McGrath & Anor v Bedford & Anor [2016] EWHC 174 (QB)

Case No HQ15D02443[2016] EWHC 174 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 3 February 2016
Before
SIR DAVID EADYSitting as a High Court Judge
Between
Michael McGrathClaimantsNecon Technologies LimitedClaimantByron BedfordDefendantsProEconomy LimitedDefendant
John Samson (instructed by Gregg Latchams) for ClaimantsIan Helme (instructed by Gisby Harrison Solicitors) for DefendantsHearing Hearing date: 15 January 2016
JudgmentSir David Eady:
[1]This is an application by the Claimants for permission to amend their particulars of claim pursuant to an opportunity granted by His Honour Judge Moloney QC, following a judgment dated 30 July 2015. The claim is founded upon allegations of defamation and malicious falsehood. The application was dated 16 October 2015 and was originally granted ex parte by Master Eastman on the same day. How that came about does not matter, but the parties agreed that the order should be set aside and the application determined at an inter partes hearing. I therefore set aside the Master’s order by consent on 15 January and proceeded to hear their submissions, which concluded at 4.20 p.m. I now, therefore, set out my conclusions by way of this reserved judgment.[2]Mr Helme for the Defendants raised a number of objections to the form and content of the claim form and the particulars, which I shall need to address. He put in the forefront of his argument the proposition that it is for the Claimants to discharge the burden of showing not merely that their case, as amended, is arguable but also that it will have a realistic prospect of succeeding. It is clear that mere assertion will not suffice for this purpose. The criteria are very similar to those applied on an application for summary judgment under CPR Part 24. He placed emphasis on a passage in the judgment of Arden LJ in Collier v P & MJ Wright (Holdings) Ltd [2007] EWCA Civ 1329, at [21]:
“…There has to be something to suggest that the assertion is sustainable. The best evidence would be incontrovertible evidence to support the applicant’s case, but this is rarely available. It would in general be enough if there were some evidence to support the applicant’s version of the facts, such as a witness statement or a document, although it would be open to the court to reject that evidence if it was inherently implausible or if it was contradicted, or was not supported, by contemporaneous documentation … But a mere assertion by the applicant that something had been said or happened would not generally be enough if those words or events were in dispute and material to the issue between the parties.”
[3]He also drew my attention to a passage in the current White Book, at 17.3.6, to the effect that a party will not be permitted to raise by amendment an allegation which is unsupported by evidence and is pure speculation or invention. I have no doubt, however, that in making this assessment the court should take into account any narrowing of the issues and in particular the scope of any admissions made, for example, in pre-action correspondence.[4]In addressing any application to amend the particulars in a defamation claim the parties, and the court, will need to have in mind the recent developments in practice which have taken place in the wake of s.1 of the Defamation Act 2013, and specifically in relation to the need for any claimant to show that serious harm to reputation has occurred or is likely to do so. This requirement is now a substantive element in any claim for libel or slander and is logically unconnected to the strength or weakness of any possible defence. Without it, no such claim will get off the ground. Defendants, therefore, need to be alert to the possibility that a claimant will not be able to establish this basic ingredient and, where appropriate, may raise the point by way of preliminary objection prior to serving a defence.[5]It will depend on the circumstances, but one can well envisage cases in which the words complained of appear not to be of a sufficient level of gravity, or where the evidence of publication is itself very limited. Where this is so, the overriding objective would appear to require that the point is taken early with a view to saving time and costs. (See e.g. the discussion in Lachaux v Independent Print Ltd and others [2015] EWHC 2242 (QB), at [12] and [168]-[169].) It seems, correspondingly, that claimants would generally be wise to be in a position to make out a case of “serious harm”, even before a defence has to be served, which goes beyond mere assertion and to be able to demonstrate that it has at least a realistic possibility of success. If a challenge is made to a plea of “serious harm” at that stage, the claimant’s cards need to be on the table and the evidence in support should be made available. It will generally not do simply to make the assertion that serious harm has been suffered and call upon the defendant to plead to it without more.[6]It may be that in some cases it will make sense to determine the “serious harm” issue at a full hearing with early disclosure of relevant documents, evidence and cross-examination. Where this happens, it will normally be appropriate for the court also to rule, in advance of such determination, upon the issues of meaning: see Lachaux at [167]. On the other hand, experience soon began to show that the overriding objective would not always be served by a full preliminary hearing, and indeed that sometimes the adoption of such a procedure will increase rather than reduce the cost of the litigation. This would appear to undermine the intention of the legislature instead of achieving its objective. These risks were highlighted in the judgment of Judge Moloney in Theedom v Nourish [2015] EWHC 3769 (QB), at [31]. He pointed out the alarming fact that the parties had expended between them, by that early stage, costs amounting to nearly £200,000. There remained yet to be incurred the costs of resolving all the other issues and duplicating in the process a good deal of what had already taken place. This means that no general rule can be laid down. Much will turn on the facts of the particular case and upon the judgment of the parties and of any judge called upon to exercise case management powers. (There is nothing new in this, since it has long been recognised that the trial of preliminary issues can prove to be a snare and delusion.)[7]This may well be a case for “serious harm” to be explored by way of preliminary hearing, although that is not a matter for me to decide. The publication appears to be very limited in scope and the defamatory meanings, which depend upon establishing an innuendo, are by no means obvious at a first reading. The Defendants will, therefore, need and be entitled to the fullest information available on the Claimants’ plea of serious harm, in order to enable them to decide whether to make an early challenge. This is quite apart from their right to have the case properly pleaded on other essential ingredients, such as publication and meaning, in accordance with the well established rules. I must now turn to the facts.[8]Necon and ProEconomy are companies which supply systems for water purification. Mr McGrath is managing director of the former and Mr Bedford is a director and the business development manager of the latter. Both systems use silver and copper in the process as biocides. These are governed by Article 95 of EU Regulation 528/2012 (as amended by Regulation 334/2014), which is known as “the Biocide Regulation”. There is some disagreement between the parties as to the factual position, but it can be said that at some point it will become necessary only to use silver in such products which has been obtained from a supplier appearing on an approved list (“the Article 95 List”). I understand that at the material time only two companies were on the List, namely ProEconomy and a third party called Tarn-Pure Ltd. Necon was not listed. The current dispute arose in the context of a tender for the supply and maintenance of a water purification system at Craigavon Area Hospital. The tender process was led on behalf of the Southern Health and Social Care Trust by one Mark Kelso, who was employed by consulting engineers Semple & McKillop Ltd. For those interested in tendering, the points of contact were Mr Kelso and/or the two relevant representatives of the Trust (Mr Donal Roche and Mr Paul McKenna).[9]It seems that ProEconomy was bidding to supply, and on 2 February 2015 Mr Bedford telephoned Mr Roche to enquire about the bid, only to discover at that stage that another bidder had offered a lower price than that put forward by ProEconomy. There was then a conversation with Mr Kelso who informed Mr Bedford that the rival bidder was in fact Necon. On the same day, Mr Bedford sent an email to Mr Kelso referring to the fact that Necon was not on the Article 95 List and stating his understanding that it would therefore not be able to supply silver after 1 September 2015. That email is complained of in these proceedings as the first of the supposedly defamatory publications.[10]There was a series of further communications and on 4 February Mr Bedford sent another email to Mr Kelso, which is the second publication complained of as being defamatory. In it, he addressed the contention of Necon (as reported to him) that it would be able to go on supplying silver even after the Article 95 List came into effect – provided that it obtained its silver from a source which was on the List. In effect, he said that this was correct in theory, but that neither of the companies on the List (i.e. ProEconomy and Tarn-Pure) would sell silver to Necon.[11]Although there is no mention of slander as a cause of action in the claim form, it emerged from the original particulars of claim that the Claimants wish to rely on a conversation in which an unnamed person “contacted Paul McKenna and Donal Roche” and “in the course of telephone conversations and/or meetings” stated that Necon would not be able to use its system after 1 September 2015. That person has subsequently been identified as Byron Bedford. (What emerged in the hearing before me, however, was that Mr Samson actually wished to complain of two slanders, published in the course of separate telephone conversations, and that there was to be no reliance on any meeting. The words alleged to have been spoken are said to have been in identical terms:
“As Necon is not a member of the silver task force or on the Article 95 List their equipment will have to be switched off as and from September”
. In light of this further refinement, obviously, paragraph 7 could not stand in its present form. The new case will have to be properly pleaded.)[12]It seems that on 16 February 2015 it became apparent that Tarn-Pure would be willing to sell silver and that this would clear the way for Necon to carry on supplying their systems. According to the Defendants, this came as a surprise to them and was contrary to what they had been told by Tarn-Pure.[13]It is clearly going at some stage to be a matter for close enquiry how much, if any, harm was done to the reputation of either Claimant. In Theedom, at paragraph 15(e), Judge Moloney referred to a category of cases in which it would be possible to infer “serious harm” by reference solely to the gravity of the words complained of and the scale of publication. This would not appear, at first impression, to be such a case. Did anyone believe and, if so, for how long that either of them had behaved in any way disreputably? Necon won the contract for the hospital and indeed has a number of other NHS contracts. Moreover, until recently, there was no suggestion that Necon had suffered any financial loss as a result of the allegedly defamatory publications (a subject to which I shall need to return shortly). That is especially significant now in the light of the provisions about corporate claimants in the 2013 Act.[14]It is against this background that Mr Helme mounts his challenge to the draft pleading as it stands. In addressing it, I must take account not only of the principles relating to amendment adumbrated in the judgment of Arden LJ, cited above, but also of the need to narrow the issues in a case of this kind from the outset, and to be in a position to test the cogency and coherence of a plea of “serious harm” or, in the case of a corporate claimant, a plea of financial loss, just as much as one would wish to do so in relation to any other basic ingredient, such as (say) meaning or publication: see e.g. Best v Charter Medical of England Ltd [2001] EWCA Civ 1588.[15]Mr Helme was at pains to point out that he was not intending to take every pleading point that was open to him, but only those which have placed his clients in genuine difficulty. I have already referred to the changing case on slander, pleaded at paragraph 7 of the particulars. I turn now to the content of the other draft amendments before me, which contain not only passages designed to meet criticisms raised before Judge Moloney in July of last year, but also some new points which have been added in the light of subsequent events.[16]Mr Helme attacks paragraph 9, which alleges that Mark Kelso republished “the words complained of” when the slanders are not alleged to have been published to him in the first place. How, therefore, could he republish them? This was referred to as the “missing link point”. It is capable of cure, no doubt, but there has to be some clarification. I believe Mr Samson would like to plead that it must be inferred that someone republished the defamatory content of the telephone conversations to Mr Kelso by reason of their close working relationship with regard to the hospital bid. That may well pass muster, but it cannot stand in its present form. He wished also to make clear that the unspecified “officers” of the Trust to whom he is alleged to have republished are confined to those listed in paragraph 9.7 (i.e. Donal Roche, Paul McKenna, Trevor Burns and Colin Clarke). It cannot be left as it is, since the class of potential publishees is left open-ended in a context where the scope of publication is of central importance. The requirement of specificity has, of course, a particular resonance where the claim is dependent on establishing an innuendo and thus requires that all publishees be shown to have had knowledge of the relevant extraneous facts. Again, Mr Helme complains that there is no evidence that Mr Kelso republished the content of the two emails to anyone, as Arden LJ contemplated in Collier. It may be that this can also be cured by reliance upon an inference (i.e. that he must have passed at least some of the content to those he was working with on the project), but that will be for Mr Samson to plead as he thinks appropriate in any further draft. At the moment, it is bare assertion.[17]The next criticism relates to paragraph 9.21, which apparently is intended to make clear why publishees would have understood the words in question to have referred to Mr McGrath. As Mr Helme described it, it is supposed to be a “particular of reference”. But it “smuggles in” a new allegation that the original publishees included Messrs Burns and Clarke and, implicitly, that each of them had the knowledge of the extraneous facts necessary to support the innuendo. Those matters need to be made good by a direct pleading to that effect, if there is evidence to justify it. The paragraph also includes the surprising suggestion that Mr McGrath was identified “by a significant but unquantifiable number of readers of the statements complained of”. That will not do in circumstances where not only has there been no publication to the world at large, but knowledge of extraneous facts is also required (both for meaning and reference): see e.g. Grappelli v Block [1981] 1 WLR 822 and Baturina v Times Newspapers Ltd [2011] 1 WLR 1256, at [45]-[47].[18]Mr Helme also had difficulty with paragraph 9.22, but was in the end content with it provided that the plea is intended to mean no more than that Mark Kelso must be taken to have identified Mr McGrath, as the subject of the words complained of, for the reason that it was to him that he went (after the relevant publications) seeking assurances about the fitness of Necon to fulfil its contractual obligations if successful in the bidding process.[19]In paragraph 10.26, there are similar words to those already considered under paragraph 9.21. The same objections were raised and I consider them to be valid for the reasons explained above, not least because of the principle discussed and explained in Grappelli and in Baturina.[20]The last sentence of paragraph 11 serves no useful purpose, as it simply gives notice that if the Claimants discover any further publication(s) before trial they will seek to rely upon them. If they do, that is a matter which can be considered at the appropriate time. Mr Samson said that the Defendants can plead to it, but there is no point in doing so, since it is not a material averment.[21]Finally, there is a plea relating to special damage raised in paragraphs 15.11 to 15.13, which is quite new and was not discussed before Judge Moloney. I confess that I am at a loss to understand it and Mr Samson’s instructions were not such as to enable him to put any flesh on the bones. The proposed plea is to the effect that “the Claimants” (not merely the corporate Claimant) were “forced” by the Defendants’ allegations to purchase a letter of access from Tarn-Pure at a cost of 200,000 Euros in order to place Necon on the Article 95 List. I had hitherto understood the Claimants’ case to be that they did not need to be on the List in order to supply silver (and indeed that the Defendants had been wrong to suggest otherwise). Certainly I cannot see how they were “forced” to pay the money as a result of anything done or said by the Defendants. If they chose, on the other hand, to pay this money, it was presumably because they perceived it as beneficial to their business, and it is thus difficult to see how they have suffered a “loss” of any kind. Moreover, Mr Samson was unable to explain how Mr McGrath would be in a position to claim such a sum in any event. The plea is lacking in coherence and for that reason appears at the moment to be unsustainable. To add to the confusion, the “loss” in question is said not to have yet crystallised – although it has apparently been incurred. At some stage, when all this is explained, if it is, the claim may resurface, but I certainly cannot permit an amendment in this form.[22]Permission to amend the relevant paragraphs is accordingly refused.

Cited in 1 later judgment