It is not often that property litigation cases make headline news, however the Supreme Court decision of Coventry & others v Lawrence & others [2014] UKSC 13 does just that. Ignoring the important legal precedents that intrigue specialist real estate litigators like me (nuisance, prescriptive rights and injunctions), the issue of legal costs once again takes centre stage. How can the 2006 purchase of a £300,000 bungalow near a motocross track in Mildenhall lead to not one, but two Supreme Court decisions in 2014 (with a third in the wings) at the cost to one side alone of in excess of £1 million?
The bungalow owners’ basic legal costs were £398,000, the success fee for the “no win, no fee” case was £319,000 and the ATE premium was in the region of £350,000. Although making clear that he was not criticising the lawyers’ conduct, Lord Neuberger, the President of the Supreme Court considered it “highly regrettable” that it cost two citizens this much to assert their right to live in peace in their home. This ignores the costs incurred by the operators of the motocross track in defending their business. As the track operators were unsuccessful in defending the Court of Appeal decision that had been in their favour, they were ordered to pay 60% of the bungalow owners’ costs.
Significantly, the Supreme Court took the view that because the costs included the success fee and the ATE premium, the order may infringe article 6 of the European Convention on Human Rights (the right to a fair trial) and under article 1 of The First Protocol (the right to the peaceable enjoyment of their possessions). If the Supreme Court were to make a declaration of incompatibility it would have serious consequences for the government, triggering compensation claims from other litigants that had been subject to such costs orders. The court adjourned this final element of the case to give the Attorney General and the Secretary of State for Justice the opportunity to be heard. And so the case trundles on…
Costs reform has been at the top of the agenda for many years now. The Woolf reforms of 1999 sought to save costs by making litigation a last resort, promote mediation and streamline procedure. This case involves the old costs regime that grew up around these reforms. The Jackson Reforms of April 2013 have tried to tackle the issue of costs once again. They have brought with them an array of different problems that unfortunately (and ironically) are just working their way through the courts.
Whatever the prevailing costs regime, the Coventry case brings into relief yet again the difficulty of affording access to quality legal advice in a cost-efficient manner. This is a conundrum that will not easily be solved. Property litigation cases are frequently technically complex and cannot be done quickly (and consequently cheaply) and well if they are to go all the way to trial. When large sums of money are in dispute and the parties are wealthy individuals or businesses, the costs involved are not always so acutely felt. However, property disputes often involve lesser sums of money but retain a high level of knotty legal complexity. The conundrum is often solved by mediation which serves often to settle the dispute although it does not necessarily provide the legal answer. Meanwhile, the costs controversy continues.
