Atlantis World Group of Companies NV & Anor v Gruppo Editoriale L'Espresso SPA [2008] EWHC 1323 (QB)

[2008] EWHC 1323 (QB)Case No HQ06X03394
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
Venue Royal Courts of JusticeDate Friday, 16 th May 2008
Before
SIR CHARLES GRAY(Sitting as a Judge of the High Court)
B E T W E E N:
Between
ATLANTIS WORLD GROUP OF COMPANIES NV & Anor.ClaimantGRUPPO EDITORIALE L'ESPRESSO SPADefendant
Transcribed by BEVERLEY F. NUNNERY & COOfficial Shorthand Writers and Tape TranscribersQuality House, Quality Court, Chancery Lane, London WC2A 1HPTel: 020 7831 5627 Fax: 020 7831 7737
MR. M. BARCA (instructed by Dawsons LLP) appeared for Claimants.MR. M. WARBY QC and MISS A. COPPOLA (instructed by Davenport Lyons) appeared for Defendant.
J U D G M E N TSIR CHARLES GRAY:INTRODUCTION
[1]This is the trial of a libel action which, by agreement of the parties, has been heard without a jury. THE PARTIES[2]The first claimant is a company incorporated in the Netherlands Antilles and forms part of the Atlantis World Group (“AWG”). It is a substantial business group with casino operation revenues of US$22 million and Italian operational revenues of E25 million in 1997. I have been shown a diagram of the corporate structure of AWG. The first claimant, Atlantis World Group of Companies NV, is the main partner in, and mandate holder of, RTI Atlantis World Group of Companies NV (“RTI”), a joint venture vehicle which was awarded one of ten licences issued by the Italian government to collect gaming taxes due from the operation of approximately 110,000 video slot machines run by independent retailers throughout Italy. The position as I understand it is that, from the inception of the AAMS licence granted by the Italian government to the first claimant until 1st February 2007, RTI was carrying on the business of the licensee and, accordingly, was doing so at the time when the article complained of was published in June/July 2006. So successful was the business of the first claimant in Italy – (it is said to have been making more than E14 million per annum before tax by 2006) – that it explored various ways of raising additional finance. Eventually, according at least to the claimants’ case, it turned its attention to the UK money markets. On 10th March 2006, the second claimant, Atlantis World Group Giocolegale Limited (“Giocolegale”), was incorporated in England. The intention was that it should take over the business of the joint venture in Italy, which I have described. At the time of publication, it is common ground that the second claimant was not conducting any trading business. That is not challenged by the claimants. It finally took over the AAMS licence, to which I have referred, on 1st February 2007 pursuant to a supplementary licence deed of 31 January 2007, to which AAMS, RTI and Giocolegale were parties.[3]The defendant company, Gruppo Editoriale L'Espresso SPA, is a major Italian publishing group and is the publisher of, amongst other publications, a magazine called “L'Espresso”. As appears from its English language website, the defendant is one of the leading media groups in Italy, with interests in publishing, radio, advertising, internet businesses and television. One of the well-known newspapers published by the defendant is La Republica. It also has a number of local newspapers and commercial radio stations. THE PUBLICATION COMPLAINED OF[4]The article which is the subject of this action appeared in the issue of L'Espresso dated 6th July 2006, although the evidence is that it was circulating rather earlier than that, from 30th June or thereabouts, onwards. The article was of course in Italian. I have been provided with an agreed translation:
“The business of AN [Alleanza Nazionale] with slot machines. This is the new thread being followed in great secrecy by the Prosecutor of Potenza. The PP Henry Woodcock summoned to his office Amedeo Laboccetta, the man who embodied the conflict of interest of AN in the gambling sector. Laboccetta, a personal friend of Gianfranco Fini, is a veteran of AN in Naples and for the last couple of years has turned to business. He is the Italian representative of Atlantis World, the main licensee of the State Monopolies for the control of slot machines. In this capacity, in the spring of 2005, Laboccetta had a telephone conversation with the private secretary of Gianfranco Fini, Francesco Proietti, who is now a member of Parliament. Woodcock listened to the tapped conversation and discovered another case of conflict of interest ‘made in AN’, after the case regarding the clinics of the Fini family. When a warrant was issued for the arrest of Vittorio Emanuele, the PP accused Proietti of entering into some kind of exchange with Giorgio Tino, Director of the AAMS, the Agency for State Monopolies, which is sin charge of monitoring gambling. According to the reconstruction done by the PP, Proietti and his friends in AN managed to avoid having the licence revoked for Atlantis World and in exchange, they supported Tino who was confirmed as head of the State Monopolies body. From the telephone conversations, the interests at stake were clear there was talk about millions of Euros that the State Monopolies body was supposed to receive but that had gone missing. The scandal surrounding the slot machines that led to the arrest of Vittorio Emanuele pales by comparison. Every year, legal slot machines bring in 20 thousand billion of old Italian lira. The ‘providers’ are there to make the slot machines operational and monitor them, and in exchange they charge a percentage one the amounts gambled. Atlantis is the market leader but was behind with its payments owed to the State. And the risk of withdrawal of the licence would have caused millions of euros worth of damage to the company headed by Laboccetta. To block Tino's ‘obstructive move’, Laboccetta contacted Francesco Proietti. Immediately, Fini's right hand man swung into action. ‘I'll phone him on his mobile and ask what the fuck this story is all about.’ However, Proietti did not try to manipulate Tina alone. As with the case of the clinics of the Fini family, the political party and family links intermingle even in the area of slot machines. According to the PP, ‘as proof of his strong and high-level connections with the Monopolies, Proietti arranged a meeting between Laboccetta and Gabriella Alemanno, Deputy Director the State Monopolies’ and the sister of the then AN minister. According to Woodcock, Laboccetta ‘received from Gabriella Alemanno a series of procedural guidelines concerning the counter-moves to be adopted’. But it was the meeting between Proietti and Tino of 27th April that unblocked the situation. According to the PP ‘the meeting had a successful outcome’. These were troublesome times for the slot machine business. The Espresso had published a series of articles that reconstructed the story of Atlantis (‘State Gambling’, 4th November 2004) and its links with AN (‘the Right Likes Gambling’, 2nd December 2004). Those articles described the incredible events surrounding the company based in the Antilles which became a provider for the Monopolies, despite the fact that its principal partner was Francesco Corallo, was the son of the criminal offender Gaetano, condemned for criminal association. Don Gaetano served his sentence and now travels freely around Italy, but in the 80s was arrested for trying to take over the casinos in Campione (which is in the news again at the moment) and Sanremo. This investigation brought to light the relationship between Don Tano and the mafia boss of Catania, Nitto Santapaola. Corallo Junior was not under investigation, and now heads an empire which controls three casinos in the Antilles. These are the same island and sector in which his father was involved. All water under the bridge. In 2004, Gianfranco Fini went on holiday there, in San Marteen, and was photographed with his wife and Laboccetta and his wife in the casino restaurant. ‘Fini was there to go diving. He and the party have nothing to do with Corallo,’ replied the spokesman Salvo Sottile when ‘L'Espresso’ noted these coincidences. However, now the Potenza investigation shows that it was Fini's right hand man who took action to help Corallo and Laboccetta's company when, in the spring of 2005, Atlantis was under fire for failing to link the slot machines to the network and for its alleged failure to comply with the regulations. During those days, even the political right wing parties asked a flurry of questions, demanding that the Monopolies revoke the licence. The Senate Finance and Treasury Committee summoned Tino for a hearing on 25th May. He was very agitated. He did not want to displease Proietti and his friend Laboccetta. He knew that the confirmation of his position with the Monopolies was also dependent on AN. But he could not go to the Senate without any defence. On 3rd May he said to his right hand man: ‘Draw up the document, it will be signed today. Tell Laboccetta off the record. Since in ten days time we have the Finance Committee, we need to have everything in order.’ According to Woodcock, however, the revocation never came: in fact, to date, Atlantis World is still on the list of State Monopolies licensees, as evidence that Proietti's intervention resulted in the outcome requested by Laboccetta. One month after the hearing, Tino was confirmed as Managing Director of the Monopolies for three years.”
[5]The claimants complain only of the following:
“The Espresso had published a series of articles that reconstructed the story of Atlantis (‘State Gambling’, 4th November 2004) and its links with AN (‘the Right Likes Gambling’, 2nd December 2004). Those articles described the incredible events surrounding the company based in the Antilles which became a provider for the Monopolies, despite the fact that its principal partner was Francesco Corallo, was the son of the criminal offender Gaetano, condemned for criminal association. Don Gaetano served his sentence and now travels freely around Italy, but in the 80s was arrested for trying to take over the casinos in Campione (which is in the news again at the moment) and Sanremo. This investigation brought to light the relationship between Don Tano and the mafia boss of Catania, Nitto Santapaola. Corallo Junior was not under investigation, and now heads an empire which controls three casinos in the Antilles. These are the same island and sector in which his father was involved. All water under the bridge.”
THE CLAIMANTS’ COMPLAINT[6]A letter of complaint was promptly despatched to L'Espresso. It is dated 30th June 2006 and was written by Signor Laboccetta, who acts as an adviser to the Atlantis Group. His letter, written in a legalistic style, concentrates in its first section upon what the writer considered to be an extremely libellous article about himself. However, it is right to say that the letter, in its subsequent pages, complains about numeral factual inaccuracies in the article and complains specifically in relation to the renewed attempt, previously made in L'Espresso articles published on the earlier occasions to which I have referred, suggesting that AWG had links to the mafia. The latter passage in the letter asserts that, as a result of what is described as “the libellous articles” published by L'Espresso, there has been considerable damage to the economic interests of the newly set up UK company (that is Giocolegale), as well as the Stock Exchange listing, with what is described in the letter as “incalculable damages estimated to total at least E100 million”.[7]No reply having been received from L'Espresso, the claimants consulted an English firm of solicitors, Dawsons. That firm wrote a further letter of complaint, dated 30th August 2006. Having referred to the two earlier articles published in L'Espresso, Dawsons' letter continues by asserting that the meaning of the words in the article is(1) that Atlantis and, accordingly, the claimants are controlled by the mafia or cosa nostra, or(2) that there are at least reasonable grounds to suspect that they controlled by the mafia or cosa nostra, or(3) that they have sufficient links with the mafia or cosa nostra that they should not have been granted the state gaming concession. There is then a reference to the transfer of the business from the first claimant to the second claimant. In the next paragraph of the letter, one finds the following words:
“Secondly, [Giocolegale] has suffered actual financial loss within the UK as a result of the publication of these articles. [Giocolegale] had made the decision to attempt to raise public finance in the UK, either by way of a bond issue or an initial public offering. In the period before the articles were published, our client was in advanced discussions in the City of London with both UBS Investment Bank and Deutsche Bank. As a result of the publication of the articles both UBS Investment Bank and Deutsche Bank ended these discussions abruptly.”
THE PARTICULARS OF CLAIM[8]No reply having been received to Dawsons' letter or to a chaser which followed it, the claim form was issued on 8th November 2006. The particulars of claim in their original form described the first claimant and the basis on which it does business. It then referred to Giocolegale as follows:
“[Giocolegale] (an English company) was 82% owned by the first claimant and was in the process of procuring the transfer to itself of the said licence and the joint venture's said business pursuant to an agreement to that effect between the participants in the joint venture.”
[9]The complaint was limited to the circulation of L'Espresso in England and Wales. The defamatory meanings attributed to the article were precisely the same as were contained in the letter before action, which I have already quoted. The damages claim is set out in paras.6 to 8 of the particulars. In effect what is claimed, in addition to general damages, is that, as a result of the publication of the article, the claimants' business contacts in the City of London lost confidence in them, with the result that the intended flotation of the Giocolegale and a bond issue in the amount of E120 million was significantly delayed and might now be permanently impaired.[10]In a Request for Further Information the defendant sought clarification of the respective businesses of the two claimants and of the nature of the business being carried on by Giocolegale at the date when the article complained of was published. In answer to that request, the claimants said this:
“The plan to transfer the licence from the RTI to a corporation owned by the RTI participants in the same proportions was inherent in their scheme from the outset.”
Later, one finds this:
“As from the date of the transfer of the licence to itself, [Giocolegale] has actively carried on the business previously carried on by the RTI. It has done so in Italy through its registered branch office there. Between its incorporation and that date, its principal business activity was to take the necessary preparatory steps towards carrying on that business; in particular, registering in Italy and participating there in the licence transfer process referred to above.”
Later, it is pleaded that at the date of the libel:
“[Giocolegale] was actively engaged in preparations to enter business in the EU, a business whose activities were likely to include ancillary activities in this jurisdiction, such as the raising of finance here, and that the libel was thus calculated to damage its commercial potential here.”
DEFENCE[11]It is an unusual feature of this case that no substantive defence is pleaded or relied on. The defence in its original form put the claimants to strict proof that the arrangements for the setting up of the joint venture involved the first claimant in carrying on the alleged (or any) business. In relation to Giocolegale, the defence put it to strict proof of the allegation that at the date of publication it was in the process of procuring the transfer to itself of the licence granted by AAMS and of the business joint venture.[12]The hard-copy circulation of L’Espresso within the jurisdiction of this court was at that stage pleaded to be only 197 copies out of a total of some 339,000 odd copies. A further 22 copies are pleaded as having been sold or distributed within the UK by means of subscription sales. The allegations of damage are denied. It is pleaded that neither claimant was carrying on any business in England or Wales at the material time. THE REPLY[13]As served in early June 2007, the reply reiterated that publication of the article in print and on the internet had taken place within the jurisdiction. Curiously, it was in this statement of case that, for the first time, the detail of the losses said to have arisen as a result of the publication of the article are set out. They are to be found in paras.6 to 8 and 10 to 15. It will be sufficient for present purposes if I explain that the claim was, firstly, for loss of the revenue and profits which the first claimant would have earned from additional machines over the period February 2007 to date. That claim was pleaded as having given rise to a loss of profit of £194,000-odd. There is then a further claim for costs associated with bank guarantees which, as I understand it, is based upon the proposition that the claimants had been planning to have a bond issue in the United Kingdom which had to be put on hold as a result of the publication of the libel. The consequence of that is pleaded to have been that the claimants incurred contractual penalties to AAMS of E2.5 million and that in challenging the imposition of penalties in Italy they were put to substantial legal expense (originally pleaded at E50,000, subsequently increased to E300,000).[14]It should be said that this claim for special damage had been foreshadowed in the letter before action, which I have already quoted and need not refer to again at this stage. FLURRY OF LATE AMENDMENTS[15]Another striking feature of this case is the dramatic change which was made to the formulation of the claimants' claim to damages. Originally there was a very heavy claim for financial losses, which I have already endeavoured to summarise. However, in mid-April 2008 shortly before the trial, the claim for special damages was, ostensibly at least, abandoned. I say “ostensibly” because the claim for general damages was at this stage re-pleaded to reintroduce under the new rubric of general damages many of the matters previously pleaded as special damages.[16]The amended reply starts by deleting and, therefore, abandoning the claim for E194,000-odd loss of revenue. However, the claim in relation to the costs of contesting contractual penalties payable to AAMS and amounting to E300,000 is retained. Also retained in the amended pleading is the reference to estimated legal fees of E300,000. Paragraph 13 reads as follows:
“As at the date hereof, the second claimant is continuing its efforts to finalise the securing of finance with Credit Suisse in London by way of a guarantee to the value of E84 million. In the course of the negotiations for this guarantee, Credit Suisse conducted its due diligence inquiries and specifically asked the claimants for explanations about the position of Mr. Francesco Corallo. The court will be asked to infer that, although it did not say so in terms, Credit Suisse was prompted to seek such explanations because of the allegations of a connection to organised crime published by the defendant. The claimants sought to assuage any concerns in this regard by providing Credit Suisse with a copy of the particulars of claim and defence in this action.”
[17]The following explanation for the volte-face in the formulation of the claim for damages was provided in a witness statement by Mr. Rudolfo Baetsen:
“It was apparent to me that, from July 2006, I was having difficulties talking to potential investors and related financial institutions. I know that Francesco had been talking to UBS in Switzerland and to Deutsche Bank in Milan around this time and that both those contacts went very quiet. I have been referred to the fact that Dawsons' initial letter before action, dated 30 August 2006, identified those contracts at Deutsche Bank and UBS as being London contacts. Having reviewed the matter more closely, I now realise that those contracts were not in London. I apologise for the mistake in the earlier letter and confirm that it was not a deliberate attempt to mislead. The truth is that I had not personally been involved in those discussions and when I approved the text of the 30 August 2006 letter, I had not appreciated that Francesco's discussions with those banks had been in Switzerland and Italy rather than London. As mentioned above, the European financial market is very much a global market these days and so any attempts to raise substantial finance in one European country will encounter difficulties if there is adverse publicity about the company in another European market.”
That witness statement was served in mid-April 2008. Mr. Mark Warby QC on behalf of the defendants describes the conduct of the claimants as “extraordinary”. ISSUES IN THE CASE ON LIABILITY[18]As I have said, the defendant does not rely on any substantive defence but puts each of the claimants to proof of the contentions, firstly, that the words complained of would have been understood by readers of L'Espresso within the jurisdiction of this court to refer to it and, secondly, that the words complained of would, when read by readers within the jurisdiction of this court, have been understood to bear one or more of the defamatory meanings attributed to the words in the particulars of claim.[19]The submission of Mr. Manuel Barca for the claimants is that the article would have been understood to refer to both claimants. He points out that Giocolegale had been incorporated in March 2006 and that, at the date of publication, the first claimant was in the throes of handing over its business, or at any rate the relevant part of its business to it. He relied in this regard on Steel and Morris v. McDonalds (Court of Appeal, 31 March 1999 unreported). Mr. Warby accepts, as he must, that the Espresso article would have been understood by some readers within the jurisdiction to be referring to the first claimant. However, he denies that any such reader (that is to say reader within the jurisdiction) would have understood the article to refer to Giocolegale which was “dormant” at the date of publication in this jurisdiction. As to the defamatory meanings attributed to the article, which I have set out earlier in the judgment, Mr. Barca effectively and, in my judgment, rightly conceded that he could not sustain the first pleaded meaning, that is that the claimants are in fact controlled by the mafia. However, he contended for the second and third meanings, namely that the claimants are reasonably to be suspected of having been controlled by the mafia and that neither claimant is fit to be the holder of an AAMS gaming licence. Mr. Warby argued that the various references to the criminal antecedents of Gaetano Corallo and to his mafia connections would not have been understood by ordinary, reasonable readers as implicating either of the claimant companies in criminality, still less as being involved with the mafia. DETERMINATION OF THE ISSUE Determination of the Issues as to Liability[20]It is convenient if I determine straight away the relatively narrow issues which arise on liability namely reference and meaning. I can do so quite briefly. In regard to reference it is, I have said, conceded that the article would have been understood to refer to the first claimant. I do not accept that any reader of the Espresso article within the jurisdiction or, for that matter, outside it would have understood it to be referring to Giocolegale, which was indeed dormant at the date of publication. It had not traded nor, on the evidence, had it done anything except instruct solicitors to effect its incorporation. McDonalds is readily distinguishable on its facts. The leaflet complained of in that case was held to be defamatory of the American parent as being the body responsible for McDonalds worldwide and in particular as being responsible for the English subsidiary.[21]My conclusion in relation to the inability of Giocolegale to establish that readers here would have understood the article to refer to it is of course fatal to its claim to have been libelled in this action.[22]In regard to the issue of meaning, I am not persuaded that the ordinary, reasonable reader envisaged by the Court of Appeal in, amongst other cases, Jameel v. Times Newspapers Limited [2004] E.M.L.R. 6 would have understood the Espresso article to bear the meaning that the first claimant is or was controlled by the mafia. As I have already indicated, I understood Mr. Barca effectively to concede that point.[23]As to the two lesser meanings pleaded at paras.5(b) and (c) of the particulars of claim respectively, I reject Mr. Warby's submission that the ordinary, reasonable reader would have understood the article to be solely concerned with political chicanery on the part of the first claimant and, amongst others, Signor Laboccetta. If that were so, why, one asks, does the writer of the article make any reference to Signor Corallo, Senior, and to his criminal conviction? It appears to me that the words selected for complaint were included in the article in order to raise in readers' minds suspicions about the first claimant and its suitability to control casinos on the same island and in the same sector as Signor Corallo Senior had been involved. Accordingly, I uphold the meanings pleaded at para.5(b) and (c) of the particulars of claim. REASONS FOR MY EARLIER RULING IN RELATION TO THE PUBLICATION ON THE JAMMA WEBSITE[24]Before turning to what appears to me to be the real question which arises for determination in this action, namely whether either claimant has established an entitlement to damages in respect of the Espresso article or its republication on the internet, I should deal with an issue which arose in the course of Mr. Barca's opening and upon which I heard argument at that stage in the hearing. I also ruled on the point at that time. It was agreed that the convenient course was for me to give reasons for my ruling when I came to give judgment. This I now do.[25]As I have explained, the position in this action is that the pleaded complaint of the claimants relates, and relates only, to the article published in the issue of L'Espresso dated 6th July 2006. The only reference in the particulars of claim to other articles is to the two earlier articles published in L'Espresso which are not the subject of any claim for damages in these proceedings. Moreover, as Mr. Barca expressly accepts, his clients' complaint is confined to the publication of the alleged libel in England and Wales and, accordingly, the claimants are entitled to recover only such damages (if any) which flow from the publication within the jurisdiction of this court.[26]The issue with which I am now dealing arose at a very late stage. It concerns a repetition or republication of the Espresso article complained of on a website called jamma.it (“the Jamma publication”). On 1st May 2008, Dawsons wrote to Davenport Lyons, solicitors acting for the defendant publication, complaining about the Jamma publication, which I should say is a republication of the very same words as appeared in Espresso. That Jamma publication was included in the trial bundle. Davenport Lyons objected to its inclusion, in response to which Dawsons wrote saying that they did not understand the defendant's objection and asked why should the Jamma publication be excluded when two other articles are contained in the trial bundle. The stance being adopted on behalf of the defendant was said to be completely illogical.[27]When he came to argue the admissibility of the Jamma publication, Mr. Barca conceded that there is no reference to it in the pleadings. He further accepts, as he must, that he cannot and does not assert that there is evidence that the defendant is responsible for the republication of the article on the Jamma website. As I have already recorded, the claimants are unable in this action to recover damages flowing from the publication of the alleged libel outside the jurisdiction of this court. Nevertheless, Mr. Barca argues that the Jamma publication is relevant and admissible evidence in support of the claimants' claim for damages. His contention is that it is relevant because it is a repetition of the alleged libel, albeit a repetition for which the defendant is not responsible. The fact that the libel has resurfaced on the Jamma website demonstrates, according to Mr. Barca's argument, the need for the award of damages to include an element of vindication. He suggests that there is a real danger that what he described as the “poison” is likely to spread in the future. Mr. Barca referred me to Kiam v. Neil [1996] E.M.L.R. 493, where the claimant was permitted to adduce evidence before the jury that the libel on which he was suing had been republished by a third party some two years after the original libel had been published. Mr. Barca also relied in Barrick Gold Corporation v. Lopehandia & Anor. [2004] Can.111 12938 (OMCA), where the court emphasised that the internet represents a communications revolution, enabling instantaneous global communication to take place.[28]As I have indicated, there is no mention of the Jamma publication in the pleadings. The contention now advanced by Mr. Barca is one which requires to be pleaded. If I were to permit an amendment to be made, Mr. Warby tells me, and I accept, that the defendants would have needed time to deal with it, so that an adjournment would have been necessary. In these circumstances, I would have refused permission to the claimants to amend their statement of case so late in the day. In any event, I consider that the basis on which Mr. Barca seeks to rely on the Jamma publication is misconceived. True it is that an award of damages in a defamation may, in suitable circumstances, include an element designed to vindicate the reputation of the claimant. This was explained by Lord Hailsham in Broome v. Cassel [1972] A.C. 1027 at 1071 in these terms:
“Not merely can he (the plaintiff) recover the estimated sum of his past and future losses but in the case the libel, driven underground, emerges from its lurking place at some future date, he must be able to point to a sum awarded by a jury sufficient to convince a bystander of the baselessness of the charge.”
As is clear from that passage, the object of permitting an award of damages to include an element designed to enable the claimant to vindicate his reputation in case the libel re-emerges on some future occasion is that, in such a situation, the claimant will be able to point to the award as showing that the libel was unfounded. I contrast that situation with the present one where, as it appears to me, the claimants are seeking additional damages from the defendants for the publication of the libel by a third party which has already taken place. That, I think, is illegitimate.[29]Finally in relation to the Jamma publication, there is the formidable difficulty that there is no way of knowing to what extent, if at all, the Jamma article was published within the jurisdiction of this court. Mr. Barca accepts that he cannot recover in respect of publication which took place out of the jurisdiction. THE BACKGROUND FACTS RELEVANT TO THE ISSUE OF DAMAGES[30]The background facts which are material to the issue of damages may be summarised as follows. I have already summarised the claimants' and their respective businesses and the arrangements for the transfer of the first claimant's business to the second claimant. I should add, however, that the ultimate shareholder in AWG is, according to the evidence, Mr. Francesco Corallo who also acts as an adviser to the joint venture and (now) as an adviser to the second claimant on strategic business matters. He is said to be known within the gaming industry to have a significant involvement with AWG's affairs. There is a detailed account of the manner in which it was intended that the business should be transferred to the second claimant (the English company) to be found in Mr. Baetsen's witness statement from para.5, onwards. I do not think any purpose would be served by my repeating it here.[31]Although the second claimant was incorporated in London in order that it might in effect take over the business of the first claimant, the AAMS licence, which was necessary in order for the second claimant to be able to carry on that business, was not transferred from the first claimant to the second claimant until February 2007. The evidence in the case is that, even after that transfer was finally effected in February 2007, little, if any, business was carried on by the second claimant in England. My understanding of the evidence is that the employees, formerly of the first claimant and after the transfer of the business (notionally at any rate) of the second claimant, continued to work in Rome. The tax continued to be collected from the distributors in Italy. There is evidence that the second claimant's place of business was in Rome, although of course it retained its English corporate identity. In those circumstances, Mr. Warby's contention is that, on the claimants' own pleaded case, they have only ever traded in Italy. He submits that the only trading activity either of them claims ever to have been involved in, even in Italy, is the supervision and collection of tax revenues from a network of video slot machines throughout Italy. He maintains that the main purpose of the licence was to bring into action a network for the computerised management of licence gaming in Italy and to manage the network. The revenue which the claimants were receiving whilst licensees was substantial, being in the region of E17 million in the year to December 2005. Trading success appears to have depended on the licence remaining in being (it has never been determined by the AAMS) and on people carrying on using video gaming machines in Italy, which was the activity which generated the tax which the first claimant and, thereafter, the second claimant collected from distributors in Italy.[32]The article complained of in this action appeared on sale, as I have said, from the end of June 2006. It should be recorded that it appeared at pp.62 and 63 of that issue of the magazine. I have referred already to the very limited number of copies which were published within the jurisdiction.[33]I should refer at this point to a series of letters which came into existence and were sent to one or other of the claimants within the period of about a fortnight, shortly before Dawsons sent the letter before action. The first is dated 14th July 2006. It is written by a firm called Investimenti Sim and it makes reference to “the recent press news and in particular the article appearing in the Espresso 6.7.2006 edition”. The letter went on to inform the first claimant of “the writer's worries in being able to find financing institution that can comfortably issue the guarantee that, on your appointment, I am trying to obtain in favour of AAMS”. The letter went on to seek explanations and refutations, adding that, otherwise, it would be truly difficult to obtain positive results.[34]Shortly after that, there was a letter from the Banca Popolare Italiana dated 20th July 2006, again referring to recent articles in the press and mentioning the Espresso and asking explanations and clarifications.[35]On the same day (that is July 20th 2006), a lengthy letter was written by Evans & Evans Incorporated, which is a Canadian limited company engaged in giving investment advice. That letter makes reference to claims which would make the probability of securing the intended financing entirely impossible and describes the material as being damning and materially and pre-eminently prejudicial against completing the listing in Canada, which was at that stage being contemplated by the claimants.[36]Just over a week later, a letter was sent by a Mr. Chahal on behalf of Cyberview Technology Limited. It is dated 26th July 2006. The writer states:
“It has come to my attention that certain news articles have been published regarding individuals employed by Atlantis World.”
It goes on to express concern about the negative impact which such publicity would have on Cyberview's ability to do business with Atlantis.[37]Finally, on 11th August, there was another letter received by Atlantis, from Nauta Dutilh which requests information as to the activities and background of Francesco Corallo. The reason said for that request is said to be that “client has heard mentioning that Mr. Corallo is being linked to the Italian mafia and that he has been subject to the interest of American drug enforcement administration”.[38]Mr. Warby pointed out that all of these communications emanate from a person or business located outside England and Wales and that they relate to potential business transactions in foreign countries. Most of the communications, he says, originated in Italy and, that being so, presumably resulted from the publication of the article in Italy rather than within this jurisdiction. EVIDENCE FOR THE CLAIMANTS[39]The principal witness for the claimants was Mr. Baetsen. He helpfully described the corporate structure of Atlantis Group and the nature of the first claimant's business in Italy. He gave an account of the unsuccessful attempts made by Atlantis to raise money in Canada, in the United States and in Italy. Mr. Baetsen accepted that the failure of those attempts to raise finance did not have anything to do with the publication of the Espresso article. He describes in his witness statement at para.14 how the decision was taken to establish an English company which would apply for a transfer of the AAMS concession. He says that one of the purposes of this was to enable the English company to raise finance in the UK market. In the course of his cross-examination, it was put to Mr. Baetsen that, following the publication of the Espresso article, he and other people within Atlantis had set about obtaining or procuring the letters which I have referred to, from Cyberview and others, in order that they might be used in defamation proceedings against the defendant to support a contention that it was the publication of the Espresso article which caused the claimants' inability raise money. Mr. Baetsen denied that, although he did agree that he had provided Evans & Evans (Canadian advisers) with a copy of the article. Mr. Baetsen was also asked in cross-examination about a claim in the letter before action that active discussions had been taking place in London with UBS and Deutsche Bank. Mr. Baetsen's evidence was that the discussions had been conducted by Mr. Corallo and that it had been entirely an oral process; there was nothing in writing. Mr. Baetsen explained that, having investigated the matter, he realised that the claimants had been wrong to say these discussions had taken place in London. He accepted that there had been no discussions in London, although he said there had been discussions with those two banks in Switzerland and in Italy. There was also detailed cross-examination of Mr. Baetsen by Mr. Warby in relation to the claim for special damages. For reasons which will appear, it is not necessary for me to go into that part of the evidence in any great detail.[40]The other live witness called on behalf of the claimants was the Mr. Chahal of Cyberview, to whom I have already referred. His evidence can be summarised as follows: he said that he was in Latin America on the business of Cyberview's English subsidiary on the date when the letter is dated, namely 26th July 2006. He said he himself had no dealings with the second claimant. He said that what happened was that he sent the draft letter, firstly, to the American parent company's legal department for approval and, thereafter, he sent it to his own personal assistant in London for her to send it on to the second claimant. He accepted in the course of cross-examination that he had met Mr. Corallo many times before he sent that letter and he also accepted that he had been in receipt of a job offer from Atlantis in January 2007 and had gone to work for them with effect from March 2007. He said it was no part of his function to carry out due diligence; that was a matter which was undertaken by outside agents. He was also cross-examined as to whether the articles which he said he was shown, implicating Mr Corallo’s father in criminality, were in fact the articles published by Espresso or whether they were articles which appeared in other publications such as Il Mondo. I will need to return at a later stage to the evidence of Mr. Chahal. DEFENDANT'S EVIDENCE[41]On behalf of the defendant, a general manager of Espresso, Signor Corrado Corradi, was called to deal with the English circulation of Espresso in both hard copy and internet forms. Also called for the defendant was Mr. Bays, senior partner of the defendant solicitors, Davenport Lyons. He dealt, amongst other things, with efforts to trace Mr. Chahal. PROPOSITONS OF LAW RELEVANT TO THE DAMAGES ISSUE[42]I start with a number of propositions of law which I do not believe are controversial. They are as follows. 1) A corporate claimant, unlike an individual, is not presumed to have a reputation. It must prove that it has a reputation which is capable of being damaged by the alleged libel: see Jameel v. Wall Street Journal Europe SPRL [2007] 1 A.C. 359 at 392 per Lord Hope. 2) Non-trading companies may have particular difficulties in this context: see, for example, Multigroup Bulgaria Holding AD v. Oxford Analytica Limited [2001] E.M.L.R. 28. 3) There is no incompatibility between Article 10 of the European Convention on Human Rights and the presumption of damage which applies not only under English law to individual claimants but also to corporate claimants: see Jameel v. Wall Street Journal Europe. 4) Companies can only suffer “in their pocket” since they have no feelings to be hurt. Any compensation should reflect this and must be focused on the company’s trading or business reputation: see Lewis v. Daily Telegraph Limited [1964] A.C.234 at 262; Jameel v. Wall Street Journal at 14 and Adelson v. Associated Newspapers Limited [2007] E.W.H.C. 3028 Q.B. at paras.4 and 7. 5) Pecuniary loss may include evidence of a general falling-off of custom. More specific losses, as of particular contracts, particular employments, particular hospitality, may also be allowed if properly pleaded and proved: see McGregor on Damages 17th Ed. at para.39-031. 6) Despite the presumption of damage, a corporate claimant will usually give evidence of general damage to avoid the risk of being awarded only small or nominal damages: see McGregor at para.30-035. 7) The mere fact that certain words have been made accessible on the internet does not give rise to a presumption of their publication; nor does it warrant an inference that the words have been published, let alone published to one or more persons in this jurisdiction. The claimant must prove a “sufficient platform of facts” to allow such an inference to be drawn: see Al Amoudi v. Brasard [2007] 1 W.L.R. 113. 8) Claimants proceeding in respect of minimal publication here, which is not proved or likely to have caused them any significant damage, may fail to show that any real or substantial tort has been committed. In that event their claims may be dismissed as an abuse of the court's process: see Jameel v. Dow Jones at paras.69 and 70.[43]Whilst dealing with the law, I should in addition refer to a case cited by Mr. Barca, namely Ingram v. Lawson (1840) 6 Bingham N.C. 212, in which it was held that, in order to estimate what damage the plaintiff had sustained, the jury might look at the nature of his business and the general rate of his profit. That case is far removed from the facts of the present case and I am unable to derive assistance from it. THE THRESHOLD QUESTION ON DAMAGES: DOES THE FIRST CLAIMANT HAVE A TRADING REPUTATION WITHIN THE JURISDICTION?[44]The threshold question on the issue of damages is whether the first claimant can discharge the onus of establishing on the balance of probabilities that it has a trading reputation in England or Wales. As I have said, the first claimant is a Dutch Antilles company. Its business, until it disposed of its rights and liabilities to the second claimant in late January 2007, was carried on in Italy and not in England. The business consisted, as I have said, in the collection of taxes from the operators of video slot machines, all of whom were situated in Italy. It is not suggested that the company has ever traded in England. Although it was at one time claimed that, at the date of the publication of the Espresso article, discussions were taking place in London with Credit Suisse and Deutsche Bank, it subsequently emerged that this was a “misunderstanding”. In any event, it is to be inferred that those discussions would have been on behalf of the second claimant rather than the first.[45]Notwithstanding these matters, Mr. Barca stoutly contended that the first claimant does enjoy a trading reputation here. In support, he cited a passage from the judgment of the Court of Appeal in the McDonalds case at pp.24 to 26. He relied in particular on the following paragraph:
“Mr. Rampton said the publication was defamatory of the first respondents in that it referred to McDonalds which people associate with the United States first respondents. The nature of the publication was that it was apt to damage the first respondent's goodwill. That is all that a plaintiff corporation needs to show for a defamation claim where there is no claim for special damages.”
The court went on to say that, in the context of that case, the appropriate questions were (a) whether the first respondents had a reputation within the jurisdiction and (b) whether the publication is apt to damage the reputation of a corporation. If a corporate plaintiff shows that it has a reputation within the jurisdiction and the defamatory publication is apt to damage its goodwill, it has a complete cause of action capable of leading to an award of substantial damages. I take the reference to “substantial” in the judgment in that case to mean no more than that such a claimant would be entitled to more than nominal damages.[46]Mr. Barca also relied on the reference made in McDonalds to the earlier decision in Shevill v. Presse Alliance [1996] A.C. 959. In the latter case, it had been submitted on behalf of the defendant that any goodwill or reputation enjoyed by the plaintiffs was in France. The judgment of the Court of Appeal in McDonalds made clear that the foreign corporation suing for defamation does not have to trade within the jurisdiction provided that it has a reputation within the jurisdiction, which McDonalds plainly did have.[47]Mr. Barca also relied on Multigroup Bulgaria Holding v. Oxford Analytica, where the claimant was a Bulgarian company with a number of subsidiaries engaging in various activities. The alleged libel was an allegation of corruption. The argument for the defendant was that a corporate claimant had to have a pre-existing reputation within the jurisdiction in order to bring a claim for libel. It was submitted that the claimant in that case had not proved that it had such a pre-existing reputation. Eady J. held that it was not established that the corporation in question traded within the jurisdiction; it did not enjoy a distinct trading reputation in its own right. Thus the claimant could not be damaged in the eyes of its investors. It did not have any competitors and it did not have any customers. In the course of giving judgment, Eady J. said:
“37. No particular evidence has been adduced, as might have been admissible, to the effect that any one person within the four jurisdictions (or any of them) would have known either of the existence of the intermediate holding companies within the Multigroup conglomerate, generally, or of the claimant's existence as one of them in particular. 38. It is submitted, too, that there is no evidence that anyone within any of the jurisdictions who had dealings with Credit Bank would have known that, as at March 1995, any Multigroup company was the majority shareholder in Credit Bank. It would follow, therefore, that there is no evidence of any such readers having thought the less of Credit Bank by reason of the contents of the Brief. As a result, the argument goes, the suggestion of inferential reference or damage to the claimant because of ostensible injury to Credit Bank's reputation would break down.”
[48]Mr. Barca accepted that the first claimant never traded in this country, and that it has never owned property here. When I asked him what the first claimant had done here, Mr. Barca responded that it had, by the time of the publication of the alleged libel, carried out preparatory work in setting up the second claimant. Mr. Barca conceded that the first claimant could only be said to have come to this jurisdiction in order to dispose of its business to the second claimant. CONCLUSION ON TRADING REPUTATION OF THE FIRST CLAIMANT[49]I readily accept that it is not fatal to the first claimant's claim to be entitled to damages that it does not and never has traded in this jurisdiction. That is not a condition of such entitlement. However, it is clear that what must be shown is that the first claimant had a trading or business reputation in this country at the date of publication; so much is clear from Jameel v. Wall Street Journal, to which I have already made reference. I do not read the judgment of Eady J. in Multigroup as having been intended to cast any doubt on that proposition. The small Shanghai trader postulated in that case is a far cry from the first claimant. As is clear from Multigroup, the question whether an individual or corporation has a trading or business reputation is a question of fact which is capable of being established by evidence. What evidence is there here that the first claimant has such a reputation within England or Wales? No actual or intended clients or investors or competitors have been called to give evidence. It is, in my judgment, highly unlikely that any such evidence exists. The connection between the first claimant and this jurisdiction is non-existent or at least exceedingly tenuous. Nor am I persuaded that the letters sent to the claimants in the weeks preceding the sending of Dawsons' letter before action, whether individually or collectively, are probative of the existence of a trading or business reputation here on the part of the first claimant. I have already noted that all bar one of those letters were sent on behalf of foreign companies. The letter from Cyberview was written to the second claimant. I can find nothing in the evidence of Mr. Baetsen which assists on this aspect of the case.[50]I am, in these circumstances, driven to the conclusion that the first claimant has failed to establish that, at the material time, it had the requisite trading or business reputation in this jurisdiction such as to entitle it to an award of damages for libel. It must follow that the claim of the first claimant be dismissed. I have already said that the claim of the second claimant has also to be dismissed. POSTSCRIPT[51]Although it is not necessary for me to do so, I will deal briefly with two further questions which were canvassed in the course of argument. The first concerns the claim for damages. I have described earlier the claim for heavy special damages which was initially advanced on behalf of the claimants. That damage was alleged to have been caused by the very limited publication of the Espresso article which took place in this country, as described earlier. Mr. Warby makes the point that the Espresso article was not the only article which was circulating at that time, which impugned the good name of the claimants. One example is the article which I have already referred to which appeared in the issue of Il Mondo on 7th July 2006 which mentioned AWG and the alleged links of Gaetano Corolla to the mafia.[52]Mr. Warby submitted that the claim to special damages was a construct or, as he described it, “a put-up job”, presumably designed to bully the defendant into surrendering and publishing an apology which the claimants would be able to deploy for their own purposes. Mr. Warby suggested that the various letters sent to one or other of the claimants by the various banks and other individuals and companies, to which I have made reference, were procured by or on behalf of the claimants. As I have said, when this suggestion was put to Mr. Baetsen in cross-examination, he denied having any knowledge of any such procurement having taken place. I accept that denial. Mr. Baetsen is based in the Dutch Antilles and he does not appear to have been personally involved in the activity which took place in the weeks following the publication of the article complained of.[53]It is noteworthy that the only witness called on behalf of the claimants to deal with this aspect of the case was Mr. Chahal, who, as I have said, was the author of the letter sent by Cyberview to the second claimant. I have already summarised in part, the evidence given by Mr. Chahal. It is something of a mystery how Mr. Chahal came to be involved in the despatch of a letter which is said to have formed part of the due diligence inquiries made on behalf of Cyberview's US parent. I would not be justified, on the evidence which I have heard, in concluding that Mr. Chahal was himself guilty of any impropriety. Nor am I in a position to make any adverse findings against anyone else within the claimant's organisation in relation to what may be called the “procurement issue”. In view of my dismissal of the claimant's claims, it is unnecessary for me to do so.[54]As I have already described, following persistent and well-directed requests on behalf of the defendant for further information about the claim for special damage, it was, as described earlier, abandoned and replaced by what was described as a claim for general damages. The substituted claim was pleaded with considerable ingenuity by Mr. Barca, who was instructed on behalf of the claimants at a relatively late stage. In relation to the claim for so-called general damages, I will confine myself to saying that, in my opinion, it was largely, if not entirely, demolished in the course of cross-examination described as a claim for general damages. The substituted claim was pleaded with considerable ingenuity by Mr. Barca, who was instructed on behalf of the Claimants at a relatively late stage. In relation to the claim for so-called general damages, I will confine myself to saying that in my opinion it was largely, if not entirely, demolished in the course of cross-examination. I do not accept that the Espresso articles had any adverse effect on the successive attempts made by the Claimants to raise finance on the money markets. The Claimants’ abandonment of the assertion that they were “in advanced discussion in the City of London with both UBS Investment Bank and Deutsche Bank” gave the lie to that.[55]As to the Claimants’ claim in paragraph 10 of the Amended Reply to be entitled to recover the cost of contest imposed on the Claimants by the Italian courts together with the costs incurred in challenging the imposition of the penalties, it seems to me to be fanciful to suppose that the sums mentioned could have been recovered in this action, least of all as general damages.[56]The second question arises out of a submission by Mr. Warby that the claim could and should be dismissed in its entirety on the grounds that it is an abuse of the process of the court. Although abuse of the process is more commonly a ground for striking out a claim before trial, I am satisfied in the light of the observations of Dillon and Stuart-Smith LJJ in Lonrho v Al Fayed (No5) [1993] WLR 1489 at 1493 D-F and 1502 D-E respectively that it is open to the court in a suitable case to dismiss a claim at trial on the ground that it constitutes an abuse of the process.[57]In my judgment the instant case does amount to an abuse of the process. I say that for two broad reasons. Firstly, the case bears all the hallmarks of forum-shopping. Notwithstanding the incorporation of Geoligale in England, this is in essence a claim against an Italian magazine with a miniscule circulation within the jurisdiction. Furthermore the Claimants’ place of business was at all material times in Rome and any damage caused by the publication of the Espresso article complained of was sustained in Italy.[58]Secondly, I am satisfied for the reasons set out earlier in this judgment not only that the original claim for special damages was misconceived but also that the reformulated version was also doomed to failure. Even if I had found liability in favour of either Claimant, the amount of general damages recoverable would have been so modest that the claim would have been liable to the struck out on the ground that “the game would not have been worth the candle”.

Cited in 2 later judgments