Rubber Improvement Ltd v Daily Telegraph Ltd
[1964] AC 234(Judgment by: Lord Reid)
Rubber Improvement Ltd
vDaily Telegraph Ltd
Judges:
Lord Morris of Borth-Y-Gest
Lord Hodson
Lord Devlin
Lord ReidLord Jenkins
Judgment date: 26 March 1963
Judgment by:
Lord Reid
My Lords, these are appeals in two actions for libel brought by the appellants Mr. Lewis and a company of which he is managing director against the proprietors of the "Daily Telegraph" and the "Daily Mail" in respect of paragraphs referring to them which appeared on the front pages of those newspapers on December 23, 1958. I have had an opportunity of reading the speeches about to be delivered by my noble and learned friends who deal fully with the facts and I shall not set out the passages of which complaint is made. On July 19, 1961, a jury awarded damages against the "Daily Telegraph" of £25,000 to Mr. Lewis and £75,000 to his company. On July 21 a different jury awarded against the "Daily Mail" £17,000 to Mr. Lewis and £100,000 to his company.
The Court of Appeal ordered new trials on several grounds of which the two most important are that the trial judge misdirected the juries and that the damages are so excessive that the awards cannot be allowed to stand. On the matter of misdirection there is no material difference between the two cases.
The essence of the controversy between the parties is that the appellants maintain that these passages are capable of meaning that they were guilty of fraud. The respondents deny this: they admit that the paragraphs are libellous but maintain that the juries ought to have been directed that they are not capable of the meaning which the appellants attribute to them. The learned judge directed the juries in such a way as to leave it open to them to accept the appellants' contention, and it is obvious from the amounts of damages awarded that the juries must have done this.
The gist of the two paragraphs is that the police, the City Fraud Squad, were inquiring into the appellants' affairs. There is no doubt that in actions for libel the question is what the words would convey to the ordinary man: it is not one of construction in the legal sense. The ordinary man does not live in an ivory tower and he is not inhibited by a knowledge of the rules of construction. So he can and does read between the lines in the light of his general knowledge and experience of worldly affairs. I leave aside questions of innuendo where the reader has some special knowledge which might lead him to attribute a meaning to the words not apparent to those who do not have that knowledge. That only arises indirectly in this case. There has been much argument about innuendoes, true or false, and about proper methods of pleading. My noble and learned friends intend to deal with those matters and I shall not add to their explanations. I shall only make some observations on the footing that in this case there is no question of innuendo in the true sense.
What the ordinary man would infer without special knowledge has generally been called the natural and ordinary meaning of the words. But that expression is rather misleading in that it conceals the fact that there are two elements in it. Sometimes it is not necessary to go beyond the words themselves, as where the plaintiff has been called a thief or a murderer. But more often the sting is not so much in the words themselves as in what the ordinary man will infer from them, and that is also regarded as part of their natural and ordinary meaning. Here there would bo nothing libellous in saying that an inquiry into the appellants' affairs was proceeding: the inquiry might be by a statistician or other expert. The sting is in inferences drawn from the fact that it is the fraud squad which is making the inquiry. What those inferences should be is ultimately a question for the jury, but the trial judge has an important duty to perform.
Generally the controversy is whether the words are capable of having a libellous meaning at all, and undoubtedly it is the judge's duty to rule on that. I shall have to deal later with the test which he must apply. Here the controversy is in a different form. The respondents admit that their words were libellous, although I am still in some doubt as to what is the admitted libellous meaning. But they sought and seek a ruling that these words are not capable of having the particular meaning which the appellants attribute to them. I think that they are entitled to such a ruling and that the test must be the same as that applied in deciding whether the words are capable of having any libellous meaning. I say that because it appears that when a particular meaning has been pleaded, either as a "true" or a "false" innuendo, it has not been doubted that the judge must rule on the innuendo. and the case surely cannot be different where a part of the natural and ordinary meaning is, and where it is not, expressly pleaded.
The leading case is Capital and Counties Bank Ltd. v. Henty & Sons. In that case Lord Selborne L.C. said: "The test, according to the authorities, is, whether under the circumstances in which the writing was published, reasonable men, to whom the publication was made, would be likely to understand it in a libellous sense." Each of the four noble Lords who formed the majority stated the test in a different way, and the speeches of Lord Blackburn and Lord Watson could be read as imposing a heavier burden on the plaintiff. But I do not think that they should now be so read. In Nevill v. Fine Art & General Insurance Co. Ltd. Lord Halsbury said: "... what is the sense in which any ordinary reasonable man would understand the words of the communication so as to expose the plaintiff to hatred, or contempt or ridicule ... it is not enough to say that by some person or another the words might be understood in a defamatory sense." These statements of the law appear to have been generally accepted and I would not attempt to restate the general principle.
In this case it is, I think, sufficient to put the test in this way. Ordinary men and women have different temperaments and outlooks. Some are unusually suspicious and some are unusually naive. One must try to envisage people between these two extremes and see what is the most damaging meaning they would put on the words in question. So let me suppose a number of ordinary people discussing one of these paragraphs which they had read in the newspaper. No doubt one of them might say - "Oh, if the fraud squad are after these people you can take it they are guilty." But I would expect the others to turn on him, if he did say that, with such remarks as - "Be fair. This is not a police state. No doubt their affairs are in a mess or the police would not be interested. But that could be because Lewis or the cashier has been very stupid or careless. We really must not jump to conclusions. The police are fair and know their job and we shall know soon enough if there is anything in it. Wait till we see if they charge him. I wouldn't trust him until this is cleared up, but it is another thing to condemn him unheard."
What the ordinary man, not avid for scandal, would read into the words complained of must be a matter of impression. I can only say that I do not think that he would infer guilt of fraud merely because an inquiry is on foot. And, if that is so, then it is the duty of the trial judge to direct the jury that it is for them to determine the meaning of the paragraph but that they must not hold it to impute guilt of fraud because as a matter of law the paragraph is not capable of having that meaning. So there was here, in my opinion, misdirection of the two juries sufficiently serious to require that there must be new trials.
Before leaving this part of the case I must notice an argument to the effect that you can only justify a libel that the plaintiffs have so conducted their affairs as to give rise to suspicion of fraud, or as to give rise to an inquiry whether there has been fraud, by proving that they have acted fraudulently. Then it is said that if that is so there can be no difference between an allegation of suspicious conduct and an allegation of guilt. To my mind, there is a great difference between saying that a man has behaved in a suspicious manner and saying that he is guilty of an offence, and I am not convinced that you can only justify the former statement by proving guilt. I can well understand that if you say there is a rumour that X is guilty you can only justify it by proving that he is guilty, because repeating someone else's libellous statement is just as bad as making the statement directly. But I do not think that it is necessary to reach a decision on this matter of justification in order to decide that these paragraphs can mean suspicion but cannot be held to infer guilt.
Even if the paragraphs were capable of meaning that the appellants were guilty of fraud I would think that the damages awarded were far too high, and a fortiori the awards could not stand if the most that could be read into the words is that they had conducted their affairs in such a way as to give rise to suspicion or to justify a police inquiry. I do not say that these amounts of damages could never be justified, but at least there would have to be evidence of a very different kind from that adduced in these cases. I do not intend to analyse the evidence already given because that might hamper the conduct of the new trials with regard to both the plaintiffs' case and the defendants' pleas of justification. But two particular matters raised in argument will probably arise at the new trials and they require some clarification.
Here there were similar libels published in two national newspapers on the same day and each has to be dealt with by a different jury. If each jury were to award damages without regard to the fact that the plaintiffs are also entitled to damages against the other newspaper, the aggregate of the damages in the two actions would almost certainly be too large. Section 12 of the Defamation Act, 1952 , is intended to deal with that. In effect it requires that each jury shall be told about the other action, but the question is what each jury should be told. I do not think it is sufficient merely to tell each jury to make such allowance as they may think fit. They ought, in my view, to be directed that in considering the evidence submitted to them they should consider how far the damage suffered by the plaintiffs can reasonably be attributed solely to the libel with which they are concerned and how far it ought to be regarded as the joint result of the two libels. If they think that some part of the damage is the joint result of the two libels they should bear in mind that the plaintiffs ought not to be compensated twice for the same loss. They can only deal with this matter on very broad lines and they must take it that the other jury Will be given a similar direction. They must do the best they can to ensure that the sum which they award will fully compensate the plaintiffs for the damage caused by the libel with which they are concerned, but will not take into account that part of the total damage suffered by the plaintiffs which ought to enter into the other jury's assessment.
The other question arises out of the decision of this House in British Transport Commission v. Gourley which deals with damages for loss of income caused by a tort. In that case Mr. Gourley had been seriously injured in a railway accident. He had been earning a large income and it was found that his loss of income due to his injuries was £37,720. But this was the gross income which he would have received but for his injuries. Out of it he would have had to pay income tax and surtax. and it was found that after paying tax he would only have retained £6,695. So his real loss was only £6,695 because he could never have derived any advantage from the balance which he would have had to pay away in tax. As damages are not subject to tax, he would have recovered far more than his real loss, if he had recovered the gross amount of £37,720, and accordingly it was held that he was only entitled to receive £6,695 in respect of his loss of income as this was sufficient to compensate him fully for the income which he had lost by the fault of the defendants.
There can be no difference in principle between loss of income caused by negligence and loss of income caused by a libel. Let me take first the case of the plaintiff company. A company cannot be injured in its feelings, it can only be injured in its pocket. Its reputation can be injured by a libel but that injury must sound in money. The injury need not necessarily be confined to loss of income. Its goodwill may be injured. But in so far as the company establishes that the libel has, or has probably, diminished its profits, I think that Gourley's case is relevant.
But damages for libel have to be assessed by a jury, and juries are not expected to make mathematical calculations, so they can only deal with this matter on broad lines. I think that a jury ought to be directed to the effect that if they think that the plaintiff company has proved that it has suffered or will suffer loss of profit as a result of the libel they must bear in mind that the company would have had to pay income tax at the standard rate out of that profit if it had been earned and would only have been entitled to keep the balance. So in assessing damages they ought not to take into account the whole of that profit, but should make allowance for the obligation to pay income tax out of it.
The position with regard to an individual plaintiff is rather different. He may be entitled to very substantial damages although his income has not been affected by the libel. But if he does attempt to prove loss of income as a result of the libel, then I think that a similar direction must be given to the jury, and it may be necessary to mention surtax as well as income tax.
Accordingly, I shall move in each case that the appeal should be dismissed, that a new trial be ordered, that costs of the abortive trial should abide the result of the new trial, and that the appellants be ordered to pay the respondents' costs in the Court of Appeal and in this House.