The Supreme Court in the case of Coventry v Lawrence (No 2) [2014] UKSC 46 has set the cat amongst the pigeons in relation to the recoverability of legal costs. The case involved a claim for nuisance by the appellants Katherine Lawrence and Raymond Shields, who were the owners of a residential bungalow against the occupiers of a stadium some 850 yards away which was operated by the defendants and which was used for speedway and other motor racing. The appellants had won at first instance; the respondents had overturned that decision in the Court of Appeal but the Supreme Court reinstated the first instance decision that the defendant, an individual trading as RDC Promotions and another defendant were liable to their neighbours.
The President of the Supreme Court Lord Neuberger expressed “grave concern” over the “exorbitant” costs of litigation for the “ordinary citizens” involved (i.e. both parties). Whilst many might be tempted to criticise the respondents from running a case which they eventually lost, the judge recognised that they were seeking to defend their businesses and plainly had a reasonable case, as was evidenced by the fact that they had won in the Court of Appeal.
The judge recognised that even though the courts are now much more sensitive to the need to manage litigation to ensure that it is conducted “proportionately” it was hard for the parties to do this particularly where there were complex issues in terms of facts, law and expertise.
The appellants had conducted the case with the benefit of a Conditional Fee Agreement and under the old costs rules were entitled to seek to recover the “success fee” and the After The Event (“ATE”) insurance premium in addition to their basic costs. This inflated the costs to £640,000. The respondents argued that to be ordered to pay the success fee and ATE premium would breach their rights under Article 6 of the European Convention on Human Rights and the court has agreed that it needs to consider that contention. The case has been adjourned for further argument so as to allow representations from HM Government.
If the “old rules” allowing the recovery of a success fee and ATE premium are found to have been in breach of Article 6 it could lead to a multitude of compensation claims against the Government to recover losses suffered by litigants in other cases.
Summary
The case is a good example of the unsatisfactory nature of litigation when one considers the impact of costs.
the outcome of the litigation (and therefore the decision as to who was likely to have to bear the brunt of the legal costs) remained uncertain until the Supreme Court;
The defendants will clearly end up in a position where they will have to pay their own costs and will, on any analysis, have to pay a significant contribution towards the appellants’ costs running into hundreds of thousands of pounds;
However the appellants’ own position is not without its cost. In addition to all of the stress and uncertainty involved in conducting the litigation, the appellants were only able to recover 60% of the costs they had incurred and this is likely to have left them, as the “successful” litigants in the case, with a substantial legal bill (estimated at £250,000) as a result of the shortfall in the costs they might recover against the legal costs that they had incurred.