Supreme Court partially allowed appeal, reducing exemplary damages from £250k to £100k while upholding general damages.

THE SUPREME COURT

APPEAL NO. 75/2004

DENHAM J.

GEOGHEGAN J.

KEARNS J.

BETWEEN

CROFTER PROPERTIES LTD

PLAINTIFF/APPELLANT

AND

GENPORT LIMITED

DEFENDANT/RESPONDENT

Judgment delivered on the 12th day of April, 2005 by Denham J.

1. This is an appeal by Crofter Properties Limited, the plaintiff/appellant, hereinafter referred to as ‘the plaintiff’, from the judgment

and order of the High Court made on 10th day of September, 2002 and 8th day of November, 2002, which was perfected on the 27th

day of January, 2004, to set aside the following parts of the High Court order:

(a) The award of IR£50,000 for general damages to the defendant.

(b) The award of IR£250,000 punitive or exemplary damages to the defendant;

(c) That the defendant be entitled to recoup interest on the sum of IR£300,000 at 8% per annum from the 23rd day of April

1996 to the date of the said judgment and order from the plaintiff and to set off same against the sums due by the defendant

to the plaintiff;

(d) The refusal of the plaintiff’s application for the costs of its claim against the defendant.

Genport Limited, the defendant/respondent, is referred to hereafter as ‘the defendant’.

2. There is a history of litigation between these parties over the last two decades. While it is not necessary to set out the previous

lengthy litigation between the parties it is appropriate to refer to the history insofar as to state that by lease dated 12th May 1981

the plaintiff demised premises known as Sachs Hotel for a term of 21 years from the 1st August, 1980 to the defendant. These

proceedings commenced as an application for ejectment. The defendant delivered a counterclaim with its defence claiming damages

and a set off. This judgment relates solely to the four grounds raised on this appeal by the plaintiff from the previously stated High

Court judgment and orders.

3. The case was remitted by the Supreme Court to the High Court to assess damages, to determine the defendant’s right to set off

and its right to relief against forfeiture. On the 10th September, 2002 the High Court (McCracken J.) delivered judgment. I shall

consider each of the issues raised on this appeal separately. As indicated by counsel for the plaintiff, however, the primary grounds of

appeal relate to the sums awarded in damages.

False Information

4. The defendant’s claim for damages for defamation arises from a series of telephone calls. False information was received from an

English Police Force who had received information from an anonymous woman on the telephone. The essence of the false information

was that both Mr. Philip Smyth and his brother Chief Superintendent Paul Smyth were actively assisting the I.R.A. in laundering drug

money through Sachs Hotel. Caroline Devine denied making the phone calls. However, on 23rd April, 2002 the High Court held that the

telephone calls had been made by Caroline Devine, who was a secretary to, and director of, the plaintiff, and who worked with Hugh

Tunney, the principle shareholder of the plaintiff. On appeal the Supreme Court held that these telephone calls had been made on

behalf of and for the benefit of the plaintiff. Further, that while the defendant was not mentioned by name, the Supreme Court held

that the words be deemed to refer to the defendant.

General Damages

5. The High Court held, on the issue of general damages, as follows:

“There is no express evidence of actual loss suffered by the defendant as a result of the allegations in the telephone calls made

by Caroline Devine. However, there is certainly general evidence that the morale of the staff in Sachs Hotel was affected, and

also general evidence that members of the Gardaí Síochána were frequent customers of the hotel and may have been affected.

It must be remembered that the defendant is a company, and a company of itself is not capable of having feelings which can be

injured by false allegations. However, a company does have a reputation, and that reputation can be injured, and I believe I am

certainly entitled to infer in the circumstances of this case that there probably was some injury to the reputation of the

company, and some loss of efficiency of its staff by reason of these allegations. However, I fully accept the arguments on

behalf of the plaintiff that this is not a comparable situation to, for example De Rossa v Independent Newspapers [1999] 4 I.R.

432, where similar very serious allegations of criminal offences and indeed of acts against the State were made in a Sunday

newspaper. The publication in this case was to members of the South Eastern Regional Crime Squad in the United Kingdom, but

with the clear intention, and knowledge, that the allegations would be repeated by that authority to the Garda authorities in

this country, and I think with the equally clear intention that they would be acted on by the Garda authorities.”

Having considered the judgment of the Supreme Court the learned High Court Judge held that on those findings it was the plaintiff’s

intention to damage the defendant in the hotel trade. He held that the plaintiff was entitled to substantial general damages based on

the likelihood of loss of various kinds, including reputation, and he assessed general damages at IR£50,000.

6. Counsel on behalf of the plaintiff, Mr. Eoin McGonigal S.C., submitted that the award of general damages was excessive. He

submitted that: (i) Genport Limited was not referred to in the information; (ii) that there was no evidence at all as to any damage

suffered by the plaintiff, and, (iii) that the publication was to a very limited class of person.

7. The law provides that the plaintiff is entitled to an award of general damages such as will fairly and reasonably compensate the

plaintiff for the wrong suffered: De Rossa v Independent Newspapers [1994] 4 I.R. 432 at 463; John v MGN Limited [1997] QB 586 at

607; Barrett v Independent Newspapers Limited [1986] I.R. 13 at 23. On this aspect of the appeal the plaintiff has raised three

specific issues and I will consider each separately.

8. The first issue raised in this ground of appeal has been decided already by this Court: [2002] 4 I.R. 73, where at p. 91 Murray J.

(as he then was) stated:

“The High Court Judge appears to have attached importance to the fact that only one express reference to the defendant by

name is to be found in one allegation as recorded by the English police. It must be noted that this reference to the defendant

by name is contained in a summary of what had been communicated to the English police in more than one phone call. However,

I consider this to be significant evidence of an express attempt to damage the reputation of the defendant.”

I am satisfied that the plaintiff may not revisit this as a substantial issue.

In reaching this decision I bear in mind that there was specific reference to Sachs Hotel (albeit that it was misspelt.). A relevant

reference was in the document, dated 26th October, 1992, to Detective Chief Superintendent from Assistant Detective Inspector

Stephen Condon, which relates to confidential information. In the report it is stated, inter alia,

“[-] allegedly is part of a money laundering operation on behalf of the I.R.A. The source states that a lot of funds are ‘cleansed’

through an Irish company called PRINCETON LIMITED. This company apparently owns hotels and clubs in Dublin including Saks

[sic] Hotel and the Hippodrome.

One of the directors of PRINCETON is called Philip SMITH who is allegedly known to _____________. Johnston. … His brother and

co-director is Paul SMITH. Paul SMITH is allegedly a member of the GARDA and until recently the Superintendent in charge of

Personnel at Phoenix Park. He has recently been promoted to Chief Superintendent and posted to Portleish [sic] …”

In reaching the decision that the plaintiff may not revisit this issue I bear in mind the facts as found by the High Court and this Court

and the relevant law. The relevant test is set out in Gatley on Libel and Slander, (8th Ed., London 1998) p. 161-163, which was cited

to the High Court and which I adopt as the correct approach:

“The test is whether the plaintiff may reasonably be understood to be referred to by the words. … ‘The test of whether words

that do not specifically name the plaintiff refer to him or not is this: Are they such as reasonably in the circumstances would

lead persons acquainted with the plaintiff to believe that he was the person referred to? That does not assume that those

persons who read the words know all the circumstance or all the relevant facts…’

As a consequence of the earlier decision of this Court, I am satisfied that the absence of specific references to the plaintiff is not a

matter to nullify the award of general damages. However, I do consider this a factor in the assessment of the damages.

9. As to the lack of evidence of actual damage suffered, this is not fatal to the claim for general damages. The learned trial judge

identified negative effects, as quoted above. I am satisfied that the learned trial judge was entitled to infer, for example, a negative

impact on the trade of the company from the facts so found, and an injury to the reputation of the company.

10. The third issue on this ground of appeal was the submission on behalf of the plaintiff that publication was only to a very limited

class of persons and that damages should be reduced accordingly. While the publication was limited, i.e. in contrast to publication by

a newspaper, it was published to an important group – police officers. Further, it could be envisaged, and it did happen, that this

information would then proceed to other police forces, including to members of the Garda Síochána. The consequences of publication

of such false information to such a group would be serious and disproportionate to the number of people to whom it was published.

Indeed, a significant part of the information given to the Garda Síochána was investigated by them and found to be without

foundation. I am satisfied that the fact that the publication was to this limited number of people is not a ground to reduce the award

of general damages given the influential people to whom it was published and the fact that the publication was made with a view to

damaging the defendant.

11. In considering the award of IR£50,000 for general damages, the analysis must take place in the context of an appellate court.

While in most cases of defamation the award is made by a jury and an appellate court would be slow to intervene, that jurisprudence

remains relevant in a case, such as this, where a judge has tried extensively relevant matters between the parties, has heard the

evidence, and has made the award. An appeal court should intervene only with diffidence. In all the circumstance of this case for the

reasons stated I am not satisfied that the plaintiff has raised grounds upon which an appeal court should intervene in the award of

general damages. Consequently, I would dismiss this ground of appeal.

Exemplary or Punitive Damages

12. The High Court

The High Court held that the telephone calls were made maliciously, and, referring to the decision of this Court, with the intention of

causing damage; that the behaviour of Caroline Devine, and of the plaintiff, was quite beyond the bounds of normal civilised behaviour

and far outside any accepted commercial relationships. Further, the learned trial judge held that it was calculated to damage the

defendant unlawfully, and, through unlawful means, to gain a benefit for the plaintiff. The High Court inferred that the allegations

were made to police authorities in the United Kingdom rather than Ireland because giving false and misleading information to a police

authority is a criminal offence. The High Court had no doubt that Caroline Devine, and possibly the plaintiff, committed a criminal

offence in the United Kingdom, which is not punishable in this jurisdiction. However, the High Court made it clear that it was not

holding that the plaintiff or Caroline Devine committed no criminal offence in Ireland.

The High Court reviewed the legal authorities and held:

“In the present case the plaintiff did concoct or attempt to concoct a malicious prosecution against the defendant and did

attempt to pervert the course of justice. Furthermore, it did so for the purpose of its own commercial advantage and in an

attempt to prevent or restrict the defendants rights under the landlord and tenants legislation.”

13. The High Court held that the intention of “punitive” or “exemplary” damages is either to punish or make an example of the guilty

party, and that if the conduct of the guilty party is such as requires them to be punished or made an example of, then the damages

should be awarded on that basis and without regard to the possibility of a windfall for the innocent party. A further factor taken into

consideration in assessing exemplary damages was that Caroline Devine, who made the telephone calls, gave false evidence on oath.

The learned trial judge held also that he was entitled to have some regard to the financial position of the parties. He stated:

“I think I also must have some regard to the guidelines laid down by the Supreme Court in regard to general damages for

defamation, as I think it would be wrong that the court would award a higher figure in exemplary damages than it would ever

award for general damages. However, this is an extremely bad case and is one in which there must be some very substantial

penalty imposed on the plaintiff. I will propose to assess exemplary damages of IR£250,000.”

Submissions

14. While counsel on behalf of the plaintiff made submissions as to the amount of the award of exemplary damage it was not argued

(and correctly so in my view) that exemplary damages did not flow from the facts. Rather, counsel submitted that the sum of

IR£250,000 was excessive, and, taken with the figure for general damages, when considering the totality, the figure of IR£300,000

was excessive. Counsel referred to the sums awarded in De Rossa v. Independent Newspapers [1999] 4 I.R. 432, McIntyre v Lewis

[1991] 1 I.R. 121, and others. Counsel for the defendant submitted that there had been an express finding by this Court that the

allegations were calculated to damage the defendant. It was submitted that it was a coldly calculated defamation, with intent to

damage. It was submitted that there was blatant perjury upon which the plaintiff never responded or explained, and that the Court

should not intervene in the award.

Appellate Jurisdiction

15. An appellate court is slow to intervene with an award by a jury in a defamation cases. However, having applied carefully the

appropriate test, the Court has jurisdiction to review and intervene. In this case, because of the circumstances, the claim for

damages for defamation came on for hearing before a judge sitting without a jury. The learned trial judge had extensive knowledge of

the parties in this case, from both the litigation in this case and from previous litigation. In view of the circumstances the trial judge

was in a good position to evaluate the case. Consequently, while the award of the High Court in such circumstances is subject to

review, I am satisfied that an appeal court should be slow to interfere and should apply , by analogy, the jurisprudence applicable

when the decision has been made by a jury.

The Law

16. The law as to the level of the award of exemplary damage was addressed by Stephenson LJ in Riches and Ors. v Newsgroup

Newspapers Limited [1986] 1Q.B. 256 where at p. 269 to 270 he stated:

“… the relevant law is concisely, correctly and comprehensively stated better than I could hope to state it on one page in the

current edition of Duncan and Neill on Defamation, 2nd Ed. (1983), paragraph 18.27, p.136:

“… (c) if the case is one where exemplary damage can be awarded the court or jury should consider whether the sum which it

proposes to award by way of compensatory damages is sufficient not only for the purpose of compensating the plaintiff but also

of the purpose of punishing the defendant. It is only if the sum proposed by way of compensatory damages (which may include

an element of aggravated damages) is insufficient that the court or jury should add to it enough ‘to bring it up to a sum

sufficient as punishment’ … (f) A jury should be warned for the danger of an excessive award. (g) The means of the parties,

through irrelevant to the issue of compensatory damages, can be taken into account in awarding exemplary damages.”

The law in relation to exemplary damages was addressed recently in O’Brien v Mirror Group Newspapers Ltd. [2001] 1 I.R. 1 at p. 22:

“As was made clear by the House of Lords subsequently in Broome v. Cassell & Co [1972] A.C. 1027, a plaintiff in an action for

defamation who established that the defendant has published the words complained of because of a calculation that the profits

resulting from the publication would exceed any damages he might have to pay would be entitled to exemplary damages since

the case would come within this category. Since, as held by this court in Conway v. Irish National Teachers Organisation

[1991] 2 I.R. 305, the jurisdiction of the court to award exemplary damages is not confined to the three categories referred to

by Lord Devlin, it would follow that there may be other cases in which such damages could be awarded, e.g. where there was

an intention to publish defamatory matter which was intended to refer to the plaintiff and which was known to be false. In the

case of such a calculated breach of the constitutional right of the plaintiff to his good name, it might well be that, in the light

of Conway v. Irish National Teachers Organisation, a plaintiff would be entitled to exemplary damages. In the present case,

there is nothing to indicate that the defendants published the offending article intending to defame the plaintiff and in the

knowledge that it was untrue. I am satisfied that the trial judge was, accordingly, correct in her decision not to leave the issue

of exemplary damages to the jury.”

17. I adopt and apply the law as stated above. It is clear that on the findings of fact of the High Court, and the Supreme Court on

the previous appeal, that this is a case where exemplary damages are appropriate. The only issues, therefore, for determination are

whether there should be an intervention in the decision of the High Court as to the level of the award, and, if so, what is the

appropriate award.

18. As stated previously, I am satisfied that there should be no intervention in the award of IR£50,000 for general damages, and thus

the issue for determination is the sum of IR£250,000 exemplary damages. This is a very serious defamation and on the facts it is

appropriate that there be an award of exemplary damages. The assessment of the award of exemplary damages should be made with

the award of IR£50,000 also in mind, as the totality of the award of damages should be proportionate to the circumstances. Other

relevant factors include: (i) the fact that the defendant is a corporation, not a human person; (ii) the nature of the publication and

the extent of the publication; (iii) the absence of express evidence of actual loss suffered by the defendant; (iv) the conduct on

behalf of the plaintiff which, as the learned High Court judge held, was quite beyond the bounds of normal civilised behaviour and

quite outside accepted commercial relationships to gain benefit for the plaintiff. Such an award should not be excessive but should be

sufficient to punish the behaviour on behalf of the plaintiff to intentionally publish defamatory matter of the defendant. Given the

jurisprudence on the level of awards by this Court I am satisfied that the sum of IR£250,000 is excessive. In arriving at this decision I

have considered especially De Rossa v Independent Newspapers [1999] I.R. 432; McDonagh v News Group Newspapers Ltd

(Unreported, Supreme Court, 23rd November, 1993); Barrett v Independent Newspapers [1986] I.R. 13. I am satisfied in all the

circumstances, that the award is so disproportionate to the injury suffered and the wrong done that no reasonable court would have

made such an award.

In these circumstances I next determine what is a fair and reasonable sum. Considering all the facts and circumstances of the case,

in the context of the jurisprudence on the awards of damages, I consider that the appropriate level of exemplary damages is

IR£100,000. Viewing this sum together with the sum of IR£50,000 for general damages, I consider that the total of IR£150,000 is a

just, reasonable and proportionate sum. Accordingly, I would allow the appeal of the plaintiff on this ground and substitute for an

order of IR£250,000 exemplary damages an order for IR£100,000 damages. This means that the order would be for an award of

IR£50,000 general damages and IR£100,000 exemplary damages.

Recoupment of Interest

19. The High Court held:

“… I have granted a stay over the years on a judgment for the agreed sum due to the plaintiff of IR£588,605.41 subject to the

defendant paying interest on that sum. As I am now finding that the correct sum due is IR£288,605.41, the defendant has been

paying interest on IR£300,000 from 23rd April 1996 to date. As that IR£300,000 was not due, the interest payments should only

have been calculated on the balance of IR£288,605.41, and the defendant should be given credit for overpayment of interest.

The amount due by the defendant to the plaintiff will, therefore, be the sum of IR£288,605.41 less the overpayment of

interest.”

Counsel submitted that this decision of the learned trial judge came as a surprise to the plaintiff as the issue had not been the

subject of legal argument and that the sum is significant (on the award of IR£300,000 by the High Court being IR£144,000). It was

submitted that the High Court did not have jurisdiction to make such order.

This was not the most significant ground of appeal pressed by the plaintiff. It related back to monies ordered to be paid by the High

Court at an interlocutory stage of the proceedings between the parties and an order on the final hearing in the High Court. I am

satisfied that the High Court had jurisdiction to make such an order in light of the findings at the trial of the action. The High Court

was entitled to make such an order, bearing in mind that the interlocutory order was to retain the status quo. In light of the findings

at the trial, the High Court held that the monies paid on the interlocutory order were excessive in light of the final order and may be

adjusted accordingly. I am satisfied that the High Court had jurisdiction to make such an order.

However, given the success of the plaintiff on this appeal in relation to the award of exemplary damages, the relevant sum will now

be different. Thus, for the sum of IR£300,000 should be replaced the figure of IR£150,000. Traversing the words of the High Court,

with the new figure, the finding would be:

“… I have granted a stay over the years on a judgment for the agreed sum due to the plaintiff of IR£588.605.41 subject to the

defendant paying interest on that sum. As I am now finding that the correct sum due is [IR£438,605.41], the defendant has

been paying interest on [IR£150,000] from 23rd April 1996 to date. As that [IR£150,000] was not due, the interest payments

should only have been calculated on the balance of [IR£438,605.41] and the defendant should be given credit for overpayment

of interest. The amount due by the defendant to the plaintiff will, therefore, be the sum of [IR£438,605.41] less the

overpayment of interest.”

While I have determined the principle to be applied in this instance, I would hear counsel on this matter as to the actual sums

involved, if they so wished.

Cost order in the High Court

20. The plaintiff has also appealed against the refusal of the High Court to award to the plaintiff the costs of its appeal against the

defendant.

It is clear that when the issue of costs arose in the High Court both sides were given the opportunity to make submissions and to

have their argument on the matter heard. Having heard counsel for both parties the High Court made no order for costs to the

plaintiff.

It is unfortunate that no reasons were given. Such an approach is not best practice. However, I would not intervene on this ground

alone.

In this case there had been a very full hearing of the case (and previous related litigation between the parties) before the trial judge.

It is plain from the written reserved judgment that the trial judge had considered all aspects of the case and was fully aware of the

nature of the disputes between the parties. He expressed also his clear opinion of the behaviour of the parties. Nothing which has

been determined by this Court interferes with those findings.

While the usual order is that costs follow the event, the Court has a discretion. The claim of the plaintiff has to be viewed in light of

all the circumstances of the case, which included the behaviour of the plaintiff and the extensive proceedings on the counterclaim.

In all the circumstances of the case I am not satisfied that an error in principle of the High Court decision on costs has been

identified. Consequently, I would not intervene in this order on costs of the High Court.

Conclusion

21. In conclusion, on the appeal by the plaintiff from the judgment and order of the High Court, as to the four parts of the High Court

order sought to be set aside, for the reasons stated, I would order:

(a) That the award of IR£50,000 for general damages to the defendant not be set aside;

(b) That the award of IR£250,000 exemplary damages to the defendant be set aside and in place order an award ofIR£100,000

exemplary damages;

(c) That the defendant be entitled to recoup interest on the sum of IR£150,000 at 8% per annum from the 23rd day of April,

1996, to the date of judgment and order from the plaintiff and to set off same against the sums due by the defendant to the

plaintiff;

(d) That there be no intervention in the order of the High Court refusing the plaintiff’s application for the costs of its claim

against the defendant.