Costs capping in CFA libel cases

King v Telegraph Group Ltd CA TLR 21 May

It is not clear that Parliament ever turned its mind to the consequences of defamation actions being conducted under a conditional fee agreement without insurance cover, or to considerations under article 10 of the European Convention on Human Rights. It was therefore right that guidance should be given as to future cases involving what was an obvious unfairness leading to a defendant in libel proceedings having to pay very high costs even if successful because an impecunious client, without insurance protection, was funded under a CFA. Otherwise the existing system was bound to have a chilling effect upon those seeking to exercise their right to freedom of expression as a result, as in this case, of the extravagant claimant’s costs. The claimant’s solicitors had written a letter before action in a vituperative tone calculated to raise the temperature and to inflate the parties’ legal costs in a manner that entirely conflicted with the philosophy underlying the civil justice reforms. There were three weapons available to a party concerned about extravagant conduct by the other side, or the risk of it: a prospective cost-capping order; a retrospective assessment of costs conducted in accordance with the principles of the CPR; and a wasted costs order. Recourse to the first of those weapons should be the court’s first response when a concern was raised by defendants of the type being considered. The court indeed had power to impose a cost-capping order in an appropriate case, as was clear from s51 of the Supreme Court Act 1981 and CPR rule 3.1(2)(m), and had been held in AB v Leeds Teaching Hospitals NHS Trust [2003] EWHC 1034. Moreover, in deciding what order to make, the court should take the principles set out in CPR rule 44.3 governing the retrospective assessment of costs as an important point of reference.