BLOG: Philip Gray on the prospective reform of legal costs in libel actions

Spurred on by the media fury and numerous reports, most recently from the University of Oxford, which concludes that libel costs exceed damages 140 times over and that CFAs may breach the rights of the press under the European Convention on Human Rights, the Government is looking at fixing recoverable hourly rates and capping costs in libel actions.

So why the furore and why is the Government taking such an interest?

A series of recent high profile cases against national newspapers, mainly involving claims for libel, has left many newspapers facing legal bills amounting to millions, far exceeding the damages awarded to the successful claimants, many of whom were on CFAs whereby their costs can be doubled.

The maximum amount a claimant can currently claim for libel is £250,000, this being the maximum amount recoverable for personal injury, however, there is at present, no absolute maximum for legal costs that are recoverable.

The lack of an upper limit, I believe, is the reason the press are so vehemently in favour of costs capping.

You may recall Paul Dacre's assault on libel costs and CFAs as part of his address to the Society of Editors Conference in the wake of the Max Mosely trial last year.

The Press Gazette and other media pressure groups have for many months been petitioning the Government to legislate in this area.

Recently their calls have been met by a Commons debate in December which lasted over an hour during which many MPs called on the Government to do something to curb the "outrageous" costs in libel matters, though many of the same MPs had to declare an interest prior to addressing the house, that they have been involved in a libel action.

Most recently, Jack Straw, the Minister of Justice, addressed the issue at the Press Gazette Media Law Conference last month in which he promised to take action on excessive libel costs, and in particular the use of CFAs.

All of which has led to a review of libel costs by Lord Justice Jackson and a consultation paper issued by the MoJ which proposes the introduction of fixed hourly rates recoverable and a mandatory costs capping for all claimants who bring a claim for defamation.

It is hard to argue that legal costs involved in running a case to trial in a libel action are high, costs are high in any case run to trial on the multi track, but does that mean that the current common law ceiling of £250,000 for libel mean that legal costs should also be capped?

It is one of the principles of the CPR that costs should not exceed the damages sought, unless in exceptional circumstances.

If, for example, I have a breach of contract case worth £20,000 my costs should not exceed £20,000 and if they do I am unlikely to recover the excess from my opponent.

But is libel really about claiming damages, or, more generally, about money at all? In my experience claimants seek vindication, either by the publication of an apology and retraction, or by the decision of a jury at trial, not damages.

Libel is not about money, it is about reputation, as many judges have contended, it is impossible to award a financial sum to repair a damaged reputation, the perception of one's self in the minds of their peers cannot be valued in hard cash.

It is unreasonable and against the principles of justice for a claimant seeking vindication to have his legal costs indexed against a juries award of damages, which is often impossible to estimate prior to the trial.

Whilst there is scope for improving the way in which libel cases proceed through the courts the idea that all libel claims can be done on the cheap is an affront to the skill and worked required in preparing for a libel trial.

Philip Gray
Kirwans