The Government may be facing claims for billions of pounds following an indication from the Supreme Court that it may be in breach of the Human Rights Act. The Supreme Court has said that the recoverability of success fees and ATE premiums under the Access to Justice Act may breach a litigant’s rights under 6 ECHR (“right to a fair and public hearing”) and Article 1 of the First Protocol (“A1P1”) which affords protection of property and the right to “peaceful enjoyment of possessions”.

In Coventry and others v Lawrence [2014] UKSC 46 the Supreme Court considered various ancillary issues following the reinstatement of an injunction sought by the occupiers of a bungalow adjoining a speedway racing stadium. One of the issues it was asked to consider was whether the Defendant’s liability to pay a success fee and ATE premium (this was a pre April 2013 case) breached the Defendant’s Article 6 and A1P1 rights.

The Court was clearly unimpressed that, with the addition of a 100% success fee and a £350,000 ATE premium to base costs of some £398,000 the Defendants liability virtually trebled to over £1 million given that the affected property had a value of less than £300,000 and the value of the nuisance was “at most” £74,000.

The Supreme Court (Lord Neuberger giving the leading judgment), while expressing the view that “it may be right” that payment of the success fee and ATE premium might amount to a breach of Article 6 in these circumstances, declined to decide the issue without first giving the Government and other interested parties a chance to be heard. The Court found it difficult to decide whether it should be the first to hear the issue or whether it should be remitted to the Court of Appeal or even the first instance judge. The case will be relisted before the Supreme Court once proper notice has been given to the Attorney General and the Secretary of State for Justice.

Any future decision that the recovery of success fees and ATE premiums may in some circumstances breach Article 6 and so be irrecoverable may have implications not only for litigants but also for the Government. The Court acknowledged that “those litigants who had been ‘victims’ of those provisions could well have a claim for compensation against the government for infringement of their Article 6 rights”.

There is a certain delicious irony to the case. The Government will have to defend the very system that it abolished in order to avoid claims that might run to billions of pounds. We wait with interest to see how they will straddle that particular fence.