Opinion: “The consequences of MGN Limited v The UK – Does the CFA regime really need reforming?” – Tim Lowles

20 01 2011

Much has been written concerning yesterday’s long awaited verdict in the European Court of Human Rights concerning Naomi Campbell, privacy and CFAs.

It came as no surprise to most practitioners that the House of Lords decision on the substantive elements of the claim were upheld and MGN’s application in this regard was dismissed especially in light of the European Court of Human Right’s decision in von Hannover v Germany [2004] EMLR 21 which immediately followed the original House of Lords decision in 2004.

But what about the Courts judgment regarding CFAs and their effect on media organisation’s article 10 right to freedom of expression?

There has been a lot of discussion of the “chilling effect” that CFAs have had on libel and privacy claims and this was an argument successfully deployed by MGN in Strasbourg. However reading into the ECtHR judgment it appears to me that the CFA regime is not as oppressive as the media (who have a vested interest in removing CFAs) make it out to be.

Costs

From the judgment we are able to deduce the amounts claimed by Ms. Campbell and the amounts paid by MGN.

These are as follows:

Amount Claimed Amount Paid % Recovery
High Court £377,070.07 £290,000.00 77
Court of Appeal £114,755.40 £95,000.00 83
House of Lords 1 £568,499.35 £350,000.00 62
House of Lords 2

(Costs)

£255,535.60 £150,000.00 59
Disbursements £26,020.65 (does not say) n/a
Total: £1,341,831.07 £885,000.00 66

What we can see from the above is that despite having won and having spent over 4 years seeking a remedy Ms. Campbell was liable to pay a shortfall in costs of £456,831.07. Whilst it is fair to say that Ms. Campbell has had a very successful and lucrative modelling career this is a lot of money to spend seeking to remedy the breach of a fundamental human right.

It is open to debate that the percentage recovery is higher if you take into account the fact that the House of Lords figures include success fees and that the correct figure should be taken against the base costs. However even ignoring the success fees the percentage recovery as against Ms. Campbell’s base costs is 93% which equates to a shortfall of £65,733.29 which would be owed to her solicitors in the event they generously waived their success fee.

Despite knowing they had settled Ms. Campbell’s costs claims for significantly less than was claimed, no doubt partly because Ms. Campbell’s lawyers were aware they would struggle to recover the 100% uplift on assessment, MGN successfully argued that the effect of the 100% success fee included in CFAs was that it breached their article 10 right to Freedom of Expression and that it had a “chilling effect” on them as a media organisation. The Court found that “the financial impact of CFAs inevitably inhibited media organisations from defending claims that should be fought and put pressure on them to settle early valid claims…” and this despite dealing with a powerful newspaper group that refused to acknowledge defeat had doggedly pursued this particular claim for nearly 10 years and yet was still found by the ECtHR to have breached Ms. Campbell’s article 8 rights.

That MGN are now seeking to recover the success fees they paid to Ms. Campbell from the UK Government together with other costs totalling £407,607.00 appears somewhat hypocritical.

The “chilling effect” – Is it really a deterrent?

The “chilling effect” of CFAs would appear not to ring true given the Mirror published the original article without fear of reprisal. Indeed having published the original article on 1 February 2001 Ms. Campbell complained through her lawyers. As a result of this MGN decided not to take Ms Campbell’s legitimate complaints into consideration and instead decided to use its most powerful weapon (the newspaper) to publish further vindictive articles about her, one of which was headed “After years of self-publicity and illegal drug abuse, Naomi Campbell whinges about privacy”.

That said had MGN considered Ms. Campbell’s article 8 rights when deciding whether to publish the original article we may not have reached the position we have today where individuals rights to privacy are properly protected in the UK Courts.

The Guardian reported yesterday that:

Freedom of expression advocates including Index on Censorship, Human Rights Watch and Global Witness told the Strasbourg court conditional fee agreements (CFAs) were having a “chilling effect” on freedom of expression in the UK.

However the majority of examples the newspapers complain about, such as Campbell, concern cases where the newspapers were not so concerned as to not publish the offending article in the first place. They also generally concern cases where they have been ordered to pay costs.

It is worth reminding ourselves that if a newspaper is ordered to pay the claimant’s costs together with a success fee it is because they have been found to have acted unlawfully. It follows that if they have not acted unlawfully no such award will be made. If the newspaper is confident of winning it is also open to them to instruct solicitors to act pursuant to a CFA on their behalf. These solicitors would be entitled to a success fee to reflect the risk in doing so in the event they succeed. This is something that the Daily Telegraph has done to good effect in a number of cases.

The possibility that a claimant may use a CFA also did not deter the Express group publishing numerous articles regarding the McCanns et al, it did not deter the News of the World writing about Max Mosley and it did not stop the Daily Telegraph from disclosing the MPs expenses files. It is difficult to see what “chilling effect” the newspapers are suffering from.

Access to Justice

The ECtHR rightly recognised that the CFA regime was intended to allow access to justice for individuals who would otherwise be unable to fund their litigation. It also questioned why those who could afford to pay their lawyers should also benefit from the regime.

The fact is that the success fee reflects the risk taken by the solicitor in conducting what is almost always uncertain litigation together with a compensatory element to reflect the fact they are not being paid throughout the course of proceedings. In Campbell the solicitors acting on a CFA conducted complex litigation in the House of Lords which resulted in a majority 3:2 decision over the course of 2 years without payment against a wealthy newspaper group with much greater resources even than Ms. Campbell. That they should be entitled to seek to recover a 100% success fee to reflect this risk would appear appropriate. In fact it is rare for privacy claims to be conducted on a CFA with their use being much more prevalent in personal injury or defamation claims.

However in the case of those who can afford to pay lawyers there already exists a safeguard for the paying party in that it is open to them to seek to reduce the success fee element during the detailed assessment procedure.

Conclusion

What is clear is that whilst the MGN may complain about having to pay 66% of Ms. Campbell’s overall costs and the effect it had on their freedom of expression, it was Ms. Campbell whose privacy was breached, who was left with no remedy in respect of keeping the fact she attended narcotics anonymous private and confidential and who was liable to pay a significant shortfall in the costs recovered after 4 years and a number of appeals.

It is difficult to substantiate the “chilling effect” of CFAs in relation to proceedings post publication. The fact the Mirror published the offending stories in the first place and the numerous other examples of breaches of privacy that have arisen since, suggest that there is no “chilling effect” on media organisations and that they instead disregard individual’s article 8 rights regularly and publish in any event knowing their victims will not sue post publication. That they continue to seek to reduce their overall liability for acting unlawfully does not reflect well on an industry already fighting serious concerns over its ability to self regulate.

And finally by seeking to remove or lower the amount of recoverable success fees the effect will only be to the detriment of those who cannot afford to litigate under normal circumstances (the majority of individuals), whether in claims for privacy, defamation, personal injury or otherwise, as there will be less lawyers who will be willing, or can afford to act for these individuals which cannot be right.

Tim Lowles is an associate at Collyer Bristow.


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One response

20 01 2011
Law Think

…enter Mr Mosley.

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