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IN THE SUPREME COURT OF JUDICATURE QBENI 97/0921/E

(Mr Justice Ian Kennedy )

Royal Courts of Justice

The Strand

London WC2

Thursday 4th December, 1997

B e f o r e:

LORD JUSTICE STAUGHTON

LORD JUSTICE AULD

SIR CHRISTOPHER SLADE

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SYDNEY ALFRED HOLLEY

SD & R TRADING LIMITED

HENRY ANSBACHER & CO. LIMITED

ANSBACHER (JERSEY) LIMITED

Respondents

- v -

DUNCAN JOHN SMITH

Appellant

- - - - - -

(Handed down Transcript of Smith Bernal Reporting Limited

180 Fleet Street, London EC4A 2HD

Tel: 0171 421 4040

Official Shorthand Writers to the Court)

- - - - - -

MISS P BAXENDALE QC and MR G CLARKE (Instructed by Messrs Lupton Alsop, London WC4R 2SS) appeared on behalf of the Respondents

MR W BENNETT (Instructed by Messrs Wright Hassall & Co., Leamington Spa CV32 5QP) appeared on behalf of the Appellant

- - - - - -

J U D G M E N T

(As approved by the Court )

- - - - - -

©Crown Copyright

Thursday 4th December, 1997

JUDGMENT

LORD JUSTICE STAUGHTON: For the reasons which have been handed down this appeal will be allowed. If the defendant is prepared to give the undertaking offered the injunction will be discharged.

Mr Smyth appeals by leave of the judge from an order of Kennedy J. granting an interlocutory injunction against him. According to an affidavit of the plaintiffs' solicitors, the first plaintiff (Mr Holley) is a director of the second plaintiffs, SD & R Trading Limited, a Jersey company; the third plaintiffs, Henry Ansbacher & Co Ltd, are a well-known merchant bank; the fourth plaintiffs, Ansbacher (Jersey) Ltd, are a Jersey trust company and merchant bank of which Mr Holley is the company secretary.

On 8th May 1997 Mr Smyth wrote a letter to the plaintiffs'

solicitors and sent it by fax. Attached were two draft press releases, for practical purposes in identical terms. They accused Mr Holley of disreputable conduct in a financial transaction, and the Ansbacher companies of trying to distance themselves from his conduct and to disclaim responsibility. I do not set out any further details, since the very object of these proceedings and of the judge's order was to restrain publication of Mr Smyth's allegations until they have been investigated by a jury.

Mr Smyth protests that he intends to justify his assertions, if he is allowed to publish them and is subsequently sued for defamation. That at once introduces the doctrine in Bonnard v. Perryman (1891) 2 Ch 269. Lord Coleridge CJ, in a judgment with which Lord Esher MR and Lindley, Bowen and Lopes L.JJ agreed, said this (at p.284):

"But it is obvious that the subject-matter of an action for defamation is so special as to require exceptional caution in exercising the jurisdiction to interfere by injunction before the trial of an action to prevent an anticipated wrong. The right of free speech is one which it is for the public interest that individuals should possess, and, indeed, that they should exercise without impediment, so long as no wrongful act is done; and, unless an alleged libel is untrue, there is no wrong committed; but, on the contrary, often a very wholesome act is performed in the publication and repetition of an alleged libel. Until it is clear that an alleged libel is untrue, it is not clear that any right at all has been infringed; and the importance of leaving free speech unfettered is a strong reason in cases of libel for dealing most cautiously and warily with the granting of interim injunctions. We entirely approve of, and desire to adopt as our own, the language of Lord Esher, M.R., in Coulson v. Coulson - "To justify the Court in granting an interim injunction it must come to a decision upon the question of libel or no libel, before the jury have decided whether it was a libel or not. Therefore the jurisdiction was of a delicate nature. It ought only to be exercised in the clearest cases, where any jury would say that the matter complained of was libellous, and where, if the jury did not so find, the Court would set aside the verdict as unreasonable." In the particular case before us, indeed, the libellous character of the publication is beyond dispute, but the effect of it upon the Defendant can be finally disposed of only by a jury, and we cannot feel sure that the defence of justification is one which, on the facts which may be before them, the jury may find to be wholly unfounded; nor can we tell what may be the damages recoverable."

And at p.285:

"Upon the whole we think with great deference to Mr Justice North, that it is wiser in this case, as it generally and in all but exceptional cases must be, to abstain from interference until the trial and determination of the plea of justification."

That wholesome doctrine has often been acted on. The last occasion that I can recall was in Maxwell Communications Corporation plc v. Newspaper Publishing plc , 1st August 1991, when it was sought to restrain publication of allegations about the financial state of the Maxwell empire. The appeal failed.

But in this case there is a new factor to be considered. Mr Smyth at and before his letter of 8th May 1997 made it clear that what he wanted was not to publish truth, but to extract money from the plaintiffs as the price of not doing so. He wrote in the letter:

"I am disappointed that you seek to distance your client from the transactions in 1991. Your client's position is akin to that taken by Rothchilds in 1994 when they also tried to avoid their obligations by adopting a similar stance, only to pay out in 1995 after public humiliation in the Press and T.V. The matter was never litigated.

For many years I was Chairman of a significant full-services Advertising Agency in Charlotte Street and I have therefore applied my expertise to drafting the enclosed Press Release on this affair. As you will note it is embargoed until May 30th so that your client can reflect again upon their position in this affair vis a vis the role of their Company Secretary.

I would state again my willingness to enter into a negotiated full and final settlement with your client in the matter of the £200,000 paid to SD&R Trading Limited in 1991 which was made mainly upon the basis of Mr Holley's assurances as to the probity of the deal.

In my view your client would be well advised to settle this matter quietly rather than face a protracted and potentially embarrassing enquiry by the fraud squad. There is also the pending High Court action which will further expose this matter to public view."

The same theme is to be found in earlier correspondence. On 12th March 1997 Mr Smyth wrote to Mr Holley:

"Under the circumstances I would appreciate any proposals you may have to quietly set the matter straight by a full repayment of the monies paid by the Trust, with interest at judgment rates from the date of purchase.

... Your response within seven days is required. Should you not make constructive proposals by this date I would add this matter as a further formal complaint to those already with Detective Chief Inspector Varriale of the Special Investigations Unit of the Warwickshire CID ..."

A further letter of 2nd April 1997 included these passages:

"As you will see I have a wealth of correspondence and documentation which links you and your Company to a series of dubious transactions. My interest is to recover what I can from those who have misled or defrauded the Trust although I do not regard litigation as the route I will necessarily use.

........

Would you please consider the information provided and let me know how your organisation proposes to deal with this matter bearing in mind the substantial amounts of money that have been lost.

A response within seven days is required with some firm proposals otherwise the matter will be passed to the appropriate authorities. If you feel a meeting would be of assistance in determining the way forward then please contact me."

Again on 8th April 1997 there was these passages in a letter to the chairman of Henry Ansbacher (Holdings) Ltd:

"I have been investigating these matters for over three years and have untangled a web of deceit and fraud which would be a media delight. In fact, some of my investigations have led to eight formal complaints being made to the City of London Police. The Fraud Investigation Department, Wood Street Police Office, only await my completed Statement to launch a major investigation covering professionals, banks and others.

I would ask that you review the correspondence which I have sent to Jersey and ensure that some substantial proposals to settle this matter are made as quickly as possible."

Is this nevertheless a case to which the rule in Bonnard v. Perryman applies, despite the manifest intention of Mr Smyth to use the threat of publication as a means of extracting money from the plaintiffs? Kennedy J. thought not. He said this:

"Bonnard v. Perryman is, to my mind, founded upon the fundamental right of free speech. Until the words have been proved to a jury to be incapable of justification that right is not lightly to be curtailed. Further, there is an important public interest in wrongdoing being brought to light.

In my judgment, it is a quite different case where a person, as did the defendant here, makes a claim for money on terms, which I am quite certain his letter involves, that if he is satisfied in respect of his claim he will remain silent about the alleged wrongdoing. That person is not the assumed guardian of the truth that is he who speaks out asserting the right of free speech, as contemplated by Lord Coleridge. To be paid to be silent is not of the same currency as free speech. The public interest which encourages those who speak out about wrongdoing is not served by giving the like protection to those who propose to speak out only because they have not been paid to remain silent. To accord that same protection would positively be a disservice to the revealing of wrongdoing."

Accordingly Kennedy J. granted an injunction. But he excepted from it publication to the Financial Services Department of the States of Jersey, the Bank of England, the Securities and Futures Authority, the police and any other regulatory or investigative authority or ombudsman which or who has a duty to investigate allegations of the kind contained in the press releases.

I entirely agree with the judge's assessment of the facts. But it is said that we are precluded by authority from upholding the injunction which he granted. First there is Bestobell Paints Ltd v. Bigg (1975) FSR 421. Mr Bigg and his partner were decorators, and used some brown paint sold by the plaintiffs with the trade mark CARSONS. After six months the paint started to turn green. Mr Bigg and his partner wrote to the plaintiffs complaining and seeking recompense. What followed is stated in the judgment of Oliver J. at p.423:

"By April of this year the two sides had taken up entrenched positions and on 16 April the defendant, Mr Bigg, wrote to the plaintiffs saying that he and his company were in a small way of business and did not feel disposed to engage in litigation. What he proposed to do, therefore, was to send details of the case to a newspaper column called "Action Line" (which has been variously attributed to the Daily Express and the Daily Mail) and also to erect a 6ft by 6ft hoarding outside the property with the words: "This is an example of Hadfields (Carsons) paints".

There can be no doubt whatever - and indeed it is not suggested otherwise - that this threat was intended to put pressure on the plaintiffs to settle the defendants' claim. Mr Aldous , who appears for the plaintiffs, has described it as blackmail, but it would, I think, be better to avoid such pejorative expressions until the facts have been fully established at the trial.

In the event, the defendants did not carry out their threat literally, but they did, at the end of May, place a notice on the outside wall of 143 Lavender Sweep of rather more modest proportions than the threatened 6ft x 6ft but still clearly legible to anybody passing by. It reads: "This house is painted with CARSONS paint. The word "Carsons" is in capital letters and is underlined. The house is, I understand, near the South Circular Road and may be said, therefore, to command a wide section of the reading public."

Oliver J., after referring to the case of Crest Homes Ltd v. Ascott (1980) FSR 396, said (at p.435) -

"So quite clearly the court did not there consider that the fact that the statement made was calculated to damage the plaintiffs in their business and was made with a view to putting pressure on them to settle the defendant's claim for compensation took the case out of the general rule."

He refused an injunction.

In the Crest Homes case Mr Ascott had bought a house from Crest Homes Ltd, who were builders. The front door began to shrink and crack, and the paint peeled off. Mr Ascott wrote to Crest Homes, but got no satisfaction. So he fixed the door to the front of his car and drove round the estate, with a notice on the door saying that it was fitted by Crest and was typical of the poor quality materials used. He also sent them a telegram, which read:

"Demo scheduled September 7th cannot disclose where - Nat. Press attending - Ascott."

The Court of Appeal set aside an injunction which Waller J. had granted. Lord Denning MR said at p.398:

"Next Mr Neill said that it was done so as to get the Crest Homes Ltd to give compensation. Mr Ascott ought to have brought an action and not acted in that manner. That may be so, but nevertheless it is not sufficient to take the case out of the general rule.

In my opinion this case comes within the general rule that an interlocutory injunction will not be granted in a libel case where the defendant says he is going to justify. I would allow the appeal and discharge the injunction."

Stephenson LJ said:

"Like my Lord, I agree that there may be exceptions to that general rule, and the court will restrain a defendant in such a case when it is just and convenient. But this is not such an exceptional case."

And Geoffrey Lane LJ (at p.399):

"If there are any exceptions to the general rule, the facts of this particular case do not fall within them."

Thirdly there is the case of Al Fayed v. The Observer Ltd , The Times 14th July 1986. There Mann J held that the general rule still applied where there was "a persistent and irresponsible journalistic campaign against the plaintiffs which was conducted as a vendetta"; that was not an exceptional case such as was contemplated by the authorities.

It is said on the basis of those decisions that the only exception to the general rule is where the material said to be defamatory is "manifestly untrue" or "obviously unfounded". I do not agree, for I accept Miss Baxendale's argument that there always remains a discretion in the grant or refusal of an equitable remedy. As Stephenson LJ said, the court will restrain a defendant when it is just and convenient - and the statute says that too. Here Mr Smyth does not wish to publish the material in question; he has not yet done so; he is not concerned to increase the store of knowledge available to the public. His concern is to obtain money for himself or for a trust with which he is associated. The fact that Mr Smyth has no wish to publish at all distinguishes this from earlier cases. It is in my opinion a case of demanding money with menaces, although whether or not it would be an offence under section 21 of the Theft Act 1968 would be for a jury to decide. It is far more serious than either the Bestobell Paints case or the Crest Homes case.

As is not uncommon in these days, we were referred to the European convention for the Protection of Human Rights and Fundamental Freedoms, and to Article 10 which deals with the freedom of expression. I do not see that this has any impact on the present problem. It is conceded that there may lawfully be restrictions on defamation; these would be permitted as being for the protection of the reputation or rights of others (Article 10.2). It is likewise conceded that there can be a prohibition on the making for gain of an unwarranted demand with menaces. I suppose that such a prohibition can be justified as a measure for the prevention of disorder or crime; but at all events it is not conduct which strikes one very obviously as the exercise of a human right or fundamental freedom. There is therefore no call to refer to the judgment of Hoffmann LJ in R v. Central Independent Television plc (1994) 3 WLR 20 at p.30, where he said:

"It cannot be too strongly emphasized that outside the established exceptions, or any new ones which Parliament may enact in accordance with its obligations under the Convention, there is no question of balancing freedom of speech against other interests. It is a trump card which always wins."

By contrast when one is considering established exceptions to the right of freedom of expression, as in this case, there are No Trumps.

If it is proper under the Convention to restrain the publication of matter which is proved to be defamatory, or the making of what are proved to be unwarranted demands with menaces, I do not see that it must always be improper to restrain pending trial conduct which may later be found to fall within one or other description. Of course the discretion to do so must be exercised with great caution as English law clearly provides. But in my judgment there remains a discretion to grant an interlocutory injunction pending trial in rare cases, of which this is one. Mr Smyth remains at liberty to disclose his material to the regulatory authorities mentioned in the order. He must be content with that.

In the circumstances I need not express any view on the point raised by the Respondents' notice (that Mr Smyth would not be able to justify his allegations); and I do not do so. I would dismiss this appeal.

LORD JUSTICE AULD: The Court is asked to decide whether a defendant who threatens defamation of the plaintiff to obtain money from him as the price of silence may rely on the rule in Bonnard v. Perryman [1891] 2 Ch 269, CA, that interlocutory relief to restrain defamation is not ordinarily granted where there is a defence or claim of justification unless the plaintiff can show that it is plainly untrue.

The Facts

The proceedings arise out of a somewhat complicated transaction in 1991 in which a trust established by Mr. Smyth paid £200,000 to the second plaintiff, a company controlled by the first plaintiff, Mr. Holley. The payment was for shares in two Spanish companies who were said to own developable land in Spain. I say "said to own" because Mr. Smyth maintains that the companies' title to the land was defective and that, as a result, the trust has lost its investment. He maintains that Mr. Holley and the second plaintiff fraudulently misrepresented to him at the material time that an adverse claim to the land was unlikely to succeed. As to the third and fourth plaintiffs, Mr. Smyth claims that, by virtue of their relationship with Mr. Holley and/or the second plaintiff, they owed him, Mr. Smyth, a duty to respond to his complaint of fraud by investigating it expeditiously, and they have not done that.

The plaintiffs' case is that there was always some uncertainty about the companies' entitlement to the land and that Mr. Smyth knew that before the trust made the investment. They say that he and the trust took the risk. The first and second plaintiffs deny any fraudulent misrepresentation. The third and fourth plaintiffs deny that they owed any duty to Mr. Smyth to investigate or otherwise act on his complaint but say that they have in fact attempted to do so.

Mr. Smyth, having unsuccessfully sought the return of the money from the second plaintiff, threatened to publish his complaints of fraud by Mr. Holley and the second plaintiff and of indifference to his complaint by the third and fourth plaintiffs. His expressly declared purpose in making that threat was to extract from one or other of them the return of the trust's investment as the price of his silence. His threat prompted the plaintiffs to issue these proceedings against him to restrain the threatened libel and also to apply for interlocutory injunctive relief. Mr. Smyth, by his pleaded defence and in affidavit evidence in response to the application, maintained that he could justify his allegations of fraud and indifference.

The Judge's Ruling

Ian Kennedy J., on the evidence before him, was unable to find that the plea of justification was plainly untrue. He decided, nevertheless, that it was a case for the grant of interlocutory relief, save in respect of the threatened publication to public regulatory and investigative authorities. He held that the Bonnard v. Perryman rule is founded on the right of free speech and that it does not protect a defendant whose motive is to extract money from the plaintiff as the price of not exercising it. This is how he reasoned the matter, at pages 9 and 10 of the transcript of his judgment:

" Bonnard v. Perryman is, to my mind, founded upon the fundamental right of free speech. Until the words have been proved to a jury to be incapable of justification that right is not lightly to be curtailed. Further, there is an important public interest in wrongdoing being brought to light.

In my judgment, it is a quite different case where a person, as did the defendant here, makes a claim for money on terms, which I am quite certain his letter involves, that if he is satisfied in respect of his claim he will remain silent about the alleged wrongdoing. That person is not the assumed guardian of the truth that is he who speaks out asserting the right of free speech, as contemplated by Lord Coleridge. To be paid to be silent is not of the same currency as free speech. The public interest which encourages those who speak out about wrongdoing is not served by giving the like protection to those who speak out only because they have not been paid to remain silent. To accord that same protection would positively be a disservice to the revealing of the wrongdoing.

Further, the very fact that there is an offer to remain silent at a price leads one to question the truth of the charges being traded, for such a proposal is not ordinarily made by a trustworthy and reliable person. So, while I must, as ever, be cautious in determining whether to order an interlocutory injunction, this case is a very different one to the general where it is suggested that injunction should go against one who intends to justify an alleged libel ...

If I continue this injunction with the modifications as to public authorities then the true merits of either side's case can be considered without the plaintiffs being subjected to 'public humiliation in the press and on TV', while any wrongdoing can be investigated by the proper authorities. If I do not, there must be risk of the plaintiffs being forced to concede an unsound claim to avoid the sort of clamour which so often accompanies the making of charges but so rarely is heard when those charges are successfully refuted. I am clearly of the view that the balance of fairness and convenience in the context of this case requires the maintenance of the injunction against the dissemination of these charges beyond the extent to which I have already referred."

Before I consider the rationale and the proper application of the rule in Bonnard v. Perryman , I say the following about the Judge's reasoning. First, he appears to have confined the benefit of the rule to those whose sole or main motive is to act as guardians of the public interest in the exposure of wrongdoing. Second, despite having held that the Mr. Smyth's plea of justification might succeed, he appears to have anticipated its failure before a jury, largely because of Mr. Smyth's pecuniary motive in threatening the defamation. Third, he was influenced by the damage from adverse publicity that the plaintiffs could suffer if the defamation were to be permitted pending the final outcome of the action, an argument advanced unsuccessfully on behalf of the plaintiffs in Bonnard v. Perryman , at 281 and in several subsequent cases on the point.

The Bonnard v. Perryman Rule

Since Fox's Libel Act of 1792 the questions "libel or no" and whether any libel is justified or privileged have been the responsibility of the jury [1]. The possibility of judicial intrusion on that responsibility at the interlocutory stage had to await another sixty years. As Lord Coleridge CJ pointed out in Bonnard v. Perryman , at 283, it was not until the enactment of the Common Law Procedure Act in 1854 that common law courts acquired the power to grant injunctive relief. And Courts of Equity still could not do so because they had no jurisdiction to adjudicate in libel matters. They had to wait until the Judicature Act 1873 when they became the Chancery Division of the High Court and were thus invested with power to exercise their traditional injunctive role in the field of defamation as well as in other actions of tort.

From the earliest days of the courts' consideration of their power to grant interlocutory relief in libel cases they seem to have been guided by two associated notions, one of high principle and one of principle and practicality. The first is the importance of protecting the individual's right to free speech. The second is an acknowledgment that the judges should not, save in the clearest case, usurp the jury's role by restraining at the interlocutory stage publication of a statement that the jury might later find to be no libel or true or otherwise defensible. Sometimes the second notion is expressed in the form that a judge should not interfere at the interlocutory stage unless the evidence before him so clearly establishes a culpable libel that he is confident that he would have to set aside a contrary verdict of the jury as perverse.

It is instructive that Blackstone, in Volume IV, pp. 182-3, of his Commentaries, published in 1854, long before any Court of Common Law considered the problem, set the scene in the following ringing tones for the first of those notions, one which was to guide the grant of interim injunctive relief in libel actions in later years, at least against the press:

" In this, and the other instances which we have lately considered, where blasphemous, immoral, treasonable, schismatical, seditious, or scandalous libels are punished by the English law, some with a greater, others with a less degree of severity; the liberty of the press, properly understood, is by no means infringed or violated. The liberty of the press is indeed essential to the nature of a free state; but this consists in laying no previous restraints upon publications, and not in freedom from censure for criminal matter when published. Every freeman has an undoubted right to lay what sentiments he pleases before the public: to forbid this, is to destroy the freedom of the press: but if he publishes what is improper, mischievous or illegal, he must take the consequence of his own temerity. To subject the press to the restrictive power of a licenser, as was formerly done, both before and since the revolution, is to subject all freedom of sentiment to the prejudices of one man, and make him the arbitrary and infallible judge of all controverted points in learning, religion, and government. But to punish (as the law does at present) any dangerous or offensive writings, which, when published, shall on a fair and impartial trial be adjudged of a pernicious tendency, is necessary for the preservation of peace and good order, of government and religion, the only solid foundations of civil liberty. Thus the will of individuals is still left free; the abuse only of that free will is the object of legal punishment."

The starting point in the jurisprudence is a passage from the judgment of Lord Esher MR in an earlier decision than Bonnard v. Perryman , namely in Coulson v. Coulson (1887) 3 TLR 846 [2]:

"... the question of libel or no libel was for the jury. It was for the jury and not for the Court to construe the document and to say whether it was a libel or not. To justify the Court in granting an interim injunction it must come to a decision upon the question of libel or no libel before the jury decided whether it was a libel or not. Therefore, the jurisdiction was of a delicate nature. It ought only to be exercised in the clearest cases, where any jury would say that the matter complained of was libellous, and where, if the jury did not so find, the Court would set aside the verdict as unreasonable. The Court must also be satisfied that in all probability the alleged libel was untrue, and if written on a privileged occasion that there was malice on the part of the defendant. It followed from those three rules that the Court could only on the rarest occasions exercise the jurisdiction." [3]

The main issue in the case appears to have been whether the threatened publication was libellous, but there was also plainly an issue as to the truth of the allegation. And Lord Esher's reference to the issues of justification and privilege as well as libel or no libel show that he intended his words to apply to all matters which were ultimately within the province of the jury. Lindley LJ, in a short concurring judgment, said much the same:

"... the Court was asked to exercise its jurisdiction without being sure that it was in possession of all the facts. [He} agreed with the rules laid down by the Master of the Rolls, and he was not prepared to say that the jury might not find this was no libel or that the alleged libel was true."

Lord Coleridge CJ, giving the leading judgment of the full Court of Appeal in Bonnard v. Perryman , with which Lord Esher MR and Lindley, Bowen and Lopes LJJ concurred, in favour of discontinuing the interlocutory restraint in that case, repeated and adopted those words of Lord Esher in Coulson v. Coulson . He held that "in all but exceptional cases" (see 285) the courts should not restrain by way of interlocutory relief the publication of a libel which the defence sought to justify save where it was clear that that defence would fail. He based that approach on the particular need in libel cases not to restrict the right of free speech, save in a clear case of an untrue libel, by intervening before final determination of the matter by a jury. This is he how he put it, at 284:

"... the subject matter of an action for defamation is so special as to require exceptional caution in exercising the jurisdiction to interfere by injunction before the trial of an action to prevent an anticipated wrong. The right of free speech is one which it is for the public interest that individuals should possess, and, indeed, that they should exercise without impediment, so long as no wrongful act is done; and, unless an alleged libel is untrue, there is no wrong committed; but, on the contrary, often a very wholesome act is performed in the publication and repetition of an alleged libel. Until it is clear that an alleged libel is untrue, it is not clear that any right at all has been infringed; and the importance of leaving free speech unfettered is a strong reason in cases of libel for dealing most cautiously and warily with the granting of interim injunctions. ... In the particular case before us, indeed, the libellous character of the publication is beyond dispute, but the effect of it upon the Defendant can be finally disposed of only by a jury, and we cannot feel sure that the defence of justification is one, on the facts which may be before them, the jury may find to be wholly unfounded; nor can we tell what may be the damages recoverable."

The remaining member of the Court, Kay LJ, at 285-289, agreed with this general proposition, but dissented from the Court's decision to discontinue the interlocutory injunction on three grounds: first, the alleged libel was expressed in such a way as to suggest it was motivated by spite rather than to protect the interests of the public; second, the defendant had failed to rebut a strong prima facie case on the evidence that the libel was untrue; and third, the balance of convenience and inconvenience favoured the continuance of the temporary restraint since it would cause little harm to the defendant not to publish the alleged libel and much damage to the plaintiff pending the outcome of the trial. The first and third of those grounds do not accord with the majority's reasoning or the courts' application of the Bonnard v. Perryman rule ever since.

Monson v. Tussauds Ltd [1894] 1 QB 671, CA, was a case in which there were issues both as to whether the offending material was libellous and whether the defendant had, in any event, consented to its publication. The members of the Court (Lord Halsbury and Lopes and Davey LJJ), in refusing interlocutory relief, differed as to the proper approach of the Court on the first issue, but all endorsed the Bonnard v. Perryman rule that such relief was only appropriate in the exceptional case of a libel to which there was clearly no defence.

More recent authorities acknowledge the strength of the rule and continue to articulate the two associated reasons for it to which I have referred, though not always giving the same relative importance to each.

In Fraser v. Evans [1969] 1 All E.R. 8, CA, Lord Denning MR, at 10, gave primacy to the right of freedom of speech:

"The Court will not restrain the publication of an article, even though it is defamatory, when he defendant says that he intends to justify it or to make fair comment on a matter of public interest. This has been established for many years since Bonnard v. Perryman. The reason sometimes given is that the defences of justification and fair comment are for the jury, which is the constitutional tribunal, and not for the judge; but a better reason is the importance in the public interest that the truth should out. ...

There is no wrong done if it [the alleged libel] is true, or if it is fair comment on a matter of public interest. The court will not prejudice the issue by granting an injunction in advance of publication."

To similar effect, though in another context, [4] is the following passage from the judgment of Griffiths LJ in Herbage v. Pressdram Ltd. [1984] 1 WLR 1160, CA, at 1162 F-H, when summarising a number of principles generally applicable to the grant of interim injunctions in defamation actions:

*"... no injunction will be granted if the defendant raises the defence of justification. This is a rule so well established that no elaborate citation of authority is necessary. It can be traced back to the leading case of Bonnard v. Perryman ...

These principles have evolved because of the value the court has placed upon freedom of speech and I think also upon the freedom of the press, when balancing it against the reputation of a single individual who, if wrong[ed], can be compensated in damages."

In Khashoggi v. IPC Magazines [1986] 1 WLR 1412, Sir John Donaldson MR emphasised the practicalities and the limited role of the court at the interlocutory stage: He said, at 1417H-1418A:

"The point is that Bonnard v. Perryman, apart from its reference to freedom of speech, is based on the fact that the courts should not step in to defend a cause of action in defamation if they think that this is a case in which the plea of justification might, not would, succeed."

The Submissions

Mr. William Bennett, on behalf of the defendant, submitted that:

- the rationale of the Bonnard v. Perryman rule is the individual's right of freedom of speech and of the public's right to be informed, subject only to subsequent penalisation of the defendant in damages if the libel is untrue;

- the main allegation here is one of fraud, a matter on which Mr. Smyth has the right to speak and in which the public has an interest;

- the only relevant consideration at the interlocutory stage is the possible truth of the allegation;

and

- therefore, the motive for the threatened defamatory statement is irrelevant.

He submitted that the right of freedom of speech, underlined since 1953 in Article 10 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (1953)(Cmd. 8969) ("the Convention"), is of such importance that it should not be eroded or qualified by the introduction of other tests. As to the motive of a person in threatening to make a defamatory statement, he said that it was irrelevant because it could not affect the truthfulness of the statement or, hence, the entitlement to make it or the public's interest in hearing it.

Miss Presiley Baxendale, QC, on behalf of Mr. Holley and the other plaintiffs, submitted that:

- the overriding test is that in Section 37(1) of the Supreme Court Act 1981 for the grant of interlocutory relief, including libel cases, namely where "it appears to the court to be just and convenient";

- the Bonnard v. Perryman approach is not an absolute rule against the grant of interlocutory relief where the libel is possibly true, it is simply authoritative guidance for the exercise of a discretion;

and

- there is a discretion in an "exceptional" case to restrain a possibly true libel.

Miss Baxendale submitted that this is such a case. Like Mr. Bennett, she suggested that the rationale of Bonnard v. Perryman is the protection of the right of free speech. However, she argued that its origin and main application have been in the context of threatened libel by the media whose freedom to publish and inform the public is of particular importance. [5] She maintained that this case is not the usual one of a plaintiff seeking to prevent adverse comment by the media; it is one of a defendant with an axe to grind seeking to extract money from the plaintiff as the price of not publishing his alleged wrongdoing. In short, her submission was that Mr. Smyth is not, by his threat to publish, asserting his right to free speech and is, therefore, not entitled to the protection which Bonnard v. Perryman normally provides.

The Modern Authorities

There are a number of comparatively recent authorities in which the courts have expressly declined to restrain, as an exception from the general rule in Bonnard v. Perryman , a threatened libel intended or calculated to damage a plaintiff and made as a means of putting pressure on him to compensate the defendant for some claimed wrong.

In Crest Homes Limited v. Ascott , a decision of this Court given in 1975, but only reported in [1980] 6 FSR 396, CA, a dissatisfied buyer of a house, having unsuccessfully sought compensation from the builder, threatened to libel it with a view to coercing it to make compensation. The Court discharged an interlocutory injunction granted at first instance restraining the libel. Lord Denning MR, with whom Stephenson and Geoffrey Lane LJJ agreed, held that neither the arguably unreasonable mode of the threatened libel nor the pecuniary motive for it was sufficient to take the case outside the general rule established by Bonnard v. Perryman . Geoffrey Lane LJ, in his short concurring judgment at 399, emphasised the strength of that general rule. He said:

" ... the line of authorities is long and weighty that interlocutory injunctions in these cases will not be granted unless the plaintiff shows that the defence of justification will not succeed; ..."

And he applied the rule notwithstanding his view that the defendant had chosen "a vulgar and offensive way to air his grievances" and that "[t]he damage to the plaintiffs was likely to be extensive and plainly difficult to prove".

In Bestobell Paints Limited v. Bigg [1975] FSR 421, Oliver J., following Crest Homes , declined to restrain a dissatisfied buyer of paint who, with a view to obtaining compensation from the seller, threatened to libel it. He held, at 434-436, that the fact that the buyer may have been malicious or that his object was to put pressure on the seller to settle his claim was irrelevant.

Lastly, in Mohamed Al Fayed & Ors. v. The Observer Limited , The Times, 14th July 1986, Mann J. declined to treat as an exception to the general rule Mr. Al Fayed's contention, assuming its truth, that the Observer had abused its right to freedom of speech by waging a persistent and irresponsible campaign against him as part of a vendetta by a commercial rival for the control of Harrods Limited long after the public had lost interest in the matter. He held, after reviewing the authorities, that the only exception to the general principle is where the allegation is "manifestly untrue" and that it applies whatever the motive or reason for the threatened publication.

I should also consider Article 10 the Convention. It provides, so far as material:

"1 Everyone has the right to freedom of expression. This right shall include freedom ... to receive and impart information ... without interference by public authority ...

2. The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, ... for the prevention of ... crime, ... for the protection of the reputation or rights of others ..."

In A-G. v. Guardian Newspapers (No. 2) [1990] 1 AC 109, HL, Lord Goff said at, 283E-284A, that Article 10 is consistent with English law and should guide the interpretation of English law when the latter permits. He referred to the restrictions on the right to speak freely stated in the Article, including those "prescribed by law and ... necessary in a democratic society", and observed:

"It is established in the jurisprudence of the European Court of Human Rights that the word 'necessary' in this context implies the existence of a pressing social need, and that interference with freedom of expression should be no more than is proportionate to the legitimate aim pursued. I have no reason to believe that English law, as applied in the courts, leads to any different conclusions."

The criteria of "pressing social need" and proportionality, derived from the jurisprudence of the European Court of Human Rights, [6] for any exception to the general right of freedom of speech are of a piece with the rationale of the English courts' rigorous application of the Bonnard v. Perryman rule over the last hundred years. Hoffmann LJ has recently underlined it in a different context in R v. Central Television Plc [1994] 3 WLR 20, CA, at 30A-F:

" The motives which impel judges to assume a power to balance freedom of speech against other interests are almost always understandable and humane on the facts of the particular case before them. Newspapers are sometimes irresponsible and their motives in a market economy cannot be expected to be unalloyed by considerations of commercial advantage. Publication may cause needless pain, distress and damage to individuals or harm to other aspects of the public interest. But a freedom which is restricted to what judges think to be responsible or in the public interest is no freedom. Freedom means the right to say things which 'right-thinking people' regard as dangerous or irresponsible. This freedom is subject only to the clearly defined exceptions laid down by common law or statute.

Furthermore, in order to enable us to meet our international obligations under the Convention ..., it is necessary that any exceptions should satisfy the tests laid down in article 10(2). They must be 'necessary in a democratic society' and fall within certain permissible categories ...

It cannot be too strongly emphasised that outside the established exceptions, or any new ones which Parliament may enact in accordance with its obligations under the Convention, there is no question of balancing freedom of speech against other interests. It is a trump card which always wins."

Conclusions

In my judgment, the authorities establish the following propositions.

The courts' power to grant interlocutory relief to restrain a libel is discretionary, [7] but it is a discretion that must be exercised with great caution.

The discretion to grant such relief is guided by the statutory constraint in Section 37(1) of the Supreme Court Act 1981 that it should be exercised only where "it appears to the court to be just and convenient to do so".

Where there is a defence or claim of justification the discretion is further guided by the rule in Bonnard v. Perryman that it is not normally just or convenient to grant relief unless the plaintiff has proved that the libel is plainly untrue.

There is no jurisprudential basis for confining the Bonnard v. Perryman rule or its rigour to threatened publication by the media. The authorities to which I have referred show that it is not so confined. And, as Hoffmann LJ observed in Central Television , the media's motivation for publication is rarely restricted to the altruistic one of informing the public of matters in which it, the public, has an interest. There is usually the additional driving force of commercial self-interest, sometimes accompanied by obsessive vindictiveness and/or irresponsibility. Yet the authorities show that the presence of one or more of those factors does not deprive the media of the protection of the rule. Why then should those outside the media be subject to more stringent control because they may have a motive other than the pure one of disseminating truth?

There may be exceptions to the general rule, but neither the would-be libeller's motive nor the manner in which he threatens publication nor the potential damage to the plaintiff is normally a basis for making an exception.

Motive is logically irrelevant to the defendant's entitlement to exercise his right to freedom of speech if what he has to say is or may be true. In particular, English jurisprudence has rejected as candidates for exception motives of vindictiveness or pecuniary gain. The fact that Mr. Smyth has expressly made the implementation of his threat conditional on the plaintiffs' failure to pay the money he claims does not distinguish it from the authorities where motivation other than a simple desire to speak freely has been held to be irrelevant. It is a fallacy to attempt to distinguish it on the basis that Mr. Smyth's aim is not to exercise his right of freedom of speech, but to extract money from another as the price of silence. The subject matter of the application for interlocutory relief is his threat to speak freely, albeit that it is contingent on the plaintiffs not meeting his possibly justified demand. It is that threat, not the equally contingent offer to remain silent, that the plaintiffs seek to restrain. The fact that he may have expressly offered to remain silent if the plaintiffs met his demand does not, in my view, distinguish this case from the clearly implied threat to like effect in Crest Homes and the other two recent authorities to which I have referred. There is nothing unusual in an aggrieved person seeking what he considers to be his due by threatening to resort to the media if his claim is not met while hoping that it will not be necessary.

Article 10(2) of the Convention, in its general provisions for qualification of the right to speak freely "for the prevention of crime" and "for the protection of the reputation or rights of others", does not identify for me any "pressing social need" for a different approach in the circumstances of this case. As to the prevention of crime, I reject the notion that Mr. Smyth's threat to libel deserves consideration as an exception because it may be criminal as an offence of blackmail. In my view, save in the most exceptional case - which this is not - it would be wrong in interlocutory civil proceedings to deny a defendant his right to publish on the basis of what would at best be a contingent finding of criminality on incomplete evidence and without the normal rigour of the criminal process. [8] Certainly, I would not feel able to express a view, on the material before me, that, in the words of Section 21(1) of the Theft Act 1968, defining blackmail, Mr. Smyth made "an unwarranted demand with menaces" in that he did not believe that he had "reasonable grounds for making" the threat or that it was "a proper means of reinforcing the demand". The whole thrust of his case is that he was seeking to regain money to which he or the trust in his name was entitled. I note that Oliver J. in Bestobell was similarly unimpressed by such a suggestion of criminality. He said, at 424:

" There can be no doubt whatever - and indeed it is not suggested otherwise - that this threat was intended to put pressure on the plaintiffs to settle the defendants' claim. Mr. Aldous, who appears for the plaintiffs, has described it as blackmail, but it would, I think, be better to avoid such pejorative expressions until the facts have been fully established at the trial."

As to the Convention's protection of the reputation or rights of the plaintiffs, this is simply an acknowledgement as applied to this country of its right to protect its citizens against defamation, as it does by statute and established jurisprudence of which the Bonnard v. Perryman rule is part.

Similarly as to the manner of the threatened publication, I can see no basis for any material distinction of it from that in the general run of authorities where the courts have declined to rely on the suggested unreasonableness or disproportionate nature of the threatened conduct of the defendant as a reason for making an exception to the general rule.

Finally, there is the question of the potential damage to the plaintiffs if the relief is not continued - a matter relied on by Ian Kennedy J.. Despite Hoffmann LJ's broad statement in Central Television , that "outside the established exceptions" and any new statutory ones, freedom of speech "is a trump card which always wins", it seems to me that the ultimate equitable discretion of the court behind the rule in Bonnard v. Perryman , allows for the possibility of an exception being made for such a reason. However, that possibility does not sit easily with the rationale of the rule or with the more general constraints of Article 10 of the Convention, both of which require great caution before interfering with the individual's right to speak freely before there is a final determination on the matter as provided by law. No doubt that is why the courts appear to have accepted up to now that the Anerican Cyanamid [9] principles governing the grant of interlocutory relief do not apply to defamation cases where the Bonnard v. Perryman rule is in play. See e.g. per Griffiths LJ in Herbage v. Pressdram Limited , at 1162G-H. Whatever the correct analysis of that approach, I can see no basis for regarding the potential damage to the plaintiffs here as of such an exceptional nature or gravity to take the case outside the general rule.

Accordingly, I am of this view that Ian Kennedy J's reasons for the exercise of his discretion to grant relief were wrong and that the circumstances of this case do not justify the Court in regarding it as an exception to the application of the general rule. If Mr. Smyth's allegations are true, he is entitled to publish them, or to threaten to publish them, regardless of his motive or of the damage such publication would or may do to the plaintiffs. Unless it can be shown at this interlocutory stage that they are plainly untrue, the scheme of the law is that he should not normally be deprived in the meantime of an entitlement which he may subsequently establish. If he succeeds in doing so, his motive continues to be irrelevant, if he fails then the law will require him to compensate the plaintiffs and his motive may be punished by an award of aggravated damages; see Rookes v. Barnard [1964] AC 1129, HL, per Lord Devlin at 1221, a head of damages that the plaintiffs have included in their claim.

Whether the threatened libel is manifestly untrue

The matter does not end there because Mr. Holley and the other plaintiffs maintain, by a Respondents' Notice and in reliance on further evidence, that Mr. Smyth's claim of justification is plainly untrue. Ian Kennedy J. rejected that contention, holding that the plaintiffs' evidence did not "remotely come with the certainty" of untruth required for the grant of interlocutory relief.

Both sides put a considerable volume of affidavit evidence before the Judge. The plaintiffs' evidence impugned Mr. Smyth's motive in threatening publication and maintained that they had not deceived him or the trust in his name about the title to the land in Spain. Mr. Smyth's evidence was that Mr. Holley and the second plaintiff had fraudulently deceived him and/or the trust, that he and/or the trust wanted return of the £200,000 invested and that his motive in threatening publication was to make them return the money.

The plaintiffs have put before this Court further affidavit evidence suggesting that Mr. Smyth was not deceived in that he knew at or before the material time that there was a potential problem with the title to the land. Mr. Smyth also swore another affidavit complaining of the third and fourth plaintiffs' continuing failure to investigate his complaints properly.

Miss Baxendale submitted that, despite the conflicting evidence, the Court could now be sure of the untruth of Mr. Smyth's plea of justification. She relied on the following matters:

- his motive for threatening publication was an attempt to secure a price for his silence and, therefore, reflected adversely on his credibility;

- there were inconsistencies in his claims which pointed to his lack of credibility;

- his allegations of fraud and/or of fraudulent misrepresentation against the first and second plaintiffs were not clearly pleaded or not sufficiently particularised;

- there were indications in the evidence, in particular, the further evidence put before this Court by the plaintiffs, that Mr. Smyth knew at the material time that the investment was not "gilt-edged";

- that the investment may yet prove to be sound;

and

- that the complaints against the third and fourth plaintiffs of indifference to the alleged fraud were plainly untrue because there was exhibited documentary evidence that they were investigating them.

In my view, on the material before the Court, none of those matters would entitle it to conclude, differently from Ian Kennedy J., that Mr. Smyth's threatened publication is plainly untrue. The arguments as to credibility must clearly await the final determination of the matter by a jury. As to the reliance on the suggested inadequacy of Mr. Smyth's pleaded case, in particular in his particulars of justification, my view is that, regardless of any technical deficiencies of pleadings beloved of libel lawyers, his make plain, as does his evidence on affidavit, that he is alleging that the first and second plaintiffs fraudulently misrepresented to him the position as to the title to the land. As Mr. Bennett submitted, the important matter at this stage is what evidence there is before the court to establish that a claim of justification is untrue, not whether that claim is pleaded properly.

As to the evidence before the Court of what Mr. Smyth knew or may have known about the title to the land at the material time, there is plainly scope for dispute about the precise content of the representations allegedly made by the first and second plaintiffs, about Mr. Smyth's precise understanding of them at the material time and also about the position as to title, notwithstanding the further documentary evidence on which the plaintiffs rely. The ultimate soundness of the investment is immaterial to the question whether the first and second plaintiffs fraudulently exposed Mr. Smyth or the trust in his name to a risk of loss by deliberately misrepresenting to him the nature of the title. Finally, as to the alleged indifference of the third and fourth plaintiffs to Mr. Smyth's complaints, there are clearly issues between the parties about the duty owed to him and about the adequacy of the investigations made.

Accordingly, I would allow Mr. Smyth's appeal and dismiss the plaintiffs' cross appeal and, accordingly, discharge the order of Ian Kennedy J.

SIR CHRISTOPHER SLADE: I have had the advantage of reading the judgments of Lord Justice Staughton and Lord Justice Auld in draft. Having done so, I find myself in agreement with Lord Justice Auld, for the reasons given by him, that the circumstances of this case did not justify Mr Justice Ian Kennedy in regarding it as an exception to the application of the rule in Bonnard v Perryman [1891] 2 Ch 269 C.A. and in accordingly granting the plaintiffs interlocutory relief in the exercise of his discretion. I will for the greater part restrict my observations to explaining why, with all respect to Lord Justice Staughton, I am unable to agree with his opinion that the Judge's decision can be supported on the grounds that the defendant's conduct amounted to the demanding of money with menaces and might in due course be shown to have been an "unwarranted" demand with menaces, constituting a criminal offence within section 21 of the Theft Act 1968.

That section, so far as material, provides:

"(1) A person is guilty of blackmail if with a view to gain for himself or another or with intent to cause loss to another he makes any unwarranted demand with menaces; and for this purpose a demand with menaces is unwarranted unless the person making it does so in the belief -

(a) that he has reasonable grounds for making the demand; and

(b) that the use of menaces is a proper means of reinforcing the demand.

(2) The nature of the act or omission demanded is immaterial, and it is also immaterial whether the menaces relate to action to be taken by the person making the demand.

..................................."

The editors of Archbold Criminal Pleading Evidence and Practice (1997 Edition) summarise the effect of the section as follows:

"Any demand with menaces is unwarranted unless the defendant is able to bring himself within both paragraphs (a) and (b) of section 21(1). Thus the essential nature of the offence is that the accused demands with menaces when he believes he is not entitled to the thing demanded or when he believes the use of menaces is improper notwithstanding his genuine claim. It appears to follow from this that a claim of right cannot be a defence as such to a charge of blackmail".

I would be inclined to accept that a plaintiff who on the evidence both put forward and established a triable case that the defendant, in threatening to publish a statement defamatory of the plaintiff, was guilty of the criminal offence of blackmail, could successfully argue that this situation constituted an exception to the rule in Bonnard v Perryman , even though the defendant proclaimed his intention to justify the statement. The Court in Bonnard v Perryman was not directing its mind to such circumstances; and I agree with Lord Justice Staughton that Article 10 of the European Convention for the Protection of Human Rights and Fundamental Freedoms, which deals with freedom of expression, would not preclude the Court from intervening for the purpose of protecting the plaintiff in a libel action from an apparent breach by the defendant of the criminal law.

In the present proceedings, however, at least until the suggestion was floated in the course of argument by this Court itself, it has, I believe, never been part of the plaintiffs' case that the defendant's threats to publish constituted blackmail or any other criminal offence. My understanding is that no such contention was advanced in the Court below. Nor is it advanced in the respondents' skeleton argument and respondents' notice addressed to this Court. We have no evidence before us specifically directed to the question whether or not the defendant's demands were "unwarranted" within the meaning of section 21 of the Theft Act 1968. He has had no opportunity of refuting that suggestion by adducing evidence to show that he can bring himself within the exempting provisions of paragraphs (a) and (b) of the section.

In these circumstances, the possibility of the defendant's threats constituting the criminal offence of blackmail is not in my judgment a factor which we would be entitled to take into account in deciding whether or not to continue the injunction granted by Mr Justice Ian Kennedy. We are bound to approach this appeal on the footing that the defendant's threats to publish the relevant statements, albeit defamatory, were perfectly lawful, provided only that he could justify them.

The Judge himself did not suggest that the defendant's threats to publish were unlawful. However, he considered that he could not successfully invoke the rule in Bonnard v Perryman , essentially on the grounds that his motive in threatening to publish was not to tell the world that which as "the assumed guardian of the truth" he thought the world ought to know; it was the less high-minded motive of obtaining, as the price of his silence, the recompense which he considered to be owed by the plaintiffs.

Even in the absence of authority, I would have been disposed to hold that in a case where a defendant proposes to publish information which he asserts he can justify, the Court should not depart from the rule in Bonnard v Perryman merely because it regards his motives in the proposed publication as less high-minded than the pure desire to let the world know the truth. In many, perhaps most, cases the motives for the intended publication may be mixed and inquiry into motive, particularly on an interlocutory application, may be a somewhat speculative exercise. Under the general law the defendant's motives ordinarily afford no sufficient grounds for restraining him from exercising a legal right.

In my opinion, however, the authorities cited by Lord Justice Auld, themselves establish that neither the would-be libeller's motive nor the manner in which he threatens publication nor the potential damage to the plaintiff is normally a basis for making an exception to the rule. I will merely refer briefly to three of these authorities.

In Bonnard v Perryman itself, as Kay L.J. pointed out in his dissenting judgment (at p. 285), the alleged libel was "expressed in coarse and abusive language which would incline any one reading it to the belief that some personal feeling of spite or malignity against the plaintiffs, and not merely a desire to protect the interests of the public was among the actuating motives of the defendant".

In Bestobel Paints Limited v Bigg 1975 F.S.R. 421, there was no doubt whatever that the defendant's threat was intended to put pressure on the plaintiffs to settle his claim; indeed the plaintiffs' counsel described the threat as "blackmail" (though the judgment makes it clear that, as in the present case, the accuracy or otherwise of that description was not tested in argument: see at p. 424). Oliver J. nevertheless declined to grant interlocutory relief. In the course of a comprehensive review of the authorities he said (at p. 434):

"It has never, so far as I know, been suggested that, in the ordinary case of libel, it makes any difference to the grant or withholding of interlocutory relief that the defamatory statement is alleged to have been published maliciously".

In Crest Homes Ltd. v Ascott (1980) F.S.R. 396 the Court of Appeal clearly did not consider that the fact that the relevant statement was calculated to damage the plaintiffs in their business and was made with a view to putting pressure on them to settle the defendants' claim for compensation took the case out of the rule in Bonnard v Perryman . Lord Denning MR (at p. 398) said explicitly:

"Next [plaintiffs' counsel] said that it was done so as to get [the plaintiffs] to give compensation. The defendant ought to have brought an action and not acted in that manner. That may be so but nevertheless it is not sufficient to take the case out of the general rule".

I accept that the Court may be left with a residual discretion to decline to apply the rule in Bonnard v Perryman in exceptional circumstances. One exception, recognised in that decision itself, is the case where the Court is satisfied that the defamatory statement is clearly untrue. In my judgment, however, that is a discretion which must be exercised in accordance with established principles. In my judgment, Mr Justice Ian Kennedy acted contrary to established principles in regarding the defendant's supposed motives in the present case as constituting exceptional circumstances sufficient to justify his declining to apply the rule.

I now turn briefly to consider the respondents' notice, in which it is contended that the Judge's decision should be affirmed on grounds other than those relied on by him, namely:

"1. The defendant's evidence failed to put forward even a minimally particularised or reasoned case that there had been fraud by any of the plaintiffs or any "key personnel" of the third or fourth plaintiffs on that the third and fourth plaintiffs had failed to act in relation to the defendant's alleged concerns about alleged fraud.

2. The defendant's libellous allegations against the plaintiffs were accordingly not even arguably justified ...".

Bonnard v Perryman itself and many subsequent authorities show that the burden falling on a plaintiff is a heavy one, if he seeks to satisfy the Court that the rule should not be applied on the grounds that the defendant's proposed plea of justification cannot succeed; the falsity of the relevant allegations must be clearly shown:

In paragraph 40 of an affidavit sworn on 30th May 1997, the defendant explicitly acknowledged that

"it would be inappropriate to make allegation as to the committing of any fraud or other wrongdoing by either of the third or fourth plaintiffs .... My complaints at those two companies are limited to their failure now to act, given their control of the second plaintiff, to remedy the matters at which I now complain .... I am happy to confirm my undertaking to the Court not to make or publish any statement implying their involvement in any fraudulent or other wrongful activity ..."

In this context therefore, I regard the relevant question as being whether the evidence discloses triable issues in regard to the defendant's claims that (a) there has been fraud on the part of the first and second plaintiffs and (b) the third and fourth plaintiffs have failed to act in relation to the defendant's asserted concerns about such fraud. In agreement with the Judge and Lord Justice Auld, I consider that triable issues have been shown on both these points. Without overlooking Miss Baxendale's careful and intricate submissions in this context, I do not think a detailed examination of the evidence at this stage would be helpful. These are issues which will have to be explored in depth at the trial.

In the result, I would for my part seek an undertaking from the defendant broadly in the form which he has already offered and to which I have referred. Subject to that, in agreement with Lord Justice Auld, I would allow the defendant's appeal, dismiss the plaintiff's cross-appeal and discharge the order of the Court below.

ORDER: Appeal allowed with costs. Leave to appeal to the House of Lords refused.