Shah v Standard Chartered Bank

A defendant seeking to justify an imputation that there were reasonable grounds to suspect misconduct must prove objectively reasonable grounds founded on the claimant’s conduct. Relevant background may be pleaded, but the plea must focus on conduct capable of warranting the suspicion rather than on antecedent reputation.

The repetition rule governs the meaning, pleading and proof of justification. A publisher cannot establish objectively reasonable grounds for suspicion merely by proving that allegations or rumours were received from apparently credible sources. The underlying facts must be proved by admissible direct evidence, unless another defence, such as qualified privilege, applies.

The claimants, former chairman and deputy chairman of a bank, sued Standard Chartered Bank for libel and slander. They alleged that statements made to the Bank of England accused them of laundering proceeds of an Indian securities fraud through their bank.

Ian Kennedy J dismissed their applications under RSC Order 82 rule 3A and to strike out particulars of justification. On appeal, the court considered the permissible meanings of the publications and whether the defendant could justify meanings of reasonable suspicion by relying on hearsay allegations and other pleaded material.

1. The appeal was allowed in part unanimously. Hirst LJ gave the principal judgment. May LJ agreed and added reasons on the repetition rule. Sir Brian Neill agreed with both judgments and the proposed orders.

2. Under RSC Order 82 rule 3A, the court was to identify the permissible outer limits of meaning, rather than determine the publication’s actual meaning. Each material publication was capable both of imputing actual guilt of money laundering and of imputing no more than reasonable suspicion. The claimants’ proposed meaning that they had given good cause for criminal prosecution was not capable of being borne by the Reed publications. The defendant’s proposed meaning concerning grounds for referral to the police or Serious Fraud Office was inconsistent with its principal meaning and was disallowed.

3. Following Lewis v The Daily Telegraph [1964] AC 234, a plea justifying reasonable suspicion must focus on conduct by the claimant that objectively gives rise to the suspicion. It may include relevant background and connecting material, particularly in a complex case. It cannot be directed merely to the claimant’s prior reputation. The pleaded central allegation concerning the claimants’ involvement in transactions in bearer bonds satisfied that requirement; the allegation that they were not reputable bankers did not.

4. The court followed Stern v Piper [1997] QB 123. The repetition rule is a rule of law governing not only meaning but also the pleading and proof of justification. A defendant cannot justify an imputation of reasonable suspicion by proving only that third parties made allegations or that the defendant regarded them as credible. It must prove the underlying facts which objectively support the suspicion. The court declined to treat Aspro Travel v Owners Abroad Group [1996] 1 WLR 132 as establishing a general contrary principle.

5. Accordingly, Ground 3 of the particulars of justification remained. The hearsay material in Ground 4 and the subsequent events in Ground 5 were struck out. The parties received leave to amend only to the extent stated in the judgments.

• Court of Appeal (Civil Division): Allowed the appeal in part, varied the pleaded meanings and struck out parts of the particulars of justification.
• Queen’s Bench Division: Ian Kennedy J, on 20 December 1996, decided the claimants’ two summonses in favour of the defendant. No citation for that decision is stated in the judgment.