Section 3(1) Of The Defamation Act 1952 Clarified By The Court Of Appeal

George v Cannell and LCA Jobs Ltd [2022] EWCA Civ 1067

Case background

Fiona George worked as a recruitment consultant for LCA Jobs Ltd which was owned by Linda Cannell. Fiona subsequently left LCA before starting as a recruitment consultant with a new company.

Linda alleged to Fiona’s new employer (defined as the “Lingenfelder Email”) and one of her customers (defined at the “Butler Words”) that she had broken her contractual commitments to LCA. As a result, Fiona pursued a claim against Linda and LCA for libel, slander, and malicious falsehood.

Fiona’s claim of malicious falsehood was dismissed by Mr Justice Saini in the first instance as she had not proved special damage as required by common law, nor had her case fallen within the exception present in Section 3(1) of the Defamation Act 1952 (DA 1952). Mr Justice Saini interpreted Section 3(1) to mean that a claimant had to show that the statement complained of probably caused some financial loss (this was categorised by the Court of Appeal as the “historic approach”).

Fiona accepted that she failed to establish special damage. She however did not agree with Mr Justice Saini’s interpretation of Section 3(1) and instead believed that the threshold was much lower. Fiona understood Section 3(1) to mean that a claimant had to prove that it was probable in the ordinary course of events that the statement would cause the claimant some financial loss regardless of whether they did or did not actually cause financial loss (this was categorised by the Court of Appeal as the “forward-looking approach”). Fiona decided to appeal Mr Justice Saini’s judgment on this basis.

The Court of Appeal established that the main issue to be determined was “what does a claimant need to prove to take advantage of Section 3(1)”. If Fiona’s interpretation of Section 3(1) was correct, this would raise a further issue to be determined, namely, in the absence of any actual financial loss can she recover anything more than nominal damages.

The Court of Appeal allowed Fiona’s appeal confirming that the purpose and effect of Section 3(1) is to relieve a claimant of the need to plead or prove any actual loss on the balance of probabilities as a matter of historical fact. It is enough for a claimant to prove that financial loss is an inherently probable consequence of a false and malicious statement.

After establishing that the forward-looking approach was the correct one to take, the Court of Appeal applied the test to the case. It was concluded that the publication of the Butler Words and the Lingenfelder Email satisfied that requirement of Section 3(1). Linda had alleged to Fiona’s new employer and her customers that she had broken her contractual commitments to LCA. This allegation had a natural tendency to cause financial loss to someone whose income is commission-based. It was decided therefore that the harmful tendency was established.

Having satisfied the requirement of Section 3(1), the Court of Appeal needed to consider whether Fiona could recover more than nominal damages. Mr Justice Saini in the first instance determined that even if Fiona’s claim had met the requirements in Section 3(1), he would have awarded a purely nominal sum.

The Court of Appeal’s decision

The Court of Appeal confirmed that the damages for malicious falsehood can only be compensatory in nature. The claimant must therefore identify some recognised type of injury. The Court of Appeal considered that the prospect of loss and the prospect of distress were both foreseeable by Linda and LCA and therefore an award of substantial as opposed to nominal damages for distress could not be ruled out.

The Court of Appeal concluded that a judgment should be entered in respect of malicious falsehood for Fiona with damages including compensation for injured feelings, to be assessed. The Court of Appeal transferred the case to the High Court for the assessment of quantum to be carried out.

Comment

The Court of Appeal’s decision, in this case, clarifies the interpretation of Section 3(1). It also provides some helpful guidance on awards of damages in malicious falsehood claims. It is clear following this case that a claimant is entitled to claim compensation above and beyond nominal damages where there is an injury to feelings in the absence of actual financial loss.