My Lords, I thank all noble Lords who have taken part in this short debate. As has been pointed out, Amendment 2 concerns two distinct but related issues. Indeed, my noble friend Lord Lester, who I greatly respect with regard to this Bill in particular, described it as two limbs. That is a nice way of reflecting on the current Government, in having two arms to the same body, and we are seeking to move forward on these matters.
The issues that have been raised again this afternoon were extensively debated during the previous stages of this Bill. These are whether there should be restrictions on the right of bodies corporate and other non-natural persons to bring an action in defamation, and whether any non-natural person which is performing a public function should be prevented from bringing a claim in relation to a statement concerning that function.
In relation to the first issue, the Government have made it clear in previous debates that there is a difficult balance to be struck, as the most reverend Primate articulated. Considerable damage can be done to the reputation of a business by unjustified and defamatory allegations, and this has an impact on all those involved with the business, including its shareholders and employees. On the other hand, we fully recognise the need to ensure that powerful businesses are not able to—for want of a better term—bully individuals or organisations with limited means into remaining silent on issues of public importance by the threat of libel proceedings.
However, if that is the problem we are trying to solve, imposing specific restrictions on the ability of businesses to sue does not seem justified. Wealthy individuals can equally send threatening letters to those with limited means. This is why we think the twin-track approach we are proposing is preferable. It embraces both elements within the Bill and procedural changes alongside it.
First, all claimants—corporate or otherwise—will have to satisfy the new test of serious harm, as my noble friend just mentioned. As we have made clear, it is our intention that the serious harm test will raise the hurdle for bringing a claim and will ensure that trivial claims do not proceed. In order to satisfy the serious harm test, businesses are likely in practice to have to show some form of actual or likely financial loss. The courts have talked in terms of,
“a tendency to directly affect its credit or property or cause it pecuniary damage”.
Quite what that will require will depend on the type of business concerned and the facts of the particular case, and we do not think that it is helpful to attempt to define explicit restrictions in the Bill.
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The cost of proceedings is at the root of many of the concerns expressed in the debate on this issue. As I have made clear, we are fully committed to reducing costs and are taking a number of steps to achieve that. The Civil Justice Council is actively engaged in considering the options for costs protection in defamation proceedings and will be reporting to the Secretary of State for Justice in March. The introduction of cost protection measures will provide valuable protection to defendants of limited means when they are faced by an opponent with substantially greater resources.
In addition, we will be bringing proposals for procedural changes before the Civil Procedure Rule Committee shortly. As we explained in the note that we provided to the House before Committee, those proposals will enable key issues—such as whether there is serious harm, what is the actual meaning of the words complained of, and whether they are a statement of fact or opinion—to be brought before the court at the earliest possible stage. In many cases, that will enable early resolution and settlement of the dispute at greatly reduced cost. We will also be encouraging the courts to be more pro-active in managing cases to ensure that a tight grip is kept on those cases which proceed to trial.
We believe that the approach that I have outlined is the best way forward. It will give significantly more protection to defendants with limited means, and lessen the likelihood of attempts being made to threaten and intimidate them, while still enabling businesses to protect their reputation where it has been seriously harmed by unjustified allegations.
I turn to the second element of the amendment. In the case cited of Derbyshire County Council v Times Newspapers, the House of Lords held that local authorities and governmental bodies are already prevented from bringing actions for defamation. As the noble Baroness articulated, the amendment would extend that principle and prevent claims by any non-natural person performing a public function.
We do not consider that extension to be appropriate. As my noble friend Lord Faulks mentioned, it would be a significant restriction on the right of a wide range of businesses and other organisations to protect their reputation, and a clear majority of responses to our public consultation on the draft Bill were opposed to it. A rigid and restrictive statutory provision which would remove the right to claim from a wide range of bodies does not represent a proportionate approach. We consider that it is much better to allow the courts to develop the Derbyshire principle as they consider appropriate in the light of individual cases.
On the basis of the explanation that I have given, I hope that the noble Baroness will be prepared to withdraw her amendment.