[COURT OF APPEAL]

CONTROL RISKS LTD. AND OTHERS v. NEW ENGLISH LIBRARY LTD.

AND ANOTHER

Libel and Slander - Pleadings - Fair comment - Facts in book alleged to be defamatory of plaintiffs - Defence of fair comment - Particulars of comment relied on to be given

The plaintiffs, who specialised in the giving of advice to representatives of kidnap victims, brought an action for defamation against the first and second defendants, the publisher and author respectively, of a book entitled "The Financing of Terror," one of the themes of which was that the business of insuring potential victims against the risk of kidnap was contrary to the public interest. The plaintiffs alleged that certain words in that book in their natural meaning meant that the plaintiffs (a) regularly obstructed the counter-terrorist work of law-enforcement agencies; (b) conducted unlawful kidnap negotiations in Italy; and (c) exploited the threat of terrorism for profit so as to be as worthy of punishment as someone harbouring a gunman on the run. In an amended defence the defendants, without pleading justification, denied that the words complained of bore the meanings alleged and, without particularising the specific comment on which they relied,

pleaded that in their context they were "fair comment upon a matter of public interest, namely, kidnapping and the role and use of insurance in relation thereto." The plaintiffs unsuccessfully applied to the master to strike out that plea as disclosing no reasonable defence but, on appeal, the judge ordered that it be struck out.

On appeal by the defendants: -

Held, allowing the appeal, that a defendant relying on the defence of fair comment had to plead with sufficient precision the comment relied upon as constituting the defence so that the plaintiff knew the case that he had to meet; that whether the words complained of included comment on a matter of public interest or whether they were capable of being distinguished from statements of fact were issues to be left to the jury to decide; and that, therefore, the defence of fair comment would be restored subject to the defendants pleading the matters that they relied on as fair comment in similar form to the way it was set out in their skeleton argument prepared for the hearing of the appeal (post, pp. 189B, C-D, H - 190C, 191B-C).

Lucas-Box v. News Group Newspapers Ltd. [1986] 1 W.L.R. 147, C.A. applied.

Order of Rougier J. reversed.

The following cases are referred to in the judgment of Nicholls L.J.:

De L'Isle (Viscount) v. Times Newspapers Ltd. [1988] 1 W.L.R. 49; [1987] 3 All E.R. 499, C.A.

London Artists Ltd. v. Littler [1969] 2 Q.B. 375; [1969] 2 W.L.R. 409; [1969] 2 All E.R. 193, C.A.

Lucas-Box v. News Group Newspapers Ltd. [1986] 1 W.L.R. 147; [1986] 1 All E.R. 177, C.A.

The following additional cases were cited in argument:

Atkinson v. Fitzwalter [1987] 1 W.L.R. 201; [1987] 1 All E.R. 483, C.A.

Broadway Approvals Ltd. v. Odhams Press Ltd. [1965] 1 W.L.R. 805; [1965] 2 All E.R. 523, C.A.

Morgan v. Odhams Press Ltd. [1971] 1 W.L.R. 1239; [1971] 2 All E.R. 1156, H.L.(E.)

Polly Peck (Holdings) Plc. v. Trelford [1986] Q.B. 1000; [1986] 2 W.L.R. 845; [1986] 2 All E.R. 84, C.A.

Prager v. Times Newspapers Ltd. [1988] 1 W.L.R. 77; [1988] 1 All E.R. 300, C.A.

Truth v. Avery [1959] N.Z.L.R. 274

Waters v. Sunday Pictorial Newspapers Ltd. [1961] 1 W.L.R. 967; [1961] 2 All E.R. 758, C.A.

INTERLOCUTORY APPEAL from Rougier J.

By a summons issued in the Queen's Bench Division on 6 January 1988 the plaintiffs, Control Risks Ltd., Control Risks Group Ltd., Arish Turle and Simon Adams-Dale, applied for an order that paragraph 7 of the amended defence served on 18 December 1987 by the defendants, New English Library Ltd. and James Adams, be struck out as disclosing no reasonable defence, alternatively under the inherent jurisdiction of the court. Paragraph 7 began:

"Further and alternatively the [words complained of] in the context in which they were published (namely chapter 8 of the book, headed 'The Snatch Business') were fair comment upon a matter of public interest, namely kidnapping and the role and use of insurance in relation thereto"

and continued, by way of particulars, with nine paragraphs of assertion of facts. On 19 April 1988 Master Prebble dismissed the application. On 27 October 1988 Rougier J. allowed the plaintiffs' appeal from the master's order, on the ground that viewing the book as a whole, comments therein were inseparable from assertion of fact and that to allow paragraph 7 to stand "would by-pass the authority of Truth v. Avery [1959] N.Z.L.R. 274 and would allow the defence of fair comment to be used as a 'currant bun' defence stuffed with assertions of fact." The judge gave leave to appeal.

By a notice of appeal, dated 27 October 1988, the defendants appealed to the Court of Appeal on the grounds, inter alia, that (1) they were entitled to plead to any defamatory sting of the words complained of which a jury, properly directed, could find that the words in their context bore; (2) the proper tests to be applied were whether a jury, properly directed, could find that the defamatory sting of those words was, in context, a comment; and if so, whether the comment contended for by the defendants was one which a jury, properly directed, could find was conveyed by those words; (3) if those tests were satisfied, the next test was whether a jury properly directed could find that the facts pleaded in support of that comment were facts on which an honest and fair-minded man could base that comment; (4) those words contained statements of fact which the defendants were unable to say were true did not matter, provided there was a substratum of fact, which a reasonable jury could find sufficient to support the pleaded comment; (5) a statement of fact gave rise to a defamatory sting did not mean it was a defamatory statement of fact; the sting might be a comment; (6) in order to strike out the pleaded defence of fair comment it was necessary for that defence to be unarguable.

The facts are stated in the judgment of Nicholls L.J.

Richard Rampton Q.C. and Thomas Shields for the defendants.

Stephen Suttle for the plaintiffs.

29 June. The following judgments were handed down.

NICHOLLS L.J. Terrorism, and the kidnapping of innocent victims by terrorists, are seldom out of the news. In 1986 Mr. James Adams wrote a book on the subject, called "The Financing of Terror." The book was published by New English Library Ltd. It is from this book that this defamation action has arisen. One of the themes of the book was that the business, which has grown up in recent years, of granting insurance policies against the risk of kidnap was undesirable and contrary to the public interest. The reason put forward was that the payment of ransoms with money provided by insurance policies finances terrorism and serves to encourage further kidnappings. Something of the flavour of the outspoken criticisms expressed in the book can be gleaned from an extract from chapter 10, pp. 247-248:

"There has also been a regrettable tendency to exploit the threat of terrorism for simple profit without thought of the consequences. An example of this is Lloyd's of London, which has led the field in establishing an insurance market for those who are threatened with

kidnapping by terrorists. This has proved extremely profitable for Lloyd's and for other companies that have jumped on the bandwagon. Kidnapping for ransom has also become an extremely profitable and regular source of income for terrorists around the world, and it has become a business where the terrorists do not suffer, only the victims themselves and society at large.

"There are professional negotiators on both sides; the kidnap victim claims back the ransom on his/her insurance; and the insurers are happy to pay out on the odd policy since the whole scheme is so immensely profitable. Unfortunately, it is not simply a matter of a little kidnapping. Every ransom paid has a multiplying effect on the terrorist groups that have received the money. Gunmen come cheap, and with no taxes to pay, much of the income can be reinvested in projects that will bring in a steady long-term income.

"It is not good enough for big business to wash its hands of responsibility: they have a role to play in the fight against terrorism that, in many respects, is as important as that played by police forces and army counter-terrorist specialists. However, for business to be persuaded to act, they have to be supplied with information and that can only come from government-supplied intelligence.

"There has been a tendency to divorce a government's fight against terrorism . . . while in some instances, for reasons that it justifies simply by pointing to improved profits, business is actually underwriting the growth in international terrorism. This should not be tolerated. In the same way as industry has the right to protection from the assaults of terrorists, so society has the right to expect that the business world will act responsibly in dealing with terrorists. Those companies that exploit terrorism for their own ends should be penalised in exactly the same way as a person who harbours a gunman on the run."

Control Risks Ltd. is mentioned by name in the book, and with some prominence. It is a company which provides specialist security services. It gives advice to the families, representatives and employers of kidnap victims on how the demands of kidnappers should be dealt with. Control Risks took the view that it was defamed by certain passages in the book. Hence this libel action brought by Control Risks, its parent company, its managing director, and the head of its prevention services division.

There are several passages in the book of which complaint is made. I must set them out in full:

"The boom in the kidnap business led Lloyd's, who are not usually known for their direct involvement in the more exotic end of the insurance market, to sponsor their own private counter-terrorist, anti-kidnap squad - Control Risks Ltd. . . . Control Risks' three founders were men whose backgrounds accurately reflect the current status of the organisation: Arish Turle, a former officer in the Royal Greenjackets regiment . . ." p. 194.

"In fact, Control Risks and the other rival companies that have sprung up in recent years have managed to operate with remarkable freedom in extremely delicate matters with the minimum of government interference, even though some of their methods may actually do considerable damage to the work of counter-terrorists around the world:" p. 195.

"Depending on the level of insurance that has been taken out, the response to a kidnapping varies. At the highest level a team - generally two people - will fly to the nearest city and take over the negotiations with the kidnappers from the family. This periodically brings them into conflict with the local police, who tend to want to set traps to catch the terrorists, while the negotiators have a different priority: to get the hostage free at the minimum cash cost:" p. 197.

"The British intelligence assessment is that there will shortly be another major kidnapping, only on this occasion the victim will be shot soon after being captured, with the I.R.A. blaming the shooting on the police or the victim. This will be followed almost immediately by further kidnapping, and this time, the I.R.A. believe, the negotiations will be swift and the money will be paid. If the security assessment is correct, then the outlook for Ireland is bleak. Experience elsewhere in the world has been that, when terrorists embark on a major kidnapping campaign, they are swiftly imitated by more run-of-the-mill gangsters, and a minor problem soon becomes an epidemic. With the growth in the number of kidnaps will come the increasing involvement of companies such as Control Risks . . ." p. 209.

"From the terrorist's point of view, kidnapping becomes especially attractive when all negotiations are done out of sight of local law enforcement agencies, which in turn must reduce the chances of capture. The cosy relationship that has built up in many countries between negotiator and terrorist, where the independent negotiator simply moves in to seal the bargain, has done immense damage to counter-terrorism:" p. 210.

"Italy has already banned kidnap negotiators from operating on its territory, and that seems to have made no difference whatsoever. Most kidnap victims are insured, and negotiators still carry on business as usual, although with slightly more discretion:" pp. 210-211.

The remaining two passages complained of comprise the first three sentences, and the last sentence, in the extract from chapter 10 set out above.

The plaintiffs' case is that in their natural and ordinary meaning the words of which complaint is made mean:

"(1) That the plaintiffs and each of them regularly and deliberately obstruct the counter-terrorist work of local police and law-enforcement agencies, and have in consequence done immense damage to such work; (2) that the plaintiffs and each of them conduct kidnap ransom negotiations in Italy, notwithstanding that such a practice is unlawful; (3) that the plaintiffs and each of them exploit the threat of terrorism for simple profit without thought of the consequences, and are for this reason as worthy of punishment as someone who harbours a gunman on the run."

The plaintiffs also allege that the words complained of mean that it is the policy of the plaintiffs to conduct negotiations and to obstruct the counter-terrorist work of law enforcement agencies, in particular in the case of acts of kidnapping perpetrated by the Irish Republican Army,

even though such practices amount to criminal offences under the Prevention of Terrorism (Temporary Provisions) Act 1984.

In their defence the defendants deny that the words bear these meanings. They also deny that, save where they are expressly identified by name, the plaintiffs are being referred to in these words. The defence contains no plea of justification, but paragraph 7 raised the defence that the words complained of, read in their context in the book: "were fair comment upon a matter of public interest, namely kidnapping and the role and use of insurance in relation thereto." This defence of fair comment was struck out by Rougier J. on 27 October 1988. By the appeal now before the court the defendants are seeking to restore this ground of defence.

Particulars were given in paragraph 7(i) to (ix). I can summarise the effect of these sub-paragraphs. Between 1968 and 1978 an estimated $250m. was paid by way of ransom to kidnappers. Many of these kidnappings were by terrorist groups who used the ransom money to finance their future operations. The growth of kidnapping in the early 1970s led to an increase in the number of insurance policies taken out to protect the insured, often a corporation, against the risk of kidnapping. In 1973 Control Risks was formed in response to what was regarded as a potential market for advisers to insurers and to their clients. Control Risks' business has grown substantially. Control Risks has, in relation to the underwriting of kidnap and ransom insurance, a close relationship with Cassidy Davis, one of the principal syndicates underwriting such insurance at Lloyd's. Of the total world premium income of some $65m., 60 per cent. is underwritten at Lloyd's. Since the late 1970s Control Risks

"has been actively involved in . . . playing a major role (once a kidnap has taken place) in securing the release of the kidnap victim for the payment of the minimum amount of ransom"

(sub-paragraph (vi)).

One of the policies issued at Lloyd's provides for underwriters to instruct Control Risks to render every reasonable assistance to the assured in an advisory capacity to secure the safe release of the insured person and conduct the negotiations so that the person is released on payment of the lowest sum practicable. Between 1976 and 1986 Control Risks has been involved in 100 cases where negotiations took place for the release of a kidnap victim. Italy, El Salvador and Germany have declared illegal the underwriting of kidnap and ransom insurance on the grounds that it is against the public interest and encourages potential kidnappers. Control Risks advised the employers of Mr. Don Tidey who was kidnapped in Eire in 1983. He was subsequently released without payment of a ransom.

In January 1988 the plaintiffs applied to strike out paragraph 7 as disclosing no reasonable defence. Master Prebble dismissed the summons. The judge reversed that decision. He held that the words complained of were a mixture: the jury might well conclude that some passages were no more than comment and that other passages contained defamatory statements of fact. In his view the comments were inseparable from the assertions of fact which, as I have already noted, are not sought to be justified. He considered that there was too much allegation of fact not sought to be justified, even though comment was also present, and that

to allow the defence of fair comment would be to permit fair comment to be used as a "currant bun" defence stuffed with assertions of fact.

In my view the starting point is to identify the comment the defendants say is to be found in the words complained of and which they are seeking to defend as fair comment. At once one runs into difficulty with the pleading as drafted. Nowhere in paragraph 7 or the particulars given thereunder does the pleader identify this comment. This is manifestly unsatisfactory. A plaintiff is entitled to know what case he has to meet under a defence of fair comment just as much as he is entitled to know what case he has to meet when faced with a defence of justification. Where justification is pleaded, a defendant is now required to spell out in his pleading the meaning of the words, which if it is their true meaning, he will seek to justify. These are the so-called "Lucas-Box" particulars: see Lucas-Box v. News Group Newspapers Ltd. [1986] 1 W.L.R. 147, 153, and the observations of Mustill L.J. in Viscount De L'Isle v. Times Newspapers Ltd. [1988] 1 W.L.R. 49, 60. In my view by parity of reasoning, when fair comment is pleaded the defendant must spell out, with sufficient precision to enable the plaintiff to know what case he has to meet, what is the comment which the defendant will seek to say attracts the fair comment defence.

No doubt there may be very simple cases where the position is obvious and a plaintiff, confronted with a plea of fair comment, will need no further guidance on what is the comment to which the plea is directed. That is not the present case. However, the defendants have now spelled out their case in writing in their skeleton argument, in these terms:

"The commercial activities of the plaintiffs in being involved in negotiating and/or securing the release of kidnap victims for ransom in cases where the victims are insured against kidnap are contrary to the public interest because they tend to encourage kidnapping and are therefore detrimental to the cause of counter-terrorism."

Mr. Suttle submitted that the plea of fair comment is bound to fail in this case. The plea of fair comment protects comment, not statements of fact. The plea cannot succeed unless the comment is recognisable as comment. In this book, he submitted, it is impossible to disentangle defamatory statements of facts from comment. He relied on some observations of Edmund Davies L.J. in London Artists Ltd. v. Littler [1969] 2 Q.B. 375, 395:

"It behoves a writer to indicate clearly what portions of his work are fact and what are comment, for, in the words of Fletcher-Moulton L.J. in Hunt v. 'Star' Newspaper Co. Ltd. [1908] 2 K.B. 309, 319: '. . . comment in order to be justifiable as fair comment must appear as comment and must not be so mixed up with the facts that the reader cannot distinguish between what is report and what is comment: see Andrews v. Chapman (1853) 3 C. & K. 286.' Failure to exhibit clarity in this respect carries its own risks, for, as Fletcher-Moulton L.J. went on to say, at p. 320: 'Any matter . . . which does not indicate with a reasonable clearness that it purports to be comment, and not statement of fact, cannot be protected by the plea of fair comment.'"

Whether the words complained of in the present case include a comment, recognisable as such, on a matter of public interest is a

question to be decided by the jury at the trial. I agree with the judge that in the present case there are passages which it would be open to the jury to find are defamatory statements of fact and there are other passages which it would be open to the jury to find are comment on a matter of public interest. But it will be for the jury to decide whether the plaintiffs are correct in their submission that the alleged comment is incapable of being distinguished from statements of fact. This is a matter to be decided by the jury at the trial. Where I have to part company with the judge is that I am unable to accept that here statements of fact and comment are so intertwined that no reasonable jury properly directed could conclude that a comment to the effect now crystallised by the defendants in the form set out above is to be found with reasonable clearness in the words complained of.

Mr. Suttle next submitted that the plea of fair comment must fail for another reason, namely, the defendants will be unable to get over the hurdle of showing that a fair-minded person could honestly express the opinion in question on the facts pleaded by the defendants under paragraph 7 of the defence. In particular, he submitted that the comment being set up by the defendants could not be made in respect of the plaintiffs, because there is no allegation by the defendants that the plaintiffs have been involved in paying over any ransoms. I cannot accept this. In paragraph 7(vi), quoted above, the defendants allege that for the last 10 years Control Risks has been actively involved in playing a major role, after a kidnap has taken place, in securing the release of the victim for payment of the minimum amount of ransom. True it is that this factual allegation cries out for further particulars of the role being alleged: for example, whether Control Risks' role is confined to advising the insured, or whether it is being said that Control Risks participates in negotiations. But further particulars have not so far been sought of this allegation. If they are, it may be that discovery or interrogatories will be needed before they can be given. Be that as it may, I feel quite unable to conclude that the pleaded facts are incapable of supporting a comment to the effect now being set up by the defendants. Whether they do or not is, here also, a matter for the jury.

Mr. Suttle advanced a further argument along the following lines. The passages complained of contain a number of statements of fact which are plainly defamatory of the plaintiffs. None of these statements is sought to be justified. The plea of fair comment would provide no defence for the defendants regarding these statements. The plaintiffs are therefore bound to succeed at the trial. The comment which the defendants seek to defend as fair comment pales into insignificance when compared with the grave libels on which the plaintiffs will succeed. It would not be right for the defendants to be permitted to raise a plea which would greatly increase the length and cost of the trial when it could have no significant effect on the outcome.

I am afraid I cannot accept this. Once more the plaintiffs are really inviting this court to trespass upon the province of the jury. Mr. Suttle's argument comes down to this, that the plea of fair comment should be struck out because it could have no useful part to play in the action: if the defendants are not permitted to raise this defence, which goes only to the comment that the plaintiffs' commercial activities are undesirable, any award of damages to the plaintiffs would not be higher than the award would be if such a defence were permitted and were successful.

For my part, I do not think that this is necessarily so. I need look no further than the last passage complained of:

"those companies that exploit terrorism for their own ends should be penalised in exactly the same way as a person who harbours a gunman on the run."

Having regard to such strong language, I do not think that it would be right to assume that, in the absence of a successful plea of fair comment, the pejorative comment propounded by the defendants would itself not increase the amount of damages which may be awarded.

These are all matters to be decided at the trial. It is not for this court to pre-judge them, either way. I would allow this appeal. I would restore paragraph 7 to the defence, subject to including therein the formulation of the comment, set out by the defendants in their skeleton argument, to which the plea of fair comment is being directed.

SIR GEORGE WALLER. I agree.

DILLON L.J. I also agree.

Solicitors: Rubinstein Callingham; Withers Crossman Block.

[Reported by EDWARD JACKSON ESQ., Barrister-at-Law]