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Lawyers often tell their clients that “principles cost money”. As actor Hugh Grant’s decision to settle his privacy claim against News Group Newspapers (NGN) shows, sometimes principles just cost too much.
Grant announced he had reluctantly accepted an “enormous sum of money” to settle his claim against the Murdoch-owned NGN, the publisher of The Sun. He has accused the publisher of “phone hacking, unlawful information gathering” and “landline tapping” among other allegations, which they have denied.
The actor made clear that he would have preferred to go to trial, but felt that he had to accept the settlement because of civil litigation rules. If he took the case to trial, he risked being ordered to pay NGN’s legal costs, which his lawyers advised could exceed £10 million.
This is because of one part of the civil procedure rules, which govern the conduct of civil disputes in England and Wales.
Part 36 of the civil procedure rules is designed to create a financial incentive for either party in litigation to accept reasonable settlement offers made in civil disputes, rather than proceeding to trial. The rules require the courts, in almost all circumstances, to financially penalise a party that does not accept what retrospectively proves to be a reasonable offer.
In Grant’s case, this meant that, if he had won at trial and the court had awarded damages that were even a penny less than the settlement offer, he would have been ordered to pay the majority of the legal costs of both sides.
It does not matter by how much the settlement offer exceeds the court’s order at trial. The claimant can be ordered to pay the defendant’s legal costs from shortly after the offer was made, plus interest.
If no Part 36 settlement offer is made, the usual outcome in a civil trial would be for the loser to pay the winner’s legal costs. In most cases, a claimant would be happy to receive a huge sum of money in settlement, and would prefer that than risk going to trial.
Part 36 of the litigation rules – which, again, is designed to incentivise a claimant to accept a settlement – puts the claimant in jeopardy if they decide to continue with the case after being offered a settlement. Even if they are successful, they could be ordered to pay a very large amount of costs, potentially exceeding any damages they receive.
What is a trial worth?
If a claimant’s primary motivation for pursuing a case is to recover a financial loss caused by the defendant, then both parties will benefit from a settlement.
They avoid the costs, stress and delay of a trial, and the court service is better able to cope with the high volume of other cases in the system.
However, in cases where a claimant is seeking a court order as vindication or to expose misconduct through a trial, then it starts to look like the civil litigation rules are hampering access to justice.
Grant is a wealthy actor, he doesn’t need the money he would have received in damages. It is clear from Grant’s statements that his motivation was to hold NGN to account for unlawful information gathering.
The suggestion from Grant, as well as other former claimants against NGN, is that the company is using its deep pockets to avoid its senior executives being required to give witness evidence, and to protect against adverse court orders that would be publicly available.
Holding companies to account
There is arguably a balance to be struck between the individualistic view of this case as just an issue between one person and a media company, and the wider public interest angle: that it should be possible to use the court system to hold big companies to account.
There has always been an element of bigger companies using their deep pockets in litigation, but this rule adds another layer of protection for those that can afford to make a generous offer.
The Me Too movement has led to more public understanding in recent years that confidential settlements can be used inappropriately to stifle the investigation of poor conduct or criminality.
There is clearly a public interest in exposure of wrongdoing, as well as a need to protect vulnerable people. Perhaps it is time to consider whether different settlement rules are necessary for a category of cases such as this, in which the value of the case is not defined solely by its monetary value.
This would not be straightforward, but worth considering if our court system is to truly offer access to justice against all defendants, no matter their wealth or fame.
Megan Shirley does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
