Telegraph judge calls for cap on no-win, no-fee libel costs

Appeal Court judge described system as ‘unfair’







The Sunday Telegraph has won a ruling which means courts will cap “extravagant” costs of up to £750 an hour charged by lawyers in no-win, no-fee libel cases.

The paper was trying to get the case of Adam Musa King thrown out at the Court of Appeal with an argument over lawyers’ use of conditional fee agreements (CFAs). It failed to get the case stopped on Tuesday, but it did win a ruling which will have repercussions for the whole CFA libel system.

Since 2000, lawyers have been able to take libel cases on a no-win, no-fee basis and then double the costs to be paid by the defendant if they are successful.

Law firm Peter Carter-Ruck & Partners took up the King case on a CFA after he was described by The Sunday Telegraph in December 2001 as someone suspected of involvement in terrorist activities.

The firm estimated its legal costs at £350,000. The Telegraph would have to pay double that figure if it lost, plus its own fees of £400,000, making a total legal bill nearly 10 times larger than the total potential damages the claimant would collect.

The paper argued that the huge sum involved meant it made no economic sense to defend the case because the claimant had no insurance and no means to pay the Telegraph’s costs if he lost. It was supported in Tuesday’s appeal with letters from the editors of The Guardian, The Times and the Daily Mail.

Lord Justice Brooke spoke of the “obvious unfairness of such a system” and said it was “bound to have the chilling effect on a newspaper exercising its right to freedom of expression”.

He described Carter-Ruck’s costs in this case as “extravagant” and said he would “expect a costs judge to take an axe to certain elements of its charges if the matter ever proceeds to an assessment”.

Brooke called for courts to set a limit on the amount lawyers can charge in future libel cases.

Sunday Telegraph editor Dominic Lawson said: “It’s encouraging that the Appeal Court has tried to create a new system of costing for these cases. I don’t have anything against CFAs in principle.

“A proper balance is going to be restored between claimants maintaining their reputation and newspapers doing their job. I’m grateful to the editors of The Times, The Guardian and the Daily Mail for supporting us at a critical stage.”

He said: “It will now be easier for newspapers to fight cases on their merits instead of being held to ransom.”

A spokesman for Carter-Ruck said that the CFA system had enabled it to help people such as teachers, charities and even journalists who normally would not be able to afford libel actions.

By Dominic Ponsford

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