Court of Appeal considers defamation act

The Court of Appeal has given judgment in George v Cannell [2022] EWCA Civ 1067 and allowed Fiona George’s appeal against the High Court’s decision that her claim against Linda Cannell and LCA Jobs Limited (LCA) for malicious falsehood was unsuccessful for ‘want of damage’.

The law

Malicious falsehood is a common law tort and concerns the malicious publication of false words that refer to a claimant, their property or their business. A successful claimant must either be able to prove ‘special damage’ – for example, that they have suffered loss as a direct and natural result of the publication that can be specified in monetary terms or that the malicious falsehood is actionable under section 3(1) of the Defamation Act 1952.

Section 3(1) provides as follows: ‘In an action for slander of goods, slander of title 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 other permanent form; or

(b) if the said words are calculated to cause pecuniary damage to the plaintiff in respect of any office, profession, calling, trade or business held or carried on by him at the time of the publication.’

The trial

George worked as a recruitment consultant for LCA, an agency owned by Cannell. After George left LCA, Cannell contacted one of George’s clients and sent an email to her new employer alleging that George had been acting in breach of her restrictive covenants by approaching LCA’s clients and soliciting business from them. George had argued that the communications sent by Cannell were calculated to cause pecuniary damage by preventing her from obtaining business and thereby preventing her from earning commission.

George issued proceedings against Cannell and LCA for libel, slander and malicious falsehood. At trial, while George established that the allegation she had acted in breach of her restrictive covenants was false and that Cannell had published the allegation maliciously, Saini J dismissed her malicious falsehood claim on the basis that she had not proved either special damages or that she fell within the exception contained within section 3(1) of the act. George’s claims for libel and slander also failed as she had not proved that she had suffered serous harm to her reputation.

Saini J held that in order to satisfy section 3(1) of the act, George had to prove that she had probably been caused some actual pecuniary loss by the emails sent by Cannell (a ‘backward-looking approach’) and unless this was satisfied she could not recover damages for injury to feelings.

The appeal

George appealed against the decision that her malicious falsehood claim failed with leave of Saini J. She argued that she had proved enough to justify findings in her favour to satisfy liability based on section 3(1) and that such damages should be assessed by the court. Judgment was given by Lord Justice Warby with whom Lord Justice Underhill and Lord Justice Snowden agreed.

First issue

The first issue before the Court of Appeal was ‘what does a claimant need to prove to take advantage of section 3(1) of the 1952 act’. The claimant argued that instead of the ‘backward-looking approach’, the act required a ‘forward-looking approach’, namely that George had to establish that the statements contained in Cannell’s communications were such that it was inherently probable that they would cause George some financial loss.

In his judgment, Lord Justice Warby held that Saini J was wrong to adopt the ‘backward-looking approach’ and that his decision that a claimant relying on section 3(1) of the act must prove that the statement did on the balance of probabilities cause actual financial loss ‘flowed from a fallacy that fails to give the statutory language its natural meaning and effect’. Instead, Lord Justice Warby considered that in applying the correct ‘forward-looking approach’, the statements made satisfied the requirements of the act as the allegation that George had broken her contractual commitments to LCA would have a natural tendency to cause financial loss to somebody whose income is commission-based.

Second issue

As George had satisfied the test in section 3(1) of the act, the Court of Appeal was then asked to consider whether George was entitled to recover anything more than nominal damages.

At trial, Saini J held that even if George had satisfied the test in section 3(1) of the act, he would have awarded a purely nominal sum in respect of her claim for general damages. Lord Justice Warby agreed with this approach and considered that damages in this context can only be compensatory.

The Court of Appeal then considered whether this precluded a claim for distress or hurt feelings. George’s claim was that she had suffered ‘huge emotional distress’ as a result of the publications which had been aggravated by the fact Cannell had acted maliciously, and that damages should be assessed by the court. The defendants asserted that damages for injury to feelings were not recoverable in the absence of actual loss and so nominal damages were appropriate, and that any assessment would be so disproportionate it would amount to a Jameel abuse.

Saini J’s initial approach (see below) concluded that damages for injury to feelings should be assessed by the court and that he would have awarded a sum for injury to feelings had the claimant made an evidential case. Lord Justice Warby agreed with Saini J’s initial approach and restored his initial conclusion. He expressed his view that he would expect damages in this category to be modest but not trivial.

Further, Lord Justice Warby held that an award for injury to feelings could be granted in circumstances where a claimant was unable to establish any actual financial loss beyond nominal damages. On the facts of this case, Lord Justice Warby considered that an award of substantial damages, as opposed to nominal damages, for distress could not be ruled out as the prospect of loss and distress were foreseeable by the defendants, although this would be left to the trial judge.

The Court of Appeal entered judgment for George in respect of her claim for malicious falsehood and the assessment of damages was remitted to the High Court for determination.

Comment

This case reached the Court of Appeal in interesting circumstances. Saini J initially sent out his draft judgment to the parties in the usual way in favour of George and found that she was entitled to general damages (including damages for injury to feelings). Unusually, Saini J was persuaded by the defendants that this was an exceptional case in which it was appropriate for him to hear further argument and the defendants proceeded to set out, for the first time, their position on section 3(1) of the act. Saini J then reconsidered the issue on the basis of further written submissions and amended his judgment dismissing George’s claims. The original conclusion of Saini J was preferred on appeal and reinstated by Lord Justice Warby.

This was the first time since its enactment that section 3(1) of the 1952 act had been considered by the Court of Appeal, or the Supreme Court. This meant that Lord Justice Warby was required, in his judgment, to start with the words of the statute in establishing the correct interpretation of the act; and certainty of construction has now been decided by the appeal court.

 

Siân Akerman is senior associate at Kingsley Napley, and a committee member of the Junior London Solicitors Litigation Association