Human rights weren't infringed, Supreme Court rules in Coventry

The Access to Justice Act 1999 (AJA) is compatible with the European Convention on Human Rights (ECHR), the Supreme Court has held by a majority of 5-2 in Coventry v Lawrence.

The court ruled that parts of the costs regime introduced by the AJA (now repealed and replaced by the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO)), in particular a claimant's right to recover any success fee and after the event (ATE) insurance premium from an unsuccessful defendant, did not infringe article 6 of the ECHR and/or article 1 of the first protocol to the convention.

David Bott, SJ author and senior partner at Bott and Co, had warned that a ruling in favour of human rights infringement could cause the case to become the new Mitchell.

The Supreme Court had been considering the decision since last year and permitted interventions from senior interested parties including the secretary of state for justice, the Bar Council, and the Law Society.

The chair of the Association of Costs Lawyers, Sue Nash, said the flaws in the pre-Jackson conditional fee agreement (CFA) regime identified in the judgment - and by Sir Rupert Jackson - had now been fully aired by the highest court in the land.

'The "costs wars" generated by that regime - with which we are all familiar - arguably took up a disproportionate amount of the courts' time, energy, and resources,' said Nash.

She continued: 'The majority judgment has now consigned such arguments to history, although it is - again arguably - to be regretted that further argument as to "legitimate expectation" will not now be aired.'

Nash added that, interestingly, at paragraph 48 of the judgment, the court has (obiter) identified three alternative methods (other than LASPO) which could have been adopted in order to achieve the government's aims, and which may have given a fairer balance between receiving and paying parties' interests.

'It is perhaps too much to expect that these will now be considered,' Nash said.

The trade body for insolvency practitioners, R3, who, assisted pro bono by 3 Hare Court, also intervened in the case, said the decision was a 'common sense victory for creditors'.

'The case had huge implications for creditors in insolvencies in cases where money was being withheld from them by directors or third parties,' said Frances Coulson, chair of R3's fraud group.

Coulson said a decision the other way would have made legal action by insolvency practitioners to retrieve the money unaffordable in most cases.

'This would have risked as much as £160m per year not getting back to creditors from rogue directors and others,' she said.

However, Coulson said the threat to creditors' money is not over, given that the Ministry of Justice is set to make a decision on how insolvency litigation is funded by the end of the year. 'It's important that that decision goes in creditors' favour too,' she added.

Laura Clenshaw is managing editor of Solicitors Journal

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