Article Story: MORE LIGHT SHED ON REYNOLDS' DEFENCE IN FIRST INSURANCE INDUSTRY LIBEL TRIAL

Date: 01/5/2002

ENGLISH & OTHERS -V- THE INSURANCE INSIDER & OTHER

MR JUSTICE GRAY; QBD – 31 JANUARY 2002

The Proceedings

In what is thought to be the first libel trial concerning the activities of the London insurance market, Gray J set out with his customary clarity more guidance as to how the courts will apply the ten-point test set out by Lord Nichols in Reynolds v Times Newspapers [2001] 2 AC p.24.

The case concerned allegations of impropriety made against two claimants who were well known and established members of the insurance community. They were managing director and a property underwriter respectively at an international underwriting firm, Trenwick International at the time of the events giving rise to the allegations. Trenwick and the claimants were the subject of allegations that they were unlawfully interfering with the contract of a third party, and diverting business from that third party to companies in which they had an undisclosed interest. The claimants sued when those allegations were published both in the October 2000 edition of The Insurance Insider, and on its website.

The allegations were contained in legal papers (including a draft Particulars of Claim and draft Opinion of Counsel) which had been leaked anonymously to the offices of The Insurance Insider. However, there was little doubt in the mind of the judge, or the parties, that the documents had been supplied by the individual making the allegations with a view to putting pressure on Trenwick and the claimants to settle their legal claim.

The Defence

The statutory privilege given by Section 15 of the 1996 Defamation Act was initially relied on, but had effectively been abandoned by the time of the trial because the defendants accepted that the article was based at least in part on documents other than the Particulars of Claim, namely a document required by law to be open to public inspection.

The principal defence relied on by the defendants was the common law defence of privilege as established in Reynolds; namely that the information was of sufficient public interest to give rise to a duty on the part of the defendants to publish contents of the article, and a reciprocal right on the part of its readers to know that information.

The Judgment

Gray J set the legal scene by reciting the tests set out in Reynolds, namely 'whether the defendant can establish that he was under a duty to publish the material in question and that those to whom the material was disseminated have reciprocal interest in receiving that material'. Gray J also quoted the restatement of this test by Lord Philips (the Master of the Rolls) in Loutchansky v Times Newspapers Limited [2001] EWCA Civ 1805:-

'Once Reynolds privilege is recognised, as it should be, as a different jurisprudential creature from the traditional form of privilege from which it sprang, the particular nature of the 'interest' and 'duty' which underlie it can more easily be understood. The interest is that of the public in a modern democracy and free expression and, more particularly, in the promotion of a free and vigorous press to keep the public informed. The vital importance of this interest has been identified and emphasised time and again in recent cases and needs no restatement here. The corresponding duty on the journalist (and equally his editor) is to play his proper role in discharging that function. His task is to behave as a responsible journalist. He can have no duty to publish unless he is acting responsibly anymore than the public has an interest in reading whatever may be published irresponsibly. That is why in this class of case the question of whether the publisher has behaved responsibly is necessarily an intimately bound with the question whether the defence of Qualified Privilege arises. Unless the publisher is acting responsibly privilege cannot arise.'

After considering the authorities Mr Justice Gray summed up the effect of the authorities as follows:-

'A conclusion that the journalist departed from the standards of responsibility to be expected of him will invariably be fatal to the defence of privilege, because (as was pointed out in Loutchansky) it cannot be said to have been in the public interest to publish in circumstances where the publisher has not acted responsibly.'

Mr Justice Gray then addressed two cases relied on by the defendants. The first was Al Fagih v HH Saudi Research & Marketing Limited [2001] EWCA Civ 1634, in which the Court of Appeal held, by a majority, that privilege was available despite the failure of the newspaper to approach the claimant for his comments before publication. It was common ground in this action that Mr Hastie had approached neither of the claimants before publishing the article.

Distinguishing Al Fagih because 'the defendant newspaper had for some weeks been reporting what was in effect a slanging match between two members of a dissident Saudi Arabian political organization', Gray J went on to warn that the court should hesitate before upholding this type of privilege where the journalist was exercising a reporting function. He noted that Lord Bingham had emphasised the distinction between the roles of a reporter and investigator in McCartan Turkington Breen v Times Newspapers Limited [2001] 2 AC 277 at paragraph 2. Lord Bingham had addressed the statutory provisions of Schedule 1 to the 1966 Defamation Act, which confers privilege on statements 'subject to explanation or contradiction'. Gray J commented that 'the court should be reluctant to hold that common law privileges available to the publication on the ground that it constitutes reportage in circumstances where so to hold would confer greater protection on the publisher than Parliament has deemed appropriate.'

Gray J also distinguished Thoma v Luxembourg [European Court of Human Rights, 29 March 2001, unreported], finding that it was 'on its facts distinguishable from the present case in several respects'.

The Ten-Point Reynolds Test

Gray J went on to recite the ten-point test set out by Lord Nichols in Reynolds, and then noted the findings of the jury, who found that on six of the seven disputed steps which Mr Hastie claimed to have taken to check the contents of the article, the jury had rejected the defendant's evidence, and found that those steps had not been taken. These included alleged visits to the Royal Courts of Justice and to Companies House.

Gray J went on to review the evidence according to the ten criteria set out in Reynolds:-

1. The seriousness of the allegations

Gray J put forward his own view that the article suggested that there was reasonable grounds for suspecting that the claimants were guilty of the conduct alleged. He concluded however that the allegations were serious, because The insurance industry depends on trust, and reputation for integrity are therefore vital.

2. The nature of the information and the extent to which the subject matter is a matter of public concern

Gray J considered that the allegations qualified as information of legitimate concern to the readers of The Insurance Insider with the caveat that 'the fact that the article consisted of such allegations may increase the importance of verifying them before publication'.

3. The reliability and motivation of the sources of information

Although the documents were provided anonymously the parties were at one in concluding that the source was likely to be the aggrieved broker who made the allegations in the documents. Although that individual was likely to have direct knowledge of the information, Gray J concluded that there were 'powerful reasons' why the editor 'should have doubted the reliability of this source, since that source clearly had an axe to grind'. The leaking of the papers rather than pursuing the claim through the courts in the ordinary way constituted 'good reason for doubting the reliability of the information provided and the fore caution about the motivation of those presumed to have provided it'.

4. The steps taken to verify the information

The defendant editor did very little to verify the allegations despite their obvious seriousness. Gray J concluded that there was 'good reason for doubting the reliability of the information provided and therefore caution about the motivation of those presumed to have provided it'. He went through the steps and that the defendant editor claimed to have taken which were not contested by the defendants, one of which put the editor on notice that the allegations were unlikely to be true.

Other steps which the defendant editor claimed to have taken, such as a visit to the Royal Courts of Justice and to Companies House, were rejected by the jury. Gray J concluded:-

'In the light of Mr Hastie's own evidence in the answers given by the jury to the questions asked of them, I am bound to conclude that Mr Hastie did not take the steps to verify the allegations against the claimants which was encumbered on him, as a responsible journalist, to take.'

5. The status of the information

'The status of the information was that it consisted in allegations made in Particulars of Claim and in a solicitor's letter, none of which had been tested in court or otherwise investigated.'

6. The urgency of the matter

Gray J considered that there was no real urgency, and the article could have been held over to the next issue.

7. Whether comment was sought from the claimants

It was accepted by the defendants that no comment was sought from either claimant. Gray J observed that it was clear both from Reynolds, Al Fagih and GKR Karate that a failure to seek the claimants' comments was not fatal to have gained Qualified Privilege. However Gray J clearly thought it important in this case, and concluded that the defendant editor's attempts, 'such as they were, to obtain comments from the Claimants appear to me to have been wholly inadequate'.

8. Whether the article contains the claimants' side of the story

Apart from the observation that one of the claimants was 'an honourable man with Christian convictions' and a response from the claimants' employers by their solicitors (contained in the leaked legal documentation) a legitimate basis for one of the steps complained of, 'the article contained nothing by way of answer to or comment from the claimants upon the allegations of diversion of funds. That was another failure of responsible journalism.'

9. The tone of the article

Apart from the extent to which the jury's verdict indicated that the article adopted the allegations it reported, Gray J found 'nothing objectionable about the tone of the article in the sense there was anything sensational about it'.

10. Other circumstances

'Neither side has suggested that there are any other criticisms to be taken into account.

Conclusion

Inevitably therefore Gray J concluded that the claim of Qualified Privilege was not made out. Gray J summarises his conclusions as follows:-

'The allegations were serious, albeit they did not impute guilt on the part of the Claimants of the misconduct mentioned in the article. I accept that the article raised issues of some public concern. Even so it was incumbent on Mr Hastie, as a responsible journalist, to proceed cautiously before publishing such allegations because it should, objectively speaking, have been apparent to him that the allegations emanated from someone with an agenda of his own. Yet, accordingly the jury's answers, the allegations were published with barely any attempt having been made to verify them or seek comments from the claimant about them. The article said nothing of the claimants' side of the story that they had, or were suspected of having, surreptitiously diverted funds to companies in which they or their associates had a beneficial interest.'

The jury awarded £10,000 each to the claimants, which probably reflected the modest extent of publication of the offending article (about 1,500 recipients in all). It probably also reflected the view expressed by the judge in his judgment (and hinted at by him to the jury) that the article in effect meant that there were reasonable grounds to suspect the claimants of the wrongdoing which was the subject of the allegations, rather than that they were actually guilty of that wrongdoing.

The proper and rigorous standard of good journalism stipulated by Gray J in his judgment can serve only to improve the quality of journalism which the right of freedom of expression preserves. That freedom is of little use if the quality of information which is disseminated under its auspices is so poor that the public are misinformed (rather than informed) because if its abuse.

The judgment indicates that instances such as GKR Karate and Al Fagih, where a journalist has failed to contact the subject of the article but still enjoys the protection of Qualified Privilege will be rare. In particular, obtaining a (draft) Opinion of Counsel will by no means constitute information of sufficient 'status' to absolve the journalist from making his own independent enquiries.

Journalists will have to be careful even when engaging what is commonly known as 'reportage', since even if in so doing allegations are reported in an unadopted form, the other disciplines which were set out by Lord Nichols in his judgment must still be applied if a journalist is to benefit from the defence of Qualified Privilege. In particular, Gray J sets an important qualification on the apparent loosening of the terms of the repetition rule comprised by the leading Court of Appeal judgment in Al Fagih. The statutory provision for reporting such public affairs provides protection for the subject of allegations made in the public forum, which protection journalists will ignore at their peril.

Jonathan Coad

This article was first published in The Entertainment Law Review 2002, Issue 4.

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