Allen Green: Libel reformers should cautiously welcome the Jackson report on court costs

What are the implications for free speech of Lord Justice Jackson’s report on civil costs published yesterday? In some ways, it is too soon to tell: it is a lengthy and complex report covering all of civil litigation, and there are free speech issues in many areas of civil law, from copyright and confidentiality to judicial review and actions against the police.

Nonetheless, the chapter on costs in defamation and related claims has already received attention, some of it adverse. This criticism is perhaps premature. The report does say some useful things about reforming libel costs. It is just that the particular solution offered by Lord Justice Jackson seems misconceived.

One major issue in respect of libel costs is the current funding structure, especially the “success fee” and the payment of insurance. As Lord Justice Jackson states:

“If a media organisation loses a case, they have to pay their own fees, the claimant’s fees, a 100 per cent success fee which multiplies the claimant’s costs by two, and after-the-event insurance, which is often 65 per cent of the sum insured This means that the defendant ends up paying something approximately four times the cost.”

This is unacceptable. Something needs to be done.

The Free Speech is Not For Sale report prepared by English PEN and Index on Censorship (whom Lord Justice Jackson wonderfully abbreviates as EPIC) recommended:

Cap base costs and make success fees and ‘After the Event’ (ATE) insurance premiums non-recoverable.

These devices were introduced to enable claimants access to court so to enforce claims they otherwise would not be able to make. But their costs have become an unwelcome and illiberal part of libel litigation.

Lord Justice Jackson refers to this report directly and states:

In relation to costs, I am in agreement with certain of EPIC’s conclusions. In particular, for the reasons set out in chapters 9 and 10 above, I consider that success fees and after-the-event (“ATE”) insurance premiums should cease to be recoverable.

This on the face of it would appear to be a win for EPIC; but, Lord Justice Jackson continues:

However, contrary to EPIC’s view, I consider that if this step is taken, other measures must be put in place in order to ensure that claimants have access to justice.

Of course “access to justice” is an important principle to set alongside free expression. And those arguing for libel reform do have to appreciate that their proposals may have unintended effects on access to the courts for deserving claimants.

With this report, libel reformers now face the challenge of explaining the impact any change will have on “access to justice”. Whatever response we make, however, it must be better than the one proposed by Lord Justice Jackson.

The report states:

If recoverability of success fees and ATE insurance premiums is abolished:

(a) The general level of damages for defamation and breach of privacy
claims should be increased by 10 per cent.

(b) A regime of qualified one way costs shifting should be introduced.

What is qualified one way costs shifting? This is defined elsewhere as follows:

By “qualified” one way costs shifting I mean that the claimant will not be required to pay the defendant’s costs if the claim is unsuccessful, but the defendant will be required to pay the claimant’s costs if it is successful. The qualifications to this are that unreasonable (or otherwise unjustified) party behaviour may lead to a different costs order, and the financial resources available to the parties may justify there being two way costs shifting in particular cases.

So, if a defendant succeeds, the defendant still has to pay his or her own costs. In contrast, if the claimant wins, the defendant has to pay both parties’ costs, but not the success fee and insurance premium. The Jackson report recommends this regime in a number of legal areas, not just defamation.

Accordingly, the present and suggested risks for the libel defendant can be summarised as follows:-

Current regime:

successful defence – defendant costs paid by claimant (in practice about 70 per cent)
unsuccessful defence – defendant pays own costs and claimant costs plus success fee and insurance

Proposed reform:

successful defence – defendant pays own costs
unsuccessful defence – defendant pays own costs and claimant costs, but no exposure to claimant costs plus success fee and insurance

From the perspective of large media organisations, such a reform could indeed help free expression. The worst case scenario of a libel threat is significantly cheaper. It would be worth paying one’s own legal costs just to avoid the burden of the success fee and the insurance. The balance may thereby be tipped in favour of publication or broadcast.

But the fault of this approach is that whilst it is helpful to the large media organisation, taking an overall commercial view, it does nothing really to help the individual journalist or writer.

For the individual defendant, there is much libel chill in having to pay all one’s legal costs even if successful than there is in facing success fees. The extra amount at stake is academic.

The current expensive regime is discredited. Even the Jackson report agrees. The Jackson proposals may even help large media organisations. But replacing the current regime with that proposed in the report will not help many who face libel chill, even in respect of costs.

The attitude of libel reformers to this report must thereby be a very qualified welcome. The report can be used to discredit the costs regime we have now, but we must come up with something better to replace it with than the one this report recommends.

Allen Green writes the Jack of Kent blog www.jackofkent.com