Case Law: Tesla Motors Ltd v. BBC: Malicious falsehood and damage – Sara Mansoori

5 11 2011

Jeremy Clarkson is in the legal media news again. However, this time not as a claimant but as the test driver whose review of the Tesla Roadster on Top Gear has led to a malicious falsehood claim being brought by Tesla against the BBC. In his judgment last week ([2011] EWCH 2760 (QB)) Tugendhat J clarified the law on pleading damages in malicious falsehood claims.

As a result, if Tesla does not file a properly pleaded case showing what probable damage the Top Gear programme caused it and why that damage was “more likely than not”, the US car manufacturer’s claim will be struck out.

The Top Gear programme was first broadcast on 14 December 2008 and repeated on other dates subsequently. The publications relied upon by the Claimant were those that fell within the year preceeding the issue of the Claim Form on 29 March 2011, such as the broadcast on the freeview channel Dave and on the Top Gear website. The programme showed Jeremy Clarkson driving the electric Roadster and it going faster than the Lotus Elise. Clarkson was very positive about the Roadster saying:

wave goodbye to dial up and say hello to the world of broadband motoring, 12 ½ rpm I cannot believe this. That is biblically quick. This car is electric … literally.

The praise continued but then changed to criticism, with Clarkson saying that the Roadster ran out of charge and had broken brakes.  There were two Roadsters available to the Top Gear team to drive and the programme said that while one was cooling down after becoming immobile through overheating, the other’s brakes had broken; as a result neither was available for driving.

Tesla claimed that these criticisms published by the BBC were false and malicious. A necessary ingredient of a claim in malicious falsehood is that special damage must follow as a direct and natural result of the publication (see Kaye v Robertson [1991] FSR 62, at 67). Section 3(1) of the Defamation Act 1952 (“the 1952 Act”) is relevant and provides:

“In an action for slander of title, slander of goods or other malicious falsehood, it shall not be necessary to allege or prove special damage (a) if the words upon which the action is founded are calculated to cause pecuniary damage to the plaintiff and are published in writing or any other permanent form…”

In relation to this aspect of the claim Tesla relied on section 3 of the 1952 Act setting out its case in its Particulars of Claim as follows:

“Each of the broadcasts was and is calculated to cause pecuniary damage to each of the claimant in respect of its business”.

One of the issues was whether this damages pleading was adequate. In addition to the requirements under CPR Part 16.4 and PD para 8.2(8) which state that the Particulars of Claim should include the facts relied on in relation to the plea of damage, the BBC also raised a number of matters relating to Tesla’s case in support of why this pleading was “wholly inadequate”.

Tugendhat J ruled the pleading was inadequate and ordered that the claim be struck out unless Tesla applied for and obtained permission to amend its Particulars of Claim to remedy this defect. In so doing he set out what is necessary to plead in order to comply with section 3:

If a trader…makes a claim for malicious falsehood and, as he is entitled to do, he relies not on any actual damage, but on probable damage such as it referred to in the 1952 Act section 3, the Claimant must nevertheless give particulars of the nature of the allegedly probable damage and the grounds relied on for saying that it is more likely than not.” [66]

For example, if the probable damage relied upon is expenses in advertising and other forms of publicity to counter the effects of the alleged falsehoods then this should be pleaded; likewise if the probable loss is a delay in sales, loss of sales or a diminution in value of goods, then this too should be expressly set out in the Particulars of Claim.

In the Tesla case this was particularly important for a number of reasons:

Firstly, the claim is not in relation to the original broadcast but the repeated broadcasts that fell within the year before the claim was issued.  As a result there are, to use Tugendhat J’s words, “formidable issues” of causation.  A proper plea on damages would allow a defendant to assess its potential liability.

Secondly, the Forms 10-K and 10-Q, which contain financial information required by the US authorities, for (respectively) yearly periods and quarterly periods, did not mention the programme or any damage from it in when filed in August 2010 and in November 2010. However, after points were raised about this by the BBC, the Form 10-Q filed in May 2011 referred to the Top Gear programme and stated that its review of the Tesla Roadster “included a number of significant falsehoods” and that this “may cause” current or potential customers not to purchase Tesla’s electric vehicles. Putting aside the lack of reference to any probable damage following the original broadcast, the level of probability set out in the May 2011 Form 10-Q would not satisfy the test in s.3(1) of the 1952 Act, as “calculated to cause pecuniary damage” means that the damage must be “more likely than not” to occur (see IBM v Websphere Limited [2004] EWHC 529 (Ch)).

Finally, as explained above, Jeremy Clarkson was initially very positive about the Roadster. Some of the negative comments, such as the engine overheating, were admitted to be true.  This was therefore different to a programme that only contained words which were alleged to be false where a court would have little difficulty in accepting that it was more probable than not that the publication had caused pecuniary damage to the Claimant.

The second issue before the Court arose in part as a result of the fact that Tesla had sued on the republication of the Top Gear programme and not the original.  The BBC said that the fact that Tesla had not sued on the original broadcast and had issued financial statements and press statements in 2010 which did not refer to the programme meant that it had waived its right to contend that the programme was actionable and/or it would be an abuse of process for it to claim damages or an injunction.

Unfortunately, the point was not dealt with by the Court and it was said to be a matter for trial rather than one for strike out/summary judgment. However this is a point that could well arise more frequently in the future. Whereas in the past, newspapers and broadcasters would publish material and it would not be repeated, or very rarely repeated, nowadays material is often available online or available via ‘on demand’ services. Libel, privacy and malicious falsehood actions can therefore be brought on ‘repeats’ rather than original publications. Whether this would be wise will depend on the circumstances, but given that the Tesla case confirms that the principles set out in Jameel v Dow Jones [2005] QB 946 and Lait v Evening Standard [2011] EWCA Civ 859 apply equally to malicious falsehood claims, there would have to be good reasons for not suing on the original – particularly if your own actions in the interim suggest that you have not suffered any damage.

Sara Mansoori is a barrister specialising in media law at Matrix Chambers

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7 11 2011
Law and Media Round Up – 7 November 2011 « Inforrm's Blog

[…] Inforrm>>Case Law: Tesla Motors Ltd v. BBC: Malicious falsehood and damage. Sara Mansoori examines the recent libel action involving the BBC’s Top Gear – and the implications for ‘on demand’ services and repeats. […]

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