Litigation costs update – Additional liabilities inter-partes – The final nail in the coffin?
The legality of the pre-Jackson additional liability and civil costs regime has finally been determined as the Supreme Court handed down the eagerly awaited judgment in Coventry and others v Lawrence and another  UKSC50.
The case originated from a claim for nuisance brought by the owners of a bungalow, under a Conditional Fee Agreement (CFA) backed by an ATE insurance policy, against the owners of a local speedway track.
The Claimants were initially successful but the Defendant appealed to the High Court. However, the appeal was dismissed and the Claimant ultimately recovered £20,750 in damages and the Claimants were also awarded 60% of their costs.
The figures being claimed for the success fee and ATE premium, £215,007 and £305,000 respectively, were objected to by the Defendant on the basis that they contravened Article 6 of the European Convention on Human Rights – The right to a fair trial. The Defendant’s therefore appealed to the Supreme Court for determination of this issue.
By a majority of 5-2, the Supreme Court dismissed the Defendant’s appeal that the system of recovery of costs in civil litigation was incompatible with Article 6.
Lord Neuberger stated: ‘In our judgment, there is a powerful argument that the 1999 Act scheme is compatible with the convention for the simple reason that it is a general measure that was (i) justified by the need to widen access to justice to litigants following the withdrawal of legal aid; (ii) made following wide consultation and fell within the wide area of discretionary judgment of the legislature and rule-makers to make’
Lord Mance went on to say although Coventry was ‘an awkward case… it is difficult to conceive of any solution which would cater for such cases, without imperilling the whole system. The system has been repeatedly endorsed by domestic courts over a decade. Litigants and their lawyers have justifiably relied upon its validity.
‘Legal certainty, consistency and the legitimate expectations which have so been generated all militate in favour of the Supreme Court upholding the system (though it can of course still be challenged as against the UK in proceedings in Strasbourg); and I would uphold it and refuse any relief accordingly
Dissenting, Lord Clarke and Lady Hale said the costs recovery system ‘was unfairly discriminatory against some classes of respondent by comparison with others’.
Whilst the Legal Aid, Sentencing and Punishment of Offenders Act 2012 has abolished the recoverability of additional liabilities between the parties, there still a large number of cases where the funding arrangements were entered in to before 1 April 2013. It therefore seems that the final avenue for challenging the recoverability of additional liabilities has now been well and truly blocked.