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

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		HQ10D01815 Royal Courts of Justice Strand, London, WC2A 2LL
		24/05/2011

Mr Justice Tugendhat :

1. The Defendant to these two libel actions ("Mr Clarke") is the Chairman of the England and Wales Cricket Board ("ECB"). On 2^nd May 2010 he sent an e-mail to Mr Manohar, the President of the Board of Control for Cricket in India ("BCCI") with copies addressed to Mr Srinivasan, the Secretary of BCCI and to Mr Collier, Chief Executive of ECB. Mr Manohar is also a member of the Board of the International Cricket Council ("ICC") and Mr Collier is the alternate director on the Board of ICC representing the ECB.
2. The e-mail is dated 2 May 2010. It refers to an e-mail dated 31 March 2010 written by Mr Regan, the Chief Executive of the Yorkshire County Cricket Club ("Mr Regan's March e-mail"). Mr Regan's March e-mail is attached to Mr Clarke's e-mail not as a separate attachment but as one of a string of e-mails that appear (in the usual way) in reverse date order under Mr Clarke's e-mail. The e-mails in the string all have in the subject heading the words: "Meeting – Lalit Modi 31^st March – HIGHLY CONFIDENTIAL".
3. In each of the two separate libel actions Mr Modi and International Management Group (UK) Limited ("IMG") sue Mr Clarke for libel. The IMG action was started on 14 May 2010. By amendment it also includes a claim in respect of a letter sent by Mr Clarke to Mr Manohar dated 2 May 2010 ("Mr Clarke's letter"). The text of this letter is identical to the text of Mr Clarke's e-mail save that certain words are omitted. Mr Modi commenced his action on 16 June 2010. The two actions are due for trial before a judge sitting with a jury at the beginning of July for a period estimated at four weeks.

THE PARTIES

4. In addition to his role as Chairman of ECB, Mr Clarke is a director of England & Wales Cricket Board Ltd ("ECB Ltd"), a director of ICC and sits on the ICC's Executive Board, and a director of ICC Development (International) Ltd ("IDI"), the commercial arm of ICC.
5. Mr Modi describes himself in his Particulars of Claim as the Indian businessman responsible for setting up the highly successful Twenty20 cricket league, the IPL. He states that he is currently disputing the validity of his suspension as Chairman and Commissioner of the IPL and has been Chairman of the Champions' League from 2007. Since 2005 he has also been the Vice President of BCCI. In his Amended Defence Mr Clarke denies that Mr Modi was responsible for setting up the IPL, which he states was set up by BCCI. He also states that prior to his suspension Mr Modi was also an alternate director on the boards of the ICC, the governing body for world cricket and IDI.
6. Mr Modi also states that under Mr Clarke's chairmanship the ECB has unsuccessfully tried to establish an English equivalent to the IPL. Mr Clarke disputes this. Mr Modi states that the ECB has no representative on the governing council of he Champions' League. Mr Clarke agrees with that.
7. IMG is an English company. It describes itself as one of the largest and most diversified sports, media and entertainment companies in the world. Its core businesses include the commercial representation of international sports governing bodies. Its clients include BCCI.

Paragraphs 8 to 70 are intentionally omitted from this public judgment

COSTS BUDGET

8. … Since PD 51D paras 1.3 and 5.1 require the court to consider what is "proportionate to the value of the claim and the reputational issues at stake", the question of meaning will be at the forefront of the matters to be considered. The seriousness of the meaning is a major factor in assessing damages in defamation, and it is central to what is meant by the words "the reputational issues at stake".
9. Mr Price submitted that in considering the reputational issues at stake, the court must also have regard to the right to freedom of expression, as contemplated by Eady J in Peacock v MGN [2009] EWHC 769 (QB). That was not disputed by Mr Browne and Mr Sherborne.
10. The phrase "reputational issues" bears a wide meaning. What appears to be at stake in the present litigation is not the value of the claim for damages…. Nor is it just reputation in the sense of how members of society generally might react to the Claimants after reading the words complained of.
11. Mr Sherborne accepts that a corporate claimant such as IMG cannot expect the value of the claim to be high in monetary terms, and that the damages which IMG could expect to be awarded would be "relatively the low (in tens of thousands)". But he and Mr Browne both submit that the reputational issues at stake are very high. They submit that the importance of vindication cannot be underestimated, citing what I said in Clarke v Bain [2008] EWHC 2636 (QB) at para [54]:

"In addressing issues of proportionality, the following must be borne in mind. Defamation actions are not primarily about recovering money damages, but about vindication of a claimant's reputation. If a successful libel claimant recovers, say, £30,000, that figure does not represent the measure of his success. In many cases, after paying his irrecoverable costs, he will be out of pocket if he recovers that amount as damages. That does not mean the litigation is not worthwhile. A claimant wrongly accused of some serious fault, such as malpractice or dishonesty in business, may well suffer very large unquantifiable loss if he does not recover his reputation. The value of the verdict in his favour is expected to consist substantially in the future loss that it is hoped will be avoided by the vindication. Where, as here, the publication complained of is on an internet news service, a verdict in his favour may provide him with a means of persuading the publishers of an archive to edit it."

12. It seems likely that what this litigation is mainly about is obtaining some advantage, or avoiding some disadvantage, in the business issues between Mr Modi on the one hand and Mr Clarke, and perhaps BCCI, on the other hand, relating to the matters referred to in Mr Regan's March e-mail. There is a small but well known category of libel actions brought by entrepreneurs and corporations against business rivals to advance their business interests. However, no party put this explanation forward, and it is a matter of inference only.
13. The Practice Direction does not require there to be a ruling on meaning in every case as part of the review under PD 51D. That would not be possible at a hearing before a Master. And it will not be necessary in every review before a judge. But … a ruling on meaning is one of the ways in which a judge can seek to manage, and reduce the costs of, litigation, and so a judge may make a ruling in pursuit of the objective to manage the litigation as required by the Practice Direction.
14. I was not able to complete the review under PD 51D para 3.4. On 5 May the figures were not available from all the parties. By 13 May Mr Clarke had issued the application notices for a ruling on meaning. This made the updated figures, which were then available from all parties, already out of date. However, Mr Price asked the court to approve Mr Clarke's revised budgets and disapprove the revised budgets put forward by IMG and Mr Modi (whereas Mr Browne and Mr Sherborne asked that all the budgets be approved).
15. There therefore had to be argument, as envisaged by PD 51D para 5.3, and the court is required to record approval or disapproval of each side's budget after the hearing such argument is complete.
16. In the course of such argument there arose an issue of principle as to the extent of the task that the Practice Direction requires the court to engage in deciding what is "proportionate".
17. The scheme for costs management would defeat its own purpose if it led to substantial increases in costs for whatever reason, whether by extending the length of costs management conferences, or otherwise. It is to be noted that PD51 para 1.3 includes the words:

"… it should not be necessary for solicitors to incur substantial additional costs in providing costs budgets to the court".

18. And as is common ground, the scheme is not concerned with assessing costs already incurred: para 1.3 also requires the management to be based on "estimates of future base costs", and other paragraphs make clear that the budgets are to relate to "intended activities" (para 3.3(1)) and "proposed procedural step" (para 5.2)).
19. The point at which Mr Sherborne's submissions became controversial is the point at which he argues that the concept of proportionality is to be tested in a review of a costs budget by reference to the factors listed in CPR Part 44.5(3). That reads:

"Factors to be taken into account in deciding the amount of costs

44.5(1) The court is to have regard to all the circumstances in deciding whether costs were –

(a) if it is assessing costs on the standard basis –

(i) proportionately and reasonably incurred; or

(ii) were proportionate and reasonable in amount, or

(b) if it is assessing costs on the indemnity basis –

(i) unreasonably incurred; or

(ii) unreasonable in amount.

(2) In particular the court must give effect to any orders which have already been made.

(3) The court must also have regard to –

(a) the conduct of all the parties, including in particular –

(i) conduct before, as well as during, the proceedings; and

(ii) the efforts made, if any, before and during the proceedings in order to try to resolve the dispute;

(b) the amount or value of any money or property involved;

(c) the importance of the matter to all the parties;

(d) the particular complexity of the matter or the difficulty or novelty of the questions raised;

(e) the skill, effort, specialised knowledge and responsibility involved;

(f) the time spent on the case; and

(g) the place where and the circumstances in which work or any part of it was done."

20. It is the conduct of the parties that is the controversial factor in the present case. Mr Sherborne and Mr Browne submit that the court should look at a witness statement filed in this case, at correspondence exchanged between the parties without prejudice save as to costs, and at a Part 36 offer.
21. In so far as such documents may show that one party or the other has made efforts to resolve the dispute, or that the differences between the parties (whether on damages or on the terms of any apology or other document) have been narrowed, then to that extent it may be submitted that the opposing party may be conducting himself or itself in such a manner that the court can form a view that that party's budgeted costs are disproportionate.
22. Mr Sherborne and Mr Browne recognise that for the court to look at a Part 36 offer has the consequences set out in Part 36.13:

"Restriction on disclosure of a Part 36 offer

36.13(1) A Part 36 offer will be treated as 'without prejudice except as to costs'.

(2) The fact that a Part 36 offer has been made must not be communicated to the trial judge or to the judge (if any) allocated in advance to conduct the trial until the case has been decided.

(3) Paragraph (2) does not apply –

(a) where the defence of tender before claim has been raised;

(b) where the proceedings have been stayed under rule 36.11 following acceptance of a Part 36 offer; or

(c) where the offeror and the offeree agree in writing that it should not apply."

23. These consequences are particularly significant in defamation cases, because such cases are generally tried by one of a small number of judges who have experience of this specialist field. If PD 51D regularly involved judges being asked to look at Part 36 offers, then that would limit the number of judges to whom the trial could be allocated.
24. Mr Browne submits that there is nothing new in this. The note in the White Book at 36.13.1 states:

"The restriction on communication under para (2) as formulated under the forerunner of this rule was held to have no application to interlocutory proceedings in the course of which it is often both necessary and desirable that the court should know of offers to settle (Williams v Boag [1941] 1 KB 1, per Goddard LJ at p[4])".

25. That case concerned an application by a defendant to amend his defence (to withdraw an admission). The defendant had paid money into court, and the effect of the amendment was admitted to raise an insuperable obstacle to any possible success by the plaintiff. That seems to me to be a rather different situation from that of a court applying the costs management scheme.
26. It is submitted that the Costs Management Scheme cannot have been intended to override the effect of Part 36. Under Part 44.4(2)(a) it is only in relation to standard costs that the court is directed to limit the costs awarded to those that are proportionate to the matters in issue. If indemnity costs are awarded, as they may be on the application of Part 36, then Part 44.4(3) applies and that makes no reference to proportionality.
27. However, PD 51D para 5.6 provides:

"The judge conducting a detailed or summary assessment will have regard to the budget estimates of the receiving party and to any view previously expressed by the court pursuant to paragraph 5.3. Unless there has been a significant change in circumstances the judge will approve as reasonable and proportionate any costs claimed which fall within the last previously approved budget. Save in exceptional circumstances the judge will not approve as reasonable and proportionate any costs claimed which do not fall within the last previously approved budget."

28. So, it is argued, if a claimant wins at trial and obtains an order for indemnity costs the costs budget will be of no consequence. So the court needs to make an assessment at the stage of a review under PD 51D para 5.3 of the likelihood of an award of indemnity costs.
29. Mr Sherborne submitted that the value of the claim and the reputational issues can change during the course of the proceedings for different reasons. For example in Hays PLC v Hartley [2010] EWHC 1068 (QB) the claimant obtained vindication from defendants, after which I held that the claim against Mr Hartley should be struck out, although it had not been an abuse of process up to the point of settlement with the other defendants.
30. Mr Price submitted that the court should not look at such documents. He argues that unless the parties have reached agreement in the course of their negotiations, then the issues are those which appear on the pleadings and the other open documents before the court. What is not agreed is logically irrelevant.
31. If the court is to consider evidence and documents, in particular if it is to consider the course of negotiations between the parties, in order to arrive at a judgment as to the value of the claim and the reputational issues at stake, then, as this case shows, the exercise of reviewing any budget which is not agreed will be time consuming and costly.
32. In my judgment this was not what is contemplated by the scheme. It is not for the court reviewing budgets which are not agreed to attempt to form a view as to whether one side or the other is being unreasonable in pursuing the claim in spite of offers of settlement by the other side. That is best left to the assessment of costs.
33. It does not seem to me that I have to decide at this stage what is the relationship between PD 51D para 5.6 and CPR 44.4(3). But if it is material, the view that I have reached is that there is no conflict between them. Under para 5.6 it is envisaged that the costs judge "will not approve as reasonable and proportionate any costs claimed which do not fall within the last previously approved budget". But if indemnity costs are awarded, an assessment under CPR 44.4(3) does not permit the costs judge to consider whether the costs are proportionate. So the fact that the costs may exceed the last previously approved budget would seem to me to be irrelevant.
34. …