Trinity loses phone hacking compensation appeal, raises provision

(Adds background, trading update)

LONDON, Dec 17 (Reuters) - Britain's Trinity Mirror (LSE: TNI.L - news) lost its legal bid on Thursday to reduce the amount of compensation it must pay eight people who had their phones hacked by staff working for the newspaper group, potentially opening it up to higher payouts in future.

The owner of the Daily Mirror and Sunday Mirror tabloids had appealed a ruling ordering it to pay 1.2 million pounds ($1.8 million) in damages to the victims, a much higher sum than those awarded to other claimants in earlier out-of-court settlements.

In response to the failed appeal, Trinity (HKSE: 0891-OL.HK - news) said it intended to take the matter to the Supreme Court. It (Other OTC: ITGL - news) also raised its provision for phone-hacking charges to 41 million pounds from 28 million.

The hacking scandal erupted in 2011 when it was revealed that some staff at Rupert Murdoch's News (Other OTC: NWSAL - news) of the World tabloid had routinely listened to private voicemail messages, including those of a murdered schoolgirl.

Murdoch shut down the 168-year-old paper and police launched a wide investigation into phone-hacking and other suspected illegal practices, a probe that later spread to the Trinity Mirror newspapers.

The British prosecutor said last week it would take no further criminal action against Murdoch's News UK or 10 Trinity Mirror journalists, bringing an end to one of the biggest scandals in British journalism.

But the Appeal Court ruling against Trinity on Thursday raises the possibility of more civil cases coming to court as potential defendants see the size of awards judges are now likely to make.

The case of the Trinity Mirror damages was the first time that a civil lawsuit related to phone-hacking had been decided by a judge, compared with previous damages claims that were settled out of court.

The victims awarded damages were actress Sadie Frost, retired footballer Paul Gascoigne, BBC staffer Alan Yentob, three TV soap opera actors, a TV producer and a flight attendant who had dated former England footballer Rio Ferdinand.

Frost was awarded 260,250 pounds and Gascoigne 188,250 pounds. According to the BBC, the compensation far exceeded the previous record for a UK privacy case - the 60,000 pounds the News of the World was ordered to pay former Formula 1 boss Max Mosley in 2008.

Shares (Berlin: DI6.BE - news) in Trinity had fallen by around 2 percent on the news, however they recovered slightly after the company released a trading update saying the board now expected its performance for the year to be marginally ahead of forecasts. At midday its shares were down 1 percent. (Reporting by Kate Holton; editing by Stephen Addison)