The Supreme Court has unanimously dismissed appeals by three newspaper publishers who claimed that orders requiring them to pay the successful claimants' additional liabilities infringed the publishers' human rights.
A Conditional Fee Agreement (CFA) permits a lawyer to be paid nothing (or a discount on normal fees) if a claim fails, but to receive their normal fee plus a success fee if it succeeds. A claimant can also take out after-the-event (ATE) insurance against the risk of having to pay the defendant's costs.
Under the regime put in place by the Access to Justice Act 1999 (the 1999 Act regime), where a claim succeeds, the claimant is permitted to recover the success fee from the defendant, as well as the ATE insurance premium. The court's power to award these heads of costs was abolished in most civil cases in 2013, but remains for defamation and privacy claims.
The appeals concerned two libel cases (Flood and Miller) and a privacy case (Frost). In each case the defendants had lost and been ordered to pay the claimants' success fees and ATE insurance premiums. The defendants appealed the costs orders. Relying on the European Court of Human Rights decision in MGN v UK, they argued that their right to freedom of expression under Article 10 of the European Convention on Human Rights (ECHR) was infringed by the requirement to reimburse the claimants' success fees and ATE premiums.
The Supreme Court dismissed the appeals. In doing so, it considered whether domestic law should reflect the decision in MGN v UK, to the extent of laying down a general rule that where a claim involves restricting a defendant's freedom of expression, it would normally be an infringement of the defendant's Article 10 rights to require it to reimburse a success fee and ATE premium. If there was such a rule, should this mean that the costs orders that were the subject of the appeals should be amended retrospectively?
The court decided that it would be inappropriate to express a concluded view as to whether there was such a general rule. This was because the UK Government was not represented at the hearing, despite having an obvious interest in the outcome. It would be similarly inappropriate to make a declaration of incompatibility in relation to the 1999 Act regime.
However, even if there were such a rule in domestic law, the court went on to hold that to deprive the claimants in this case of their right to recover the additional liabilities would infringe the claimants' rights under Article 1 of the First Protocol to the ECHR (right to peaceful enjoyment of possessions) because the claimants had a legitimate expectation that the 1999 Act regime would apply and be upheld.
To refuse the costs orders in Miller and Flood would also directly infringe the fundamental principle that citizens are entitled to rely on the law as set out in legislation on the assumption that it will not be changed retroactively. Freedom of expression is a potentially competing principle, but was only indirectly engaged in this case. The court found that to allow the appeal would involve a graver infringement of the claimants' rights than the defendants would suffer if the appeal were dismissed.
With this judgment, the Supreme Court has allowed the continued recovery of success fees and ATE premiums in publication cases. However, it inclined to the view that such costs orders may infringe publishers' Article 10 rights (while declining to make a conclusive judgment on the point). Therefore, while recovery of these additional costs remains possible, there appears to be scope for a future challenge.