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The Supreme Court is currently hearing three joined appeals brought by media Wills_A (2)organisations challenging the ECHR compatibility of the recoverability of conditional fee agreement (CFA) success fees/uplift and after the event (ATE) insurance premiums (“additional liabilities”) in libel and privacy claims.

The media organisations contend that the scheme permitting courts to order the recovery of additional liabilities (under the Access to Justice Act 1999 and relevant provisions of the CPR and Costs Practice Direction) amounts to a disproportionate interference with their rights under ECHR, art 10.

The appeal in Flood raises a discrete challenge to the base costs awarded in that case on the basis that The Times succeeded in its public interest/Reynolds defence with respect to most of the publications.

Background and the judgments of the lower courts

Flood v Times Newspapers is a libel case with a lengthy history. This is its second visit to the Supreme Court; the first hearing resulted in a landmark decision on the Reynolds/public interest defence. TNL’s success in that appeal meant that publications up until a certain date were Reynolds privileged but there remained a small number of the publications for which TNL was liable. Following a damages hearing in December 2013, Nicola Davies J awarded £60k in damages to Mr Flood in respect to the publications for which his claims were made out. Holding Mr Flood to be the successful party, the judge ordered TNL to pay the costs of the action. This included the parts of the action in which the Reynolds privilege applied.  The Court of Appeal dismissed the appeal. TNL was also held liable to pay a CFA success fee and ATE premium.

Miller v Associated Newspapers arises from a successful defamation claim brought in respect of an article published in the Daily Mail. Sharp J awarded £65,000 in damages. Base costs were compromised at £633k. Associated disputed their liability to pay any part of the success fees or ATE premium on the basis that this amounted to a violation of its rights under ECHR, art 10. On the recovery of success fees, Mr Justice Mitting accepted that there was a stark conflict between the ratio of House of Lords’ judgment in Campbell v MGN Ltd (No 2) [2005] UKHL 61 and MGN v UK, the ruling of the Strasbourg Court in the same case. But the judge considered himself bound to follow the decision of the House of Lords. As to the ATE premium, Mitting J held that it was compatible with article 10 on the basis that the burden imposed by the ATE premium scheme on defendant publishers is not so large or so lacking in appropriate controls so as to amount to a disproportionate interference.

Frost v MGN originates from the well-known judgment (widely known as Gulati) of Mann J in the phone hacking litigation against the Mirror. Eight claimants received substantial damages for the tort of misuse of private information. All of these claimants (and a further 12 whose claims settled before trial) were litigating on a CFA and most had taken out ATE insurance. As in Miller, Mann J considered himself bound by the decision in Campbell and held that the regime permitting the recovery of CFA success fees to be compatible with article 10. He agreed with Mr Justice Mitting regarding the compliance with article 10 of the recovery of ATE premiums.

Both Miller v Associated Newspapers and Frost v MGN are leapfrog appeals from the High Court.

Issues before the Supreme Court

The primary issues that the Court has been asked to determine are as follows:

  • Whether the recoverability of CFA success fees and/or ATE insurance premiums is a proportionate interference with the art 10 rights of the appellants and, by extension, media organisations generally.
  • In addressing these questions the UKSC will consider whether to apply domestically the decision of the Strasbourg Court in MGN v UK and to therefore depart from the House of Lords’ decision in Campbell (No 2). And, if so, whether to extend the reasoning in MGN v UK to the recoverability of ATE insurance premiums.
  • If one or both regimes is found to be incompatible with art 10, what is the appropriate remedy? In particular, should the relevant provisions be read down or disapplied so as to ensure compatibility, or should no such action be taken on the basis that the respondents, their lawyers and insurers had a legitimate expectation that additional liabilities would be recoverable and that that position would not be altered retrospectively?

LASPO ended recovery of additional liabilities for most causes of action – privacy, defamation and harassment claims against the press are amongst the few exceptions. This case is of profound significance for both the future funding of such claims and the costs faced by media organisation defendants.

The judgment may also be significant in the context of the ongoing debate on whether or not the Crime and Courts Act 2013, s 40 should be brought into force. Some responses to the government consultation have criticised s 40 (3) as being incompatible with art 10 for the same reasons advanced by the appellants challenging the CFA/ATE regime. Should the UKSC hold that the imposition of additional costs liabilities is incompatible with art 10, it is difficult to see how section 40 (3), whose costs implications are more severe, would survive a similar challenge (were it to be in force).

I will be writing a more detailed post once the Supreme Court has handed down its judgment.