England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
Mr Justice Mann
HC14A00460

		Royal Courts of Justice Strand, London, WC2A 2LL
		11 February 2016

Lord Justice Lewison:

1. The issue raised on this appeal is the scope of a compromise. The background is fully set out in the judgment of Mann J from whom this appeal is brought (with his permission). The judge's judgment is at [2015] EWHC 125 (Ch) (Brazier v News Group Newspapers Ltd). I take the background facts largely from that judgment.
2. The original litigation arose out of widespread claims of phone hacking principally carried out by Glenn Mulcaire, a private investigator engaged by News Group Newspapers Ltd (NGN) which published the News of the World and other newspapers at the time. Because of the large number of claimants who made similar claims, special case management directions had to be made. The main directions were contained in an order of Vos J dated 20 April 2012 (as amended). Although there was no formal group litigation order, the various claims were all managed together. To come within the scope of the order a claim had to meet the criteria specified in paragraph 17 of the order, namely that it was a claim for misuse of private information (and other causes of action) and:

"The claim must arise in whole or in part from (a) the activities of [Mr Mulcaire] and/or his associates pursuant to instructions from employees of [NGN] and/or (b) activities undertaken by or on behalf of employees of [NGN]."

3. All the claims that met these criteria proceeded by way of what were called "generic" Particulars of Claim followed by "claimant-specific" Particulars of Claim (called "Details"). The generic Particulars of Claim were potentially applicable to every case and they set out a considerable amount of background common to each case. In particular they alleged publication of stories about the various claimants, and pleaded a number of matters which, it was said, indicated the general scope of the phone hacking exercise that occurred in the period in question, without necessarily linking to specific activities directed at the particular claimant. They also provided a pleading framework into which the claimant's specific allegations could be fitted by means of a subsequent claimant-specific set of Particulars. The generic Particulars of Claim were re-amended on 11 October 2012.
4. Mr Leslie issued his claim form on 14 September 2012. That claim was given the reference HC12AO3643. Mr Mulcaire was the First Defendant and NGN was the Second Defendant. On 9 November 2012 Mr Leslie served a document entitled "Details to be added to Generic Particulars of Claim" (which had by then been re-amended).
5. On 30 November 2012 NGN's solicitors proposed terms of compromise. Terms of compromise were agreed and were embodied in a Tomlin order made on 14 January 2013. The scope of the compromise depends on the interpretation of that order in the light of the admissible background evidence. Put shortly Mr Leslie says that the compromise encompassed claims for phone hacking relating to a particular mobile phone effected by Mr Mulcaire and his associates on behalf of the News Desk of the News of the World. NGN, on the other hand, says that the compromise encompassed all allegations of phone hacking by or on behalf of NGN. Mann J agreed with NGN.
6. In order to resolve this dispute it is necessary to examine the scope of the original action and then, against that background, to interpret the compromise and its accompanying documents.
7. It is, to my mind, clear that the scope of the generic Particulars of Claim was not limited to instances of phone hacking of which the claimants were actually aware. Nor was it limited to the activities of Mr Mulcaire. It was not even limited to the News of the World. For example paragraph 14B of the generic Particulars of Claim pleaded:

"Senior Executive C frequently instructed journalists working for the News of the World and for the Sun to carry out voicemail interception.

14B.1 On Saturday 20 May 2006 … Senior Executive C instructed journalist B to intercept the phone of an identified victim. Journalist B intercepted the victim's voicemail messages pursuant to that instruction.

14B.2 Senior Executive C frequently instructed Sean Hoare to carry out voicemail interception both as a fishing exercise and as a targeted exercise."

8. Paragraph 14C pleaded:

"Senior Executive C was frequently played recordings of intercepted voicemail messages by journalists working for the News of the World in order to satisfy that senior executive that the story should be published."

9. Paragraph 21.1 pleaded:

"[Mr Mulcaire] and/or his associates (that is other individuals involved in, or acting with [NGN] under the Arrangement) and/or private investigators such as Steven Whittamore acting on behalf of [NGN] obtained … the mobile telephone numbers, direct dial numbers, pin numbers… location data and other personal information … about individuals who were of interest to [NGN's] journalists…"

10. Paragraph 21B pleaded:

"The call data setting out telephone calls to compromised or potentially compromised voicemails by [Mr Mulcaire] and employees/agents of [NGN] only represents a small percentage of the calls made by the Defendants to voicemails to obtain confidential and/or private information."

11. Sub-paragraph (iii) of that paragraph pleaded that:

"[NGN's] journalists intercepted voicemail messages using their home telephones, pay phones and mobiles in respect of which the call data has not been preserved."

12. Later in that paragraph it was said:

"The Claimant reserves the right to rely upon such further examples as can be seen from the disclosure, and will invite the court to draw the inference that [NGN's] journalists, including Mr Goodman, were carrying out interception on a substantially greater scale in terms of the number of interceptions per victim, and the length of interceptions per victim, than [Mr Mulcaire], not least because they had a greater and more direct knowledge of and interest in the personal lives and activities of the victims than him."

13. The generic Particulars of Claim also alleged that Dan Evans (who worked for the News of the World Features Department) was one of the journalists who made use of the intercepted voicemails.
14. Mr Leslie's own Details pleaded (among other things):

"5 a. From around 1998 Mr Leslie had a mobile phone with telephone number [the number was given]. During the relevant period, that mobile phone used an account on the Vodafone network.

b. Mr Leslie did not use a customised PIN for remote access to his mobile phone voicemails.

6. Mr Leslie was targeted by the News of the World because of his high profile occupation as a television presenter …

23. The Defendants targeted Mr Leslie pursuant to the arrangement on various dates beginning at the latest in or around October 2003. The Defendants intercepted mobile phone voicemail messages left for and by Mr Leslie, and/or obtained details of call data relating to Mr Leslie by deception and/or from the voicemail envelope associated with voicemail messages that the Second Defendant intercepted.

36. The Claimant is unable to particularise his damage further until he has ascertained the full nature and extent of the wrongful acts committed by the Defendant in accordance with paragraph 39 below.

39. Mr Leslie has not yet ascertained the full extent of the information that was unlawfully obtained by the Defendants or the uses made thereof, but will seek to ascertain the same and obtain relief in respect of the same. In order to enable the Court to assess the full extent of the damage suffered by the Claimant, and in order to allow the Claimant to ascertain the misuses of his private information as a self-standing remedy pursuant to his Article 8 rights, the Claimant requires an order that the Defendants provide information as to the full extent of their wrongdoing, including:

39.1 The identity of each and every employee or agent of the First Defendant who intercepted the Claimant's voicemail messages.

39.2 The identity of each and every employee or agent of the First Defendant who obtained and used information obtained from the Claimant's voicemail messages.

39.3 The number of occasions on which the Claimant's voicemail was intercepted.

39.4 All the information obtained from the Claimant's voicemail messages, the extent to which this information was circulated and used by the First Defendant's journalists, and all the uses made thereof."

15. The relief claimed included:

"1) Damages or an inquiry into damages … for breach of confidence and/or misuse of private information.

2) Delivery up on oath of all documents (whether in hard copy or electronic form) regarding or concerning the Claimant or his friends and family (which has been obtained from the Claimant's voicemail messages) and/or his mobile telephone numbers, pin numbers and direct dial numbers and all copies in whatever form they may be kept or otherwise held by or on behalf of the Defendants or either of them;

3) An order that the First Defendant, on oath, provide information as to:

a. The identity of each and every employee or agent of the First Defendant who intercepted the Claimant's voicemail messages.

b. The identity of each and every employee or agent of the First Defendant who obtained and used information obtained from the Claimant's voicemail messages.

c. The number of occasions on which the Claimant's voicemail was intercepted.

d. All the information obtained from the Claimant's voicemail messages, the extent to which this information was circulated and used by the First Defendant's journalists, and all the uses made thereof."

16. That was the state of the pleading when NGN made its offer to settle. Their solicitors' letter said:

"Based upon the information currently available and using a generous criteria as to liability and quantum, NGN has evaluated the maximum sum which it considers your client could hope to recover at trial. A Part 36 offer in excess of this amount will be made to your client on expiry of the WAPSATC offer contained herein . . . . The Part 36 offer will be in the sum of £5,500.

In an attempt, however, to avoid further significant costs being incurred unnecessarily NGN is willing to make an alternative, enhanced offer of settlement now but which is capable of acceptance for a short period only."

17. That enhanced and alternative offer was an offer to settle at £15,000 on the terms of a draft Tomlin order. It was that offer which formed the basis of negotiations. As part of the compromise the parties agreed the text of a private letter of apology to be written by NGN to Mr Leslie and also the text of a statement to be read out in open court. The Tomlin order recited, in the usual way, that the parties had agreed terms set out in the schedule and provided for a stay of the proceedings. Permission for the reading of the statement was also given. The Schedule began by saying that:

"The Parties have agreed terms in full and final settlement of the Claimant's claim in proceedings HC12A03643 (the "Claim") as follows:"

18. It then set out the settlement sum and the text of the letter of apology which read (so far as material):

"I am writing this letter of apology to you on behalf of News International and News Group Newspapers. The facts are that journalists employed by News Group Newspapers invaded your privacy."

19. The statement to be read in court included text to be read both by counsel for Mr Leslie and counsel for NGN. The former included:

"The Claimant was deeply angry and upset to discover that, owing to the deliberate destruction of documents by The News of the World, he will never find out the true extent to which his privacy was invaded. Whilst he has received evidence of misuse of private and confidential information from what remains of the First Defendant's records, he does not know, and will never know, the full extent of the Defendant's activities."

20. After counsel for NGN formally apologised Mr Leslie's counsel continued:

"In the light of the undertaking not to repeat and the payment of substantial damages to the Claimant by the First Defendant and the public apology given to him today, the Claimant considers that he has been fully vindicated and is happy to let the matter rest."

21. The agreed statement was read out in open court on 20 April 2013.
22. Following the compromise Mr Leslie began a second action complaining about phone hacking by NGN. His Particulars of Claim, dated 5 June 2014, are freestanding and do not rely on any generic Particulars of Claim. Mr Ullstein QC, presenting Mr Leslie's appeal, emphasised a number of differences between the claims in the second action and the claims in the first action. The main points were these:

i) The second action refers to two mobile phones. Although one of them is the same phone as was pleaded in the first action, the second one is new.

ii) The second action pleads "a series of arrangements" for phone hacking. The only arrangement specifically pleaded in the first action was the arrangement with Mr Mulcaire. Although the arrangement with Mr Mulcaire was also pleaded in the second action, that action also referred to arrangements made with Mr Derek Webb.

iii) The second action refers to arrangements made by the News Desk and the Features Desk. The first action had not gone into this detail.

iv) The second action pleads many allegations about the activities of Mr Dan Evans which were not pleaded in the first action.

v) The second action gives extensive particulars of the distress and damage that Mr Leslie suffered as a result of phone hacking, which had not been pleaded in the first action.

vi) The second action claims substantial damages as special damage which the prayer for relief quantifies as being in excess of £300,000. The first action only claimed general damages.

23. The judge held that as a matter of interpretation of the Tomlin order, in the light of the admissible background, these claims fell within the scope of the compromise of the first action. They could not therefore be maintained in a second action; and thus he struck out the paragraphs of the Particulars of Claim which raised those claims.
24. The essence of the judge's reasoning is at [125]. He said:

"The question is: What was the real subject matter of the compromise? Undoubtedly Mr Leslie's claim … starts with the Arrangement involving Mr Mulcaire. However,… the Particulars of Claim, when properly read, demonstrate that the claim was really about all phone hacking activity conducted by the News of the World, and Mr Leslie made it clear that he would claim for everything, not necessarily confined to the Arrangement. It is to be accepted for present purposes that most of what he knew about concerned the Arrangement, because that was all that had been made public at that time, but …he did not accept for one minute that he had obtained all the information that there was to be obtained about phone hacking done by the News of the World – hence his claim for proper disclosure about it all. In the circumstances his claim was about all phone hacking, and not just about Mr Mulcaire's activities."

25. The judge considered the fact that the second action pleaded a second mobile phone, but did not consider that it made a material difference. Nor did the judge consider that the quantum of the claim as pleaded in the second action shed any real light on the scope of the compromise of the first action. I would be content at this point to say that I agree with the judge for the reasons that he gave. But in deference to Mr Ullstein's sustained argument I will give my reasons in my own words.
26. It is common ground that if the judge was right in his interpretation of the order, he was right to strike out those paragraphs. So the question boils down to one of interpretation of the order. It is also common ground that, to put it more precisely, what needs to be considered is the schedule to the order which contains the agreed terms of compromise; and further that since those terms are contractual the usual principles of interpreting contracts apply.
27. There is therefore no dispute that the question to be answered is what the words of the Tomlin order would mean to a reasonable reader with the background knowledge of the parties. The Schedule to the order states that the terms are in full and final settlement of the claims in HC12A03643. The reasonable reader would therefore look to the claims made in that action in order to find out what they were. Since the terms were stated to be a "full and final" settlement of those claims, I do not consider that the reasonable reader would interpret the claims restrictively.
28. Mr Ullstein argued that the Details, which were Mr Leslie's individual statement of case in the first action, did not incorporate the whole of the generic Particulars of Claim. I do not agree. The Details were to be "added" to the generic Particulars of Claim with which they were to be "read in conjunction"; the paragraph numbering of the Details was plainly intended to tie in with the generic Particulars of Claim; and where a specific allegation (such as harassment) was not relied on in the Details, the relevant paragraph was annotated "n/a".
29. On examining the claims the reasonable reader would find the following salient points:

i) Mr Leslie's Details referred to only one mobile phone which had no customised PIN. But the prayer for relief sought delivery up of all documents about Mr Leslie and his family including "mobile phone numbers" (plural), "pin numbers" (plural) and "direct dial numbers" (plural).

ii) The Generic Particulars of Claim pleaded instructions given by Senior Executive C not only to journalists working for the News of the World but also to journalists working for the Sun. They also pleaded that journalists (i.e. not just Mr Mulcaire) intercepted voice messages. Paragraph 21B of the generic Particulars of Claim emphasised that what the claimants knew about was only a small percentage of the intercepted calls. That paragraph also alleged phone hacking by NGN's journalists themselves, and reserved the right to rely on any further examples as emerged on disclosure. Moreover that plea in the Generic Particulars of Claim invited the court to infer that phone hacking was carried out by NGN journalists on a wider scale than phone hacking involving Mr Mulcaire; and specifically named Mr Evans. This ties in with paragraph 39.1 of Mr Leslie's Details and the prayer for relief which sought the name of individual employees of NGN who intercepted his voicemail messages. Mr Mulcaire's name was, of course, already known.

iii) Mr Leslie's Details also emphasised that he did not know the full extent of the wrongdoing, and was looking to NGN to provide further information. Paragraph 36 said that Mr Leslie could not quantify the damage he had suffered without more information, which he was looking to NGN to provide. Paragraph 39 of Mr Leslie's Details said in terms that he would seek to ascertain the full extent of NGN's wrongdoing "and obtain relief in respect of the same".

30. Turning to the Tomlin order, the reasonable reader would see that:

i) The agreed letter of apology said that journalists employed by News International and NGN invaded Mr Leslie's privacy. Mr Mulcaire was not a journalist.

ii) The agreed text of the statement to be read in open court emphasised that Mr Leslie did not know and would "never find out" the true extent to which his privacy was invaded; and would "never know" the full extent of NGN's activities. Nevertheless, despite that lack of knowledge he was "happy to let the matter rest".

31. Mr Ullstein's first point was that the judge was wrong to conclude that the compromise included matters that Mr Leslie did not know about and could not have known about. There is no legal obstacle to the compromise of claims of which the parties are unaware: whether they have done so depends on the terms of the compromise. The first part of this submission is, in my judgment, plainly contradicted by the terms of the agreed statement which formed part of the compromise, as well as the form of the pleadings themselves. It was an important part of the case pleaded in the first action that Mr Leslie did not know the full extent of NGN's activities. To echo the judge at [88] (borrowing from Mr Donald Rumsfeld) this was a "known unknown". The second part of the submission depends in part on what you mean by "could not have known". The judge referred to the arrangements about disclosure in the first action and pointed out at [128] that Mr Leslie chose to compromise his action before disclosure was complete. He thus chose to forego the chance of finding out more. This is not a case like BCCI v Ali [2001] UKHL 8, [2002] 1 AC 251 where the cause of action asserted in the second action was unknown to the law at the time of the compromise of the first action. In Mr Rumsfeld's terminology that would have been an "unknown unknown". In this case Mr Leslie could have found out more by pursuing the claim at least as far as disclosure. In my judgment this, too, was a "known unknown". I reject this ground of appeal.
32. The second ground of appeal asserts that the judge misdirected himself that the meaning to be applied to the Tomlin order was that which it would convey to a reasonable person with the background knowledge of the parties at the time the compromise was made. Put in that way this ground of appeal is contradicted by paragraph 28 of Mr Ullstein's skeleton argument in which he accepts that the judge correctly set out the principles that he had to apply. What I think this ground really asserts is that the judge did not give sufficient weight to particular features of the background. First, Mr Ullstein relies on the pleading in the first action and, in effect, argues that it was of particular significance that Mr Leslie pleaded only one mobile phone, and that the "Arrangement" defined in the generic Particulars of Claim was an arrangement with Mr Mulcaire alone. However, as I have tried to show the pleaded claim (and the relief sought) went much further. Second, Mr Ullstein relies on the terms of NGN's solicitors' letter proposing the terms of compromise which said that the contemplated Part 36 offer was based on "the information currently available". There are three reasons why this is of little significance. First, as I have said, if Mr Leslie had waited for disclosure more information would have come to light. Second, the letter used that information in order to calculate the amount of the proposed Part 36 offer; but the proposed settlement figure was nearly three times as much, and was expressed as "an alternative" offer. Third, the letter was no more than an offer, and where a contract is reduced to writing statements made in the course of negotiations are generally of little help in interpreting the agreement (if they are admissible at all). I reject this ground of appeal.
33. The third ground of appeal again relies on the offer letter. I have already dealt with that. But to the extent that Mr Ullstein seeks to match offer and acceptance, the offer that Mr Leslie accepted was not an offer of £5,500 based on "the information currently available" but the much greater offer of £15,000. I reject this ground of appeal.
34. The fourth ground of appeal attacks the judge's finding that it was implausible that Mr Leslie did not rely on the statement in the offer letter. Whether one party to a contract does or does not (as a matter of fact) rely on a statement made by the other party does not seem to me to be of any relevance in interpreting the agreement, which must be done on an objective basis and without reference to either party's subjective state of mind. Had there been a claim for misrepresentation reliance would have been important. But no such claim is made. I reject this ground of appeal.
35. The fifth ground of appeal asserts that the judge placed too much reliance on the Generic Particulars of Claim in the first action in determining the scope of the compromise. But an examination of Mr Leslie's Details shows, to my mind, that his own claim went beyond the particular instances of phone hacking that he was able to particularise. I reject this ground of appeal.
36. The final ground of appeal asserts that the judge was wrong to hold that on an objective reading of the Tomlin order Mr Leslie was fully compensated for the wrongs that he had suffered at the hands of NGN despite the fact that he had not claimed in the first action the special damages that he claimed in the second action. There are a number of reasons why, in my judgment, this ground of appeal must fail. First, the particular damage that Mr Leslie asserts in the second action all occurred within the time frame covered by the first action. He could therefore have pleaded it in the first action if he had chosen to do so. Mr Ullstein argued that there was no evidential foundation for a causal link at the time. But if Mr Leslie had waited until disclosure such a link might have come to light. Second, the extent to which the publication of newspaper articles based on unlawfully gathered material had damaged Mr Leslie's career and private life was peculiarly within his own knowledge rather than that of NGN (even if he could not have proved at that stage that the articles had been published using the fruits of phone hacking). Third, the interpretation of a contract must be objective as between both parties, and there is no reason to suppose that the details of the damage suffered by Mr Leslie were known to NGN when the compromise was made. Fourth, the pleading in the second action does not distinguish between damage caused by the phone hacking which was within the scope of the first action and phone hacking which is said to be exclusively related to the second action. Mr Ullstein accepted in argument that it was impossible to disentangle the two. Some part of that damage must necessarily have been compromised when the first action was settled. Fifth, whether Mr Leslie was or was not fully compensated for the wrongs that he suffered is a question-begging way of putting the point. The allegations in the second action are no more than that: allegations. Sixth, at bottom the argument is that the consideration for the compromise of the first action was inadequate. But the law is not generally concerned with the adequacy of consideration. I would reject this ground of appeal. I should add that Mr Ullstein referred us to the decision of the House of Lords in Heaton v AXA Equity and Law Life Assurance Society plc [2002] UKHL 15, [2002] 2 AC 329. That case was concerned with the question whether A, having concurrent causes of action against B and C, was entitled to sue C after he had compromised with B. C, of course, will not have been a party to the compromise. This case is not concerned with that question. The question in this case is whether A can sue B for a second time; and that depends on the terms of the compromise. I do not consider that Heaton v AXA bears on the issue raised in this appeal.
37. Since I have rejected all the grounds of appeal, I would dismiss the appeal.

Lord Justice Ryder, Senior President of Tribunals:

38. I agree.

Sir Terence Etherton, Chancellor of the High Court:

39. I also agree.