Aleksej Gubarev v Orbis Business Intelligence Ltd
| Jurisdiction | England & Wales |
| Judge | Senior Master Fontaine |
| Judgment Date | 31 January 2019 |
| Neutral Citation | [2019] EWHC 162 (QB) |
| Docket Number | Case No: HQ17D00413 |
| Court | Queen's Bench Division |
| Date | 31 January 2019 |
[2019] EWHC 162 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Senior Master Fontaine
Case No: HQ17D00413
Andrew Caldecott QC, 1 Brick Court and Ian Helme, Matrix Chambers (instructed by McDermott Will & Emery UK LLP, 110 Bishopsgate, London EC2N 4AY) for the Claimants
Gavin Millar QC and Edward Craven, Matrix Chambers (instructed by Reynolds Porter Chamberlain LLP, Towerbridge House, St Katherine's Way, London E1W 1AA) for the Defendants
Hearing dates: 7 November 2018
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This was the hearing of the Claimants' application dated 27 April 2018 for an order pursuit to CPR 3.1(2)(i) that there should be a split trial in the proceedings. The application was supported by the third witness statement of Ziva Robertson dated 27 April 2018, responded to by the first witness statement of Christopher Steele dated 30 October 2018 and the third witness statement of Nicola Cain dated 30 October 2018, and replied to by the fourth witness statement of Ziva Robertson dated 2 November 2018.
In this judgment witness statements are referred to as “Surname number/paragraph” and documents in the hearing bundle as [tab no./page number].
Background to the Claim
The claim was issued on 8 February 2017 and accompanied by Particulars of Claim dated 3 February 2017. The Claim Form was amended on 13 July 2017 and Amended Particulars of the Claim served on 4 July 2018, Particulars of Special Damages provided on 19 June 2018 and an amended Defence and Response to Particulars of Special Damages served on 1 August 2018. A Reply had been served dated 30 June 2017 (no consequential amendments being required). Various requests for Part 18 information have been served and responded to.
The First Defendant, a company providing corporate intelligence services, was engaged between June and December 2016 by a consultancy based in Washington DC, Fusion GPS (“Fusion”), which provides research, strategic intelligence and due diligence services to clients. Their brief was to prepare a series of confidential memoranda based on intelligence concerning Russian efforts to influence the US Presidential election process and links between Russia and the then Republican Presidential candidate Donald Trump. Sixteen memoranda were produced by October 2016, prepared before the US Presidential election (“the pre-election memoranda”). A final memorandum (“the December Memorandum”) was provided after the date of the election. The memoranda, including the December Memorandum, are referred to in the Amended Particulars of the Claim as “the Steele dossier”. On 10 January 2017 that dossier was published by a news website, BuzzFeed, on its website. The Second Defendant was the author of that document in his position as Director of the First Defendant, and the First Defendant has admitted vicarious liability for any actions of the Second Defendant. The Claimants' libel claim is in respect of that publication in relation to one paragraph of the December memorandum (see Paragraph 6 of the Amended Particulars of the Claim). None of the pre-election memoranda contained any reference to or intelligence about the Claimants. The Defendants deny liability for the publication complained of and say that liability for such publication resides with BuzzFeed. There is a secondary defence of qualified privilege. The First Claimant has also brought defamation proceedings in Florida against BuzzFeed in respect of the same publication. The proceedings in this court relate to publication within the EU.
Issues for Trial
The parties have helpfully agreed a list of issues, save for one issue in dispute ((iv) below in square brackets). These are as follows:
List of Issues
Responsibility for Publication
i) Are the Defendants responsible as a matter of law for the publication of the December Memorandum on the Buzzfeed website?
Meaning
ii) What is the meaning of the words complained of?
Serious harm/[abuse of process]
iii) Have the Second and Third Claimants suffered serious financial loss because of such publication, and/or are/were they likely to do so?
iv) [Are any of the claims by any of the Claimants properly characterised as a Jameel abuse of process with the consequence that they should be stayed/struck out?]
Qualified Privilege
v) Did such publication take place on an occasion of qualified privilege?
Remedies
vi) What award of general damages (if any) should be awarded to each of the Claimants?
vii) What award of special damages (if any) should be awarded to the Second Claimant?
viii) Are the Claimants entitled to an injunction?
On 11 October 2017 the case came before Master Thornett for a costs and case management conference (“CCMC”). The CCMC was adjourned by Master Thornett but he ordered that the parties consider by 4pm on 1 December 2017, inter alia, whether the case is suitable for a split trial on liability (including consideration of section 1(2) of the Defamation Act 2013), and if so what directions may be suitable.
The form of split trial order sought by the Claimants is as follows:-
1 There shall be a split trial in these proceedings as follows:
1.1 The first trial (“the first trial”) shall be of the following issues:
(1) The meaning of the words complained of:
(2) Whether the words are defamatory of the Second and Third Claimants having regard to section 1(2) of the Defamation Act 2013;
(3) Whether the Defendants and each of them are liable for publication of the words complained of;
(4) Whether such publication is protected by the defence of common law qualified privilege;
(5) What award of general damages (if any) should be awarded to the First Claimant; and
(6) What other remedies (if any) should be awarded to the Claimants in terms of non-pecuniary relief (save for any costs orders).
1.2 The second trial (“the second trial”) in the event that it is necessary shall be of the following issues:
(1) What award of general damages should be awarded to the Second and Third Claimants (including what award (if any) to compensate the Third Claimant for the claimed general downturn of business);
(2) What award (if any) of special damages should be awarded to the Second Claimant;
(3) Any issues concerning interest on the above.
The application is resisted by the Defendants.
Summary of the Claimants' Submissions
The claim has changed and narrowed since issue, in that the Fourth Claimant (“XBT Holding S.A.”) has withdrawn its claim and only the Second Claimant claims special damages. Both the Second and Third Claimant plead that they have suffered serious financial loss and/or are/were likely to do so, as required for corporate claimants by section 1(2) of the Defamation Act 2013 (“the 2013 Act”) – Amended Particulars of Claim Paragraph 9 [9/88]. The Particulars of Special Damages contain a calculation of the Second Claimant's loss of profit in the sum of €940,587.36, and the Third Claimant provides particulars of its serious financial loss based on a general downturn in revenue and a cancellation of five EU customer contracts in 2017.
It is submitted that calculation of the Second Claimant's claim for special damages, and evidence to demonstrate the Third Claimant's general downturn in business to support its claim in general damages, will require expert evidence and substantial factual evidence. Thus, the main objective of the Claimants in the application is to “hive off” the issues that will be expensive to prepare and may not be required in the event that the Claimants failed to establish liability in respect of any of the issues which they seek to be determined on the first trial. It is submitted that this is a pragmatic, principled and proportionate manner of proceeding, supported by authority, which will ensure the best use of court resources and enable the case to proceed to substantive resolution as quickly as possible. It is submitted that once the first trial is completed and if the claim succeeds, it may be possible for the parties to reach resolution by ADR or other form of settlement negotiations.
The Claimants rely on the principles in relation to split trials stated in the guidance given by Hildyard J. in Electrical Waste Recycling Group Ltd v Philips Electronics UK Ltd [2012] EWHC 38 (Ch).
The Claimants also rely on a number of other authorities in relation to their proposal that the issues of general damages for the Second and Third Claimants, including any award to compensate the Third Claimant for general downturn of its business, and special damages for the Second Claimant, be determined separately from the liability trial, namely:
i) Brett Wilson LLP v Persons Unknown [2016] 4 WLR 69;
ii) Pirtek (UK) Ltd v Jackson [2017] EWHC 2834 (QB);
iii) Euroeco Fuels (Poland) Ltd v Szczein and Swinoujscie Seaports Authority SA [2018] EWHC 1081 (QB);
iv) Burki v Seventy Thirty Ltd [2018] EWHC 2151.
Those authorities make it clear that there is a distinction between “serious financial loss” as set out in section 1(2) of 2013 Act, and a special damages claim. Thus it is submitted that:
i) the evaluation of ‘a tendency’ to cause serious financial loss is fact sensitive, and will depend upon such factors as the nature of the Claimants' business, the relevance of the allegation to such business and the identity of the publishees;
ii) the substantial and complex evidence which will be required for the issues proposed to be dealt with in the second trial will be of an...
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