Last Friday the government unveiled its plans to bring in costs protection in defamation cases.
The proposed scheme would be similar to the qualified one-way costs shifting (QOCS) regime that came in into force in personal injury in April, but with some important differences. In particular, in defamation, QOCS will be available to defendants as well as claimants, and it will not be there for parties who are considered too wealthy.
It’s hard to argue with the fact that some kind of reform is needed in this area. As the high-profile Libel Reform Campaign has pointed out, when the Jackson Review began in 2008, the average cost of the 20 most expensive trials was £753,677, with the most expensive action costing £3.2m. The average cost of a libel trial in England and Wales is ‘over 100 times the European equivalent’, the group says.
With the recoverability of success fees and after-the-event insurance premiums already stripped away for almost all other areas of civil litigation, its long-term retention in defamation cases - an area where high costs are clearly causing problems - could never be justified. But, arguably, the introduction of QOCS is better news for defendants than it is for claimants - particularly where a claimant with little money sues a large and powerful publisher. Defendants will no longer be on the hook for claimant lawyers’ success fees, or those whopping great after-the-event premiums. True, where QOCS is in play, defendants will not be able to recover their costs from a losing claimant. But they will benefit from a distinctly more weaponised Part 36; it will be a lot harder for the ordinary individual claimant to reject a low offer, when doing so could potentially have such a dramatic effect on costs from that point onwards.
The same is true for the small publisher, who may find it hard to turn down an unattractive deal offered by a wealthy claimant. By rejecting the Part 36 offer, it immediately puts itself at risk of paying the claimant’s expensive legal fees from the point of the offer onwards (in the post-Jackson world, of course, legal costs must always be ‘proportionate’, but no one yet knows precisely what that actually means). Government doesn’t necessarily see pressure to accept offers as a bad thing, however - the consultation document says, ‘it is hoped that the proposals might also encourage earlier settlement of cases’. But that doesn’t make those settlements fair.
Since QOCS was introduced in personal injury in April, its extension to other areas has always been on the cards - and it will not stop at defamation. But I’m not sure how many lessons can yet be learnt from the PI experience. While QOCS may be in place, the courts will still be choking on the backlog of cases brought in under the old regime, ahead of the 1 April deadline. As far as possible, though, the government must examine how some of the more difficult aspects of QOCS are panning out in practice in PI - the funding of disbursements, the impact of Part 36 offers, the loss of QOCS protection due to strike out or ‘fundamental dishonesty’ - before the detailed rules are drawn up for defamation.
It is fair to say that the way the QOCS regulations were brought in earlier in the year, with all the confusion and delay that accompanied them, leaves considerable room for improvement.