Steve Morgan C.B.E. is an impressive individual. As a young man in the 1970s working for Wellington Civil Engineering, a business that was going to the wall, he borrowed £5,000 and took over one of Wellington’s contracts to put sewers in in Penley, near Wrexham. Fast forward to 2019 and he retires from his business Redrow PLC this year with the housebuilding firm valued at £2.2 billion.
His own personal wealth is significantly reduced by his decision to devote time and money to the Steve Morgan Foundation which supports charitable causes across North Wales, Merseyside and the North West and to which he has given over £300m. As the Statement in Open Court which brought an end to this matter makes clear, though, he remains a wealthy man.
A principled, robust, successful and wealthy individual is the worst combination for a newspaper which has got it wrong and accused that individual, as Nicklin J found in determining the preliminary issue of meaning, of “exploiting his position to line his own pockets in a greedy, unethical and morally unacceptable way”. This was an allegation that Steve would not let lie.
The original Daily Mail article had alleged that Steve had bought 6 houses from Redrow, for a total of £860,000, which should have been made available as affordable housing and had been on sale for £350,000 each (£2.1m total). The truth was; the houses were never offered for sale for £350,000 (or anything approaching that), Redrow had tried but been unable to sell the houses to registered providers for affordable housing. Steve had therefore agreed to buy them and rent them out as affordable housing himself. As the evidence in the case would go on to show, it looks like he significantly overpaid for the properties.
The article appeared in August 2017 and the Statement in Open Court was read before Warby J on 12 February 2019, with an apology appearing on page 11 of the Daily Mail and online on the same day. It was a long wait for Steve which can be explained by some of the lessons learned below.
From a media law perspective, what were those lessons learned?
1. For publishers; when accusing business leaders of being “fat cats” make sure that the target is in fact an overweight feline.
As stated in the Statement in Open Court “these allegations struck at the heart of [Steve Morgan’s] personal integrity and dignity”. Ironically enough, a short while after the article was published Steve would be lauded by the Mail as “Hero of the Week” for his criticism of the directors of Persimmon. For years he has gifted his salary to charity, has only taken profits from his shareholding and has gifted millions to charity through his foundation. It is little wonder that he fought this case for over 18 months to get the right result in terms of the apology, Statement in Open Court and substantial damages that went towards the provision of smiley buses for special needs schools.
The Mail’s decision to put up a defence (which would later be struck out) aggravated damage, delayed vindication and made the reading of a Statement in Open Court – which would act to counter what had been said in open court at previous interim hearings – essential.
2. When meaning is in dispute the court will, mostly, expect the parties to submit to an early preliminary issue hearing.
The case was one of a few adeptly summarised in Kirsten Sjøvoll’s note (here) where Nicklin J expressed the strong view that, as a matter of case management, meaning should be decided before any further cost is incurred and a Defence is filed. Nicklin J expressed his disquiet about the costs consequences (discussed below) of failing to take this approach which, in his view, is the consistent way to proceed under the overriding objective.
In the last year, though, there has been at least one exception in a case our firm acted on – Reay v Beamont (now settled). In that matter, where we acted for the Defendant, the Claimant made an application for a trial of preliminary issue on meaning before Nicol J. That application was rejected. Key in Nicol J’s findings were the particular facts of the case. This was not a simple libel claim involving a newspaper article, it involved an immersive and interactive theatre performance and stand-up act, a performance that was fluid and, of which, there was only one record (a grainy recording taken by a private investigator retained by the Claimant). Context is all and the experiences of audience members would have come in to play if the case had not settled.
Nicol J observed that it is common in defamation claims for there to be an order for a preliminary trial on meaning and referenced the procedural and costs savings available but was not persuaded that it applied in this particular case. Nicol J found that the context of the performances would need analysis at any trial to understand meaning (referring, by way of example, to the various character voices used by the Defendant in the performance) and he was persuaded that any trial of preliminary issue would likely be a significant exercise lasting a day. The benefit of that long exercise, weighed against the size of the exercise, did not persuade Nicol J that it was appropriate. He noted that many of the issues to be tried at a preliminary hearing were not severable from those that would be heard at trial, and particularly noted that the Claimant’s claim included claims in privacy and data protection as well as defamation.
The Morgan case, like Bukova and Poroshenko, leads defamation practitioners firmly towards a preliminary issue on meaning before any further cost is incurred. Reay v Beamont reminds us though that, where peculiar facts arise, the position is not so straightforward.
3. Costs in media matters are a primary concern for the Media List judges.
Judges in media cases have long been vocal on the question of costs and the unnecessary incurring of vast sums in libel and privacy litigation. Libel and privacy litigation is complicated by the fact that it is the vindication of reputation or protection of information that is primarily at stake as opposed to an easily quantifiable sum of money in damages. In Arcadia and Others v Telegraph Warby J did note that “proportionality cannot be assessed by reference to any damages claim, or any other financial yardstick” and indicated that fees in excess of the guideline rates may be allowed (seemingly up to £550 compared to the guideline rates of £409 and the Claimants’ solicitors rate of £690).
In Morgan, on 7 December 2018 Nicklin J delivered a judgment in which he struck out the Defendant’s defence of honest opinion, which had been first served in March 2018, following the issue of proceedings in October 2017 and an article published on 24 August 2017. In striking out the defence (and refusing permission for a draft amended version of the defence) Nicklin J criticised the Defendant for filing a defence before meaning had been determined, stating that this had complicated matters unnecessarily and caused reverberations throughout the litigation which had “bedevilled” the case. He had, during submissions, asked the parties to address him on their global costs so that he was able to observe, in his judgment, the amount of costs that had unnecessarily been incurred in this case where, over 18 months down the line, the pleadings were not even closed – the on the record defence had been struck out and the Defendants were ordered to start again with a blank sheet of paper if they wished to defend the claim. As pleadings were not closed the case had not yet got to the costs budgeting stage.
4. Honest opinion defences must be supported by the facts.
In very simple terms – the Defendant sought to defend (as honest opinion) an article that had accused Steve of lining his pockets out of greed by buying homes at undervalue by pleading a defence which did not make any real case that the price he paid was an undervalue. Nicklin J found that an honest opinion defence must properly plead the facts which are relied on and that the Claimant is entitled to know with clarity and particularity the case which is being made against him and what he is said to have done. On the particular facts of this case Nicklin J commented that, if the homes were really valued higher than the price paid by Steve, then it would be a simple exercise for the Mail to obtain an expert view on that and plead a cogent case. They could not do so.
The honest opinion defence pleaded by the Mail had followed a long delay in serving the Defence, beyond the deadline for service. Multiple extensions of time were allowed whilst the Mail made enquiries of the local council in the vain hope of finding information which they might be able to hang a defence on. Ultimately this was a futile exercise resulting in the defence which was struck out in December 2018.
Note – the case was managed by Himsworth Scott founder director Matt Himsworth and senior associate Steven Hudson. The firm instructed Justin Rushbrooke QC and Felicity McMahon of 5RB throughout the matter.