important-decision-on-the-recoverability-of-ate-success-fees-for-media-cases important decision on the recoverability of ate success fees for media cases | Legal Protection Group

Important Decision on the Recoverability of ATE Success Fees for Media Cases

by Sheena Court | Mon 26, Jun 2017 | News

Following on from our recent article on the Supreme Court decision in Plevin (Respondent) v Paragon Personal Finance Limited (Appellant), we are again pleased to see that the court has sought to maintain vested rights and expectations arising from previous law/the LASPO exemptions.

In "Times Newspapers Ltd and others v Flood and others" [2017] the media organisation appellants unsuccessfully attempted to argue that the threat of having to pay ATE insurance premiums and success fees was such a financial burden that it meant they were fearful of reporting news of interest to the public. Their legal argument was that the recoverability of additional liabilities infringed Article 10 and their right to freedom of expression and would have a ‘chilling effect’ on their reporting.

Background to the Appeal

The Supreme Court heard three joined appeals with each involving a challenge to an order for costs made by a High Court judge against a newspaper publisher following trial. Flood v Times Newspapers Limited (“Flood”) and Miller v Associated Newspapers Ltd (“Miller”) each involved an allegation that the newspaper had libelled the claimant, and Frost and others v MGN Ltd (“Frost”) involved allegations that the newspaper had unlawfully gathered private information about the claimants by phone hacking. In each case, the newspaper publisher lost at trial and was ordered to pay the claimants’ costs.

In each case, the original claimants had entered into Conditional Fee Agreements (CFAs) and ATE insurance policies where the fees would be recoverable from the losing defendant upon success. Defamation and Privacy proceedings do of course remain litigation types which are exempt from the LASPO provisions introduced in 2013.

In each appeal, the media organisations relied upon the decision of the European Court in MGN Ltd v United Kingdom, where it was held that MGN’s right to freedom of expression under Article 10 of the European Convention on Human Rights was infringed by the order to reimburse the success fee and ATE premium incurred by the claimant. The newspaper publishers contended that the costs orders in the present appeals similarly infringed their rights under Article 10.

The Judgment

The Supreme Court did not rule on whether the media’s Article 10 rights had been breached as they felt it was inappropriate for it do so without the United Kingdom being a party to the proceedings.

They did however find that, even if it was shown that Article 10 rights had been breached, it would then be necessary to consider a claimant’s rights and on balance decide which was more important. When it comes to a claimant’s rights the court identified that they had to consider whether restricting the ability for a claimant to recover legitimate costs which they had incurred would infringe their rights under Article 1 (right to property). The original claimants had incurred financial obligations in reliance on a statute and had a legitimate expectation that the statute would not be retrospectively repealed or otherwise invalidated to their detriment.

On balance it was decided that whilst the principle of freedom of expression is a fundamental principle, the just and appropriate order under section 8(1) of the Human Rights Act was to dismiss the appeals, as to allow them would be a graver infringement of the claimants’ rights than the infringement which the newspaper publishers will suffer if the appeals are dismissed.

Impact of this decision

There were concerns prior to this decision that a ruling in favour of the media would result in ATE premiums for policies already taken out no longer being recoverable and the same for CFA success fees. Fortunately the Supreme Court has clarified the position and made clear that clients who have entered into valid arrangements in line with the law at the time have a right to rely on the arrangement they have made.

For future media cases it is clear that the Supreme Court are looking for the Government to come up with an answer to the issue of costs. There is obviously not a simple answer to this question as otherwise there would not be an exemption for media cases in the first place. For the foreseeable future it appears to be that the current recoverable costs regime (plus additional liabilities) will continue unless the Government develops an alternative solution that maintains access to justice.

As it is unclear for how long recoverable ATE insurance policies will remain in existence, Legal Protection Group recommend that insurance is taken out at the outset of any new matters as a priority.

To discuss your insurance arrangements or any particular cases please call us on 0333 700 1040.




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