedient for the Secretary of State to revive it in the case of national danger. That is the explanation for the appearance of the words, as that Act has effect from time to time in this amendment.

I am very conscious that in what I have been saying I have been going into matters legal but, notwithstanding that, I hope that these amendments will find favour with your Lordships. I beg to move.

Lord Morton of Shuna

My Lords, so far as it goes, Amendment No. 22 is acceptable. But, in my view, it does not go far enough. It is apparently to apply to Scotland. I can think of at least one retired judge of the Court of Session who might raise his eyebrows on reading that the new subsection (5A) was applicable to Scotland. It states: It is hereby declared that liability by virtue of this Part is to be treated as liability in tort". That might cause confusion.

This is merely a declaratory provision. I do not understand why it is difficult to say that for England, Wales and Northern Ireland liability is liability in tort, and for Scotland it is to be treated as liability for delict or quasi-delict. This is my difficulty. I have always been taught and have understood that inherent in the theory of delict and quasi-delict is the idea of a wrong—a wrongful act—for which, having done or threatened such act, one has an obligation to make reparation. That is the whole theory of the Scottish law of delict and quasi-delict. As I understand it, that is also the Continental theory.

What is quite clear, and, in my submission, is not a matter of doubt on anybody's part, is that Part I is not dealing with a wrong at all. There is no question of the defective product implying that the producer has committed a wrong. Because he has produced a defective product, he has created a liability on himself but nobody is saying that he is wrong. The whole purpose is to avoid saying that he is wrong. It therefore appears to me that this new subsection, through inserting Amendment No. 22, does not sit happily with the law of Scotland. Almost as much violence has been done to the law of delict and quasi-delict as certain Englishmen tried to do to certain Welshmen on Saturday. But perhaps that is a different point. I do not wish to stop Amendment No. 22 being agreed to. However, it may be necessary to come back and improve it at a later stage.

If one turns to Amendment No. 27, the difficulty disappears. Section 2 of the Crown Proceedings Act states: The Crown shall be subject to all those liabilities in tort to which, if it were a private person of full age and capacity, it would be subject". On the application to Scotland, Section 43 states: In the application of this Act to Scotland the expression 'tort' means any wrongful or negligent act or omission". That definition would not suit Part I of this Bill. It is of no use to Part I because we are not dealing with a wrongful or negligent act. The whole point of product liability is that that is unnecessary. It therefore appears to me that some other provision is needed.

On Amendments Nos. 100 and 101, I have nothing to say. I hope that the Government have found the various legislative provisions. I somehow doubt it, but no doubt they have done their best in Amendments Nos. 100 and 101.

I regret that I can give Amendment No. 22 only a very cool welcome. I cannot see why it could not be worded that, it is hereby declared that liability by virtue of this Part is to be treated as liability in tort, delict or quasi-delict". By the Civil Jurisdiction and Judgments Act, that is the basis on which the court's jurisdiction for the place where the harmful event occurred would be established. I can therefore give this amendment only a very qualified welcome.

Lord Airedale

My Lords, I agree entirely with the noble Lord, Lord Morton. It is unfortunate—when the whole point of Part I is to get rid of the need for an action for liability in tort—then to read that, liability by virtue of this Part is to be treated as liability in tort". I understand what the noble and learned Lord the Lord Advocate is seeking to achieve. However, these words are singularly unfortunate when the whole emphasis throughout the rest of Part I is, at last, that negligence does not have to be proved. There does not have to be liability in tort. Liability is irrespective of liability in tort. That is the whole point of Part I. Then one reads these dismal words: liability by virtue of this Part is to be treated as liability in tort", which seems to me to be very sad and depressing. I wish that it could be expressed in some other way.

Lord Denning

My Lords, I do not share my noble friend's view on the use of the word "tort". "Tort" not only covers negligence, but covers many cases of strict liability—for example, the escaping of dangerous things even though there is no negligence at all. Such a case is treated in the books and in every way as a liability in tort; that is the phraseology of tort. It is something for which you are liable. I do not share the difficulty of my noble friend.

Lord Cameron of Lochbroom

My Lords, I am obviously very grateful for what has been said by noble Lords which we shall certainly take aboard. Perhaps I may just reply to the noble Lord, Lord Airedale, and say that I regret it is necessary to make reference to tort for the very reason which the noble Lord, Lord Morton, identified when he spoke in Committee as regards jurisdiction. I simply say to the noble Lord opposite that this matter has been considered. Certainly, I have listened to what he has said, and obviously will look at it again. But, in turn he may like to bear in mind what is said in Schedule 1 Part II of the Bill. In particular, on Page 43 of the Bill, the new Section 22(B), which is there set out, describes the obligation under Section 2 of the 1987 Act as follows: (to make reparation to damage caused wholly or partly by a defect in a product)", That seems to me adequately to describe what is delict in the law of Scotland. I beg to move.

On Question, amendment agreed to.

Clause 7 [Prohibition on exclusions from liability]:

Lord Cameron of Lochbroom moved Amendment No. 23:

Page 6, line 14, leave out subsection (2)

The noble and learned Lord said: My Lords, I spoke to this amendment when speaking to Amendment No. 1. I beg to move.

On Question, amendment agreed to.

Lord Beaverbrook

My Lords, in moving that further consideration on Report be now adjourned, perhaps I may suggest that we do not return to this Report stage until five minutes past eight o'clock.

Moved accordingly and, on Question, Motion agreed to.