Written evidence 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; and
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 15 complaints which were
settled, five were considered by us to be legitimate. The other
10 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 judgment of the Court of Appeal in
C v W, which was delivered on 19 December 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 judgment, 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 [|]";
and
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 9 November 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:
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; and
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 Back
2
C v W [2008] EWCA Civ 1459 Back
3
R v B [2006] EWCA Crim 2692 Back
4
R v Hamza [2006] EWCA Crim 2918 Back
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). Back
6
Green Corns Ltd v Claverley Group Ltd and another [2005] EWHC
958 (QB) Back
7
Child XXX v A Strategic Health Authority HQ07X03831 Back
8
Murray (by his litigation friends Murray and another) v Big Pictures
(UK) Ltd [2008] EWCA Civ 446 Back
|