Sir Charles GrayNews International announced on Thursday 31 January 2013 that it will close down the Voicemail Interception Compensation Scheme (“the Scheme”) set up for News of the World phone hacking victims, just 14 months after it was launched.  The announcement says that phone hacking claims will not be considered for the Scheme after 8 April, meaning the only remedy will be more civil claims through the courts.

The Scheme was set up in November 2011 but the move to close it down at this stage is surprising and disappointing.  Victims of phone hacking are still being told that they have been hacked or that their personal details appear in Glenn Mulcaire’s notebooks.  Individuals are contacting solicitors to seek advice on a daily basis.

In her evidence to the Leveson Inquiry in July, Sue Akers, the then Deputy Assistant Commissioner in charge of Operation Weeting, said there were 4775 “potential” phone hacking victims.  Of these she estimated just over 1000 were “likely victims”.  She said that 2615 had been notified and of those 702 fell into the category of “likely victim”.  In her final witness statement to Leveson in October she said that the MPS had contacted in the region of 2,500 individuals who they believed potentially to be victims.

Police contact with potential victims is on-going and, in the circumstances, it seems premature for News International to announce the closure of its Scheme.

Scheme Launch

The Scheme did not really get off the ground until February 2012, after much time had been spent negotiating the precise terms of the Scheme Rules with lawyers acting for potential Applicants.

The original Scheme Rules were drafted by Olswang, then NGN’s solicitors, who were subsequently replaced by Linklaters.  This resulted in a number of significant changes to the Scheme.  Although the Scheme was launched in November 2011, in practice it has been in operation for less than 1 year.  The first letters of acceptance of claims into the Scheme were signed off by NGN in February 2012 and for a number of reasons the first Applicant’s cases were not filed until the latter part of last year.  The suggestion by NGN that the Scheme will have been up and running for almost two years is therefore not really correct.

Although lawyers acting for victims accept that the Scheme must have an end date, the preference would be for this date to be somewhat later than April 2013 in view of the ongoing police activity and new potential Applicants coming forward seeking legal advice on their options.

Third Tranche of Litigation?

There have been a number of settlements of claims brought in the Scheme.  There have also been a number of settlements in the phone hacking litigation in the High Court before Mr Justice Vos.

The closure of the Scheme will inevitably lead to a third tranche of phone hacking litigation claims in the High Court, which is something Mr Justice Vos wished to avoid.  He has expressed a desire that all cases should be dealt with in the second tranche of litigation which is now pending.

There is a sense that NGN has a renewed desire to bring this saga to a swift close but that is not going to be possible while individuals are still being notified that they are potential victims.

Scheme Advantages

In my previous articles on Inforrm (here and here) I set out how the Scheme was progressing and the advantages and disadvantages of Applicants joining the Scheme.  The Scheme has proven to be advantageous to those wanting confidentiality.  The prospect of keeping claims confidential in the High Court litigation is limited.  Only in the rarest of cases have Claimants been granted anonymity.  In the Scheme, however, Applicants can easily elect for their claims to be treated on a confidential basis and this does appear to have worked in practice.

There is also less of a costs risk.  Applicant’s lawyers will be paid as the claim progresses, subject to the prescribed rates under the Scheme Rules.  There is no adverse costs risk for Applicants and the usual Part 36 rules do not apply.

Rigour in future claims?

NGN has recently indicated that it wishes to take a more rigorous approach to accepting claims onto the Scheme.  Previously, in all cases where an Applicant had discovered his or her information was recorded in Glenn Mulcaire’s notebooks, or had been informed by the MPS that calls may have been intercepted, their claims were accepted onto the Scheme.  NGN has indicated that it will now consider applications on a case by case basis.  It is of the utmost importance therefore that any individual who thinks he or she may have a claim obtains proper expert advice before submitting an application to the Scheme.  The Scheme Rules state

‘NGN shall only refuse to accept an application if satisfied that it raises no prima facie case in respect of the matters referred to in Rule 2.1 or is otherwise wholly unmeritorious. 

Applicants’ lawyers will press for all claims to be accepted on the Scheme where the MPS has informed an individual that private information appears in the Mulcaire papers.  This, we would submit, should be sufficient prima facie evidence.

Settlement offers

Following recent settlements, there will no longer be “representative cases” in the Scheme.  Under the current regime NGN will make an Applicant a written offer to settle his or her claim or inform that Applicant that no offer will be made within 21 days following service on NGN of an Applicant’s case and witness statement.  If a settlement offer is made and is either rejected or not accepted within 21 days, NGN is then required to serve its case and give standard disclosure within 42 days.

Cases are now progressing well under the Scheme, and in most cases, an Applicant with a substantial case can expect to receive a settlement offer. Not one case has yet gone to adjudication.

It is not clear, however, what will become of cases which arise after 8 April 2013.  It seems likely (unless the period is further extended) that there will be a third tranche of High Court litigation – or an extended second tranche.

Steven Heffer is Head of Media, Sports & Culture at Collyer Bristow LLP and Chair of Lawyers for Media Standards.  He represents over 100 victims of voicemail interception and related claims.