HomeInsightsHigh Court stresses need for clarity in settlement agreements: Sabby Mionis v Democratic Press SA

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This article was written by Sarah Branthwaite, Solicitor, Wiggin LLP and first published in the Entertainment Law on 2 April 2015.

*Ent. L.R. 100  With Sabby Mionis v Democratic Press SA,1 the High Court has found that an undertaking in a settlement agreement entered into by Mr Sabby Mionis and Democratic Press SA pursuant to libel proceedings was too vague and uncertain to be enforceable. The clause effectively restricted Democratic Press from “referring” to Mr Mionis or to his “immediate family” in any subsequent publications. However, in the context of what the parties understood the clause to mean at the time of the agreement, including the acceptance of Democratic Press’ continuing right and duty to report accurately and fairly *Ent. L.R. 101  on the story in question, the undertaking was found to be not sufficiently clear to be enforceable. Accordingly, Democratic Press was not in breach of the settlement agreement and Mr Mionis’s application for an injunction and an inquiry as to damages as a result of the alleged breach was dismissed.

Background

The libel proceedings concerned a series of articles published in the Greek language newspaper Demokratia between October 29, 2012 and May 13, 2013, about the “Lagarde list”, which had been passed in 2010 by the then Finance Minister of France, Madame Lagarde, to the Greek Government with a view to helping the relevant authorities to identify individuals involved in tax evasion. The list consisted of a spreadsheet containing the names of approximately 2000 Greek citizens linked to bank accounts held at the Geneva branch of HSBC. The list was originally passed in confidence, but it was subsequently published in full (both in hard copy and online) on October 27, 2012 by Hot Doc magazine. The contents of the list therefore became widely known.

Mr Mionis, a businessman and philanthropist and, until 2009, the chief executive of CM Advisers Ltd, claimed that the defamatory meaning of the articles was that he had knowingly and dishonestly facilitated tax evasion on a large scale and that, following publication of the list, he had immediately sought to shut down his businesses in order to cover his tracks. He denied these allegations and issued libel proceedings against Democratic Press.

Mr Mionis said Demokratia’s articles formed part of “a sophisticated campaign against him” and included “gratuitous and deeply offensive personal attacks upon him”. There were 18 articles altogether, all of which were published on the front page of the newspaper’s website and most of them on the front page of the hard copy editions. Democratic Press accepted that the articles could have been read in the United Kingdom “by a very few people on the internet”.

The settlement agreement

The parties entered into a settlement agreement by way of a resolution to the libel proceedings. The agreement included, at cl.3.2, an undertaking by Democratic Press not to publish, in any jurisdiction, any articles or statements which “refer to” Mr Mionis or “his immediate family”, a concept expressly defined as including his mother, father, brother or children, but subject to certain exceptions including reports of court proceedings or parliamentary inquiries.

Mr Mionis subsequently alleged that Democratic Press had breached this clause by publishing two articles in Demokratia in January 2014 (both in hard copy and online) and a further article in the June 2014 edition, which referred indirectly to Mr Mionis and to his brother in the context of details about associates of Mr Mionis and various bank transfers to Swiss bank accounts. Mr Mionis sought an injunction against Democratic Press and an inquiry as to damages resulting from the alleged breaches.

Democratic Press resisted the allegations of breach, advancing a number of arguments: that cl.3.2 was too vague to be enforceable; alternatively, that it should not be enforced in light of ECHR art.10; and in any event, on a reasonable construction of the settlement agreement, the articles in question did not amount to a breach.

Decision

The judge, Sir David Eady, focused on the first of the three prongs of the defence: that the undertaking was too vague to be enforceable.

On the question as to whether the articles referred to Mr Mionis or his immediate family, he found that, on the evidence (which included an admission by Democratic Press that in some instances the articles did indeed relate to Mr Mionis and his brother, but that it believed these individuals had been sufficiently disguised) that he could assume that Mr Mionis would have been identifiable to a “significant number of readers”. Mr Mionis had produced evidence from 20 witnesses saying that they had read the June article as referring to Mr Mionis in the light of their background knowledge of him and of the Lagarde list. Moreover, Mr Mionis said, any reasonable reader with some knowledge of the background would understand the articles to refer to him and the June article also to his brother.

In the judge’s view, it was clear that the words “refer to” must have been intended by the parties to bear their everyday meaning and that the use of the words in a libel context accorded with ordinary usage. Sir David Eady referred to the objective test expressed in Gatley on Libel and Slander2 which stated that words are taken to refer to a person if reasonable readers would understand them so to refer. He also cited Duncan & Neill on Defamation, in which it is stated that:

“If reasonable people would so understand the words, the defendant will not escape liability though he may have tried to disguise the reference to the claimant by using initials or asterisks or a fictitious name or some other subterfuge …” 3

Further, it was found that if, despite efforts made by Democratic Press to disguise any reference to Mr Mionis, reasonable people would still understand the words to refer to him, then that was enough to establish reference. “We do not in everyday speech take ‘reference’ to be confined, for example, only to direct reference by name”, Sir David Eady said. Therefore, cl.3.2 had to be construed as embracing indirect as well as direct reference. *Ent. L.R. 102 

However, in construing cl.3.2, the judge recalled the words of Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society,4 where he had stated that “the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean”.

Mr Mionis had accepted that Democratic Press had a right and indeed a duty to report accurately and fairly on the developing story of the Lagarde list. That right was expressly stated in early correspondence and reaffirmed by counsel in the course of submissions. This gave rise to a tension, however, when it came to construing the scope of the restrictions imposed on its freedom of expression by the terms of the settlement agreement, Sir David Eady said. If it were right that Democratic Press was to be restrained from mentioning Mr Mionis, not only directly but also indirectly, then problems were bound to arise if the mention of other persons included in the Lagarde list or with connections to HSBC accounts in Switzerland was alleged to be an impermissible indirect reference to Mr Mionis.

It was held that the Lagarde list controversy was clearly a matter of legitimate public interest in Greece and elsewhere in Europe. Since it had been alleged that Mr Mionis had played a significant role in the investment or management of the vast sums of money in the Swiss bank accounts, it was likely that his name would be linked in the minds of reasonable readers with any allegation on the subject. If any such risk was to be eliminated, the judge said, Democratic Press was likely to be severely inhibited in what it could cover. In reality, its capacity to carry out its duty to report that important story would be seriously restricted, which would impact not only on its own freedom of expression rights, but also on the public’s right to be informed.

Democratic Press had provided evidence about its efforts to comply with its understanding of cl.3.2 of the settlement agreement and the difficult decisions faced when trying to determine to what extent articles could touch upon the involvement of individuals connected with Mr Mionis in order to tell the story, without being in breach of the settlement agreement.

Sir David Eady said he found it difficult to identify an underlying common intention between the contracting parties and so, instead, applied the “officious bystander” test. He imagined that the following hypothetical question had been put to the publisher when cl.3.2 was being negotiated:

“If you want to refer, in a forthcoming article, to individuals associated with the Claimant, would you need to ensure that it is so worded that no reasonable reader would take the passage to be referring indirectly to him?”

He concluded that (standing in the shoes of the reasonable onlooker) the response would certainly not have been “Of course we would”.

It was held that the difficulties of interpretation that would repeatedly arise, almost every time an article on the Lagarde list was contemplated, would render cl.3.2 too vague and uncertain, as to the scope of the obligation imposed, for it to be enforceable.

“What a contracting party is required to do or to refrain from doing needs to be spelt out clearly, and especially so when it is sought to limit the right to communicate information and ideas,”Sir David Eady said.

It followed, therefore, that Democratic Press was not in breach of the terms of the settlement agreement and Mr Mionis’s applications were dismissed.

Comment

The judge highlighted the fact that the restrictions imposed upon Democratic Press’ future conduct by the settlement agreement went beyond anything the court would have been able to grant if Mr Mionis had been successful at trial with his libel claim. The standard form of injunction granted at the close of a successful libel claim, would prevent only publication of the words complained of and “any similar words defamatory of the claimant”. That did not mean in itself that the terms of the agreement were unenforceable, since parties are, in general terms, allowed to negotiate an agreement by way of settling litigation, which goes wider than the scope of legal remedies obtainable from the court. However, in doing so, parties risk future litigation (and therefore further costs) as to the enforceability of such provisions. They therefore need to be very carefully negotiated and drafted so that the obligations are, in Sir David Eady’s words, “spelt out clearly”.

Ent. L.R. 2015, 26(3), 100-102

1. Sabby Mionis v Democratic Press SA [2014] EWHC 4104 (QB).
2. Gatley on Libel and Slander, 12th edn (Sweet and Maxwell, 2013).
3. Duncan & Neill on Defamation, 3rd edn(LexisNexis Butterworths, 2009).
4. Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 W.L.R. 896.

 

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