New Clause 10 - Disapplication of Legal Aid, Sentencing and Punishment of Offenders Act 2012
Dai Havard (Merthyr Tydfil and Rhymney, Labour)
With this it will be convenient to discuss the following:
New clause 11—Limitation of success fees—
‘(1) Section 44 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 shall not apply in relation to civil actions for defamation, malicious falsehood, breach of confidence, privacy or publication proceedings.
(2) Section 58(4)(c) of the Courts and Legal Services Act 1990 is amended to add at end the words “except in defamation, malicious falsehood, breach of confidence, privacy or publication proceedings where that percentage must not exceed 50 per cent.”.’.
New clause 12—Moratorium on application of Legal Aid, Sentencing and Punishment of Offenders Act 2012—
‘Sections 44 and 46 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 shall not be brought into force in relation to proceedings relating to defamation, malicious falsehood, breach of confidence or privacy until the relevant Secretary of State has—
(a) carried out a review of the findings and recommendations of all four Modules of the Leveson Inquiry into the culture, practices and ethics of the press;
(b) established a body to replace the Press Complaints Commission following the review of the findings of the Leveson Inquiry;
(c) carried out a review of the impact and effectiveness of the body set up to replace the Press Complaints Commission;
(d) carried out a review of the impact of this Act; and
(e) published a report of the conclusions of the reviews referred to in this section.’.
New clause 13—Recovery of costs—
‘Costs ordered against a party in a civil action for defamation, malicious falsehood, breach of confidence, privacy or publication proceedings shall not exceed the amount (if any) which is reasonable having regard to all the circumstances of the case, including—
(a) the financial resources of all the parties to the proceedings, and
(b) the conduct of the parties in connection with the dispute to which the proceedings relate.’.
Robert Flello (Stoke-on-Trent South, Labour)
“civil actions for defamation, malicious falsehood, breach of confidence, privacy or publication proceedings”.
Did my hon. Friend intend to cover just that narrow grouping?
Andy Slaughter (Hammersmith, Labour)
If my hon. Friend reads the Committee proceedings on LASPO—I am sure he has done so several times already—he will see that we went through a whole series of different types of civil action that we believe are adversely affected, perhaps sometimes unintentionally, by the changes brought in primarily to address personal injury claims and, within that group, road traffic claims. In relation to this Bill, I intended solely to address defamation, but it seemed logical to address defamation-style actions, which is why the new clause is phrased in those terms. If the purpose of LASPO was to save money for the NHS, the Ministry of Defence and other Government agencies or their insurers, it is difficult to see why it should extend to defamation. There is no saving to the public purse from the changes being made.
If the Minister is not with me on that, I suggest that he look at new clause 11, which is a mitigated form of the same provisions; it involves severe curtailment of success fees. Equally, new clause 13 is not designed to restore ATE premiums, but would introduce QOWCS for defamation cases, using the legal aid Act formula, because the Government have not said what formula they intend to use for QOWCS. Clearly, the intention, the objective, of new clauses 11 and 13, which are probing—I wish that we had time to press new clauses 10 and 12 to a vote—is to suggest to the Government a way forward that is supported by a number of organisations, including the Libel Reform Campaign. It is a mitigation of the existing cost rules, without throwing the baby out with the bathwater.
New clause 12 is a milder version and replicates, in the context of defamation cases, what the Government have already conceded following their defeats in the other place in relation to mesothelioma. In other words, given what is happening with Leveson and other related issues such as privacy, it seemed sensible to do what the Government have done with insolvency and types of industrial disease—to wait and see the effects and what remedies will be available before introducing matters of that kind.
I would like to give one or two case examples, but first I shall summarise the central argument, which could apply to any of the new clauses. It is for the Government to judge how far they want to go, if they want to go any way at all. The reason why I would like to leave the Minister time to respond, apart from allowing him to thank everyone, is to see whether we can get any indication from him, because we will undoubtedly return to these issues at later stages of the Bill here or in the other place, as to whether there is any room for movement on them. I hope that we can get a fairly succinct answer.
Let me give a short history of how we got to this position. [Interruption.] The Minister sighs, but if it were not for his guillotine, the shortlist would be a couple of hours long, so he is very lucky.
Andy Slaughter (Hammersmith, Labour)
It is the agreement of a chained man.
Before the Access to Justice Act 1999, there was no access to justice for ordinary citizens for claims against the media. No legal aid has ever been available for such cases, yet such litigation has always been complex and, therefore, expensive, balancing the right for people not to be defamed with the right to free speech and reporting. Therefore, when threatened with a claim of defamation, any media owner’s first thought was not whether the claim was justified, but whether the claimant could afford to pursue and lose litigation. That effectively left all but the wealthy claimants with no remedy other than a complaint to the Press Complaints Commission.
The failings of the PCC are many and infamous, and it did not offer any real remedy. It was therefore open to media owners to use their financial might to force claimants to abandon their meritorious claims, simply because claimants could not afford the cost of litigation, in particular the adverse cost if such litigation were lost.
The situation changed with the introduction of the principle of recoverability of success fees and ATE premiums in the 1999 Act. Claimants could now benefit from having their case conducted on a no win, no fee, conditional fee agreement, where the ordinary and success fees and the ATE premium would be recoverable and payable by the media owners if the case succeeded.
Unsurprisingly, media owners deeply resented the use of such mechanisms, as they were now accountable to many more claimants and needed to be careful about the accuracy of their reports, at a time when their own profitability was being challenged by the growth and speed of reporting on the internet. Without any sense of irony, media owners complained about the cost of the litigation with which they were now faced, conveniently forgetting their own use of costs as a weapon in the defence of their conduct. The great idea they hit upon was to argue that the costs had a chilling effect on what they were able to report and how they behaved. That in turn was a threat to freedom of speech, which they argued was essential to any free democracy.
Bizarrely, media owners argued that claimant lawyers specialising in the field cherry-picked cases so that they pursued only the claims that had merit. That overlooked the considerable cost that such lawyers had to incur in investigating and ultimately rejecting claims that were not of sufficient merit. As a result of those arguments and the pressures that they were able to bring to bear, changes were made to the rules, and in cases that are settled within 14 days of a letter of claim, the defendant will not be liable to any success fee or ATE premium.
When the Legal Aid, Sentencing and Punishment of Offenders Act 2012 comes into effect in April 2013—if it does—it will not be possible to recover any success fee or ATE premium from the paying party. The broad intention of the legislation has changed to enable solicitors to charge a success or contingency fee to their client in consideration for undertaking the case, without charging, or charging at a much reduced rate, during the life of the case. The success and contingency fees will be a percentage of the damages awarded to a claimant. Similarly, under the new regime, any ATE premium will have to be paid by the claimant out of the damages received.
The problem is that in defamation and privacy cases, damages awarded are typically between £10,000 and £20,000. When the costs of such litigation frequently run into many hundreds of thousands of pounds, it is immediately apparent that the damages are insufficient to begin to satisfy any success fee or ATE premium.
Currently, ATE premiums are stepped from modest levels at the outset of the case to high levels by the time of trial, reflecting the increasing risks to the underwriter of the case losing. Further, if the case is lost, the ATE insurer pays the opponent’s costs and the insurer’s own disbursements, but there is no premium for the insured to pay. The model depends on the insurer using careful risk selection to ensure that more cases are won than lost. It is particularly difficult to make insurers pay in defamation and privacy cases, because there are relatively few claims and they are high risk. Thus, one loss can have a dramatic effect on business, from anyone’s viewpoint.
The effect of removing recoverability of ATE premiums to pay part of defamation and privacy cases is to make such cases uninsurable, because there are insufficient damages to pay the required premiums, especially by the time of trial. Further, claimants will ordinarily be unable to pay the level of premiums required from their own resources.
The Prime Minister, in evidence to the Leveson inquiry, remarked that ordinary people, such as the Dowler family, should not be left without redress and at the mercy of the media. However, by removing recoverability of success fees and ATE premiums, that is precisely what his Government will achieve. Given the evidence from the Leveson inquiry it seems extraordinary that the media should be granted all that they have lobbied for by the removal of recoverability. Heaven forbid there should be any chilling effect on such responsible and morally driven organisations.
It is to be remembered that the most egregious behaviour from certain sections of the media occurred precisely when they complained that they were suffering from the chilling effect of success fees and so on. The chilling effect, one sometimes thinks, is, like the compensation culture, a myth. There is nothing that prevents the media from reporting responsibly and, indeed, the Bill would make it harder to sue the media. Given the way in which certain sections of the media routinely behave, even if there is a chilling effect, what is happening is not merited.
The Prime Minister seems to believe that the Leveson inquiry will produce some new form of quick, cheap-fix remedy for citizens who are subject to the worst excesses of the press. That may happen, but there is no certainty about when, and that is why new clause 12 addresses the issue of delay. What is certain is that when recoverability is removed, after April 2013, the ordinary citizen will be deprived of any effective remedy against the media, which is doubtless music to Mr Murdoch’s ears.
In the last two or three minutes that I am going to take up, I want to say that the Joint Committee, the Libel Reform Campaign, which is often seen to be a claimant organisation, and the Hacked Off campaign observed the same thing. Even Lord Justice Jackson in his fall-back position talked about moderated success fees. I do not have time to read now—they have been read out before—the moving letters that have been sent by the Dowler and McCann families to the Prime Minister, which sum up the issue perhaps better than anything else. There was, of course, a round robin letter to The Guardian from many aggrieved claimants and defendants, which summed it up. I shall just read from one paragraph:
Sadly, we did not have a chance to vote on that proposal, and will not have the opportunity today. Sooner or later, the right hon. Member for Carshalton and Wallington will get his opportunity to vote with me on the issue.
Tom Brake rose—
Andy Slaughter (Hammersmith, Labour)
I would like to give way; I feel for the right hon. Gentleman and it is a bit unfair that I mentioned him, but I want to finish and I said I would leave the Minister five minutes. I think I am being as succinct as I can be.
I have 50 separate case histories, including quite famous ones such as the McCanns and the Dowlers; but the overwhelming impression from reading them—claimant and defendant cases—is that they generally involve ordinary people, often vulnerable or from minority groups, who are severely abused. I do not have time to read 50 cases. If I did, I would, because it would contradict the impression that the Government want to give, that somehow the issue is a minor one, which does not need to be addressed.
I shall read what people might think is one of the less attractive cases. It proves how important it is that justice be done. It is the case of Sylvia Henry, who was the Baby P social worker, the mother of five children, living in Haringey, who was falsely accused in 80 articles in various newspapers of being negligent, including criminally so, in her care for Baby P. In fact, Ms Henry had intervened 27 times to try to prevent the return of Baby P to his mother.
The Sun in particular published 11 front pages and 36 articles blaming her for the death of the child. More than 3 million signatures were collected and sent to No. 10 Downing street calling for her sacking, and asking that she be never allowed to work with children again, in what The Sun characterised as its biggest ever crusade.
The Sunfailed completely to respond to allegations, served a spurious defence, not backed by evidence, refused an offer to consider what the claimants described as a sham defence, and used its corporate muscle to make application after application to force the disclosure of documents from third parties, in a desperate attempt to obtain further evidence. Two months before the trial it tried to hype the allegations as criminal incompetence, even though it had no evidence, in a final attempt to browbeat Ms Henry into submission. The case settled a week before trial, after a 16-month legal battle. The allegations were all completely false, but The Sun nevertheless put Ms Henry through months of hugely stressful litigation, only to settle before the trial. That is typical of how the media behave in this country.
Andy Slaughter (Hammersmith, Labour)
I wish I could, but I cannot.
I urge the Minister, in the time he has available, to say that he will at least consider looking again at the attacks made by massive media corporations on individuals who have no redress and no means.
Tom Brake (Carshalton and Wallington, Liberal Democrat)
I have two sentences. The first is that I understood that access to justice in privacy and libel cases would be addressed in the Bill because it was not addressed in LASPO, so perhaps the Minister will give some ground on that. Secondly, I pay tribute to Evan Harris, whose fingerprints were all over our briefings, and the Libel Reform Campaign for their work.
Paul Farrelly (Newcastle-under-Lyme, Labour)
I, too, have two points, and I will give my thanks on Third Reading. The Justice Committee looked at conditional fee agreements and access to justice issues. It is important to remember that equality of arms applies both ways. I am reminded that one attempt to reform the CFA arrangements, through a statutory instrument that sought to cap success fees at 10% and which was introduced by my right hon. Friend the Member for Blackburn (Mr Straw), was defeated, almost uniquely, in Committee by the combined forces of Labour—his own side—Conservatives and Liberal Democrat Members. I therefore ask the Minister to look at that debate and tell us what has changed. It was never envisaged that success fees would entirely disappear, so what measures will he introduce to redress the balance?
Jonathan Djanogly (Parliamentary Under Secretary of State (HM Courts Service and Legal Aid), Justice; Huntingdon, Conservative)
I gave my thanks earlier because I knew exactly what the hon. Member for Hammersmith would do—he always does it, and leopards never change their spots.
Currently, the recoverability of success fees and insurance premiums from the losing side can have the perverse effect of preventing defendants from fighting cases—even when they know that they are in the right—for fear of the disproportionate legal costs involved if they lose. High and disproportionate costs have a negative impact not only because they might deny access to justice, but more broadly because they may lead people to change their behaviour in damaging ways from their fear of claims.
Nowhere is that more true than in relation to responsible journalism, as well as to academic and scientific debate. The judgment of the European Court of Human Rights in January 2011 in Mirror Group Newspapers Ltd v. UK, the so-called Naomi Campbell privacy case, found that the existing CFA arrangements—with recoverability, in that instance—were contrary to freedom of expression under article 10 of the European convention on human rights. Editors and journalists have long warned of the chilling effect of the current libel regime and have argued that the huge costs imposed by no win, no fee cases are part of the problem. Defendants are not always rich and powerful newspapers; they are also scientists, non-governmental organisations, campaigners and academics.
The CFA changes are intended to apply to all areas of civil litigation, as was set out in LASPO, from April 2013. The Government believe that any further exceptions to the CFA reforms are unnecessary. Our CFA reforms will ensure that meritorious cases can still be brought, but at a more proportionate cost. I share the concern that individuals who are not wealthy or powerful will sometimes need to bring defamation or privacy cases. Nothing in our proposals should prevent them from doing so where they have a good case. The Government are determined to tackle disproportionate costs across the board, and our CFA reforms seek to do that.
I remind the Committee that just weeks before the last general election, the previous Government attempted, and failed, to tackle the high costs associated with CFA success fees in only one area, namely defamation and privacy. The hon. Gentleman’s new clauses therefore represent a U-turn of epic proportions. As I have said, this Government are reducing the impact of success fees in all cases, but I accept that the issue of cost must be reassessed in a balanced and cautious manner in the context of the outcome of this legislation.
The Bill and the procedural reforms we intend to introduce with it are, of course, about reducing the complexity and therefore the expense involved. In order for those aims to be achieved, Lord McNally gave a commitment in the other place on 27 March 2012 that we would look at the rules on costs protection for defamation and privacy proceedings when the defamation reforms come into effect, and I repeat that commitment today.
I thank you, Mr Havard—as well as Mr Chope—for chairing the Committee. I also thank all hon. Members for turning up for what, on the whole, has been an agreed Bill. [Interruption.]