Legislative Scrutiny: Defamation Bill - Human Rights Joint Committee Contents

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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Prepared 12 December 2012