As the panic that set in following the July 2014 Coventry v Lawrence (No 2) judgment has now abated after the Coventry v Lawrence (No 3) judgment in July this year, it now seems an appropriate time to look back at how the issue arose, how it was developed and how it was dealt with by the Court.
A brief history
On 23rd July 2014, the Supreme Court handed down judgment in Coventry v Lawrence (No 2) and opened the door to a year of doubt and confusion.
Coventry was a case arising out of allegations of nuisance including the liability of landlords for nuisance. The issues arising from the judgments in Coventry Nos 1 and 2 have been dealt with eloquently elsewhere. What concerns this article is the issue on costs which sprung into life when Lord Neuberger, in Coventry (No 2), said this, “In the light of the facts of this case and the Strasbourg court judgments relied on ….it may be that the respondents are right in their contention that their liability for costs under the 1990 Act, as amended by Part II of the 1999 Act, and in accordance with the CPR, would be inconsistent with their Convention rights. However, it would be wrong for this Court to decide the point without the Government having had the opportunity to address the Court on the issue.”
The consequences of these words were far reaching:
- There were many thousands of live Conditional Fee Agreements (CFAs) and After The Event (ATE) policies in place that would be undermined.
- Arguments about the compatibility of the 1999 Act Regime had effectively been shut down by the Court of Appeal in 2011 in Sousa v London Borough of Waltham Forest  EWCA Civ 194.
- However, the 1999 Act Regime had been disavowed by Jackson LJ in his reports, and recoverability of success fees and ATE premia removed by the LASPO changes from 1stApril 2013. Did this mean that the judicial wind was now blowing in a different direction than it had been in Sousa?
One commentator put the true amount in issue at £15billion.
Recognising the potential effect on the Bar, the Bar Council sought – and was granted – permission to intervene, and a team consisting of Nicholas Bacon QC, Mark Friston and I from the Bar Council’s Remuneration Committee volunteered to work on the case.
The Bar Council were joined, as interveners, by the Secretary of State for Justice, The Law Society, The Department of Justice Northern Ireland, The Association of Business Recovery Professionals, the Media Lawyers Association, the Asbestos Victims Support Group Forum UK and the Association of Costs Lawyers.
The question at the heart of the appeal was this: was the system of CFAs and ATE insurance, in force from 2000 to 2013, compatible with the European Convention on Human Rights?
That system, implemented by the Access to Justice Act 1999, provided that success fees under CFAs and the ATE insurance premiums were payable by unsuccessful litigants. The system has, of course, now changed – with effect from 1st April 2013 – thanks to Sir Rupert Jackson’s recommendations but there are many thousands of cases still running under the old arrangements.
The facts, insofar as relevant to the issue at stake, can be briefly summarised as follows: Katherine Lawrence and Raymond Shields were the owners of a bungalow in Suffolk which was about 800 metres away from a stadium used for speedway and motor car racing. Lawrence and Shields brought proceedings for an injunction and damages in nuisance as a result of noise from the track. The action was taken against the operators, David Coventry and Moto-Land UK Limited. Lawrence and Shield recovered damages of £20,000 and were awarded an injunction. Proceedings against the landlords were dismissed. The value of the nuisance, had there been no injunction, was £74,000 on the evidence.
The difficulty arose because the parties fought each other to a standstill, first in the High Court, where the damages and injunction were awarded, next in the Court of Appeal – where the original decision was reversed – and then finally in the Supreme Court, which reinstated the original decision (with some modifications). A second hearing in the Supreme Court determined the issue of the liability of the landlords for the nuisance.
The sting in the tail was this: the judge at first instance made an order, quite properly, that Coventry and Motoland pay 60% of Lawrence and Shield’s costs. Those costs were described as “eye catchingly large” and amounted to over £300,000 of which 60% is circa £180,000. Additionally, under the Access to Justice Act regime, Coventry and Motoland were liable to pay a success fee of circa £130,000 and an ATE premium of circa £183,000. Coventry and Motoland argued that payment of the additional sums for the success fee and ATE premium was contrary to their Article 6 or Article 1 First Protocol cases. Further costs were incurred in the Court of Appeal and then in the Supreme Court, adding to the costs burden. For completeness it should be said that the amount of costs incurred was not the subject of criticism, but rather an inevitable consequence of hard fought litigation over 11 days in Court followed by two appeals.
The Court decided, by a majority (Lord Clarke and Lady Hale dissenting) that the Access to Justice arrangements (and particularly the secondary legislation under which it operated) was compatible with the European Convention on Human Rights. Lawyers breathed a huge sigh of relief but, perhaps, not quite as large as the sigh from the government who had faced the potential £15bn bill.
Lords Neuberger and Dyson held that, by reference to the generality of cases, the Access to Justice arrangement was justified by the need to widen access to justice following withdrawal of legal aid, that it was made following wide consultation and fell within the broad area of discretionary judgment of legislature and rule makers. There was, it was said, no perfect solution to the problem of how best to enhance access to justice.
Interestingly, and topically, Lords Neuberger and Dyson (with whom Lords Sumption and Mance agreed) recognised that the current system introduced via the LASPO reforms, following Sir Rupert Jackson’s recommendations, contained inherent restrictions on access to justice. Indeed they went further, setting out that it was impossible to devise a fair scheme to promote access to justice to all litigants without a widely available civil legal aid system.
Lords Neuberger and Dyson also accepted the Bar Council’s submission that clients and their lawyers had a legitimate expectation that the Court would not (at least not without reasonable notice) decide against recoverability where the Court had previously allowed recovery of the costs and ATE premium. It was noted that such a decision would impact on many thousands of pre-April 2013 cases and mesothelioma, insolvency and publication/privacy cases.
The legitimate expectation clients and their lawyers had in the established system of costs recovery was also accepted by Lord Mance (with whom Lord Carnwath agreed) as a matter that the Court ought to take account of in its decision, and not merely (being itself a protected possession within A1P1) being raised in a Strasbourg claim against UK.
The judgment lifted a cloud of uncertainty that had hung over litigants and their representatives since July 2014.
It was particularly helpful that the majority of the Court gave a clear judgment reinforcing the rights of litigants and their lawyers, and this should avoid the potential for large scale satellite litigation. If there had been stray words or comment in the judgment these would, inevitably, have been pored over.
It is particularly interesting that the Court accepted The Bar Council’s submission that litigants and lawyers had, and have, a legitimate expectation (and protected possession rights under Article 1 First Protocol) in recovering fees and premiums properly incurred under the pre LASPO regime. This may be a point of more general application in the future.
The LASPO system is still bedding down but the observations that the current LASPO system may inherently restrict access to justice will resonate with some and will undoubtedly provoke further debate.
I would like to pay tribute to the countless hours put into the case by Nicholas and Mark and those behind the scenes at the Bar Council. It is also right to acknowledge the contribution of the SBAs and PIBA in particular with Andrew Ritchie QC and Martyn McLeish in particular putting in detailed and helpful submissions from the perspective of the personal injury bar and to Kieron Beal QC instructed by the Law Society.
Greg Cox is a Solicitor-Advocate and Partner at Simpson Millar LLP, he can be contacted at firstname.lastname@example.org
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