Coventry and others v Lawrence and another

The Supreme Court considered whether the costs recovery regime created following the Access to Justice Act 1999 (notably recoverable conditional fee agreement (CFA) success fees and after-the-event (ATE) insurance premiums, implemented by amendments to the Civil Procedure Rules and Practice Direction) was compatible with the European Convention on Human Rights, in particular article 6 and article 1 of Protocol 1. The court analysed the meaning of proportionality in both Convention and costs-assessment contexts and examined the critics’ complaints (including the Practice Direction paras 11.7 and 11.9).

Having reviewed the policy background, domestic case law (including Lownds, Rogers and Callery) and Strasbourg authority (MGN v United Kingdom), the majority concluded that the 1999 Act scheme pursued legitimate aims (widening access to justice after the withdrawal of legal aid), fell within the legislature’s margin of appreciation and was, as a whole, compatible with article 6 and A1P1. The court held that paras 11.7 and 11.9 of the Practice Direction were integral to the scheme and could not be read down or disapplied without fundamentally undermining it. The court therefore refused to accept the respondents’ contention that recoverable success fees and ATE premia violated their Convention rights.

Background and parties:

• The dispute concerned a nuisance claim by the appellants (Lawrence and Shields) against Moto-Land UK Ltd and Mr Coventry. After a trial the judge awarded the appellants damages and an injunction and ordered the respondents to pay 60% of the appellants’ costs. The respondents (Coventry and others) argued that to be liable for the appellants’ CFAs’ success fees and ATE insurance premia would breach their rights under article 6 and/or article 1 of the First Protocol (A1P1) of the Convention.
• Procedural history: the case had already reached this court twice ([2014] UKSC 13 and [2014] UKSC 46). It was on appeal from the Court of Appeal [2012] EWCA Civ 26.

Nature of the application and issues:

• (i) Nature of the challenge: the respondents sought a ruling that liability to pay CFA success fees and ATE premiums (as recoverable under the 1999 Act and the Civil Procedure Rules / Practice Direction) infringed their Convention rights; they sought an adjustment or disapplication/reading down of the Practice Direction provisions (notably paras 11.7 and 11.9) to require broader consideration of proportionality and the payer’s circumstances.
• (ii) Issues examined by the Court: whether the scheme pursued a legitimate aim; how to apply proportionality in Convention terms and in costs-assessment terms; whether MGN v United Kingdom required a finding of incompatibility; whether paras 11.7/11.9 of the Practice Direction were compatible with article 6/A1P1; and, if incompatible, what remedy should follow.

Court’s reasoning and outcome:

• The majority examined the statutory and rule framework (Access to Justice Act 1999, amended CPR and Practice Direction) and the policy aims (widening access to justice and substituting private funding for legal aid). It distinguished the two senses of proportionality: the Convention balancing test and the CPR proportionality test applied in costs assessment.
• The court accepted that the regime had important flaws and could produce hard individual cases (and acknowledged the ‘‘blackmail/chilling’’ risk), but concluded that: (a) the scheme pursued legitimate aims and fell within the legislature’s broad margin of appreciation; (b) the Practice Direction provisions that required an ex ante assessment of additional liabilities (CPD 11.7) and resisted reducing a percentage uplift simply because the total looked disproportionate (CPD 11.9) were integral to the scheme’s viability; (c) reading down or disapplying those provisions would radically change the scheme and could not be achieved by interpretation under the Human Rights Act; and (d) taking the payer’s financial circumstances into account on assessment would produce satellite litigation and was not supported by the CPR framework.
• The majority therefore held the 1999 Act / rule-based scheme compatible with article 6 and A1P1 and refused to read down or disapply the Practice Direction; a dissenting judgment would have reached the opposite conclusion and would have allowed the appeal on human-rights grounds.

The appeal is dismissed. The Supreme Court (majority) held that the post-1999 Act funding-and-costs regime (including recoverable CFA success fees and recoverable ATE premiums as implemented in the CPR and Practice Direction) pursued legitimate aims in widening access to justice, fell within the legislature’s margin of appreciation and was compatible with article 6 and A1P1. The Practice Direction provisions (notably paras 11.7 and 11.9) were integral to the scheme and could not be read down or disapplied without undermining it; therefore the respondents’ Convention challenge failed.

On appeal from the Court of Appeal [2012] EWCA Civ 26. The matter had previously been considered in this court in two earlier judgments: [2014] UKSC 13 and [2014] UKSC 46. The appeal to the Supreme Court raised a human-rights challenge to the costs-recovery regime created by the Access to Justice Act 1999 and implemented in the Civil Procedure Rules and the Practice Direction supplementing CPR Part 44.