Court of Appeal provides guidance on Conditional Fee Arrangements in defamation actions: Musa King v The Telegraph

The Musa King case against The Telegraph has featured in the law reports for a number of reasons to date, and has become a pitched battle between those bringing conditional fee arrangement (CFA) actions against the media (where the lawyers’ charges vary according to the result of the case), and the press in particular who are most commonly the defendants in such actions. It concerns a libel claim by Mr King against The Telegraph over allegations of an association between him and the Al Qaeda network. The action is being conducted on a CFA with no insurance cover for Mr King’s costs should he lose the action.

On behalf of The Telegraph (as supported by other media publishers) an application was made before Mr Justice Eady for summary judgment. In view of the fact that

The Telegraph’s costs, should it win the action, would be irrecoverable from Mr King, The Telegraph also applied for an order that Mr King pay money into Court for the privilege of taking it to trial.

This application was rejected and the matter went before the Court of Appeal on 18 May. There were two important principles at stake: the key purpose of the availability of CFA arrangements to claimants who might not otherwise be able to protect their reputations in the courts, and the potential injustice to media defendants in having to fight actions without being able to recover their costs if they win.

For the newspaper, it was said that the situation that they faced had “a chilling effect on a newspaper exercising its right to freedom of expression [which] would not be in the public interest which the Reynolds defence, for example, is designed to protect.”

The Court of Appeal was strongly critical of the manner in which the claimant’s action had been advanced by his solicitors, which Lord Justice Brooke clearly regarded as excessive and contrary to the principles laid down in the Civil Procedure Rules (CPR). This was evidently an important factor in the Court of Appeal’s search for greater protection for defendants facing CFA litigation.

Brooke LJ considered a variety of solutions to the type of problems faced by The Telegraph, observing that “simple palliatives are not easy to identify”. He agreed with Mr Justice Eady in rejecting an application that Mr King provide security for costs. Instead he adopted a solution from the Arbitration Act 1996 which permits a tribunal to cap the costs of an arbitration (or any part of it), and also enables an arbitrator to control costs of specific steps in the arbitration in advance of those steps being taken.

Brooke LJ concluded that if defamation proceedings were initiated under a CFA without after the event insurance cover, the Master at the allocation stage should make an order which has the effect of capping the costs and requiring the parties to make an application before exceeding those costs.

As Brooke LJ observed: “What is at issue in this case, however, is the appropriateness of arrangements whereby a defendant publisher will be required to pay up to twice the reasonable and proportionate costs of the claimant if he loses or concedes liability, and will almost certainly have to bear his own costs … if he wins.”

The first of the three weapons available to defendants is the costs capping order referred to above. The second is the vigorous challenging of costs in accordance with CPR principles, and ultimately there is the wasted costs jurisdiction, under which the legal representatives can face personal liability if litigation is conducted improperly. The judgment contains plenty of warnings to both litigants and practitioners that the courts will punish excesses in litigation (from either side) by disallowing costs when appropriate.

Bulletins are for general guidance only. Legal advice should be sought before taking action in relation to specific matters. Where reference is made to Court decisions facts referred to are those reported as found by the Court. Please note that past bulletins included in the Archive have not been updated by any subsequent changes in statute or case law.