Measure Means Businesses Need To Prove Financial Loss To Bring A Case

By Rob Dixon

A defamation law expert has said the new defamation bill passed by MPs and Lords is a sign that the Government is trying to ensure libel laws remain fair and proportionate, but warned that it would be interesting how the delicate balance between parties would be maintained.

After much discussion in both the House of Commons and the House of Lords, peers this week voted by a majority of 78 to pass the new defamation bill. It will now return to the Commons for formal approval, although no new amendments can be proposed.

Among the measures included (which was much debated) is the need for companies to prove they have suffered a financial loss, or at least the likelihood of it, as a result of defamatory comments before they are able to bring a claim, as well as changes to modernise defences related to defamation proceedings.

There will also be a requirement for claimants to show that they have suffered serious harm before suing for defamation, it removes the current presumption in favour of a jury trial and it provides increased protection to operators of websites that host user-generated content provided that they comply with certain procedures.

The aim is to ensure that a balance is struck between both private reputation and public information, as well as to prevent organisations or individuals from making claims regarded as spurious.

Rebekah Finch, a legal expert who specialises in defamation (including libel and slander) issues at Irwin Mitchell LLP, said the changes were a broadly sensible move but warned that it will be interesting to see how the changes impact on cases in practice.

She outlined: “Defamation actions can be very costly and large corporations are often at a significant advantage over individuals in such actions. 

“Most importantly, individuals being pursued by corporations with endless funds may not have funds to defend a claim being brought against them, which often leads the individual with no option but to retract their comments, apologise or undertake both.

“These changes are aimed at addressing the balance and making it clear that companies must be able to provide evidence that their business has suffered financially, or that it is likely to, as a result of any comments which they deem to be defamatory or inaccurate.

“This is not designed to give more power to journalists or others who publish comments, but to instead ensure that businesses have a clear reason to be bringing claims.”

Rebekah added: “A company must prove its financial loss is linked directly to an article or comments made regarding it.

“This may not be a straightforward process and could cause organisations some difficulty, particularly if they feel that major reputational issues, which may not be properly reflected in their accounts or that do not result in specific contracts or clients being lost, have arisen from an article.

“It will be interesting to see how this issue pans out over the coming months and how these issues come into play as the measures are introduced.”

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