logosun-getcccctyA claim for damages brought by RBoS Shareholders Action Group Limited (“the Action Group”) against News Group Newspapers Limited (as publishers of The Scottish Sun) has been settled with the publication of an apology and the payment of damages and costs.

On 12 May 2013, The Scottish Sun published a article entitled “Murky past exposed of man behind fight for RBS investors” in which it was said that thousands of investors suing the Royal Bank of Scotland “forked out £5 million to a firm founded by a man branded as a fraudster”.  The “firm” in question was the the Action Group. It was said that a “shady businessman”, Gerard Walsh, was behind the Action Group.   The article dealt with Mr Walsh’s background over some 64 paragraphs.

The Action Group immediately complained about the article.  A claim form was issued on 21 November 2013 making a claim only in respect of publications in England and Wales.  Particulars of Claim were served in which it was alleged that the article meant that

“it is highly likely, or at least strongly to be suspected, that the Claimant company is being controlled and used by Gerard Walsh as a conduit for the fraudulent misappropriation of funds contributed by its members for his own personal benefit”.

The Action Group issued an application for the determination of the issue of meaning as a preliminary issue.   This was heard by Tugendhat J on 23 January 2014.  Judgment was handed down on 4 February 2014 ([2014] EWHC 130 (QB)).

The Defendant sought an adjournment but this was refused.   Tugendhat J noted that

Applications for a preliminary issue to determine the actual meaning of words complained of have been granted with increasing frequency in recent years, pursuant to the overriding objective to try a case justly and at proportionate cost [18]

The Judge then considered the submissions of the parties on meaning.

The Defendant argued that the article was not defamatory of the Action Group – as opposed to Mr Walsh, who did not sue.  Alternatively it was argued that any meaning which was defamatory was not sufficiently serious to meet the threshold of seriousness.

This was a publication before 1 January 2014 so the common law test of seriousness applied, rather than that found in section 1 of the Defamation Act 2013.  In particular, it was not necessary for the Action Group to establish that the statement “caused or is likely to cause … serious financial loss”.

Tugendhat J held that, in their natural and ordinary meaning, the words meant that

“it is strongly to be suspected that the Claimant company is being controlled and used by Gerard Walsh as a conduit for the fraudulent misappropriation of funds contributed by its members for his own personal benefit.” [33]

He rejected the argument that the meaning included that it was “highly likely” that this was the position.

Although the meaning portrayed the Action Group as a victim, it did not preclude a finding that the allegation was defamatory of the Action Group:

Such a meaning has a tendency to deter third parties from dealing with, or being associated with the Claimant. [35]

This falls within the analysis of what counts as defamatory in the case of a corporation, trade union, or charitable organisation as explained in Derbyshire County Council v Times Newspapers Ltd [1993] AC 534 at 547

“a trading corporation is entitled to sue in respect of defamatory matters which can be seen as having a tendency to damage it in the way of its business. Examples are those that go to credit such as might deter banks from lending to it, or to the conditions experienced by its employees, which might impede the recruitment of the best qualified workers, or make people reluctant to deal with it”.

Following this ruling, the parties have reached a settlement.  On 16 February 2014, the Sun published the following apology:

RBOS Shareholders Action Group – apology

Our May 12, 2013, article “Murky past exposed of man behind fight for RBS investors” gave the impression that the RBoS Shareholders Action Group may have been used by its co-founder Gerard Walsh as a vehicle for fraud. We now accept this is untrue and members’ funds have never been at risk. We apologise to the Group to whom we have paid damages.

The defendant also agreed to pay costs and permanently to remove the article from its websites.

Hamlins LLP acted for the successful Claimant, instructing Justin Rushbrooke QC and William Bennett of 5RB. RPC acted for the Defendant and instructed Andrew Caldecott QC and Claire Kissin of 1 Brick Court as well as Desmond Browne QC of 5RB.