Libel: ruling could undermine the conditional fee agreement regime, City lawyer argues


A High Court ruling that has imposed what is thought to be the first ever cap on a claimant's costs in a libel case could undermine the conditional fee agreement (CFA) regime, her solicitor warned this week.


In last week's unreported case, Alberta Matadeen v Associated Newspapers, Master Eyre said that while the need for vindication may induce a more liberal approach in assessing a claimant's costs, it would not be so liberal as to approve the 'giant scale' of City firm Charles Russell's £558,000 estimated base costs in this case even before the success fee. Defence costs have been put at £198,000.


The order, which was granted before disclosure during allocation proceedings, has now been sent to a costs judge to set the level of the cap. A ruling is expected in the next six to eight weeks.


It follows last year's Court of Appeal decision in King v Telegraph Group, which said there should be cost-capping orders in cases such as this where a claimant is represented under a CFA but has no after-the-event insurance to pay the other side's costs if the claimant loses.


Master Eyre also said the fact of a CFA creates at least a provisional inference that the claimant is impecunious where the claimant has refrained from calling any evidence to the contrary.


The case concerns a London Evening Standard newspaper report on a care home owned by the claimant. Monica Bhogal, assistant solicitor at Charles Russell, who is acting for Ms Matadeen, explained that the estimated costs were warranted because it was a large and important claim that involved a defence of justification.


Ms Bhogal said: 'We are waiting to see what the level of the cap will be. But the fact that a cap has been ordered will encourage defendants to apply for one in the future. If capping orders are routinely imposed it would undermine the CFA regime.


'The whole CFA system is set up as an alternative funding route, with the aim that overall, cases that are won will compensate for those that are lost. It is supposed to give claimant lawyers the reassurance that when they win they are getting something back for having done the work on a CFA basis.'


Niri Shan, partner at City firm Taylor Wessing which won the capping order on behalf of Associated Newspapers, argued: 'Capping will mean that defendants will know what they are facing in terms of the level of risk - at the moment defendants are not allowed to know what the level of success fee is. Publications will be able to budget properly. This will dissuade law firms acting on CFAs from taking on cases where they will have to spend a lot of money bringing the case to trial.'