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King v Telegraph Group Limited, Court of Appeal, 18 May 2004

27 May 2004
The issues

Conditional Fee Agreements – Costs – Libel – Costs Capping Order

The facts

The Telegraph Group was a Defendant in libel proceedings brought by Adam Musa King. A number of interlocutory orders had been made by the High Court Judge in June 2003 against which the Defendant appealed. One of the appealed Orders was the Judge’s decision to refuse the Defendant’s Application for a Costs Capping Order. The Defendant sought an Order capping the Claimant’s costs where the Claimant brought proceedings under a Conditional Fee Agreement for libel and without after the event insurance and where the Defendant was a substantial risk as to increasing costs.

The decision

1. It would be inappropriate for an Appellant Court to impose a novel Order which the Judge had not seen fit to make in the absence of any error on the part of the Judge.

2. However, guidance should be given as to future cases to deal with what was an obvious unfairness to Defendants in libel having to pay high costs even if successful. There were three weapons available to a party which was concerned about the other side’s conduct and costs being run up: – a costs capping Order; detailed assessment; a wasted costs Order.

3. The Court had jurisdiction to impose a costs capping order in an appropriate case under Section 51 of the Supreme Court Act 1981 and CPR Rule 3.1(2) (m). Recourse to a costs capping order should be the Court’s first response when a concern was raised by a Defendant.

4. If the defamation proceedings were begun under a CFA without after the event cover, a Master should at allocation stage make an Order analagous to an Order under Section 65 (1) of the Arbitration Act 1996. The Court should prescribe a total amount of recoverable costs which would be inclusive of any additional liability as far as a CFA funded party was concerned. If the introduction of this costs capping regime meant that Claimant lawyers might be reluctant to accept instructions on a CFA basis unless they assess the chances of success as significantly greater than evens that was a small price to pay compared to the cost of allowing the present state of affairs to continue.

Comments

In the future if a Claimant’s solicitor agreed to act on a CFA without after the event cover in a defamation action, they would have to bear in mind from the time they were first instructed the requirement to assess the likely value of the claim, its importance and complexity and the necessary working expense appropriate to each stage up to Trial.

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