HL Deb 19 March 1987 vol 485 cc1519-40

3.20 p.m.

Read a third time.

Clause 2 [Liability for defective products]:

Lord Morton of Shuna moved Amendment No.1:

Page 2, line 36, after ("damage") insert ("or, in the case of that person being incapable of acting, a person authorised to act on his behalf")

The noble Lord said: My Lords, perhaps I may speak to this amendment in my name and that of my noble friend Lord Williams of Elvel. The amendment relates to a fairly technical point in Clause 2. In that clause, there are provisions for the person who has suffered damage to ask the supplier to identify the person who gave the product to the supplier and for going back down the line to get to the producer. This amendment will deal with, the situation in which a person who has suffered damage is not capable of asking the supplier or anyone else for information, either because that person is not capable because of age (such as in the case of a very young child) or is incapable as a result of the damage suffered. That situation is not met in any way in the Bill and what we have endeavoured to do in this amendment is to cover the situtation so that somebody who is a child who has suffered damage or somebody who is mentally injured or has suffered severe brain damage can have the processes of the Act working for him. It is a fairly simple amendment and I trust that the Government will accept it. I beg to move.

Lord Campbell of Alloway

My Lords, surely the supposition as to incapacity to which the noble Lord refers is met. A solicitor, friend or legal advice centre could easily make such a request. Also, if it is not complied with, under subsection (3)(c) we see that the supplier is liable for the defective product. With great respect, it is hard to understand how the amendment serves any practical purpose.

Lord Morton of Shuna

My Lords, with the leave of the House, may I deal with the point raised by the noble Lord, Lord Campbell of Alloway? At least in Scotland, if one acts for somebody who has no authority to ask one to act, one has no authority to act. Somebody who has suffered severe brain damage cannot, in Scottish law at any rate (and I would be surprised if it is different in England), instruct a solicitor to act on his behalf. How would he do that? It is easy if somebody is capable of giving instructions. But what does one do with somebody who is incapable of giving instructions? It is that situation which I have endeavoured to meet.

Lord Lucas of Chilworth

My Lords, I fear it will be necessary for me to jog back a bit. I accept that the person who is injured by a product must be able to ask the supplier, under Clause 2(3), to identify the producer. At Committee stage, the noble Lord, Lord Morton, put down an amendment to ensure that the injured person could act through a representative. As my noble and learned friend the Lord Advocate said at that time, it seemed to us unnecessary to make a provision of that kind. However, the amendment did highlight a potential difficulty in cases where the injured person had died before making a request, because he would not by that date have acquired a cause of action under Part I which would enable his estate or his dependants to sue. We accordingly tabled an amendment at Report stage to deal with that problem and the relevant provision is now in Clause 6(2). I am grateful to the noble Lord, Lord Morton, for putting us on notice of that problem.

At that time, the noble Lord questioned whether the amendment went far enough to meet his point. He mentioned in particular the case where a person had suffered an injury which was so serious that he was incapable of giving instructions to anybody to deal with the matter. That is the point which he reiterates this afternoon and that is one example of a disability. There are of course others, such as the case where the injured person is an infant. In such cases I am satisfied that the existing provisions of the law governing the exercise of powers of a person under a disability by his guardian or other representative are adequate to allow a request made by that representative under Clause 2(3) to be treated as having been made by the injured person himself.

I fear that the only effect of the noble Lord's amendment would be to throw doubt upon the ability of a representative to give notices and take similar steps under other legislation which does not contain a similar provision, and I oppose it on that ground. In addition, the amendment gives rise, in our view, to difficult problems of interpretation. On the one hand, if the authority referred to is a reference to the person who is under the disability, it is not easy to see how that person is supposed to give the authority itself. On the other hand, if the authority is that conferred by the general law, there is obviously no need for it to be restated in this Bill. There is, finally, a risk that by limiting its application to persons incapable of acting, the amendment would imply that anyone else would have to act personally and would not, for example, be entitled to instruct a solicitor.

I hope that what I have said will convince the noble Lord that the matter dealt with by this amendment is adequately accommodated by the general law and that an amendment on the lines proposed would only confuse the issue.

Lord Morton of Shuna

My Lords, I do not intend to press the matter. However, I may say that I find the Minister's answer wholly unsatisfactory. Perhaps the matter will be cleared up in another place. I ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 6 [Application of certain enactments etc.]:

Lord Morton of Shuna moved Amendment No. 2: Page 7, line 8, after ("tort") insert (", or in Scotland delictual or quasi-delictual liability,").

The noble Lord said: My Lords, this amendment is fairly straightforward. Again, it is a matter which I raised at Committee stage and which the Government dealt with to some extent by an amendment they proposed at Report stage. However, I regret that that does not fully satisfy me.

What is said in Clause 6(7) is, 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". That section applies to Scotland. I regret to say that "tort" is a term which is not used in Scotland at all. We use the words "delict" and "quasi-delict". Since the 1982 Act adopted the conventions on jurisdiction and refers to tort, delict or quasi-delict, I do not see why this House or the Government are so intent on leaving out the words which have a meaning in Scotland. I hope that on this occasion they will be prepared to accept the amendment because the sense remains the same but it would become understandable in Scotland. I beg to move.

Lord Lucas of Chilworth

My Lords, your Lordships will recall that at Report stage my noble and learned friend the Lord Advocate explained that we had considered the noble Lord's desire to make clear that liability under Part I is to be treated as a liability in tort, delict or quasi-delict. We had taken the view that there was some uncertainty about the position under the law of tort. However, we did not think that the same doubt arose about delict. We accordingly tabled amendments dealing only with certain statutory provisions referring to liability in tort, of which the most important is now in Clause 6(7).

My noble and learned friend the Lord Advocate explained at that time that he would give consideration to the reservations about the position in delict which the noble Lord, Lord Morton, said he still felt about the matter and which he still feels this afternoon. This consideration has not yet been completed and it would therefore be wrong to indicate acceptance of this amendment until consideration has been completed. It may be helpful if I explain the three main difficulties raised by the amendment. I ought to raise them if only for the record so that if we should come back to the matter we have the background clear in our minds.

First, it is not clear that any amendment is required because it is difficult to see how the liability imposed by Clause 2 would be classified under Scots law if it was not delictual. It is true, as the noble Lord says, that Clause 2 does not expressly impose a legal duty on a producer or a supplier not to produce or supply any defective product. It simply imposes upon them liability for any damage caused by such a defective product. Nevertheless, it is not at all clear why this should prevent the liability from being considered delictual.

Secondly, if it is thought that, for the avoidance of doubt, there should be an express provision making it clear that the liability under Clause 2 is delictual, it is not clear that the noble Lord's amendment would suffice. That amendment has the effect of providing only that the liability is delictual or quasi-delictual for a particular purpose; namely, that of any enactment conferring jurisdiction on a court. It is necessary to consider what other enactments might be in question, and how any amendment should relate to them.

Thirdly, the amendment of the noble Lord, Lord Morton of Shuna, does not make it clear whether the liability under Clause 2 is delictual or quasi-delictual. As my noble and learned friend pointed out at the Report stage, the distinction between these concepts has created some confusion and we should attempt, so far as we can, not to perpetuate that confusion in the Bill.

These are all matters upon which I think it would be advisable for further and detailed consideration to be given. This we shall do, reflecting perhaps in another place the outcome of such consideration. If the noble Lord can accept what I have said and the assurance I have given, I should be grateful to him if he would withdraw the amendment.

3.30 p.m.

Lord Morton of Shuna

My Lords, subsection (7) of Clause 6 deals only with jurisdiction. Therefore it does not matter whether something is delict or quasi-delict.1 should not wish to detain the House but I am perfectly prepared to detain the noble Lord the Minister in some other place for a discussion on the distinction between delict and quasi-delict. The difficulty here is that it is said to be, liability in tort for the purposes of any enactment conferring jurisdiction on any court". Why it is difficult for the Government to say, "Treat it as liability in tort or in delict or quasi-delict," I fail to see. However, as the Government are continuing to look at the matter, I ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 14 [Suspension notices]:

Lord Morton of Shuna moved Amendment No. 3:

Page 14. line 4. at end insert ("; and (c) it is shown that the enforcement authority did not have reasonable grounds for exercising the power.").

The noble Lord said: My Lords, perhaps I may speak to this amendment with Amendment No. 4 which is an amendment to similar effect in Clause 34. They relate to the payment of compensation.

Amendment No. 3 relates to compensation after a suspension notice has been served. Amendment No. 4 relates to compensation after seizure of goods. In both cases the "enforcement authority" in Clause 14 or the "officer" in Clause 29 is under a duty to issue the suspension notice or to seize the goods if he has "reasonable grounds for suspecting". Then he has a duty to serve the suspension notice or to seize and detain. In both instances, there is the compensation provision although for Clause 29 that provision is in Clause 34.

The authority is to be liable for compensation if, at the end of the day, it is found there is no contravention and that the exercise of the power has not been due to the fault of the owner of the goods, the person who has the interest in the goods. As the Bill is drafted—and this is what we seek to correct—there is no excuse. The authority or the officer had reasonable grounds for doing what he did. If one compares that with the numerous Bills which have become law, one gets a very different picture.

In Clause 1 of the Banking Bill, which we discussed on Monday, there is a liability on the board or its staff only if they are shown to have acted in bad faith. Otherwise they have no liability at all. I do not need to remind the Minister, although perhaps I may remind other noble Lords, that Section 187 of the Financial Services Act has the same exclusion of any liability for the members and staff of self-regulating organisations, the designated agency, the competent authority and recognised professional bodies, for any of their acts except if done in bad faith. The Criminal Justice (Scotland) Bill which was before the House last month only has responsibility in respect of Customs officers and police if they are found to have been unjustified in seizing property and are shown to be in serious default. The Drug Trafficking Offences Act has the same provision for serious default and a necessity to prove substantial loss.

If we want the Consumer Protection Bill to protect consumers, the enforcement agencies must not be inhibited from issuing suspension notices and seizing goods which they reasonably think are potentially dangerous by the possibility that they may be found liable in compensation. It is applying a standard totally different from that applied to everybody else. It is reasonable that they should be liable to pay compensation only if it were shown that they did not have the reasonable grounds for exercising the power in the first place. I beg to move.

Lord Campbell of Alloway

My Lords, perhaps I may briefly ask the noble Lord, Lord Morton of Shuna, how it is to be shown. Who is to decide whether the enforcement authority did or did not have reasonable grounds for exercising the power? As far as I can see, there is no machinery in the Bill to enable such a decision to be made. It would appear that the only available remedy is judicial review. Is judicial review with its complex, costly legal proceedings appropriate apart from bad faith, which the noble Lord mentioned, where it would apply in any event?

By and large, if there were any evidence, any basis, for the exercise of power, as matters now stand according to the state of the law on judicial review, judicial review would not lie. Therefore under judicial review, which appears to be the only available machinery—there is none in the Bill—there are no grounds apart from bad faith on which it could lie. The Wednesbury principles, about which your Lordships have heard so much, concerning whether something which ought to have been taken into account was not taken into account or whether something which was taken into account ought not to have been taken into account are totally wide of the mark on reasonable grounds, the basis upon which this amendment is proposed. With the greatest respect, I suggest that this amendment is misconceived.

Lord Lucas of Chilworth

My Lords, I agree with the summing up of the position by the noble Lord, Lord Morton, but I fear that after that I part company with him. These two amendments raise an important question for both traders and enforcement officers. I begin by recalling a little of the history of these provisions since they represent the outcome of considerable debate earlier in our proceedings and an earlier change in the provisions in favour of the enforcement officers.

The new powers of suspension and forfeiture were suggested in the White Paper on the safety of goods published in 1948. Because of the sweeping nature of the powers, the White Paper suggested that compensation should be available to traders wherever there was no conviction under the safety legislation. That is, compensation would not be paid only when there was a conviction.

During the passage of the Consumer Safety (Amendment) Bill in 1986, it was suggested that a compensation provision along those lines did not sufficiently reflect the difficulties that trading standards officers might face. Noble Lords will probably be aware that the Government listened to those representations, and the result was that the circumstances in which compensation would not be paid were substantially widened. Those new circumstances were enacted in the Consumer Safety (Amendment) Act 1986 and they are reproduced in the present Bill, which in this respect does no more than consolidate that Act.

The provisions were substantially widened and indeed they are wider than noble Lords opposite acknowledge. Compensation is to be paid only if both of two conditions are satisfied. They are that there has been no contravention in relation to the goods of any safety provision—that is, in fact that the goods are safe—and that the exercise of the relevant power of suspension or forfeiture is not attributable to any neglect or default by the person seeking compensation. This latter condition is an important one, and it does not just include specific failures to meet obligations under safety legislation, but also any act or omission which is in the circumstances blameworthy. It could include, for example, an unreasonable unwillingness to provide an enforcement officer with information or indeed access to the goods.

There is an important balance here between the trading standards officer and the trader, and this has been much discussed. The circumstances in which compensation shall be paid are relatively narrow.

I now turn to the specific effect of the two amendments before us. I said both in Committee and on Report that the important question we have to address is what should happen in those unfortunate circumstances where goods are seized or suspended and nobody is to blame. The goods are safe, the trader has acted reasonably and so has the enforcement officer. Such circumstances could arise when the enforcement officer relied, quite reasonably, on incorrect information supplied perhaps by a third party. Noble Lords opposite say that in those circumstances the trader should bear the loss.

The Bill as it stands says that in those circumstances, unfortunate though they may be, it is the enforcement authority that should bear the loss. We think it is quite wrong that in providing powers for enforcement authorities to halt the supply of unsafe goods we should do so at the expense of the innocent trader. Frankly, we are not prepared to create a new burden on business of this nature.

The noble Lord has during our consideration of this part of the Bill brought up the contrast between this legislation and other criminal legislation such as the Drug Trafficking Offences Act 1986 and the analogous provisions of the Criminal Justice (Scotland) Bill which have recently been discussed by a Committee of your Lordships' House. I explained in some detail during the Report stage, that I agree that there is a contrast between the two sets of legislation. In that Act and the Criminal Justice (Scotland) Bill, there is a provision that compensation shall not be paid unless the court is satisfied that there has been some serious default on the part of the person concerned in the investigation or the prosecution of the offence.

As I explained again on Report, I did not believe then, and I continue not to believe, that the analogy with the investigation of a very serious crime like drug trafficking is sufficiently relevant to provide an answer here. A police officer must be free to act on his reasonable suspicion that a serious crime has been committed. However, there it is accepted that where things have gone seriously amiss an innocent person may receive compensation.

I would not wish your Lordships to feel that I underestimate the importance of consumer safety, but we must recognise that we are not talking about the same kind of thing when we are concerned with the suspension of the supply of goods or their forfeiture. It seems right that where local authorities have a power to interfere with the course of trade they should exercise a greater degree of caution. I repeat, as I said at Report stage, that this has nothing to do with any difference in attitude that the Government may have to the police and to local authorities. It is the nature of the underlying offences which is the fundamental distinction.

The noble Lord, Lord Morton, raised a number of points of contrast with other legislation. I find his attitude just a little odd. I can understand that he might want consistency between the two sets of legislation, although, as I explained, I find that formal consistency inappropriate. The noble Lord is seeking to have it both ways. He sought to remove from the Criminal Justice (Scotland) Bill the same sort of provision. I accept it is not exactly the same but it is very similar to the provision he is now trying to insert into this Bill. The noble Lord, while asking why we are not consistent, seems to me to be seeking to make the two pieces of legislation inconsistent in a quite undesirable way, making compensation more easily available in the case of suspect drug traffickers and less easily available for innocent traders.

It is for those reasons, and in support of what I have said on a number of occasions, that I ask your Lordships' House to resist both these amendments.

Lord Morton of Shuna

My Lords, I am interested in the arguments put forward by the Minister when he said compensation for the suspected drug traffickers as opposed to compensation for the innocent trader. That is not the point. Under the drug trafficking legislation, before there is any question of compensation the accused drug trafficker's innocence has to be established. It is not a case of being a suspect; he has been acquitted and so has the trader. He has been acquitted, and they are both in exactly the same position. The acquittal of a trader under the Consumer Protection Act, as it will be, will have exactly the same standard of leaving a suspicion, or not leaving a suspicion, as the acquittal of somebody on any other charge.

I failed to see on drug trafficking, and even more so under the Financial Services Act, why a person who wishes to do financial service trading is entitled to no compensation unless he can establish bad faith. He is to get no protection, no compensation. He may be prevented from doing any business at all but he will get no compensation whereas the trader is to receive compensation even where the enforcement authority can show that it has reasonable cause for acting. That seems to me and to others on this side of the House to be entirely wrong. It also seems wrong because it will inhibit the enforcement authorities from acting at all.

I turn now to the point made by the noble Lord, Lord Campbell of Alloway. I refer, first, to Clause 14. In the compensation provisions it has to be shown that, there has been no contravention"— and that presumably is an acquittal—and, the exercise of the power is not attributable to any neglect or default". However, with someone as careful as the noble Lord in considering legislation and the amendments I find it surprising that he spoke about judicial review, because in Clause 14(8) and Clause 34(2) he will see who is to make the decision. It is quite easy to put on to the arbiter who is to be appointed the decision on whether the enforcement authority had reasonable grounds for suspecting, just as it is the decision on whether there has been neglect or default by the owner of the goods. Therefore, it seems that there is no question, and can be no question, of judicial review. I regret to say—

Lord Campbell of Alloway

My Lords, I am obliged to the noble Lord for giving way. I agree with him, but the difficulty is that his amendment does not provide that the arbiter should set aside. In the absence of any provision in the Bill as it stands, or in the amendment as drafted, the only other possible judicial redress is judicial review. I agree with the noble Lord that it is not appropriate, but his amendment does not tie it up.

Lord Morton of Shuna

My Lords, I am sorry, but we seem to be misunderstanding each other. Clause 14 states: Where an enforcement authority serves a suspension notice … the authority shall be liable to pay compensation", and so on, if: "(a) there has been no contravention", and (b) there has been no "neglect or default". If one adds an additional paragraph (c) that comes to be one of the facts that has to be decided, in the event of a dispute, by the arbiter appointed under subsection (8). In my submission, that is quite clear, but we must remain in dispute. Unfortunately, on this occasion I am not prepared to withdraw the amendment and I must seek the opinion of the House.

3.53 p.m.

On Question, Whether the said amendment (No. 3) shall be agreed to?

Their Lordships divided: Contents, 76; Not-Contents, 111.

Airedale, L. Barnett, L.
Allen of Abbeydale, L. Beaumont of Whitley, L
Aylestone, L. Bonham-Carter, L.
Banks, L. Brockway, L.

On Question, amendment agreed to.

Bruce of Donington, L. Lloyd of Hampstead, L.
Burton of Coventry, B.[Teller.] Lloyd of Kilgerran, L.
McNair, L.
Carmichael of Kelvingrove, L. Mais, L.
Cledwyn of Penrhos, L. Manchester, D.
David, B. Morton of Shuna, L.
Dean of Beswick, L. Mulley, L.
Diamond, L. Murray of Epping Forest, L
Elwyn-Jones, L. Nicol, B.
Ennals, L. Northfield, L.
Ewart-Biggs, B. Ogmore, L.
Fisher of Rednal, B. Ponsonby of Shulbrede, L.[Teller.]
Fitt, L.
Fletcher, L. Raglan, L.
Gallacher, L. Rathcreedan, L.
Gladwyn, L. Ritchie of Dundee, L.
Graham of Edmonton, L. Robson of Kiddington, B.
Grimond, L. Rochester, L.
Hacking, L. Sainsbury, L.
Hampton, L. Seear, B.
Hirshfield, L. Serota, B.
Houghton of Sowerby, L. Silkin of Dulwich, L.
Hughes. L. Somers, L.
Hunt, L. Stallard, L.
Hutchinson of Lullington, L Stewart of Fulham, L.
Irving of Dartford, L. Strabolgi, L.
Jeger, B. Taylor of Blackburn, L.
Jenkins of Putney, L. Tordoff, L.
John-Mackie, L. Underhill, L.
Kagan. L. Wells-Pesteli, L.
Kilbracken, L. Whaddon, L.
Kilmarnock, L. Wigoder, L.
Kirkhill, L. Williams of Elvel, L.
Leatherland. L. Wilson of Langside, L.
Llewelyn-Davies of Hastoe, Ypres, E.
Aldington, L. Ferrier, L.
Alexander of Tunis, E. Fraser of Kilmorack, L.
Alport, L. Gainford, L.
Arran, E. Gridley, L.
Atholl, D. Hailsham of Saint
Auckland, L. Marylebone, L.
Bauer, L. Hankey, L.
Beaverbrook, L. Hardinge of Penshurst, L.
Belhaven and Stenton, L. Harvington. L.
Belstead, L. Hesketh. L.
Bessborough. E. Hives, L.
Blyth, L. Home of the Hirsel, L.
Borthwick, L. Hood, V.
Boyd-Carpenter, L. Hooper, B.
Brabazon of Tara, L. Jessel, L.
Brougham and Vaux, L. Kimball, L.
Broxbourne. L. Kitchener, E.
Butterworth, L. Knollys, V.
Byron, L. Lane-Fox, B.
Caithness, E. Layton, L.
Campbell of Alloway, L. Lindsey and Abingdon, E.
Carnegy of Lour, B. Long, V.
Carnock, L. Lovat, L.
Clitheroe. L. Lucas of Chilworth, L.
Coleraine, L. Luke, L.
Cottesloe. L. Marley, L.
Cowley. E. Massereene and Ferrard, V.
Cox, B. Maude of Stratford-upon-Avon, L.
Craigavon, V.
Cullen of Ashbourne, L. Merrivale, L.
Davidson, V. [Teller.] Mersey, V.
De Freyne, L. Milverton, L.
Denham, L. [Teller.] Molson, L.
Denning, L. Monk Bretton, L.
Dilhorne, V. Morris, L.
Drumalbyn. L. Mowbray and Stourton, L.
Dulverton, L. Moyne, L.
Dundee. E. Munster, E.
Eccles, V. Murton of Lindisfarne, L.
Effingham. E. Nugent of Guildford, L.
Ellenborough. L. Orr-Ewing, L.
Elliot of Harwood, B. Pender, L.
Enroll. E. Portland. D.
Ferrers. E. Rankeillour, L.
Reigate, L. Terrington, L.
Renton, L. Teviot, L.
Rootes, L. Thomas of Swynnerton, L
Saint Oswald. L. Thomeycroft, L.
Saltoun of Abernethy, Ly. Trumpington, B.
Sandford, L. Vaux of Harrowden, L.
Shannon, E. Vickers, B.
Skelmersdale. L. Ward of Witley, V.
Slim. V. Westbury. L.
Stanley of Alderley. L. Whitelaw, V.
Strange. B. Wise, L.
Sudeley, L. Young of Graffham, L.
Swansea. L.

4.1 p.m.

Clause 34 [Compensation for seizure and detention]:

[Amendment No. 4 not moved.]

An amendment (privilege) made.

Lord Lucas of Chilworth

My Lords, I beg to move that the Bill do now pass.

This may be a good time to remind the House of the Bill's main purposes. Part I implements the European Commission product liability directive, which is a long-awaited improvement in consumer affairs. Some aspects of this part of the Bill were discussed at length, and in particular I have in mind the importance of the development risks defence in the overall balance of this improvement to the consumers' position.

In Part II of the Bill we have introduced the new concept of a general safety requirement, which provides that the supply of any consumer goods that are unsafe will constitute an offence. However, as with any general offence of this nature there is a range of defences against prosecution, including compliance with an approved standard.

Part III deals with misleading price indications and replaces the complicated provisions of Section 2 of the Trade Descriptions Act 1968 and the Price Marking (Bargain Offers) Order 1979. Part III creates the offence of giving a misleading price indication. It provides for a code of practice and confers a power to make regulations. Perhaps at this point I may mention one matter that has still to be resolved; namely, the legal status of the code. The Government's original proposal was to the effect that compliance with the code should constitute a complete defence. However, some of the major interests which are affected have recently presented an agreed package of alternative proposals which includes one that suggested that the code should not provide a defence but that compliance or contravention should tend to establish innocence or guilt. The Government are now consulting on the matter and will move amendments that reflect that consultation in another place. Your Lordships will have an opportunity to consider the matter further when the Bill returns for our consideration of amendments agreed in the other place.

During the passage of the Bill the Government have been offered a great deal of help by your Lordships in matters of detailed policy and in drafting. We have not always complied with the advice offered by noble Lords, but the fact that your Lordships have considered these points can only add to my confidence in the Bill. I should like briefly to express my gratitude to your Lordships for the way in which the Bill has been treated. The noble Lord, Lord Williams of Elvel, assured us at the outset that he and his colleagues would deal expeditiously with it, and they have done so. I am grateful to them, as I am also grateful to all noble Lords opposite and behind me for the cooperation that we have received.

I have said that the Bill has been widely welcomed. I hope that we can now send it to another place and that we can look forward to its return for our consideration with that one outstanding matter resolved.

Moved, That the Bill do now pass.—(Lord Lucas of Chilworth.)

Lord Williams of Elvel

My Lords, indeed this is an important Bill and your Lordships have recognised it as such by spending so much time and trouble on its various provisions. The Opposition Benches welcomed the Bill on Second Reading. We still welcome the Bill and wish it well. We think that your Lordships have made a number of improvements to the Bill during its passage through the House. They have perhaps not been in full the improvements that we should have liked to have seen; but there has been some progress, and on some issues the Government have shown a welcome flexibility for which we are grateful.

Nevertheless, as the Minister pointed out, there is a fairly major hole in Part III of the Bill, on which the Government are still consulting with various parties. Noble Lords will not know the result of that consultation until amendments are moved by the Government in another place and then, as the Minister has said, we shall have a chance to review them in this Chamber. This is not an altogether satisfactory situation. I have to make clear (as I did when we had our debate on this subject in Committee) that we are not entirely satisfied that this is the right way to go about things. Nevertheless, the Government have decided that it is what they want to do. I only hope very much that, the Bill having passed through another place, they do not come back to your Lordships'House with exactly the same formulation with which we started when the Bill was introduced.

The Minister was kind enough to refer to the cooperation given by the Opposition in seeing the Bill through the House expeditiously. I am grateful for his remarks and in turn wish to thank him and the noble and learned Lord the Lord Advocate for having been so accommodating and courteous in their replies to arguments, which, however badly they may have been formulated by the Opposition, nevertheless received a genuine, prompt and considerate response from the Government Front Bench, for which we are grateful.

I should like to thank my noble friends Lord Morton of Shuna, Lady Nicol, Lord Gallacher and Lord Graham for their co-operation from the Opposition Front Bench. I ought also to thank the noble Baroness, Lady Burton of Coventry, for the part that she has played in furthering this Bill. She is a well known champion of the consumer, and I hope she feels that the fact that this Bill is heading towards the statute book is due at least in part to her unremitting efforts. I also thank the noble Lord, Lord Allen of Abbeydale, who has contributed to your Lordships' discussions a great deal of the wisdom and experience that he gained from his role on the Pearson Commission.

We wish this Bill well. We hope that it will not get lost as a result of the timing of the next general election. We should very much like to see this measure on the statute book before the general election and we hope that the Government will ensure a quick passage for it in the other place and its return to your Lordships' House with a formulation of Part II that we can sensibly discuss.

Lord Campbell of Alloway

My Lords, my noble friend the Minister is to be congratulated upon the patience, courtesy and indeed ingenuity with which he has handled the formidable set of gremlins lurking in Part II of the Bill. It was helpful of my noble friend not to oppose Amendments Nos. 71 and 72 during the Committee stage of the Bill which could have forced a division that would have divided even these Benches. He was also helpful in regards to Amendments Nos. 44 and 62 in particular during the Report stage.

The essence of the problem warrants restating in view of the postponement of the revisory role. The essence of the problem is concerned solely with the due administration of the criminal law, for, in Committee, the enforcement procedures envisaged in Part III of the Bill were bedevilled by resort to contravention of a code of practice as an aid to conviction of a criminal offence.

On Report, my noble friend the Minister grasped the lifeline proffered by the noble Lord, Lord Henderson of Brompton, and accepted Amendments Nos. 44, 61 and 62, which removed all reference to a code of practice from Part III of the Bill. My noble friend accepted those amendments, without commitment, as part of a perfectly proper constitutional procedural device by which the revisory role of your Lordships' House was to be postponed so that when the Bill returned to your Lordships' House, "further opportunity to discuss the status of the code", —[Official Report, 12/3/87; col.1155] would be afforded.

Amendment No. 61 accorded the status of compliance with the code only for the purposes of defence. When my noble friend dealt with Part II just now, he seemed to suggest that the defence aspect as the only aspect that he had in mind for further consultation. I hope that that is not the case. My noble friend always keeps a mind open to argument and a door open to consultations, but has this devil of a code been exorcised? No assurance can be sought as to the form of amendments to be presented to another place. What is said in your Lordships' House today may well affect the ongoing process of consultation; what was said by the noble Lord, Lord Williams, just now may well affect the ongoing process which my noble friend has undertaken to entertain.

What then is the valedictory message? It is simply, first, resort to a code of practice as an aid to conviction of a criminal offence, whether as proposed in the Bill as originally drafted or, by analogy, by resort to a "highway code", was not acceptable to your Lordships' House. Secondly, the Bill, as amended, is acceptable to your Lordships' House, and provides a framework for enforcement by redefinition of Clauses 20–23 or by regulations under Clause 26, or both. Thirdly, and lastly, my noble friend Lord De La Warr, speaking from his experience of trade interests, and the noble and learned Lord, Lord Denning, speaking from a lifetime's experience of judicial office, strongly advised your Lordships' House that anything relating: to the code of practice should go out of the Bill altogether". —[Official Report, 12/3/87; col.1152.] Such is the position of the noble Lord, Lord Henderson of Brompton, as I understand it, such assuredly is my position and such is the position of many noble Lords.

That is the position as the Bill now stands. The hope must be that Her Majesty's Government will not, by amendment, seek to restore the admissibility of this code of practice as an aid to conviction of a criminal offence. The interests of any trade are subservient to the public interest and to the due administration of criminal justice. If the status of the code of practice were to be restored as an aid to conviction, it would tend to confuse, import uncertainty and inhibit effective enforcement.

In conclusion (end of message) does it not come to this? The principles of the amendments carried into the Bill on Report were accepted without a Division. The hope must be that, on reactivation of the revisory role of your Lordships, your Lordships will not be called upon to examine any substantial departure from those principles.

4.15 p.m.

Baroness Burton of Coventry

My Lords, I should like to comment briefly before we part with the Bill. This Consumer Protection Bill contains provisions that, are welcomed by consumer organisations, and we in the House have been able to carry certain measures which add to that welcome. I very much regret that we were unsuccessful in deleting the development risks defence. I believe that in future it will be seen as a grave error and a misjudgment. Obviously, this is not the occasion to reopen the matter, but I still feel that the argument that the individual should not suffer unduly compared with the rest of us is a just one. Four member states of the Community accept that responsibility: namely, France, Belgium, Luxembourg, and West Germany also in cases involving pharmaceuticals. I regret that we could not join them.

My main regret, and one that I suggest is particularly suitable for comment before we send the Bill on its way, concerns the position of your Lordships' House. We all know the difficulty of securing debates in this House on any major Bill prior to it being debated in another place. I think we all appreciate the problems faced by Leaders of the House, irrespective of which party is in power, and so those of us with a particular interest in consumer affairs welcomed the advent of the Consumer Protection Bill. I think that all quarters of the House have worked hard on the Bill, and we are appreciative of the part played by the Minister the noble Lord, Lord Lucas.

But I feel, and I feel very strongly, that this House has been slighted—I do not know whether "slighted" is the correct word or whether it should be "eroded" or "had its position weakened", I shall leave it with the term "slighted"—by the action proposed on behalf of the Government: namely, that the Secretary of State is prepared to reflect the outcome of the serious and proper consultations that we have been discussing when the Bill is before another place.

As 1 see it, it is our—I stress the word "our"—responsibility to pass on this Bill when we have discussed the major provisions contained in it. As the noble Lord, Lord Lucas, said: The legislation contains three basic elements: a general offence of giving a misleading price indication; a code of practice; and regulation-making powers."—[Official Report, 12/3/87; col.1153.] We have not been able to discuss those elements because when we try to do so we are told that all will be included in the discussions taking place with the Retail Consortium and other interested parties which are known by the umbrella term of the "concordat". In a letter dated 5th March, the consortium stated the disquiet and disagreement felt by the whole concordat with many of the provisions contained in this part of the Bill.

Alternative proposals have been submitted to the Minister more than once and at his request. These alternative proposals were further developed and presented to the Secretary of State on 19th February. The Minister found these unacceptable and further comments were invited for 25th March and 21st April.

I find myself quite unable to accept that what is proposed by the noble Lord, Lord Lucas, at cols.1154 and 1 156 on 12th March—namely, that to be able to comment on any amendments proposed in another place when the Bill eventually returns to us (as of course we have always been able to do under the rules of procedure; this is nothing new; this is no concession)—is in any way the same as reasoned debate in our Chamber on a major Bill starting its parliamentary journey in your Lordships' House.

I am not unmindful of what the noble Lord, Lord Lucas, has tried to do by accepting Amendments Nos. 44, 61 and 62 proposed by the noble Lords, Lord Gallacher and Lord Williams of Elvel, and myself. Obviously all I can do is to protest. However, I feel strongly on the matter and I think that this is the time to say so.

I should like to express appreciation to the Government Bench, and especially to the noble Lord, Lord Lucas, for their patience and courtesy throughout.1 am not unappreciative of what we have been able to achieve and we must obviously now await the outcome.

Lord Denning

My Lords, may I from these Benches add a few words? I thank the Government for all the concessions that they have made, but I should like to say a word about the code of practice. In the form in which the Bill leaves this House it is only a guide. It is no basis whatever for a criminal charge. It is suggested by the Government that in another place in some way or other they will make it the basis for evidence in support of a criminal charge. I would deplore any such introduction in the Bill after it leaves this House. However, we may be able to consider that at a later time.

Perhaps I may turn to another very important point. This is the first Bill that I know of in which it states in Part I on product liability: This Part shall have effect for the purpose of making such provision as is necessary in order to comply with the product liability Directive and shall be construed accordingly.". How many of your Lordships will have seen or sent for that product liability directive? It is much shorter and far simpler than our Bill. Our Bill has been considered here, line by line, and word by word, but not the directive.

The important point of principle which I should like your Lordships, and our courts afterwards, to consider is this. What is the relationship between our Act of Parliament, passed by both Houses after full consideration in every detail, with the product liability directive passed in Brussels without any democratic assembly or members going through it line by line or word by word? That is the legal point that I should like to raise.

Our Act of Parliament, our statute, is directed to all the people of England and Scotland, and others, and they must obey it. The directive in its very terms is addressed to the member states only, to all 12 of them, in the nine languages in which they operate. Each of them is equally authentic, and there are many differences between each of them. The question which I ask, and which must be considered by the courts, is this. How far in interpreting our Bill are we to look at that directive? If there is a conflict, is the directive to take governance over our own statute?

I have written this out because it is important for the future. I should like to suggest that the courts of this country should have regard exclusively to the English statute and should ignore the directive for this reason. By our law the statute alone is that which is binding on our people. The directive is not. By the Treaty of Rome the directive is not addressed to our people at all. It is addressed to the governments of the member states for each one of them to implement by its own legislation. It is addressed to them in nine different languages, each of which is equally authentic.

Each member state, including our own, must implement the objectives by its own legislation, using its own language, legal terms and concepts, clearing up any ambiguities or uncertainties and adding any additional explanation which it thinks desirable consistent with the result to be achieved. In short, it is by the process of synthesis—I do not understand altogether what synthesis is—by putting the objectives of the directive into a coherent statute, recognisable by our English courts. Once the Bill is passed the courts should assume that this implementation has been well and truly done.

For those reasons the Government were quite right during the the passage of the Bill to refuse to append the directive in the schedule where it could be seen and also to refuse to have the English text of it or make it authoritative, because it is no part of our law. Nor should our English courts ever refer to Luxembourg for the meaning of the directive. Once the Bill is on the statute book our courts must go by the words of the statute and not by the directive. That is why we have been through our statute word for word and line by line, at all stages, and not through the directive.

For instance, how grateful we were in Part I where there were two or three quite incomprehensible passages, which were, quite rightly, struck out. The Government conceded that they were, in effect, meaningless. We were going through a Bill which was to become our statute. That is why we went through it word by word, and line by line, so that the statute, as finally passed by both Houses of Parliament, would govern our courts and not a directive which was addressed to all member states in Brussels.

I should like to suggest that that is a very important point, governing not only the implementation of this directive but of other directives in the future. That is why I have said as much as I have.

4.30 p.m.

Lord Allen of Abbeydale

My Lords, I hesitated before speaking today but I should not like the Bill to leave this House without saying that it is a source of gratification that Part I will enable this country to put into effect the EC directive on product liability which was at last concluded after so many years of delay and disappointment. It has not been very encouraging to those of us who laboured pretty hard, and certainly pretty long, on the Pearson Commission that our report has been so largely ignored. It would be churlish of me not to recognise that at any rate one of our main recommendations has at long last been implemented. I should like to add my appreciation for the way in which the Minister responded to the arguments put in the course of debate, even though sometimes he came to the wrong conclusion.

I certainly do not wish to go over the arguments that we had at the earlier stages of the Bill, but I must record my regret that in two respects it seems to me that as the Bill leaves this House, it is quite seriously flawed. In my innocence I had thought that a consumer protection Bill would protect all consumers. Alas, that has turned out not to be. As the Bill leaves your Lordships' House it still exempts some of the food we eat, as there remains the exemption for agricultural produce which has not undergone an industrial process. In spite of all that has been said, we still do not know precisely what constitutes such a process. Try as I may, I have been unable to understand this decision. It is not much of an exaggeration to say that those who insisted on retaining this special provision for agricultural products argued, on the one hand, that industry was so efficient, and already so hedged about with controls and subject to criminal sanctions, that the risk of things going wrong was minimal. On the other hand, to refuse this let-out would cripple the industry and bring the farmers to their knees. There seems to be something missing in the argument. However, the decision has been taken; so be it.

I must say a few words about the second aspect already touched upon by the noble Baroness concerning the defence of development risks. The wording of the relevant subsection has been greatly improved and I should like to express the hope that the Government will not countenance any alteration in another place. There is also the comforting thought that the directive itself provides for the operation of this particular defence to be reviewed in 10 years' time, so that consideration can then be given to its abolition. I hope and believe that that is what will happen. I am pleased that the Bill is drafted in such terms that, if the need arises, this defence can be struck out by a subordinate instrument without the need for fresh legislation.

However, I find it particularly disappointing that drug manufacturers remain within this exception, if only for a decade. I devoutly hope that there will never be a tragedy comparable to the thalidomide disaster. No one has ever sought to deny that another tragedy of this kind could happen, however remote the possibilities in the light of the precautions which are now taken. It is an odd and rather disquieting reflection that, although the thalidomide tragedy was largely responsible for starting the debate in this country concerning strict liability, followed by the setting-up of the Pearson Commission and the reference to the Law Commissions, we are now leaving the possible victims of a further thalidomide-type tragedy as one of the very few exceptions to the doctrine of strict liability provided for in the Bill.

At earlier stages we heard a lot about the threat to innovation, most of it, to my mind, misconceived. We heard a good deal about the merits of the pharmaceutical industry, merits which no-one for a moment has had any thought of denying. But, after all, it is not much comfort to know that this is an industry which has gone along without strikes if you happen to have been born without any arms. Our decision not to venture down the path which West Germany has already gone down and make special provisions is not a decision on which the House will be able to look back with any pride.

Lord Auckland

My Lords, having been involved, albeit marginally, in several consumer protection Bills in my years in your Lordships' House, perhaps I may venture a few words as the Bill takes its valedictory passage through your Lordships' House.

As I said on Second Reading, I believe that this is the most important of all consumer legislation Bills which Parliament has discussed. In a philosophical moment one may say that no piece of government legislation will ever protect every consumer, no matter how watertight the wording may be. I have spent most of my working life in the insurance industry. I am also honorary vice-president of the Royal Society for the Prevention of Accidents; so I have an ambivalent view on certain aspects of the Bill.

Undoubtedly, Clause 4 is the linchpin of the Bill. I have had many years of interest (of a non-financial kind) in the pharmaceutical industry. Serving, as I have, on hospital committees, I have come into contact with that industry. I have discussed matters, many of which are inherent in the Bill. I venture to question that even if Clause 4 were deleted it would be possible, in any definite sense, to avoid something as awful as the thalidomide tragedy. So long as there is human error, no matter what legislation government produce, the unfortunate fact that we have to face is that such tragedies will happen.

I would beg the insurance industry to recognise that when it comes to this very difficult problem of product liability, the more research that is undertaken, whether it concerns drugs, electrical appliances or other products, the less the risks are likely to be. I believe the insurance industry has an important part to play here. I leave the House with that thought.

Finally, I should like to support a comment made by the noble Lord, Lord Williams of Elvel; namely, that when the Bill reaches the other place it will go through as rapidly as is possible, bearing in mind the exhaustive amount of discussion the Bill has had in your Lordships' House. It would be a great tragedy— whatever may happen in the next three months—if the Bill was lost. This is a necessary Bill. It is by no means a perfect Bill; but this House has shown what it can do, on all sides, in making legislation as practicable as possible.

Baroness Robson of Kiddington

My Lords, on behalf of these Benches, I should like to join Members of the House in welcoming the Bill, which in many ways has been greatly improved by your Lordships. It goes to the other House as probably the best Consumer Protection Bill that has ever come before us. I must however join the noble Baroness, Lady Burton of Coventry, in regretting that we did not manage to amend the development risk defence.

I think that, as the noble Lord, Lord Allen, has said, we should at least have removed it on pharmaceuticals. I am equally sad that the amendment on agricultural produce failed by only four votes. It shows that a large number of Members of your Lordships' House felt that this was an amendment that should have been passed.

Another major concern remains which we have not discussed. It is that any Bill which, after its passage through the other place will become an Act of Parliament, is only as good as the enforcement mechanism contained within it. I refer not only to the mechanism of enforcement, but also to the financial implications of enforcement. I am more than concerned that the Bill states: There are not expected to be any implications for public expenditure or public service manpower.". I know that my noble friend Lord Ezra has written to the Minister and pointed out that many local authorities have estimated that the increased cost of the enforcement will be about 3 per cent, per annum. I should like to ask the Government to keep that in mind when the rate support grant is under discussion because, unless local authorities have the right amount of finance at their disposal, the enforcement will not take place. With those words I welcome the passing of the Bill.

4.45 p.m.

Lord Airedale

My Lords, I should not like to be left out of the felicitations that have been exchanged this afternoon, but I must say a few words about the unsatisfactory nature of Part I of the Bill as it leaves this House.

Originally the question was: is it just that a producer who is without blame shall be liable, to the limit of his resources, for a defective product? We were told "You need not really worry about that because the producer can get his protection by ensuring against his liability and he can pass on the cost of the insurance in the price of the products that he sells." It took a very long time to induce the Government to believe that there was a flaw in that argument, but by the time we reached the Report stage the Government had accepted that insurance for unlimited liability simply is not available, and so the producer was left exposed to liability up to the limit of his financial resources beyond the point at which he could obtain insurance cover. We were not just talking about great big manufacturing industries. This is very much the age of small businesses and they were left exposed to unlimited liability.

Faced with that argument on Report, the best that the Government could do was to say, "Unlimited liability is not unique to this Bill. There is unlimited liability in cases of negligence."

That is true, but not all of us are happy about that position and I do not believe that the noble and learned Lord, Lord Denning, is happy about that position. If I am wrong, I shall surely be put right. I say that because, in yesterday evening's debate upon civil liability for negligence by members of the professions, the noble and learned Lord said at col.1487 of Hansard: When professional men are involved, let them insure as best they can. Do not make them liable beyond the limits of what any reasonable insurance can cover. Surely that is fair, both to the injured person and to the professional person. If that is true in cases of negligence, how much more must that be true in the case of people who are without fault and without blame.

I understand that we are prohibited by the directive from placing a limit upon the liability of the producer, so I suggest that we are driven to an inescapable conclusion that it must be right that, where the producer is blameless and exposed beyond the point for which he could insure, he deserves to be compensated as to the exess by the Community. I do not believe that we could achieve fairness in Part I of the Bill in any other way, having been prevented by the directive from imposing a limit of liability. I hope very much that this Bill will come back to this House with an amendment taking care of this aspect of the matter.

Lord Henderson of Brompton

My Lords, I have hardly spoken on this Bill, but I have followed its proceedings with some care. I would not have sought to speak on Third Reading but for the fact that I find myself in disagreement with what the noble Baroness, Lady Burton of Coventry, said on Report, and again today on Third Reading, about the position of your Lordships' House. She said today that this House had been slighted or perhaps eroded or possibly weakened by the conduct of the Minister in this House and the Government generally and particularly the Secretary of State.

The noble Baroness knows that I have the very highest regard for her and that I disagree with her only with great misgiving, but I must do so on this occasion and salute, if I may, the Minister and his reaction to a very complicated and difficult problem. Here he was, bringing this Bill into this House of Parliament as the first House to consider it. He found not only strong views on all sides of the House, but also a very powerful consortium, or whatever it is called—the concordat—outside the House. He would have rightly been accused of perhaps eroding the position of this House or slighting this House if he had sought to call up a large majority of his supporters to defeat opinions strongly held in this House, not just on the Cross-Benches or the Opposition Benches but also on his own Benches.

I have no doubt that he could have summoned up forces of that kind, and if he had done so he would then have been treating the House with contempt. I regard the way that he behaved and the way that the Secretary of State has behaved as the classic way in which Ministers and governments should respond to proper pressure from Parliament. In this context, where this House is the first House of Parliament to consider the Bill, another place has the revisory function, which normally falls to us because most Bills are introduced in another place. After this consultation period, which simply could not have been concluded by the time the Bill leaves this House because of the diversity and number of those who have to be consulted, (who number well over 200), it is for the Minister in another place to present the result of those consultations. Then of course we in this House must see what another place makes of them. We have an opportunity to comment on the amendments made by another place when the Bill returns to this House and that is entirely right and proper. I congratulate the Minister on the way that he has handled the Bill, particularly in relation to the difficult crux: namely, the code of practice in Part III.

The noble Lord, Lord Campbell of Alloway, mentioned my name, and I should like to say that this is a indication of the flexibility of the Minister. He brought in the Bill with a code of conduct with the intention that it should be a complete defence for those who had complied with it in a court of law. It leaves the House as nothing more than a guide. Perhaps something in between the two will result from the consultations which the Minister is now having and the amendment made in another place.

I particularly ask the Minister and the ministry to have regard to the three principles enunciated by the noble Lord, Lord Campbell of Alloway, at the Report stage on 12th March (Official Report, col.1150): first, when dealing with a code of practice such as this, to create the offence; secondly, if one is to use a code of practice, redraft the code with the use of the criminal courts in mind; thirdly, that the status of the code in terms of legal efficacy must be defined with total clarity in the primary legislation.

If the Minister and the ministry will bear those principles in mind during the consultations that they are having with the concordat and others, I should be most grateful. I believe that in many ways this is a test case for the use of codes of conduct in Bills of this importance. It is vital that the matter should be right so that in future cases there will not be the muddle which, quite frankly, has been exposed in the course of the deliberations of this House on the Bill.

Baroness Burton of Coventry

My Lords, may I have the permission of the House to comment on what the noble Lord, Lord Henderson, has said? We all recognise the noble Lord's great constitutional authority, and the affection and respect in which we hold him. I am afraid that with some temerity I disagree with what he has said. I should like to ask him whether he is aware that if the Secretary of State had been able to accept the substantiated proposals which were submitted to him by the concordat and the Retail Consortium for the second time in February, we should then have been able to discuss them in full in the Bill. I still maintain, with great respect to the noble Lord, Lord Henderson, that that would have been a more democratic procedure and more in keeping with the rights of your Lordships' House.

Lord Lucas of Chilworth

My Lords, I do not want to keep your Lordships' House this evening. I should like to acknowledge with thanks the points which have been made this afternoon—some more heartfelt than others. We have discussed most of them on more than one occasion and therefore I do not propose to reiterate any arguments.

I should like to add one final comment, despite the fact that the noble Lord, Lord Henderson of Brompton, has made the point. I certainly neither sought to slight, nor erode, nor weaken the role of your Lordships' House, and neither did those of my colleagues, nor the managers of our affairs. In a bicameral Parliament there is no erosion, weakening or slighting in allowing the second Chamber to make further amendments to a Bill in the light of undertakings given in the first Chamber. It happens frequently in your Lordships' House in respect of another place; now it will happen the other way round. I suggest that it is one of the great advantages of our system. Noble Lords will be able to consider any amendments which are put down in another place when that other place returns the Bill to your Lordships' House in due course. With those remarks, I commend the Bill to the House.

On Question, Bill passed, and sent to the Commons.