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Clause 2—(Financial Conditions Of Legal Aid)

Volume 465: debated on Wednesday 25 May 1949

The text on this page has been created from Hansard archive content, it may contain typographical errors.

I beg to move, in page 3, line 10, to leave out from "except," to the end of line 11, and to insert:

"such payment as is directed by this Part of this Act to be made out of the legal aid fund."
This is really a drafting Amendment. As worded, the Clause would have imposed an obligation on solicitors and counsel to make certain that their fees came from the legal aid fund. The new wording of this Amendment avoids placing that onus on them, but still makes it clear that they must not receive any payment from their client.

I should like to thank the right hon. and learned Gentleman for recognising by this Amendment the force of the point which I raised in Committee.

Amendment agreed to.

I beg to move, in page 3, line 15, after "order," to insert "or agreement."

I think it would be convenient to the House if we considered with this Amendment the Amendments in page 4, line 23; page 7, lines 30 and 31; and page 13, line 4, all of which deal with corresponding matters.

I hope that the hon. and learned Gentleman will excuse me if I do not on every occasion in introducing an Amendment say that I am indebted to him or other hon. Members for raising these points upstairs. I shall at an appropriate stage express my indebtness to all hon. Members, including the hon. and learned Gentleman, for the great help they have given on this Bill. These Amendments are the results of points raised by one side or the other, and very often by the hon. and learned Gentleman, in Committee.

This group of Amendments is intended to deal with the question of costs, where a case is settled instead of being fought out, and is made the subject of an order for costs. A case may sometimes be settled without any express provision having been made between the parties over the payment of costs, and, in such an event, under Clause 3 (4), the legal aid fund will have a claim on the amount, whatever it is, which is paid to the assisted litigant. Very often in settling cases it is convenient, first of all, to negotiate on damages, the defendant agreeing to pay £x, and when there has been an agreement on damages to negotiate with regard to the question of costs, the defendant agreeing to pay £y. In such a case, under this Amendment, the amount which has been specifically agreed to be paid for costs will be paid straight into the legal aid fund. That is the substance of what are, in a sense, drafting Amendments.

Amendment agreed to.

I beg to move, in page 3, line 20, at the end, to insert:

"having regard to all the circumstances, including the means of all the parties and their conduct in connection with the dispute."
It might be appropriate if at the same time we discuss the Amendment in line 29. We had a good deal of discussion upstairs as to the extent to which the unsuccessful assisted litigant should be protected from the ordinary liability of having to pay the whole of the costs. It is clear that if the unsuccessful assisted litigant were left without any protection at all, the risks—litigation being as it is an extremely uncertain matter—of having to pay the whole of the costs if he failed would be a very powerful deterrent to people going to law even if they were advised that they had quite a good case. That fact has been very much impressed upon us, as I think it was impressed upon the Rushcliffe Committee in regard to this matter. On the other hand, one must consider the position of the successful and unassisted defendant or the successful and unassisted litigant, whether he be plaintiff or defendant.

After giving the matter very careful consideration in the light of the discussion which took place upstairs, we are of the view that if the payment of the balance of costs not awarded against the assisted and unsuccessful litigant were put as an obligation upon the State, it would result in most undesirable consequences. I do not want to enlarge upon what those consequences are, but this at least would, I think, be the consequence, and this is what we are advised by the profession. It would lead to considerable extravagance in litigation and often perhaps to cases which really ought to be settled not being disposed of in that way, but being fought out to the bitter end in full knowledge that the whole of the costs on each side were going to be found by the State. We think that the suggestion which was made, and which I confess attracted me a good deal at one time—that the State should pay the balance between the amount which was ordered against the assisted litigant and the actual taxed costs—would really be impracticable.

On the other hand, we have decided to modify the protection given to the assisted litigant under the Bill as it stands by relaxing the provision which prevented his dwelling house and household effects being taken into account. The tribunal, under this Amendment, will be entitled to consider the dwelling house and the household effects in the same manner as those things might be considered in assessing the applicant's means when he was applying for legal aid. If it appears that he could raise money on his house—raise an appropriate sum of money towards the costs of the successful litigant—then he will be required to do so.

On a point of Order. Is it your intention, Mr. Speaker, to call the Amendment in my name in line 24, because it might affect the course of discussion on this Amendment?

I am afraid it is not, because it is out of Order. It might involve a charge. Therefore, I cannot call it.

These two Amendments really raise points of some importance. With regard to the first, it adopts phrasing which I think in substance was suggested in the course of our discussion in Committee. I should like to say that I do not propose to take up time in saying "Thank you" to the right hon. and learned Gentleman on every occasion on which he has met points raised from our side of the Committee, as he has done—and I am grateful to him—on a large number of occasions. The Amendment in line 20 is really one point where he has met us. I think that it makes a considerable improvement in the Bill. It goes some way to meeting the problem which is bound to arise where the assisted litigant is suing a person who is not receiving assistance but who is only just over the border-line from getting assistance. We know that under this scheme, if it works properly, the assisted litigant will contribute all except a portion of his capital and income to the cost of his own litigation. Therefore, it may well follow that if he fails in that litigation the court may conclude that it would be unreasonable to order him to pay to the successful unassisted litigant anything in the way of costs. Therefore, we have this problem, and it is a real dilemma; if we seek to place the liability for costs, for the full costs of the other side, on the assisted litigant if he fails, then in many cases that will be a very considerable deterrent to people from taking advantage of this scheme, which is designed for their assistance and benefit.

The other limb of the dilemma is that there is a possibility that the unassisted litigant who is just above the ceiling from getting assistance, will think that it is not worth while fighting proper cases to be fought, cases which he would like to fight and which indeed if he had been a bit poorer he would have had assistance in fighting. He might say to himself, "If I win this case, I shall still have my own costs to pay and that will impoverish me to the extent that it is not worth fighting this case although right is completely on my side."

That is the dilemma that arises. I think that the right hon. and learned Gentleman has gone a long way towards the right solution—to leave it to the court to exercise its discretion as to what it is reasonable for the assisted but unsuccessful litigant to be ordered to pay in the way of costs, having regard to his means and to the conduct of the parties. I think I am right in saying, and I think that the right hon. and learned Gentleman will correct me if I am wrong, that in addition to this discretion which is left to the court, there is the intention of making regulations providing that the court can, if it thinks proper, revoke the legal aid certificate which would make the person who had received that certificate then liable for the full costs. I think that the right hon. and learned Gentleman made some statement to that effect in the course of the Committee stage. If that be so, and I take it that it is, it is, in my opinion, an important factor to be borne in mind.

With reference to the second Amendment, that again brings the Bill more into line with the Report of the Rushcliffe Committee. I myself think it right that there should be that power to which the right hon. and learned Gentleman referred in the case of a man having a substantial freehold which is unencumbered and which might be charged for the purpose of providing some funds towards his costs of litigation. Therefore, so far as I am concerned, both these Amendments are acceptable.

I will not detain the House for long on these Amendments, because in relation to them I stand in the position of an unsuccessful unassisted litigant. I fought and lost this battle in the Committee almost alone. My hon. and learned Friend the Member for Daventry (Mr. Manningham-Buller) had signed the Rushcliffe Report which was inconsistent with my Amendments, and the right hon. and learned Gentleman the Attorney-General was sticking to the Bill, which was equally inconsistent with them. While I would be the first to recognise that the Amendments now proposed, go some way to meet the criticisms which I made then, I confess that I cannot express myself as wholly satisfied either with them or with the reasoning which has led the Government and the Opposition to find them sufficient. We must remember exactly what it is that we are discussing in relation to this matter. I think everybody is greed that one of the defects of this scheme is the very sharp line of demarcation which exists between those who are just within the limit for assistance and those who are just outside it.

I invite the House for a moment to consider what will be the result where a person who is just outside the limit for assistance is fortunate enough to prove that he was right all along—either that the claim of his more fortunate assisted opponent was false, and ought never to have been brought, or that the defence which his more fortunate and assisted opponent had put forward to his claim was bad, and the action ought never to have been resisted. In such circumstances the situation is this: despite the Amendments the unassisted litigant, who may be very little richer than the assisted litigant, will not have the protection he has at present, that is to say, he will not get his full party costs. He will have to find something—and it may be considerable where the claim was put forward in good faith—out of his own pocket. What is worse is that all the time he fights against his opponent, knowing that he was right all along, all the time he fights his case for justice, the whole power of the State and the Legal Aid Fund is trying to stop him. That is not an altogether very satisfactory position.

7.30 p.m.

That is where I start in this matter. I have been a supporter of this scheme throughout, but when it becomes law what is known as maintenance will be extended. Maintaining other people's cases, as it is known, has been not only not considered always meritorious but, in certain cases, has been considered a crime against the State. By virtue of the Bill we are now nationalising maintenance on a gigantic scale. We are making matters a great deal worse by ensuring that one party may well have to pay—and in a great many cases will have to pay—a substantial sum towards his own costs in establishing his just rights.

Let us see how that will affect the matter in practice: The man who is faced with a claim for, say, £200 or £300, put forward by an assisted litigant, says to himself, "I know this claim is false and ought not to be made. There has been misrepresentation of the facts, or a mistake in law by the State employed counsel. But it will cost me £200 to fight it, and even if I win I shall not be able, thanks to the Legal Aid and Advice Act, to get the money out of the other side. I will, therefore, pay something to settle the case." Alternatively, put the man in the position of the plaintiff, claiming £200 against the assisted litigant. He says, "I know I am owed this money, but if I am to establish my claim it will cost me all that and perhaps more to do it, and I shall never get the money out of the Legal Aid Fund, or out of the defendant, thanks to the Legal Aid and Advice Act." In both cases there is an injustice.

The proposal made in Committee, which was rejected by the Attorney-General, was simply that the difference between what the man would have got but for the Bill and what he would get under the Bill in order to recoup his own expenses in establishing his rights, should be borne by the Legal Aid Fund. The Attorney-General rejected that suggestion on grounds which, I must say, I find somewhat unsatisfactory. First, he said that cases which ought to be settled will be fought. I wonder. I cannot myself see that of necessity the situation will be any different under the alternative proposal than it is at the moment, when two substantial people are fighting one another. Each knows that if he wins he will get his costs, such as they are, out of the other side. I do not think that is a bad thing; my own view about litigation, uncertain and unreasonable as it is as a pastime, is that so far as possible the wealth or poverty of the litigant should not be either an advantage or a disadvantage in law.

I cannot see that under the alternative suggestion, with the State underwriting the difference, there would be any greater likelihood of cases being fought which ought to be settled than there is at the moment between two substantial litigants. It is said that in these circumstances both would know that the State would underwrite the expenses of both sides. I do not find that to be the case. Under the Bill the assisted litigant will have to make his own contribution to his own costs—certainly if he is unsuccessful. That may well be substantial, especially when he comes somewhere near the line of what does or does not constitute entitlement to assistance. The unassisted litigant will have to bear the whole costs of the litigation if he is unsuccessful, and I can testify that that fear has a very considerable deterrent effect in practice. For these reasons I regret to say that I still remain of the same opinion. However, as I explained when I began, I recognise that in this matter I am an unsuccessful unassisted litigant and, having recorded my opinion, I will say no more.

I think the Amendment goes a long way to meet any such objection as the hon. Member for Oxford (Mr. Hogg) has just raised. One would think, listening to him, that there has been no such thing as Poor Persons' Rules. The same objection that has just been advanced by the hon. Member lies with equal force against the system as it works today. The only difference is that that system is being extended inasmuch as new categories can become assisted litigants. The hon. Member forgets that it will not be as easy as he thinks to impose upon the scheme.

The person who seeks legal advice must, by the provision in Clause 1 (6), show that he has reasonable grounds for being a party to the litigation. That is not merely a question of making a recommendation to the committee before whom he goes; he has to demonstrate that he has reasonable grounds, and it is clear that the committee will not allow him to become an assisted person unless he does that. He also has to go further; the particular circumstances of the case have to be taken into consideration. How we are to do more than is being sought to be done now, if we are to have legal aid at all, I do not know. It obviously must provide for the person whose circumstances are such that they require legal aid. Because it happens that certain people have got assistance is no reason in the world why other people, who are perfectly able to meet the costs of litigation, should find any advantage in that.

There is only one point I would emphasise, and that is that a person ought not to be able to impose on another party some litigation which is obviously groundless, and in that way force him to incur expense. The only thing that can be done to avoid that is to take as careful steps as possible to prevent it happening. It seems to me that in the machinery of this Bill that is being done as far as it can be done. In addition, in my respectful submission, the Attorney-General's present Amendment goes a long way, even in circumstances of hardship, to visit the consequences of a person's needless act, should he rush into litigation when he has no grounds for doing so.

Although I agree with neither, I must admit that I see more force in the arguments advanced in favour of the Amendment by the Attorney-General than in those advanced by the hon. and learned Gentleman the Member for Gloucester (Mr. Turner-Samuels). I do not want to pursue the hon. and learned Member's particular line of argument, because that would take us into the operation of the system at present in force under the Poor Persons Act and the Legal Aid Advice Bill procedure, which is outside the scope of this particular Amendment.

I want to express a certain amount of support for the view advanced by my hon. Friend the Member for Oxford (Mr. Hogg). I find myself in a real difficulty like he does. I fully appreciate the force of the argument that if a successful unassisted litigant is enabled to recover his costs from the Legal Aid Fund then litigation is being financed at the expense of the taxpayer. Personally, I think that that is a bad principle, though why hon. Members opposite should not approve of it I fail to see, because it is exactly the same thing in law as the Government have done for medicine. Everyone in this country is entitled to a health service at the expense of the taxpayer and the proposal made by my hon. Friend the Member for Oxford is entirely analogous, and would enable substantially everyone to obtain, up to a certain limit, legal aid at the expense of the taxpayer.

I differ from the Attorney-General in the remarks which he made about the: desirable possibility which he foresaw of litigation being brought to a conclusion, as a result of a settlement being forced upon a party through his fear of the costs involved. That is not a good principle, and does not help to establish the purity of justice or of the law. If we are proceeding upon a system in which that influence is intended to work upon the mind and pocket of litigants, we are detracting from the merits of our own judicial system. I feel we are embarking upon a system of that sort, and I hope that the Attorney-General will go back to the straight and narrow path and not take into account that there are advantages in such an argument.

7.45 p.m.

On this actual question I cannot see that it can be right for the mind of a man to be influenced by the fear of the costs that he may have to pay as against one who has not so to do. Take the case of two neighbours, A and B. Both of them may be in practically identical circumstances, although one is five years older than the other and therefore five years more advanced in life. He may have through those five years a greater increment in his grade in the Civil Service, if they are in the Civil Service, as well as five years more savings. He is just outside the assistance limit, whereas his neighbour is just inside it. One has a case against the other. The first goes to the Legal Aid Committee, and is advised that prima facie he has a good case. The second goes to his own solicitor, and is similarly advised.

What is, in fact, going to happen? In the assisted case the husband and wife are going to discuss it to see whether or not this law suit is going to be worth while. The factors which are going to guide them well are, first, that they have been advised they ought to win; secondly, the possible chance of what they are going to benefit by it; and, thirdly—and this is the all-important factor here in the average household—what they stand to lose. In the first household they know to a pretty exact degree their maximum liability and they can judge whether it will be great or small.

In the other household, where the circumstances are practically identical except that the case is unassisted, the risk is far more difficult to assess, and the liability, which may be imposed upon the household if they lose, is certainly going to be considerably greater. But it is much more difficult for the householder himself or his solicitor to see at that time what the liability will be. It is that element of unknown risk which is going to influence the man who is unassisted to say to his wife, or vice versa, that it is not worth while for the sake of their home and their children to run that risk. They will say that it will be better to find out what the case can be settled for. "When we know for certainty how much it involves," they might say, "then we can decide whether or not to go on with it at all."

Those are the actual facts as I see them which will influence the mind of two people. This fear of costs has become a factor in litigation, and is a matter which we ought to do everything to avoid. I appreciate that some steps have been taken by the right hon. and learned Gentleman in the Amendment he has moved, and they are steps in the right direction though to my mind they do not go far enough. I hope it may be possible in another place for further consideration to be given to this matter, so that these difficulties may be overcome.

I could not agree more with the hon. Member for Chichester (Mr. Joynson-Hicks) in his views that fear of having to pay costs ought not to add to the difficulties of litigation of just causes. I do not think I follow him in his argument that there should be a significant difference between the position of assisted and unassisted litigants in assessing in advance their potential liability for costs. I should have thought that in practice they would be in substantially the same position. The assisted litigant will know that if he succeeds he will, at most, have to pay whatever contribution has been fixed at the time of his application, and that he will not even have to pay that, if he succeeds in recovering his costs from the unassisted opponent.

He will know at the worst that he will have to pay whatever contribution has been fixed in connection with his application for legal assistance, and in addition such sum—it may be the whole amount—of costs awarded against him by the tribunal, or such sum as the tribunal thinks reasonable that he should pay towards the costs of the successful defendant. That will be his position. He will not be able to assess exactly what the defendant's costs will be nor what proportion of their total he will be ordered to pay. He will know that he will have to pay a substantial amount.

The unassisted litigant, on the other hand, will know that if he wins he will get from the court an order in respect of some part of his costs. He will be able to assess, with as much accuracy as I suppose he can assess now, whether he will recover those costs. Even now, when a person is sued in the courts he may find it very difficult to know whether or not, if he wins his case and gets an order for costs, he will be able to collect them. The unassisted litigant will be in the same position in regard to that matter. He will know that if he loses the litigation he will be in the same position as if his opponent were not assisted at all, because he will have to pay the whole of the costs. I do not think there is much difference between them in that respect.

This is a most difficult problem. I agree with the hon. Member for Oxford (Mr. Hogg) that it is so. He says that he is of the same opinion still. I wish I could convince him against his will. It really is a most difficult dilemma. On one point I think that the hon. Member for Oxford did not state with complete accuracy the position which arises in practice. In practice in the great majority of cases—not, of course, in all—we find that on the one side there is a comparatively wealthy party, supported by an insurance company, a newspaper, or a big company. On the other side there is a party less wealthy. The Rushcliffe Committee realised, as I think we realised upstairs and as I hope the House will realise, that the would-be litigant who was not wealthy but was not penniless, the man who had saved up £200 or £300 and perhaps had a house subject to a mortgage, even if assisted in regard to his own costs under the scheme, would still be deterred from entering upon litigation, even if advised that he had a good case, by the risk that if he lost he might be sold up.

That risk does not apply to a man who is penniless. He can pursue his litigation without regard to the consequences to himself. He knows that if he loses he will not be any worse off. A man who, by thrift, has saved a little money and who is likely to be compelled to pay his costs if he fails in his action, is often deterred in pursuing his action, not because of his own costs but because of the risks of the law and the danger that if the law turns out to be against him he may have to pay the costs of the other side. It was the fact that that kind of risk operates in practice and is a very serious deterrent, that led the Rushcliffe Committee, and led us, to take the view that some protection must be given to the assisted litigant.

I agree with my hon. and learned Friend the Member for Gloucester (Mr. Turner-Samuels) that we are really only expanding somewhat further the principle that has been recognised under the Poor Persons Rules. We are expanding it further in the sense that we are applying it now to what will no doubt be a vast number of cases, whereas in the past it has applied in practice to very few. We are not expanding it to the same extent as it exists already in those very few cases. In those very few cases, virtually no costs can be ordered against an assisted party. Under the provisions of the Bill the amount of costs which may be ordered against an assisted but unsuccessful litigant can be very substantial.

I think the Attorney-General will agree that, in the existing situation, against those who get poor persons' assistance an order for costs on anything like a High Court scale would be impossible.

That is quite true, but that does not make the injustice, if injustice it be, to the successful defendant any the less. If aid were not given to the poor person in this case, the wealthy defendant would not be exposed to litigation and no question of costs would arise. When aid is given under the Poor Persons Rules and the plaintiff fails, the successful defendant is unable to recover any part of his costs from his opponent and has to pay the whole of his own costs. It really is the application of a principle, the necessity for which has been recognised in our procedure for a very long time. I would only add that I did not, I am afraid, deal with this matter, under the Amendment which I am proposing in page 3, line 20, when I moved the Amendments all together.

The position now will be that the assisted litigant will have to satisfy the tribunal as to his means. He will have to go into the witness box and he will be subject to cross-examination as to his means. The tribunal will consider what his means are and how far he has acted honestly and reasonably in bringing the claim, and the general conduct of the litigation. I commend the Bill to the House. Faced with this troublesome dilemma we think that on the whole that we have adopted the solution which will result, I do not say in no injustice, but in the least injustice.

Amendment agreed to.

Further Amendments made: In page 3, line 28, leave out "and."

In line 29, after "prescribed," insert:

"and except as aforesaid."—[The Attorney-General.]