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IntroductionWills_A (2)

On 11 Apr 2017 the Supreme Court unanimously dismissed three appeals brought by media organisations challenging the ECHR, art 10 compliance of the recovery of additional liabilities (CFA success fees and ATE insurance premiums) from defendants in ‘publication cases’ ([2017] UKSC 33). The Court held that, even assuming that orders to pay additional liabilities infringed the art 10 rights of two of the appellants, denying these sums to the respondents would entail a greater interference with their rights and may undermine the rule of law.

Background

Success fees are a percentage uplift (up to 100%) on base costs provided for under a conditional fee agreement (“CFA”) and payable to a litigant’s lawyers in the event that s/he is successful. After-the-event insurance premiums are sums paid by a litigant to insure her inter alia against potential costs liability. Although Part 2 of the Legal Aid, Punishment and Sentencing of Offenders Act (“LASPO”) 2012 ended the recovery of these sums from opponents, a transitional order preserved the pre-LASPO position in specific categories of litigation, including publication cases (primarily privacy and defamation claims).

The appeals were against costs orders made in two libel cases (Miller and Flood) and a privacy case (Frost) under which publishers were required to pay successful claimants’ additional liabilities. The appellants contended that these orders amounted to a disproportionate interference with their rights under art 10 of the Convention, primarily on the basis that the regime permitting the recovery of additional liabilities has a chilling effect on journalism. The Flood appeal also challenged the judge’s exercise of discretion in the award of base costs.

Judgment

Delivering the judgment on behalf of all members of the Court, Lord Neuberger addressed three issues in relation to the art 10 argument:

  1. Whether domestic law should reflect the Strasbourg Court’s decision in MGN v UK (2011) 53 EHRR 5 such as to lay down a general rule that: “where a claim involves restricting the defendant’s freedom of expression, then at least where the defendant is a newspaper or broadcaster, it would … normally infringe the defendant’s article 10 rights to require it to reimburse [a claimant’s additional liabilities].” (The rule in MGN v UK in domestic law) If so:
  1. Whether the effect of this should be that the costs orders made in the appeals must be amended to exclude the defendant in each case from paying the success fee and the ATE premium for which the claimant is liable (The application of the rule in MGN v UK to the appeals).
  1. Whether the Court should make a declaration of incompatibility under HRA 1998, s 4 in relation to the Access to Justice Act 1999, or even in respect of the costs regime which applies following LASPO and the Defamation Act 2013 (Declaration of incompatibility).

(1) The rule in MGN v UK in domestic law

Lord Neuberger considered that ECtHR’s decision in MGN v UK was “full and careful” and its reasons “largely sound” (based primarily on Sir Rupert Jackson’s Review of Civil Litigation Costs) [32] and [41]. Strasbourg reached its decision notwithstanding the wide margin of appreciation granted to the UK.

Holding that the decision of the ECtHR in MGN v UK was based on the 1999 Act regime in principle and not confined to the facts of that case, the Court held that its effect is that:

“where a claim involves restricting a defendant’s freedom of expression, it would normally be a breach of its article 10 rights to require it to reimburse the claimant any success fee or ATE premium which he would be liable to pay” [34] and [42].

However, Lord Neuberger declined to express “a concluded view” on the application of the rule in MGN v UK in domestic law and left the point open [29] and [41]. This was on the basis that the government was not a (interested) party to the proceedings and that, by reaching such a finding, the Court would make it difficult for the government to “re-open” this question and/or to challenge the reasoning in MGN v UK in a future case in Strasbourg [29].

(2a) Application of the rule in MGN v UK: Miller and Flood

Proceeding on the basis that it would normally breach a publisher’s art 10 rights to require it to reimburse any success fee or ATE premium, the starting point was that, in the absence of a good reason to the contrary, the appellants in Miller and (by implication) Flood would be entitled to have the costs orders amended to remove the additional liabilities [42] and [45].

The Court held that there was a good reason not to amend the cost orders because to do so would:

  • Infringe the rights of Miller and Flood under Art 1 of First Protocol to the Convention (“A1P1”): the right to property. This right extends to situations in which financial obligations are incurred in reliance on a legal act giving rise to a legitimate expectation that the legal act/right will not be retrospectively invalidated [46] – [48].
  • Undermine the rule of law as:

“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 – ie in such a way as to undo retrospectively the law upon which they committed themselves” [53].

Lord Neuberger accepted that, regardless of the decision that the Court reached, one side’s Convention rights would be infringed. Allowing the appeal would, he concluded, involve a graver infringement of the rights of Miller and Flood than the infringement of the appellant publishers’ article 10 rights that would result from permitting the cost orders to stand [54] and [56].

Please see Part Two here.