Equity is facing its first operating deficit in eight years, with the union blaming a court hearing last year that left it with a bill running to hundreds of thousands of pounds in costs.
The predicted shortfall for 2012 currently stands at around £176,000, which Equity claims is “solely as a result of an adverse costs judgement” made last year in a defamation hearing involving three of its members, which the union funded.
The union will present its final accounts for the 2012 calendar year to its ruling council on January 22. If, as expected, the final accounts record a deficit, it would mark the first time its income and expenditure account – which tracks what the union earns and spends – has been in the red since 2005. At that time, the union recorded a deficit of £834,098, which it put down to costs incurred with the refurbishment of Guild House, its London offices.
The projected deficit for 2012 follows Equity’s decision to fund legal action on behalf of three members who are part of music group the Gillettes, who claimed they had been defamed by a booking agency that posted online comments about them.
Although the court found the Gillettes had been libelled, the judge said they were entitled to only nominal damages and would have to pay 75% of the defendant’s costs after it emerged that one of the members had lied during his evidence.
Equity claims the total costs for the case could be in the region of £500,000, and has said that it is predicting a deficit in its own accounts as a result.
The actual deficit will not be confirmed until later this month, with the predicted amount based on the union’s spending up until November last year and an estimate of its outgoings in December.
While some of the costs incurred as part of the Gillettes’ court case have already been paid, the amount owed for the defence’s costs will not be known for some weeks, and is likely to be paid out of Equity’s 2013 accounts.
Since 2005, the union has worked to avoid a deficit, with 2011’s operating surpluses put at £677,504.
The legal action by the Gillettes was launched four years ago after agency 1311 Events posted negative comments about the group on its website.
Before the high court hearing last year, the case had already been once before the high court, as well as the court of appeal and even the supreme court. It is understood Equity has already spent about £200,000 on its own costs for the trial, and paid £130,000 to the defendants over the four-year period.