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	England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Yeo v Times Newspapers Ltd [2015] EWHC 209 (QB) (04 February 2015) URL: http://www.bailii.org/ew/cases/EWHC/QB/2015/209.html Cite as: [2015] 2 Costs LO 243, [2015] 1 WLR 3031, [2015] WLR 3031, [2015] EMLR 18, [2015] EWHC 209 (QB)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		04/02/2015

Mr Justice Warby:

1. The claimant ("Mr Yeo") is an MP. He sues Times Newspapers Limited ("TNL") for libel in articles published in hard copy on the front page and on pages 6-7 of The Sunday Times for 9 June 2013, and a further article published two weeks later on 23 June 2013. All three articles have also been published on TNL's website, with some modifications, since June 2013.
2. The general subject-matter of the articles is indicated by the front page headline of 9 June 2013: "Top Tory in new Lobbygate row". The articles followed undercover investigation by two journalists from TNL's "Insight" team, posing as representatives of a consultancy ("CGG") to a Far Eastern solar company. The articles were largely though not exclusively based on exchanges between the journalists and Mr Yeo over a lunch on 21 May 2013, which was covertly filmed.
3. This is the second case management conference ("CMC"), and the first costs management conference. After the first CMC, in a judgment handed down on 20 August 2014 ([2014] EWHC 2853 (QB)), I ruled against an application by TNL for trial by jury and determined as preliminary issues what defamatory meanings the articles complained of bore, and whether those meanings were factual or comment. I found that the articles of 9 June 2013 bore two defamatory meanings, one factual and the other exclusively comment. I found that the article of 23 June 2013 bore a single defamatory factual meaning.
4. Because these meanings were different from those complained of by Mr Yeo, and different from those which were then defended by TNL as true or fair comment, I gave Mr Yeo permission to amend the Particulars of Claim to complain of the meanings I had found the articles to bear, and struck out TNL's defences of justification and fair comment, as they were then pleaded.^[1]
5. Mr Yeo having amended his Particulars of Claim TNL re-pleaded its Defence so as to justify the defamatory factual meanings of both articles, and to defend as fair comment the defamatory comment contained in the articles of 9 June 2013. The Amended Defence also retains in their original form defences of Reynolds privilege, asserting that the articles were "on a subject of strong public interest, were responsibly published and were expression protected by Article 10.1 of the Convention".
6. On 3 October 2014 Mr Yeo served a Reply. This addresses in some detail the particulars relied on in support of justification, fair comment, and Reynolds privilege, and further alleges that the words complained of were published maliciously.
7. Two issues arise for decision:-

i) Whether Mr Yeo's plea of malice should be struck out.

ii) To what extent the parties' costs budgets should be approved.

The plea of malice

8. TNL's attack on Mr Yeo's pleaded case of malice is double-barrelled. One criticism is that the malice plea, as it stands, is equally consistent with the absence of malice as with its presence and is therefore non-compliant with well-established pleading principles and falls foul of the Part 53 Practice Direction.
9. TNL's other criticism is that the plea is misdirected. It fails to make the only relevant allegation, namely that someone for whose conduct TNL is responsible published the defamatory comment without an honest belief in it. Instead, it alleges that the journalists did not believe in the truth of the narrow factual allegation contained in the articles of 9 June 2013, which is not a sufficient basis for alleging malice.
10. To assess these points it is convenient to begin by examining the plea of malice in its context within the statements of case overall. In relation to the articles of 9 June 2013, the Defence pleads the defences of justification, fair comment and Reynolds in that order. This is sensible, as the Reynolds defence is put forward as an answer to both the defamatory meanings of the articles, and the statutory public interest defence explicitly protects opinion as well as fact: Defamation Act 2013, s 4(5). In relation to the article of 23 June 2013, which bore only a factual meaning, the Defence pleads justification and Reynolds. As there was no comment, there is no room for any defence of fair comment.
11. The Reply pleads to the particulars of justification in paragraph 5, which contains numerous sub-paragraphs in which each particular is addressed and responded to in turn. Paragraph 6 addresses the plea of fair comment as follows:

"Save that it is admitted that the standard of behaviour of a Member of Parliament and Select Committee Chair is a matter of public interest, paragraph 34 is denied. The Defendant cannot demonstrate any (or any sufficient) factual support for the defence of fair comment/honest opinion. The facts reported in the article were not true. Paragraph 5 is repeated."

Specific paragraphs of the particulars of facts relied on in support of the fair comment plea are then addressed. If this plea were made good, the defence of fair comment would fall short of meeting the objective test of fair comment: that the comment is one that an honest person could have made on the basis of the facts.

12. Paragraph 7 of the Reply deals with the Reynolds defence. The body of that paragraph states that the plea of Reynolds privilege is denied, and explains the basis for that denial: "the Defendant (principally through the actions of the two journalists) did not act responsibly or in the public interest in publishing the Articles." Details of Mr Yeo's case in this respect follow, over 38 sub-paragraphs.
13. These sub-paragraphs identify a number of respects in which the Defendant's conduct is explicitly said to have been irresponsible or not responsible. For example, paragraph 7.16 alleges that in making reference in the articles to a House of Commons rule "The Defendant failed to act responsibly in that it did not make clear to readers that the Rule related specifically to bribes." At paragraph 7.18 it is alleged that statements in the article describing the initial contact made with Mr Yeo by the journalists were false and "particularly irresponsible", for certain stated reasons. Paragraph 7.27 describes the journalists' activities as a "blatant fishing expedition [which] was utterly inconsistent with the tenets of responsible journalism". Paragraph 7.29 complains that "The Defendant's decision to place the Claimant's denial at the end of the Front Page and Inside Page Articles, when the allegation appeared so prominently, was irresponsible."
14. The particulars also contain, however, a number of explicit allegations of deliberate misconduct. For example, paragraph 7.17 alleges that "The Defendant deliberately misrepresented the initial approach made in its email, …". Paragraph 7.23 alleges that "The Defendant deliberately distorted the Claimant's crucial caveat …", and paragraph 7.24 that "The Defendant thereby deliberately distorted the Claimant's clear statement that he could not act as a public advocate …"
15. There are also allegations which clearly imply deliberate misconduct even if they do not use the word "deliberate". At paragraph 7.15, for example, it is alleged that "by the time they came to write the Articles, Ms Blake and Mr Calvert must have appreciated that any indication by the Claimant of a willingness to provide advisory services was not a breach of the rules." In paragraph 7.32 it is alleged that "The video footage contained highly selective quotes designed to mislead and give a false impression of what the Claimant had said."
16. Other sub-paragraphs of Mr Yeo's case on Reynolds privilege contain allegations that are consistent with, and could be taken to imply, a case of deliberate misconduct, but are in my judgment equivocal. One example is paragraph 7.14, which says this:

"The Defendant had access to the full recording of the Meeting. The decision to deprive readers of the same access meant that it was incumbent on the Defendant to ensure that it presented an accurate and fair account of what had been said. Instead, the Defendant presented a grossly misleading account supplemented by a highly selective and misleading extract of video footage."

17. The language here does not include any allegation of deliberate wrongdoing. The nub of the criticism here could be viewed as a failure to discharge a duty incumbent on a responsible journalist to present an accurate and fair account, without an imputation of dishonesty. Certainly, there is no clear allegation of dishonesty. Yet there is some loaded language implying a state of mind ("decision to deprive", "selective").
18. Other instances of allegations which are equivocal in their presentation are the allegation that "The Defendant" had no sufficient basis on which to justify the use of subterfuge against the Claimant for the purposes of the PCC Code (Reply 7.9-7.13); and the allegation that paragraph [26] in the Inside Article ('Asked by the reporters if he would be able "to guide us through that process", Yeo replied "Yes"') was highly misleading (Reply 7.20).
19. A further, and prime example of an equivocal plea is what I shall call "the joke point". It arises from paragraph 7.29 of the Reply, in which the pleaders deal with an episode described in the first six paragraphs of the article published on the inside pages of The Sunday Times of 9 June 2013. That article referred to the appearance before the Energy and Climate Change Select Committee of John Smith, Managing Director of GB Railfreight. That company was described as "a company owned by Eurotunnel, of which Yeo himself is a paid director and shareholder, so he could not be seen to help Smith push its commercial interests before the committee." The article continued:

"[5] But Yeo had devised another way to ensure his colleagues got the right message. He would later reveal how before the hearing he had tutored the executive on what he needed to say to win over his fellow MPs.

[6] At a lunch immediately after the hearing with two strangers offering him a new job as their parliamentary advocate and adviser, Yeo could not resist boasting about what he had done. As he explained what he was willing to do for them behind the scenes, he confided: "This morning I had a case, in front of the committee we had a company called Great British Railfreight who have big contracts for moving coal and biomass around the country. And I said, because GB Railfreight is a subsidiary of Eurotunnel, I could not ask this guy any questions in public because it would look as though I might be biased about that. But what I do for him in private is another matter altogether, obviously."

[7] Asked to elaborate, he leant forward: "I was able to tell him in advance what he should say," he confided, before rolling back in his chair in a gust of laughter."

20. At paragraph 7.29 of the Reply the following is alleged:

"It would have been immediately obvious to any responsible journalist that the Claimant had not given them what they wanted during the Meeting. Instead of dropping the story, or treating it responsibly, the Defendant chose to focus on a joke made by the claimant which they presented as an admission by the Claimant that he had "coached" a witness, choosing this as the sub-headline to the Front Page Article, and the words "I told him in advance what to say, Ha ha" as the headline to the Inside Article…"

This is equivocal because terminology appropriate to a case of irresponsible journalism is used, but so is language (such as "obvious", "chose", "presented") which is suggestive of a case of knowing falsehood.

21. Another feature of the particulars of Mr Yeo's case in response to the Reynolds defence will be apparent from the passages I have quoted: it generally directs its allegations at "the Defendant" but on one occasion makes an allegation of knowledge against the journalists by name, and on another refers to "any responsible journalist". As already noted, the wording in the body of paragraph 7, which introduces these sub-paragraphs, alleges that TNL was irresponsible "principally through" the two named journalists. It is not made clear which other employees or agents of TNL are implicated.
22. I come now to the plea of malice which appears in paragraph 14, after paragraphs which deal with the defences of justification and Reynolds privilege in respect of the article of 23 June 2013. The plea is in these terms:

"MALICE

14. If and insofar as is necessary the Claimant will contend that the words complained of were published maliciously.

PARTICULARS OF MALICE

14.1 The Defendant is vicariously liable for the actions and state of mind of the journalists.

14.2 For the reasons set out above, and by reason of their attendance at the Meeting, the journalists knew that the Claimant had not acted in the way alleged in the Articles; he was not prepared to act, and had not offered himself as willing to act in a way that was in breach of the Code of Conduct of the House of Commons by acting as a paid Parliamentary advocate in the manner alleged. Such allegations were known to the journalists to be false.

14.3 Therefore, the journalists could not and did not honestly believe that the Claimant had acted scandalously and/or that he shown himself willing to abuse his position in Parliament to further his own financial and business interests in preference to the public interest".

23. TNL complained in correspondence and then subsequent application notice that this was plainly an inadequate pleading on the grounds that it provided no proper particulars of the facts relied on in support of a serious allegation of malice. This was met dismissively by Mr Yeo's solicitors. In a letter of 15 January 2015 they cited paragraph 7.14 of the Reply, which I have quoted at paragraph 17 above. They went on:

"The subsequent paragraphs contain particulars of the journalists' deliberate misrepresentation of the rules, deliberate misrepresentation of the basis on which our client agreed to meet the journalists and deliberate misrepresentation of our client's conduct during the meeting, such misrepresentation being not merely irresponsible but deliberate and knowingly false.

…

Paragraph 14.2 of the plea of malice contains an averment that "for the reasons set out above" the journalists knew (i) that our client had not acted in the way alleged in the Articles; and (ii) that the allegations were false. It is perfectly obvious that the "reasons" referred to in 14.2 are those set out in the lengthy Reply to the responsible journalism defence. We are surprised that you required this explanation but trust that your client will now withdraw this application."

24. Despite this attempted brush-off TNL has, through Mr Millar, persisted in its complaint about the failure adequately to particularise the allegation of malice, and it is clear, in my judgment, that TNL's complaint cannot be so readily dismissed.
25. The only reasonable interpretation of paragraph 14 of the Reply is that it makes an allegation of dishonesty against each of the journalists. That would be clear enough on the face of the Reply itself. Paragraph 14 says that malice is pleaded "if and in so far as may be necessary". The plain and natural interpretation is that malice is alleged to defeat the defence of fair comment. This is and always has been the effect of proof of malice in a fair comment case, and it is the only reason one would expect to see a plea of malice in this Reply. Although the Reynolds defence is a species of privilege it is not the practice to plead malice in answer to a Reynolds defence because, as Lord Hoffmann explained in Jameel v Wall Street Journal sprl [2007] 1 AC 35 [35] "There is no question of the privilege being defeated by proof of malice because the propriety of the conduct of the defendant is built into the conditions under which the material is privileged."
26. An allegation of malice in the context of a fair comment defence is an allegation that the person concerned dishonestly expressed an opinion which they did not hold. As Lord Nicholls, sitting in the Court of Final Appeal of Hong Kong, put it in Tse Wai Chun v Cheng [2001] EMLR 77 [24], summarising the effect of the English authorities:

"… malice covers the case of the defendant who does not genuinely hold the view he expressed. In other words, when making the defamatory comment the defendant acted dishonestly. He put forward as his view something which, in truth, was not his view. It was a pretence."

27. This approach has become accepted in this jurisdiction, as indicated by Lord Phillips in Spiller v Joseph [2011] 1 AC 852, [108]. For publication in and after 2014, s 3(5) of the Defamation Act 2013 applies, and is to the same effect. Mr Yeo's solicitors' letter of 15 January 2015 merely assists, if this was necessary, by re-confirming that Mr Yeo's case is one of dishonesty on the part of the journalists and each of them.
28. Sometimes malice is pleaded in aggravation of damages, and Mr Browne sought on behalf of Mr Yeo to defend paragraph 14 as permissible on this basis. However, it is not presented in that way; it does not appear to me that this is why it was pleaded; nor do I accept that such a plea (even assuming it to be legitimate) would properly belong in the Reply. Any such allegation would belong in the Particulars of Claim. These do in fact contain a plea in aggravation of damages, but not one that encompasses allegations of malice. In any event, Mr Browne did not submit that paragraph 14 was to be regarded as pleaded solely in aggravation of damages, and his submission would not meet (and in fairness was not presented as meeting) TNL's complaint that the plea is an allegation of dishonesty which is lacking in proper particularity.
29. That complaint is advanced on the basis of CPR 3.4(2)(a) and (c) and PD 53 2.9. The former provides that the court may strike out a statement of case on the basis that it discloses no reasonable basis for bringing a claim or that it fails to comply with a Practice Direction. PD53 2.9 provides: "If the defendant contends that any of the words or matters are honest opinion, or were published on a privileged occasion, and the claimant intends to allege that the defendant acted with malice, the claimant must serve a reply giving details of the facts or matters relied on." Implicit in this is that the details given must comply with the relevant principles of pleading.
30. Clarity and precision are always required in statements of case, but never more so than when an allegation of dishonesty is being made. This is axiomatic. One reason is the obvious one that the ordinary requirements of fairness dictate that a person accused of acting dishonestly must be given a clear statement of the case against him, so that he can prepare to meet it.
31. Clarity and precision are also required in order that the party accused and the court can police the making of allegations of dishonesty, and weed out those which do not deserve to go to trial because the case cannot attain the high standard required.
32. The approach to be taken to the pleading and proof of allegations of dishonesty was considered by Lord Hobhouse in Three Rivers District Council v Bank of England [2003] 2 AC 1 at [161]. His observations were made in the context of a summary judgment application in a claim for misfeasance in public office, but are of general application:

"The law quite rightly requires that questions of dishonesty be approached more rigorously than other questions of fault. The burden of proof remains the civil burden—the balance of probabilities—but the assessment of the evidence has to take account of the seriousness of the allegations and, if that be the case, any unlikelihood that the person accused of dishonesty would have acted in that way. Dishonesty is not to be inferred from evidence which is equally consistent with mere negligence. At the pleading stage the party making the allegation of dishonesty has to be prepared to particularise it and, if he is unable to do so, his allegation will be struck out...It is normally to be assumed that a party's pleaded case is the best case he can make (or wishes to make). Therefore, in the present case, the particulars given provide a true guide to the nature of the case being made by the plaintiffs (claimants)... "

33. Applied to a plea of malice in a defamation case these principles have the consequences spelled out at paragraph 28.6 of Gatley on Libel and Slander (12^th Ed):

"The plea must be more consistent with the presence of malice than with its absence; if it is not, it is liable to be struck out. Generalised or formulaic statements will not be permitted. The plea of malice must focus upon what the defendant did or said or knew. The court will be sceptical about pleas of malice in which the claimant pitches the meaning high and then asserts that the defendant did not or could not believe that high meaning to be true, and so is malicious. The claimant must allege specific facts from which it is alleged the inference is to be drawn."

34. Here, the plea of malice as it stands does not clearly or distinctly allege that the defendant knew the words complained of contained the defamatory comment. That is something that Mr Yeo's legal team have offered to put right by spelling it out in an amendment. Another linked and well-established point should be made, however. Where the defendant is a company as is the case in this action, the plea of malice must set out a case of dishonesty on the part of one or more identifiable individuals for whose conduct the company is responsible. It is not good enough to allege generally that the company was malicious, still less to aggregate pieces of knowledge or conduct of several individuals.
35. The court must be vigilant in ensuring that the principles I have identified are adhered to. They represent an important safeguard for freedom of expression, as Eady J pointed out in Henderson v London Borough of Hackney [2010] EWHC 1651 (QB) [35]:

"It is not appropriate merely to plead … absence of honest belief …. Unsupported by relevant factual averments, those are merely formulaic assertions. It is certainly not right that a judge should presume such assertions to be provable at trial. Otherwise, every plea of malice, however vague or optimistic, would survive to trial. It would be plainly inappropriate to move towards such an unbalanced regime, since it would tend to undermine the rights of defendants protected under Article 10 of the European Convention on Human Rights."

36. It would not be fair to characterise Mr Yeo's plea of malice in this case as "merely formulaic". In my judgment, however, it fails to comply with the principles stated above.
37. The most obvious flaw is that the Reply fails to plead clearly and distinctly the factual case relied on to establish dishonesty on the part of the two journalists. It does not make clear what are the "reasons set out above" that are referred to in paragraph 14.2. It is not good enough for Mr Yeo's solicitors to say that this is a reference to the entirety of the plea in paragraph 7 in response to the Reynolds defence. That plea is explicitly directed at establishing that the defendant's conduct failed to meet the objective standard of responsible journalism. That is a very different thing from an allegation of dishonesty. Moreover, whilst the case of malice is explicitly directed at "the journalists" the case of irresponsible journalism is directed at "the Defendant (principally through the actions of the two journalists)".
38. Furthermore, as illustrated above, although paragraph 7 contains some explicit allegations of deliberate wrongdoing, it also contains a number of allegations which go no further than imputing irresponsibility, and some allegations which as presently pleaded are equivocal. If the words "reasons set out above" are a compendious reference to paragraph 7 it is left unclear how the allegations of irresponsibility are supposed to contribute to the case of dishonesty. On the face of it, an allegation of irresponsible journalism cannot serve that function.
39. Mr Browne has submitted that it would be disproportionate and unnecessary to require Mr Yeo's case to be further particularised. It is, he submits, sufficiently clear already. He has taken me on a tour of the Reply to illustrate this point. This took some time, which rather undermined his proportionality point, and aspects of the exercise seem to me to have underlined the unsatisfactory nature of the malice plea. It is enough to give three illustrative examples.
40. Mr Browne has explained that the crux of Mr Yeo's case on justification and fair comment is the allegation of willingness to abuse his position. His case is that he only ever indicated a willingness to consider a consultancy position, which was not in breach of any rule, and that the journalists knew this, yet published what they did nonetheless. The parts of Mr Yeo's Reply referred to by Mr Browne in explaining how this case was pleaded were, in this order, paragraphs 5.5, 7.15, 7.35(2), 5.52, 5.9, 7.8, 7.17 and 5.16. It will be obvious from this that the paragraphs relied on are not limited to particulars pleaded under paragraph 7, in answer to the Reynolds defence, but extend to sub-paragraphs of the reply to justification. The mere fact that such a tour was thought necessary in order to explain Mr Yeo's case to me is an indication that the statement of case is unsatisfactory.
41. When Mr Browne's account of Mr Yeo's case came to the joke point he referred to paragraph 5.31 of the Reply. This pleads that when asked if he had been able to ask Mr Smith of GB Rail Freight questions after the Select Committee hearing "the Claimant responded as a joke" with the words about telling him in advance what to say. This was contrasted with the way this episode is treated in the Defence, which presents Mr Yeo's remark as a true account of what had taken place. Given the content of paragraph 7.29 of the Reply, which I have described above as a prime example of an equivocal plea, I asked whether it was Mr Yeo's case that the journalists knew that those words were a joke. Mr Browne's response was that this in itself as currently pleaded is not a particular of malice.
42. In my judgment, if the journalists are to be accused of malice they and TNL are entitled to a much clearer and more precise statement, in writing, of the exact case that it is intended to advance against them than the one contained in the Reply as it stands. It is now plain that what was said in Carter-Ruck's letter of 15 January 2015 was wrong or misleading: the facts relied on in support of the case of malice are not all contained in paragraph 7 of the Reply, nor are all the facts alleged in paragraph 7 relied on in support of that case. Mr Browne has made clear in his oral submissions that all the allegations in paragraph 7 are made against the journalists, even if they may also apply to other personnel of the defendant. That too would need to be made clear, in order for the Reply to comply with PD53 2.9, if particulars pleaded under paragraph 7 are to be relied on in support of the malice plea.
43. Mr Browne invited me, if I concluded that the pleading was lacking in the necessary clarity and precision, to refrain from striking it out but to allow a chance to reformulate. I have however concluded that the better approach is to strike out paragraph 14 as it stands, without prejudice to an application to amend to add a plea of malice, if one can be properly formulated. That is for three reasons. The first is that given what has happened so far the onus should in my judgment be firmly on Mr Yeo to persuade the court to allow in a plea of malice.
44. Secondly, I see a real risk that an attempt to reformulate which starts with the present form of paragraph 14 would produce something unsatisfactory; it would be better to start with a clean sheet. Thirdly, this approach seems to me likely to make it easier to test whether the plea of malice meets the requirement that it should state facts which are more consistent with malice than the absence of malice, and to evaluate whether TNL's second complaint about the malice plea is sound.
45. That complaint, as indicated earlier, is that the plea is directed at the wrong meaning. The meanings I have found the articles complained of to bear are that Mr Yeo:

i) was prepared to act, and had offered himself as willing to act in a way that was in breach of the Code of Conduct of the House of Commons by acting as a paid Parliamentary advocate who would:

a. push for new laws to benefit the business of a client for a fee of £7,000 a day; and

b. approach Ministers, civil servants and other MPs to promote a client's private agenda in return for cash;

ii) by behaving in the manner referred to in the articles, had acted scandalously and shown willing to abuse his position in Parliament to further his own financial and business interests in Parliament.

46. The first meaning is factual and the second is pure comment. Paragraph 14.2 of the Reply alleges that the journalists knew the first of these meanings was false. Paragraph 14.3 alleges that "Accordingly" they could not and did not honestly believe the second meaning. Mr Millar submits that this is a non-sequitur, because the first meaning is a narrow factual meaning and the comment is far broader. The reference to "behaving in the manner referred to in the articles" encompasses a great deal more than Mr Yeo's alleged willingness to act in a way that was in breach of the Code of Conduct by acting as a paid Parliamentary advocate.
47. The articles of 9 June 2013 did indeed refer to a lot more than Mr Yeo's alleged willingness to act as a paid advocate. There was reference to Mr Yeo's role as chair of the Energy and Climate Change Select Committee, to his resulting prominence in green politics, to roles he had played in, and sums he had earned from, private firms since taking over as Committee chair, and to shares and options he held as a result of such work.
48. At paragraph [108] of my August 2014 judgment I found that these references contributed to the defamatory comment. All these matters are pleaded as facts relied on in support of the defence of fair comment. Reference is also made to statements Mr Yeo made at the lunch about his parliamentary and business roles, which were reported in the article but are not relied on as part of the plea of justification. These include his account of telling a witness what he should say in evidence to the ECCSC.
49. Though that is said by Mr Yeo to have been a joke, Mr Yeo's Reply admits much of what is pleaded by TNL in the way of additional factual material in support of the comment. Paragraph 6 of the Reply, which responds to that factual case, does not contain anything approaching an allegation that the journalists knew any of these other facts to be untrue. Nor has Mr Browne included in his account of Mr Yeo's case any reference to paragraph 6 of the Reply.
50. Mr Millar submits that a plea of malice must contain something from which the court at trial could rationally infer malice on the part of the journalists in expressing the opinion in issue; a rational assessment would necessarily have to include consideration of all the facts relied on and (as Lord Hobhouse observed in Three Rivers) would have to take account of inherent probabilities; thus, the plea of malice contains a fundamental flaw and should be struck out on that basis also. Mr Browne's reply to this is to maintain that the factual allegation of willingness to act as a paid advocate was so central and so prominent in the articles that an allegation that the opinion was expressed in the knowledge that this central charge was false is sufficient, at the pleading stage, to pass muster.
51. It seems to me that Mr Millar is clearly right as to the principle but also right to say that this ground of objection does not turn so much on the principle as on the particular facts of the case. Since I have concluded that the plea of malice should be struck out for other reasons in any event it is unnecessary to reach a conclusion on this separate argument. It is also undesirable. If the plea of malice re-emerges, it will be pleaded in different terms, which should be addressed if and when they are formulated.

Costs budgeting

52. Costs budgeting is a major plank of the Jackson reforms. It was introduced by Part II of CPR rule 3 from 1 April 2013 for all multi-track cases with a value of less than £10 million. It is governed by CPR 3.12 to 3.18 and PD3E. One feature of the regime is that the notice of allocation served under CPR 26.3(1) will normally require the parties to file costs budgets by a specified date. That date will be not less than 28 days after service of the notice: r 26.3(6)(b)(ii). The parties must file and exchange budgets by the specified date or, if none is specified, 7 days before the first CMC: CPR 3.13.
53. The court may then make a costs management order in respect of costs "to be incurred by any party in the proceedings": CPR 3.15. It will do so unless satisfied that the litigation can be conducted "justly and at proportionate cost in accordance with the overriding objective" without such an order (CPR 3.15(2)), which will not generally be the case: see PD3E 7.1. To the extent that a party's budget is agreed, that will be recorded by the court: CPR 3.15(1). In respect of budgets or parts of budgets that are not agreed the court will record its "approval after making appropriate revisions": r 3.15(2).
54. Where a costs management order is made, the last agreed or approved budget of the receiving party for each phase of the proceedings is the starting point for assessment of costs on the standard basis. Rule 3.18 provides that in making such an assessment the court will have regard to and "not depart from such approved or agreed budget unless satisfied that there is good reason to do so". The process of agreement or approval therefore has the potential to be a powerful tool for controlling costs.
55. Here, the parties filed and exchanged budgets after service of the Defence, on 22 July 2014. That was just over 7 days before the substantial CMC hearing at which I determined the issue of mode of trial and defamatory meaning. There was no costs management order made before, at, or after that CMC. Nor was any agreement reached. My order of 20 August 2014 gave the parties permission to restore for further directions and costs budgeting, which Mr Yeo eventually did on 8 December 2014. It was some two weeks later that TNL issued its application to strike out paragraph 14 of the Reply.
56. For the purposes of this further CMC each party produced a revised costs budget, dated 16 January 2015. Neither was agreed by the other party. The issues were debated at some length in correspondence, which I read before the hearing. There were then two hours of oral argument. In the result, I have approved budget figures for costs to be incurred on future phases of this litigation by each party, in sums which are set out in Appendices to this judgment.
57. I reserved my decision because, although costs budgeting has now been in place for over 20 months, the detailed implementation of the scheme is still relatively untested, the argument on this application addressed issues of methodology, and the case throws up some other issues of general importance for costs budgeting in publication cases. For those reasons only I thought it useful to give this judgment highlighting particular issues that arise, and offering some guidance for the future, with particular reference to publication cases. As will be seen, it is very far from being my view that a costs management conference should ordinarily involve lengthy oral argument and a reserved judgment.

(i) Hearing or no hearing

58. "Where practicable, costs management conferences should be conducted by telephone or in writing": CPR 3.16(2). In this case the parties' rival contentions were set out very fully in correspondence, and each party treated its letters as a substitute for a skeleton argument on the issue. That was entirely appropriate. An oral hearing was justified because of the points of more general importance that arose. I do not consider that the detailed oral debate which took place over rates, hours, and proportionality would have justified a hearing.
59. Rulings without a hearing take up judicial resources, but save time and costs for the parties. The recoverable costs of budgeting are capped at 1% of the approved budget for completing Precedent H and 2% of that budget for all other costs, save in exceptional circumstances: PD3E 7.2. For these reasons it is to be hoped that as the system becomes a firmly established and well-understood feature of multi-track litigation parties will propose and agree to this method of dealing with costs management.

(ii) Incurred costs

60. These are not subject to the approval process. This means that under the default procedure substantial costs may already have been incurred, without any budgetary control, by the time a decision is taken at a CMC. The parties' costs figures in this case illustrate the point. The total incurred by the time of my budgeting decision was over £200,000 (£110,000 on the claimant's side and £94,000 on the defendant's). In a case that goes to trial the successful party's costs incurred before approval of a budget will normally need detailed assessment, in the absence of agreement.
61. However, if by the time the costs management process takes place substantial costs have been incurred, one thing the court may do is to "record its comments on those costs": see PD3E 7.4. What the court will do is to "take those costs into account when considering the reasonableness and proportionality of all subsequent costs": ibid. The court may reduce a budget for reasons which apply equally to incurred costs, or for reasons which have a bearing on what should be recoverable in that respect, for instance, that so much had been spent before the action began that the budgeted cost of preparing witness statements is excessive. If so, it is likely to help the parties reach agreement without detailed assessment later on if these reasons are briefly recorded at the time the budget is approved. I make some comments of this kind below.

(iii) The approach to approval

62. "The court's approval will relate only to the total figures for each phase of the proceedings": PD3E 7.3. The figures may conveniently be set out in the form of a table such as the Appendices to this judgment. However, such a table need only include the approved figures. I have included the parties' figures for incurred and estimated future costs, and contingencies, for the purposes of illustrating some of the points made in this judgment.
63. Mr Browne submitted that in determining what was an appropriate figure for each phase the court should focus primarily on the proportionality of the costs, applying the test prescribed by CPR 44.3(5). It was not appropriate to conduct the kind of debate that had been undertaken on behalf of TNL in correspondence. The process was intended to be one conducted swiftly and economically, and of necessity had to be something of an impressionistic exercise. He submitted that this is a matter of substantial non-monetary value to both sides, complex, and raising issues of reputation and public importance on both sides of the case.
64. In support of these submissions Mr Browne referred to a speech given by the Senior Costs Judge, Master Gordon-Saker, to the Commercial Litigation Association on 1 October 2014. This emphasised that costs management is not a prospective detailed assessment, and described the training given to judges on these issues as having suggested they should not look at hourly rates or hours but rather at overall reasonableness and proportionality. That may be so, but I note first of all that the Master recorded that the most common question raised by Judges was how they could approach the overall question without reference to hours and rates.
65. Secondly, I note that whilst PD3E 7.3 states that "When reviewing budgets, the court will not undertake a detailed assessment in advance, but rather will consider whether the budgeted costs fall within the range of reasonable and proportionate costs" it also states that "in the course of its review the court may have regard to the constituent elements of each total figure."
66. Thirdly, Precedent H allows the court to review hourly rates and estimated hours by requiring these to be stated on the form. It seems to me that whilst the question of whether the totals are reasonable and proportionate will always be the overall criterion, the court's may need to consider rates and estimated hours. The approach will need to be tailored to the case before the court.
67. On one view, the costs of libel, privacy and some harassment cases typically become disproportionate at an early stage, before the ordinary time for costs budgeting has arrived. Such cases do in any event involve rights and interests that cannot be measured simply in money. In a case involving costs that run to six or even seven figures in total it is in my judgment appropriate to have regard not only to the factors listed in CPR 44.3(5) but also to the hours and rates, as would be done upon a summary assessment of costs at the end of an interim hearing. That is not the same as conducting a detailed assessment.

(iv) Contingencies and revision

68. By PD3E 6 a budget must be in the form of Precedent H, which has a section for contingencies. This has caused difficulty in this case, as appears from the Appendices to this judgment. The parties between them identified six contingencies. Not one was common to the parties. The guidance notes on Precedent H state at paragraph 3 that this section of the Precedent should be used "for anticipated costs which do not fall within the main categories set out in this form … Costs which are not anticipated but which become necessary later are dealt with in paragraph [7.6] of the Practice Direction."
69. PD3E 7.6 provides that "Each party shall revise its budget in respect of future costs upwards or downwards, if significant developments in the litigation warrant such revisions", and sets out a procedure for doing so. The provisions of PD3E 7.9 are also relevant. This provides that "If interim applications are made which, reasonably, were not included in a budget, then the costs of such interim applications shall be treated as additional to the approved budgets."
70. The first point to make about contingencies is that they must involve work that does not fall within the main categories on Precedent H. Secondly, in order for work to qualify as a contingency it must be possible to identify to the opposite party and the court what that work would be. Otherwise it would be impossible to determine whether the work falls within or outside a specified category, and it is hard to see how any assessment could be made of what its cost would be. Thirdly, there is the important issue of how likely it needs to be that the work will be required, before it can properly be included as a contingency. Mr Browne submitted that the test should be whether the work was "reasonably likely" at the time the budget was approved.
71. In my judgment work should be included as a contingency only if it is foreseen as more likely than not to be required. This seems to me a clear criterion that provides a practical solution, consistent with PD3E 7.4 and 7.9. If work that falls outside one of the main categories is not thought probable, it can reasonably and should be excluded from the budget. The time and costs involved in estimating how much work would cost are not easily justified if the work is no more than a possibility or is unlikely. If work identified as a contingency is included in a budget but not considered probable by the court no budget for it should be approved. If the improbable occurs, in the form of an unexpected interim application, the costs will be added to the budget pursuant to PD3E 7.9, unless the matter involves a "significant development" within para 7.4 in which case, if time permits, a revised budget should be prepared and agreed or approved.

Mr Yeo's budget

72. I marked the first three items on this budget N/A because the costs involved had all been incurred by the time I came to review them. I reduced all the other figures because I considered the solicitors' hourly rates to be too high by 20-25%, and in some instances excessive partner time had been provided for. The disclosure exercise is likely to be more onerous and costly for the defendant than the claimant, and I reduced the claimant's estimate accordingly. Mr Yeo will have at most one additional witness and very substantial cost was incurred before the action started and on the pleadings, which makes it appropriate to keep his witness statement costs well below the estimate.
73. I consider that excessive preparation time was provided for in respect of the PTR. The trial preparation estimate is very considerably cut in my schedule, but this is because the estimated figure includes Counsel's brief fees. The guidance notes make clear that these should be included in trial costs, which is what TNL have done. It is important that the schedules compare like with like, and departure from the guidance will only tend to confuse. I have therefore transferred what I consider appropriate for brief fees to the trial phase. I consider that the main sections allow enough for "strategy review and consultation" which is not a separate contingency. "Possible further work" meets none of the three criteria for a contingency that I have identified above. It is for these reasons that I have marked both Mr Yeo's contingencies as not applicable.

TNL's budget

74. I have approved the majority of this budget, and there is little call for comment. I should however explain why I have marked three of the four contingencies N/A. This is because, on the basis of the evidence and argument I have seen and heard in this case to date I do not consider any of those three eventualities as more likely than not. Contingency A seems to me very unlikely. Contingency B is possible but no more. Contingency C was not understood by Mr Browne, nor by me. I have allowed Contingent cost D on the basis that it does not exceed the cap of 3% of approved costs to which I have referred above, and the costs of budgeting in this case will have been more significant than they ordinarily would be.

Timing

75. I add some short observations about timing which are prompted by but do not apply to the present case. The court has power to give directions for the filing and exchange of budgets at an earlier stage than the CMC. This is so as part of its general powers of management but is reflected in CPR 3.13, which requires parties other than litigants in person to "file and exchange budgets as required by the rules or as the court otherwise directs". If that power is exercised the general rule will apply, that the court will make a costs management order. An early costs budgeting process may be initiated by the court or by one of the parties.
76. Libel and other publication cases are rarely undefended, and will all but inevitably be assigned to the multi-track. They therefore represent a class of case in which early intervention may be merited. I am far from saying that this should be routine; the standard process will be apt for many cases. But the fact that rights of freedom of expression are engaged is relevant, and there may be cases that are particularly apt for earlier intervention. One example would be a case in which there is a wide disparity in the parties' resources, and a need to control costs as a means of ensuring equality of arms.
77. If a budget is required at an early stage it need not be for the entire litigation: "In substantial cases, the court may direct that budgets be limited initially to part only of the proceedings and subsequently extended to cover the whole proceedings": PD3E 6.
APPROVED BUDGET FOR THE CLAIMANT

Work done/to be done	Incurred	Estimated	Approved
Pre-action costs	27,334.25	0.00	N/A
Issue/statements of case	50,305.75	0.00	N/A
CMC	22,609.00	28,725	N/A
Disclosure	10,055.00	22,650	17,000
Witness statements	0	45,175	26,000
Expert reports	0	0	N/A
PTR	0	39,210	30,000
Trial preparation	0	217,000	56,000
Trial	0	128,515	223,000
ADR/Settlement discussions	0	28,340	18,000
Contingent cost A: Strategy Review and consultation	0	18,350	N/A
Contingent cost B: Possible further work	0	31,950	N/A
TOTALS	110,304	559,915	370,000

APPROVED BUDGET FOR THE DEFENDANT

Work done/to be done	Incurred	Estimated	Approved
Pre-action costs	5,230	0.00	N/A
Issue/statements of case	39,457.85	0.00	N/A
CMC	47,225.48	19,851.50	N/A
Disclosure	982.50	20,292.50	20,000
Witness statements	0	35,000.00	35,000
Expert reports	0	0	N/A
PTR	0	21,125.00	21,125
Trial preparation	0	39,800.00	39,800
Trial	0	208,900.00	205,000
ADR/Settlement discussions	0	17,175.00	17,175
Contingent cost A: App. to s/o honest opinion	0	15,125.00	N/A
Contingent cost B: App for specific disclosure	0	15,125.00	N/A
Contingent cost C: App for 3rd party disclosure	0	15,125.00	N/A
Contingent cost D: Costs associated with costs budgeting	1,368.50	8,453.50	8,453.50
TOTALS	94,264.33	415,972.50	346,553.50

Note 1   This judgment uses the terminology of the common law, which applies to publication in hard copy and online up to the end of December 2013. Publication online from 1 January 2014 is subject to the Defamation Act 2013, and the defences under ss 2-4 of that Act are relied on. Nothing turns on this, however, so references to the common law defences should be read as encompassing their statutory counterparts.    [Back]