Evidence submitted by Ian Hislop, Editor,
Private Eye
1. I am writing this letter to you in connection
with the above Inquiry, with particular regard to the use and
operation of Conditional Fee Agreements (CFA'S). In this letter
I will recount my experience of being involved in litigation where
a CFA has been used by the other party.
2. I have been the Editor of Private Eye
magazine since 1986, which was founded in 1961 and is published
by Pressdram Ltd. Private Eye has been involved in many libel
claims during its existence. Relatively few have had to be resolved
at a trial, as agreement about their disposal has been reached
by agreement.
3. In March 1992 Private Eye published an
article about a chartered accountant practicing in Cornwall called
John Condliffe. The essence of the story was that he was dishonestly
overcharging many of his small business clients. In July 1993
proceedings for libel were issued on his behalf against myself
and Pressdram Ltd as respectively editor and publisher of Private
Eye. His lawyers were Peter Carter-Ruck and Partners ("Carter-Ruck").
4. The proceedings were defended on the
grounds of justification ie that what we had published was true.
5. Unusually for a chartered accountant
Mr Condliffe was declared bankrupt in August 1993. However he
claimed that he would be able to finance his costs of the claim
with financial support from his mother. Unhappy about the risk
that we would not be able to recover our legal costs if we won
the case we applied for security for our legal costs. However
both the Judge and then the Court of Appeal, in October 1995,
ruled against us.
6. The action proceeded at a snail's pace
through the court procedures necessary to prepare the case for
trial; it was a very expensive process as Mr Condliffe was required
to produce to our lawyers all his files relating to the clients
who we said he had cheated, but the form in which his files were
received by our lawyers were chaotic. They had to be put in order
and then considered by an independent chartered accountant we
had engaged to be our expert witness. By the time of the trial
we had whittled down the files we wanted available at court to
a form that occupied 28 ring-binders. Condliffe's lawyers insisted
that the court also had available all of the documents from the
files that Condliffe had produced. This meant preparing an additional
set of 113 ring-binders for use by the court; in practice this
meant preparing copies of this set (in addition to the 28 file
set) for each of the Judge, the barristers and the witness. In
court our barrister suggested to Mr Condliffe that this was designed
to increase costs and try to frighten off Private Eye and to "confuse,
bamboozle and obfuscate." The trial Judge said he was "absolutely
horrified" by this decision by Condliffe's lawyers. During
the trial he also said "I despair of this litigation. It
is never-ending. It is the most disproportionate piece of litigation
I have ever been involved in."
7. In the meantime CFA's became available.
In August 2001 Carter-Ruck gave notice that they had entered into
a CFA with their client. Some time before they entered into a
CFA Carter-Ruck had said that their client would settle for no
apology, no damages but payment of £250,000 for his legal
costs. In other words all the action seemed to be about was Carter-Ruck
getting a substantial amount for their costs and the usual purpose
of a libel action, the clearing of one's reputation, was no longer
important. The trial was fixed to commence in October 2001 before
a Judge sitting without a jury.
8. The effect of Condliffe being represented
on a CFA was of course explained to us by our own advisers, namely
(in summary) that his lawyers would be entitled to charge an enhanced
(probably double their normal) rate, for which we would be liable
if we lost the case. Of course we knew that the prospect of recovering
any of our legal costs from Condliffe, let alone anything like
what our costs would actually be if we fought the case to trial
and won the case, was negligible.
9. Even if we and our advisers had not fully
appreciated the situation, we would have been left in no doubt
about it by Carter-Ruck as result of communications with our lawyers
before the trial. Carter-Ruck told us at one point that their
costs to date were (now) £600,000, and that they estimated
their further costs of the trial would be £1.2 million, which
would include their 100% success fee. In other words we faced
paying some £1.8 million if we fought the case and lost,
on top of which we would have to pay our own lawyer's bill, which
would be about £750,000. Carter-Ruck made clear that if we
won Condliffe simply would go bankrupt (again) ie we would not
recover any costs from him.
10. So if we took the case to trial then,
at worst, we faced legal costs of some £2.5 million (if we
lost) at best £750,000 (if we won). The implications were
extremely serious. There was, at the very least, a real risk that
if we lost Pressdram Ltd would not have been able to pay Carter-Ruck
costs and that it would go into liquidation, leading to the closure
of Private Eye. As an individual defendant I would also have been
personally liable to pay Carter-Ruck costs from my own resources,
regardless of Pressdram's ability to pay them.
11. There was no doubt in my mind that Carter-Ruck
were using the threat of the enormous potential liability we faced
to try and force us into settlement purely for commercial reasons,
unconnected with the actual merits of the claim. Whatever our
perceptions and advice about our prospects of success, the outcome
of any litigation at a trial is inherently uncertain, and the
commercial reasons for settlement were apparently overwhelming.
12. We decided we were not going to be bullied
into settlement by these tactics. So the case came for trial before
Mr Justice Gray in October 2001. Condliffe was represented by
a QC and two junior barristers. Their QC was also on a CFA with
a success fee. In the sixth week of the trial Condliffe's claim
collapsed after the Judge indicated that cross-examination of
Mr Condliffe had cast "very considerable doubt on his credibilty",
the issue which lay "at the heart of the action." Immediately
following this ruling, settlement negotiations took place in the
court corridor, culminating in an agreement made the same day
under which the claim was dropped and Condliffe was to pay £100,000
towards our costs. He failed to do this and was made bankrupt.
Ian Hislop
Editor
Private Eye
November 2005
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