My Lords, after that excitement I rise to move Amendment 2 on behalf of my noble friend Lord Browne of Ladyton and the noble Lord, Lord Lester of Herne Hill. It would end the current position whereby individuals and organisations have identical hurdles to jump in an action for defamation.
Defamation is about someone’s reputation being trampled and seriously damaged by untrue statements made about them. Some commentators think that since only people and not organisations have feelings, only people should be able to sue. We do not go that far. We accept that organisations can be damaged by untrue allegations. Had horse meat not been in those burgers, or pork not in that halal food, such innocent information could have substantially and unjustifiably ruined a company’s reputation and caused untold financial harm. That would be the same if a small corner butcher, for example, was wrongly accused of having mice in the shop, if Perrier was falsely accused of being a purveyor of foul water or if a car manufacturer was said to have made a car with unsafe brakes.
Amendment 2 would allow such cases to be brought, provided that the allegations would cause substantial financial harm. The approach came from the Joint Committee. The amendment was moved in Committee on this Bill by its chair, the noble Lord, Lord Mawhinney, who cannot be in his place today. It is supported by Liberty, the Libel Reform Campaign, the Media Lawyers Association, Which? and the Commons Culture, Media and Sport Committee, which noted the mismatch of resources in a libel action between large corporations, for which money may be no object, and a small newspaper or NGO, which has had a stifling effect on freedom of expression.
In their response to the Joint Committee, the Government said that it was unacceptable that corporations were able to silence critical reporting by threatening or starting libel actions that they knew the publisher could not afford to defend but where there was no realistic prospect of financial loss.
This morning on the “Today” programme, John Humphrys, normally not afraid of anything, commented on a piece about branding and said that he dared not say anything derogatory about Coca-Cola because it would sue. John Humphrys may be powerful, but clearly not powerful enough to damage Coke’s profits. Even he knew the chill factor of a threatened action.
In Committee, our amendment was supported by my noble friend Lord Triesman and the noble Lords, Lord Faulks and Lord May of Oxford. It is no secret that the noble Lord, Lord McNally, shared this view until his then boss, Ken Clarke, took him into a quiet room, sat him down and, with the persuasiveness for which he is renowned, convinced him that corporations have reputations. The words are those used by the Minister in Committee on 17 December.
The cases that led to much of the pressure for libel reform were largely brought by corporations, using deep pockets and expensive lawyers to stifle criticism. An American corporation sued Dr Peter Wilmshurst, the British Chiropractic Association sued Simon Singh,
Trafigura sued the BBC, manufacturers are for ever threatening Which?, and McDonald’s infamously and stupidly sued two individuals.
The Joint Committee on Human Rights called for the Bill to be amended so that non-natural persons would be required to establish substantial financial loss in any claim for defamation. Its report stated:
“Professor Phillipson … suggests that the failure to impose any restrictions on corporations’ ability to sue in defamation renders the law on reputation inconsistent and incoherent. Defamation law and the protection afforded under Article 8 has developed on the basis that the protection of an individual’s reputation is a significant human rights issue. Corporate claimants have neither personal emotions nor dignity, and yet are treated as natural persons for the purposes of defamation”.
The Commons Culture, Media and Sport Committee also called for a requirement on a corporation to prove actual damage to its business before an action could be brought. Regrettably, the Government opposed this on the grounds that a corporation does have a reputation. Our amendment does not contradict that. It simply requires companies to obtain the court’s permission to sue by showing that it has been, or is likely to be, caused substantial financial loss. This has widespread support and we hope that the Minister will think again.
The second part of our amendment extends the bar on public authorities being able to take action to other organisations performing a public function. The Derbyshire principle is a legal precedent that a government authority cannot be sued for libel. There are good reasons for this. First, it is a body corporate and thus, under the first part of the amendment, it should be debarred since it cannot show financial loss, given that all of us must pay its levy, whether by income tax or rates. The second reason is the comparative resources of any government body compared with those of an individual. The third is that such an authority had a monopoly over education, street cleaning, social care, parking and myriad other services, so any damage to a its reputation would not dent its market, while publicity was not a key driver of improved services or access to redress, since users were unable to take their custom elsewhere. That world has changed. We now have free schools in competition with those run by local authorities, while the voluntary sector and private companies run myriad services on behalf of public authorities and paid for by public funds.
First, users need to be able to comment on such services without fear of a defamation action. Secondly, ratepayers and taxpayers must similarly be able to comment without fear of action. Thirdly, since such services are won through competitive tendering, it seems extraordinary that in compiling their bids, private or voluntary sector organisations can say what they like about the local authority against which they are bidding, but could take action for defamation if the local authority or any of its service users said a critical word about them. Are these providers spending taxpayers’ money on services, including issues such as the Border Agency, adoption and care homes, really to be protected from criticism by hiding behind the threat of defamation? Surely we should be able to hear questions about standards, complaints or conduct without lawyers bullying commentators into silence.
Our amendment would cover only those parts of a corporation performing a public function. Thus, Virgin Care would lose its right to sue over its commissioned work but Mr Branson could still protect his brand’s name where Virgin’s profitability was at risk. In the Commons, the Government rejected this on the excuse that the court in Derbyshire had rejected it. However, that was 20 years ago, when outsourcing was a fraction of what it is today. Now we have one lot of bidders—public bodies—at a disadvantage compared with others because one side can sue for libel but not the other.
In Committee, the Minister, the noble Lord, Lord Ahmad, said that,
“legislation could remove the flexibility that exists under the common law for the courts to develop the Derbyshire principle … in the light of individual cases … it is better to allow the courts to do this rather than introduce … statutory provision”.—[Official Report, 17/12/12; col. GC 467.]
This is a decision that Parliament should take, not the courts. Why do a 2013 Government, pledged to update our defamation laws, feel bound by a 1993 ruling when new legislation is exactly the time to make good any shortfall in the law? The Derbyshire case upheld the right for uninhibited public criticism of public authorities. We should extend this to organisations carrying out those services which were once the monopoly of public authorities.
The amendment is not unfair to corporations. It allows them access to the courts to pursue a defamation case where there is a risk of substantial financial harm to their business. It would remove that right only from those providing public services, akin to the existing bar on public authorities. I beg to move.