Motorsport track operators liable for half a million pounds because of no-win-no-fee arrangement

Moto-Land UK Ltd and David Coventry, operators of the Mildenhall stadium as well as an adjacent speedway track, appealed on the basis paying the bonuses of the other party’s lawyers breached their right to a fair trial and that the costs were excessive.

However, President of the Supreme Court, Lord Neuberger, sitting withLord Mance, Lord Clarke, Lord Sumption, and Lord Carnwath ruled by a majority of 3-2 that losing parties in civil cases are required to pay opponents’ lawyers where there was a conditional fee arrangement between those lawyers and their clients. Lord Mance and Lord Carnwath dissented.

The court acknowledged the system may be flawed but that because of the lack of legal aid for the majority of civil cases it at least allowed substantial public access to civil litigation.

Raymond Shields and his partner Katherine Lawrence successfully sued the operators on the basis the noise caused was a nuisance and diminished the value of their bungalow.

In addition to the £20,000 in damages, the operators had to pay 60 per cent of the pair’s legal costs – £184,585.

However, as the couple had a conditional fee arrangement with their lawyers the respondents were also required to pay a further £312,000 in insurance and bonus money to the lawyers.

Richard Buxton, for the couple said they were “pleased with the result”.

The company has gone into liquidation due to the extent of its liabilities its lawyer, Jo Pooley, said.

“They are not in a position to pay,” she added.

The no-win-no-fee system was established in the Access to Justice Act 1999in order to to protect the taxpayer’s legal aid fund from being drained.

Judges said the system “has the legitimate aim of the widest possible public access to legal services for civil litigation funded by the private sector. There is no perfect solution to the problem of how best to enhance access to justice following the withdrawal of legal aid for most civil cases”.

In 2013 the rules were changed so that bonus and insurance payments may no longer be reclaimed in new cases – though the system is still in place in cases of defamation and breaches of privacy.

Media lawyer, Gavin Millar QC, intervened in the case and said the dissenting judgments were significant.

He said: “This case shows there is unease among the judges about this scheme continuing but the government still allows the regime to apply to publishers where it has a chilling effect, especially on smaller publishers who are not willing to take the risk of running legally risky copy or challenging in the courts complaints bought under conditional fee agreements.”