Aspro Travel Ltd v Owners Abroad Group Plc
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE SCHIEMANN,LORD JUSTICE STUART-SMITH |
| Judgment Date | 07 July 1995 |
| Judgment citation (vLex) | [1995] EWCA Civ J0707-17 |
| Docket Number | NO: QBENI 93/1645/E |
| Court | Court of Appeal (Civil Division) |
| Date | 07 July 1995 |
[1995] EWCA Civ J0707-17
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
On appeal from Sir Michael Davis Sitting as a High Court Judge
Before: Lord Justice Stuart-Smith Lord Justice Waite and Lord Justice Schiemann
NO: QBENI 93/1645/E
MR T SHIELDS QC & MR S SUTTLE (instructed by Watson Farley & Williams, London EC2A 2HB) appeared on behalf of the Appellants/Plaintiffs
MR D EADY QC (instructed by Herbert Smith, London EC2A 2HS) appeared on behalf of the Defendants/Respondents
Friday 7th July 1995
There are before us several interlocutory appeals by defendants in a defamation action. The action was started by two limited companies —Aspro and IEA —and four directors of those companies. The action has been settled as between the two limited companies and the defendants. This action is however pursued by the 4 directors.
Before turning to the individual appeals it is useful to set out the background to the action.
The facts pleaded in the Amended Statement of Claim are essentially as follows. At all material times the first plaintiff, Aspro Travel Ltd ("Aspro") was owned by the Asprou family and it clearly took its name from the family. The third, fourth and fifth plaintiffs, the Asprou brothers and their father, the sixth plaintiff held virtually all the shares in Aspro and were directors of the company. The company sold package holidays in Cyprus particularly but also in Crete, Greece, Spain, the Balearic Islands,Canary Islands, Portugal and Tenerife. The second plaintiff, Inter European Airways Ltd ("IEA") was a wholly owned subsidiary of Aspro. It operated aircraft and supplied flights for those who booked holidays sold by Aspro.
The defendants were competitors of the corporate plaintiffs in the package holiday business. Paragraph 1 of the Amended Statement of Claim, after setting out the status of the individual plaintiffs as shareholders and directors of the corporate plaintiffs, alleges:
"The respective roles played by IEA and the third, fourth, fifth and sixth plaintiffs and each of them in the business of Aspro are well known among travel agents, hoteliers and other persons who provide travel, including goods and services ancillary thereto in the resorts at which Aspro provides holidays."
Paragraphs 3, 6A, 11, 18, 20 and 25 of the Amended Statement of Claim allege that in or about June 1992 the various representatives of the defendants made statements to hoteliers and travel agents in Cyprus particularly but also in other countries where the plaintiffs traded. Those statements included matters such as saying that Aspro and IEA were "going bust" or would be "bankrupt in a few days", or saying that there were reliable rumours to the same effect. It is alleged by the plaintiffs that those statements were made as a prelude to the defendants offering to take over Aspro's bookings if and when Aspro went under.
The directors contend in para 8 of their S/C that in their natural and ordinary meaning the published words meant and were understood to mean
1. that Aspro and IEA were, or were reasonably suspected of being, insolvent or at least in serious financial difficulty and were, or were reasonably suspected of being, about to go into liquidation;
2. that the directors had caused or permitted, or were reasonably to be suspected of causing or permitting, the companies to trade whilst insolvent or at least in serious financial difficulty.
Clearly a number of possible meanings are here pleaded. One of them is that the directors had caused the companies to trade whilst insolvent. The Defendants before us have not sought to submit that this construction put on the words allegedly spoken is not a possible one.
THE ORDER 82 RULE 3A APPEAL
This appeal required leave which we gave. It arises from a determination made by Bell J on an application by the defendants. This new rule enables a party to apply to a judge for an order determining whether or not the words complained of are capable of bearing a particular meaning attributed to them in the pleadings. The defendants applied for a declaration that the words complained of were not capable of any defamatory meaning. In order to resolve this issue against the defendants it is only necessary to show that one of the meanings pleaded in paragraph 8 of the S/C is capable of being defamatory.
The defendants submitted before the judge and before us that the words allegedly spoken were not capable of bearing the meaning contended for by the plaintiffs. They submitted that no reasonable or fair minded person properly directed could think the worse of directors merely because of allegations to the effect that they permitted continued trading by a company of which they were directors which was insolvent. They submitted that the statutory regime within which directors operate is that set out in s.214 of the Insolvency Act 1986 and that unless the words could be understood as suggesting that the directors had failed to take some step or steps which in law they were obliged to take with a view to minimising the potential loss to creditors the words could not be defamatory.
S. 214 of the Insolvency Act as such seems to me an irrelevancy. That section is concerned with the question whether or no a director of a company which is being wound up should be ordered by the court to make any contribution to the company's assets. The section provides that this is not to be done unless before the commencement of the winding up the director knew or ought to have concluded that there was no reasonable prospect that the company would avoid going into insolvent liquidation. It is further provided that even if that condition is fulfilled, the court shall not make such an order if it is satisfied that the director took every step he ought to have taken with a view to minimising the potential loss to creditors.
It is seems to me the crucial point that Mr Eady for the defendants seeks to make can be made irrespective of the section. That point is that it is in some circumstances legally and morally permissible for directors to authorise continuing trading by their company notwithstanding that the directors know that the company is temporarily insolvent. For present purposes I accept that point but do not consider that it disposes of the submission that to say of a director that he is doing this can be defamatory.
The Plaintiffs submitted before the judge and before us that this was case where for the purpose of this argument it was accepted by both sides that because this was a family company the words referred to and were understood to refer to the individual plaintiffs. Before us Mr Eady did not dispute that proposition which seems to me to be one of importance in as much as it means that nothing we say in the present case necessarily affects the position of directors and in particular non—executive directors in large companies.
The Plaintiffs further submitted, and again this was common ground, that the correct approach for a court in considering whether words are capable of bearing a defamatory meaning was set out by the CA in John Mitchell v Faber & Faber Ltd (an unreported decision on 24.3.94). Hirst LJ giving the judgment of the Court stated:
"It is well settled that the question whether the words which are complained of are capable of conveying a defamatory meaning is a question of law and is therefore one calling for decision by the Court. If the words are so capable then it is a question for the Jury to decide whether the words do in fact convey a defamatory meaning. In deciding whether words are capable of carrying a defamatory meaning the Court will reject those meanings which can only emerge as the product of some strained or forced or utterly unreasonable interpretation. In CAPITAL AND COUNTIES BANK v GEORGE HENTY AND SONS Lord Selborne LC said:-
"The test according to the authorities, is, whether under the circumstances in which the writing was published, reasonable men to whom the publication was made would be likely to understand it in a libellous sense."
The ordinary and natural meaning of words may be either the literal meaning or it may be an implied or inferred or an indirect meaning; any meaning that does not require the support of extrinsic facts passing beyond general knowledge but is a meaning which is capable of being detected in the language used can be part of the ordinary and natural meaning of words. See LEWIS v DAILY TELEGRAPH LTD. The ordinary and natural meaning may therefore include any implication or inference which a reasonable reader guided not by any special but only by general knowledge and not fettered by any strict legal rules of construction would draw from the words. The test of reasonableness guides and directs the Court in its function of deciding whether it is open to a Jury in any particular case to hold that reasonable persons would understand the words complained of in a defamatory sense".
Hirst LJ then went on to accept the submission of counsel for the plaintiff in the case before the CA namely that the learned Judge had to decide whether different people of different (but still reasonable) outlook, temperament and experience could have understood the words in more than one sense, and if so whether the pleaded meanings fell within the range of possible meanings; and...
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