The government made two minor changes to plug gaps in its Litigation Funding Agreements (Enforceability) Bill yesterday as it passed through committee stage in the House of Lords.
In grand committee, advocate general for Scotland Lord Stewart (Keith Stewart KC) described both changes to the short bill as ‘small technical amendments’.
The first amendment remedies a gap in relation to litigants in person by ensuring the bill’s definition of a litigation funding agreement (LFA) includes agreements to fund the expenses of LiPs, for example to meet the cost of an expert’s report.
The second amendment broadens the definition of an LFA to make clear that it can relate to the payment of costs following court, tribunal or arbitration proceedings, or as part of a settlement. Stewart said this addressed concerns that the previous wording, which referred to payments relating to a ‘costs order’, could be interpreted ‘too narrowly’ and become ‘a source of litigation around its meaning regarding LFAs which neither specifically fund court or tribunal proceedings, or envisage the issue of costs being determined by the court.’
The bill was introduced into the Lords on 19 March in response to the Supreme Court’s decision in PACCAR, which called into question the enforceability of LFAs. Since being published, most criticism of the bill has centred on its retrospective effect, with the bill stating its provisions are to be treated ‘as always having had effect’. Opponents have argued this contravenes the European Convention on Human Rights by depriving people of existing rights.
In committee, Lord Stewart reiterated comments he made at second reading earlier this month that the government had carefully considered the point and decided that the bill should have retrospective effect. He added that the government is ‘looking into the issues raised’ and will provide an update at report stage.
During the committee hearing crossbench peer Lord Carlile (Alex Carlile KC) said the bill would be ‘absolutely pointless’ if it were not retrospective. ‘It was created to right a wrong that nobody expected. It’s simply restoring people to the legal rights that they already had,’ he said.
Conservative peer Lord Sandhurst (Guy Mansfield KC) added: ‘[When] parliament reaches a considered decision to pass legislation that is fully retroactive and does so for good reasons then, providing the legislation is drafted carefully, the Supreme Court has ruled that it is not contrary to our constitutional norms… We should not fear challenge at some later date in the ECHR. The balancing reasons are absolutely clear: this is for access to justice. There may be no perfect answer, but this is the right route - or the least bad route.
‘I am confident that the government will look further at the detail of the retroactivity provisions and will not bring this bill to finality without taking care to ensure that it is properly addressed.’
Meanwhile peers welcomed the broad terms of the Civil Justice Council’s review of litigation funding, published last week.
Lord Marks said he would argue for regulation of the sector, and he expected the Civil Justice Council review would come to the same conclusion.
Crossbench peer and former lord chief justice Lord Thomas of Cwmgiedd added that lessons could be learnt from Australia. He said: ‘Australia has a lot of experience of how to deal with this, looking not to the creation of yet another regulatory body but to whether the courts themselves, through the Civil Procedure Rules, can be given the powers and guidance necessary to deal with the issues.’
The government’s amendments were agreed and the bill will now move on to the report stage and third reading before transfer to the House of Commons.
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