Supreme Court rejects rights challenge to English "no win no fee" regime
The conditional fee agreement, or "no win no fee", regime for the recovery of costs in civil litigation in England & Wales between 1999 and 2013 was not contrary to the European Convention on Human Rights, the UK Supreme Court ruled today.
Seven judges decided by a 5-2 majority that the system introduced by the Access to Justice Act 1999 was a proportionate way of achieving the legitimate aims of containing the rising cost of legal aid, improving access to the courts for members of the public with meritorious claims, and discouraging weak claims.
The issue arose in Coventry v Lawrence, an action for nuisance brought by the owners of a bungalow against the operators of a nearby stadium used for motor sports. The claimants were successful after trial, and were awarded 60% of their costs as assessed on the standard basis at £307,642. As they were party to a conditional fee agreement (CFA), the defendants were also liable to 60% of a success fee of £215,007 and of an after-the-event (ATE) insurance premium of about £305,000. Further costs, made up in the same way, were incurred in appeals to the Court of Appeal and the Supreme Court.
The defendants challenged their liability to pay the success fee and ATE premium on the basis that this would infringe their rights under article 6 of the Human Rights Convention (right to a fair trial), and/or article 1 of the first protocol (right to peaceful enjoyment of one's possessions).
In the leading judgment, Lords Neuberger and Dyson, with whom Lords Sumption and Carnwath agreed (Lord Mance gave a separate judgment in the majority), said the scheme had the legitimate aim of the widest public access to legal services for civil litigation funded by the private sector. The concept of proportionality, which was at the heart of the case, had two distinct senses: first, the scheme had to strike the right balance between the rights of different types of litigant; secondly, the costs rules only permitted costs “which are proportionate to the matters in issue”, which involved further considerations. This also applied to success fees and insurance premiums.
While the Human Rights Court, in Mirror Group Newspapers v United Kingdom, had previously held the scheme incompatible with article 10 of the Convention, the balancing exercise in that case was different in character. The issue in the present case was not whether the regime had flaws, but whether it was a proportionate way of achieving the legitimate aim pursued. The court had to give considerable weight to informed legislative choices, and the Human Rights Court recognised that a regulatory scheme might be compatible with the Convention even if it operated harshly in individual cases. There was no perfect solution, and the financial position of the paying party had never been a relevant factor in determining the assessment of reasonable and proportionate costs. The scheme as a whole was rational and coherent, and this led to the conclusion that it was not incompatible with the rights founded on.
Lord Clarke and Lady Hale, who dissented, considered that the regime was disproportionate because it did not treat all defendants in the same way but chose a particular class of defendants to impose liabilities far beyond the bounds of what was reasonable or proportionate. This was a case where a measure was discriminatory in a way that was incapable of objective justification.