Supreme Court dismisses publishers' appeals against recoverability of ATE and success fees

The Supreme Court has unanimously dismissed an appeal by newspaper publishers that the recoverability of success fees and after-the-event insurance in defamation and privacy claims infringed their right to freedom of expression.

The three conjoined cases, Times Newspapers Ltd v Flood, Miller v Associated Newspapers Limited, and Frost and others v MGN Limited, were heard by Lords Neuberger, Mance, Sumption, Hughes, and Hodge. TN and ANL contested adverse costs orders following defamation claims. MGN appealed a costs order in relation to allegations it had unlawfully gathered private information about 23 claimants by hacking in to their phone messages.

In each case, the publishers lost at trial and were ordered to pay the claimants’ costs. The claimants had each taken advantage of conditional fee agreements introduced by the Access to Justice Act 1999. Defamation and privacy claims did not fall within the scope of Lord Justice Jackson’s 2013 reforms.

The publishers argued that recovery of success fees and ATE insurance would have a ‘chilling effect’ on press freedom and infringed their article 10 right subject to the European Court of Human Rights’ 2011 decision in MGN v UK.

Giving the lead judgment, 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 – i.e. in such a way as to undo retrospectively the law upon which they committed themselves.’

‘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,’ the president of the Supreme Court said. ‘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.’

The court declined to decide on whether there is a general rule that recoverability would infringe article 10. The five justices said the UK government was not represented and so it would be ‘inappropriate’ to rule on whether the publishers’ rights were infringed.

Francis Kendall, vice-chairman of the Association of Costs Lawyers, said: ‘The nature of the ruling means that the issue has not been fully determined, but it has clearly shut the door to the argument in circumstances where there is illegal conduct involved (phone hacking/blagging etc).

‘This should apply to all such cases. It may be unsurprising, with hindsight, that the Supreme Court did not find favour in an argument based on the freedom of expression to publish illegally obtained material. In respect of other privacy/defamation cases, it appears that, despite this ruling, the lower courts will still be bound by the Campbell v MGN House of Lords ruling that additional liabilities do not breach the article 10 right, until there is an appeal to the Supreme Court at which the government is represented. The government may find this an unwelcome distraction at this time.’

MGN, the publisher of the Daily Mirror and Sunday Mirror, was ordered to pay £1.2m in the High Court to eight hacking victims in 2015. Today’s decision related to 23 claimants who sued for breach of privacy, including actress Sadie Frost and former footballer Paul Gascoigne.

Base costs in each of the cases varied between £22,000 and £210,000. Success fees ranged between 25 and 100 per cent. ATE premiums also fluctuated from £13,515 to £87,450. MGN also contested further costs of £739,457, success fees of £645,800, and ATE premiums of £318,000 incurred at the Court of Appeal.

ANL, publisher of the Daily Mail, had been sued over a 2008 article headlined ‘Met boss in new “cash for friend” storm’. The High Court awarded management consultant Andrew Miller £65,000 in damages for the suggestion he won Scotland Yard contracts through cronyism. The publisher was also ordered to pay £633,000 in costs, a £587,000 success fee, and the £248,000 insurance premium.

Police officer Gary Flood brought a case for defamation against The Times after an article suggested he had taken bribes from Russian exiles. Flood, who had been exonerated by a police investigation, was awarded £60,000 in damages plus costs and additional liabilities.

Nick Neocleous, a partner at Edwin Coe who acted for Flood, said: ‘It has been a long and bumpy road, with two trips to the Court of Appeal, two to the Supreme Court, and numerous other hearings. It is not a case for the faint-hearted.’

John van der Luit-Drummond is deputy editor of Solicitors Journal

john.vanderluit@solicitorsjournal.co.uk | @JvdLD