The court considered Southwark London Borough Council v Mills  stating “where activities constitute a nuisance, the general principle is that “the persons directly responsible for the activities in question are liable, but so too is anyone who authorised them.” In order to be liable for authorising a nuisance, the landlords “must either participate directly in the commission of the nuisance, or they must be taken to have authorised it by letting the property.” In the present case, there can be no question of the landlords being liable to the appellants for the nuisance on the grounds that they did not actively or directly participate in the respondent’s nuisance and neither was it an inevitable or nearly certain consequence of the letting to the respondent tenants.
The defendants were ordered to pay 60% of the claimants’ costs consisting of base costs, success fee and ATE premium. The figures involved were very disturbing. The addition of a 100% success fee and a £350,000 ATE premium to the base costs of some £398,000 meant the defendants liability virtually trebled to over £1 million. The value of the property in question was less than £300,000 and the value of nuisance was at most £74,000. The defendants relying on MGN Limited v United Kingdom (2011) 53 EHRR 5 and Dombo Beheer BC v Netherlands (1994) 18 EHRR 213 contended that article 6 would be infringed if the court required them to pay 60% of the success fee and ATE premium. James v United Kingdom (1986) 8 EHRR 123 also relied upon.
It was held that if the defendants’ argument based on article 6 was correct, it may well be that the proper outcome would not be to disregard paras 11.7 – 11.10 of the CPR 44PD, but to grant a declaration of incompatibility. The present appeal should then be relisted for a hearing after appropriate notice has been given to the Attorney – General and the Secretary of State for Justice.
If such a declaration was made by the court it would have enormous consequences on litigants whose claims are being funded by conditional fee agreements with an entitlement to a success fee and an ATE. They could potentially have claims against the Government for compensation for their loss of recovery of additional liabilities to which they were once legitimately entitled.