Costs protection in defamation and privacy cases could be achieved by a form of qualified one-way costs shifting for which both claimants and defendants could apply, a Civil Justice Council (CJC) working group has recommended.
However, this so-called ‘variable costs protection’ (VCP) could be removed by the judge if a party was deemed to have sufficient means to litigate without it.
The CJC was asked to investigate costs protection  by justice minister Lord McNally during passage of the Defamation Bill during Parliament, and the working group – chaired by Irwin Mitchell chief executive John Pickering – did not have time to consider the impact of the recommendations by Lord Justice Leveson.
Its report did not come down firmly either way on whether VCP should apply by default. If so, it should only be to claimants, the group said, subject to an application by the defendant for it to be disapplied.
That application would be made on the basis that the claimant was ‘of sufficient means’ to be able to litigate without protection against the defendant’s costs being enforced in full against them.
Defendants seeking VCP would have to prove they have insufficient means to be able to litigate based on the potential costs consequences that could follow.
The report said the mechanism should be sufficiently flexible so that it does not require an ‘all or nothing’ type application. “Whilst parties should be encouraged to apply as early as possible for costs protection (if appropriate to do so), provision should still be made for such protection to be applied for at any stage in the proceedings.
“Provision should also be made within the drafting of any costs protection mechanism for the assigned judges to have the power to order costs protection only in respect of a certain stage of the proceedings and/or for it to apply only above a certain level of costs.” The continuing need for costs protection should also be regularly reviewed throughout the proceedings, the working group said.
However, a minority of members of the working group were completely opposed to the introduction of any type of costs protection system at all, “because they believed the risk of facing a costs liability to be an extremely important part of civil litigation”, the report said.
Other key recommendations included:
- Greater judicial case management, with specialist judges allocated to ensure proceedings are dealt with swiftly and at minimal cost, with early intervention, approval of costs budgets and overseeing progress;
- Agreeing in which circumstances parties might lose their cost protection – for example if a claim is found to have been fundamentally dishonest, or has been struck out (eg, as being an abuse of the court process);
- Applying costs budgeting measures, as adopted in other areas of law, so that parties draw up realistic budgets for cases and adhere to them under judicial supervision; and
- Allowing the courts to continue to use their cost-capping powers to supplement VCP.
Mr Pickering said: “Our task was a difficult one. Defamation and privacy law is fast-changing and complex, not least because of the advent of social media and online publication. Ideally we would have had much more time (for example not all members were able to sign off the report), than the ministerial timetable permitted, to both consider the issues and consult widely.
“Our deliberations were also hampered by examining the issues without knowing what model of arbitration would develop in response to the Leveson inquiry.
“Nonetheless, we have done our best to weigh up the pros and cons of various methods for protecting parties from major adverse costs in bringing or defending a defamation or privacy claim, as without such protection there is a real risk of people not receiving access to justice.”
Members of the working group included media law specialists such as Desmond Browne QC (5 Raymond Buildings), Keith Mathieson (partner, Reynolds Porter Chamberlain), Lucy Moorman (partner, Simons Muirhead & Burton), Zoe Norden (in-house lawyer, The Guardian), Marcus Partington (group legal director, Trinity Mirror), and Alasdair Pepper (partner, Carter-Ruck).