McLaughlin & Ors v Newall

In a defamation settlement, leaving the wording of an apology open will ordinarily create a serious risk that no binding compromise exists. It is not, however, an absolute rule. The circumstances may show that the apology was not an essential term. Where the parties’ correspondence makes performance of all settlement terms a condition precedent to compromise, the claimant’s obligation not to sue does not arise until every term has been performed. A defendant may plead compromise and justification in the strict alternative. The existence of a justification plea does not, without an irrevocable election or clear inconsistency, prevent reliance on the compromise defence.

The claimants brought a defamation action concerning letters and an internet publication attributed to the defendant. Before proceedings were served, the parties’ solicitors negotiated a proposed settlement involving disclosure, identification of sources, an undertaking against repetition, and a written apology and retraction in terms to be agreed.

The defendant contended that the correspondence created a binding compromise, taking effect no later than 4 July 2008. The claimants applied under CPR 3.4(2)(a) and CPR 3.4(2)(b) to strike out the compromise defence. They argued that the absence of an agreed apology prevented contract formation or meant that the claimants’ obligation not to sue had not arisen. They also argued that the defendant’s subsequent plea of justification was inconsistent with any sincere apology and constituted an election or anticipatory breach.

1. Application granted. The parts of the Defence relying on compromise were struck out under CPR 3.4(2)(a). The defendant had no prospect of establishing that the claimants were contractually debarred from pursuing the defamation action.

2. The usual position, confirmed in Western Broadcasting Services v Seaga [2007] UKPC 19, is that agreement on the wording of an apology is an essential term of a defamation settlement. The apology commonly serves the principal purpose of restoring reputation, and its wording is often a substantial part of the negotiations. That principle is not absolute. In a rare case, the correspondence and surrounding circumstances may show that the apology was not essential.

3. On the evidence, there was a real possibility that disclosure and information concerning an alleged campaign against the claimants were more important to them than an apology. The limited circulation of the publications, the later introduction of the apology requirement, and the claimants’ decision to postpone drafting it all supported that possibility. The court therefore could not strike out the defence on the basis that the open wording of the apology necessarily made the compromise void.

4. The correspondence nevertheless established, on the defendant’s own case, that performance of all four proposed terms was a condition precedent to settlement. The defendant had accepted that compliance with and performance of each term were required before the claims would be treated as settled. Since no apology had been agreed and provided, the claimants’ obligation not to sue had not arisen. They were not estopped from continuing the proceedings after partial performance.

5. The alternative plea of justification did not itself prevent reliance on compromise. The doctrines discussed in Lissenden v CA Bosch [1940] 1 AC 412, Express Newspapers v News (UK) [1990] 1 WLR 1320, and Adelson v Associated Newspapers [2008] EWHC 278 (QB) depended on an election between incompatible positions. The defendant had pleaded the two defences expressly in the alternative and had made no such irrevocable election. The approach was consistent with Clarke v Marlborough Fine Arts [2002] 1 WLR 1731.

6. The court added that a defamation settlement leaving the apology wording open remained at grave risk of being incomplete and unenforceable. A formal written contract or memorandum would have reduced the scope for dispute.

First-instance decision. No prior appellate decision is stated in the judgment.