Recoverability of Success Fees and ATE Premiums

The much anticipated judgment of the Supreme Court in Coventry v Lawrence [2015] UKSC 50 resulted in a resounding 5-2 majority decision that the pre-Jackson CFA/ATE regime, under which the loser was at risk of paying base costs, a success fee and an ATE premium, was not incompatible with ECHR Article 6 and/or Article 1 of the First Protocol to the ECHR. This comes as no real surprise given the chaos that a contrary decision could have caused and the fact that the regime in question has now all but passed into history.

It is perhaps ironic that those cases in which the “old” regime still applies were not directly the subject of this decision. What then can be inferred about the attitude of the Court to any comparable challenge in such cases, including “publication and privacy cases” as defined in the CFA Order 2013, namely, proceedings for defamation; malicious falsehood; beach of confidence involving publication to the general public; misuse of private information or harassment by a news publisher. In these cases, success fees and ATE premiums remain recoverable from an opponent, but pending the judgment in Coventry defendants have refused to make any such payments.

The Supreme Court in Coventry gave permission to the Media Lawyers Association (“MLA”) to intervene by way of written and oral submissions. This was not at all surprising given that the cornerstone of the attack on the “old” regime was the decision of the ECtHR in MGN v UK (2011) 53 EHRR 5 in which the ECtHR declared that the regime that allowed the recoverability of a success fee by the wealthy claimant in Campbell v MGN (No.2) [2005] UKHL 61 had infringed the Art 10 rights of MGN.

The MLA sought to have the Court adopt the conclusion of the ECtHR and declare that the continuation of the “old” regime in cases in which Art 10 was engaged was incompatible with the ECHR. The problem that this submission faced (as pointed out by Lord Neuberger in argument) was that it sought a decision on a category of case which was not actually at issue in the case being decided. Accepting the force of that observation, the Court was expressly told that the intention was to use any dicta on the topic to persuade costs judges to apply MGN v UK rather than Campbell v MGN.

The main judgment is that of Lords Neuberger & Dyson (Lords Sumption & Carnwath agreeing). They consider the scope of MGN v UK at [50-52] but reject the submission that that case required a finding that the “old” regime was incompatible with Art 6. They note that that decision concerned Art 10 which is “always given particular weight by the ECtHR” and decide that the balancing exercise in that case was “of a wholly different character” to that under consideration.  There is no hint of criticism of the decision in MGN v UK in Art 10 cases, but neither is there any suggestion that the contrary decision of the House of Lords in Campbell v MGN should not be followed. Lord Mance (Lord Carnwath agreeing) gave a judgment to the same effect, thus constituting the majority of 5 justices.

Lord Clarke delivered the dissenting judgment with which Lady Hale agreed. At [129] he expressly endorsed MGN v UK and considered that it applied beyond Art 10 cases.

So what do the judgments offer to litigants in “publication and privacy proceedings” seeking certainty about the(ir)recoverability of success fees and ATE premiums?

Having permitted submissions from an organisation which was only interested in publication and privacy proceedings, the decision not to make any express comment as to the impact of MGN v UK upon the authority of Campbell v MGN  (and the decision not to explain the lack of comment) may be thought odd. It is certainly unhelpful, leaving the potential protagonists to such disputes (and the judges deciding them) in the dark as to how the majority in the highest court in the land views the issues.

Given the lack of any criticism of MGN v UK what is likely to happen if it is used to attack the still current costs recovery regime in “publication and privacy” cases, almost all of which are bound to engage Article 10?

Lord Neuberger & Lord Dyson observe at [87] that the real issue was whether paras 11.7 and/or 11.9 of the Costs Practice Direction could be “read down” to remedy the defects upon which the MGN v UK decision was predicated.  They conclude that, even if the old regime was incompatible with the ECHR, it would not be right to do so because of the legitimate expectation of litigants and their lawyers that the regime would apply to cases which fell within it. At [90] they point out that doing so would “have a  serious impact on many thousands of pre-April 2013 cases which are in run-off, as well as claims to which the pre-Jackson costs rules continue to apply, such as ….publication and privacy cases.”

This might be taken as an indication that the “legitimate expectation” argument would apply equally to publication and privacy cases.

Lord Mance reaches the same conclusion but without making a comparable comment.

The dissenting minority would not have allowed any legitimate expectation to trump the need to give effect to the ECHR and would have been prepared to read down or striking down paras 11.7 and/or 11.9 and thus bring into the consideration of the recoverability of success fees and ATE Premiums the means of the parties. This would mean that the balance between the rights of the CFA funded claimant under Art 6 (and Art 8) would need to be balanced on a case by case basis against the rights of the defendant   (under Art 10). Thus would be avoided what might be thought the least attractive aspect of the CFA regime (that it is available to those who have no need of it) while serving the real need of access to justice for those who cannot afford it.

The following would therefore seem to summarise the position:
1. the Supreme Court chose not to make any specific comment on this issue;
2. as a matter of strict precedent, Campbell v MGN continues to govern;
3. the majority of the Supreme Court considers there to have been (and to be) a legitimate expectation that the existing regime on recoverability will continue to apply;
4. if the regime is to be modified to meet the ECtHR’s criticisms it will probably be by a more  subtle means than denying recoverability to all.