Memorandum submitted by Trinity Mirror Plc

 

Introduction

1. This submission is made on behalf of Trinity Plc.

2. As requested we are including an executive summary of our submission.

Executive Summary

1. We support the self-regulatory regime which governs the press.

2. UK libel laws, which are widely recognised as being the most oppressive in the developed world, have a direct and constant restrictive effect on press reporting.

3. The excessive legal costs which have been the hallmark of Conditional Fee Agreements (CFAs) have had - and continue to have - a negative effect on press freedom.

4. The CFA system, designed to provide access to justice, has been exploited for the benefit of specialist London lawyers who act for rich people (who already had access to justice).

5. CFAs should remain but to ensure that the costs of resolving disputes are reasonable and proportionate mandatory prospective cost capping should be introduced in all cases involving Article 10 of the European Convention of Human Rights (ECHR) and success fees should not be recoverable from losing defendants.

6. The Contempt of Court Act 1981 (CCA) is observed by newspapers. However the CCA, and the principles underlying it, need to be re-examined in light of the expansion of the internet. Research should be conducted into the effect (if any) of pre-trial publicity on juries.

7. In the last few years the courts have become extremely keen on pushing the right to privacy as against press freedom. The judiciary express support for the principle of press freedom but increasingly the reality is that they wish only to support the freedom of expression which they approve of.

8. There is no role for financial penalties for libel or invasion of privacy being exemplary rather than compensatory. Any restriction on Article 10 of the ECHR must be no more than that which is necessary and proportionate on the facts of each case. Exemplary damages, with their stress on punishment, do not pass this test which is why they are not available in a claim for infringement of privacy and should not be available in a libel action.

9. The Committee should examine the problems with, and impact upon, press freedom of after the event insurance (ATE) - the cost of which is excessive and contrary to Article 10 of the ECHR.

A. The self-regulatory regime

1. We support the stance of both the Committee and the government that self-regulation of the press should be maintained. As the Committee concluded only 18 months ago, in July 2007, "statutory regulation of the press is a hallmark of authoritarianism and risks undermining democracy"; a view the government endorsed when they said, in October 2007, that "there is no case for statutory regulation".

2. We support the work undertaken by the Press Complaints Commission (PCC) and abide by its Code of Practice and its adjudications. Adherence to its Code of Practice is, and has been for some time, part of the employment contracts of journalists who work for Trinity Mirror Plc.

3. The self-regulatory regime will always exist alongside (as opposed to instead of) the law but we would welcome the Committee's support for more people using self-regulation rather than the Courts given the huge cost factors (addressed elsewhere in this submission) associated with the courts. We also believe that it would benefit society if there were more use of (the free) system of self-regulation, rather than the courts.

B. The interaction between the operation and effect of UK libel laws and press reporting

4. UK libel laws are widely recognised as being amongst the most oppressive in the developed world and have a direct and constant affect on press reporting. The balance between freedom of expression and the right to reputation has swung too far against the public's right to know. A recent UN report, by the Human Rights Committee, stated that the Committee thought that this country's application of the law of libel "has served to discourage critical media reporting on matters of serious public interest, adversely affecting the ability of journalists and scholars to publish their work"[1].

5. It is no surprise that potential claimants regard London as one of the most advantageous jurisdictions in which to sue and why it is regarded as the home of so called "libel tourism". Our procedures and practices are so out of step with other countries that American states are now passing laws to prevent the enforcement of libel judgments of this country.

6. The costs of libel proceedings, which are addressed elsewhere in this paper, constitute a chilling effect on freedom of expression, which is to the detriment of our democracy. Whilst the offer of amends procedure introduced by the Defamation Act 1996 has been successful and widely used the risks associated with defending published material in terms of costs and the likelihood of success are becoming increasingly formidable. Indeed, for smaller publishers the risks are now such that the instinct when receiving a complaint is simply to 'pay up and get out'. In this connection the Committee is referred to the final sentence of paragraph 10 below and the comment by Mr Justice Eady from 2005.

7. We refer below to the myth about the defamation and privacy cases being difficult for claimants and how the truth is significantly different. The vast majority of libel actions are won by claimants. This is a further factor affecting a publisher's willingness to stand behind the material they have published. We believe the time has come for a review to the right to trial by jury provided for by section 69 of the Supreme Court Act 1981.

8. We also believe, given the chilling effect on press reporting, that urgent consideration should be given to making changes to libel procedure. For example, we would suggest that there is a case for moving towards a stronger public figure defence as in the USA, that corporations should be prevented from bringing defamation actions unless they can prove quantifiable damage, that there should be a single publication rule with a view to preserving the maintenance of historical archives without fear of legal proceedings, and that the Committee should endorse complaints being resolved, if possible, by compulsory mediation/arbitration as opposed to through the Courts.

C. The impact of conditional fee agreements on press freedom

9. The system of CFAs that currently operates in this country, with success fees and ATE premiums being recovered from defendants, has had - and continues to have - a severe effect on press freedom. The system has had a chilling effect on what is published and after publication continues to have a chilling and ransom effect as particularly in these economic times defendants are being forced to resolve complaints about material because of the huge potential costs of fighting a case through to trial.

10. As Caroline Kean of the law firm Wiggins said in 2008 "there is no doubt that the use of CFAs is having a chilling effect on the media .... With the burden of proof effectively resting on the defendant, they are forced to enter into settlement negotiations in some cases before they have necessarily had a chance to test the claim, if they are to contain the costs that the claimant's solicitors will seek to recover from being totally out of all proportion to the value of the claim". This mirrors an observation made by Mr Justice Eady in 2005 when he said "... there must be a significant temptation for media defendants to pay up something, to be rid of litigation for purely commercial reasons and without regard to the true merits of any pleaded defence. This is the so-called "chilling effect" or "ransom factor" inherent in the conditional fee system ..." (emphasis added).[2]

11. Although the problems of excessive base costs for defamation - and now privacy - cases (which can be up to 500 per hour and above) have been recognised[3] there has been unwillingness in the court system to tackle them. That is why one of our suggestions - see paragraph 23 below - is that prospective cost capping should be made mandatory in all Article 10 cases.

12. The potential problems inherent in the system of CFAs were identified, as long ago as 2002, by Lord Bingham of Cornhill who said that the new funding regime was "obviously open to abuse". He identified 3 possible abuses and said:

"One possible abuse was that lawyers would be willing to act for claimants on a conditional fee basis but would charge excessive fees for their basic costs, knowing that their own client would not have to pay them and that the burden would in all probability fall on the defendant or his liability insurers. With this expectation the claimant's lawyers would have no incentive to moderate their charges. Another possible abuse was that lawyers would be willing to act for claimants on a conditional fee basis but would contract for a success uplift grossly disproportionate to any fair assessment of the risks of failure in the litigation, again knowing that the burden of paying this uplifted fee would never fall on their client but would be borne by the defendant or his insurers".[4]

13. Trinity Mirror has consistently since 2003 drawn the attention of the Government and, in addition the Constitutional Affairs Committee in 2005 when it conducted an inquiry into the "compensation culture"[5], to the problems of CFAs and their impact on press freedom which come on top of the problem of excessive base costs.

14. Over the last few years a well meaning system - which was intended to bring access to justice to those who didn't have it - has been seized upon and exploited by lawyers, and very often in our experience it has been the lawyers for the rich (who already had access to justice). Why have those lawyers seized upon it? There are two principal reasons and a subsidiary one. Firstly because they can make more money, because they can recover not only their (already high) base charges but also a success fee of anything up to 100% of their base charges; and, secondly, because they can use the system (including ATE) to exert economic pressure on defendants - the so called ransom effect - to settle cases quickly because, as we have referred to above, of the fear of costs being out of all proportion to the value of the claim. The subsidiary reason is that because no steps have been taken to restrict CFAs to those who could not have access to justice without them (in comparison to civil and now, in certain respects, criminal legal aid which have been so restricted) they have been used by rich people. Naomi Campbell, Roman Polanski, Sharon Stone, Cherie Blair and Ashley Cole are 5 examples of rich people who have used CFAs in claims against the media.

15. It is very important that the Committee recognises and appreciates what the success fee (or uplift) is supposed to do and what the effect of it being recovered from the defendant means. The success fee is to "compensate solicitors for the risk of failing to recover any fee at all"[6].

16. The success fee/uplift is case specific and should not (emphasis added), as the above wording implicitly recognises, be set by reference to other factors outside the case in hand. There is therefore no question that a success fee should be fixed by reference to a previous (perhaps losing) case. Nor should it be fixed by any reference to a standard arrangement which a firm of solicitors may have with a provider of ATE insurance or with a set of standard success fees which that firm applies to all cases, irrespective of their individual merits.

17. The reality is that the vast majority of cases against the media are won by claimants and therefore the "risk of failing to recover any fee at all" is minute. It is a myth, widely promulgated and therefore believed, that defamation and privacy cases are difficult for claimants which is used as a justification for very high base costs and thereafter excessive success fees. The reality is very different as the vast majority of 'media cases' are 'won' - in the sense of the lawyers recovering their fees - by claimants.

18. It is, unfortunately, due to the unwillingness of the main claimant firms of solicitors impossible to obtain accurate statistics about how many CFA cases are won and lost, although Atkins boasts that they have never lost a CFA case[7]. Carter-Ruck have - on their website[8] and in a letter to the Times[9] - previously boasted about how many CFA claims they have successfully handled but, in recent times, and with we believe an increased desire to avoid scrutiny of how many actions they have won and lost, ceased to publicise such information. We suspect that they have a success rate of 97/98% which would suggest that any success fee should be miniscule[10]. The reality is, however, that that firm has standard success fees which rise to 100%. (The Committee is asked to refer to the second abuse (grossly disproportionate success uplifts) identified by Lord Bingham in paragraph 12 above.) We would like to suggest that the Committee use its powers to request evidence from the main claimant firms (Carter-Ruck, Schillings and David Price & Co) of their numbers of CFA wins and losses.

19. The current CFA system also has the perverse result that the better the defendant's Article 10 case (e.g. see the Naomi Campbell/Daily Mirror case, where the Law Lords split 3:2 against the Daily Mirror) the greater the financial penalty - and therefore infringement with their Article 10 rights - which has to be borne by the defendant. The only beneficiaries of this are the lawyers for Ms Campbell who have had a huge financial windfall and yet are under no obligation whatsoever, as a consequence of their receipt of huge success fees, to provide access to justice to someone who deserves it. Ms Campbell's leading solicitor recovered a fee in the House of Lords - including the success fee, but excluding VAT - of over 730 per hour.

20. Another failing of the current system is that the amount of the success fee is assessed at the time when the CFA is entered into (which is at a time of the claimant solicitor's choosing). Thereafter the amount of the success fee applies throughout the proceedings[11], and to all parts of it, even if the risk of the lawyers 'failing to recover any fee at all' (see paragraph 15 above) has reduced to nil.

21. The fact that the success fee is recovered from the defendant means that the amount of it is added on top of a figure for the base costs which is regarded as 'reasonable and proportionate'. This means that by its very nature the total figure for costs, including the success fee, is at a level which is no longer proportionate i.e. it becomes disproportionate. This is, we would submit, clearly incompatible with Article 10 but yet the rules permit this to happen - with the persistent recovery of costs at a level which is disproportionate.[12] As such it is at odds with the Ministry of Justice's stated aim which is that it is "committed to ensuring that the cost of resolving disputes is proportionate and reasonable"[13]

22. It is, in our submission, impossible to consider the impact of CFAs on press freedom without also, at the same time, looking at the issue of after the event insurance (ATE) which is why we have included a separate section on that issue (see H below).

23. In order that the impact of CFAs on press freedom is limited to being no more than is necessary in order to achieve access to justice we would submit that the following changes should be brought about with immediate effect -

a. Changes should be made to prevent the recovery of success fees from losing defendants in cases concerning Article 10 of the ECHR. This would leave CFAs in place, thereby providing access to justice, but prevent the recovery of excessive and disproportionate legal costs which have had such a detrimental effect on press freedom in recent years.

b. Prospective cost capping should be made mandatory in all Article 10 cases so that there is a proactive approach to ensuring that legal costs are reasonable and proportionate; which is the Ministry of Justice's stated aim (see paragraph 21 above).

c. Lawyers should only be permitted to seek the recovery of legal costs which they certify are both "reasonable" and "proportionate". At the moment the costs system expressly permits costs to be recovered at a level which is disproportionate[14], which is incompatible with Article 10 of the ECHR, and there is nothing to prevent lawyers doing this.

D. The observing and enforcement of contempt of court laws with respect to press reporting of investigations and trials, particularly given the expansion of the Internet

24. Newspapers and their websites observe the laws of contempt, principally the strict liability test under the Contempt of Court Act (CCA) 1981. The very small number of prosecutions for breaches of that Act are a testament to how the mainstream media in this country obeys and respects the contempt of court laws.

25. The judiciary, at a higher level, are very clear that the jurors are robust and capable of handling information, including considering cases solely on their merit with an analysis of the information which is placed before them in a trial.

26. The CCA is now almost 30 years old and was passed long before the arrival of the internet. The growth of the internet and people's access to information in this country, which is generated from all around the world, and which cannot be controlled by either Parliament or the Courts in this country, is something that Parliament needs to consider. We would suggest that the time is right for a review of the CCA not least because of the fact that there is now so much access to information from so many different sources. If such a review is undertaken we suggest that it is important for research to be carried out into the effect (if any) of pre-trial publicity on juries. At the moment, section 8 of the CCA prevents such research being carried out. That prohibition, particularly in the context of furthering the development of policy in this area, is clearly something that should be urgently examined.

E. What effect the European Convention on Human Rights has had on the courts' views on the right to privacy as against press freedom

27. Please see under section G below.

F. Whether financial penalties for libel or invasion of privacy, applied either by the courts or by a self-regulatory body, might be exemplary rather than compensatory

28. There is no role for damages or financial penalties (for either libel or invasion of privacy) being exemplary rather than compensatory.

29. Article 10 of the ECHR has been repeatedly referred to as "one of the essential foundations of a democratic society".[15] Any restrictions on the rights provided by Article 10 must be narrowly construed, "convincingly established", and must be no more than that which is necessary and proportionate[16]. When considering restrictions the courts must take into account the public interest in the free press and the potential "chilling effect" of restrictions.

30. Mr Justice Eady has ruled that:

"Exemplary damages are not admissible in a claim for infringement of privacy, since there is no existing authority (whether statutory or at common law) to justify such an extension and, indeed, it would fail the test of necessity and proportionality".[17]

31. As regards libel, the Neill Committee recommended, as long ago as 1991, the abolition of exemplary damages in the field of defamation and whilst the Court of Appeal in 1995[18] awarded a sum in exemplary damages there remain, we would suggest, serious question marks as to whether an award of exemplary damages should be made in a libel case. Indeed it is difficult to see the logic behind the court being of the view that they are not available in a privacy action but that they are still available in a defamation action.

32. Our submission is that there is no role for exemplary damages in respect of either cause of action. Nor do we believe that it would be appropriate for the PCC to have the power to award financial penalties, whether compensatory or exemplary.

G. Whether, in the light of recent court rulings, the balance between press freedom and personal privacy is the right one

33. There has been a gradual, and recently an increasingly more rapid, development by the courts of greater protection for the right to privacy as against press freedom.

34. Initially, after the Human Rights Act 1998 (HRA) came into force in October 2000, the courts were watchful to not develop the right of privacy[19] or, to give it its correct name, the "right to respect for private and family life" provided for by Article 8 of the ECHR. In the initial judgments after the coming into force of the HRA the courts seemed to take account of the will of Parliament in passing section 12 of the HRA - with its stress on their being a mandatory requirement for the courts to have "particular regard to the importance of the Convention right to freedom of expression". The approach of the courts was exemplified by the decision of the Court of Appeal in A -v- B & C (the Garry Flitcroft case).[20]

35. Since that decision, in the spring of 2002, there has been, and particularly since the decision of the House of Lords in the Naomi Campbell case in May 2004[21], the development of the right to privacy at the expense of press freedom. The decision of the House of Lords in that case by the narrowest of margins (3:2) meant that momentum was given to the right to privacy and the decision of the Court of Appeal in the case of McKennitt -v- Ash[22] in December 2006 gave a further impetus to it. In obiter comments the Court of Appeal suggested that with regard to the right to privacy it mattered not whether the information was true or false. This has resulted in people now bringing or threatening privacy actions, whereas in the past they would have brought defamation actions on the basis that the information was untrue.

36. There has also been a slow and subtle overturning of the will of Parliament by the courts, with the result that the rights protected by Article 8 have grown in importance when compared with (and at the expense of) the rights protected by Article 10. Section 12(4) of the HRA provides that "the court must have particular regard to the importance of the Convention right to freedom of expression" when "considering whether to grant any relief which, if granted, might affect the exercise of the Convention right to freedom of expression". Initially, after the HRA came into force, the courts accepted the view that this meant that the right to freedom of expression was not equal to (but took precedence over) the right to privacy. (This was consistent with previous jurisprudence from the ECtHR.)

37. However those members of the judiciary who favour a right to privacy as against freedom of expression have, in our view, redefined the will of Parliament from the time of the passing of section 12 of the HRA[23] by a clever sleight of hand in saying that Parliament's will was that the courts must have particular regard to not freedom of expression but rather "the Convention right to freedom of expression" which, by virtue of the provisions of Article 10(2) of the ECHR, with its reference to "the protection of the rights and freedoms of others", means that they do not (and can not) have a particular regard to freedom of expression but rather they have to balance freedom of expression against the right to respect for private and family life - with neither Article (Article 8 or Article 10) having precedence.

38. The effect of this is that, increasingly, the rights protected by Article 8 are now given a more sympathetic - and arguably preferential treatment - than the rights protected by Article 10. The exception to this is if a publisher, such as a newspaper, can persuade the judge that material they have published, or wish to publish, is justified as being in the 'public interest'; wording which, incidentally, does not appear in Article 10. The practical reality over the last few years is that the Courts have been subtly but steadily raising the Article 10 hurdle for the media. That hurdle is now, contrary to the law[24], higher than the PCC's Code of Practice and, furthermore, does not adequately take account of the decisions of the PCC and the fact that the Code of Practice says that "there is a public interest in freedom of expression itself". We have travelled a long way since 1994 when Lord Justice Hoffmann, as he then was, said: "But a freedom which is restricted to what judges think to be responsible or in the public interest is no freedom. Freedom means the right to publish things which government and judges, however well motivated, think should not be published"[25]. The overall effect is that it is now easier to obtain protection for the rights covered by Article 8 and much harder for publishers such as newspapers to obtain protection for their - and the public's - right to freedom of expression under Article 10.

39. We would welcome the Committee's support, through amending legislation such as section 12 of the HRA, in redressing the balance between privacy and press freedom so that the decisions of the courts in the future correctly reflect the will of Parliament and strike the right balance between personal privacy and freedom of expression.

H. After the event insurance (ATE)

40. As we have stated above (in paragraph 22) it is impossible to consider the impact of CFAs on press freedom without also taking into account the way that ATE insurance is utilised.

41. We have referred above, in paragraph 12, to two of the possible abuses identified by Lord Bingham in 2002. Both of those abuses have occurred as has the third possible abuse identified by Lord Bingham. As he said, in 2002:

"A third possible abuse was that claimants, although able to obtain after the event insurance, would be able to do so only at an unreasonably high price, the after the event insurers having no incentive to moderate a premium which would be paid by the defendant or his insurers and which might be grossly disproportionate to the risk which the insurer was underwriting".[26]

42. ATE insurance is taken out, without any warning to the defendant, by a potential claimant. It is taken out as soon as the claimant instructs a solicitor and, in the case of the vast majority of firms, seemingly without any regard to whether the insurance will actually be required. For example, the case may settle without proceedings or the claimant may be aware that it is highly likely that an offer of amends will be made. In both these events the ATE insurance is unnecessary. The premiums for ATE insurance in Article 10 cases - which are never paid by the claimant - are at a level where no reasonable and rational individual would, if they were being asked to finance the premiums themselves, incur let alone pay them. As such ATE insurance costs are disproportionate and unreasonable, and the cost of the premium for ATE insurance is a further reason why (as explained above in paragraph 6) there is a temptation for some publications to simply 'pay up and get out' of a complaint.

43. The cost of ATE insurance for libel or defamation proceedings can amount to over 68,000 for 100,000 worth of cover. In contrast, the premium in Callery -v- Gray (a non-Article 10 case) was 350.

44. We would suggest that the Committee should carefully examine the operation of ATE insurance in the area of libel and privacy proceedings given the chilling and ransom effect on press freedom which has been created by a form of insurance which is excessively expensive and, even leaving aside the issue of the excessive premiums, has severe question marks over the extent to which it provides the defendant with sufficient insurance cover.

 

January 2009



[1] UN Human Rights Committee, 93rd session, 30 July 2008 CCPR/C/GBR/CO/6 - http://www.unhcr.org/refworld/category,COI,HRC,,GBR,48a9411a2,0.html

[2] Alin Turcu -v- News Group Newspapers Limited [2005] EWHC 799 (QB)
- http://www.5rb.co.uk/casereports/detail.asp?case=363

[3] Lord Chief Justice's evidence to the Constitutional Affairs Committee in 2005 - http://www.parliament.the-stationery-office.co.uk/pa/cm200506/cmselect/cmconst/754/5120603.htm (Q25)

[4] Callery -v- Gray (Nos 1 and 2) [2002] UKHL 28 - http://www.publications.parliament.uk/pa/ld200102/ldjudgmt/jd020627/call-1.htm

[5] Trinity Mirror's evidence - http://www.parliament.the-stationery-office.co.uk/pa/cm200506/cmselect/cmconst/754/754i.pdf

[6] C -v- W [2008] EWCA Civ 1459 at [8]

[7] http://www.atkinssolicitors.com/how/fees.htm

[8] http://www.carter-ruck.com/Newsletters/200302-cfa.html

[9]http://business.timesonline.co.uk/tol/business/law/public_law/article510895.ece?token=null&offset=12&page=2

[10] In October 2007 I told Carter-Ruck that I thought for every 100 cases they won 97/98 and lost 2/3. If I was wrong I invited them to tell me and to tell me what the current figures were. They declined to deal with the issue claiming confidentiality. This was despite their disclosures on their website and to the Times.

[11] KU -v- Liverpool City Council [2005] EWCA Civ 475

[12] CPD 11.9

[13] Consultation Paper "Conditional Fee Agreements in Publication Proceedings - Success Fees and After the Event Insurance" - http://www.justice.gov.uk/docs/cp1607.pdf

[14] CPD 11.9

[15] Handyside -v- UK (1979) 1 EHRR 737

[16] The Observer and the Guardian -v- UK (1991) 14 EHRR 153

[17] Max Mosley-v-News Group Newspapers Limited [2008] EWHC 687 (QB) - http://www.5rb.co.uk/search.asp?q=mosley&submit1=Search

[18] Elton John -v- MGN Limited [1997] QB 586 CA- http://mavrkydefamationcaselaw.blogspot.com/2007/01/john-v-mgn-ltd.html

[19] "This claim fails, as there is no tort of privacy" L J Mummery in Wainwright -v- The Home Office [2001] EWCA Civ 2081

[20] A -v- B & C [2002] EWCA Cov 337 (the Garry Flitcroft case) - http://www.5rb.co.uk/casereports/detail.asp?case=403

[21] Naomi Campbell -v- MGN Limited [2004] UKHL 22 - http://www.publications.parliament.uk/pa/ld200304/ldjudgmt/jd040506/campbe-1.htm

[22] McKennitt -v- Ash [2006] EWCA Civ 1714- http://www.5rb.co.uk/casereports/detail.asp?case=558

[23] In the House of Lords, during the passage of the Human Rights Bill, the Lord Chancellor said (more than once) on 24 November 1997: "It will be a better law [the Human Rights Act] if the judges develop it after incorporation because they will have regard to Articles 8 and 10, giving Article 10 its due high value ... that it enjoys"

[24] Section 12(4) of the HRA provides that whenever the Court is considering "whether to grant any relief (emphasis added) which... might affect the exercise of the Convention right to freedom of expression" the court "must have particular regard... to [under (4)(b)] any relevant privacy code"; the PCC Code of Practice being a 'relevant privacy code'.

[25] R -v- Central Independent Television PLC (1994) Fam 192

[26] Callery -v- Gray (Nos 1 and 2) [2002] UKHL 28- http://www.publications.parliament.uk/pa/ld200102/ldjudgmt/jd020627/call-1.htm