July 20th 2009 was a good day to bury bad news. All eyes were on The Constitutional Reform and Governance Bill which was having its first reading in parliament and promised to give the electorate some redress in respect of errant parliamentarians. Mrs Balls was just setting out her bear trap for future governments, to be henceforth chained to her moving target of cutting ‘child poverty’.

Scarcely surprising then that another government press release went unnoticed. As the tea-trolley rattled its way through civil service corridors, two years of hard work by a dedicated team of lawyers tasked with advising the Lord Chancellor on necessary reforms to civil justice was biting the dust. The report was rejected out of hand by the government. So what, I hear you say? Let me explain. This concerns your money.

Tomorrow morning, at 9am sharp, a shoal of letters will be delivered to the bleary eyed MPs returning to their troughs in Parliament. Sir Thomas Legg will be writing to those whose expenses accounts he has been forensically examining to tell them whether they appear excessive or ‘against the spirit of the rules’. Some 300 MPs, and the Prime Minister is believed to be amongst them, will face demands to repay part of the monies claimed by them. Legg’s inquiry is believed to have cost a million pounds, the repayments may go some way to covering this sum, but the tax payers will still be collectively out of pocket.

In America, they have a legal solution for these situations. It is called a ‘class action’. Class actions evolved from the equitable doctrine of ‘virtual representation’. It was only necessary for one or two named persons to bring an action which would give relief to all who were harmed by that action. In other words, a defendant who causes widespread harm, which may be minimal on the individual (in our case taxpayer), can be forced to pay a sum which is then shared out equally amongst those harmed. These class actions have commonly been brought on behalf of small shareholders where companies have been engaged in behaviour harmful to their collective shareholders. Punitive damages can be awarded.

Fraud is generally a civil matter, as opposed to Theft, which is of course criminal. Much has been made of the necessity of proving ‘intent’ to harm in a fraud case, but that only applies to ‘actual fraud’. There is another type of fraud, less common, known as ‘constructive fraud’. Constructive fraud applies where there is ‘a presumption of overreaching conduct that arises when a profit is made from a relation of trust’.

In plain English, (and heavily simplified, before any lawyers land on my head!) this means that when you have a particular reason to trust someone – they are your lawyer or banker, although these ‘off the peg’ definitions are not exclusive for English law has never closely defined who has such a ‘fiduciary duty’ to you, a fiduciary relationship extends to every possible case in which one side places confidence in the other and such confidence is accepted; this causes dependence by the one individual and influence by the other.

The MPs that we elect to Parliament to spend our collective tax pennies on our behalf would almost certainly be held to have such a fiduciary duty to us.

We could conceivably have mounted a class action to recover those funds misused by MPs. The courts stringently examine transactions between people involved in fiduciary relationships toward one another. Particular scrutiny is placed upon any transaction by which a dominant individual obtains any advantage or profit at the expense of the party who has placed his/her trust in them.

We could – except that back last July, unnoticed by us all, the chief trougher cast one eye over the proposed change to the law that would have allowed us to do so, and on behalf of the other 645 little piggies, rejected the recommendations of the Civil Justice Council except in relation to carefully limited actions.

The Troughers will go on bringing home the bacon, and there is nothing we can do about it.

Voting only changes the Piglet, not the Trough.

Tagged as: Civil Justice Council, Gordon Brown, Sir Thomas Legg