Memorandum submitted by Foot Anstey Solicitors

 

INTRODUCTION

 

1. There are approximately 85 regional daily and Sunday paid-for newspapers in England and Wales, and several hundred paid-for and free weekly papers. Foot Anstey's Media & Publishing Team represents approximately 40-50% of those newspapers, and has done so for the last 19 years or so. We also represent several national newspapers, and believe we have a unique insight into the pressures faced by publishers.

 

Q.1+2 THE SELF-REGULATORY REGIME AND THE MCCANN CASE

 

2. We were not involved in the McCann case, and so we are unable to offer views on the first and second questions posed by the inquiry.

 

Having said that, however, we firmly believe that the PCC is an effective regulatory body, whose Code of Practice and determinations are taken seriously by the print media. Anyone who suggests that the press ignores the PCC and its Code, is simply wrong.

 

Q.3 THE INTERACTION BETWEEN THE OPERATION AND EFFECT OF UK LIBEL LAWS AND PRESS REPORTING

 

3. UK law is perceived to be anti-freedom of expression, particularly in the USA. In May 2008, the State of New York enacted the Libel Terrorism Protection Act to protect American citizens who are held to be liable for defamation abroad. The legislation was prompted by disquiet felt in the US in respect of the case brought against the author Rachel Ehrenfeld, who had judgment entered against her in the High Court in a defamation suit brought by Khalid Salim a Bin Mahfouz, a Saudi Arabian businessman and banker. Mr Bin Mahfouz is one of the world's most prolific 'libel tourists', having used or threatening to use claimant-friendly English courts to sue for libel at least 36 times since 2002.

 

4. It is no coincidence that London is still the libel capital of the world, as evidenced by the number of Middle-Eastern and Russian citizens who come here for the purpose of bringing libel actions.

 

5. The effect, particularly on the regional press, is that the fear of litigation has a 'chilling effect' on the media. We develop this argument in relation to CFAs below.

 

 

Q.4 THE IMPACT OF CONDITIONAL FEE AGREEMENTS

 

6. Our experience is that the "ransom or chilling effect" of CFAs is very real to the regional press, and has a decisive effect on the exercise of their right to freedom of expression.

 

4.1 Background

 

7. There appears to be a perception amongst members of the public and some, if not all, claimant solicitors that the publishers of regional newspapers have access to unlimited funds, and the issue of the costs of litigation is, in reality, of little consequence to them.

 

Nothing could be further from the truth:

 

those local publishers which are wholly owned subsidiaries of PLCs or very large private companies receive no subsidy from their parent and, from a financial perspective, are treated as stand-alone businesses;

 

the privately owned publishers are invariably local, small to medium enterprises, who have to rely on their own assets and profitability to pay litigation costs.

 

8. Most of the well known claimant firms of solicitors in London charge their time at rates of between 300 and 500 per hour, rates which both objectively and to a regional publisher are very high, and which increase significantly after the application of the success fee, particularly in the absence of a cap on costs. The risk of being obliged to pay enormous sums by way of Claimant's costs, which cannot be calculated or even estimated with any degree of accuracy, imposes intolerable pressure on the regional press, and effectively compels publishers both to refrain from publishing contentious material and to settle potential claims, irrespective of the merits of the claim.

 

4.2 After the event insurance

 

9. It is now the norm for claimants to purchase After the Event (ATE) insurance policies, ostensibly to ensure that any orders for costs in favour of a defendant may be satisfied. The value of cover provided by ATE policies is usually 100,000.


 

Disregarding the fact that such policies may well be ineffective in the event of a successful plea of justification, the quantum of the ATE premium (usually between 5,000 and 15,000 at the time the Protocol letter of claim is issued, and rising to about 68,000 by the time a trial commences) and the timing of the purchase of the ATE policy, contribute significantly to the pressure that is applied to the right to freedom of expression on the part of the regional press. This is because the ATE premium is a recoverable disbursement from the defendant in the event of an Order or an agreement to pay the claimant's costs.

 

The time at which liability to pay the ATE premium is incurred is a particular issue for regional publishers. With the exception of David Price Solicitors and Advocates, it is the practice of all the principal claimant solicitors to arrange for their clients to incur a contractual liability for payment of a (deferred) ATE premium before the Protocol letter of claim is despatched to the publisher.

 

Thus, claimants incur a liability to pay a significant sum (although they themselves do not pay it), irrespective of the strengths or weaknesses of the cases of the intended claimant and intended defendant, and without any reference to the likely payee, the intended defendant.

 

The injustice of this system is obvious, particularly if the publisher accepts that the claimant has a valid complaint and admits liability immediately upon receipt of the Protocol letter of claim. In this scenario, a significant financial liability has been incurred quite unnecessarily. On any view, it is unjust for a claimant to incur a liability which he will never pay, without reference to the person who, in the overwhelming majority of cases, will be paying it.

 

10. Our experience is that the operation of the CFA system fails to discourage weak claims against the press. The regime allows claimants and their lawyers to hold publishers to ransom by threatening litigation, because both claimants and the publishers know that the latter risks incurring huge, probably irrecoverable, costs if they do not accede to the claimant's demands.

 

11. In short, the reality is that if a regional publisher is contemplating publishing contentious material or defending a claim brought by a CFA funded claimant under current arrangements, a financial commitment is required which many regional publishers are simply not capable of giving. They know that they have little option

 

but to refrain from publishing or to settle (even if the claim is without merit). The "ransom or chilling effect" of CFAs is very real to the regional press.

 

4.3 Wider issues

 

12. Fearless reporting has often revealed information which it has been in the public interest to expose. Armed with a CFA, a claimant can gain enough leverage to suppress the publication of an article, or force capitulation after publication, even when a meritorious defence may exist.

 

13. The Overriding Objective requires the exercise of proportionality in relation to any Court action, especially in respect of costs

 

Publishers can face legal fees, even if the claim against them is successfully defeated. If a claimant without means loses, he will be unable to pay the defendant's costs. This will leave the blameless defendant to pay its own legal fees.

 

In the absence of a costs capping order, costs judges have been awarding disproportionate uplifts in costs under CFAs.

 

The percentage uplift applied to the costs under a CFA is meant to reflect the risk taken by a lawyer in taking on a client who may not have a strong case. Its use as a tactical weapon is wholly inconsistent with this aim.

 

14. The Courts have demonstrated a reluctance to step in on the issue of CFAs, seeing their control and/or reform as the function of Parliament. Instead, the Court of Appeal has recommended that a cap on costs be made at the allocation stage, by analogy with the jurisdiction in arbitration cases under S.65 of the Arbitration Act 1996.[1]

 

15. Article 10 of the European Convention on Human Rights preserves the right to freedom of speech. It often comes into conflict with Article 8, which protects the right to a private and family life. In such a clash, the two should surely be allowed to resolve their relative importance without the 'chilling effect' of CFAs weighing in on the side of the claimant.

 

16. Turning to post-publication issues, by way of example of the above conclusions, we have represented 17 clients since 2004 to whom Protocol letters were sent by the three or four prominent claimant solicitors. Two complaints were the subject of proceedings, and the remaining fifteen were settled without proceedings being issued. Of the fifteen complaints which were settled, five were considered by us to be legitimate. The other ten were thus considered to be unjustified and/or defendable from a purely legal perspective, but were nevertheless settled because of concerns by our publishing clients of the financial consequences of defending the claims. They knew that they would be significantly out of pocket, even if their defences were successful, and that they could be severely damaged financially if the defences were unsuccessful.

 

4.4 Judicial decisions

 

17. In recent years, the Courts have been inundated with satellite cases and appeals concerned solely with costs issues arising from the primary litigation. It is not appropriate to list those decisions here.

 

18. However, we think it worthwhile drawing the Committee's attention to the judgement of the Court of Appeal in C v. W, which was delivered on December 19th 2008.[2] This was a costs appeal arising from a road traffic accident/personal injuries case, in which the defendant admitted liability to the claimant, who sought damages via CFA funded claim.

 

19. In his judgement, Lord Justice Thomas:

 

agreed with submissions made by Counsel for the defendant that there are "very forcible and attractive submissions about the lack of an effective market, and paucity of information that existed in relation to such a market as there was";

 

said that the submissions made by Counsel for the defendant "are issues that need to be considered in a wider context, including the effect that this regime is having on transferring costs to others and the fundamental right of access to justice";

 

 

 

referred to "the real difficulties that face both solicitors and the Court in attempting to fashion a CFA in cases where liability is admitted, given the inter-relationship of the necessity of financing litigation through a CFA...";

 

expressed the view that "it is clear that for the CFA regime to operate more effectively then much better statistical information must be collected and made available to assist the better assessment of risk; I understand that the Ministry of Justice has commissioned research that will include the provision of hard statistical data".

 

These are complex issues. We highlight them to demonstrate the judicial and executive concern that exists about CFAs and ATE insurance.

 

Q.5 CONTEMPT OF COURT LAWS

 

20. The press does not ignore contempt laws. The author and his colleagues spend a good deal of time ensuring that our clients comply with contempt of court laws, because the publishers take them seriously. No editor ever wants to risk prejudicing any type of court proceedings. The sanctions for doing so are a very effective deterrent.

 

21. The freedom of the press to report the proceedings is central to the upholding of transparent justice. Even with the internet providing a wealth of information and removing geographical barriers, the track record of the regional press shows that publishers and editors can be trusted to fulfil their responsibilities accurately, to inform the public of court proceedings and to exercise sensible judgment about the publication of comment which may interfere with the administration of justice.

 

22. The jury system itself provides sufficient safeguards to prevent any prejudice that might arise from media coverage of a hearing. Jurors must be credited with the will and ability to focus on matters in the court room, to follow the judge's directions and fundamentally believe that the trial process should be fair, without being swayed by external media reports or the internet.


 

23. We make the assertions contained in paragraphs 21 and 22 in light of the speeches of Mr Justice Butterfield and Sir Igor Judge in the case of Barot[3], and by Lord Phillips CJ in the case of Abu Hamza[4] .

 

24. Research conducted by the New Zealand Law Commission suggests that the impact of pre-trial publicity and of prejudicial media coverage is, in reality, minimal.[5] Given that S.8 of the Contempt of Court Act 1981 prevents such research being carried out in this country, these findings are as representative of the position in this country as is likely to be found.

 

Q.6 THE EFFECT OF THE EUROPEAN CONVENTION ON HUMAN RIGHTS ON THE COURTS' VIEWS ON THE RIGHT TO PRIVACY AGAINST PRESS FREEDOM.

 

25. As Parliament has not yet given it serious consideration, the law of privacy in the UK has been entirely created by the courts, and has grown case by case. The speech by Paul Dacre to the Society of Editors on November 9th 2008, has received much criticism for his personal attack on Mr Justice Eady, but the underlying sentiment about the incremental development of the law of privacy by the courts, is sound.

 

26. We have represented regional publishers in cases where the right to privacy has restricted the right of freedom of expression. For example, in the Green Corns case, a local newspaper was injuncted from publishing information on the grounds of privacy, even though thousands of local people already knew that information.[6] Similarly, a teenager who sued his Strategic Health Authority for substantial damages following injuries sustained at birth, successfully prevented details of his claim being made public. He secured an injunction notwithstanding that full details were set out in the Claim Form and Particulars of Claim, which had been filed at court, and thus were available for inspection.[7]


 

27. The Courts are developing a law of privacy without any Parliamentary debate or scrutiny. The test is whether there is a reasonable expectation of privacy. This is being applied in the context of sexual misdemeanour and a wide variety of other circumstances such as financial misconduct, photographs of children, and wedding photographs.

 

28. Recently, as a result of the J.K. Rowling case[8], English law has shifted towards the more restrictive, European interpretation of privacy law. We see this trend as being contrary to the right to freedom of expression.

 

29. A related trend which is developing is that claimants, especially the rich and famous, appear to be instituting privacy claims in the High Court rather than lodging complaints to the PCC. It seems that they do so because they prefer an award of damages in the long term, rather than a PCC determination (which is not accompanied by any financial redress) in the short term. Because of the CFA regime, this course of action creates no financial risk to them. As a result, the PCC runs the risk of being seen as irrelevant, even though the PCC is intended to remedy breaches of the Code swiftly and cheaply, and does so. (It should be noted that the Code's provision with regard to privacy is virtually identical to Article 8).

 

30. In consequence, editors are forced to seek a quick, and thus less expensive, settlement of a claim that is often without any real substance, which would be vigorously defended were it not for the chilling effect of litigation and CFAs. The consequence is obvious: newspapers, especially local ones, will avoid publishing stories that are in the public interest because of the growing threat of privacy litigation funded by CFAs.

 

Q.7 FINANCIAL PENALTIES FOR LIBEL OR INVASION OF PRIVACY

 

31. The basis of damages awarded under English law is that a wrong should be righted by putting the parties in as close a position as possible to where they would be if the harm had not occurred. Exemplary damages are a severe punitive measure, to be used only in cases of extremely bad behaviour and abuse of court process.

 

32. Parties found liable for defamation often acted, or believed that they were acting, in the public interest. Similarly, those found to have infringed a person's right to

 

privacy have operated on the same basis. To penalise publishers with exemplary, rather than compensatory, damages risks crippling journalistic freedom and enterprise through fear of such a consequence if a court found against them.

 

33. In short, if damages were awarded on an exemplary, not a compensatory basis, it would be a severe blow to reporting generally, and to publishers' rights to freedom of expression.

 

Q.8 THE BALANCE BETWEEN PRESS FREEDOM AND PERSONAL PRIVACY

 

34. In our opinion, the current state of the law has created an imbalance between press freedom and personal privacy.

 

35. Freedom of expression has been greatly restricted in the last seven years by the fear of litigation brought via CFAs, and the incremental development of privacy law by the courts, operating without Parliamentary scrutiny.

 

36. Without reform, this unsatisfactory situation will only create further obstacles to the historic right to freedom of expression enjoyed by, and expected of, the regional press.

 

CONCLUSIONS

 

37. In outline, we consider that the costs and CFA regime should be reformed to prevent:

 

excessively high hourly rates being allowed;

excessively high success fees being applied to those hourly rates;

the claimant from incurring liability to pay the premium, or the first tranche thereof, of an ATE insurance policy until the defendant has despatched his formal written response to the letter of claim;

excessively high ATE insurance premiums being charged.

 

38. With regard to the law of privacy, we believe that the development of such a law by the Courts is not the correct way to apply the European Convention for Human Rights. The absence of any public debate or Parliamentary scrutiny is to be regretted.

 

39. We fear that the PCC risks being marginalised, with all that implies for self regulation, by the use of CFAs to fund privacy claims.

 

January 2009

 

 

 

 

 

 

 

 

 

 

 

 



[1] King v Daily Telegraph Group Ltd [2004] EWCA Civ 613

[2] C v. W [2008] EWCA Civ 1459

[3] R v B [2006] EWCA Crim 2692

[4] R v Hamza [2006] EWCA Crim 2918

[5] Young, Cameron & Tinsley, Juries in Criminal Trials: Part Two, vol 1, ch 9, para 287 (New Zealand Law Commission preliminary paper no. 37, November 1999).

[6] Green Corns Ltd v Claverley Group Ltd and another [2005] EWHC 958 (QB)

[7] Child XXX v A Strategic Health Authority HQ07X03831

[8] Murray (by his litigation friends Murray and another) v Big Pictures (UK) Ltd [2008] EWCA Civ 446