The government has today proposed the introduction of qualified one-way costs shifting (QOCS) in defamation and privacy cases – depending on the wealth of the party seeking protection.
It had originally rejected such a move when proposed by Lord Justice Jackson, but has rethought in the light of the support for QOCS in the Leveson report.
A consultation paper issued today said: “The rationale for introducing costs protection in these cases is quite simple: it is to ensure that meritorious cases are able to be brought or defended by the less wealthy, who should not be deterred from bringing or defending an appropriate claim through the fear of having to pay unaffordable legal costs to the other side if they lose.”
Claimants who are not individuals, such as businesses or charities), and all defendants, could also apply for costs protection.
However, unlike in relation to personal injury, the government said it is not right to provide QOCS across the board regardless of means in defamation cases
Full costs protection would be afforded to those who would face “severe financial hardship” if they had to pay the other side’s costs.
There would be partial protection for those of “some means” who could pay something “without seriously affecting their overall financial position”. The consultation paper said: “While they might not be able to pay all of the opponents’ costs – and would suffer severe financial hardship if they did so – they could nevertheless pay a reasonable amount.”
This sum would be capped by the judge at the first judicial hearing, if not agreed between the parties. If determined by the judge, it would be based on the applicant’s statement of assets and the costs budget. It might be that the opponent’s assets are also a relevant factor, given that the effect of partial costs protection would be to reduce the costs that the opponent might otherwise receive.
There would be no QOCS for “very wealthy individuals or organisations”. The paper said: “This provision is intended to apply even if a national newspaper, for example, reports that it is losing money; the fact that it continues to run and pay for a substantial organisation should mean that it can afford to pay a claimant’s costs without facing severe financial hardship.”
The proposals build on the report of a Civil Justice Council working party, which recommended 'variable costs protection' depending on a party's means.
The costs of the QOCS hearing would be in the court’s discretion, but the consultation suggested the default position could be each side bearing their own costs unless another order is appropriate. “A disincentive to satellite litigation on costs protection might be provided by a presumption that a party who unsuccessfully opposes another party’s application for costs protection would have to pay the costs of the applicant party on the indemnity basis,” it added.
Justice minister Helen Grant said: “Defamation and invasion of privacy can have a devastating effect on lives and it is crucial that people, whatever their means, can stand up for their rights in court even when they are facing a wealthy opponent who can afford to appoint a team of expensive lawyers.”
The proposed changes are intended to come into effect from April 2014, alongside implementation of the LASPO reforms for defamation and privacy cases, which were paused to enable this issue to be considered.