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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Citation Plc v Ellis Whittam Ltd [2013] EWCA Civ 155 (08 March 2013) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2013/155.html Cite as: [2013] EWCA Civ 155

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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Mr Justice Tugendhat
[2012] EWHC 549 (QB)

		Royal Courts of Justice Strand, London, WC2A 2LL
		08/03/2013

Lord Justice Tomlinson :

1. Tugendhat J has determined that this action for slander and malicious falsehood is an abuse of the process of the court and he has struck it out, invoking the jurisdiction recently invigorated by the decision of this court in Jameel v Dow Jones [2005] QB 946. The question in such cases can be summarised as whether the game is worth the candle, that being the happy phrase used by Eady J in Shellenberg v BBC [2000] EMLR 296, approved very recently in this court in Cammish v Hughes [2012] EWCA Civ 1655, at paragraphs 55 and 56, per Arden LJ.
2. The parties to the action are competitors in business. The Claimant and Appellant I shall call "Citation". The Defendant and Respondent I shall call "Ellis". The business of both is the provision of professional advice and compliance packages to business clients in the fields of employment law and health and safety regulation. It is said that there is a fundamental distinction between the manner in which each offers protection to their respective clients in the event that, notwithstanding or perhaps because of advice given, the client suffers loss as a result of claims made against it in consequence of shortcomings in the relevant area of its business. Ellis, in common it is said with all other service providers in this field, offers the benefit of an insurance policy which affords cover in respect of such claims, subject of course to policy terms, conditions and limits. A key point of Citation's offering is that it, by contrast, gives to its clients a guarantee whereunder the client is, broadly speaking, indemnified in respect of any losses incurred as a result of reliance upon the advice given. That guarantee is of course only as good as the ability of Citation to meet it, but it could be perceived as more attractive than being offered the benefit of an insurance policy. We have not been invited to compare the terms of Citation's guarantee with the terms of a typical policy.
3. In early 2011 a firm of solicitors in Kent, RG Solicitors of Sidcup, was looking to change its external provider of personnel and employment advisory services. Ms Harris, personal assistant to the Chief Executive of the firm, was tasked with researching the field. Having done so she arranged to meet with both Citation and Ellis in order to discuss with them the services which they could provide. Having first met with Citation, on 7 April 2011 she met with Mr Dave Bostock, a salesman then employed by Ellis who had formerly been employed by Citation. According to Ms Harris, Mr Bostock discussed with her not just the services that Ellis provides to its clients but also Citation and the services which it provides to its clients. Specifically, he discussed the value of Citation's unique selling point, its guarantee, and the qualifications of its staff.
4. According to Ms Harris, Mr Bostock said that Citation's guarantee was not what they say it is, because Citation is self-insured and not insured through a broker, and that, because of this, Citation was unable to pay out on claims, and that Citation did not pay out on claims. As regards the Claimant's advisers, he said that Citation does not have any qualified lawyers working for it and that, with Citation [RG Solicitors] would not be dealing with employment law lawyers. The underlined words are the words complained of in the action, as slander and/or malicious falsehood. Ms Harris is naturally dependent on memory for what was said, but she explains in paragraph 10 of her witness statement why it is that she is confident that this is what Mr Bostock said. She relies on the content of an email sent one month later to Citation and also upon the content of two more contemporary telephone conversations with Citation personnel.
5. As I have already observed, it is not immediately obvious that "being insured through a broker" is in this context necessarily a status superior to self-insurance. However the remarks were clearly intended to be derogatory, and the sting in that part of them lies perhaps in an imputation of financial insecurity rather than in the incomplete comparison between self-insured and insured status. The remarks do not of course stop there. They imply an unwillingness to pay claims as well as an inability to do so. What is said as to Citation's staff goes yet further. There is clearly an arguable case that the words complained of are defamatory of Citation, and that they are calculated to disparage Citation in its business. The contrary has not been argued. If the evidence of Ms Harris were accepted at trial, the cause of action for slander would be complete, unless Ellis was able to establish a substantive defence. Ellis has served a defence in which it denies publication, but advances no substantive defence. In particular, it does not attempt to justify the words complained of.
6. Although Mr Bostock's remarks caused Ms Harris concern, her concerns were assuaged and RG Solicitors subsequently became a client of Citation. It is not alleged that Citation has suffered any actual damage.
7. Insofar as the claim is in slander, the meaning attributed to the words in the Particulars of Claim is:-

"5.1 The Claimant was unwilling or unable to pay out on claims made under its contracts with clients, and was accordingly guilty of mis-selling its products to clients or failing to provide them with what they were bargaining for;

5.2 The Claimant did not have any qualified lawyers working for it and accordingly provided advice to clients from inadequately qualified and/or incompetent employees or agents;

5.3 The Claimant thereby provided an inadequate and second-rate service to its clients, in particular as compared with the Defendant's, such that prospective clients should steer well clear of it."

8. Paragraph 6 of the Particulars of Claim reads:-

"Pending disclosure and/or the provision of Further Information herein the Claimant is unable to give particulars of other publications of the said words or words substantially similar thereto to third parties within this jurisdiction, but in the meantime it invites the obvious inference that this was not an isolated incident. It will rely on such publications at trial in support of its claim for damages."

9. Insofar as the claim is in malicious falsehood, based on the same words, the particulars of falsity are as follows:-

" 8.1 The Claimant is able to pay out on claims made by clients under its advice guarantee scheme;

8.2 The Claimant does and would pay out such claims;

8.3 The Claimant does have qualified lawyers working for it;

8.4 The Claimant's clients do deal with suitably qualified advisors that include employment law lawyers."

10. As the judge observed, the claim in malicious falsehood is based not on actual damage but on likely damage pursuant to s.3 of the Defamation Act 1952 which reads:-

"3 (1) In an action for slander of title, slander of goods or other malicious falsehood, it shall not be necessary to allege or prove special damage - (b) if the said words are calculated to cause pecuniary damage to the plaintiff in respect of any office, profession, calling, trade or business held or carried on by him at the time of the publication."

11. Paragraphs 10 and 11 of the Particulars of Claim read:-

"10. In support of this averment the Claimant will say that the words were self evidently seriously damaging to the Claimant's goodwill, its ability to retain current clients and its ability to attract and win new clients. Whilst the Claimant does not believe it has suffered any loss or likely loss in respect of its relationship with R G Solicitors, it is likely to have suffered loss of business as a result of other similar publications (which as pleaded above it is to be inferred have also taken place) and is likely to suffer such loss in the future unless the defendant is restrained by injunction or offers adequate undertakings as to the future.

11. Unless restrained by injunction the defendant will continue to publish the said or similar falsehood defamatory statements of and concerning the Claimant and its business. In support of this averment the Claimant will refer to and rely on the correspondence between the parties in which the defendant failed and refused to offer an unqualified undertaking not to publish the said statements in the future."

12. In addition to denying publication of the words complained of Ellis denies that the words bear the defamatory meaning attributed to them in the Particulars of Claim. It declines to plead to the allegation that it is to be inferred that there were publications to other publishees, on the basis that it is a speculative averment based upon an unsupported inference.
13. The Particulars of Claim seek damages for slander and/or malicious falsehood and an injunction restraining Ellis from further publishing the said or any similar false and/or defamatory words of and concerning Citation.
14. In a witness statement served in response to the application to strike out the claim Mr Lindsay Hill, Chief Executive of Citation, who is himself a former practising solicitor and erstwhile head of the commercial litigation department at a prominent firm of solicitors, said this:-

"I accept that in the event, and despite Ellis Whittam's Statements, RG Solicitors did nevertheless decide to progress with Citation and that Citation has not, therefore, suffered any direct financial loss in this case. This action is not and has not been about damages and Citation has never sought damages from Ellis Whittam. Similarly, it was only once Citation had issued a High Court claim (after some 7 months of pre-action correspondence with Ellis Whittam) that it sought a contribution towards its costs from Ellis Whittam. Until the claim had been issued, Citation would have been prepared to bear its own costs of this matter, provided that Ellis Whittam had provided an undertaking that would give Citation the necessary assurance that the Statements would not be repeated. As I have explained below in paragraphs 13 to 15, Ellis Whittam has not been prepared to do this."

15. The judge identified the central issues before him on the strike out application as being:-

"(i) Does the Claimant have an arguable case that it is to be inferred that there were publications of the said words, or substantially similar words, to third parties other than Ms Harris?

(ii) Does the Claimant have an arguable case for the grant of a permanent injunction at trial? and in any event

(iii) Is this a real and substantial tort?"

16. The judge concluded that there is an arguable case that the court may infer that Mr Bostock spoke to another prospective customer, or customers, words similar to those which he allegedly spoke to Ms Harris. He recognised that such an inference had not previously without more been drawn in any reported slander action. That, he thought, rendered the drawing of such an inference more difficult, but it did not make it impossible.
17. On this appeal Mr Richard Rampton QC, for Ellis, contended that the judge had been wrong to draw such an inference. He contended that the case was indistinguishable from Barham v Lord Huntingfield [1913] 2 KB 193, where in an action for slander imputing immoral conduct to the plaintiff, a married woman, the statement of claim alleged publication to one named person and publication also during three specified years to various other persons unnamed. The Court of Appeal held inadmissible interrogatories asking whether the defendant had in any of the three years uttered the words complained of to any person other than the person named and, if so, the names of such persons. The court observed that the plaintiff's application to administer interrogatories was not based upon sworn evidence as to there having been other publications. It drew a contrast with Russell v Stubbs [1913] 2 KB 200, a libel case, where it was a fair inference from the medium in which a proved publication had taken place, a trade gazette made available on enquiry, that there would have been other publications and moreover where such a publication had been made upon enquiry by the plaintiff's solicitors. We were taken to a number of authorities on this point and both Mr Rampton and Mr James Price QC, for Citation, addressed us at some length on it. For my part I think it unnecessary to decide whether the judge was right to draw the inference which he did and I am reluctant to contribute to the jurisprudence on the topic. Mr Price at the outset of his address accepted, as I understood him, that the critical feature in this case is not the possibility of the proof of other publications which will or may give rise to an award of damages but rather the question whether there is an arguable case that there is a real risk of repetition of the alleged slander, such as requires to be restrained by injunction. The judge concluded that Citation has no such arguable case.
18. The judge posed the question, at paragraph 23 of his judgment, whether there was "good ground to fear that unless a satisfactory undertaking is given, the statements would be made again". In so doing, he may have been paraphrasing his own distillation of the effect of paragraphs 74-76 of the judgment of this court in Jameel – see the observations of Tugendhat J in Hays plc v Hartley [2010] EWHC 1068 (QB) at paragraph 57. Unless that question could be answered in the affirmative, there was no basis for claiming a permanent injunction at trial.
19. A letter of claim was sent to Ellis by Citation's solicitors, Eversheds, early on 16 May 2011. By that letter and by further letters of 2 August 2011 and 13 October 2011, which made slight alterations to the request, Citation asked for an undertaking "(in a form to be agreed by us) that you will not repeat the statements, or make any [substantially] similar statements . . . to any third party."
20. Mr Ellis replied to the letter of 16 May 2011 on the same morning. He raised some questions of his own, and continued:-

"I await your response to those points raised above. In the meantime, to give your client some comfort, I have instructed EW's commercial director to advise all EW's sales colleagues: (1) that so far as I am currently aware your client offers an 'indemnity' scheme to all its prospects/clients and that its advisers include some barristers and/or solicitors (non practicing) (sic); (3) [sic] that I currently have no knowledge that it is unable to pay out or does not pay out on valid claims under its scheme; and (4) that any untrue/defamatory statements made by any EW colleague would be against EW values, not permitted and treated by EW as a disciplinary matter."

21. The communication to be made by the Commercial Director was not disclosed at that time, but was disclosed to Citation very shortly before the hearing of the application to strike out the claim.
22. Ellis made proposals as to the form of the undertaking by letters dated 23 June 2011, 20 July 2011 and 24 August 2011. On 19 October 2011 Ellis offered an undertaking in the following form:-

"to use its reasonable endeavours to ensure that it will not …make any statements to the effect that [the Claimant] does not employ any employment law solicitors (non-practicing) or barristers or that clients of [the Claimant] never deal with employment law solicitors (non-practising) or barristers or that [the Claimant] never pays out on claims and/or is unable to pay out on any claims for as long as that remains to be the case. For the avoidance of doubt if it is or becomes the case that [the Claimant] does not employ employment law solicitors (non-practising) or barristers or that clients of [the Claimant] would not be dealing with employment law solicitors (non-practising) or barristers, or that [the Claimant] stops paying or does not pay out on claims or [the Claimant] becomes unable to pay out on claims [the Defendant] will be released from the relevant part of this undertaking."

Ellis also offered £1,500 as a contribution towards Citation's costs.

23. By letter dated 28 October 2011 Citation rejected the undertaking offered as unacceptable because it did not contain an unqualified undertaking. The Claim Form issued on 13 October 2011 was enclosed by way of service.
24. Mr Price submitted that the proposed undertaking is objectionable because it failed to inspire confidence. Although in correspondence and before the judge the principal objection appears to have been to the best endeavours aspect of the undertaking, before us it was said to be the use of the word "never" which was the sticking point, together with the proviso releasing Ellis from the relevant part of the undertaking in the event that it becomes the case that, putting it broadly, Citation does carry on its business in the manner which Mr Bostock is alleged to have described. In short, it was submitted by Mr Price that the refusal to proffer an undertaking in the hallowed form, not to repeat publication of the words alleged in the same or similar form, reflected an intention to reserve the right to do it again.
25. The judge observed that Ellis had never asserted that the words complained of are true in the meaning attributed to them by Citation. The judge also observed that not only was there no suggestion of an intention to repeat the words complained of, on the contrary Ellis had sought to reassure Citation in correspondence.
26. Mr Price put forward four principal reasons in support of his contention that Citation is both entitled and has a need to progress the action. First, the circumstance that the sales force in this business is typically remunerated by commission imposes a strong temptation to make disparaging comments about a competitor. Second, insofar as the denial that the words were said is based upon a denial by Mr Bostock, he is lying both about what he said to Ms Harris and about what he has said to others. Third, as above, the refusal of an undertaking in the normal form is to be regarded as a reservation of the right to say it again. Fourth, the court cannot assume that there will be no further evidence which will bear upon the risk of repetition.
27. Mr Rampton accepted that perhaps the word "never" in the proposed undertaking was inappropriate or, as he put it, too strong. It does of course leave it open to Ellis to say that Citation does not usually pay claims, etc. I suggested in the course of the argument that this problem could have been overcome if perhaps the undertaking had been along the lines of not suggesting that Citation had a policy of not employing qualified lawyers or of not paying claims, and so on and so forth. The problem is however that this point was not raised at the time. The undertaking was rejected out of hand. I do not for my part regard the reasonable endeavours language as in this context objectionable. I agree with Mr Rampton that bearing in mind that Ellis was concerned with the activities of a sales force it would have been imprudent to give an unqualified undertaking. The suggested wording was a pragmatic compromise, not of itself indicative of bad faith or Machiavellian intention. If the reservation expressed at the end of the undertaking posed a problem, Citation could have countered by, for example, asking for a formulation along the lines that Ellis would notify Citation if circumstances came to its attention which, in its view, justified it being released from the undertaking.
28. It was the principal submission of Mr Rampton that the material before the court suggests that Ellis has taken the steps that it ought to have taken to prevent a repetition of the alleged publication and that there is no evidence to suggest that those steps have been ineffective. In my judgment there is no material before the court from which it is permissible to derive the inference that there either has been further publication since the email sent by Ellis on 16 May 2011 or that there will be such further publication. Like the judge, I reach that conclusion based upon the correspondence exchanged between the parties. The inutility of this Action is however put beyond doubt by disclosure of the instruction given by the Commercial Director of Ellis to its entire sales force on 16 May 2011. This read as follows:-

"Today, Citation's lawyers have written to us to allege that an EW employee has told a Citation prospect the following;

1. that Citation are 'unable to pay out on claims'.

2. that Citation does not have qualified lawyers working for it

3. that the prospect would therefore not have qualified lawyers working for it; and that

4. Citation does 'not pay out on any claims'.

It goes without saying that we have denied these claims, although we have asked for further detail of the source and the prospect to whom these alleged comments were made.

So far as I am aware Citation offers a self funded (albeit non FSA registered/regulated) "indemnity" to its prospects/clients. I have no knowledge that it either is not able to pay our or does not pay out on valid claims under its scheme. So far as I know Citation does have some barristers and/or solicitors (non practising) working for it and those advisers do deal with clients.

Please ensure that you do not make any statements about Citation as alleged above nor any other statements about it (nor any other competitors) that are or might be untrue/defamatory. Any such untrue/defamatory comments would be against EW values, place EW at risk of litigation and will therefore be treated by EW as a disciplinary matter."

29. As Laws LJ observed in the course of the argument, this is not just an instruction not to repeat the alleged slander but an instruction not to say anything untrue or defamatory about Citation or any other competitor. Mr Rampton described it, with some forensic hyperbole, as a truly remarkable document, but he is on firm ground in submitting that it was a clear instruction given immediately the complaint had been made and that there is no evidence before the court of anything having happened since to suggest that this instruction was either undermined or disobeyed.
30. In reality Mr Price's only answer to this was his reminder that the court cannot assume that there will not be further evidence at trial which will bear upon the risk of repetition. In fact, he made it plain that Citation has such evidence which it is reluctant to bring forward save by way of compulsory disclosure with the normal protection which that brings. The implications of this approach were not of course lost on the court. Nor am I oblivious to the timing of the application to strike out, brought before Ellis itself came under an obligation to give disclosure. On the whole however this part of the debate generated more heat than light. The court must proceed upon the basis of the material before it. In my view the judge was right to derive assistance from the approach of the court in Proctor v Bayley (1889) 422 Ch D 390 to a permanent injunction to restrain infringement of a patent. As there, so here, on the material before the court there is no ground for inferring that Ellis intends to repeat the alleged slander.
31. That leaves only the question of damages. On this aspect the judge's approach, under the rubric "is there a real and substantial tort?" was as follows:-

"47. The Claimant has throughout made clear that it has no evidence that it has suffered actual damage. I accept that if damages are awarded under s.3 of the Defamation Act 1952 they would not be nominal, since that would defeat the purpose of that section: Joyce v Sengupta [1992] EWCA Civ 9; [1993] 1 WLR 337, 347A. But the Claimant is a company, and can recover no damage for distress. And it has made clear that the purpose of this action is to obtain an injunction, and not to recover damages.

48. The purpose of an award of damages in such a case as this is vindication of a claimant's reputation. Where there has been no slander to the public at large, but only to an unknown number of prospective clients, vindication in the form of a public judgment following a trial is unlikely to be necessary, or of value, since it would involve public repetition of the words complained of. The Claimant's chief executive, Mr Hill, says in his statement: "This action is not and has not been about damages and Citation has never sought damages from [the Defendant]".

49.The acceptance by the Defendant that it must not repeat the words complained of is likely to be as valuable a form of vindication that can in practice be achieved."

32. I agree with the judge. The game is not worth the candle. An over-enthusiastic, misguided and ill-intentioned piece of salesmanship by a former employee of Citation, if such it was, has caused no apparent damage and lessons have been learned. Mr Price submitted that parties would be deterred from taking a realistic approach to the likely recovery of damages if this approach were adopted. That is of course a danger. But the pursuit of speculative claims for damages carries its own dangers too in terms of adverse costs consequences. This consideration does not deter me from dealing with the case before the court in what seems to me the appropriate manner.
33. In Jameel at paragraph 70 the court said this:-

"If we were considering an application to set aside permission to serve these proceedings out of the jurisdiction we would allow that application on the basis that the five publications that had taken place in this jurisdiction did not, individually or collectively, amount to a real and substantial tort. Jurisdiction is no longer in issue, but, subject to the effect of the claim for an injunction that we have yet to consider, we consider for precisely the same reason that it would not be right to permit this action to proceed. It would be an abuse of process to continue to commit the resources of the English court, including substantial judge and possibly jury time, to an action where so little is now seen to be at stake. Normally where a small claim is brought, it will be dealt with by a proportionate small claims procedure. Such a course is not available in an action for defamation where, although the claim is small, the issues are complex and subject to special procedure under the CPR."

34. Applying that approach, there is neither reality nor substance to the tort here alleged. It is not proportionate to permit the action to proceed to trial.
35. Mr Price buttressed his argument on Citation's right to proceed to trial by reliance upon Article 6 of the Human Rights Convention. In my judgment this adds nothing to the argument. Citation has in fact achieved public vindication of its rights through the medium of the court. Mr Price made the same point in Jameel. The court there answered it in this way:-

"We do not consider that this article requires the provision of a fair and public hearing in relation to an alleged infringement of rights when the alleged infringement is shown not to be real or substantial. Subject to the final issue, to which we now turn, and on the premise that there have only been the five individual publications within this jurisdiction, we would dismiss this action as an abuse of process."

36. The judge directed Citation to pay Ellis the costs of and incidental to the action as from the date of service of the Claim Form on 28 October 2011. He made no order for the costs of the correspondence exchanged pursuant to the Defamation Pre-Action Protocol prior to the date of the service of the Claim Form. This is not the occasion for a discussion as to the jurisdiction to award such costs. There was in my judgment no basis upon which the judge could properly have ordered the costs of the correspondence to have been paid by Ellis. Liability had been neither found nor admitted. As to the costs of the action, the proceedings achieved no purpose over and above that which had already been achieved. There is no basis upon which the judge's exercise of his discretion as to costs can be impugned.
37. I would dismiss the appeal.

Lady Justice Arden :

38. I agree.

Lord Justice Laws :

39. I also agree.