In the case of Marathon Mutual Ltd and another v Waters and another, the High Court has held that a company could sue for malicious falsehood even where the words complained of did not actually refer to it.

Background

To succeed in an action for malicious falsehood, a claimant needs to prove that (1) the defendant published to third parties words which are false; (2) that they refer to the claimant or its property or its business; (3) that they were published maliciously; and (4) that special damage has followed as a direct and natural result of their publication.

Facts

The First Claimant, Marathon (M) was a mutual protection fund specialising in insuring care homes. The Second Claimant, Regis (R) was in the business of managing mutual protection funds, including M in relation to which it took a management fee of 11.5% of M’s income.

The First Defendant, Waters (W), was a director of M. In September 2008, he resigned and became a director of the Second Defendant, Primecare (P) an insurance broker also offering insurance services to care homes in competition with M.

In November 2008, P and W sent a letter to M’s customers and W also telephoned one of M’s customers. M alleged that in the letter and during the telephone call, P and W made various disparaging remarks about M. M brought proceedings against W and P for malicious falsehood.

R also sued for malicious falsehood although it had not been mentioned or referred to at all in the letter or telephone call. R argued that its income was directly limited to the income of the companies it managed, of which M was one. Accordingly R alleged that when M suffered damage by way of a fall in business as a result of the words complained of, it also suffered damage of a reduced income.

This was a preliminary application in relation to the parties’ statements of case and so it was not necessary for the court to decide whether M and R’s claims succeeded in substance. The question for the High Court was only whether R should be entitled to continue with its claim at all. W and P argued that R should not be allowed to continue with its claim. They argued that the words used in the letter and telephone call did not refer at all to R. They argued that it was an essential element of a claim in malicious falsehood that the words should refer to the particular claimant and be false in relation to him/her. The fact that R had suffered loss as a result of an alleged malicious falsehood against another should not be sufficient to give it a cause of action of its own. Therefore R’s claim should be struck out.

Decision

The High Court held that, for a malicious falsehood claim, there must be some reference, direct or indirect, in the words complained of to the claimant or his/her business, property or other economic interest, although it was not necessary that the words caused the recipients to actually identify the claimant. The court said that to allow a claim in malicious falsehood to proceed where the words did not refer to the claimant at all would open the floodgates to claims and would fall foul of Article 10 of the ECHR would required any restrictions on freedom of expression to be proportionate.

The High Court held that although the words allegedly used in the letter and telephone call did not refer to R at all, R could proceed with its claim. This was because the management of M was the essential subject matter of R’s business. R and M’s interests were so closely connected that any attack on M would also be an attack on R and would sufficiently refer to R’s business.

Comment

This case is interesting, as it appears to have expanded which is meant by the requirement that the words complained of must ‘refer to the claimant’. It seems that a business will be able to bring a claim in malicious falsehood in respect of words that do not identify it or refer to it at all provided that its interests are so closely linked with the business that is the subject of the words that the words, by extension, also ‘refer’ to it.

There is yet to be a hearing on the substance of the claims made by M and R.

Further reading

A copy of the judgment is only available via subscription services. The citation is Marathon Mutual Ltd and another v Waters and another [2009] EWHC 1931.