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Amendment No. 417 would add two further grounds that are variants of those proposed by amendment No. 416, and once again we are not persuaded, for substantially the same reasons as before, of the arguments of the hon. Member for Huntingdon. I
17 Oct 2006 : Column 838
therefore ask him to consider withdrawing the amendment. If he does not do so, we will feel it necessary to oppose it.

Mr. Djanogly: Under these provisions, there will be a wider variety of people who can be sued, it will be possible to sue people for a greater variety of offences, and there will be a more straightforward procedure by which to sue people, which I think the Minister called a clearer and more accessible procedure. I foresee that the net result will be that more people will, indeed, be sued, as my hon. Friend the Member for North Wiltshire (Mr. Gray) suggested.

The Government have introduced certain amendments to tighten this part of the Bill, introducing the two-stage process, which in itself could be contentious—I have doubts that it will, in the event, save costs. While we note the requirement for the claimant to establish a prima facie case in order to obtain permission to continue a derivative claim, the introduction of the threshold does not entirely address the concerns about frivolous litigation. For certain categories of claim, it will be easy to establish a prima facie case, and the threshold might not act as a deterrent. The best example that I can give is where directors or the company have been fined for regulatory breaches. Evidence of the conviction will itself amount to a prima facie case of breach of duty under clause 243(3). The threshold is also no answer to the concerns that arise from allowing shareholders to bypass the board when commencing a derivative claim.

We remain concerned that part 11 empowers shareholders to commence litigation against the directors without consulting or informing the board. That increases the chances of tactical litigation, as I have made clear. Secondly, it will create the capacity for disruption. Thirdly, it will give the shareholder a primary, rather than a derived, right to bring a claim in the company’s name. On that point, we have common ground with the Liberal Democrats; it comes to the fore in relation to amendment No. 415.

9.30 pm

It is a fundamental principle of company law that directors owe their duties to the company, and the company thus has the primary right to sue them in respect of wrongdoing. At present, a shareholder derives a right to sue in a company’s name in particular circumstances, including because the wrongdoers who control the company will not exercise the company’s primary right to sue. By failing to include a requirement that the board be consulted on, or informed about, a shareholder’s intention to sue the directors in the company’s name, the company will be deprived of an opportunity to exercise its primary right to sue in any circumstances in which the shareholder chooses not to consult the board. We were not convinced by the Minister’s response to that point, so although I will not press amendments Nos. 412 to 414 to a Division, I will press amendment No. 415. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: No. 415, in page 121, line 33, at end insert—

‘(6) A derivative claim under this Chapter may only be brought if the directors have been requested by a member of the company
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to bring a claim in respect of an act or omission specified in subsection (3) and have not agreed to the request after the expiry of a reasonable period from service of the request.’.— [Mr. Djanogly.]

Question put, That the amendment be made:—

The House divided: Ayes 191, Noes 287.
Division No. 310]
[9.30 pm


Afriyie, Adam
Ainsworth, Mr. Peter
Alexander, Danny
Amess, Mr. David
Arbuthnot, rh Mr. James
Atkinson, Mr. Peter
Bacon, Mr. Richard
Baker, Norman
Barker, Gregory
Baron, Mr. John
Barrett, John
Beith, rh Mr. Alan
Beresford, Sir Paul
Blunt, Mr. Crispin
Bone, Mr. Peter
Boswell, Mr. Tim
Bottomley, Peter
Brady, Mr. Graham
Brazier, Mr. Julian
Breed, Mr. Colin
Brokenshire, James
Brooke, Annette
Browne, Mr. Jeremy
Browning, Angela
Burns, Mr. Simon
Burt, Lorely
Butterfill, Sir John
Cable, Dr. Vincent
Campbell, Mr. Gregory
Campbell, rh Sir Menzies
Carswell, Mr. Douglas
Clark, Greg
Clegg, Mr. Nick
Clifton-Brown, Mr. Geoffrey
Cox, Mr. Geoffrey
Crabb, Mr. Stephen
Davey, Mr. Edward
Djanogly, Mr. Jonathan
Dodds, Mr. Nigel
Duddridge, James
Duncan, Mr. Alan
Duncan Smith, rh Mr. Iain
Dunne, Mr. Philip
Ellwood, Mr. Tobias
Evans, Mr. Nigel
Fabricant, Michael
Fallon, Mr. Michael
Farron, Tim
Featherstone, Lynne
Field, Mr. Mark
Foster, Mr. Don
Francois, Mr. Mark
Garnier, Mr. Edward
George, Andrew
Gibb, Mr. Nick
Gidley, Sandra
Goldsworthy, Julia
Goodman, Mr. Paul
Goodwill, Mr. Robert
Gove, Michael
Gray, Mr. James
Grayling, Chris
Green, Damian
Greening, Justine
Greenway, Mr. John
Gummer, rh Mr. John
Hague, rh Mr. William
Hammond, Mr. Philip
Hammond, Stephen
Hands, Mr. Greg
Harper, Mr. Mark
Harris, Dr. Evan
Heald, Mr. Oliver
Heath, Mr. David
Heathcoat-Amory, rh Mr. David
Hemming, John
Hendry, Charles
Herbert, Nick
Hoban, Mr. Mark
Hogg, rh Mr. Douglas
Hollobone, Mr. Philip
Holloway, Mr. Adam
Holmes, Paul
Horam, Mr. John
Horwood, Martin
Hosie, Stewart
Howarth, David
Howarth, Mr. Gerald
Hunt, Mr. Jeremy
Jack, rh Mr. Michael
Jackson, Mr. Stewart
Jenkin, Mr. Bernard
Jones, Mr. David
Kawczynski, Daniel
Keetch, Mr. Paul
Key, Robert
Kirkbride, Miss Julie
Knight, rh Mr. Greg
Laing, Mrs. Eleanor
Lait, Mrs. Jacqui
Lancaster, Mr. Mark
Lansley, Mr. Andrew
Leech, Mr. John
Leigh, Mr. Edward
Letwin, rh Mr. Oliver
Lewis, Dr. Julian
Lidington, Mr. David
Llwyd, Mr. Elfyn
Loughton, Tim
Mackay, rh Mr. Andrew
MacNeil, Mr. Angus
Main, Anne
Maples, Mr. John
May, rh Mrs. Theresa
McCrea, Dr. William
McIntosh, Miss Anne
McLoughlin, rh Mr. Patrick
Miller, Mrs. Maria
Moss, Mr. Malcolm
Mulholland, Greg
Mundell, David
Murrison, Dr. Andrew
Neill, Robert

Newmark, Mr. Brooks
O'Brien, Mr. Stephen
Oaten, Mr. Mark
Öpik, Lembit
Ottaway, Richard
Paice, Mr. James
Paterson, Mr. Owen
Pelling, Mr. Andrew
Penrose, John
Pickles, Mr. Eric
Price, Adam
Prisk, Mr. Mark
Pritchard, Mark
Pugh, Dr. John
Randall, Mr. John
Redwood, rh Mr. John
Reid, Mr. Alan
Rennie, Willie
Robathan, Mr. Andrew
Robertson, Angus
Robertson, Hugh
Robertson, Mr. Laurence
Rogerson, Mr. Dan
Rowen, Paul
Ruffley, Mr. David
Russell, Bob
Scott, Mr. Lee
Selous, Andrew
Shapps, Grant
Simmonds, Mark
Simpson, David
Simpson, Mr. Keith
Smith, Sir Robert
Soames, Mr. Nicholas
Spelman, Mrs. Caroline
Spicer, Sir Michael
Spink, Bob
Spring, Mr. Richard
Stanley, rh Sir John
Stuart, Mr. Graham
Stunell, Andrew
Swinson, Jo
Syms, Mr. Robert
Tapsell, Sir Peter
Taylor, Matthew
Taylor, Dr. Richard
Teather, Sarah
Turner, Mr. Andrew
Tyrie, Mr. Andrew
Villiers, Mrs. Theresa
Waterson, Mr. Nigel
Watkinson, Angela
Webb, Steve
Weir, Mr. Mike
Whittingdale, Mr. John
Widdecombe, rh Miss Ann
Wiggin, Bill
Willetts, Mr. David
Williams, Hywel
Williams, Mark
Williams, Mr. Roger
Williams, Stephen
Willis, Mr. Phil
Willott, Jenny
Wishart, Pete
Wright, Jeremy
Yeo, Mr. Tim
Younger-Ross, Richard
Tellers for the Ayes:

Mr. David Evennett and
Andrew Rosindell

Abbott, Ms Diane
Ainger, Nick
Ainsworth, rh Mr. Bob
Alexander, rh Mr. Douglas
Allen, Mr. Graham
Anderson, Janet
Atkins, Charlotte
Austin, Mr. Ian
Bailey, Mr. Adrian
Banks, Gordon
Barlow, Ms Celia
Barron, rh Mr. Kevin
Battle, rh John
Bayley, Hugh
Begg, Miss Anne
Benn, rh Hilary
Benton, Mr. Joe
Berry, Roger
Blackman, Liz
Blackman-Woods, Dr. Roberta
Blears, rh Hazel
Blizzard, Mr. Bob
Borrow, Mr. David S.
Bradshaw, Mr. Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr. Nicholas
Brown, Mr. Russell
Browne, rh Des
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burgon, Colin
Burnham, Andy
Butler, Ms Dawn
Byers, rh Mr. Stephen
Byrne, Mr. Liam
Caborn, rh Mr. Richard
Cairns, David
Campbell, Mr. Alan
Campbell, Mr. Ronnie
Caton, Mr. Martin
Cawsey, Mr. Ian
Chapman, Ben
Chaytor, Mr. David
Clapham, Mr. Michael
Clark, Ms Katy
Clark, Paul
Clarke, rh Mr. Charles
Clarke, rh Mr. Tom
Clelland, Mr. David
Coaker, Mr. Vernon
Coffey, Ann
Cohen, Harry
Connarty, Michael
Corbyn, Jeremy
Cousins, Jim
Crausby, Mr. David
Creagh, Mary
Cruddas, Jon
Cryer, Mrs. Ann
Cummings, John
Cunningham, Mr. Jim
Cunningham, Tony
Curtis-Thomas, Mrs. Claire
Darling, rh Mr. Alistair

David, Mr. Wayne
Davidson, Mr. Ian
Dean, Mrs. Janet
Devine, Mr. Jim
Dhanda, Mr. Parmjit
Dismore, Mr. Andrew
Dobbin, Jim
Donohoe, Mr. Brian H.
Doran, Mr. Frank
Dowd, Jim
Drew, Mr. David
Dunwoody, Mrs. Gwyneth
Durkan, Mark
Eagle, Angela
Ellman, Mrs. Louise
Engel, Natascha
Ennis, Jeff
Farrelly, Paul
Field, rh Mr. Frank
Fisher, Mark
Fitzpatrick, Jim
Flello, Mr. Robert
Flint, Caroline
Flynn, Paul
Follett, Barbara
Foster, Michael Jabez (Hastings and Rye)
Francis, Dr. Hywel
Gapes, Mike
Gardiner, Barry
George, rh Mr. Bruce
Gerrard, Mr. Neil
Gibson, Dr. Ian
Gilroy, Linda
Godsiff, Mr. Roger
Goodman, Helen
Griffith, Nia
Griffiths, Nigel
Grogan, Mr. John
Gwynne, Andrew
Hall, Mr. Mike
Hall, Patrick
Hamilton, Mr. David
Hamilton, Mr. Fabian
Hanson, Mr. David
Harman, rh Ms Harriet
Harris, Mr. Tom
Henderson, Mr. Doug
Hendrick, Mr. Mark
Heppell, Mr. John
Hesford, Stephen
Hewitt, rh Ms Patricia
Heyes, David
Hill, rh Keith
Hillier, Meg
Hodge, rh Margaret
Hodgson, Mrs. Sharon
Hoey, Kate
Hood, Mr. Jimmy
Hoon, rh Mr. Geoffrey
Hope, Phil
Hopkins, Kelvin
Howarth, rh Mr. George
Hoyle, Mr. Lindsay
Hughes, rh Beverley
Humble, Mrs. Joan
Hutton, rh Mr. John
Iddon, Dr. Brian
Ingram, rh Mr. Adam
Jackson, Glenda
James, Mrs. Siân C.
Jenkins, Mr. Brian
Johnson, rh Alan
Johnson, Ms Diana R.
Jones, Helen
Jones, Mr. Kevan
Jones, Lynne
Jones, Mr. Martyn
Joyce, Mr. Eric
Kaufman, rh Sir Gerald
Keeble, Ms Sally
Keen, Alan
Keen, Ann
Kelly, rh Ruth
Kemp, Mr. Fraser
Kennedy, rh Jane
Khabra, Mr. Piara S.
Khan, Mr. Sadiq
Kidney, Mr. David
Knight, Jim
Lammy, Mr. David
Laxton, Mr. Bob
Lepper, David
Levitt, Tom
Lewis, Mr. Ivan
Linton, Martin
Lloyd, Tony
Love, Mr. Andrew
Lucas, Ian
Mackinlay, Andrew
MacShane, rh Mr. Denis
Mallaber, Judy
Mann, John
Marris, Rob
Marsden, Mr. Gordon
Marshall, Mr. David
Marshall-Andrews, Mr. Robert
Martlew, Mr. Eric
McAvoy, rh Mr. Thomas
McCabe, Steve
McCafferty, Chris
McCarthy, Kerry
McCarthy-Fry, Sarah
McDonagh, Siobhain
McDonnell, Dr. Alasdair
McDonnell, John
McFadden, Mr. Pat
McFall, rh John
McGovern, Mr. Jim
McGuire, Mrs. Anne
McIsaac, Shona
McKechin, Ann
McKenna, Rosemary
Meacher, rh Mr. Michael
Meale, Mr. Alan
Merron, Gillian
Michael, rh Alun
Milburn, rh Mr. Alan
Miliband, Edward
Miller, Andrew
Mitchell, Mr. Austin
Moffatt, Laura
Mole, Chris
Moon, Mrs. Madeleine
Morden, Jessica
Morgan, Julie
Morley, Mr. Elliot
Mountford, Kali
Mudie, Mr. George
Mullin, Mr. Chris
Munn, Meg
Murphy, Mr. Jim
Naysmith, Dr. Doug
O'Brien, Mr. Mike

O'Hara, Mr. Edward
Olner, Mr. Bill
Osborne, Sandra
Owen, Albert
Palmer, Dr. Nick
Pearson, Ian
Plaskitt, Mr. James
Pope, Mr. Greg
Prentice, Bridget
Prentice, Mr. Gordon
Primarolo, rh Dawn
Prosser, Gwyn
Purchase, Mr. Ken
Purnell, James
Rammell, Bill
Raynsford, rh Mr. Nick
Reed, Mr. Jamie
Reid, rh John
Riordan, Mrs. Linda
Robertson, John
Roy, Mr. Frank
Ruane, Chris
Ruddock, Joan
Russell, Christine
Ryan, Joan
Salter, Martin
Seabeck, Alison
Shaw, Jonathan
Sheerman, Mr. Barry
Sheridan, Jim
Simon, Mr. Siôn
Simpson, Alan
Singh, Mr. Marsha
Skinner, Mr. Dennis
Slaughter, Mr. Andrew
Smith, rh Mr. Andrew
Smith, Ms Angela C. (Sheffield, Hillsborough)
Smith, Geraldine
Smith, rh Jacqui
Smith, John
Snelgrove, Anne
Soulsby, Sir Peter
Spellar, rh Mr. John
Starkey, Dr. Phyllis
Stewart, Ian
Stoate, Dr. Howard
Strang, rh Dr. Gavin
Stuart, Ms Gisela
Sutcliffe, Mr. Gerry
Tami, Mark
Taylor, Ms Dari
Taylor, David
Tipping, Paddy
Todd, Mr. Mark
Touhig, rh Mr. Don
Trickett, Jon
Truswell, Mr. Paul
Turner, Dr. Desmond
Twigg, Derek
Ussher, Kitty
Vis, Dr. Rudi
Waltho, Lynda
Wareing, Mr. Robert N.
Watson, Mr. Tom
Watts, Mr. Dave
Wicks, Malcolm
Williams, rh Mr. Alan
Williams, Mrs. Betty
Wills, Mr. Michael
Winnick, Mr. David
Winterton, rh Ms Rosie
Wood, Mike
Woodward, Mr. Shaun
Wright, Mr. Anthony
Wright, David
Wright, Mr. Iain
Wright, Dr. Tony
Wyatt, Derek
Tellers for the Noes:

Mr. Michael Foster and
Huw Irranca-Davies
Question accordingly negatived.
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17 Oct 2006 : Column 841

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Clause 265

Derivative proceedings

Amendment made: No. 171, in page 125, line 4, leave out ‘461(2)(c) of the Companies Act 1985 (c. 6)’ and insert ‘963(2)(c)’.— [Margaret Hodge.]

Further consideration adjourned .—[Mr. Alan Campbell.]

Bill, as amended in the Standing Committee, to be further considered tomorrow.


Motion made, and Question put forthwith, pursuant to Standing Order No. 18(1)(a) (Consideration of draft regulatory reform orders),

landlord and tenant

Question agreed to.

17 Oct 2006 : Column 843


Motion made, and Question proposed,

9.46 pm

Mr. Stephen O'Brien (Eddisbury) (Con): I am grateful for the chance to discuss this important matter, which might not have arisen had the previous business run to the moment of interruption.

An important question must be asked of Ministers on the Treasury Bench, who do not include a Health Minister— [Interruption]. I see the Minister of State, Department of Health, the hon. Member for Don Valley (Caroline Flint), running to take her place. I welcome her to the debate. I hope that she is considerably more briefed on the statutory instrument than I have had the opportunity to be.

The statutory instrument was laid before the House on 2 June this year, when Parliament was sitting and capable of dealing with it. The arrangements that the order implements were put into practical effect—came into force—on 1 July, when the House was still sitting. The question is, why are we faced this evening with a statutory instrument that was laid before the House on 2 June? I am sure that the Minister will be able to explain the reason.

Dr. Andrew Murrison (Westbury) (Con): My hon. Friend will have read in the explanatory note on the order that

Mr. Speaker: Order. I must give a ruling here. We should not debate the order. We are considering whether the order should be referred to a Committee, not the merits of the order itself.

Peter Bottomley (Worthing, West) (Con): On a point of order, Mr. Speaker. This is in no sense a challenge, but my hon. Friend the Member for Westbury (Dr. Murrison) has read out part of the explanatory note on the order. Under that heading—in brackets and italics, so it may not count—appear the words:

Presumably, therefore, debating that is not debating the order.

Mr. Speaker: This is getting too technical even for the Speaker. What we are going to do is talk about whether the order is to go into Committee, where such tricky little things can be discussed.

Mr. O'Brien: I am grateful for your ruling, Mr. Speaker. It had struck me that to debate the point that my hon. Friend the Member for Westbury made, very perceptively, would have been to discuss the substance of the order. I recognised that that would not be relevant this evening, as your ruling on the point of order confirms.

17 Oct 2006 : Column 844

What matters is the fact that the order came into effect on 1 July, it having being laid before Parliament on 2 June—six or seven weeks before the House rose for the long summer recess. Why was not the order laid before the House and time found for a debate, so that we might understand the serious consequences that flow from it?

I fully accept Mr. Speaker’s ruling that we must not debate the substance of the order. Schedule 2 abolishes all the strategic health authorities with which we were so familiar and which existed in our various constituencies across England, albeit not in Scotland. Schedule 1 replaces them with a lesser number of strategic health authorities but, interestingly, there were issues about the transfer of staff, so there will be no difference. Will the Minister explain why the House was not given the opportunity to debate the order and possibly to vote to refer it to Committee? That would have allowed us to discuss the substance.

Damian Green (Ashford) (Con): My hon. Friend has ensured that a Health Minister is present on the Front Bench to discuss whether one of the orders covered by the motion should be referred to Standing Committee. The other order mentioned in the motion relates to changes in immigration rules. I hope the Government can provide a Home Office Minister to discuss the second and equally important part of the motion.

Mr. Speaker: Too long. Mr. O’Brien, have you any more to add?

Mr. O'Brien: The point raised by my hon. Friend the Member for Ashford (Damian Green) was a point of order, so I do not need to refer to it.

The Minister must deal with the extra cost has been placed on the processes of the House and therefore on the taxpayer, now that we are challenged to consider the order after it has been put in place. I ask you, Mr. Speaker, to consider, and I hope the Minister will also think about, the feelings of members of strategic health authorities who have recently been appointed. What must they think of a Government who suddenly put before Parliament a measure that may or may not be referred to Committee to confirm the job that they have just secured?

Mr. Speaker: Order. The hon. Gentleman is getting so desperate that he is drawing the Chair into his argument. Let us hear what the Minister has to say.

Mr. O'Brien: I hope the Minister will rise to the challenge of explaining why the order has appeared now and give the House a response.

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