Supreme Court hands down judgment on the renowned case of Coventry and Others (Respondents) v Lawrence and Another (Appellants).

The Supreme Court handed down Judgment today on the renowned case of Coventry and Others (Respondents) v Lawrence and Another (Appellants).

The Respondents argued that the scheme for the recovery of success fee and ATE premium from the unsuccessful defendant under the Access to Justice Act 1999 and associated costs rules (‘the 1999 Act scheme’) was in breach of the defendants’ rights under the European Convention on Human Rights.

The Respondents contended that the breach could be remedied by reading down section 11.9 of the CPD so that the court could reduce the success fee or ATE premium payable by reference to the proportionality of costs overall and the means of the paying party.

The case was heard before seven Justices.  Five adjudged that the 1999 Act scheme did not constitute a breach of Article 6 of the European Convention on Human Rights i.e. right to a fair trial or indeed the right to possessions under Article 1 of Protocol 1.

The Judgment makes it clear that, after considering full submissions from the Respondents and Appellants and several Interveners, including the Asbestos Victims Support Groups Forum UK, the Respondents be ordered to pay the success fee and the ATE premium to the Appellants.

The Court heard detailed evidence that the aim of the 1999 Act scheme was to provide legislation for the successful party to recover the cost of the success fee and the ATE premiums from the losing party.

In effect, Parliament had transferred the cost of providing assistance in bringing cases from the taxpayer to the insurance premium payer.  In addition, it was shown that, after detailed mediations and industry wide negotiations involving both Claimant and Defendant representatives, an agreement to the percentage success fees being paid in various claims had been reached.

The Justices considered Lord Jackson’s four flaws and felt that the third flaw i.e. that the costs burden placed upon opposing parties is excessive and sometimes amounts to a denial of justice, “blackmail” or “chilling” effect, lay at the heart of this case.

The Court considered whether this flaw rendered the 1999 Act scheme incompatible with Article 6 and A1P1.  It described this flaw as overlapping with one of the four “unique and regrettable features” of the 1999 Act scheme as referred to by Lord Neuberger described at para 37 of his judgment in Coventry v Lawrence (No.2).  It described the flaw as an inevitable consequence of the regime but it did not necessarily breach the defendants’ Article 6 or A1P1 rights.

The Justices also considered the Legal Aid Sentencing and Punishment of Offenders Act 2012 (the ‘LASPO scheme’) and felt that there are restrictions on access to justice inherent in the LASPO scheme.

They considered that the LASPO scheme has inevitably curtailed access to the courts in some respects as a result, as is demonstrated by the facts of this case.

Claimants of modest means cannot finance litigation without a Conditional Fee Agreement (CFA), better known as ‘no win, no fee’.  But that inevitably requires them to pay a success fee on their solicitors’ and counsel’s basic charges.

In a substantial case, these costs are bound to be high.  How is the success fee to be paid by claimants who bring claims for non-financial remedies or where the damages claimed are very small?

Sir Rupert recognised the problem, when he called for general damages to be increased by 10%.  This was effected by the Court of Appeal in Simmons v Castle [2012] EWCA Civ 1039 and 1288, [2013] 1 WLR 1239.  But in the present case, this would have benefited the appellants to the extent of only £2,085.

Even if the success fees were to be substantially reduced on assessment, this increase in damages would represent a very small fraction of the overall figure.  In short, under the LASPO scheme, the present litigation would not have been viable.  The success fees are almost certainly more than the claimants’ likely damages, and more than the financial value of the rights they are attempting to protect (the diminution in value of their home being, on the expert evidence, no more than £74,000).

In addition, a decision to amend the costs rules under the 1999 Act scheme would have a serious impact on many thousands of pre-April 2013 cases which are in run-off, as well as claims to which the pre-Jackson costs rules continue to apply, such as mesothelioma, insolvency and publication and privacy cases.

Any order made by this court in the present case would have no effect on the contractual obligations of litigants to pay success fees to their lawyers and ATE premiums to their insurers.  Successful parties would, therefore, still be liable to pay their lawyers and insurers if they won their cases and could not recover them from unsuccessful defendants.

Doug Jewell provided evidence on behalf of the Forum and stated:

“This Judgment is extremely welcome.  If Claimants in mesothelioma cases were made liable for additional liabilities such as success fees and ATE premiums, the numbers who pursued claims for personal injury would have declined dramatically.  This would have resulted in families being at a financial disadvantage and could mean their spouse not only losing a partner but also seeing their income slashed.  We believe this would have been a double injustice.”

“We also welcome the Justices’ clear indication that LASPO has curtailed access to courts.  This has been the Forum’s view from the outset.”

Harminder Bains, Partner at Leigh Day who represented the Forum at the Supreme Court said:

“I am grateful to the Supreme Court for ordering the Respondents to pay the success fee and the ATE premium. 

“In many cases it would have been simply uneconomic for Claimants to continue to trial, even if they were faced with an inadequate part-36 offer, because of the likelihood of any additional damages they may have hoped to recover would have been wiped out.”

Last year the Forum succeeded in its Judicial Review against the Government when it attempted to bring in legislation to remove the section 48 LASPO exemption for mesothelioma sufferers.

Miss Bains continued: “This Judgment clearly coincides with the Forum’s view that the additional 10% increase in general damages provided in LASPO would be a completely inadequate substitute.

“In addition the implementation of Qualified One Way Costs Shifting to mesothelioma claims would not provide protection where the mesothelioma claimant had failed to better a part-36 offer and therefore would not address the primary concern expressed by most sufferers”.