Ipsofactoj.com: International Cases [2003] Part 6 Case 5 [CAEW]


COURT OF APPEAL, ENGLAND & WALES

Coram

MGN Ltd

- vs -

Kiam II

LORD JUSTICE SIMON BROWN

LORD JUSTICE WALLER

LORD JUSTICE SEDLEY

28 JANUARY 2002


Judgment

Lord Justice Simon Brown

INTRODUCTION

  1. On 10 March 2000, at the end of a five day libel trial before Moore-Bick J and a jury, judgment was entered for the claimant, Mr. Victor Kiam II, for £105,000 damages. Although Mr. Kiam died on 27 May 2001 it is not suggested that his death affects the outcome of this appeal and I shall call him simply the respondent. The jury made plain that their award was for aggravated compensatory damages. MGN Ltd (the appellants), the publishers of the libel, now appeal against the quantum of the award by leave of this court granted on 11 October 2000. Although other grounds were earlier canvassed, the sole question remaining for decision is whether the award of £105,000 was excessive and, if so, what is the proper sum to substitute for it.

    THE LIBEL

  2. The libel sued upon was the lead article published prominently in colour in the “City Slickers” column of the Mirror on 6 January 1999. The author was Mr. Hipwell. Under the banner headline “MY COMPANY HAS BOUGHT IT” and alongside a large photograph of the respondent, the text read:

    Victor’s profits go up in smoke

    He liked the Remington shaver so much that he bought the company.

    But unfortunately for 72-year-old American entrepreneur Victor Kiam, he also liked the cigarette lighter company so much, he bought that too.

    And according to sources at the Crawley-based company, he could put it into receivership “any time now”.

    Kiam, who runs the business from his sun-drenched Florida home as executive chairman, is so fed up with the firm into which he has ploughed more than £10 million, that he is thinking of closing it down.

    Debt

    After a succession of dismal trading results, bad debt provisions, escalating losses and a share price that has fallen off a cliff during the past year, Kiam has finally had enough.

    Company sources confirm he could easily put the shutters up on Ronson within the next few weeks.

    The latest problem centres on the departure of finance director Laurie Todd, who bailed out just before Christmas.

    Todd appeared to leave the company on amicable terms to join a bigger firm Staveley Industries, but friends say he had faced some major problems with Ronson’s £8 million refinancing programme, put together by Kiam.

    Shares in the cigarette lighter maker first arrived on the stock market in the mid 1980s at 60p. But they were suspended last June at 4.5p and resumed trading in September at just 1.5p.

    Yesterday Kiam, who also invented the Cross Your Heart bra in the 1950s, must have watched in horror as he saw another 10 per cent wiped off the value of his substantial shareholding.

    Critics of the company say that Kiam has failed to unlock the value of the Ronson brand.

    One advertising industry expert told Slicker: “Ronson lighters and pens are very upmarket and have a whiff of James Bond about them, but Kiam hasn’t managed to capitalise on this at all. This is puzzling as he’s a charismatic guy who clearly understands brand marketing".

    Slicker says: Never mind, Vic. Your place in history is secure thanks to that great “I bought the company” catchphrase. Perhaps now is the time to hang up your boots and concentrate on getting a tan".

    A further caption next to the photograph read:

    BLAZING AWAY: Victor Kiam has finally lost patience with the cigarette maker Ronson, into which he has poured £10 million.

    THE DEFAMATORY MEANINGS

  3. The respondent relied on both the natural and ordinary meaning of the words and also an innuendo. The article suggested, he contended,

    • first, that his entrepreneurial ability, on which he had based his business success and reputation in the past, had wholly deserted him so that he was now fit only for retirement;

    • secondly, that he was prepared to give up on Ronson and close it down with obviously devastating consequences for staff who would lose their jobs, shareholders their money and customers their contracts; and

    • thirdly, that Ronson’s imminent financial collapse was attributable to his own professional failures,

      • first in having put together a refinancing programme so flawed that it caused Ronson’s finance director (Mr. Todd) to resign, and

      • secondly in failing to exploit the value of the Ronson brand name, the so-called “whiff of James Bond”, thereby indicating that he had lost his marketing and entrepreneurial ability.

  4. As to the innuendo, a number of those reading the article would have read too the respondent’s interview in the July/August 1998 edition of “Brands”, a magazine for retailers, expressing his confidence in Ronson’s survival and making a 5 year commitment to the company, and/or his circular letter dated 18 September 1998 to Ronson’s customers reassuring them about the company’s financial stability and future. The article would have suggested by way of innuendo that the respondent had lied or misled the public about his commitment to Ronson and the company’s financial viability.

  5. Given the narrow basis of this appeal, the jury must be assumed to have accepted the respondent’s contention that the article bore all those meanings. Similarly they must be assumed to have accepted the respondent’s case on all the many aggravating features of the case upon which the respondent relied and which the judge left for their consideration. These I must now summarise.

    THE AGGRAVATING FACTS

  6. The article was untrue in every material respect and had been published maliciously. The respondent had become Executive Chairman and Chief Marketing Officer of Ronson in July 1998, a month after the London Stock Exchange suspended its share listing. He had invested not £10 million but £1 million. He was intent on saving the company and had committed himself wholeheartedly to doing so, remaining in England and away from his family for the purpose. There was no question of him having “had enough” and “thinking of closing it down”. The refinancing programme had been a complete success and, when the article was published, the company’s losses were no longer “escalating” but rather were diminishing. Mr. Todd left Ronson solely because he had been head hunted by a bigger company. The story could easily have been checked with Ronson, Mr. Todd, or the respondent himself. None of them, however, had been contacted. Although, moreover, the reader was led to believe that the story was based on numerous sources, disclosure of Mr. Hipwell’s notebook indicated a single unidentified source who in any event had suggested that Mr. Hipwell speak to Mr. Todd (which, of course, he did not do). Discovery further revealed that Mr. Hipwell had made use of a Sunday Telegraph article of 1 March 1998 (before the respondent joined Ronson) which itself had referred to “bad debt provisions, escalating losses, a share price that has fallen off a cliff over the last two years”. Mr. Hipwell could therefore be seen to have applied to Ronson’s position in January 1999 the Sunday Telegraph description of its position some ten months earlier before the refinancing of the company under Mr. Kiam’s leadership. Other earlier statements had been similarly distorted. In short, Mr. Hipwell’s complete indifference to the truth was amply demonstrated. By the time of trial he had been dismissed for (unrelated) gross misconduct. He was not in those circumstances called as a witness to explain his conduct. Neither did Mr. Piers Morgan, the editor, give evidence.

  7. When invited by the respondents’ solicitors on 8 January 1999 to publish an article correcting the errors and apologising to Mr. Kiam, the editor denied that the article was materially inaccurate save only as to the extent of the respondent’s investment in the company. That alone he offered to correct and he refused to apologise. Even after June 1999 when the appellants served their defence pleading neither justification nor fair comment, no apology was made. The absence of apology was the more serious since the respondent had told his acquaintances that he would shortly be getting one. He had, indeed, attached his solicitor’s letter of 8 January to a circular letter sent on 12 January 1999 to his many friends and customers with a view to reassuring them as to the true position.

  8. Shortly before trial the appellants published in the City Slickers column three further short articles about the respondent and Ronson respectively on 7 December 1999, 13 January 2000, and 14 January 2000. Put briefly, these suggested that the respondent was deceiving the stock market by concealing plans to merge Ronson with an Internet company; they said that Ronson’s shares were “ready to roll big time”. The respondent was naturally concerned, fearing that readers would be drawn into a false market in the shares and then blame him for their predicament. Again, no one checked the truth of those articles with the respondent or anyone else at Ronson and again they were accepted at trial to be factually incorrect.

  9. Another major aggravating feature of the case was the appellants’ conduct at trial and not least suggestions made in counsel’s closing speech to the jury that “Mr Kiam is simply impossible to satisfy”, that “no amount of money will satisfy Mr. Kiam”, and that in both this case and an earlier case against the Sunday Times in 1994 (Kiam v Neil (No. 2) to which I shall return) the respondent had wanted “his day in court” and nothing the appellants did could have prevented it. None of these allegations had been put to the respondent in cross-examination; rather his evidence that he was not a quitter had been turned against him and used as a stick for criticism. Furthermore, although the appellants’ only witness, their Legal Manager, had accepted in cross-examination that the article was obviously damaging to the respondent, counsel continued to submit to the jury that it was not defamatory at all, thereby adding to the imputation that the respondent had acted wholly unreasonably in ever bringing the claim.

  10. The article had been published to some 6.37 million readers. No apology for it had ever been given. True, by open letter dated 1 March 1999 (five days before the trial began) the appellants had offered £50,000, costs and an apology. That, however, was regarded by the respondent as too little, too late, and in the event no apology was published. The appellants’ case to the end was that no damages should be payable since the article, though untrue, was simply not defamatory. The respondent gave evidence of distress, upset, annoyance and frustration. All this was undisputed; so too was strong supporting evidence from his wife, his son, and fellow Ronson directors.

  11. All these matters notwithstanding, it is the appellants’ case that £105,000 was quite simply excessive so that this court should intervene and substitute for it some lesser award. Before, however, turning to consider the court’s powers and the authorities governing the proper approach to its exercise, there are other important features of this case to which I must refer.

    OTHER FEATURES OF THE CASE

  12. First is this. The respondent had claimed not only aggravated damages but also exemplary damages. A ruling as to that was not made until the final morning of the trial, just before counsel’s speeches. The judge ruled that whilst there was evidence which enabled the jury to find malice, there was insufficient evidence from which to infer that the appellants had “carried out a calculation” that publication of this article “would give it a commercial advantage which would outweigh any liability it might incur to Mr. Kiam”. The exemplary damages claim was accordingly withdrawn. The issue of malice nevertheless remained before the jury for two reasons:

    • first because in any event it went to the question of aggravated damages;

    • secondly because, lest the jury were to accept the appellants’ case that the article was simply not defamatory of the respondent, there remained an alternative claim for damages for malicious falsehood.

    In the event, having found for the respondent on his claim for libel, no verdict was called for regarding malicious falsehood.

  13. The next point to note is the care with which the judge warned the jury about matters which might wrongly have inflated their award. Having given his ruling on exemplary damages, he instructed the jury (before counsel’s speeches) to put that aspect of the case completely out of their minds and said there would be “no question of awarding exemplary or punitive damages”. Twice in his summing up he reminded the jury of this direction:

    • first, when explaining why they might award aggravated damages: “not, I emphasise, to punish the defendants, but in order to award him fair and reasonable compensation for the injury which he has received, aggravated by the defendants’ conduct”; 

    • secondly, just before the jury retired, when he expressly reiterated that they must put exemplary damages “entirely out of your mind”.

  14. Similarly he warned the jury to ignore completely the effect of the articles on Ronson itself and to bear in mind that the three later articles went only to aggravation; the respondent was not claiming further damage to his reputation arising from them.

  15. The final matter of importance to mention is the guidance given by the judge as to the appropriate level of damages in the case. Having pointed out that no personal injury claim was likely to attract a general damage award of more than £150,000, and having instanced awards of some £100,000 for the loss of both arms and some £45,000 for the loss of a hand, the judge referred briefly to the Elton John case (John v MGN [1997] QB 586) and to the respondent’s earlier action (Kiam v Neil (No. 2) [1996] EMLR 493) and continued:

    Now although, as I seek to emphasise, the decision on damages is yours and yours alone, much may depend on the meanings which you find this article bore. But I would suggest that, if you find that the article bears the more serious defamatory meanings of the kind suggested by Mr. Kiam, you may think that an award of much less than £40,000 would not properly reflect the seriousness of the slur on him, and the subsequent aggravation of the injury to his feelings. You might also think that an award of more than £75-80,000 might be considered excessive, given the scale of damages generally. I have to stress that the decision is yours and yours alone.

    THE COURT'S POWERS

  16. Section 8 of the Courts and Legal Services Act 1990 provides:

    (1)

    In this section ‘case’ means any case where the Court of Appeal has power to order a new trial on the ground that damages awarded by a jury are excessive or inadequate.

    (2)

    Rules of court may provide for the Court of Appeal, in such classes of case as may be specified in the rules, to have power, in place of ordering a new trial, to substitute for the sum awarded by the jury such sum as appears to the court to be proper.

  17. The first relevant rule of court was Order 59 rule 11(4) which applied to appeals set down after 31 January 1991 and provided:

    In any case where the Court of Appeal has power to order a new trial on the ground that damages awarded by a jury are excessive or inadequate, the court may, instead of ordering a new trial, substitute for the sum awarded by the jury such sum as appears to the court to be proper. ...

  18. The rule presently in force is CPR 52.10(3):

    In an appeal from a claim tried with a jury the Court of Appeal may, instead of ordering a new trial 

    .....

    (b)

    vary an award of damages made by the jury.

    THE AUTHORITIES

  19. The early authorities, in particular Sutcliffe v Pressdram Ltd [1991] 1 QB 153, Rantzen v Mirror Group Newspapers Ltd [1994] QB 671 and John v MGN Ltd [1997] QB 586, have been rehearsed many times in subsequent decisions and I shall content myself, therefore, with a relatively brief summary of their effect.

  20. In Sutcliffe a £600,000 compensatory award was set aside by the Court of Appeal on the grounds that it must have been made on the wrong basis, almost certainly so as to punish Private Eye. It was the Court’s inability to reassess the damages itself that led to the enactment of section 8 of the 1990 Act.

  21. Shortly after Sutcliffe the barrier against intervention was lowered. This was not, however, the consequence of section 8 - how could it be?: the power to reassess only arises where the Court of Appeal already ‘has power to order a new trial’. Rather it was the effect of Article 10 of ECHR and Lord Goff’s speech in Attorney-General v Guardian Newspapers Ltd (2) [1990] AC 109, 283-284, which together caused Neill LJ, giving the judgment of the court in Rantzen, to say at p.692g:

    .... it seems to us that the grant of an almost limitless discretion to a jury fails to provide a satisfactory measurement for deciding what is ‘necessary in a democratic society’ or ‘justified by a pressing social need.’ We consider therefore that the common law properly understood requires the courts to subject large awards of damages to a more searching scrutiny than has been customary in the past. It follows that what has been regarded as the barrier against intervention should be lowered. The question becomes: ‘could a reasonable jury have thought that this award was necessary to compensate the plaintiff and to re-establish his reputation?

  22. At the same time as the Court of Appeal was lowering the threshold of intervention it was also considering how best to assist the jury in its task of assessing damages. Lord Donaldson MR. in Sutcliffe suggested at p.179b-c, that a jury could be guided:

    .... in terms which will assist them to appreciate the real value of large sums .... the Judge could, I think, properly invite them to consider what the result would be in terms of weekly, monthly or annual income if the money were invested in a building society deposit account without touching the capital sum awarded or, if they have in mind smaller sums, to consider what they could buy with it.

  23. This was carried further in Rantzen when the court suggested at p.694b-c:

    .... that over a period of time the awards made by the Court of Appeal [under section 8] would provide a corpus to which reference could be made in subsequent cases. Any risk of over citation would have to be controlled by the trial judge, but to prevent reference to such awards would seem to us to conflict with the principle that restrictions on freedom of expression should be ‘prescribed by law.’ The decisions of the Court of Appeal could be relied upon as establishing the prescribed norm.

  24. The court, however, continued to rule out any reference to awards in personal injury cases and concluded [at p.695h-696b]:

    It is to be hoped that in the course of time a series of decisions of the Court of Appeal will establish some standards as to what are, in the terms of section 8 of the Act of 1990, ‘proper’ awards. In the meantime the jury should be invited to consider the purchasing power of any award which they may make. In addition they should be asked to ensure that any award they make is proportionate to the damage which the plaintiff has suffered and is a sum which it is necessary to award him to provide adequate compensation and to re-establish his reputation.

  25. The matter of guidance was taken still further in John. Sir Thomas Bingham MR., giving the judgment of the court (consisting also of Neill and Hirst LJJ), said at p.612c-d:

    We agree with the ruling in the Rantzen case that reference may be made to awards approved or made by the Court of Appeal. [Rantzen had in fact referred only to ‘awards made by the Court of Appeal’.] As and when a framework of awards is established this will provide a valuable pointer to the appropriate level of award in the particular case. But it is plain that such a framework will not be established quickly: it is now 5 years since section 8(2) of the Act of 1990 and Ord. 59, r.11(4) came into force, and there is no case other than Gorman, Rantzen and Smith in which the Court has itself fixed the appropriate level of award. It is true that awards in this category are subject to the same objection that time can be spent by the parties on pointing to similarities and differences. But, if used with discretion, awards which have been subjected to scrutiny in the Court of Appeal should be able to provide some guidance to a jury called upon to fix an award in a later case.

  26. Additionally, and importantly, the court in John also concluded that the time had come when judges and counsel should be free to draw the jury’s attention to the conventional compensatory scales of award in personal injury cases, the ceiling for such awards being at that date some £125,000. At p.614f-g, the court said that: “Juries may properly be asked to consider whether the injury to his reputation of which the plaintiff complains could fairly justify any greater compensation”, and expressed the view that it is “offensive to public opinion, and rightly so, that a defamation plaintiff should recover damages for injury to reputation greater, perhaps by a significant factor, than if that same plaintiff had been rendered a helpless cripple or an insensate vegetable.”

  27. As to ‘the process of mentioning figures’, the Court said at p.615h-616d:

    We can for our part see no reason why the parties’ respective counsel in a libel action should not indicate to the jury the level of award which they respectively contend to be appropriate, nor why the judge in directing the jury should not give a similar indication. The plaintiff will not wish the jury to think that his main object is to make money rather than clear his name. The defendant will not wish to add insult to injury by underrating the seriousness of the libel. So we think the figures suggested by responsible counsel are likely to reflect the upper and lower bounds of a realistic bracket. The jury must of course make up their own mind and must be directed to do so. They will not be bound by the submission of counsel or the indication of the judge. If the jury make an award outside the upper or lower bounds of any bracket indicated and such award is the subject of appeal, real weight must be given to the possibility that their judgment is to be preferred to that of the judge. The modest but important changes of practice described above would not in our view undermine the enduring constitutional position of the libel jury. Historically, the significance of the libel jury has lain not in their role of assessing damages, but in their role of deciding whether the publication complained of is a libel or no. The changes which we favour will, in our opinion, buttress the constitutional role of the libel jury by rendering their proceedings more rational and so more acceptable to public opinion.

  28. The final authority requiring detailed consideration is Kiam v Neil (No.2) [1996] EMLR 493, important both for its general statements on the correct approach to quantum appeals in libel cases and also as an obviously relevant comparable for the purposes of the present case. At this stage, however, I am concerned only with the general approach.

  29. Having quoted the court’s judgment in John (part of the passage set out in paragraph 27 above), Beldam LJ at pp 507-508 said this:

    It is, I think, necessary to bear in mind that Parliament has repeatedly declined to attenuate the right of a plaintiff who claims trial by jury in a libel action .... Whilst it is tempting to think that the greater the guidance given by judges, the more rational the jury’s conclusion is likely to be, it seems to me that if the failure of the jury to keep its award within bounds indicated by a judge gives rise merely to the possibility that their judgment is to be preferred to that of the judge, the court may appear to preserve only the semblance of a right which Parliament has repeatedly affirmed. At present it remains the plaintiff’s constitutional right .... I would therefore approach the question suggested by Neill LJ [in Rantzen] : ‘could a reasonable jury have thought that this award was necessary to compensate the plaintiff and to re-establish his reputation?’ by allowing an appropriate degree of flexibility to a jury of 12 to tailor its award to the injury done to Mr. Kiam’s reputation. Unless The Times establishes that the award so judged is out of proportion, this court would not be entitled to substitute its own assessment ....

  30. Evans LJ, in a passage much relied upon by Mr. Browne QC for the respondent, said at p.513:

    If this [The Sunday Times’ submission that the Court of Appeal now has to form its own estimate of whether the damages awarded were excessive] means that the court has to assess what it regards as a ‘reasonable’ figure without regard to the jury’s award then I cannot accept this submission. If correct, it would mean that the measure of compensation and liability would depend upon the views of three (or five) judges rather than of the jury. This would be to usurp the traditional and statutory function of the jury, and whether it would lead to greater certainty in predicting the amount of the eventual award (a factor which has been regarded as important under the European Convention) must be a matter for debate. If on the other hand the appellants’ submission is that the court should consider whether the figure is one which ‘a reasonable jury’ (see the conclusion in Rantzen quoted above) could properly award then it seems to me that this is entirely in line not only with Rantzen but also with the common law authorities to which Lord Donaldson MR. referred in Sutcliffe ... The significance of the judgments in Rantzen and John, in my view, is that the legal requirements of a valid award have been re-defined in the light of recent developments in the law, including recognition as part of the common law of the principles expressed in the European Convention. In considering whether the jury’s figure is excessive, or inadequate, therefore, the court has to define the legal limits and decide whether the award is outside them, or not. The limits include the court’s own assessment of what a reasonable jury could properly decide, because that is the only way in which the court can combine the requirements of the law with the jury’s freedom of decision. But this does not mean, in my judgment, that within those limits the court is permitted to give effect to its own view as to the reasonableness or otherwise of the jury’s award.

  31. Pill LJ at p.516-517 said this:

    .... I agree that awards which in the words of the Master of the Rolls in John are ‘in sums wildly disproportionate to any damage conceivably suffered by the plaintiff’ constitute a mischief and there is need to seek means, as the Courts have been doing, by which to eliminate that mischief and also to ensure that the Court of Appeal can be, as Lord Lester described it, a safety net. The danger I foresee in inviting juries to make comparisons with other cases, comparisons which would inevitably become elaborate as each party emphasises particular but different features of those other cases, is that the jury will be distracted from their central duty to consider the circumstances of the case in hand and make an award based on their conscientious assessment of what is involved. I agree with the Master of the Rolls’ call for discretion in citing awards. In this context, a ‘battle of comparables’ in front of a jury may produce its own injustice, as well as being time consuming and costly. In Tolstoy v United Kingdom (1995) 20 EHRR 442, the European Court of Human Rights acknowledged that ‘the absence of specific guidelines in the legal rules covering the assessment of damages must be seen as an inherent feature of the law of damages in this area’. Inherent in jury trial is a degree of respect for the jury’s sense of values.

  32. There is, to my mind, a certain tension apparent within these various citations. On the one hand the court manifests its concern that libel damages are unhealthily high: “A road to untaxed riches ....[ the ] legal process fail[ing] to command the respect of lawyer and layman alike”, as the Master of the Rolls put it in John at p 611, and in particular disproportionately high in comparison to personal injury awards. This, of course, was why John introduced the right to refer to personal injury damages and suggested that juries be guided by reference to brackets, the proposed ceiling for any libel award being the maximum recoverable for the gravest personal injuries. On the other hand the court continues to place emphasis on the importance of the jury’s role in assessing damages.

  33. The statement in John at p 616c that “ historically, the significance of the libel jury has lain not in their role of assessing damages but in their role in deciding whether the publication complained of is a libel or no” is, perhaps, difficult to reconcile with the judgments in Kiam v Neil; and still more so with Nourse LJ’s judgment in Sutcliffe at p 182:

    When one turns to the matter of damages the primacy of the jury is seen to be even more firmly established. I do not know that it was ever doubted that the amount of the damages should be left to the jury. The rule received the unqualified support of Scrutton LJ in Youssoupoff v MGM Pictures (1934) 50 TLR 581, 584:

    The constitution has thought, and I think there is great advantage in it, that the damages to be paid by a person who says false things about his neighbour are best decided by a jury representing the public.

  34. True it is that in John the court suggested that the changes they were introducing would “buttress the constitutional role of the libel jury by rendering their proceedings more rational and so more acceptable to public opinion”. But this, of course, will be so only if the jury substantially accepts the bracket which the judge suggests to them and does not take too literally the comment (as here) that “the decision is yours and yours alone” – in line with the court’s judgment in John (see paragraph 27 above) that juries must be directed “to make up their own mind” as to the appropriate award.

    COMPARABLES

  35. It is time now to summarise those few defamation cases in which the Court of Appeal has itself had to consider juries’ awards of damages in the exercise of its section 8 power. There are six in all. In five the damages were reassessed. In the sixth, Kiam v Neil, the court refused to interfere with the award. I shall mention a seventh case also, one of malicious falsehood.

    Chronologically they are as follows.

    1. Gorman v Mudd (15 October 1992, unreported)

  36. The plaintiff, the Conservative MP for Billericay, complained of a “mock press release” written and circulated by the defendant, Mudd, a prominent member of the local community and chairman of the Billericay Conservative Businessman’s Association, to ninety-one people most of whom knew something of the underlying quarrel between the parties. The publication suggested that the plaintiff had sought to destroy the Association and to humiliate the defendant out of personal spite. The tone of the release was unpleasant ( suggesting for example, that the plaintiff’s female charms were inadequate despite a hormone implant). Although a plea of qualified privilege was upheld, the jury found express malice. There was no apology. Rather Mrs. Gorman had been subjected to unpleasant cross-examination which had increased her sense of humiliation. The Court of Appeal reduced the jury’s award of £150,000 to £50,000 (worth £63,000 in January 2001).

    2. Rantzen v Mirror Group Newspapers [1994] QB 670

  37. The action concerned four articles in the same issue of The People including one on the front page and a leading article, all covering the same story about Esther Rantzen’s organisation, Childline. The articles suggested that the plaintiff had protected a teacher who had revealed to Childline abuses of children occurring at a school where he taught, by keeping secret that he himself was a pervert, unfit to have any child in his care. The suggestion was that Miss Rantzen had protected the teacher as a reward for his help. In so doing she had abandoned her own moral standards; her public statements of concern for abused children were insincere and hypocritical. Finally it was suggested that she had lied when informing the newspaper that publication of the story would hamper the police investigation when the truth was that she wished to avoid exposure of her own misconduct and omissions. The defendant pleaded justification and lost. The allegations were very grave, going to the heart of the core attributes of Miss Rantzen’s character. The Court of Appeal reduced the jury’s award of £250,000 to £110,000 (£133,000 today).

    3. Houston v Smith (16 December 1993 unreported)

  38. The parties were doctors (respectively male and female), operating separate practices within the same building. The defendant falsely accused the plaintiff of harassing her and her staff, groping them and fondling them sexually. The allegation was made in the hearing of several of the plaintiff’s patients in the doctors’ joint waiting room. The defendant denied having suggested impropriety with her staff but sought to justify her allegation of personal harassment, alleging that the plaintiff had brushed up against her deliberately. The allegation of sexual harassment was plainly a matter of the utmost gravity for a general practitioner. There were furthermore a number of aggravating features of the case and there had been no apology. The publication, however, had been only to a very small number of people. The Court of Appeal reduced the jury’s award of £150,000 to £50,000 (£62,000 today).

    4. John v MGN [1997] QB 586

  39. The action concerned an article in the Sunday Mirror which covered two inside pages and was introduced on the front page by a headline “Elton’s diet of death” and a photograph of the plaintiff, stating that he had suffered from bulimia and was now hooked on a bizarre new diet that could kill him. It described his behaviour at a party in California where he was seen to put food in his mouth, chew it and then spit it out. The plaintiff had never been at the party and was “incensed” by the article because he had had eating and drug and alcohol addiction problems but had cured himself, publicising the facts on television. The newspaper had offered an apology but, its terms not being agreed, none was published. The claim was defended on the grounds that the words were not defamatory. The Master of the Rolls observed that “though the article was false, offensive and distressing, it did not attack [the plaintiff’s] personal integrity or damage his reputation as an artist”.

    The Court of Appeal reduced the jury’s award of compensatory damages from £75,000 to £25,000 (£28,000 today) and the award of exemplary damages from £275,000 to £50,000.

    5. Kiam v Neil (No 2 )[1996] EMLR 493

  40. The libel was published in the Sunday Times business section to a readership of some 3 million. It consists of the following short paragraph in a long article criticising the National Westminster Bank:

    Another high profile NatWest customer is Victor Kiam, owner of the Remington razor company. He is being sued by NatWest after defaulting on a £13.5 million loan he used to buy New England Patriots, the American football team. Kiam has also filed for bankruptcy protection.

  41. The article also carried the innuendo to members of the public who had bought Remington shavers relying on a money refund promise if they were not satisfied, that Mr. Kiam had induced them to buy when he was in no position to fulfil the promise.

  42. Mr. Kiam was horrified to read the article. He protested vigorously and demanded an apology. Three weeks later the newspaper admitted that the report was untrue and published an apology in agreed terms. The jury awarded £45,000 compensatory damages (£51,000 today). In dismissing the defendant’s appeal the court characterised the libel as follows:

    Beldam LJ at p 498:

    It would be hard to imagine a more damaging allegation against a successful entrepreneur.

    Beldam LJ at p 510:

    [The libel] struck at the core of his life’s achievement and personality and .... had had a prolonged and significant effect on him personally. [It was] a widespread, grave and irresponsible assertion of insolvency against a prominent entrepreneur.

    Evans LJ at p 515:

    To describe the damaging and untrue assertion which the article made about the plaintiff’s management of his financial affairs, with or without the innuendo, he also alleged, as a “not very serious” libel upon a successful international businessman and entrepeneur, as the plaintiff is, seems to me to be wholly unreal .... Here, the libel was potentially as serious for the plaintiff as any which did not impute dishonesty; The circulation of the newspaper was enormous, and the libel appeared in the section which sets out to be read widely in business and financial circles ....

    6. Jones v Pollard [1997] EMLR 233

  43. The plaintiff complained of two articles in consecutive issues of The Sunday Mirror which accused him of pimping for the KGB by organising sex with Russian prostitutes for British businessmen visiting Russia who could then be blackmailed. The defendants pleaded justification. The plaintiff conceded in evidence that he was a persistent womaniser, but denied procuring prostitutes, though a tape of a conversation with a journalist in which the plaintiff was apparently arranging an assignment between the journalist and a prostitute was introduced in evidence (the plaintiff’s explanation being that he was either drunk or fantasising). The defendants called no evidence and the judge withdrew from the jury such parts of the plea of justification as suggested contact with the KGB. The Court of Appeal reduced the jury’s award of £100,000 to £40,000 (£44,000 today). In doing so they held that the jury must have concluded that the charge of procuring prostitutes was made out in part and that there were other matters which went to reduce the damages. Hirst LJ, giving the only reasoned judgment, said at p 259:

    I ask the same question as that asked by Neill LJ in Rantzen, namely could a reasonable jury have thought that this award was necessary to compensate the plaintiff and to re-establish his reputation? In my judgment, grave though the libel is, and grave though the aggravation has been, the answer to that question is decisively no. First, I can see no justification for an award which is comparable with Rantzen, approximately double the awards either approved or substituted by the Court of Appeal in Houston and [Kiam] v Neill, and no less than four times the award substituted in John. Secondly, it is in my judgment out of all proportion to personal injury awards of a comparable amount, which embrace such very serious injuries as paraplegia and total blindness; these personal injuries awards .... do not of course establish a scale in the libel field, but I feel sure that, had that comparison been available to the jury in the present case (as it would be today in the post-John era), they would not have awarded anything like £100,000, even if the plaintiff had enjoyed an unblemished reputation. Thirdly, when the material in reduction of damages is also taken into account (as of course it must be) the award seems to me still more gravely disproportionate to the injury caused.

    7. Khodaparast v Shad [2000] EMLR 265

  44. The claimant in this malicious falsehood case was an Iranian woman who worked as a teacher at an Iranian religious school in London. The defendant was her former lover. He created a set of mock-up documents using photographs of the claimant superimposed on pornographic pictures from a magazine and inserting words which suggested that the claimant was advertising sexual services. These were sent to the daughter of a newspaper editor. The newspaper did not publish but the documents were circulated widely in the Iranian community in London. The judge awarded £20,000 as general damages for malicious falsehood but said that, had the claim been brought in defamation, he would have awarded £50,000. The Court of Appeal described this as an “eminently reasonable” figure.

    INCREASE IN PERSONAL INJURY DAMAGES

  45. The one other important consideration to be noted before finally coming to the central question raised by this appeal is that in 2000, by the Court of Appeal’s decision in Heil v Rankin [2000] 2WLR 1173, the maximum general damage award available in personal injury cases has been increased from £150,000 to £200,000 – see the JSB Guidelines, 5th Edition.

    THE RIVAL ARGUMENTS

  46. Miss Victoria Sharp QC (junior counsel rather than leading counsel instructed below) submits that the award here was plainly excessive, some 30% higher than the upper limit of the judge’s bracket which itself she contends was too high and the whole of which in any event postulated the jury finding “the more serious defamatory meanings .... suggested by Mr. Kiam”. Miss Sharp furthermore suggests that this libel could not possibly be regarded as worth double the award approved in Mr. Kiam’s first case, Kiam v Neil. That, she submits, was an unusually close comparable; both The Sunday Times’ defamation and its apology were included in the jury’s bundle in the present case. This award, she argues, is also clearly too high in comparison both with the much graver libel in Rantzen and with general damage awards in personal injury cases, the ceiling for which was only £150,000 at the time of this award and is even now only £200,000. Justification, Miss Sharp points out, was never pleaded; rather the only defence was that the article was not libellous, so that there was less than the usual need for vindication. Furthermore, although late in the day, there was both the offer of an apology and a substantial offer of damages (£50,000). Finally, the most serious of the pleaded meanings, the innuendo, would have been understood only by a small proportion of the overall readership.

  47. Mr. Browne QC submits that particular respect must be paid to a jury’s verdict where, as here, the issues have been presented to it accurately and dispassionately in an unimpeachable summing up. He reminds us of the Master of the Rolls’ dictum in John at p 607 that:

    The more closely [the libel] touches the plaintiff’s personal integrity, professional reputation, honour, courage, loyalty and the core attributes of his personality, the more serious it is likely to be.

    and submits that this libel by its natural and ordinary meanings damaged the respondent’s professional reputation, and by innuendo attacked his personal integrity (not least, for example, in the eyes of the 1500 staff at Ronson whose jobs were at stake). He argues that this was a graver libel than in Kiam v Neil and that it was attended by altogether more serious aggravating features, not least the appellants’ refusal until the very eve of trial to offer any form of apology, their publication of further untruthful articles and finally their counsel’s inflammatory closing speech. Above all, Mr. Browne reminds us that the jury (and, indeed, the judge who decided what bracket to suggest to the jury) were present throughout this five day hearing, listening to all the witnesses and speeches and observing their effect on the respondent, whereas we, of course, were not. The judge himself, moreover, refused permission to appeal, observing that “this was an award by the jury which, although higher than I suggested would be appropriate, was not clearly extravagant”.

    THE CORRECT APPROACH

  48. This court can only interfere with a jury’s award if it is “excessive”. (We are not here concerned with the other limb of the power, to vary an “inadequate” award). The question for the court is whether a reasonable jury could have thought the award necessary to compensate the claimant and to re-establish his reputation. If the answer is “no”, the award is to be regarded as excessive and the court will substitute for it a “proper” award. But what is a “proper” award? Is it whatever sum the court thinks appropriate, wholly uninfluenced by the jury’s view? Or is it rather the highest award which the jury could reasonably have thought necessary? I take it to be the latter. In Gorman, for example, where the court substituted an award of £50,000 for the jury’s award of £150,000, Neill LJ concluded that “on no possible view could the award of damages exceed £50,000”, Rose LJ agreeing “that a proper award cannot exceed £50,000”. The Court of Appeal should surely take as much account as it properly can of the jury’s attitude to the case and only on this approach would it be doing so.

  49. To my mind, therefore, this court should not interfere with the jury’s award unless it regards it as substantially exceeding the most that any jury could reasonably have thought appropriate.

  50. When one comes to consider the seven “comparables” summarised above and stands back from their detailed facts, the following points stand out. Only four of the seven cases concerned national newspapers: Rantzen, John, Kiam v Neil and Jones v Pollard. Of those four libels, that in John did not go to the “core attributes” of the claimant’s personality and that in Jones was to a substantial extent justified. The substituted award in Rantzen (updated to today's value) exceeded the award in the present case by £28,000. The award in Kiam v Neil was approved but so too might have been a larger award and in any event the aggravating features in the present case were substantially more serious. Yet more striking is this: in three of the five cases in which this court interfered, – Gorman, Houston and John – the sums substituted were only one third of those awarded by the jury. In the other two cases the jury’s awards were reduced by more than half – in Rantzen from £250,000 to £110,000, in Jones from £100,000 to £40,000.

  51. In the present case Miss Sharp submits that the most that any reasonable jury could have awarded would have been £50,000. If that was so, of course, then here too the damages would be reduced by more than half. But that would mean that the jury had been seriously misled by the judge’s suggested bracket and that he is open to criticism no less than they are.

  52. This, so far as counsel’s experience goes, is the first section 8 case to be considered by this court in which the judge has suggested to the jury a bracket for damages. Plainly the bracket itself is not sacrosanct. But it can hardly be thought irrelevant. For one thing it must inevitably have influenced the jury. For another, it reflects the judge’s own view of the gravity of the libel - and he like the jury was present at the trial.

  53. With these thoughts in mind let me finally state my own conclusions on the appeal. I can now do so comparatively briefly:

    1. The judge’s bracket seems to me entirely reasonable. Certainly, having regard to his advantages over us, I am not prepared to fault it.

    2. Given that the premise of this bracket was the jury’s acceptance of the more serious suggested defamatory meanings, I take the judge’s own view to be that an appropriate award here would have been some £60,000 (the middle of his bracket).

    3. That, however, is not to say that £60,000 is the correct (or “proper”) award here. Rather, as already stated, the proper sum is for this purpose the most that any reasonable jury could have awarded. If, as I would hold, the bracket of £40,000-£80,000 was reasonable, so too on any view would have been an award of £80,000. One must then bear in mind “the possibility that [the jury’s] judgment is to be preferred to that of the judge” (see the passage cited in John paragraph 27 above), a very real possibility given this court’s emphasis in Kiam v Neil upon the continuing pre-eminence of the jury’s role in assessing libel damages. In short the jury’s award should not be condemned as “unreasonable” unless it is out of all proportion to what could sensibly have been thought appropriate.

    4. Although I have not found this an easy case and confess to having initially thought the award “excessive”, I have finally reached the opposite conclusion. I am influenced most particularly by three considerations.

      • First, the practice of showing deference to damages awards even when made by judges and even when assessed in the more standardised field of personal injuries – see for example Pickett v British Rail Engineering [1980] AC 136, 151 and 172; manifestly a far greater deference must be shown to jury awards in defamation cases.

      • Secondly, I am struck by the large percentage differences between the juries’ awards and those substituted for them in the few section 8 cases in which this Court has been prepared to intervene.

      • Thirdly, and, as I recognise, to a degree fortuitously, the effect of Heil v Rankin has been to raise the ceiling for juries’ libel awards to almost twice that now under appeal in this case; leaving therefore a very substantial margin to accommodate the yet graver libels which have to be slotted into the overall bracket.

    5. None of this is to say that the present award should itself henceforth be regarded as a true comparable; only that it is not so far removed from my own (or evidently, the trial judge’s) view of the true value of the claim as to justify the exercise of the section 8 power.

    POSTSCRIPT

  54. Given that this is the first bracket to have been considered by the Court of Appeal I would venture these further reflections on the use of brackets and, indeed, the use of comparables generally.

  55. Although the court in John (in the passage cited at paragraph 27 above) saw no reason why counsel should not indicate to the jury the level of award they respectively contended to be appropriate, Pill LJ in Kiam v Neil (in the passage cited in paragraph 31 above) foresaw “.... the danger in inviting juries to make comparisons with other cases, comparisons which would inevitably become elaborate as each party emphasises particular but different features of those other cases” so that “a battle of comparables in front of a jury may produce its own injustice as well as being time consuming and costly.” In practice, we are told, counsel in libel cases do not ordinarily address the jury on libel comparables or, indeed, mention figures at all save that counsel for the defendant for obvious reasons sometimes refers to personal injury awards. This seems to me entirely sensible and, indeed, commendable and for my part I think that generally speaking the only detailed guidance on figures should come from the judge.

  56. In the present case, it appears, the judge indicated to counsel before their closing speeches his own proposed bracket without at that stage having invited or received any assistance on the matter. His initial bracket was £45,000- £80,000 (marginally higher, therefore, than the final bracket suggested to the jury). Counsel then reacted, counsel for the defendants with “extreme alarm” to the figure of £45,000 as the bottom of the bracket; Mr. Browne for the claimant by indicating that he intended to suggest to the jury that the claim was worth at least double the £45,000 award made in Kiam v Neil. It would seem to me preferable for the bracket to have been more formally discussed before it was fixed, with each side being given a proper opportunity to argue the matter after having exchanged authorities and brief skeleton submissions indicating how they proposed to argue the matter. If, as in the present case, either side suggests that there is a close comparable in point, consideration should be given to handing to the jury an agreed note identifying the particular points which each side wishes to emphasise. Otherwise, counsel should not generally refer to comparables and, if they do, the judge should be alert to explain to the jury how these are being properly taken into account in his own bracket.

    RESULT

  57. I would dismiss this appeal.[a]

    Lord Justice Waller

  58. I agree that for the reasons given by Simon Brown LJ that this appeal should be dismissed.

  59. Naturally a comparison between the general damages awarded for serious personal injuries with those awarded in libel actions gives cause for anxiety. Furthermore at first sight the award seems a very high one. But what weighs with me on the critical question whether this court should interfere are the following factors:-

    1. the jury in this case were made aware (as is now the practice) of the sort of damages that would be awarded in personal injury cases;

    2. in an impeccable summing up they were given a bracket of £40,000 to £75,000-£80,000, but told “I have to stress that the decision is yours and yours alone”

    3. “If the jury make an award outside any bracket indicated real weight must be given to the possibility that their judgment is to be preferred to that of the judge.” (see the passage quoted from the judgment of Sir Thomas Bingham M.R. in John quoted at paragraph 27 of Simon Brown LJ’s judgment);

    4. for the Court of Appeal to interfere, the award must be one which no jury properly directed could have arrived at or as the notes in the former Annual Practice continued and without citing the authorities there referred to: "The matter may be otherwise expressed by saying that the verdict must be an “impossible” verdict .... or represent an entirely erroneous estimate .... or show no reasonable proportion between the amount awarded and the amount sustained ...."

    5. the judge who had provided the bracket and presided over the five-day trial with the opportunity of getting a full “feel” of the case which this court is simply not in a position to do, in refusing permission to appeal said: “.... this was an award by the jury which, although higher than I suggested would be appropriate, was not clearly extravagant”.

  60. I have read the draft judgment of Sedley LJ and although I understand the strength of his views, it seems to me that whilst it remains the tradition for damages in defamation to be assessed by the jury, one must be careful in assuming that there should be the close analogy with personal injury awards which he assumes. We simply do not know precisely what views juries hold on such things. The verdict of a jury properly directed should not lightly be overturned in the court of appeal. For reasons which I do not understand to differ from Simon Brown LJ in my view this court should not interfere with the jury’s award in this case.

    Lord Justice Sedley

    (dissenting)

  61. The law governing general damages depends upon the fiction that suffering can be translated into money. Because it is a fiction, damages as a whole are arbitrary. But as between damages for one kind of injury and another, both legal certainty and elementary justice require careful regard to be had to relativities.

  62. It was because of the vagaries of jury verdicts and awards in personal injury cases that the courts were given power, initially in 1854 (see Ford v Blurton (1922) 38 TLR 801, CA); then by section 6 of the Administration of Justice (Miscellaneous Provisions) Act 1933, and presently by section 69(3) of the Supreme Court Act 1981, to grant or refuse jury trial in such actions. In the exercise of this power the courts have since the decision of this court in Ward v James [1966] 1 QB 273 adopted a uniform policy of having both liability and quantum tried by judge alone.

  63. One intended consequence of this development has been a reasonably coherent tariff of awards for personal injuries, which since 1992 has enabled the Judicial Studies Board to publish a booklet, Guidelines for the Assessment of General Damages in Personal Injury cases, now in its fifth edition. A second consequence has been that the traditional inhibition on the citation of comparables to trial courts has gone.

  64. It was the repeated contrast between the elevated sums awarded by juries in libel actions and the modest sums awarded by judges for personal injuries which led first to adverse public comment (though its main source, the media, could not be said to have been disinterested) and then to judicial intervention. The critical decision was John v MGN Ltd [1997] QB 586. There a jury had awarded a popular singer-songwriter £75,000 compensatory damages and £275,000 exemplary damages for a newspaper story which untruthfully asserted that he was following a bizarre and probably harmful diet. In 1993, when the jury made this award, a claimant reduced by brain injury to a vegetative state might at highest have recovered general damages of £125,000; for a spinal injury causing permanent spastic quadriparesis or unremitting headaches, at most £50,000; for the loss of both arms or both legs, £100,000.

  65. It was plain that the law was coming into disrepute and that something needed to be done. No doubt a freeing-up of damages awards generally was one possibility; but the policy adopted by this court to the same end in John was to level libel awards towards comparability with personal injury awards. These, while open to criticism for being ungenerous, are intended to be sensitive to inflation: see Heil v Rankin [2000] 2 WLR 1173. The wide latitude given to juries before John v MGN was decided in December 1995 was held by the European Court of Human Rights in Tolstoy Miloslavsky v UK (1995) 20 EHRR 442 not to offend against the requirement of Article 10 of the Convention that any restraint on free expression must be prescribed by law. The methodology of damages introduced by John v MGN is therefore certainly Convention-compliant.

  66. But it is apparent that the decision in John v MGN has not succeeded in its avowed purpose. Counsel have helpfully prepared for us a table of recent indications given by trial judges to juries of suggested upper limits to any awards they make for defamation. In three recent high-profile cases the figure has been £150,000. For a disabled claimant that is a sum which represents both grave trauma and lifelong suffering. In others, indicating an upper end of £50,000 or £75,000, judges have told libel juries that in personal injury terms this represents the loss of a limb or paraplegia. Generally, though not always, jury awards have stayed within the figures suggested by the judge. But looking at these figures, it seems to me that the train has left the station again and is now accelerating.

  67. It may be that the re-escalation of libel damages is due in part to the fact that it began from a high base. This court replaced the enormous award in John v MGN Ltd. with a sum of £25,000 general damages and £50,000 exemplary damages. Since I am dissenting, it will not be disruptive of precedent if I respectfully remark that in 1993, £25,000 was more than a claimant would get for the loss of sight in one eye, or for any but the gravest facial scarring. It was the sort of sum awarded to a person so psychiatrically traumatised as to face many years, possibly a lifetime, of inability to cope with relationships and of vulnerability to further trauma. In a case in which, as the court pointed out, the libel had neither attacked the plaintiff’s personal integrity nor damaged his artistic reputation, how a figure of £25,000 articulated with the personal injury tariff is not immediately apparent and is not explained in the judgment of the court.

  68. Restarting from this already generous base, there has been a perceptible process of what Americans might call compensation creep, pushing up not only the brackets given by judges to juries but the base from which this court is now invited to start its reconsideration of arguably excessive awards.

  69. Even in this inflationary situation I do not consider that the award of £105,000 to Mr. Kiam can be regarded as anything but excessive. It is some 30% above the top of the bracket proposed by the judge, a bracket which in itself – for the reasons I have been considering – is unrealistically high, and no less so for being commensurate with other recent judicial directions. Even if one takes the jury award of £45,000 upheld by this court in Kiam v Neil (No. 2) [1996] EMLR 493 as a starting point, I do not consider that any award of general damages exceeding £60,000 can be sustained in the present case.

  70. To be sure, this was a spiteful, insolent and damaging story, based on slapdash research, published without any justification and without even asking the claimant about it. It was repeated more than once and was defended in one way or another until the end of the trial. All of this I accept and so, clearly, did the jury. It was their verdict in his favour which vindicated Mr. Kiam’s good name. There was no ongoing damage that anybody could point to, except no doubt that some of the mud would have stuck in some people’s minds. But substantially it was all over within 14 months of the original publication. To put this, by an award of £105,000, on a compensatory par with the wreckage of a human life by brain damage or the loss of both legs below the knee is, in my opinion, indecent. Even a sum of £60,000 represents considerably more than, for example, a young woman would get for severely disfiguring facial scarring.

  71. In this situation, it is relevant to ask what has gone so fundamentally wrong. The answer is not very far to seek. A fair analogy with personal injury damages would require judges to point out to juries that the compensation for the sometimes unspeakable grief of a bereavement is set at present by law at £7,500 (Fatal Accidents Act 1976, s.1A(3)(5)), and that the humiliation and wretchedness of being traduced in public with no chance to reply, bad as that is, is unlikely to be worse than this. The judge might then turn to the judgment of Hirst LJ. in Jones v Pollard [1997] EMLR 233, 243, where a checklist of compensable factors advanced by Mr. Andrew Caldecott QC and accepted by counsel both in that case and in this is cited with approval:

    1.

    The objective features of the libel itself, such as its gravity, its prominence, the circulation of the medium in which it is published, and any repetition.

    2.

    The subjective effect on the plaintiff’s feelings (usually characterised as aggravating features) not only from the publication itself but from the defendant’s conduct thereafter both up to and including the trial itself.

    3.

    Matters tending to mitigate damages, such as the publication of an apology.

    4.

    Matters tending to reduce damages ....

    5.

    Special damages.

    6.

    Vindication of the plaintiff’s reputation past and future.

  72. This list, it should be remembered, is not a cash register on which a series of sums of money accumulates. Most of what it contains is subsumed in the hurt for which the basic award compensates. Special damage is separately quantifiable, so that a person who has, for example, lost his job as a result of a lie published about him is entitled to full but separate compensation for this. Mr. Kiam suffered no such loss.. The vindication of the claimant’s reputation is the principal function of the verdict itself: it will be double-counting if any but a modest element of the general damages goes to this.

  73. Perhaps most important is the question of wilful or reckless behaviour on the defendant’s part in publishing the libel. As Mr. Caldecott’s list makes clear, this feeds into general compensatory damages only to the extent that it has made the wound to the claimant worse. It is, of course, humiliating to be lied about in the press without even having been asked about the truth of the story; but at least on one view it is more, not less, humiliating to be lied about after having told the authors of the libel that it is completely untrue. Where the deliberate or reckless publication of untruths properly counts in libel is in opening the door to an award of exemplary damages. But in the present case, and without cross-appeal, exemplary damages were withdrawn by the judge from the jury.

  74. What I strongly suspect has happened in this case is understandable, but it is also appealable. Mr. Browne legitimately opened his pleaded case for exemplary damages in full to the jury. Significant passages of his speech denounce the newspaper’s cavalier conduct in powerful and resonant terms. What is more, even when at the end of the trial the judge withdrew the issue of exemplary damages, there remained for the jury the charge of malicious falsehood as an alternative to libel. In order to deal with this the judge had to explain to the jury the ingredients of malice – publishing a false statement without knowing or caring whether it is true or false or, worse, knowing it to be untrue – and the description may well have rung fresh bells with the jury, supported as it was by Mr. Browne’s closing submissions. That is probably one reason for the high award. Secondly, juries in these cases probably consider that they are dealing with wealthy media organisations for whom a four or five-figure sum is little more than petty cash. They ask themselves, and judges and lawyers too ask themselves, what is the use of setting damages at a level which makes libel cheap at the price.

  75. The law’s answer, which has its own anomalies, is that in a case where the evidence reaches a sufficiently cogent level to attract an award of exemplary damages such a defendant can be taught that libel does not pay. The principal anomaly is that the penalty goes in to the claimant’s pocket as a pure windfall. But in a great many cases proof of a cold-blooded cost-benefit calculation that it was worth publishing a known libel is not there, and the ineffectiveness of a moderate award in deterring future libels is painfully apparent. It is this, I believe, that is leading both judges and juries once more to lift the level of general damages for libel into a different league from personal injury damages, at least in cases like the present where the newspaper has not simply got its facts wrong but has behaved outrageously from start to finish. Although this was a predictable by-product of any serious restriction of compensatory damages for libel, it is strangely enough a factor which, so far as counsel have been able to show us, is not addressed in any of the appellate decisions on the limitation of libel damages. Judges, juries and the public face the conundrum that compensation proportioned to personal injury damages is insufficient to deter, and that deterrent awards make a mockery of the principle of compensation.

  76. I do not, even so, believe that there is any necessary incompatibility between the moderation of compensatory awards for libel and the punitive and deterrent purposes which exemplary damages serve. Punishment in a modern society is not the business of private individuals: it is a matter for the state. If a motorist drives recklessly he will have to compensate any victim for the injury he inflicts, but it is to the state that he answers by way of punishment for his abuse of the right to drive a vehicle. Where it is appropriate that the victim should be fully compensated for his injury and loss, it is inappropriate that he should pocket the proceeds of punishment. If, comparably, the enormous power of the news media to misinform and to injure is to be matched with legal responsibility going beyond simple compensation and involving punitive measures, it is likewise to the state that the media ought to answer. A defendant who so conducts himself as to deserve punishment by law can and should be tried with the full safeguards of due process and proof beyond reasonable doubt. He should also be prepared to face the consequences of being convicted.

  77. It is Parliament who alone can decide whether this should happen. What needs unravelling is the single proceeding in which compensation and punishment have for centuries have been rolled together, and which is not appropriately adapted, either in its process or in its outcome, to the increasingly fundamental distinctions between the two. No doubt, as Lord Denning MR. said in Ward v James, jury trial has no equal when honour or integrity are at stake. But when it comes to damages, the three virtues which he went on to enumerate – assessability, uniformity and predictability – also matter a great deal. Something needs to be done about the conflict between the need for fair but balanced compensation for victims of libel and the equal and opposite need to prevent libel from paying. It is possible within the present law for damages to be assessed by judges; but the underlying tension between compensation and deterrence is something, as it seems to me, that Parliament alone can resolve. So far as the courts are concerned it is now apparent that attempting to reduce the bracket produces an understandable but impermissible reaction against the effects of making libel cheap to commit.

  78. For my part, therefore, I would allow this appeal on the narrow ground that even by comparison with other libel awards, but especially by comparison with personal injury awards, the figure awarded by the jury as compensatory damages is wholly excessive. Although I have given £60,000 as the highest figure which I believe to be defensible in the present state of law and practice, the general level of compensatory libel damages which it represents is also in my view indefensible.


Cases

John v MGN [1997] QB 586; Kiam v Neil (No. 2) [1996] EMLR 493; Sutcliffe v Pressdram Ltd [1991] 1 QB 153; Rantzen v Mirror Group Newspapers Ltd [1994] QB 671; Attorney-General v Guardian Newspapers Ltd (2) [1990] AC 109; Gorman v Mudd (15 October 1992, unreported); Houston v Smith (16 December 1993 unreported); Jones v Pollard [1997] EMLR 233; Khodaparast v Shad [2000] EMLR 265; Heil v Rankin [2000] 2WLR 1173; Pickett v British Rail Engineering [1980] AC 136; Ford v Blurton (1922) 38 TLR 801, CA; Ward v James [1966] 1 QB 273; Tolstoy Miloslavsky v UK (1995) 20 EHRR 442

Legislations

Courts and Legal Services Act 1990: s.8

Authors and other references

JSB Guidelines, 5th Edition

Representation

Miss Victoria Sharp QC (instructed by Messrs Olswang for the Appellant)

Desmond Browne Esq, QC & Miss Lucy Moorman (instructed by Messrs Peter Carter-Ruck & Partners for the Respondent)

Notes:-

[a] On the issue of costs of the appeal Lord Justice Simon Brown (Lord Justice Waller & Lord Justice Sedley, both agreed with him) on 6 February 2002 delivered the following judgment:-

  1. Upon the handing down of our judgments on 28th January 2002, dismissing by a majority MGN Ltd’s appeal against the jury’s award of £105,000 damages to the late Mr. Kiam (the appeal ultimately being argued on the sole ground that the award was excessive), Mr. Browne QC for the successful respondent applied for the costs of the appeal on an indemnity rather than standard basis. The essential basis for the application was that on 27th June 2001 Mr. Kiam’s solicitors, by letter headed “Without Prejudice Save as to Costs”, had offered to accept £75,000 and to return to the appellants £30,000 plus appropriate interest, an offer which the appellants simply ignored.

  2. The application seemed to me to raise an important point of principle and we had the advantage of both written and oral submissions upon it.

  3. The question of indemnity costs orders following upon offers of settlement has recently been explored in a trilogy of Court of Appeal decisions: Petrotrade Inc v Texaco Ltd [2001] 4 AER 853; McPhilemy v Times Newspapers (No 2) [2001] 4 AER 861; and Reid Minty (a firm) v Taylor [2001] EWCA Civ 1723 (transcript 29th October 2001). The first two of these cases dealt specifically with the claimant’s position under Rule 36 and decided that an Order for indemnity costs under Rule 36.21(3) was not penal and carried no stigma or implied disapproval of the defendant’s conduct and so ought generally to be made where a claimant recovers in court more than he has previously offered to take. The two cases are fully reported and I need not further summarise them. Reid Minty, however, has broken new ground. To some extent it appears to suggest that the Rule 36 approach may allow defendants too, by way of Rule 44(3), to claim indemnity costs when they defeat a claim having previously made a settlement offer which the claimant has declined. The most directly relevant part of Rule 44(3) is paragraph 4 which reads:

    In deciding what Order (if any) to make about costs, the court must have regard to all the circumstances, including a) the conduct of all the parties; b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and c) any payment into court or admissible offer to settle made by a party which is drawn to the court’s attention (whether or not made in accordance with Part 36).

  4. The leading judgment in the Court of Appeal was given by May LJ (and to this I shall return) but Kay LJ pithily added:

    The approach of the CPR is a relatively simply one: namely, if one party has made a real effort to find a reasonable solution to the proceedings and the other party has resisted that sensible approach, then the latter puts himself at risk that the order for costs may be on an indemnity basis. What would be a reasonable solution will depend on all the circumstances of the case ....

  5. It is principally upon Reid Minty that Mr. Browne relies in submitting that the unsuccessful appellants here, having refused the “reasonable solution” and “sensible approach” represented by Mr. Kiam’s offer (to take reduced damages of £75,000), should accordingly pay the costs of the appeal on an indemnity basis. Mr. Browne does not go so far as to suggest that the respondent is in the same position as a first instance claimant who beats his own Rule 36 offer. He submits, however, and with this I agree, that he is in a comparable position to that of a first instance defendant whose position was explored in Reid Minty.

  6. The reason why I regard this application as raising an important point of principle is this: the underlying rationale of Rule 36.21 - to encourage claimants to make offers - has simply no counterpart with regard to defendants. As Chadwick LJ pointed out in McPhilemy, the provision in Rule 36 that, where it applies, the court will order indemnity costs “.... unless it considers it unjust to do so ....” is (p871):

    .... intended to provide an incentive to a claimant to make a Pt 36 offer. The incentive is that a claimant who has made a Part 36 offer (which is not accepted) and who succeeds at trial in beating his own offer, stands to receive more than he would have received if he had not made the offer.

  7. I myself put it thus (p874):

    The judge below, without the benefit of this Court’s judgment in Petrotrade, wrongly directed himself that an indemnity costs order under CPR 36.21 is of a penal nature and implies condemnation of the defendant’s conduct and so would be unjust unless the defendants had behaved unreasonably in continuing the litigation after the offer. That misunderstands the rationale of the rule. It is not designed to punish unreasonable conduct but rather as an incentive to encourage claimants to make, and defendants to accept, appropriate offers of settlement. That incentive plainly cannot work unless the non-acceptance of what ultimately proves to have been a sufficient offer ordinarily advantages the claimant in the respects set out in the Rules.

  8. If the claimant thought that, even if he were to make and then beat an offer, he was going to get no more than his costs on the standard basis, why would he make it? It would afford him no advantage at all. He would do better simply to claim at large and recover his costs whatever measure of success he gained. His position is, in short, quite different from that of the defendant who plainly has every incentive to make a settlement offer, generally by way of payment into court, irrespective of the basis on which any costs order will be made. Take any ordinary damages claim. A defendant wishing to protect himself will pay money into court. The incentive to do so is self-evident. The incentive does not need to be created or stimulated by raising the defendant’s expectation as to the level of costs he will recover. And, consistently with this, where payments in are not beaten, defendants routinely recover their costs on the standard basis; I know of no rule or practice in such cases for making indemnity costs orders.

  9. With these thoughts in mind, I return to Reid Minty in which the central issue arising was whether the trial judge had been right to direct himself:

    .... that indemnity costs should only be awarded on an indemnity basis if there has been some sort of moral lack of probity or conduct deserving of moral condemnation on the part of the paying party.

  10. In holding that to be a misdirection, May LJ referred to the following passage in my judgment in McPhilemy (p874):

    When dismissing the principal appeal, we left over for decision whether The Times should pay the respondent’s costs of that appeal on the standard or an indemnity basis. Clearly rather more of a stigma attaches to an indemnity costs order made in this context than in the context of a Rule 36.21 offer - although even then no moral condemnation of the appellant’s lawyers is necessarily implied ....

  11. May LJ’s essential approach to the question of indemnity costs for unreasonable conduct appears from the following two paragraphs:

    28.

    As the word ‘standard’ implies, this will be the normal basis of assessment where the circumstances do not justify an award on an indemnity basis. If costs are awarded on an indemnity basis, in many cases there will be some implicit expression of disapproval of the way in which the litigation has been conducted. But I do not think that this will necessarily be so in every case. What is, however, relevant to the present appeal is that litigation can readily be conducted in a way which is unreasonable and which justifies an award of costs on an indemnity basis, where the conduct could not properly be regarded as lacking moral probity or deserving moral condemnation ....

    ....

    32.

     

    There will be many cases in which, although the defendant asserts a strong case throughout and eventually wins, the court will not regard the claimant’s conduct of the litigation as unreasonable and will not be persuaded to award the defendant indemnity costs. There may be others where the conduct of a losing claimant will be regarded in all the circumstances as meriting an order in favour of the defendant of indemnity costs. Offers to settle and their terms will be relevant and, if they come within Part 36, may, subject to the Court’s discretion, be determinative.

  12. I for my part, understand the Court there to have been deciding no more than that conduct, albeit falling short of misconduct deserving of moral condemnation, can be so unreasonable as to justify an order for indemnity costs. With that I respectfully agree. To my mind, however, such conduct would need to be unreasonable to a high degree; unreasonable in this context certainly does not mean merely wrong or misguided in hindsight. An indemnity costs order made under Rule 44 (unlike one made under Rule 36) does, I think, carry at least some stigma. It is of its nature penal rather than exhortatory. The indemnity costs order made on the principal appeal in McPhilemy was certainly of that character. We held that the appeal involved an abuse of process on the footing that:

    .... to have permitted the defendants to argue their case on perversity must inevitably have brought the administration of justice into disrepute among right-thinking people.

  13. It follows from all this that in my judgment it will be a rare case indeed where the refusal of a settlement offer will attract under Rule 44 not merely an adverse order for costs, but an order on an indemnity rather than standard basis. Take this very case. No encouragement in the way of an expectation of indemnity costs was required for him to make his offer to accept £75,000: its object was to protect the respondent against a standard costs order were the Court, say, to reduce the damages to that level. Where, as here, one member of the Court considered the jury’s award “wholly excessive”, and thought that £60,000 would have been the highest sustainable award, it seems to me quite impossible to regard the appellant’s refusal to accept the £75,000 offer as unreasonable, let alone unreasonable to so pronounced a degree as to merit an award of indemnity costs. It is very important that Reid Minty should not be understood and applied for all the world as if under the CPR it is now generally appropriate to condemn in indemnity costs those who decline reasonable settlement offers.

  14. I recognise, of course, that under an indemnity costs order the receiving party only recovers the amount of costs actually incurred. But those costs may well be disproportionate (proportionality not being an issue under an indemnity order). In any event, the greater the disparity between the settlement figure offered and that achieved (and prima facie, therefore, the more “unreasonable” the rejection of the offer) the more the receiving party will be in pocket as against what he was prepared to accept/pay so as to be in a position to meet any costs shortfall.

  15. I add only this. Mr. Browne sought to bolster his application by reference to a second submission, namely that time and costs were wasted in preparing both written and oral arguments upon two other grounds of appeal which in the event were abandoned at the outset of the hearing. I think it unnecessary to deal with this in detail. Suffice it to say that it would be generally undesirable to penalise by indemnity costs a decision not to press particular points in the interests of the expeditious disposal of the appeal. I can see no good reason for departing from that policy here.

  16. I would accordingly refuse this application and award the respondent his costs of the appeal on the standard basis.

    For the reasons given in the judgment, which has already been handed down, the order made is that the appeal be dismissed, with costs to be taxed if not agreed on the standard basis, save that there be no order as to the costs of the hearing on Monday, 28th January. Permission to appeal to the House of Lords be refused. This order has been made in the absence of counsel, pursuant to the recent practice direction, in the terms of the order having now being agreed


all rights reserved