Sleepwalking into an obscene damages award

Kenmare ResourcesObscene. Once I had caught my breath, and collected my composure, this was my immediate reaction to learning that a high court jury had awarded 10 million euro in libel damages, made up of €9m in compensatory damages and €1m in aggravated damages. According to RTÉ:

A Co Louth businessman who took a libel action against his former employers after an incident in which he sleep walked naked has been awarded €10m in damages.

The jury agreed that a press release sent out by mining company Kenmare Resources in July 2007 insinuated that Donal Kinsella had made inappropriate sexual advances to company secretary Deirdre Corcoran on a business trip in Mozambique in May that year.

The award is the highest award of damages for defamation in the history of the State. … Lawyers for Kenmare Resources were granted a stay on the award pending an appeal to the Supreme Court. … Kenmare Resources issued a statement saying it was ‘shocked’ at the verdict and it will ‘immediately and vigorously appeal the decision’.

The Irish Times added: “Outside court, Mr Kinsella (67) said he was ‘exhilarated and vindicated’ by the jury’s verdict”. I do not in any way begrudge him the vindication of his reputation, but does this really require 10 million euro? Indeed, the reported that the judge (Mr Justice Éamon de Valera) “appeared surprised at the scale of the damages being awarded”.

Appeals to the Supreme Court are pending in three other high profile cases of involving very high levels of damages. In a libel action against the Mirror, businessman Denis O’Brien was originally awarded Ir£250,000 (c€317,000) by a jury in the High Court. However, on appeal, in O’Brien v Mirror Group Newspapers [2000] IESC 70 (25 October 2000), the Supreme Court set it aside as disproportionately high and sent the case back to the High Court for a retrial on the issue of damages only. In that retrial in 2006, a High Court jury awarded Mr O’Brien record damages of €750,000; Mr O’Brien declared himself happy to have been “vindicated” by the award; and the Mirror announced it would appeal (update: it seems from this comprehensive post on defamation damages that the case subsequently settled). In 2008, a High Court jury awarded €900,000 to Martin McDonagh, whom the Sunday World described as a “Traveller drug king” and a “loan shark”; Mr McDonagh declared himself “delighted“; and the paper announced that it would appeal. In 2009, a High Court jury awarded awarded PR consultant Monica Leech a record €1.87m in damages after she won a libel action against Independent Newspapers; Ms Leech declared herself “absolutely vindicated“; and Independent Newspapers announced that they would appeal. Today’s award follows exactly this same pattern: a record award, a vindicated plaintiff, and an intention to appeal.

It will be very interesting if the Supreme Court hears these appeals in this order. In the O’Brien appeal, Chief Justice Keane commented ([2000] IESC 70 (25 October 2000) [42]) that the Supreme Court has never exercised the power to substitute for the sum awarded by the High Court such sum as the Supreme Court thinks appropriate, and Mrs Justice Denham (at paras [90] and [94]) left for another case the matter as to whether it would be open to the Supreme Court to substitute an award of damages. It would all have been so much simpler if the Supreme Court, having said that the original award of Ir£250,000 (c€317,000) was too much, had gone on to substitute its own, lower, assessment. It would be have been absurd if the Supreme Court were to hold that the second award of €750,000 was also disproportionately high, but declined to substitute a lower amount, and simply sent the case back to the High Court for a third time. This appeal is would have been the perfect case in which the Court could accept have accepted that it does did indeed possess a jurisdiction to substitute its own assessment of libel damages prior to the enactment of sections 13 and 31 of the Defamation Act, 2009 (also here), and all four cases – O’Brien, McDonagh, Leech and Kinsella – would all be appropriate cases in which to exercise that power. Moreover, by the time the appeal in Mr Kinsella’s case came on, the principles by which the Supreme Court would reduce libel damages would have been clarified in the earlier three cases.

In these cases, the juries in effect received no guidance whatsoever about the quantification of libel damages. In John v MGN Ltd [1997] QB 586, [1995] EWCA Civ 23 (12 December 1995) Lord Bingham MR said that such juries “were in the position of sheep loosed on an unfenced common, with no shepherd”. Indeed, the juries in these cases have increasingly gone progressively further astray. All four cases were taken before the recent Defamation Act, 2009 (also here) came into force on 1 January this year. That Act makes several changes.

First, it provides for speedy non-monetary means of vindication of plaintiffs’ reputations (sections 28, 30 and 34). So, where a plaintiff simply wants vindication, obscene damages awards will not be necessary. Second, in a significant departure from the law that applied in the above four cases, section 31 of the Act allows the parties to make submissions to the jury in relation to damages, and requires the judge to direct the jury on the issue. The section sets out several matters to be considered, including the nature and gravity of any allegation, the means and extent of publication, and any offer of apology or amends. Section 32 codifies the position on aggravated damages. Third, section 13 provides that

(1) Upon the hearing of an appeal from a decision of the High Court in a defamation action, the Supreme Court may, in addition to any other order that it deems appropriate to make, substitute for any amount of damages awarded to the plaintiff by the High Court such amount as it considers appropriate.

(2) In this section “ decision ” includes a judgment entered pursuant to the verdict of a jury.

Today’s award of €10m demonstrates the vital necessity of these reforms. If they work as intended, then obscenely high damages awards in libel cases should become a thing of the past.