Examination of Witnesses (Question Numbers
918-919)
SIR ANTHONY
CLARKE AND
LORD JUSTICE
RUPERT JACKSON
19 MAY 2009
Chairman: Good morning. This is a further
session of the Committee's inquiry into press standards, privacy
and libel, and we are concentrating particularly today on the
making and implementation of the law. I would, especially, like
to welcome our witnesses this morning, the Master of the Rolls,
Sir Anthony Clarke, and Lord Justice Jackson; we are extremely
grateful to you for coming. I might just add at this point that
none of us on the Committee is a lawyer, so be patient with us
on subjects of law.
Q918 Mr Evans: Conditional Fee Agreements,
CFAs were introduced to improve access to justice for both defendants
and also for the claimants. Do you think it is working?
Sir Rupert Jackson: Well, undoubtedly,
CFAs under the present regime are effective in terms of promoting
access to justice for claimants. There is a concern that the balance
which has been struck by the present regime is far from satisfactory
and, if you would like me to explain in a couple of sentences
why, I will. The rationale of the present CFA regime, under which
success fees and After the Event insurance (ATE) premiums are
recovered from unsuccessful defendants, is as follows: if you
take a cohort of cases, a block of cases brought on CFAs with
ATE insurance, some cases, indeed most cases, won, as is the way
of things, but some lost and, if you look at the overall financial
position, once the success fees and the ATE premiums have been
paid to claimant solicitors in the won cases and the ATE insurers
have paid out costs in the lost cases, the overall effect is that
the entire costs of all those cases are borne by the defendants
and the claimants bear no costs whatsoever. In other words, litigation
of this character has the entirety of the costs placed upon one
side only. Now, that is the theory. When you come to the practice,
there is evidence that more than the entire costs of the litigation
is borne by the defendants. First of all, even if the ATE premiums
are calculated with precise accuracy, they must include an extra
element to cover the administration costs of the insurers and,
on top of that, they must include an element of profit for the
ATE insurers. That is all that happens, if the system worked to
perfection. There is evidence, however, that ATE premiums are
too high because there is no effective market force to control
the ATE premiums paid by claimants to the insurers because claimants
have no direct interest, they are never going to pay the premiums,
win or lose. There are also suggestions in some of the evidence
which I have seen that success fees are too high and do more than
compensate the claimant lawyers for the cases which they lose.
Now, this is a matter of controversy and it is something which
I am looking into in my inquiry. There is, however, a growing
body of evidence which suggests that the present CFA and ATE regime,
which is of course satisfactory for claimants, and one must not
lose sight of access to justice, also has the consequence that
significantly more than the entire costs of the relevant litigation
is cast upon the defendants. As you know, Mr Chairman, I have
been tasked with reviewing the costs of civil litigation this
year and to make recommendations to promote access to justice
at proportionate costs, and this is a matter which I am looking
into.
Sir Anthony Clarke: Can I just
add that I agree with that, but the other point I would like to
make, which is a point I made in the paper which I have submitted,
is that the problems relating to CFAs are problems which cover
the whole range of litigation, if you like, and I know that the
focus of the Committee is on the effects on the media of CFAs
and the way they have worked in media cases, but very similar
problems arise across the board and we are somewhat concerned
that there may be a desire to go in for piecemeal reform in one
area before Rupert Jackson has finished his inquiry so that we
can see what the problem is and what the possible solutions are
across the whole piece.
Q919 Mr Evans: The Committee has
heard that some claimants, such as the supermodel Naomi Campbell,
have used a CFA in order to sue media organisations, even though
they could afford to do so themselves without one, so should means-testing
be introduced?
Sir Rupert Jackson: The House
of Lords considered this issue in the case of MGN v Campbell.
The House of Lords came to the conclusion that the legislation
passed by this House entitles anyone to make use of the CFA regime.
The House of Lords also came to the conclusion that means-testing
for the purpose of CFAs was not practicable. As the Master of
the Rolls said, it is very important to look at the problems of
costs holistically. There are serious issues concerning the costs
of defamation proceedings and there are very serious issues concerning
the costs of the whole of civil litigation, which is why the Master
of the Rolls has taken me out of sitting for a year in order to
address them, and I do endorse the point which Sir Anthony Clarke
has made that we must deal with this problem in principle and
across the board and, if I may respectfully suggest it to Members
of this House, not embark on piecemeal reform for one tiny part
of the civil litigation terrain which may perhaps have a slightly
more vocal presentation than others.
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