And now it's payback time

Independent, Tuesday August 12, 2003

Back in the 1980s, London was known as 'the libel capital of the world.' Huge damages awards were commonplace in an environment where the merest hint of the untoward, not to mention the downright scurrilous and defamatory, would prompt a writ for libel. Lord Aldington won 2 million over allegations that he was a war criminal, Graham Souness walked away with 750,000 after The People quoted his ex-wife describing him as 'a dirty rat,' and Jeffrey Archer emerged from libel proceedings against The Daily Star 500,000 better off. Some awards were reduced on appeal, and, in Lord Archer's case, led to a spell behind bars, but more often than not the rich, famous and sensitive would leave the High Court with broad smiles as they laughed all the way to the bank.

Then, in the 1990s, a sea-change took place, particularly as the courts began to look upon large damages for an injured reputation as absurd when compared to the amounts recovered in personal injury claims. The vast sums of money handed out by juries in libel actions were regularly slashed on appeal, and, after a while, juries stopped awarding grandiose figures in the first place. This was a brave new world for publishers and journalists, but following a recent Privy Council judgment, there is a danger that the relatively risk-free days of late might be over.

The worry for journalists is that what was famously described by Lord Keith, in a 1993 Court of Appeal judgment, as the 'chilling effect' engendered by the fear of a claim for libel might be back. The Privy Council appears to have gone where no court has sought to tread, and baldly stated that the chilling effect is no bad thing. Into the bargain, the claimants are walking away with a libel award of 533,000. Could this herald a fresh blast of the chilling effect?

The case arose when Eric Abrahams, the Minister for Tourism for Jamaica between 1980 and 1984, sued two daily newspapers in Jamaica, the Daily Gleaner and Star, which had accused him of fraud. The defendant, The Gleaner Company (which owned both newspapers) insisted that its stories were true, but its defence was struck out and in 1996 there was a trial on damages alone. The jury awarded Mr Abrahams 80.7 Jamaican dollars, which sounds a lot and, equating to 1.2 million, more than dwarfed contemporaneous awards for libel in the English courts.

The Gleaner Company appealed and the Court of Appeal reduced the award to J$35 million, equivalent to 533,000. A further appeal was launched, with the Gleaner Company contending that so large an award would have an inhibiting effect on the constitutional right to freedom of expression. It would, in short, have a chilling effect. The appeal came on for hearing before the Privy Council in July.

The context in which the Privy Council went on to uphold the award of 533,000 is intriguing. A recent libel case involving unfounded allegations of child abuse had seen the English courts award the claimants 200,000 each. It is difficult to imagine a more serious libel than to be an alleged child abuser, and yet the court pointed out that in its view there was a ceiling beyond which libel damages could not go. That ceiling was 200,000, and but for its existence, said the court, the claimants would have won significantly more in damages.

Throughout the early 1990s, the Court of Appeal had regularly slashed huge jury awards in libel cases. Following the Court of Appeal's 1997 decision in James v Pollard, libel lawyers accepted that the maximum a wrongly defamed client could expect to win was 115,000. London had lost its allure as the libel capital of the world, so much so that there was an 83% decrease between 1997, when 452 writs for libel were issued, and 2002, when 128 claims were started. The accepted wisdom, following a case brought by Victor Kiam in 2001, was that libel damages have a ceiling of 200,000, and that this limit would only very rarely be breached.

Now, though, we have a Privy Council decision that appears to make a virtue of the chilling effect and could more than double the ceiling for libel damages. The Privy Council is the court of final appeal for Commonwealth and many formerly Commonwealth countries. Its decisions are not binding on English courts, but are of 'strongly persuasive authority.' Four of the five judges involved in the Abrahams case were from the House of Lords. As Nigel Tait, a defamation lawyer at Peter Carter-Ruck and Partners (a firm known for its claimant work), says: "The fact that the majority of the judges were from the highest court in the land will have given our High Court and Court of Appeal food for thought on the question of whether libel damages in England should remain capped at 200,000."

Tait says that the Abrahams case could lead to a resurgence of the claim for libel. "When damages were cut by various Courts of Appeal, this became one factor that meant libel was no longer so enticing," he says. "With the Abrahams case, a large jury award is not going to be so amenable to appeal. And the idea of 'compensation creep' where a jury will want to award more than its predecessor will also come into play." Tait also points out that even under the present ceiling, juries have "a wide margin of appreciation" before an appeal court will reduce a damages award. In the Kiam case, for example, the Court of Appeal ruled that though it felt an award of 60,000 would have been appropriate, the actual award of 105,000 was not so untoward that it should be reduced.

In Abrahams, the Privy Council had little truck with the idea that the chilling effect is incompatible with freedom of speech, expressly saying that the Court of Appeal in Jamaica was "entitled to take the view that if it (the damages award) had a chilling effect... that would be no bad thing." The high damages award of 533,000 would not, therefore, be reduced.

This all sounds rather worrying for journalists, but at least one defendant defamation lawyer is relatively sanguine about the potential effect of the case. Gill Phillips, an in-house solicitor for The Times and Sunday Times, says that the Privy Council's decision should be viewed in local, Jamaican terms, rather than in the context of damages awards in England. Moreover, she says: "One of the judges, Lord Hoffman, was at pains to emphasise that there was no question of press freedom in the case, and went on to say that responsible journalists have nothing to fear from the judgment." Phillips agrees that claimant lawyers will be wearing broad smiles on the back of the judgment, but says that it was "clearly targeted at discouraging irresponsible journalism and poor subsequent conduct don't forget that the jury got to award damages in 1996, some nine years after the original publications and that their award included aggravated damages as well as compensation for actual financial losses and personal injury."

So, is the chilling effect back, or not? Is London once again to step forth as the libel capital of the world? Phillips is not convinced, but agrees that the case is "a salutary reminder to the media" of the dangers of the claim for libel. Meanwhile, there is a twinkle in Tait's eye as he foresees the erosion of the present 200,000 ceiling, with "awards of 300,000 to 400,000 upheld in the near future." The jury, for the moment, is out, but the premium on responsible journalism has never been greater.