England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE,
COURT OF APPEAL (CIVIL DIVISION)
APPEAL OF DEFENDANTS FROM ORDER OF
MR. JUSTICE BELL

		Royal Courts of Justice, Strand, London WC2.
		25th March 1994.

LORD JUSTICE NEILL: This is an appeal by the defendants from the order of Bell J. dated 15 November 1993 striking out parts of their defence and particulars in an action brought against them by McDonald's Corporation and McDonald's Restaurants Ltd. McDonald's Corporation is a company incorporated in the State of Iowa in the United States of America and is the proprietor of the McDonald's chain of restaurants in the United States. In other parts of the world McDonald's restaurants are owned and run by subsidiary companies or by franchisees or by means of joint ventures between McDonald's Corporation and a partner. McDonald's Restaurants Ltd. is a wholly owned subsidiary of McDonald's Corporation and is responsible for managing a large number of McDonald's restaurants within the United Kingdom. I shall refer to the plaintiffs under the general name "McDonald's".

On various dates between October 1989 and April 1990 the defendants with other persons distributed and published in this country a leaflet entitled "What's wrong with McDonald's?"

The leaflet contained a number of serious allegations against McDonald's. For the purpose of the present proceedings these allegations have been grouped under seven headings. It is sufficient to refer to the two headings to which this appeal relates. These are headings numbers 1 and 7 -"Destruction of the Environment" and "Employment Practices".

It is said by McDonald's that in relation to the allegations under heading (1) the defendants' leaflet alleged that they had purchased large tracts of land in poor countries and destroyed vast areas of central American rain forest to create grazing pastures for cattle. As a result native farmers had been evicted from land where food might have been grown for the people living there.

The allegations under heading (7) related to the employment practices of McDonald's. McDonald's assert that the leaflet alleged that they had exploited their workforce and deterred their employees from becoming members of trade unions.

The writ in the action was issued on 20 September 1990 and served on the defendants together with the statement of claim. On 16 November 1990 the defendants served their defence setting out pleas of justification and fair comment.

There then followed a large number of interlocutory applications which led to further and better particulars of justification and fair comment being served by the defendants on 23 October 1991, on 3 December 1991, on 31 July 1992 and 11 March 1993.

The summons for directions was heard by Drake J. on 2 February 1993. On that occasion he ordered inter alia that lists of documents should be served, that there should be inspection within fourteen days after service of the lists and that witnesses' statements and experts' reports should be exchanged.

The case came back before Drake J. on 7 July 1993. On that occasion Drake J. ordered inter alia that the defendants should serve full witnesses' statements of all witnesses upon whose evidence they intended to rely at the trial by 28 July 1993. At the same time he ordered that the defendants' application that further discovery be made by McDonald's be adjourned until after the service of the witnesses' statements. The defendants sought but were refused leave to appeal from that order to the Court of Appeal.

On 30 September 1993 McDonald's applied to strike out parts of the defence and parts of the particulars of justification and fair comment served thereunder. This summons came on for hearing before Bell J. on 2 November 1993. By that time Bell J. had become the judge to whom the case was assigned for any further interlocutory hearings and for the trial.

Before Bell J. on 2 November there were a number of applications:

(1) An application by the plaintiffs to strike out parts of the defence and the particulars served thereunder.

(2) An application by the defendants that McDonald's should give further discovery.

(3) An application by the plaintiffs for an order for the withdrawal of a number of interrogatories which had been served upon them.

At the hearing on 2 November counsel for McDonald's put forward five propositions in support of his submissions (a) that parts of the defence and the particulars should be struck out, and (b) that the striking out application should be decided before the application for further discovery was dealt with. It is necessary to refer only to the first two of these propositions which the judge in his judgment on 3 November recorded in these terms (J.11 D):

"The first proposition is that a general plea of justification of libel without particulars of that justification is bad. The defendants must state the facts upon which their plea of justification is based in order to give the plaintiffs a proper opportunity of denying them. ...

The plaintiffs secondly contend that the defendants should not have pleaded justification or any part of it unless they had clear and sufficient evidence to support it or the material part of it. ... In other words the plaintiffs contend that if it is apparent that clear and sufficient evidence does not exist to support the plea of justification or the material part of it then the plea or the material part of it is bad.

Since witness statements have been disclosed in this case one can at this stage in the proceedings look with some advantage to see whether the defendants have clear and sufficient evidence to support the parts of the particulars of justification which the plaintiffs seek to strike out. When doing so one can look at the witnesses of the plaintiffs as well as of the defendants in so far as their statements have been disclosed, since the defendants are entitled to take what they can from the plaintiffs statements. The same applies to documents which have been so far disclosed. Looking at the witness statements which have been disclosed does not amount to deciding the case on those witness statements. If there appears to be some clear and

The defendants on the other hand submitted that any question of striking out could only be considered after full discovery had been given including the answers to the interrogatories. In substance the judge accepted the argument for the plaintiffs. At page 15 B he said:

"In my judgment so far as those parts, if any, of the plea of justification which are bad for lack of particularity or clear or sufficient evidence to support them are concerned, I shall proceed to hear the application to strike out and shall strike them out now before considering further discovery or answers to interrogatories. If I took any other course the defendants would in fact be allowed to do that which the authorities to which I have been referred clearly say they are not to do; that is to put forward a plea of justification when they have no clear and sufficient evidence to support it and to do so in the hope that discovery will then force the plaintiffs to produce the necessary evidence which the defendants themselves lack. Such a course would, in my view, amount to an abuse of the process of the court quite apart from any question of consequent unnecessary delay of the trial, or extension of the length of the trial, or unnecessary and costly discovery".

Having given the ruling as to the order in which he would deal with the applications, the judge then proceeded to hear detailed submissions on the application to strike out parts of the defence and the particulars thereunder. The hearing continued on 4, 5 and 12 November 1993. On 15 November 1993 the judge made an order striking out substantial parts of the defendants' pleadings and providing that other parts would be struck out unless witnesses' statements containing admissible evidence to support other passages in the pleadings were served within specified times. For the purposes of the present judgment it is unnecessary to refer to the full terms of the order; it is sufficient to record that all the passages in the pleadings under the first heading (the destruction of the environment) were struck out and that the great majority of the passages in the pleadings under the seventh heading (employment practices) were also struck out.

At the time when he made his order on 15 November 1993 Bell J. delivered a detailed and comprehensive judgment giving his reasons for striking out the individual passages in the defendants' pleadings. It is right to pay tribute to the care with which these extensive pleadings were analysed and addressed. For the purpose of the present appeal, however, it is unnecessary to set out at length any part of the judgment of 15 November. The question with which this court is concerned does not relate to particular passages in the pleadings but is whether the judge approached the striking out application on the correct basis.

It is apparent from the judgment which Bell J. delivered on 3 November 1993 that in large measure he adopted the submissions put before him by counsel for McDonald's. These submissions, which were substantially reproduced in the skeleton argument provided to this court, were on the following lines:

(1) That it is a long-established rule that a defendant to a defamation action who pleads justification (or fair comment) must give full and precise particulars of the facts and the matters on which he relies in support of the plea.

(2) That it is, however, also a rule that a plea of justification should not be placed on the record unless the pleader has "clear and sufficient evidence" to support it. Reference was made in support of this submission to the following passage in the judgment of Lord Denning MR in Associated Leisure Ltd. Associated Newspapers Ltd. [1970] 2 QB 450 where he said at 456E:

"Like a charge of fraud, [counsel] must not put a plea of justification on the record unless he has clear and sufficient evidence to support it."

Lord Denning took the phrase "clear and sufficient evidence" from a passage in Gatley on Libel and Slander, (6th Edition) at p.462. Attention was also drawn in the skeleton argument to unqualified repetitions of Lord Denning's dictum in two later cases in the Court of Appeal -Atkinson v. Fitzwalter [1987] 1 WLR 201, 204D and Prager v. Times Newspapers [1988] 1 WLR 77, 89A.

(3) That the obligation of the plaintiff to give discovery (or to answer interrogatories) in relation to a plea of justification (or fair comment) does not arise until full and precise particulars of the facts and matters relied upon are given by the defendant. Moreover the discovery is confined to the matters put in issue by those particulars.

(4) That where it can be demonstrated to the satisfaction of the court that a plea of justification or fair comment has no proper basis in fact, it may be struck out as an abuse of the process of the court either under RSC Order 18 r.19(1)(d) or under the inherent jurisdiction of the court.

(5) That under the former practice, provided the plea of justification was properly particularised, it was very rare for a plaintiff to be able to demonstrate that it should be struck out as an abuse of process on the ground that it was unsupported by evidence. The reason was that in the ordinary way there was no acceptable means by which the court could test the factual validity of an apparently proper plea.

(6) That the position has now changed, however, by reason of the introduction in November 1992 of the new RSC Order 38 r.2A which provides for the exchange of witnesses' statements. It is now possible, after the witnesses' statements have been exchanged, to test whether the plea is or is not supported by "clear and sufficient evidence".

The judge accepted these submissions. Basing himself on them and on the authorities cited by counsel Bell J. held that in the context of this case a plea of justification was bad "firstly, if it lacks sufficient particularity; secondly, if there is not clear and sufficient evidence to support it." (J 14B) Furthermore, it is plain from the terms of the order made on 15 November 1993 that the "clear and sufficient evidence" required had to be admissible evidence.

The defendants have now appealed to this court.

The appeal raises questions of difficulty and importance. On the one hand reliance can be placed on the principle that it is in the public interest that litigation can therefore be argued that it is now possible after the witnesses' statements have been exchanged to narrow the pleaded issues further by excluding those which are based on pleas which can be seen to be unsupported by evidence. For this purpose the salutary remedy of striking out can be employed. Furthermore, if the exchange of witnesses' statements precedes the completion of discovery it will also be possible to limit the scope of the discovery by postponing any further discovery until after the decision on the striking out application has been reached.

On the other hand it can be argued that the procedure adopted in this case introduces a fresh interlocutory step into legal proceedings and one which may lead to additional delay and expense. Furthermore, it can be said, the new rule providing for the exchange of witnesses' statements was never intended to lead to a hearing at which the strength of the evidence should be tested perhaps weeks or months before the trial, and perhaps before a different tribunal from the court of trial. Such a course is particularly undesirable where the trial will or may take place before a jury.

In seeking to find the solution to the problems posed by these conflicting arguments I propose to consider the matter at the following stages in the case:

(1) The service of the defence.

(2) An interlocutory application to strike out.

(3) At the outset of the trial.

(4) At the conclusion of the evidence.

The Service of the Defence.

In the course of the argument before us it became necessary to examine the origin of the phrase "clear and sufficient evidence" which, it is believed, has appeared in all the editions of Gatley on Libel and Slander since the first edition. The authority given in Gatley is a passage in the judgment of Darling J. in Mangena v. Edward Lloyd Ltd. (1908) 98 LT 640 at 643. One of the issues in Mangena's case was whether an abstract from a Parliamentary Paper had been published by the defendants bona fide and without malice. It was in that context that Darling J. referred to an earlier case where a plea of justification had been placed on the record but the defendant at the trial had offered no evidence in support of it. Darling J. added:

"... A plea of justification ought never to be put on the record unless the person believes in it and is prepared to support it with evidence".

It was not suggested in the arguments presented to us that the test "clear and sufficient evidence" had been previously subjected to critical examination. Nor does it appear that these words formed part of the ratio decidendi in Associated Leisure. In the present case, however, we have had the benefit of argument as to the threshold which has to be reached before a plea of justification can properly be put on the record.

In the light of these arguments and as a matter of principle I am satisfied that the suggested test of "clear and sufficient evidence" cannot be accepted. If applied literally, it would impose an unfair and unrealistic burden on a defendant. Furthermore, it does not appear to be supported by what Darling J. said. It is true that a pleader must not put a plea of justification (or indeed a plea of fraud) on the record lightly or without careful consideration of the evidence available or likely to become available. But, as counsel for the plaintiffs recognised in the course of the argument, there will be cases where, provided a plea of justification is properly particularised, a defendant will be entitled to seek support for his case from documents revealed in the course of discovery or from answers to interrogatories.

In recent times there has been what I regard as a sensible development whereby pleadings in libel actions are treated in the same way as pleadings in other types of litigation. It is therefore instructive to refer to a short passage in the judgment of May L.J. in Steamship Mutual Underwriting Association Ltd. v. Trollope & Colls (City) Ltd. (1986) 33 BLR 77 where, on an application by a firm of structural engineers that the claim against them should be struck out, he said at 87:

"In my opinion, to issue a writ against a party, ... when it is not intended to serve a statement of claim, and where one has no reasonable evidence or grounds on which to serve a statement of claim against that particular party, is an abuse of the process of the court."

Actions for defamation take many forms. The allegations complained about may vary from the moderately serious to the very grave. It may therefore be unwise to put forward a formula which will match all occasions. Nevertheless I am satisfied that before a plea of justification is included in a defence the following criteria should normally be satisfied:

(a) The defendant should believe the words complained of to be true;

(b) The defendant should intend to support the defence of justification at the trial;

(c) The defendant should have reasonable evidence to support the plea or reasonable grounds for supposing that sufficient evidence to prove the allegations will be available at the trial. A similar approach should be adopted towards facts which are relied upon in support of a plea of fair comment.

It is to be remembered that the defences of justification and fair comment form part of the framework by which free speech is protected. It is therefore important that no unnecessary barriers to the use of these defences are erected, while at the same time the court is able to ensure that its processes are not abused by irresponsible and unsupported pleadings.

An Interlocutory Application to Strike Out. The Rules of the Supreme Court make provision for striking out pleadings and indorsements. RSC Order 18 r.19 provides:

"(1) The Court may at any stage of the proceedings order to be struck out or amended any pleading or the indorsement of any writ in the action, or anything in any pleading or the indorsement, on the ground that -

(a) it discloses no reasonable cause of action or defence, as the case may be; or

(b) it is scandalous, frivolous or vexatious; or

(c) it may prejudice, embarrass or delay the fair trial of the action; or

(d) it is otherwise an abuse of the process of the court;

and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.

(2) No evidence shall be admissible on an application under paragraph 1(a)."

In addition to the power of the court to strike out pleadings under RSC Order 18 r.19 the court has an inherent and general jurisdiction to stay all proceedings before it which are an abuse of its process.

It will be seen from the wording of Order 18 r.19(2) that, by necessary implication, evidence is admissible on an application to strike out a pleading on the ground that it is an abuse of the process of the court. Evidence is likewise admissible on an application under the court's inherent jurisdiction. It follows therefore that there can be no objection in principle to an application being made to the court on the basis that a statement of claim or a defence should be struck out as an abuse of process because, as disclosed in the affidavits filed in support of the application, the claim or defence is incapable of proof.

Furthermore, following the introduction of the practice whereby witnesses' statements are exchanged in accordance with RSC Order 38 r.2A, there may well be cases where after the witnesses' statements have been served it may be possible to demonstrate that the pleaded case is hopeless. For example, in a libel action it might become clear that the defendant had no evidence available other than rumour and that there was no possibility that the case was going to be improved by discovery.

It is to be remembered, however, that the evidence on which a defendant may be entitled to rely upon at trial may take a number of different forms. It may include:

(a) His own evidence and the evidence of witnesses called on his behalf.

(b) Evidence contained in Civil Evidence Act statements.

(c) Evidence contained in his own documents or in documents produced by third parties on subpoena.

(d) Evidence elicited from the plaintiff or the plaintiff's witnesses in the course of cross examination.

(e) Answers to interrogatories.

(f) Evidence contained in documents disclosed by the plaintiff on discovery.

At the Outset of the Trial.

I understand that it has become the practice in actions for defamation to consider at the outset of the trial whether some parts of the defence should be struck out on the basis that it has become apparent that some of the matters pleaded are not going to be supported by evidence. I can understand that in an appropriate case this is a sensible course which is likely to shorten the trial. On the other hand there may be cases where a defendant pleads some matter which he believes to be true but which he may still be unable to prove by admissible evidence otherwise than by eliciting an answer in cross examination. Each case will have to be considered on its own facts.

At the Close of the Evidence.

By this stage all the evidence will be before the court. Where the trial is with a jury (or even where the trial is by a judge alone) I can see considerable merit in removing from the pleadings those allegations of which there is no evidence for the jury to consider.

The Present Case.

I have come to the clear conclusion that the approach adopted by the judge in this case was incorrect. It may well be that there were some passages in the pleadings which were wholly unsupported by any evidence in the witnesses' statements and where it was clear from the discovery already given and from the other circumstances that no admissible evidence was ever going to be forthcoming. In these cases an order to strike out a relevant passage would have been fully justified.

It seems clear, however, that there were many other passages where the defendants' case, though very weak in November 1993, might have been greatly improved or even transformed by the date of the trial. We were not invited to consider the individual passages, but I am satisfied that the correct approach is to consider whether or not the defendants' case in relation to a particular passage is

incurably bad. The power to strike out is a draconian remedy which is only to be employed in clear and obvious cases. I have already set out the wide variety of the evidence which a defendant may be able to rely upon at the trial. I anticipate therefore that it will only be in a few cases where it will be possible to say at an interlocutory stage and before full discovery that a particular allegation is incapable of being proved.

I would therefore allow this appeal and remit the matter to the judge for further consideration if necessary. It may be, however, that the parties will be able to prune the pleadings on the basis of the guidance given in this judgment. I am satisfied that it is right to strike out passages in the defence or the particulars which can be described as "incurably bad" because there will be no evidence to support them. Unless, however, the passages meet this test I consider the pleadings should be left until trial.

For the avoidance of doubt I would only add that nothing I have said is intended to apply to other parts of the judge's order dated 15 November 1993 where parts of the pleadings were struck out on other grounds.

LORD JUSTICE STEYN:

I agree.

LORD JUSTICE PETER GIBSON:

I also agree

(Order: Costs allowed in this court, costs below to be determined by Judge after further consideration, but with liberty to apply to this court in case the matter is solved by the parties themselves. Leave to appeal to the House of Lords refused.)