Category: Litigation

On Wednesday 22 January the claim brought by Prince Harry and Lord Watson against News Group Newspapers was settled.

The scheduled long public trial of this claim, after many years of pre-trial hearings and manoeuvring, should have started the day before, but the parties had asked the judge for adjournments for negotiations to take place.

The judge granted a couple of short adjournments, until the Wednesday – but the trial would really then have to begin.

But the trial did not begin: the parties instead returned to court to tell the judge that the claim had been settled and that NGN had offered a formal apology and substantial damages and costs. Barring the finalisations of the details, the case was thereby over. An order – it seems a so-called Tomlin Order – was made by the court to stay the case on terms agreed by the parties.

Why had the case settled?

One possible reason seemed obvious to some pundits: the last two surviving claimants in this action, out of hundreds, Prince Harry and Lord Watson had now also finally been defeated by the costs risks of continuing. It seemed that the sheer financial might of NGN, coupled with its litigation tactic of setting onerous costs traps, had prevailed yet again.

It appeared that just like every other claim brought against NGN in respect of alleged phone hacking and alleged other unlawful invasions of privacy (primarily through the use by NGN of private investigators to commit unlawful acts – Unlawful Information Gathering, or UIG) the Duke and the Baron had been forced to settle because they could not afford to go on.

This was perhaps a fair supposition.

And so this is what many commentators said:

“In the end even [Harry] could not defy the financial risks”

“Even princes have to settle”

*

But.

This explanation did not match the available facts.

Over at Prospect I have set out in a post an alternative explanation for why the case came to an end in the manner it did – please now click here and read it.

Here I want to set out more fully the “workings” which led me both to not accept the reasons given by other commentators and to suggest another theory which did at least accord with the circumstances of how the case came to an end.

*

Useful commentary can often come from a sense of puzzlement – the reaction of “that does not make sense” – which can lead to working out an explanation which does make sense.

There were at least two things which were puzzling about how the case ended.

First, there was the apology – here it is in the form circulated to reporters:

Why did this document even exist?

For example, when NGN forced Hugh Grant to settle his claim, there was no apology. Instead there was this curt statement:

“A judge recently ruled that parts of Mr Grant’s claim were out of time and we have reached agreement to settle the remainder of the case. This has been done without admission of liability. It is in both parties’ financial interests not to progress to a costly trial.”

Had the prince and the politician been forced to settle in the same way as Grant had done so, then there would have simply been a similar statement from NGN.

But, no: we got this extraordinary and unprecedented document instead.

And not only was the existence of this document a puzzle, so was its content.

In particular the first two paragraphs, which were open admissions that NGN were responsible for unlawful activity (though note admitting civil liability is not the same as admitting criminal activity – and this was a civil case).

Yes, in a later paragraph we get a sentence with the familiar words “It is also acknowledged, without any admission of illegality, that NGN’s response to the 2006 arrests and subsequent actions were regrettable.” But that qualification did not go to the open statements in the first part of the text.

It did not matter that the wrongdoing is placed with the private investigators instructed by NGN. At law it makes no difference whether such acts are done by directors or employees of a company, or by contractors on a company’s behalf: the corporate entity can and will be liable all the same.

And in this case, where much of the documentary evidence was in the form of instructions to and invoices from the private investigators, any acknowledgment would necessarily have to accept the role of third parties “working for” the company.

The rest of the statement is also remarkable – and it covers issues which were not even part of this litigation. It is essentially a wish-list of Harry and Watson of what they wanted in a NGN statement if the case was to be discontinued. The document indicated that it had been effectively dictated by the claimants to the defendant from a position of negotiating strength.

A sort of “ok, you’ve got it” situation.

The text of the apology was far, far away from the situation of Hugh Grant and the many other claimants who had been forced to settle.

And so the explanation for why the claim of the Duke and the Baron came to an end could not easily be the same.

That explanation did not make sense.

*

The second thing which did not make sense was the timing – though here the puzzlement came from experience and knowledge of practical civil litigation.

The puzzle was this: there was no particular costs reason why Harry and Watson would have to settle on the eve of trial.

Yes, each day would incur more legal costs – but by this point of the litigation the marginal increases are pebbles on a beach.

There was no inherent reason why costs would force the claimants into settlement on that day which was different from a week ago.

And had the settlement been on the basis of a brand new “Part 36 offer” (on which more below) there would be a period to respond, and there would be no real need for anxious negotations, as they are effectively “take it or leave it” devices.

Indeed, a claimant is generally in its strongest position as a trial is about to begin for the claimant gets to put their case first.

The real pressure on the eve-of-trial is usually on a defendant and not on a claimant.

And so the question becomes: what could it possibly be about a trial about to begin that would motivate a defendant into settlement?

Here the answer is perhaps plain: when a trial actually begins, all sorts of court documents and documentary evidence can enter the public domain, and as a trial continues that documentary evidence is placed before the court (and the public) and witnesses are openly examined and cross-examined.

If the objective of a party to litigation is to avoid such dislosure of things to the world, the eve of trial is the very last chance to ensure absolutely that it does not happen. Any settlement thereafter, during the trial, is risky, as complete control over various documents will have been lost.

*

And then there was another point, which came from reading thirteen or so reported rulings and judgments in respect of pre-trial hearings in this case.

NGN actually had a good arguable defence which may have prevailed at trial.

This defence was not on the actual substance of the case – there seemed no plausible answer to the questions raised by the documentary evidence that had been mentioned in the pre-trial proceedings.

It was instead a technical defence, based on limitation – that the claims had been brought too late.

The allegations in respect of phone hacking had already been struck out of the claimants’ cases, as the claimants could have brought their claims within the relevant limitation period, but did not.

The allegations in respect of other unlawful activity – UIG – had survived a pre-trial application by NGN for strike-out – but only just.

The judge had decided, on balance, that the issue of whether the claimants were out of time to bring the UIG claims was to be decided at trial.

Here the issue turned on what is called “constructive” knowledge – could the claimants have known earlier that there was a potential claim.

The judge was plainly uneasy on this point.

Here is a paragraph from a June 2024 ruling:

And here are three paragraphs from a July 2023 ruling:

As the judge put it elsewhere: “The relevant question […] is whether by September 2013 the Duke knew or could with reasonable diligence have known that he had a worthwhile claim against NGN for blagging or UIG conducted by PIs.”

It may be that NGN would have successfully relied on this defence at trial.

But unfortunately for NGN it would have to be mounted at trial.

In pre-trial hearings, NGN tried hard to have the UIG claim knocked out, like the phone hacking claim, or to have it dealt with as a preliminary issue – and they almost succeeded, but the judge hesitated and said it was a matter for a full hearing.

By which time it would then be too late for NGN, if their goal was to prevent a public trial.

*

When NGN succeeded in knocking out out the phone hacking allegations on the basis of limitation, it was presented by their spokesperson as a triumph – a “significant victory”:

“The High Court has today, in a significant victory for News Group Newspapers, dismissed The Duke of Sussex’s phone hacking claims against both the News Of The World and The Sun. […]

“Mr Justice Fancourt then dismissed the duke’s phone hacking claims against both the News Of The World and The Sun on the grounds that the claim had been brought too late.

“This substantially reduces the scope of his legal claim. The exact nature and scope of any trial of the remainder will be the subject of further hearings.”

But it was not a significant victory for NGN.

It was in fact a significant defeat.

NGN’s strongest legal defence – perhaps their only defence, but still a strong one – would have to be heard at full trial, rather than be the knock-out blow before the trial.

*

The reason why it is significant that NGN actually had a good arguable defence in this case is that it make it even more puzzling that they were so anxious to settle on the eve of trial.

A defendant in possession of such a good – if technical – complete defence would be tempted to let the trial run its course, win on the limitation defence, and then hammer the claimants for legal costs.

But NGN didn’t.

NGN did not want a trial, even if there was a good chance of their limitation defence succeeding.

*

So what could explain all this?

The volunteered apology with its open admissions and statements on matters which were not even part of the litigation?

The anxiety that the case has to end before a public trial began?

The urge to end a case even where the defendant had a good (if technical) defence at trial?

And then there were other odd details, which required knowledge and experience of civil litigation to pick up: there had been no application for a statement in open court (which can happen when a Part 36 claim had been accepted) and the case had ended with a Tomlin order (or similar) which is not the means be which a case usually comes to an end because of costs pressures under Part 36.

It was a curious situation, which every detail made curiouser and curiouser.

*

Before we get to the solution, a quick word now about Part 36.

Part 36 describes a process in civil litigation where a party (either a defendant or a claimant) makes a formal offer to settle a claim.

If the other party does not accept the offer and instead proceeds to trial, that other party has to then “beat” the offer.

If the judge awards compensation less than the offer or no compensation at all (the judge at this stage is not told about the offer) then the party that did not accept the offer is heavily penalised for costs of the other party on the so-called, onerous “indemnity” basis. And costs often are far in excess of the compensation,

This means a party that rejects a reasonable offer is at risk of losing in reality when it nominally wins.

As a mechanism, it concentrates the minds of the parties to litigation wonderfully.

And in the vast majority of cases it works well – to the benefit of both claimants and defendants.

But it is a system which can be gamed – though how it can be reformed without losing its benefits for majority of cases is a difficult question.

If a party makes a Part 36 offer which is higher than any amount that could possibly be awarded by a judge, then the other party has no real choice but to accept the offer and end the case.

And this is what happened with Hugh Grant and other claimant in this litigation.

They still – theoretically – had the right of access to a court and a full trial – just as nominally we all have the right to go for lunch at The Ritz.

But in reality a claimant has to end the case.

Unless, of course, you have a claimant who is as determined as the two remaining claimants in this case.

*

And so we come to the eve of trial (or indeed, but for the last minute adjournments, the day of trial).

Every other claimant, bar the two remaining, had settled – including being forced into settlement by generous Part 36 offers.

The application to strike out the entire claim on the basis of limitation failed.

The application to have the limitation defence heard as a preliminary issue failed.

Nothing in the litigation strategy of NGN – otherwise highly successful – had worked.

And yes, NGN had a good arguable defence – but it was a defence which could only be used if the trial went ahead.

Offers of cash were not working – the remaining claimants wanted more than cash – they wanted admissions.

And there could not be another adjournment – the trial was about to begin, and NGN would lose control over all sorts of documents and evidence the moment the trial commenced and as it continued.

What could NGN possibly do?

They had only one remaining option – a nuclear button option or, to switch metaphors, one final pill in the litigation medicine chest.

They could admit liability for the claim – or at least signal to the claimants that they would now accept liability for the claim.

*

By admitting liability for the claim, it would not then matter who at NGN knew what or when, and how far up the organisation went the instructions and knowledge of wrongdoing- the corporate entity would still be liable.

And if they accept the claim, then there would be no need for a full trial.

Harry and Watson could not force a full trial even if they had wanted to do so, for there would be no issue to be tried.

It would stop, at a stroke, the possibility of documents being disclosed and matter being dealt with in public court.

The cost of this move, however, was to shatter the litigation strategy that had hitherto been so successful with other claimants.

The cost of this move would also be a public statement on terms dictated by the claimants – the “ok, you’ve got it” situation.

And the cost of the move would be, well, costs. Lots and lots of costs.

A defendant admitting liability at the opening of a trial can expect to be hammered by the court for costs on an indemnity basis, and then hammered and hammered again.

As it was, the defendant did not need to formally admit the claim – it was enough to tell the claimants that it would be prepared to as a basis for settlement.

And so a public trial was avoided.

*

If this theory – and it is only a theory, based entirely (with one exception – the Tomlin Order point, which came from someone in court) on a close reading of the public domain documents and a knowledge and experience of civil litigation – is correct then many things are explained, which otherwise cannot be explained.

It explains the volunteered public apology in its wide-ranging terms and its open admissions – in contrast with how the Hugh Grant claim and other claims ended.

It explains the timing – which cannot be explained by costs risks on the defendants.

It explains why NGN did not proceed to trial even though it had a good arguable but technical defence.

It explains all the odd procedural technical details of how the case came to an end.

It makes sense – wheras the “costs risk” explanation of other commentary did not make sense and match the facts.

*

All this said, it is still only a theory – the above is an explanation which matches the available facts.

But it provides a solution to something which was otherwise very puzzling.

***