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England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Collins Stewart Ltd. and Anor v The Financial Times Ltd.  EWHC 2337 (QB) (20 October 2004)
Cite as:  EWHC 2337 (QB),  EMLR 64
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| Collins Stewart Ltd and anr
|- and -
|The Financial Times Ltd
Desmond Browne QC, Leon Kuchke and David Sherborne (instructed by Farrer &Co) for the Defendant
Hearing dates: 4th 5th 6th October
Crown Copyright ©
Mr Justice Tugendhat :
i) The Defendant's application notice dated 12th August 2004 to strike out paragraphs 3 to 6 of the Claimants` Particulars of Damages:
ii) The Defendant's application under the same notice that all issues relating to damages (both general and special) be tried by judge alone
The form of the applications is set out fully below.
iii) An application by the Claimants for disclosure and
iv) an application by the Defendants for disclosure.
I heard and have already disposed of the third and fourth applications in so far as they were still live. As to the first and second applications, I heard argument over some two days and this is my reserved judgment.
"Terry Smith has never been shy of a fight as one of the City's most outspoken stockbrokers. But the Chief Executive of Collins Stewart faces a no-holds-barred battle now to preserve the reputations both of himself and his firm after a former employee filed a highly-critical claim for wrongful dismissal.
In the High Court Claim form and accompanying 32-page document sent to the Financial Services Authority, analyst James Middleweek paints a picture of a firm suffering from conflicts of interests. These conflicts, he alleges, put pressure on analysts to support corporate finance work, including low- quality new equity issues.
The complaint comes not from a rank outsider but from an analyst who had been with the firm for seven years, covering Collins Stewarts core area of smaller companies and who never missed receiving his annual performance bonus. But Collins Stewart believes it is being subjected to a blackmail attempt by a former employee, who only raised complaints after being dismissed.
It commissioned an independent investigation into the claims by lawyers Clifford Chance who had full access to all staff and tape recordings of conversations at the firm. It says this found no evidence to support any of Mr Middleweek`s claims including:"
There then follows six bullet point paragraphs setting out the claims said to have been made in the report accompanying Mr Middleweek's High Court Claim Form. The words complained of conclude:
"Mr Middleweek also denies blackmail in the claim. He says his lawyers held a meeting in July 9 with Collins Stewart where the claim was discussed and that they had indicated that Mr Middleweek would be willing to not lodge a report with the FSA, providing his employment claims were settled. But he said he would like to know that an internal enquiry had been launched into his allegations. Mr Middleweek adds that Collins Stewart even after dismissing him for alleged blackmail, came back to him seeking a settlement along the lines originally proposed".
"The Claimants were thereby guilty of gross, widespread and institutionalised impropriety in the way in which they carried on business, and had committed or encouraged or acquiesced in the commission of serious criminal offences, in particular insider dealing, for which they would or should be successfully prosecuted by the Financial Services Authority ".
"by reason of the publication of the words complained of the Claimants have suffered extremely serious injury to their trading reputations and very substantial loss and damage".
"8.6 …. the damage to the Claimants' reputations caused by the article complained of continues. The Claimants will invite the court to infer that all of the foregoing post-publication conduct on the part of the Defendant has added increasing momentum to the collapse in the Second Claimant's share price – as to which see further below.
8.7 After and as the foreseeable consequence of the publication of the allegations complained of, the Second Claimant has suffered a dramatic fall in the value of its share price. Since the close of trading on 26 August 2003, the day before the article was published, the share price has dropped by approximately 16% from 457.5 pence to a closing price on 16 September 2003 of 382.5 pence, against the background of a broadly positive market. This represents a fall in the Second Claimant's market capitalisation of approximately £141,000,000. For the avoidance of doubt, the Claimants will ask the court to infer that this fall reflects the damage to the market perception of the Claimants which has very substantially, if not wholly, resulted from the publication complained of and that it confirms the resulting substantial but necessarily unquantifiable general financial loss caused to the Claimants, in respect of which it will seek to recover such sum at trial as shall seem fair and just.
8.8 The Claimants will furthermore claim at trial for all special damage caused to the Claimants` business as a result of the publication complained of including all losses of profits actual and reasonably anticipated in future years. Particulars of such loss and damage, which is likely to run into millions of pounds, will be served as soon as the same have become available.
"12.6 Particular 8.6 is denied. In particular,and without prejudice to the generality of the foregoing denial and the fact that the Second Claimant bears the burden of proof in this regard, it is denied that the Defendant is responsible for any alleged fall in the Second Claimant`s share price. The Defendant is entitled to and will rely in support of this contention upon all of the press coverage during the relevant period, as well as a number of other factors including: (a) the fact the Second Claimant's share price had already fallen 6.6% on Tuesday 26 August 2003, the day before the Article was published; (b) the share price was in any event liable to retrenchment as a result of it having almost doubled in value between October 2002 and the middle of August 2003; (c) the ongoing concerns in the market about the FSA`s investigation into split capital trusts which encompassed the activities of the First Claimant; (d) the markets concerns about how the Claimants were handling the controversy surrounding Mr Middleweek`s litigation and the allegations made in those proceedings, which had been published in a number of newspapers; (e) the news on 3 September 2003 that the City of London's police had decided not to pursue the blackmail charges made against Mr Middleweek made by the First Claimant.
12.7 No admissions are made as to the first three sentences of particular 8.7. As to the remainder of this particular, it is denied that it is permissible to rely upon the alleged fall in the Second Claimant's share price as in any way indicative of financial loss caused to the company. In any event, as set out in sub-paragraphs 4.2 and 4.3 above, the Second Claimant has no actionable claim for libel as against the Defendant and the alleged fall in its share price is irrelevant to the computation of any claim for damages by the First Claimant.
12.8 Particular 8.8 is denied. At the date hereof, the Claimants have still not served any particulars of loss and damage.
13 If and in so far as necessary, the Defendant will rely in extinction (or alternatively diminution) of any damages awarded against them upon the facts and matters set out in paragraphs 8 and 9 above, as well as the fact that the Claimants have themselves posted the solicitors` letter of complaint on their own website at [and the address is given]. "
"9.5… The bitter dispute between the First Claimant and Mr Middleweek was highly topical, having been initially triggered by the article in the Financial Mail on Sunday 24th August 2003 entitled "Top Broker Rocked by Insider Dealing Claim", to which the Defendant will refer at trial, along with the other press and media coverage at the time. That article also set out extracts from Mr Middleweek's Report. As far as the Defendant is aware, by the date hereof (let alone, at the time of the publication of the Article complained of), there had been no issue or threat, of proceedings by the First or Second Claimants over the publication of the Financial Mail on Sunday article nor had the Claimants ever publicly challenged the authenticity of the Report".
"10.7 As to paragraph 9.5, there was no urgency about the information published by the Defendant, other than that imposed by the Defendant – for its own commercial reasons upon itself: as Mr Tassell well knew, the Claim Form in Middleweek's action had been issued as long before as 22nd July 2003, and the "story " of Middleweek's claim had been well ventilated in the national press, including by the Defendant itself, in articles preceding the articles complained of, commencing with articles published in the Mail on Sunday and Sunday Times on 24 August 2003. The dispute between the First Claimant and Middleweek was not "triggered" on 24 August 2003 (as pleaded ), but when the claim had been issued, one month previously. The fact that the Claimants had not yet publicly challenged the authenticity [sic] of the report is irrelevant: the Defendant knew full well that the Claimants were vigorously disputing the truth of the allegations".
11.3 As to paragraph 12.6, and in respect of the other factors sought to be relied on by the Defendant as causing the fall in the Second Claimant's share price:
11.3.1 As to factor (a), it is admitted that the share price had fallen approximately 6.6% - to 457.5- by the close of trading on the day before the article was published. It is averred, however, that even if the prior press coverage had created some downward momentum in the share price, this was wholly, or substantially, overtaken by the impact of the publication in the Financial Times of the article complained of and that the publication was wholly, or substantially, responsible for the much greater fall in the share price in the period commencing 27th August 2003.
11.3.2 As to factor (b), the contention that the share price was due for retrenchment is misconceived:
220.127.116.11 The brokers UBS Investment Research had put out a positive analyst's note only about four weeks previously, which rated the Second Claimant as a " buy";
18.104.22.168 The unusually high volume of trading in the shares in the week beginning 26 August 2003, and the background of buoyant market conditions generally, are obviously inconsistent with the notion that retrenchment, or normal profit taking was taking place.
22.214.171.124 The fact that the shares in the Claimants` two main competitors Numis Corporation Plc and ICAP, Plc rose by 26% and 28% respectively between 22nd August 2003 and 24 January 2004 (whilst the Second Claimant's share price has fallen 6%) is inconsistent with the notion that retrenchments was taking place or liable in the Claimants' business sector.
11.3.3 As to factor (c), it is denied that this factor had any material effect on the Second Claimant's share price on 27 August 2003 and in the ensuing period.
11.3.4 As to factor (d), the Defendant is put to strict proof of the alleged concerns in the market. As to the allegations published in other newspapers, the Claimants aver (for the avoidance of doubt) that by far the most detailed, extensive one sided, and damaging report of the allegations was that published by the Defendant and which is the subject of this claim.
11.3.5 As to factor (e) the press reporting on 4 September 2003 of the CPS`s decision not to pursue the blackmail charges cannot as a matter of logic have had any material effect on the Second Claimant's share price in the period between 27 August 2003 and 8 September 2003. It is in any event denied that this factor had any material effect on the Second Claimant's share price thereafter.
12 As to paragraph 13, it is denied that any of the matters relied on serve to diminish (let alone extinguish) the damage for which the Defendant is liable or that the Defendant may rely upon the same for this purpose".
"1. The best particulars that the Claimants can presently give of their case on special damages is set out below. The Claimants reserve the right to amend and/or supplement these particulars as may be necessary or appropriate between the date hereof and trial, since (a) such losses are continuing (b) further and/or more up to date figures are likely to become available in that time
2. The Claimants repeat paragraph 8.1 of the Particulars of Claim and 11.3.4 of the Reply and will say that the Defendant is liable to compensate the Claimants for the very substantial majority of the losses identified herein, since by far the most detailed, extensive, one sided and damaging report of the allegations made by Middleweek was that published by the Defendant, and since its newspaper is by far the most influential in the business and financial sectors in this jurisdiction. They will seek an award of special damages in a sum equivalent to such proportion or proportions of the heads of loss identified herein as shall seem fair and just.
3. Further to paragraph 8.7 of the Particulars of Claim and by way of update thereto, as at the close of business on 26 March 2004 the share price of the Second Claimant was 445p, which amounts to a loss of 12.5p, or a decrease of 2.8% since the close of business on 26 August 2003 (when the share price closed at 457.5p).
4. In contrast, the share prices of the Second Claimant's very close comparators Numis and ICAP have risen 28.5% and 20.8% respectively between 26 August 2003 and 26 March 2004 (Numis`s share price rising from 517.5p on 26 August 2003 to 665p on 26 March 2004 and ICAP`s from 252.5p to 305p over the same period.)"
The figure 517.5 is footnoted as follows
"London Stock Exchange's Historic Price Service quotes closing figures for Numis of 507.50p to 527.50p. The Claimants have taken the mean of those bid and offer figures as the price. "
The figure 252.5 is footnoted as follows
"London Stock Exchange's Historic Price Service quotes closing figures for ICAP of 1252.50p and 1272.50p. The Claimants have taken the mean of those bid and offer figures as the price, and divided by 5 to reflect the fact that between 26 August 2003 and 26 March 2004 ICAP shares were split 5 for 1".
"5. Measured against the performance of those very close comparators the Second Claimant's share price should have risen by 24.65% (being the mean of the percentage rise of Numis's and ICAP'S share prices over the period) rather than fallen by 2.8%. Accordingly, in order to keep pace with these close comparators, the Second Claimant's share price should have risen by 27.45% making its share price 567p at the close of business on 26 March 2004. (For the avoidance of doubt the Second Claimant's share price had tracked those of ICAP and Numis over the previous year to a correlation figure of .9334 and .9595 respectively). This represents a loss in the Second Claimant's potential market capitalisation since 26 August 2003 of approximately 122p per share, or £230,526,320 calculated on an issued share capital of 188,956,000 shares.
6. Further or alternatively to their case that the aforesaid dramatic loss in the Second Claimant's potential market capitalisation since the publication complained of evidences the damage to the Claimants reputation caused by the Defendant's conduct, and/or confirms the resulting substantial but necessarily unquantifiable general financial loss caused to the Claimants, the Claimants will also invite the court to assess the special loss suffered by the Claimants on the basis that this fall of £230.5 million is the best available reflection of the loss in future revenues which the Second Claimant has suffered and will suffer: it is the direct measure of the change in the market's assessment of the net present value ( NPV) of future earnings of the company.
7. Further or alternatively, the Claimants have suffered the following heads of loss:
(1) Losses suffered by the First Claimant's stock-broking business: in the period September 2003 to end December 2003 the First Claimant suffered a loss of revenue from its brokerage activities (including market making revenue) of approximately £3.3 million. Such losses are continuing.
For the avoidance of doubt, the total figures are estimated on the basis of the reductions in the First Claimant's market share of all trades done on the London Stock Exchange from a figure of .95% in the year to July 2003 to figures of .56%, .64%, .83% and .70% in the months of September, October, November and December 2003 respectively.
By way of specific examples of identifiable lost custom, between the publication complained of and 1 March 2004, Schroders Fund Management refused to buy shares in companies for whom the First Claimant acted as nominated broker: in that period Collins Stewart would have received commission payments of approximately £250,000 from trades done with Schroders alone. Furthermore, Arca (an Italian company) and Allied Irish Bank both removed Collins Stewart form their panel of brokers for a period of approximately 1 month and 3 months respectively, thereby causing the First Claimant to lose commission of £30,000 and £43,000 respectively.
(2) Losses suffered by the First Claimant's business of sponsoring Initial Public Offerings (IPO's) or secondary offerings in the market for smaller companies:
Shortly after and as a direct result of the publication complained of one client, East Surrey Water, called an emergency meeting with the First Claimant and forced it to accept a substantially reduced commission fee on its proposed IPO (of 34.86 million shares at £3 a share), i.e. just over 2% instead of the usual figure of 3.5 to 4%. This translates to a loss of commission in the sum of at least £1,424,781.
(4) Loss of expected new business from other territories: the First Claimant had recruited new salesmen to seek business from institutions in Ireland, Scandinavia, France and Germany and to seek to sell Japanese equities to UK clients. The salesmen struggled to get on business from such institutions, and on occasion found direct evidence of competitors raising the Defendant`s coverage of the Middleweek allegations with the potential client, resulting in a loss to it of approximately £ 1-2 million.
(5) Private client business: the First Claimant`s private client business in both London and the Channel Islands has suffered substantial losses, including seventy days of additional staff time spent reassuring clients in order to keep their business at a total cost of £28,000, and very significant lost revenues and lost opportunity for new business. A total estimated losses for the London operation are £914,200, and for the Channel Islands £522,500.
(6) Sums expended on engaging PR firms to mitigate the effects of the damage caused by the publication complained of: the Claimants have incurred invoices in the total of £398,429 to date".
"3. Under paragraph 5 of the Particulars
Of: "... the Second Claimant's share price should (have risen [but failed to rise] by 27.45% [which] represents a loss in the Second Claimant's potential market capitalisation since 26 August 2003 of approximately 122p per share, or £230,526, 320 calculated on an issued share capital of 188,956,000 shares."
Requests [and Responses]:
3.1 The Claimants' are requested to state whether they contend that the market value of the shares in Plc is (a) an asset of Plc or (b) an asset of the shareholder.
[The market value of shares is not an asset of anyone. It is the value of the shares as attributed to them by the market in which the shares are traded. The shares themselves are an asset of their owners.]
3.2 If (a), please explain the factual and/or legal basis for that contention.
3.3 If (b), please explain how Plc suffers financial loss in respect of a reduction in the value of an asset which does not belong to it.
[The question proceeds upon a misreading of the Claimants' case, which is set out at paragraph 6 of their Particulars of Special Damage and further particularised below.]
3.4 What was the nominal value of Plc's issued share capital on 26 August 2003?
[The nominal value of the issued share capital was 188,955,937 (the number of Ordinary shares in issue) x 25p (the nominal value of those shares) = £47,238,984.25].
4. Under paragraph 6 of the Particulars
Of: "... the special loss suffered by the Claimants [is to be assessed] on the basis that this fall of £230.5 million is the best available reflection of the loss in future revenues which the Second Claimant has suffered and will suffer ..."
Requests [and Responses]:
4.1 Please specify whether "revenues" is a reference to total income, total turnover, gross profit, net profit or some other measure of income.
["Revenues" is a reference to the net profit figure.]
4.2 Is it the Claimants' case that Ltd suffered the same loss in future revenues as that allegedly suffered by Plc?
[No, although the loss in future revenues as estimated by the market is likely to be very largely, if not exclusively, based on losses in future revenues suffered by the First Claimant's business, since it was allegations about that business that were specifically the words complained of.]
4.3 Please clarify the precise basis on which it is contended that the fall of £230.5 million reflects the loss suffered jointly by Plc and Ltd.
[See the preceding answer. Insofar as Plc will suffer a loss in future revenues, this is very largely, if not exclusively, based on losses suffered by the business of the First Claimant, its wholly owned subsidiary.]
Of: "... the market's assessment of the net present value (NPV) of future earnings of the company (".
Requests [and Responses]:
4.4 Please confirm that the reference to "the company" is intended to be a reference to Plc. If not, what company is being referred to?
[The reference to "the company" is intended to be a reference to Plc.]
4.5 What was the nature and source of Plc's/the company's direct earnings over the past three years and what was the annual amount of such earnings?
[See Response at …]
4.6 What was the net present value (NPV) to Plc/the company (itself) of its future earnings on 26th August 2003 immediately prior to the publication of the report?
[The net present value of Plc's future earnings on 26 August 2004 immediately prior to the publication of the report was assessed by the stock market to be £864,473,412. The Claimants will say that that is the best available figure for the NPV of Plc's future earnings as at that date.].
4.7 Please provide particulars of how the NPV referred to in Request 4.6 is calculated, estimated and/or arrived at.
[The figure is arrived at by analysts and investors estimating the future earnings of the Plc and then discounting those figures at the Plc's estimated weighted average cost of capital (WACC) to produce an NPV. The theory and methodology involved is well recognised, and is a matter of expert evidence which the Claimants will adduce at trial.]
4.8 Is it the Claimants' case that on 29th March 2004 the value to Plc/the company of its future earnings was £230 million less than the value to it of such future earnings on 26th August 2003 immediately prior to the publication of the report?"
"(1) An order that paragraphs 3- 6 of the Claimants` Particulars of Special Damage dated 29 March 2004 (the particulars) be struck out pursuant to CPR Part 3.4, because, they disclose no reasonable grounds for bringing the Claimants claim for special damages in that the claim is (a) not properly arguable as a matter of law and/or (b) a claim which neither of the Claimants has standing to bring and/or (c) unsupported by the facts set out in the Particulars or the Claimants` Further Information dated 2 August 2004 and/or (d) unparticularised or insufficiently particularised and/or (e) one which, if continued, would waste the resources of the Court and the parties or otherwise obstruct the just disposal of these proceedings.
(2) An order that all issues relating to damages (both general and special) be tried by Judge alone because the issues will involve prolonged examination of documents and/or expert evidence such as cannot conveniently be tried by a jury".
"1. Under paragraph 1 of the Particulars
Of: "[The Claimants'] losses are continuing and … further and/or more up to date figures are likely to become available …"
1.1 Please state whether or not the Particulars set out are the best particulars the Claimants can give at the date of their response to this Request.
1.2 If not, please provide any up to date and/or amended particulars of special damage.
1.3 Please provide full particulars of the continuing losses which each of the Claimants has suffered.
1.4 Without limiting Request 1.3 above –
(a) the First Claimant ("Ltd") is requested to describe the precise nature of the losses which it allegedly continues to suffer, with a quantification of those losses;
(a) the Second Claimant ("Plc") is requested to furnish the same information (as requested in (a) above) in respect of itself; and
(c) where losses are quantified, each of Ltd and Plc is requested to furnish full details of how their respective alleged losses are calculated and arrived at.
1.5 Please clarify whether it is the Claimants' case that every loss suffered by one of them is automatically a loss suffered by the other.
(a) If so, please explain the factual and legal basis of that case.
(b) If not, (i) please identify how each head of special damages claimed is to be separated and/or apportioned between the Claimants and (ii) set out the reasons and basis for such separation and/or apportionment.
1.1 The best particulars that the Claimants can currently give of their claim for special damage are as set out in the Particulars of Special Damage as supplemented by the answers set out below.
The Claimants will add a claim under paragraph 7(2) of the Particulars in respect of lost fees from the First Claimant's Initial Public Offering (IPO) business. After and as a direct result of the publication complained of the First Claimant suffered a dramatic drop in the number of new IPO instructions and consequently a drop in the commission fees generated from such instructions.
In the four month period May 2003 to August 2003 (that is immediately prior to the date of publication of the article complained of) the Claimants sponsored the following IPOs (which include the new and innovative Accelerated IPO structure employed in the Northumbrian Water deal):
[There then follows a table setting out the names of five customers and a calculation showing Total Commission of £18,675,099, total Corporate fees of £875,000, and the total of the two being £19,550,099]
In the four month period September 2003 to December 2003 (the period immediately after the publication of the article complained of) the Claimants sponsored the following IPOs (including the Accelerated IPO on behalf of Center Parcs) work in respect of which commenced prior to publication of the article:
[There then follows a table setting out the names of six customers and a calculation showing Total Commission of £19, 039,077, the total over the eight month period May 2003 to December 2003 being £38,588,176]
In contrast, in the seven months of 2004 to date the First Claimant has sponsored only the following IPOs, the work in respect of which commenced after publication of the article complained of. This was against a background of relatively buoyant market conditions:
[There then follows a table setting out the names of six customers and a calculation showing Total Commission of £10,280,090, total Corporate fees of £1,950,000 the total of the two being £12,230,090]
The number of clients securing new IPO mandates has therefore declined significantly, and the Claimants will claim a sum for lost commission and fee income therefrom of approximately £26,358,086.
(a) The Claimants will, at the assessment of damages hearing, update their claim under paragraphs 3-5 of the Particulars of Special Damage to take into account the Second Claimant's share price as at that date, and the movement in the share price relative to that of its close comparators, Numis and ICAP. These are publicly available figures and the Defendant is well aware of the basis on which this claim is calculated.
(b) The Claimants will likewise update their claim under paragraph 7(1) of the Particulars for losses suffered by the First Claimant's stockbroking business to take into account its market share figures for the further months from January 2004 and following. The figures up to June 2004 are set out at answer 5.3(b) below.
(c) The Claimants have updated their claim in relation to sums expended on engaging PR firms to mitigate the effects of the damage caused by the publication complained of and further particularise those claims in response to Requests 9.1 to 9.4 below.
1.5 It is not the Claimants' case that every loss suffered by one of them is automatically a loss suffered by the other. The Claimants repeat their answers to Requests 3 and 4, already served. Further:
1.5.1 If the 'no reflective loss' rule is held to apply in the present case (contrary to their primary case that it does not) the Claimants will seek to recover on behalf of the Second Claimant only a sum in general damages for loss of and damage to reputation, and will confine their claim for special damages to the First Claimant.
1.5.2 Their primary case, however, is that the Second Claimant may recover such special damages and that the best available method of assessing that damage is by reference to the movement in its share price, for the reasons already explained.
1.5.3 If, alternatively, the First Claimant recovers the special damages (and the Claimants do not of course seek to make double recovery), the measure of such damage will still be the same, since, as they will aver, it is the change in the market's assessment of the net present value of the earnings to be generated from the First Claimant's business which the movement in the share price has essentially reflected.
1.5.4 For the avoidance of doubt the losses claimed under Paragraph 7 of the Particulars are by way of alternative to the claim based on the movement in share price; they are identifiable losses suffered by the First Claimant and which will be claimed by the First Claimant, save for that claimed under paragraph 7(6), which will be claimed by the Second Claimant."
THE POWER TO STRIKE OUT A STATEMENT OF CASE
"The court may strike out a statement of case if it appears to the court –
(a) that the statement of case discloses no reasonable grounds for bringing or defending the claim;
(b) that the statement of case is an abuse of the courts process or is other wise likely to obstruct the just disposal of the proceedings:… "
DAMAGES AND THE LAW OF DEFAMATION
"General damages serve three functions: to act as a consolation to the claimant for the distress he suffers form the publication of the statement; to repair the harm to his reputation (including, where relevant, his business reputation); and as a vindication of his reputation. While actual financial loss (such as loss of business or employment) which is not too remote is clearly recoverable … it is a comparatively rare case in which evidence of such loss is given, simply because it is not available."
i) Para 26.29, under the heading 'special damage', where it is stated that:
"Where the claimant claims to have suffered financial loss, he must allege such damage, including a general falling-off of business, with reasonable particularity, otherwise he will not be able to give evidence of such damage at the trial. The defendant is entitled to particulars of any special financial damage alleged so that he may know what case he will have to meet, and have an opportunity of inquiring into the allegation of damage before he comes to court."
ii) para 32.49, under the heading 'Actual damages' where it is stated that:
"The claimant can lead evidence of actual loss, whether it be general loss of business or profits, or loss of particular earnings, customers, clients or patients, provided the details have been set out in the particulars of claim. The former may be a matter of inference if the words were likely to produce a general loss of business".
"If, indeed, over and above this general damage, further particular damage is under the circumstances to be relied on by the plaintiff, such particular damage must of course be alleged and shewn. But a loss of general custom, flowing directly and in the ordinary course of things from a libel, may be alleged and proved generally. "It is not special damage" - says Pollock, C.B., in Harrison v. Pearce … - "it is general damage resulting from the kind of injury the plaintiff has sustained." So in Bluck v. Lovering…, under a general allegation of loss of credit in business, general evidence was received of a decline of business presumably due to the publication of the libel, while loss of particular customers, not having been pleaded, was held rightly to have been rejected at the trial: …
Macloughlin v. Welsh was an instance of excommunication in open church. General proof was held to be rightly admitted that the plaintiff was shunned and his mill abandoned, though no loss of particular customers was shewn. Here the very nature of the slander rendered it necessary that such general proof should be allowed. The defamatory words were spoken openly and publicly, and were intended to have the exact effect which was produced. Unless such general evidence was admissible, the injury done could not be proved at all.'
"If, in addition to this general loss, the loss of particular customers was to be relied on, such particular losses would, in accordance with the ordinary rules of pleading, have been required to be mentioned in the statement of claim…"
'The necessity of alleging and proving actual temporal loss with certainty and precision in all cases of the sort has been insisted upon for centuries: … In all actions accordingly on the case where the damage actually done is the gist of the action, the character of the acts themselves which produce the damage, and the circumstances under which these acts are done, must regulate the degree of certainty and particularity with which the damage done ought to be stated and proved. As much certainty and particularity must be insisted on, both in pleading and proof of damage, as is reasonable, having regard to the circumstances and to the nature of the acts themselves by which the damage is done. To insist upon less would be to relax old and intelligible principles. To insist upon more would be the vainest pedantry. The rule to be laid down with regard to malicious falsehoods affecting property or trade is only an instance of the doctrines of good sense applicable to all that branch of actions on the case to which the class under discussion belongs. The nature and circumstances of the publication of the falsehood may accordingly require the admission of evidence of general loss of business as the natural and direct result produced, and perhaps intended to be produced. An instructive illustration, and one by which the present appeal is really covered, is furnished by the case of Hargrave v. Le Breton …, decided a century and a half ago. It was an example of slander of title at an auction. The allegation in the declaration was that divers persons who would have purchased at the auction left the place; but no particular persons were named. The objection that they were not specially mentioned was, as the report tells us, "easily" answered. The answer given was that in the nature of the transaction it was impossible to specify names; that the injury complained of was in effect that the bidding at the auction had been prevented and stopped, and that everybody had gone away. It had, therefore, become impossible to tell with certainty who would have been bidders or purchasers if the auction had not been rendered abortive. This case shows, what sound judgment itself dictates, that in an action for falsehood producing damage to a man's trade, which in its very nature is intended or reasonably likely to produce, and which in the ordinary course of things does produce, a general loss of business, as distinct from the loss of this or that known customer, evidence of such general decline of business is admissible."
'(ii) Awards in other libel cases
…. in Rantzen v Mirror Group Newspapers (1986) Ltd  QB 670, …. the Court of Appeal said that article 10(2) of the European Convention on Human Rights, which required that any restrictions on freedom of speech should be "prescribed by law" and "necessary in a democratic society", required that awards of damages for libel should be more controlled and predictable than they were. Leaving the award to a unguided jury and refusing to interfere unless the damages were such that "no twelve men could reasonably have given them" might not comply either with the principle of legal certainty or the requirement of proportionality. Their view was later confirmed by the European Court of Human Rights in Tolstoy Miloslavsky v United Kingdom (1995) 20 EHRR 442 in which an award of £1.5 million by a jury under the pre-Rantzen regime was held to be excessive having regard to the absence of any judicial guidance.
Rantzen's case therefore made two changes in the law. First, juries should still not be told of awards made by other juries but could be referred to awards made by the Court of Appeal in the exercise of its new powers… Secondly, the Court of Appeal decided that in future the awards of juries would be subjected to "a more searching scrutiny" than in the past. The question, in relation to compensatory damages, would be:
"Could a reasonable jury have thought that this award was necessary to compensate the plaintiff and re-establish his reputation? ( QB 670, 692)." …..
(iii) General damages in personal injury cases
Reference to awards in personal injuries cases is far more controversial. It was advocated as a legitimate comparison by Diplock LJ in McCarey v Associated Newspapers Ltd (No 2)  2 QB 86, 109-110 but rejected by Lord Hailsham of St Marylebone LC in Broome v Cassel & Co Ltd  AC 1027, 1070-1071 and by the Court of Appeal in Rantzen's case  QB 670, 695. In John v MGN Ltd  QB 586 the Court of Appeal reversed itself and since then juries have regularly been told to have regard to awards of general damages (for pain, suffering and loss of amenity) in personal injury actions. These are themselves conventional figures: the current scale was fixed by the Court of Appeal in Heil v Rankin  QB 272 and runs to a maximum of £200,000 for the most catastrophic injuries. As a result, Eady J said in Reed & Lillie v Newcastle Borough Council  EW HC 1600 (QB) at paras 1547-1551 that there is now a ceiling of £200,000 for compensatory damages in libel cases.'
DAMAGES IN COMPANY LAW
'These authorities support the following propositions. (1) Where a company suffers loss caused by a breach of duty owed to it, only the company may sue in respect of that loss. No action lies at the suit of a shareholder suing in that capacity and no other to make good a diminution in the value of the shareholder's shareholding where that merely reflects the loss suffered by the company. A claim will not lie by a shareholder to make good a loss which would be made good if the company's assets were replenished through action against the party responsible for the loss, even if the company, acting through its constitutional organs, has declined or failed to make good that loss. So much is clear from Prudential Assurance Co Ltd v Newman Industries Ltd (No 2)  Ch 204, particularly at pp 222-223, Heron International, particularly at pp 261-262, George Fischer, particularly at pp 266 and 270-271, Gerber and Stein v Blake, particularly at pp 726-729. (2) Where a company suffers loss but has no cause of action to sue to recover that loss, the shareholder in the company may sue in respect of it (if the shareholder has a cause of action to do so), even though the loss is a diminution in the value of the shareholding. This is supported by Lee v Sheard  1 QB 192, 195-196, George Fischer and Gerber. (3) Where a company suffers loss caused by a breach of duty to it, and a shareholder suffers a loss separate and distinct from that suffered by the company caused by breach of a duty independently owed to the shareholder, each may sue to recover the loss caused to it by breach of the duty owed to it but neither may recover loss caused to the other by breach of the duty owed to that other. I take this to be the effect of Lee v Sheard, at pp 195-196, Heron International, particularly at p 262, R P Howard, particularly at p 123, Gerber and Stein v Blake, particularly at p 726. I do not think the observations of Leggatt LJ in Barings at p 435b and of the Court of Appeal of New Zealand in Christensen v Scott at p 280, lines 25-35, can be reconciled with this statement of principle.
These principles do not resolve the crucial decision which a court must make on a strike-out application, whether on the facts pleaded a shareholder's claim is sustainable in principle, nor the decision which the trial court must make, whether on the facts proved the shareholder's claim should be upheld. On the one hand the court must respect the principle of company autonomy, ensure that the company's creditors are not prejudiced by the action of individual shareholders and ensure that a party does not recover compensation for a loss which another party has suffered. On the other, the court must be astute to ensure that the party who has in fact suffered loss is not arbitrarily denied fair compensation. The problem can be resolved only by close scrutiny of the pleadings at the strike-out stage and all the proven facts at the trial stage: the object is to ascertain whether the loss claimed appears to be or is one which would be made good if the company had enforced its full rights against the party responsible, and whether (to use the language of Prudential Assurance Co Ltd v Newman Industries Ltd (No 2)  Ch 204, 223) the loss claimed is "merely a reflection of the loss suffered by the company". In some cases the answer will be clear, as where the shareholder claims the loss of dividend or a diminution in the value of a shareholding attributable solely to depletion of the company's assets, or a loss unrelated to the business of the company. In other cases, inevitably, a finer judgment will be called for. At the strike-out stage any reasonable doubt must be resolved in favour of the claimant.'
'A company is a legal entity separate and distinct from its shareholders. It has its own assets and liabilities and its own creditors. The company's property belongs to the company and not to its shareholders. If the company has a cause of action, this is a legal chose in action which represents part of its assets. Accordingly, where a company suffers loss as a result of an actionable wrong done to it, the cause of action is vested in the company and the company alone can sue. No action lies at the suit of a shareholder suing as such, though exceptionally he may be permitted to bring a derivative action in right of the company and recover damages on its behalf: see Prudential Assurance Co Ltd v Newman Industries Ltd (No 2)  Ch 204, 210. Correspondingly, of course, a company's shares are the property of the shareholder and not of the company, and if he suffers loss as a result of an actionable wrong done to him, then prima facie he alone can sue and the company cannot. On the other hand, although a share is an identifiable piece of property which belongs to the shareholder and has an ascertainable value, it also represents a proportionate part of the company's net assets, and if these are depleted the diminution in its assets will be reflected in the diminution in the value of the shares. The correspondence may not be exact, especially in the case of a company whose shares are publicly traded, since their value depends on market sentiment. But in the case of a small private company like this company, the correspondence is exact.
This causes no difficulty where the company has a cause of action and the shareholder has none; or where the shareholder has a cause of action and the company has none, as in Lee v Sheard  1 QB 192, George Fischer (Great Britain) Ltd v Multi Construction Ltd  1 BCLC 260, and Gerber Garment Technology Inc v Lectra Systems Ltd  RPC 443. Where the company suffers loss as a result of a wrong to the shareholder but has no cause of action in respect of its loss, the shareholder can sue and recover damages for his own loss, whether of a capital or income nature, measured by the diminution in the value of his shareholding. He must, of course, show that he has an independent cause of action of his own and that he has suffered personal loss caused by the defendant's actionable wrong. Since the company itself has no cause of action in respect of its loss, its assets are not depleted by the recovery of damages by the shareholder.
The position is, however, different where the company suffers loss caused by the breach of a duty owed both to the company and to the shareholder. In such a case the shareholder's loss, in so far as this is measured by the diminution in value of his shareholding or the loss of dividends, merely reflects the loss suffered by the company in respect of which the company has its own cause of action. If the shareholder is allowed to recover in respect of such loss, then either there will be double recovery at the expense of the defendant or the shareholder will recover at the expense of the company and its creditors and other shareholders. Neither course can be permitted. This is a matter of principle; there is no discretion involved. Justice to the defendant requires the exclusion of one claim or the other; protection of the interests of the company's creditors requires that it is the company which is allowed to recover to the exclusion of the shareholder. These principles have been established in a number of cases, though they have not always been faithfully observed. The position was explained in a well known passage in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2)  Ch 204, 222-223:
"But what [the shareholder] cannot do is to recover damages merely because the company in which he is interested has suffered damage. He cannot recover a sum equal to the diminution in the market value of his shares, or equal to the likely diminution in dividend, because such a 'loss' is merely a reflection of the loss suffered by the company. The shareholder does not suffer any personal loss. His only 'loss' is through the company, in the diminution of the value of the net assets of the company, in which he has (say) a 3% shareholding. The plaintiff's shares are merely a right of participation in the company on the terms of the articles of association. The shares themselves, his right of participation, are not directly affected by the wrongdoing. The plaintiff still holds all the shares as his own absolutely unencumbered property. The deceit practised upon the defendant does not affect the shares; it merely enables the defendant to rob the company. A simple illustration will prove the logic of this approach. Suppose that the sole asset of a company is a cash box containing £100,000. The company has an issued share capital of 100 shares, of which 99 are held by the plaintiff. The plaintiff holds the key of the cash box. The defendant by a fraudulent misrepresentation persuades the plaintiff to part with the key. The defendant then robs the company of all its money. The effect of the fraud and the subsequent robbery, assuming that the defendant successfully flees with his plunder, is (i) to denude the company of all its assets; and (ii) to reduce the sale value of the plaintiff's shares from a figure approaching £100,000 to nil. There are two wrongs, the deceit practised on the plaintiff and the robbery of the company. But the deceit on the plaintiff causes the plaintiff no loss which is separate and distinct from the loss to the company. The deceit was merely a step in the robbery. The plaintiff obviously cannot recover personally some £100,000 damages in addition to the £100,000 damages recoverable by the company."
It is indeed obvious that (on the given facts, where no consequential losses are stated to have arisen) the defendant cannot be made liable for more than £100,000 in total. It is equally obvious, however, that if the damages were recoverable by the shareholder instead of by the company, this would achieve the same extraction of the company's capital to the prejudice of the creditors of the company as the defendant's misappropriation had done.'
'Reflective loss extends beyond the diminution of the value of the shares; it extends to the loss of dividends (specifically mentioned in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2)  Ch 204) and all other payments which the shareholder might have obtained from the company if it had not been deprived of its funds. All transactions or putative transactions between the company and its shareholders must be disregarded. Payment to the one diminishes the assets of the other. In economic terms, the shareholder has two pockets, and cannot hold the defendant liable for his inability to transfer money from one pocket to the other. In principle, the company and the shareholder cannot together recover more than the shareholder would have recovered if he had carried on business in his own name instead of through the medium of a company. On the other hand, he is entitled (subject to the rules on remoteness of damage) to recover in respect of a loss which he has sustained by reason of his inability to have recourse to the company's funds and which the company would not have sustained itself.'
THE STRIKE OUT APPLICATION
THE DEFENDANT'S CONTENTIONS
i) The market's assessment of any loss is irrelevant. It is for the Court to assess damages itself. The Court should not take the assessment of the market or anyone else. There is no knowing what factors the market takes into account.
ii) The shortfall in market capitalisation in Plc's shares is a loss which neither Claimant has suffered ... the reflective loss principle) The Court is bound to treat the two Claimants as separate entities, there being no circumstances which justify lifting the corporate veil, notwithstanding the consolidation of accounts. Mr Browne QC contends that Ltd is seeking to recover the loss suffered by shareholders – the added complication being that it is not in fact the loss of its own shareholder, Plc, but the loss of Plc's shareholders. And, he contends, Plc is seeking to do the same thing that is to recover the loss suffered by its own shareholders. But in addition, he submits, Plc is also seeking to do what the other shareholders have sought to do in the decided cases, that is, in its capacity of shareholder in Ltd, to recover the losses suffered by Ltd, which are not losses suffered directly by itself.
iii) Lack of certainty and precision. The share price of Plc varies from date to date. If the date of the assessment is at whatever is the date of the hearing, that date, and so the price, will be arbitrary and fortuitous. Further, a case based on Plc's share price as at date of trial would be unjusticiable: it would require examination of why Plc's share price was at the level it was immediately before the article complained of, and why it was as it was at the date of calculation; whether the two comparators are true comparators; and the same examination of the levels of each of the comparator's share prices at the date immediately before publication, and at the date of trial.
iv) Risk of double recovery confusion and waste of time. If Plc recovers damages on the basis of a diminution of its share price at the date of trial, and Ltd recovers substantial damages on the basis of its claim for loss of particular business (pleaded in PSD para 7) there will be an unavoidable risk of double recovery. There is no way of knowing to what extent the market price is based on any assumption that Ltd will recover a substantial sum under PSD para 7.
v) ECHR Art 10 Mr Browne QC draws attention to the exceptional size of the claim. He accepts that if special damages of that amount can be properly argued and established at trial, the award of such a large sum for a publication will not in principle fall foul of the ECHR judgment in Tolstoy. But he submits that the fact that the claim advanced is so large does have a chilling effect on financial journalism, and so calls for careful scrutiny to ensure that it is indeed arguable that any award can be properly established in accordance with the law, and is necessary and proportionate.
vi) Developments in Claimants' pleaded case Mr Browne QC draws attention to the way the pleaded case has developed with each further statement, such as the introduction of comparators in PSD, and the introduction of the proposed assessment of Special Damage on the basis that £230m is the 'best available reflection of the loss', and the changing phraseology.
vii) Inconsistent out of court statements by Plc's CEO. In addition, Mr Browne QC had made submissions on out of court statements reported to have been made by Mr Smith in Plc's financial statements, and in the press. I can put these submissions to one side immediately. They could not fairly be adjudicated upon without further evidence, which has not been adduced at this hearing. I pay no regard to these matters.
i) there is a diminution in the market value of Plc which 'is properly calculated as the difference between the value (as attributed by the market in which the shares are traded) that all the shares in the Second Claimant would have had if those libels had not been published and the value that those shares have as a result of publication of those libels. This contention raises questions of fact and/or expert evidence, and cannot be disposed of on the strike-out application'.
ii) 'that calculation (carried out by comparing the fall in the price of shares in Plc with the increase in the price of shares in appropriate close comparator companies [namely Numis and ICAP]) shows that the diminution in the market value of Plc caused by the libels complained of was some £230,526,320 [ie as at 26 March 2004]. Again, this contention raises issues of fact and/or expert evidence, and cannot be disposed of on the strike-out application'.
iii) 'In the event that only one company had been libelled and that the loss of net profits had been occasioned to only one LSE-listed company, the Claimants contend that the position would be straightforward. The best measure of likely future losses would be that provided by the market in which the shares in the company were traded, because the price that is set by the market for those shares is a direct reflection of the market's estimate of the net present value of future profits of the company, and the market's approach to these matters is reliable.'
iv) 'that aspect of their case has more than a real prospect of success, and in truth, and as already pleaded on the Claimants' behalf, involves a theory and methodology that is well recognised. While the Claimants adhere to their pleaded case that this is a matter for expert evidence in due course, they would point out that it has support from numerous respected publications. These include the Defendant's own publication "Corporate Valuation" by David Frykman and Jakob Tolleryd, which devotes the whole of Chapter 6 to "Discounted Cash Flow Valuation", stating that "The most commonly used standalone valuation model is the discounted cash flow (DCF) model" and that "The main idea behind the McKinsey model (and all other cash flow models) is that the value of a company today is equal to all future free cash flows, discounted back to the present with a discount rate that reflects the level of risk inherent in those cash flows", and explaining that such models are so popular and widely used "Primarily, [because] the model is theoretically 'correct' and is compatible with financial theory and other models used on the capital markets ….Company valuations produced by the DCF model fit very well with the way capital markets value companies in practice". The first element of the authors' analysis of the McKinsey model concerns WACC, which is fully in accordance with the Claimants' pleaded case.'
v) 'In the present case, two companies are involved. It is the business of one company (Ltd) that has been primarily affected by the allegations complained of. However, that company is not a listed company; rather it is a wholly-owned subsidiary of another company (Plc), which is a listed company. Moreover, the losses of future revenue of the Group of which Plc is the holding company are largely, if not exclusively, based on losses suffered by the business of Ltd. In these circumstances, the loss of future net profits of Ltd is reflected not in a reduction in the price of the shares in Ltd, but in the shares of Plc. The measure of the loss that has been produced by this means is £230,526,320.'
vi) 'As it is obvious that one or other of the companies must be entitled to effect this recovery, the Claimants' primary submission on the present application is that it is a sterile debate and a waste of the resources of the parties and the time of the Court to force the Court to give a definitive ruling on this matter at this stage. The artificiality and futility of this exercise is, we would suggest, all the greater in the case of a company such as the Second Claimant which produces its accounts on a consolidated basis.'
"The figure is arrived at by analysts and investors estimating the future earnings of the Plc and then discounting those figures at the Plc's estimated weighted average cost of capital (WACC) to produce the NPV. The theory and methodology involved is well recognised, and is a matter of expert evidence which the Claimants will adduce at trial. "
In their Skeleton Argument it is repeated that this is a matter for expert evidence, but reference is made to what is called 'the most commonly used stand alone valuation model … the discounted cash flow model," as explained in a book published by the Defendant 'Corporate Valuation' by David Frykman and Jakob Tollard.
'… although a share is an identifiable piece of property which belongs to the shareholder and has an ascertainable value, it also represents a proportionate part of the company's net assets, and if these are depleted the diminution in its assets will be reflected in the diminution in the value of the shares. The correspondence may not be exact, especially in the case of a company whose shares are publicly traded, since their value depends on market sentiment. But in the case of a small private company like this company, the correspondence is exact.'
' A further issue is whether, in the case of Lonrho plc, injury to business reputation can be recovered as a form of injury to property, sc goodwill; that involves considering what is meant by goodwill and—on the way the case has been argued by Mr Beveridge—whether fluctuations in the share price of a company reflect its goodwill and reputation.'
'To prove loss of orders and loss of trade is another matter; that is recognisable pecuniary damage. The claim in respect of the joint venture with Iranian interests referred to in part II of schedule 2 to the particulars of damage could come in under this heading if a link between the loss of the venture and Miss Pollard's campaign is sufficiently proved. Such loss of orders, for example, would involve injury to the goodwill of a business which may be one of the most important assets of the business. But goodwill in that sense must have the meaning put on that word in Trego v Hunt  AC 7 esp at 17–18, 24, [1895–9] All ER Rep 804 esp at 809–810, 813 per Lord Herschell and Lord Macnaghten. It cannot mean some airy-fairy general reputation in the business or commercial community which is unrelated to the buying and selling or dealing with customers which is the essence of the business of any trading company.
Again the well-established right to damages in passing off where deceptive goods have been put on the market and passed off as the plaintiff's goods has a practical relationship to the plaintiff's business, which is a long way from the allegations of injury to the business goodwill of Lonrho in the particulars: see Draper v Trist  3 All ER 513 at 519 per Greene MR and A G Spalding & Bros v A W Gamage Ltd (1918) 35 RPC 101 at 116, where Swinfen Eady LJ cited from the speech of Lord Sumner on the hearing of an earlier stage in that case in the House of Lords; those were straightforward deceptive goods cases which bear no resemblance at all to the elaborate allegation of injury to business goodwill or business reputation in the particulars in the present case.
Beyond that, Lonrho's share price is not an aspect of Lonrho's goodwill in the sense referred to above. The share price of Lonrho is not an asset of Lonrho at all. That the share price may be affected by the perceptions of stock market analysts, financial commentators and business journalists does not mean that the assets of Lonrho are affected by such perceptions or that Lonrho suffers pecuniary damage if its share price falls as a result of the publication of such perceptions…
Accordingly I would refuse to allow amendment to introduce the proposed sub-head (a) in the proposed particulars of the claim by Lonrho, and the whole of schedule 3 there referred to, and also the repetition of schedule 3 in para 1 of part 1 of schedule 4.'
'What "goodwill" means must depend on the character and nature of the business to which it is attached. Generally speaking, it means much more than what Lord Eldon took it to mean in the particular case actually before him in Cruttwell v. Lye where he says: "the goodwill which has been the subject of sale is nothing more than the probability that the old customers will resort to the old place." Often it happens that the goodwill is the very sap and life of the business, without which the business would yield little or no fruit. It is the whole advantage, whatever it may be, of the reputation and connection of the firm, which may have been built up by years of honest work or gained by lavish expenditure of money.'
' I turn to the specific heads of damage in the proposed re-re-amendment.
(a) 'Damages for injury to Lonrho's right of property in the goodwill of its business the value of which was diminished by each and/or all of the conspiratorial acts identified in part I of Schedule 2 hereto.'
With the exception of the allegations in the Esterhuysen proceedings and the demonstration outside Lonrho's annual general meeting by Miss Pollard, these are all statements made by Miss Pollard. The manner in which goodwill is said to have been damaged is set out in schedule 3. In my opinion this schedule is nothing more than a complaint of injury to reputation with some wholly unspecified and unquantified injury to goodwill, which ranges from damage to the confidence of customers, the ability to attract employees and backers, the perception of stock market analysts, financial commentators and journalists and the impact on Lonrho's share price. I would refuse leave to amend to include this paragraph. I reach this conclusion without regret because I consider the claim in para (a) even if it were or could be properly quantifiable as virtually untriable. The number of witnesses on both sides would be likely to be legion and how a judge could determine that it was Miss Pollard's letters and other effusions, assumed for this purpose to be true, rather than other extraneous factors such as poor service, overborrowing, weak managerial control or the caprice of African ministers that cause a loss of business, if any, or adverse opinions of analysts, journalists, staff and others, I do not know.'
'If a person libelled has suffered specific damage he can plead it as special damage and recover it. That claim will then have the advantage (or disadvantage) of a careful scrutiny, supported by documents and oral evidence from which a court can decide whether in truth a decline of business resulted from the libel. The plaintiffs would then have to give particulars and facts and figures to support it. The plaintiffs or their accountants could produce figures of turnover and graphs showing any sudden downward tendency, such as, for instance, that in the week after the libel orders noticeably declined and so forth. Managers, salesmen, and others could give supporting evidence. Evidence could be called to show that the price of the shares in the stock market had declined. And the defendants would have an opportunity of calling evidence to counter the plaintiffs' claim for special damage. The plaintiffs did not take this course. They did not plead any special damage. But even though the plaintiff pleads no special damage, he may rely on a general loss of business if the words were in their very nature intended or reasonably likely to produce a general loss of business (Ratcliffe v. Evans, [1892 2 QB 524, 532] per Bowen L.J.). That is a reasonable way of dealing with some general loss from a libel which can reasonably be inferred and cannot be proved. Nevertheless, if large sums are to be attributed to loss of business from a libel, it is plainly desirable that they should be pleaded, particularised, and so far as possible supported by evidence' (emphasis added).
'With regard to the evidence of share price, I am prepared to accept that this may be relevant to goodwill as well as to special damages, as Lord Williams submits, and that so far as it is relevant to good will rather than special damage, it does not have to be pleaded'.
MODE OF TRIAL
"(1) Where, on the application of any party to an action to be tried in the Queen's Bench Division, the court is satisfied that there is in issue – ...
(b) a claim in respect of libel, …
the action shall be tried with a jury, unless the court is of the opinion that the trial requires any prolonged examination of documents or accounts or any scientific or local investigation which cannot conveniently be made with a jury…
(3) An action to be tried in the Queen's Bench Division which does not by virtue of subsection (1) fall to be tried with a jury shall be tried without a jury unless the court in its discretion orders it to be tried with a jury.
(4) Nothing in subsections (1) to (3) shall affect the power of the court to order, in accordance with rules of court, that different questions of fact arising in any action be tried by different modes of trial: and where any such order is made, subsection (1) shall have effect only as respects questions relating to any such charge, claim, question or issue as is mentioned in that subsection"
"In the course of his judgment the judge conducted an extensive review of the relevant authorities and correctly extracted the following principles:
(i) The basic criterion, viz that the trial requires a prolonged examination of documents, must be strictly satisfied, and it is not enough merely to show that the trial will be long and complicated (Rothermere v Times Newspapers ). However the word "examination" has a wide connotation, is not limited to the documents which contain the actual evidence in the case and includes, for example, documents which are likely to be introduced in cross-examination (Goldsmith v Pressdram )."
"16. I come then to the linked and more difficult question whether it can be said that the examination of those documents cannot conveniently be made with a jury. The connotation of "conveniently" is less clear than the meaning of "prolonged examination" which is relatively straight forward. Some guidance can, however, be derived from the authorities. In Goldsmith v Pressdram Limited Slade LJ at p74H said:
"Correspondingly, I infer that the legislature, in using the particular word "conveniently" in the context of the sub-section, was directing its attention to the efficient administration of justice, rather more than the probable difficulty or otherwise of issues involved There may be many cases where numerous documents will be required to be looked at, but no substantial practical difficulties are likely to arise in their examination being made with a jury. On the other hand, cases may, I concede, arise where relatively few documents will require examination, but nevertheless long and minute examination of them is likely to be required, and, because of their particular nature, a satisfactory examination of them by a jury will present formidable practical difficulties".
In the same case Kerr LJ said at p74A:
"Conveniently' means, as I see it, without substantial difficulty in comparison with carrying out the same process with a Judge alone. On the issues raised in this case the investigatory process of arriving at the ultimate answer would be a difficult task for any judge despite constant reference to documents, and far more difficult, and therefore inconvenient as a forensic process, when it has to be done in a way that is capable of being followed and understood by 12 jurors".
The physical problem of handling large numbers of documents in the jury box;
The prolongation of the trial because of the number and complexity of the documents;
The increased expense, both by the added length of the [jury] trial and copying; and
The risk that the jury may not understand the documents.
"1. I have heard very helpful submissions this morning, albeit at short notice, which is to some extent regrettable, but nevertheless Counsel have been able to do their clients justice on both sides on this very and important issue.
2. The Application before me is that of the Defendant that there should be a split trial, and the way that it is put is that the issue of special damages should be separated out and dealt with apart from liability and general damages. That was clarified in the course of argument this morning. It is not suggested (at the moment at any rate) that the issue of general damages should go off for separate trial along with special damages.
3. I have no hesitation at all in coming to the conclusion that this is a case for separate trials at any rate on special damage as compared to the other issues. At the moment, as things stand, it looks as though the trial, certainly on liability and possibly on general damages, is going to be by Judge and Jury… " (emphasis added)
"The second plaintiff's claim derives solely because of his association with the first plaintiff and the libel upon it. Much of the same evidence will be relevant to the claims of both plaintiffs. While no doubt a jury will be directed by the judge not to take account of any financial loss to the second plaintiff and to award only damages for injury to his reputation and injured feelings, in my view the claims of the two plaintiffs are so closely linked that the task of both jury and judge would be made difficult if they had to assess damages independently of each others. I think that there is a risk of double compensation or possibly under compensation and the possibility of inconsistent verdicts…".
"In this judgment we shall endeavour to avoid a term [special damages] which, intelligible enough in particular contexts, tends, when successively employed in more than one context and with regard to different subject-matter, to encourage confusion in thought. The question to be decided does not depend on words, but is one of substance."
"'It is apparent that the judge's award to Beta of £90,000 general damages was a round figure which was not based on any exact calculation. Indeed no special damages have ever been claimed by Beta'."
"(i) In the period 1 November 1987 to 31 October 1988 [Beta] suffered a loss of net profit of £109,672 after deduction of corporation tax. (ii) The estimated loss of net profit after deduction of corporation tax for the next nine years is at the rate of £109,672 p.a., excluding any allowance for growth of business or inflation. "
There was a report which accompanied the particulars, which was 16 pages in length and was accompanied by appendices and schedules running to 65 pages. The report sought to show:
"(1) that there was a substantial fall in turnover in Beta's business in the year following the programme; (2) based upon the previous progress of Beta and five identified competitors, that Beta could have expected an increase in turnover in that year; (3) that the loss of profit on such increased turnover was £109,672 and that such loss is attributable to the programme; (4) that the market in asbestos stripping will increase over the next five years'. "