“The Future of Phone Hacking Claims: Details of the News Group Compensation Scheme – Steven Heffer

There are currently 60 individuals pursuing claims in the High Court for damages for breach of privacy and misuse of confidential information, arising out of phone hacking conducted by Glenn Mulcaire on behalf of the now defunct News of the World. A number of lead claims,currently before Mr Justice Vos, are due to be heard at a trial expected to start at the end of January next year.

The last announcement from Operation Weeting suggested that less than 500 of potentially thousands of victims had so far been notified by the police that they may have been hacked.  The Metropolitan Police have recently stated that the number of potentially identifiable victims is now 5,795.

A number of victims have not issued claims, perhaps because of fear that doing so will bring yet more unwanted publicity from the media. These include high profile public figures, victims of crime and celebrities.

Compensation Scheme

News Group Newspapers (NGN) announced in April 2011 that it had set up a compensation scheme to deal with all remaining claims, although it has taken six months for the scheme to be formally launched.  This was done today – details can be found on the News International website.

The scheme will operate as a binding arbitration agreement, within the meaning of Section 6 of the Arbitration Act 1996.

NGN has appointed an independent adjudicator – Sir Charles Gray – to decide applications for compensation according to a new

“streamlined procedure aimed at reducing the costs and complexity of the court procedure and ensuring a speedy, fair and efficient means to ensure victims of voicemail interception are adequately compensated”.

An individual who considers he or she has a case against NGN may apply for compensation and other remedies (see below) and NGN will initially determine whether the application is suitable for the scheme. An application will be rejected if considered “ unsuitable for the scheme having regard to the evidence presented and the complexity of the issues to be determined”.

Such applications are meant to be dealt with within 14 days and, if accepted, the applicant agrees to join and be bound by the scheme.

There are provisions for disclosure by NGN and from the Metropolitan Police service. NGN will pay the applicant’s reasonable costs, including the costs of a court application for police disclosure.

The scheme provides for informal statements of case (in place of the pleadings in litigation) and procedural orders can be made, if it is not possible to resolve matters through correspondence with NGN’s solicitors, on written application to the adjudicator.

The Adjudication

This will usually take place after a consideration of the written statements and evidence but there is provision for an oral hearing to be requested in exceptional circumstances.  The adjudicator will consider

• Whether or not NGN is liable to the applicant in respect of the interception or attempted interception of voicemails.
• The amount of compensation, if any, payable based on the principles which would be applied if the matter were heard in the High Court.
• Any additional remedies requested by the applicant – as he considers just and proportionate including (1) a direction that NGN cease any activity (2) a direction that NGN refrain from using any information and (3) a direction that NGN deliver up any information.

The guiding principle is whether the remedies would be likely to be available if the matter were to be heard in the High Court.

The adjudicator will provide his decision in writing but taking appropriate care not to prejudice any criminal proceedings.

Advantages of the scheme

There are a number of obvious advantages to the scheme.

• The individual’s costs will be paid by NGN.
• Disclosure by NGN will be provided before the applicant has to serve particulars of his or her case.
• There are provisions for confidentiality, in appropriate cases, so that the application and adjudication will be kept confidential.  Any confidential information will be placed in a confidential schedule which will not be published.
• There will be a 10% uplift added to the amount awarded.

Disadvantages

The main disadvantage of the scheme is that once an individual has agreed to pursue a claim through the scheme, there seems to be no real way out.  Although an individual may withdraw, it seems that he or she will have effectively waived any ability to make a claim outside of the scheme and will continue to be bound by the terms.

Effectively, there is no possibility of an appeal, save where there has been “serious irregularity”.  Section 69 of the Arbitration Act 1996 will not apply so that any effective appeal on points of law will be unavailable, although such appeals in arbitrations are fairly rare.

If an applicant’s claim is rejected by NGN at the initial stage, the applicant will have to bear his or her own costs.

There will obviously be concern by some as to whether the adjudicator will be as rigorous as the court, but there is no present reason to think that this will not be the case.  Sir Charles Gray, a former High Court Judge has been appointed as adjudicator under the scheme and if he is not able to act, such other individual of similar background and standing may be appointed by NGN under the scheme rules.

Quantum

The factors which the adjudicator will take into account under the scheme include

• Details of any telephone calls made to the applicant’s voicemail or other voicemails relied on.
• Details of any information which the application alleges was used to intercept the voicemails of the applicant or other voicemails.
• Details of the content of any communications which the applicant alleges to have been intercepted.
• Details of any information alleged to have been published by the News of the World as a result of the voicemail interceptions identified.

There have of course been settlements of various relevant cases in the last few years.  The vast disparity in the size of the awards can no doubt be explained to some extent by the desire on the part of NGN to keep matters away from the public eye in some cases, rather than based purely on normal principles of assessing damages.

The recent disclosures of documents in the investigation undertaken by the Government Select Committee, have thrown a spotlight on some of the thinking behind NGN’s earlier conduct of its legal claims.  In particular the disclosure of the opinion of Michael Silverleaf QC (the leading Counsel now acting for NGN in the phone hacking litigation before Mr Justice Vos) has been illuminating, although still somewhat perplexing.

Mr Silverleaf commented in his June 2008 opinion (now in the public domain) “the nature of the wrongs complained of…and the conduct by NGN’s journalists make it almost inevitable that the court will wish to mark its disapproval of their activities by awarding an enhanced level of damages”. The accessing of voicemails was said by Mr Silverleaf not only to be illegal but that it will be seen as “immoral and repugnant by any Judge who is likely to hear the action”.  The Judge who had sentenced Glenn Mulcaire described his conduct as “the lowest of the low”.

The starting point for assessment of damages was, according to Mr Silverleaf, general damages for the hurt the individual and those around him have suffered as aggravated by the “wickedness of Mr Mulcaire’s and NGN’s conduct”.   He went on to suggest that damages are likely to be assessed by the Judge as a round sum aiming to reflect the “gross and illegal intrusion” into the individual’s private and professional life and also the defendants’ motives in making the intrusion.  He suggested that the court might award a sum at any level from £25,000 to £250,000 or possibly even more.

Whilst it may be difficult to predict with any certainty the likely level of damages which will be awarded Mr Silverleaf advised that a Judge will be trying to reflect both disapproval and deterrence.

It remains to be seen whether exemplary damages (designed to punish the defendant) will also be awarded but the opinion disclosed confirms that it is certainly open to the Judge – and that will apply in the court cases or under the compensation scheme. Most of the phone hacking claimants are seeking aggravated and exemplary damages.

Lead Cases

It is likely that the lead cases in the phone hacking litigation will be heard in the early part of next year.  The judgment of Mr Justice Vos is expected to give some firm guidelines on the likely damages awards in each individual case.  It seems unlikely that there will be any adjudications in the phone hacking compensation scheme cases before Mr Justice Vos makes his awards.

Conclusion

Looked at broadly, there are a number of reasons why the compensation scheme will appeal to some individuals, over the prospect of engaging in High Court litigation. If it operates well it may achieve its stated aims of deciding applications for compensation in a speedy, fair and efficient way – but only time will tell.

There will be individual claimants who feel strongly enough to want their day in court, and ensure that the criminal behaviour of Mulcaire and NGN is fully exposed, and in the public glare.

Steven Heffer, Chair, Lawyers for Media Standards and Head of the Defamation and Reputation Management team at Collyer Bristow LLP.