In English law, the default position is that the loser pays the winner’s costs (of legal representation). That sounds fair, right?

What if your opponent is counted among the world’s richest individuals and you are trying to report on corruption? It is beginning to sound a little less fair. If you lost, you may face financial ruin. You suddenly lose the wherewithal to exercise your rights, and instead try to achieve certainty and regain your financial security at any cost. If the choice is between shouting from the rafters about someone’s true reputation and being forced to live on the street, I imagine there are very few who would maintain their position in the former (thank goodness for those brave enough to do so).

A large part of litigation has sadly always been with an eye on the money (costs) rather than the pure merits. Mr Raab says that’s about to change (in defamation cases) by way of an amendment to the Economic Crime (Transparency and Enforcement) Bill.

How might it work?

Interestingly (well, I’m interested), this is not new. Logically, and as you might expect, there are other areas of the law where the above costs rule doesn’t particularly work in context. Just look at personal injury claims: victims of a personal injury come in all different bank-account shapes and sizes. It was decided as recently as April 2013 that there should be “qualified one-way costs shifting” in such cases, meaning a Claimant of humble means could still have access to the Court system (and legal representation) without fearing financial ruin if they were unsuccessful i.e. their opponent would pick up their own costs whether the Claimant won or lost. Mr Raab appears to be proposing an imposition of QOCS in reverse for libel (with the difference being that the Defendant benefits here rather than the Claimant). This would be very welcome.

A vital aspect of the costs regime in the UK is that it forces the parties to be commercial at an early stage. With QOCS, the necessity for the benefiting individual to be commercial isn’t lost, as if they receive an offer to settle, refuse, but fail to do better at trial, QOCS is disapplied. So they must consider any offer(s) carefully.

Legal representation and how it’s funded (no win, no fee)

Digging a little deeper – it is still fairly common for the wealthy and allegedly defamed to secure legal representatives for defamation claims on a conditional “no win, no fee” agreement (CFA). CFAs were arguably attractive in libel claims because if the balance of power was with the wealthy, then the safe assumption would be that a settlement would be forthcoming (and a success fee would be built in).

This changes the power dynamic again in defamation claims as the wealthy individual isn’t paying, whereas rarely (if ever) does the Defendant have access to paid legal representation unless they are fortunate enough to have the promise of it wrapped up in a home or car insurance policy.

Insurance

The after the event (ATE) insurance position differs again between personal injury and defamation claims (the two types of case where insurance policies are most common with respect to legal fees). An insurance policy is often taken out by claimants in personal injury to cover expert fees and other disbursements in the event of a loss. Insurers take the risk subject to an assessment on the prospects of success from a barrister.

Since 2013 (the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO)) it has been the case that insurance premiums utilised in personal injury cases cannot be recovered from one's opponent. It’s no coincidence that QOCS and LASPO came about at the same time - they’re known as the Jackson Reforms (named after Lord Justice Jackson).

The principles in LASPO were not applied to defamation as the premium remains recoverable from your opponent if you win, however its existence must be declared to them at an early stage. It was decided that if recoverability was removed for defamation it would impede claimants of modest means bringing a meritorious claim.

How would this new reverse-QOCS regime not be subject to abuse with each new libel claim being accused of being a SLAPP?

There is precedent for this too. In defamation/libel claims, a fairly new convention is that there is a preliminary hearing on meaning. Since defamation claims by jury have been abandoned since 2013 (the Defamation Act 2013), it is now the case that a Judge has conduct of the matter throughout. So rather than get to a full-blown trial and realise that the Claimant was understandably perhaps a little sensitive about what was being said (rather than it being defamatory as a matter of law), a Judge is invited by way of an application to take an early view. This is not a view on the merits of the claim, just a cold, hard, independent reading of what was written and a determination by the Court of what it means. It helps dispose of cases in a cost-effective way - and quickly. A preliminary issues hearing could be imposed in a suspected Strategic Lawsuit Against Public Participation (or a “SLAPP”).

But what about an individual’s human right to a fair trial?

One’s Article 6 rights cannot be said to effected by the new proposed costs position as the Court system would still be available to the privileged individual.

This is a deviation from how we have seen QOCS imposed however, as in that regime the payer is almost always a large insurer. There is a litany of regulation for insurers such that they must always have sufficient overhead for such claims. But, that is a company, not an individual, and companies don’t have “human” rights.

It is troubling to think that someone who has genuinely been defamed, may have to risk some of their large (hopefully legitimately earned) wealth to do so. The Government's proposal therefore must (and will) be subject to much debate as a result.

This new proposal appears to be in place to benefit responsible journalists and media. I hope it fixes that problem. But not all defamation claims are brought against the media; look at Facebook/Twitter users. Given the recent debates on “lawfare” it would appear it is a risk Parliament may be willing to take, at least in the short-term and until the kinks can be ironed out.

FYI - You may not know (I didn’t) that the European Convention on Human Rights (ECHR) permits states to ‘derogate’ from their human rights obligations in ‘times of war and other public emergency threatening the life of the nation’ (Article 15 ECHR).

The Government's amendment to the law is proposed to be included as an amendment to the Economic Crime (Transparency and Enforcement) Bill.