The Supreme Court has held that the pre-April 2013 costs regime introduced by Part II of the Access to Justice Act 1999, may potentially be incompatible with the European Convention on Human Rights.
In a case concerning a claim for nuisance, the judge at first instance ordered the respondents to pay 60% of the appellant’s costs which comprised £398,000 base costs, £319,000 success fee and an ATE premium of £350,000. Apparently the amount of damages for the nuisance was £74,000 at most. The respondents contended that their liability to pay 60% of the success fee and ATE premium infringed their rights under art 6 of the ECHR and/or Article1 of the First Protocol. The respondents argued that “the court, as a public body, must exercise its discretion when awarding costs in accordance with the Convention, save where otherwise required by Primary legislation (such as the1990 and 1999 Acts), and the secondary legislation (such as the CPR and Practice Direction) must be disapplied where it requires otherwise” and relied on the cases of MGM v United Kingdom (2011) 53 EHRR 5, Dombo Beheer BV v Netherlands (1994) 18 EHRR 213 and James v United Kingdom (1986) 8 EHRR 123. The respondent's argument was that proportionality should not be disapplied from the assessment of additional liabilities as required by the Costs Practice Direction.
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But Lord Neuberger went further in his comments saying that there is a substantial argument to the effect that it is not merely secondary legislation, namely CPR 44 and CPR 44 PD, but also Part II of the 1999 Act, that is in question.
The court did not rule on this part of the case. The Court was undecided whether, if it did rule in favour of the respondent, a declaration of incompatibility or another relief would be the appropriate remedy, but in any event a declaration of incompatibility should not be made without first giving the Government the opportunity of addressing the Court. Therefore if the respondents wish to maintain their objection to the order for costs, then theappeal is to be relisted after appropriate notice is given to the Attorney-General.
A full summary of the case will follow shortly.