News: UK Supreme Court holds that CFA regime is compatible with Human Rights Convention

22 07 2015

uksccrest2_400x400The UK Supreme Court today handed down judgment in the case of Coventry v Lawrence ([2015] UKSC 50) [pdf]. By a majority of 5:2 the Court held that the conditional fee and after the event insurance regime brought in by the Access to Justice Act 1999 (“the AJA regime”) was compatible with the European Convention on Human Rights.

The leading judgment was given by the President of the Court, Lord Neuberger, and the Master of the Rolls, Lord Dyson. Lords Sumption and Carnwath agreed. Lord Mance gave a concurring judgment. Lord Clarke gave a dissenting judgment, with which Lady Hale agreed. The summary which follows is taken from the Courts Press Summary.

The majority noted that key aims of the AJA regime were to contain the rising cost of legal aid, to improve access to the courts for members of the public with meritorious claim and to discourage weak claims.

The AJA regime deliberately imposed the costs of all CFA litigation on unsuccessful defendants as a class. Instead of placing a burden on the legal aid fund, legal proceedings were to be funded by a party’s lawyers (who would undertake the work “on risk” in exchange for a potential success fee) and then, if the proceedings were successful, the burden of the success fee would be transferred to the losing party.

The scheme had the legitimate aim of the widest public access to legal services for civil litigation funded by the private sector [26- 27].

In order to be a proportionate means of reaching its legitimate aim, the scheme had to strike the right balance between the rights of different types of litigant.

Further, the costs rules under the Civil Procedure Rules only permit costs “which are proportionate to the matters in issue”; this involved first asking whether the total sum claimed was disproportionate, and then, if the costs as a whole did appear to be disproportionate, asking whether the work in relation to each item was necessary and, if so, whether the costs of each item was reasonable, in which case it was proportionate. This approach was applied to success fees and insurance premiums; fees that were reasonable in amount were necessary, and therefore deemed to be proportionate [29- 41].

The decision of the ECtHR in MGN v United Kingdom, which held that the AJA scheme was incompatible with article 10 of the Convention, concerned the balancing of the rights guaranteed by article 10 with article 6 rights.

In that case, the ECtHR identified four flaws in the AJA regime; (1) the lack of focus of the regime and the lack of any qualifying requirements for claimants who would be allowed to enter into a CFA; (2) the absence of any incentive for claimants to control the level of legal costs and the fact that judges assessed costs only at the end of the case when it was too late to control costs; (3) the “blackmail” or “chilling” effect of the regime which drove parties to settle early despite good prospects of a defence; and (4) the fact that the regime gave the opportunity to “cherry pick” winning cases to conduct on CFAs [43, 53].

The Court accepted the first, second and fourth flaws.  However, the third flaw was at the heart of the case: the questioon was whether this flaw rendered the scheme incompatible with Article 6 or A1P1.  The Court had to consider whether the AJA regime is a proportionate way of achieving the legitimate aim it pursued [56-57].

The court must give considerable weight to informed legislative choices in circumstances where state authorities are seeking to reconcile the competing interests of different groups in society [58-59]. The ECtHR recognises that a regulatory scheme may be compatible with the Convention even if it operates harshly in individual cases [60-63].

There is a powerful argument that the AJA regime is compatible with the Convention simply because it is a general measure which was

  • justified by the need to widen access to justice to litigants following the withdrawal of legal aid;
  • made following wide consultation and
  • fell within the wide area of discretionary judgment of the legislature and rule-makers to make [64].

It was argued that the scheme fails to take into account the position of the paying party, but the financial position of the paying party had never been a relevant factor in determining the assessment of reasonable and proportionate costs [79].

The scheme as a whole was a rational and coherent scheme for providing access to justice and in the circumstances this led to the conclusion that the scheme was not incompatible with article 6 or A1P1 [83- 84].

 


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