Collins Stewart Ltd and Another v Financial Times Ltd

JurisdictionEngland & Wales
JudgeThe Honourable Mr Justice Tugendhat,Mr Justice Tugendhat,THE HON. MR JUSTICE GRAY,Mr Justice Gray
Judgment Date25 February 2005
Neutral Citation[2004] EWHC 2337 (QB),[2005] EWHC 262 (QB)
Docket NumberCase No: HQ03X02745,Case No: HQ 03X02745
CourtQueen's Bench Division
Date25 February 2005
Collins Stewart Ltd and anr
The Financial Times Ltd

[2004] EWHC 2337 (QB)


The Honourable Mr Justice Tugendhat

Case No: HQ 03X02745



Royal Courts of Justice

Strand, London, WC2A 2LL

Richard Spearman QC and Justin Rushbrooke (instructed by Schillings) for the Claimant

Desmond Browne QC, Leon Kuchke and David Sherborne (instructed by Farrer &Co) for the Defendant

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.

The Honourable Mr Justice Tugendhat Mr Justice Tugendhat

On the 27 th August 2003, just over a year ago, the Financial Times published an article headed "Reputations on the Line at Collins Stewart". On the 2 nd September a claim form was issued by Collins Stewart Ltd, as first Claimant ("Ltd") and Collins Stewart Tullett Plc as second Claimant ("Plc"). The claim was for damages for libel and an injunction. On Monday 4 th October 2004 I heard a number of applications in relation to this action. It is currently listed to be tried with a jury commencing on 6 th April 2005 with a time estimate of 25 days. On 8 th July 2004 the matter came before Eady J. He ordered that there be a split trial, the issues of liability and general damages to be tried first with a jury, and the claim in special damages to be tried thereafter. It is now common ground that the assessment of special damages be by judge sitting alone.


The applications before me on 4 th October included the following:

i) The Defendant's application notice dated 12 th August 2004 to strike out paragraphs 3 to 6 of the Claimants` Particulars of Damages:

ii) The Defendant's application under the same notice that all issues relating to damages (both general and special) be tried by judge alone

The form of the applications is set out fully below.

iii) An application by the Claimants for disclosure and

iv) an application by the Defendants for disclosure.

I heard and have already disposed of the third and fourth applications in so far as they were still live. As to the first and second applications, I heard argument over some two days and this is my reserved judgment.


On 17 th September 2003 Particulars of Claim were served. The Claimants described themselves as follows. Ltd is a company incorporated in England and based in London. It carried and carries on the business of stock brokers in the United Kingdom and it is widely known to be a wholly owned subsidiary of Plc. Plc is a company also incorporated in England and is widely known to be the holding company of the Collins Stewart group, a financial service group whose services include institutional and private clients` stock broking, market making, corporate finance (all of which are carried on through Ltd), the supply of on-line financial information and inter-dealer broking.


The Defendant is the publisher of the Financial Times. That is, of course, a daily national newspaper with a substantial and influential circulation in the financial, business and professional communities.


The Particulars of Claim set out the whole of the article published on 27 th August 2003. It is not necessary for me to read the whole of it. It includes the following

"Terry Smith has never been shy of a fight as one of the City's most outspoken stockbrokers. But the Chief Executive of Collins Stewart faces a no-holds-barred battle now to preserve the reputations both of himself and his firm after a former employee filed a highly-critical claim for wrongful dismissal.

In the High Court Claim form and accompanying 32-page document sent to the Financial Services Authority, analyst James Middleweek paints a picture of a firm suffering from conflicts of interests. These conflicts, he alleges, put pressure on analysts to support corporate finance work, including low—quality new equity issues.

The complaint comes not from a rank outsider but from an analyst who had been with the firm for seven years, covering Collins Stewarts core area of smaller companies and who never missed receiving his annual performance bonus. But Collins Stewart believes it is being subjected to a blackmail attempt by a former employee, who only raised complaints after being dismissed.

It commissioned an independent investigation into the claims by lawyers Clifford Chance who had full access to all staff and tape recordings of conversations at the firm. It says this found no evidence to support any of Mr Middleweek`s claims including:"

There then follows six bullet point paragraphs setting out the claims said to have been made in the report accompanying Mr Middleweek's High Court Claim Form. The words complained of conclude:

"Mr Middleweek also denies blackmail in the claim. He says his lawyers held a meeting in July 9 with Collins Stewart where the claim was discussed and that they had indicated that Mr Middleweek would be willing to not lodge a report with the FSA, providing his employment claims were settled. But he said he would like to know that an internal enquiry had been launched into his allegations. Mr Middleweek adds that Collins Stewart even after dismissing him for alleged blackmail, came back to him seeking a settlement along the lines originally proposed".


In paragraph 6 of the Particulars of Claim the Claimants plead the meanings, which they claim the words of the article bear. The first eight sub-paragraphs summarise the meanings complained of by reference to the bullet points which I have referred to above. Paragraph 6.9 summarises the gist of the meanings complained of as follows

"The Claimants were thereby guilty of gross, widespread and institutionalised impropriety in the way in which they carried on business, and had committed or encouraged or acquiesced in the commission of serious criminal offences, in particular insider dealing, for which they would or should be successfully prosecuted by the Financial Services Authority".


Before I turn to the question of damages which is what the applications before me both relate to, it is convenient to note the Defence of the Defendant filed on 12 th November 2003. The Defendant alleges that the Particulars of Claim served by Mr Middleweek served in his court proceedings contained express reference to, and had physically annexed to them, a Report, that Mr Middleweek had prepared for submission to the Financial Services Authority. The Defendant claims that, by being annexed to the Particulars of Claim in that action, and being expressly referred to therein, that Report was a public document pursuant to the Defamation Act 1996 s.15 and part 1 paragraph 5 and/or part 2 paragraph 10 of Schedule 1 to that Act. Accordingly, says the Defendant, it is entitled to rely upon that statutory defence known as qualified privilege. Alternatively, it relies on the common law defence of qualified privilege, commonly referred to as Reynolds privilege. These defences are public interest defences available to defendants who cannot, or do not wish to attempt, to prove the truth of the allegations they have published. In this case, the Defendant is not claiming that Mr Middleweek's allegations are true, merely that it was entitled to publish them, whether they were true or not.


It is necessary to refer in more detail to the Claimants' case on damages, which gives rise to the questions which I have to decide in this judgment.


In paragraph 7 of the Particulars of Claim they plead:

"by reason of the publication of the words complained of the Claimants have suffered extremely serious injury to their trading reputations and very substantial loss and damage".


In the following paragraph 8, they set out some substantial particulars by way of background, and then plead as follows:

"8.6 …. the damage to the Claimants' reputations caused by the article complained of continues. The Claimants will invite the court to infer that all of the foregoing post-publication conduct on the part of the Defendant has added increasing momentum to the collapse in the Second Claimant's share price – as to which see further below.

8.7 After and as the foreseeable consequence of the publication of the allegations complained of, the Second Claimant has suffered a dramatic fall in the value of its share price. Since the close of trading on 26 August 2003, the day before the article was published, the share price has dropped by approximately 16% from 457.5 pence to a closing price on 16 September 2003 of 382.5 pence, against the background of a broadly positive market. This represents a fall in the Second Claimant's market capitalisation of approximately £141,000,000. For the avoidance of doubt, the Claimants will ask the court to infer that this fall reflects the damage to the market perception of the Claimants which has very substantially, if not wholly, resulted from the publication complained of and that it confirms the resulting substantial but necessarily unquantifiable general financial loss caused to the Claimants, in respect of which it will seek to recover such sum at trial as shall seem fair and just.

8.8 The Claimants will furthermore claim at trial for all special damage caused to the Claimants` business as a result of the publication complained of including all losses of profits actual and reasonably anticipated in future years. Particulars of such loss and damage, which is likely to run into millions of pounds, will be served as soon as the same have become available.


Before me the parties both state that paragraph 8.7 is to be taken as a claim for general damages and paragraph 8.8 as a claim for special damages.


Although for the purposes of this strike out application I must assume the facts pleaded in the Particulars of Claim will be established, nevertheless it...

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