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

Examination of Witnesses (Question Numbers 920-939)


19 MAY 2009

  Q920  Mr Evans: So you are not looking, at the moment, at the possibility of having legal aid for cases of defamation?

  Sir Rupert Jackson: Well, legal aid has never been available for defamation, and one of the effects of the reforms introduced by Parliament in 1999 was that legal aid becomes available for an even narrower area of civil litigation. All the indications which I have received are that there is no realistic prospect of legal aid being expanded either to the boundaries which it occupied up to 1999 or, and more expansively, as Mr Evans posits, to include defamation as well. It seems to me that I have got to conduct my present review upon the assumption that legal aid is not going to be made more widely available and, given the present state of the economy, that is probably a safe assumption.

  Sir Anthony Clarke: If I could just add a footnote to that in relation to your question, if there are problems with CFAs, they are the problems or the question of whether success fees should be recoverable from the defendant; it is not the CFA itself which is the problem. The problem arises when one asks whether it is just that a percentage of the success fee, which may be 100% of the base costs which include profit costs, should be recoverable from the defendants, and that is a problem which arises starkly in a case like the Campbell case which the House of Lords decided on.

  Q921  Chairman: But you will appreciate that this Committee is essentially concentrating on libel and that is the topic of our inquiry, and I just wanted to clarify something. You are suggesting that, by looking at the broader range of all civil litigation, the problems which we have received evidence about in relation to libel cases are actually not, by any means, unique to libel cases, but they are problems that are now occurring right across the range of civil litigation?

  Sir Rupert Jackson: Yes.

  Q922  Chairman: Therefore, with the particular concern which we have, which is the potential "chilling" effect on journalism, do you hear complaints that there are similar adverse consequences affecting other areas of law?

  Sir Rupert Jackson: Yes. I shall make recommendations in my report later this year which, I hope, will address these problems both in relation to defamation or publication proceedings and also in relation to the entirety of civil litigation. Perhaps I may just say a word about the task which I am engaged in. I have been asked to review the rules and principles governing the costs of civil litigation and to make proposals to promote access to justice at proportionate costs. My terms of reference require me to look at the procedural rules where procedures might be changed to prevent such substantial costs being incurred, to compare our regime with regimes overseas, to review academic material, meet interest groups and so forth and to look at the whole of this area from first principles. I am conducting this inquiry in three stages. The first stage is to identify the facts, identify what costs are being incurred in different categories of litigation, identify the positions of different interest groups, review the literature and so forth and to look at overseas regimes. I have completed the first stage, as planned, in the first four months of this year and, Mr Chairman, I believe that you and your colleagues have received copies of my preliminary report. This is not a report which comes to conclusions, it is a report which sets out the evidence, the issues and the competing arguments. I am not a politician, I am a judge and I am conducting my inquiry, as best I can, in a judicial manner, which is, first, to identify the facts and the evidence and then I embark on a consultation period which begins this month. During the consultation period, I hear what everyone has to say about the matters raised in my preliminary report, I am holding public seminars, meetings with many interest groups and so forth, and then I shall make the final report with my recommendations in the autumn. It is very important that I keep an open mind both during phase one when collecting the evidence and during phase two when I hear the arguments, so I am not, Mr Chairman, going to propose any magic solutions today, but I can assure you that I am very much alive to the issues which concern all areas of litigation. In my preliminary report, I deal with the costs of defamation proceedings in chapter 37 and I have an appendix, which is appendix 17, which sets out the costs of claims resolved by settlement or judgment in defamation or publication claims against the media in 2008. This material was very kindly provided to me by the Media Lawyers' Association and I hope that the members of this Committee will find the data in appendix 17 to be helpful. You can see that CFAs were entered into in about 17% of the cases, you can see set out what the costs of each side were and what the damages are, and I have put some notes at the top of the schedule which explain the details of the figures, so I very much hope that this Committee will find appendix 17 helpful. If it would help the Committee to look at the problems of defamation costs in the wider context, you will be able to look at costs in other areas of litigation in the numerous other appendices to the report and I have set out the issues, as best I can, in the surrounding chapters, although chapter 37 is specifically focused on defamation.

  Q923  Chairman: I note that, of the 154 cases in appendix 17, three went to trial.

  Sir Rupert Jackson: Yes.

  Q924  Chairman: And they were all won by the claimant.

  Sir Rupert Jackson: Yes.

  Q925  Chairman: One of the things which has been put to us in relation to CFAs is that, I think it was, 98% of the cases which were CFAs were won by the claimant and their solicitors who had the CFAs.

  Sir Rupert Jackson: It appears, from the evidence which I have received, that claimants are successful in a very high percentage of defamation cases. The evidence which has been supplied to me does not enable me to give you a precise percentage; it is something I would have been delighted to receive, but none of the parties on either side of this particular divide has furnished me with evidence which enables me to confirm or contradict the 98%. I would be surprised if it is that high, but it is certainly a high percentage.

  Q926  Janet Anderson: We have heard some evidence about the level of charges in cases involving CFAs. Do you think the level of charges in these cases is out of control?

  Sir Rupert Jackson: Well, first of all, the hourly rate charged by solicitors can be challenged by the losing party on assessment and, if there is a detailed assessment, that will be dealt with by a costs judge in the Supreme Court Costs Office. I say that because the vast majority of defamation claims are tried in London and, therefore, it will be one of the costs judges here who deals with it. This Committee can have confidence in the judgment of the costs judges in dealing with hourly rates. There is a new committee set up, the Advisory Committee on Civil Costs, chaired by Professor Stephen Nickell, an economist at Oxford, who is currently looking into the guidelines rates and, no doubt, the results of his work will be of assistance to the costs judges who are doing detailed assessments. One firm of claimant solicitors has provided to me, in confidence, details of the hourly rates which they charge, and clearly I cannot furnish that information to the Committee as it is confidential, but the material supplied to me indicates hourly rates distinctly lower than figures which have been bandied around in some of the documents.

  Sir Anthony Clarke: I agree with that. I still feel myself that the area of concern is the percentage success fee aspect of the CFAs; that is my impression really across the board. One of the things which is somewhat disappointing is that there is not, so far as I know, any research which anybody has conducted. The Government, for example, has never conducted any research, so far as I am aware, into the underlying question of whether it is necessary for solicitors to charge success fees and, if so, at what level. The justification of it is said to be that they need to do that in order, if you like, to pay for the cases that are lost. Well, one might think there would be a great deal to be said for some detailed research into the number of cases that are lost and the whole profile, but, as far as I know, and I am sure Rupert Jackson will tell me if this is wrong, no one has ever conducted any public research into that which, to my mind at least, is a great pity. That is right?

  Sir Rupert Jackson: It is correct, yes.

  Q927  Janet Anderson: Do you think that, if success fees and ATE insurance became irrecoverable, damages would have to increase to compensate for that?

  Sir Anthony Clarke: Well, it is certainly something to be considered.

  Sir Rupert Jackson: I am looking at the question of whether success fees and ATE premiums should be recoverable at all in any area of civil litigation, and that, for your reference, is discussed in chapter 47 of my preliminary report. If success fees and ATE premiums become irrecoverable, then one has to look at the position of claimants. So far as the ATE aspect is concerned, one issue which I must consider is whether there should be a restriction on the claimant's liability for costs because, if the claimant's liability for costs were substantially curtailed, the need for ATE insurance in respect of adverse costs would go, and I have done some calculations which are set out in the report which show that defendants would be significantly better off if there were one-way cost-shifting and they never got costs at all when they won, so that is one issue. So far as the success fee is concerned, if the success fee is irrecoverable, then it would have to come out of the damages. Now, the deductions from damages raise important policy issues which vary from one part of litigation to another. If you take defamation proceedings, the claimant's main concern is to have his or her reputation vindicated, and this Committee may think that it would be no great hardship to a claimant in defamation proceedings to lose a significant portion of his or her damages by way of deduction for the success fee because the claimant would still retain some damages and the claimant's reputation would have been vindicated. When one comes to the area of personal injuries, however, deductions from damages become much more problematic because, very often, a large part of the damages relates to future care, and I do not think anybody would want a deduction from that. I hope the Committee will forgive me if I say that the question of transferring the burden of the success fee from defendant to claimant is one which raises difficult issues in different parts of civil litigation, and these are issues with which I am grappling, but those issues are less worrying in defamation than in other areas. As to whether or not damages should go up, it seems to me that damages for defamation ought not to go up unless personal injury damages go up. The convention has now been established that defamation damages should be kept proportionate to personal injury damages because it is offensive that an individual should receive greater compensation for hurt to his reputation than for injury to his body. Now, there is a related question of whether personal injury damages should go up, as recommended by the Law Commission 10 years ago, but not yet implemented, and there is a related question to that which is whether it might be affordable if the costs of personal litigation can be controlled or brought down. These are issues, all of which I am looking at, which are a long way from defamation, but, if I may respectfully say so, they illustrate the importance of looking at these costs issues holistically and not introducing urgent reform or immediate reform now when a comprehensive review is due later this year.

  Q928  Philip Davies: On this, I was interested, Sir Anthony, in your point about the purpose of the success fee which is, in effect, to cover the costs of the ones that you lose. Now, I acknowledge that we have not got the exact figures, but, if the figures are anywhere near to the suggestion that 98% of these cases are being won by the claimant, would that indicate that success fees are not justified?

  Sir Anthony Clarke: Well, it would certainly be a factor. I still think that more detailed research is required, but it would certainly be an indicator to that. The other thing to bear in mind, however, in relation to the notion that claimants always win is that one way a defendant can protect himself, whether a defamation or any other, is to make, what we call, a Part 36 offer to settle the proceedings so that, if the claimant does not beat the offer, then, from the moment of the offer, the claimant will be expected to pay the defendant's costs, which is quite an important factor, to my mind, in thinking about all this.

  Q929  Philip Davies: Because it seems to me, from listening to what you have said, that success fees may be justified if lawyers were taking on 50-50 cases under CFAs, but I get the distinct impression from the evidence that we have heard throughout this inquiry that, in effect, lawyers are only taking on as CFAs those cases which they think are absolute racing certainties and they are, in effect, therefore, getting paid double for the simplest cases to prosecute, which, to a layman like me, seems like an absolute racket. Would you not accept that, if they are being used in the sense that they are only taking on the racing certainties under CFAs, these exorbitant success fees are just simply not justifiable in any shape or form?

  Sir Anthony Clarke: On that hypothesis, I can see that there is something to be said for that. The question is whether the hypothesis is correct.

  Sir Rupert Jackson: If I may just come in on that point, there is a clear body of evidence which suggests that, overall, success fees may be bringing too great a benefit to the claimant side, but one has to approach this evidence with caution because claimant solicitors have made the point to me that, when a single case is lost, the costs, if that action has gone all the way to trial, for example, may be enormous and they may need the success fees on a substantial number of won cases in order to cover all their outlay on the lost cases. Now, I do not know, without the detailed research which, sadly, does not exist, precisely how many won cases one needs in order to cover one substantial lost case, but I do not think one should adopt too simplistic an approach to this.

  Q930  Philip Davies: Do you not acknowledge that it is quite easy to envisage that there is a good number in this firm of lawyers where they take on the easiest cases that they are certain to win under CFAs and then they get paid double for the easiest cases, which seems, to me, to be perverse as you should get paid double for the hardest cases, not the easiest cases?

  Sir Rupert Jackson: Of course, the easiest cases are the ones that are likely to settle early and, with a staged success fee, it will be nothing like 100%. The most difficult cases are the ones which go further and which attract a success fee of 100%, and it must also be borne in mind that, for every case which claimant solicitors take on on CFAs, they will have spent time reviewing a significant number of other cases before deciding that it is not practicable to take them on on a conditional fee agreement because the merits are not strong enough. Therefore, the success fees in the won cases not only have to cover the costs of those relatively few cases which are lost, but also the costs of reviewing a large number of cases which are not taken on and giving advice to the litigants in those other cases. I am not here to make out a case either for claimant solicitors or for media defendants; the arguments on both sides have been presented to me and I have summarised them, as best I can, in the report. I am very much alive to the points which Mr Davies puts to me and these are matters which I shall be addressing, but, I am afraid, I am not prepared to come to a final conclusion of the kind which is being put to me just four and a half months into a 12-month inquiry; that is not how judges work, although it may—

  Philip Davies: You do not have to finish your sentence!

  Q931  Paul Farrelly: We are going to come on to the issues of costs capping in a moment, but may I ask a couple of questions about your very helpful table. First of all, it would be quite right to say, in terms of the current situation, that there is an economic incentive that might generally lead you to conclude that "nearly always win, double the fee" might be the outcome of the current arrangements, that the economic incentives are there that might lead to that situation?

  Sir Rupert Jackson: I am terribly sorry, but I am not sure I have understood your question. Are you saying that there is economic incentive to double the fee?

  Q932  Paul Farrelly: You have said that you will not pronounce on the evidence at the moment because you said that is not what judges do, but economists look at incentives and the current situation with CFAs, from an incentive point of view, might reasonably lead you to conclude that the incentive is there which might lead to a situation where lawyers pick and choose and it really is almost the case that it is "nearly always win, double the fee".

  Sir Rupert Jackson: Well, first of all, I agree that there is an economic incentive to pick cases which, the lawyers think, are going to win. If they proceed on any other basis, they would go out of business very quickly if they are dealing with cases on a conditional fee agreement. There is, of course, that incentive there and that incentive is very important for defendants because it means that unmeritorious and frivolous cases are less likely to be pursued. One of the strengths of the conditional fee agreement regime is that a filter is created which, generally, weeds out weak and frivolous cases and that, from an economist's point of view, is, no doubt, very important. Secondly, you say, the incentive is to double the fee in every case because of the 100% success fee. There, I would question what you say because the success fee only goes up to 100%, to double the fee, in those cases which proceed some distance. In the strong cases which are resolved quickly, there may be no success fee or a low-staged success fee.

  Q933  Paul Farrelly: The caveat then to your argument with respect to claimants, clearly, is one of motivation, this kind of chilling effect. If the claimant's motivation is not pecuniary, the argument that you have advanced, that the situation helps to protect the defendant, would be false, would you not agree?

  Sir Rupert Jackson: Well, one has got to look at two different parties within the claimant camp; there is the claimant and there are the claimant solicitors. The claimant's concern, clearly, is to vindicate his reputation and to recover a sum by way of damages. The concern of the claimant solicitors is to avoid conducting cases which will be lost and then they will have to bear the costs themselves.

  Q934  Paul Farrelly: Can I come to your table, which is very, very helpful to the Committee. I just wondered whether you had any similar data, which will mean a lot more work, from previous years so that we can establish whether there is any trend.

  Sir Rupert Jackson: No, I am afraid I do not have data from previous years. Obviously, it would be helpful if I did have. This report has been prepared in the space of four months and defamation litigation is actually a very small part of the total subject and there are a huge number of appendices dealing with costs in all sorts of areas. I took the view that the contemporaneous evidence is the most helpful, and my appendices give a snapshot of costs being incurred at about the present time.

  Q935  Paul Farrelly: One of the allegations that has been really made most strongly by the media is that there are two particular firms, Carter-Ruck and Schillings, who are serial offenders, in their terms, to the extent that they now tout for business, encouraging people to bring claims, particularly where the internet is concerned, and there is a need for a modification here. Would it be possible for you to break down just by number of cases, not by sums or anything that could be held to be commercially confidential, the cases where particular firms acted for claimants and the number of cases where firms acted for defendants, just to break it down by legal firm for us?

  Sir Rupert Jackson: I cannot tell you which solicitors firms acted either for the claimant or for the defendant in any individual case in this schedule.

  Q936  Paul Farrelly: You do not have that information?

  Sir Rupert Jackson: I do not have that information.

  Q937  Paul Farrelly: The third question it would be very helpful if you could answer is: could you break down these cases, not in terms of identity, but by number, where it is foreign nationals who are the claimants or UK nationals? That would be helpful to the Committee when it comes to the issue of forum-shopping.

  Sir Rupert Jackson: No, I am afraid I do not have that data.

  Q938  Chairman: Can I just put one other point to you, which is looking at the economic incentives. One other claim which was put to us by the Media Lawyers' Association was that one of the consequences is that the solicitors for the claimant will deliberately prolong proceedings as much as possible in order that they run up obviously as large a bill as possible. Have you ever had any evidence of that or seen that happen?

  Sir Rupert Jackson: I have not seen any evidence which demonstrates to me that claimant solicitors are deliberately prolonging proceedings in order to inflate costs. One feature of defamation proceedings is that there is a tendency for pleadings to become somewhat more complex than in some areas and for technical points to be taken more often. I am not a libel specialist, let me say, but my impression is that there are more interim applications of a technical nature in libel proceedings than elsewhere in civil litigation, but maybe the Master of the Rolls would care to add to that.

  Sir Anthony Clarke: Well, traditionally, that was certainly the case and libel proceedings generally had a very bad reputation for giving rise to all kinds of, what I call, the very worst evil we have to deal with, namely satellite litigation where money is spent on satellite issues which are not really about resolving the merits of the case, and endless technical points, historically, were made in defamation-type cases. My impression is, and I am not a libel lawyer either, although I do sometimes hear appeals in defamation of privacy cases, but my impression is that, since the advent of the Woolf reforms 10 years or so ago, that evil has significantly improved and it is certainly something which judges should, and I think probably do, look out for because it is obviously very, very unsatisfactory for any party of any litigation deliberately to string it out in order to make money.

  Q939  Chairman: It was an allegation made directly to us by the Media Lawyers' Association that it happened on a regular basis. I merely leave it at that.

  Sir Anthony Clarke: Well, I do not know whether the claimant lawyers accepted that and perhaps they did not.

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