Martin
Horwood indicated
dissent.
Edward
Miliband: The hon. Gentleman shakes his head, but that
would be the effect of the amendment. It would mean that decisions not
to open inquiries—not that many inquiries take place each year;
I believe that the number is in the hundreds—would leave the
charity tribunal open to challenge from anyone who wanted an inquiry
into a particular
charity.
Martin
Horwood: I think that the Minister’s later remarks
answered my point somewhat. He said that there could be thousands of
challenges, but obviously common sense must intrude into the process at
some point. The decision not to instigate an inquiry is taken only in
response to an appeal to instigate an inquiry. The amendment would not
completely open the floodgates. It is only when an inquiry is
requested, as the Alzheimer’s Society did in the case of the
Alzheimer’s Foundation. I cannot believe that a floodgate would
be opened that would lead to an unmanageable work load. As I keep
saying, there are plenty of other examples in the schedule of decisions
not made being subject to review by the tribunal. I cannot see what is
so different about this particular class of
decision.
Edward
Miliband: The difference is that the decision in question
would be one of sufficient gravity that it would call into question the
nature of the charity and
the institution. Therefore, there is a danger of the floodgates being
opened to all types of complaints against institutions. The amendment
is dangerous in the breadth of what it proposes. With that information,
I hope that the hon. Gentleman will withdraw his
amendment.
Martin
Horwood: I am grateful to the Minister for his comments. I
will withdraw the amendment. However, I shall do so in the hope that
the Minister, having found himself a little ill at ease in answering
some of the questions that were put to him, will consider examining the
schedule and making appropriate amendments in due course under the
powers that are conferred in the Bill to address these serious
issues. The general
principles that he has stated do not hold water. If other decisions are
in the schedule, both being and not being made and in both cases being
open to challenge, and if such a serious matter—the phrase he
used was “of sufficient gravity”—as the decision
to instigate an inquiry can be included in the positive, I cannot
understand why it, like those other decisions, cannot be included in
the negative as well. That seems a perfectly logical and reasonable
thing to do. I do not
think that the other amendments in the group, which have not been moved
and therefore cannot be withdrawn—I am learning Mr.
Gale—take us into the field of administration. There is nothing
to suggest that in the amendments. They allow a particular class of
decision—to appoint a receiver manager—to be revisited
and reopened. That does not mean that the administration has to be
reviewed as a matter of legal principle. It simply allows the decision
to continue with the appointment of receiver manager to be challenged.
That seems a reasonable and legally justifiable step to take. With that
expectation and hope, I withdraw the amendment in my
name. Amendment, by
leave,
withdrawn.
The
Chairman: Before I proceed, the hon. Gentleman said that
at the appropriate time, he wants to move amendment No. 19. Having
heard the Minister, is that still his
view?
I beg to move amendment No. 14,
in
clause 8, page 9, line 17, at
end insert ‘and
compensation.’.
The
Chairman: With this it will be convenient to discuss the
following amendments: No. 78, in
clause 8, page 9, line 22, leave
out subsection (5). No.
15, in
clause 8, page 9, line 28, at
end insert ‘and in doing so shall have regard to the need for
the charity to continue to meet its objectives.’.
No. 83, in
clause 8, page 9, line 33, at
end insert ‘or the decision, direction or order of the
Commission which is the subject of such
proceedings.’. No.
16, in
clause 8, page 9, line 33, at
end insert— ‘(7A) The
Tribunal may award compensation to any party to proceedings before
it.’.
Mr.
Turner: I referred to amendments Nos. 15 and 16 in our
discussion on amendment No. 12. The Joint Committee, chaired by the
right hon. Member for Darlington, recommended that the tribunal should
have power to award compensation and/or costs against the Charity
Commission. The Bill only provides for the award of costs. The Joint
Committee’s recommendation was supported by, for example, the
Association for Charities, which pointed out the substantial costs that
could accrue to charities as a result of incorrect legal decisions. We
have already heard about
maladministration. 2.45
pm Amendment No. 15
takes us into slightly different territory: the possibility of costs
being awarded against charities. Proposed new section 2B(6) of the 1993
Act in clause 8
says: “If the
Tribunal considers that any party to proceedings before it has acted
vexatiously, frivolously or unreasonably, the Tribunal may order that
party to pay to any other party to the proceedings the whole or part of
the costs incurred by that other party in connection with the
proceedings.” Although I
do not intend to encourage anyone to appeal to the tribunal
vexatiously, frivolously or unreasonably, each of those things is a
matter of judgment—particularly “unreasonably”. As
far as I can see, there are only three parties on the side of a charity
that could meet an award of costs.
First, that could mean an
insurance company with which the charity has an insurance arrangement,
although it is difficult to get insurance against behaving vexatiously.
Secondly, such a party could be trustees of the charity. We do not want
to make people fear that their trusteeship should lead to them losing
their house, or something of that kind, perhaps because of a decision,
for which they had a distant responsibility, taken on the
recommendation of well-paid or, more likely, not very well-paid
officials. Thirdly, the charity could bear responsibility for paying
such costs. The costs may not be substantial, but there is no bar to
representation before the tribunal. In many cases, there is an
unbalanced relationship between the appellant and the respondent in
such a tribunal, because the charity only has its money and the Charity
Commission has lots of public money and may have retained solicitors
and possibly even barristers to represent it and may be seeking those
costs. There is a danger that such a decision may either bankrupt or
reduce substantially the asset base of the
charity. I do not want
to encourage people to behave vexatiously or frivolously, but what is
unreasonable to one person is often reasonable to another. I do not
know whether we are talking about Wednesbury unreasonableness or pure
common or garden unreasonableness, with which we are all confronted
from time to time in life, but I should not like a charity to be run
out of town as a result of a decision taken by the tribunal because the
tribunal did not have the responsibility, as this amendment proposes,
to have regard to the need of the charity to continue to meet its
objectives and, by implication, to retain a reasonable proportion of
its
assets.
Martin
Horwood: I sympathise with much of what the hon. Member
for Isle of Wight said. I am
impressed by the new concept of common or garden reasonableness. I am
not sure how easy it would be to define that in law, but I am sure that
Bates, Wells and Braithwaite would charge a healthy fee to find
out. My amendments Nos.
78 and 83 have similar aims to those tabled by the hon. Gentleman, but
they would achieve them differently, by omitting Clause
8(5)— “The
Tribunal may award costs only in accordance with subsections (6) and
(7)”— which
restricts the extent to which costs may be awarded. Amendment No. 83 is
a consequent amendment to No. 78. Although I should like those to be
considered, I am broadly sympathetic to the hon. Gentleman’s
amendments and am happy to support
them.
Mr.
Turner: On a point of order. I should have given notice of
my intention to speak on amendment No.
15.
Edward
Miliband: This is an important matter and an important
part of the clause. Amendments Nos. 14 and 16 in a sense go together,
because they both concern compensation. The Government believe that the
tribunal should be able to award costs against the commission, and that
is the position taken in the Bill. The problem, which has been
mentioned in relation to earlier amendments, is that although the
amendments would widen the scope of the tribunal and give it the remit
to consider compensation claims, compensation is not a matter for
tribunals. The tribunal makes alegal finding. Compensation is
a matter for the independent complaints reviewer, which has the power
to recommend a consolatory payment, or for the parliamentary ombudsman,
who can recommend any level of redress if the complainant has evidence
that he or she has experienced quantifiable financial loss, or
inconvenience, or
worry. Although I
sympathise with the motivation for the hon. Gentleman’s
amendment, the tribunal makes a finding of legal fact and can award
costs against either party, depending on how they have acted, in the
manner set out in subsections (6) and (7). However, questions of
compensation for financial loss and other matters are not questions for
the
tribunal.
Mr.
Turner: I am having difficulty working out whether the
Minister means a tribunal in the sense of a tribunal as referred to in
the Bill, and also whether, when he talks about the way the tribunal
system works, he means the tribunal system in the context of the Bill,
or tribunals more generally. [ Interruption.] He is talking about
the Bill. I was going to say that other tribunals, such as employment
tribunals, can make compensation payments. If he means tribunals as
referred to in the Bill, that is why we are proposing the amendment,
because we want to change the system in the Bill, although doubtless
the Minister will tell us more about why we should
not.
Edward
Miliband: My understanding is that, in the case of
tribunals dealing with appeals against public bodies, the practice is
not for compensation to be awarded by the tribunal but for compensation
to go through the independent complaints reviewer and the parliamentary
ombudsman.
Mr.
Peter Bone (Wellingborough) (Con): If the tribunal rules
in one direction and compensation is then awarded by the parliamentary
ombudsman, does the parliamentary ombudsman have the power to force
that compensation to be
paid?
Edward
Miliband: The parliamentary ombudsman does not have the
power to force compensation to be paid, but the commission will almost
always accept the parliamentary ombudsman’s recommendation. If
the recommendation were not accepted, there would have to be a report
to the Select Committee on Public Administration. Acceptance is not
compulsory, but I think that I am right to say that in custom and in
practice the commission always accepts the ombudsman’s
advice.
Mr.
Bone: But the only way in which we could
guarantee payment of compensation would be by allowing the tribunal to
award it. We have seen cases in which the parliamentary ombudsman has
said that the Government have to do something about pensions and the
Government have totally rejected that recommendation. The only way to
ensure that compensation will be paid would be to provide for that in
the Bill.
Edward
Miliband: I take the hon. Gentleman’s point.
Nevertheless, we have an assurance that the commission follows the
recommendations of the independent complaints reviewer—that is
its record, and follows the advice of the parliamentary ombudsman. That
is how the system works for public bodies, and it is a perfectly
reasonable way
forward.
Mr.
Turner: The Parliamentary Secretary seems to be falling
into the trap of confusing the exact two issues that he complained were
being confused by the hon. Member for Cheltenham and me earlier. I am
talking about, on the one hand, the administrative issues, which go
before the independent complaints reviewer and the ombudsman, and on
the other, the legal issues, which go before the tribunal.
I accept that legal issues can
go to the independent complaints reviewer, but it seems absurd that,
having gone to all the trouble of getting a tribunal decision, someone
would have to go to someone else, to start, presumably, with a blank
sheet. I accept that that blank sheet would contain the decision, but
the compensation would then have to be assessed. That seems to build an
unnecessary hoop into the
system.
Edward
Miliband: I am not sure about a hoop. The parliamentary
ombudsman and the independent complaints reviewer have experience in
such matters of financial loss, in working out the effect of any
maladministration and in making a judgement. If we were to do this, we
would give the tribunal a new set of responsibilities as regards
quantifying the extent of financial loss and so on. I do not accept
that there is a new hoop; it is either an additional responsibility for
the tribunal or it builds on existing responsibilities for the
ombudsman and the independent complaints
reviewer. I move on to
amendment No. 78, which was tabled by the hon. Member for Cheltenham.
It would widen
the powers of the tribunal—not, on this occasion, to provide
compensation, but to provide costs. As I understand it, its effect
would be to do so in all circumstances, not only those in which either
party had acted unreasonably, vexatiously or frivolously. Again, we can
be sympathetic to the intentions behind the hon. Gentleman’s
amendment, because we do not want a Goliath Charity Commission against
a David complainant. However, I caution the Committee
against turning things into a lawyer’s paradise. Some would say
that about employment tribunals, although I could not possibly comment.
We want the process to be a simple and straightforward one, in which
people can go to tribunals, get easy means of redress and represent
themselves. We do not want to create lots of business for Bates, Wells
and Braithwaite and other firms, worthy though the individuals working
for them may be. There
is a danger that in giving such a broad allowance for costs,
essentially the same as that of any court of law, we would open up the
process—on both sides, to be fair—to large legal costs.
The point applies equally to the Charity Commission. At the moment, the
commission will have to pay its own costs unless it can show that the
other side has acted frivolously, unreasonably or vexatiously. If we
accepted the hon. Gentleman’s amendment, the Charity Commission
could run up big legal costs, if it was confident of victory, and
charge them to the other side. That might also cause dangers and
threats to the charities
concerned. I understand
the sentiment behind the amendment, and it is important that as we
scrutinise how the tribunal works in practice, we ensure that it has
proper means of redress. The overall principle is supported on both
sides: going to the High Court as the only route of redress against the
commission is not sufficient. There needs to be an easy means of
redress. Let us not try to turn the tribunal into another version of
the High Court. That is my fear about the amendment and, on that basis,
I hope that the hon. Gentleman will not press it to a
Division. 3
pm That takes me to
amendment No. 15. It is a reasonable proposition of the hon. Member for
Isle of Wight, but I fear that there is a danger. It is qualifying the
awarding of costs in cases when a charity is considered to have acted
vexatiously and unreasonably. I understand the hon. Gentleman’s
motivation. He does not want lots of worthy charities facing huge costs
as a result of a tribunal case. However, the proposal would open up the
tribunal system to vexatious individuals who will want to take a case.
In a sense, they would be assured that the charity itself will have a
degree of protection, even if the individuals within it were acting in
a vexatious way. Let us be honest:the test of vexatiousness,
frivolousness or unreasonableness is pretty stern. The Wednesbury test
concerns unreasonable action that no reasonable person would have
followed. It is not simply that someone is adjudicated to be on the
wrong side of an argument. Unreasonableness is a much sterner test than
that. The gap between being wrong and being unreasonable is very
wide.
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