The Independent is facing renewed questions about its long-term financial health after Britain’s highest court took the unusual step of placing strict conditions on its final bid to appeal against a defamation ruling involving unfounded allegations of domestic abuse and child kidnapping.
French national Bruno Lachaux successfully sued the Independent, London's Evening Standard, and the Huffington Post in July 2015 after the outlets published stories that involved allegations about his acrimonious divorce and custody battle with his ex-wife in Dubai.
In a document obtained by BuzzFeed News, the Supreme Court has now given the green light for Independent Print Limited to make a last-ditch appeal – but only after the company stumped up £85,000 and agreed to give up any chance of redeeming the cost of future legal bills.
Media lawyers say the conditions reflect a concern that the company would be unable to pay further damages and Lachaux's legal costs in the event that its appeal fails.
“Typically, an order that an appellant lodge a ‘security for costs’ is made where the court accepts a respondent’s concerns that the appellant may not be in a position to meet any adverse costs order down the line,” said defamation lawyer Iain Wilson from Brett Wilson LLP.
“The payment of the security assuages such concerns and assures that the respondent will not be out of pocket by virtue of resisting an unsuccessful appeal.”
Wilson said the court takes into account publicly available findings when deciding on conditions to be placed on appeals, adding that the Independent's agreement to give up the chance to redeem legal costs was “relatively unusual”.
Legal sources have also expressed doubts about the publisher's chances of success with the appeal – failure would leave its Russian billionaire owner, Evgeny Lebedev, with a hefty legal bill that'll likely run well into six figures.
They were left stunned by the Independent's decision to agree to the conditions of the deal, especially considering the legal bills will be much higher than the actual damages the company would need to pay. One told BuzzFeed News: “They must really want to win the legal argument, but at what cost?”
Both the Independent and Lebedev refused to comment when BuzzFeed News asked a series of questions about the conditions of the Supreme Court appeal and the financial future of the news outlet.
The articles at the centre of the Lachaux case were published in 2014, when the Independent still published a daily newspaper. In March 2016, it ceased its print editions and has since existed only as an online news outlet, which is run by Independent Digital News and Media.
But Independent Print Limited has continued to exist, with Lebedev as its only lender, and the company's most recent publicly available accounts make clear how it affects the financial health of the Independent group.
In the accounts filed with Companies House in October 2016, auditor William Touche registered concerns after the Independent group of companies reported a net profit before tax of just £8,320,000 and net liabilities of £60,824,000.
"The operations of the group are linked to the operations of the Independent Print Limited which continues to make significant operating losses and requires continued funding to trade," Touche said.
"These conditions … indicate the existence of a material uncertainty which may cast significant doubt about the group’s ability to continue as a going concern."
In the same filings, the directors of Independent Print Limited said they had serious concerns about long-term funding.
"The company’s shareholder and lenders have expressed their willingness to continue supporting the company as and when required, however there is no formal funding facility agreed and therefore there is material uncertainty as to the continued availability of funding," wrote the directors.
Lachaux launched his legal action after being alerted by a friend to the articles published by the Independent, the Evening Standard, and the Huffington Post. According to the judgment, he considered them to be a “campaign to defame him in the English press” by his ex-wife Afsana Lachaux, a former policy adviser to Gordon Brown.
The articles touched on certain parts of what Lord Justice Davis in the Court of Appeal described as the “extreme acrimony” around the Lachaux divorce proceedings that were going on in Dubai.
According to Davis, the Independent’s article, published on 25 January 2014, made out that Lachaux was “violent abusive and controlling” towards Afsana, and that he falsely accused her of kidnapping their son and “had himself callously and without justification snatched their son back from his mother’s arms”.
There was also a claim Lachaux had been using the UAE legal system in order to bring the false allegation of child abduction and “deprive Afsana of custody and of access to their son”.
The news outlets were found to have defamed Bruno Lachaux. In September last year, the Court of Appeal rejected an appeal from the media outlets on every ground, concluding that the articles had indeed fulfilled the “serious harm” test under the new Defamation Act.
Since last year's judgment, the Huffington Post has decided not to follow the Independent and appeal the decision in the Supreme Court.
A Huffington Post spokesperson told BuzzFeed News: “We chose not to pursue a further appeal and are in the process of reaching a mutually satisfactory resolution of the matter with Mr Lachaux's team.”
BuzzFeed News understands Huffington Post's story about the Lachaux divorce proceedings had been posted to the open-source blogging section of the US-based website, meaning that it didn’t undergo the same editorial checks as the site's original journalism. Huffington Post UK announced editorial changes around the website’s blogging platform earlier this year.
After the Independent got the go-ahead for its appeal to the Supreme Court last month, legal insiders said it would be the first time Britain’s top court would be taking a look at the “serious harm” test in the country’s new defamation law, going on to predict it's “unlikely” the trial will take place before 2020.
Mark Di Stefano is a media and politics correspondent for BuzzFeed News and is based in London.
Contact Mark Di Stefano at firstname.lastname@example.org.
James Ball is a freelance writer and journalist. He is a former special correspondent at BuzzFeed UK.
Contact James Ball at email@example.com.
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