Reference:  EWHC 637 (QB)
Court: Queen's Bench Division
Judge: Eady J
Date of judgment: 28 Mar 2006
Summary: Defamation - Libel - Offer of Amends - Compensation
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Appearances: David Sherborne (Claimant)
Instructing Solicitors: Harbottle & Lewis for the Claimant; Roche & Co for the Defendants
The 81 year old director of an aircraft and defence equipment company sued a rival company and its managing director for alleging that he had been convicted and imprisoned for illegal arms dealing. The accusation had been contained in a letter written by the defendants to Price Waterhouse Coopers, the receivers of the claimant’s former business, which both the claimant’s current company and the defendants were competing to purchase. The letter was also copied to four other organisations, all of whom were connected with the claimant’s ability to conduct his business. Although accepting that the specific allegation was false, the defendants refused to make an offer of amends until the issue of proceedings since they sought to exploit a prosecution which had apparently been brought many years earlier but subsequently abandoned. Although all other steps were agreed, the parties could not agree on the issue of compensation.
The appropriate level of compensation under the offer of amends procedure bearing in mind the two-stage test: the first stage is to identify the figure which the judge would award at the conclusion of a hypothetical trial in which there is no aggravation to the claimant’s feelings; the second stage is to consider to what extent (if at all) that figure should be discounted to give effect to any mitigating factors of which the defendant is entitled to take advantage.
The right starting figure was £40,000. Although there was a limited publication and no evidence of any lasting actual damage, this was a very serious allegation touching upon the claimant’s core attributes. It was important that people should not feel that ‘there was no smoke without fire’. As to the appropriate discount, the defendants had not only failed to capitulate at an early stage, their attitude being grudging and not sufficiently conciliatory, they had also aggravated the hurt to the claimant by persisting until a late stage in the suggestion that the claimant’s character might be attacked in court. Applying a 40% reduction, the Court awarded compensation in the sum of £24,000.
This is another example (like Campbell-James v Guardian Media Group plc) where a defendant has lost the full benefit of the deflationary effect of an offer of amends by a grave error of judgment in persisting in correspondence in an unsustainable defence of ‘fair comment’, as opposed to making a full acceptance that the allegation is false and defamatory. A defendant must be careful properly to assess if there is truly any legitimate background material which might mitigate the award under Burstein principles, lest the effort to mitigate just makes matters worse.