Discounted damages nailed down by Court of Appeal

Jimmy Nail v (1) News Group Newspapers Ltd (2) Rebekah Wade (3) Jules Stenson and Jimmy Nail v (1) Geraint Jones (2) Harper Collins Publications Ltd [2004] EWCA Civ 1708


The Court of Appeal has endorsed deflating defamation damages under the offer of amends (OoA) procedure, ensuring that is likely to remain an attractive option for media defendants willing to make amends for unintentional libels.


In assessing damages under the OoA, Mr Justice Eady had applied a 'healthy discount' to the damages that he would otherwise have awarded to the claimant as a 'reward' to the defendants for having used the conciliatory procedure. The appellant appealed to the appeal court that the judge had misapplied the law.



The British actor Jimmy Nail had sued Harper Collins and News Group Newspapers over the publication of defamatory allegations about his private and professional life in an unauthorised biography and in the News of the World respectively. The allegations, summarised by his counsel before Mr Justice Eady, were that he had progressed from 'a dog- meat eating yob, who engaged in grubby obscene sexual behaviour... to heartless prima donna'. The defendants offered amends under the OoA procedure in section 2 of the Defamation Act 1996, accepting that the allegations were untrue.



The claimant accepted the OoA. But not satisfied with the offer of damages made by the defendants, he took advantage of his right under the procedure to have the damages determined by a judge. Adopting a starting point for the newspaper's libel of £45,000, Mr Justice Eady proceeded to consider whether there were any aggravating or mitigating factors to increase or reduce that award. In the first decision of its kind, he held that adopting the OoA procedure itself would go towards mitigation and accordingly, he deflated the notional original amount by a significant 50%. This reduced the award to less than the amount offered by the defendants, resulting in the claimant having to pay a proportion of the defendants' costs.


As summarised by Lord Justice May in the leading judgment of the Court of Appeal at the end of December 2004, 'the core issue in this appeal concerns the extent to which the making of the offer of amends should go in mitigation of the amount of his compensation'.


The grounds for the appellant's appeal were that Mr Justice Eady had misapplied section 3(5) of the Defamation Act. This sets out that damages under the OoA procedure should be determined by a judge and not a jury 'on the same principles as damages in defamation proceedings'. It also provides that the court 'shall take account of any steps taken in fulfilment of the offer and (so far as not agreed between the parties) of the suitability of the correction, the sufficiency of the apology and whether the matter of their publication was reasonable in the circumstances, and may reduce or increase the amount of compensation accordingly'.


The appellant argued that there was no principle in assessing defamation damages that gives rise to a discounting benefit for the very fact of adopting the statutory policy of the OoA procedure. He argued that he was entitled to a proper vindication, evidenced by an appropriate sum of damages, and that the judge's approach in deflating the damages as he had done would give rise to irresponsible journalism.


Summarising the appellant's case, Lord Justice May said his position was that 'irresponsible newspapers may be tempted to make defamatory publications confident that, if they are sued, a relatively cheap procedure is available which is likely to result in modest compensation'.



Mr Justice Eady's starting point in assessing the damages had been that he 'must approach the allegations on the basis that they were false and defamatory and that they caused major and continuing distress to Mr Nail, which undermined his family relationships'. Then, in only the second OoA case to have damages assessed by a judge (the first being Cleese v Clark, [2004] EMLR 37, again before Mr Justice Eady), he had to determine the appropriate compensation.



The procedure adopted by the judge involved him assessing damages in the normal way, considering what a judge might award where there were no aggravating or mitigating factors, and then applying a reduction to take account of the apology published and 'the very willingness of the defendant to use the offer of amends route' (see Gazette [2004]) 10 June, 30).



The appeal court was not persuaded that in adopting this approach the judge had erred in law. In assessing damages under the regime, the judge should first consider what he believes the proper compensation to be, 'not to speculate what a putative jury might award'. Then he should consider 'whether there should be any increase in, or reduction from, that amount'. Given that damages are assessed not at the point of publication of the libel, but when the matter comes before the court, the actions of the parties post publication can impact on the damages, either aggravating or mitigating them.


Accordingly, while Mr Justice Eady may have used the words 'a healthy discount', that was not considered by the appeal court to be different from 'mitigation' under section 3(5). Similarly, while Mr Justice Eady may have spoken of 'rewarding' a defendant for using the procedure, the appeal court did not think that it amounted to more than 'a reduction in compensation on account of the substantial mitigation bound to result from the use of the procedure'.


Addressing the appellant's concern that irresponsible journalism could ensue from reducing the damages, Lord Justice May said: 'I accept that the court must be careful not to drive down damages in libel cases to a level which publishers might with equanimity be tempted to risk having to pay.' But he also went on: 'The obvious corollary is that the level of damages should not be so disproportionately high that freedom of expression is unduly curtailed.'


Lord Justice May rejected 'entirely' any idea of a standard percentage discount in OoA cases, restating that every case should be decided on its facts and on individual consideration. But while a 50% reduction to media defendants - or anyone else using the OoA procedure - is not to be considered standard fare for all such cases, the appeal court has endorsed the appropriateness of the court to apply a reduction to damages where the mitigating factors of the defendant's behaviour includes use of the conciliatory procedure.


Both sides to the debate may remain concerned that the other has got off lightly. Defendants may have wished to establish a standard percentage discount for clarity; claimants might argue that their compensation will be whittled down unfairly. But the appeal court's endorsement could make the OoA procedure all the more attractive to media defendants to extricate themselves quickly and cheaply from litigation, and be equally beneficial to claimants, provided with vindication of their reputations through a genuine offer to make amends, a speedy apology and a swift payment of damages.



By Amber Melville-Brown, David Price Solicitors & Advocates, London