Alternative Libel Project Report: Costs, ADR and Leveson – Helen Anthony

English PEN and Index on Censorship, two organisations committed to freedom of expression, embarked on the Alternative Libel Project last April and have spent the last year considering whether defamation claims can be resolved in a better way than by using the current High Court process.  The project was funded by the Nuffield Foundation, and Index and PEN have had support and advice throughout from members of an expert advisory committee, chaired by Sir Stephen Sedley.  The project’s final report, in which Index and PEN make recommendations for change was launched in the middle of March.

The report calls for a culture change but does not contain radical proposals, except perhaps on costs, although even here our recommendations are not without precedent in other areas of law.  Instead it concentrates on improving the current system, ensuring judicial encouragement for parties to use methods of alternative dispute resolution (ADR), and calls for consistent, robust case management so that the court, and not a wealthy party, controls the litigation.  The details of our recommendations can be found in the report, so I will not repeat them here.  Instead, I’d like to expand on our thinking on three key issues.

The cost of libel cases

Firstly, the project centred on the high costs of libel cases, the fact that this makes proceedings unaffordable for many, and that this ought to change.  I cannot recall speaking to anyone in the course of this project who disagreed with this premise and approach.  Last summer, however, Dr David Howarth published ‘The Cost of Libel Actions: A Sceptical Note’(Cambridge Law Journal, 70(2), July 2011, pp. 397–419), which does exactly what is says on the tin, and questions whether libel cases in England and Wales really are that high.

Dr Howarth does this in part by looking critically at the MLA’s table of figures submitted to Jackson, carrying out a statistical analysis which includes calculating median figures for litigants’ costs, excluding one particular high cost case. This gives an artificial picture, as there can be no guarantee that a party’s legal costs will not be one of those significantly higher than the median figure.  What the MLA research shows me is that almost 10 per cent cost more than £161,588 (the average UK house price) and almost a quarter cost more than £26,200 (average gross earnings).  This is despite the fact that these are cases which involved media organisations with in-house legal departments, and therefore the defendants’ costs may be recorded as lower than they would in cases without media involvement.

There is also plenty of ad hoc and anecdotal evidence that libel actions are hugely expensive.  A snapshot of recent cases, for example, shows that £10,000 can easily be incurred by one party just to get to strike out or summary judgement (see reports on Lait v Evening Standard, Kordowski v Hudson, Robins v Kordowski) – and for some cases this incredibly conservative (Apsion v Butler).  That’s £10,000 per party where there are essentially no grounds for a case.

Other figures show that when a case progresses to trial, it will cost hundreds of thousands is not millions of pounds.  In Cambridge v Makin, for example, the defendant was ordered to pay approximately £320,000 in costs and in Nat Rothschild’s claim against the Daily Mail, the paper has said that losing would have cost the paper over £1m.

These figures are consistent with the results of research carried out by The Publishers Association, which shows that it costs their members an average of £21,000 every time a libel threat is made against them, and £1.33m if a case proceeds to trial.

We remain of the view that these costs are too high, and that they prevent both claimants and defendants from asserting the rights given them according to law.  The problem is not just caused by funding arrangements, though CFA uplifts and after the event insurance do currently contribute to extortionate costs in some cases.  Nor is the problem just one of solicitors’ hourly rates and counsel’s fees, though again keeping these to a reasonable rate would help.  It is a problem which is also caused by a procedure which allows and sometimes requires too much work to be done to incur those costs.  Our focus throughout the project has then been to consider how the procedure could be made more efficient.

ADR and the question of compulsion

Our research showed that it is possible to resolve libel cases quickly and at low cost, even where initial correspondence fails and the parties seem to be staunchly standing by their own arguments.  Early involvement of a neutral third party, either in the form of a mediator or an arbitrator, appears to be the key to settling.

Despite the success of mediation and arbitration, some parties may be reluctant to go down this route even if they are genuinely interested in resolving the dispute (as opposed to running up costs to try to force the other party to concede).  In our view, parties are most likely to refuse to mediate either because they are so convinced of their position that they are not willing to concede anything or the other party is so unreasonable that mediation will fail to result in a settlement.  Parties may not want to go to arbitration because they seek a judicial rather than private determination of their claim.

An early judicial opinion would provide a reality check in all of these scenarios, revealing any weaknesses or confirming the strengths of the case in the first example, and exposing any unreasonable positions in the second.  Early neutral evaluation (“ENE”), carried out by a judge in the course of proceedings, would provide this judicial opinion.  It is a form of ADR used with success in other areas of law and we think it would work well in defamation cases.

Despite believing that mandatory mediation would be compatible with the right to a fair trial (Article 6, European Convention on Human Rights), and knowing that a form of ENE is a required step in family financial proceedings,  we stopped short of recommending that ADR be made mandatory.  ADR will not work in every case, and to require parties to spend money on a process that seems doomed to fail is contrary to our aim.  Though some people have questioned the value of mediation where each party is insisting that they have truth on their side, this is not our primary concern.  Mediators have told us of cases involving serious allegations of criminality that have been settled in mediation.  Our concern is not the issues in the case, but the approach of the parties:  we do not want to give wealthy bullies another tool, another excuse, to run up costs, when they have no intention of trying to resolve the case.

This is why we have adopted the carrot and stick approach.  The carrot is that ADR works: if a party uses mediation, arbitration or ENE, the reward will be a fair, low cost resolution of the case.  The stick is a court imposed costs penalty for unreasonably refusing to use ADR.

If consistently applied by the court, costs penalties will quickly have the effect of showing the parties that the court is serious about requiring parties to use court proceedings as a last result.

The Leveson Inquiry

The view that has emerged over the last few months that Leveson LJ may recommend that a new press regulator has an adjudicative function (such as the proposed Media Standards Authority) was obviously considered in the course of the project.

The absence of a contractual relationship between the parties in defamation makes a construction industry style adjudication system more difficult to establish.  The reform of the Press Complaints Commission to include an adjudicative arm would overcome this.  But the inclusion of a compulsory system would give us cause for concern.

Index and PEN oppose statutory regulation of the press.  This applies even if the statute is said to be enabling, because even this will require the involvement of politicians or the state in the appointment or operation of the regulatory body.  If such an enabling statute sets up such a body without any such controls, what is the point of the statute?

Statutory compulsion to use an adjudication scheme offered by a body such as a press regulator is also problematic, if the press are incentivised to join the scheme. Why should a claimant be compelled to use a body that the defendant has chosen to join because of the commercial advantages it offers? This would not have the appearance of being fair.

If part of court procedure, compulsion to use such a scheme might work if it did not affect any subsequent court case. If additional defences were on offer, this could fall foul of Article 6 of the European Convention on Human Rights.  However, using an existing procedure such as the offer of amends, or making a Part 36 offer, based on the adjudicator’s decision, would offer a defendant protection in costs.  The problem of an unhappy party issuing court proceedings does nevertheless remain.

A voluntary system, however, which is established and offers parties a cheap, fast and fair way of resolving defamation claims would be incredibly attractive to potential litigants who have a genuine interest in resolving their dispute.  A voluntary system would seem fairer to parties and they would therefore be less likely to issue proceedings if unhappy with the adjudicator’s decision.  This could easily fit in to the ADR regime we have recommended, with the courts recognising that adjudication through the press regulator as a genuine attempt to resolve the case.

Helen Anthony is the Lead Researcher for the Alternative Libel Project, which launched its final report on 15 March 2012.