Reference:  UKHL 61;  1 WLR 3394;  4 All ER 793;  EMLR 1; The Times, 21 October 2005
Court: House of Lords
Judge: Lords Nicholls, Hoffmann, Hope, Carswell, Baroness Hale
Date of judgment: 20 Oct 2005
Summary: Costs - Conditional Fee Agreements - Success Fee - Article 10 - Access to Justice - Article 6 - Proportionality - Cost-capping
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Instructing Solicitors: Schillings for the Claimant; Davenport Lyons for the Defendant
In May 2004, the House of Lords by a majority of 3-2 overturned the Court of Appeal’s unanimous dismissal of Naomi Campbell’s privacy action, restored the order of Morland J. and ordered MGN to pay Ms Campbell’s costs in the Court of Appeal and House of Lords. The newspaper group was served with a legal bill of £1,086,296.47, £594,470 of which related to the House of Lords appeal which Solicitors and Counsel for Ms Campbell acted on a CFA, with success fees of 95% and 100% respectively. Thus the ‘profit’ element of the legal bill was £288,468 whilst disbursements were £26,020. MGN petitioned against liability to pay any part of the success fee on the basis that, in the circumstances of the case, the liability was so disproportionate as to infringe their Article 10 rights.
(1) whether success fees can in cases brought against the media are incompatible with Article 10 as being a disproportionate interference with freedom of expression; (2) whether it was disproportionate to allow a wealthy claimant to take advantage of a CFA.
(1) Parliament had decided that CFAs with success fees were permissible. That was a policy based decision to impose liability on losing Defendants in order to facilitate wider access to justice by other litigants; (2) in relation to the issue of proportionality, the issue was not whether the costs in the instant case were disproportionate to the sum at issue, but whether the legislative framework of CFAs which, through success fees, required losing Defendants to contribute to the funding of other litigation, was a proportionate measure
to provide those other litigants with access to justice, having regard to its effect on the article 10 right to freedom of expression. The scheme under which such liability is imposed was a choice open to Parliament; (3) this funding regime did not become disproportionate if used by wealthy litigants and there was nothing that required a solicitor to inquire as to means prior to agreeing to act on a CFA.
The decision itself – that it is a matter for Parliament to structure the CFA regime so as to strike a balance between Article 10 and Article 6 rights – is unremarkable. However, Lord Hoffmann’s obiter comments about the particular problems in CFA defamation cases are likely to have wider ramifications. He suggested that the circumstances in Turcu gave rise to a “blackmailing effect” and endorsed the cost-capping proposals put forward by the Court of Appeal in Musa King. However he regarded this as being a mere “palliative” and no answer to the inherent problems for the media of facing CFA cases brought by impecuious Claimants.