Case Law: Theedom v Nourish Training Ltd, “serious harm to reputation” once again established by inference – Hugh Tomlinson QC

4 01 2016

CSPIn the case of Theedom v Nourish Training Ltd ([2015] EWHC 3769 (QB)) HHJ Moloney QC decided, on the trial of a preliminary issue, that the claimant had established serious harm to reputation” for the purposes of section 1 of the Defamation Act 2013. Once again, the claimant succeeded on a “serious harm” case based almost entirely on inference.

Background

In 2013 and 2014 the claimant worked for the first defendant recruitment consultancy which trades as “CSP Recruitment” (“CSP”).  The second defendant, Colin Sewell (“Mr Sewell”) was claimant’s immediate manager.

The claimant’s employment came to an end on 26 June 2014 in disputed circumstances. On 29 and 30 June 2014 Mr Sewell sent the emails complained of to 124 different email addresses. The recipients worked for 102 different companies and were all actual or potential customers of CSP.

The email complained of was headed “Dismissed for gross misconduct“.  It stated that the claimant had been passing confidential information to ex-employees of CSP who were working for a rival agency and that criminal proceedings were being considered (for the full text, see [4]).

Proceedings were commenced and, by consent, it was ordered that there be a preliminary issue as to meaning and serious harm.

Judgment

The Judge began by considering meaning, applying the well known principles summarised in Jeynes v News Magazine ([2008] EWCA Civ 130).

Taking into account the nature of the readers of the email, the Judge essentially accepted the claimant’s contentions on meaning, holding that the natural and ordinary meaning of the email was

“(a)    While employed by the defendant, CSP, the claimant has regularly supplied commercially important, confidential information about CSP’s business and its customers’ businesses to CSP’s commercial rivals in breach of his contractual obligations to his employer.

 (b)     As a result, CSP has rightly dismissed him for gross misconduct.

(c)      His misconduct has been so serious that there are reasonable grounds to suspect that it also amounts to a criminal offence.” [12]

The Judge then considered serious harm under section 1 of the Defamation Act 2015, setting out nine helpful principles derived from the cases ([15]).  These can be summarised as follows

(1)    In addition to satisfying all the previously existing requirements of the common law, a claimant must now establish that the statement complained of has in fact caused or is likely to cause serious harm to his reputation.

(2)   Under s.1(2), a body trading for profit must, in order to establish that serious harm, show actual or likely serious financial loss but this does not apply to a natural person.

(3)    Section 1 is concerned only with harm to reputation, not with injury to feelings which cannot, on its own, found a defamation claim.

(4)   Section 1 requires the claimant to prove as a fact, on the balance of probabilities, that the statement complained of has caused or will probably cause serious harm to his reputation.

(5)    The claimant may be able to satisfy s.1 without calling any evidence, by relying on the inferences of serious harm to reputation properly to be drawn from the level of the defamatory meaning of the words and the nature and extent of their publication.

(6)    The claimant can call evidence in support of his case on serious harm and the defendant can call evidence in rebuttal, or indeed seek to demonstrate that no serious harm has occurred or is likely to do so.

(7)   It will often, though not always, be appropriate, as an exercise in effective case management, to direct that the issue of serious harm be determined as a preliminary issue, together with the closely related issue of actual defamatory meaning.

(8)  Section 1 is essentially a threshold requirement, intended by Parliament to weed out those undeserving libel claims otherwise technically viable, but which do not involve actual serious harm to reputation or likely serious harm to reputation in the future.  Once that threshold has been passed, no useful purpose is served at this early stage of the proceedings by going on to consider evidence which is really material only to the quantum of damage if liability is proved.

(9)    There is an unresolved question of law under s.1 as to the date at which the likelihood of future serious harm falls to be assessed.  Should it be the date of issue of the claim or the date of the s.1 hearing itself?

The claimant relied on inferences of serious harm drawn from the words complained of and the nature and extent of publication and evidence of specific instances.  The defendant advanced a positive case that, as the claimant has been successful in his new employment after the emails were sent out, it could be inferred that it is unlikely that there has been or will be serious harm.

The Judge considered eight specific instances of individuals who the claimant said had communicated with him in relation to the contents of the email.  He concluded that this evidence

“neither adds nor detracts very much from the inferences one would normally draw from the fact of publication in a case of this kind” [26]

The fact that the claimant had done well in the recruitment business after the publication of the email was a strong point in the defendant’s favour [27].

The judge’s conclusions were as follows:

(a)   Where there was a publication by an influential and apparently reliable author of a fairly serious libel to a fairly substantial audience then there was an inferential case of serious harm which required rebuttal ([29](a))

(b)  The rebuttal evidence established that the claimant had not suffered demonstrable financial loss and few recipients had taken adverse action against him but this was not sufficient to rebut the inferences

“the fact that few publishees have manifested hostility to the claimant’s face is not a reliable guide to his standing in the eyes of those who remain silent.([29](b))

(c)  There had been no steps “withdraw or correct the email, let alone to apologise for it, so whatever harm it originally caused is likely to have persisted” ([29](c)).

As a result the Judge concluded that on the balance of probability, that the publication of these emails has caused harm to the claimant’s reputation of a sufficient degree of seriousness to pass the threshold set by section 1(1) [30].

The Judge concluded his judgment by making some observations on the procedural lessons to be drawn from the trial.  He noted that there been cross-examination of the claimant and that the total costs of the exercise were over £170,000.  He said that

“the hearing of evidence has added little or nothing to the conclusions that an experienced defamation judge would have drawn simply from reading the email and considering the agreed distribution list” ([31] (c))

If the action went to trial there would be a wasteful duplication of evidence and cross-examination.  As a result, he concluded that

“the Masters considering whether to direct trial of a preliminary issue under s.1 should exercise as much caution as they would in respect of other classes of case, and should decline to do so if the exercise is likely to involve a lengthy evidential dispute or to overlap with other factual issues arising later in the case. Unfashionable as it may appear, I consider that there is much to be said in this area for asking a judge to rule on whether the case is capable of passing the s.1 test, or on the other hand whether the defendant has any real prospect of establishing that it does not.  That question could be determined without hearing any evidence, probably alongside the closely-related issue of defamatory meaning. If the court concluded that there was a live issue under s.1 to be decided, the judge would then be in a good position to direct whether it would be better dealt with as a preliminary issue or as a part of the ultimate trial.  But if a routine practice develops of listing such preliminary issue trials uncritically, that is likely to increase the overall cost and delay of libel cases, which is the opposite of Parliament’s clear intentions in passing s.1″. [31] (g)

Comment

This is the third judgment in which “serious harm” under section 1 of the Defamation Act 2013 has been dealt with as a preliminary issue. The intention of the drafters of the statute appears to have been to reduce the expense and complexity of defamation actions by enabling trivial claims to be more easily disposed of at an early stage.  In practice, in at least some cases. this provision has added another round of interim dispute and another layer of costs.

The practice of trying “serious harm” as a preliminary issue has  developed over the past 18 months.  There have now been four such trials, before four different judges. In the first, Cooke v MGN, the claimant failed – largely because of the prompt withdrawal of the allegation and apology by the defendant (see the Inforrm case comment).  In the second, Lachaux v Independent, the claimant succeeded in a case largely based on inference (see the Inforrm case comment).  The defendants are seeking permission to appeal (see the Grounds here [pdf]). The Theedom case was the third such trial.  A reserved judgment is awaited in the fourth, Sobrinho v Impressa Publishing, heard on 7 to 9 December 2015 by Dingemans J.

These preliminary issue trials have gradually become more elaborate – with increasingly substantial evidence and lengthy cross-examination.  Judge Moloney QC expressed his concerns about this process in strong terms, suggesting that rather than a full trial of the issue a “capability test” should be applied.  This view, which he describes as “unfashionable” seems unlikely to be attractive to practitioners as it would re-introduce yet another interim stage in libel litigation.  The guidance given by Warby J in the Lachaux case (see the Inforrm post here) contemplates a full preliminary trial where serious harm is a live issue.  The courts are still feeling their way.  The issue needs to be considered in every case but, if the libel is a serious one and the publication more than trivial then the answer may be obvious and the trial of a preliminary issue may be unnecessary.

The decision in Cooke left open the question as to the extent to which “inferences” of serious harm were permissible.  The present case confirms that approach in Lachaux that an inference of serious harm will be relatively easy to draw: at least where the defendant is apparently reliable, the libel is “fairly serious” and the number of publishees is more than negligible.  On this approach it is certainly not necessary for a claimant to show that s/he was, in fact, “shunned and avoided” by anyone or suffered any financial damage.

There a strong argument that this approach strikes an appropriate balance between the Article 8 rights of claimants and the Article 10 rights of defendants. If such inferences are not permitted then the formidable evidential barriers to the positive proof of actual damage to reputation would mean that serious interferences with the right to reputation would no longer be actionable in domestic law.  Although the somewhat confused Strasbourg case law on the Article 8 right to reputation (see T Aplin and J Bosland, “The Uncertain Landscape of Article 8 of the ECHR: The Protection of Reputation as a Fundamental Human Right?“) appears to require a “certain threshold of seriousness” there remains a positive obligation to protect this right when it is engaged.

Arguments about the operation of the “serious harm” threshold will continue to engage the attention of the Courts in 2016.  Pending further guidance from the Court of Appeal this case provides a helpful summary of the principles for practitioners trying to provide practical advice in this area.

Hugh Tomlinson QC is a member of Matrix Chambers and an Editor of Inforrm.


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