A time to reflect – the serious harm test

On 1 January 2014, the Defamation Act 2013 came into force in England and Wales, introducing a series of new provisions applicable to the law of libel and slander. Of greatest interest was Section 1 of the Act, the "serious harm" requirement. This introduced a new hurdle for persons and businesses wanting to bring a claim for defamation.

Under Section 1(1) a statement is not defamatory of an individual "unless its publication has caused or is likely to cause serious harm to the reputation of [that person]".

Under Section 1(2), where the party affected by the statement is a body that trades for profit, it must show that the publication of the statement has caused or is likely to cause the body "serious financial loss".

The serious harm requirement acts in addition to the existing requirements for a defamation claim under the common law. In order to be defamatory, a statement must make the claimant identifiable (whether explicitly or not) and carry a meaning that adversely affects the attitude of other people towards the subject. To found a successful claim, the statement must also of course be false (on the balance of probabilities).

Below, in brief, are some of the key principles that can be derived from the first two and a half years the Act has been in force.

Raising the bar for claims?

Prior to coming into force there was much debate over how the serious harm requirement would make it harder to pursue a claim. The first decision by the High Court on the provision, Cooke, certainly suggested a pretty significant raising of the bar. However, two and a half years on, and a few cases later, the situation has evolved.

The situation for individuals

It will not always be necessary to provide evidence of actual serious harm if it can be inferred. Moreover, although Cooke suggested that the inference could only be made in the most extreme circumstances, recent decisions indicate a more balanced approach.

The context of the publication is all important, including factors such as the extent of publication in England and Wales and the likelihood that those reading the allegations will take them seriously. For example, a court would be more likely to infer that serious harm has been caused if an allegation about an Englishman is published in a reputable UK national newspaper, rather than on a Twitter account in Finland that has 20 followers.

Another factor would be the severity of the wrongful allegation; plainly, the more serious the allegation, the more likely it is that an inference of serious harm can be made without additional evidence. Again, the circumstances of publication are central to the claim.

Where it is more difficult to infer that serious harm has been caused, then evidence will likely be required to demonstrate that specific individuals think less of the subject as a result of the allegations.

The situation for companies

The situation for "a body that trades for profit" remains relatively untested with only two court judgements to date considering the "serious financial loss" requirement in any detail. The first matter involved a website calling itself "Solicitors from Hell UK" (SFHUK), which published allegations of fraud and unethical practices (amongst other things) against a firm of solicitors.

Despite the requirement for "financial loss" being more tangible than "serious harm to reputation", the claimants provided relatively little specific evidence on this issue, although the court did accept the firm's submission that a prospective client had withdrawn instructions as a result of the website.

For the most part, the claimants asked the court to draw inferences on the likely consequences of the damaging allegations appearing prominently on Google search results. The willingness of the court to accept this evidence in deciding in the claimant's favour suggests that the courts may look at the wider circumstances of a claim and draw inferences from them if appropriate. However, the value of the case should not be overstated since the defendants did not respond to any correspondence nor did they contest the court hearing.

By contrast, when the serious financial loss test was considered in the more recent case of Down to Earth (London) a more forensic approach was adopted by the court. Despite the claimant alluding to a decline in revenues the court did not consider that there was enough evidence to justify a finding of serious financial loss. In particular, the claimant failed to provide any clear evidence of the effect the publication had on profits (as opposed to revenues) and the court placed significance on this. In any event, the claimant had been unable to show that the publication referred to it (as opposed to the individual behind it), meaning that its case effectively failed before the issue of financial loss was even considered.

Setting the record straight

It is clear that a prompt and effective apology or clarification is likely to be seen by the courts as inhibiting a claimant from establishing serious harm. This is particularly the case where the claimant cannot show that serious harm has already been caused and is relying on likelihood. On the other hand, delay or an ineffectual apology is less likely to be treated as having undone the harm caused. Similarly, in the case of extremely serious and/or widely published allegations, even a prompt apology may not be enough and serious harm may already have been caused.

Outlook

The Act remains in its early stages and the approach followed to date will be nuanced and developed as we move forward. In particular, one of the key decisions so far, Lachaux, is under appeal, with the hearing due in November of this year. Nonetheless, the cases to date certainly seem to suggest that the hurdle may not be as high as would-be individual claimants once feared. Meanwhile, the situation for corporate claimants remains less clear, although the case of Down to Earth (London) hints at a strong focus on the provision of evidence demonstrating a loss of profitability.

Contrary to what some might have us believe, defamation claims are not dead yet.

If you require further information on anything covered in this briefing please contact Thomas Rudkin ([email protected] ; +44(0) 203 375 7586), Oliver Lock ([email protected] ; +44(0) 203 375 7201) or your usual contact at the firm on 020 3375 7000. Further information can also be found on our Reputation Management page.

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

© Farrer & Co LLP, July 2016