Its consultation proposes the introduction of qualified one-way costs shifting (QOCS) for these cases in England and Wales. Those bringing personal injury claims currently receive similar protection from legal costs.
"The rationale for introducing costs protection in these cases is quite simple: it is to ensure that meritorious cases are able to be brought or defended by the less wealthy, who should not be deterred from bringing or defending an appropriate claim through the fear of having to pay unaffordable legal costs to the other side if they lose," the MoJ said in its consultation paper.
Unlike the costs protection regime applicable in personal injury cases, the Government does not propose extending full protection to all those bringing defamation and privacy claims regardless of means. Instead, those that can afford to pay some of the costs in these cases, whether bringing or defending the claim, would be expected to do so. This is due to the number of very wealthy people, such as celebrities, who regularly feature in this type of claim; as well as the fact that the less well-off party can often be the one defending rather than bringing the claim.
As proposed, the new regime would apply differently to three groups of people, whether they are an individual or organisation bringing a relevant claim or an individual or organisation defending one. They would be split into those of 'modest' means, who would be entitled to costs protection in full; those of 'some' means, who would be entitled to capped costs; and those of 'substantial' means, who would not get any costs protection as, if ordered, they could pay the other side's costs without facing "severe financial hardship".
Under the new regime, it would be open to parties that are not individuals to agree the costs protection position amongst themselves. If this could not be agreed, the judge would decide based on a statement of assets provided by the party claiming financial hardship. Where costs are to be capped because the party falls into the middle category, this would be done by the judge at the first judicial hearing if not agreed between the parties. Individual claimants that are not of substantial means would be entitled to the relevant level of costs protection unless they formally apply to the court to confirm that they would not suffer severe financial hardship if ordered to pay costs.
The consultation makes it clear that "very wealthy individuals or organisations", including national newspapers and publishing groups, would not be entitled to any costs protection unless they could prove "severe financial hardship". This will apply even where a national newspaper reports that it is losing money. According to the consultation, "the fact that it continues to run and pay for a substantial organisation should mean that it can afford to pay a claimant's costs without facing severe financial hardship".
Judges would be able to order any costs protection order to be set aside under the same circumstances as is currently the case in personal injury cases. Grounds include dishonest claims or proceedings brought without reasonable grounds; abuse of court process; or obstruction or attempted disruption of court proceedings. Parties could also face sanctions if they do not comply with the Pre-Action Protocol for Defamation and the costs budgeting rules that apply to all civil court cases.
The consultation closes on 8 November. It is proposed that the new costs regime would take effect through an update to the Civil Procedure Rules (CPR) in April 2014.