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	Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> McCann v Scottish Media Newspapers Ltd [1999] ScotCS 52 (18 February 1999) URL: http://www.bailii.org/scot/cases/ScotCS/1999/52.html Cite as: 1999 SCLR 636, [1999] ScotCS 52, 2000 SLT 256

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This action, in which the pursuer seeks damages for defamation, came before me for debate on the procedure roll in respect of the defenders' first plea-in-law, which is a plea to the relevancy and specification of the pursuer's averments.

The pursuer is the chairman of and a shareholder in Celtic plc. He avers that amongst the general public he is strongly associated with the activities of Celtic plc. He further avers that prior to February 1998 he had announced his intention to sell his shares in Celtic plc, and had stated his intention to sell to members of the public rather than to a single investor. On 9 February 1998 Celtic plc published its "Interim Report 1997" containing its accounts for the six months to 31 December 1997, and also containing a chairman's statement. In that connection there was issued to the news media a press release which contained quotations from the chairman's statement, and which had a copy of the statement appended to it. The pursuer avers that the chairman's statement set out a true and fair view of the business of Celtic plc; that in particular it referred to the increase in the turnover of the company, the heavy spending on new players, the sharply increased salaries, and the increase in operating expenditure; that it stated that as a result the profit from operations had declined by £141,000 or 4%, but that gains on disposal of player registrations had increased the net profit for the half year to the record total of £7.6m (1996 - £2.1m); and that after the chairman's statement the Interim Report set out detailed accounts. It is further averred that the press release also contained reference to the increase in turnover, the increase in net profit, the increased spending on players, the gains made on the sales of players (sic), the increase in players' salaries, the increase in operating costs and the resulting fall in operating profits.

The defenders are the publishers of The Herald newspaper. On 10 February three articles were published in The Herald relating to the Interim Report. The pursuer's contention, as summarised in Article 3 of the condescendence, is that in those articles the defenders defamed him by representing that he had made misleading statements in relation to Celtic's accounts, that he had sought to conceal the true financial position of Celtic plc, and that the misleading statements were made with the intention of securing a higher price for his shares in Celtic plc, which he intended to sell.

In his pleadings the pursuer quotes and relies upon passages from each of the three articles. The first article was headed "Salaries slice Celtic's profits". The passages on which the pursuer relies from that article were in the following terms:

and:

The second article was headed "First-half let-down for Celtic". The passages from that article on which the pursuer relies were in the following terms:

and:

From the third article, which appeared under the heading "Business Comment. A matter of control. Celtic's rose-tinted reportage fools no-one", the pursuer relies on the following excerpts:

and:

At the end of Article 3 of the condescendence the pursuer avers that the three articles contained numerous references to the pursuer in connection with the issuing by Celtic plc of the interim accounts, to his being the chairman of the company, and to his majority shareholding in it; that no other person is named in the articles as a spokesperson for Celtic plc; and that any ordinary reader would infer that the comments in the press release were those of the pursuer or made on his behalf.

In Article 4 of the condescendence the pursuer sets out the false and calumnious imputations which he contends were conveyed by the articles complained of. It will be convenient for purposes of reference to set them out in a numbered list. Before doing so I note that in the first six it is averred that the articles "represented" certain matters; in the seventh to eleventh it is averred that the articles "represented directly and by innuendo" certain matters; and the ninth to eleventh are prefaced by averments making reference to requirements of the Companies Act 1985, the Alternative Investment Market (AIM) Rules and the Financial Services Act 1986. Those last-mentioned averments were amplified by amendment in the course of the hearing on the procedure roll, and it is convenient to note their terms in a little more detail, and to record the nature and effect of the amendment. The averments as they stood at the outset of the debate were to the effect (i) that it is a requirement of the Companies Act 1985 that company accounts, including directors' reports, contain a true and fair view of the development of a company's business; (ii) that it is a requirement of the AIM Rules for Companies that published accounts of companies comply with relevant national law and accounting standards, and that directors accept full responsibility for compliance with the rules; and (iii) that it is an offence under section 47(1) of the Financial Services Act 1986 for a person to make a misleading statement for the purpose of inducing a person to enter into an investment agreement, such as the purchase of shares. The amendment proposed at the bar in the course of the debate was to insert after those averments the following averments:

There followed a reference back to those averments tying the following averments of innuendo to those new averments of fact. Mr Woolman for the defenders did not oppose the motion to amend, although he sought to reserve his position on whether he required to answer the new averments. Since both parties wished the debate to proceed, I allowed the record to be amended as proposed at the bar, and noted in the minute of proceedings that the defenders should be allowed in due course to amend in answer at the pursuer's expense.

The imputations which the pursuer avers were made in the articles are:

1. that the pursuer is not honest in his business dealings and in his actions as chairman of Celtic plc;
2. that he had behaved in a misleading way in relation to the interim accounts published by Celtic plc;
3. that he had made statements to the press and in his chairman's statement which were intended to mislead shareholders and potential investors as to the financial performance of the company;
4. that in issuing the press release he had referred only to the level of net profit with the intention of misleading investors as to the true level of profitability of Celtic plc;
5. that the press release did not disclose figures showing the true level of profitability of Celtic plc;
6. that an investor reading the press release and chairman's statement would be misled as to the financial performance of Celtic plc;
7. that the intention of the misleading statements was to influence the value of the pursuer's shares in Celtic plc;
8. that the pursuer was attempting to mislead potential investors in the hope of securing a higher price for his shares in Celtic plc;
9. that the pursuer had failed to present a true and fair view of the business of Celtic plc;
10. that, in his actions as chairman of Celtic plc, he had not complied with the requirements of the Companies Acts and the AIM Rules; and
11. that he had made misleading statements for the purpose of encouraging persons to purchase his shares in Celtic plc, contrary to the Financial Services Act 1986.

The submissions made on behalf of the defenders by Mr Woolman were (a) that the words complained of were not, when understood in their natural and ordinary meaning, defamatory of the pursuer, and (b) that the words complained of did not bear the innuendo pled by the pursuer. He advanced four propositions which, he submitted, were borne out by authorities which he cited. The propositions were:

1. The test to be applied in determining whether a relevant averment of a defamatory imputation has been made is an objective one. That means that the words used are to be viewed from the point of view of the reasonable or right-thinking person, and that the Court should look for the reasonable, natural or necessary interpretation of the words.
2. In the case of an alleged innuendo, it is for the pursuer to specify the meaning which he alleges the words complained of bear.
3. It is for the court to decide as a matter of reasonable inference whether the words will bear the innuendo alleged.
4. If the court holds that the words are not capable of bearing a defamatory meaning, directly or by innuendo, the defenders are entitled to have the case dismissed.

The authorities on which Mr Woolman relied began with Cooper on Defamation, second edition, p. 1:

He continued with reference to a passage in the opinion of Lord Kinnear in Waddell v Roxburgh (1894) 21 R 883 at 886:

In The Capital and Counties Bank Limited v George Henty & Sons (1882) 7 App Cas 741 at 745, Lord Selborne LC said:

In Sim v Stretch [1936] 2 All ER 1237 at 1240, Lord Atkin said:

In Russell v Stubbs Limited 1913 SC (HL) 13 at 20, Lord Kinnear said:

After citing a passage from the speech of Lord Selborne in The Capital and Counties Bank Ltd at 744, where his Lordship said:

Lord Kinnear went on:

In the same case (Russell v Stubbs Limited) Lord Shaw of Dunfermline said at 23:

In Langlands v John Leng & Company Limited 1916 SC (HL) 102 at 105, Viscount Haldane said:

Finally, in Gollan v Thompson Wyles Company 1930 SC 599 at 602, Lord President Clyde said:

At 604 his Lordship continued:

Mr Woolman then turned his attention to the individual imputations which the pursuer alleged were conveyed by the articles complained of, seeking to test them in accordance with the approach approved of in the authorities. It is unnecessary to deal in detail with each of them individually, since the broad submission was that properly understood the articles (a) did not convey any of the defamatory imputations alleged, as a matter of the ordinary and natural meaning of the words used, and (b) did not provide ground for a reasonable inference that any of the defamatory imputations alleged was intended. In relation to imputation (1), however, Mr Woolman's submission was that there was nothing in the words used, or in any reasonable inference that could be drawn from them, that could reasonably be construed as a general attack on the pursuer's honesty in his actions as chairman of Celtic plc, still less in any other business dealings. Imputation (2) was also too broadly expressed to be supported by the words used or any reasonable inference from them. Likewise, there was no proper support in averment for imputation (3), since the only use of the expression "misleading" was in the third article, where it was applied not to the pursuer but to Celtic plc. Imputations (4), (5) and (6) likewise related to the press release, and there was no foundation for treating them as imputations against the pursuer. Imputations (7) to (11), although each introduced by the words "represented directly and by innuendo", were not supported by the plain words of the articles, and therefore required to be tested by whether there was an adequate basis in averment for the innuendo alleged. No ordinary right-thinking reader could have drawn from the articles the inferences on which these imputations depended. These imputations involved the sort of strained interpretation or conjecture which the authorities showed was illegitimate. To allow these averments to be admitted to probation would be countenancing a claim for reparation in respect of a wrong that had not been committed.

In the defenders' Note of Argument a point was taken against the specification of the pursuer's averment of loss of business reputation. In the event, however, Mr Davies, who appeared for the pursuer, accepted that the pursuer's claim was for solatium only, and on that basis Mr Woolman was content not to press his argument about specification of the averments of loss.

In the result, therefore, Mr Woolman's primary submission was that the action should be dismissed. In the alternative he submitted that various passages in Article 4 of the condescendence should be excluded from probation, to the effect of confining the pursuer's case to imputations (7), (8) and (9), and that on the basis of innuendo only.

Mr Davies submitted that the proper approach to analysing whether a statement was defamatory was to proceed in two stages by asking first what the direct or inferential meaning of the words complained of was, then whether the words, so understood, were defamatory. In dealing with the first of these stages, he submitted, the articles were to be read as a whole. The question was what the ordinary reasonable person would understand from the articles as a whole. That did not mean that the individual words or sentences did not require to be examined, but it did mean that words should be read in their context, rather than divorced from that context. Here the three articles should be treated as one whole, since they all appeared in the one edition of the newspaper, and more particularly because the first article ended with a cross reference to the second, and the second ended with a cross reference to the third. In that connection he referred to Russell v Stubbs Limited in which it was held that a published list of decrees in absence had to be read with an explanatory note contained in the journal, pointing out that publication did not imply inability to pay. He also cited Charleston v News Group Newspapers Limited [1995] 2 AC 65, in which it was held that the question whether an article was defamatory had to be answered by reference to the response of the ordinary reasonable reader to the entire publication; and that a publication which, when considered as a whole, was not defamatory, could not support a claim on the basis that some readers would read only a part of it which, when considered in isolation, was defamatory. At this stage what the court had to consider was whether the meaning alleged fell within the range of meanings which the ordinary reasonable reader might understand the articles to bear. Mr Davies referred to Lewis v Daily Telegraph Limited [1964] AC 234, in which Lord Reid said (at 258 - 260):

(See also Muirhead v George Outram & Company Limited 1983 SLT 201, per Lord Grieve at 203.) Once it has been determined that the meaning contended for is one which the ordinary reasonable man might take from the article, Mr Davies submitted, the second question is whether that meaning is defamatory; and that falls to be tested by the criterion formulated by Lord Atkin in Sim v Stretch.

Mr Davies submitted that, in light of the averments made by the pursuer about his position as chairman of and shareholder in Celtic plc, and the strong association in the minds of the general public between him and the activities of the company, the ordinary reader of the articles complained of would not distinguish between what was said about the pursuer and what was said about Celtic plc. Given the close relationship averred between the chairman's statement and the press release, and the pursuer's prominent position in the company, the ordinary reader would be likely to regard the press release as a document issued by, or at least with the authority and approval of, the pursuer. When the third article came to refer to Celtic's "misleading behaviour" in deciding to issue the press release in a form which "homed in on" the record net profit, without a profit and loss account breaking it down, the ordinary reader would see that as directed against the pursuer as much as against the company. That was particularly so since the press release referred back to the chairman's statement. The repetitive references to the pursuer's announced intention to sell his shares, and to the impact of the company's results on that proposed sale; the emphasis on the pursuer "choosing to focus on" or "choosing to highlight" the after-tax profits, or on his "painting things in the best possible light"; and the references to figures being "boosted artificially" and to "misleading behaviour", when all taken together, provided proper support in averment for the proposition that the ordinary reasonable reader of the articles would draw the various inferences as to what was being implied in them that are formulated in Article 4 of the condescendence.

In relation to imputations (9), (10) and (11), Mr Davies submitted that they highlighted the seriousness of the imputation of presenting misleading figures in relation to the financial performance of the company. He recognised, however, that the averments, on which those imputations depended, about the Companies Acts, the AIM Rules and the Financial Services Act, did not, as they stood, bring home knowledge of these matters to the ordinary reasonable reader. It was for that reason that he made in the course of the debate the motion to amend which I have already mentioned. The additional averments, he submitted, made it clear that the pursuer was offering to prove that at least part of the section of the public who would read the articles would have sufficient knowledge of the law relating to company accounts to appreciate that the imputation that the pursuer provided misleading information also carried the imputation that he had acted illegally in the respects averred.

In the result, therefore, Mr Davies submission was that the imputations set out in Article 4 of the condescendence were imputations which the ordinary reasonable reader (or in the case of imputations (9), (10) and (11) a certain sub-group of ordinary reasonable readers) would understand the articles to be making against the pursuer. Those imputations were, in the circumstances, clearly defamatory. The case should accordingly be sent to proof before answer.

I am not concerned at this stage with deciding whether in the articles complained of the defenders did in fact defame the pursuer. My task is to decide whether the pursuer has set out in his averments a relevant case that the articles contained defamatory imputations against him. The authorities which were cited to me as to the nature of that task were expressed in terms of the contrast between the role of the judge in determining the relevancy of the averments of defamation and the role of the jury in determining whether the pursuer had in fact been defamed. Here the pursuer does not seek trial by jury. Mr Davies' motion was for the allowance of a proof before answer, leaving standing not only the pursuer's plea to the relevancy of the defence of fair comment, but also the defenders' plea to the relevancy of the action. By proposing a proof before answer, the pursuer may be taken to have waived his entitlement to a decisive determination in his favour that his pleadings are relevant; but that does not deprive the defenders of their right to a decision as to whether the pursuer's averments are relevant. They are entitled to dismissal of the action if, on the application of the appropriate tests, the pursuer's averments do not relevantly support the proposition that he has been defamed.

Where the words complained of are not "obviously and on the face of it defamatory", it is for the pursuer to set out in his pleadings the meaning which he contends the words bear. He may do so on the basis that that meaning is to be inferred simply from the words used, or on the basis that circumstances extrinsic to the words used show that it is a reasonable inference that the words were intended to convey the imputation alleged (Langlands v John Leng & Company Limited, per Viscount Haldane at 105; Gollan v Thompson Wyles Company, per Lord President Clyde at 602). It seems to me that in the present case, the pursuer does not found on the meaning which the words obviously bear on their face, but on the interpretation which, it is contended, may reasonably be placed on them. The imputations set out in Article 4 of the condescendence all involve a measure of interpretation of the words used. It does not seem to me that there is any substantial difference, in that respect, between those imputations which are averred to have been "represented" in the articles, and those which are averred to have been "represented directly and by innuendo". In judging the relevancy of the averments which explain the imputations which the pursuer alleges were made in the articles, it is in my view necessary to bear in mind not only the averments relating to the "manner and occasion of the publication", but also the other averments by which the pursuer seeks to set the context of the words complained of (The Capital and Counties Bank Limited, per Lord Selborne at 744, as glossed by Lord Kinnear in Russell v Stubbs Limited at 20). In the present case those include the pursuer's averments about the strong association in the minds of the general public between him and the activities of Celtic plc; the averments at the end of Article 3 of the condescendence about the circumstances which would lead the ordinary reader to infer that the comments in the press release were those of the pursuer or made on his behalf; and the averments in Article 4 (as elaborated in the amendment allowed in the course of the debate) about the familiarity of at least a section of the likely readership with the legal requirements affecting company accounts.

I accept Mr Davies' analysis of the questions which the court must address in judging the relevancy of the pursuer's averments. The first stage is to examine what it is averred that the material complained of would be understood to mean. That involves examination of the words used, and of the inferences which they are said to bear. I accept Mr Davies' submission that in that context the articles complained of must be read as a whole. Within the context of a single article, that proposition is clearly borne out by Russell v Stubbs Limited and Charleston v News Group Newspapers Limited. In the particular circumstances if the present case, it is in my view appropriate to take the point further and treat all three articles as constituting one whole. Whether the mere fact that all three appeared in one edition of the newspaper would be sufficient to make that approach appropriate does not in my view require to be determined, because here there is the additional factor that the articles were linked by references leading the reader forward from the first to the second, and from the second to the third. Once it has been determined whether the articles can bear the meaning complained of, the remaining question is whether that meaning is defamatory. That depends on whether it amounts to an injurious imputation against the character or reputation of the pursuer (Cooper on Defamation, page 1; Waddell v Roxburgh per Lord Kinnear at 886), or, in other words, whether it is such as to "tend to lower the [pursuer] in the estimation of right-thinking members of society generally" (Sim v Stretch, per Lord Atkin at 1240).

In determining whether the pursuer has relevantly averred that the article complained of bears a particular meaning, it is in my view clear on authority that the question is not simply whether the article is theoretically capable of bearing that meaning. Although there are dicta which express the question for the court in terms of whether the words are "capable of the defamatory meaning ascribed to them" (Russell v Stubbs Limited, per Lord Kinnear at 20; Sim v Stretch, per Lord Atkin at 1240), it is clear that "capable" must be read in a special sense. Attention must focus on the "reasonable, natural or necessary" interpretation of the words (Russell v Stubbs Limited, per Lord Shaw of Dunfermline at 23). These terms are not synonyms, and I take the view that a reasonable interpretation would be relevant, even if it was not the meaning which the article complained of necessarily bore. When the matter is one of inference, it is the inference of the reasonable person that forms the test (The Capital and Counties Bank, per Lord Selborne LC at 745 ). It is not, pace Viscount Haldane in Langlands v John Leng & Company Limited at 105, a matter of how the words were actually "intended to be construed". Rather the issue is objective: whether the circumstances "provide grounds for a reasonable inference" that the meaning contended for was intended (Gollan v Thompson Wyles Company, per Lord President Clyde at 604). Any "strained and sinister" interpretation is to be left out of account (Russell v Stubbs Limited, per Lord Shaw of Dunfermline at 23), as is the inference that might be drawn by the "unusually suspicious" person (Lewis v Daily Telegraph Limited, per Lord Reid at 259).

That approach must be applied to the averments in Article 4 of the condescendence in which the pursuer sets out the imputations which he maintains were conveyed by the articles complained of. As Lord Reid pointed out in Lewis v Daily Telegraph Limited at 260, "What the ordinary man ... would read into the words complained of must be a matter of impression". My impression is that, with one exception, to which I shall return, the imputations which the pursuer avers the articles conveyed are within the scope of what a reasonable person might understand that the articles were intended to convey. I accept Mr Woolman's submission that much of what the articles said was unexceptionable, and could not reasonably be construed as conveying the imputations set out in Article 4 of the condescendence. Indeed, he was in my view right to identify the use of the phrase "misleading behaviour" in the third article as the crux of the pursuer's case. As Mr Woolman pointed out, that phrase was applied directly to the actings of Celtic plc, not to those of the pursuer. But in my view there is enough, both in the terms of the articles themselves, which focus closely on the pursuer's involvement, and in the pursuer's averments about the strong association in the public mind between him and the activities of the company, to entitle the pursuer to go to inquiry on the basis that the reasonable man reading the articles might well regard the press release as issued by or with the authority of the pursuer and understand the reference to "misleading behaviour" as applying to the actings of the pursuer. If that is once accepted, it seems to me readily to follow that a reasonable man might well interpret the articles as making most of the representations averred in Article 4 of the condescendence. Those averments are repetitive and overlapping in content, but it seems to me that the essence of them is the proposition that the articles conveyed the impression that the pursuer, who had announced his intention of selling his majority shareholding in Celtic plc, and who thus had a personal interest in presenting the financial affairs of the company in the best possible light, had deliberately chosen to emphasise the "artificially boosted" after-tax profit figure, rather than other more relevant figures, in a way that could be characterised as misleading, and had thus sought to mislead potential investors. I do not consider that it can be said at this stage that such an interpretation of the articles lies beyond the "most damaging meaning" (Lewis v Daily Telegraph Limited, per Lord Reid at 259) that a reasonable man might take from them. I have no doubt that the imputations alleged, if held to have been made, could properly be regarded as defamatory.

Imputations (9), (10) and (11) are, in my view, a more specialised elaboration of the same point. They go, in my view, beyond what the ordinary reader would reasonably take from the articles. Had the averments at pages 9E to 10C of the Closed Record stood alone as they were at the outset of the debate, I would have excluded those imputations from probation. I take the view, however, that the averments added by amendment are sufficient to entitle the pursuer to seek to prove that there was a section of the readership of The Herald which would have a sufficient familiarity with the legal requirements relating to company accounts to infer that the general imputation carried with it the more particular imputations (9), (10) and (11). On the other hand, it may be that the more knowledgeable reader would be slow to draw the inference suggested from the single reference to misleading behaviour. That is, in my view, a matter which it is appropriate to leave to be determined after proof.

Although I have formed the opinion that the majority of the averments in Article 4 of the condescendence should be remitted to probation, there is one significant exception. That is imputation (1) - "that the pursuer is not honest in his business dealings and in his actions as Chairman of Celtic plc". I am of opinion that it cannot be concluded on the basis of the averments made by the pursuer that a reasonable reader would have drawn so sweeping an inference from the articles. Their focus was entirely on the pursuer's presentation of the figures for the second half of 1997, and it would in my view be going beyond the most damaging meaning that a reasonable person would put on the articles to construe them as such a general attack on the pursuer's honesty.

In the result, therefore, I shall sustain the defenders' first plea-in-law to the limited extent of excluding from probation the words:

appearing in the third, fourth, fifth and sixth lines of Article 4 of the condescendence. Quoad ultra I shall allow a proof before answer.