Hodgins v Squire Sanders LLP [2013] EWHC 2404 (QB)

[2013] EWHC 2404 (QB)Case No HQ13D02115
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 01/08/2013
Before
Mrs Justice Sharp
Between
Patrick HodginsClaimantSquire Sanders LLPDefendant
Andrew Caldecott QC (instructed by Reed Smith LLP) for ClaimantJames Price QC (instructed by Squire Sanders LLP) for DefendantHearing Hearing dates: 26 June 2013
Judgment
[1]This is an application by the Defendant, Squire Sanders LLP, to strike out this libel action under CPR paragraph 4.1 of PD 53, on the ground that the words complained of in this libel action are incapable of bearing the meaning pleaded in paragraph 4 of the Particulars of Claim.[2]The Claimant sues on a letter dated 2nd January 2013 (the letter) sent to him by email but copied his current employer in Greece and to the other members of the management board of Danaos Corporation, of which his current employer is President and CEO, by the Defendant firm of solicitors.[3]The letter said this:
“2 January 2013 Dear Sir Letter Before Action We are London solicitors for Solym Holdings Corporation of Marshall Islands and its subsidiary, Solym Carriers Limited of Gibraltar (the ‘Company’), Mr Vassilios Hatzigiannis and Mr Nikolaos Paplios [sic] who are the Directors and Shareholders of the above companies (the ‘Directors’). We write to notify you that we are instructed to commence concurrent actions in the High Court of Justice, Queen’s Bench Division, Commercial Court and London Arbitration against you pursuant to your implied contract of employment with Solym Carriers Limited of Gibraltar (on behalf of the Company) and Mr Hatzigiannis and Mr Papalios (as Directors and on behalf of the Company) pursuant to the Shareholders Agreement dated 27 February 2012. The Company’s action against you is for breach of your fiduciary duties to the Company including, but not limited to, your duty to promote the success of the Company, your duty to act within powers, your duty to exercise reasonable care, skill and diligence as Director of the Company, your duty to avoid conflict of interest and your duty not to accept benefits from third parties. Further the Directors’ claim against you for breach of Section 10 of the Shareholders Agreement dated 27 February 2012 which claim shall be commenced by way of London Arbitration pursuant to Clause 22 of the Shareholders Agreement. We should be grateful if you would treat this as the Claimant’s Letter Before Action pursuant to the Civil Procedure Rules of England and Wales. We should also be grateful if you would provide us by return with your preferred address for service of our clients’ Claim Form and Notice of Appointment of Arbitrator. All of our clients’ rights remain fully reserved in the interim and all further correspondence in relation to this matter should be directed to this office. We look forward to hearing from you. Yours faithfully Squire Sanders (UK) LLP”
Dear Sir Letter Before Action Yours faithfully Squire Sanders (UK) LLP”

Yours faithfully

[4]The natural and ordinary meaning attributed to the letter is that the Claimant: i) Had placed himself in a position of conflict of interest and acted in grave breach of his fiduciary duties as a director of Solym Carriers Ltd; and ii) Had while a director of that company accepted bribes or other improper benefits from third parties in return for acting in a manner detrimental to the company’s interests.[5]As Mr Caldecott QC submits, any meaning has two ingredients: the nature of the charge and the level at which the allegation is pitched. The meaning complained of here is pitched at one of “guilt”; and the sole issue which arises on the Defendant’s application is whether the words are capable of bearing that (highest) meaning.

The relevant principles for determining meaning and the range of permissible meanings

[6]The legal framework for determining meaning and the principles which the court must apply when considering an application under CPR Part 53 para 4.1 are well settled. i) The court should give to the material complained of the natural and ordinary meaning which it would have conveyed to the ordinary reasonable reader reading the article (or viewing the programme) once. ii) The hypothetical reasonable reader (viewer) is not naïve but he is not unduly suspicious. He can read between the lines. He can read in an implication more readily than a lawyer and may indulge in a certain amount of loose thinking, but is not avid for scandal and someone who does not, and should not, select one bad meaning where other non-defamatory meanings are available. iii) While limiting its attention to what the defendant has actually said or written, the court should be cautious of an over-elaborate analysis of the material in issue. iv) The reasonable reader does not give a newspaper item the analytical attention of a lawyer to the meaning of a document, an auditor to the interpretation of accounts, or an academic to the content of a learned article. v) In deciding what impression the material complained of would have been likely to have on the hypothetical reasonable reader the court is entitled (if not bound) to have regard to the impression it made on them. vi) The court should not be too literal in its approach. vii) The hypothetical reader is taken to be representative of those who would read the publication in question.[7]See Gillick v BBC [1996] EMLR 267 at 272-3, where Neill LJ summarised the guidance given by Sir Thomas Bingham MR in Skuse v Granada TV [1996] EMLR 278 as to the approach to be adopted when determining actual meaning; and see also Jeynes v News Group Newspapers Ltd [2008] EWCA Civ. 130 at [14].[8]The threshold for shutting out a meaning is a relatively high one: it is an exercise in generosity not parsimony: per Sedley LJ on Berosovsky v Forbes Inc [2001] EMLR 1030 at para 16. See also Jameel v The Wall Street Journal SprL [2004] EMLR 6. However that is not to say that a judge on a meaning application may more safely err on one side than the other. That would be inconsistent with the overriding objective: see John v Guardian News & Media Ltd [2008] EWHC 3066 (QB) at [16] and [17].

The Defendant’s submissions on meaning

[9]Mr Price QC for the Defendant submits the letter is not reasonably capable of being understood by the hypothetical reasonable reader in the position of those on the management board to bear a meaning of guilt of the conduct described. The letter does no more than indicate the allegation that the company (claimant) will seek to establish, namely that the Claimant did what it is claimed that he did. In this sense only, the letter does make that allegation: and he describes this as the high point of the Claimant’s case. But he says it is an illogical and impermissible leap to the conclusion that this is the natural and ordinary meaning of the letter. The content of a letter before claim merely intimates or states the claim or charge which the person will set out to prove in legal or arbitral process. The ordinary reasonable reader would not take it as a statement of guilt since this would negate the very nature of the process. He accepts that the Defendant might have to establish and therefore meet a meaning that there are proper grounds for bringing a claim, but no higher meaning, and certainly not one of guilt.[10]The position he submits is analogous to that which arises when there is a criminal charge, where it would be unreasonable to take that charge as meaning guilt: see Lewis v Daily Telegraph [1964] AC 234 and what is said by Lord Hodson at p.275:
“It may be defamatory to say that someone is suspected of an offence, but it does not carry with it that the person has committed the offence, for this must surely offend against the idea of justice which reasonable persons are supposed to entertain.”
[11]He says the reasonable reader would not expect solicitors to be expressing any conclusion as to the Claimant’s guilt; and would understand that a lawyer may intimate and pursue a claim whilst entertaining doubts about its prospects of success. The well-known example of the conversation between ordinary people discussing what they read in the newspaper given by Lord Reid in Lewis at p. 259-260 applies equally well to the facts of this case. Cadam v Beaverbrook Newspapers Ltd [1959] 1 QB 413 raised essentially exactly the same point as this case; and is supported by the later decision of the Court of Appeal in Stern v Piper [1997] QB 123. He submits the repetition rule has no role to play in this case; and English law has now reached the point where what Cadam decided to be arguable, is in fact the law, or recognised to be correct. See also Mirror Newspapers v Harrison [1982] 149 CLR 293, a decision of the High Court of Australia.

The Claimant’s submissions on meaning

[12]Mr Caldecott QC submits that far from being an “incapable” meaning this is as clear an allegation of guilt as there could be for the following reasons.[13]First, as a matter of plain ordinary language, the letter does not suggest the putative claimants merely suspect the malpractice alleged, still less that they are raising questions to be answered in order to establish whether it happened or not. It is an outright assertion that it did happen, and this will found the basis of the threatened claim. He draws attention to the brevity of the declaration, the lack of particularity and the lack of any interest in what the Claimant might say in response to what he describes as two strikingly serious allegations to be made about any businessman: breach of fiduciary duty, and receipt of improper benefits from a third party.[14]Secondly, having regard to the circumstances and context of the publication. For the purposes of this application, the circumstances of publication insofar as they are relevant to meaning, must be deemed to be true. The covering email was not marked “Private” or “Confidential”; it was signed by a named partner of the Defendant firm; sent to the email address management@danaos.gr and addressed “Dear Sirs”. There was no suggestion in the letter that the recipients of the email had anything to do with the complaint made by the letter, which concerned the Claimant’s previous employment. There could be no possible purpose in copying the letter to the Claimant’s employer and the Danaos board unless it were to suggest that the Claimant was guilty of the malpractice alleged, and was unfit to be employed.[15]Thirdly, added weight is given (or arguably is at this stage) to the communication by the fact that grave charges are made by a partner in a well-established firm. The reasonable reader is bound to assume that the more serious the charge, the more care will have been taken before making it, particularly given the communication with the subject’s employee where the potential consequences are also very serious.[16]These matters are obviously cumulative and will have to be assessed by the trial tribunal in the round, when it comes to determine meaning.

Discussion

[17]In my view, applying the principles set out in paragraphs 6 to 8 above, it is sufficient to say that the words are capable of bearing the meaning contended for by the Claimant for the reasons succinctly advanced by Mr Caldecott. It would be pointless to set out the principles with regard to the determination of meaning, and then engage in precisely the sort of close textual analysis which is discouraged. The essential points are encapsulated at paragraphs 12 to 16 above.[18]I should however deal with the argument raised by Mr Price as to principle. There is a difficulty in my view with the submission that there is a certain class of publication which is not capable of bearing a particular meaning, because, when determining what words mean “It is necessary to take into consideration not only the actual words used, but the context of the words.” Per Lord Halsbury LC in Nevill v Fine Arts Co [1897] 1 AC 68, at 72. The Claimant’s case is legitimately based in my view on two things which need to be looked at together: the text of the letter, and the circumstances in which it was sent and received.[19]As for the authorities, in Cadam a newspaper published an article stating that a writ had been issued against four named defendants for “alleged conspiracy”. The original defence to the action for libel was ‘not defamatory’. The defendant then sought leave to add a plea of justification relying on the issue of the claim rather than the underlying merits. The Master granted leave, and the plaintiff appealed. The sole issue for the two-man court was whether the defence was arguable (a lower threshold than capability). There was no attack on the plaintiff’s case. The decision therefore merely allowed the defendant to justify that possible meaning. At p.426 Morris LJ said:
“In my judgment it could not be said that these particulars could not justify some conceivably defamatory meaning that somebody might say was the ordinary meaning of those words…”
At p.422 Hodson LJ said “it was arguable that the defence put forward of justification could be supported by a reference to a writ.”[20]The court did not consider any argument therefore, let alone strike out the claim on the basis that the words were incapable of bearing any higher meaning than that a claim had been made. It seems to me therefore, Mr Caldecott is right to characterise Cadam as a red herring on the issue of meaning which arises in this case.[21]Whether, as Mr Price submits, the Court of Appeal in Stern later regarded the decision in Cadam as being arguably correct is therefore nothing to the point.[22]In Stern the newspaper published a report of a defamatory affirmation made in the course of civil proceedings. The court refused to apply Cadam and struck out a defence of justification relying on the fact that an affirmation had been made in those terms, on the ground it was contrary to the repetition rule (“For the purpose of the law of libel a hearsay statement is the same as a direct statement, and that is all there is to it.” Per Lord Diplock, Lewis at pp. 283-284).[23]Hirst LJ distinguished Cadam saying at p.134:
“I think it is acceptable that a statement that a writ or equivalent civil proceedings has been issued (or for that matter that an indictment or similar criminal proceedings has been laid) may be capable of conveying no more than the fact that the relevant proceedings have in fact been launched; moreover, and most important, there is no hearsay problem.”
Simon Brown LJ said at p.137 that he regarded Cadam as an exception to the repetition rule (a category he went on to say at 137 G that should not be expanded).[24]The court in Stern did notsuggest there was any merit in applying the approach of the court in Cadam to other situations. It went no further than saying a third party’s report that a writ has been issued may be capable of meaning no more than that. As Mr Caldecott submits, Stern provides no support for the proposition that it must only mean that.[25]Cadam and Stern provide no authority it seems to me, therefore, for the proposition that as a matter of principle, a letter before action can only mean that an allegation has been made, or that there existed proper grounds for bringing a claim, and is incapable of bearing any higher meaning. I should add that I do not find the case of Mirror Newspapers of assistance in determining the issue of meaning which arises in this case on different facts (it was concerned with the question whether a mere newspaper report of the fact of arrest and charge was capable of bearing an imputation of guilt of the offence charged: the court held it was not).[26]Mr Caldecott accepts that a mere report of a claim or charge may be capable of meaning no more than the prosecution think there are sufficient grounds to prosecute, or there is a proper claim to be brought, but not one which will necessarily succeed. But he is right in my judgment to draw attention to the difference between a newsworthy report, and what might be regarded as a “targeted” publication from the originator of the allegation, or someone speaking on his or her behalf who will have an inside view of the facts.[27]Both Mr Price and Mr Caldecott submit that there are wider policy considerations as to the consequences if the case is decided one way or the other. Mr Price submits if the letter of claim is taken to bear the meaning that the intended defendant is guilty, the law may put solicitors in a curious position: the solicitor could not use the offer of amends procedure under section 2 of the Defamation Act 1996 or defend the defamatory meaning unless so instructed by his client, although he concedes this may be a good reason why a solicitor should be careful about those to whom he shows such a letter.[28]Mr Caldecott on the other hand submits it would be an extraordinary outcome if pre-action letters making serious and unqualified allegations against a putative defendant could be sent by solicitors for a putative claimant to third parties unconnected with the dispute (including presumably the press and employers) with impunity, because they could be defended on the self-proving basis that they are true as only meaning the solicitor’s client was advancing those claims or complaints. He says further that such an approach would be non-Convention compliant in denying a remedy for an obvious wrong and a potentially serious infringement of the Claimant’s rights.[29]In the event, I have determined the application in favour of the Claimant, and the Defendant’s application is refused.

Cited in 1 later judgment