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Lord Wedderburn of Charlton: In anticipation of the session with my noble friend, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Simon of Highbury moved Amendment No. 56:

Page 26, line 28, leave out ("28") and insert ("20 working")

On Question, amendment agreed to.

Lord Wedderburn of Charlton moved Amendment No. 57:

Page 26, line 31, at end insert--
("( ) Where it is alleged that a party is vicariously liable for a breach of an agreement or method made legally enforceable by virtue of this paragraph, he shall be so liable by reason of the act of another person only where that person was--
(a) an employee acting in the course of his employment, or
(b) an agent acting within the scope of his authority,
and where in addition such an act would have constituted a breach of that agreement or method if done by that party:
In this sub-paragraph the word "act" includes a deliberate failure to act, and similar words shall be construed accordingly.")

The noble Lord said: Amendment No. 57 touches on the same areas as previous amendments. It concerns responsibility of a party for what has been done where the collective agreement, or collective contract, has caused that party to be in breach of the obligations.

My next point is different from previous ones. Let us take the most common situation in a collective agreement as we know it. I am sure that my noble friend will have met many of these types of cases, not just in the Law Reports. Indeed, there are very few reported in the Law Reports as we do not have binding collective agreements. There have been many such situations where one side says to the other, "These are the procedures that we set out in the collective agreement". There can be little difficulty about that. However, the employer will say, "Your people"--in the case of the union "your members" or sometimes "your shop stewards"--"have acted precipitously and have not gone through the procedure"; the holy words of British industrial relations. It may be the other way round: the union may object that the employer's action is not consistent with the procedure. Much can be said about that in terms of paragraph 27; but let us leave it there. That could occur. If it occurred after the Act was given Royal Assent, he could be in breach of contract. The only remedy is specific performance.

One way out is for the employer or union to say, "Those were not my people at all". On the union side the people concerned may not have had any authority to act as they did. The Minister may recall the case of Heaton's Transport in 1973 Appeal Cases, better known as the "stuffing and stripping case". The Transport and General Workers' Union shop stewards took it upon themselves to bring out a lot of workers in the docks

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who objected to the new transportation system for goods which could and did deprive them of their jobs. I see that the Minister knows about that case.

I can assure the Minister that everything will turn on such legal points. It is all very well to have quoted in the courts what the Government believe but it is what is in the Bill that counts. There was nothing in the 1971 Act about whether or not the union was liable for the shop stewards' actions. This Bill will be like that if something is not done about it. The matter went to the Court of Appeal and the Court of Appeal said, "Yes, you looked from the top down on the union and the shop stewards really do not have the authority". The matter came to your Lordships' House and the Judicial Committee said, "No, the union is liable because the shop stewards had implied authority to commit the union, as such, to this form of action".

One can find dozens of cases on the employers' side, but they are not so remarkable. I note that that point has been ignored in some of your Lordships' debates. The employer is normally a company; and a company will have employees and other agents who will cause the company to be responsible for what they do, if it is within the course of their employment or within the express or implied authority. The amendment asks the Government to make the position clear on the face of the Bill.

The normal authority tests are set out here. Noble Lords may not like the drafting; if so, I am sure that it can be improved. All that is set out here is the common law test. Why, it may be asked, do we have to do that? There is already some confusion about whether the very special rules about agency and the like apply to this Bill. Those special rules are in Sections 20 and 21 of the Trade Union and Labour Relations Consolidation Act 1992. I shall not go through them because I allege that it is wrong to transpose statutory authority rules put in there in terms of industrial action or the industrial torts, as they are sometimes called.

If one leaves it blank there may be confusion in the courts that somehow the Government meant to go to Section 20 of the Act. I am sure that is not what it means. At least, I hope that is not what it means because a large number of people will withdraw from this field if that sort of thing is put in in terms of action. The fact that parties have done a deal does not mean that they will abide by it, however defective it is later seen to be. I hope the Minister will at least give us some chance to come back to this matter on Report. I beg to move.

9 p.m.

Lord Meston: I did not follow the noble Lord, Lord Wedderburn, in his argument about interlocutory proceedings--or interim proceedings as we are meant to call them since the reforms introduced under the initiative of the noble and learned Lord, Lord Woolf. However, I follow his argument about vicarious liability.

It seems to me, particularly in employment, that vicarious liability has different meanings in different contexts, as the noble Lord explained. For example, in the fields of racial and sex discrimination, the courts

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have recently come to give an extended meaning to the phrase--many of us would say quite rightly. In this amendment the noble Lord invites the Government to indicate the parameters of vicarious liability, and on that basis I look forward to the Government's response.

Lord McIntosh of Haringey: This amendment deals with the complicated subject of vicarious liability. I am advised that the concept is well established in law. Vicarious liability can arise only where the person causing, in this case, the breach of contract is an employee acting within the course of his employment or an agent acting within the scope of his actual or ostensible authority, ostensible authority being the authority that the agent gives the appearance of having to outsiders. I appreciate that that could fit some of the examples given by my noble friend in moving this amendment.

My noble friend confirmed that he is concerned primarily with the possibility that a union could be held vicariously liable for a breach committed by a member or lay officer, perhaps acting, as he said, precipitously, on the basis that the member or official is an agent who, even if he has no actual authority from the union to commit the breach, may be viewed by the courts, in the terms of the definition I have given, as having the ostensible authority to do so.

Except in the area of liability for inducing industrial action where special rules apply, trade unions are subject to the same common law principles as everyone else. My noble friend referred to the case of Heaton's Transport v. Transport and General Workers' Union which was decided by the Judicial Committee of this House in 1972. In that case it was held on the facts and having regard to the union's rules that the union was responsible for the acts of lay officials in inducing industrial action. My noble friend will be aware that, because the case concerned the inducement of industrial action, it could not occur today because the rules in Section 20 of the 1992 Act would apply. I appreciate that my noble friend referred at some length to the provisions of Section 20 of the 1992 Act, but my advice is that the Heaton's case could not occur in the same way.

It is true that common law rules will apply. Section 20 of the 1992 Act applies only to industrial action, not to the range of subjects covered by the schedule, which is concerned with collective bargaining. I am not aware of any examples where the application of the ordinary principles of vicarious liability to unions in other areas has caused them particular problems and I see no particular reason for thinking that they will do so here. I also have a high opinion of trade unions' ability to train and brief their officials and members. The prospects of a union finding itself in a position where it is vicariously liable for the acts of an official who has no actual authority to undertake them are remote. There is therefore no need to try to narrow it in the way proposed by the amendment. The courts can be trusted to apply the concept sensibly and reasonably.

My noble friend will be aware that, since his amendment is quite properly even-handed, it gives employers the same leeway as unions. If we made the

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changes in his amendment, it would be difficult indeed not to apply it to both unions and employers. But I am far from convinced that it is appropriate in relation to employers.

Clearly this is a matter where lawyers must speak to some extent to lawyers. I repeat the offer which I made to my noble friend on earlier amendments; that is, that we should talk together between now and Report stage. My present inclination is to take the view that this is an unnecessary amendment; that the fears expressed by my noble friend are not likely to be realised, indeed, are not in danger of being realised. However, I am happy to talk to him about it between now and Report stage and I hope that he will see fit to withdraw his amendment.

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