Journalism is a dangerous business, and libel claims can be an expensive hazard, particularly when reporting on large City institutions. A record £230.5 million libel claim against The Financial Times by City brokers Collins Stewart Tullet plc – the largest special damages claim ever brought in a defamation action-must have raised many a temperature in the newsrooms.
So it is not only the FT but the media industry as a whole that can breathe a sigh of relief that a significant part of that claim has now been struck out by Mr Justice Tugendhat as “a waste of time.”
Had the judgment gone the other way it would have opened up the possibility for companies to sue newspapers every time they suffered share price falls as a result of alleged defamatory articles.
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Collins Stewart sought special damages for hundreds of millions of pounds it claimed were wiped off its share price as a direct result of an allegedly libellous article published in The Financial Times , which reported on High Court proceedings for wrongful dismissal brought by a former employee of the company. Whilst the company’s share price had in fact fallen only slightly, the figure claimed was arrived at by comparison with sharp rises in the market capitalisation of two similar companies in the same sector.
Saying that such a huge claim would have a “chilling effect on free speech,” Mr Justice Tugendhat rejected this ‘novel’ claim, holding that the suggested measure was far too uncertain to be acceptable as a legal basis for assessing damages and the court could only speculate as to the factors which influenced the fluctuations in companies’ share prices. The well-developed rules governing damages in tort generally and defamation in particular were the appropriate basis for any assessment of damages.
Although the FT has by no means won the war -a claim for lost business (amounting to some £37 million) will proceed-it has certainly won an important battle and, if the FT article is found to be libellous, the damages will not be on such an unprecedented large scale.
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The awarding of damages in defamation claims remains of course a difficult matter, and one that has given rise to many judicial and legislative attempts to impose a systematic approach.
Although subject to the usual rules, as to proving causation and that the harm is not too ‘remote’ to be recoverable, the very nature of the tort makes the assessment a matter ‘more of impression than addition’ and this impressionistic approach, coupled with little if any guidance, has led to juries making substantial- some would say unjustifiable- awards. It is little surprise, therefore, that in a separate judgment Mr Justice Tugendhat has ruled that, in this case, if The Financial Times is found liable, damages will be assessed by a judge sitting alone.
Charles Brasted is a trainee solicitor for Lovells in their Intellectual Property Department.
Charles Brasted
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