Campbell (Appellant) v. MGN Limited (Respondents)

A statutory scheme permitting a successful litigant’s conditional-fee success fee to be recovered from an unsuccessful media defendant is compatible in principle with article 10. The scheme pursues the legitimate objective of providing effective access to justice.

Eligibility for a conditional fee agreement does not depend upon the client’s means. A general rule available to all litigants is justified by the impracticability of means testing. The reasonableness and proportionality of the particular success fee remain matters for costs assessment, at which the rights and interests of both parties must be weighed.

Following privacy proceedings against a newspaper publisher, the House had restored an award of £3,500 damages and ordered the publisher to pay the claimant’s costs. The substantive decision was reported at [2004] 2 AC 457.

The claimant’s House of Lords appeal had been funded by a conditional fee agreement providing for success fees of 95% and 100%. Before taxation, the publisher petitioned for a ruling that no part of those success fees was recoverable. It argued that the resulting liability would be a disproportionate interference with freedom of expression under article 10.

The central issue was whether recoverability was inherently disproportionate, particularly where the successful claimant might have been able to fund the litigation personally.

Petition dismissed unanimously.

1. Per Lord Hoffmann, with whose conclusion all members of the Committee agreed, the recoverability of a success fee was a legislative policy choice directed towards access to justice. Its indirect effect upon freedom of expression was relevant, but it did not make the scheme incompatible with article 10. The legislature could require unsuccessful defendants collectively to contribute towards the cost of litigation conducted under conditional fee agreements.

2. Lord Hoffmann distinguished two forms of proportionality. The costs rules examine whether expenditure on the particular litigation was reasonable and proportionate. Article 10 asks whether imposing liability for success fees is a proportionate means of funding access to justice, having regard to its effect upon freedom of expression. The mere fact that base costs would be increased by as much as 100% did not answer the Convention question.

3. Lord Hoffmann held that a client’s personal wealth did not determine entitlement to use a conditional fee agreement. Neither the legislation nor the applicable rules required solicitors to investigate whether clients could finance litigation themselves. A means test would be impracticable and unfair if applied retrospectively. Parliament was entitled to establish a workable general rule making conditional fee agreements available to everyone.

4. Per Lord Hope, the amount recoverable remained subject to assessment. The percentage increase had to be considered separately from the base costs. Reasonableness principally concerned the risk of the litigation failing. Proportionality remained an ultimate control requiring the receiving party’s article 8 and access-to-court interests to be balanced against the paying party’s article 10 interests. A reduction borne by the receiving client also affected that balance.

5. Lord Hoffmann recognised, by way of wider comment, that conditional-fee defamation litigation could create a chilling or ransom effect, especially where an impecunious claimant lacked adverse-costs insurance and conducted litigation extravagantly. Early costs-capping could mitigate the problem, although legislative intervention might ultimately be necessary. Baroness Hale reserved her position on that wider question. Lord Carswell agreed that the statutory policy had not been shown to violate the Convention, while expressing concern about its fairness.

1. House of Lords: The present petition challenging liability for conditional-fee success fees was dismissed unanimously: [2005] UKHL 61.
2. House of Lords: By a majority of three to two, the House had allowed the claimant’s substantive appeal, restored Morland J’s order and awarded her costs: [2004] 2 AC 457.
3. Court of Appeal: The court had unanimously allowed the publisher’s appeal, dismissed the privacy claim and reversed Morland J: [2002] EWCA Civ 1373; [2003] QB 633.
4. High Court: Morland J had upheld the breach-of-confidence claim, awarded £3,500 damages and ordered costs. No citation is stated in the judgment.