Defendant lawyers today told the Supreme Court that the pre-Jackson costs rules were unfair and disproportionate.

The long-awaited hearing for Coventry v Lawrence began this morning with a condemnation of the recoverability of success fees and after-the-event insurance from losing parties.

The rules, created by the Access to Justice Act 1999, were torn up in April 2013 through the Legal Aid, Sentencing and Punishment of Offenders Act.

Coventry, a private nuisance case which took place in the intervening years, involved a defendant held liable for £292,000 in success fees and £378,000 in ATE insurance – in addition to the £492,000 base costs of the case. The costs far outweighed the value of the case.

Robert McCracken QC (pictured), representing the defendant, the operator of a speedway stadium, said the old costs regime had been inconsistent with article six of the European Convention on Human Rights, which protects the right to a fair trial.

McCracken said that the system meant that claimants' solicitors could take on cases with only a one in three chance of winning, on the basis that one win would cover the costs of the two losses. 

The rules were also unfair because some defendants were contesting cases with parties that had ATE insurance, while others were not.

‘There is no reason why funding of ATE and CFAs should fall on those who happen to be unsuccessful when facing them,’ he said. ‘The effect in this case is so grotesque that even if you accept the system as a whole you could not accept it in this case.’

McCracken said there was a general acceptance that the pre-Jackson system was ‘fundamentally flawed and unfair’.

He accepted that the UK had an obligation to ensure that claimants could bring a case but said that ‘non-rich’ defendants were denied justice by the costs barriers facing them.

‘The government has chosen to adopt this system which is irrational and unfair,’ he added.

The hearing is set to continue tomorrow and on Thursday, with eight parties in total given permission to intervene. The Ministry of Justice, Law Society and Bar Council are all set to argue that the system as it stood was lawful.

A victory for Coventry would cause a major headache for the government, with the potential for thousands of costs awards between 1999 and 2013 to be disputed.