Michael Jackson C4 libel case exposes CFA 'iniquity'

The operation of the insurance system in the no-win, no-fee conditional fee agreement (CFA) regime under which lawyers represent would-be claimants in defamation cases was described as “an iniquity” by a Court of Appeal judge.

The comment came from Lady Justice Smith at a hearing at which a former bodyguard to the late Michael Jackson was trying to force Channel 4 and the makers of a documentary to recover and disclose emails deleted from the account of a journalist who worked on the show.

The application by bodyguard Matthew Fiddes was the latest stage in a bitterly fought libel battle in which he claims that Channel 4 faked elements of the documentary, which purported to show members of Michael Jackson’s family – including old brother Tito Jackson – moving to Devon.

Fiddes, who acted as the local guide in Devon for the production, and is being represented by law firm M Law on a no-win, no-fee Conditional Fee Agreement (CFA), is suing Channel 4, Studio Lambert, the documentary’s production company, and freelance journalist Jane Preston, who was the narrator.

The defendants plead justification and fair comment, while Fiddes alleges malice against Preston and Studio Lambert in a bid to defeat the fair comment defence.

Fiddes asked the Court of Appeal to overturn Mr Justice Tugendhat’s refusal to make the disclosure order he sought.

Disclosure to Fiddes’ legal team had included 500 emails, of which 70 or so were sent by or to Preston and retrieved from the senders or recipients.

Also disclosed was a document described as a contemporaneous diary written by Preston, which she had altered considerably during the editing stage of the programme.

Fiddes wanted an inspection of Preston’s laptop to check the dates of the alterations, but the machine was stolen the night before inspection was to take place.

He then sought an order that Studio Lambert, the second defendant, should search back-up tapes of its computer system for deleted emails about the production which were sent by or to Preston and someone else during a specified period, and for the company to produce a list of such documents, claiming that the deleted emails might reveal significant and relevant information, particularly in relation to his allegation of malice against Ms Preston.

Preston initially said she deleted the e-mails as a routine matter as her e-mail account was full, and later said that she had not sent any emails during the relevant period.

The defendants accepted that had the e-mails not been deleted they would have been searched for the purpose of disclosure, but resisted Fiddes’ application on the basis that it was unnecessary and inappropriate.

Mr Justice Tugendhat held that the libel action was relatively complex, that several hundred e-mails might be retrieved at a cost of up to £10,000 in a case which costs already totalled GBP1 million, and that it was not sufficiently likely that any e-mails which were significant and relevant would be disclosed.

Fiddes argued that the judge had wrongly elevated the significance of any document likely to be discovered to a decisive factor, and claimed that the fact that the diary was altered showed that there was a need for further disclosure, and that e-mails discovered might throw light on Ms Preston’s state of mind.

The Court of Appeal – Lord Justice Pill, Lady Justice Smith and Lord Justice Wilson – rejected his appeal on March 24, holding that this was not an appropriate case in which to overturn Mr Justice Tugendhat’s decision, as he was an experienced judge, had dealt with the case throughout, had had all the relevant material before him and had heard submissions on it.

It also expressed concern about the costs of the case, which it was told had already reached £1 million, and about the effects of the fact that Fiddes was working on a CFA.

Matthew Nicklin, for Channel 4 and the other defendants, told the court that the technical cost of recovering the deleted emails would be up to £10,000 – but that there would then be extra costs as they would have to be studied by Mr Fiddes’ legal team.

David Sherborne, for Mr Fiddes, had said that the defendants would recover their costs if they won, Mr Nicklin said.

But, he went on, the reality was that while Fiddes had after the event (ATE) insurance intended to cover the defendants’ costs if they won, it would at present pay a maximum of only £200,000, while their costs had already reached some £500,000.

Sherborne told the court that Fiddes’ lawyers had asked the defendants if they wanted to increase the insurance cover to £600,000, but that they had said they did not want that done.

Lady Justice Smith said: “The difficulty is, and it is an iniquity in this system which I hope has been addressed by Lord Justice Jackson, is that you are asking them whether they would like you to get an increased cover, but who is going to pay the premium?

“You are not, nobody is going to pay it as I understand it, unless you win and the defendants pay, is that right?”

Sherborne said: “Yes, that is how After the Event insurance always works,” to which Lady Justice Smith replied: “Well, what an iniquity really.”

Sherborne argued that it was not Mr Fiddes’ fault if the level of insurance cover was insufficient for the defendants – but Nicklin then said that the claimant had been asked for a copy of the ATE policy, but had refused to hand one over.

Insurance policies in libel cases usually contained a clause which allowed that if a defendant’s justification defence succeeded, the insurers could disclaim the policy and refuse to pay out, in which case it would be a worthless security for the defendant’s costs.

The defendants in this case were unwilling to run the risk of greatly increased premiums unless they knew the terms of the insurance policy and the protection it would offer if they won, he added.

The case is expected to come to trial in the summer, with Ronald Thwaites QC representing Fiddes and Adrienne Page QC acting for Channel 4 and the other defendants.

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