Memorandum submitted by Farrer & Co LLP

 

 

Press standards, privacy and libel

 

1. Farrer & Co LLP

 

1.1 Farrer & Co LLP acts for a wide range of publishers, broadcasters and other media clients in defending and responding to claims in libel and privacy. Such clients include national newspaper and magazine publishers as well as business to business titles and regional newspaper groups. We also act for private individuals, institutions and corporate claimants. We have, therefore, considerable experience built up over the past 20 years in advising claimants and defendants and their insurers in libel and privacy litigation in England and Wales.

 

1.2 The views expressed in this paper are general observations based on our experience in this area of the law. We are not instructed by any particular client to submit views and the following response is provided so as to assist the Committee by way of observation only.

 

2. The Inquiry Questions

 

2.1 The McCann Case

 

No doubt those acting for the McCanns; the PCC and other news organisations will express a view. In the statement read in open Court at the settlement of the McCanns' libel claim against Express Newspapers, the newspaper's in-house lawyer told the Court that Express Newspapers regretted publishing the allegations against the McCanns and that the newspaper group had agreed "to make a substantial contribution to the Madeline Fund, which [we] hope will assist in continuing the search for her". In response, the McCanns' solicitor said that their "object in bringing these proceedings has been achieved".

 

The decision to sue for libel rather than to engage with the PCC, if that were the case, by the McCanns allowed them to seek a financial remedy and, ultimately, to secure a negotiated settlement which included the payment of damages to the Madeline Fund. Such a decision does not, of itself, suggest any fault or deficiency in the alternative route open to complainants to bring their complaint to the PCC.

 

2.2 Conditional Fee Agreements and Press Freedom

 

We would refer the Committee to the submissions made by Farrer & Co in response to the Government's consultation paper (CP 16/07) (copy attached).

 

The Ministry of Justice published its summary of responses in July 2008 and indicated that a further feasibility study had been commissioned and pending the results of further investigation, the Department would not be implementing any scheme of fixed recoverable success fees and capped recoverability on ATE premiums. Further developments, in this area, are eagerly awaited by defendant media publishers whose concern, as recognised by the House of Lords in the CFA claim brought by the model, Naomi Campbell, against the newspaper publisher MGN Limited, is that a legislative solution was required to cure the "blackmailing effect" of CFA litigation in publication cases.

 

An ongoing concern for media libel defendants is the insurance market and the costs claimed for the premiums for "After the Event" insurance cover. We have encountered CFA cases involving the Claimant taking out an ATE policy and subsequently taking out "top-up" cover as the case progresses. The apparent cost of the premium (potentially recoverable from the Defendant if the Claimant wins) of such "top-up" cover is 50% of the expected costs of the Defendant (less any existing cover). For example, if there is existing ATE cover of 100,000 and the Defendant anticipates its costs to trial will amount to 400,000, the likely premium for "top-up" ATE cover taken out by the CFA Claimant could be as much as 50% of 300,000, amounting to a premium of 150,000. There is also the spectre of the top-up policy containing a self-insuring clause for the top-up premium itself which would add a further percentage to the costs of the premium all of which is potentially recoverable from the Defendant if the claim is successful. By way of example, in a large-scale libel action, the costs may amount to:

 

Defendant's costs

400,000

 

Claimant's base costs

500,000

 

Claimant's CFA uplift at 100%

500,000

 

Claimant's ATE cover for 100,000 of Defendant's costs (estimate)

 

15,000 initial premium

Claimant's ATE "top-up cover" to cover the balance of the Defendant's costs (50% of that balance)

150,000 premium plus

insurer's costs (27.5%) 41,250

plus tax (5%) 9,562

Total: 200,812.00

 

Self-insurance cost of the top-up premium (50% of the original top-up premium)

 

100,406.00 premium

 

In the above example, the costs risk to the Defendant, if the Claimant wins at trial is to pay the Claimant's costs plus uplift (1million) plus its own costs (400,000). In addition, the ATE insurance and top-up ATE insurance is a further potential cost to be paid by the Defendant if the claim succeeds at trial or if the Defendant settles the claim earlier with payment of the Claimant's costs once the premiums have been incurred. On these figures, the insurance cost element alone amounts to a potential payment by the Defendant of 316,218.00.

 

It is not clear whether or not CFA claimants in fact have to pay such ATE premiums for their insurance cover up-front. Nevertheless, the prospect of the Defendant being liable to pay such premiums if the Claimant's case succeeds on top of CFA hourly rates at 100% uplift acts as yet a further "chilling factor" on the media's approach to defending (legitimately) libel or privacy claims brought by CFA claimants where ATE premiums are involved. The level of such premiums (a very high percentage of the actual cover obtained) in our experience can act as a disincentive to defend libel claims for purely commercial reasons rather than media defendants making a fair assessment of the legal merits taking account of a fair amount of commercial risk.

 

2.3 Contempt and the Internet

 

Serious consideration ought to be given to whether or not, in practical terms, the internet has rendered certain aspects of the Contempt of Court Act 1981 otiose. Influential commentators, such as Lord Falconer, have previously suggested that the media should be required to delete online archive material if a matter on which they have previously reported subsequently comes to trial. We question whether that is feasible, let alone sensible or necessary.

 

Trial Judges are able to warn juries against carrying out their own internet based research and the law recognises that juries can be trusted to decide cases on the evidence heard at trial. This is the position in America where there is no similar reporting restriction as found in the Contempt of Court Act.

 

Rather than imposing a requirement on the media somehow to manage online databases in an attempt to prevent juries carrying out internet research, serious consideration should instead be given to amending the statute so as to remove any risk for the media of committing an offence by virtue of their online archive.

 

2.4 Exemplary damages

 

As a matter of law, exemplary damages are already available in cases where the claimant can establish, on the evidence, that the defendant knew or was reckless as to whether or not a defamatory statement was untrue and it was published by a defendant having calculated that it would gain financially from publication notwithstanding the risk of a claim in damages. The law, therefore, affords claimants suitable remedy in a case where a defendant should be penalised as a result of its own calculated decision to defame.

 

In privacy cases, however, the law does not allow for exemplary damages. This was considered by Mr Justice Eady in the recent case of Max Mosley v News Group Newspapers Limited. The Judge considered that extending the law in this way, so as to allow Mr Mosley to claim exemplary damages, could not be justified by reference to Article 10 of the European Convention on Human Rights (freedom of expression) which forms part of English law by virtue of Human Rights Act 1998. The Judge held that such an award was not necessary in a democratic society nor was it required in addition to the availability of compensatory damages and injunctive relief. He said that the "chilling effect" of exposing the media to the "unpredictable risk of being fined on a quasi-criminal basis" would be "obvious" (paragraph 173 of his Judgment).

 

The Judge went on in the Mosley Judgment to take account of the established principle that aggravated damages (being part of the compensatory function) can, nevertheless, go to the "top of the bracket" and in doing so, this would reflect any disapproval by the Court of the defendant's conduct (paragraph 193). The Judge concluded that any extension of exemplary damages into privacy cases "would fail the tests of necessity and proportionality" (paragraph 197). We see no reason to extend the law in light of these judicial observations.

 

January 2009