Downtex v Flatley

For summary disposal under CPR Part 53, the claimant must show that the defence has no realistic prospect of success. The court should avoid a mini-trial where the issue is fact-sensitive and further evidence may emerge, but should decide the issue where the essential material is already before it.

Qualified privilege requires a communication fairly warranted by the occasion. The relevant interests of the publisher and recipients are assessed objectively. A publisher’s honest concern cannot itself create privilege, and an alleged reciprocal interest among strangers requires particular factual justification. Imputations of insolvency or near insolvency unsupported by the material relied upon cannot attract the defence.

Downtex and its directors brought claims in defamation against Flatley and his company, together with a contractual claim by Downtex. The claims concerned letters sent to Downtex’s suppliers during a dispute arising from the sale of a business. Two letters were admitted to be defamatory.

Elias J dismissed Downtex’s application for summary relief, holding that the qualified privilege defence was fact-sensitive and should be determined after trial. Permission to appeal was granted on whether publication of the letters was protected by qualified privilege. The central issue was whether the defence had any real prospect of success on the material already before the court.

Disposition. The Court of Appeal unanimously allowed Downtex’s appeal on qualified privilege. The appeals of the second and third claimants were dismissed, subject to leave to discontinue. The respondent’s cross-appeal was dismissed.

1. Under CPR Part 53, the applicable threshold was essentially the same as under Part 24: the claimant had to show that the defendant had no real prospect of successfully defending the proceedings. This meant a realistic, rather than fanciful, prospect. Summary procedure should not become a mini-trial where a defence was fact-sensitive and further facts might emerge. However, where the essential material had been deployed and no significant further case was likely at trial, the judge should analyse the evidence and decide whether the defence was merely fanciful. The court applied the approach in Swain v Hillman [2001] 1 All ER 90 and James Gilbert Ltd v MGN Ltd [2000] EMLR 681.
2. Qualified privilege required the communication to be fairly warranted by the occasion. Where privilege was based on reciprocal interest, the recipient had to possess a corresponding legitimate interest in receiving the communication. The distinction between communications within an established relationship and communications between strangers, discussed in Kearns v General Council of the Bar [2003] EWCA Civ 331, [2003] 2 All ER 534, did not alter those principles. Communications between strangers ordinarily required close factual examination, as illustrated by Comarek v Ramco Energy [2002] EWHC 2501 (QB), [2002] All ER (D) 314.
3. Whether the occasion and the relevant interests existed was an objective question for the judge. A defendant could not create privilege through an honest subjective belief. The letters imputed insolvency or near insolvency to Downtex and alleged manipulation of its financial figures and risks with other people’s money. The material relied upon, including Downtex’s accounts and supplier information, did not objectively justify those imputations. The suppliers’ alleged reciprocal interest was neither properly pleaded nor supported by the evidence. The qualified privilege defences therefore had no realistic prospect of success and were bad in law. The court applied the principle in Hebditch v MacIlwaine [1894] 2 QB 54.
4. As to the directors’ separate claims, permission had not been granted to appeal the finding that the letters did not sufficiently identify them. Where defamatory words do not expressly name a claimant, extrinsic evidence is required to connect the words with that claimant. No such third-party evidence had been adduced, so the issue was properly left to trial.
5. Downtex was entitled to judgment for damages in libel, excluding the anonymous letter and the letter of 19 June, with damages to be assessed by a judge sitting without a jury. The same judge was to determine any application under sections 8 and 9 of the Defamation Act 1996 and assess damages for breach of contract. The first claimant’s appeal costs were payable by the defendants, while the action costs were reserved.

• Court of Appeal (Civil Division): In [2003] EWCA Civ 1282, allowed the first claimant’s appeal on qualified privilege, dismissed the second and third claimants’ appeals subject to discontinuance, and dismissed the respondent’s cross-appeal.
• High Court of Justice, Queen’s Bench Division: Elias J, on 10 October 2002, dismissed the application for summary relief under CPR Part 53, holding that the qualified privilege issue was fact-sensitive and should not be finally determined at that stage.