All England Law Reports/1995/Volume 3 /McDonald's Corp and another v Steel and another - [1995] 3 All ER 615

 

 

[1995] 3 All ER 615

 

McDonald's Corp and another v Steel and another

 

COURT OF APPEAL, CIVIL DIVISION

 

NEILL, STEYN AND PETER GIBSON LJJ

 

 

1, 15, 25 MARCH 1994

 

Pleading – Striking out – Abuse of process of the court – Libel – Defendants pleading justification and fair comment – Parts of defence and particulars struck out on grounds of insufficient supporting evidence – Criteria for pleading justification and fair comment – Principles to be applied by court in considering interlocutory application to strike out for abuse of process – RSC Ord 18, r 19.

 

In 1990 the plaintiffs issued libel proceedings against the defendants in respect of serious allegations about their operation of a chain of fast-food restaurants contained in a leaflet which the defendants had published and distributed in the United Kingdom. The defendants pleaded justification and fair comment in their statement of defence and in response to a number of interlocutory directions served further and better particulars of their defence. They sought further discovery from the plaintiffs, but their application was adjourned until both parties had served full witness statements of all witnesses upon whose evidence they intended to rely at trial. After service of the witness statements the plaintiffs applied to strike out certain parts of the defence and particulars of justification and fair comment. The judge ruled that he would decide the striking out application before considering the defendants' application for further discovery, on the basis that it would be an abuse of the court's process to allow the defendants to put forward a plea of justification when they had no clear and sufficient evidence to support it in the hope that discovery would then force the plaintiffs to produce the necessary evidence which the defendants themselves lacked. The judge heard the striking out application and made an order striking out substantial parts of the defendants' pleadings and requiring other parts to be struck out unless

[1995] 3 All ER 615 at  616

 

witness statements containing admissible evidence to support other passages in the pleadings were served within specified times. The defendants appealed.

 

Held – The appeal would be allowed for the following reasons—

 

(1) A plea of justification to a libel action was not required to be supported by 'clear and sufficient evidence' before being properly placed on the record, since that threshold test, if applied literally, would impose an unfair and unrealistic burden on a defendant whose plea was properly particularised but who was entitled to seek support for his case from documents revealed in the course of discovery or from answers to interrogatories. Nevertheless, before pleading justification, a defendant should (i) believe that the words complained of were true, (ii) intend to support the defence at trial and (iii) have reasonable evidence to support the plea or reasonable grounds to suppose that sufficient evidence to prove the allegations would be available at trial (see p 621 e f j and p 623 j, post).

 

(2) The correct approach of the court in considering whether to allow an interlocutory application under RSC Ord 18, r 19 to strike out a pleading for abuse of process was to determine whether the defendant's case in relation to a particular passage was incurably bad. The power to strike out was a draconian remedy which was to be employed only in clear and obvious cases where it was possible to say at an interlocutory stage and before full discovery that a particular allegation was incapable of being proved. On the facts, the approach adopted by the judge was incorrect because, while it might have been clear in relation to some passages in the defendants' pleadings that no admissible evidence would ever be forthcoming, there were many other passages where the defendants' case, although very weak when the striking out order was made, might have been greatly improved or even transformed by the date of the trial (see p 623 e to j, post).

 

 

Notes

 

 

For power to strike out pleadings, see 37 Halsbury's Laws (4th edn) paras 430–436.

 

 

Cases referred to in judgments

 

 

Associated Leisure Ltd v Associated Newspapers Ltd [1970] 2 All ER 754, [1970] 2 QB 450, [1970] 3 WLR 101, CA.

 

Atkinson v Fitzwalter [1987] 1 All ER 483, [1987] 1 WLR 201, CA.

 

Mangena v Edward Lloyd Ltd (1908) 98 LT 640.

 

Prager v Times Newspapers Ltd [1988] 1 All ER 300, [1988] 1 WLR 77, CA.

 

Steamship Mutual Underwriting Association Ltd v Trollope & Colls Ltd (1986) 6 Con LR 11, CA.

 

Appeal

 

The defendants, Helen Marie Steel and David Morris, appealed from the decision of Bell J made on 15 November 1993 whereby he ordered that parts of their defence and the particulars served thereunder to a libel action brought by the plaintiffs, McDonald's Corp and McDonald's Restaurants Ltd would be struck out under RSC Ord 18, r 19 as an abuse of the process of the court and directed that other parts would be struck out unless witness statements containing admissible evidence to support other passages in the pleadings were served within specified times. The facts are set out in the judgment of Neill LJ.

[1995] 3 All ER 615 at  617

 

Patrick Milmo QC and David Sherborne (instructed by Richards Butler) for the defendants.

 

Richard Rampton QC and Timothy Atkinson (instructed by Barlow Lyde & Gilbert) for the plaintiffs.

 

Cur adv vult

 

25 March 1994. The following judgments were delivered.

 

 

NEILL LJ.

 

This is an appeal by the defendants, Helen Marie Steel and David Morris, from the order of Bell J dated 15 November 1993 striking out parts of their defence and particulars in an action brought against them by McDonald's Corp and McDonald's Restaurants Ltd. McDonald's Corp is a company incorporated in the State of Iowa in the United States and is the proprietor of the McDonald's chain of restaurants in the United States. In other parts of the world McDonald's restaurants are owned and run by subsidiary companies or by franchisees or by means of joint ventures between McDonald's Corp and a partner. McDonald's Restaurants Ltd is a wholly-owned subsidiary of McDonald's Corp and is responsible for managing a large number of McDonald's restaurants within the United Kingdom. I shall refer to the plaintiffs under the general name 'McDonald's'.

 

On various dates between October 1989 and April 1990 the defendants with other persons published and distributed in this country a leaflet entitled 'What's wrong with McDonald's?'.

 

The leaflet contained a number of serious allegations against McDonald's. For the purpose of the present proceedings these allegations have been grouped under seven headings. It is sufficient to refer to the two headings to which this appeal relates. These are headings (1) and (7)—'Destruction of the Environment' and 'Employment Practices'.

 

It is said by McDonald's that in relation to the allegations under heading (1) the defendants' leaflet alleged that they had purchased large tracts of land in poor countries and destroyed vast areas of central American rainforest to create grazing pastures for cattle. As a result native farmers had been evicted from land where food might have been grown for the people living there.

 

The allegations under heading (7) related to the employment practices of McDonald's. McDonald's assert that the leaflet alleged that they had exploited their workforce and deterred their employees from becoming members of trade unions.

 

The writ in the action was issued on 20 September 1990 and served on the defendants together with the statement of claim. On 16 November 1990 the defendants served their defence setting out pleas of justification and fair comment.

 

There then followed a large number of interlocutory applications which led to further and better particulars of justification and fair comment being served by the defendants on 23 October 1991, on 3 December 1991, on 31 July 1992 and on 11 March 1993.

 

The summons for directions was heard by Drake J on 2 February 1993. On that occasion he ordered, inter alia, that lists of documents should be served, that there should be inspection within 14 days after service of the lists and that witnesses' statements and experts' reports should be exchanged.

 

The case came back before Drake J on 7 July 1993. On that occasion Drake J ordered, inter alia, that the defendants should serve full witnesses' statements of

[1995] 3 All ER 615 at  618

 

all witnesses upon whose evidence they intended to rely at the trial by 28 July 1993. At the same time he ordered that the defendants' application that further discovery be made by McDonald's be adjourned until after the service of the witnesses' statements. The defendants sought but were refused leave to appeal from that order to the Court of Appeal.

 

On 30 September 1993 McDonald's applied to strike out parts of the defence and parts of the particulars of justification and fair comment served thereunder. This summons came on for hearing before Bell J on 2 November 1993. By that time Bell J had become the judge to whom the case was assigned for any further interlocutory hearings and for the trial.

 

Before Bell J on 2 November there were a number of applications: (1) an application by the plaintiffs to strike out parts of the defence and the particulars served thereunder; (2) an application by the defendants that McDonald's should give further discovery; and (3) an application by the plaintiffs for an order for the withdrawal of a number of interrogatories which had been served upon them.

 

At the hearing on 2 November counsel for McDonald's put forward five propositions in support of his submissions (a) that parts of the defence and the particulars should be struck out and (b) that the striking out application should be decided before the application for further discovery was dealt with. It is necessary to refer only to the first two of these propositions which the judge in his judgment on 3 November recorded in these terms:

 

'The first proposition is that a general plea of justification of libel without particulars of that justification is bad. The defendants must state the facts upon which their plea of justification is based in order to give the plaintiffs a proper opportunity of denying them†… The plaintiffs secondly contend that the defendants should not have pleaded justification or any part of it unless they had clear and sufficient evidence to support it or the material part of it … In other words the plaintiffs contend that if it is apparent that clear and sufficient evidence does not exist to support the plea of justification or the material part of it then the plea or the material part of it is bad. Since witness statements have been disclosed in this case one can, at this stage in the proceedings, look with some advantage to see whether the defendants have clear and sufficient evidence to support the parts of the particulars of justification which the plaintiffs seek to strike out. When doing so one can look at the witnesses of the plaintiffs as well as of the defendants in so far as their statements have been disclosed, since the defendants are entitled to take what they can from the plaintiffs' statements. The same applies to documents which have been so far disclosed. Looking at the witness statements which have been disclosed does not amount to deciding the case on those witness statements. If there appears to be some clear and sufficient evidence which might be credible which supports the plea of justification then those particulars can stand. If not, they must go.'

 

 

The defendants on the other hand submitted that any question of striking out could only be considered after full discovery had been given, including the answers to the interrogatories.

 

In substance the judge accepted the argument for the plaintiffs. He said:

'In my judgment, so far as those parts, if any, of the plea of justification which are bad for lack of particularity or clear or sufficient evidence to support them are concerned, I shall proceed to hear the application to strike out and shall strike them out now before considering further discovery or

 

[1995] 3 All ER 615 at  619

answers to interrogatories. If I took any other course the defendants would in fact be allowed to do that which the authorities to which I have been referred clearly say they are not to do: that is, to put forward a plea of justification when they have no clear and sufficient evidence to support it, and to do so in the hope that discovery will then force the plaintiffs to produce the necessary evidence which the defendants themselves lack. Such a course would, in my view, amount to an abuse of the process of the court quite apart from any question of consequent unnecessary delay of the trial, or extension of the length of the trial, or unnecessary and costly discovery.'

 

 

Having given the ruling as to the order in which he would deal with the applications, the judge then proceeded to hear detailed submissions on the application to strike out parts of the defence and the particulars thereunder. The hearing continued on 4, 5 and 12 November 1993. On 15 November 1993 the judge made an order striking out substantial parts of the defendants' pleadings and providing that other parts would be struck out unless witnesses' statements containing admissible evidence to support other passages in the pleadings were served within specified times. For the purposes of the present judgment it is unnecessary to refer to the full terms of the order; it is sufficient to record that all the passages in the pleadings under the first heading (the destruction of the environment) were struck out and that the great majority of the passages in the pleadings under the seventh heading (employment practices) were also struck out.

 

At the time when he made his order on 15 November 1993 Bell J delivered a detailed and comprehensive judgment giving his reasons for striking out the individual passages in the defendants' pleadings. It is right to pay tribute to the care with which these extensive pleadings were analysed and addressed. For the purpose of the present appeal, however, it is unnecessary to set out at length any part of the judgment of 15 November. The question with which this court is concerned does not relate to particular passages in the pleadings but is whether the judge approached the striking out application on the correct basis.

 

It is apparent from the judgment which Bell J delivered on 3 November 1993 that in large measure he adopted the submissions put before him by counsel for McDonald's. These submissions, which were substantially reproduced in the skeleton argument provided to this court, were on the following lines.

 

(1) That it is a long-established rule that a defendant to a defamation action who pleads justification (or fair comment) must give full and precise particulars of the facts and the matters on which he relies in support of the plea.

 

(2) That it is, however, also a rule that a plea of justification should not be placed on the record unless the pleader has 'clear and sufficient evidence' to support it. Reference was made in support of this submission to the following passage in the judgment of Lord Denning MR in Associated Leisure Ltd v Associated Newspapers Ltd [1970] 2 All ER 754 at 757–758, [1970] 2 QB 450 at 456:

'Like a charge of fraud, [counsel] must not put a plea of justification on the record unless he has clear and sufficient evidence to support it.'

 

 

Lord Denning MR took the phrase 'clear and sufficient evidence' from a passage in Gatley Libel and Slander (6th edn, 1967) p 462. Attention was also drawn in the skeleton argument to unqualified repetitions of Lord Denning MR's dictum in two later cases in the Court of Appeal: Atkinson v Fitzwalter [1987] 1 All ER 483 at 485, [1987] 1 WLR 201 at 204 and Prager v Times Newspapers Ltd [1988] 1 All ER 300 at 309, [1988] 1 WLR 77 at 89.

[1995] 3 All ER 615 at  620

 

(3) That the obligation of the plaintiff to give discovery (or to answer interrogatories) in relation to a plea of justification (or fair comment) does not arise until full and precise particulars of the facts and matters relied upon are given by the defendant. Moreover the discovery is confined to the matters put in issue by those particulars.

 

(4) That where it can be demonstrated to the satisfaction of the court that a plea of justification or fair comment has no proper basis in fact, it may be struck out as an abuse of the process of the court either under RSC Ord 18, r 19(1)(d) or under the inherent jurisdiction of the court.

 

(5) That under the former practice, provided the plea of justification was properly particularised, it was very rare for a plaintiff to be able to demonstrate that it should be struck out as an abuse of process on the ground that it was unsupported by evidence. The reason was that in the ordinary way there was no acceptable means by which the court could test the factual validity of an apparently proper plea.

 

(6) That the position has now changed, however, by reason of the introduction in November 1992 of the new Ord 38, r 2A, which provides for the exchange of witnesses' statements. It is now possible, after the witnesses' statements have been exchanged, to test whether the plea is or is not supported by 'clear and sufficient evidence'.

 

The judge accepted these submissions. Basing himself on them and on the authorities cited by counsel, Bell J held that in the context of this case a plea of justification was bad 'firstly, if it lacks sufficient particularity; secondly, if there is not clear and sufficient evidence to support it'. Furthermore, it is plain from the terms of the order made on 15 November 1993 that the 'clear and sufficient evidence' required had to be admissible evidence.

 

The defendants have now appealed to this court.

 

The appeal raises questions of difficulty and importance. On the one hand reliance can be placed on the principle that it is in the public interest that litigation should be conducted as expeditiously and economically as possible and that at the trial the evidence should be directed to what is truly at issue between the parties. It can therefore be argued that it is now possible after the witnesses' statements have been exchanged to narrow the pleaded issues further by excluding those which are based on pleas which can be seen to be unsupported by evidence. For this purpose the salutary remedy of striking out can be employed. Furthermore, if the exchange of witnesses' statements precedes the completion of discovery it will also be possible to limit the scope of the discovery by postponing any further discovery until after the decision on the striking out application has been reached.

 

On the other hand it can be argued that the procedure adopted in this case introduces a fresh interlocutory step into legal proceedings and one which may lead to additional delay and expense. Furthermore, it can be said, the new rule providing for the exchange of witnesses' statements was never intended to lead to a hearing at which the strength of the evidence should be tested perhaps weeks or months before the trial and perhaps before a different tribunal from the court of trial. Such a course is particularly undesirable where the trial will or may take place before a jury.

 

In seeking to find the solution to the problems posed by these conflicting arguments I propose to consider the matter at the following stages in the case: (i) the service of the defence, (ii) an interlocutory application to strike out, (iii) at the outset of the trial and (iv) at the conclusion of the evidence.

[1995] 3 All ER 615 at  621

 

The service of the defence

 

In the course of the argument before us it became necessary to examine the origin of the phrase 'clear and sufficient evidence', which, it is believed, has appeared in all the editions of Gatley since the first edition. The authority given in Gatley is a passage in the judgment of Darling J in Mangena v Edward Lloyd Ltd (1908) 98 LT 640 at 643. One of the issues in Mangena's case was whether an abstract from a Parliamentary paper had been published by the defendants bona fide and without malice. It was in that context that Darling J referred to an earlier case where a plea of justification had been placed on the record but the defendant at the trial had offered no evidence in support of it. Darling J added:

'… a plea of justification ought never to be put on the record unless the person believes in it, and is prepared to support it with evidence.'

 

 

It was not suggested in the arguments presented to us that the test 'clear and sufficient evidence' had been previously subjected to critical examination. Nor does it appear that these words formed part of the ratio decidendi in Associated Leisure. In the present case, however, we have had the benefit of argument as to the threshold which has to be reached before a plea of justification can properly be put on the record.

 

In the light of these arguments and as a matter of principle I am satisfied that the suggested test of 'clear and sufficient evidence' cannot be accepted. If applied literally, it would impose an unfair and unrealistic burden on a defendant. Furthermore, it does not appear to be supported by what Darling J said. It is true that a pleader must not put a plea of justification (or indeed a plea of fraud) on the record lightly or without careful consideration of the evidence available or likely to become available. But, as counsel for the plaintiffs recognised in the course of the argument, there will be cases where, provided a plea of justification is properly particularised, a defendant will be entitled to seek support for his case from documents revealed in the course of discovery or from answers to interrogatories.

 

In recent times there has been what I regard as a sensible development whereby pleadings in libel actions are treated in the same way as pleadings in other types of litigation. It is therefore instructive to refer to a short passage in the judgment of May LJ in Steamship Mutual Underwriting Association Ltd v Trollope & Colls Ltd (1986) 6 Con LR 11 at 27, where, on an application by a firm of structural engineers that the claim against them should be struck out, he said:

'In my opinion, to issue a writ against a party … when it is not intended to serve a statement of claim, and where one has no reasonable evidence or grounds on which to serve a statement of claim against that particular party, is an abuse of the process of the court.'

 

 

Actions for defamation take many forms. The allegations complained about may vary from the moderately serious to the very grave. It may therefore be unwise to put forward a formula which will match all occasions. Nevertheless I am satisfied that before a plea of justification is included in a defence the following criteria should normally be satisfied: (a) the defendant should believe the words complained of to be true; (b) the defendant should intend to support the defence of justification at the trial; and (c) the defendant should have reasonable evidence to support the plea or reasonable grounds for supposing that sufficient evidence to prove the allegations will be available at the trial.

 

A similar approach should be adopted towards facts which are relied upon in support of a plea of fair comment.

[1995] 3 All ER 615 at  622

 

It is to be remembered that the defences of justification and fair comment form part of the framework by which free speech is protected. It is therefore important that no unnecessary barriers to the use of these defences are erected, while at the same time the court is able to ensure that its processes are not abused by irresponsible and unsupported pleadings.

 

An interlocutory application to strike out

 

The Rules of the Supreme Court make provision for striking out pleadings and indorsements. Order 18, r 19 provides:

'(1) The Court may at any stage of the proceedings order to be struck out or amended any pleading or the indorsement of any writ in the action, or anything in any pleading or the indorsement, on the ground that—(a) it discloses no reasonable cause of action or defence, as the case may be; or (b) it is scandalous, frivolous or vexatious; or (c) it may prejudice, embarrass or delay the fair trial of the action; or (d) it is otherwise an abuse of the process of the Court; and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.

 

(2) No evidence shall be admissible on an application under paragraph 1(a) …'

 

 

In addition to the power of the court to strike out pleadings under r 19 the court has an inherent and general jurisdiction to stay all proceedings before it which are an abuse of its process.

 

It will be seen from the wording of r 19(2) that, by necessary implication, evidence is admissible on an application to strike out a pleading on the ground that it is an abuse of the process of the court. Evidence is likewise admissible on an application under the court's inherent jurisdiction. It follows therefore that there can be no objection in principle to an application being made to the court on the basis that a statement of claim or a defence should be struck out as an abuse of process because, as disclosed in the affidavits filed in support of the application, the claim or defence is incapable of proof.

 

Furthermore, following the introduction of the practice whereby witnesses' statements are exchanged in accordance with Ord 38, r 2A, there may well be cases where after the witnesses' statements have been served it may be possible to demonstrate that the pleaded case is hopeless. For example, in a libel action it might become clear that the defendant had no evidence available other than rumour and that there was no possibility that the case was going to be improved by discovery.

 

It is to be remembered, however, that the evidence on which a defendant may be entitled to rely at trial may take a number of different forms. It may include: (a) his own evidence and the evidence of witnesses called on his behalf, (b) evidence contained in Civil Evidence Act statements, (c) evidence contained in his own documents or in documents produced by third parties on subpoena, (d) evidence elicited from the plaintiff or the plaintiff's witnesses in the course of cross-examination, (e) answers to interrogatories and (f) evidence contained in documents disclosed by the plaintiff on discovery.

 

At the outset of the trial

 

I understand that it has become the practice in actions for defamation to consider at the outset of the trial whether some parts of the defence should be struck out on the basis that it has become apparent that some of the matters pleaded are not going to be supported by evidence. I can understand that in an

[1995] 3 All ER 615 at  623

 

appropriate case this is a sensible course which is likely to shorten the trial. On the other hand there may be cases where a defendant pleads some matter which he believes to be true but which he may still be unable to prove by admissible evidence otherwise than by eliciting an answer in cross-examination. Each case will have to be considered on its own facts.

 

At the close of the evidence

 

By this stage all the evidence will be before the court. Where the trial is with a jury (or even where the trial is by a judge alone) I can see considerable merit in removing from the pleadings those allegations of which there is no evidence for the jury to consider.

 

The present case

 

I have come to the clear conclusion that the approach adopted by the judge in this case was incorrect. It may well be that there were some passages in the pleadings which were wholly unsupported by any evidence in the witnesses' statements and where it was clear from the discovery already given and from the other circumstances that no admissible evidence was ever going to be forthcoming. In these cases an order to strike out a relevant passage would have been fully justified.

 

It seems clear, however, that there were many other passages where the defendants' case, though very weak in November 1993, might have been greatly improved or even transformed by the date of the trial. We were not invited to consider the individual passages, but I am satisfied that the correct approach is to consider whether or not the defendants' case in relation to a particular passage is incurably bad. The power to strike out is a draconian remedy which is only to be employed in clear and obvious cases. I have already set out the wide variety of the evidence which a defendant may be able to rely upon at the trial. I anticipate therefore that it will only be in a few cases where it will be possible to say at an interlocutory stage and before full discovery that a particular allegation is incapable of being proved.

 

I would therefore allow this appeal and remit the matter to the judge for further consideration, if necessary. It may be, however, that the parties will be able to prune the pleadings on the basis of the guidance given in this judgment. I am satisfied that it is right to strike out passages in the defence or the particulars which can be described as 'incurably bad' because there will be no evidence to support them. Unless, however, the passages meet this test I consider the pleadings should be left until trial.

 

For the avoidance of doubt I would only add that nothing I have said is intended to apply to other parts of the judge's order dated 15 November 1993 where parts of the pleadings were struck out on other grounds.

 

 

STEYN LJ.

 

I agree.

 

 

PETER GIBSON LJ.

 

I also agree.

 

Appeal allowed. Leave to appeal to the House of Lords refused.

 

Paul Magrath Esq Barrister.