“12.6 Particular 8.6 is denied. In particular,and without prejudice to the generality of the foregoing denial and the fact that the Second Claimant bears the burden of proof in this regard, it is denied that the Defendant is responsible for any alleged fall in the Second Claimant`s share price. The Defendant is entitled to and will rely in support of this contention upon all of the press coverage during the relevant period, as well as a number of other factors including: (a) the fact the Second Claimant’s share price had already fallen 6.6% on Tuesday26 August 2003 , the day before the Article was published; (b) the share price was in any event liable to retrenchment as a result of it having almost doubled in value between October 2002 and the middle of August 2003; (c) the ongoing concerns in the market about the FSA`s investigation into split capital trusts which encompassed the activities of the First Claimant; (d) the markets concerns about how the Claimants were handling the controversy surrounding Mr Middleweek`s litigation and the allegations made in those proceedings, which had been published in a number of newspapers; (e) the news on3 September 2003 that the City of London’s police had decided not to pursue the blackmail charges made against Mr Middleweek made by the First Claimant. 12.7 No admissions are made as to the first three sentences of particular 8.7. As to the remainder of this particular, it is denied that it is permissible to rely upon the alleged fall in the Second Claimant’s share price as in any way indicative of financial loss caused to the company. In any event, as set out in sub-paragraphs 4.2 and 4.3 above, the Second Claimant has no actionable claim for libel as against the Defendant and the alleged fall in its share price is irrelevant to the computation of any claim for damages by the First Claimant. 12.8 Particular 8.8 is denied. At the date hereof, the Claimants have still not served any particulars of loss and damage. 13 If and in so far as necessary, the Defendant will rely in extinction (or alternatively diminution) of any damages awarded against them upon the facts and matters set out in paragraphs 8 and 9 above, as well as the fact that the Claimants have themselves posted the solicitors` letter of complaint on their own website at [and the address is given]. ”
“3. Under paragraph 5 of the Particulars Of: “ the Second Claimant’s share price should have risen [but failed to rise] by 27.45% [which] represents a loss in the Second Claimant’s potential market capitalisation since26 August 2003 of approximately 122p per share, or£230,526 , 320 calculated on an issued share capital of 188,956,000 shares.”
“ the special loss suffered by the Claimants [is to be assessed] on the basis that this fall of£230.5 million is the best available reflection of the loss in future revenues which the Second Claimant has suffered and will suffer ”
“ the market’s assessment of the net present value (NPV) of future earnings of the company ”
“1. Under paragraph 1 of the Particulars Of: “[The Claimants’] losses are continuing and … further and/or more up to date figures are likely to become available …”
“The court may strike out a statement of case if it appears to the court – (a) that the statement of case discloses no reasonable grounds for bringing or defending the claim; (b) that the statement of case is an abuse of the courts process or is other wise likely to obstruct the just disposal of the proceedings:… ”
“General damages serve three functions: to act as a consolation to the claimant for the distress he suffers form the publication of the statement; to repair the harm to his reputation (including, where relevant, his business reputation); and as a vindication of his reputation. While actual financial loss (such as loss of business or employment) which is not too remote is clearly recoverable … it is a comparatively rare case in which evidence of such loss is given, simply because it is not available.”
“If, in addition to this general loss, the loss of particular customers was to be relied on, such particular losses would, in accordance with the ordinary rules of pleading, have been required to be mentioned in the statement of claim…”
‘(ii) Awards in other libel cases …. in Rantzen v Mirror Group Newspapers (1986) Ltd[1994] QB 670 , …. the Court of Appeal said thatarticle 10(2) of the European Convention on Human Rights , which required that any restrictions on freedom of speech should be “prescribed by law” and “necessary in a democratic society”, required that awards of damages for libel should be more controlled and predictable than they were. Leaving the award to a unguided jury and refusing to interfere unless the damages were such that “no twelve men could reasonably have given them” might not comply either with the principle of legal certainty or the requirement of proportionality. Their view was later confirmed by the European Court of Human Rights in Tolstoy Miloslavsky v United Kingdom(1995) 20 EHRR 442 in which an award of£1.5 million by a jury under the pre-Rantzen regime was held to be excessive having regard to the absence of any judicial guidance. Rantzen’s case therefore made two changes in the law. First, juries should still not be told of awards made by other juries but could be referred to awards made by the Court of Appeal in the exercise of its new powers… Secondly, the Court of Appeal decided that in future the awards of juries would be subjected to “a more searching scrutiny” than in the past. The question, in relation to compensatory damages, would be: “Could a reasonable jury have thought that this award was necessary to compensate the plaintiff and re-establish his reputation? ([1994] QB 670 , 692).” ….. (iii) General damages in personal injury cases Reference to awards in personal injuries cases is far more controversial. It was advocated as a legitimate comparison by Diplock LJ in McCarey v Associated Newspapers Ltd (No 2)[1965] 2 QB 86 , 109-110 but rejected by Lord Hailsham of St Marylebone LC in Broome v Cassel & Co Ltd[1972] AC 1027 , 1070-1071 and by the Court of Appeal in Rantzen’s case[1994] QB 670 , 695. In John v MGN Ltd[1997] QB 586 the Court of Appeal reversed itself and since then juries have regularly been told to have regard to awards of general damages (for pain, suffering and loss of amenity) in personal injury actions. These are themselves conventional figures: the current scale was fixed by the Court of Appeal in Heil v Rankin[2001] QB 272 and runs to a maximum of£200,000 for the most catastrophic injuries. As a result, Eady J said in Reed & Lillie v Newcastle Borough Council[2002] EW HC 1600 (QB) at paras 1547-1551 that there is now a ceiling of£200,000 for compensatory damages in libel cases.’
‘These authorities support the following propositions. (1) Where a company suffers loss caused by a breach of duty owed to it, only the company may sue in respect of that loss. No action lies at the suit of a shareholder suing in that capacity and no other to make good a diminution in the value of the shareholder's shareholding where that merely reflects the loss suffered by the company. A claim will not lie by a shareholder to make good a loss which would be made good if the company's assets were replenished through action against the party responsible for the loss, even if the company, acting through its constitutional organs, has declined or failed to make good that loss. So much is clear from Prudential Assurance Co Ltd v Newman Industries Ltd (No 2)[1982] Ch 204 , particularly at pp 222-223, Heron International, particularly at pp 261-262, George Fischer, particularly at pp 266 and 270-271, Gerber and Stein v Blake, particularly at pp 726-729. (2) Where a company suffers loss but has no cause of action to sue to recover that loss, the shareholder in the company may sue in respect of it (if the shareholder has a cause of action to do so), even though the loss is a diminution in the value of the shareholding. This is supported by Lee v Sheard[1956] 1 QB 192 , 195-196, George Fischer and Gerber. (3) Where a company suffers loss caused by a breach of duty to it, and a shareholder suffers a loss separate and distinct from that suffered by the company caused by breach of a duty independently owed to the shareholder, each may sue to recover the loss caused to it by breach of the duty owed to it but neither may recover loss caused to the other by breach of the duty owed to that other. I take this to be the effect of Lee v Sheard, at pp 195-196, Heron International, particularly at p 262, R P Howard, particularly at p 123, Gerber and Stein v Blake, particularly at p 726. I do not think the observations of Leggatt LJ in Barings at p 435b and of the Court of Appeal of New Zealand in Christensen v Scott at p 280, lines 25-35, can be reconciled with this statement of principle. These principles do not resolve the crucial decision which a court must make on a strike-out application, whether on the facts pleaded a shareholder's claim is sustainable in principle, nor the decision which the trial court must make, whether on the facts proved the shareholder's claim should be upheld. On the one hand the court must respect the principle of company autonomy, ensure that the company's creditors are not prejudiced by the action of individual shareholders and ensure that a party does not recover compensation for a loss which another party has suffered. On the other, the court must be astute to ensure that the party who has in fact suffered loss is not arbitrarily denied fair compensation. The problem can be resolved only by close scrutiny of the pleadings at the strike-out stage and all the proven facts at the trial stage: the object is to ascertain whether the loss claimed appears to be or is one which would be made good if the company had enforced its full rights against the party responsible, and whether (to use the language of Prudential Assurance Co Ltd v Newman Industries Ltd (No 2)[1982] Ch 204 , 223) the loss claimed is "merely a reflection of the loss suffered by the company". In some cases the answer will be clear, as where the shareholder claims the loss of dividend or a diminution in the value of a shareholding attributable solely to depletion of the company's assets, or a loss unrelated to the business of the company. In other cases, inevitably, a finer judgment will be called for. At the strike-out stage any reasonable doubt must be resolved in favour of the claimant.’
‘Reflective loss extends beyond the diminution of the value of the shares; it extends to the loss of dividends (specifically mentioned in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2)[1982] Ch 204 ) and all other payments which the shareholder might have obtained from the company if it had not been deprived of its funds. All transactions or putative transactions between the company and its shareholders must be disregarded. Payment to the one diminishes the assets of the other. In economic terms, the shareholder has two pockets, and cannot hold the defendant liable for his inability to transfer money from one pocket to the other. In principle, the company and the shareholder cannot together recover more than the shareholder would have recovered if he had carried on business in his own name instead of through the medium of a company. On the other hand, he is entitled (subject to the rules on remoteness of damage) to recover in respect of a loss which he has sustained by reason of his inability to have recourse to the company's funds and which the company would not have sustained itself.’
“The figure is arrived at by analysts and investors estimating the future earnings of the Plc and then discounting those figures at the Plc’s estimated weighted average cost of capital (WACC) to produce the NPV. The theory and methodology involved is well recognised, and is a matter of expert evidence which the Claimants will adduce at trial. ”
‘Of ‘… the market’s assessment of the net present value (NPV) of future earnings of the company’ … 4.7…Please provide particulars of how the NPV … is calculated, estimated and/or arrived at’
‘… although a share is an identifiable piece of property which belongs to the shareholder and has an ascertainable value, it also represents a proportionate part of the company's net assets, and if these are depleted the diminution in its assets will be reflected in the diminution in the value of the shares. The correspondence may not be exact, especially in the case of a company whose shares are publicly traded, since their value depends on market sentiment. But in the case of a small private company like this company, the correspondence is exact.’
‘ A further issue is whether, in the case of Lonrho plc, injury to business reputation can be recovered as a form of injury to property, sc goodwill; that involves considering what is meant by goodwill and—on the way the case has been argued by Mr Beveridge—whether fluctuations in the share price of a company reflect its goodwill and reputation.’
‘To prove loss of orders and loss of trade is another matter; that is recognisable pecuniary damage. The claim in respect of the joint venture with Iranian interests referred to in part II of schedule 2 to the particulars of damage could come in under this heading if a link between the loss of the venture and Miss Pollard’s campaign is sufficiently proved. Such loss of orders, for example, would involve injury to the goodwill of a business which may be one of the most important assets of the business. But goodwill in that sense must have the meaning put on that word in Trego v Hunt[1896] AC 7 esp at 17–18, 24, [1895–9] All ER Rep 804 esp at 809–810, 813 per Lord Herschell and Lord Macnaghten. It cannot mean some airy-fairy general reputation in the business or commercial community which is unrelated to the buying and selling or dealing with customers which is the essence of the business of any trading company. Again the well-established right to damages in passing off where deceptive goods have been put on the market and passed off as the plaintiff’s goods has a practical relationship to the plaintiff’s business, which is a long way from the allegations of injury to the business goodwill of Lonrho in the particulars: see Draper v Trist[1939] 3 All ER 513 at 519per Greene MR and A G Spalding & Bros v A W Gamage Ltd(1918) 35 RPC 101 at 116, where Swinfen Eady LJ cited from the speech of Lord Sumner on the hearing of an earlier stage in that case in the House of Lords; those were straightforward deceptive goods cases which bear no resemblance at all to the elaborate allegation of injury to business goodwill or business reputation in the particulars in the present case. Beyond that, Lonrho’s share price is not an aspect of Lonrho’s goodwill in the sense referred to above. The share price of Lonrho is not an asset of Lonrho at all. That the share price may be affected by the perceptions of stock market analysts, financial commentators and business journalists does not mean that the assets of Lonrho are affected by such perceptions or that Lonrho suffers pecuniary damage if its share price falls as a result of the publication of such perceptions… Accordingly I would refuse to allow amendment to introduce the proposed sub-head (a) in the proposed particulars of the claim by Lonrho, and the whole of schedule 3 there referred to, and also the repetition of schedule 3 in para 1 of part 1 of schedule 4.’
‘What "goodwill" means must depend on the character and nature of the business to which it is attached. Generally speaking, it means much more than what Lord Eldon took it to mean in the particular case actually before him in Cruttwell v. Lye where he says: "the goodwill which has been the subject of sale is nothing more than the probability that the old customers will resort to the old place." Often it happens that the goodwill is the very sap and life of the business, without which the business would yield little or no fruit. It is the whole advantage, whatever it may be, of the reputation and connection of the firm, which may have been built up by years of honest work or gained by lavish expenditure of money.’
‘ I turn to the specific heads of damage in the proposed re-re-amendment. (a) ‘Damages for injury to Lonrho’s right of property in the goodwill of its business the value of which was diminished by each and/or all of the conspiratorial acts identified in part I of Schedule 2 hereto.’
‘A decline in the price of the shares would be evidence of damage to the goodwill of the company’
‘If a person libelled has suffered specific damage he can plead it as special damage and recover it. That claim will then have the advantage (or disadvantage) of a careful scrutiny, supported by documents and oral evidence from which a court can decide whether in truth a decline of business resulted from the libel. The plaintiffs would then have to give particulars and facts and figures to support it. The plaintiffs or their accountants could produce figures of turnover and graphs showing any sudden downward tendency, such as, for instance, that in the week after the libel orders noticeably declined and so forth. Managers, salesmen, and others could give supporting evidence. Evidence could be called to show that the price of the shares in the stock market had declined. And the defendants would have an opportunity of calling evidence to counter the plaintiffs' claim for special damage. The plaintiffs did not take this course. They did not plead any special damage. But even though the plaintiff pleads no special damage, he may rely on a general loss of business if the words were in their very nature intended or reasonably likely to produce a general loss of business (Ratcliffe v. Evans, [1892 2 QB 524, 532] per Bowen L.J.). That is a reasonable way of dealing with some general loss from a libel which can reasonably be inferred and cannot be proved. Nevertheless, if large sums are to be attributed to loss of business from a libel, it is plainly desirable that they should be pleaded, particularised, and so far as possible supported by evidence’
‘if to follow [the rule] would give rise to injustice, the court has power to fix such other date as may be appropriate in the circumstances’
‘If the company’s assets would otherwise have been diminished by reason of [the defendant’s wrongful act] they were enhanced by a corresponding amount equal to the value of the company’s claim or claims in respect of that wrong’
“(1) Where, on the application of any party to an action to be tried in the Queen’s Bench Division, the court is satisfied that there is in issue – (b) a claim in respect of libel, … the action shall be tried with a jury, unless the court is of the opinion that the trial requires any prolonged examination of documents or accounts or any scientific or local investigation which cannot conveniently be made with a jury… (3) An action to be tried in the Queen’s Bench Division which does not by virtue of subsection (1) fall to be tried with a jury shall be tried without a jury unless the court in its discretion orders it to be tried with a jury. (4) Nothing in subsections (1) to (3) shall affect the power of the court to order, in accordance with rules of court, that different questions of fact arising in any action be tried by different modes of trial: and where any such order is made, subsection (1) shall have effect only as respects questions relating to any such charge, claim, question or issue as is mentioned in that subsection”
"In the course of his judgment the judge conducted an extensive review of the relevant authorities and correctly extracted the following principles: (i) The basic criterion, viz that the trial requires a prolonged examination of documents, must be strictly satisfied, and it is not enough merely to show that the trial will be long and complicated (Rothermere v Times Newspapers[1973]). However the word "examination" has a wide connotation, is not limited to the documents which contain the actual evidence in the case and includes, for example, documents which are likely to be introduced in cross-examination (Goldsmith v Pressdram[1988])."
“1. I have heard very helpful submissions this morning, albeit at short notice, which is to some extent regrettable, but nevertheless Counsel have been able to do their clients justice on both sides on this very and important issue. 2. The Application before me is that of the Defendant that there should be a split trial, and the way that it is put is that the issue of special damages should be separated out and dealt with apart from liability and general damages. That was clarified in the course of argument this morning. It is not suggested (at the moment at any rate) that the issue of general damages should go off for separate trial along with special damages. 3. I have no hesitation at all in coming to the conclusion that this is a case for separate trials at any rate on special damage as compared to the other issues. At the moment, as things stand, it looks as though the trial, certainly on liability and possibly on general damages, is going to be by Judge and Jury… ”
“‘It is apparent that the judge’s award to Beta of£90,000 general damages was a round figure which was not based on any exact calculation. Indeed no special damages have ever been claimed by Beta’.”
"(i) In the period1 November 1987 to31 October 1988 [Beta] suffered a loss of net profit of£109,672 after deduction of corporation tax. (ii) The estimated loss of net profit after deduction of corporation tax for the next nine years is at the rate of£109,672 p.a., excluding any allowance for growth of business or inflation. "
“(1) that there was a substantial fall in turnover in Beta's business in the year following the programme; (2) based upon the previous progress of Beta and five identified competitors, that Beta could have expected an increase in turnover in that year; (3) that the loss of profit on such increased turnover was£109,672 and that such loss is attributable to the programme; (4) that the market in asbestos stripping will increase over the next five years’. ”