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Judgments - Campbell (Appellant) v. MGN Limited (Respondents)

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    48.  For the reasons given by my noble and learned friend, Lord Hoffmann, I agree that this petition should be dismissed. It is a separate question whether a legislative solution may be needed to comply with article 10. As my noble and learned friend has shown, this is a complex issue involving a delicate balance between competing rights upon which I would prefer to express no opinion.


My Lords,

    49.  I have had the advantage of reading in draft the opinions prepared by my noble and learned friends Lord Hoffmann and Lord Hope of Craighead. I agree with their reasons and conclusions and wish to add only a few observations of my own.

    50.  Prior to the passing of the Courts and Legal Services Act 1990 it was not possible for parties to litigation and their lawyers to enter into conditional fee agreements ("CFAs"), whereby the lawyers were entitled to charge an extra success fee in the event of success in the litigation, but the clients would not be liable to pay the lawyers' fees if they were unsuccessful. The reasons why such agreements were unenforceable at common law and contrary to professional ethics are well known and do not require repetition. They centre round twin concerns: first, the conflict of interest seen to exist in the temptation for a lawyer to advise settlement of a case below its value in order to secure payment of his costs and, secondly, the temptation for the client to press on with a hopeless and irresponsible claim in the hope that he might obtain some profit, while at no risk in respect of his own side's costs. As late as 1979, when the government accepted the view of the Royal Commission on Legal Services to that effect, this was conventional morality.

    51.  The government, allied with the Law Society, underwent a Pauline conversion in 1989, when it published a Green Paper favouring the introduction of CFAs and followed it up by making statutory provision for them in the 1990 Act. The reasons for the shift in opinion were described by Lord Woolf CJ in para 7 of his judgment in Callery v Gray [2001] 1 WLR 2112, 2116:

    "The introduction of the legislation which made conditional fees lawful was motivated primarily by two problems in relation to the provision of legal aid for civil litigation. The first was that progressively fewer members of the public were eligible for legal aid to bring civil proceedings. It was thought that the introduction of CFAs would have the effect of enabling those who could not afford to bring proceedings without the benefit of legal aid to do so. The second problem was that the cost of providing legal aid was growing year on year. Accordingly the Government decided to reduce the areas of litigation which were funded by legal aid. It was considered that this would not reduce access to justice since those affected could bring proceedings using CFAs. The reason for reducing the areas of litigation eligible for legal aid was not, it was said, to reduce expenditure overall but rather to use the funds saved thereby to meet the need for publicly funded legal services to be provided in a different manner."

    52.  The subsequent history of CFAs has been fully set out in the opinion of Lord Scott of Foscote in the House of Lords in Callery v Gray (No 1) [2002] 1 WLR 2000, to which I would refer. For present purposes the two most significant developments were the extension of the scheme to defamation actions, which were originally not covered by it, and the provision in the Access to Justice Act 1999 and consequent rules of court which made the opposing party liable for payment of the successful party's success fee and after-the-event insurance premium. The former change opened the way for claimants to pursue causes of action which could thitherto be afforded only by litigants with very deep pockets, as the size of the costs bills in the present case amply demonstrates. The latter completely changed the balance between litigating parties: the losing party is now liable for not only his own costs, which he could generally not recover when he won against a legally aided party, but the success fee payable to the winner's lawyer, which could be up to 100 per cent of the base costs, and even the premium paid by the winner for insurance to protect himself against the consequences of losing the case.

    53.  It is, however, worth mentioning that that system has not been universally accepted in all parts of the United Kingdom. As Lord Hope of Craighead has pointed out in paras 40 and 41 of his opinion, in Scotland the client who has succeeded in the litigation has to pay the success fee out of his damages and it cannot be recovered from the losing party. In Northern Ireland under the Access to Justice (Northern Ireland) Order 2003 (2003 No 435 (N.I. 10)) provision is made both for CFAs and an alternative, the setting up of litigation funding agreements. It is still under consideration which of these will receive the support of the government as a substitute for the existing system of legal aid still in operation, but the model of litigation funding agreements has attracted considerable support.

    54.  It has to be said that there are many who regard the imbalance in the system adopted in England and Wales as most unjust. The regimen of CFAs and the imposition of these charges upon the losing party is, however, legislative policy which the courts must accept, as Lord Hoffmann has stated in para 16 of his opinion, and the present case has to be judged against this background.

    55.  It is necessary to bear in mind that the House has been asked to rule only on the matter of principle whether success fees can be charged at all in cases brought against the media involving issues such as breach of confidence or defamation or whether they are incompatible with article 10 of the European Convention for the Protection of Human Rights and Fundamental Freedoms. That such fees constitute a "chill factor" cannot be doubted, but the issue is whether they are a proportionate way of dealing with the issue of the funding of such litigation. As Lord Hoffmann has stated (para 23 of his opinion), it is not really in dispute whether the legislature can in principle adopt this method of funding access to justice.

    56.  The petition before the House then turns upon the question whether it is nevertheless still proportionate to permit the operation of the CFA system to the detriment of a losing defendant in a breach of confidence case when the claimant could be regarded as well able to afford to pay the costs and so as not being in need of the support of a CFA. It seems to me undeniable that there is a degree of roughness about the justice of this, but there are inevitably incidents of any system for the funding of litigation which will bear more harshly upon some parties. The practical problems involved in determining at the time when parties enter into CFAs with their lawyers whether they can afford to finance the litigation themselves would be enormous. It was submitted on behalf of the appellant Ms Campbell, supported by the helpful written submission of the Law Society, that such an examination would be unworkable, and I have to agree with this conclusion, attractive as the idea might appear at first sight.

    57.  My conclusion accordingly has to be clear, though I do not reach it without regret. While I am far from convinced about the wisdom or justice of the CFA system as it is presently constituted, it has to be accepted as legislative policy. It has not been shown to be incompatible with the Convention and the objections in principle advanced by MGN cannot be sustained. The quantum of the costs sought by Ms Campbell is not in issue in this appeal and will be decided in due course by the costs judge. I would only add, by way of a tailpiece, that I see considerable force in the comments made by Lord Hoffmann in the concluding paragraphs of his opinion.


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