Many would argue that reform to the way defamation cases are conducted in England and Wales is long overdue. Various major reforms in this area of the law are looming large, including two possible changes which are designed to overhaul how defamation complaints are paid for.
The Ministry of Justice has just closed a consultation on whether to bring in means-tested “costs protection” for parties to litigation. At the same time the Leveson Report’s recommendation that there be a new “arbitration service” for defamation complaints has been incorporated into the new Royal Charter on Self-Regulation of the Press.
Each scheme attempts to solve the same perceived problem. It can be prohibitively expensive for claimants to pursue a defamation case, yet the regime which remains in place for defamation claims to try to alleviate that burden – recoverable CFA success fees and ATE premiums – can upset the balance between claimants and defendants. It has also been viewed by the ECHR as a threat to the freedom of the press.
The Ministry of Justice is proposing, possibly as soon as April next year, to introduce the right for claimants or defendants to a “costs protection order”. If it can show that paying adverse costs would cause “severe financial hardship” then a party will be protected in whole or in part from the risk of having to pay adverse costs if unsuccessful. The costs burden (of own and adverse costs) would instead be shifted to the opponent.
Whilst the protection is in theory available to claimants and defendants, costs protection would probably be used most often to protect impecunious claimants at the expense of publisher defendants. This may not be any improvement on the current costs regime: for example defendants will still feel unfairly burdened by costs; and the protection will not reduce all costs risk for claimants¹. There is also a risk that the overall costs of defamation litigation may rise, and the process be delayed, by contested applications to obtain the protection or to have it removed.
There is a question mark over the whole of the Royal Charter, given that news publishers have so far refused to agree to it. However, any eventual Recognition Panel established under the Charter is charged with setting up an independent arbitration service. The aim is to provide a dispute resolution procedure for defamation complaints which is paid for by the defendant publisher but is free of charge to claimants. It would be manned by former defamation specialist judges or lawyers.
Interestingly, Leveson recommended the arbitration service on the premise that litigation was beyond the reach of most claimants because of prohibitive costs. Two particular assumptions were made:
- that the right to recover CFA success fees and ATE premiums was going to be lost in defamation cases along with most other types of litigation (as part of the Jackson reforms which took effect in April this year); and
- that no form of costs protection was going to be introduced for defamation and privacy cases: Jackson limited costs shifting reforms to personal injury cases.
Both assumptions turned out to be incorrect. Defamation claims have so far retained recoverability of CFA success fees and ATE premiums, and the government plans to introduce costs protection. Is the arbitration service necessary in the litigation landscape in which defamation actually finds itself?
Details on both proposed procedures have yet to be finalised. But where the purpose behind both is the goal of assisting access to justice for impecunious parties, the obvious overlap needs to be addressed.
The motivation behind a genuine defamation claim is the right to a public vindication when a reputation has been tarnished. Arbitration as commonly understood, with its attendant confidentiality, will not achieve that. If that confidentiality is intended for the defamation arbitration service then many may prefer traditional litigation. Yet parties to whom the arbitration service is available may be penalised in costs if they instead choose to go to court. Should parties really be penalised for seeking their day in court?
It remains to be seen whether the costs protection regime and/or the arbitration service will actually come into effect. But if they are both introduced, and within a short space of time, there is a risk of inconsistent application and even confusion as to the most appropriate dispute resolution method.
Added into that mix will probably also come the changes to the substantive law of defamation when the Defamation Act 2013 comes into force later this year. That will create another area of uncertainty while the courts grapple with the various new tests and defences it introduces.
Anyone who may be involved in defamation cases in the next few years should beware of potential difficulties in the way cases are dealt with as well as the changing law itself. Whilst change has been desirable for some time, and an integrated solution to the particular costs problems which arise in defamation claims would have been welcomed, could this be a case of too much too soon?
¹ For BLP’s full view on the proposed costs protection scheme and whether it is an adequate replacement for the current costs regime, please see BLP’s Response to the Defamation Costs Protection Consultation.