3 Wider issues raised by defamation
reform
59. Whilst scrutinising the Bill for human rights
concerns, we also considered some wider issues, which, although
not directly dealt with by the Bill itself, are nonetheless pertinent
to the reform of defamation.
Costs, funding and access to
justice
60. The availability of conditional fee agreements
("CFAs") for actions in defamation has long been the
subject of debate. Under a traditional CFA the lawyer does not
generally receive a fee from the client if the case is lost. However,
if the case is won, the lawyer's costs (the 'base costs') are
generally recoverable from the losing party. In these cases, the
lawyer could charge an uplift on these base costs, which (until
very recently) was recoverable from the losing party. This uplift
is known as the 'success fee'. In addition, After the Event (ATE)
insurance can be taken out by parties in a CFA-funded case to
insure against the risk of having to pay their opponent's costs
and their own disbursements if they lose. As with success fees,
until very recently, ATE insurance premiums were recoverable from
the losing party.
61. It has therefore been argued that defendants
in actions for defamation could be perceived to be under a coercive
financial risk, as they could be liable for success fees on top
of base costs. Critics argue that this inhibits the freedom of
expression of defendants in a real and material way. Irresponsible
parties have no incentive to maintain sensible costs, as they
are afforded protection by the structure and operation of the
CFA model. In addition, ATE insurance raised similar concerns,
as it was recoverable from the losing defendant.
62. The European Court of Human Rights recently
gave judgment in MGN v the UK[20]
in which the Court agreed with such a view, finding that the
existing CFA arrangements on recoverability contravened Article
10: the risk to the defendant of being liable for the high and
disproportionate costs in a defamation action produced a chilling
effect on free speech. CFAs that enabled recovery of success fees
from the losing side were deemed disproportionate.
63. The subsequent Legal Aid, Sentencing and
Punishment of Offenders (LASPO) Act 2012 has altered the way in
which CFAs operate. Sections 44-46 of the LASPO Act 2012 govern
the recoverability of success fees and ATE insurance. The net
effect of these provisions is to limit the recoverability of success
fees and ATE in a CFA-funded case from a losing defendant. Members
will recall that a major criticism of these reforms is that they
render the CFA-model almost obsolete, as lawyers will be reluctant
to take on defamation cases on a CFA-basis if they are no longer
commercially viable.
64. We wrote to the Government expressing our
concerns that this change to CFAs and ATE may inhibit access to
justice for those claimants and defendants, who are middle-income,
but not eligible for legal aid. The Government has responded to
our concerns by reaffirming their commitment to the LASPO reforms,
and the belief that these rules will restore balance to the system
and result in a reduction in legal costs. The Government also
relied on the decision of the European Court of Human Rights in
MGN Ltd. V the UK (2011) ECHR 66, to justify the changes
to costs in defamation proceedings: the new rules on non-recoverability
of success fees and ATE from the losing party will address the
European Court's criticism in that case.
65. The Government also outlined what the LASPO
reforms would achieve:
"We are not removing the access to CFAs of either
claimants or defendants; rather we aim to create a stronger balance
between the interests of claimants and defendants. The reforms
will still provide the claimants with a means to bring meritorious
cases but will also ensure that the costs faced by defendants
are proportionate, thereby correcting the present anomaly where
claimants have little incentive to keep an eye on the costs they
incur. Moreover, it is unfair on defendants that they may feel
unable to fight cases, even when they know they are in the right,
for fear of excessive costs if they lose."
66. However, the Government has acknowledged
the dilemma facing less wealthy claimants and defendants, as they
may be put off from pursuing or defending reasonable actions because
of the risk of having to pay the other side's legal costs if their
case fails. The Government has therefore said that it will therefore
consider the issue of costs protection.
67. Lord McNally made a commitment at Second
Reading to ask the Civil Justice Council to consider the case
for, and possible options for reform of, costs protection in defamation
and privacy related claims. The Civil Justice Council is an advisory
body, chaired by the Master of the Rolls, and has previously assisted
the Ministry of Justice in developing a regime of costs protection
in personal injury cases. The Government has indicated in its
response to us that the Civil Justice Council will set up a working
group to consider the issue of costs protection in defamation/privacy
cases, and report with its recommendations by the end of March
2013. This timetable will allow the Government to consider what,
if any changes, should be made to the Civil Procedure Rules when
the Defamation Bill comes into effect.
68. We are concerned that this
change to CFAs and ATE may inhibit access to justice for those
claimants and defendants who are middle-income, but not eligible
for legal aid. We are particularly concerned that the reforms
in the LASPO Act 2012 do not tackle this issue, as the present
rules on CFAs may prevent claimants and defendants of modest means
from accessing the courts, a particularly pertinent concern when
the action is one of defamation.
69. We note the Government's
ongoing efforts to address this particular issue, and welcome
its ongoing consideration of the 'costs protection' issue. We
remind the Government that a solution to the difficulty faced
by "middle income, not eligible for legal aid" claimants
and defendants is necessary if defamation reform is to be effective
in practice, so that all persons, regardless of financial means,
can access justice in defamation proceedings.
Relationship between qualified
privilege and Article 8 ECHR
70. We also sought to ascertain the Government's
view on the on the inter-relationship of Article 8 and 10 ECHR
and the law of qualified privilege in light of recent judicial
decisions such as W v Westminster City Council[21].
71. W v Westminster City Council involved
an action for libel against a defendant council, for the allegations
made by its social workers in a child protection dispute. W was
alleged to have been grooming S, the daughter of W's partner,
with a view to abusing her sexually. It was also alleged that
there were serious grounds to suspect W was a predatory paedophile.
These allegations were contained in a report intended for use
at a child protection case conference relating to S. W took action
against Westminster Council for libel. The defendant council advanced
defences of absolute and qualified privilege.
72. The High Court held that the social workers'
report was protected by qualified privilege, where the social
workers had been acting in good faith, but they had mistakenly
exceeded the limits of what should have been communicated. The
publication of the report therefore breached W's rights under
Article 8 of the ECHR. Accordingly, just because the original
claim was defeated by a defence of qualified privilege did not
mean that a claim under section 7 of the HRA 1998 for breach of
Article 8 would also fail.
73. The Government has stated in its response
to us that it notes the conclusion of W v Westminster City
Council concerning actions under section 7 of the HRA 1998,
but is content to await further considerations of this issue by
the courts.
74. We have concerns that the
development of the relationship between qualified privilege and
section 7 claims under the HRA 1998 may inhibit local authorities
in their ability to execute their statutory functions, under the
Children Act 1989, to investigate safeguarding and child protection
matters. We recommend that the Government make further enquiries
and keep this matter under review.
20 (2011) ECHR 66 Back
21
[2004] EWHC 2866 (QB) Back
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