Tommy Sheridan wins appeal for interest on £200,000 damages award for defamation

The First Division of the Court of Session allowed an appeal by the pursuer (Mr Sheridan) against a judge’s decision to refuse to award any interest on the damages awarded by the jury, having granted an application to apply the jury’s verdict following an unsuccessful motion by the defender (News Group Newspapers) for a new trial in light of the former MSP’s conviction for perjury.

The Lord President, Lord Carloway, sitting with Lord Menzies and Lord Brodies, said the issue was whether, following the unsuccessful appeal by News Group for a new trial, interest should be allowed on the damages awarded by the jury from the time when, but for the appellate proceedings, interest would have been applied.

Judge’s discretion

The Lord Ordinary (Lord Turnbull) observed that the rule at common law was that interest was not payable on damages until the date of decree; since it was only then that the damages became liquid.

The judge also observed that, in terms of section 1(1) of the Damages (Scotland) Act 1958, the court had a discretion to award interest on damages from the date on which the right of action arose, and that in terms of section 1(1A) that discretion was to be exercised in favour of a pursuer in the absence of “reasons special to the case”.

In light of the history of the case, the Lord Ordinary reasoned that it could not be said that the defender had caused any “unreasonable delay” or that there has been “wrongful withholding” of the debt by the defenders in exercising their right of appeal.

In considering whether to exercise his discretion in favour of the pursuer, the Lord Ordinary considered that the “exceptional circumstances” of the case amounted to special reasons which entitled him to make no award of interest.

In his written opinion, Lord Turnbull said: “Not only does it concern an award which was, by three times, the highest award ever made in Scotland for defamation, but it was awarded to a pursuer who was subsequently found to have committed perjury of such a serious sort as to warrant a sentence of three years imprisonment. The period of time which has elapsed has been explained by the time taken up with the preparation for his criminal trial, his unsuccessful attempts to challenge that verdict and the hearing of the application for a new civil trial in the Inner House. There can be few other cases heard in modern times which have attracted such notoriety. I know of no other case in which a litigant, who sought to vindicate his reputation through an action for defamation, emerged as a criminal convicted of perjury and at the same time secured an award of a very substantial sum of money. To include within the award of damages in the verdict a further £200,637, or a further £173,159, would be a step which many would find difficult to comprehend, not least those who suffered injury to their standing and feelings as a consequence of the pursuer’s conduct towards them in court and went uncompensated.”

‘Plainly wrong decision’

Appealing against that decision, Mr Sheridan argued that the Lord Ordinary erred, and the court held that the judge’s decision was “flawed”.

Delivering the opinion of the court, the Lord President said: “First, there is no rule at common law that interest is not payable on damages until the decree of the court of final appeal. The Lord Ordinary was in error in this respect. Although originally at common law there was an emphasis on the need for the liquidation of damages before interest could run, and hence a stress on the need for a decree, where there had been a quantification of damage at an earlier date, interest could run from that date.

“Secondly, there has always been a discretion to award interest from the date when a jury’s verdict could have been applied…or that when a Lord Ordinary has advised the case.

“Thirdly, in so far as some cases express the view that quantification occurs only when a final court of appeal pronounces judgment… these cases, in their application to situations where there has been a jury’s verdict or a judge’s interlocutor which is upheld on appeal, are inconsistent with the principle behind an award of interest and with the dicta to the effect that interest should run at least from the date of quantification. This is because it is from that date, at the latest, that the pursuer, if he eventually wins, has been out of pocket and unable to use the damages to which he is later found entitled to be paid.

“It is from that initial standpoint that the Lord Ordinary ought to have assessed the matter. This critical aspect appears to have been overlooked in his exercise of discretion, which was based at least in part on whether the defenders’ pursuit of a new trial had been justified by the pursuer’s conduct.

“Even assessing this matter at common law, therefore, the pursuer ought to have been entitled to interest from the date when the jury’s verdict would, but for the motion for a new trial, have been applied.”

Lord Carloway added: “If the matter were to be analysed on the basis that the Lord Ordinary’s decision in declining to award post verdict interest, were to be looked at on the basis of the exercise of a discretion, that exercise is flawed, not just because it proceeds upon the basis of the errors of law already described, but because it fails to take into account relevant considerations, takes account of irrelevant ones and amounts to a decision that is unreasonable in the sense of being ‘plainly wrong’.

“The reasons special to the cause which the Lord Ordinary found relevant were, first, that the defenders had not caused any unreasonable delay (and thus had not wrongfully withheld payment) given that the grounds for a new trial were ‘anything but frivolous’. He held that the defenders were not responsible for the time taken to resolve the appeal and payment of the principal sum. The reasons for these matters, according to the Lord Ordinary, lay in the criminal prosecution which arose out of the pursuer’s own conduct.

“This analysis contains significant flaws. First, it was the defenders who initiated a motion for a new trial, in the knowledge that this could delay payment, and secondly, and most important, they failed in their attempt to have the jury’s verdict overturned. The fact that they were unsuccessful ought to have been the central feature of the Lord Ordinary’s thinking rather than the fact that the defenders had had arguable grounds to pursue.

“It is not possible either to agree with the Lord Ordinary’s view that many would find it difficult to comprehend the inclusion in the verdict of a further £200,637 or £173,159. There is no difficulty at all in understanding that a person who is defamed, and to whom a jury awarded £200,000 as damages for the effect on his reputation, such as it may have been, should be entitled to interest on that sum from on or about the date of the award until payment as compensation for the loss of use of that money. This again amounts to the taking into account of an irrelevant consideration.”