Libel Reform Debate: Part 2 “Damages cap and remedies”

In an earlier post we suggested that there should be a mature debate on the various issues raised by Libel Reform Campaign.  Last week we discussed the burden of proof in libel cases.  This week we  discuss the idea of a cap on libel damages

Background

The English common law provides only two remedies in a libel case.  The primary remedy is financial compensation – “damages” – which, according to the case law, has three purposes: to compensate a claimant for injured feelings and damage to reputation and to provide “vindication”.  In addition, at the conclusion of a libel trial, the court will usually grant a successful claimant an injunction to restrain the repetition of words to which the action related.

Until recently, there were serious problems with damages in libel cases.  They were usually awarded by juries who could not be given guidance about appropriate figures and were generally regarded as being far too high.   Nevertheless, the Court of Appeal was reluctant to overturn with large awards assessed by juries.  The Court of Human Rights held that the award of £1.5 million to Lord Aldington in respect of a pamphlet alleging that he was a war criminal was  a disproportionate interference with freedom of expression (see Tolstoy v United Kingdom (1995) 20 EHRR 442).  However, shortly before that case, in Rantzen v Mirror Group ([1993] EWCA Civ 16) the Court of Appeal overturned an award of £250,000 and held that juries could be given limited guidance on the appropriate award.  Subsequently, in John v MGN Ltd ([1995] EWCA Civ 23) the Court of Appeal broke decisively with the traditional practice and held that a jury could properly be referred to awards in personal injury cases.  The highest level of personal injury awards has now been adopted as the “ceiling” for compensatory damages in defamation cases, at present something around £215,000.

These changes have led to very substantial reductions in the levels of libel damages awards.   There are no authoritative statistics for defamation damages but the 2008 Media Lawyers’ Association figures prepared for Sir Rupert Jackson’s report on legal costs suggest an average award/settlement figure of £25,000.   An analysis of libel damages awards made by the Courts between June 1997 and January 2009 indicates that the mean award was just short of £48,000, while  the median award was £25,000.  The mean award since January 2004 was under £38,000 and the median award just over £20,000 (see A Mullis and A Scott, “Something Rotten in the State of English Libel Law?”, para 41).

These figures are relatively high by European standards – where damages are not the primary remedy – but they are in line with awards in other common law jurisdictions such as Canada and Australia.  The figures are of course very low by US standards where, according to the freedom of expression NGO Article 19 the average libel damages award is US$471,221.

In limited circumstances, the English courts can, by statute grant other remedies to a successful claimant.  Where a court grants “summary relief” – because there is no defence which has a realistic prospect of success – it can (in addition to ordering damages of up to £10,000 and granting an injunction) make a declaration that the statement was false and defamatory of the claimant and can order that the defendant publish a suitable correction and apology.  Where the parties can’t agree the content of the correction or apology the court may direct the defendant to publish a summary of its judgment.   Such “summary judgments” in favour of claimants are rare and this power has not often been used.

The Reform Argument

The report “Free Speech is not for Sale” contends that, at present, “English libel law is more about making money than saving a reputation”. It argues that

“The chief remedy in libel should be an apology, not financial reward. The law supposedly exists to restore the claimant’s reputation, not to enhance their bank statement with hefty awards for damages. The courts should take the financial incentive out of libel law by capping damages at £10,000. If a claimant wishes to demand more, then they would need to prove material damage such as loss of earnings.

We recommend: Cap damages at £10,000”

The proposal appears to imply that the Court should have power to order the publication of an apology – as we have indicated, this is not generally the case at present.

Lord Lester’s Defamation Bill does not propose a damages cap or the power to order the publication of an apology.

Responses to the Proposal

In the report by Professor Mullis and Dr Scott “Something Rotten in the State of English Libel Law?” the authors make the point that libel damages have been substantially reduced over the past 20 years:

“Whereas twenty years ago, libel claims were seen by some claimants as a road to untaxed riches, this is no longer the case. The Court of Appeal now exercises considerable control over the level of damages with the effective maximum now just over £200k. Moreover, the award of even half that amount is a rare occurrence. Given that most libel damages are modest and the claimant only recovers a proportion of his costs, even successful libel litigants are often left out of pocket” [13].

The authors are not against a damages cap in principle but suggest that the level of cap proposed is “seriously flawed”:

“First, there is precious little evidence that any claimants regard their actions as being “more about making  money than saving a reputation” … Even successful claimants are usually left with some measure of cost burden. Moreover, damage awards have decreased substantially over the last decade.  … We doubt the wisdom of any suggestion that £10k could reasonably serve as adequate compensation for two social workers wrongly accused of child abuse, driven from their homes, and subjected to a hostile campaign lasting for several years in the local and national press, or for the parents of the abducted child Madeleine McCann, repeatedly accused by sections of the national media of complicity in that abduction and possibly in murder” [43-44].

Finally, they make the point that restricting the compensation available in libel actions to too low a level  would mean that libel damages would not be an effective “deterrent”:

“We would be concerned that a cap of £10k would leave the repercussions of even the most serious libel almost negligible for an international media company. If, in the absence of both effective alternative regulatory mechanisms and adequate alternative remedial options, one of the functions of the law of libel is to discourage irresponsible journalism, damages need to be set at a level that encourages the taking of due care. The envisaged cap is woefully inadequate to perform this function and may well lead to the excesses of the early 1990s that characterised some sections of the British press” [45].

However, Professor Mullis and Dr Scott note that the Libel Reform campaign suggests that the primary remedy in libel actions should be the correction and/or apology.  They comment as follows:

“Insofar as the purpose of libel remedies is to offer vindication, this is an appealing and possibly a sustainable point. We note, however, that corrections or apologies made would necessarily have to be allowed equivalent exposure as the original defamation and that satisfactory performance of this remedy would require to be overseen by some regulatory mechanism. Moreover, the purposes of libel remedies as currently understood extend beyond vindication alone”. [46]

The Strasbourg Cases

As already mentioned, in Tolstoy v United Kingdom ((1995) 20 EHRR 442) the European Court of Human Rights held an award of £1.5 million damages by a jury which received no guidance on quantum was disproportionate and a breach of Article 10.  In Steel and Morris v United Kingdom ((2005) 41 EHRR 22) it was held that an award of £40,000 against defendants of modest resources was disproportionate ([96]).  However, in Independent News and Media v Ireland ((2006) 42 EHRR 46) it was held that a jury libel award of IR£300,000 was not disproportionate as the jury had been given appropriate guidance.  In general, the Convention requires damages to be predictable and proportionate but places no specific limit on their amount.

Discussion

At present libel damages are, effectively, capped at £215,000.  However, a substantial reduction in the level of the cap seems difficult to defend for two reasons.  First, there is the need to preserve what has been called the “deterrent” effect of damages.  As the Privy Council said in Gleaner v Abrahams ([2004] 1 AC 628)

“[Defamation] damages often serve not only as compensation but also as an effective and necessary deterrent. The deterrent is effective because the damages are paid either by the defendant himself or under a policy of insurance which is likely to be sensitive to the incidence of such claims. Indeed, the effectiveness of the deterrent is the whole basis of Lord Lester’s argument that high awards will have a “chilling effect” on future publications. Awards in an adequate amount may also be necessary to deter the media from riding roughshod over the rights of other citizens”[53]

Second, there is the need to preserve flexibility.  Whilst some libel claims involve minor complaints which could properly be compensated by small sums, there are some extremely serious libels which seem to require substantial compensation.  The case of the McCanns is one recent example, but there are other recent cases involving false accusations of serious criminality or child abuse.  An award of £10,000 appears obviously inappropriate in cases of this kind.

Damages are not capped in the United States or in Canada, New Zealand or South Africa.  A cap has recently been introduced in Australia by the Uniform Defamation Act 2005.   By section 35 there is a limit on general damages of Aus$250,000 (£146,000) but the court can “otherwise order” and make a higher award if satisfied the case is such as to warrant an award of aggravated damages.  It is noteworthy that according the freedom of expression NGO Article 19 the only one of the 53 European countries surveyed had a statutory damages cap for defamation cases.  This was Greece where the cap was set at US$438,000.

The arguments in favour of a statutory cap on damages of £10,000 are not, in our view, convincing and, taking account of developments in the law of defamation over the past two decades, it is unclear whether any statutory cap is needed at all.  Once again, this is not a proposal taken forward by Lord Lester’s Defamation Bill.

There is, however, another aspect to the proposal.   We believe that there is a strong argument in favour of giving the courts a power to provide other remedies to vindicate a claimant who has been defamed by the publication of a false allegation.  One possibility is a “declaration of falsity”.  Another is the power to order the publication of a correction or apology.  The latter is an available remedy in many European countries – a 2005 Mediawise briefing identifies such legal obligations in eight countries.  If the courts were able to order the publication of corrections or apology – perhaps in the form of the publication of a summary of the Court’s judgment, with appropriate prominence – this would be a powerful factor in reducing the level of damages.   It seems likely that, in practice, this remedy would prove attractive to many claimants for whom, as the Libel Reform campaign correctly suggests, vindication is often the primary aim.   A declaration of falsity may, in many cases, be a sufficient remedy for a claimant whose main concern is to set the record straight.   There has, unfortunately, been little debate about these alternative remedies.  One reason for this may be their unpopularity amongst the media supporters of libel reform.

In short, therefore, although there are strong arguments against a statutory damages cap of £10,000 there are equally strong arguments in favour of the other aspect of the Libel Reform proposal, a new power to order corrections and apologies and, in addition, a power to grant “declarations of falsity”.

We would, of course, welcome guest posts from anyone who wants to put forward a different view.   We would welcome  posts setting out the arguments in defence of this proposal, or of the proposal to “reverse the burden of proof” which was considered in the first post in this series.