High Court judge attacks use of conditional fees in libel actions

30 March 2009

A High Court judge has launched a stinging attack on the use of conditional fees to fund libel claims, saying “the conduct of libel proceedings on credit is a thoroughly bad idea”.

His words are likely to be seized on by critics of conditional fees as the Ministry of Justice consults on measures to cut the cost of libel actions, including fixed hourly rates and cost capping.

Ruling in Noorani v Calver [2009] EWHC 592 (QB), Mr Justice Coulson said: “There is no doubt that, in certain cases, a CFA can be beneficial, and allow a claim to be brought where otherwise the claimant may not have had the financial resources to come to court.

“But, so it seems to me, the operation of a CFA agreement in practice can be fraught with difficulties and can be a positive disadvantage for the other party.

“This case is a good example. I am in no doubt that, if the claimant had not had the advantage of a CFA, and had had to pay all his legal costs as they fell due, as the defendant had to do, he would have realised much earlier that his claim should not be pursued, and that he was running a wholly unjustified financial risk.

“The existence of a CFA can inure a party like the claimant to the chilly winds of reality. It can make him oblivious to the significant financial risk that he is running and the potentially ruinous costs liability that he may be incurring.”

Mr Justice Coulson said the claimant, Bahram Noorani, was seeking to use the libel proceedings “in order to pursue the bizarre vendettas that bedevilled the West Wirral Conservative Association”.

Noorani sued former chairman Dick Calver for libel, on the basis of a letter, and slander. Mr Justice Coulson struck out the slander claim.

The defendant was alleged to have said to the claimant’s wife: “No wonder you have depression, married to an Islamist terrorist. He is a refugee. He is a troublemaker.”

Mr Justice Coulson, applying the test in Jameel v Wall Street Journal Europe SPRL (No 3) [2006] UKHL44, said the words were allegedly spoken in the street. They were published to just two people, the claimant’s wife and daughter and never to a third party of any kind.

The libel claim was discontinued by the claimant on the third day of the trial. The defendants sought an order for indemnity costs.

Mr Justice Coulson agreed, and ordered the claimants to make an interim payment of £50,000 on account of costs.

“…the most significant thing of all about this claim was that, in my judgment, it should never have been brought at all”, he said.

“One conclusion is that it was pursued and maintained on an entirely false basis, of which the claimant was always aware.

“Alternatively, giving him the greatest possible benefit of the doubt, the only other explanation is that the claim was maintained in circumstances where the claimant must have known, on his own case, that, in order to find for him, the jury were going to have to accept a whole series of highly improbable explanations and coincidences.”