Out-Law News | 19 Jan 2011 | 4:41 pm | 2 min. read
The ruling could speed the adoption of measures proposed by Lord Justice Jackson, who said in a report on litigation costs last year that the losers of civil cases should not have to pay success fees to the winner's lawyers.
"The Court considers that the requirement that [the Mirror] pay success fees to the claimant was disproportionate having regard to the legitimate aims sought to be achieved and exceeded even the broad margin of appreciation accorded to the Government in such matters," said the Court's ruling (62-page / 515KB Word document).
"The Court finds that there has been a violation of Article 10 of the Convention," it said, referring to the article of the European Convention on Human Rights that guarantees the right to freedom of expression.
The Court said that forcing the publishers to pay disproportionately high success fees would act as a deterrent to the publication of stories, and so breached the right to free expression.
UK law allows participants in civil cases to engage lawyers on a no win no fee, or partial no win no fee, basis and to agree that the lawyer can charge up to double the agreed rate if the case is won. The losing party has to pay a substantial part of that extra sum.
The Court has ruled that the UK should not allow courts to force the loser to pay that extra charge of up to 100% of the agreed fee if the overall fee is disproportionately high.
The ruling makes the adoption of proposals made by Lord Justice Jackson a year ago more likely. The Ministry of Justice is considering what action to take after the judge recommended that losers not be forced to pay success fees and that costs in cases be proportionate to the award made in the case itself.
Litigation expert and costs lawyer Keith Levene of Pinsent Masons, the law firm behind OUT-LAW.COM, said that the case will have implications for all kinds of civil litigation in the UK.
"Whilst this decision deals with a libel case, the underlying principal will have an impact on the Government's approach to the recoverability of costs, in particular in relation to clinical negligence, personal injury cases and 'low value' claims," he said.
"This adds support to the view reached by Lord Justice Jackson in his review of civil litigation costs," said Levene. "In particular it supports his views on whether success fees and after the event insurance premiums should be recoverable from a losing party paying costs, and on the proportionality of costs to be paid by the losing party."
The Court ruling said that in commissioning the costs research the UK Government had conceded that the success fee arrangement was not desirable.
"The Ministry of Justice acknowledged in that process that, as a result of recoverable success fees, the costs burden in civil litigation was excessive and, in particular, that the balance had swung too far in favour of claimants and against the interests of defendants," said the ruling. "This was particularly so in defamation and privacy cases."
"Not only was the burden on defendants in publication cases recognised as excessive but one of the acknowledged flaws of the scheme - the opportunity for solicitors to 'cherry pick' cases evidenced by the success of publication cases run on a CFA/success fee basis - would appear to indicate that the scheme has not achieved the espoused aim of ensuring access to justice of the broadest range of persons," it said.
The case concerned a 2001 article in the Mirror which claimed that Campbell was a drug addict. Campbell sued for breach of confidence and won £3,500 in damages.
The Mirror claimed that the fees it had to pay, which have been reported as being over £1 million, were disproportionate to the damages awarded.
The Court agreed with the Mirror on that issue but did not uphold the paper's claim that the ruling on breach of confidence unlawfully restricted its rights to freedom of expression.