New Clause 6 - Enforcement orders: costs

Enterprise Bill – in a Public Bill Committee am 10:00 am ar 16 Mai 2002.

Danfonwch hysbysiad imi am ddadleuon fel hyn

'Where the court determines that the person named in the application is not engaged in conduct which constitutes an infringement and that therefore the application brought under section 206 has failed, the court shall make an order that the enforcer shall bear the costs of that application.'.—[Mr. Djanogly.]

Brought up, and read the First time.

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon

I beg to move, That the clause be read a Second time.

We return to consumer legislation. The new clause deals specifically with provisions under which the enforcer—it may be the OFT or the local trading standards body—applies to the court for an enforcement order that subsequently fails. I hope that the Under-Secretary will confirm that, in that situation, existing legislation allows the court to make an order for costs to go to the winning party.

The new clause gives us a good and possibly final opportunity briefly to remind the Committee of a point that my hon. Friends and I have made throughout our proceedings. In many ways, the Bill has been drafted too one-sidedly and against the interests of business. Although that has happened for all the right reasons in many cases, there has been a massive increase in the OFT's power. That will often have dramatic implications for businesses, in terms of the costs that they will have to incur to defend themselves. Indeed, they will incur costs even before they are prosecuted, when they respond to requests for documentation that are made under the Bill's investigatory powers.

For all those reasons, it was necessary to include in the Bill provisions to redress the balance and to give business more rights to obtain compensation where it had acted properly and has been found innocent at the end of the day. Of course, the business will often have been subject to insolvency in the meantime, and the personal reputations of its owners will have been subject to a significant downside. The new clause would redress the balance by stating that, where the court finds against the enforcer making the application, it is just and correct that the person on the other side receives their costs.

Photo of John Pugh John Pugh Democratiaid Rhyddfrydol, Southport

I do not quite understand the principle that is operative in the new clause. If such a clause were appropriate, it would also be appropriate in a whole range of legislation, and all sorts of enforcement bodies would be faced with the same proposition: if they prosecuted their businesses properly and acted in a perfectly valid and sensible way, but judgments were none the less not in their favour, they would incur costs. I am all in favour of taking the concerns of business seriously, but a principle is involved.

Enforcement legislation that is not successfully carried out has an effect on the enforcer, even if the enforcer is a public body. If the new clause is serious, it ought to be read into all manner of legislation, including that for trade description bodies and the like. I cannot see how it can seriously be sustained without taking that principle and running it right across all legislation. That, however, would have dangerous consequences for the public good.

Photo of Miss Melanie Johnson Miss Melanie Johnson Parliamentary Under-Secretary, Department of Trade and Industry

The hon. Member for Southport (Dr. Pugh) is right in thinking that the new clause would have widespread consequences. As he said, present provision is in line with civil proceedings provisions in other legislation. The new clause would introduce an entirely new element. Proceedings under this part of the Bill would be subject to civil procedure rules, including the provisions on costs in part 44 of the rules.

The rules already provide that costs normally follow the event—that the loser pays the costs of both parties. From that point of view, the rules are wholly appropriate and reasonable.

A provision such as that proposed in the new clause would result in the enforcement bodies being required to meet the costs of every failed claim regardless of the merits of the claim or of the behaviour of the defendant. That would effectively negate the new provision, as enforcers would be highly unlikely to make a claim unless it was 100 per cent. guaranteed to win—and that will seldom, if ever, be the case. Under the circumstances envisaged in the new clause, were an enforcer to win a case, it might not receive some or all its costs because of its behaviour—perhaps because it had pursued an allegation unreasonably. I therefore ask the Committee not to support new clause 6.

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon

I take some satisfaction from the Under-Secretary's clarification that the courts would be able to award costs. I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.