George v Cannell

The claimant worked as a recruitment consultant for an agency owned and operated by the defendants. After the claimant left and took a new job with another agency, the first defendant spoke to one of the claimant’s clients and sent an email to her new employer alleging that the claimant had been acting in breach of restrictive covenants in her contract with the second defendant by approaching its clients and soliciting business from them. The claimant sued the defendants for libel, slander and malicious falsehood.

The claims were tried by Saini J: [2021] EWHC 2988 (QB); [2021] 4 WLR 145. Saini J dismissed all the claims for want of proof of harm. He held that the defamation claims failed because the claimant had not proved that either publication caused serious harm to her reputation as required by s.1(1) of the Defamation Act 2013. In respect of malicious falsehood, while the claimant had established that the statements complained of were false and had been published maliciously, he also dismissed those claims because the claimant had not proved special damage as required by common law nor shown that her case fell within the exception to that requirement in s.3(1) of the Defamation Act 1952. In reaching the conclusion that he did on s.3, Saini J decided that the provision was to be construed as providing for a historic, backward-looking test whereby a claimant in order to succeed was required to prove that they had probably been caused some actual pecuniary (financial) loss by the publications complained of. He also found that unless a claimant proved that they had sustained some actual financial loss, they could not recover damages for injury to feelings.

The claimant appealed from the decision dismissing her s.3 malicious falsehood claim with the permission of the Judge. The central issue on appeal was the correct interpretation of s.3 and whether it provided for a historic test as the Judge had applied or a forward-looking test, as the claimant contended, which required a claimant to prove that the publications complained of were likely (judged at the time of publication) to cause them pecuniary damage.

The Court of Appeal (Underhill, Warby, Snowden LJJ) [2022] EWCA Civ 1067; [2023] QB 117 allowed the appeal.

The Court of Appeal decided:

1. The forward-looking test was the correct interpretation. This is what Parliament had intended. The Porter Committee Report which preceded and informed the 1952 Act clearly supported that view of the law. Earlier authority did not decide otherwise. Section 3 of the HRA 1998 did not compel a different construction.
2. The claimant had satisfied that test on the facts.
3. Saini J had stated that if he had found that the claimant satisfied the requirements of s.3 he would only have awarded her nominal damages in respect of her claim for general damages other than for injury to feelings. There was no reason to disturb that decision. Even if the claimant could only recover nominal damages in respect of general damages other than injury to feelings, that did not preclude a claim for distress or hurt feelings. On the facts, that award was liable to be modest but not necessarily trivial.
4. Judgment would be entered for the claimant on her malicious falsehood claims and the assessment of damages remitted to the High Court for determination.

The defendants applied to the Supreme Court for permission to appeal. It was granted by Lord Briggs, Lord Hamblen and Lord Leggatt.

(1) The correct interpretation of s.3(1) of the Defamation Act 1952.

(2) Whether damages for injury to feelings were recoverable in claims of malicious falsehood and if so in what circumstances.

By a majority (Lord Hodge, Lord Leggatt and Lord Richards):

(i) Section 3(1) created a forward-looking test (para.68).

(ii) If its requirements were satisfied, it created an irrebuttable presumption of law that the claimant had suffered some but not substantial financial loss (para.51). This would entitle a claimant who had established the relevant matters to judgment and an award of nominal pecuniary damages. On this basis, the Claimant, who had satisfied the requirements of s.3(1), was entitled to judgment and an award of £5 by way of nominal damages.

(iii) It was open to a s.3 claimant if he and she wished to seek to prove that they had suffered some substantial financial loss and recover such sums by way of an award of compensatory damages (para.108).

(iv) However, unless a malicious falsehood claimant – whether a claimant seeking to prove special damage at common law or a claimant invoking s.3(1) – was able to establish that he or she had suffered significant financial loss, they were not entitled to seek to recover from the defendant damages for injury to feelings (para.96). Furthermore, a claimant would need to prove that his or her injury to feelings had been caused by the financial loss sustained (para.104).

(v) There was nothing in the circumstances of the case which could reasonably be said to justify an award of aggravated damages (para.119).

(vi) Accordingly, where the Claimant had not established a right to either distress damages or aggravated damages, the Court of Appeal’s order would be discharged insofar as it remitted for assessment of such damages by a judge (para.120).

The minority (Lord Hamblen and Lord Burrows) disagreed with the majority on points (ii) and (iv)-(vi). Their view was that:

(a) If a claimant satisfied the requirements of s.3(1), pecuniary loss would be inferred or rebuttably presumed in the claimant’s favour (para.162). It was open to the defendant to rebut the presumption of pecuniary loss with evidence, but if they did so, the claimant would still be entitled to an award of nominal pecuniary damages (para.164).

(b) Mental distress damages could be awarded in malicious falsehood to a claimant relying on s.3(1) even though he or she had suffered no pecuniary loss (paras.234, 235, 237). The basic point was that in principle, if a tort had been committed, the claimant should be entitled to compensation for all pecuniary and non-pecuniary loss caused by the tort subject to normal rules restricting or denying damages such as remoteness and mitigation.

(c) Furthermore, it was not necessary to confine recovery of mental distress damages to distress that had been suffered in consequence of the sustaining of actual pecuniary loss (para.234(iv)). That was not a distinction drawn elsewhere in the law of damages.

(d) The appeal should be dismissed and the assessment of damages for mental distress remitted to a judge in accordance with the Court of Appeal’s order (paras.235, 238).

It is hard to know precisely where this leaves this law of malicious falsehood. One curiosity of the decision of the majority is, perhaps, that, if proving significant financial loss is a requisite of a claim brought under s.3(1) if the claimant wishes to recover damages for injury to feelings, it is unclear what the statutory route offers over a common law claim, and therefore whether Parliament’s statutory purpose in enacting s.3 – “to make it easier for claimants to recover damages in actions for malicious falsehood” (per Lord Leggatt for the majority at para.47) – has been fulfilled. The recovery of damages for financial loss short of technical “special damage” has been available in malicious falsehood since the Court of Appeal’s decision in Ratcliffe v Evans ([1892] 2 QB 524) in 1892.