The heavy costs burden of defamation proceedings has long been recognised. In 2010, Lord Justice Jackson’s Review of Civil Litigation Costs noted that “in the paradigm libel case the claimant is an individual of modest means and the defendant is a well-resourced media organisation”.
He deduced from this that there were strong policy reasons why the claimant should be protected against liability for adverse costs. However, he described the existing system for achieving costs protection for claimants as “the most bizarre and expensive system that it is possible to devise”.
At the time, Jackson LJ considered that the issue of defamation costs should not be treated independently from the wider context of civil litigation, which he described as also suffering from “very serious [costs-related] issues”.
Now tasked with undertaking a review of fixed recoverable costs to be completed by 31 July 2017, Jackson LJ has announced that his proposals to extend the current fixed costs regime may also apply to defamation proceedings, subject to a percentage uplift.
This is a timely debate. Indeed, the Supreme Court has recently heard three conjoined appeals challenging the compatibility of the recoverability of conditional fee agreement (CFA) success fees and after the event (ATE) insurance premiums in libel and privacy claims with the Article 10 right to freedom of expression. The recoverability of these ‘additional liabilities’ has long been denounced in the media as aggravating the costs burden of libel proceedings. With the Jackson review due to be completed by the end of July 2017, it is likely that the decision in these appeals will be handed down before then, and that it will influence the contents of the Report.
I suggest, however, this fundamental costs concern cannot be appropriately resolved by extending a fixed costs regime to defamation cases.
To do so would be to undervalue the very nature of this type of proceedings. At the heart of libel actions is the claimant’s wish for vindication. Non-monetary remedies are often as important, if not more, than damages, as was made clear by Tugendhat J in Clarke v Bain  EWHC 2636 (QB):
“Defamation actions are not primarily about recovering money damages, but about vindication of a claimant’s reputation. If a successful libel claimant recovers, say, £30,000, that figure does not represent the measure of his success. […] The value of the verdict in his favour is expected to consist substantially in the future loss that it is hoped will be avoided by the vindication.”
Determining the fixed recoverable costs by reference to the damages sought or recovered is therefore wholly inappropriate for libel actions, in which the claim’s value is part of a ‘package’ that also includes other elements such as a judgment in the claimant’s favour and an injunction to restrain publication (or republication) of the disputed material.
The proposed grid of fixed costs outlined by Jackson LJ in the 2016 IPA annual lecture would limit the recoverable costs to £18,750 for those claims whose value would range from £25,000 to £50,000, and to £30,000, £47,500 and £70,250 for larger claims up to a ceiling of £250,000. Jackson LJ noted that consideration should be given to whether other categories of disputes (for example defamation, clinical negligence or construction disputes) would require a percentage uplift on the basic figures.
Regardless of the uplift, such a system of fixed fees would ultimately aid conspicuously wealthy parties, whether claimant or defendant. Those for whom the impossibility to recover additional fees would not be an issue could, in effect, outspend their opponent. Newspapers involved in defamation proceedings could behave stubbornly in litigation in order to run claimants out of money, with the safety of knowing that they would only have to pay a small proportion of their opponent’s costs.
This would result in a significant inequality of arms. In turn, it would run counter to the very purpose of introducing an extensive fixed costs regime, which is to enable litigants to be in a better position to predict their potential costs liability and thereby to promote access to justice.
An order declaring the payment of ‘additional liabilities’ to be unlawful would also have negative consequences on the promotion of access to justice. The recoverability of these ‘additional liabilities’ guarantees that lawyers will continue to offer less wealthy clients assistance on a ‘no win, no fee’ basis. To prevent it would ultimately inhibit the CFAs’ goal, which is to enable those who would otherwise have been unable to fund the substantial costs involved in defamation claims to bring proceedings.
To give just one example, in Mahmood and the Daily Mail, the claimant brought proceedings against the MailOnline regarding an article in which members of a Muslim family were reportedly refused permission to travel to Disneyland because of alleged links with Islamic extremism. The Mail apologised and paid £150,000 in libel damages, as well as costs, 12 months after publication of the initial article. The Mahmood family were represented under a CFA with ATE insurance, which allowed them to sustain the costs of the lengthy proceedings.
That is not to say that defamation practice and procedure are currently fit for practice.
This area of law is undeniably beyond the means of all but the immensely wealthy, unless they are on a CFA. Defamation has long been recognised as a specialist field of practice in which solicitors are permitted to charge more, because the cases can be complex and require particular skill. It is also indisputable that the Defamation Act 2013 has failed to relieve the costs of libel litigation (despite this being announced as an underlying objective of the Defamation Bill).
However, to impose a fixed costs regime to defamation proceedings would disregard the heterogeneous nature of this area of law. Indeed, libel cases are characterised by a huge variability in the issues and defences at play. As such, they are not susceptible to a ‘one size fits all’ fixed fee arrangement.
The force of this argument, which has been put forward in many of the written submissions received to assist the fixed costs review, has been recognised by Jackson LJ himself in his keynote address to the Costs Conference held on 7 March 2017. He consequently acknowledged that in order to identify the types and ‘levels’ of cases that are suitable for fixed costs, one should look not only at the value of the claim, but also at “the complexity of the case, the number of issues, the number of experts and so forth”.
These factors clearly suggest that defamation is not an area of law that is suited to a regime of fixed costs (regardless of the proposed creation of a new ‘intermediate track’ for litigation). Instead, the objective should be to control – not fix – the costs of libel cases.
Likewise, the recoverability of additional liabilities should be preserved, but the maximum permitted level of success fees (which is currently 100%, although this is rarely awarded in practice) could be reduced. In MGN v UK  ECHR 66, the relevant success fees were of 95% and 100% respectively. Arguably, lower success fees would not be disproportionate to the legitimate aim sought to be achieved by CFAs.
The issue, of course, is how to control costs in libel proceedings. While costs budgeting has helped in controlling such costs, as is apparent from various written submissions received to assist the review, it has not been sufficient to lastingly transform the culture and practice of libel litigation.
One possibility is to consider other forms of dispute resolution than High Court litigation, which is inherently costly. These include alternative dispute resolution mechanisms such as arbitration and mediation. These mechanisms must be considered as part of the Pre-Action Protocol for Defamation, and both IMPRESS and IPSO have launched arbitration schemes to provide cost-effective access to justice for claimants. However, their effectiveness is yet to be ascertained.
In respect of High Court litigation, it was hoped that the Defamation Act 2013 would reduce the costs of libel proceedings by removing the presumption for jury trials, encouraging earlier settlement of claims and preventing trivial claims from going to trial. Regrettably, instead, the Act has substantially increased the cost and time to trial of most defamation actions. This is largely due to the escalation in the conduct of hearings on serious harm, as was noted by HHJ Moloney in Theedom v Nourish Training Ltd  EWHC 3769 (QB). Further, the Court of Appeal in Simpson v Mirror Group Newspapers Ltd  EWCA Civ 772 considered that the meaning of a defamatory statement does not necessarily establish the intensity of its sting. It also noted that the latter issue is sometimes best left for discussion at a full trial, rather than at a preliminary issue trial focused on section 1 issues. Whilst the decision is undoubtedly correct, this approach runs directly against the Act’s objective of early determination of claims.
Some existing rules can help alleviate the costs burden for one of the parties to the procedure. For media defendants, section 40 of the Crime and Courts Act 2013 establishes a mechanism which – if and when it is introduced – will enable them to avoid paying the claimants’ legal fees. This mechanism would apply whether such defendants win or lose, subject to their joining an approved regulator. However, it is hotly contested by the press.
More generally, the solution to efficiently reduce the costs of the proceedings as a whole is to introduce early and effective judicial case management.
This would involve assigning defamation cases to specialist judges, who would play an enhanced role in case management. Specialist judges are already used to hear clinical negligence and mesothelioma cases. A similar trend has recently emerged in relation to media wrongs. Since 1 March 2017, Mr Justice Warby is the judge in charge of the new ‘Media and Communications List’ and will “take primary responsibility for cases involving one or more of the main media torts […] and related or similar claims”. While it is said that these modifications will not change existing practice, Warby J is reportedly “proposing to consult in due course with those who litigate in this area and the judiciary with relevant experience, with a view to establishing generally whether there are any improved practical arrangements that might be made for cases of the kind specified.”
The proposed solution would require substantial judicial training on case management issues, as judges have been reported to be reluctant to use their case management powers to actively manage costs, and the case and costs management conferences are currently said to involve unduly long hearings and to be micro-managed by the judges. However, it is a simple solution that entails using mechanisms which already exist, merely extending them where appropriate. For instance, judges already have the power to direct limits on the documentation submitted to the court, and this power could be extended to other relevant steps of the procedure such as the time speeches should run. Similarly, judges could increase the number of paper determinations, which would reduce the time and, relatedly, the expense spent on these issues. Again, these powers already exist but judges have proved reluctant to use them.
Ultimately, controlling the costs of libel litigation could therefore be efficiently achieved by using (and extending) procedural rules and practices which already exist, but are simply not exercised regularly enough.
Mathilde Groppo is currently working as a paralegal at Carter-Ruck, as part of her French qualification to practice. She has a special interest in media law and data protection.
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“Ultimately, controlling the costs of libel litigation could therefore be efficiently achieved by using (and extending) procedural rules and practices which already exist, but are simply not exercised regularly enough.”
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Whilst agreeing with Ms Groppo that “early and effective judicial case management” to manage costs is required – and should, incidentally, be compulsory – as every practitioner in the area of libel and privacy knows, it is most often the costs which are incurred by non-fee paying claimants’ lawyers long before a complaint gets close to a Claim Form, let alone a court (and judicial management) which are the real problem.
A Carter-Ruck example may help bring some facts to this debate.
In 2015, they were instructed by a claimant in a local newspaper wrong photo case. I represented that newspaper. An offer of amends was made and accepted, and an agreed apology was subsequently published. Damages were agreed in due course, and for reasons it is unnecessary to dwell on, it was also agreed that the defendant would pay only a proportion of the claimant’s costs.
Carter-Ruck’s initial demand for costs, including VAT, exceeded £115K.
My experience is that restraint in terms of costs has long been absent from many claimant firms, with CFAs and ATE simply compounding the problem.
Fixed costs, particularly prior to proceedings, would be a long overdue and necessary reform.
Because the bulk of complaints are resolved without proceedings, no amount of judicial management of costs, even if it took place and were improved with training for judges, will deal with claimants running up excessive costs before the case ever (and, perhaps, never) gets to court.
Fixed costs, particularly prior to proceedings, would be a long overdue and necessary reform.