Briefing

Reputational Harm and Financial Loss: First Profitable Body Succeeds in bringing a Claim under the New Defamation Act

Posted by : Alicia Mendonca and Tom Rudkin | Date posted : 09/10/2015

Brett Wilson LLP v Person(s) Unknown [2015] EWHC 2628 (QB)

Section 1(2) of the Defamation Act 2013 introduced a new hurdle for corporate claimants seeking to sue for defamation: the requirement to show that "serious financial loss" has been caused, or is likely to be caused, as a result of the defamatory statement. Until now, many commentators have suggested that Section 1(2) would make it extremely difficult for bodies trading for profit to succeed under the new Act.

However, the first case in which Section 1(2) was considered in any detail suggests the hurdle might not be as high as anticipated. In Brett Wilson LLP v Person(s) Unknown the claimant, a solicitors firm, succeeded in establishing that the words complained of met the serious financial loss requirement.

Background

Brett Wilson LLP is a boutique solicitors firm specialising in media law and criminal law. The firm found itself featured on the website, 'Solicitors from hell' or SFHUK.com, which claims to list solicitors firms known for, "solicitor fraud, misconduct, incompetence, negligence, dishonesty, overcharging, corruption, embezzlement, lying/perjury and racism". The website also specifically accused the firm of harassment and overcharging, with the allegations contained in a purported letter of complaint on the website.  The firm brought a claim for damages and an injunction in libel.

 

Financial Loss

Under Section 1(1) of the Defamation Act 2013, a statement is only defamatory if it has caused or is likely to cause "serious harm" to the reputation of the claimant. Section 1(2) specifies that a body trading for profit can only succeed in meeting this requirement if the statement has caused or is likely to cause "serious financial loss" to the organisation in question.

The firm pleaded that, as a small and new firm, it relied heavily on attracting work from the internet and that prospective clients frequently carried out an internet search before instructing the firm.  In this regard, for the last six months, Google searches for the firm produced links to the 'Solicitors from hell' website within the first five search results, with a snippet warning clients to "stay well away"

The firm claimed it was "inevitable" that a number of prospective clients would read this and that loss of a single instruction could cost them tens of thousands of pounds.

In addition, the firm claimed that it had evidence of a prospective client who had withdrawn instructions as a result of the allegations, and pleaded that there were likely to be many others who had decided not to instruct the firm without informing them. They also referred to the fact that a litigation opponent (in a separate set of proceedings) had raised the allegations as evidence that they were a disreputable firm.

 

Conclusion

Mr Justice Warby held that it was "beyond dispute" that the words on the 'Solicitors from hell' website would likely "put people off dealing with the claimant firm" and would "be likely to deter anybody unfamiliar with the firm from engaging its services". Citing Brett Wilson LLP's claim that at least one client had withdrawn instructions, and the likelihood that many others would have been put off, Warby J stated he had no doubt "that there has been a financially damaging impact on a serious scale".  The claimant was therefore awarded damages and an injunction against the website. 

 

Comment

This case is helpful for potential corporate claimants as an example of how they might seek to meet the serious financial loss requirement.  Warby J appears to have been willing to draw the inference of serious financial loss from the underlying facts, albeit that Brett Wilson LLP did also claim to have evidence of a prospective client who withdrew instructions as a result of the website.  In particular, he considered the case pleaded as a whole, including the fact that the firm relied heavily on the internet for new instructions.  What the decision suggests is that claimants will not need to go to the lengths one might have expected to collate evidence of financial loss and that the court may draw inferences from the broader context.

Nonetheless, whilst the decision is instructive, its value should not be overstated. The defendant did not respond to the claim and consequently the claimant's case was unchallenged.  For the moment, defendants may still choose to rely (albeit now somewhat more riskily) on Section 1(2) as a safety net in itself.

 

If you require further information on anything covered in this briefing please contact Alicia Mendonca (alicia.mendonca@farrer.co.uk; 020 3375 7614) or Tom Rudkin (tom.rudkin@farrer.co.uk; 020 3375 7586) or your usual contact at the firm on 020 3375 7000. Further information can also be found on the Reputation Management page on our website.

 

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, October 2015