Memorandum submitted by News International Ltd
1. This response is made on behalf of News International Ltd, whose subsidiaries publish The Sun, The Times, News of the World, The Sunday Times, and thelondonpaper.
2. News International welcomes the opportunity to contribute to the current inquiry into press standards, privacy and libel. It comes at a critical time when the industry faces both severe commercial challenges and challenges to press freedom.
3. Last year alone, hundreds of editorial jobs were cut across the industry as publishing businesses faced with the challenges of the digital revolution had to cope with the additional difficulty of rapidly shrinking advertising markets.
4. On top of this, a series of privacy rulings, culminating in the judgment by Mr Justice Eady in the case of Mosley vs News Group Newspapers Ltd, have dangerously tipped the balance away from press freedom.
5. The same publishing businesses that are finding their reporting freedoms restricted and their commercial basis endangered have been pushed further towards the edge by the iniquitous system of Conditional Fee Arrangements - originally intended to provide access to justice for those who could not afford it, the system instead has been widely used by wealthy complainants and lawyers charging exorbitant fees. Newspaper publishers have often been left with little choice but to settle complaints, even where they believe they have a strong defence.
6. Against this background, the Press Complaints Commission has continued to operate a first class service for the public. The Committee should not recommend any measure that would undermine self-regulation.
7. As Lord Bingham said in McCartan, Turkington Breen vs Times Newspapers Ltd, the press are "the eyes and ears of the public to whom they report". It is essential to the proper functioning of a democracy that we should maintain a healthy, commercially viable press.
8. With this in mind, we have made a number of constructive proposals which we believe address some of the urgent problems facing the press today.
The McCann case and the Press Complaints Commission
9. When a child goes missing, the press and the media play a vital role in helping to raise publicity and aid the search. The McCanns recognised this and were proactive in keeping the story at the top of the news agenda. However, the circumstances of their case were rare, if not unique. The combination of factors that were relevant to the way the media in general responded included: that the events took place abroad; that the local police had issued a blanket ban on media coverage; that at the same time the local police were leaking information to the local press; that the case had attracted massive public interest in this country and was therefore rightly being followed closely by all of the media, that the hunt for Madeleine went on for so long and that there was a lengthy time lag before any of the published stories were challenged.
10. The fact that the McCanns chose to pursue complaints against the Express Group titles through the courts does not, in our view, have any bearing either way on the system of self-regulation. The Editors' Code does not replicate or compete with the law of libel. It is quite separate and distinct and deals with accuracy, not "reducing people's reputations in the eyes of right thinking people".
11. In any case, it is hard to see where and when the PCC could have intervened. An enormous amount of factual material was being put out for publication by those involved. No formal complaint was made to the PCC by the McCanns or any other party. And, in the circumstances of an ongoing police investigation, how could the PCC take unrelated action to intervene?
12. News International strongly supports the system of press self-regulation administered by the PCC. It has proved itself robust and adaptable. The Code continues to evolve and the remit of the PCC itself has expanded to meet the challenges of the digital age.
13. At News International, our commitment is demonstrated by the in-house training we provide for our journalists. Not only is the Code of Practice in all our journalists and editors' contracts, but our titles regularly run training/revision programmes on a wide number of editorial issues. This ensures that everyone contributing to our papers is clear about the meaning and intention of the Code and the wider legal framework within which we operate. In addition, senior editorial staff check any PCC-related issues and advise the editors to make any changes in coverage to make sure we meet code requirements.
14. In spite of this, we acknowledge that sometimes mistakes are made. But as Lord Nicholls observed in Reynolds v Times Newspapers Ltd 2001: "Historically the common law has set much store by the protection of reputation.... There must be exceptions. At times people must be able to speak and write freely, uninhibited by the prospect of being sued for damages should they be mistaken or misinformed. In the wider public interest, protection of reputation must then give way to a higher priority." In this case the "higher priority" was trying to find Madeleine or the person responsible for her abduction. Given what the House of Lords has said about "higher priorities", in this increasingly fast-paced, highly competitive media world, self-regulation is the best tool for ensuring that standards are upheld.
15. At the end of its last inquiry into press self regulation in 2007, the Culture, Media & Sport select committee concluded: "We do not believe that there is a case for a statutory regulator for the press, which would represent a very dangerous interference with the freedom of the press. We continue to believe that statutory regulation of the press is a hallmark of authoritarianism and risks undermining democracy. We recommend that self regulation should be retained for the press, while recognising that it must be seen to be effective if calls for statutory intervention are to be resisted."
16. These conclusions remain valid today.
The interaction between the operation and effect of UK libel laws and press reporting.
17. English libel law has traditionally given disproportionate protection to an individual's reputation, at the expense of the right of the media to be "the eyes and ears of the public to whom they report" (Lord Bingham). While the Reynolds, "public interest" and "responsible journalism" defence has had new life breathed into it following the decision of the House of Lords in Jameel v Wall Street Journal Europe (No 2) (HL) 2006, UK law is still heavily weighted in favour of a claimant. This is because a claimant is presumed to have an unblemished reputation and the words are presumed to be false until proven otherwise. In effect, the newspaper is presumed guilty until it has proven its innocence.
18. Because UK libel laws are so favourable to claimants, London has become the libel capital of the Western World and US courts have begun to refuse to enforce UK libel judgments because they regard UK libel law as an unjust and unconstitutional restraint on free speech. US courts particularly object to the UK principle that the burden of proof falls on the defendant (see above) rather than on the claimant who is seeking monetary compensation.
19. "Libel tourism" is therefore a serious problem, which is now made possible with electronic internet publication across borders and actions are brought in the UK at considerable expense to taxpayers even though there has been minimal publication in this jurisdiction.
20. The following reforms to our current libel laws are therefore urgently needed if the UK is not to be found in breach of the European Convention on Human Rights and taxpayers are not to be asked to fund the cost of expensive libel actions over here which involve celebrities outside the jurisdiction but with a cause of action in the UK, such as Jameel (above) and Loutchansky (below):-
(i) In an age of electronic communications, there is no effective limitation period (the one year period in which a claim has to be brought against a publisher of defamatory material) for articles retained on electronic databases, particularly where they can be accessed years after they were first placed on a website. Quite extraordinarily in a modern electronic age the UK courts are bound by an 1849 judgment, Duke of Brunswick v Harmer, in which the Duke sent out his manservant to buy a back issue of a newspaper which he had overlooked some 17 years previously. By selling a back copy of the newspaper, there was a second publication of the defamatory article. This gave the Duke a "new cause of action" and he was able to sue for libel 17 years after the article had first appeared. Nowadays, anyone accessing a newspaper, magazine or television website containing archival material can cause the republication of a defamatory article and thus create a new cause of action without the publisher having done anything to actually "cause" that publication.
This anomaly has been pointed out to the Government but the Ministry of Justice still has not drawn up proposals for a Single Publication Rule, like they have in the United States, where there is a rule that the publication of an electronic article takes place when it is downloaded to a website not when the article is accessed, what may be years later by a member of the public. This point has been taken to the European Court of Human Rights by Times Newspapers Ltd, an NI subsidiary, following its libel action with Grigori Loutchansky, a Russian oligarch who had sued over here even though he had been refused entry into the UK by two Home Secretaries for being a "mafia" boss. The ECtHR has already declared this application by Times Newspapers to be "admissible" and prima facie an interference with free speech under Article 10 of the ECHR in the UK. However, the UK Government has still done nothing to sort out this unnecessary and disproportionate restraint on free speech and a final ruling by the ECtHR is expected next year, 2009.
(ii) Under UK law, libel actions are still for the most part tried by juries, which is a constitutional right under s. 69 of the Supreme Court Act 1981. This is an anomaly because jury trials in personal injury actions were abolished many years ago and trial by judge alone is the norm in all other tortious claims. Many claimant lawyers therefore refuse what may be a perfectly sensible and reasonable offer by a media defendant to have the question of the "meaning" of an article, which can lie at the heart of a libel action, referred to independent and speedy arbitration by a judge or libel silk and two lay assessors (see Times Newspapers' Fast Track Arbitration Scheme - copy attached as Appendix 1). Solicitors acting for a wealthy claimant often insist on their client having a statutory right to put their case to a jury - at tax payers' expense - many years later and after huge legal costs may have been run up on both sides. This makes no sense, when resolving the meaning of an article in the first month of a libel action could lead to the speedy settlement of many libel actions. Section 69 of the Supreme Court Act should therefore be amended so that libel claimants do not have an automatic prima facie right to jury trial, particularly where the key issue is one of meaning which should be decided at the beginning of a case by a judge or preferably by a judge with two lay assessors under s. 70 of the Supreme Court Act.
(iii) Under present High Court rules, it is impossible to "order" the parties to a libel action to go to binding arbitration on the meaning of an article even though this is likely to lead to speedy resolution of many libel claims. Often the key issue will be whether the article actually accused the Claimant of "being a terrorist" (a Chase level 1 meaning) or "there being reasonable grounds to believe that the Claimant might be a terrorist" (a Chase level 2 meaning) or "that there might be grounds to investigate the Claimant" (a Chase level 3 meaning). A provision should therefore be inserted into the Civil Procedure Rules of the High Court under which parties could be "ordered", in appropriate cases, to go to binding arbitration on any sensible issue such as the meaning of an article or the quantum of damages if an offer of amends has been made. The parties could agree the form of arbitration but if there was no agreement the judge could order it to be done by a judge alone as a preliminary issue or by a libel silk with two lay assessors to reflect a wider divergence of opinion on the reading of an article in a borderline case.
The impact of conditional fee agreements on press freedom.
21. Conditional Fee Agreements (CFAs) or "no-win, no-fee" agreements were brought in as an alternative to civil legal aid and to make justice accessible to the less well off. However, CFAs allow solicitors and barristers operating under them to double their fees if they are successful (the uplift or success fee) and reclaim what may be a huge insurance premium (ATE cover), even though it will never have been paid, from a losing defendant. If the claimant does not have insurance and is impecunious, a media defendant is in a "no win" situation. It will have to pay a huge amount to defend the action but with no hope of recovering its costs even if it wins the case; if it loses, it will not only have to pay its own lawyers but also damages and on top of that the claimants lawyers' fees with what may be a 100% uplift and what could be a huge insurance premium. As Lord Justice Brooke said in Adam Musa King v Telegraph Group Limited  EWCA (Civ) 613, paragraph 90,
"It is not at all clear whether Parliament ever turned its mind to the consequences of defamation actions being conducted under a CFA without any ATE cover, or to the ECHR considerations that were of such concern to Eady J and Gray J...."
22. In Callery v Gray (Nos 1 and 2) [ Lord Bingham had already recognised that this new funding regime "was obviously open to abuse in a number of ways". He listed "excessive base costs" of claimant lawyers and "uplifts" bearing no relation to the risk in taking on an action. In Campbell v MGN Ltd 2005, Lord Hoffmann identified a further abuse which he referred to as the "blackmail effect" of CFAs in publication proceedings. Lord Justice Brooke neatly identified the inequity of CFAs in publication proceedings as follows: "it cannot be just to submit a defendant in these cases, where their right to freedom of expression is at stake, to a costs regime where the costs they will have to pay if they lose are neither reasonable nor proportionate and they have no reasonable prospect of recovering their reasonable and proportionate costs if they win".
23. The Government now appears to be waking up to the enormity of CFAs in publication proceedings and how the "blackmail effect" of CFAs can act as an incentive to buy out of proceedings for commercial reasons to avoid a massive financial penalty if an action is lost. This is having a profound effect in free speech cases and any genuine quest for the truth. It is therefore only a matter of time before a small publishing company is put out of business because it has had a huge costs order made against it in a marginal case but the claimant's solicitors are on a CFA and are entitled to claim a 100% uplift on base hourly costs of anything up to £550 per hour. [In Campbell v MGN Ltd, Ms. Campbell sued MGN for breach of confidence and was awarded £3,500 damages and her costs of £1,086,295.47. She had entered into a CFA for the purpose of her appeal to the House of Lords. The costs of that two day appeal to the House of Lords were £594,470 including a success fee of £279,981.35.]
24. In 1990 the Government had to introduce legislation to give the Court of Appeal the power to reduce massive jury awards in libel actions following the £1.5m award of damages in the case of Lord Aldington v Tolstoy Miloslavsky. It is now up to the Government to rectify the disproportionate and unreasonable costs that can be run up by claimant lawyers in CFA driven cases, particularly where the claimant is a wealthy celebrity without any need to go onto a CFA or claimant solicitors have "cherry picked" cases which are "sure fire winners" and involve no risk, simply so that they can double their own costs with a 100% uplift or "success fee".
25. Late last year, the Master of the Rolls announced a "fundamental review of the rules and principles governing the costs of civil litigation and to make recommendations in order to promote access to justice at proportionate cost". This review under Lord Justice Rupert Jackson will obviously include a major review of CFAs and how they are impacting on various areas of the law. While they may have worked reasonably well in Road Traffic Accident cases which revolve around insurance claims and also in many personal injury cases, they have undoubtedly had a disastrous effect in publication proceedings and caused costs awards which are wholly disproportionate to the damages awarded. While CFAs will remain an integral part of the current costs regime, we believe that they need fundamental reform in the area of publication proceedings. News International will be putting the following reforms to Lord Justice Rupert Jackson's committee:-
(i) All costs in publication proceedings must be "reasonable and proportionate" in order for them to be recoverable. This means the abolition of Costs Practice Direction 11.9 which specifically allows them to be unreasonable when any "uplift" (allowed by a CFA) is added to the base hourly rate of a specialist lawyer in this field, which might be as high as £550 per hour thus generating an hourly rate of £1,100 per hour.
(ii) In all publication proceedings, where there is an estimate in the Case Allocation Questionnaire that the case is likely to involve legal costs of over £50,000 or £100,000 there should be an automatic referral of the case to a judge for the judge to call for detailed cost estimates so that he can impose a "cost cap" or a "costs budget" i.e. a maximum sum recoverable by one side or the other or maximum amounts recoverable for different stages of the litigation. This would not prevent a party spending as much as it wanted in fighting a case but simply restrict it to what it can reasonably and proportionately recover from the other side.
(iii) There should be no "uplift" or right to claim an ATE insurance premium ("additional liability") from a defendant before the defendant has had a reasonable opportunity to make an offer of amends under s. 2 of the Defamation Act 1996. In privacy or confidence cases where there is no right to make an offer of amends, no uplift or ATE premium should be allowed until the Defendant has either served a defence or made it quite clear that the claim is rejected.
(iv) Judges should be given wide discretionary powers to refuse any uplift or ATE premium where there was prima facie evidence that the claimant did not need to enter into a CFA in order to obtain justice.
(v) Just as claimants may have to pay their own solicitors out of the damages they recover in employment cases so too in publication proceedings should a judge have the power to make claimants pay part of their own costs out of any damages awarded where either the client has not exercised sufficient cost control over his own lawyers or it would be fair an equitable for the claimant to have to pay some of his own costs from the damages awarded.
(vi) The Costs Council should set out base hourly rates for specialist lawyers in publication proceedings. Those base rates would be taken as the normal rates and it would be up to the parties to show why the rates should be exceeded.
The observance and enforcement of contempt of court laws with respect to press reporting of investigations and trials, particularly given the expansion of the Internet.
26. The expansion of the internet and electronic newspaper websites with substantial volumes of archival material on them will inevitably radically affect the law of contempt. This is particularly the case where a simple online search under a key word can bring huge amounts of electronic information to the attention of someone who might be a juror.
27. The media would not dispute that IF this material were "displayed" on the face of the newspaper website as available and contemporaneous material, it would be the sort of material that could, in many cases constitute a serious contempt in that it could give rise to a substantial risk of serious prejudice to someone's trial. However, the prejudicial material will lie passively in the newspaper's electronic archive until it is accessed which needs a positive act by a third party. The way therefore to deal with this problem is for the Judge to give instructions to the jury to stay away from the internet in general and from newspaper websites in particular.
28. Indeed, this is not an uncommon problem. The solution adopted in Queensland and New South Wales, Australia, has been to make it an offence for jurors to conduct investigations about the defendant including by means of the Internet. In New South Wales, it is also an offence for jurors to conduct their own investigations with respect to the trial. While there may be no certain mechanism to ensure that jurors obey the judge's instruction not to conduct investigations on the Internet or otherwise, directions along the lines of those suggested are likely to substantially if not completely reduce the risk of such conduct.
29. It is well known and has been commented upon by judges (for example in Ex parte Telegraph  1 WLR 987) that "... a court should credit the jury with the will and ability to abide by the judge's direction to decide the case only on the evidence before them"). Research suggests that jurors are impressed with the solemnity of their task and endeavour to abide by the judge's directions. It is reasonable to assume that most jurors would not engage in conduct which they have been expressly told by the Judge they must not do.
30. In September 2001, Lord Osborne delivered an opinion in the High Court of Judiciary in the case of William BEGGS. He was being prosecuted for murder and assault. An attempt was made to commit various newspapers for contempt on the basis that their online archives contained accessible material which was seriously prejudicial to the accused. After hearing argument, the judge ruled inter alia that there was no contravention of the strict liability rule because the test in section 2(2) was not breached. He found that "...the availability of the material as part of an archive, as opposed to part of a current publication, renders it less likely that it may come to the attention of a juror than would be the case if it formed part of a contemporaneous publication" (para 24 of the Opinion).
31. Further, in December 2002, the Law Commission published its Scoping Study No.2 which was primarily concerned with defamation and the internet. In a self-contained section of the study (Part Five), the Commission dealt briefly with the decision in BEGGS and the significance for online publishers. The Commission concluded that this was not a priority for law reform and that the risks to publishers were overstated. It did not deal in any detail with the construction of section 2 of the 1981 Contempt of Court Act, but, crucially, it did "accept that it is not practically possible to monitor all criminal trials in the country and subsequently to remove from internet archives any potentially prejudicial material" (para 5.25). The Commission added that it "is clear that jurors cannot be prevented from using the internet to search for detrimental material on criminal defendants" (para 5-26). It felt that "much of the prejudicial effect of such material" could be removed by an appropriate judicial direction to try the case on the evidence.
32. Research is surely necessary in this area. Currently, proper academic research about a jury room deliberation is precluded by s. 8 of the Contempt of Court Act (1981). This needs to be amended to allow proper and detailed research as to what in practice is prejudicial to juries.
33. The reality, which courts and the legislators have eventually to recognise, is that in cases where the defendant (or a witness) have matters in their past which have been widely publicised there is nothing which can be done (short of incarcerating the jury for the whole trial) to prevent electronically inquisitive jury members discovering that material. The available publication "pool" from which information can be fished out goes far beyond UK newspapers and broadcasters.
The balance between press freedom and personal privacy.
34. News International believes that successive High Court privacy case judgments, culminating in the recent Max Mosley judgment, are creating precedents that undermine the freedom of the press and are diverging from public policy determined by Parliament.
35. The Human Rights Act requires that a fair balance be struck between European Convention Article 8 (Privacy) and Article 10 (Freedom of Expression) and that the right of free speech should only be interfered with where there is a "pressing social need". However, in just a few years, UK privacy case law has skewed that balance so far in favour of Article 8 that, post-Mosley, morality no longer has any place in the Court's decision-making.
36. As Mr. Justice Eady decreed in his judgment on the Max Mosley case: "It is not for journalists to undermine human rights, or for judges to refuse to enforce them, merely on grounds of taste or moral disapproval". This means that commonly held moral values no longer weigh in favour of free speech and publication. Consequently, determining what is in the public interest or is a "higher priority" to the protection of someone's reputation or privacy is extremely difficult to discern and is far too dependent on the subjective views of a High Court judge.
37. News International believes that the public has a right to expect fit and proper standards of behaviour, both professionally and privately, from those in public life, whether through election or otherwise. The public has a right to know when the behaviour of public figures, particularly those elected to office, is hypocritical or is such that it is likely to bring disrepute on the organisations or people they represent. Public accountability is an essential part of that process.
38. The law being applied by Mr. Justice Eady has never been debated in the UK parliament and a draconian privacy regime is being introduced by the back door by one person. This is a thoroughly unsatisfactory state of affairs.
39. The law in this area should be developed in line with public policy determined by Parliament but this is not happening. Last year, s. 78 of the Criminal Justice and Immigration Act 2007 brought some degree of consistency to the "public interest" defence for media defendants in civil and criminal actions brought under the Data Protection Act 1998 for misuse of personal information - an area of law which is analogous and closely related to the law of privacy. Parliament accepted, after specialist advice from Antony White QC, a leading silk on privacy and Data Protection, that the "public interest" defences under sections 32 and 55 of the DPA should be brought into line so that any media defendant which "reasonably believed that it was acting in the public interest" should have an absolute defence. This statute based objective test as to what is in the public interest is not however being followed by the judges where the defence only works if the media defendant actually proves to the satisfaction of the judge that what was published "was in the public interest" - a much more subjective test wholly reliant on the particular views of an individual judge. Proving that the media defendant had a "reasonable belief" that it was in the public interest is therefore a much more objective test and is much more easily evaluated prior to publication.
40. News International therefore believes that the Government should look for a suitable opportunity to introduce an amendment that would bring judge-made law in this area into line with public policy. We enclose a copy of the latest opinion we have from Antony White QC making out this case (Appendix 2).
41. Until some uniformity is brought to this area of law and there is some degree of legal certainty over a "public interest" defence for the media in Article 10 cases, English judges will continue to apply the law in individual cases here in a subjective way with one eye on the latest cases coming out of the European Court of Human Rights in Strasbourg. Unfortunately the ECtHR cases are fact specific with the Princess Caroline of Monaco case skewing the law heavily in favour of privacy rights while earlier judgments had favoured the right of free speech except where there was a pressing social need.
42. News International believes it cannot be right that a principle so fundamental to the healthy functioning of a democratic society is left to be interpreted by one person. The right of privacy must be carefully circumscribed so that where appropriate a "higher priority" or what is "reasonably" believed to be in the public interest provides a sensible defence.
43. If this does not happen, investigative journalism will be the victim of a law which will fundamentally undermine the Fourth Estate and the vital role it plays in a healthy democracy. We will end up with a judge-made law which is heavily reliant on judicial hindsight "to protect the legal but immoral behaviour of the better classes behind closed doors" as one American law professor has put it.
44. A society that allows its media to lose the right, even by default, to investigate and report on the doings of those in power is a society on the slide to censorship and secrecy.
Press self-regulation and financial penalties
45. The current system of self-regulation administered by the Press Complaints Commission delivers a service which is fast and costs the complainant nothing. Its procedures and rulings, and the Code to which it works, are all set out in non-technical language. No expert knowledge is required in order to make a complaint. With its emphasis on resolution, the PCC succeeds in dealing with the majority of complaints rapidly and to the satisfaction of the complainant. Further, Editors hate having to publish adverse findings of the PCC so there is a strong incentive on the part of a newspaper to try to resolve matters prior to a complaint going to adjudication.
46. Over recent years the PCC has been increasingly pro-active in warning newspapers about what might constitute a breach of the Code of Practice. The PCC sends out regular warnings to the Press when it receives letters or emails from members of the public or their solicitors asking for the press or the paparazzi to desist from approaching them or trying to take photographs. High profile celebrities like Kate Middleton, and other less well known members of the public like the victims and daughters of the man who was convicted of rape in Sheffield last November, have taken advantage of the system and the press have been advised by the PCC not to approach the person or persons further without it giving rise to a harassment complaint.
47. These are the positive benefits of the current system, which has evolved over the last fifteen years. If it were to be "toughened" in order to make it "more attractive to those seeking redress", we can only imagine that this would mean the introduction of financial penalties.
48. But as has been argued before, and as the Culture, Media and Sport Select Committee accepted in the conclusions to its last inquiry into this area, the introduction of financial penalties would "risk changing the nature of the organisation and might need statutory backing to make the power enforceable".
49. Once financial penalties are introduced, the system will inevitably become more legalistic and have to be compliant with legal principles.
50. Currently, the only serious overlap between the PCC Code of Practice and the law is Clause 3 of the Code of Practice which concerns "Privacy". In the past and while there was no enforceable law of privacy, the PCC was the only means of redress. Sara Cox, the DJ, is perhaps the best known PCC complainant who, having complained to the PCC in 2001 and through it having negotiated a favourable apology from the People newspaper for publishing photographs of her naked on honeymoon, then instructed her lawyers to sue Mirror Group Newspapers for breach of privacy and financial compensation. What is interesting about that case was that within a week the People agreed to publish an apology to her but it took up to two years for the lawyers to agree the damages of £50,000 in a final out of court settlement.
51. A body that was able to impose fines would bear little resemblance to today's PCC. Its work would be slowed down by the involvement of lawyers on all sides and it would find that newspapers would be less likely to admit mistakes and offer ways of resolving complaints.
52. We believe this would be to the detriment of the vast majority of complainants. We believe that the PCC and its complaints procedure work well.