Liability to pay success fees and ATE premiums is not a breach of human rights - DAC Beachcroft

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Liability to pay success fees and ATE premiums is not a breach of human rights

Published On: 24 July 2015

The Supreme Court, in its keenly-awaited judgment in Coventry and others v Lawrence and others, has considered whether the old Conditional Fee Agreement ("CFA") scheme of funding claims, introduced by the Access to Justice Act 1999 ("1999 Act") was contrary to Article 6 of the European Convention on Human Rights and Article 1 of the First Protocol to the Convention.

Lawrence pursued Coventry for damages and an injunction, alleging that the noise emitted by Coventry's speedway track caused a nuisance.  An injunction and damages were awarded, the damages totalling £20,750, and Coventry was ordered to pay Lawrence's costs comprising £184,585 base costs, a success fee of £129,004 and an ATE premium in the region of £183,000.

The Legal Aid, Sentencing and Punishment of Offenders Act 2012 ("LASPO") abolished the recoverability of CFA success fees and ATE premiums from the losing party in the vast majority of claims brought after 1 April 2013.  This appeal, therefore, concerned whether claims operating under the old pre-LASPO funding scheme infringed the paying party's human rights and thus entitled them to claim compensation from the UK government for this infringement. The appeal also concerned whether the financial means of the paying party should be taken into account when deciding the level of success fee and premium which should be paid.

Article 6 provides that, in the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law.  Article 1 of the Protocol preserves the right to peaceful enjoyment of property.

Dissenting, Lord Clarke and Lady Hale decided that the old system of funding claims through CFAs singles out litigants whose opponents use the agreements and imposes on them a disproportionate burden in costs, and that the means of the paying party should be considered when assessing costs.

However, in a majority of 5:2, the Supreme Court found the old CFA scheme was a proportionate way of funding litigation and compatible with the Convention rights of litigants.  It was a general measure which was justified by the need to widen access to justice to litigants following the withdrawal of legal aid, was made following consultation with Parliament, and was a measure falling within the wide discretion of the rule-makers.

Requiring the means and circumstances of paying parties to be taken into account when assessing costs would result in satellite litigation, and was rejected alongside arguments that CFA funding should only be allowed against parties whose means were sufficient to pay the costs.

Had the appeal succeeded, it would inevitably have led to confusion over the costs liabilities of different parties, to substantial litigation over whether success fees should be paid, and to further turmoil in the legal sector.  Whilst the status quo this judgment gives will not see savings for paying parties, it does provide certainty over costs liabilities for claims pre-dating Lord Justice Jackson's reforms.  It may also raise questions about whether the new LASPO regime has gone too far the other way by undermining the key purpose behind the 1999 Act – access to justice.