Overhaul of defamation law and its implications

Since its announcement in the Queen’s speech nearly a year ago, the Defamation Bill (the “Bill”) has been discussed at length and is now not far from receiving the Royal Assent and becoming law. The Third Reading at the House of Lords took place on 25 February 2013, which was the last stage that it could be amended. It has now been sent back to the House of Commons for consideration of any amendments before being passed on to receive Royal Assent. The recent tripartite agreement over press regulation is good news for the Bill’s future and the law on defamation is set to significantly change.

The Bill

The aim of the Bill is to reform the law of defamation so as to ensure that a fair balance is struck between Article 10 of the Human Rights Act, the right to freedom of expression, and the protection of reputation. The Bill makes a number of substantive changes to the law of defamation without codifying the law into a single statute.

The Bill, following the case of Thornton v Telegraph Media Group [2010] EWHC 1411(QB), seeks to prevent frivolous claims from being pursued by including a requirement for claimants to show that they have suffered serious harm before suing for defamation. The intention behind this is to raise the threshold from what we had before and to provide confidence to publishers that statements which do not cause significant harm, such as parody and irreverent criticism, do not put them at risk of losing a libel claim.

The current presumption in favour of a jury trial is removed by the Bill, meaning that jury trials would only be possible if the court makes an order to that effect. This was a controversial amendment which received significant opposition from the press who feel that this cost saving measure will stifle freedom of speech.

Public opinion was also divided on the Bill’s approach to ’libel tourism’ as it makes it more difficult for foreign based individuals (e.g. Britney Spears) and companies to sue their detractors in London as the courts must be satisfied that England and Wales is the appropriate jurisdiction for such claims. The Bill, in its explanatory notes, states it will consider the ‘global picture’ where the statement has been published in other jurisdictions as well as our own.

Further, in light of instances such as the recent Lord McAlpine and Twitter affair, the Bill introduces a defence of "responsible publication on matters of public interest" and provides increased protection to operators of websites that host usergenerated content, provided that they comply with the procedure to enable the complainant to resolve disputes directly with the author of the material concerned.

The Bill also introduces new statutory defences of ‘truth’ and ‘honest opinion’ to replace the common law defences of ‘justification’ and ‘fair comment’. These defences have been created as a result of scientific cases such as the widely reported ‘Singh’ case. Simon Singh himself is an advocate of libel reform and has been reported as stating that libel actions were used to block what he viewed as ‘legitimate scientific inquiry and debate’. The new defences will facilitate such academic opinion, although, claimants will still be able to defeat the defence of honest opinion by establishing that the defendant did not hold the opinion expressed.

Recent Controversy

In February 2013, during the Bill’s reading at the House of Lords, Lord Puttman introduced further amendments in response to the Leveson enquiry which has the press in uproar. The most controversial of these amendments is the creation of an arbitration system between newspapers and members of the public making claims for defamation. This scheme is intended to be voluntary but the practical implications will leave newspapers with no choice but to sign up. Lord Puttman’s amendments will punish newspapers that choose not to use the arbitration system as the court will take this into account when awarding costs and damages regardless of whether they are successful or not.

Another criticism is that as the proposed arbitration system will be set up through legislation thereby enabling Parliament and Government to manipulate it. The implication of this is that newspapers will only be protected from huge libel damages if they have sought advice from the effectively non-independent regulator and have received pre approval to publish an article.

This caused commotion amongst politicians and both the House of Commons and the House of Lords. The stalemate centred on a key issue: freedom of speech. Eminent QCs, commissioned by the press, have expressed concerns over compatibility of the Bill with Article 10 of the Human Rights Act. David Cameron, initially against Lord Puttman’s contested amendments, agreed on 18 March 2013 to set up a newspaper regulator under a Royal Charter. The Conservatives have said that the new laws will not explicitly refer to press regulation. Instead, there will be a small legal clause in the Enterprise and Regulatory Bill to stop future governments tampering with the press regulator without the agreement of two-thirds of MPs.

Despite the controversy, the proposal of an arbitration system for press complaints will now go ahead. This could also potentially impact those outside the press, such as bloggers, as the new laws also cover the internet. Bloggers are unlikely to have access to the same level of legal advice as the press and thus, this could have a chilling effect on the freedom of expression of those outside the media.

Outside the Press

Not all of the recent amendments have received media scrutiny to the extent of those mentioned above. Part of the Bill relates to 'non-natural persons' whereby companies or other organisations trading for profit will have to seek the permission of the court in order to bring a defamation claim. The court will strike out such applications unless the body corporate can prove that the defamatory statement has caused, or is likely to cause, substantial financial loss.

This is likely to seriously impact on the number of claims instigated by non-natural persons and arguably cause an unleveled playing field. Not all defamatory statements will cause substantial financial loss; some may make it more difficult for companies to borrow or attract suitable staff and thus adversely affect the efficient carrying out of its functions.  ompanies will also be deterred from taking preventative measures, which is of particular importance in brand related disputes as the financial impact on a brand is often difficult to quantify straightaway. In addition, as the limitation period in libel is only one year from the date on which the cause of action arose, many potential claims by companies waiting to gather sufficient evidence will run the risk of being time-barred.

This new amendment is in stark contrast with current case law. The high profile case of Jameel v Wall Street Journal Europe SPRL (No.3) [2006] UKHL 44, set the precedent that a company which had a trading reputation in England and Wales was entitled to pursue a remedy in a defamation action without being required to allege or prove that the publication complained of had caused it actual damage. The proposed amendment will render this decision pointless.

Further, there is a new amendment (in line with the ‘Derbyshire’ rule) which states that non-natural persons performing a public function will not have an action in defamation in relation to a statement concerning that function. The court will disregard any omission made by defendants to verify the truth if they believe that the statement was in the public interest.

Both these amendments, if successful, are good news for potential defendants.

The Future

The deal over press regulation is good news for advocates of the Bill. Amendments related to the Leveson enquiry may still be redrafted but the Bill itself is likely to be enacted, and it will drastically change the landscape of defamation law. The proposed new arbitration system will be free for all claimants and undoubtedly it will lead to an increase of claims against the press. However, there should be a reduction in claims being intimated towards defendants outside the press; this could be good news for some Insurers.

Currently, key newspaper groups are seeking legal advice on whether to co-operate with the new press watchdog. The new scheme will not practically work if there is no media buy in; we will just have to see how events unfold.