A constant revolution?
Date: 11 February 2011
Authors: David Greene
Issue: Vol 161, Issue 7452
Categories: Opinion
David Greene reflects on the Jacksonian effect
Two recent decisions in different tribunals could not have been timed any better to liven up the debate raised in Jackson LJ’s proposals for civil costs reform and the government’s green paper.
A case in point
The decision in MGN Ltd v UK (App no 39401/04),[2011] All ER (D) 143 (Jan) by the European Court of Human Rights (ECtHR) explores the relationship between Art 6 (access to justice) and Art 10 (freedom of speech). This raises some fascinating issues about the effect, or “chilling effect” as the ECtHR repeatedly quotes, that the recovery of the success fee on conditional fee agreements has upon the defendant.
Whether it has wider implications outside the defamation/privacy field remains to be seen but certainly it provides the pro-Jackson lobby with a shot in the arm in its bid to see the end of recovery of both success fees and after the event (ATE) premiums.
For the claimant lobby pressing against the green paper proposals it was the wrong case at the wrong time. While much of their argument is based on preserving access to justice, no one ever accused the claimant in the MGN domestic proceedings, Naomi Campbell, of being short of a bob or two and atypical of the general run of claimant seeking access to the court through conditional fees otherwise perhaps denied.
The ECtHR balanced the “chilling effect” of potential liability for very substantial costs against the restrictions that that may have on those who may, with the prospect of that liability, back away from expressing views they might otherwise publish. The access to justice (Art 6) provided by recovery of success fees needed to be balanced with the freedom of speech guaranteed by Art 10. The conclusion of the court was that recovery of success fees was disproportionate to the end to be achieved under Art 6 and unreasonably restricted MGN’s Art 10 rights.
It may be said that this only affects defamation and privacy claims in which Art 10 comes into play but what about the competition between parties under Art 6. The claimant’s Art 6 rights played against the defendant’s Art 6 rights. It comes back to the old argument about who pays for access to justice; with yet further cuts to legal aid piggy backing on restricting access for claimants under the Jackson reforms where’s the balance to be achieved?
A domestic spat
The ECtHR’s intervention into the costs debate has been quickly followed by a more domestic argument in the Court of Appeal in Sibthorpe v L B of Southwark [2011] EWCA Civ 25, [2011] All ER (D) 183 (Jan). That decision explored one aspect of the modern funding of litigation and in particular the legality of a solicitor providing their client with an indemnity in relation to any adverse costs that may be awarded. The paying party, Southwark, argued that that arrangement was champertous and therefore unlawful, and amounted to the solicitor providing a policy of insurance which meant that the regulatory requirements for insurance had to be met. The point has been exercising minds for some time but is particularly pertinent to a potential post Jackson funding world.
Sibthorpe involved two housing disrepair claims. These are typical of the claims that may have been within the scope of legal aid in years gone by. Access to the court is probably unaffordable unless the solicitor is willing to work on a conditional fee agreement. In this area of work we have seen a gentle move away from ATE provision to cover for adverse costs to solicitors agreeing to cover the downside. Southwark proffered that that arrangement was champertous because the solicitor had a financial interest in the outcome of the proceedings and thus unlawful and if not champertous then an insurance arrangement between solicitor and client which the solicitor was not authorised to issue.
Southwark lost. Having reviewed recent developments in this judicially active area of the law the court concluded simply that the arrangement was not champertous and would indeed require an extension of the principles of champerty to make it so. As to it being a policy of insurance; short shrift from their lordships with little ceremony, this type of arrangement is not a policy of insurance.
So two cases that have a very Jacksonian feeling about them. Be you for or against his proposals these cases are a mark of the constant revolution in the costs field.
David Greene partner, Edwin Coe LLP & consultant editor of New Law Journal.
E-mail: David.Greene@EdwinCoe.com
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