News: Civil Justice Council Working Group Report on Defamation Costs

On Thursday 18 April 2013 the Civil Justice Council (“CJC”) Working Group on Defamation costs published its Final Report [doc] on the case and options for costs protection in defamation and privacy proceedings.

The Working Group was set up in response to a request by Justice Minister Lord McNally to explore the issue ahead of the measures in the Defamation Bill coming into effect.

At present many defamation and privacy cases are brought under Conditional Fee Agreements (CFAs or as they are sometimes known, no-win, no-fee agreements). This system was reformed in April 2013 for most claims.  However, the Government delayed implementation of those changes for publication and privacy cases in the light of the Leveson report.  The Working Group considered what forms of costs protection regime should apply in this area of law and to see whether forms of costs protection would help parties secure effective access to justice.

The Working Group report includes a number of recommendations on the options for controlling costs in defamation and privacy proceedings, including:

• A call for greater judicial case management, with specialist judges allocated to ensure proceedings are dealt with swiftly and at minimal cost, with early intervention, approval of costs budgets and overseeing progress (recommendations 1-9);

• A suggestion that a system of ‘Variable Costs Protection’ is introduced, a form of qualified one-way costs shifting that both claimants and defendants could apply for, on the basis that in this area of law either claimant or defendant could require costs protection to conduct their case (recommendations 10-13);

• Agreeing in which circumstances parties might lose their cost protection – for example if a claim is found to have been fundamentally dishonest, or has been struck out (e.g. as being an abuse of the court process) (recommendations 33-36).

• Applying costs budgeting measures, as adopted in other areas of law, so that parties draw up realistic budgets for cases and adhere to them under judicial supervision (recommendation 15); and

• Allowing the courts to continue to use their cost capping powers to supplement the costs management and protection systems developed (recommendation 14).

The report contains illustrations of four “scenarios” for media claims.  The first Costs protection scenario covers number of possible situations where a poor claimant sues a major media organisation.  In this cases, if the claimant loses he or she does not pay the defendant’s costs.  The Second, Third and Fourth Costs protection scenarios cover two possibilities where the claimant is wealthy and one where the parties have equal resources.

The report has been submitted to the Ministry of Justice, which will consider it as part of its wider work on procedural reform in this area in the light of the Defamation Bill coming into force, the wider changes to the costs regime for civil litigation and potential changes to the arbitration process following the Leveson Inquiry report.

John Pickering, Chairman of the Working Group, said:

“Our task was a difficult one. Defamation and privacy law is fast-changing and complex, not least because of the advent of social media and online publication. Ideally we would have had much more time (for example not all members were able to sign off the report), than the Ministerial timetable permitted, to both consider the issues and consult widely. Our deliberations were also hampered by examining the issues without knowing what model of arbitration would develop in response to the Leveson Inquiry.

“Nonetheless, we have done our best to weigh up the pros and cons of various methods for protecting parties from major adverse costs in bringing or defending a defamation or privacy claim, as without such protection there is a real risk of people not receiving access to justice.”