England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		5 December 2003

Mr Justice Eady:

1. On 24 and 25 November 2003, a week before the trial began, I heard various submissions at a pre-trial review. In particular, Mr Robertson QC for the defendants sought to undermine the second Claimant's standing to sue in these proceedings for injury to reputation. There were three grounds of attack. First, it is suggested that this Claimant, which is a Saudi company, does not actually trade at all and thus cannot have a trading or business reputation that would be recognised by the law of defamation in this jurisdiction. Secondly, even if it is established that it does trade or carry on business in Saudi Arabia, he argues that it has no reputation within England and Wales such as to permit libel proceedings to be brought here. Leaving aside the question as to whether that is correct as a matter of law, it is quite obvious that both these submissions depend upon certain factual assumptions. It is accepted that they cannot therefore be resolved until at least the Claimants' evidence on the nature of the company, and the extent of its reputation here, has been placed before the court. At some stage I may have to rule on these matters in the light of any further submissions the parties care to make.
2. There is, however, a third line of attack which, in Mr Robertson's phrase, would enable him to "bowl out" the second Claimant on a preliminary issue and without the need for further evidence. He recognises that the argument is novel. He refers to the well known principle of English law that claimants are entitled to rely upon a presumption of damage once the publication of a libel has been established, as confirmed by the House of Lords for example in Shevill v Presse Alliance SA [1996] AC 959, and submits that the Human Rights Act 1998 requires modification to this general rule – at least to the extent that a foreign corporation must prove some actual measurable damage to its trading or business reputation in order to recover.
3. He submits that such a limitation is needed because there is no "pressing social need" for freedom of communication to be so restricted; especially it cannot be said to be "necessary" for media defendants to labour under the disadvantage of such a presumption when investigating and reporting on matters of public interest touching upon foreign corporations. He argues, in effect, that if any such entity is permitted to come to this court to seek vindication in respect of its reputation then it should at least be called upon to demonstrate that some such damage has occurred. The presumption of damage may be of long standing but, according to Mr Robertson, it has never been properly thought through in any English authority; in any event, even long standing principles, or "sacred cows", may sometimes have to be jettisoned under the analytical glare of Article 10: see e.g. Berezovsky v Forbes Inc [2001] EMLR 1030, 1037-8 at [10], per Sedley LJ.
4. Mr Price QC has argued for the Claimants that the values of the Convention, as reflected in the use of such concepts as "necessity" and "proportionality", are already sufficiently honoured in the approach of English courts to quantum of damages. If a corporate entity, foreign or otherwise, is unable to establish actual damage to its reputation or goodwill in the sense of measurable financial loss, then because it does not suffer anxiety, stress or hurt feelings, it will generally achieve vindication through a modest or even nominal award. If it were not even permitted to sue and put the record straight in respect of a defamatory publication, then English law would surely not be giving sufficient weight to protection of reputation. In Berezovsky itself the Court of Appeal, especially at [12], acknowledged both "… the legitimate purpose, recognised by Article 10(2), of protecting people from the publication of damaging and unjustified falsehoods" and the significance of Lord Hobhouse's reminder in Reynolds v Times Newspapers Ltd [2001] 2 AC 127 that "… a democratic society has no interest in the dissemination of untruths".
5. Mr Price argues, against that background, that since the law makes no provision (save in the very limited circumstances contemplated by sections 8–10 of the Defamation Act 1996) for a declaration of falsity, or any other mechanism for putting the record straight, it would be defective in protecting reputation if a corporation, which has ex hypothesi been libelled within this jurisdiction, were not even able to achieve nominal damages for that purpose. It would mean that false allegations, however serious, would remain uncorrected and to that extent the public could be seriously misled.
6. It was recognised by Sir Brian Neill's Committee on Defamation in July 1991, and eventually in the Defamation Act 1996 which to a large extent followed its recommendations, that it would be wholly unacceptable for the law to compel journalists to publish corrections or apologies. Sometimes where defendants cannot prove the truth of what they have published, but nevertheless still believe it to be true, or even that it may be true, it would be an unacceptable restriction upon their freedom of communication to require that they publish the contrary. Correspondingly, of course, there would be a real possibility of the public being given a false impression by such a compulsory vindication. Mr Price argues that, since the rights of journalists are so protected, the other side of the coin is that the law must afford some proportionate means for those who have been libelled to achieve an authoritative vindication. The only method of obtaining this objective known to the common law is by an award of damages. Since it is obvious that a company can only suffer "in its pocket", as Lord Reid put it in Lewis v Daily Telegraph [1964] A.C. 234, 262, it will often be appropriate in the absence of demonstrable loss that a company will require only a relatively modest award to achieve the object of vindication.
7. It has long been said that the purpose of general damages in a libel action is threefold. First, in the case of an individual claimant, there may be a need to compensate for hurt feelings or distress. Secondly, there will be the need to compensate for any actual injury to reputation. Thirdly, there is the element of vindication. In a classic passage in Cassell v Broome [1972] AC 1027, 1071, Lord Hailsham L.C. explained this as follows:

"Such actions involve a money award which may put the plaintiff in a purely financial sense in a much stronger position than he was before the wrong. Not merely can he recover the estimated sum of his past and future losses, but, in case the libel, driven under ground, emerges from its lurking place at some future date, he must be able to point to a sum awarded by a jury sufficient to convince a by-stander of the baselessness of the charge. As Windeyer J. well said in Uren v John Fairfax and Sons Pty. Limited., 117 C.L.R.115, 150:

'It seems to me that, properly speaking, a man defamed does not get compensation for his damaged reputation. He gets damages because he was injured in his reputation, that is simply because he was publicly defamed. For this reason, compensation by damages operates in two ways–as a vindication of the plaintiff to the public and as consolation to him for a wrong done. Compensation is here solatium rather than a monetary recompense for harm measurable in money.'

This is why it is not necessarily fair to compare awards of damages in this field with damages for personal injuries".

8. Obviously it is necessary to distinguish between human and corporate claimants to the extent that the former have characteristics that cannot possibly have any application to the intellectual construct that a corporation represents. The most obvious example is the capacity to feel and to suffer. There is no reason, as a matter of logic, to distinguish between human and corporate claimants save to that extent.
9. In particular, there is a need to include an element of vindication in any award of damages to a corporation that succeeds in libel proceedings. That might well be achieved by an award of special damages where significant and measurable loss has been established. As with a human being, on the other hand, there is no rational basis to preclude the element of vindication merely because there happens to be no demonstrable financial damage.
10. This seems to me to be clearly what underlay the words of Goddard L.J. in English & Scottish Co–operative Properties Mortgage Investment
    Society Ltd v Odhams Press Ltd [1940] 1KB 440, 461-2:

"There is no obligation on the plaintiffs to show that they have suffered actual damage. A plaintiff may, if he can, by way of aggravating damages, prove that he has suffered actual damage. But in every case he is perfectly entitled to say that there has been a serious libel upon him; that the law assumes he must have suffered damage; and that he is entitled to substantial damages. If the defendant, by giving evidence in mitigation of damages, or by saying that the libel is very nearly true, but not quite, can mitigate the damages, be it so. But in this case the defendants did nothing of that sort. It would have been open to the defendants in this case to attempt to justify the libel by saying that they were not bound by what the magistrate found in the police court proceedings; that this was a dishonest return; and that the plaintiffs made it dishonestly. Instead of choosing to do that, they accepted the situation that there was no moral obliquity on the plaintiff society at all.

Therefore one gets the position of a trading company having being charged, as the jury find by the answers to the questions left to them on the innuendo, with the most disgraceful conduct that any company could be charged with; and yet the jury are told that because the company have not given any evidence showing actual pecuniary loss, they can properly be compensated by a farthing. That was undoubtedly a misdirection".

11. More recently, in Steel & Morris v MacDonalds Corporation, 31 March 1999, CA (unreported), by which time judges were well used to taking into account the European Convention on Human Rights, Pill L.J. made a very similar point:

"As with an individual plaintiff, where a company brings proceedings for libel, there is no obligation on them to show that they have suffered actual damage … The effect of this is, not that there is an irrebuttable presumption of substantial damage, but that a corporate plaintiff which shows that it has a reputation within the jurisdiction, and that the defamatory publication is apt to damage its goodwill, has a complete cause of action capable of leading to an award of substantial damages. Other considerations could lead to an award of nominal damages … "

12. In a letter of 24 September the Defendant's solicitors sought to compare the law in other jurisdictions. I was invited first by Mr Robertson to consider the American case of National Refining Co v Benzo Gas Motor Fuel Co (1927) 20 Federal Reporter (2^nd series) 763, a decision of the Circuit Court of Appeals, Eighth Circuit. Even having regard to the constraints of the First Amendment, it was there recognised by Circuit Judge Booth that "… the legal principles constituting the law of libel are the same whether corporations or individuals are involved". Such distinctions as are recognised grew largely out of the difference between natural and artificial persons.
13. Reference was also made to the decision of the Federal Court of Australia in Australian Broadcasting Corporation v Comalco Ltd (1986) 68 ALR 259. There Pincus J referred to what was described as a "trend of authority in the United States" and in particular cited the Benzo Gas case, and the passage to which I have already referred, and accepted that the idea of a solatium for a corporation (as apparently adopted by the trial judge in the Comalco case) "was difficult to reconcile with the theory of corporate personality in systems based on English law". Pincus J concluded in this context that it was enough to express the view that "the learned trial judge was in error in treating this trading corporation as entitled to damages for 'reputation as such', apart from any direct or indirect financial loss". He appeared to express agreement with the words of Judge Booth in the Benzo Gas case to the effect that libels against a corporation, in order to be actionable, had to be confined to "attacks which injure the property, the credit, the business of the corporation".
14. It is nonetheless important to recognise that this is not to be equated to the proposition that a corporation can only succeed in such proceedings if able to establish actual financial loss. As it was expressed by Pincus J at p. 351:

"The absence of any evidence as to damages from a single person with capacity to do the respondent harm did not oblige the learned judge to refrain from giving damages for the mere risk of financial harm, and the contention on behalf of the appellant to the contrary must be rejected." (emphasis added)

Nevertheless the absence of any evidence of harm, for example from viewers of the relevant television programme, was a matter to which considerable weight should be attached in the assessment of damages. Notwithstanding the absence of specific loss, the court felt it right, although reducing the sum awarded at trial, to assess the appropriate sum at 100,000 dollars.

15. In the Comalco case Neaves J also accepted that a corporation would not have a "reputation as such", being a reputation other than what is encompassed by its reputation in the way of its trade or business. She also accepted, however, that "damages are at large in the sense that it is unnecessary for Comalco to prove special damage". Her conclusion was expressed at pp. 334-5:

"Turning to the question of general damages, the trial judge referred in some detail to the evidence adduced by Comalco to demonstrate the circumstances in which the publication of the programme could have resulted in injury to its business activities. But it is of considerable significance that no evidence was adduced by Comalco to show any actual loss suffered by reason of the publication. The absence of such evidence must, of necessity, make the task of assessing a proper award of damages more difficult. One is left largely to speculate from the degree of seriousness of the defamatory material published and the general nature of Comalco's business, involving as it does substantial dealings with governments and large commercial enterprises both in Australia and abroad as well as dealings with the general public, what was the likelihood of injury to Comalco resulting from the publication of the programme in the Australian Capital Territory and the States of Victoria and South Australia (excluding from consideration publication or republication elsewhere)".

16. These authorities appear thus to recognise that, even in the absence of special damage, it is appropriate to award a corporation (even a non-trading corporation in the appropriate circumstances) general damages to take account of the "likelihood of injury" or for the "mere risk of financial harm". Thus, an inference may be invited that some damage is likely to be done to the company's goodwill from the very nature of the libel and the scale of its publication. It needs hardly to be stated that this exercise is by no means to be equated with relying on a presumption of damage. Mr Price wishes to invite such an inference here.
17. There is, naturally, no question of solatium but the legitimate objective of vindication may be just as appropriate for a corporate entity as for an individual human being. These cases from other common law jurisdictions thus would appear to confirm that there is nothing about the nature of a corporate entity, or its characteristics which are different from those of a human being, which requires vindication to be eliminated along with solatium.
18. There is no doubt that Article 10 of the Convention was considered both by the Court of Appeal and their Lordships in Derbyshire County Council v. Times Newspapers Ltd, albeit for the limited purposes taken into account prior to the enactment of the Human Rights Act 1998. It was clearly critical to the decision that a local authority, as opposed to other non-trading corporations, should not be permitted to sue for libel. Yet no reference was made to any comparable considerations of public policy that required any qualification to the right of other corporations to sue for libel. For example, Butler-Sloss L.J. observed at [1992] 1 QB at 829:

"Consequently, from the authorities to which I have referred above and a number of decisions in other common law jurisdictions which we have been invited to consider, I have come to the conclusion that there is no difference in principle between a trading company and a non-trading corporation for the purposes of suing in tort, including the tort of defamation. In each case a corporation has its reputation, separate from its members, capable of being adversely affected by defamatory statements and which it is entitled to protect by recourse to an action for libel".

19. One of the authorities to which her Ladyship was referring was South Hetton Coal Limited v. North-Eastern News Association Limited [1894] 1 QB 133 and, in particular, the words of Lord Esher MR at 138-139:

"The question is really the same by whomsoever the action is brought – whether by a person, a firm, or a company. Although the law is the same, the application of it is, no doubt, different with regards to different kinds of plaintiffs

…

Then, if the case be one of libel – whether on a person, a firm, or a company – the law is that the damages are at large. It is not necessary to prove any particular damage; the jury may give such damages as they think fit, having regard to the conduct of the parties respectively, and all the circumstances of the case".

20. It is true that in Derbyshire County Council v. Times Newspapers Ltd the Court of Appeal was only required to take into account the disciplines of Article 10 because the English common law was perceived at that stage to be sufficiently unclear with regard to local authorities, as opposed to trading and other non-trading corporations, to justify resort to European jurisprudence. It is, of course, no longer necessary to establish any such pre-condition for Article 10 to become relevant. Since October 2000, it must be taken into account even when considering principles of English law which have hitherto been thought to be clear and well established.
21. Mr Price has argued that if a foreign corporation is properly before the court, in respect of a libel published about it in this jurisdiction, then there is no reason in law or logic to discriminate between corporations trading within this country and those from abroad. The same principles should apply.
22. Mr Robertson, on the other hand, argues that whatever the position may have been in English law in the nineteenth century or at any moment down to the coming into effect of the Human Rights Act 1998 in October 2000, a court must now give effect to the values and imperatives of the European Convention by creating just such a distinction. He submits that the law does now require courts to distinguish between foreign corporations and companies registered within this jurisdiction – to the extent that the former should be made to prove special damage, even though the latter need not. (I do not understand Mr Robertson to go so far as to suggest that Article 10 now requires that even United Kingdom corporations must prove special damage.)
23. As Sedley L.J. made clear in Berezovsky, at [11], it remains for national legal systems to set their own thresholds of defamation, subject always to the Convention standard of "proportionality" and the right to a legal remedy for breaches. I come back to the point which has been made by a number of judges in the past (not least by Pill L.J. in Steel & Morris) to the effect that a presumption of damage is not a presumption of substantial loss. It is not, therefore, inherent in the principle that any remedy achieved by a corporate claimant is bound to be disproportionate. I turn therefore to the equally important Article 10 test of "necessity". Is it necessary to encroach upon freedom of communication to the extent of affording a remedy to foreign corporations, which have ex hypothesi been libelled in this jurisdiction, even though they may not be able to establish actual financial loss? If this approach were not adopted, it is clear that foreign corporations would be treated differently not only from individual human claimants but also from United Kingdom corporations.
24. In my judgment, it is clear that the European Convention gives a high priority to the protection of reputation. Moreover, insofar as it is possible to avoid it, it is undesirable that the public should be misinformed – especially on matters of genuine public interest. I see nothing inherent in the values of the Convention, or of Article 10(2) in particular, that requires foreign corporations with a recognised cause of action in defamation to be deprived of a remedy by way of vindication - for no better reason than that they are unable to establish, on the balance of probabilities, that they have suffered actual financial loss.
25. I recognise, of course, that it is necessary to be wary of referring to balancing exercises in the context of freedom of speech, having regard to what was said by the European Court of Human Rights in Sunday Times v United Kingdom (1979) 2 HRR 245,281:

"The court is faced not with a choice between two conflicting principles, but with a principle of freedom of expression that is subject to a number of exceptions which must be narrowly interpreted".

Nonetheless, provided that it is understood, it has to be recognised that inevitably the exercise of reconciling the demands of competing rights involves an element of balancing. As Balcombe L.J. accepted in the Court of Appeal in Derbyshire County Council v Times Newspapers Ltd, at p. 814C:

"Article 10 requires a balancing exercise to be conducted: the balance in this case is between the right of freedom of expression and such restrictions that are necessary in a democratic society for the protection of the reputation of a non-trading corporation which is also a public authority"

In this case, by contrast, the court is concerned with balancing the right to freedom of expression and such restrictions as are necessary for protecting the reputation of foreign trading (and perhaps even of non-trading) corporations.

26. If Mr Robertson's argument were to prevail, it would mean that journalists would be free within this jurisdiction to publish whatever they liked about a foreign corporation, however serious, while the corporation would be entirely powerless to achieve a public vindication unless it so happened that it could prove financial loss directly attributable to the relevant publication. What is more, it would seem that the public might therefore continue to be misinformed by the uncorrected and ex hypothesi false allegations. Mr Price said it would be "open season".
27. Mr Robertson was somewhat scornful of what he categorised as a " floodgates argument". Nonetheless, a judge who is asked to "cull sacred jurisprudential cows" (as it was put in Berezovsky) would always be wise to have regard to the width of any principle to be overturned and conscious of any consequences beyond the particular case in question.
28. I am not persuaded that the rights of journalists to freedom of expression should be given so high a priority that foreign corporations, which are able to overcome forum conveniens or other jurisdictional hurdles, should nevertheless be deprived of remedies (that would be open to United Kingdom corporations which had been libelled) merely because they are unable to prove that actual financial loss had been caused.
29. I accordingly reject Mr Robertson's submission on the preliminary issue and will allow the second claimant to remain in the proceedings at least for the time being.