Jon Richard Ltd v Gornall

The Claimant is a company that runs a business that started in 1985, although the Claimant itself was incorporated in 1992. It retails women’s jewellery and accessories and has concessions in department stores. Its turnover to the year ended 28th February 2012 was nearly £26 million. The department stores with which it has dealings and through which it sells its goods include Debenhams; and it is through Debenhams that it does the overwhelming majority of its business, some 97%. It is also a connection which is of some longstanding, having been enjoyed for some 20 years. It is quite clear that that connection is of the utmost importance to the Claimant.

The Defendant used to be employed by the Claimant as a human resources manager. Her employment came to an end on 11th November 2011. The details of that termination are not relevant for present purposes. All that needs to be said is that there had been a disciplinary investigation and the Claimant paid the Defendant something approaching £22,000 by way of a final settlement.

It appears that the Defendant was unhappy about the arrangements. Around the time she was leaving, she mentioned to people that she had information and was prepared to use it. In short, there is material to support the belief expressed by Ms Sarah Frew, the chief executive officer of the Claimant, that the Defendant was disgruntled when she left and that she bore a particular grudge against Ms Frew and also another lady who works for the Claimant, Ms Louise Yates.

Debenhams received a letter, dated 12th July 2012, which was headed “Whistleblowing”. The letter said that the writer wished to draw to Debenhams’ attention

“fraudulent/inflated invoices being issue [sic] to Debenhams from [the Claimant] for store refurbishments, shopfits, gondolas and new store openings …”

The letter went on to say that over a number of years invoices had been inflated fraudulently and that the discrepancies were in excess of £300,000. It was said that the fraudulent instructions had been given by Ms Frew and Ms Yates. The letter also said that this matter came to light when a woman, to whom I will refer as “JR”, sent an email in error to Debenhams. There is no need to go into the details of the lady employee who made that mistake, because I have no information as to whether any criticisms of her are justified or not. However, attached to the letter of 12th July 2012 was a note from Ms Frew referring to difficulties arising from the apparent mistake on the part of JR. It refers to concerns that Ms Frew had that confidential information in the form of a spreadsheet had been sent to Debenhams.

Debenhams did not immediately draw this letter to the Claimant’s attention. I do not infer from that that was because they were not concerned. One can well suppose that Debenhams first wished to consider what action they should take in light of the allegations and to turn their minds to whether their own internal records threw any light upon it. However, when Debenhams did draw the matter to the Claimant’s attention, on 28th August 2012, the Claimant carried out an investigation and found nothing to indicate that anything was untoward. It also invited Debenhams’ internal audit team to examine its records. The result of that investigation was that, on 12th October 2012, Debenhams confirmed in writing that, in light of the audit by their team, they were satisfied that there was no evidence of any wrongdoing on the part of the Claimant.

That, however, was not the end of the matter. On 12th November 2012, another letter, also headed “Whistleblowing”, was sent to Debenhams. It referred to Debenhams’ “recent meeting with [the Claimant]” and it went on to say that the information provided by the Claimant in response to the allegations “was far from the truth to detract you from away from investigating these fraudulent, inflated invoices”. It said that the senior management of the Claimant were bullies and “extremely political and challenging”. It, again, referred to Ms Frew and Ms Yates being extremely clever in “covering up their actions and placing blame on people who have left”. It repeated the allegation that the defalcation gave rise to a discrepancy in excess of £300,000 and ended up by suggesting “a full thorough investigation be continued and appropriate action be taken for fraud”.

On 26th November 2012, the Claimant’s solicitors wrote to the Defendant setting out its complaints with regard to the two letters and requesting undertakings and an apology. The Defendant’s response, two days later, was to deny the responsibility for sending the letters and to state that she had never disseminated or published defamatory allegations about the Claimant. She stated that she had never provided defamatory material concerning the company: “I never have and I never will.”

On 4th December 2012, the Claimant’s solicitors wrote to the Defendant rejecting her denial that she had sent the two letters. They provided a suggested letter that they invited the Defendant to send, confirming that she had sent the letters and agreeing not to repeat what they said. However, the Defendant maintained her position that she was not responsible for the publication and hence, on 7th December 2012, these proceedings were issued. In response to the Claimant’s application for an interim injunction restraining repetition of the substance of the allegations, the Defendant provided an undertaking not to publish such words until trial or further order. The pleadings reflected the allegations which I have indicated. The Defendant denied that she had published or caused the publication of either of the letters. No Defence of justification was pleaded.

Matters came to a head when, on 19th February 2013, Master Kay ordered disclosure of the Defendant’s computer equipment with a view to its examination by an independent expert. The Defendant was ordered not to destroy, tamper with or delete any relevant data on the devices.

On 13th March 2013, such an expert attended the Defendant’s house to take appropriate imaging from computers associated with the Defendant. In due course, he published a report. I do not need to go into the report in great detail. In his final report, dated 15th April 2013, Mr Wright, the expert, stated that he considered that there was “substantial positive evidence which links the Defendant’s computers with the creation of the two letters to Debenhams”. There were two computers, one of which appears to have been the Defendant’s own and the other of which appears to be that of the Defendant’s daughter, although I should make it clear that there is no evidence or suggestion made by the Claimant that the daughter was improperly involved in these matters.

The evidence not only associated the computers with the two letters, it also provided clear evidence that, notwithstanding the order of the Master, on 12th March 2013, the day before Mr Wright went to the Defendant’s home to undertake this exercise, attempts had been made to delete documents from at least one of the computers and that, for this reason, applications had been downloaded.

This is an application under section 8 of the Defamation Act 1996. Accordingly, I must first consider whether I should grant summary relief, that is to say, decide initially whether it appears to me that there is no defence to the claim that has a realistic prospect of success and that there is no other reason why the claim should be tried.

At this hearing, I have been assisted by counsel representing the Claimant, Mr Matthew Nicklin QC and Miss Victoria Jolliffe. The Defendant does not attend and is not represented.

On 8th April 2013, the Defendant’s solicitors notified the Claimant that she “does not intend to continue defending the claim”. They also expressed the opinion that there was no need for summary judgment. Therefore, I have not heard from the Defendant or her representatives. However, my attention has been drawn to three letters sent by her solicitors. One is dated 7th February 2013, another dated 17th April 2013 and the third a recent letter dated 16th May 2013.

The only defence that was pleaded is that which I have indicated, that the Defendant did not publish and was not responsible for the publication of the two letters.

It is clear from the evidence of the expert that the Defendant’s computer and another computer in her home were associated with the letters. That in itself is some significant evidence, but it does not, to my mind, show conclusively that she was responsible for the publication. Added to that is the consideration that the Defendant left her employment in the circumstances that I have outlined and appears to have a motive to be vindictive towards the Claimant company and perhaps the two ladies to whom I have referred. That, too, is not, to my mind, conclusive. Her unhappiness about her treatment might have been relayed to others close to her, perhaps at her home, who might have taken it upon themselves to seek revenge on her behalf.

There is also the consideration that the Defendant has chosen not to defend these proceedings. Again, that might be explicable by her wish not to involve those close to her in litigation.

However, there are two further considerations which seem to me be adequate reason to set aside the perhaps unrealistic possibilities to which I have referred. Firstly, the letter attached to the July communication to Debenhams was a doctored version of a genuine email composed by Ms Frew expressing concern about JR. In its original form, it did not have the implications that it had in the doctored form in which it was sent to Debenhams, but the fact that the sender of the first letter had access to the undoctored version is clear evidence that it was the Defendant herself rather than anyone else at her home who was responsible for the publication of the first letter. I would add that the similar phraseology of the first and second letters make it clear that the second letter was sent by the same person.

The second conclusive point, to my mind, is that there are errors in the second letter which Ms Frew’s evidence makes clear are characteristic of the Defendant’s typing, specifically a tendency to write “where” rather than “were” and a misspelling of the word “defence”.

It seems to me that this is as clear a case as there could possibly be that the Defendant’s denial that she published the two letters was, in the case of each, untrue and that she has no real or realistic chance of succeeding in defending the action. The Claimant seeks summary judgment and, in those circumstances, to my mind, there is no other reason why the matter should go to trial.

That leads me to the question what relief, if any, I should order. What the Claimant seeks in its application is, firstly, two declarations to which I will refer in more detail shortly, secondly, damages and, thirdly, an injunction against repetition of the publication.

As far as the declarations are concerned, the meaning of the letters, which is pleaded as the “ordinary natural meaning of the defamatory words”, is, in the case of the second letter: (1) that the Claimant had:

“systematically inflated invoices and has thereby been guilty of a massive £300,000 fraud on Debenhams over a number of years”

and (2) that the Claimant had

“conspired to cover up the fraud during an investigation by Debenhams by (i) providing and/or instructing employees to provide false information to Debenhams, and (ii) withholding and/or instructing other employees to withhold evidence from Debenhams.”

The first declaration which is sought is that the words complained of in the first letter, the July letter, bore the meaning that I have indicated and that it was defamatory of the Claimant and false. The second declaration sought is a comparable declaration with regard to the November 2012 letter.

As I have already concluded, the Defendant did publish the letters. They were published to Debenhams and they were published anonymously. It seems to me that the meaning was clearly defamatory in the sense that I have indicated. I also conclude, without any doubt or qualification, that the letters, and specifically the meaning of the letters to which I have referred, were false. As I have already said, there is no plea of justification and there has at any no stage been any suggestion made by the Defendant that the allegations were true.

Secondly, to my mind, it is of significance that, in order to support the allegations, the Defendant resorted to manipulating, distorting, doctoring and falsely presenting a genuine communication by Ms Frew. Had there been any truth in the allegations, one would not have expected a whistleblower to have resorted to such tactics. That in itself belies the content of both the July and then the November letter.

Thirdly, there is every indication that the investigation conducted by the Claimant when Debenhams raised their concern was proper and thorough. The evidence of Ms Frew that the allegations were taken seriously and the Claimant was determined to be satisfied that there was nothing in them is evidence that the Court should accept.

Fourthly, there is the very fact that the Claimant opened its records to Debenhams. As far as the evidence before me goes, they did so willingly and sought to hide nothing from Debenhams.

Fifthly, there is Debenhams’ own audit. They, too, no doubt, would have taken a matter of this kind seriously. They sent in their audit team. There was no restriction on the documents to which they had access and no limit on their investigations. Their conclusions can draw a line under any residual doubt in that regard.

Accordingly, it seems to me that the Claimant is entitled to the two declarations that it seeks.

With regard to the injunction, the terms of the injunction reflect the declarations and also would prohibit the publication, disclosure or communication of any similar allegation defamatory of the Claimant. The only doubt that I had as to whether such an injunction should be made is that the chances of the Defendant, in view of the history of this matter, being minded to repeat her lies must, I would have thought, be remote. However, in view of her devious conduct in the past, it seems to me that the residual risk is sufficient to justify the injunction being made.

Before considering the question of damages, I mention that the draft order contemplated that the Defendant should be ordered to publish an apology. It seems to me that that would in any case have been unnecessary and certainly without her consent, which is not forthcoming, no such order should be made. There is the question as to whether she should be ordered to send a copy of this judgment, or a summary thereof, to Debenhams or individuals connected with Debenhams, but, in view of the terms of this judgment, that, too, seems to me unnecessary. I decline to make any order of that kind.

I come to the question of damages. Of course, it is the case that the Claimant is a company. Were individuals involved, an award of damages in defamation cases has three purposes: to compensate the damage to reputation; to vindicate the wronged person’s name; and to take account of distress and humiliation. With a corporate claimant the Court is concerned only with damage to the business. The third purpose of damages has no application.

This being the summary procedure, damages cannot exceed £10,000, but the established course in such cases as this is for the Court to consider what award of damages would otherwise be appropriate and then to apply the limit. It is not appropriate for the Court simply to say that it is clear that damages of at least £10,000 are appropriate and, therefore, that sum will be awarded.

The guidance as to what level of damages is to be awarded is scant. However, I have been assisted by Mr Nicklin by reference to such authorities as there appear to be. In particular, he drew my attention to the importance recognised by Tugendhat J in McLaughlin v Lambeth BC [2011] EMLR 8, in particular at paragraph 112, of fulfilling the purpose of vindication, even in a case where there has been limited publication. Part of the reason for recognising that purpose is that vindication prevents, or at least reduces, the risk of future publications of the words complained of, but that is only a part of the purpose. It is the very award of damages which provides a form of vindication which reduces the malignant and damaging effect of the wrongful publication. It seems to me to follow that the sum must be sufficient to support the Court’s concern that there should be a proper vindication of the Defendant in face of the defamation.

Although the publication was limited, it seems to me that, in this case, there are significant aggravating features. First, one must have some regard to the nature of the Claimant and its business. It has been established, as I have indicated, for between 25 and 30 years. It might be said to be in its first generation. It is not a business that has yet had the opportunity to build up for generations an established standing associated with integrity from which those with whom it is dealing would immediately recognise that any wrongdoing was entirely uncharacteristic of it. In that sense, it was vulnerable, perhaps, to this sort of attack. The same might be said of the size of the business, a business of only 500 employees, a business, one might suppose, controlled by a small band of senior executives, again, vulnerable in the sense that one would not suppose that any wrongdoing of this kind was confined to an aberrant area of the business, as one might in the case of a large corporation.

Second, one has to consider the gravity of the allegations, in the sense of them being allegations of criminal offences, in the sense of the extent and terms of the amount involved and in terms of the time over which the wrongdoing took place.

The third point to be taken into consideration is the nature of the recipients of both defamatory letters. The first letter was sent to three people at Debenhams: the divisional trading director, a senior external business manager and an employee involved with Debenhams Direct. The second letter was sent to the CEO of Debenhams and to non-executive directors. They were clearly targeted to do the maximum damage to the Claimant. Debenhams themselves were deliberately targeted because of their crucial importance to not only the prosperity but, it is clear, the survival of the Claimant business. The first was sent, at least in the case of two of the recipients, to senior persons.

The second letter itself was clearly sent when it appeared that the mischief which the first letter was designed to achieve had been dealt with by the investigation and the audit. The defamation was then repeated clearly with a view to seeking to reignite the flames. For that reason, it is not surprising perhaps that it was targeted to the chief executive officer and non-executive directors who, it might be supposed, were in the position of those who would be concerned to re-examine what had been done by the executives. It was designed, in short, to do the maximum damage.

Finally, as far as aggravating features are concerned, there is the presentation of the letters. They were, as I have indicated, headed “Whistleblower” or “Whistleblowing” and designed to clothe the sender as a well intentioned and indeed high minded person with genuine concerns.

Secondly, the content of the letters was such that it would appear to Debenhams that the sender had certain information. It did not have the appearance of a letter from what one might call a “madman on the street”.

Thirdly, in the case of the first letter, there was the supposed supporting material, the doctored version of the document created by Ms Frew.

Nevertheless, the Defendant’s solicitors have asked that it be drawn to the Court’s attention that they contend that there is “no basis for the award of general damages sought” and that “it is apparent that [the Claimant] has suffered no injury to reputation”.

It is true that the efforts of the Claimant in September and October 2012, together with the facilities they made available to Debenhams, are likely to have gone a long way to defeating the object of the Defendant to ruin the Claimant’s reputation with Debenhams and, I have no doubt, to bring down the company, but that does not mean that there was no damage done to its reputation. The difficulty with allegations of this kind is that, in reality, the damage can never be entirely undone and the Court can never know whose minds have been poisoned by such a publication.

Secondly, I bear in mind that the Court’s declarations and this judgment will go some way, I would suppose, to vindicate the Claimant’s reputation, but that, again, does not in itself provide sufficient vindication. As I have already indicated, the judgment itself, in order effectively to support the Claimant’s right to vindication, must pitch damages at a level appropriate to support its expression of concern that that end should be achieved.

I must, of course, maintain some sense of proportion in the essentially notional award of damages. To my mind, the proper award in this case is one of £75,000. That is subject to the cap in section 9(1)(c) of the Defamation Act 1996 and so the award will be one of £10,000. I, therefore, make the declarations in the terms that I have indicated, grant the injunction in the terms sought and I award damages in the sum of £10,000.

There is an application for costs and that they should be on an indemnity basis. The general rule is that the unsuccessful party pays the successful party’s costs. There is no reason to depart from that here. Accordingly, I order that the Defendant pay the Claimant’s costs.

As for the basis, the Court will not order indemnity costs unless there is something to take the matter outside the ordinary run of litigation which calls for the Court to respond by way of an award of indemnity costs. In my experience, it is not conventionally regarded as a sufficient basis to order costs on an indemnity basis that a party has lied in evidence, correspondence or pleadings. It might be that one day that position will be reviewed, but I do not think it is for me to challenge what I understand to be conventional. Nor does it seem to me that the position with regard to offers in correspondence justifies costs being assessed on the indemnity basis.

What does take this case outside the ordinary run of litigation is that the issue in the case cried out to be resolved by expert examination of the computer equipment. Master Kay made an entirely appropriate order, designed to cut through the central issue and to get to the truth. It is quite clear from the evidence before me that the Defendant sought to frustrate that and to mislead the expert by deleting material from her computer. Whether it could be said that she in fact deleted or damaged data so as to be in breach of the order of Master Kay might be a nice question. It seems to me, however, that, on any view, she did tamper with data and certainly she attempted to tamper with it. That, in my view, calls for the Court to respond with an order that costs be assessed on the indemnity basis.