Angel v Stainton & Anor

The Claimant in this libel action is Mr Norman Angel, who is now 81 years of age. He has been associated in one capacity or another with the aircraft and defence business for over 60 years and served as a pilot in the Royal Air Force in the second world war. He is now the director of AEI Systems Ltd (“AEI Systems”), a company which specialises in the manufacture and marketing of defence equipment. He had also been a director of Aircraft Equipment International Ltd (“Aircraft Equipment”), which was placed into receivership on 16 June 2005. The business and assets of this company were acquired by AEI Systems, a few weeks later, on 15 July 2005.

The first Defendant, Mr Adrian Stainton, is the managing director of the second Defendant, Repaircraft plc. This is described in his witness statement by Mr Angel as “a rival company to Aircraft Equipment”. It appears from the evidence that at various stages, including as long ago as 1994, Mr Stainton had expressed interest in acquiring the Aircraft Equipment business.

The claim arises from a letter written by Mr Stainton, on the printed paper of the second Defendant, on 2 July 2005. This was obviously after Aircraft Equipment had gone into receivership and during the period when its business and assets were available for acquisition. At that stage Price Waterhouse Coopers LLP (“PWC”) were acting as receivers and were involved inter alia in discussions with AEI Systems regarding the purchase of the business and assets with the assistance of its bank (HSBC). Mr Angel explained to me in the course of evidence that they had been his bankers for many years.

Although he did not discover the full contents of the 2 July letter at once, Mr Angel eventually obtained it on or about 21 July. At first, he only knew of the particular defamatory allegation of which he complains. That was drawn to his attention within 48 hours by Mr Gercke, the head of the PWC team which was conducting the receivership. He was one of the original recipients. For present purposes, it will suffice for me to set out only part of the three page letter, which will put the words complained of in context:

As previously stated during my visit to the AEI premises, 1 Kings Ride Ascot, Berkshire, Repaircraft PLC are most interested in acquiring the assets/business.

Unfortunately, I do not believe that Repaircraft PLC or any other third party will be able to put in a realistic bid against the former management because PWC, in conjunction with the former Shareholders/Managers, have been unnecessarily and gratuitously obstructive.

The words selected for complaint in the letter are confined to the extract “… rumour that Mr Norman Angel received a custodial Prison sentence some years ago for selling certain goods to people that he should not have”. It is said that the natural and ordinary meaning, when taken in the context of the letter as a whole, was that the Claimant had been convicted and imprisoned for illegal arms trading. Indeed, the Defendants’ solicitors asserted (on 25 July 2005) that “… in a letter by one arms-dealer about another, an allegation of illegal trading is likely to refer to and/or be understood to refer to illegal arms-dealing”.

Apart from Mr Gercke, to whom the letter was addressed, it is accepted that copies were sent to a number of other relevant parties:

The Rt Hon Alan Johnson MP, the Secretary of State for Trade and Industry, that department being responsible for issuing export licences which would be necessary for the Claimant successfully to run the business he was planning to acquire.

HSBC Bank PLC, which was not only the Claimant’s bank but would also be providing AEI Systems with the finance to enable the purchase of Aircraft Equipment’s business and assets to take place.

The Home Office Firearms Section, which was responsible for providing the necessary licence under the Firearms Act 1968, required for the manufacture, keeping or disposal of prohibited weapons and ammunition (without which, of course, no such business could operate).

Mr Chris Sambrook, of the Firearms Section of the Thames Valley police, which had the responsibility for issuing firearms licences (a necessary requirement for obtaining the licence from the Home Office under s.5 of the 1968 Act).

Not surprisingly, it is argued on Mr Angel’s behalf that the allegation that he had been convicted of and imprisoned for a serious criminal offence, when addressed to the selected publishees I have listed, was likely to cause him considerable damage personally and, potentially, to jeopardise the acquisition of the business and assets for which he was negotiating at that time.

The matter now comes before me in accordance with the statutory jurisdiction under s.3(5) of the Defamation Act 1996, which is part of the machinery for implementing the offer of amends procedure:

It is necessary to consider the background of what happened in a little detail, and especially what occurred between 2 July and 2 September 2005, when the unqualified offer was made in accordance with the statutory procedure.

Mr Angel first came to know of the allegation when he was telephoned on 4 July by PWC. Their concern was reiterated in a letter of 5 July, which referred to the words complained of and asked for a written reply “as regards the truth or otherwise of this statement at your earliest opportunity”. Mr Angel responded in writing the same day denying the allegation.

Mr Gercke wrote to Mr Stainton on 7 July and observed that it was “a very serious allegation to make and one that I do not take lightly”. He asked for any evidence to support the allegation to be brought to his attention “and to the attention of the relevant authorities” immediately. That letter was copied to the recipients of the original letter from Mr Stainton. It thus clearly came to their attention that the allegation was being taken seriously by PWC.

It was also on 7 July that Mr Angel’s solicitors wrote to Mr Stainton complaining of the allegation he had made to PWC (as relayed by Mr Gercke to Mr Angel) in these terms:

On 13 July there was a further “holding” response from Roche & Co, who protested that they were unable to take “detailed instructions”. They also made the rather feeble point:

By 15 July, it seems that Roche & Co were not even in a position to admit that Mr Stainton was responsible for disseminating the 2 July letter. It was only on 21 July that a substantive response was received and a copy of the letter of 2 July actually supplied. The response was, however, hardly satisfactory. It was very difficult for Mr Angel to fathom exactly what stance Mr Stainton was taking. On the one hand, there was paragraph 3:

Astonishingly, the letter argued that there was “a strong prima facie defence of fair comment”. In Campbell-James v Guardian Media Group PLC [2005] EMLR 24 at [7], I described the insulting suggestion that the defamatory allegation in that case was fair comment as “a grave error of judgment”. So too here, the absurd suggestion that an allegation of conviction and imprisonment for illegal trading could possibly be susceptible to a defence of fair comment was also an error of judgment. Far from mitigating the impact of the original allegation, the contents of this letter plainly aggravated the hurt to Mr Angel’s feelings and his sense of indignation.

As at 21 July, the Defendants were not prepared to make an offer of amends under s.2 of the Defamation Act 1996 but, nevertheless, went on to acknowledge that:

Mr Angel could, therefore, at this stage be forgiven for not appreciating whether he was on his head or his heels. Furthermore, on 25 July 2005 Roche & Co indicated that they were open to discussion of the terms of an offer of amends, but at that stage did not anticipate that agreement could be reached unless “(1) it was clear that no admission of defamation was made by our client; (2) nothing more than a nominal sum by way of compensation and costs was payable”. That was unrealistic, not least because an offer of amends inevitably involves an acknowledgment that the words complained of were defamatory in some sense.

Proceedings were launched on 9 August 2005 since no satisfactory proposals had been forthcoming. Then on 2 September, the very last day before the defence was due, an offer of amends was made in accordance with the statutory requirements. Thus, nearly two months had elapsed from the initial complaint before the offer was made, despite the fact that Mr Stainton knew perfectly well that there was no evidence to support the suggestion that Mr Angel had been convicted, let alone imprisoned. So much had been admitted on 21 July. Nevertheless, insult was added to injury by attaching a “schedule” to the offer of amends containing what was described as “relevant background context”. This set out a number of matters on which the Defendants proposed to rely, including the remarkable proposition that the Claimant had a reputation within the industry for having been “done” for illegal arms trading, “which is true provided ‘done’ is understood to mean ‘prosecuted’ but not ‘convicted’”. This ridiculous stance amounted to reliance upon a general reputation for not having been convicted in order to mitigate the defamatory assertion that the Claimant had been convicted and, what is more, sent to prison.

The reference to “relevant background context” was no doubt based upon the doctrine developed by the Court of Appeal in Burstein v Times Newspapers Ltd [2001] 1 WLR 579. The Defendants through their solicitors were seeking to exploit a prosecution which had apparently been brought in 1988 but subsequently abandoned. Quite how it was to be exploited, on the other hand, remains something of a mystery. First, it was suggested that it could give rise to a defence of fair comment (obviously nonsense). Then it was contended that the Claimant was in any event guilty (tantamount to a threat of justification). Finally, it was dusted down as the basis of a plea of general bad reputation (albeit for not having been convicted). It had been made quite clear in the letter of 25 July that it was the Defendants’ intention in resisting any claim for defamation “… that the facts giving rise to the prosecution [in 1988] would form the central material of a trial, before a jury, where the character of your client would certainly be an issue”. It was pointed out on Mr Angel’s behalf that that threatened attack upon his character only finally disappeared in March of this year, when Mr Stainton’s witness statement was served.

This background is clearly relevant to the process of assessing compensation, and Mr Sherborne for Mr Angel places considerable reliance upon these matters by way of aggravation.

Since the offer of amends procedure under the 1996 Act has begun to be tested in court, over the last three to four years, a fairly well defined methodology has emerged. When exercising this jurisdiction, a judge will generally address the matter in two stages:

I turn to the first stage. An allegation of this kind, made against a senior and respected figure in the industry, is clearly to be taken very seriously. I need to bear in mind, however, that the scale of publication was relatively limited. Plainly a much higher award would be required in the case of publication of a similar allegation in the national media. On the other hand, the recipients of the 2 July letter who were targeted by Mr Stainton were, in the circumstances then prevailing, clearly people who were in a position to do considerable harm to Mr Angel and his business affairs if the allegation of criminality was taken seriously. At that stage, there was clearly a risk that it might harm his chances of acquiring the assets from PWC and, even if he was successful, the allegations might do considerable harm to the new business. I have no doubt, in the light of his evidence, that these concerns caused great anxiety and frustration to Mr Angel. They also caused him personal distress for a considerable period of time, and undoubtedly for longer than was reasonably necessary “in order to investigate the complaint and make a properly informed decision as to what steps to take” (see e.g. Nail v News Group Newspapers Ltd [2004] EMLR 20 at [59], QBD).

It is common ground that the purpose of libel damages, or of compensation awarded under this statutory regime, is threefold. First, it is necessary to provide solatium for distress and hurt feelings. Secondly, one must compensate so far as possible for any actual injury to reputation which has been proved or which may reasonably be inferred. Thirdly, such an award will generally serve as an outward and visible sign of vindication.

“In assessing the appropriate damages for injury to reputation the most important factor is the gravity of the libel; the more closely it touches the plaintiff’s personal integrity, professional reputation, honour, courage, loyalty and the core attributes of his personality, the more serious it is likely to be”: John v MGN [1997] QB 586, 607 F-G, per Sir Thomas Bingham MR. Applying those criteria, it seems to me that the libel must be treated as very serious in itself although, as was pointed out immediately following the passage I have cited, a libel published to millions has a greater potential to cause damage than a libel published to a handful of people.

In the present case, there is fortunately little or no evidence of substantial injury actually incurred to Mr Angel’s reputation. I naturally take note of the apparent anxiety of Mr Gercke, as expressed on the telephone on 4 July and in writing the following day. I may safely conclude, however, that the impact was relatively short-lived because Mr Angel was able (albeit not immediately) to put his mind to rest through his unequivocal denial. Also, there is no actual evidence of a tangible reduction in the esteem in which Mr Angel was held so far as any of the other recipients was concerned. Nonetheless, some damage is presumed.

In the course of cross-examination, Mr Angel did speak of his perception that HSBC was less enthusiastic and supportive than in the past. This only arose because of the questions asked by Mr Dingemans QC, and it had not been foreshadowed in correspondence or in the witness statements of Mr Angel. It is by now well known that both claimants and defendants should put their cards on the table before an offer of amends is accepted. It is unlikely that permission will be given to introduce new material, on either side, once the parties have committed themselves to this statutory process. I propose in the circumstances to put to one side the possibility of continuing damage in the eyes of HSBC, although I have no doubt that Mr Angel’s perception is quite genuine. That is a factor which often arises in this context. When someone has been libelled, and cannot be confident of how far the allegations have penetrated, he will naturally be suspicious of any slight, real or imagined, and tend to attribute it to the influence of the libel. Furthermore, as Mr Dingemans himself pointed out, if Mr Angel is correct in perceiving HSBC to be rather luke-warm in the service it has provided recently, there is an alternative explanation in the form of the previous company going into receivership. Mr Angel accepted in cross-examination, I believe, that this was partly at least brought about by debts outstanding to HSBC.

In the circumstances of this case, it seems to me that the most important factor in arriving at an assessment of the appropriate compensation is that of the impact on Mr Angel’s feelings and the distress caused. I have no doubt at all that this was significant. There is clearly a continuing sense of injustice and indeed genuine outrage on his part. As to vindication, this is less important in a situation where there has been only limited publication and no evidence of any actual diminution in the Claimant’s reputation. Nevertheless, if I were to award only a modest sum of compensation in respect of an allegation of criminality, there would remain a real possibility that some people, coming to learn of the award, might think that there was no smoke without fire. As Lord Hailsham explained in Cassell v Broome [1972] AC 1027, 1071 C-D, “… in case the libel, driven underground, emerges from its lurking place at some future date, he must be able to point to a sum awarded by a jury sufficient to convince a by-stander of the baselessness of the charge”. Indeed, the very fact that Mr Stainton through his solicitors has repeatedly tried to extract some mileage from the aborted 1988 prosecution might suggest that a correspondingly greater sum should be awarded to convince relevant by-standers of the baselessness of this particular charge. That would only apply, of course, if it can be shown that Mr Stainton’s tactics in this respect were common knowledge among the recipients of the original letter. If this were so, they might have been more inclined to believe the allegation and to require a more convincing vindication. As I have no evidence that this in fact occurred, it is another factor which I am prepared to put to one side.

I have come to the conclusion that, having regard both to the gravity of the allegation and to the limited scale of publication, the right starting figure would be of the order of £40,000.

I now turn to stage two. That is to say, I must consider how far the resort by the Defendants to the statutory procedure has in fact served to mitigate the damage. It is clear that there is no standard “discount” to be applied in such circumstances, although the court will generally recognise that a willingness to use the offer of amends regime tends to reduce the appropriate level of compensation quite significantly. As was pointed out by the Court of Appeal in Nail v News Group Newspapers Ltd [2005] 1 All ER 1040 at [41]-[42]:

The following considerations were highlighted in Cleese v Clark [2004] EMLR 3 at [25]-[26]:

Here, there are certain particular features which require to be taken into account. First, it can hardly be said that the unqualified offer to make amends on 2 September 2005 was “early” or that the Defendants “capitulated at an early stage”. It was left until the last day before the defence was due. Secondly, even after the offer was made and accepted, it remained somewhat unclear as to the way in which the Defendants would present their case in court. In particular, it still remained a possibility that Mr Angel’s character would be attacked until, as I have said, Mr Stainton’s witness statement was served very shortly before the hearing. Naturally, therefore, he would have been rather less “relieved from the anxiety” than some other claimants. The way in which the Defendants have reacted to his complaint appears to have assuaged his feelings hardly at all.

Everything has finally been agreed, including the terms of a statement to be read in open court, but I would not regard the Defendants as having been obstructive in this respect. Also, I must bear in mind that the Defendants did proffer an apology and that it is through no fault of theirs that no apology has actually been published in this case.

They are in the present context mainly to be criticised for aggravating the hurt to the Claimant’s feelings through the contents of their solicitors’ letters, for delaying unnecessarily, and for the continuing uncertainty as to whether his character was to be attacked in court. Their attitude was grudging and not sufficiently conciliatory. For these reasons, I would be inclined to make a less generous “discount” than in the case of Nail v News Group Newspapers. I have come to the conclusion that the appropriate reduction is one of 40%. The consequence is that I award Mr Angel £24,000 by way of compensation.