2010 could well be a year in which we see significant changes to our libel laws, which can affect anyone from individuals to small businesses to large plcs, domestic or overseas. The latest report on this area was published yesterday (House of Commons Culture, Media and Sport Committee Report on Press standards, privacy and libel).

England is currently perceived to be a claimant friendly jurisdiction in which to bring libel claims, primarily due to the presumption of falsity, the lack of a requirement on a claimant to prove specific loss and the availability of conditional fee agreements ("CFAs"). A number of attempts to redress the balance have been made over recent years including through the development of the responsible journalism (Reynolds qualified privilege) and fair comment defences. However, some say that this is not enough. Reform of our libel laws is now firmly on the political agenda: the Ministry of Justice has set up a "Working Group on Libel" to consider reform.

Business impacts

The possible reform of our libel laws will impact upon both claimants and defendants. The two opposing camps feel strongly and the debate over freedom of expression versus protection of reputation is raging more fiercely than ever.

It seems inevitable that some changes will be implemented. Some of the law in this area dates back hundreds of years and is hard to apply to all the new forms of communication (and therefore publication) in this digital age. At present, companies have the right to sue in defamation but it is entirely possible that this right will be qualified.

Nearly all agree that the costs in defamation are disproportionate, views differ on the appropriate means to bring those under control. The ultimate question is how far the pendulum will swing in favour of the powerful media defendants.

The agenda for change

  • February 2009: consultation issued by the government on controlling costs in defamation proceedings. Report issued in September 2009.
  • September 2009: consultation issued on the multiple publication rule, consultation closed on 16 December 2009, report not yet issued.
  • November 2009: joint report issued by English PEN and Index on Censorship, (interest groups fighting for greater media freedom) criticising the current state of our libel laws and setting out ten key proposals for reform.
  • January 2010: abolition of archaic crimes of criminal libel and sedition
  • January 2010: Lord Justice Jackson published his report on his year-long review into the costs of civil litigation.
  • January 2010: consultation issued by the government, just days after the publication of the Jackson report, on a proposal to reduce success fees on CFAs from 100% to 10%. The timetable for response was truncated to just 4 weeks.
  • February 2010: the House of Commons Culture, Media and Sport Committee publishes its long-awaited report following its inquiry into press standards, privacy and libel.

Summary of key proposals

Costs

The costs consultation resulted in the implementation of a new pilot costs management scheme for defamation and malicious falsehood claims in the RCJ and Manchester District Registry from September 2009 until 30 September this year. Parties have to exchange, file and regularly update detailed budgets for estimated costs and solicitors must liaise monthly to check the budget is not being exceeded. Costs management conferences have been introduced in order to monitor expenditure.

It also resulted in the introduction of a notification system and "cooling off period" for settlement in relation to After-the-Event ("ATE") insurance premiums which are currently recoverable from the other side under a CFA in the event of winning the litigation.

Lord Justice Jackson's report was summarised in our e-bulletin on 14 January. One of his main proposals for costs generally is that success fees and ATE insurance premiums under CFAs should cease to be recoverable. CFAs have been widely used in recent years and are seen to have greatly assisted access to justice for claimants.

Key recommendations in the Jackson report from a defamation perspective include:

  • Damages should be increased by 10%.
  • There should be qualified one way costs shifting in favour of claimants. Generally, the usual costs position in civil litigation is that the losing party pays the winning party's costs (called costs shifting). This proposal would mean that for defamation claims, if a claimant loses, the amount of costs (if any) that he will be ordered to pay to the defendant will be assessed by reference to the financial resources of the parties and their conduct in the dispute, with an overall consideration of what is reasonable in all the circumstances.
  • The pre-action protocol should require (rather than desire as it currently does) the alleged meaning attributed to the words to be set out in the Letter of Claim.
  • The question of whether jury trials should be retained be considered.

The latest consultation on costs has recently closed. This sought views on the government's proposal to reduce the permissible success fees under CFAs from 100% to 10%. The indication from the government has been that it can, and may, introduce this reform by way of secondary legislation on a short timescale, prompting criticism that the proposal has been ill-thought through and politically motivated.

Internet libel

Currently the multiple publication rule (established in the Duke of Brunswick case in 1849) provides that each publication of defamatory material gives rise to a separate cause of action. In internet claims, this means that each "hit" on a website constitutes a new libel. Reformers argue that this rule renders online publications unfairly vulnerable to claims long after initial publication and undermines the purpose of the one year limitation period for defamation claims. They want a single publication rule to be introduced. Others argue that the rule should be retained, pointing to the fact that often a claimant only becomes aware of a defamatory publication more than one year after it was published.

The Culture, Media and Sport Committee Report

The conclusions and recommendations in relation to libel proceedings made by the Committee include:

  • It is in the interests of natural justice for defendants to be required to prove the truth of their allegations. The government is urged to consider how claimants may be better required to make reasonable disclosures of evidence to assist with this burden.
  • The Committee identifies "a mismatch of resources in a libel action, for example between a large corporation for which money may be no object and a small newspaper or NGO" and that this "has already led to a stifling effect on freedom of expression". Suggestions are made that corporate claimants should be required to prove actual damage to their business or, in the alternative, companies should only be allowed to rely on the malicious falsehood cause of action, where damage needs to be shown and malice or recklessness proved. Further, the general burden of proof should be reversed in cases involving claimant corporations.
  • Endorsing the development of a defence of responsible journalism by the courts but expressing concern that the defence remains costly and therefore inaccessible to publishers with poor financial resources. The Committee is also of the opinion that there is potential for a statutory responsible journalism defence to protect serious, investigative journalism and the important work undertaken by NGOs and recommends that a detailed consultation be launched.
  • Expressing concern over the well-founded fears of the medical and scientific community about their ability to comment and urging the government to particularly consider the issue of fair comment in academic peer-reviewed publications.
  • Imposing additional hurdles for claimants in "libel tourism" cases i.e. where the UK is not the primary domicile or place of business of the claimant or defendant. The Committee would also like to see the collation of statistics relating to jurisdictional matters so that this issue can be assessed properly.
  • The introduction of a one-year limitation period for internet publication actions unless the publisher has not amended or flagged the online version in response to a complaint.

The Committee considers that "the evidence [it has] heard leaves [it] in no doubt that there are problems which urgently need to be addressed in order to enable defamation litigation costs to be controlled more effectively". It makes a number of recommendations including:

  • Endorsing the costs management pilot, more active case management and a more interventionist approach by the courts to control costs.
  • Seeing merit in limiting maximum hourly rates.
  • Agreeing with Jackson LJ that ATE premiums should become wholly irrecoverable.
  • Limiting recoverable success fees under CFAs to 10% of costs leaving the balance to be agreed between solicitor and client.

What next?

Ultimately, libel reform will be debated in Parliament. Whilst it is unlikely that this will occur before the next general election, libel reform is likely to take place sooner rather than later given the intense and highly public debate the issues generate.