Smith v ADVFN Plc

This appeal comes before the court at the appellant’s instigation as an urgent matter. It is appropriate to give a decision at once. I shall be quite short and there may be some rough edges. The appellant, Mr Smith, contends that defamatory statements have been published about him on a series of internet bulletin boards. He wishes to bring proceedings against the persons who have made these statements but he does not know, or does not know the identities, of the people. He only knows them by their online user names, which are, oddly, referred to as avatars. The defendant is the operator of the internet bulletin boards. The defendant’s system asks the users of the bulletin board for their real names and addresses when they initially register as users but the users may or may not give these details accurately. However, when a user registers and each time he subsequently access the bulletin board the defendant’s system records the IP address or IP number of the user’s computer. The IP address may sometimes change from day to day and, if the user accesses the board from different computers, from computer to computer. It appears that the true identities of the users are obtainable from their internet service providers if the relevant IP address or addresses are provided. Mr Smith sought Norwich Pharmacal orders against the respondent. On 20 April 2007 he obtained an order ex parte from HHJ Hickinbottom sitting as a deputy High Court judge for the disclosure of the detail of the users, which was subsequently varied in a hearing between the parties by Gray J on 24 April 2007.

The order, as varied, provided that the respondent was to provide to Mr Smith the registered name, address, e-mail address and IP address of the persons lying behind 23 avatars who had been responsible for 109 separate postings. These postings had occurred in the period between 17 and 24 April 2007. The respondent provided 18 avatars’ IP addresses, as at the time of their initial registration. The remaining five avatars’ IP addresses had not been caught because at the time of their registration the software was not in place to do so. Of the 18, apparently, some of these have been successfully pursued by Mr Smith. Some have apologised and some have paid money to him.

The appellant, Mr Smith, however, believed that the order was not adequate or was not adequately complied with because the respondent did not provide the IP addresses that related to the use of the bulletin board at the time of the alleged defamatory postings were made, which would not necessarily be the same as the IP addresses at the time of registration.

This prevented him, he says, from obtaining the requisite personal details from the internet service providers. He accordingly made a further application for disclosure, which came before Mackay J on 13 March 2008. The judge was satisfied that the respondent had complied with the terms of Gray J’s order. The terms of the order meant that only the registered IP addresses needed to be provided. The judge stated that the exact relief which Mr Smith wanted and had applied for had varied but that two possible draft orders were proposed. These were referred to as Option 1 and Option 2. Option 1 was for disclosure relating to 252 postings by 64 avatars from April 2007 to date. Option 2 was for disclosure relating to 100 or so postings made by those avatars whom Gray J had considered when he made his order in 2007. In each case disclosure was sought for the users’ names, addresses, e-mail addresses and IP addresses, the latter being those IP addresses which were captured on the days that the allegedly defamatory postings were made. After stating what is, as I see it, uncontentious law about Norwich Pharmacal orders to which I shall return, the judge examined an issue as to the degree of difficulty and expense involved in obtaining the information which Mr Smith sought. The respondents contended, upon evidence, that the cost of obtaining the information would be at least £50,000, this in comparison with a very small cost which Mr Smith had paid as a result of Gray J’s order. Mr Smith disputed this and said that he had an expert who could examine their computers to determine how great the difficulty involved would be. The judge was unhappy with this and thought that a full-scale trial would be needed and considered it to be inappropriate to the type of application brought by Mr Smith.

The judge noted that time was a problem as the limitation period for defamation actions is short and in the case of some of the postings had already expired. He then decided not to examine the postings to see whether they were allegedly defamatory, that is to say the postings in relation to those matters which Gray J had not considered. The judge preferred to rely on the decision of Gray J, which the respondents accepted it could not go behind, that postings to which that order related were arguably defamatory. The judge said this:

“26.

Time is a problem. There is a short limitation period for defamation actions, which is what Mr Smith is anxious to bring. These avatars are beginning to drop off the end of the limitation conveyor belt. In my judgment it is an impossible and unsuitable task for me to adapt Mr Parkes’ Sheffield Wednesday approach to this case. I tested that by asking Mr Smith to nominate his top 12 postings. We looked at them together. Some of those were plainly potentially defamatory of him. Some of them were arguably defamatory of him. As for the rest, it was doubtful whether they were or were not but much could be made of the context and the sustained nature of the attack where what might in an isolated incident be “vulgar abuse” becomes defamatory. These are difficult areas. Option 2 does not extend the challenged postings beyond those already subject to a judicial order which the defendant accepts it cannot now go behind. It has therefore the merit that I would be entitled to treat Lightman J’s condition 1 as having been met [parenthetically, I shall return to Lightman J’s condition 1]. As to (b) and (c) there is no serious problem.

27.

As to the exercise of my discretion, which I accept is a separate step, the Data Protection Act 1998 is engaged and covers this material. The defendant cannot merely disclose it without a court order both because of the data subject’s statutory rights and because as individuals they have a contractual expectation of anonymity. I have to be careful because these people are not represented before me and they have rights of freedom of speech under Article 10 and this is an invasive type of order which will conflict with those rights.”

Parenthetically again the judge might also have alluded to Article 8 of the European Convention on Human Rights. Returning to his judgment:

“28.

There is a discretion to be exercised as to whether I should make an order and, if so, in what form. Option 1 would cause me great concern at this stage, even though mechanically it is no more onerous for the defendant to provide details of 252 as opposed to 100 postings once it had its system in place and the software available to do that. But in my judgment the claimant has cast his net too wide for an order of this nature. He has thrown a problem at the court, albeit fully documented, and said, ‘Look at these various postings, isolate the ones which are not covered by any existing relief I have, examine them on the principles set out above and find that I am entitled to an order in their respect.’”

Then, said the judge:

“28.

I decline to exercise my discretion in that way but the expense and difficulty of complying with Option 2 are very important factors which I must also have in mind when exercising discretion. It is an acute issue. Although there is the very unsatisfactory feature of the defendant’s dramatic change of position in this regard which understandably elicits suspicion on the part of the claimant, which is to an extent shared by the court, it would be wrong for me to make any finding on that on an occasion of this nature. It may prove to be the case that this relief will be a very pyrrhic victory for Mr Smith, I do not know. I have considered whether I should, and then whether I could, order him to pay some substantial money into court to abide the event of disclosure, whereupon the defendant would come to court and justify the expenditure it says it has incurred and explain what it did, how it had to do it and why. Mr Smith, it would seem, would be entirely unable to comply with any substantial requirement of that nature. He needs to use the damages he collects to pay his way, as he has done since the last order. So such an order would give him relief with one hand and take it away with the other and that would be wrong.”

Mackay J’s order was in these terms: he ordered the respondent to provide the applicant with the name, address and e-mail address of each avatar together with the IP number for the avatar at the time of each alleged defamatory posting as listed below and the list extends to 100 items, essentially those which Gray J considered. Paragraph 2 of the order says:

“If multiple IPs were recorded for an avatar on the day of the alleged defamatory post, then the Respondent is to supply all the IP numbers captured from that avatar on that day indicating if possible which IP was captured at the time of the alleged defamatory post.

3: This information to be supplied by the respondent within 14 working days of the Order with liberty to apply.

4: The Applicant do pay the respondent’s reasonable costs of complying with paragraphs 1 and 2 of this order, to be assessed if not agreed.

5: The Applicant do pay the respondent’s costs of the application assessed at £12,000 of which £2,000 is to be payable by 14 April 2008 and with liberty for the Respondent to apply for an order as to the date by which the balance must be paid.”

14 April 2008 was yesterday.

The claimant had a number of grounds of appeal supporting an application to this court that Mackay J’s order should be varied to include all 252 postings considered by the court and that the time for complying with the order should be reduced to three working days. In brief summary the grounds were: first that the judge was wrong not to permit Mr Smith to adduce expert evidence, which would have challenged so as to reduce the complexity, time and cost of the exercise which Mr Chambers, for the respondent, had put at £50,000. Second, that the judge wrongly exercised his discretion. Third, that the judge failed to protect Mr Smith from the continued postings of defamatory statements. Fourth, that there was apparent bias because the respondent’s counsel sits as a deputy judge in matters such as these -- see Mr Parkes QC’s decision sitting as a deputy judge in Sheffield Wednesday Football Club v Hargreaves [2007] EWHC 2375 to which Mackay J had referred in the passage I read out just now and where, in a broadly similar case, Mr Parkes undertook the detailed consideration which Mackay J declined to undertake in this case and fifthly that the judgment has resulted in further defamatory postings. The application for permission was considered on the papers by Buxton LJ, who granted permission to a limited extent for the following reasons. He wrote as follows:

“The only arguable ground concerns whether the judge should however summarily have separately addressed each of the 252 postings relied on under Option 1 in order to decide whether the first limb of the Norwich Pharmacal test was satisfied in respect of them rather than subjecting them to a blanket rejection on the grounds of onerousness. I do not understand the judge to have relied as a separate ground in relation to Option 1 on the alleged cost and expense of the operation. The appellant must however understand that even if he were to succeed in principle on that point (1) the matter would be remitted to the judge and not decided by this court. (2) any order of this court would be subject to further considerations. Those considerations not addressed by the judge because of the absolute nature of his order would include (1) the appropriate time for compliance; (2) the burden and expense of giving information about 252 rather than 109 postings; the court would expect to have further submissions from the respondent on both those issues though on the basis of the evidence as it was before the judge. I agree with the judge that it was not appropriate for him on a motion and certainly not for this court to conduct any sort of trial or investigation into those matters.”

Since Mackay J’s decision things have moved on somewhat. Firstly the respondents have complied with Mackay J’s disclosure order. Secondly the appellant tells us that solicitors on his behalf paid £2,000 by cheque through the DX system yesterday, although, as at the time of submissions this morning, it was not possible to verify that this had arrived. Thirdly, the respondents have modified their position about costs and complexity. They will comply with a wider order if it is made. They now say, in summary, that, firstly, the relevant log files need to be located by a member of the IT staff on the respondent’s computer systems. Secondly, they must then be put on a separate external hard drive because the search cannot be conducted on the respondent’s live systems. Thirdly, these processes will involve many hours of work for the one member of their IT staff with the expertise to carry it out and his job is to keep the website working, which is critical to the respondent’s business. Fourth, the information must then be passed to the respondent’s outside contractors for their search and analysis. The price which they charge to carry out their work depends on whether it is done within seven days, 14 days or some other period and varies between something over £6,000 and something under £5,000. When that is done, the report can be passed to Mr Smith. In short it is submitted that the information can be provided if the court orders that it should be, but given what the judge was told about Mr Smith’s resources it is difficult to believe that he would be able to pay the cost of the respondent’s disbursements, let alone the cost of the staff time involved in compliance with an order. It would, it is said, be most unjust to the respondent which is not a large business and in this context is an innocent intermediary to be left out of pocket.

I say this, albeit Buxton LJ had said that this court would not look at additional evidence, because it seems to me to accord broadly with the evidence which Mr Smith would want the court to look at. I consider that this court should proceed without examining any of this in detail on the basis that the cost would be not £50,000 but much less, perhaps £5,000 or rather more with whatever extra would be allowed for the time of the respondent’s own member of staff. I understand that this broadly accords with Mr Smith’s advice and understanding. Mackay J, correctly it seems to me, directed himself as to the law applicable to this jurisdiction and the law can be taken quite briefly from paragraphs in his judgment. He referred first to the decision in Norwich Pharmacal itself, which is reported at [1974] AC 133, in which Lord Reid said:

“if through no fault of his own a person gets mixed up in the tortious acts of others so as to facilitate their wrong-doing he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him information and disclosing the identity of the wrongdoers.”

Mackay J then said that it is by this route and on this basis that innocent parties are asked to exert themselves to the extent of co-operating with the claimant in righting the wrong he says he has suffered. The judge then referred to the decision of Lightman J in Mitsui Ltd against Nexen Trading UK [2005] EWHC 625 at paragraph 21 to the effect that (a) a wrong must have been carried out or arguably carried out by an ultimate wrongdoer; (b) there must be the need for an order to enable action to be brought against the ultimate wrongdoer; and (c) that the person against whom the order is sought must be mixed up in the wrongdoing so as to have facilitated it and be able, or likely to be able, to provide the information necessary to enable the ultimate wrongdoer to be sued. Mackay J observed, as I think is uncontentious, that it is only the first of these requirements that would cause any difficulty in the present case. The judge then referred to the case of Sheffield Wednesday Football Club v Hargreaves [2007] EWHC 2375 to which I have already referred and which as the judge said, on very different facts, Mr Parkes went through a number of website postings said to be defamatory and formed a summary assessment of those were arguably defamatory and those that were not. The judge was also referred to Totalise Plc v The Motley Fool Limited [2001] EWCA Civ 1897. This was an appeal from Owen J. The case concerned postings on a website and the claimant successfully obtained a Norwich Pharmacal order for disclosure of the identity of a person using a nickname. Owen J not only made the order but ordered the defendants to pay the costs of the application. This court allowed an appeal against the costs order. In doing so Aldous LJ, giving the judgment of the court, said this at paragraph 29 of the judgment:

“Norwich Pharmacal applications are not ordinary adversarial proceedings, where the general rule is that the unsuccessful party pays the costs of the successful party. They are akin to proceedings from pre-action disclosure where costs are governed by CPR r 48.3. That rule, we believe, reflects the just outcome and is consistent with the views of Lord Reid and Lord Cross in the Norwich Pharmacal case… In general, the costs incurred should be recovered from the wrongdoer rather than from an innocent party. That should be the result, even if such a party writes a letter to the applicant asking him to draw the court’s attention to matters which might influence a court to refuse the application. Of course such a letter would need to be drawn to the attention of the court. Each case would depend on its facts and in some cases it may be appropriate for the party from whom disclosure is sought to appear in court to assist. In such a case he should not be prejudiced by being ordered to pay costs.

The court, when considering in its order as to costs after a successful Norwich Pharmacal application, should consider all the circumstances. In a normal case the applicant should be ordered to pay the costs of the party making the disclosure including the costs of making the disclosure. There may be cases where the circumstances require a different order but [and then there are some other exceptions to which the judgment refers].

So that is the general position. There are, in my judgment, two main matters for consideration on this appeal. First, that identified by Buxton LJ. That is to say whether the judge should have conducted an individual examination of each of the 252 postings which were not comprised in the original 100 or so covered by Gray J’s order. Second, and inevitably I think, cost. As to the first of these, Mr Parkes submitted that the judge had asked Mr Smith which order he was asking the court to make and Mr Smith had said that he preferred Option 1 but failing that he asked for Option 2. Mr Parkes has referred us to the transcript. He says that the respondents were neutral as to which order was to be made. Given that Mr Smith was asking for one order or the other the judge, he says, had a discretion as to which order to make. He exercised that discretion in favour of Option 2 for the reason which he gave in his judgment, namely that the appellant had, in effect, thrown on the court the burden of examining a huge volume of material, deciding which were and which were not arguably libellous and which merited orders for disclosure, and which did not. As the judge correctly stated in giving his reasons for refusing permission to appeal, the real issue, says Mr Parkes, was whether he should exercise his discretion in favour of a wider rather than a narrower order and there is, he submits, no basis for interfering with the exercise of that discretion which could hardly have been exercised otherwise given the sheer volume of material thrown at the court and Mr Smith’s failure to set out in a coherent or manageable form the libels of which he complained.

Insofar, as perhaps Mr Parkes was submitting, that Mr Smith had invited the judge to adopt one option or the other in the sense that Mr Smith would be content with either, the transcript does not, in my view, bear this out. Mr Smith was undoubtedly seeking the wider order. He was not offering the judge a discretionary choice. Mr Parkes submits more persuasively that satisfying the first of Lightman J’s requirements is not readily achieved with material such as this by reading quickly highlighted passages of what might broadly be compared with abusive exchanges in a public house. Material such as this takes colour from its context and a balance has to be struck between the existence and apparent strength of a case if the statements are defamatory and the intrusive nature of the order in terms of the writer of the material. Article 8 and Article 10, and perhaps consideration of the Data Protection Act, must be brought into play. Well prepared though the material may look on paper it is really, submits Mr Parkes, a disorganised and indiscriminate mass which the court should not entertain without better and more economic presentation. Mr Parkes accepted that mere volume should not be an impediment. He expressed the belief that the judge’s decision was probably affected by the time available for the application and he told us that Mr Smith had pressed for an early hearing on a very short time estimate.

Mr Smith, for his part, agreed with Moore-Bick LJ that his 152 additional postings probably comprised a maximum of 46 additional different individuals whose identity would be revealed by examination of one posting for each pseudonym and he agreed that the case that postings were defamatory was much stronger in some cases than others. He agreed that a more discriminating selection was both possible and, on reflection, desirable. He showed us paragraph 36 of his Grounds of Appeal where he had made a short selection of about 20 such postings, albeit in very short telegrammatic form only. In my judgment, in these circumstances the judge had a discretion to decline to address item by item an indiscriminate and disorganised mass of material of this kind. A person in Mr Smith’s position should set about organising material of this kind so that the court may readily see that a wrong has arguably been committed and such a person should discriminate by reducing substantially the number of postings which will legitimately serve his purpose. By doing this he ought to reduce, if not eliminate, serious opposition to this part of the court’s consideration. Mr Parkes told us on instructions that his client would take no point if Mr Smith were to make a new, reduced and more discriminating application to a judge seeking an order with reference to the strongest parts of the mass of material now before the court. Considering as I do that Mackay J was entitled to make the order he did I would dismiss this appeal without prejudice to a renewed application.

As to costs, it will be a matter for the judge’s consideration if there is a new application which would otherwise succeed what order as to costs and as to the costs of complying with it should be made or whether the court should impose conditions. Mr Smith, in effect, says that he is unable to pay significant costs immediately but that he will pay when he has succeeded sufficiently in the defamation claims which the order he seeks will enable him to bring. He offers what he refers to as a token payment as earnest of his future intention and he referred to the £2,000 which was paid, he says, on his instructions yesterday as such a token payment. He says, in effect, that if the defamation claims do not succeed he will find other sources of money. I was not myself clear why he could not find those other sources now. I have considerable sympathy with Mr Parkes’ submission that the respondents should not be expected to finance the costs of Mr Smith’s potential defamation claims whose success, even if he wins them, is not assured. Mr Smith paid the costs resulting from Gray J’s order by January of this year. Assuming that he has indeed paid the £2,000 yesterday there is a further £10,000 outstanding on Mackay J’s costs order and, according to Mr Parkes at least, £2,791 for the costs of complying with that order. There may also be some more costs, in a moment, of this appeal but we shall see. Mr Parkes says that the respondents would not expect to be paid costs up front and it is correct that the form of Mackay J’s order, as with Gray J’s order before it, enables the respondents to set about enforcing the order, but Mr Smith should not assume that the court, upon a new application, will simply make an order on the faith that he will be able to pay the now mounted costs at some indefinite future date. The matter will be entirely in that court’s discretion but Mr Smith should have his eyes open. Accordingly, and for those reasons, I would dismiss this appeal.

I agree and there is nothing that I can usefully add.