Wright v McCormack

Factual and Procedural Background

The appeal concerns whether damages for defamation can be reduced to reflect the claimant's fraudulent exaggeration of the claim, a reduction made by the trial judge. The Appellant, a businessman active in cryptocurrency who claims to be the creator of Bitcoin under the pseudonym "Satoshi," sued a blogger and podcaster (the Appellee) for libel following tweets and a YouTube video denying the Appellant's claim and accusing him of fraud.

At trial, the Appellee admitted responsibility for the publications and their defamatory meanings. The Appellee abandoned any defence of truth, so the case turned on whether serious harm to reputation had been caused, as required by the Defamation Act 2013. The trial judge found serious harm was proven but also found that the Appellant had deliberately advanced a false case on serious harm, supported by false evidence, which led the judge to reduce damages to a nominal sum of £1. The Appellant appeals solely on the ground that this reduction was wrong in law.

Legal Issues Presented

1. Whether damages for defamation may lawfully be reduced to reflect the claimant's fraudulent exaggeration or falsehoods advanced in litigation.
2. Whether the trial judge was correct in treating the claimant's deliberate falsehoods as relevant to the assessment of damages for injury to reputation.
3. The proper application of principles regarding compensation and vindication in defamation damages when the claimant has engaged in litigation misconduct.

Arguments of the Parties

Appellant's Arguments

• The trial judge erred in law by reducing general compensatory damages to a nominal sum based on the claimant's litigation misconduct.
• There is no principle in tort or contract law allowing damages to be reduced due to a claimant's dishonest exaggeration of a genuine claim; misconduct should be addressed by other means such as striking out, costs, or contempt proceedings.
• The principle from Campbell v News Group Newspapers Ltd that a claimant’s conduct up to trial can reduce damages is wrongly decided or at least overbroad and inconsistent with later authority.
• Damages for injury to reputation should adhere to the restitutio principle, aiming to restore the claimant to the position before the harm, and misconduct unrelated to the injury does not justify reduction.
• Post-publication misconduct should not reduce damages unless it is relevant to the gravamen of the libel.
• The judge's use of moral concepts such as "unconscionability" is inappropriate and risks unpredictability.
• There was no evidence properly establishing disreputable facts to justify reduction beyond the rejected false case.

Appellee's Arguments

• The trial judge correctly applied established principles of defamation law, independently of Campbell, to reduce damages based on the claimant’s deliberate falsehoods.
• Damages in defamation serve to compensate for injury, vindicate reputation, and address distress; vindication has a moral element and is relevant to assessing damages.
• The claimant’s fraudulent conduct in litigation so gravely undermined his reputation that substantial damages would be unconscionable and unnecessary for vindication.
• Falsehoods and deception presented by the claimant are properly regarded as disreputable facts relevant to the claimant's entitlement to damages.
• The law of defamation differs from personal injury in that the claimant’s dishonesty can affect the reputation protected by the tort, justifying reduction of damages.
• Precedents such as Joseph v Spiller and FlyMeNow Ltd v Quick Air Jet Charter GmbH support reductions where claimants have engaged in dishonest litigation conduct.
• The judge’s approach is consistent with general tort principles and the particular nature of defamation damages.

Table of Precedents Cited

Court's Reasoning and Analysis

The court carefully analysed the nature of damages in defamation, emphasizing that damages serve to compensate for reputational injury, vindicate the claimant's reputation, and address distress. Vindication is a distinctive element in defamation damages with a moral aspect, aiming to restore the claimant's reputation by convincing others of the baselessness of the defamatory charge.

The court accepted the trial judge’s unchallenged factual findings that the claimant deliberately advanced a false case on serious harm, supported by false evidence, thereby engaging in misconduct that attempted to deceive the court. This misconduct was relevant to the claimant’s entitlement to damages because it so damaged the claimant’s reputation that awarding substantial damages would not further vindicate it.

The court rejected the appellant’s argument that general tort principles prevent reduction of damages based on litigation misconduct, distinguishing defamation from personal injury where dishonesty does not affect the underlying injury. It held that in defamation, dishonesty in litigation can affect the reputation protected by the tort and thus the appropriate damages.

The court found that the judge’s approach was a legitimate application of defamation law principles, consistent with overarching tort principles and the particular nature of defamation damages. It acknowledged the uniqueness of defamation damages and the established principle that damages reflect the claimant’s deserved reputation. The judge’s reasoning that the claimant’s lies rendered a substantial award unconscionable was regarded as a moral expression of the vindicatory purpose rather than a separate legal test.

The court noted that the relevant precedents, including Joseph v Spiller and FlyMeNow Ltd, supported the reduction of damages where claimants engaged in dishonest litigation conduct. It also distinguished personal injury cases cited by the appellant as irrelevant to the unique features of defamation damages.

Though the court considered the Campbell decision, it concluded it was not essential to its reasoning and that the principle that claimant conduct may reduce damages is well-founded in defamation law. The court declined to overturn Campbell but acknowledged it is somewhat of an outlier and not binding on all aspects of defamation damages.

The court emphasized that the assessment of damages, including the weight given to relevant disreputable conduct, is a matter of trial judge’s discretion and that the appellant’s all-or-nothing approach to the appeal was not persuasive.

Holding and Implications

The court’s final decision is to DISMISS THE APPEAL.

The holding confirms that in defamation claims, damages may be lawfully reduced to a nominal sum where the claimant has deliberately advanced falsehoods in litigation that gravely undermine the claimant’s reputation and negate the need for substantial vindication. This principle reflects the unique nature of defamation damages, which incorporate a vindicatory element absent in other torts.

The decision directly affects the parties by upholding the trial judge’s reduction of damages to nominal due to the claimant’s fraudulent conduct. However, it does not establish a broad precedent permitting reductions of damages for any litigation misconduct but confines such reductions to cases where misconduct materially affects the claimant’s reputation and the purpose of vindication. The ruling maintains coherence with established defamation law principles and distinguishes defamation from other torts regarding the impact of claimant dishonesty on damages.