SoE calls on government to reform CFA and defamation costs order rules
11 April 2017
The Society of Editors has called on the government to reform no win, no fee rules and introduce 'fair and proportionate' costs orders in relation to defamation and privacy cases after the Supreme Court ruled against three newspapers and said that they should pay extra costs to claimants that will cost them millions.
The publishers, Times Newspapers Ltd, Associated Newspapers and Mirror Group Newspapers, had argued that making them pay success fees and premiums for after-the-event (ATE) insurance in defamation and privacy cases breached their rights to freedom of expression under Article 10 of the European Convention on Human Rights.
The current rules allow lawyers representing claimants in libel and privacy cases to double the fees that are paid to them by the losing side to compensate them for the risk of losing and have been widely criticised by media organisations for being disproportionate and a serious threat to investigative journalism.
Ian Murray, Deputy Executive Director of the Society of Editors said: "Following this week's decision by the Supreme Court, it is about time that the government looked seriously at the issue of conditional fee agreements (CFA) and the crippling effect that costs orders in relation to privacy and defamation cases are having, and will continue to have, on investigative journalism if Section 40 is commenced."
The Supreme Court dismissed the newspaper publishers’ appeals on the basis that allowing the appeals “would be a graver infringement of the claimants’ rights than the infringement which the newspaper publishers will suffer if the appeals are dismissed.”
It was widely expected that had the newspapers been successful, it could have marked the end the use of CFAs, where claimants only pay lawyers if they win a case, in publication cases.
The CFA scheme, which was widely criticised, has now largely been replaced for claims brought after April 1 2013 but is still used in defamation and privacy cases. The government is currently considering whether to enact Section 40 of the Crime and Courts Act which would introduce a new costs regime in defamation and privacy cases. The legislation has been widely criticised by the Society of Editors and other media organisations.
Ian Murray added: "The Society of Editors, alongside other media organisations, has, for years now, highlighted the fact that lawyers on CFA cases charge inordinate success fees which are manifestly unreasonable and bear little relation to either the risk they undertake in accepting a case or the level of damages awarded. It is not uncommon to see success fees significantly higher than the level of damages awarded.
"CFA success fees are as detrimental to press freedom as the threat currently being posed by Section 40 of the Crime and Courts Act. Any decision to commence measures that would force newspapers to pay both sides costs in defamation and privacy cases, regardless of whether or not they successfully defend a case, makes even more of a mockery of the idea that justice should be fair.
"Only the government can correct the faultline at the heart of legislation surrounding privacy and defamation and ensure that the claimant lawyer gravy train that we have seen in recent years is stopped once and for all. It is essential that costs orders in relation to such cases are fair and proportionate and do not threaten the future of investigative journalism."
The News Media Association also criticised the CFA regime.
Santha Rasaiah, the News Media Association legal, policy and regulatory affairs director said: "The CFA regime that requires losing newspapers to pay the claimants’ costs with lawyers’ success fees of up to twice the normal fee and exorbitant ATE premiums creates a chilling effect upon freedom of expression and journalism. As the Supreme Court described, this regime has been subject to wide spread criticism, in Strasbourg, by the domestic courts and by reviews since the 1999 Act came into force.
“Yet legislative reforms have not been brought forward. Worse, Section 40 of the Crime and Courts Act 2013 would require newspapers to pay claimants’ costs, win or lose, unless they signed up to the regime under the state sponsored Royal Charter
“These threats to the fundamental right of freedom of expression must be removed. The 1999 Act CFA regime must be reformed and Section 40 must be repealed.”