(2.00 pm)
MR JAY
We are on to section 5 now of your submission, please. Page 15, 00861, "Establishing the scope and jurisdiction in a changing digital media environment", where obviously there may be different providers growing up over the course of time. Can I ask you, please, to just summarise what your advice is in this context.
MR RICHARDS
I think in essence we make a very obvious point which a number of other people have made, which is that this world is changing significantly, and we need to think about, or the Inquiry needs to think about how to ensure that that evolution of digital communications is anticipated in any proposals that are made. We note the environment as it is today, and in this context I think that's particularly relevant in relation to our co-regulator ATVOD, who were discussed earlier, and that's a relatively new relationship that we have, very young. But we have got a good understanding now of how I think that works. Clearly that is dealing with an on demand, video on demand world, which has been populated thus far largely by people with feet in the broadcasting environment, but which in the future may well be populated by people who have historically been press organisations.
Q. The conclusions of your paper again summarise the points you made before, but 6.5 is likely to be seen as the critical point: the importance of public confidence in the press cannot be overstated. Confidence in a system can be undermined very quickly by the actions of individual commercial enterprises acting against the interests of the industry as a whole. An effective regulatory mechanism which builds public trust is in the interest of the press as well as the public." I'm sure that's a point you would wish to underscore. One point you haven't addressed in this paper, but you did in the letter of 6 June, was the relevance and significance of the sanctions. Could I ask you please to talk to that. Ofcom we know and understand doesn't have the ability to order compensation to complainants, but it does of course have the power to impose, I think, unlimited fines. What is the significance of that power within a regulatory system, whether it be self-regulatory, co-regulatory or statutory regulatory?
MR RICHARDS
I don't think our fines are unlimited, but they are significant. The way I would describe the fines and the significance of the fines is in the context of the overall framework of sanctions. This is very much how we think about it, and I would say I think it's very much how our regulated companies think about it, which is to say that there is a ladder of sanctions, beginning with the simplest, which is that we may take a case, we may decide that it is indeed a breach of the Broadcasting Code, and we simply record in public that it is a breach. That has a reputational effect. It has a it helps set precedent, it helps clarity, and it establishes a basis, should there be any further similar breaches. We then step through a series of sanctions which could be things such as requiring the programme in question not to be broadcast again, requiring an apology or a correction to be broadcast, importantly in a form and at a time of our choosing. And then through to fines, and then ultimately the sanction we have which is of course licence revocation or suspension. So that is a ladder of interventions and we always start at the typically start at the most lenient, and then go through those measures as appropriate.
LORD JUSTICE LEVESON
As a criminal judge, that's not uncommon.
MR RICHARDS
Indeed.
MR JAY
As you say in the letter, obviously it's a punishment, but perhaps more importantly, it's a deterrent.
MR RICHARDS
Yes. I think we found the system works. It's very, very rare that we revoke a licence. We have revoked one in the last year or so. But it was it's an egregious case, and we
LORD JUSTICE LEVESON
We talked about it on the last occasion.
MR RICHARDS
We did. Thank you for reminding me. So it's very rare, and largely we don't have to do that. The sanctions are known, and they are, I think, broadly speaking, effective. And they are needless to say, I think they are an essential part of effective regulation.
MR JAY
Two final areas of questioning. Mr Suter's proposal, which I think on analysis is a form of co-regulation. Whether with your agreement or not, he places Ofcom at the centre of it as the co-regulator. Could I have your considered reaction, please, to what he's propounding.
MR RICHARDS
I think the ideas that Tim Suter has put to you are very interesting, and there are some similarities to one or two points that I think we've made in the past. In a document we submitted to the inquiry at an earlier stage we made the argument for the case for common or similar codes. There is a similarity between the existing PCC code and our own Broadcasting Code. There's a close relationship between our code and the BBC's editorial guidelines. In a converging digital world, it does seem to us to make an awful lot of sense that the closer the relationship between those codes, the better. So I think that underlying point that Tim Suter is making is a very, very good one, and one which we agree with. He then goes on to expound a longer term vision, if you like, about how this all might fit together, the notion of authorisations and the notion that Ofcom might be the spider at the heart of the web and not actually doing any regulation any more itself, but approving codes and being the backstop. I think I can probably say two things about that. Firstly, we are obviously used to being a backstop. We are a backstop in relation to ATVOD and various other co-regulators. So the concept is familiar to us. The second though is where we would have concerns about that kind of idea is that it would seem to move broadcasting into a very different place potentially. Actually, I think the level of trust among the public or certainly what the public tells us about the effectiveness of broadcasting regulation is it's pretty high. It seems to work pretty well, it works with the industry pretty well, and therefore I would be I think our instinct would be to be cautious in relation to radical change to a part of the system, a media regulatory system, which broadly speaking works pretty well.
LORD JUSTICE LEVESON
Do I understand that it's this. If that works for the press, why shouldn't it work for the broadcasters, and why shouldn't there be a common system, albeit with different regulators? Why should Ofcom be directly involved? Is that the point?
MR RICHARDS
Slightly different, I think. I think where Mr Suter it he was in a sense saying Ofcom should step back from regulating in any respect, and merely be the code approver. And I think what I'm saying is, well, I can see the logic of that argument, particularly from a longer term perspective, but I observe that in broadcasting we have got something that works very well, and therefore part of me is saying, well, why would we want to change that?
LORD JUSTICE LEVESON
Yes. I think that's what I was trying to suggest. I don't think he was suggesting you should change broadcasting, but given the rather different dynamics of the press, a slightly different system might work better for them. I'm not going to ask you to sign up to anything. It would be quite unfair of me to do so, and it's not in my gift. But I did want to make sure that you had the opportunity to comment upon it, given that we've just heard about it.
DR BOWE
Well, I think the only thing I would add is if you look at paragraph 5.6 of our advice to you, page 0861 of your papers, you'll see that we're saying there the importance of different regulatory bodies working together, common and consistent principles. You'll recall that Tim Suter ended his remarks by talking not only about the importance of in effect being able to deal with the convergent digital future, but also of the importance for consumers and citizens of knowing where to go in a clear way if they've got a problem. So I think what we're saying here is we think the direction of travel sketched by Tim Suter is very interesting. Right at this moment we have a system of broadcasting regulation that appears to work well, and which appears to command public trust. The two things, I think, are not inconsistent.
LORD JUSTICE LEVESON
Yes. I understand the point you're making.
DR BOWE
Thank you.
MR JAY
There's one matter I have been asked to raise with you from another core participant. One issue which has been raised before is what happens when, at least in regulators, when there's the possibility or the actuality of contemporaneous court proceedings. The position with you, at least as regards fairness complaints, section 114 of the Broadcasting Act I'm sure this is well-known to you, but it won't be well-known to everybody else is that if the matter complained of is a matter in respect of which the complainant or the person affected has a remedy by way of proceedings in a court of law, and that in the particular circumstances it is not appropriate for Ofcom to consider a complaint about it, so you have to reach a view as to whether or not it's appropriate to consider the complaint.
MR RICHARDS
Yes.
Q. I haven't forewarned you of this question, but are you able to help us in general terms as to how that works in practice? What factors do you take into account in deciding whether or not it's appropriate to consider a complaint if there are extant legal proceedings?
MR RICHARDS
In light of legal proceedings taking place in parallel, I think in light of I think the kind of thing we would look at there is whether there is a broader set of issues for broadcasting itself beyond the individual specific case against the broadcaster, and therefore whether there was something we could learn or something that was important for a wider community. That's the kind of consideration we take into account there.
LORD JUSTICE LEVESON
Other professions have been through this battle. I vividly remember involvement in the accounting industry where there were enormous corporate collapses, and civil proceedings against auditors parallel to disciplinary proceedings, and there were a number of conflicting decisions ultimately resolved by saying get on with it. So you look for something more than just get on with it. You want to see that there is a wider public interest engaged. But if there is, you do press on with it, even though there are extant civil proceedings?
MR RICHARDS
I think that's the approach we would seek to take. Another example of that kind of thinking is own initiative investigations where sometimes we don't receive not very often, but occasionally we don't receive a complaint, but we have the power to make an own initiative investigation, if we judge that there is an issue, and potentially a wider issue, even though the individual in question hasn't actually complained. So you can see it from both sides of that perspective.
MR JAY
Thank you very much, both of you. Those were the questions I had.
LORD JUSTICE LEVESON
Dr Bowe, Mr Richards, before you go, could I just repeat my thanks. You have many other calls upon your time and have had many other calls upon your time, and taking on this role for the Inquiry has had little benefit for you, but it's had a great benefit for the Inquiry. And I would like to thank both of you, and indeed anybody else and I'm sure there are others who exercised some grey matter in connection with this paper. I would be grateful if you would pass on to them my real thanks.
DR BOWE
Thank you very much. Some of those people are here with us in the room, and have heard what you have very kindly said.
LORD JUSTICE LEVESON
I'm very pleased about that.
MR JAY
The next witness is Sir Charles Gray. SIR CHARLES GRAY (sworn) Questions by MR JAY
MR JAY
Thank you, Sir Charles. Your full name, please.
A. Charles Anthony St John Gray.
Q. You have provided us with two submissions. The main one we're going to be working from today is dated 7 June 2012. You've signed and dated it. Is this your formal evidence to the Inquiry?
A. Yes, it is.
Q. You wrote to Lord Justice Leveson on 3 February 2012, and we have that letter as well. I'm not quite sure whether it's on our Lextranet system but I'm not going to be inhibited by that.
LORD JUSTICE LEVESON
For the avoidance of all doubt, Sir Charles and I have known each other for a very long time. We appeared jointly together in the House of Lords, and we were colleagues on the bench together until he decided that he'd had enough.
MR JAY
In terms of your career, Sir Charles, you were at the bar for 30 years. Your practice was increasingly in media law. You were involved in a number of extremely high profile cases as a barrister, including the Crossman diaries case, which I think was in the mid-1970s.
A. Yes, a very long time ago.
Q. The Spycatcher case which went to the House of Lords, Aldington v Tolstoy which was the Lords and then I think Europe, and as a High Court judge, where you served for ten years between 1998 and 2008, you tried a number of high profile cases, including the well-known case of Irving v Penguin Books?
A. In this court, I think.
Q. Now having retired as a High Court judge, you are involved in a number of areas, but in particular arbitration, mediation and adjudication. You're here to tell us about a company called Early Resolution, how that works, what's its objectives are, and how it can operate as an alternative to litigation. Can you tell us, please, in your own words how the company was set up.
A. Yes. There was a group formed, I think, by Alastair Brett, who was then the legal manager of the Times and the Sunday Times. There were several members of what you might call the media bar who were all very concerned about the way costs seemed to be going up inexorably, and we got together and formed what was called a procedure group, the Early Resolution procedure group, and it had members such as Andrew Caldecott, Robert Clinton, senior partner of a firm that did this sort of work a lot, Adrian Page and many others. The objective was, as I said in my witness statement or submission, to really achieve a system of fair, rapid and cost-effective resolution of media disputes. The way in which we've done that it may be it's fairly familiar territory, I don't know but what happens is that there is a panel of experts. They're either silks or some retired judges. They preside over arbitrations is perhaps not quite the right word, but hearings, at which a claimant who wants to go down that route can hopefully achieve in a cost-effective, rapid and relatively informal way either the vindication he wants or, if appropriate, compensation, and I think it works quite well.
Q. The scheme as it operates at the moment depends on the agreement of both parties; is that right?
A. That's one of the problems.
Q. We'll come to how those problems might be circumvented. But in terms of the benefit of the scheme, you make it clear that there are certain media disputes, if I can so describe the work you do, that lend themselves very readily to the scheme because of the type of issue which is at stake. Maybe there are other more limited classes of disputes which don't lend themselves so well. Could you help us please, for those of us who are not aware of the bread and butter of media law, how this operates?
A. Certainly. This may be a bit surprising, perhaps, but the meaning of what is complained of by the claimant is often at the very heart of the dispute. The newspaper will say "We published something that was really anodyne", the claimant will vigorously deny that and say "No, this is highly defamatory of me". So you get two rival contentions as to the meaning of the words, and the basic advantage, as I see it, of the system Early Resolution is now running is that it enables the silk who is on the panel or the retired judge who is on the panel to adjudicate on meaning, whether the claimant is right or whether the defendant is right, or whether some intermediate meaning may be the right one, at a very early stage. Once you have got that determined, so many other things are unlocked. The newspaper knows exactly what it has to prove, if it's pleading justification, for example. The claimant knows the difficulties for him if the lower meaning is found to be the right one, and he may realise that he's he going to find it difficult to prevent the newspaper proving that that meaning is true. So everyone knows where they stand at an early stage, and the fact is that it's not only meaning that the ER panels can deal with; they can deal with other questions, they sound a little arcane, but whether the words are statements of fact or whether they are comment or honest opinion. That sounds a fairly clear and obvious distinction. It's not so obvious and so clear in practice. But again
LORD JUSTICE LEVESON
Don't worry about that, Sir Charles. Having spent many months in this Inquiry, debating the difference between fact and opinion and comment is clearly at the heart of many disputes.
A. It is, it is. Once you get that decided, you know which defence is going to be the one the newspaper, effectively, has to run. So in all these various ways, you cut to the cut to the chase in a way, and you rapidly find that cases will resolve themselves.
MR JAY
What sort of case in your view is not so well suited for this system?
A. It's not going to be terribly easy, although I think we would be more than happy to try it if the parties felt it appropriate for example to deal with a long factual dispute which might arise if there was a plea of justification. That would involve a lot of witnesses, possibly a lengthy hearing, and it might not really be the suitable kind of thing for one of our panels to deal with.
LORD JUSTICE LEVESON
What about privacy issues?
A. Very suitable, I would think. I would suggest. Because most of the people most of the experts on the panel will have considerable experience of privacy litigation, and they will be able to recognise very rapidly whether there is an invasion or a misuse of private information. It's a relatively straightforward question. I'm not suggesting the answer is always straightforward, but it's one that can be arrived at by a sensible person, assisted if necessary and this applies in defamation and privacy by lay assessors. I have done one, only one. I sat with two assessors to decide a meaning issue two or three years ago. It worked extremely well because after all the judge, if it's in court, is supposed to be determining the meaning, not according to his own view of the meaning, but according to what ordinary people, ordinary readers would make of the newspaper article if it's a newspaper article. So to have lay assessors giving their lay view of what a particular article means is a very good idea, and it worked well with me.
MR JAY
Thank you. So under the system as presently constituted, as you explained in the letter you wrote back in February, the costs of going to this voluntary arbitration are borne by the publisher; is that right?
A. Yes. I think that wouldn't necessarily be so in every case because sometimes one might get a foolish application being made by somebody who had no merits at all. Then I think we would reserve the right. But it would be a very unusual case. Normally the media defendant will be bearing the whole cost, which it has to be said are not that great because it's a day for most of these hearings. Half a day for some of them. If it's a meaning dispute, it's very quick.
Q. To be clear, in this arbitration system there's nothing to prevent the parties having lawyers to represent their case, but there's nothing which requires it; is that right?
A. That's right.
Q. Are you able to help us, how often, what percentage of the time, are there lawyers approximately?
A. I think more often than not. In fact I would say in the vast majority of cases. Of course it depends on the issue, and it may be that the claimant will want to come and argue his case because he feels he doesn't need a lawyer, in which case all the better.
Q. Before we look at your proposal, which is an Article 6 compliant mandatory system, could you outline, please, from your perspective it's paragraph 6.3 of your main June submission the present state of litigation involving the media? You have touched on the issue of costs, but there are other problems I think you identify in that system which you wish to outline for us.
A. Well, I must underline costs. They are horrific, and of course they're aggravated by conditional fee agreements, which are still, I think, possible up to 100 per cent, although there's legislation in the course of being passed to reduce it to 25 per cent, I think. Also the actual court costs are quite considerable. I believe I'm right in saying it costs GBP1,500 to issue a claim form now, which is a fairly astonishing figure. The other problems that surround litigating, I think, are these. First of all, you tend to have and this is very often a device adopted by defendants prolonged and often rather unfruitful interlocutory jousting. That just adds to the costs and although one doesn't really have juries dealing with these cases any more, the power of judges to get things moving is, as I think we all know and understand, a bit limited. However hard you try, somehow these things do last longer than they really should.
Q. If defendants, if their strategy is, as you say, to have prolonged interlocutory arguments, one consequence of that is there is a war of attrition whereby claimants lose. We have heard though from a number on the other side that the effect of a 100 per cent CFA regime is that newspapers often had to settle cases which they would otherwise have wanted to fight because the risks of losing, even in not particularly high risk, were just too great. Is that something you would emphasise?
LORD JUSTICE LEVESON
And the costs are fabulously high.
A. They really are. I mean, if you multiply whatever the going hourly rate is, and I wouldn't even presume to know now, by 2, and have a three-week trial, you are going to be in a stratosphere which no sensible newspaper is really going to want to contemplate.
LORD JUSTICE LEVESON
Where costs utterly overwhelm the amount that could ever legitimately be considered to be at stake.
A. Of course. Because damages, as my Lord will know very well, have been reduced by various decisions in the courts. So costs are often a far greater factor than the top bracket award of damages which might be available.
MR JAY
Your statement also refers to the decline in investigative journalism.
A. Yes.
Q. What do you analyse to be the fundamental causes of that decline?
A. Well, I think it's the mainly the risk that newspapers are at, that they will get it wrong in some way or be found by the tribunal to get it wrong in some way, which might result in a major award of damages. I think the other problem that the press are facing at the moment is a very sharp downturn in advertising revenue, so that funds are a bit scarce. I think it's an enormous pity, the change that's taken place, because one remembers maybe 30 years ago, whatever it is, the number of really good investigative stories that used to appear in the press. The thalidomide story is one. Spycatcher. All these kind of cases, where the press were running great risks of the rather lesser costs than they would nowadays run, but they were running those kind of stories, which is, as I have always understood it, the essential role of the press. Nowadays one tends to get celebrity stories and things like that instead, and that's a shame, obviously.
Q. Before we look at the features of your proposed scheme, I think you want to explain for us why ER should be the answer to the current problems. This is paragraph 7.2 of your submission.
A. Yes.
Q. Can I invite you, please, to outline that for us.
A. Yes. The first thing that I think I ought to stress is that the role that ER plays, if it's going to play a role in the future, is all after publication. The reason I stress that is that that means that there can't be really any sensible objection on the grounds that we're going to be interfering in any way with the freedom of the press which we entirely support and endorse. If the regulatory system which ER is proposing were to come into effect, it would only come into effect after the publication has taken place. So there's no risk of anyone saying, look, I wouldn't have published that story, or rather I would have published that story if I hadn't thought that there was going to be trouble as a result of it. So that's one example.
LORD JUSTICE LEVESON
It might be said that because the regime is so oppressive, we can't publish stories that we otherwise would publish. That's not particularly for ER, but generally for regulatory regimes.
A. Yes, that could be said. But, I mean, better a regulatory regime that operates post publication than a regulatory machine that comes into play at some earlier stage, pre-publication.
MR JAY
Apart from that factor, there are other positive aspects of the scheme that fulfils the criteria of effectiveness, fairness, objectivity, independence and costs. Is that right?
A. Yes.
Q. Can we please look at the features of the
LORD JUSTICE LEVESON
Just before you do, are there any other advantages to a scheme and one could talk about ER, but actually one can expand it a little bit to some form of arbitral mechanism.
A. Absolutely.
LORD JUSTICE LEVESON
Which perhaps we'll come on to discuss when you discuss ER.
A. Yes.
LORD JUSTICE LEVESON
What are the other advantages of some sort of mechanism?
A. Well, mostly I suppose cost saving. Enormously cheaper than going to court in the present circumstances. You'll achieve in a day, I think this is fair to say, with a competent silk who knows his way about, what might take several days for a jury certainly, and even for a judge who is less versed in that if I may dare respectfully say so, in that field.
LORD JUSTICE LEVESON
They don't give me cases to try at first instance any more, Sir Charles. You don't need to be polite.
A. Of course I wasn't referring to your Lordship. The other advantages are these, I think. The hearings do take place in private. That will invariably suit, I think, both claimant and defendant. If the claimant wins, he can publish it as he wishes, or the result of it as he wishes. Very often the whole exercise is done on paper without any need for any oral hearing at all. The decision is invariably arrived at within days or certainly within weeks. If it's just a meaning issue it's usually a matter of days. Whereas at present the position is that very often you'll have to wait for the full trail before you get a decision on meaning. That's not always the case as it once was. And it is worth noting, I think I'm right in saying, that a number of editors, including the editors of the Financial Times, the Guardian, the Independent and the Daily Telegraph, have all expressed their support for the sort of arbitral scheme that ER would be.
LORD JUSTICE LEVESON
You wanted to ask about the features.
MR JAY
The features of the scheme. Paragraph 6.4.
A. Yes.
Q. First of all, so we understand the derivation of its power, we're talking about, say, a scheme which is underpinned by statute?
A. Yes.
Q. Is that correctly understood?
A. Can I explain the reason for that, because that's provoked a certain amount of resistance, I think, on the part of some people.
LORD JUSTICE LEVESON
Sorry, now we are moving away from what ER actually is?
A. Yes.
LORD JUSTICE LEVESON
Into a new idea?
MR JAY
Yes.
LORD JUSTICE LEVESON
We just have to be clear. Yes.
A. It's a mandatory scheme. It's got to be mandatory, it's got to be compulsory, and I say that really for this reason. It's only if you have a compulsion for every person who wants to bring a defamation action or an action for an invasion of privacy to go to ER, or to whichever arbitration body it may be, that you can ensure that the system of having a reasonably inexpensive resolution of disputes can be achieved. If either party can simply say, no, I don't want to play ball with that, that really defeats the whole object of the exercise.
LORD JUSTICE LEVESON
And that can work both ways, because it may be a newspaper that feels "I can bash this claimant into submission, make it go away". But equally, it could be an extremely wealthy claimant that feels "I can so overwhelm the defendant newspaper with the risk of costs that they will have to go away".
A. Your Lordship is entirely right. It's as likely to be the one as the other. I mean, wealthy claimants do bully defendants into submission. Sometimes wealthy defendants can bully claimants into submission as well. So it is a real problem, that. The other advantage, I think, is perhaps equality of arms, because once you are in front of the arbitral panel, rich claimants and defendants are almost by definition in the same position. There's no inequality which can be exploited by the richer of the two. It's another way of expressing, I think, the point that your Lordship just put to me.
LORD JUSTICE LEVESON
It's a slightly different point, because one of the things that I have been thinking about, and raised with a number of people, is that actually if your arbitral system is our normal mechanism for resolution of disputes, then there could be inequality because one side could bring along the most fashionable silk in the area, and the other may not be able to afford such representation; which is why I have toyed with the idea of an inquisitorial type mechanism that permits the arbitrator, or whatever you want to call him, to control precisely what's going on, and thereby demonstrate that it isn't necessary to bring the most
A. Well, I quite understand the point, but I think that the system that ER is advocating really meets that problem by the form of the tribunal who is going to be making the decision. It is an experienced silk who knows his way around the media world. I just don't think, however fashionable the silk who appears for one side or another may be, he's going to be able to achieve very much in the way that your Lordship is rightly suggesting.
LORD JUSTICE LEVESON
It's not for me to sell the services of one silk as opposed to another.
A. Can I just say something that I ought to say, which is that we don't anticipate there's any problem with Article 6. I think it is Article 6 compliant, the proposed scheme, because we're not ruling out the possibility of an appeal on some point of law against the decision that the tribunal or any other tribunal might have arrived at.
MR JAY
And the tribunal wouldn't be able to order injunctive relief.
A. No.
Q. All pre-publication issues, therefore, are left for the High Court?
A. Absolutely.
Q. And as you also explain in paragraph 6.4 of your submission there, there are certain types of claim which would exceptionally still need to be dealt with through the court system.
A. Yes, it wouldn't just be interlocutory injunctions. The parties, I suppose, could agree to some form of order being made by an arbitrator, but I think in practice if a final injunction is sought. But that would follow as a matter of course, wouldn't it, if the arbitration resulted in a win for the claimant, he's almost entirely assured of getting an injunction in his favour. Conversely, no injunction could be applied for if the finding was against him. It's an obvious point.
Q. The exceptional type of case which is not suitable for this system where there would still be ability to go to the High Court this is setting aside the case of where injunctive relief is being sought. In paragraph 6.4 of your submission you refer to cases which involve more recondite issues such as issuing letters of request, service of subpoenas, et cetera?
A. I didn't realise you were referring to those kind of applications that sometimes have to be made, and have to be made to the court. But they're all interlocutory. They're not involving the final decision, which could presumably go back to the tribunal.
Q. What about a case which may involve such an important point of principle or engage the public interest in such a way that almost as a matter of public interest you would want it tried, like the case you tried of Irving v Penguin Books. Would that be appropriately resolved in this submission if one of the parties didn't want that to happen?
A. Well, I would be very reluctant I think that is the exceptional case. I don't mean that particular case, but there will be some kind of cases like that. You could I suppose get over the problem of retaining an arbitral panel to deal with those kind of cases if it were to be public. But there are some where you do need and they would be probably very lengthy. The Irving case lasted about ten weeks, from recollection. I think you're right. They would have to go really to a judge.
LORD JUSTICE LEVESON
But that doesn't prevent you having a compulsory system. It merely permits an application within the compulsory system to say this doesn't work. Please transfer us or authorise us to do it differently.
A. Yes.
MR JAY
And the ER system on its statutory base, save for the inability to grant injunctive relief, would it otherwise have exactly the same powers in relation to awards and quantum of damages as the High Court has at the moment?
A. Yes, and costs.
Q. Can I ask you, please, to compare and contrast this system, which I know you think operates successfully in another realm altogether, namely the adjudication system in the construction industry.
A. Yes. There are obviously considerable differences between defamation or privacy cases on the one hand and construction cases. But I think there is a lot that can be learned from what happens. Your Lordship probably knows this already. There was a paper written this is the origin of it. It's the only reason I mention it by Sir Michael Latham, back in 1994, which was called "Constructing the team". That resulted, to cut things fairly short, in the enactment of an Act called the Housing Grants Construction and Regeneration Act 1976, which in effect has the result that every dispute involving the construction industry there are some exceptions, I'll mention them in a moment is dealt with not in the courts expensively and rather slowly, sometimes, but by an adjudication. We wondered it was actually suggested by Lord Justice Jackson that such a scheme might work in the defamation field, and I've had discussions with Alastair Brett, firstly with the present head of the TCC, Mr Justice Akenhead, and also with Julian Holloway, who was a solicitor with great experience of construction law and practice, and we were rather encouraged by those discussions. What operates in the construction scheme at the moment is a statutory and mandatory scheme for all parties to construction contracts and the exceptions are contracts involving residential property and certain oil and gas contracts. Those are all dealt with by arbitration or adjudication. What happens is that if one party to the dispute says, well, I want to go to adjudication, he applies to the adjudicating nomination board. The adjudicator is then appointed. He can rule on any issue which arises. There's no judge or statutory body involved. The adjudicator can appoint his own experts. This scheme is also Article 6 compliant, so it's believed, because either party may apply to the TCC, the Technical Construction Court, and there's a section in the Act which makes that possible. And when an application is made to court, which it hardly ever is, we understand, it can be heard very quickly because the judges have been free from dealing with a lot of these construction contracts for the very reason that they've gone to adjudication. It's widely regarded, so we are led to believe, as a huge success. Subcontractors get paid on time and so on and so forth.
MR JAY
There may or may not be cultural differences between the construction industry and the press as currently constituted.
LORD JUSTICE LEVESON
I don't think that's likely to be an issue.
MR JAY
No, because it's mandatory.
LORD JUSTICE LEVESON
But it's not irrelevant to note and I'm grateful to you for pointing it out that the Joint Committee on Privacy and Injunctions in its report of March of this year advocated an increased role for regulating and arbitrating and mediating privacy disputes with the advantage that it would reduce the burden on the court system.
A. Yes.
MR JAY
We know that the press in general I don't think it's an exaggeration to put it this high are hostile to any form of statutory scheme. Do you feel that there's any justification for their fear?
A. Well, I don't. And really for the reason I have already given, I can't see any problem, so far as the freedom of the press is concerned, by the setting up of whatever body it may be, which is only going to come into play after the publication complained of has taken place. It seems to me to follow as night follows day that there can't be any question of anyone's any freedom of the press issue arising, if all we're concerned with is dealing with the problem that's already arisen in the publication, if it is a problem.
Q. It's always possible to enshrine or entrench quasi constitutional rights such as freedom of the press within an enabling statute?
A. Yes. I think my Lord has already suggested that there is the Constitutional Reform Act 2005, which expressly in terms safeguards the independence of the judiciary. Maybe that's necessary, and maybe it would be a good thing to do in the present case as well. I don't know.
LORD JUSTICE LEVESON
That doesn't itself impact on free speech. One of the points that was made, I think, by Lord Hunt was well, yes, there is that statute, but then this minister abused it by saying what she wanted to say, and that minister abused it by saying what he wanted to say, and
A. What can be done about it?
LORD JUSTICE LEVESON
But it's a question of identifying the independence. Then it's a matter for everybody else to say this is the independence that you've got to recognise, and therefore, although you had free speech rights, they have got to be exercised within the law. Namely to uphold the independence in that case of the judiciary, in this case of free speech.
A. Yes. I think it's easier with free speech in a way than it is with because it's such a clear cut thing. You don't interfere pre-publication with what is going to be published. You might occasionally if there's an interlocutory injunction. But interlocutory injunctions don't get granted when the defendant says he's going to justify it.
LORD JUSTICE LEVESON
I would like at some stage to ask you about that because I have got a wrinkle on all that, but I'll find an appropriate moment.
MR JAY
If the system is free of charge for complainants and going to be so effective, people will say you will get a whole host of vexatious claims. How would we deal with those?
A. That is a potential one. I don't think it's likely to happen. I just don't see that there is a sort of floodgates point taken sometimes, but I don't see where the flood is going to come from. There was a limited number of even arguable claims, I would have thought, on any day of newspapers getting published. But supposing it were to develop into a problem, it's relatively easy to solve, I think, because you can have either some sort of filter system, this would involve an appropriate person, whether one of the panel of experts that we already have or someone else, saying that this is hopeless, and as it were striking out the claim. Alternatively, and I think this is really a better way of dealing with it, to have the reserve power to make an order for costs against anyone who brings a claim which is manifestly a hopeless and speculative one. So I think it can be controlled in one or other or both of those ways.
Q. As we see, employment tribunals, I think, have such a power exceptionally.
A. I didn't know that. But that's encouraging.
Q. Can we understand, Sir Charles, how this system would work in the context of any reformed regulatory system as a whole? We look first of all at Lord Black's proposal, which, as you know, is a contractual proposal. He had as a shaded box or possibility within his proposal what he called an arbitral arm, which he understood would require statutory underpinning. That arbitral arm looks rather like the sort of system you are proposing. Or we could have some sort of statutory system or system underpinned by statute where there's the main regulator which carries out traditional regulatory functions and then an arbitral arm which again would be you, as it were. How do you see yourself working with or co-existing with either the two hypothetical models I have put forward?
A. Well, I think we're clearly of the view that it's got to be a mandatory system, it's going to be compulsory, and the only way you can really compel is by a statute. We say no. We are unequivocal about that. I think I'm right in saying I only read rather short passages from not the evidence given I think earlier this week by Lord Black, but the evidence of Lord Hunt, and I think he conceded as I understand it that there was an urgent need for a more effective system of redress for members of the public who can't afford to take their case through the courts. He endorsed, again, as I understood his evidence, a much tougher and I think he even contemplated a compulsory system, of bringing parties together in the hope of reaching a full and final settlement of the claims. That's pretty close to what we're advocating.
Q. I think even in the self-regulatory model, which is primarily contract based, its proponents recognise that the arbitral arm would have to be statutorily underpinned because of Article 6?
A. Again, I think Lord Hunt said that in terms.
Q. Yes.
A. It might turn out that it did need statutory backing.
Q. Would your system, in your view, happily co-exist with either a primarily self-regulatory model, or a model with the new regulator, whatever you want to call it, having a statutory underpinning?
A. I think it wouldn't co-exist at all, would it, because of the compulsory nature of what the statutory scheme would be. I mean, that can't co-exist with a voluntary scheme. If everybody has to go to ER, or whichever other organisation it may be, how can that coexist with a voluntary? I think that's the short answer, isn't it?
Q. Well, it would be somewhat anomalous that if the main regulatory structure were voluntary, that you were nonetheless forcing people to bring their disputes to a mandatory arbitral system, but
A. Well, you could put that the other way as well, couldn't you, and say if you have got a mandatory system, you can't have people setting up a voluntary scheme in parallel. I mean, I think they are mutually exclusive, unless I'm missing the point.
Q. So it follows from that that you would be favouring, when one is looking at the regulatory system more generally, some sort of mandatory statutory underpinning for such a system, of which ER, which may have a new name under this system, is equally a mandatory component?
A. Is your question addressing only post publication regulation?
Q. Yes.
A. Yes, I think then I entirely agree. Pre-publication is a different matter altogether, and it's no part of my brief to be at all critical of the PCC. But I know that the joint committee on privacy and injunctions was highly critical in a number of respects of the way in which the PCC unfortunately has been operating, as I'm sure you already appreciate.
Q. Yes. I think it's your view that the PCC, even in a reform state, is not an answer to the current problems of the culture, practice and ethics of the press; is that so?
A. Well, that was the view. There was another committee, if you remember, on it was just a House of Commons committee, as I recollect. And that also took the view, having heard a lot of evidence about it, that that was not something that the PCC was really the right body for dealing with. But that in a sense is rather outside the role that I feel able to play. I mean, I don't know what the solution to that is. My Lord will have to wrestle with that, I suppose.
Q. In section 9 of your statement, you do elaborate your proposal for a media regulator which has statutory underpinning?
A. Yes.
Q. You have already explained to me why really as a matter of principle you would favour that. But you've also taken time to comment on the proposal from the Media Standards Authority, which we can see in paragraphs 9.5 and 9.7. There's no 9.6, but don't worry about that.
A. Sorry, I've just noticed.
Q. It's a form on our understanding of co-regulation, we can see from those two paragraphs that you're not immediately attracted by it. Could you elaborate why, Sir Charles?
A. Well, we have got the same objectives. I suppose the only reason that I am a little critical of the MSA is that it's dependent on media organisations being persuaded by a system of incentives to join it, whereas the adjudication system proposed by ER and by the MSA is statute based. Only the participants who join the MSA and submit to its jurisdiction will be in a position to stay libel actions started in the High Court, and have them compulsorily transferred to adjudication. Does that answer the question?
Q. It may feed into the wider question. If one were to have an objection as a matter of principle to a compulsory regime, in your view are there a form of practical incentives, sticks and carrots, which could bring people into a compulsory system and therefore achieve the same outcome? I think it's implicit here that you don't think there are?
A. I don't think there are. I don't conceive of a way in which you can, as it were, coerce people in a voluntary manner to join a scheme. I think it's really got to be compulsory, and I don't myself see any sensible objection to that because it's, as I say, not interfering with the freedom of expression that we all rightly cherish.
Q. I have been asked to ask you this. How effective has ER been since it was set up?
A. It's not been as effective as we hoped, and can I try and explain why that is? We thought that, for example everybody talks about the nationals. The regionals are just as important, I think, to the whole of the dispute with which his Lordship is concerned. The regional newspapers were hugely enthusiastic when we launched the ER scheme. But they met with opposition by claimants. What's the basis for that opposition? I don't quite understand what the basis can be, because it must be in the interests of most claimants to go down the ER route, or whatever other route.
LORD JUSTICE LEVESON
I wonder whether it might be different if and when CFA is changed.
A. That may be one if I may say so, I entirely agree. It may be that the role of some advisers I don't want to be critical of everybody, but it may be that advice along the lines that your Lordship has just indicated is being given to claimants, that it's in both the claimants' interest and in the legal advisers' interests that they should operate on a CFA, and
LORD JUSTICE LEVESON
But you could articulate it slightly differently, couldn't you, in a way that doesn't carry any pejorative undertone? Because you could say, well, you can use this system which would be free, but of course I'm not free, and therefore you will have to pay for me out of whatever ultimately you recover. Alternatively, you can use what is actually the courts of the country. It will take rather longer, but you will be protected from any potential risk as to costs because, with the benefit of a CFA and after the event insurance, there won't even be the chance of you having to pay me.
A. That's a more attractive way of putting what I was trying to suggest.
LORD JUSTICE LEVESON
I deliberately
A. There was an element of cupidity in my expression of it, and not in your Lordship's. So can I adopt your Lordship's version.
LORD JUSTICE LEVESON
Is that what you were referring to when you said that's the problem in answer to the question Early Resolution requires the agreement of both parties?
A. Yes.
LORD JUSTICE LEVESON
So it's not been the press.
A. No. It hasn't. And I think the press stand to gain in some ways more than the claimants. But I really don't entirely understand why people haven't taken up. It may be that it's new, which it is. That may be part of the reason. But we're puzzled.
LORD JUSTICE LEVESON
Well, it may be that if one adds some arbitral arm to a system that covers the far more wide-ranging issues that I've got to address, then there will be rather more work to do. Do I gather that you and those with whom you have been associated in ER could see a place for themselves helping to adjudicate in issues along these lines?
A. Absolutely. If I haven't made it clear, which I fear I haven't, often it will be meaning which is the key thing.
LORD JUSTICE LEVESON
I understand that.
A. Suppose you take a case where there was an argument about meaning, and it's decided by the silk, assisted or not by lay assessors, that the claimant's right or the defendant's right, whichever it may be, that's the moment where both the claimant and the defendant might say this is a frightfully good way of actually disposing of every issue that's going to arise. We have got meaning out of the way. There's going to be a plea of justification or a plea of privilege, and every time it's open to the parties to say would you be prepared to
LORD JUSTICE LEVESON
Do the next step.
A. Do the next step.
LORD JUSTICE LEVESON
I hadn't appreciated that.
A. I should have made it clear that that is on offer, because after all you can always by consent go to arbitration, can't you, and that's really what it would amount to. We would hope, eventually, if the thing were to take off, as it were, that more and more people would see the sense from the costs point of view and from every other point of view in getting every meaning out of the way every issue out of the way and having damages awarded by the experienced silk or whoever it might be.
LORD JUSTICE LEVESON
I have one other thing to raise with you, and that's to just really ask for the benefit of your experience in relation to pre-publication issues. You'll be aware, or you may or may not be aware depending on how much you have followed of what I've been concerned with that one of the issues that has addressed a number of people, particularly, of course, Mr Moseley, is the whole question of pre-publication notification. I understand very clearly why, as a matter of principle, requiring pre-publication notification could cause enormous damage to free expression, although editors have said that as a matter of routine they always will, but they want to preserve the right not to. I recognise the strength of both arguments. Mr Moseley makes the point, why on earth wouldn't you stop somebody cutting off a leg wrongly when you can't put the leg back with damages or anything else. It's there forever. His own evidence about his own experience is a very powerful enunciation
A. Yes, I heard him.
LORD JUSTICE LEVESON
of the problem. On the other hand, the press say, entirely legitimately, well, if we've got to pre-notify, then, first of all, the wealthy will injunct us, and so suddenly we're bogged down. We will lose the element of our scoop that we've put money into, that we have researched, and alternatively, we won't be able to find a villain who will deliberately make himself scarce so that our story is emasculated in that way. What I would like your view on, based upon your experience in the field, is whether there isn't room for saying to a newspaper: you don't have to pre-notify if you think that it will be inimical to your interests to do so, but rather than if I borrow somebody else's phrase mark your own homework, if you think you have got a good case not to pre-notify, there is nothing to stop you going to somebody who wouldn't otherwise be involved one could take I'm not talking about Early Resolution, but somebody in your position.
A. I know what your Lordship means.
LORD JUSTICE LEVESON
To say, look, this is our story. This is why we don't want to pre-notify; what do you think? And that person could look at it, and assuming the facts were right, because that would be the premise of the view, say, no, I think this is a very good case for not pre-notifying that.
A. Yes.
LORD JUSTICE LEVESON
In which event, of course, there wouldn't be pre-notification, and if there was a challenge, that the newspaper would then be able to use the fact that they had taken the responsible step of getting a second opinion on the issue to mitigate potentially exemplary or aggravated damages. I'm not trying to punish anybody for not doing it, but I'm trying to underline the risk of publishing without notification. Alternatively, if you choose not to ask, or to ignore the advice, you're entitled to do that. You might be right, and the judge at the end of the day may say that was perfectly legitimate, and there's nothing wrong with that. But if the judge took the view that, no, actually the advice you received was right, or you should have gone for advice, then I can take that into account as a matter of aggravation. Now, using all your experience, recognising on my part that the advice you're about to give me is worth exactly what I'm paying for it, which I say before anybody asks is nothing, I would be very interested for your view.
A. Yes. I have no hesitation in saying I'm not enthusiastic about what your Lordship has just put to me. The reason I think is really a very simple one. There cannot be any this is my sort of humble experience. There can never be any justification for compelling, even in the very skillful and indirect way that I think your Lordship is putting to me there can never be any justification for interfering before publication in any way at all with the freedom of the press and the right of the newspaper to run the risk of having a massive award of damages against it.
LORD JUSTICE LEVESON
But I wasn't trying to interfere with it.
A. Your Lordship I'm sorry.
LORD JUSTICE LEVESON
Let me just articulate why.
A. Yes.
LORD JUSTICE LEVESON
It would be advisory only. It doesn't in any sense prevent a newspaper from publishing precisely what it wants to publish. But the concern that I have is to cope with
A. Yes, I know. What happened in the Moseley case.
LORD JUSTICE LEVESON
what happened in the Moseley case, and one could take a different case. I'm not personalising to Mr Moseley.
A. No, he just gives evidence very articulately. I have heard him do so.
LORD JUSTICE LEVESON
About that issue. I'm trying to find a way. Maybe you should say in every single case, if you don't pre-notify when you could, that's a reason potentially for a court to consider aggravated damages.
A. Publish and be damned.
LORD JUSTICE LEVESON
Publish and be damned. But then I'm trying to find a way for the newspaper to get some protection. So far from seeking to limit the freedom of speech, I'm actually trying in some way to support it.
A. Yes. I do understand that.
LORD JUSTICE LEVESON
Now it may not work and that's why I'm keen on your evisceral reaction is itself extremely important.
A. But I just have a feeling that if you even have the informal mechanism that your Lordship, I think, is proposing mechanism is not even the right word, the informal sort of understanding I think if you put that to a newspaper editor, and said, well, what's wrong with your Lordship may have done this, I don't know he would immediately say, no, I don't think that is really something I could possibly agree to, or want to happen. I think I would agree with the newspaper editor who reacted in that way, although I understand where your Lordship is coming from in making that suggestion. I just think that one has got to give them utter freedom to behave as badly as they like, knowing as one does that damages aren't an adequate remedy very often at all, however large.
LORD JUSTICE LEVESON
But that's the point. So is there an answer to Mr Moseley's point, or is there just no answer?
A. I fear there's no answer, even though I'm saying that in the context of a privacy case, where I think the arguments are even stronger than in a defamation case.
LORD JUSTICE LEVESON
It's actually privacy that I'm thinking of. Much more so, because in libel, where damages it seems to me there's rather more scope in libel than in privacy.
A. Is your Lordship thinking of exemplary damages and whether they're going to be available in privacy cases? That's a potential problem. Leaving that aside, I just think it's a line I wouldn't want to cross in any way. I suppose it's partly because I was brought up I suppose so long ago with that being the cardinal principle, that you had no interference, and one went traipsing in to see the judge in chambers, and if the defendant says I'm going to justify, that was it.
LORD JUSTICE LEVESON
Yes. Well, I've been in that position myself.
A. I'm sure.
LORD JUSTICE LEVESON
And I recognise it. I'm just struggling to deal with what, on the face of it, appears to be a potentially terrible injustice that is irremediable.
A. Yes. And especially in privacy cases. Because
LORD JUSTICE LEVESON
Because by definition, this is not libellous.
A. Yes, and the damages are relatively low, and I think it's an insoluble problem, myself, and I fear that I wouldn't want to encourage your Lordship, if I may put it that way, to
LORD JUSTICE LEVESON
Not only you're not encouraging me, you are discouraging me, and you're not suggesting anything in its place.
A. I didn't know your Lordship was going to ask me about this.
LORD JUSTICE LEVESON
Sorry.
A. If something occurs to me that might be a solution
LORD JUSTICE LEVESON
If something occurs to you, I would be very, very interested to hear it.
A. How can I communicate?
LORD JUSTICE LEVESON
By all means, if you would just write me a letter, I would be very grateful.
A. I'll certainly do that. I'm sorry not to be able to express agreement with
LORD JUSTICE LEVESON
No.
A. what is a new proposal to me.
LORD JUSTICE LEVESON
I wanted your experienced view because I know that, as you explained, you spent 30 years doing this sort of work, and I'm very conscious, and I'm constantly reminded, even if I'm not conscious of it, of the fact that this isn't my area and I am interfering with it
A. It's much better if I may say so, it's much better your Lordship comes from outside the area.
LORD JUSTICE LEVESON
Well, thank you very much indeed.
A. Thank you.
LORD JUSTICE LEVESON
And thank you for the assistance you have provided. We will have a break. (3.19 pm) (A short break) (3.25 pm)
MR JAY
The final witness for today is Mr David Thomas. His statements are at tabs 87 and 21. MR DAVID THOMAS (affirmed) Questions by MR JAY
LORD JUSTICE LEVESON
There are probably very many people named David Thomas, but again for the avoidance of all doubt, I have just realised that Mr Thomas and I have known each other for more years than I care to think about, although we have not seen each other for almost as many such years. I've got the correct Mr Thomas?
A. You have indeed, my Lord. We used to appear in Wirral Magistrates Court some 30 years ago.
MR JAY
There we go. First of all, please, your full name?
A. David Thomas.
Q. Thank you. Now, you provided us with a witness statement dated 5 July, which is quite short and tells us about yourself, but additionally there is a submission which was provided by the British and Irish Ombudsman Association dated 7 June 2012 to which you're going to speak; is that right?
A. Indeed.
Q. And insofar as the matters are facts set out in that submission, do you attest to the truth of those matters?
A. I do indeed.
Q. First of all about yourself, you qualified as a solicitor in 1969 in England and Wales, and then in Ireland in 1991. In 1997 you were appointed as the banking ombudsman, being a principal ombudsman with the statutory Financial Ombudsman Service from its creation until you retired in 2012. You also have and had various part-time roles in relation to ombudsmanry, if I pronounce it right, and related matters; is that so?
A. Indeed.
Q. You tell us there about the BIOA, the British and Irish Ombudsman Association. What is it, and what does it do?
A. This was a body which was established back in 1993 as the United Kingdom Ombudsman Association, changing its name a year later when its scope was extended to the Irish Republic. It has two classes of members. They were originally called full or voting members and associate members, but they have been retitled as ombudsman members and complaint handling members. There are 24 or 25 my statement said 25, when I tried to count it this morning, I got 24 ombudsman members of the scheme, and some 35 complaint handling members. The Association was created in order to protect the sort of reputation of ombudsmanry, and foster good complaint handling, and it contains ombudsman schemes that handle complaints against, for example, national governments, devolved governments, local government, police, financial services, businesses, lawyers, estate agents and some utilities, both here and in Ireland.
Q. Thank you. Now, the term "ombudsman" is one which is quite familiar to lawyers, but it has a precise meaning which some people in this Inquiry, with respect to them, have abused. Could you please
LORD JUSTICE LEVESON
Certainly used differently.
MR JAY
I put it slightly high. But abused in the sense that they have used incorrectly. Could you tell us, please, in your own words the principal features of an ombudsman scheme in the United Kingdom?
A. Well, the principal features are that ombudsmen are there to resolve complaints. They are not in any sense regulators, and it's a mechanism which is typically used to resolve disputes between somebody small, ordinary people, as it were, and somebody big, either a large company or a large institution. Their processes are designed to be informal, and to redress the balance of resources and experience available to the small citizen or consumer on the one hand and the large institution or the large business on the other. They deploy a range of tools in order to deal with resolution of those disputes. So typically they will deal with inquiries, and indeed many things can be disposed of quickly and simply as inquiries, without turning into full complaints. But if they do turn into complaints, then maybe they can be resolved by mediation. If that fails, maybe a recommendation. But if all else fails, maybe by a formal decision. The process is a process of active investigation. So there's no concern that one party may have better resources or better representation than another, because the ombudsman controls the process. And
LORD JUSTICE LEVESON
We call that inquisitorial rather than
A. Indeed. So it is, as your Lordship says, an inquisitorial approach. Ombudsmen also tend to view their role as going beyond dealing with the particular cases that they deal with, but drawing lessons, general lessons, and then feeding them out generally to government and public regulators and consumer bodies. Typically they are quicker and cheaper than an equivalent case would be in a court or tribunal. We tend in ombudsmanry to use the term unit cost, which is the total cost of the ombudsman scheme divided by the number of cases. Typically that would range between about GBP500 and about GBP2,000. That doesn't mean a case costs between GBP500 and GBP2,000. That's, as I say, the total costs. So you are throwing all of the enquiries and all of the outreach activities in for free, as it were.
MR JAY
If an ombudsman is working in a context or in a regime where there is also a regulator, does the ombudsman really as a matter of definition have to be independent of the regulator and, if so, what does that mean?
A. Well, certainly in the view of the Association they ought to be. And indeed usually that is the pattern. So if you see the situation which obtains here in the UK at the moment in relation to law, to financial services, to utilities and to property professionals, the ombudsmen are entirely separate from the regulatory body, whether that's a statutory regulator or a self-regulator. I think there are perhaps a number of reasons why one would go down this road. There's a concern that otherwise one might confuse sanction for breaking rules, which is a matter for the regulator, with redress for those adversely affected by the actions of the body, which is a matter for the ombudsman. It's very difficult to handle within the same body both sanction and redress with their differing standards of proof, the effect that it has on mediation in redress issues, if there is potentially a sanction, if somebody confesses that they have done or accepts for the purpose of resolution that they have done something wrong, and indeed entirely different skills are required for the different roles. So as far as the Association is concerned, they are not enthusiastic about the proposal that has been put forward by the on behalf of the industry, that complaints should be handled within the body that also handles the regulation. The fact that within that model the proposal is that it should be handled by two separate arms goes some way to recognising the points that I have made about the difference in function. But our view would be why not go the whole hog and separate them into an independent body for complaints? The arguments seem to us to be strong to have them separate, but we're not aware of any strong arguments why they need to be packaged together.
Q. So if you have a complaints handling arm within a regulatory body, that entity should be called complaints handling arm or something similar, and shouldn't on your approach be called ombudsman?
A. Absolutely not. So there is a sort of a slight embarrassment about the situation in Ireland. I'm aware that you are receiving evidence about that tomorrow. There is an organisation in Ireland called the Press Ombudsman, a very distinguished gentleman, but the scheme itself is not recognised by the Association as an ombudsman scheme, it is recognised merely as a complaint handling scheme, because of the closeness of the relationship between the ombudsman and the Press Council.
Q. One attribute of the system in Ireland, which may well have other virtues, which we'll address tomorrow, is that there's a right of appeal from the ombudsman in Ireland to the Press Council in Ireland?
A. Indeed.
Q. Which again is anathema really to the proposal to the scheme that you are outlining to us?
A. Indeed.
Q. Thank you. Now, in terms of different types of ombudsman, this is first of all page 2, 00310 of your submission. Very often they are public sector schemes, but we're concerned with a private sector scheme. In a private sector scheme, the complaints are going to come mainly from customers, but the press and media are somewhat of a special case because they may or may not be a customer who is going to be complaining of breach of privacy or defamation, whether that may or may not be the position. As you explain, in a press context, you'll be balancing the wider public interest against the private interests of individuals. But can you tell us, please, about the three different ways of establishing ombudsman schemes which is under the heading "Methods of establishment"?
A. Certainly. Just touching on your last point, I think likely the complainant will almost certainly not be a customer of the newspaper. Our public sector colleagues, of course, do have a role in weighing the public interest when they deal with complaints that they deal with. So far as private sector ombudsmen are concerned, they can be established in one of three ways. Either established by statute, the financial ombudsman, the legal ombudsman, for example, were established in that way. Or they can be underpinned by statute in the sense that the law requires that there be an ombudsman which satisfies various characteristics, but doesn't actually establish the ombudsman, and the industry or some other body is left to bring forward an ombudsman who meets those characteristics. Examples there are the property ombudsman and the energy ombudsman. Or an entirely voluntary scheme established by an industry or trade association, but with independent governance, of which the most recent example is the removals industry ombudsman, although the banking ombudsman scheme to which you referred earlier was originally a voluntary scheme.
Q. So the voluntary scheme will typically be contractual, but the two other schemes will have some form of statutory underpinning or the entity itself will be created by statute?
A. Indeed.
Q. And the detail of it is set out at pages 3 and 4 of the submission. It may not be necessary to look at the fine detail. We can just understand the concept for present purposes. Can I deal with the issue of complaint handling, which is page 5, 00313. Can you tell us typically how that works, whether it be a statutory scheme or a voluntary scheme or the intermediate underpinned by a statutory scheme?
A. Well, the first essential is that there should be a proper regime for the businesses themselves to handle complaints. It's right that people should take their concerns first to the business that is causing them that concern, and they should deal with it appropriately and promptly. And hopefully most difficulties will be resolved in that way, leaving only unresolved issues to be taken to the ombudsman. It may be that that at that early stage, maybe even before a complaint has been made, that an inquiry will be made to the ombudsman. Typical sorts of proportions. The ombudsman gets 75,000 enquiries, but handles 8,000 cases. The financial ombudsman gets more than 1 million inquiries, handles 250,000 cases. So quite a lot of stuff is headed off at an early stage, and obviously with minimal expense. Assuming the citizen is not satisfied with the response that they get, then it would come to the ombudsman scheme which would see whether it was a matter that was in their jurisdiction. They would also see whether actually there was some ground to bring it to a halt without taking it any further. So if, for example, it was clear that even if the ombudsman accepted every dot and comma of the complaint that had been made, the redress that the business had already offered would be bound to be sufficient, then the ombudsman wouldn't take it any further. Assuming that's not the position, then in many cases it's possible to resolve the matter by mediation, with the assistance of an independent third party view from the ombudsman scheme. Although if the parties are more entrenched or in the more complicated of cases, there may need to be an inquisitorial investigation, leading usually to a recommendation. Within most ombudsman schemes, there's usually a two stage approach. So you have a case handler with a variety of different fancy names who would conduct the investigation and would produce the recommendation, which in the majority of cases is accepted by both parties, but in a minority of cases, either party can say, no, I want this case looked at by the ombudsman. So the ombudsman actually acts as an internal appeal stage, rather than the first instance.
Q. And in terms of the powers of the ombudsman, of course that's going to depend on what the statute says, or the rules say, but at the bottom of page 6 you explain that their power may often be a power to award compensation up to a ceiling; is that correct?
A. Indeed. So two powers qualified in a specific way. So to award compensation, but subject to a maximum ceiling for reasons which no doubt we'll get into in a moment. Or to require the business to do something in relation to the complainant, but it's something in relation to that complainant. So not something that they must do generally. Something to put it right for that particular person.
LORD JUSTICE LEVESON
To what extent do you require a detailed knowledge and understanding of the operation of the business that you are seeking to act as an ombudsman in respect of?
A. It is helpful if the ombudsman goes out of his or her way to develop an understanding of these things. If I go back to the days when I was appointed as the banking ombudsman, coincidentally, by Sir David Calcutt, I was not a banking lawyer because it was considered it didn't look good to appoint a banking lawyer as the ombudsman, and I had to go out of my way to learn a lot and visit bank branches and look at the insides of cash machines to understand how they worked. It seems to me that one of the points that's been raised by the industry proposal is their suggestion it's necessary to have active editors involved in the process, because they know what's going on, which leaves aside the fact that an ombudsman who is specialising in this field can actually spend time to do that, and to acquaint themselves with the latest goings on and developments.
LORD JUSTICE LEVESON
Yes. Is there a difference because in most fields you're either dealing with something that has gone wrong administratively, or in some way structurally, in the operation, whereas for the press the type of issue that's likely to come to any complaints handler, whether it's within the PCC or to an ombudsman, is a much more subjective or could be a much more subjective question of opinion and balance. Do you understand
A. I understand absolutely the point your Lordship makes. I think it's fair to say that the majority of cases that come to ombudsmen are of sort of administrative failings, using that in a very, very, very broad sense. But equally, they can be failings of judgment. So if one looks in the field of financial services, for example, the ombudsman may be called upon to take a view as to whether the judgment whether the advice that somebody was given about the suitability of an investment was appropriate advice. So there are those elements of judgment. What's lacking of course is the wider judgment of balancing the interests of the individual against the wider public interest, although, as I said before, our public sector colleagues do have to take that into account in the work that they do.
MR JAY
One feature though of an ombudsman system is that the successful complainant, having been awarded a sum by the ombudsman, can say, no, I'm not going to take the compensation. I'm going to sue instead. Of course, if he or she takes the compensation, that's the end of it, presumably. But there's an option to start afresh in court proceedings. So one doesn't, as it were, sign away one's legal rights, if I have correctly understood?
A. That's right.
Q. Could you, as a matter of principle, have a system where you did sign away your rights, in other words the decision would be legally binding for all purposes, and you couldn't say, as the complainant, I don't like this decision, or I do like the decision but it's not enough money, and be prevented from going off to court?
A. So if you're postulating a position where the decision is automatically binding on the complainant, acres have been written on the effect of that and its compatibility with the Human Rights Act and various other things. The pensions ombudsman, who deals with occupational pensions, his decisions are binding on the complainant, and the financial services ombudsman in Ireland works obviously against the same background of European human rights law. His decisions are binding on the complainant. So this is theoretically possible. It's not a view that the Association would advocate.
Q. Why not?
A. Because the model under which an ombudsman works is broadly this, that the business is able to say to the dissatisfied citizen, look, we've told you we don't think your complaint is justified. But if you're not happy, you don't need to go to the newspapers or to your MP or whatever about it. You can go to the ombudsman it's free the ombudsman will investigate it, and look at it, and express his opinion, and if you don't accept the ombudsman's opinion, then at the end of the day you are still free to go to court. Now, that's a strength and a weakness of the system. The cards are stacked to a certain extent in favour of the consumer, but this is a model that was invented by the industry voluntarily originally. But because it is in that way, then it's very easy for the industry to bring complaints to a suitable close. The reality is that once the consumer gets to the end of the process, and has the ombudsman's decision, and given the risk of an adverse costs order, it would be a very brave consumer who then went off to court and it's not something that one normally hears of.
Q. Thank you. Now, in terms of the ability to award compensation, we've spoken of a monetary limit. Obviously there's power to award financial compensation for financial loss, but in the sort of realm with which this Inquiry is concern, one would be awarding compensation we can see it here at page 7 for damage to reputation, possibly damages for distress and inconvenience, if one included that within a general damages award for damage to privacy. Funding, please, which is the next section. As funding of the system, it can either be a levy payable by all businesses covered by the scheme, or it can be case fees payable by the businesses or a combination of the two; is that correct?
A. That's correct.
Q. In terms of the press, if one is going to conceive of a system which might be appropriate for our Inquiry, would you have a provisional view as to how it might be funded in terms of whether we would be going for the levy, for case fees or a mixture of the two?
A. I don't think the Association has a view on that at all. It's largely a matter of convenience. The key thing from the ombudsman's point of view is to ensure there are adequate resources. The way in which the resources are collected is less important.
Q. Thank you. Accessibility next. That's page 8, 00316. That section is self-explanatory. It's obviously vitally important that the consumer, who would be the complainant, would know of the system and of the processes which need to be undertaken to gain access to it.
A. Indeed. And ombudsman seems to be quite a powerful brand which is it is comparatively easy to sell to the public, I think.
Q. Accountability. Well, that's done by consultation and publication of a yearly report, as one might expect?
A. Mm-hm.
Q. Can I ask you to elaborate on this section: "Relationship with any regulator". That's likely to be highly relevant to our consideration. How an ombudsman scheme would work in conjunction with a regulator, however that regulator is configured.
A. So I was postulating a situation where the ombudsman is focusing on redress, whilst the regulator is focusing on sanction. And there clearly needs to be a process by which there is a flow of information from the ombudsman to the regulator in order to inform the regulator's general view as to the behaviour of the industry, and indeed where sanctions need to be imposed. It's also helpful for there to be a flow of sort of non-business specific information about new and emerging trends, so that the regulator can be developing policies in order to deal with those as they go on. As we have indicated in the evidence, there are clearly some advantages to the ombudsman of being a statutory body, or being underpinned by statute, but there clearly would be risks, if the regulator were a self-regulatory body, to have an ombudsman who was underpinned by statute, because there would be inexorable pressure, I think, from the public if they were to be satisfied with the self-regulatory body to look to the ombudsman for that which the ombudsman could not in fact deliver.
Q. Thank you.
LORD JUSTICE LEVESON
Does it mean that there is a risk of duplication? Rather than talk about a regulator as being concerned with sanction, I'd rather talk about the regulator as being concerned with standards.
A. Mm-hm.
LORD JUSTICE LEVESON
And I'm just concerned with the proposition that the ombudsman would require an investigative arm to look at the issues, as you have rather explained, and that the standards the regulator would require an investigative arm to look at possibly the same or equivalent issues, albeit through different eyes. Now, in financial services, which is an absolutely vast area, that may not matter. In banking, that may not matter. But in the rather smaller area of the press, that might be quite a serious disadvantage to requiring there to be a dual system.
A. Yes and no in the sense you are right there is a degree of duplication, because there may be certain issues which are being looked at from a redress point of view and from a potential sanction point of view. But they are being looked at in different ways; and what the ombudsman is looking at is not has somebody deliberately set out to do somebody harm. It's: have they done somebody harm in circumstances where the liability ought to fall on them, rather than the person who has been harmed? So it's a different quality of investigation. And it's perfectly possible during the course of the ombudsman investigation for the business on the receiving end to say, well, these are matters of judgment and now, with the wisdom of hindsight and looking at it very carefully, we can accept that perhaps we did get it wrong here and that we ought to provide some redress to this sort of person, which is an approach which is very difficult to take if at the same time they are accepting to somebody who is acting on behalf of the regulator that they have made a mistake.
MR JAY
Thank you. I pass over the section "Industry codes" because that's unlikely to be greatly material to us, but deal with section C of your submission which is page 10, 00318, issues that would be particular to a press or media ombudsman, potential complaints issues. The complaints that fall for consideration appear to cover broadly the following groups: various forms of redress after publication, harassment, improper acquisition, use of personal information pre-publication, and intervention in relation to harassment. We would also include, I suppose, breaches of privacy, but they may be included within personal information. The first issue which you discussed is relationship with the court. Could I ask you to elaborate on that issue, please?
A. Well, I think the key point there is contained in the earlier reference to setting some upper financial limit on the award that the ombudsman can make. The ombudsman procedure, as I have described it, is a more informal procedure, and one where the parties don't need to be represented and are usually not represented. If the ombudsman has power to award unlimited amounts, the pressure for the ombudsman to become very like a brother of the High Court becomes fairly inexorable. So one has to make a judgment, and set a compensation limit which is high enough to cover most ordinary people, but low enough to ensure there's not inexorable pressure that the ombudsman loses all of the advantages of being an ombudsman. So certainly on the basis of the Association 's submission, this is not a suggestion that the ombudsman would take up everything which now would go to court. Rather, it would take up many of the things which people might perhaps like to take to court, but are unable to take to court, and some of the things which do go to court.
Q. So how would one determine which cases then go before the ombudsman and which cases go to court?
A. Well, the person who wished to bring the claim would have that choice. They would know that if they went to the ombudsman, the most that they could get was X, and they could go to the ombudsman knowing that that was all they could get, or they could go to court.
Q. So it would be a voluntary system, but for most complaints, the complainant would take it up, either because of the nature of the complaint, or because they wouldn't have the resources in any event to go to court?
A. Yes.
Q. I understand. Relationship with the regulator. I mean, that may depend on whether the regulator is statutory or statutorily underpinned or a voluntary regulator. But could I ask you, please, to elaborate the points you are making in that section.
A. Well, in a sense I sort of foreshadowed some of what's written down in that section in something that I said before about problems if they are if the regulator and the ombudsman are of a sort of a different nature in terms that one is underpinned by statute and one is not. I think they need to be broadly of equivalent underlying structure. As far as the ombudsman was concerned, the ombudsman's role would be to provide appropriate redress for the person, if the case was upheld, for the person who had been badly treated, but that would not extend to anything punitive, and if it was felt that a sanction was necessary, particularly if there had been regular recurrence of a similar problem, then that would be reported to the regulator and would be for the regulator and not the ombudsman to deal with.
Q. Thank you. Relationship with any rules, guidance or code of practice. Well, in our context, the ombudsman would presumably have to take into account the successor to the Editors' Code of Practice in deciding what were appropriate standards. The businesses covered, the issue here may be online businesses but one would have to be clear as to which were covered. Complainant eligibility. Are there any points there which you would like to draw to our attention?
A. It is common in ombudsman schemes to set out unlike with the courts, which are open to all, it's normal with an ombudsman scheme to say that these are the sort of people who can go to court, you normally cut out larger businesses or maybe all businesses altogether. There is clearly a question, it's not something the Association has a view on, but it's clearly a question for the Inquiry whether eligibility would be confined to those who wished to complain about a hurt that they had suffered themselves, or whether it would be open to representative complainants who are concerned about the way in which a group of people had been treated.
Q. Basis of ombudsman decision. Very often the role of the ombudsman, particularly in the public sector, is to determine whether there's been maladministration, which is quite a broad concept. It doesn't just involve that which is contrary to the civil law. You make the point here that we have got to be careful to define what the media ombudsman might be doing. Presumably that entity would not be deciding the broad question of whether or not the newspapers acted fairly, but the more specific question of whether the newspaper has acted unethically, in breach of the code, or has invaded the private rights of the complainant; is that right?
A. Yes. I mean, they would be deciding whether the newspaper had acted rightly or wrongly in relation to the individual who was making the complaint. But clearly there is the problem that we referred to before, about balancing the private rights of the dissatisfied individual against the wider public interest, and clearly if an ombudsman were to be established in this area, it would be helpful to write something about that specifically into the terms of reference and the basis of decision.
Q. Thank you. Issues of redress on the next page, this is page 13, 00321, are broadly self-explanatory. But the issue of intervention before publication may be trickier, particularly in the light of the evidence we heard from Sir Charles Gray. Can I ask you to consider this. Might there have been a role for the ombudsman to act in an advisory way in the context of intervention or pre-publication issues? In other words, if a newspaper were concerned as to whether or not to give notification to the target of an article before it's published, or that is going to be published, the newspaper can obtain advice from the ombudsman as to whether or not notification may be avoided for good public interest reasons. Do you see that as being the sort of role that the Press Ombudsman might be able to fulfil?
A. As the written evidence indicates, this would be fairly novel territory for ombudsmen, but in theory perfectly possible. Clearly it's a matter of judgment for the Inquiry as to whether it's desirable or not for there to be some facility for newspapers to get this sort of advice. But it seemed to the Association perfectly possible for the ombudsman to be a source of such advice. But of course it would be advice, and no more than that, and it would be something to be taken into account later, either by the ombudsman or by the court or indeed by the regulator, in deciding some subsequent complaint.
Q. Yes. May I move forward to section D, which is your views on the proposal advanced by the PCC. I think you are looking at there when we're talking about what the PCC has proposed, it's a variant, I think, of an earlier incarnation of Lord Black's proposal. But it's basically a new voluntary regulator, with contractual underpinning, with two arms. One of the arms would be complaints and mediation. The other arm would be more traditional regulation. But you don't think that that's an appropriate model. Could you explain why you don't think that?
A. Okay. Well, the first issue is one that we've already discussed, which is the problems that are inherent in having redress and standards within the same body, whether that's a regulatory body or a statutory body or a self-regulatory body. So I refer back to the comments that I made on that before. Secondly, then there is the way in which the function is actually fulfilled. Lord Black's proposal refers to the adjudicators on the complaint committee. We passed over the constitution of an ombudsman scheme, but normally there would be a board, which might have a minority of industry representatives on it but a majority of public representatives. But they do not make any decisions in individual cases. It is their role to appoint the decision-makers. So I think there's the Association is very uncomfortable with the notion of this panel of people making the decision, especially when some of them are serving editors, which, as I said before, is perhaps to confuse the role of the expert witness and the judge, and it's perfectly possible for the decision-makers to be trained and familiarised with the latest developments in the particular area. There seems to be an element of ambiguity, on my reading of it at any rate, in the proposal about the role of the independent assessor, because there's a reference to the ability for a complainant to appeal to the independent assessor, and in one place it says the independent assessor can determine a different conclusion and refer back with reasoning. But there's another place, I think in the chart, where it sets out the overall structure, which rather implies the independent assessor is inviting these adjudicators to think again. So it's not an appeal in the true sense. So my own profession, the solicitors' profession, had many decades of trying to wrestle with these problems. The Law Society itself, first of all, dealt with consumer complaints. Then it reconstituted that bit as a thing called a solicitors' complaint bureau, and then it reconstituted that as the Legal Complaints Service. But it never worked out in the end, and we've ended up with a legal ombudsman. So far as the powers of the redress body are concerned, the proposed body would have power to fine in terms of breach or habitual breach of standards, but the highest level of redress that is available to the dissatisfied complainant is a critical adjudication. Given that the well-off can go to court and secure financial redress, it seems to be a shortcoming in the proposal that the less well-off, who feel that they cannot take the chance of going to court, can end up with no redress.
Q. Thank you. Then you have some tentative suggestions for consideration. Can I ask you, please, to outline those, particularly in the context of the possibility of an ombudsman being within the new regulatory umbrella, if I can use a loose term?
A. Yes. The Association has put forward its views at two sorts of levels. So it can see the possibility of a role for an ombudsman as part of whatever new machinery emerges as a result of the Inquiry's work. But it doesn't pretend to have a view on the whole apparatus, and can quite see that the judgment as to whether there ought to be an ombudsman, and how the ombudsman would fit in, is something that has to be decided as part of looking at the overall fabric in which an ombudsman would operate. So to that extent the Association's views are tentative. The Association's views are far from tentative, however, when it comes to the characteristics that it would look for if an ombudsman were to be created, which in a sense brings us back to your opening question. The Association would be extremely unhappy to see something created which was called an ombudsman, but which was not in reality an ombudsman, and which did not have all of the characteristics which are set out in the Association's published criteria for ombudsman schemes which have been recognised also by the Cabinet Office. Then there's a list which I won't repeat, unless you wish me to, in bullet point term of how perhaps those principles would play out if the Inquiry were to recommend an ombudsman had some role as part of the apparatus.
Q. These are the eight or nine bullet points halfway down page 15, 00393?
A. And on page 16.
Q. And on the next page, there's a lot more of them there?
A. Yes.
Q. They merely reflect the general principles
A. Indeed.
Q. that you have earlier outlined. So on this model, the ombudsman would be doing the work which it is properly designed and designated to do, but it would be independent from the regulatory body which would be carrying out its standard regulatory functions?
A. Indeed.
Q. And each body could, I suppose, have a statutory underpinning or could be created by statute, depending on policy preference?
A. Or could be created voluntarily. All those are possibilities.
LORD JUSTICE LEVESON
But if voluntarily, everybody has got to have signed up to it?
A. Indeed. It's perfectly possible, as with all of these other mechanisms, if they volunteer to join, to bind them. But getting them in is the difficulty.
MR JAY
The advantage of this model, provided one understands how it's got to work, namely its independence from the regulator, is the term "ombudsman" has a particular cachet with the public. It will win it immediately a degree of respectability it's more than that. People like it. People understand that ombudsmen do a good job in their areas of work. So that would be, as it were, immediately appealing to public confidence.
LORD JUSTICE LEVESON
It's rather more than that, isn't it? It's because the public have an understanding of what ombudsmen do and the results they achieve, and if you try and call somebody an ombudsman that doesn't seek to do what you actually seek to do and does not therefore achieve what you seek to achieve, you risk damaging the concept which is very important in many different areas of our public life.
A. Absolutely.
MR JAY
Thank you. Those are all the questions I have, Mr Thomas.
LORD JUSTICE LEVESON
Is there anything you felt we've not covered, Mr Thomas?
A. No.
LORD JUSTICE LEVESON
Thank you very much.
A. Thank you. (4.13 pm) (The hearing adjourned until Friday, 13 July 2012 at 10.00 am)
