Part Two: Defamation and a statutory threshold test of harm
38. The focus of this chapter is the actionability of defamatory statements and restrictions on who can raise proceedings.
What is defamation?
39. Reputation has been described as an integral and important part of the dignity of the individual, and as forming the basis of many decisions in a democratic society which are fundamental to its well-being, for example, whom to employ. This forms the basis of the law of defamation: a person’s character, honour and reputation should be protected.
40. Where a statement is made about a person which is false, derogatory in nature and is made maliciously, then the person concerned may be entitled to damages for solatium and patrimonial loss. Defamatory comments will most commonly be made about an individual. However, it is possible for companies, partnerships and voluntary organisations to be defamed.
41. The defamatory statement must be communicated for it to be actionable. Unlike English law, the communication does not have to be to a third party.
42. The test of whether a statement is defamatory is objective – that is, would the statement lower the estimation of the person among right-thinking members of society generally. The objective test involves considering the context in ascribing the meaning to be given to the statement and whether it exposes the person to hatred, contempt or ridicule. The context is important as, for example, a statement that may have been considered defamatory 50 years ago may no longer be considered so.
43. The fundamental principles of the law of defamation are set out in case-law, and this includes the definition of defamation. Some responses to the Commission’s reform project took the view that what constitutes defamation should be restated in statutory form. The Commission acknowledge the benefit of restating in statutory terms common law definitions, and in some jurisdictions what constitutes defamation is defined. In the Republic of Ireland, a defamatory statement is defined as, “a statement that tends to injure a person’s reputation in the eyes of reasonable members of society.”
44. A statutory definition may also go some way to ensure that Scots law accords with the requirement of the European Convention of Human Rights that restrictions on freedom of expression should be accessible. Delineating the boundaries of what makes a statement defamatory could also be a means of pre-empting the abuse of overbroad legal terms which could be detrimental to both freedom of expression and to the protection of reputation.
45. The Commission, after consideration, rejected this suggestion, noting both that the reform project was not a complete consolidation of the law of defamation and that there was a lack of support for such a restatement. Added to this, they point out that what is meant by defamation is widely understood.
46. There is no single definition of defamation used in the common law, though the concept seems to be well-understood and there appears to be little confusion. The benefits of producing a definition in statutory form is that it is accessible to all, but as there is no single definition universally used, there is the potential that some of the nuances of what may constitute defamation are lost in any restatement, thereby losing the full sense of the concept that we currently have. Furthermore, there is a risk that any new definition will result in satellite litigation, at least initially.
47. We therefore ask:
2. Do you consider defamation should be defined in statute?
The threshold test of serious harm
48. One of the recommendations made by the Commission is to introduce a provision similar to section 1(1) of the 2013 Act – otherwise known as the threshold test of serious harm. The effect of this test is to introduce a filter through which claims in defamation must pass before they are allowed to proceed further. In England and Wales, prior to commencement of the 2013 Act, there was already a (common law) filter in place that meant that trivial and unfounded claims were discouraged. Section 1(1) recasts in statutory form the criterion by which all claims in defamation in that jurisdiction are filtered. In so doing, the threshold test is able to filter out such trivial claims at an early stage in judicial proceedings, that is before they exhaust judicial resources and impose disproportionate burdens on defenders.
49. In England and Wales, in order to raise a claim in defamation, it must be shown not only that the statement complained of is capable of bearing a defamatory meaning, but that it has caused serious harm to the claimant’s reputation (or is likely to do so). This is the criterion for the filtering process that section 1(1) introduces. By contrast, in Scots law, it is enough that a pursuer establish that the statement complained of is capable of bearing a defamatory meaning.
50. One of the motivating factors for the civil society campaign to change defamation laws in England and Wales, was the perception that trivial proceedings were being raised (or threatened to be raised) in order to bring undue pressure on individuals and the media to prevent publication, adding to a chilling effect where freedom of expression is curtailed due to the threat of litigation.
51. Discussions of the common law threshold test in England and Wales centre on two cases. In the first, Jameel (Yousef) v Dow Jones & Co Inc. it was recognised that given certain circumstances the courts could bring to a stop - as an abuse of process - defamation proceedings that were not properly serving the purpose of protecting the claimant’s reputation, given that so little was at stake.
52. In the second case, Thornton v Telegraph Media Group Ltd, it was acknowledged that whatever definition of ‘defamatory’ is adopted by the court it must include a qualification (or ‘threshold of seriousness’ test) in relation to harm to reputation. This has been paraphrased as follows:
“A statement is to be regarded as defamatory if it substantially affects in an adverse manner the attitude of other people towards the claimant, or has a tendency to do so.”
53. Section 1(1) of the 2013 Act recast this common law so that a statement is not defamatory “unless its publication has caused or is likely to cause serious harm to the reputation of the claimant”. What constitutes ‘serious harm’ has been left undefined.
54. How far section 1(1) altered the common law test in England and Wales has been questioned. As the Commission note, cases involving an imputation which has the tendency adversely to affect a person’s reputation to a substantial degree are also likely to cause serious harm. Neither is it clear to what extent claims that could have proceeded under the common law test of England and Wales would now be filtered out by the statutory test.
55. Since publication of the Commission’s Report, an appeal against the decision of the Court of Appeal in the leading case on section 1(1) has been permitted. The appeal focusses primarily on the ordinary meaning of the words set out in section 1(1), and whether it is necessary to go beyond the words of the statement complained of. The appeal was heard by the Supreme Court in November 2018, and a published judgement is anticipated in spring 2019.
56. In Scotland there is at present no filter (either at common law or in statute). If the Scottish Government were minded to proceed with, and the Scottish Parliament agreed to, the Commission’s recommendation that third party communication becomes a requirement to bringing proceedings in defamation then this could lead to the development of a common law filter in Scots law on defamation. The courts in Scotland may move towards adopting a common law threshold test similar to that described in the two English cases mentioned above (but not necessarily exactly the same). In other words, Scots law of defamation could itself develop a test that filters out actions regardless of whether the Scottish Parliament agreed to adopt an equivalent criterion to section 1(1). In view of the small numbers of defamation actions brought in Scotland the opportunity for the common law to develop in this way is likely to be limited; moreover such reform could take a long time to occur.
57. It should also be noted, however, that Scottish courts do not yet have a power to strike out proceedings similar to their English counterparts. Lord Gill’s review of civil courts in Scotland recommended that courts in Scotland be given power to enable any party and the court itself:
“… to seek summary disposal at any stage in the proceedings. The test should be whether the pursuer or the defender has no real prospect of success and where there is no other compelling reason why the case should proceed… The court should also have the power ex proprio motu, and as part of its active case management function, summarily to dispose of an action or defence by applying the same test.”
58. This recommendation has not yet been fully implemented either in the Sheriff Court or the Court of Session, and therefore the law on defamation may not develop along the same lines as was the case in England and Wales prior to 2013. The Commission highlight that the courts should be given enhanced case management powers in defamation actions, and these should extend to the power to strike out at an early stage actions that do not meet the serious harm test. On publication of their Report on 14 December 2017 the Commission wrote to the Lord President, in his capacity as Chair of the Scottish Civil Justice Council, to draw his attention to the fact that potential issues of procedure and efficient case management may arise in relation to the recommendation to introduce a “serious harm” threshold to defamation proceedings.
59. Given the relative lack of defamation proceedings raised in Scotland when compared to other jurisdictions of the UK, if Scottish courts were to develop a (common law) criterion similar to that which subsisted in England and Wales prior to the 2013 Act, then Scottish courts and practitioners would no longer have the same kind of access to developing decisions made by the courts in England and Wales, a practice that had developed in most areas of defamation law prior to the introduction of the 2013 Act. Instead, the courts in England will develop the criterion of serious harm rather than what came before commencement of that Act.
60. Although the requirement for a threshold test was generally well received during the Commission’s reform project, the point was raised that the criterion adopted in England and Wales was done so for a particular reason: to filter out trivial claims. It was pointed out that given the low number of defamation proceedings raised in Scotland each year adopting this threshold test was unnecessary.
61. Writers, publishers and other respondents, on the other hand, express the view that a chilling effect on freedom of expression is often felt not when legal claims are raised, but when letters threatening legal action are issued. A threshold test similar to section 1(1), they argue, would help prevent the silence of criticism that results, although there is no explanation given for how a threshold test would do so. The Commission took the view that it was difficult to see why a claim that did not demonstrate serious harm should be allowed to proceed.
62. Evidence from England and Wales since the introduction of the 2013 Act indicates that the average number of claims raised in the three years prior to the Act is similar to the average number of claims raised after the Act.
63. Against this discussion we ask the following questions:
3. Should a statutory threshold test of serious harm like section 1(1) of the Defamation Act 2013 be introduced?
4. If a statutory test is adopted, should we define what constitutes ‘serious harm’?
5. Do you have any suggestions about would should constitute ‘serious harm’?
Should a threshold test be applied to parties other than private individuals?
64. Legal proceedings in defamation are not restricted to being brought by an individual; an action for defamation may be brought by sole traders and bodies such as companies, partnerships and unincorporated associations, so long as the person bringing the action has a reputation. Such legal persons cannot seek damages for hurt feelings and/ or emotional distress. Instead, any award is generally based on economic loss.
65. Section 1 of the 2013 Act included a variant of the statutory threshold test of serious harm that is applicable to these types of legal persons: they must have suffered serious financial loss (or be likely to do so). This test is found in section 1(2) of the 2013 Act and states that “harm to the reputation of a body that trades for profit is not ‘serious harm’ unless it has caused or is likely to cause the body serious financial loss.” To ensure that this does not apply to bodies like a charity, or university – that is, non-profit organizations - section 1(2) applies only in so far as any allegedly defamatory imputation relates to the activities of a body whose primary purpose is to make a profit.
66. The method in which this statutory threshold test is applied appears to differ slightly from that applied to individuals under section 1(1). In a recent judgment it was said that:
“in [the Presiding Judge’s] view the pronoun ‘it’ in s1(2) must stand for ‘harm’ (that is ‘harm to reputation’). So it is the harm to reputation that must have caused or be likely to cause serious financial loss. By contrast with s1(1), where the court has to consider, as it were one step further back, whether the publication of the words has caused or is likely to cause serious harm.”
67. What is required for a body that trades for profit to satisfy this test, though, is uncertain. In one of the few cases dealing with this issue since the introduction of the 2013 Act in England, the court considered that although some statements of fact are needed to demonstrate actual (or likely) financial loss it will look at the context in which the statement is made to determine the question of whether the threshold has been met. Similar to section 1(1), it appears that although some evidence of (financial) harm need be shown, it is not likely to be onerous for those bringing the claim to do so.
68. Whether those bodies whose primary purpose is to make profit should be able to raise an action in defamation proceedings at all was questioned during the Commission’s reform project. A series of high profile actions in defamation raised in England and Wales by legal persons were highlighted as egregious, and were regarded as an important factor when considering the chilling effect on freedom of expression. Such fears seem to be closely bound up with high legal costs associated with (defending) actions in defamation.
69. If the recommendations made by the Commission with respect to ‘verbal injury’ are taken forward by the Scottish Government and agreed to by the Scottish Parliament, then, it was argued, should legal persons seek to recover economic loss as a result of harm done they could do so by raising proceedings under this type of civil action (rather than under defamation law).
70. The focus on financial harm, however, fails to recognise the non-financial damage that can be done to a body that trades for profit. The very willingness of such bodies to raise actions in defamation could indicate the (non-economic) value of ‘reputation’ to their business interests, rather than be viewed as an attempt to restrict freedom of expression. In other words, it is not necessarily the case that publication of a defamatory statement will impact the finances of a company. Whilst specific losses must be averred in the pleadings in defamation proceedings, it is well established that a claim for damage to goodwill is admissible.
71. As 99.3% of all private sector businesses in Scotland are classed as small or medium, restricting the ability of bodies that trade for profit to raise proceedings in defamation to only instances where financial loss has been suffered (or is likely to be) could be detrimental. These enterprises are said to rely heavily on their (non-economic) reputation. Such bodies could be left with no remedy for the harm done to such reputation by publication of a defamatory statement.
72. One option would be to follow the example of Australia, where bodies that trade for profit are prohibited from raising proceedings in defamation unless they employ fewer than 10 people (known as a micro enterprise). The reasons behind such a policy was that small, for-profit bodies may be disproportionately affected by a defamatory publication and less likely to weather its consequences.
73. The Commission made the decision to follow the provisions of the 2013 Act, allowing legal persons such as companies to continue to raise proceedings in defamation on the condition of demonstrating that they have suffered serious financial harm (or be likely to do so). The Commission point out that it is a radical step to strip such bodies of the rights they currently enjoy, especially as they currently enjoy a similar right in almost all other jurisdictions.
74. We therefore ask:
6. Legal persons which have as its primary purpose trading for profit may have a reputation that they wish to protect. Do you agree that such bodies should be able to raise actions in defamation?
7. Damage to the reputation of such legal persons may not take the form of financial loss. If the Scottish Government were to take forward (and the Scottish Parliament agreed to) the Commission’s recommendation that such bodies are allowed to continue to raise proceedings in defamation, do you agree that these types of legal persons should face a threshold test of showing that serious harm to their reputation has caused (or is likely to cause) financial loss?
8. If legal persons were allowed to continue to raise proceedings in defamation subject to a threshold test, should this be further limited to allow only micro enterprises to continue to raise proceedings?
Restrictions on public authorities raising actions in defamation
75. During the Commission’s reform project, it was suggested that the common law principle laid down in Derbyshire County Council v Times Newspapers Ltd and Others (“the Derbyshire principle”) should be restated in statutory form. In that case it was held that a public authority has no right to raise an action in defamation – even if the functions performed are of a commercial nature. It was held that a public authority should use political means to protect its reputation and not litigation. For the Commission, restating the principle in statutory form enhances the clarity and accessibility of the law – but it is not their intention to extend (or recast) the principle.
76. Whether a person is a public authority for the purposes of defamation will be a matter for the courts to resolve based on the individual facts of each case. The Commission have included a power for Scottish Ministers to introduce regulations so that identified persons are not treated as a public authority.
77. Some responses to the draft Bill suggested that the definition of public authority is too wide, and may bar some natural persons from raising proceedings in defamation. To take the example of a doctor whose role extends to assisting in the running of a health board, it is argued that they may be barred from raising proceedings.
78. In so far as private companies provide identical or complementary services to those offered by local authorities, the Derbyshire principle does not apply. Over the last 20 years or more, the public sector has, to different degrees, delegated delivery of public services to private companies. A private company that runs a prison (which public function accounts only for a fraction of their overall business), for example, would be able to raise an action in defamation to protect their reputation whereas a prison run by the Scottish Prison Service would not. Covering these types of private companies would, the Commission point out, significantly extend the Derbyshire principle beyond its reach under the common law, resulting in a recasting and not a restatement.
79. Concern was also raised by some about the ability of public authorities to circumvent the Derbyshire principle by financially supporting an individual in their employ to raise proceedings in defamation. This would, it is argued, undermine the principle as already stated. It has the potential not only to create an inequality of arms that can lead to a chilling effect, but also undermines the public policy for which the principle was decided.
80. The Commission explicitly state that their intention is not to prevent an individual from defending their professional reputation against allegations relating to the discharge of their public functions. They also explain that even were an individual able to raise an action of the type detailed above (which would not be the case in all circumstances), success would vindicate the reputation of the individual and not necessarily the local authority. Additionally, any amount of reward recoverable would be attributable to the damage done to the individual’s reputation, not the local authority’s.
81. Against this discussion we ask the following questions:
9. While the intention to state the Derbyshire principle in statute was widely welcomed, a number of responses questioned the definition of ‘public authority’ used in the Commission’s draft Bill, with some uncertainty about whether a charity or even a doctor could be caught by the definition. Is there anything captured by the definition that is not by the Derbyshire principle?
10. Conversely, is there anything not captured by the definition that is caught by the Derbyshire principle?
11. Should the Derbyshire principle be recast so that private companies delivering public functions are not able to raise an action in defamation?
12. Public authorities are barred from raising proceedings in defamation under the Derbyshire principle, but are able to fund proceedings brought by an individual in their employment. Do you agree that public authorities should continue to be able to meet the expense of defamation proceedings in this situation?
Unjustified threats of legal action
82. Scottish PEN express the view that a chilling effect on freedom of expression is often felt when letters threatening legal action are issued, and not solely when legal claims are raised. In correspondence with the Scottish Government, Scottish PEN suggest that a model based on the unjustified threats provisions that exist in UK intellectual property (IP) law could deal with such threats when they are unjustified. This was not an issue raised during the Commission’s reform project, and as far as the Scottish Government are aware no other jurisdiction operates a similar provision with regards to defamation law.
83. In short, and as applied to defamation law, the position would be that a person who is aggrieved by threats of defamation proceedings could bring an action to demand that the threatener justifies their threat. If the threatener cannot do so, then the pursuer would be entitled to declarator, a stop (interdict) to the threat, and/or damages. For example, where the author of a statement receives a letter threatening legal proceedings from a complainer who believes the statement to be defamatory of them, then the author can raise legal proceedings in order to force the complainer to justify their threat.
84. In the context of defamation actions, the cause of action would arise as soon as an unjustified threat of legal action is communicated. In practice, this could be the receipt of a legal letter or correspondence communicating an unjustified threat prior to any court action. This will not restrict communications sent to parties requesting clarifications or reasonable modifications on published statements but will focus on communications that contain implicit or explicit threats against parties that are deemed to be unjustified.
85. In the field of intellectual property rights, baseless threats of litigation based on patents, trademarks and registered design rights have been regarded as problematic. In England and Wales, threats provisions were introduced in the nineteenth century to clamp down on the misuse of threats. In 2017, the UK Parliament reformed IP law to provide greater protection against unjustified threats of infringement proceedings by the holder of a patent, trade mark, unregistered design right or registered design. The law applies throughout the UK.
86. The Intellectual Property (Unjustified Threats) Act 2017 (“the 2017 Act”) amended the relevant IP law to provide that a communication contains a threat if a reasonable person would understand from it that the relevant IP right exists and the person communicating the threat intended to bring proceedings. Such a threat is actionable by the aggrieved person. If the court finds the threat of IP litigation was unjustified it is empowered to (a) issue a declarator that the threat of litigation is unjustified, (b) stop (interdict) the continuation of the threat, and (c) award damages to the aggrieved person in respect of any loss sustained by reason of the threat.
87. There are a number of exceptions which may apply to a threat such that it is not actionable, and one of those is a ‘safe harbour’ of ‘permitted communications’ which allow parties to communicate and take some steps towards resolving disputes without running the risk of triggering litigation. Certain conditions must be met, otherwise the threat is actionable.
88. There is also a defence available to a person who is sued for making threats by an aggrieved person, to show that the threat is justified because the infringement of IP rights occurred or was intended.
89. The unjustified threats provisions do not apply to a ‘primary actor’, such as a manufacturer or importer of an alleged infringing product. Threats to retailers, and stockists in general, are not allowed as such actors in the supply chain are likely to be the most harmed and the least harmful in terms of IP infringement.
90. It could be said that, as applied to defamation, a provision based on the unjustified threats provision in intellectual property law could add to the chilling effect. If we take the example of a less well-resourced person who believes they are the subject of a defamatory statement, they may be unwilling to challenge a well-resourced person for fear of an action for unjustified threat being brought against them.
91. Further, introducing a provision dealing with unjustified threats could add a layer of complexity to defamation proceedings.
92. Finally, any such provision may have the effect of increasing litigation as a ‘sue first, ask later’ attitude could be adopted by complainers, and in so doing de-incentivize the use of other methods of dispute resolution.
93. Seeking initial views on the general principle of unjustified threats we ask the following question:
13. Do you agree that a new action of unjustified threats is necessary over and above the recommendations made by the Commission in their Report?
Summary of the Commission’s recommendations
94. The following is a list of the Commission’s recommendations relevant to Part Two of this consultation paper:
2. It should be competent to bring defamation proceedings in respect of a statement only where the publication of the statement has caused, or is likely to cause, serious harm to the reputation of the person who is the subject of the statement.
3. Bodies which exist for the primary purpose of making a profit should, in principle, continue to be permitted to bring proceedings in defamation.
4. A non-natural person whose primary purpose is to trade for profit should be permitted to bring defamation proceedings only where it can demonstrate that the statement complained of has caused or is likely to cause it serious financial loss.
5. Persons which are classed as public authorities for the purposes of the Bill should not be permitted to bring proceedings for defamation.
6. A person should be classed as a public authority if the person’s functions include functions of a public nature.
7. A person should not fall into the category of a public authority if it is a non-natural person which has as its primary purpose trading for profit or is a charity or has a charitable purpose and is not owned or controlled by a public authority and only carries out functions of a public nature from time to time.
8. There should be a power for Scottish Ministers to make regulations specifying persons or descriptions of persons who are not to be treated as a public authority, where this result is not achieved already by section 2. Such regulations should require public consultation before they are made and be subject to the affirmative resolution procedure.
Email: Michael Paparakis
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