A RESPONSE TO THE LEVESON CONSULTATION, PART 5: THE PUBLIC BENEFITS OF SECTION 40

Hacked Off logoPosted: January 9, 2017 at 9:00 am

 

By Brian Cathcart

 

This is the fifth part of a response to the government consultation. More will follow. We will welcome your comments, and if you wish to register your views with the government, click here.

Answers to the second part of Question 2, asking for evidence in support of full commencement that relates to the impacts on the press industry and claimants:

Evidence

Impact on claimants: Access to justice

Section 40, once commenced, will deliver to the general public a historic new right of access to affordable justice in libel and privacy cases. The consultation document presents this merely as the ‘view’ of ‘some victims of press abuse and their representatives’, but it is an incontrovertible fact because the terms of Section 40 are unequivocal.

Everyone with a reasonably arguable case against a news publisher that is a member of a recognised regulator will have access to arbitration at the price of a modest administration fee. Those with a reasonably arguable case against a news publisher which, by refusing to participate in recognised regulation and thus refusing to offer low-cost arbitration, denies this right of access to justice, can sue in the normal way in the knowledge that, providing the judge deems it fair and equitable in all the circumstances, the news publisher will have to meet all costs, win or lose.

This is designed to provide news publishers with an incentive to join a recognised regulator offering arbitration – a step to which (see above) they can make no reasoned objection. Section 40 will thus bring to an end the longstanding scandal that only the rich and the fortunate in this country have been able to uphold their rights against the press.

The consultation document includes the ministerial declaration: ‘This is a government that works for everyone and not just the privileged few.’ Here is a measure that clearly benefits everyone rather than the privileged few. Indeed, the continuing denial of this measure specifically benefits the privileged few and runs contrary to the interests of everyone else.

 

Impacts on the press industry: Chilling

Just as Section 40 inevitably transforms access to justice, it also brings to an end the ability of wealthy individuals to bully news publishers, providing they are members of a recognised regulator. This ability of wealthy individuals and institutions to ‘chill’ or stifle public interest journalism by exploiting the expense and complexity of legal proceedings has been a subject of complaint from newspapers at least since the time of Robert Maxwell. At the Leveson Inquiry the editor of the Financial Times, Lionel Barber, said of chilling: ‘In terms of libel, this is the one area that concerns me most.’ The then editor of the Guardian, Alan Rusbridger, remarked in evidence: ‘You’ve heard us whingeing endlessly about the cost of libel and the chilling effect that libel [exposes us] to (our emphasis). In evidence to the CMS select committee in 2009 the then president of the Crime Reporters’ Association, Jeffrey Edwards, said: ‘We do not mess with Abramovich. He is too powerful. He is too litigious.’ (para 237)

These concerns are answered by Section 40, fully in line with the intentions expressed in the Leveson Report (Part Part J, Chap 3, 6.7). Journalists working for a news publisher which is a member of a recognised regulator will have complete protection from chilling so far as libel and privacy are concerned. Editors will be able to insist that any potential claimant attempting to obstruct reporting by chilling must proceed to low-cost arbitration. If the potential claimant insists on court proceedings the news publisher will know that its costs exposure is limited and much less than in court proceedings. This is a very substantial boost for the freedom of the press and for investigative journalism at all levels of the industry. So long as Section 40 is not commenced this freedom is being denied to the industry, with adverse consequences for the quality of journalism available to the public.

The consultation document repeats a concern expressed by some news publishers refusing to participate in recognised regulation: that they may be subject to chilling of a new kind. They say they will be subject to legal action from people wishing to suppress stories that are in the public interest and who rely on the presumption that they would have their legal costs paid regardless of whether they won or lost.

There are two points to be made in answer to this.  First, any adverse consequences can be avoided by news publishers choosing to set up or join a recognised regulator. Section 40 was designed to provide that choice with an incentive.

Second, for those publishers that have chosen to expose themselves to the prospect of penalties, a distinction must still be made between meritorious and unmeritorious claims.  An increase in meritorious claims is in the public interest: it involves people properly vindicating their rights and newspapers which invade those rights being held to account. No reasonable person can do anything other than welcome such a prospect. As for unmeritorious claims, the possibility that these might arise was fully foreseen and guarded against in 2013. All potential claimants, and all news publishers, will know or will be advised that, under Section 40(2)(b), the courts will not award costs against a news publisher unless they are satisfied that ‘it is just and equitable in all the circumstances of the case’.  This important point is acknowledged in the consultation document, which notes: ‘The court retains a general discretion as to the award of costs in all cases . . .’ (para 37). In his Report Sir Brian Leveson expressed his confidence in the ability of the courts to dispense with unmeritorious cases. Referring to a court awarding costs against successful defendants, he wrote: ‘I recognise that this would not be the case if the court was dealing with vexatious or utterly misconceived litigation.’ (Part J, Chap 3, 6.8).

 

The local press

Concern about chilling is raised in the document with particular reference to local newspaper titles. A small-town weekly paper, it is implied, does not have the resources to contest a libel claim and could be ruined if it did. This is at best misguided. In practice the risk of ruin for any publication that has not committed a gross breach of rights is close to nil.

Most of our press, including our local press, is owned by large corporations. More than 80 per cent of local titles are owned by a handful of groups [pdf].  The nine biggest newspaper groups, national and regional, are all profit-making, once one-off costs are set aside. As cited above, their latest combined operating profits were £380m. The local papers often carry insurance against legal claims.  If the insurance is inadequate, the corporations which own these papers are able to meet the costs. In short, local newspapers, though they are often small operations, are not in practice any more exposed to ruin in the libel courts than national papers.

The assertion that having to pay both sides’ costs is likely to bankrupt newspapers is not supported historically. For decades the courts have had the power to award both sides’ costs against a publication that loses a libel action, so it follows that, if the corporate press is correct, for decades publications have been continually at risk of being bankrupted as a result of legal action, albeit only when they were defeated. In the past quarter-century, however, not one local, regional or national newspaper has been driven out of business by court costs. (Only two small-circulation publications are believed to have suffered that fate and neither was corporately owned. One was Scallywag, a small gossip magazine sued by Sir John Major in 1993, and the other was LM Magazine, which closed in 2000 as a result of libel action by ITN.)

Let us say, as an extreme example and purely for the purpose of argument, that Section 40 doubled the likelihood that newspapers would suffer adverse costs orders: on the basis of recent history the number of cases of insolvency likely to result would remain negligible at most. Set against this the fact that since 2005 almost 200 local and regional newspapers have been closed by their owners, usually on financial grounds, and it is clear that Section 40 is the least of their worries.

 

Impact on claimants: Chilling

It is not only journalists and news publishers that can be chilled. Claimants can be chilled too. Wealthy news publishers are in a position to intimidate potential claimants in various ways. One is by personal attack in their publications, which can have the dual effect of giving the relevant claimant grounds to fear for his or her reputation and of causing other potential claimants to hesitate. It should be noted that if Section 40 is fully commenced news publishers joining a recognised regulator receive protection from chilling but claimants will remain exposed to this form of bullying. Wealthy news publishers have also been known to chill claimants by showing that they are prepared to use their wealth to take claimants through lengthy legal processes even where the courts are consistently against them. Unless Section 40 is commenced, this practice will continue.

 

Impacts on the press industry and claimants: volume of cases

The consultation document states that the government is particularly interested in views relating to whether full implementation of section 40 would increase or decrease the volume of cases brought against publishers outside a recognised self-regulator. It repeats the suggestion that ‘commencement of Section 40 will increase the volume of cases brought, as the presumption is that claimants will be protected from paying legal costs for cases against publishers who are not members of a recognised self-regulator’.

Unless this consultation is concerning itself exclusively with the commercial interests of newspaper companies to the exclusion of the interests of the public and of justice, there can be no merit in addressing this ‘particular interest’. Even if it could be assumed that there would be an increase, and even if it were possible to predict on credible grounds what such an increase might be (and neither point is accepted here) a simple number of possible additional cases would prove nothing of value.

This returns us to the matter of meritorious and unmeritorious cases. Since no one could object where citizens proven to have been wronged have been able to obtain justice, it would be necessary to subtract from any putative total  of additional claims the number that are likely to be won by the claimant. Any other course would amount to an endorsement of injustice. Equally, since the courts have always had and continue to have powers and means to strike out claims which are without merit, or to make cost awards that penalise abusive claimants irrespective of section 40, that number would have to be excluded. They would not proceed, so they cannot be counted. If they did proceed the costs penalty would be reversed. This leaves only those cases which have sufficient merit to go before the courts, but in which the claimants are ultimately unsuccessful. These too can hardly be included, since by definition the claims are sufficiently strong to go before the courts and it is therefore right that they should do so. Even the briefest discussion of these matters demonstrates the absurdity of the exercise of calculation contemplated in the question.

A case has been made in the past that Section 40 costs provisions might encourage some people who would otherwise have sought remedy through complaint to the regulator to ‘upgrade’ their cases to legal ones. All the above applies in such cases. If their case is good and they win, or if it is good enough to get to court but they lose, justice is done as it should be. If the case has no merit it will not proceed.

The main problem with that suggestion is that the industry has not been able to identify from its records any cases of complaints which were settled by a complaints process, with no compensation, which could have been brought as a legal claim instead and would only be brought as a legal case under the Leveson system.

Once again, no consideration of these matters by government will be complete if it does not take account of the effects of the Defamation Act 2013, which, by design and with effect from 2014, has given news publishers significant new protections against successful prosecution for libel (notably the ‘serious harm’ test). This represents an important gain for freedom of expression while also pushing the bar for claimants higher. Any calculation of potential changes in the number of cases being brought against news publishers as a consequence of Section 40 would therefore have to weigh in the balance the probable reduction in the volume of cases brought (albeit one that by nature is just as difficult to measure) in consequence of the 2013 Act.

 

Impacts on claimants and the press industry: Effect of costs

According to the consultation document the government is also particularly interested in views relating to the extent of legal costs associated with bringing and defending individual cases. To have a fuller understanding of likely impact it wants to know the average costs of cases and the range of costs by type of case.

From the point of view of claimants, and by extension of the general public, this is where Section 40 counts most: the higher the costs, the stronger the case for carrying through the changes agreed by all parties in Parliament in 2013. For claimants costs have long been prohibitive to all but the few and the fortunate, and so ordinary people have very often been denied access to justice. Recently there has been a significant increase in the court fee in civil cases like libel and privacy. These fees often have to be paid by the claimant up-front and can easily range up to £10,000 for a libel action. This is scandalous, and must be recognised as such by a government ‘that works for everyone and not just the privileged few’. For the industry the costs have been a matter of complaint for many years, as was made plain at the Leveson Inquiry.

Both complainants and news publishers therefore stand to gain substantially from low-cost arbitration, which has been introduced successfully in other walks of life. Justice can be delivered cheaply and quickly, and this benefits not just both parties in the case but also the state, since the state carries costs in all cases that go through the courts.

Again, where potential costs to the industry are concerned, any consideration must also take into account the effects of the Defamation Act 2013. Since January 2014 news publishers have enjoyed the financial benefits of reduced exposure to libel actions in consequence of the Act.

 

Conditional Fee Agreements

Conditional Fee Arrangements (CFAs) are referred to briefly and without context in the consultation document. Their many shortcomings are almost universally recognised, including by Government. No claim can be made that they provide satisfactory access to justice for the general public in relation to libel and privacy, nor can it be asserted that they operate in a manner that conforms to the interests of the press.

While it is sometimes asserted that CFAs enable claimants to litigate at no cost and no risk, this gives a false impression. In practice the threshold for access to CFAs is very high because solicitors are risk-averse and accept only those claims with strong chances of success. This tends to exclude many potential claimants whose cases have merit and deserve a hearing. As for the press industry, it has complained vociferously for years about the costs implications of recoverable success fees and ATE insurance premiums which are a necessary part of a viable CFA system in media cases.

The CFA regime was recognised as unsustainable by 2013, when the proposal was made to replace it with the Qualified One-way Cost Shifting (QOCS) system. Ultimately, however, this too was rejected. Among its demonstrable shortcomings was that, by eliminating ‘recoverable success fees’ it would make solicitors even more reluctant to take on cases and so would restrict access to justice for the general public even further. Again, it was also opposed by the press industry.

It is little wonder that Sir Brian Leveson, in addressing the problem of access to justice for ordinary people, chose a very different path. Equally, it is not surprising that Parliament agreed that low-cost arbitration was the appropriate alternative to high-cost litigation, and that it endorsed Section 40 as the means to make this possible. For members of the public making claims, the cost of access to arbitration through Impress is £70. The cost of defending a case need be no more than a few thousand pounds. Compared with the cost of litigation (both court fees and legal fees) in the High Court these are trifling sums. The continuing delay in the commencement of Section 40 is denying both news publishers and the general public access to these benefits.

 

Conclusion in relation to impacts on the press industry and claimants

All of the matters in the preceding paragraphs have this in common: nothing (with the exception of the Defamation Act) has changed in the period since the Leveson Inquiry considered them, since the cross-party agreement agreed what actions were necessary and since all parties in Parliament approved those actions by the passage of Section 40. There has been no substantive increase in court costs in cases of libel and privacy, while there has been a reduction in libel cost risks arising from the effect of the new Defamation Act.

Insofar as anyone might be able to calculate a change in the number of libel and privacy cases that might result from commencement of Section 40, the calculation can be no different now from what it would have been when Parliament considered these matters in 2013 and gave its overwhelming support to Section 40. Nor would it be different from when Sir Brian Leveson made his recommendations.

In short, we are where we were in 2013, and no grounds exist for overriding Parliament’s will. In the meantime, and for as long as the commencement of Section 40 is delayed, ordinary citizens are being denied access to justice.

END OF PART 5

 

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