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Coventry v Lawrence [2015] UKSC 50

The Supreme Court today held, by a majority of 5-2, that the system for costs recovery in civil litigation under the Access to Justice Act 1999 (which has now been replaced following the Jackson reforms) was compatible with Article 6 of the European Convention on Human Rights. 

This was an interesting final twist in the long tale of the Coventry v Lawrence litigation, a nuisance claim which has already produced two judgments of the Supreme Court ([2014] UKSC 13, and [2014] UKSC 46). Katherine Lawrence and Raymond Shields were the owner of a bungalow about 800m from a motorsports stadium and they brought a claim for an injunction and damages arising from the noise which the motorsports generated. 

Having succeeded in the substantive claim at first instance, lost in the Court of Appeal, and then won again in the Supreme Court (although the Supreme Court refused to grant the injunction sought) the issue with which the latest judgment is concerned was costs. The judge at first instance ordered that the Respondents should pay 60% of the Appellants costs. The Appellants’ base costs were £307,642 and the Respondents would therefore be liable for 60%(i.e. £184,585). However, as was permissible under the 1999 Act regime, the Appellants had also entered into a conditional fee agreement with a success fee of £215,007 (i.e. £129,004) and were also entitled to recover an After the Event (“ATE”) insurance premium of about £305,000 (i.e. £183,000). 

The total value of the damages awarded was £20,750. 

The resulting argument was that the scale of costs was disproportionate, and contrary to the Respondents’ Article 6 rights because the costs risk prohibited them from defending the claim. There was also a further argument that the effect of the regime was discriminatory in that it particularly affected ‘one-off’ uninsured defendants, who could not afford to take the rough with the smooth in the way that large institutions like insurance companies could. These arguments were based on the Strasbourg decision in MGN Ltd v UK (2011) 53 HRR 5where the European Court of Human Rights had held that the UK costs regime had not struck a fair balance in awarding eye-watering costs following the success of Naomi Campbell’s privacy case against the Daily Mirror. The potential read-over into this case had been given considerable encouragement in the initial discussion contained in Lord Neuberger’s judgment in the Coventry v Lawrence (No 2), but the court felt at that point that that the Attorney-General and wider stakeholders should be allowed to make submissions. 

In the event, the majority were persuaded that the legitimate aim of widening access to justice following the withdrawal of legal aid justified the impacts of the regime on individual rights, even though those impacts could be harsh. The leading judgment was given jointly by Lords Neuberger and Dyson with whom Lord Sumption and Lord Carnwath agreed. 

The minority, Lord Clarke with whom Lady Hale agreed, considered that the effect of the system could not be justified for the reasons identified in the MGN case and that the difference between the right to freedom of expression and the right of a defendant to a fair trial was not a reason why the Strasbourg court’s analysis should not apply. This was substantially the view which Lord Neuberger appeared to endorse in Coventry v Lawrence (No 2)

The key to the movement of the majority may well be that the justices came to appreciate just how fundamental ATE and success fees had been pre-Jackson, and the potential consequences of a finding that that system had been unlawful. A pointer to this is found in the judgment was given by Lord Mance, with whom Lord Carnwath also agreed, which emphasised that the case was an awkward one. Interestingly, Lord Mance observed that: 

Whatever the position in this regard, the balancing exercise and any decision as to the validity of the system and the grant of any relief must all be undertaken taking account of the circumstances and competing interests as they stand at the time of the present proceedings. It is unnecessary and indeed inappropriate to scrutinise the scheme in the same way as would or might have been appropriate before or when it first came into force. Since then, much water has flowed under the bridge, in terms of the rules made and practice directions issued under the legislation, and the constant jurisprudence of domestic courts endorsing the system and of litigants and their lawyers acting on the basis that it applied and was valid. 

Although, he was careful to reject the idea that this could amount to a legitimate expectation, this comment might suggest that his and Lord Carnwath’s view might well have been different if the system had been challenged at an early point.