The Sun could be left facing a total costs bill well in excess of £2m as a result of its “sustained and vitriolic campaign” against 'Baby P' social worker Sylvia Henry.
This follows an Appeal Court ruling in a dispute over legal fees which dates back to Henry’s legal settlement with the Sun of June 2011.
The effect of today’s judgment is to overturn an earlier ruling last May which said Henry could not recover £268,000 of her legal costs from News International.
That ruling could have left her potentially out of pocket despite winning substantial damages and an apology from The Sun on the eve of a planned trial.
The Sun’s campaign against Henry and Haringey Social services ran from November 2008 and included more than 80 articles which were said to have had the effect of blaming Henry for Peter Connelly’s death.
She received an apology and substantial damages from The Sun in June 2011.
Henry had been team manager of the Referral and Assessment Team at Haringey social services when, on 11 December 2006, nine-month old Peter Connelly was referred to her team after he was taken to hospital with a head injury. Six months later the child died after sustained terrible injuries at the hands of his mother, her boyfriend and the man’s brother.
In its apology The Sun said that it accepted Henry “did her very best for Peter and particularly that she made repeated efforts to have him kept safe by being placed in foster care rather than being returned to the care of his mother”.
Back in September 2010, both sides agreed a budget for legal costs in the dispute under a new system designed to stop costs in libel cases spiralling out of control.
They were £539,847 for Henry and £531,746 for The Sun (including trial costs).
In the event there was no trial, leaving Henry’s solicitors with an agreed costs limit of £381,305.
But in May 2011 Taylor Hampton told News International that their costs bill to that point (including a success-fee and insurance) was £1,567,365. They were claiming a 100 per cent boost on their base-costs as a success fee. The Sun revealed that its cost at this stage (on the eve of agreeing a settlement) were more than £600,000.
In May last year, senior costs judge Hurst ruled that Henry’s solicitors had “ignored the provisions of the Practice Direction [the agreed limit]” so he said ”I therefore reluctantly come to the conclusion that there is no good reason to depart from the budget”.
The effect of this was to disallow £268,832 of her legal bill from the total which could be recovered from The Sun.
But today Lord Justice Moore-Bick said: “I am satisfied that there is good reason in this case to depart from the appellant’s budget.
“It will be for the costs judge to decide in what respects and to what extent the appellant should be allowed to recover costs in excess of those for which the budget allows.
“That will depend principally on the extent to which the costs actually incurred were reasonable and proportionate to what was at stake in the proceedings and on the extent to which they could have been reduced if the practice direction had been properly followed.
“The burden of satisfying the court that it should depart from the budget in any particular respect, and if so to what extent, will be on the appellant. However, the costs judge will no doubt wish to bear in mind not only the course which the proceedings took but the number and nature of the publications in respect of which the appellant sued since they bear directly on the reputational issues involved.”
The matter will now go back for a decision to a costs judge who will decide on how much of the disputed £268,000 to approve and also make a ruling on whether Taylor Hampton can charge The Sun a 100 per cent success fee, effectively doubing their earnings from the case.