Wright v McCormack (CA)

The Claimant, Dr Craig Wright, is well-known within the Bitcoin and cryptocurrency community. He avers that he is Satoshi Nakamoto (“Satoshi”), the individual or group of individuals widely understood to have created Bitcoin. The Defendant, Peter McCormack, is a blogger on matters concerning cryptocurrency.

The Claimant sued in libel over 14 Tweets by the Defendant and a YouTube video featuring the Defendant. The Defendant agreed that the tweets carried a chase 1 meaning of fraud, namely, that the Claimant fraudulently claimed to be Satoshi or, in respect of one tweet, to have written the seminal Bitcoin White Paper (whose author(s) are considered to have invented Bitcoin). The trial judge, Chamberlain J, held that the YouTube video carried a chase 2 meaning of fraud to the same effect.

The Claimant succeeded on liability as Chamberlain J found that each of the publications caused, or was likely to cause, serious harm to the Claimant’s reputation under s.1(1) of the Defamation Act 2013. The Defendant advanced no substantive defences at trial.

However, shortly before trial, the Claimant abandoned part of his case on serious harm (namely, that he had been excluded from industry panels and disinvited to conferences as a result of the publications complained of) on the basis that the reputational harm was caused outside the jurisdiction. Chamberlain J held that this part of his case had been advanced on a “deliberately false” basis and accordingly reduced the Claimant’s damages award to £1.

The Claimant appealed the nominal damages award.

(The Claimant did not accept the finding of dishonest conduct, but this finding of fact was not challenged on appeal.)

(i) Whether general damages in libel can properly be reduced to reflect a claimant’s litigation misconduct – here, the “fraudulent” exaggeration of the claim.

(ii) Whether the Court of Appeal was bound by its previous decision in Campbell v News Group Newspapers Ltd [2002] EWCA Civ 1143 that wholly disreputable conduct of the claimant was relevant to the question of damages, or whether it fell to be considered as an exception under Young v Bristol Aeroplanes Ltd [1944] KB 718.

Appeal dismissed.

(i) Reduction of damages to a nominal sum on the basis of litigation misconduct

Although novel, there was nothing wrong in principle with Chamberlain J taking account of post-publication event in the shape of his own judgment (in which he made the findings about the Claimant’s litigation conduct) to mitigate damages. It was a novel extension of the principle set out in Goody v Odhams Press Ltd [1967] 1 QB 333 (as extended by Turner v News Group Newspapers Ltd [2006] EWCA Civ 540, [2006] 1 WLR 3469), namely, that previous criminal convictions and judicial strictures in previous civil litigation are “authoritative public denunciations” which are admissible as evidence to rebut the presumption of a claimant’s good character. The Goody principle is an exception to the rules on admissibility of evidence in mitigation of damages, which are rules of procedure and case management rather than law and aimed at preventing irrelevant prejudice and satellite litigation.

Chamberlain J made no error in treating Dr Wright’s “lies” and “deception” (findings which were not challenged on appeal) as disreputable facts properly before the court, applying FlyMeNow Ltd v Quick Air Jet Charter GmbH [2016] EWHC 3197 (QB) at [128]. They were relevant to damages and logically affected the extent to which the Claimant was entitled to vindication, as the sting of the libel and the litigation misconduct alleged were comparable as both concerned dishonesty. In any event, the extent to which disreputable conduct affects damages is a matter of judgment, which fell within the province of the trial judge.

However, it was unhelpful for Chamberlain J to award nominal damages on the basis that it would be “unconscionable” for the Claimant to receive more. Morality or tests of unconscionability risks the law becoming too loose and unpredictable.

(It was not argued by Dr Wright that, even if the trial judge was wrong to take into account Dr Wright’s lies, the CA should review the weight placed on those light and substitute a different damages award.)

(ii) Campbell v News Group

Campbell was a striking case on its facts. The claimant complained of an allegation that he was a pervert and a habitual sexual abuser of children. The newspaper accepted the verdict on liability but challenged the damages award of £350,000. The Court of Appeal reduced the award to £100,000 on the basis that it was manifestly excessive, and further reduced it to £30,000 to reflect the claimant’s “elaborate and long-lasting attempt to pervert the course of justice” and included fabricating and procuring false testimony and accusing innocent third parties of corruption and lying (which was not the same conduct as imputed by the libel).

Warby LJ did not address whether Campbell was authority for a broad principle that all and any disreputable conduct by a claimant may be taken into account to reduce damages, or whether any of the Young v Bristol Aeroplanes exceptions applied. However, he found that the application of the damages principles to the facts of that case was “unorthodox” and described Campbell an “outlier” in the jurisprudence, highlighting that it had not been cited in the majority of the relevant cases on this appeal.

Further, Warby LJ held (obiter) that there is no general rule that a finding of dishonesty will result in the striking out or dismissal of the whole claim (even after trial) or a reduction of damages: Ul Haq v Shah [2009] EWCA Civ 542 [2010] 1 WLR 616 and Summers v Fairclough Homes Ltd [2012] UKSC 26 [2012] 1 WLR 2004, applied. Specific rules of law may allow for this, such as in insurance cases, but a court should not deprive a claimant of rights to which he is entitled, save in exceptional cases. However, that is not what happened here – the trial judge did not engage in the prohibited exercise of ascertaining the damages and reduce that figure to reflect litigation misconduct, but rather Chamberlain J took account of the Claimant’s lies and attempt to deceive the court when determining the Claimant’s entitlement.

The Court of Appeal also refused C/A permission to appeal to the Supreme Court.

Warby LJ gave a detailed examination of the law surrounding general damages – including the restitutio principle and the circumstances in which damages (which are assessed as at trial) could properly be reduced to take account of the Claimant’s conduct. Specifically, Warby LJ highlighted that there may be a reduction to the compensation once the court identifies the interests protected and the kinds of loss and damage which are recoverable, applying the principles of causation, remoteness, reduction and mitigation of damages and certainty.

Warby LJ painted defamation as an outlier among torts: vindicatory damages are not usually recoverable in tort law, and it differs from personal injury law in terms of: (i) the approach to proof of existing interest and extent of the injury sustained (as it will necessarily be more difficult for a libel claimant to prove reputation and injury, hence the rebuttable presumption that all libel claimants have a good reputation); and (ii) the approach to compensation (as an apology or retraction may vindicate someone’s damaged reputation, but they do nothing for a broken leg).

Further, Warby LJ confirmed that the Pamplin principle is extremely broad, such that evidence would be admissible on the question of mitigating damage if relevant, properly admitted (on whatever basis), necessary and proportionate – including evidence tending to establish partial truth or an aspect of the claimant’s reputation which is partially undeserved.