The use of CFAs in cases against the media had become a scandal long before this appeal was heard. A mechanism intended to provide access to justice had become a gravy train for claimant lawyers. As claimant lawyers know, the mere threat of a CFA and ATE insurance could be used to bulldoze a media company into submission.
Claimants’ costs in cases against newspapers are beyond a joke. In the hacking cases against Mirror Group the claimant’s costs of an appeal to the Court of Appeal which lasted less than two days were said to be £1.7M – a multiple of Mirror Group’s own costs, and it was the appellant! Those same claimants’ costs in the Supreme Court, where they were one of three respondents to appeals based on article 10, are said to be a further £500,000 – and that is before the addition of the success fee.
In Andy Miller’s libel case against the publisher of the Daily Mail his lawyers are now seeking a success fee of £587,000 (this is a reduced claim following agreement on base costs) and an ATE premium of £248,000. Associated is facing similar claims for success fees and ATE in another libel case where the costs proceedings were stayed pending the outcome of the appeal to the Supreme Court.
In the MGN hacking litigation claimants’ lawyers have submitted huge claims for costs. In one pre-action claim just under £150,000 is being claimed; in another claim which settled just after service of the claim form, £165,000 is claimed.
These problems do not arise in other areas of civil litigation as the Government sensibly reformed the law governing recoverability of success fees and ATE premiums: see the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (“LASPO”). But not all of the changes introduced by LASPO apply to defamation and privacy claims. It is particularly ironic that additional liabilities remain recoverable in such claims considering that the European Court of Human Rights had found in 2011 (in MGN v UK) that the rules permitting recoverability of success fees offended the Convention in that very category of case.
Instead of changing the law to reflect the ECtHR decision and give some protection against excessive costs to defendants in media cases, the Government chose instead to give costs protection in virtually every case other than media cases: an almost complete perversion of MGN v UK. It is especially disappointing that the law has still not been changed considering the Government said back in 2013 that the exemption of publication proceedings from one of the principal LASPO reforms would be only a short-term measure.
Had the Government not exempted media claims from the LASPO rules on recovery of additional liabilities there would have been no need for an appeal to the Supreme Court. The appeal was necessary because the Government had failed to act on the ECtHR’s decision.
The Supreme Court has effectively endorsed the analysis and conclusion of the Strasbourg court in MGN v UK. The judgment sends a clear message that in cases involving freedom of expression the award of additional liabilities will normally infringe defendants’ Article 10 rights. That is the big picture which eclipses the outcomes in each of the three appeals whereby, for various other reasons, the Supreme Court decided not to interfere with the costs orders made below.
The big question will be what happens next. Unless the Government has tin ears, it must now be aware of the need to do something about the matter: it cannot ignore the clear message of the Supreme Court that it is wrong to make huge awards of costs against publishers.
In the meantime the publishers concerned in the appeal (and possibly others) will be considering whether it is right that they – and not the Government – should bear the eye-watering costs arising from the operation of a system that the Government was told more than five years ago was contrary to the Convention and which it deliberately chose not to reform, and has still not reformed.
The Supreme Court’s judgment will not be the final word on the matter. Apart from whatever challenges to the Government may flow from the judgment, we can safely predict that challenges to additional liabilities sought under existing and future CFAs have not gone away.
Keith Mathieson is a partner of RPC and represented Associated Newspapers and MGN in the Supreme Court and at earlier stages.