Collins Stewart, the City broker, has accepted £300,000 in damages plus costs from the Financial Times in an eleventh-hour settlement of its landmark libel action against the paper.
The FT agreed to pay all Collins Stewart’s legal costs in the long-running litigation, which are expected to reach around £2 million. The FT is estimated to have spent a similar amount on its own legal team.
Collins Stewart, led by chief executive Terry Smith, had sued the FT for £37 million in lost earnings as a result of four articles that appeared in the newspaper in August 2003. The articles included allegations from James Middleweek, a former Collins Stewart analyst, over alleged improper working practices at the brokerage.
Collins Stewart’s solicitor, Rod Christie-Miller, told Mr Justice Eady today: “The defendant, through its solicitor, is here today to express on behalf of the Financial Times its regret at the way in which it reported Mr Middleweek’s allegations against Collins Stewart in August 2003.
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“The Financial Times is happy to clarify that it did not ever endorse Mr Middleweek’s allegations and apologises for any impression to the contrary that may unintentionally have been given.
“The Financial Times has agreed to pay substantial damages and legal costs to Collins Stewart, and to publish an apology to that effect on the front page of the Companies and Markets section of its newspaper.”
Mr Middleweek and Collins Stewart have already reached an out of court settlement in their dispute.
The case against the FT was expected to last for at least three weeks, and has come under intense scrutiny from both the press and the City. How it ended could yet have a bearing on the way financial journalists write about companies.
Mr Justice Eady, who was sitting without a jury, was due to hear evidence from Andrew Gowers, who stepped down as the editor of the FT in November, and Mr Smith. The impending court battle had been interpreted in some quarters as a grudge match between the pair.
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Collins Stewart had alleged that the FT acted “thoroughly irresponsibly” in its coverage. The FT, which had denied libel, did not seek to justify the allegations it carried in its pages, but said they were not defamatory and were covered by qualified privilege. That defence would have rested on the paper having acted responsibly and fairly over the story and it being judged that it was in the public interest to publish.
In October 2004, another judge threw out the brokers’ claim for £230.5 million special damages based on the difference between its market capitalisation in March 2004 and what it claimed it would have been but for the publication. Mr Justice Tugendhat said that a trial of that issue would have been a waste of time as Collins Stewart could not win.
Last April Collins Stewart won damages from Mr Middleweek’s former solicitor. Jeremy Benjamin, a fund manager and friend of Mr Middleweek, also paid damages to Collins Stewart after posting false allegations on a financial website.
There remains a claim for substantial damages based on alleged loss of business and other financial loss.
The FT is owned by Pearson, whose shares were up 2.6 per cent or 17.5p at 688p in afternoon trade. To track the stock click here. Shares in Collins Stewart were down 2p at 645p. To track the stock click here.