All journalists, but particularly ?nancial journalists, must be aware of the potentially catastrophic problem of claims for libel damages based on a company’s fall in value caused by a defamatory article.
This was brought home to the Financial Times last week when it received a complaint accusing the newspaper of publishing an article that was responsible for a fall of many millions of pounds in the share price of the ?rm of stock brokers, Collins Stewart Tullett.
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An expensive lesson was learnt after BBC News falsely linked a mining company, Oryx Natural Resources, to the Al-Qaida terrorist network, when it confused one of the company’s shareholders with a terrorist convicted of bombings of US embassies in Africa. A multi-millionpound libel claim was launched but the case eventually settled (after an apology) for much less.
Clause 14 of the Editors’ Code of Practice, as well as the Press Complaints Commission’s best practice guidance note, which is drawn from the house rules of a number of different publications, aims to ensure that readers receive disinterested advice and information and that journalists, and those connected with them, do not pro?t as a result of publication.
The need for such safeguards is undeniable. The PCC code prohibits journalists from using ?nancial information received in advance of its general publication for their own pro?t, and prevents them from writing about shares in whose performance they have a ?nancial interest. This acts as a valuable precaution against insider dealing.
When the PCC investigated allegations that the Daily Mirror had breached the code in connection with its City Slickers column in 1998, one of the journalists involved told the PCC: “Every time I tipped a share the price shot up between 30 per cent and 100 per cent the next morning.”
Although the Mirror was held to have acted in breach of the code, the newspaper had however been alert to the risk of libel complaints and had put in place special procedures under which the Mirror’s legal adviser took over personal responsibility for checking the column.
Although general damages for injury to reputation and hurt feelings in libel cases have fallen dramatically since the libel claimant’s heyday of the early Nineties, special damages claims can still be considerable.
Special damages may be awarded in respect of any injury proved to have been suffered as the natural, and not unduly remote, consequence of the defamatory publication complained of.
Although ?nancial loss is only recoverable where it is the natural and probable result of the publication – and evidence must be provided to this effect, in the case of newspaper reports, which quite often have a bearing on a company’s share price – it might be possible to demonstrate the required link.
In the proposed claim against the FT, Collins Stewart Tullett claims that the worldwide in?uence of the City’s daily makes the article more damaging to its business than any other newspaper article on the subject and, for the time being, the claim is being valued by the ?rm at £128m. This represents the fall in its stock market value since the day before the article was published and its value at the end of that week.
The damages position may yet become more complicated however.
No doubt to the relief of all concerned, the Collins Stewart Tullett share price has partly recovered, perhaps due to the ?rm’s efforts at mitigating its loss by making such a highly publicised complaint. It has also been alleged, however, that the stance adopted by the FT in writing about Collins Stewart Tullett may be part of a longrunning dispute between Collins Stewart’s chief executive and Pearson, the owner of the Financial Times.
This might open the newspaper to a claim for aggravated damages, in addition to special damages, which would take account of any improper motive in publishing the article complained of.
Furthermore, if the newspaper is to stand by its story, with the further repetition of the allegations that that would entail and the absence of any apology, that may give rise to calls for greater damages. For the time being however, the claim contemplated by Collins Stewart Tullett appears to be limited to a mere £128m.
James Damon is a solicitor in the media and entertainment department at Charles Russell
by James Damon