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Lord Goodhart: I have to say that while on the face of it this looks like something I should welcome, and indeed in certain respects I do, I think it is in fact an extremely dangerous provision. Or shall we say that what lurks behind it in the Bill itself is an extremely dangerous provision. What is now proposed is stated in the Explanatory Notes, which say:

This raises exactly the same point that occurred in my Amendment No. 133. That amendment related to the recovery of money by the community legal service fund from the party whom it had funded. This concerns to the different, though related, issue of payment by the assisted party to the other party to the case. As soon as the value of the home is counted towards the assets of the assisted party, that means there are going to be far more assets against which the court will be able to make an order. It is likely therefore that there will be far more cost orders made against an unsuccessful assisted party. It is even worse than in the case of the recovery of payments by the community legal service fund because in this case it appears that the whole value of the home shall be counted towards the assets--it does not say

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anything about the first £8,000--and, perhaps worse still, the statutory bar on enforcing against the home will be lifted.

This will be an enormous disincentive to anyone thinking of applying for assistance. Coupled with the problem which I attempted to deal with by means of Amendment No. 133, it means that it will be virtually impossible for anyone who is an owner-occupier to apply to receive legal assistance in any case where the costs are at all serious without incurring great danger to himself and to his home. This is a seriously misguided view. The Government should revert to the previous position. It is certainly something I shall wish to examine again at Report stage.

Lord Kingsland: I may not have heard the noble and learned Lord clearly, and I apologise if I have misunderstood. Is he saying that the liability of the commission to contribute to costs awarded in favour of an unassisted person who succeeds against the assisted party is something that will be determined by regulation, or is it now to appear on the face of the Bill?

Lord Falconer of Thoroton: The purpose of this clause is to bring on to the face of the Bill protection for those receiving funded services from having to meet a liability for costs should they lose. What it deals with--on the face of the Bill, not in regulations--is a right in certain circumstances not to be pursued for the costs if one loses.

Lord Kingsland: I am most grateful to the noble and learned Lord. I was thinking of the opposite situation and the rights of an unassisted party. I know that that is not dealt with in the noble and learned Lord's amendment.

Lord Falconer of Thoroton: This is a very Byzantine way of looking at it but, as far as an unassisted party is concerned, he has no relationship with the legal services commission or the Legal Aid Board. The individual can pursue him, often on behalf of the legal services commission or the Legal Aid Board, pursuant to the ordinary rules of costs. We would not be expected to deal with that on the face of the Bill or in regulations.

Lord Kingsland: I am most grateful to the noble and learned Lord for clarifying that matter. Clearly I misheard what he said.

Lord Thomas of Gresford: Am I right in thinking that, whereas a person who is the beneficiary of a conditional fee agreement can cover his liability for costs with insurance, a person who receives assistance under the CLS scheme may find, as a result of this clause and the amendment, that his house is taken away from him and that he is not insured against that dramatic and dreadful loss that he may suffer if he should lose the case?

Lord Falconer of Thoroton: The noble Lord, Lord Thomas of Gresford, in effect raises the same point as the noble Lord, Lord Goodhart. What is the right

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answer where the assisted person loses and on the other side there is someone of modest means who has fought and won, having spent a great deal of money fighting the battle? Where should the financial pain lie? Must it always lie with the person who has won, even though the person who has lost has a house with a valuable amount of equity in it? Is not the right course in relation to those cases for the court to be in a position to consider, having regard to the resources of both the defeated assisted party and the victorious unassisted party, what the right result should be?

Let me give an example. Suppose you have spent £100,000 in costs in fighting off an unmeritorious claim put together on the basis of perhaps unreliable evidence by the assisted party. You have to sell your house in order to pay your lawyer, even though the other party, which was assisted, had equity in a house which was even greater than the equity in your house and, because of the point made by the noble Lord, there is nothing that can be done about it. That does not feel fair to me.

Lord Thomas of Gresford: I do not think that the noble and learned Lord is addressing my point. As I understand it, conditional fee agreements with an insurance cover are there to protect a person who loses a case. It is not always unmeritorious cases that lose; there is a balance of merit. There are some cases which are hopeless and some which are marginal and on the cusp where that party loses. A person who has a CFA is protected, but it seems to me that a person who can qualify for financial assistance under this scheme has his house on the line. It is that unfairness that I should like the noble and learned Lord to address.

Lord Falconer of Thoroton: With the greatest respect to the noble Lord, that seems to me to be dealing with a completely different point. You are there comparing the unfairness, as you would have it, between a conditional fee case, on the one hand, and a legally aided case, on the other. The balance of hardship in these cases is not between the case in front of the court and some notional other case; the unfairness is between the plaintiff and the defendant. Where should the burden fall? With the greatest respect to the noble Lord, Lord Thomas of Gresford, I do not think that the comparison he makes is the right one.

The right comparison--that raised by the noble Lord, Lord Goodhart--is the point I have to deal with. Should the failed assisted party in the case be able to treat his house as protected whereas the successful party who has to pay his own costs should have his house taken into account? If he is unassisted, his lawyers will seek to get their fees from wherever they can. The point made by the noble Lord, Lord Goodhart, merits consideration, and the noble and learned Lord the Lord Chancellor has indicated that, without giving rise to any expectation that change will occur, I should say that consideration will be given to it. However, the arguments about resources are quite powerful and would have to be answered by the noble Lord, Lord Goodhart, before there was any reasonable expectation of give in relation to that issue. I hope that that is a satisfactory response to the noble Lord's point.

On Question, amendment agreed to.

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Lord Falconer of Thoroton moved Amendment No. 140:

Page 7, line 45, leave out ("limiting the amount of") and insert ("specifying the principles to be applied in determining the amount of any").

On Question, amendment agreed to.

9.15 p.m.

Lord Renton moved Amendment No. 141:

Page 8, line 15, at end insert (", and
(h) providing for the payment of the costs of any other party.").

The noble Lord said: On behalf of the noble and learned Lord, Lord Simon of Glaisdale, I beg to move Amendment No. 141. I have always thought it best that the courts should be given a broad discretion as to costs without tying them down to too much detail. In my time that was always the practice. I do not know whether it is still so. But here the arrangement is that regulations shall be made governing the award of costs. Those regulations may in particular make provision for the various matters that are listed. The noble and learned Lord, Lord Simon of Glaisdale, has in my humble opinion correctly suggested that we should add something to enable the payment of the costs of any third party, for example, or to enable a co-defendant who may not be legally assisted to be paid. I believe that to be an omission that the noble and learned Lord is wise to suggest should be put right.

Lord Falconer of Thoroton: I dread to think what would have happened to me had I included in the Bill a provision such as this if the noble and learned Lord, Lord Simon of Glaisdale, had been here. He would have said that such a provision was quite unnecessary. He would have drawn my attention to Clause 11(1), which gives a general power to make regulations that

    "make provision about costs in cases in which services have been funded by the Commission for any of the parties as part of the Community Legal Service".
He would also have drawn my attention to Clause 11(2)(a), which explicitly provides powers to make regulations concerning the payment of costs awarded against an assisted party whether they are to be paid either by the assisted party or by the commission. These powers are not limited to apply in relation to the costs of the successful unassisted opponent but to any costs awarded against the assisted person or commission.

The noble and learned Lord, Lord Simon of Glaisdale, would have asked in tetchy tones what was the point of adding this additional clause when it was obvious to anyone of reasonable common sense that the matter was already covered and that we should not insert provisions simply for the fatuous imagination of some crazed lawyer. In those circumstances, adopting the submissions of the noble and learned Lord, Lord Simon of Glaisdale, on previous occasions, I invite the noble Lord to withdraw the amendment.

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