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THE COST OF LIBEL ACTIONS: A SCEPTICAL NOTE

Published online by Cambridge University Press:  20 June 2011

David Howarth
David Howarth
Affiliation:
Clare College, Cambridge.
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The Cambridge Law Journal , Volume 70 , Issue 2 , July 2011 , pp. 397 - 419
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Copyright © Cambridge Law Journal and Contributors 2011

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References

1 Sarah Boseley, “Simon Singh and the Silencing of the Scientists” http://www.libelreform.org/news/442-simon-singh-and-the-silencing-of-the-scientists.

2 Chris Tryhorn and Afua Hirsch, “Cut cost of libel loss, judge urges” 14 January 2010 http://www.guardian.co.uk/media/2010/jan/14/cut-costs-libel-loss.

3 Culture, Media and Sport Committee, Press Standards, Libel and Privacy HC 361-1. 2010.

4 Report of the Libel Working Group, MoJ 23 March 2010.

5 Campaign for Libel Reform, “Free Speech is Not for Sale” http://libelreform.org/reports/LibelDoc_LowRes.pdf, 2009.

6 The government was defeated in committee on the relevant statutory instrument (see http://www.publications.parliament.uk/pa/cm200910/cmgeneral/deleg1/100330/100330s01.htm). It then declined to bring the matter to a vote in the House itself.

7 The Coalition: Our Programme for Government (Cabinet Office, May 2010), p. 11. The Ministry of Justice has produced a draft libel reform bill for pre-legislative scrutiny. Ministry of Justice, Draft Defamation Bill: Consultation, CP3/11, 2011.

8 Official Rep. HL Deb. 9 July 2010 cols. 423–484. See e.g. Lord Lester at col. 423, Baroness McIntosh of Hudnall at col. 429, Lord Goodhart at col. 436, Baroness D'Souza at col. 444, Lord Willis of Knaresborough at col. 448, Baroness Bonham-Carter of Yarnbury at col. 454 and Lord Ramsbotham at col. 458.

9 Application no. 39401/04, 18th January 2011 at para. 185.

10 Campaign for Libel Reform note 5 above at pp. 9–10.

11 Culture, Media and Sport Committee note 3 above at p. 69 (para. 274).

12 Campaign for Libel Reform note 3 above at p. 69 (para. 274). The select committee also urged closer adherence in costs assessments to the guidelines of the Advisory Committee of Civil Costs (para. 285).

13 Libel Working Group note 4 above at p. 34.

14 The Libel Working Group supported, for example, changes to the defamation pre-action protocol, including requiring claimants to set out the meaning about which they complain, but failed to reach consensus on various other proposals. See note 4 above at pp. 15–16.

15 Jackson L.J., Review of Civil Litigation Costs: Preliminary Report, Appendix 17 (http://www.judiciary.gov.uk/Resources/JCO/Documents/app17.pdf).

16 Jackson L.J., Review of Civil Litigation Costs: Preliminary Report, vol. 1 (TSO for the Ministry of Justice: London, 2010) at p. 137. For a list of the Media Lawyers Association's members, see The Media Lawyers Association, “Response to the ‘Controlling Costs in Defamation Proceedings – Reducing Conditional Fee Agreement Success Fees’ Consultation Paper” (Feb 2010) pp. 7–8 (http://www.ppa.co.uk/legal-and-public-affairs/ppa-responses-and-evidence/~/media/Documents/Legal/Consultations/MoJ-ReducingCFA_SuccessFees-PPA_Response_Final_/RPCDOCS19697724v1FINALCONSULTATIONRESPONSEFEB2010.ashx).

17 Jackson L.J. note 16 above at pp. 338–352.

18 Jackson L.J. note 16 above at p. 343.

19 For example, the claimant's cost data has a positive skew of over 6.

20 It is worth mentioning that if one looks only at the 126 cases in which claimant costs were £100,000 or less (£100,000 is the highest claimant costs in the zero defendant cost group), so eliminating trials and very complex cases, average (mean) claimant costs in the face of in-house defendant lawyers is £5801, as opposed to £18,079 in other cases (p=0.00016 two tailed).

21 I.e. performing a regression on defendant costs and claimant costs in the 62 cases produces a positive intercept and a relevant slope of 1.44. The r2 is 0.754. The results would be highly statistically significant (p<0.0001) were it not for skewedness of the data (skew=4.54). We can reduce the degree of skewedness to around 0.5 by using the logarithms of the data (although that transformation loses one data point where the claimant's costs were zero). On that basis, the r2 falls slightly to 0.695, but the level of statistical significance remains.

22 I.e. the slope becomes 1.18. The r2 is even higher, a remarkable 0.986. The data are however, still heavily positively skewed, so that statistical significance of p<0.0001 for these results should not necessarily be taken at face value. One cannot even be entirely sure that from these 41 cases that claimant and defendant base costs are different at all. A t-test on the raw data, even assuming that defendant and claimant costs are correlated, fails a two-tailed p<0.01 test. Taking the logarithms of the data to reduce the level of skew and reanalysing does, however, lead to a success at that level (at-test shows the difference to be statistically significant at p=0.000229).

23 MLA note 16 above at p. 29.

24 The correlation between defendant costs and claimant costs in the 62 cases is 0.87. The correlation is slightly higher for the full 139 cases.

25 The correlation between claimants' costs and the damages awarded is around 0.4 (slope=1.6, p=0.0012, but the caveats about skewedness still apply), and that between defendants' costs and damages awarded is around 0.3 (slope=0.8, p=0.0103).

26 See e.g. Turcu v. News Group Newspapers Ltd ([2005] EWHC 799, King v. Telegraph Group Ltd [Practice Note] [2005] 1 W.L.R. 2282, Campbell v. MGN Limited [2005] UKHL 61, MGN v. UK Application no. 39401/04, 18th January 2011.

27 See e.g. the Campaign for Libel Reform note 5 above at p. 5, John Whittingdale M.P., HC Deb. 15 July 2010 col. 331WH, Baroness McIntosh of Hudnall loc. cit. note 8 above and Lord Bach, loc. cit. note 8 above at col. 475.

28 MGN Ltd v. UK Application no. 39401/04, 18th January 2011 at para. 186.

29 Culture, Media and Sport Committee note 3 above at p. 64 (para. 248).

30 T. Larson and D. Leonardi, “A Comparative Study of Costs in Defamation Proceedings across Europe” (Programme in Comparative Media Law and Policy, Centre for Socio-Legal Studies University of Oxford December 2008).

31 See Jackson L.J., Review of Civil Litigation Costs: Preliminary Report, Appendix 28, p. 3.

32 Ibid. at p. 6.

33 See Larson and Leonardi note 30 above at p. 61, where the respondent lawyers refer to “the actual case”. The relationship between the reported figures and the actual cases is, however, somewhat unclear. The respondents say, for example, that scenario one damages were £75,000 in the real case, but also that they would have estimated damages in advance at £10,000. To add to the mystery, in the summary graph at p. 179, the figure for damages is recorded as £50,000.

34 See Larson and Leonardi note 30 above at p. 62.

35 See Larson and Leonardi note 30 above at p. 76.

36 See Larson and Leonardi note 30 above at p. 75.

37 See Larson and Leonardi note 30 above at p. 76.

38 See Larson and Leonardi note 30 above at p. 76.

39 See Larson and Leonardi note 30 above at p. 80.

40 See Larson and Leonardi note 30 above at p. 82. The rather more careful attempt to compare German civil litigation costs with those in a common law jurisdiction undertaken by Annette Marfording and Ann Eyland (“Civil Litigation in New South Wales: Empirical and Analytical Comparisons with Germany” [2010] UNSWLRS 28) also came across the problem that German respondents typically give the statutory minima rather than market rates.

41 See Larson and Leonardi note 30 above at pp. 179ff.

42 One might add that there is little reliable evidence of the average total costs in the USA. US analysis tends to concentrate on the (very small) number of cases that go to trial. See e.g. Logan, D., “Libel Law in the Trenches: Reflections on current data on libel litigation” (2001) 87 Va. L.R. 503CrossRefGoogle Scholar. There are some indications, however, that defence costs in the U.S.A. are generally in the same region as those in England. See e.g. A. Leondis, “Insurance May Ease Monetary Sting For Bloggers Sued Over Posts” Bloomberg 18 September 2009, which suggests a range of $5,000 to $100,000 to defend an internet libel action.

43 On the basis of the statutory minima alone, Marfording and Eyland (note 40 above) find that New South Wales lawyers charge 18 times more than German lawyers in civil liability cases, but they also point out two important facts: that German court fees are high and rise sharply with the amounts in issue (reaching almost ten times NSW levels); and German lawyers do not undertake a wide range of tasks typically undertaken by NSW lawyers, including talking with witnesses prior to trial, preparing witness statements and analysing opponent's witness statements, preparing expert evidence, discovery, interrogatories and issuing subpoenas. Some of these tasks are undertaken by the court. Some are left to the litigants to achieve by other means at their own expense. Some, such as discovery, are barely possible at all in Germany – see Heraeus Kulzer Gmbh v. Biomet Inc No. 09-2858 (7th Cir. Jan. 24, 2011).

44 C. Byrne, “Top Italian Lawyers Are The Highest Paid In Europe” Bloomberg 28 Feb 2007.

45 http://www.statistics.gov.uk/downloads/theme_labour/ASHE-2009/2009_all_employees.pdf.

46 http://www.mediaweek.co.uk/news/rss/991945/Profits-Sun-News-World-slip-10/.

47 Jackson L.J. note 16 above at p. 342.

48 [1993] 4 All E.R. 975.

49 [1997] Q.B. 586, [1996] 2 All E.R. 35. See also Tolstoy Miloslavsky v. UK (1995) 20 EHRR 442 and Steel and Morris v. UK Application no. 68416/01 15 May 2005 (ECtHR) for human rights limits to libel damages.

50 There was, however, a time when, anomalously, legal aid was available for malicious falsehood, leading to some strange claims in that tort. E.g. Joyce v. Sengupta [1993] 1 W.L.R. 337.

51 See loc. cit. at note 8 above at col. 429.

52 See e.g. Editorial “Libel laws: In the public's interest” Guardian 7 June 2010.

53 See http://www.newspapersoc.org.uk/PDF/Industry-Survey-2008.pdf p. 4.

54 The 139 case mean values are the appropriate ones for this calculation rather than the no zero-defendant cost mean values. The cost of in-house lawyers would already be counted in the companies' accounts.

55 The libel liability market is reasonably competitive. Suppliers include AON and QBE as well as specialists. A report from 2006 lists about 20 insurance companies active in the technology, media and telecommunications market across Europe. It described market conditions at the time as “soft” and reported “premiums are going down” (Marsh Liability Insurance Buyers Report 2006: Managing Liability in the Technology, Media and Telecommunications Sector http://www.marsh.co.uk/research/liability06/index.php). If newspapers are nevertheless dissatisfied with the policies on offer, they have the means to establish their own mutual insurance scheme.

56 See generally, N. Davies, Flat Earth News (London 2008).

57 See note 6 above.

58 Jackson L.J., Review of Civil Litigation Costs: Final Report, (TSO for the Ministry of Justice: London 2010) at p. 111.

59 Ibid.

60 Turcu v. News Group Newspapers Ltd [2005] EWHC 799 (QB), King v. Telegraph Group Ltd (Practice Note) [2005] 1 W.L.R. 2282.

61 Jackson L.J. note 58 above at p. 111.

62 See E. Rasmusen, “Nuisance suits” in P. Newman (ed.) The New Palgrave Dictionary of Economics and the Law (Basingstoke 2002) vol. 2 at pp. 690–693.

63 E.g. King v. Telegraph Group Ltd (Practice Note) [2005] 1 W.L.R. 2282.

64 Jackson L.J. note 58 above at pp. 110–111.

65 See D. Howarth, “Consequences and Lessons” in K. Oliphant et al., On a Slippery Slope: A response to the Jackson Report (Working Group on Civil Litigation Costs: London 2011) ch. 3. It is important to understand that the extent of the success fee is not particularly important in itself. Under no-win-no-fee, claimant lawyers are never paid only the uplift or only the base fee. They are only ever paid, and defendants only ever pay, both together. What matters, therefore, is the regulation of the total fee, not just the uplift element of the fee.

66 Culture, Media and Sport Committee note 3 at pp. 65–66.

67 Jackson L.J. Jackson L.J. note 58 above at p. 324.

68 E.g. skew=4.85 for defendant costs in the 62 non-zero defendant cost cases. For claimant costs in the same 62 cases, skew=4.02.

69 E.g. skew=9.9 for claimant costs in the personal injury cases collected for Appendix 1a of the Jackson Review preliminary report, and skew=7.62 for claimant costs in the various commercial cases collected in Appendices 5, 9 and 13.

70 Application no. 39401/04, 18th January 2011.

71 Campbell v. MGN Limited [2004] UKHL 22.

72 Campbell v. MGN Limited (no. 2) [2005] UKHL 61.

73 See e.g. Tolstoy Miloslavsky v. UK (1995) 20 EHRR 442.

74 Independent News and Media and Independent Newspapers Ireland Limited v. Ireland, Application no. 55120/00 16 June 2005.

75 MGN Ltd. v. UK at para. 197.

76 MGN Ltd v. UK at para. 217.

77 One might add a question about the quality of evidence available to the court in a case in which the state defendant disagrees with the impugned policy. The court seems misinformed about what precisely happened in the British policy and political processes surrounding the Jackson review and libel costs. It assumes, for example, that British political opinion was unanimous in the view that success fees in libel and privacy cases were too high and should at least be cut from a maximum of 100% to 10%. That is not the case. The previous government failed to proceed with the proposal to cut libel and privacy success fees not because, as the court claims, there was a general election pending, but because it was defeated in the relevant legislative committee after a revolt by members of parliament on all sides. Those members were far from convinced that 10% success fees would sufficiently achieve the legitimate aim of allowing victims of media wrongdoing to vindicate their rights. See note 6 above. The author declares an interest as one of the majority who defeated the government at that committee.

78 Steel and Morris v. UK Application no. 68416/01 15 May 2005.

79 MGN Ltd's parent company, Trinity Mirror plc made operating profits of £105 m in the year to January 2010. The division of the company containing the Daily Mirror made operating profits of £83.6 m. See http://www.trinitymirror.com/pdf/2009PreliminaryAnnouncementFinal.pdf. Claimant's costs agreed in the Campbell litigation amounted to 0.5% of the defendant's operating profit and less than 0.07% of its turnover. The equivalent sum for a family on average earnings of £26,000 would be less than £20, which contrasts with the damages awarded against the less-than-average earning libel defendants in Steel and Morris of £40,000.

80 See Howarth note 65 above.

81 See e.g. Ministry of Justice, Proposal for the Reform of Legal Aid (MoJ Consultation Paper CP12/10, London November 2010). Economic and financial catastrophe has not, however, dimmed the optimism of the Council of Bars and Law Societies of Europe. See CCBE Recommendations on Legal Aid (Brussels: 2010), which calls for EU funding of legal aid as a fundamental right.

82 Van der Mussele v. Belgium Application no. 8919/80 23 Nov. 1983 (compulsory pro bono work by pupil advocates not a violation of article 4 (forced labour), but the nature and degree of the imposition is relevant and consent to entering the profession is not in itself sufficient to prevent a violation). Zarb Adami v. Malta Application no. 17209/02 29 June 2006 holds that discrimination in the imposition of burdens may render them violations of article 4.

83 See Rasmusen note 62 above.

84 Jackson L.J., Review of Civil Litigation Costs: Preliminary Report, Appendix 28a.

85 See Jackson L.J., Review of Civil Litigation Costs: Preliminary Report, Appendix 1a.

86 Jackson L.J., Review of Civil Litigation Costs: Preliminary Report, Appendix 5.

87 Jackson L.J., Review of Civil Litigation Costs: Preliminary Report, Appendix 9.

88 Jackson L.J. note 16 at p. 107. Note that there is no detailed evidence of what drives these higher costs – whether, for example, commercial cases involve more preliminary applications or longer trials than libel cases. Note also that the absence of the civil jury in commercial cases does not obviously lead to cost savings.

89 Jackson L.J., Review of Civil Litigation Costs: Preliminary Report, Appendix 13.

90 McCann & McCann v. Express Newspapers 19 March 2008 (HCt) (Statement in open court reported by the claimants' solicitors at http://www.carter-ruck.com/Miscellaneous/?page=29).

91 [2004] EWCA Civ 613, [2005] 1 W.L.R. 2282.

92 [2001] EWCA Civ 1197.