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How “serious” does a defamatory statement about a business have to be for it to be actionable?

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We are often asked to advise commercial clients how they can protect their business’ reputation against defamatory comments. The position for businesses is less straightforward than for individuals.

The basics of defamation

Defamation covers both libel (permanent forms of publication, such as printed or broadcasted statements) and slander (temporary forms of publication, such as non-recorded verbal statements and gestures).

The Defamation Act 2013 (“the Act”) applies to potentially defamatory statements made after 1 January 2014 and it updated the law on defamation with a view to limiting trivial and spurious claims.

Whilst there is no single definition of what “defamatory” means in either the Act or caselaw, it is largely accepted to refer to untrue statements which “tend to lower the claimant in the estimation of right-thinking members of society generally” or are “likely to affect a person adversely in the estimation of reasonable people generally”.

Further, section 1(1) of the Act provides that a statement is defamatory only if “its publication has caused or is likely to cause serious harm to the reputation of the claimant”. Section 1(2) of the Act states that harm to a body trading for profit, will only be “serious” if it has “caused or is likely to cause the body serious financial loss”.

Serious harm

It is not difficult to imagine the types of statements which would likely lower society’s estimation of an individual (such as about criminal and unethical conduct). There is a plethora of caselaw on whether particular statements made about individuals may cause serious harm to their reputation and are therefore considered to be defamatory, but for businesses, the position is less clear.

Whether a statement about a business is defamatory depends on what exactly was said, the context of what that means to the business and whether the potential financial consequences for that business are “serious”. It is therefore case-specific. In the absence of clarity in the Act, a judge would have to consider previous caselaw on the issue.

In Brett Wilson LLP v Person(s) Unknown, Responsible for the Operation and Publication of the Website www.solicitorsfromhelluk.com [2015] EWHC 2628 (QB), a small boutique law firm was listed on the website www.solicitorsfromhelluk.com. The firm featured in the top five search results in Google for solicitorsfromhelluk.com, it could prove that it lost at least one instruction as a result and there had been a noticeable reduction in the conversion of internet inquiries from prospective clients into instructions, which suggested that some had been lost. As a small firm, which tended to receive high value instructions, the financial impact of losing one instruction was significant and so the Court found the statement made about it was defamatory.

In Pirtek (UK) Ltd v Jackson, the Court held that because the claimant had incurred £15,000 in engaging a public relations consultant to deal with various issues caused by the Defendant's publication, it was deemed to meet the “serious financial loss” requirement of s.1(2) of the Act and was therefore defamatory.

Whilst a loss of customers/business may be evidence of harm, the Court will only consider the harm to be serious if that loss is significant to the business. The loss of one piece of work for a small company may be significant, whereas the same loss may not be significant to a large international company.

In seeking to bring defamation proceedings (whether a claim for damages alone or alongside an injunction to remove publication of the statement), it is therefore important for business claimants to monitor and keep detailed records of the likely loss that it may suffer as a result of the statement. Examples of evidence of such loss include communications from actual or potential customers, website traffic statistics and conversion rates and revenue records for both the weeks/months before the statement was made and thereafter.

If you’d like to find out more about defamation, please contact Kayleigh Fantoni of our Commercial Dispute Resolution Team.

Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.