DEFAMATION

Libel - qualified privilege - - electoral candidate - right to a fair trial - freedom of expression

Mary Culnane v (1) Mark Morris (2) Vijay Naidu: QBD (Mr Justice Eady): 8 November 2005



The claimant British National Party (BNP) electoral party candidate (C) had sued for defamation in respect of words contained in a leaflet published by the defendant Liberal Democrats (D) at the time of an election.


D had pleaded that they were under a social, moral and legal duty to communicate the alleged true nature of the BNP, and that the recipients had a corresponding interest in receiving the words complained of. D had also pleaded in the alternative that if any potential privilege only arose as a result of the publication having taken place 'at the time of the election', then section 10 of the Defamation Act 1952 should be construed in a manner that permitted the availability of the defence of privilege to comply with articles 6 and 10 of the Human Rights Act 1998 and the European Convention on Human Rights.


C submitted that section 10 of the Act precluded the defendants from relying on the defence of qualified privilege.


Claire Miskin (instructed by Osmond & Osmond) for the claimant; Sara Mansoori (instructed by Wragge & Co) for the defendant.


Held, the introductory rubric of section 10 - limitation on privilege at elections - would appear to suggest that it was Parliament's intention that privilege at elections should be 'limited' rather than precluded altogether. More importantly, the section did not provide that 'a defamatory statement published by or on behalf of a candidate in any election to a local government authority or to Parliament shall be deemed not to be published on a privileged occasion'. The provision could be construed to the effect that it would never be sufficient to establish that a defamatory statement was material to a question in issue in the election.


In other words, a candidate could not acquire a special privilege for the publication of defamatory statements, not open to other citizens, merely because he happened to be addressing such a material issue. No doubt circumstances could arise in the course of communications with electors, which would give rise to a prima facie defence of qualified privilege.


The Court of Appeal in Plummer v Charman [1962] 1 WLR 1469 had considered that the effect of section 10 was to impose significant restrictions on a candidate's scope for pleading privilege in respect of words published during an election period. Lord Denning in particular had commented that the only defences available to a person who made an election address was that the words were true or were fair comment on a matter of public interest. However, the case had been heard prior to the advent of the 1998 Act and prior to the decision in Pepper (Inspector of Taxes) v Hart (1993) AC 593. The appeal court had not had the opportunity to consider the parliamentary debates, which might have made a significant difference.


It was clear that the original proposals for section 10 had been worded restrictively and would have had the effect of precluding a defence of qualified privilege. However, the wording was later modified, the intention being not to deprive a candidate of privilege possessed by everybody else, but to ensure that such persons were not accorded a special privilege of their own.


To construe section 10 as precluding the defence of qualified privilege would not seem to be consistent with any legitimate aim and, more importantly, was not what Parliament had set out to achieve (Plummer doubted). The Act also had not specified that a candidate should be confined to the defences of fair comment and justification, and such words should not be implied from the text.



There was no difficulty in interpreting section 10 in a way that was compatible with convention rights, as section 3 of the 1998 Act required, if it was construed in accordance with the natural meaning of the words: a candidate could not claim special privilege by virtue only of publishing words that were 'material to a question in the election'. On the other hand, a candidate like any other citizen might be able to establish a defence of qualified privilege if the ingredients recognised at common law were present on the facts of the case.


For determination of whether or not there was an occasion of privilege, there was no statutory bar prohibiting reference to the fact of an election or the relevance of issues within it. Such matters were part of the background circumstances that might be proper to take into account, even if they were insufficient in themselves to give rise to privilege automatically.


Preliminary issue determined in favour of defendant.






COSTS


Conditional fee agreements - costs-capping orders - costs estimates - disclosure - legal costs insurance

Marion Henry v British Broadcasting Corporation: QBD (Mr Justice Gray): 11 November 2005


The applicant (BBC) applied for a costs-capping order in libel proceedings brought against it by the respondent (H). H had retained solicitors under a conditional fee agreement (CFA), accompanied by legal costs insurance (LCI). The success fee in the CFA, although not disclosed, had been estimated at 100%. The parties' solicitors had given estimates of their costs in their allocation questionnaires.


H's solicitors had refused the BBC's request for details of the conditions and level of cover of the LCI policy. It contained certain exemptions that made it likely that the insurer would be able to disclaim liability for the BBC's costs if the BBC were to succeed in its defence of justification. H's solicitors had initially refused the BBC's requests for a revised costs estimate. Immediately prior to the instant application, H's solicitors served the BBC with a revised costs estimate, which had increased significantly. The BBC's predicament was that if it lost, it would be liable for H's costs which, inclusive of the success fee, would total in the region of £1.6 million, whereas if it successfully defended the claim there was doubt that it would be able to claim under the LCI policy, which in any event provided totally inadequate cover, and it would struggle to recover from H herself, whose assets were not enough to cover the costs.


The BBC, although admitting that its application was being made at a late stage, argued that the delay was as a result of H's conduct in not disclosing information about the escalating costs and the terms of the LCI. H submitted that the application was being made too late in the course of the litigation, and that it would be unfair to cap costs from that point on, given that part of the rationale for the costs-capping regime was to allow the capped party to plan ahead and allocate resources appropriately in light of the cap.


H contended that there had not been any deception regarding the terms of the LCI cover. H further argued that it would be impracticable for a judge sitting alone, without advice or assistance from a costs judge, to determine the right figure for the cap.


Andrew Caldecott QC, Catrin Evans (instructed by the in-house solicitor) for the applicant; Richard Rampton QC, Jacob Dean (instructed by Carter-Ruck) for the respondent.


Held, on the face of it, the facts of this case indicated that a costs-capping order was required. Where costs were high and a CFA with a substantial success fee was in place, the court was likely to be willing to intervene with a costs-capping order. However, a court could not impose such an order of its own motion. As was clear from the relevant practice direction (parts 43-48) and sections 6.1, 6.3 and 6.6 of the Schedule of Costs Precedents, it was for the parties to keep themselves informed of their opponents' estimated costs, and if necessary make an application to the court for an order that an estimate be provided. However, no such application had been made in this case.


The BBC had not been informed of H's increased costs until a late stage. The BBC could and should have been informed much earlier of the escalating costs, particularly in light of the existence of a CFA, which could have potentially doubled its costs exposure. The BBC had not been informed about the terms of the LCI policy. That should not have happened. The BBC had a legitimate interest in knowing the extent of the protection provided under the policy.


However, although the BBC had found itself in a situation where if it successfully defended the claim, it was unlikely to recover all of its costs, yet if it lost the claim it would incur substantial costs, a costs-capping order could not be imposed at such a late stage in the litigation. The trial was only days away. A costs-capping order should operate prospectively, not retrospectively (King v Telegraph Group Ltd [2004] EWCA Civ 613, [2005] 1 WLR 2282, and Weir v Secretary of State for Transport [2005], unreported, applied).


The imposition of a costs-capping order so close to trial would effectively penalise H's solicitors, which was not the purpose of a costs-capping order. Furthermore, the judge was unable to determine, without the assistance of a costs judge, the amount of brief fees, the charging rates, and how much work was reasonable and proportionate. Such an exercise was more suitable for a costs judge or at least a judge sitting with a costs judge.


Application refused.






LANDLORD AND TENANT


Assignment - breach of covenant - leases - limit of liability - release - void contract terms - contracting out of liability

Avonridge Property Co Ltd v London Diocesan Fund & Ors: House of Lords (Lords Nicholls of Birkenhead, Hoffmann, Scott of Foscote, Walker of Gestingthorpe, Baroness Hale of Richmond): 1 December 2005


The appellant lessee (X) appealed against the dismissal of its appeal ([2004] EWCA Civ 1306, [2005] 1 WLR 236) against a finding in favour of the respondent sublessees (Y) that the Landlord and Tenant (Covenants) Act 1995 rendered a clause in the lease void.


X had acquired by assignment a lease of shop units. X granted subleases of six of the shops to Y, who paid substantial premiums for those subleases. The rent payable under each sublease was a peppercorn. Each sublease contained in clause 6 a landlord's covenant for payment of the rent reserved by the head lease. Clause 6 began: 'The landlord covenants with the tenant as follows (but not, in the case of X only, so as to be liable after the landlord has disposed of its interest in the property).' X subsequently assigned the head lease to a third party who disappeared, leaving the rent due under the head lease unpaid.


Y were granted relief from forfeiture but had to pay the rent arrears under the head lease and take new leases of their shops for a higher rent. Y brought successful proceedings against X for damages for breach of the landlord's covenant in clause 6.


The judge held that the Act rendered void the words in clause 6, limiting X's liability to the time it was the landlord. Y submitted that the words in clause 6 were an agreement relating to a tenancy within the meaning of section 25 of the Act and the agreement frustrated the operation of the limited release provisions in sections 6 to 8 of the Act, which were intended to be the sole means whereby an original landlord could obtain a release from the landlord covenants when he assigned the reversion.


Mark Warwick (instructed by Philippsohn Crawfords Berwald) for the appellant; Nathan Wells (instructed by Gattas Denfield) for the respondents


Held - Lord Walker dissenting - sections 5 to 8 of the Act were relieving provisions intended to benefit landlords or tenants to relieve them from a liability which would otherwise exist. The sections introduced a means, which could not be ousted, whereby in certain circumstances, without the agreement of the other party, a tenant or landlord could be released from the liability he had assumed. The object of the legislation was that on lawful assignment of a tenancy or reversion, and irrespective of the terms of the tenancy, the tenant or landlord should have an exit route from his future liabilities.


Thus the mischief at which the statute was aimed was the absence in practice of any such exit route. The legislation was not intended to close any other exit route already open to the parties, in particular that by agreement their liability could be curtailed from the outset. Section 25 was to be interpreted generously, but there was nothing in the Act to suggest that the statute was intended to exclude the parties' ability to limit liability under their covenants from the outset in whatever way they agreed. That was so whether the agreed limitation was included in the lease itself or in a separate document by way of waiver or agreement to release. Such an appraisal of the Act accorded with the Law Commission's report Landlord and Tenant Law &150; Privity of Contract and Estate (Law Com No. 174, 1988).


The events did not exemplify a loophole in the Act, as the risks involved were not concealed or obscured from Y but were evident on the face of the subleases. Any competent conveyancer should have warned Y of the risks clearly and forcefully.


The case of BHP Great Britain Petroleum Ltd v Chesterfield Properties Ltd [2001] EWCA Civ 1797, (2001) 50 EG 88 (CS) did not assist Y as X's liability under clause 6 was expressly limited to the period for which it held the reversion (BHP distinguished). Section 3 of the Act was irrelevant to this case as X's liability under the covenant in clause 6 was expressly limited to the period when it held the reversion and nothing in section 3 precluded the parties from limiting the liability of the original covenantor in that way. Nor was such a limitation rendered void by section 25.


Appeal allowed.







TORT


Damages - insurance - negligence - bailment - damage to goods - equipment leasing - insurance claims - railways - reversionary interests

HSBC Rail (UK) Ltd v Network Rail Infrastructure Ltd (Formerly Railtrack plc): CA (Civ Div) (Vice-Chancellor Sir Andrew Morritt, Lords Justice Longmore, Lloyd): 25 November 2005


The appellant (H) appealed against the decision ([2005] EWHC 403 (Comm)) on a preliminary issue that it was not entitled to claim substantial damages against the respondent (N) in respect of the loss of and damage to railway rolling stock.


H was the owner of railway carriages that were leased to a train-operating company (G). The carriages had been damaged as a result of a train derailment. N was the owner and operator of the railway track infrastructure. G and N were party to a claims allocation and handling agreement. Insurance had been taken out in the names of both H and G, and the joint material damage insurers made payments to H for carriages that had been written-off and for the cost of repairing other carriages.


H acknowledged that rental was no longer payable in respect of the carriages written off. The insurers, in the name of G, then sought to recover from N.


N, in its defence, relied on limitation provisions in the claims allocation and handling agreement and also alleged that maintenance contractors, who were party to that agreement, were liable to contribute to the limit under it. The insurers then issued proceedings in H's name against N in negligence on the basis that H, as bailor of the carriages, could sue for substantial damages, and that H's claim would not be met by the contractual limitation clause. The judge held that H was only entitled to recover in respect of any permanent damage to its reversionary interest and that no such damage had occurred.


N submitted that H could not sue for damages unless it could show permanent damage to its reversionary interest, not just damage to the carriages. H sub-mitted that as the owner of the carriages, it had a right to sue N in tort for negligence since the carriages had suffered permanent damage and that the cost of repair and compensation should be ignored, as they had been paid pursuant to the terms of an insurance policy.


Christopher Butcher QC, James Brocklebank (instructed by Burges Salmon) for the appellant; Michael Crane QC, Katherine Watt (instructed by Kennedys) for the respondent.


Held, it was clear from the authorities that a bailor not in possession had a right of suit in respect of actual damage provided it affected his reversionary interest. Ignoring the effect of insurance, H had been paid the full value of the carriages that were beyond repair and those carriages that could be repaired. H was not out of pocket and on ordinary negligence principles had suffered no loss and could make no recovery.


There were exceptions to that general rule but there was no authority in support of H's proposition that a goods owner without possession or the immediate right to possession could recover the value of the goods, even where he had been compensated by the bailee. Where a goods owner sued in tort, his claim would be defeated if his title was a bare proprietary one and did not include any right of possession of the goods


(Obestain Inc v National Mineral Development Corp Ltd (The Sanix Ace) [1987] 1 Lloyd's Rep 465 considered). H's right during the term of the lease of the carriages was a bare proprietary right since it did not carry with it any right to possession. In the circumstances, H had to show permanent injury to the reversionary proprietary interest (P & O Nedlloyd BV v Utaniko Ltd [2003] EWCA Civ 83, [2003] QB 1509 applied). Where the bailor had not been compensated by repair or replace-ment of the goods, he would have suffered a real loss and would be compensated accor-dingly. But there was no need for compensation if the goods had been repaired or replaced and he had suffered no loss.


Under the lease agreement, the party at risk was G rather than H, provided that G was solvent. It was unrealistic to regard an insurance policy that insured the respective rights and liabilities of G and H as indemnifying H rather than G. The legal significance of what happened against the background of the lease agreement and the insurance policy was that G's liability to H had been discharged.


The judge was right that the party that sustained the loss was G, and that G had been indemnified by the insurers. H as lessor had suffered no damage to its reversionary interest because G had indemnified it, not because it had been indemnified by insurance.


Appeal dismissed.