Press standards, privacy and libel - Culture, Media and Sport Committee Contents

Examination of Witnesses (Question Numbers 918-919)


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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