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Cite as: [1999] 2 IR 192, [1999] IEHC 164, [1999] 2 ILRM 391

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Norbrook Laboratories Limited v. Smithkline Beecham t/a Smithkline Beecham Animal Health [1999] IEHC 164; [1999] 2 IR 192; [1999] 2 ILRM 391 (18th May, 1999)

THE HIGH COURT

1994 No. 3975P

BETWEEN

NORBROOK LABORATORIES LIMITED AND NORBROOK LABORATORIES (IRELAND) LIMITED

PLAINTIFFS

AND

SMITHKLINE BEECHAM (IRELAND) LIMITED T/A SMITHKLINE BEECHAM ANIMAL HEALTH

DEFENDANT

JUDGMENT of Mr Justice Kelly delivered the 18th day of May, 1999

INTRODUCTION

1. This case raises an interesting point of practice concerning the payment of monies into Court in defamation actions.

2. The Defendant seeks "an Order giving directions as to whether a payment into Court by the Defendant pursuant to Order 22 of the Rules of the Superior Courts in respect of the Plaintiffs' allegation of slander of goods and in respect of some but not all of the Plaintiffs' allegations of defamation contained in the Statement of Claim herein would be a valid payment into Court for the purposes of the said Order".

THE PROCEEDINGS

3. This action was commenced by the issue of a Plenary Summons on the 1st of July 1994. The Statement of Claim was delivered on the same day.

4. The Statement of Claim alleges that the first named Plaintiff's principal business is the development and manufacture of veterinary products including one known as "Life Aid Extra". The second Plaintiff is what is described as an ancillary company and has as its principal business the marketing, distribution and selling of veterinary products including "Life Aid Extra".

5. The Defendant, it is alleged, is also engaged in the business of manufacture and sale of veterinary products including one known as "Lectade Plus".

6. It is alleged that in January 1994 the Defendant wrote a letter to all members of the veterinary profession within the State. The text of the letter is reproduced in full in the Statement of Claim. It clearly sought to promote the Defendant's product. In the course of so doing the following sentence occurred:-

"Indeed a recently introduced competitor is seriously hypertonic thus running the risk of compounding the dehydration problem" .

7. The Plaintiffs take exception to the letter in general but in particular to the words which I have just reproduced. They say that that reference was designed to and did in fact disparage the Plaintiffs' product "Life Aid Extra".

8. The Statement of Claim goes on to allege that the words in question were false and were published maliciously or recklessly. It is then contended that the words were calculated to denigrate the Plaintiffs' product and so to cause pecuniary damage to the Plaintiffs.

9. Paragraph 9 of the Statement of Claim reads as follows:-

"Further, the said words in their natural and ordinary meaning meant or, in the alternative, by inference and innuendo were understood to mean that the Plaintiffs, and each of them:

(a) Manufactured, distributed and sold an animal health product which was substandard.

(b) Manufactured, distributed and sold an animal health product which was likely to cause damage to calves including dehydration.

(c) Manufactured, distributed and sold a product which would compound dehydration problems in calves.

(d) Were negligent in the manner in which they researched, developed and manufactured the said product 'Life Aid Extra'.

(e) Marketed, sold and distributed an animal health product to the veterinary profession and to the farming industry in a dishonest and disingenuous fashion.

(f) Produced and put on the market an animal health product which was in fact dangerous for the health of livestock.

(g) Put the said product on the market when they knew that it was dangerous and not beneficial for the health of livestock or not caring whether it was dangerous or not beneficial to the health of livestock.

(h) Promoted and advertised the said product in a false and negligent fashion.

(i) Made claims for the properties of the said product which they knew or ought to have known, were unwarranted and unjustified.

(j) Were ruthless and unscrupulous in their promotion and sale of the said product".

10. The Statement of Claim goes on to claim damages for slander of goods and for libel.

11. A defence was delivered on the 2nd of May 1995. It consists of a series of traverses, an allegation of bona fide belief and lack of malice on the part of the writer of the letter in suit and a claim of qualified privilege. The defence specifically denies that the words complained of were understood to bear the meanings attributed to them at paragraph 9 of the Statement of Claim or any meaning defamatory of the Plaintiffs.

12. The present motion was issued on the 5th of November 1998 and came on for hearing before me on the 6th of May 1999.

THE DEFENDANT'S PROBLEM

13. The affidavit grounding the application outlines a problem which now confronts the Defendant. It has been advised by Counsel that it would be prudent to admit liability in respect of the allegation of slander of goods and in respect of certain of the allegations of defamation made by the Plaintiffs. It has furthermore been advised to make a single lodgment into Court in respect of those allegations. Counsel has advised that as far as the allegations of defamation are concerned a lodgment should only be made in relation to some meanings of the alleged defamation as set out at paragraph 9 of the Statement of Claim but that a lodgment should not be made in respect of other meanings contained in that paragraph. In other words the Defendant wishes to admit to certain of the innuendoes and to make a lodgment in respect of them but to maintain its defence in respect of others. The question which I have to decide is whether or not it is open to the Defendant so to do pursuant to the provisions of Order 22 of the Rules of the Superior Courts.

ORDER 22

14. Order 22 Rule 1(3) of the Rules of the Superior Courts provides:-

"In actions for libel or slander, or where the defence raises questions of title to land or incorporeal hereditaments, money may not be paid into Court under this rule unless liability is admitted in the defence".

15. Order 22 Rule 1 (5) provides:-

"Where money is paid into Court in satisfaction of one or more of several causes of action the notice shall specify the cause or causes of action in respect of which payment is made and the sum paid in respect of each cause of action, unless the Court otherwise orders".

16. Order 22 Rule 1(3) has for long been a source of controversy. In the Law Reform Commission Report on the Civil Law of Defamation published in 1991 it is pointed out that there does not appear to be any obvious reason why in an action for damages other than for defamation a Defendant is entitled to make a payment into Court whether or not liability is admitted but in the case of a defamation may only lodge monies with an admission of liability. The Commission commented that there did not appear to be any obvious reason for the distinction and said that it had been criticised as being unfair to Defendants. When this matter was highlighted in its Consultation Paper together with a provisional recommendation that the rules on payment into Court should be identical for defamation and other tort actions there was no dissent from that proposal. On the contrary it evoked wide support. Accordingly, the Law Reform Commission recommended that the Rules of Court be amended so that a Defendant in a defamation action could make a payment into Court without admission of liability. That recommendation has not been acted upon.

17. The Rules of Court in England and Wales on the topic were at one stage similar to the present rules in Ireland. They were changed many years ago so as to enable a lodgment to be made without an admission of liability.

18. The former English rule was apparently enacted in order to reverse a decision which allowed for a denial of liability and a payment into Court as in all other tort actions. The decision in question was that of the Court of Appeal in Hawkesley v. Bradshaw 5 QBD 302. That much is clear from the judgment of Lord Coleridge, CJ in Fleming v. Dollar 23 QBD 388. Having pointed out that the old English rule, which was Order XXII, r. 1, was directed against the decision of the Court of Appeal in Hawkesley v Bradshaw , he went on to say that that decision established the position that the Defendant should not be in a worse position in libel than in other cases. He continued:-

"But morally and practically there is a difference between libel and other cases. Thus, in an action for breach of contract, there is no reason why the defendant should not be at liberty to say, 'I never made the contract, but if I did, I say that forty s. is enough to satisfy your claim'. But to permit a Defendant, in cases where a question of character is involved to say to the plaintiff, 'Take forty s., or go on with your action', is practically a very different thing. This being felt to be so, Order XXII, r. 1, was framed, and whilst it permits payment into court with a denial of liability in other actions, it excepts libel and slander".

19. I do not find any convincing reasoning to justify a differentiation between defamation and other tort actions when it comes to the question of payment into Court. It would appear that even if such reasoning was once thought to be persuasive in England such is no longer the case for it is now and has for many years been possible to deny liability in a defamation action whilst paying money into Court. Notwithstanding all of the above however, the Rules of the Superior Courts in this jurisdiction have not been amended and so I must give effect to them.

PARTIAL JUSTIFICATION

Even in 1889 when Fleming v Dollar was decided it was clear that a plea of justification to a part of a divisible libel was permissible. Lord Coleridge CJ said at 392:-

"If a man makes several distinct charges and he can prove that some are true, but cannot prove others, it is fair enough that he should divide them; therefore, he can pay money into court in respect of the latter".

Later he said :-

"Admitting, therefore, that the defendant may sever his justification where the alleged libel is divisible, we have now to see what application should be made of that principle to this case".

The case of Fleming v. Dollar was a libel action where the Defendant by his defence admitted the publication of the words but denied the innuendoes. He pleaded that to the extent of the facts thereinafter stated the words were true in substance and in fact. The defence then set out a number of facts and finally contained an admission that the words were not wholly justified by the facts already mentioned and that the Defendant paid forty shillings into Court in satisfaction of the Plaintiffs' claim. It was held that the defence was bad. Unless amended, it would have to be struck out as being contrary to the provisions of the then Order XXII, r. 1 and also as being embarrassing, in as much as it left in doubt what the Defendant justified and what he did not. Lord Coleridge CJ went on to say:-

"Now I have stated what the pleader has here tried to do. He admits that the defendant has gone too far, but he does not mention in what respect, or to what extent he has gone too far. Indeed it is said on his behalf that it is impossible to make the pleading more explicit in this respect. In my opinion this defence is extremely embarrassing to the Plaintiff, apart from the rule; but I think also that it infringes Order XXII, r. 1. I do not say that you cannot deal severally with the charges where they are divisible. But I say that the rule was pointed at this very kind of plea. The defendant will not particularise; in effect, therefore, he does not justify".

20. This case seems to accept that a libel may be divisible not merely for the purposes of partial justification but also for the purposes of a lodgment in Court provided that the Defendant furnishes sufficient particulars of the parts of the libel in respect of which the lodgment is made.

21. The colourful case of Mackay v. Manchester Press Company 6 Times Rep. 16 is further authority for such a proposition. That was a libel action in which the Plaintiff sued in respect of matter which appeared in the Manchester Examiner and Times of the 6th of April 1889. The article read:-

"It is not generally known that Mrs Mackay, who entertained the Prince of Wales on Wednesday night, and whose parties will be conspicuous features of this season, was once what Americans call a washwoman - what we call a washerwoman. She was a poor widow with two children to support, and washed clothes for some of Mr Mackay's miners out in Nevada. One of the men said to Mr Mackay one day, knowing that he had a good heart, 'Won't you go in and see poor - 's widow? She's is in great trouble - very poor' . Mr Mackay went to the cottage, saw the widow, fell in love with her, and married her".

22. The innuendo pleaded by the Plaintiff in her statement of claim was - "meaning thereby that the plaintiff was not a lady by birth or education, nor accustomed to associate with persons of good position". In their defence, the Defendants said that the words set out in the alleged libel did not mean that the Plaintiff was not accustomed to associate with persons of good position, and followed that with a plea under Lord Campbell's Act with a payment of ten pounds into Court. When that defence was delivered the Plaintiff took out a summons to strike out the denial of the innuendo or alternatively the plea of payment into Court as being a violation of Order XXII Rule 1. The Master refused the Order sought. There was then an appeal to the Judge in chambers (A L Smith J) who made an Order that the Defendants amend by limiting the plea of payment into Court to the libel "without the innuendo denied" . This Order was appealed to the Queen's Bench Divisional Court. Baron Huddleston affirmed the Order of the Court below. He is reported as saying that he "did not quite agree that there were here substantially two libels, but there was the libel and the innuendo, a part of the latter being accepted by the defendants as the meaning of the words, and a part denied. Under those circumstances it was right that the defendants should state in their defence to which part of the statement of claim the payment into court was intended to apply, and the appeal would, therefore, be dismissed" .

23. These cases appear to establish that there is no objection in principle to a defence of partial justification. Neither was there any objection in principle to a lodgment under the relevant Rules of Court in England to part of a defamation claim provided that the Defendant made it clear as to the part to which the lodgment was being made. Furthermore, it appears from the views of Baron Huddleston that although he did not "quite agree" that there were substantially two libels in the Mackay case, nonetheless the lodgment was permitted.

24. Order 22 Rule 1 (5) in this jurisdiction provides that where money is paid into Court "in satisfaction of one or more of several causes of action" the notice is to specify the cause or causes of action in respect of which payment is made. Can it be said that when a Plaintiff alleges a series of innuendoes each of them constitutes a different cause of action allowing a lodgment to be made in respect of each one severally? The answer to that I think can be found in two English cases. The first is Grubb v. Bristol United Press Limited (1963 QB 309). In the course of his judgment Holroyd Pearce LJ said at 326:-

"In my judgment, the strong body of authority which has been cited leads to the conclusion that any innuendo ( that is, any allegation that the words were used in a defamatory sense other than their ordinary meaning) cannot rely on a mere interpretation of the words of the libel itself but must be supported by extrinsic facts or matters. Thus, there is one cause of action for the libel itself, based on whatever imputations or implications can reasonably be derived from the words themselves, and there is another different cause of action, namely, the innuendo, based not merely on the libel itself but on an extended meaning created by a conjunction of the words with something outside them. The latter cause of action cannot come into existence unless there is some extrinsic fact to create the extended meaning. This view is simple and accords with common sense".

25. The second case is Pedley v. Cambridge Newspapers Limited [1964] 1 W.L.R. 988). In the course of his judgment Lord Denning MR dealing with the aspect of the matter with which I am directly concerned here said in respect of an allegedly libellous newspaper article:-

"In view of these three innuendoes, it may be said that the Statement of Claim contained three separate causes of action, one for each innuendo: see Grubb v. British United Press (sic). The point that arises is this: the defendants wish to make a payment into court, but they wish to make one entire payment for the whole libel and not three separate payments for the three separate causes of action. If this were any ordinary kind of action - not libel or slander - the defendants could under the new practice undoubtedly have made one entire payment into court in respect of all the causes of action. That is clear from the new R.S.C. Ord 22 r. 1, which came into force at the beginning of this year. But actions for libel or slander are different. They are still governed by the old practice. The new R.S.C. Ord. 82 r.. 4, deals with libel and slander in the self same words as the old R.S.C. Ord. 22 r. 1(2). The result is that in a libel action, the notice must specify the cause of action in respect of which payment is made, and the sum paid in respect of each cause of action, unless the court otherwise orders. In other words, the defendant must make the payments separately for each cause of action, unless he can persuade the court to allow him to make one entire payment in respect of all".

26. Having considered these authorities it seems to me that the position in this jurisdiction is as follows:-

1. Lodgment in Court may not be made in defamation proceedings unless liability is admitted in the defence.

2. There is no objection in principle to a defence of partial justification in respect of an alleged defamation. Such being so there is no objection in principle either to a Defendant making a lodgment with an admission of liability in respect of a defamation in its natural and ordinary meaning and some of the innuendoes alleged or alternatively to some only of the innuendoes alleged

3. Each of the innuendoes constitutes a separate cause of action for the purposes of Order 22 Rule 1 (5).

27. The practical effect of this is that in defamation proceedings it is possible to make a lodgment with an admission of liability to part of a Plaintiff's claim i.e. the natural and ordinary meaning plus some of the innuendoes or some of the innuendoes alone provided that the Defendant makes the necessary admissions in the defence and identifies in the notice of lodgment the particular allegations in respect of which payment is made.

28. In the present case I will therefore accede to the Defendant's application (which was neither consented to nor opposed by the Plaintiffs) by directing that a payment into Court by the Defendant in respect of the Plaintiffs' allegation of slander of goods and in respect of some but not all of the Plaintiffs allegations of defamation is a valid payment and in conformity with the provisions of Order 22 of the Rules of the Superior Courts provided that the notice of such lodgment specifies the particular allegations in respect of which payment has been paid. It will also be necessary to make the relevant admissions in the Defence. Furthermore, in the light of the views of the Court of Appeal in Pedley's case I am of the opinion that there should be a single payment made in respect of those parts of the Plaintiffs claim in respect of which there will be an admission of liability rather than a separate sum in respect of each allegation.

29. I order accordingly.