Law Report: Damages over reputation disallowed: Lonrho plc and others v Fayed and others - Court of Appeal (Lord Justice Dillon, Lord Justice Stuart-Smith and Lord Justice Evans), 22 July 1993

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The only remedy for damages for loss of general or business reputation is an action for defamation. Such damages cannot be claimed in an action for conspiracy to injure by lawful means.

The Court of Appeal allowed Lonrho's appeal but dismissed appeals by Tiny Rowland and Sir Edward Du Cann from an order of Mr Justice Macpherson striking out their action against the defendants.

Mr Rowland and Lonrho fell out with the Fayed brothers over the acquisition of the House of Fraser in 1985. Lonrho had publicly denounced the Fayeds. The Fayeds responded by a campaign carried on by a Francesca Pollard, who sent scurrillous letters to officials in Africa and the Middle East where Lonrho did or hoped to do business. The Fayeds were also alleged to have caused a JC Esterhuysen to bring an action against Lonrho, Mr Rowland and others.

The plaintiffs, Lonrho, Mr Rowland and Sir Edward Du Cann brought an action in a 'lawful means' conspiracy to injure, that is an agreement by the defendants to do acts, lawful in themselves, for the sole or predominant purpose of causing injury to the plaintiffs and which caused pecuniary loss to the plaintiffs.

The plaintiffs claimed damages for injury to feelings and reputation, including business reputation. Lonrho also claimed the loss of an Iranian venture, business in Africa and the costs of the Esterhuysen action.

John Beveridge QC and D W Mildon (Denton Hall Burgin & Warren) for the plaintiffs; James Munby QC and Alistair Walton (Herbert Smith); Edward Faulks (Titmuss Sainer & Webb) for the defendants.

LORD JUSTICE DILLON said that if the plaintiffs wanted to claim damages for injury to reputation or injury to feelings, they must do so in a defamation action. Justification - truth - was an absolute defence to an action for defamation, and it would be lamentable if a plaintiff could recover damages against defendants who had combined to tell the truth about the plaintiff and so had destroyed his unwarranted reputation. That would be the consequence if damages for injury to reputation or feelings could be claimed in a 'lawful means' conspirary action. To tell the truth would be wrongful. There was no difference between general reputation and commercial or business reputation.

To prove loss of orders and loss of trade was another matter; that was recognisable pecuniary damage. Loss of orders would involve injury to the goodwill of a business, but goodwill in that sense could not mean some general reputation in the business or commercial community which was unrelated to buying and selling or dealing with customers.

The particulars of loss claimed by Lonrho relating to the Iranian venture would be allowed but those in relation to the African businesses were not adequately pleaded. Lonrho should also be allowed to claim the costs of the Esterhuysen action. Lonrho's appeal would therefore be allowed but the individual plaintiff's action must remain struck out.

LORD JUSTICE STUART-SMITH said that as a matter of principle and on authority, an individual or a company must sue in defamation for injury to reputation. A claim for injury to reputation could not be tacked on as parasitic damages to some head of pecuniary loss. The personal plaintiffs alleged no pecuniary loss so they had no cause of action. The alleged financial loss in Africa was unquantifiable but the alleged loss of the Iranian venture should not be disallowed.

However the claim for the costs of defending the Esterhuysen action or the irrecoverable costs was unsustainable. It was an abuse of process for Lonrho to sue for those costs in this action, when they could be recovered in the Esterhuysen action.

LORD JUSTICE EVANS said that damages for loss of reputation or loss of business reputation were not sufficient to establish the cause of action in conspiracy. Nor could such damages be recovered parasitically in addition to damage for pecuniary loss. His Lordship agreed with Lord Justice Stuart-Smith that the claim for the Esterhuysen costs should be disallowed.