(back to preceding text)

    19.  This is not an unattractive argument, and it would be persuasive if, in such a case, excessive, punitive or exemplary damages were awarded. But the damages awarded to the second claimant in this case were not excessive, and the argument encounters three problems of principle. First, as the text of article 10 itself makes plain, the right guaranteed by the article is not unqualified. The right may be circumscribed by restrictions prescribed by law and necessary and proportionate if directed to certain ends, one of which is the protection of the reputation or rights of others. Thus a national libel law may, consistently with article 10, restrain the publication of defamatory material.

    20.  Secondly, the national rule here in question, pertaining to the recovery of damages by a trading corporation which proves no financial loss, has been the subject of challenge before the European Commission and Court in the context of libel proceedings brought by two corporate plaintiffs against two individual defendants. In S and M v United Kingdom (1993) 18 EHRR CD 172, 173, the challenge to the rule was somewhat oblique and the Commission made the points summarised in para 19 above. In Steel and Morris v United Kingdom (2005) 41 EHRR 403 the challenge was direct: see para 31 (a) and (b), p 419. The Court accepted that the domestic rule was as stated in Derbyshire (para 40) but held (para 94) that

"The state therefore enjoys a margin of appreciation as to the means it provides under domestic law to enable a company to challenge the truth, and limit the damage, of allegations which risk harming its reputation."

The Court cited and echoed observations in an earlier decision, Märkt Intern and Beerman v Germany (1989) 12 EHRR 161, paras 33-38. Thus the Court did not hold the current rule to be necessarily inconsistent with article 10: it was a matter for the judgment of the national authorities.

    21.  Thirdly, the weight placed by the newspaper on the chilling effect of the existing rule is in my opinion exaggerated. Among the arguments it advances is that the rule is unnecessary since, it is said, defamation of a company involves defamation of directors and individuals who are free to sue as personal plaintiffs. I very much doubt if this is always so, although in some cases it will be. But, to the extent that it is so, I question whether the possibility of a claim by the company will add significantly to the chilling effect of a claim by the individuals.

    22.  I would accordingly answer this question in the negative.

(3)  Revision of the current law

    23.  Since the European Court accords a generous margin of appreciation to the judgment of national authorities, and these include courts, it is appropriate for the House to review the merits of the South Hetton rule as re-stated in Derbyshire. The newspaper argues that, in accordance with the trend towards enhanced recognition of freedom of expression, the rule should be abrogated. Parliament could of course have legislated to abrogate or modify the rule, but it has not done so. It is accordingly necessary to revert to basic principles.

    24.  The tort of defamation exists to afford redress for unjustified injury to reputation. By a successful action the injured reputation is vindicated. The ordinary means of vindication is by the verdict of a judge or jury and an award of damages. Most plaintiffs are individuals, who are not required to prove that they have suffered financial loss or even that any particular person has thought the worse of them as a result of the publication complained of. I do not understand this rule to be criticised. Thus the question arises whether a corporation with a commercial reputation within the jurisdiction should be subject to a different rule.

    25.  There are of course many defamatory things which can be said about individuals (for example, about their sexual proclivities) which could not be said about corporations. But it is not at all hard to think of statements seriously injurious to the general commercial reputation of trading and charitable corporations: that an arms company has routinely bribed officials of foreign governments to secure contracts; that an oil company has wilfully and unnecessarily damaged the environment; that an international humanitarian agency has wrongfully succumbed to government pressure; that a retailer has knowingly exploited child labour; and so on. The leading figures in such corporations may be understood to be personally implicated, but not, in my opinion, necessarily so. Should the corporation be entitled to sue in its own right only if it can prove financial loss? I do not think so, for two main reasons.

    26.  First, the good name of a company, as that of an individual, is a thing of value. A damaging libel may lower its standing in the eyes of the public and even its own staff, make people less ready to deal with it, less willing or less proud to work for it. If this were not so, corporations would not go to the lengths they do to protect and burnish their corporate images. I find nothing repugnant in the notion that this is a value which the law should protect. Nor do I think it an adequate answer that the corporation can itself seek to answer the defamatory statement by press release or public statement, since protestations of innocence by the impugned party necessarily carry less weight with the public than the prompt issue of proceedings which culminate in a favourable verdict by judge or jury. Secondly, I do not accept that a publication, if truly damaging to a corporation's commercial reputation, will result in provable financial loss, since the more prompt and public a company's issue of proceedings, and the more diligent its pursuit of a claim, the less the chance that financial loss will actually accrue.

    27.  I do not on balance consider that the existing rule should be changed, provided always that where a trading corporation has suffered no actual financial loss any damages awarded should be kept strictly within modest bounds.

II  REYNOLDS PRIVILEGE

    28.  The decision of the House in Reynolds v Times Newspapers Ltd [2001] 2 AC 127 built on the traditional foundations of qualified privilege but carried the law forward in a way which gave much greater weight than the earlier law had done to the value of informed public debate of significant public issues. Both these aspects are, I think, important in understanding the decision.

    29.  Underlying the development of qualified privilege was the requirement of a reciprocal duty and interest between the publisher and the recipient of the statement in question: see, for example, Harrison v Bush (1855) 5 E & B 344, 348; Pullman v Hill & Co Ltd [1891] 1 QB 524, 528; Adam v Ward [1917] AC 309, 334; Watt v Longsdon [1930] 1 KB 130, 147, all cases cited in Duncan & Neill on Defamation, 2nd ed (1983), pp 93-94, paras 14.04-14.05. Some of these cases concerned very limited publication, but Adam v Ward did not, and nor did Cox v Feeny (1863) 4 F & F 13; Allbutt v General Council of Medical Education and Registration (1889) 23 QBD 400; Perera v Peiris [1949] AC 1 and Webb v Times Publishing Co Ltd [1960] 2 QB 535. Thus where a publication related to a matter of public interest, it was accepted that the reciprocal duty and interest could be found even where publication was by a newspaper to a section of the public or the public at large. In Reynolds the Court of Appeal restated these tests ([2001] 2 AC 127, 167, 177), although it suggested a third supplemental test which the House held to be mistaken.

    30.  I do not understand the House to have rejected the duty/interest approach: see Lord Nicholls of Birkenhead, pp 194-195, 197, 204; Lord Steyn, p 213; Lord Cooke of Thorndon, pp 217, 224, 227; Lord Hope of Craighead, pp 229, 235; Lord Hobhouse of Woodborough, pp 237, 239. But Lord Nicholls (p 197) considered that matters relating to the nature and source of the information were matters to be taken into account in determining whether the duty-interest test was satisfied or, as he preferred to say "in a simpler and more direct way, whether the public was entitled to know the particular information."

    31.  The necessary pre-condition of reliance on qualified privilege in this context is that the matter published should be one of public interest. In the present case the subject matter of the article complained of was of undoubted public interest. But that is not always, perhaps not usually, so. It has been repeatedly and rightly said that what engages the interest of the public may not be material which engages the public interest.

    32.  Qualified privilege as a live issue only arises where a statement is defamatory and untrue. It was in this context, and assuming the matter to be one of public interest, that Lord Nicholls proposed (at p 202) a test of responsible journalism, a test repeated in Bonnick v Morris [2003] 1 AC 300, 309. The rationale of this test is, as I understand, that there is no duty to publish and the public have no interest to read material which the publisher has not taken reasonable steps to verify. As Lord Hobhouse observed with characteristic pungency (p 238), "No public interest is served by publishing or communicating misinformation". But the publisher is protected if he has taken such steps as a responsible journalist would take to try and ensure that what is published is accurate and fit for publication.

    33.  Lord Nicholls (at p 205) listed certain matters which might be taken into account in deciding whether the test of responsible journalism was satisfied. He intended these as pointers which might be more or less indicative, depending on the circumstances of a particular case, and not, I feel sure, as a series of hurdles to be negotiated by a publisher before he could successfully rely on qualified privilege. Lord Nicholls recognised (at pp 202-203), inevitably as I think, that it had to be a body other than the publisher, namely the court, which decided whether a publication was protected by qualified privilege. But this does not mean that the editorial decisions and judgments made at the time, without the knowledge of falsity which is a benefit of hindsight, are irrelevant. Weight should ordinarily be given to the professional judgment of an editor or journalist in the absence of some indication that it was made in a casual, cavalier, slipshod or careless manner.

    34.  Some misunderstanding may perhaps have been engendered by Lord Nicholls' references (at pp 195, 197) to "the particular information". It is of course true that the defence of qualified privilege must be considered with reference to the particular publication complained of as defamatory, and where a whole article or story is complained of no difficulty arises. But difficulty can arise where the complaint relates to one particular ingredient of a composite story, since it is then open to a plaintiff to contend, as in the present case, that the article could have been published without inclusion of the particular ingredient complained of. This may, in some instances, be a valid point. But consideration should be given to the thrust of the article which the publisher has published. If the thrust of the article is true, and the public interest condition is satisfied, the inclusion of an inaccurate fact may not have the same appearance of irresponsibility as it might if the whole thrust of the article is untrue.

    35.  These principles must be applied to the present case. As recorded in para 8 above, the Court of Appeal upheld the judge's denial of Reynolds privilege on a single ground, discounting the jury's negative findings concerning Mr Dorsey's sources: that the newspaper had failed to delay publication of the respondents' names without waiting long enough for the respondents to comment. This seems to me, with respect, to be a very narrow ground on which to deny the privilege, and the ruling subverts the liberalising intention of the Reynolds decision. The subject matter was of great public interest, in the strictest sense. The article was written by an experienced specialist reporter and approved by senior staff on the newspaper and The Wall Street Journal who themselves sought to verify its contents. The article was unsensational in tone and (apparently) factual in content. The respondents' response was sought, although at a late stage, and the newspaper's inability to obtain a comment recorded. It is very unlikely that a comment, if obtained, would have been revealing, since even if the respondents' accounts were being monitored it was unlikely that they would know. It might be thought that this was the sort of neutral, investigative journalism which Reynolds privilege exists to protect. I would accordingly allow the appeal and set aside the Court of Appeal judgment.

    36.  I am in much more doubt than my noble and learned friends what the consequence of that decision should be. The House has not, like the judge and the jury, heard the witnesses and seen the case develop day after day. It has read no more than a small sample of the evidence. It seems to me a large step for the House, thus disadvantaged, to hold that the publication was privileged, and I am not sure that counsel for the newspaper sought such a ruling. But I find myself in a minority, and it serves no useful purpose to do more than express my doubt.

LORD HOFFMANN

My Lords,

    37.  On 6 February 2002 the Wall Street Journal published an article claiming that Saudi Arabian Monetary Authority ("SAMA"), at the request of the US Treasury, was monitoring the accounts of certain named Saudi companies to trace whether any payments were finding their way to terrorist organisations. The jury found the article to be defamatory of the claimants, who are respectively the principal director and holding company of a group named in the article. The principal question is whether the newspaper was entitled to the defence of publication in the public interest established by the decision of this House in Reynolds v Times Newspapers Ltd [2001] 2 AC 127. The judge (Eady J) and the Court of Appeal (Lord Phillips of Worth Matravers MR, Sedley and Jonathan Parker LJJ) rejected it. But in my opinion they gave it too narrow a scope. It should have been upheld and the action dismissed.

    38.  Until very recently, the law of defamation was weighted in favour of claimants and the law of privacy weighted against them. True but trivial intrusions into private life were safe. Reports of investigations by the newspaper into matters of public concern which could be construed as reflecting badly on public figures domestic or foreign were risky. The House attempted to redress the balance in favour of privacy in Campbell v MGN Ltd [2004] 2 AC 457 and in favour of greater freedom for the press to publish stories of genuine public interest in Reynolds v Times Newspapers Ltd [2001] 2 AC 127. But this case suggests that Reynolds has had little impact upon the way the law is applied at first instance. It is therefore necessary to restate the principles.

    39.  The background to the article was the defining event of this century, the destruction of the World Trade Center and the other atrocities of 11 September 2001. It was quickly established that 15 out of the 19 hijackers had come from Saudi Arabia and it was strongly suspected that sources in the same country had financed them. Efforts to trace terrorist funds were high on the US and international agenda. On 28 September 2001 the Security Council passed Resolution 1373 requiring all states to prevent and suppress the financing of terrorist acts. The United States made strong diplomatic efforts to secure the co-operation of SAMA. In the months that followed, there was much speculation and controversy about the extent to which the Saudi government was really helping. Some US newspapers and prominent politicians such as Senators McCain and Lieberman accused the Saudis of doing very little, appeasing domestic supporters of the terrorists in the controlled domestic media while publicly denouncing them in statements for overseas consumption. "Time to give Saudis an ultimatum" said the Boston Globe headline on 13 January 2002. But the official US government line was that they were co-operating fully with the US Treasury. The subject was one of very considerable public interest, not least to the financial community served by the Wall Street Journal.

    40.  The article was written by Mr James Dorsey, the paper's special correspondent in Riyadh and checked by Mr Glenn R Simpson, a journalist based in Washington who was concentrating almost exclusively on terrorist funding and had daily contact with sources at the US Treasury. It was published in the New York edition but the claimants have brought their proceedings in this country against the publishers of the European edition, the Wall Street Journal Europe, in which it also appeared. The defendants are based in Brussels but some 18,000 copies of the paper are sold daily in the United Kingdom. The article was not the lead story but appeared on the front page:

SAUDI OFFICIALS MONITOR CERTAIN BANK ACCOUNTS

Focus Is on Those With Potential Terrorist Ties

RIYADH, Saudi Arabia - The Saudi Arabian Monetary Authority, the kingdom's central bank, is monitoring at the request of US law-enforcement agencies the bank accounts associated with some of the country's most prominent businessmen in a bid to prevent them from being used wittingly or unwittingly for the funnelling of funds to terrorist organizations, according to US officials and Saudis familiar with the issue.

The accounts - belonging to Al Rajhi Banking & Investment Corp, headed by Saleh Abdulaziz al Rajhi; Al Rajhi Commercial Foreign Exchange, which isn't connected to Al Rajhi Banking; Islamic banking conglomerate Dallah Al Baraka Group, with $7 billion (8.05 billion euros) in assets and whose chairman is Sheik Saleh Kamel; the Bin Mahfouz family, separate members of which own National Commercial Bank, Saudi Arabia's largest bank, and the Saudi Economic Development Co; and the Abdullatif Jamil Group of companies - are among 150 accounts being monitored by SAMA, said the Saudis and the US officials based in Riyadh. The US officials said the US presented the names of the accounts to Saudi Arabia since the Sept 11 terrorist attacks in America. They said four Saudi charities and eight businesses were also among 140 world-wide names given to Saudi Arabia last month.

The US officials said the US had agreed not to publish the names of Saudi institutions and individuals provided that Saudi authorities took appropriate action. Many of the Saudi accounts on the US list belong to legitimate entities and businessmen who may in the past have had an association with institutions suspected of links to terrorism, the officials said. The officials said similar agreements had been reached with authorities in Kuwait and the United Arab Emirates. 'This arrangement sends out a warning to people,' a US official said.

SAMA couldn't be reached for comment. In a recent report to the United Nations about combating terrorism, however, the Saudi government said: 'The Kingdom took many urgent executive steps, amongst which SAMA sent a circular to all Saudi banks to uncover whether those listed in suspect lists have any real connection with terrorism.'"

    41.  The article went on to say that some of the named companies had denied that they were being monitored but that "the Abdullatif Jamil Group of companies couldn't be reached for comment". Abdul Latif Jameel Company Ltd, the second claimant, is a very substantial Saudi Arabian trading company with interests in a number of businesses, including the distribution of Toyota vehicles. It is part of an international group owned by the Jameel family which includes Hartwell plc, a company which distributes vehicles in the United Kingdom. Mr Mohammed Abdul Latif Jameel, the first claimant, is general manager and president of the second claimant and the principal figure in the group.

    42.  The jury found that the article was defamatory of both claimants. The newspaper did not attempt to justify any defamatory meaning and there is no appeal against the finding that it was defamatory. The absence of a plea of justification is not surprising. In the nature of things, the existence of covert surveillance by the highly secretive Saudi authorities would be impossible to prove by evidence in open court. That does not necessarily mean that it did not happen. Nor, on the other hand, does it follow that even if it did happen, the Jameel group had any connection with terrorism. The US intelligence agencies sometimes get things badly wrong.

    43.  The newspaper's principal defence was based on Reynolds v Times Newspapers Ltd [2001] 2 AC 127. It is called in the trade "Reynolds privilege" but the use of the term privilege, although historically accurate, may be misleading. A defence of privilege in the usual sense is available when the defamatory statement was published on a privileged occasion and can be defeated only by showing that the privilege was abused. As Lord Diplock said in a well-known passage in Horrocks v Lowe [1975] AC 135, 149:

"The public interest that the law should provide an effective means whereby a man can vindicate his reputation against calumny has nevertheless to be accommodated to the competing public interest in permitting men to communicate frankly and freely with one another about matters in respect of which the law recognises that they have a duty to perform or an interest to protect in doing so. What is published in good faith on matters of these kinds is published on a privileged occasion. It is not actionable even though it be defamatory and turns out to be untrue. With some exceptions which are irrelevant to the instant appeal, the privilege is not absolute but qualified. It is lost if the occasion which gives rise to it is misused."

    44.  Misuse of the privileged occasion is technically known as "malice" and the burden is upon the claimant to prove it. In Reynolds, counsel for the newspaper invited the House to declare a similar privilege for the publication of political information. But the House refused to do so. Lord Nicholls of Birkenhead said that to allow publication of any defamatory statements of a political character, subject only to proof of malice, would provide inadequate protection for the reputation of defamed individuals.

    45.  Instead, Lord Nicholls said (at p 202) that—

"the common law solution is for the court to have regard to all the circumstances when deciding whether the publication of particular material was privileged because of its value to the public. Its value to the public depends upon its quality as well as its subject matter. This solution has the merit of elasticity. As observed by the Court of Appeal, this principle can be applied appropriately to the particular circumstances of individual cases in their infinite variety. It can be applied appropriately to all information published by a newspaper, whatever its source or origin."

    46.  Although Lord Nicholls uses the word "privilege", it is clearly not being used in the old sense. It is the material which is privileged, not the occasion on which it is published. There is no question of the privilege being defeated by proof of malice because the propriety of the conduct of the defendant is built into the conditions under which the material is privileged. The burden is upon the defendant to prove that those conditions are satisfied. I therefore agree with the opinion of the Court of Appeal in Loutchansky v Times Newspapers Ltd (Nos 2-5) [2002] QB 783, 806 that "Reynolds privilege" is "a different jurisprudential creature from the traditional form of privilege from which it sprang." It might more appropriately be called the Reynolds public interest defence rather than privilege.

    47.  In Reynolds itself, the publication failed by a very considerable margin to satisfy the conditions for the new defence. The House was therefore able to deal with those conditions only in very general terms. Lord Nicholls offered guidance in the form of a non-exhaustive, illustrative list of matters which, depending on the circumstances, might be relevant. "Over time", he said (at p 205), "a valuable corpus of case law will be built up." This case, in my opinion, illustrates the circumstances in which the defence should be available.

    Applying Reynolds

    48.  The first question is whether the subject matter of the article was a matter of public interest. In answering this question, I think that one should consider the article as a whole and not isolate the defamatory statement. It is true that Lord Nicholls said, in the passage which I have quoted above, that the question is whether the publication of "particular material" was privileged because of its value to the public. But the term "particular material" was in my opinion being used by contrast with the generic privilege advocated by the newspaper. It was saying that one must consider the contents of each publication and not decide the matter simply by reference to whether it fell within a general category like political information. But that did not mean that it was necessary to find a separate public interest justification for each item of information within the publication. Whether it was justifiable to include the defamatory statement is a separate question, to which I shall return in a moment.

    49.  The question of whether the material concerned a matter of public interest is decided by the judge. As has often been said, the public tends to be interested in many things which are not of the slightest public interest and the newspapers are not often the best judges of where the line should be drawn. It is for the judge to apply the test of public interest. But this publication easily passes that test. The thrust of the article as a whole was to inform the public that the Saudis were co-operating with the US Treasury in monitoring accounts. It was a serious contribution in measured tone to a subject of very considerable importance.