Coventry v Lawrence: Place Your Bets!
Some of you will be eagerly awaiting the judgment in this case, others will have dismissed this as nothing more than a rogue decision of the Supreme Court which will be given short shrift.
To put into simplistic terms the issue is whether or not the recoverability of additional liabilities from a losing party constitutes a breach of Article 6 of the European Convention of Human Rights namely the right to a fair trial. A decision of incompatibility with regards to the Access to Justice Act 1999 will undoubtedly be, at least in monetary terms, the single biggest decision in the history of legal costs.
Although some say that the Courts will not allow the floodgates to open by making a decision of incompatibility, it is important to remember the simple doctrine that in any democracy the judiciary must be independent of the government, (and the executive for that matter). It should also be borne in mind that nothing is ‘set in stone’ as England and Wales does not have a constitution like the USA for example. It’s also important to remember that in the substantive case in Coventry, the Supreme Court had no qualms about making changes to long established principles governing the law of nuisance.
The application of the Human Rights Act since its introduction in 1998 and its enforcement in 2000 has been one never-ending balancing act which never leaves everyone entirely happy. The right to respect for your private and family life and freedom of expression are two rights which regularly clash- Ryan Giggs will vouch for this. However the balancing act in Coventry seems to be confined to Article 6 itself. Prior to the introduction of these acts, the government underwent a long research period to ensure the right balance was struck.
Four main issues have been identified by Lord Neuberger:
- Claimants don’t care about the level of costs, which makes for an uneven playing field.
- Defendants have no say in relation to costs that have been incurred.
- The old proportionality rules were flawed and changed nothing.
- The stranger the case, the greater the Defendant’s costs.
The idea that Claimants didn’t care how much costs they would have to pay as there was no risk has been rejected by individuals such as the Association of Costs Lawyers on the basis that in cases where there is a CFA, there is a contractual obligation for the client to foot the bill for any shortfall. This is strictly true but it is difficult to avoid the fact that this rarely happens in practice. However the important point is that even if Claimants don’t care about the level of costs, their representatives most certainly do. A Lawyer’s most important commodity is their time as this is how revenue is generated. They would not waste time on a case that has no merits as this is a waste of their most important resource, regardless of how insistent the Claimant may be.
The idea that Defendants are powerless in relation to costs is, in my view, the weakest argument by some distance. The Part 36 regime affords them with the opportunity to make an offer early on which would shift the entitlement to costs if it beats the final outcome. In addition, they are given advance warning of any additional liabilities (and the avenues for applying from relief for failure to do so have, as we all know, become significantly narrowed of late). In addition, there is the process of the detailed assessment in which all aspects of costs can and usually are challenged. We have a far more advanced law on costs than say the American legal system because it is a long established general principle that the loser pays the winner’s costs as opposed to a simple liability between lay client and lawyer.
The introduction of success fees and ATE premiums were and are available to everyone, and various parties have benefited from this. Defendants have been able to recover their costs in unsuccessful cases where previously they would be pursuing an individual with no means to pay their legal fees. It also significantly eased the burden on the state with respect of the Legal Aid bill.
Lord Neuberger also raised the point that proportionality played no part under the old rules. It’s difficult to argue that the Lownds test on proportionality was robust- how can something be unnecessary but reasonable or vice versa? But, in relation to the decision in Coventry; so what? This has nothing to do with the issue of whether a finding of incompatibility will be made- proportionality applies to all cases on the standard basis regardless of how it was funded.
Litigation is a risky business as Ward LJ began his in Hedrich v Standard Bank London Ltd  EWCA Civ 905:
“…litigation is an inherently risky business: there are no certain winners; and very often even the fruits of success are never recovered. This is just such a case. The moral is caveat litigator.”
The advent of additional liabilities has not changed this for either party. The only thing that changed is the potential liability in lost cases.
Going back to the idea of a balancing act, it is clear that CFAs have been taken up much more by individual litigants rather than insurers, not least because the latter has fixed agreements with Solicitors at reduced rates due to the repeat business that they can offer Solicitors and so have no need for these. The elephant in the room is that the man on the Clapham omnibus simply doesn’t have access to justice because he doesn’t have tens of thousands of pounds sitting in his bank account which is something overlooked by many in the legal profession.
For these and various other reasons, the Access to Justice Act did not create an imbalance that would render it incompatible with the Human Rights Act and in my humble opinion this appeal will fail.