Case summary: Flood, Miller and Frost (SC)

Times Newspapers Limited (Appellant) v Flood (Respondent), Miller (Respondent) v Associated Newspapers Limited (Appellant), Frost and others (Respondents) v MGN Limited (Appellant)

Reference: [2017] UKSC 33

Court: Supreme Court

Date of judgment: 11.04.17

The facts of the case

Proceedings were brought against three newspaper publishers by claimants who had entered into Conditional Fee Agreements (“CFAs”) with their solicitors and barristers, and who had obtained after-the-event insurance (“ATE”) in respect of the defendants’ legal costs. Two of the claims, Flood v Times Newspapers Ltd and Miller v Associated Newspapers Ltd, were libel claims, and the third claim, Frost and others v MGN Ltd, involved allegations that the newspaper had unlawfully gathered private information about the claimants by hacking into their phone messages. The claimants were successful in their claims and were awarded damages and costs including success fees and ATE premiums. The defendants appealed the costs awards contending that payment of the success fees and ATE premiums infringed their right to freedom of expression under Article 10 of the European Convention on Human Rights.

Background

Under the Access to Justice Act 1999 (the “1999 Act”), a claimant could bring proceedings on terms which involved:

the claimant’s solicitors agreeing under a CFA to be paid nothing if the claim failed, but to be entitled to receive up to twice their normal rates if the claim succeeded (success fee); and/or
the claimant could take out ATE insurance against the risk of having to pay the defendant’s costs in the event that the claim failed; and/or
the claimant being able to recover from the defendant the success fee and the insurance premium as part of his costs if the claim succeeded.

In the case of Campbell v MGN Ltd (2) [2005] 1 WLR 3394, the defendant MGN, which had been ordered to pay damages and costs after losing a privacy case, appealed the costs award contending that its Article 10 rights would be infringed if it was required to pay the success fee. When MGN’s appeal was rejected in the Supreme Court, it applied to the European Court of Human Rights [MGN v UK (2011) 53 EHRR 5]. The Strasbourg court ruled in MGN’s favour holding that the 1999 Act exceeded the broad margin of appreciation afforded to convention states and infringed MGN’s Article 10 rights.

Before and after MGN v UK there had been concerns that the 1999 Act regime was being abused and that the costs claimed were disproportionate to the amounts in dispute. In 2008 Sir Rupert Jackson investigated the costs of civil litigation and released the report: Review of Civil Litigation Costs: Final Report (2009), which recommended that successful parties to an action should not be able to recover success fees or ATE premiums. This proposal was implemented by the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (“LASPO”), and applied to proceedings commenced from 1 April 2013. Success fees and ATE premiums could still be recovered by successful litigants in defamation and privacy claims.

The appeals: Flood, Miller and Frost

The newspaper publisher Appellants contended that UK domestic law should reflect the decision in MGN v UK. The Court said that this was the first issue to consider, and that if the Respondents were correct, it would mean that (1) where a claim involves a newspaper or broadcaster, it would, as a matter of domestic law, normally infringe the defendant’s Article 10 rights to require it to reimburse the success fee and ATE premium for which the claimant is liable. If the Court decided that MGN v UK should be applied domestically, it would go onto consider the other issues including (2) whether the Appellants in Flood and Miller should be excluded from paying the success fee and ATE premiums (3) whether MGN should pay the Respondents in Frost their success fees and ATE premiums (4) whether the Court should make a declaration of incompatibility under s.4 of the Human Rights Act 1998. However, those three issues would fall away if the Court decided that MGN v UK did not apply domestically.

Should MGN v UK be applied domestically

The Court said it did not need to decide whether MGN v UK should apply domestically. The Court had jumped ahead and considered issues 2 to 4 on the assumption that MGN v UK did apply domestically and concluded that none of the costs orders should be varied to exclude the Appellants’ liability. Therefore, the Court did not consider it appropriate to express a concluded view on the issue of whether MGN v UK should apply domestically as the party most affected by the decision, the UK government, was not before the Court.

The Court went on to say that it was open to a domestic court to refuse to follow the decision of MGN v UK, as it is not a Grand Chamber decision, and there were no other section decisions to the same effect. There was a powerful argument that MGN v UK should be followed as it was a full and careful decision based on a report by a UK judge and the UK government did not seek to have the decision reconsidered in the Grand Chamber. On the other hand, there were also good reasons as to why the MGN v UK decision should not be followed. The Strasbourg court had not taken into account that defendants could also enter into CFAs and take out ATE insurance. The Strasbourg court accepted without question that there was no incentive for a claimant to attempt to control costs when in fact claimants can be become liable for at least some of the costs incurred by the parties. There was also force in the argument that recoverability of success fees and ATE premiums was the least bad option.

The Court doubted that these points would justify a domestic court refusing to follow the reasoned judgment of the Strasbourg court. However, it decided that the point should be left open and that it should give its decision on the remaining issues on the assumption that MGN v UK applied domestically.

If MGN v UK applies, does it prevent Miller and Flood recovering their success fees and ATE premiums?

On the assumption that MGN v UK applied, the Court decided that it would be unjust to prevent Mr Miller and Mr Flood from claiming their success fees and ATE premiums. Mr Miller and Mr Flood had embarked on their claims in the expectation that if their claims succeeded and they were awarded their costs, the Appellants would be liable for the success fees and ATE premiums. Mr Flood and Mr Miller’s Article 1 of the 1st Protocol to the Convention (A1P1) right to property would be infringed if they were deprived of the success fees and ATE premiums. To support this conclusion, the Court referred to Simor and Emmerson on Human Rights Practice which contains the proposition that “where in reliance on a legal act, an individual incurs financial obligations, he may have a legitimate expectation that that legal act will not be retrospectively invalidated to his detriment” and relied upon the Strasbourg cases Pine Valley Developments v Ireland (1991) 14 EHRR 319, Pressos Cia Naviera SA v Belgium (1995) 21 EHRR 301 and Stretch v UK (2003) 38 EHRR 12, all cases where the applicant’s disappointed legitimate expectation of a legal right was held to justify his A1P1 claim.

In Pressos the Court pointed out that not all retrospective deprivations of accrued rights would offend A1P1, as the question of proportionality will usually arise. However, in this case it was difficult to see how Miller’s and Flood’s A1P1 claims could be defeated as the government had not rendered LASPO (the legislation which superseded the 1999 Act) retrospective, as it only applied to claims issued from 1 April 2013.

The Court also considered that Mr Flood’s and Mr Miller’s Article 6 rights to a fair trial may be infringed if their right to claim success fees and ATE premiums was taken away retrospectively as the purpose of the 1999 Act regime was to enable access to the courts. Their Article 8 rights may also be infringed as the purpose of bringing the proceedings was to restore or maintain their personal dignity. However, Article 6 and Article 8 rights had not been raised in argument at all on the behalf of Mr Flood and Mr Miller, therefore the Court’s decision was solely based on an infringement of Mr Flood’s and Mr Miller’s A1P1 rights.

If MGN v UK applies, are the Respondents in Frost prevented from recovering their success fees and ATE premiums?

The Court said that the Respondents’ argument was weaker than in Miller and Flood as they entered into the CFAs and took out ATE after the decision in MGN v UK. However, to successfully rely on the case of MGN v UK, MGN would have to establish that it applies in cases where information is obtained illegally by or on the behalf of a media organisation. MGN’s Article 10 rights were engaged, but they could not be given the same amount of weight as they were given in MGN v UK. Due to the persistent, pervasiveness and flagrancy of the hacking and blagging, and the lack of any public significance of the information sought, the rule in MGN v UK could not be invoked.

A declaration of incompatibility?

It was not appropriate to make a declaration of incompatibility as the Court had decided to leave the question of the domestic application of MGN v UK open. The Court also considered that it would not be correct to grant such a declaration in relation to the 1999 Act regime, as it had been superseded by other legislation, including LASPO, and the effect of the other legislation had not been taken into consideration to decide the issues in the appeals.

Conclusion

The three appeals were dismissed.

Comment

Though the Court left the question of the domestic application of MGN v UK firmly open, it is apparent from the judgment that the Court was of the view that requiring media defendants to pay success fees and ATE premiums is usually a breach of their Article 10 rights. However, it will take another case with different facts, or a further application to the Strasbourg Court, or a change in domestic legislation before this question is settled.

It is also important to note that the Flood and Miller appeals failed as the Respondents had a legitimate expectation that the law would not be changed retrospectively to their detriment. The Court considered that the Frost Respondents had a weaker case as they entered into CFAs and took out ATE insurance after publication of the judgment in MGN v UK, though it accepted that at the relevant time the 1999 Act regime was the domestic policy whereby citizens could get access to the courts. This suggests that next time the recoverability of success fees and ATE premiums comes before the court, it may be more difficult for successful litigants to rely on their A1P1 rights due to the forewarning provided by this judgment. Instead litigants may do well to argue that their Article 6 and Article 8 rights would be infringed if they were prevented from recovering their success fees and ATE premiums from the losing party.