Costs News

13 April 2017
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Supreme Court backs pre-LASPO recoverability

Challenges by three leading newspaper publishers to the pre-LASPO recoverability regime failed in the Supreme Court on Tuesday. The court held that the claimants had a legitimate expectation under the Access to Justice Act 1999 that they would be able to recover additional liabilities at the time they entered into conditional fee agreements (CFAs).

The court was asked to resolve the tension between earlier rulings of the House of Lords and the European Court of Human Rights (ECtHR) on whether success fees and after-the-event insurance (ATE) premiums should be recoverable in publications proceedings – the House of Lords said in 2005 that they should be, but the ECtHR said in 2011 that they usually should not be because they breached the article 10 right to freedom of expression.

However, in the three conjoined cases of Times Newspapers Ltd & Ors v Flood & Ors [2017] UKSC 33, the Supreme Court – with president Lord Neuberger giving the unanimous ruling – held that the claimants’ rights under article 1 of the first protocol to the European Convention on Human Rights were more important.

Lord Neuberger said: “It is a fundamental principle of any civilised system of government that citizens are entitled to act on the assumption that the law is as set out in legislation (especially when its lawfulness has been confirmed by the highest court in the land), secure in the further assumption that the law will not be changed retroactively – i.e. in such a way as to undo retrospectively the law upon which they committed themselves.”

While the ruling suggested that it was hard to impugn the European court’s decision, the Supreme Court said it was “very difficult” to see how Mr Miller’s claim under article 1 “could be defeated”.

Lord Neuberger said: “Parliament did not see fit to render the LASPO regime retrospective: on the contrary, as explained above, the 1999 Act regime applies to all proceedings begun before 1 April 2013.

“Parliament thereby correctly recognised that, while the 1999 Act regime was unsatisfactory, it would be wrong to disapply it to proceedings which had been issued in the expectation that that regime would continue to apply to those proceedings.”

Lord Neuberger said that to refuse Mr Miller his costs would directly infringe on the fundamental right not to be deprived of his accrued rights and his legitimate expectations. “While freedom of expression is, of course, another fundamental principle, it is not so centrally engaged by the issue in this case: the decision in MGN v UK is essentially based on the indirect, chilling, effect on freedom of expression of a very substantial costs order.”

As a result, Lord Neuberger declined to reach a definitive conclusion on whether the ECtHr ruling was part of domestic law.

Were the Supreme Court to do this, “it would not technically bind the government [as it was not a party to this case], but it would make it difficult for the government to re-open the question in this country, and it could make it more difficult for the government to challenge the conclusion and reasoning in MGN v UK in Strasbourg.

“Although we are not being asked to make a declaration of incompatibility, a decision that the [ECtHR ruling] applies but cannot assist the appellants in the three appeals could have very similar consequences, and section 5 of the Human Rights Act 1998 requires the government to be notified if a declaration of incompatibility is sought in any proceedings.”

The claimants’ argument in one of the cases, Frost v MGN, was weaker as the claimants – who were victims of phone hacking – all entered into CFAs and took out ATE insurance after publication of the ECtHr ruling.

But Lord Neuberger still reached the same conclusion – despite that ruling, the pre-LASPO regime was still in force and lawful in domestic terms. Further, he continued, a “more fundamental” reason to reject MGN’s appeal was the ECtHR ruling could not be properly invoked in a case involving “the persistence, pervasiveness and flagrancy of the hacking and blagging, and the lack of any public significance of the information which it would be expected to and did reveal”.

ACL vice-chairman Francis Kendall commented: “The nature of the ruling means that the issue has not been fully determined, but it has clearly shut the door to the argument in circumstances where there is illegal conduct involved (phone hacking/blagging etc). This should apply to all such cases. It may be unsurprising, with hindsight, that the Supreme Court did not find favour in an argument based on the freedom of expression to publish illegally obtained material.

“In respect of other privacy/defamation cases, it appears that, despite this ruling, the lower courts will still be bound by the Campbell v MGN House of Lords ruling that additional liabilities do not breach the article 10 right, until there is an appeal to the Supreme Court at which the government is represented. The government may find this an unwelcome distraction at this time.”

Costs Lawyer Andy Ellis, managing director of Practico, added: “The decision represents a series of snookers that trap media defendants against the cushion. The only crumb of comfort is the emphasis given in paragraph 9 to ‘the new provisions which limit the level of overall costs to what is proportionate (pursuant to CPR 44.3(2)(a))’.

“This reference only makes sense if the amount of additional liabilities are up for grabs in the post-LASPO ‘stand back’ proportionality test. All eyes will now be on the BNM v MGN and May v Wavell appeals later this year, when it will be harder for claimants to argue that their blanket immunity from the Jackson reforms should continue.”

 

The ACL eBulletin will back in a fortnight.

 

This post was posted in ACL e-Bulletin

Comments

Sue Nash   25/09/2017 at 20:56

It appears that RNB is set for a HC appeal - watch this space! Meanwhile, RIP Solicitors Journal which - sadly - has just ceased publication after 180 years

News Flash   28/09/2017 at 12:18

Another pointless case, why resist a payment on account when your paying the opponents costs in the end anyway? these types of disputes should be a thing of the past!

MB   05/10/2017 at 13:18

Why has the focus returned to the SCCO "going completely digital". Was the electronic bill not extended to all Courts!

Dragon   12/10/2017 at 13:40

Well said Jim. Too often we see clinical negligence claims settle for say £2k only to be followed by a bill for say £50k. Thankfully there are some excellent costs lawyers out there who battle those costs down, but the situation remains outrageous.

Simon Mccarthy   13/10/2017 at 13:56

Dragon - your comment overlooks the fact that it is almost invariably your clients - the Defendants - who cause those scandalous costs by intransigently, and inexplicably, refusing to come to the negotiating table until too late, when the costs have already been racked up; it is their failure to take a realistic view to claims at the outset which necessitates the costs. This faux horror is therefore hard to stomach, especially when one considers the equivalent costs being incurred by government bodies (funded by us tax payers of course) often to the tune of 4-5 times the sums you mention, and the many Defendant costs draftsmen shelling peas for their piece of the pie. Sadly, it is the same old story of 'pay peanuts get monkeys' and, unless and until government wake up and start paying competent people to deal with claims pragmatically, the UK public purse will continue to haemorrhage billions of pounds that we can ill afford. Still, as long as it keeps Defendant costs draftsmen/lawyers in business?....

Northern Costs Monkey   13/10/2017 at 14:31

Just shows how ridiculous the whole budgeting process is. The reason firms generally don’t make applications to revise their budgets is because the bar set for varying them is absurdly high. No one even knows what a “significant development” is. A load of nonsense in my opinion. The situation we have now is that firms just don’t bother revising the budgets because in all likelihood it won’t be accepted. Meaning firms can be stuck with an “approved” budget that is a couple of years out of date, was drafted before the directions were even agreed, and is no longer fit for purpose. What should happen is that budgets should be drafted after the first CMC, and there should be a rule put in place that parties are able to freely revise a previously agreed or approved budget every six months, regardless of significant developments, with the updated budget to be considered at a costs management conference listed for a later date. That after all was the whole point of budgeting, was it not? Pragmatic costs management?

Simon   16/10/2017 at 16:47

I find this whole issue completely unnecessarily. Independent Midwives had commercial insurance suitable for their needs, however to try and save money they chose to try and become self-funding and cancelled their insurance without fully understanding the risks and exposures. I cannot see why it is in the public interest to bring a JR (and why the costs should be capped) when commercial solutions were available, however the issue is that as a group they didn't want to pay the costs of commercial insurance.

Dragon 2   18/10/2017 at 08:07

Great points Simon. Fully agree. Courts are fully aware of how these matters are conducted by those representing defendant. Surely though the money for damages and costs comes out of the medical suppliers' insurers' account, not tax pot nor nursing fund. Maybe that's why there is such a drive to extend the fixed costs regime to clin neg claims. Just a thought......

Mel B   19/10/2017 at 12:05

'Like' Simon McCarthy's comment

Cath Hart   21/10/2017 at 09:32

In reply to Simon's comment (which I thought at first meant this situation could be resolved) my understanding is that professional indemnity insurance for independent midwives has been withdrawn, but even if available the premium would be in the region of 20-30k annually (reference https://www.aims.org.uk/Submissions/nmc.htm) so I would disagree that it was cancelled to "save money" - these premiums exceed many of the midwives salaries so it was simply unworkable without government assistance. When professional indemnity insurance became mandatory under the EU directive in 2014 the independent midwives did appeal to the government for funding but this was rejected due to the low number of women involved so was not thought to represent value for money for the taxpayer. (reference: https://www.gov.uk/government/news/independent-midwives-insurance-options-outlined).

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