Neutral Citation Number: [2012] EWHC 2751 (QB)
Case No: HQ12D02733

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 10/10/2012

Before :

THE HONOURABLE MR JUSTICE TUGENDHAT
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Between :

	Sir Elton John	Claimant	
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	Times Newspapers Ltd	Defendant	

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Ronald Thwaites QC and William McCormick QC (instructed by Carter-Ruck) for the Claimant
Manuel Barca QC (instructed by Pia Sarma) for the Defendant

Hearing dates: 9 October 2012
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Judgment

MR JUSTICE TUGENDHAT : 

1.	This is an application by the Defendant ("TNL") for a ruling pursuant to CPR PD53 para 4.1(1) that the words complained of in this libel action are not capable of bearing the meaning attributed to them by the Claimant in his Particulars of Claim, nor any other meaning defamatory of him. If that application is successful, TNL asks for an order that the action be dismissed.
2.	The Claimant needs no introduction as a musician and song writer. For the purposes of this action he emphasises his work as the founder and Chairman of the Elton John Aids Foundation, and the other work for music and charities for which he was awarded a CBE in 1996 and a knighthood in 1998.
3.	The words complained of were published in the print issue of The Times dated Thursday 21 June 2012, and online. The words complained of are set out in over eight pages of the single spaced Particulars of Claim. In the print edition they appear as follows:
i)	On the front page, under the heading “Screen play: how movie millions are moved offshore. Secrets of the tax avoiders” the words complained of make up the only news story, and that article is continued on page 8. Also on page 8 is a separate article under the heading “Cameron condemns ‘straightforward tax avoidance’”. The two articles together are the only text on page 8, but the article headed “Cameron condemns…” is relied on only as part of the context in which the words complained of appear;
ii)	On pages 6 and 7, under the heading “World of glitz and glamour that’s on the Revenue’s radar. Secrets of the tax avoiders” the words complained of are the only text on page 6, and most of the text on page 7. The remaining text on page 7 is a related article about tax avoidance under the heading “An offer of a film role that lost its liability”, but that is not pleaded in the Particulars of Claim.
iii)	On page 2, under the heading “Morality, Money and Tax” there is a leader which is relied on as context, and which is referred to on page 1 (“There is no moral case for the avoidance of tax”) in a box which also refers to an article published in The Times the previous Tuesday (“The Revenue goes for glitz”).
4.	The Claimant is named in three places in these articles. There is no need for me to set out all of this text in this judgment. But the passages which refer to the Claimant expressly are as follows. 
5.	On page 1 the first two of the three columns read as follows:
“Wealthy investors in tax-efficient film finance schemes are secretly moving tens of millions of pounds offshore in an abuse of tax breaks designed to support Britain’s creative industries.
Seventy-five members of just one film investment scheme called Terra Nova are set to avoid £18 million in tax by moving their liabilities to Luxembourg.
Although many film schemes have attracted investments from Premier League footballers, their managers, and television personalities, this partnership was dominated by people working in the City.
S…, a hedge fund manager, invested £5.5 million in the scheme, alongside other bankers, traders and fund managers.  The Labour Government introduced tax breaks for film investment in 1997.  But HM Revenue and Customs believes that billions of pounds in tax revenue has been lost as the schemes are increasingly sold to high-net-worth individuals as a means of avoiding or deferring tax.
The Revenue told The Times that it had put 600 film schemes, involving thousands of wealthy and well-known people, under inquiry.  “Film schemes are a £5 billion risk for us at least,” one senior Revenue official said.  “Someone puts in money, and then the film scheme promoter says, “We’re going to lend you ten times that’… so all you do is generate tax relief and make a shedload of money for nothing.”
The revelations came as David Cameron led condemnation yesterday of the comedian J… and other investors in the K2 tax avoidance scheme, exposed by The Times on Tuesday. “All those people who work hard and pay their tax and out of that save up to go and see J…, he’s taking that money and stuffing it somewhere where he doesn’t pay tax,” the Prime Minister said.  “That’s not morally right.”  There were also calls that an OBE for G…, announced this week, ought to be reconsidered after The Times revealed that he and two other band members put tens of millions of pounds in music industry investment vehicles that act as tax shelters.
Many of the film investment schemes being investigated by the Revenue were set up by two men: Patrick McKenna, the former accountant of Sir Elton John who runs Ingenious Media and Tim Levy, founder of Future Capital Partners.  Both maintain that they run commercial investments and not tax-avoidance schemes.”
6.	On page 6 the first five paragraphs reads as follows:
“To investors, they offer a glamorous and tax-efficient glimpse into a world of red carpets, champagne and stardom. Patrick McKenna, Elton John’s former accountant and an adviser to the Labour Party, and Tim Levy, the founder of Future Capital Partners, are the two main providers of film investment schemes in the UK.
Since Labour introduced tax breaks for film schemes, the pair have generated hundreds of million pounds-worth of tax relief for investors, who have used their partnerships to purchase films such as X-Men: The Last Stand, Pirates of the Caribbean, The Bourne Ultimatum and Enchanted.
To the Revenue, the two men represent a threat. HM Revenue and Customs believes that film schemes have enabled investors to avoid at least £5 billion in tax. Much of that sum, the Revenue says, is attached to schemes created by Mr Levy and Mr McKenna.
In April the Revenue won a landmark victory against Mr Levy and his investment partnership Eclipse 35, as a result of which investors, including Sir Alex Ferguson, the Manchester United manager, were barred from claiming tax relief of £117 million.  Now The Times has learnt that the Revenue is challenging the remaining 39 Eclipse partnerships, which have attracted £1.8 billion and contain 636 investors.
Mr McKenna, 56, founder of Ingenious Media, is also involved in a long-running Revenue inquiry into three of his partnerships. The England footballers W… and S… and the film-maker G… all poured money into McKenna film schemes.”
7.	On page 6 there are six photographs. At the bottom of the page there is a cut out head and shoulders of Mr Levy. At the top of the page there is a picture of three men in outdoor gear (about 11 x 7 cms). On the right hand side of the page there are three pictures of similar size one above the other, and a much smaller one underneath. The top picture is of some yachts. The second picture is of a team at a sporting event. The third picture is of the Claimant wearing a glitzy outfit, apparently taken some years ago. The lowest of the four pictures on that side of the page is much smaller. There are two captions. 
8.	The caption at the top of the page reads:
“Tim Levy, bottom of the page and far left, with Bear Grylls and a colleague during the North Pole expedition. Future Films, the company he co-founded, was known for its parties on yachts that overlooked the red carpet at Cannes Film Festival, right, and trips to the Rugby World Cup in 2007, below right”.
9.	The caption under the picture of the Claimant, and to the right of the lowest of the four pictures on that side of the page reads:
“Patrick McKenna, right, is the founder of Ingenious Media. He previously worked as an accountant for Elton John, above, and as chief executive of Andrew Lloyd Webber’s Really Useful Group, left. He advised Robbie Williams on a record deal and also helped Simon Fuller”.
10.	Thus the Claimant is named in three separate places, and in each case he is named as one of the persons or bodies with whom Mr McKenna has been professionally associated in the past, in the Claimant’s case in the capacity of an accountant. Mr McKenna is said to have been professionally associated in the past with other named individuals, in the capacity of a partner, a company executive or an adviser. 
11.	The persons with whom Mr McKenna is said to have been associated in one or other of these capacities (but against whom no express allegation of tax avoidance is made) are named in the words complained of. They are the Claimant, Deloitte & Touche (as a former partner: page 1 cols 2 and 3, page 6 col 2), the Labour Party (as a former accountant and an adviser: page 6 col 1), Andrew Lloyd Webber’s Really Useful Group (as an executive: page 1 col 2, and page 6), the British Council (as a board member: page 6 col 2), the Young Vic Theatre and Hat Trick Productions (as chairman: page 6 col 2), Ed Milliband (“to develop tax policy to stimulate growth in the creative industries”: page 6 col 2),  Ivan Lewis, Shadow Culture Secretary for the Labour Party (page 6 col 2), Robbie Williams and Simon Fuller (page 6, caption).
12.	In fact Mr McKenna never worked for the Claimant, and TNL published a correction to that effect on the following day, 22 June. It was in this form:
“Yesterday we reported that Patrick McKenna was the former accountant to Sir Elton John. This was incorrect and we apologise for the inaccuracy”.
13.	Inaccuracy, for whatever reason, may be a matter for criticism of a newspaper, but the inaccuracy in this case is not of itself relevant to whether words complained of are capable of bearing a defamatory meaning.
THE MEANINGS ATTRIBUTED TO THE WORDS BY THE CLAIMANT
14.	The meanings which the Claimant attributes to the words complained of are pleaded as follows:
“In their natural and ordinary meaning the words complained of (whether each of the articles at paragraph 3.1 [the article on pages 1 and 6] and paragraph 3.2  [the article on pages 6 and 7] is taken separately or with either or both of the articles identified at paragraph 3.3  [the leader and article on pages 2 and 8] or they are taken together, whether with or without those other articles) meant and were understood to mean that the Claimant had [1] engaged in or [2] was reasonably to be suspected of having or being engaged in immoral tax avoidance or [3] there were grounds to investigate whether he had done or was doing so”.
15.	The text in square brackets is added. These three levels of meaning are commonly referred to as Chase Level 1 (actual guilt), 2 (reasonable suspicion of guilt) and 3 (grounds to investigate whether there is guilt).
THE LAW TO BE APPLIED ON THIS APPLICATION
16.	The principles to be applied by the court on an application such as this one are not controversial. In deciding what meaning words are capable of bearing for the purposes of libel the court must have in mind the guidance given in Skuse v Granada Television, summarised most recently by Sir Anthony Clarke MR in Jeynes v News Magazines Limited [2008] EWCA Civ 130 at paragraph 14: 
"The legal principles relevant to meaning … may be summarised in this way: (1) The governing principle is reasonableness. (2) The hypothetical reasonable reader is not naïve but he is not unduly suspicious. He can read between the lines. He can read in an implication more readily than a lawyer and may indulge in a certain amount of loose thinking but he must be treated as being a man who is not avid for scandal and someone who does not, and should not, select one bad meaning where other non-defamatory meanings are available. (3) Over-elaborate analysis is best avoided. (4) The intention of the publisher is irrelevant. (5) The article must be read as a whole, and any "bane and antidote" taken together. (6) The hypothetical reader is taken to be representative of those who would read the publication in question. (7) In delimiting the range of permissible defamatory meanings, the court should rule out any meaning which, "can only emerge as the produce of some strained, or forced, or utterly unreasonable interpretation…" …. (8) It follows that "it is not enough to say that by some person or another the words might be understood in a defamatory sense."
17.	Mr Barca emphasises principles (5) and (6) from Jeynes: particularly in point in the present case is the requirement that the words be read in their context, and that they be read as a whole, so that the meaning cannot be taken for example simply from a headline: Charleston v Newsgroup Newspapers Limited [1995] 2 AC 65 and  Dee v Telegraph Media Group Ltd [2010] EWHC 924 (QB); [2010] EMLR 20 at paras 27-31. 
18.	Mr Barca also cites from John v Guardian [2008] EWHC 3066 (QB) where I said: 
"16. I do not read these authorities as saying that a judge hearing a meaning application may more safely err on one side than on the other. That would not be consistent with the overriding objective. If the judge does err in holding words to be incapable of bearing a meaning pleaded by a claimant, then he deprives the claimant of his right to vindicate his reputation before a court. If the judge errs in holding words to be capable of a meaning pleaded by a claimant, then the defendant is wrongly burdened with defending libel proceedings. This can be a very onerous burden and one which interferes with the right of freedom of expression. 
17. ... There is a real risk of a violation of Art 10 if a claimant strains to attribute to words complained of a high factual meaning, which cannot be defended as true..."
19.	He also cites passages from Lukowiak v Unidad Editorial SA (No 1) [2001] EMLR 46 at para 47 and Lennon v Scottish Daily Record & Sunday Mail Ltd [2004] EMLR 18 at para 18. In each of those case Eady J, and then I following him, stated that ordinary citizens are now perceived by the courts, both domestic and international, as having more discriminating judgment than was traditionally recognised. Mr Barca submits that that is particularly in point in applying para (6) of the guidance in Jeynes. In the case of the Times I take the hypothetical reasonable reader to be amongst the more highly educated and better informed members of the public.
20.	Mr Thwaites cites equally well known passages from decisions of the Court of Appeal. In Berezovsky v Forbes Inc [2001] EMLR 45; [2001] EWCA Civ 1251 at para 16 Sedley LJ said:
“The real question in the present case is how the courts ought to go about ascertaining the range of legitimate meanings. .... Such an exercise is an exercise in generosity, not in parsimony.”
21.	He also cited Jameel v The Wall Street Journal Europe SprL [2003] EWCA Civ 1694; [2004] EMLR 6, at para 14 where all members of the court agreed with Simon Brown LJ, as he then was, who said:
“…every time a meaning is shut out (including any holding that the words complained of either are, or are not, capable of bearing a defamatory meaning) it must be remembered that the judge is taking it upon himself to rule in effect that any jury would be perverse to take a different view on the question. It is a high threshold of exclusion. … the meaning of words in civil as well as criminal libel proceedings has been constitutionally a matter for the jury. The judge's function is no more and no less than to pre-empt perversity. That being clearly the position with regard to whether or not words are capable of being understood as defamatory or, as the case may be, non-defamatory, I see no basis on which it could sensibly be otherwise with regard to differing levels of defamatory meaning. Often the question whether words are defamatory at all and, if so, what level of defamatory meaning they bear will overlap.”
SUBMISSIONS
22.	It was not disputed before me that an imputation that a person is engaged in tax avoidance is capable of being defamatory. So the issue between the parties on this application is whether the words complained of are capable of being understood as imputing to the Claimant involvement in tax avoidance at one or other of the three Chase levels pleaded by the Claimant.
23.	Mr Thwaites accepts that no such involvement is expressly stated in the words complained of. He submits that the imputation is to be inferred from the repeated references to Mr McKenna as the Claimant’s former accountant. 
24.	The first reason Mr Thwaites advances for his contention is in the form of a question: to what purpose would a reader understand the Claimant has been named (and pictured), if not to link him as a participant (actual, suspected or to be investigated) in tax avoidance?
25.	The second reason Mr Thwaites advances is that the Claimant falls squarely within the category of the wealthy and famous who are identified in the words complained of as participants in tax avoidance.
26.	Mr Thwaites notes that the association between Mr McKenna and the Claimant is said to be that Mr McKenna was his accountant, and there is no disavowal of any suggestion that the Claimant is or might be a participant, nor anything else to negative any such suggestion.
27.	Mr Barca’s submissions are as follows. The references to the Claimant are fleeting in the context of such a long series of articles in a single issue of the newspaper. The references in each case make clear that the association is in the past (“former accountant”, “previously worked as an accountant”). There are photographs not just of the Claimant, but of others, such as Lord Lloyd Webber, against whom no express imputation is made. The articles do make an express imputation of participation in tax avoidance of a number of named individuals, some of them as well known to the public as the Claimant, whether in the worlds of entertainment or of sport or of finance. Where the articles do this, the allegation is clear, and the association with Mr McKenna is also explained.
28.	So Mr Barca submits that it would be wholly unreasonable for a reader to draw an inference that the Claimant, or any of the other persons with whom Mr McKenna is said to have been associated, were in any way tainted by the imputation of involvement in tax avoidance, except where the articles expressly say so. The purpose of naming these other persons associates of Mr McKenna was unambiguously by way of background, to introduce Mr McKenna. There might be some readers who would infer that actual, or possible, guilt is an imputation made in the words complained of. But by the rules of interpretation set out in Jeynes, the fact (if it be such) that some readers might draw that inference is not enough. Any such readers would not be within the definition of the hypothetical reasonable reader.
DISCUSSION
29.	It is understandable that the Claimant should take exception to the inaccurate statement that Mr McKenna had formerly been his accountant. But that is not relevant to any question I have to decide. 
30.	As to the submission that the words complained of are capable of bearing the Chase Level 1 or 2 meanings, this contention appears to me to be so lacking any possible basis, that it is obviously to be rejected.
31.	As to the submission that the words complained of are capable of bearing a Chase Level 3 meaning, I accept that some readers might infer something to the discredit of the Claimant to be investigated by reason of his alleged association with Mr McKenna. But I accept Mr Barca’s submission that a hypothetical reader of The Times who inferred that would be outside any definition of the reasonable reader which a jury could apply without perversity. There is simply nothing to support the inference other than the alleged association. 
32.	Of course, the fact that there are others named as associates in addition to the Claimant does not exclude the possibility that each of those others might be defamed. I say that to make clear that I do not assume that any of the other associates named have not been defamed. I make no assumption one way or the other as to whether anyone other than the Claimant might have been defamed.
CONCLUSION
33.	In my judgment the submissions of Mr Barca are to be preferred. The words complained of are not capable of bearing the meanings attributed to them by the Claimant or any other meaning defamatory of him.
34.	After the handing down of this judgment I received a letter from solicitors for Mr   McKenna. They informed me that TNL had published a further clarification of the articles referred to in this judgment, in the following terms:

CLARIFICATION: The above article refers to film finance schemes which are secretly moving tens of millions of pounds offshore in an abuse of tax breaks. We have been asked to make clear that the film finance partnerships arranged by ingenious Media, whose CEO is Patrick McKenna, do not offer schemes of this type and they have not been involved in moving money offshore to avoid tax. It was not our intention to make such an allegation and we are happy to make the position clear.

35.  	 Paragraph 29 of this judgment includes the words “It is understandable that the Claimant should take exception to the inaccurate statement that Mr McKenna had formerly been his accountant”. That paragraph of the judgment was referring, not to anything that Mr McKenna has in fact done, but to the allegations TNL made against Mr McKenna in the words of which the Claimant claims. Nothing in this judgment should be understood as stating or implying that the court has made any finding or assumption that Mr McKenna has engaged in immoral tax avoidance, or any other discreditable conduct. Mr McKenna is not a party to these proceedings, and he was not represented in court.