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The European Court of Human Rights has rung the death knell for success fees in defamation and privacy cases.
Following strong representations from media and human-rights lobbyists and pusillanimous submissions from the UK Government, the ECHR has held unanimously that success fees payable by MGN, the publisher of The Daily Mirror, violated MGN’s right to freedom of expression.1 The judgment stems from the long-running litigation over the Mirror’s publication in 2001 of articles and photographs about Naomi Campbell’s treatment for drug addiction.
The ECHR, however, upheld the House of Lords’ reasoning that the Mirror, in publishing articles and photographs after the initial disclosure of Ms Campbell’s addiction, had not contributed to any debate of general interest to society. As such, the publication represented a breach of Ms Campbell’s right to privacy and could not be justified.
Background
On 1 February 2001 The Daily Mirror published an article on its front page entitled “Naomi: I am a drug addict” and a longer article, across two pages inside the newspaper, which expanded on her treatment for drug addiction. Photographs of Ms Campbell outside a Narcotics Anonymous meeting centre, which had been taken covertly, accompanied the articles.
Ms Campbell’s lawyer wrote to MGN, complaining that the articles infringed her privacy and asking MGN to undertake not to publish further private information. MGN responded by publishing another two articles about Ms Campbell, which contained further details of her attendance at Narcotics Anonymous meetings, as well as new pictures of her going to a meeting. The articles were also critical of her complaint that her privacy had been infringed, featuring the heading: “After years of self-publicity and illegal drug abuse, Naomi Campbell whinges about privacy.”
Ms Campbell sued the newspaper for breach of confidence, and the High Court found in her favour in March 2002 , awarding her a total of £3,500 in damages.2 MGN appealed and, in October 2002, the appeal was unanimously allowed by the Court of Appeal.3 Ms Campbell appealed and, in 2004, the House of Lords allowed her appeal.4 Lord Nicholls of Birkenhead and Lord Hoffman dissented from the majority verdict by Lord Hope of Craighead, Baroness Hale of Richmond and Lord Carswell.
The House of Lords found that, despite Ms Campbell’s international reputation in fashion modelling (which was conducted under the constant gaze of the media) and despite her status as a celebrity, details concerning treatment for drug addiction amounted to private information about her physical and mental health. While the choices made about the presentation of material that it was legitimate to convey to the public were pre-eminently editorial matters with which the court would not interfere, choices to publish private material raised further issues that were not simply about presentation and editing: the public interest in disclosure had to be balanced against the right of the individual to respect for private life. The publication of the initial disclosure could have been justified as a matter of public interest because Ms Campbell had previously publicly denied drug use. Yet the publication of pictures of Ms Campbell outside Narcotics Anonymous meetings, in combination with the text of the articles published, had the potential to cause harm and had been offensive and distressing for her, and so infringed her right to respect for her private life. The House of Lords restored the High Court’s award and ordered MGN to pay Ms Campbell’s costs, the amount to “be certified by the Clerk of Parliaments, if not agreed between the parties”.
Costs and sub-proceedings
Ms Campbell’s solicitors served three bills of costs on MGN in the total sum of £1,086,295.47. £377,070.07 related to the High Court proceedings, and £114,755.40 to the Court of Appeal proceedings. £594,470 related to the House of Lords proceedings (comprising base costs of £288,468, success fees of £279,981.35 and disbursements of £26,020.65). In the High Court and Court of Appeal, Ms Campbell’s solicitors and counsel had acted under an ordinary retainer, but the appeal to the House of Lords had been conducted under a conditional fee agreement (CFA). This provided that, if the appeal succeeded, solicitors and counsel should be entitled to their base costs, as well as success fees amounting to 95% and 100% of their base costs respectively.
Further proceedings regarding the costs ensued. In 2005 the House of Lords unanimously dismissed MGN’s appeal seeking a ruling that it should not be liable to pay the success fees.5 MGN had argued that, in the circumstances, the success fees were so disproportionate as to infringe MGN’s right to freedom of expression under Article 10 of the European Convention on Human Rights. The House of Lords found that the existing CFA regime (with recoverable success fees) was compatible with the Convention, although the court expressed some reservations about the impact of disproportionate costs.
MGN then sought to challenge, before the Judicial Taxing Officers of the House of Lords, the proportionality of the costs and success fees claimed for both appeals to the House of Lords. Before the Judicial Taxing Officers reached any decision, however, MGN agreed to a settlement of the costs payable for the first House of Lords appeal, in order to avoid accruing daily interest, possible further litigation and new success fees. The Judicial Taxing Officers approved the success fees which MGN was asked to pay in the second, costs-related House of Lords appeal and diminished only slightly the hourly rate on which they were based. A subsequent appeal by MGN before the House of Lords was refused leave.
MGN then appealed to the ECHR on two grounds, namely that:
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the House of Lords’ finding of misuse of private information in relation to the articles and photographs amounted to a breach of MGN’s right to freedom of expression; and |
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MGN should not be required to pay what MGN considered to be disproportionately high success fees. |
It took over six years for the ECHR to adjudicate, and its decisions on these two grounds of appeal are set out below.
The ECHR’s decision
1 Misuse of private information
The ECHR assessed that it must determine whether the findings by majority of the House of Lords for misuse of private information against MGN constituted an interference with MGN’s rights. In its reasoning, the ECHR recalled the vital role of the press in a state governed by the rule of law and observed that a balance had to be made between public interest and the need to protect Ms Campbell’s private life. The ECHR assessed the domestic courts’ decisions in relation to the publication of information following the disclosure of Ms Campbell’s addiction. The majority agreed with the House of Lords and concluded that the articles and photographs had not contributed to any debate of general interest to society and had not been “necessary in a domestic society”. As such, there was a lower level of protection of freedom of expression for the articles and photographs, and their publication could not be justified.
Accordingly, the ECHR found that the House of Lords had not violated Article 10 of the Convention in finding that MGN had misused private information.
Judge Bjorgvinsson expressed a partly dissenting opinion. He found that the test implied by Baroness Hale in the House of Lords judgment (i.e. that it was “not necessary to publish any further information”6) was wrong in relation to balancing Article 8 and Article 10. Judge Bjorgvinsson found that the Mirror had been justified in publishing its original disclosure under Article 10.2, and that it had continued to be justified in publishing the subsequent information and photographs, stating: “The applicant newspaper was justified in alerting the public about her drug addiction. The additional information and photographs were no more than a continuation of the original legitimate story … [and] cannot be considered as sufficient and serious enough to justify the restriction on freedom of expression under Article 10. ”
2 Success fees
The ECHR heard submissions from the applicant and the Government, as well as joint third-party submissions from the Open Society Justice Initiative, Media Defence Initiative, Index on Censorship, the English PEN and Human Rights Watch. These third parties considered that the case raised an important issue as to the chilling effect of high costs in defamation proceedings on NGOs and small media organisations.
The ECHR examined whether the recoverability of substantial success fees against unsuccessful defendants in civil actions was reasonable and proportionate. It was noted that, following detailed domestic public consultations initiated by the British Ministry for Justice from 2003, there had been no legislative follow-up to the consultations’ conclusions. Nonetheless, fundamental flaws in the success-fee scheme had been identified. These consultations, typified by the Jackson Review,7 criticised CFAs, including, in particular:
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the lack of qualifying requirements for claimants to keep control of success fees, given that they were only payable if claimants were successful and often by the losing party; |
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the fact that the losing party was often forced to settle early, despite good prospects, in order to prevent escalation of success fees; and |
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the opportunity for lawyers to pick cases likely to succeed and to impose a large success fee. |
The court found that there was a risk to freedom of expression, since the imposition of success fees put defendants (usually media and publishers) under pressure to settle cases that could have been defended. The case of MGN had not entirely lacked merit, as the Court of Appeal and two of the five House of Lords judges had decided in its favour. While the proceedings had been complex, only £3,500 had been awarded to Ms Campbell in damages; but the success fees claimed in the respect of the appeals alone had amounted to more than £365,000, and MGN argued that the success fees were not proportionate.
The ECHR concluded that the requirement on MGN to pay the success fees that had been agreed under Ms Campbell’s CFA was disproportionate to the aim sought to be achieved by the introduction of the success-fee system in the UK, and so there had been a violation of Article 10.
Comment
This case provides a clear signal to the Government on the direction that legislation relating to the funding of civil litigation should take. The weak submissions made by the Government to defend the CFA regime in this case read as half-hearted. Following the Conditional Fee Agreements (Amendment) Order, which was laid before Parliament by the previous Government but was not maintained during the run-up to the general election in April 2010, it seems that the Government has allowed a tough decision to be made by somebody else. In light of popular opinion (or the prevailing media view) the Government has effectively let the ECHR do its work and no submissions were made at all by the pro-CFA lobby.
There has been little mention in the media of the ground of appeal on which MGN lost. Perhaps this is unsurprising, given that the alleged effects of success fees on freedom of expression has been a cause célèbre for many years. It is important, however, to note that the ECHR agreed with the House of Lords in finding that MGN’s freedom of expression had not been breached when it was found that there had been a misuse of private information.
This case highlights the contrast between the balancing exercise carried out in privacy cases (between privacy and freedom of expression) with the legal analysis undertaken in defamation cases. In defamation cases, a defendant can rely on the Reynolds defence: if it is in the public interest to publish an allegation, then, as long as a journalist/editor has acted responsibly, the journalist/editor will be afforded a margin of discretion should the allegation prove to be false. It seems that the courts are more likely to place greater weight on editorial discretion when assessing defamation defences than those in breach of privacy claims. Publishers should take note of this distinction.
What next? No doubt the CFA regime will need to be amended. The changes may not, however, involve the wholesale slashing that some commentators suggest is inevitable. New regulations could be used to ensure the proportionality of CFAs between client and solicitor, similar to the Defamation Proceedings Costs Management Scheme, which has been implemented as a pilot from 1 October 2009 to 31 March 2011 under Practice Direction 51D. The objective of that scheme is to manage the litigation so that the costs of each party are proportionate to the value of the claim and the reputational issues at stake, and so that the parties are on an equal footing. Solicitors are already required by paragraph 2.03 of the Solicitors Code of Conduct 2007 to provide costs budgets to their clients. Accordingly, it should not be necessary for solicitors to incur substantial additional costs in providing costs budgets to the court. The success of this scheme has yet to be reviewed, but it may provide a useful precedent.
The question remains whether the changes to the legislation on CFAs will relate solely to privacy cases, or whether the impact will be broader. Following this ruling, there may be further appeals to the ECHR in relation to success fees that parties have had to pay in the past. This seems highly likely, given the vast awards made under the CFA regime to date.
Eleanor Steyn and Gillie Abbotts
Article written for Entertainment Law Review.
1 MGN Ltd v United Kingdom (Application No 39401/04).
2 [2002] EWHC 499 (QB).
3 [2002] EWCA Civ 1373.
4 [2004] UKHL 22.
5 [2005] UKHL 61.
6 [2004] UKHL 22, paragraph 152.
7 “Review of Civil Litigation Costs: Final Report”, published by TSO (The Stationery Office) January 2010; also see “Press Standards, Privacy and Libel”, Report of the House of Commons Culture, Media and Sport Committee in February 2010.
8 Reynolds v Times Newspapers Ltd [2001] 2 AC 127.
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