Defence Against Defamation
28 November 2006 Sarah Webb
The House of Lords recently overturned a decision concerning companies that claim for defamation without proof. Sarah Webb, a partner at Russell Jones & Walker, outlines the cases and decisions that led to this judgement.
The media has been given a powerful boost in reaffirming the defence of Reynolds qualified privilege by the recent House of Lords decision in the case of Jameel & Another vs Wall Street Journal Europe. The decision has also confirmed that a company can have a right to claim for defamation without proof of damage.
The defendants in the case, the Wall Street Journal Europe, published an article claiming that the Saudi Arabian monetary authorities were monitoring, at the US Government's request, certain bank accounts in connection with the knowing or unknowing funding of terrorism. The Abdul Latif Jameel Group was named as being on the list of such accounts. The main company in that group and its president, Mohammed Jameel, sued the Wall Street Journal for libel.
The substantive defence was Reynolds qualified privilege, in other words the defendants did not seek to prove that the article was true.
Reynolds privilege was a decision reached by the House of Lords in 2001 which held that a newspaper could show that it had a general duty to publish information to the public at large, even if that information turned out to be untrue, provided that it could meet a ten-point test. Briefly, this test was as follows:
- The seriousness of the allegation
- The nature of the information and the extent to which the subject matter is a matter of public concern
- The source of the information
- Steps taken to verify the story
- The status of the information
- The urgency of the matter
- Whether comment is sought from the claimant
- The inclusion of the gist of the subject's response
- The tone of the article
- Other circumstances of the publication, including timing
Since Reynolds, the courts have interpreted this test quite strictly, meaning newspapers had to show that they had complied with all of them.
With Jameel, the Wall Street Journal lost in the first instance in front of Mr Justice Eady and again in the Court of Appeal. The House of Lords in reversing the decision stated that it was not necessary to find a separate public interest justification for each aspect of a publication but rather for the 'thrust' of the article as a whole.
It accepted that allowance had to be made for editorial judgement. In the circumstances of the case, it upheld that the publication was privileged without the need for a retrial.
While this is of obvious interest and benefit to newspapers, how does the decision affect companies generally?
The decision reaffirmed the wider point that a company with a trading reputation in England and Wales was entitled to pursue a remedy in a defamation action without being required to allege or prove that the publication complained of had caused it actual damage. A trading corporation could sue in respect of defamatory matters that could be shown to be likely to damage its business.
This principle goes back to the case of South Hetton Coal Company vs North Eastern News Association Limited (1984). The newspaper in that case had published an article that was strongly critical of the way the plaintiff – a colliery owner – housed its workers.
The company, when suing for libel, had neither stated nor sought to prove that it had suffered any actual damage. It was argued by the paper that a company could have no personal character and that the article had not related to the business of the company. This argument was unanimously rejected.
The Court held that, "It is not necessary to prove any particular damage. The jury may give such damages as they think fit, having regard to the conduct of the parties, respectively, and to all the circumstances of the case."
While the rule in the South Hetton case has been looked at in the case of Lewis vs Daily Telegraph, when Lord Reed indicated that a company cannot be injured in its feelings but only in its pocket, it was not specifically considered in that case and therefore was not overruled.
The matter was looked at again by the Faulkes Committee in 1975 and recommended an amendment that trading companies could only bring cases for defamation where they could establish that they had suffered some special damage or that they were likely to suffer financial damage. Parliament chose not to support this.
Derbyshire County Council vs Times Newspapers Limited (1993) (143NLJ) concerned the entitlement of a local authority, not a trading corporation, to sue for libel. When the South Hetton decision was considered, the Court of Appeal was not asked to question the decision and the Court accepted that it remained binding, but, of course, could be distinguished because it did not refer to a company.
The South Hetton decision continued to be accepted by the Court as good law, in particular in the decision of Shevel vs Press Alliance SA1996 (AC959). Accordingly, the Courts in Jameel concluded that under current law in England, a trading company with a trading reputation may recover general damages without the need to show that it has suffered any special damage, if the publication that it is suing has a tendency to damage its business.
This last phrase is obviously deliberately open to interpretation. Most companies would be able to show that any negative publicity about them which proves to be untrue would have a tendency to damage their reputation.
The decision was also considered in relation to Article 10 of the European Convention of Human Rights in the right to freedom of expression. The Courts decided that there was no infringement of the right of freedom of expression by allowing a company to sue even if it could not show actual damage.
It held that, "The good name of a company as that of an individual is a thing of value. A damaging libel may lower its standing in the eyes of the public and even its own staff make people less ready to deal with it, or less willing or less proud to work for it. If this were not so, corporations would not go to the lengths that they do to protect and burnish their corporate images."
The Court also recognised the difficulty sometimes that a company can have in actually showing that contracts have been lost or potential clients put off as a result of a publication. Also, if a defendant does publish an apology reasonably quickly, this may stop actual financial loss, but may still damage the company's reputation.
The House of Lords, however, did maintain that if there was no financial loss, the damages awarded should be limited.
This is an important decision for companies in reaffirming their rights to sue for defamation without having to prove a loss. The need to prove a loss would undoubtedly have stopped a number of companies from being able to bring claims because of the notorious difficulties in showing special damage in such cases.
The decision tells us that if the company cannot show any special loss, it should aim be to obtain a prompt apology and accept that this will not be an opportunity to recover significant damages.