Supreme Court dismisses media publishers' appeals against costs awards

The unanimous judgment of the Supreme Court means that the publishers are liable for the success fees arising from conditional fee agreements (CFAs) entered into by the claimants and their lawyers and the insurance premiums arising from ATE policies entered into by the claimants. Publication cases, including libel and privacy claims, are an exception to the  provisions of the 2012 Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) which brought to an end the recoverability of success fees and ATE premiums generally.

"This has been an eagerly awaited decision on a particularly vexed issue," said media law expert Alex Keenlyside of Pinsent Masons, the law firm behind Out-Law.com. "The recoverability of success fees and after the event (ATE) premiums in publication cases is a major factor for individuals when considering whether to bring proceedings."

"The Supreme Court's decision is obviously good news for potential claimants and therefore a boon to media lawyers with claimant practices; but it is something of a blow to media publishers. Their argument that such additional liabilities constitute an infringement of their Article 10 rights does, in two of the cases, seem to have been accepted by the Supreme Court, but it was outweighed by the claimant's legitimate expectation that the law on recoverability of success fees and ATE premiums would not change retroactively. It is unlikely we have seen the end of this particular battle," he said.

In each of the three cases, individuals who had successfully sued a media publisher had been awarded their costs in line with the regime introduced by the 1999 Access to Justice Act (AJA). Two of the cases, Flood v Times Newspapers Ltd and Miller v Associated Newspapers Ltd, involved allegations that the publisher had libelled the individual concerned. The third case stemmed from the High Court's award of damages to eight people, including former footballer Paul Gascoigne and the actor Sadie Frost, for phone hacking carried out by Mirror Group.

In all three cases, the publisher argued that the costs order infringed its 'freedom of expression' rights under article 10 of the European Convention on Human Rights (ECHR). This argument was partly based on a 2011 finding of incompatibility by the European Court of Human Rights in Strasbourg.

Lord Neuberger, giving the unanimous judgment of the court, said that each of the individuals began their claim against the publisher "in the expectation that, if the claim succeeded and he obtained an order for costs, [the publisher] would be liable to reimburse not only the base costs but also the success fee and ATE premium" under the costs regime in force at the time.

"Parliament did not see fit to render the LASPO regime retrospective: on the contrary, as explained above, the 1999 Act regime applies to all proceedings begun before 1 April 2013," the judge said. "Parliament thereby correctly recognised that, while the 1999 Act regime was unsatisfactory, it would be wrong to disapply it to proceedings which had been issued in the expectation that that regime would continue to apply to those proceedings."

"It follows from all of this that upholding [the High Court's] costs order would infringe [the publisher's] article 10 rights for the reasons given by the Strasbourg court ... and would therefore involve an injustice, but amending that costs order in the way sought by [the publisher] would not only involve an infringement of [the individual's] A1P1 rights: it would undermine the rule of law," he said.

"It is a fundamental principle of any civilised system of government that citizens are entitled to act on the assumption that the law is as set out in legislation (especially when its lawfulness has been confirmed by the highest court in the land), secure in the further assumption that the law will not be changed retroactively … While freedom of expression is, of course, another fundamental principle, it is not so centrally engaged by the issue in this case," he said.

The position in the phone hacking case was slightly different as the individuals had begun their legal action after the Strasbourg court had published its 2011 judgment, including its findings against the UK regime, the judge said. However, in that case the publishers could not rely on their article 10 rights because the information being published was "obtained illegally by or on behalf of a media organisation", he said.

The court was also asked to rule on whether the High Court judge was correct to award full costs to Mr Flood in his case against Times Newspapers, given he had only been partly successful in his claim against the publisher. The judge had taken the fact that Flood had won on a significant part of the case into account when deciding what costs order to make, and she was perfectly entitled to use her discretion to do so, the Supreme Court found.

"While the judgment as a whole is significant, the fact that the Supreme Court upheld the judge's discretion on costs generally where the publisher had been partially successful is particularly interesting," said legal costs expert Keith Levene of Pinsent Masons. "The weight to be given to the fact that Mr Flood was only partially successful was a matter for the first instance judge's discretion."