Supreme Court backs pre-LASPO recoverability of success fees and ATE premiums

Neuberger: legitimate expectation

The Supreme Court has ruled against three leading newspaper groups over having to pay claimants’ success fees and after-the-event insurance under the pre-LASPO regime, saying that the media’s rights under the European Convention on Human Rights were not engaged as critically as the rights of those suing them.

The court said the claimants had a legitimate expectation under the Access to Justice Act 1999 that they would be able to recover additional liabilities at the time they entered into conditional fee agreements (CFAs), and this was a bigger consideration than the newspapers’ argument that recoverability infringed their article 10 right to freedom of expression and would have a ‘chilling effect’ on their reporting.

Giving the unanimous judgment of the court, its president, Lord Neuberger, said: “It is a fundamental principle of any civilised system of government that citizens are entitled to act on the assumption that the law is as set out in legislation (especially when its lawfulness has been confirmed by the highest court in the land), secure in the further assumption that the law will not be changed retroactively – ie in such a way as to undo retrospectively the law upon which they committed themselves.”

He was ruling in three conjoined cases, Times Newspaper Ltd v Flood, Miller v Associated Newspapers Limited, and Frost and others v MGN Limited, the latter two of which were leapfrogged from the High Court. The first two concerned libel proceedings, the latter phone hacking.

Each exposed the tension between the House of Lords costs ruling in Campbell v MGN in 2005 – which determined that the then CFA regime was not a breach of article 10 – and the European Court of Human Rights’ (ECtHR) 2011 decision in MGN v UK, when it held that recoverability infringed the newspaper’s article 10 rights.

However, while indicating that it was hard to impugn the European court’s decision, the Supreme Court said it was “very difficult” to see how Mr Miller’s claim under article 1 of the first protocol to the convention (right to property) – about his legitimate expectation at the time he signed the CFA – “could be defeated”.

Lord Neuberger said: “Parliament did not see fit to render the LASPO regime retrospective: on the contrary, as explained above, the 1999 Act regime applies to all proceedings begun before 1 April 2013.

“Parliament thereby correctly recognised that, while the 1999 Act regime was unsatisfactory, it would be wrong to disapply it to proceedings which had been issued in the expectation that that regime would continue to apply to those proceedings.”

He added that given the purpose of the 1999 Act regime – as the Strasbourg court accepted – was to enable people to get access to the courts, to hold that Mr Miller could not recover the success fee and the ATE premium could infringe his right to fair trial under article 6.

Further, it may be that such a decision would infringe Mr Miller’s article 8 rights as well, given that the purpose of his bringing the proceedings was for the purpose of restoring or maintaining his personal dignity.

“However, no argument based on article 6 or article 8 was raised at all on behalf of Mr Miller (or Mr Flood). In those circumstances, I prefer to base my conclusion on Mr Miller’s A1P1 right not to be deprived of his accrued rights and his legitimate expectations…

“To refuse the costs order which Mr Miller seeks would directly infringe that fundamental principle. While freedom of expression is, of course, another fundamental principle, it is not so centrally engaged by the issue in this case: the decision in MGN v UK is essentially based on the indirect, chilling, effect on freedom of expression of a very substantial costs order.”

As a result, Lord Neuberger declined to reach a definitive conclusion on whether the ECtHr ruling was part of domestic law.

Were the Supreme Court to do this, “it would not technically bind the government [as it was not a party to this case], but it would make it difficult for the government to re-open the question in this country, and it could make it more difficult for the government to challenge the conclusion and reasoning in MGN v UK in Strasbourg.

“Although we are not being asked to make a declaration of incompatibility, a decision that the [ECtHR ruling] applies but cannot assist the appellants in the three appeals could have very similar consequences, and section 5 of the Human Rights Act 1998 requires the government to be notified if a declaration of incompatibility is sought in any proceedings.”

The claimants’ argument in Frost v MGN was weaker as the claimants – who were victims of phone hacking – all entered into CFAs and took out ATE insurance after publication of MGN v UK ruling.

Lord Neuberger said: “Despite that, I would reach the same conclusion as in Miller v ANL. Notwithstanding the judgment in MGN v UK, until LASPO came into force, the 1999 Act regime, as approved by the House of Lords in Campbell (No 2), was lawful in domestic terms, and, with all its flaws, it represented the domestic policy whereby citizens could get access to the courts to vindicate their civil legal rights.

“Parliament could have enacted that decisions of the Strasbourg court had direct effect on UK law, but, for good reasons, it did not do so.”

Further, he continued, a “more fundamental” reason to reject MGN’s appeal was the ECtHR ruling could not be properly invoked in a case involving “the persistence, pervasiveness and flagrancy of the hacking and blagging, and the lack of any public significance of the information which it would be expected to and did reveal”.

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