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The noble Lord said: My Lords, I will speak also to the remaining amendments in the group. The most important reason for supporting the amendment, and those that flow from it, is one of principle. Those exonerated following investigation or litigation should not be penalised for being found blameless. Accordingly, to require an authorised person under the Bill to pay the Office of Legal Complaints for the costs of handling a complaint when the complaint is unfounded and the person has handled the matter properly in house would be wholly unjust.
It would also deter practitioners from acting in those fields of law where unjustified complaints are disproportionately likely such as in the areas of criminal and family law. In any case, since it will not be the Government or the OLC but the authorised persons in general who will have to pay instead through the general levy, neither the Government nor the OLC have any financial interest in sustaining the scheme set out in the Bill.
The Bill’s provisions are founded on the approach adopted by the financial ombudsman scheme. There, financial service providers are required to pay charges in respect of the handling of a complaint whatever its outcome. The Government believe that the OLC should be free to adopt the same approach; but the circumstances of the provision of legal services are different from the provision of financial services. Unfounded complaints, for example, from those who have lost a court case or whose house purchase has fallen through, are far more likely than in financial services. Furthermore, some practitioners are disproportionately likely, as I have indicated, to be the subject of such complaints. We
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Yet if the OLC has an unrestricted power to charge, it is likely to opt for a case-handling fee in all circumstances simply because that would be administratively more convenient to operate. I would add parenthetically and, I hope, reassuringly that of course we accept that the power to order authorised persons to pay charges cannot sensibly be confined only to cases where the complaint is upheld after a determination by an ombudsman. The likelihood is that the great majority of complaints will be conciliated in one way or another. It would not be satisfactory if authorised persons could avoid any liability to pay simply by settling the matter shortly before a determination would have to be made.
Our amendment would also have the added attraction of encouraging practitioners to operate proper in-house complaints resolution systems. Failure to operate proper in-house procedures damages one of the Bill’s key objectives; namely, ensuring that complaints can be resolved as rapidly as possible. Leaving all matters to be sorted out by the OLC is unsatisfactory from the perspective of complainants and involves putting an additional burden on the OLC. There is no reason why the profession collectively, rather than the practitioner who has failed to deal properly with the matter in-house, should bear the cost of that.
In conclusion, it is important for the Bill to set out the limits of the OLC’s discretion to impose charges. It would be quite wrong to put administrative simplicity ahead of the need to avoid causing injustice to those authorised persons who are the subject of unfounded complaints. I need add nothing to what I have said about the Minister’s proposition that complaints that have got as far as the OLC must be partially justified. That assertion was effectively demolished in Committee. I beg to move.
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Lord Campbell of Alloway: My Lords, I support the amendments as being of principle, for the reasons given by my noble friend. There is not, and never has been, any entitlement to costs. An award of costs is entirely a question of discretion. In this case, with the ombudsman or the OLC, it is an exercise of quasi-judicial discretion. There is no entitlement; there never has been. The exercise of quasi-judicial discretion imposed by a mandatory costs order under primary legislation is anathema; it is ill-conceived and outrageously unfair.
The exercise of such discretion, whether judicial or quasi-judicial, takes due and fair account of factors relevant to the case. I never cite cases here, but there was one in which I won in the Privy Council against my erstwhile noble friend, the late Lord Ripon, in which I did not get my costs. There was another in your Lordships’ Appellate Committee, in which I lost and I did not have to pay any costs. The details do not matter—they are all recorded in the law reports—but what matters is the principle on which the court or the tribunal makes a fair decision.
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Is it really the business of Government to impose a costs order upon a lawyer who has committed no misconduct because he or she happens to have rendered legal services? How on earth did this happen? Well, you start off by calling the lawyer a “polluter”. You take a spin for a placebo to feather, perhaps, the legacy nest. You conjure up in your mind a puppet show on the seaside in the old days: consumer with a truncheon clobbers bewigged polluter, and everyone screams with enjoyment. Why on earth were the recommendations of the Joint Committee, on which I had the privilege to serve, rejected? I would like that question to be answered.
Why cannot the Clementi soft touch be found in the Bill? My noble and learned friend Lord Mackay of Clashfern mentioned this the other day, albeit in another context. Why was it ignored?
I have another question which is relevant for answer. Is it the business of government to usurp this quasi judicial function as to costs? For the reasons given by my noble friend, which I have sought to supplement, I suggest that there is no justification for that whatever.
Lord Clinton-Davis: My Lords, I appeal to my noble friend to respond affirmatively to these amendments. I have not entirely made up my mind about this; I remain to be convinced. Prima facie, I do not think that the Government’s approach can be justified. I find it mysterious that they have moved in this direction. For that reason I remain to be convinced about the arguments.
I share the view of the noble Lord, Lord Campbell of Alloway, that there ought to be discretion here, as there is at the moment. Why does my noble friend depart from that view? I also share the view that in exercising that discretion—which the Government purport to avoid—the court should not be deprived of being able to listen to the arguments conveyed and make up its own mind. As I say, I find this whole thing very mysterious. I hope that it will be possible for the Government to change their mind.
Baroness Butler-Sloss: My Lords, I, too, support these amendments tabled by the noble Lord, Lord Kingsland. I am particularly concerned about Clause 133 and the requirement that the respondent who is in receipt of complaints by the applicant should be required to pay charges to the OLC. As a retired judge, I put a slightly different perspective on this. In some cases, judges force an agreement, settlement or, indeed, outcome over which the lawyer may have no control. They may be situations in which, for a number of very good reasons, there is absolutely no point in going to appeal but that is the basis of the complaint to the OLC. You cannot put the judge in the dock and it is extraordinarily unfair to put the lawyer in the dock for a situation over which he had no control. An absolute obligation that the respondent should pay charges would be manifestly unjust, like many other circumstances that have been referred to. I should not like to think that this Government acted unjustly in this sort of circumstance.
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The Earl of Onslow: My Lords, I am the only non-lawyer pleading for more money in lawyers’ pockets, but on this occasion I think that they are right. Will the noble Baroness take it from a non-lawyer that on this occasion we must say, “Poor pathetic lawyers, they need looking after”?
Viscount Bledisloe: My Lords, I make two points in support of the noble Lord, Lord Kingsland. First, the comparison with financial institutions really is not right. In so far as the buyer is concerned, this burden will fall primarily on those who practise in the less well remunerated fields such as criminal law and family law and primarily on the younger members of the profession who have to deal with the more difficult and unreasonable clients. They are sole practitioners and would have to find those costs out of their own pockets.
Secondly, there is the very important difference that if a nasty client who may cause trouble comes along, a financial institution can say, “I am sorry, I do not want to do your work”. The poor unfortunate barrister, according to the cab-rank rule, has to take on the work even if he knows that the previous six people who acted for this client have all had complaints made against them, and that he is absolutely doomed to a complaint unless by very remarkable chance he happens to win. There he is, he takes it on because the rules say that he has to, and then he is landed with a bill for costs as a thank you for doing so.
Lord Neill of Bladen: My Lords, I have spoken on previous occasions on this issue, and I have made clear my view that this is a thoroughly unjust provision and that the amendment is right. I have a specific question for the Minister. There is the usual certificate on the back of the Bill that all its provisions are in accordance with the Human Rights Act. Has some Minister actually considered that, if there are proceedings in which the accused is acquitted, it is in accordance with the human rights convention that what amounts to a financial fine can be imposed on him?
Lord Mayhew of Twysden: My Lords, may I ask one further specific question? If this provision is incorporated into the Bill, can the Minister think of a single more enticing invitation to make a malicious complaint against someone who may have given you uncongenial advice than this one? If she can, will she specify it?
Lord Maclennan of Rogart: My Lords, I venture to say that no provision in the Bill has aroused stronger or more carefully argued opposition than this one. At this stage, since the arguments have been deployed extensively, I sense that the House is anxious to hear the views of the Minister and to reach a conclusion.
Baroness Ashton of Upholland: My Lords, I have no doubt that the House is anxious to reach a conclusion. The noble Lord, Lord Kingsland, said that he had demolished me. I feel dented rather than demolished by my experiences.
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Lord Kingsland: My Lords,I do not think that I said that I demolished her; Isaid that her argument had been demolished in Committee.
Baroness Ashton of Upholland: Indeed, my Lords, but I like to give the noble Lord credit where credit is due for at least some denting.
I looked very carefully at these issues, because I hope that noble Lords accept that it is my wont, certainly in Committee, to listen very carefully to what is being said. The only issue that divides us on the amendment is whether we define in the Bill at this point how a charging regime might operate, or whether we leave that to the Office for Legal Complaints, which must do it in consultation with the approved regulators, with the consent of the Legal Services Board and of the Lord Chancellor and in line with the regulatory objectives.
The Government’s position is that the latter route is more appropriate in seeking to set out in the Bill how it would happen, not least because it allows for flexibility and it ensures that the charging system can change and adapt over time on the basis of the sort of experience and good practice that noble Lords would wish to see the OLC consider. I know that noble Lords are worried and concerned about how the Office for Legal Complaints would exercise that flexibility, but I emphasise that the flexibility does not happen in an unconstrained way. In drawing up its rules, the Office for Legal Complaints must have regard to the regulatory objectives, including the public interest, and to the ombudsman scheme best practice, which is in Clause 113. It is also under a duty to consult on the content of the rules, which is in Clause 195.
The Legal Services Board will have to give its consent to the rules under Clause 152 and, in doing so, must have regard to the regulatory objectives we have debated at length. The consent of the Lord Chancellor is required under Clause 152 and, taken together, we expect the oversight of both the Legal Services Board and the Lord Chancellor to be an important check, if needed, on how the Office for Legal Complaints drafts the rules to ensure that they are fair and proportionate.
I could add that the Office for Legal Complaints and, indeed, the Legal Services Board are responsible to Parliament for the operation of the scheme, including the system of case fees. They will have to produce the annual report and, if need be, appear before—
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Lord Campbell of Alloway: My Lords, what is the object and justification for a mandatory costs imposition for that?
Baroness Ashton of Upholland: My Lords, if the noble Lord will let me continue, I will deal with that point.
As I was saying, the OLC can also be required to appear before a parliamentary Select Committee to give evidence on the operation of the scheme. Ultimately,
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We come to the proposition, which I have seen in briefing material for today’s debate, that Clause 133 is manifestly unfair. I could not disagree more. Nowhere does Clause 133 say that a flat fee will apply for every complaint the OLC receives. Nowhere does it say that every lawyer will have to pay the same rate of charge. Nowhere does it say that the lawyers will pay the charge even if the complainant is vexatious or frivolous. It says that the scheme rules will set out how charges against lawyers are to operate. I have been through this in great detail because I was much taken with our debate in Committee. The implication of many speeches in your Lordships’ House has been that we were setting out a system under which every lawyer has to pay regardless. Nowhere does Clause 133 say that. It says that the scheme rules will have to set this out. As to whether it is human-rights compliant, I am the human rights Minister: it is my job to ensure, certainly within my own department, that it is compliant. It is.
The critical point is that the clause does not say what has been implied, and there is therefore an unfounded concern in your Lordships’ House. It is possible that the OLC, having considered representations made and having read the deliberations of your Lordships’ House will decide that it would be unfair to charge a fee for complaints that are not upheld. There are other circumstances, as noble Lords have indicated at Second Reading and in Committee, and repeated today, where it might also be deemed unfair to charge a fee. My argument is simple: the Office for Legal Complaints should take a view on the circumstances in which fees should and should not apply, based on appropriate oversight and the consultation required under the clauses I have indicated.
We cannot argue that the rules are unfair, because they have not been made. Nothing in the Bill suggests that there must be a blanket charge for any lawyer, whether or not they have fulfilled their obligations under an in-house complaints system, or have been taken to the Office for Legal Complaints in a vexatious way. Quite the opposite: the Office for Legal Complaints must draw up rules and, in doing so, consult the professions and the Legal Services Board, and consult and deal with the Lord Chancellor. There are currently no rules, and it is important that we let the Office for Legal Complaints design the rules within the process and constraints I have identified.
On the case-handling fee being disproportionately high, nowhere in Parts 6 or 7 does the Bill say what the split will be between the levy and charges. Nowhere does it indicate how that will be calculated. Parts 6 and 7 say that the Legal Services Board and the Office for Legal Complaints should decide what the split should be between the levy and the charges under Clause 133. In the absence of their having made that decision, we cannot speculate on what the case-handling fee would be. The truth is that until they have decided we will not know what the split will
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In conclusion, I am arguing for flexibility; let the Office for Legal Complaints make the decisions within its constraints. It will take into account not only your Lordships’ words, but also its consultation with the professions. On that basis and with my assurances, noble Lords will see that there is nothing in Clause 133 that says that any lawyer has to pay regardless. It says that there should be rules that set out the circumstances in which lawyers should pay or not pay.
Lord Elystan-Morgan: My Lords, will the Minister accept that the failure that we are concerned with is not that there is no statement giving the power that might be abused, but that there is a total silence with regard to a priceless principle—a person who has discharged him or herself of services in a proper professional way should be condemned in costs? Is it impossible to include such a statement of principle which would deal with the problem simply?
Baroness Ashton of Upholland: My Lords, throughout this legislation we have debated fairness, proportionality and the regulatory objectives. I completely understand the concerns that have been raised. Having looked at the Bill, it is my view that those issues with which noble Lords are concerned are inherent within it in the context of people behaving in a proportionate and fair manner. That is an important part of the way that the OLC would operate.
There is nothing in the Bill that does what noble Lords fear. There is everything in the Bill that says that the OLC must make rules and identify those who should pay and not pay. I understand noble Lords’ concerns that those that have been brought in a vexatious way should have that recognised by the OLC and I agree with them.
Lord Kingsland: My Lords, your Lordships have asked the Government to enshrine in the Bill the principle that an authorised person should not be penalised for being found blameless. The Government have been unable to do that. In the circumstances I wish to test the opinion of the House.
4.07 pm
On Question, Whether the said amendment (No. 354) shall be agreed to?
Their Lordships divided: Contents, 183; Not-Contents, 127.
Addington, L.
Allenby of Megiddo, V.
Alliance, L.
Ampthill, L.
Anelay of St Johns, B.
Arran, E.
Astor of Hever, L.
Attlee, E.
Barker, B.
Beaumont of Whitley, L.
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Bledisloe, V.
Bonham-Carter of Yarnbury, B.
Bowness, L.
Bradshaw, L.
Bridgeman, V.
Brooke of Sutton Mandeville, L.
Brougham and Vaux, L.
Butler-Sloss, B.
Byford, B.
Campbell of Alloway, L.
Cathcart, E.
Cavendish of Furness, L.
Chadlington, L.
Chidgey, L.
Clement-Jones, L.
Colville of Culross, V.
Cope of Berkeley, L. [Teller]
Craig of Radley, L.
Crickhowell, L.
Crisp, L.
De Mauley, L.
Dean of Harptree, L.
Dear, L.
Denham, L.
Dholakia, L.
Dixon-Smith, L.
Dykes, L.
Eccles, V.
Eccles of Moulton, B.
Elles, B.
Elliott of Morpeth, L.
Elystan-Morgan, L.
Ezra, L.
Feldman, L.
Fellowes, L.
Flather, B.
Fookes, B.
Freeman, L.
Garden, L.
Gardner of Parkes, B.
Gilmour of Craigmillar, L.
Glasgow, E.
Glentoran, L.
Goodhart, L.
Goodlad, L.
Griffiths of Fforestfach, L.
Hamilton of Epsom, L.
Hamwee, B.
Hanham, B.
Hanningfield, L.
Harris of Richmond, B.
Hayhoe, L.
Henley, L.
Higgins, L.
Hooper, B.
Howard of Rising, L.
Howe, E.
Howe of Aberavon, L.
Howell of Guildford, L.
Hunt of Wirral, L.
Inglewood, L.
James of Blackheath, L.
Jenkin of Roding, L.
Kalms, L.
Kimball, L.
Kingsland, L.
Kirkham, L.
Kirkwood of Kirkhope, L.
Knight of Collingtree, B.
Laing of Dunphail, L.
Lamont of Lerwick, L.
Lane of Horsell, L.
Lester of Herne Hill, L.
Lewis of Newnham, L.
Livsey of Talgarth, L.
Lloyd of Berwick, L.
Lucas, L.
Luke, L.
Lyell of Markyate, L.
McColl of Dulwich, L.
Maclennan of Rogart, L.
McNally, L.
Maginnis of Drumglass, L.
Mar and Kellie, E.
Marlesford, L.
Masham of Ilton, B.
Mayhew of Twysden, L.
Miller of Chilthorne Domer, B.
Miller of Hendon, B.
Morris of Bolton, B.
Naseby, L.
Neill of Bladen, L.
Neuberger, B.
Newby, L.
Noakes, B.
Northbrook, L.
Northesk, E.
Northover, B.
Norton of Louth, L.
O'Cathain, B.
Onslow, E.
Oppenheim-Barnes, B.
Palmer, L.
Park of Monmouth, B.
Patten, L.
Pearson of Rannoch, L.
Perry of Southwark, B.
Pilkington of Oxenford, L.
Quinton, L.
Rawlings, B.
Reay, L.
Rees, L.
Rees-Mogg, L.
Rennard, L.
Renton of Mount Harry, L.
Roberts of Conwy, L.
Roberts of Llandudno, L.
Rodgers of Quarry Bank, L.
Rogan, L.
Roper, L.
Rotherwick, L.
Ryder of Wensum, L.
Saatchi, L.
Saltoun of Abernethy, Ly.
Scott of Needham Market, B.
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