Defamation in business – Citation PLC v Ellis Whittam Ltd

The law relating to defamation

Defamation, unlawful under the common law, occurs when there is publication to a third party of words or matters containing an untrue imputation against the reputation of individuals, companies or firms which serves to undermine that reputation in the eyes of right thinking members of society generally, by exposing the victim to hatred, contempt or ridicule.

There are two “types” of defamation: libel and slander. Libel is the publication of a defamatory statement in permanent form (i.e. on television, in a newspaper, on the internet etc.). Slander is the publication of a defamatory statement in a less permanent form (generally by word of mouth). In slander claims the Claimant must show proof of damage that has been caused whereas in libel the Claimant simply has to show that the libellous statement was made (i.e. that the statement “could” have caused damage).

A Claimant (the person defamed) must therefore meet the following three elements to succeed in a claim for defamation:

  1. Was a defamatory statement made?
  2. Did this defamatory statement refer to the Claimant?
  3. Was this defamatory statement which referred to the Claimant published?

If the Claimant succeeds in proving on the balance of probabilities that the Defendant (the person doing the defaming) has five potential defences:

  • Consent: that the Claimant consented to the publication of the statement (rarely successful)
  • Truth: that what they said was true
  • Fair comment: that the comment was a matter of legitimate public interest and objectively fair
  • Qualified privilege:  successful where the Defendant has a legal, moral or social duty to communicate and the reader has a legitimate interest in the communication (i.e. a solicitor-client letter)
  • Absolute privilege: absolute defence but extremely limited (i.e. a statement in Parliament would count as an absolutely privileged statement)

The facts in Citation PLC v Ellis Whittam Ltd

Having had a brief look at the law relating to defamation claims, we’ll now take a look at the facts in the case at hand – Citation PLC v Ellis Whittam Ltd.

Both firms provide legal services to clients and are in competition. The Claimant (Citation PLC) alleged that a representative of the Defendant (Ellis Whittam Ltd) made defamatory statements to a potential client of the Claimant.

The alleged words spoken were:

  • “Citation’s guarantee is not what they say it is… because Citation is self-insured and not insured through a broker”
  • “[Citation] is unable to pay out on claims”; and (among others)
  • “Citation does not have any qualified lawyers working for the company”

These allegations were communicated to Citation PLC and they subsequently issued a claim for defamation.

The main substantive issues in the claim related to whether the alleged defamatory statement had been published to a third party and whether the statement itself was true. The main procedural issue was whether there were reasonable grounds for bringing the claim as there was no real or substantial tort. The Claimant was seeking an injunction against the Defendant making further such comments.

The High Court’s judgment in the defamation case

The High Court did not make a judgment on whether the statement was defamatory or whether the alleged defamatory statement had been communicated to a third party. The Court refrained from doing so as it believed that the claim itself was an abuse of process – it felt that the seeking on an injunction by the Claimant was an unsuitable remedy in the circumstances.

Our thoughts on Citation PLC v Ellis Whittam Ltd

This is an interesting case on defamation. It (clearly) revolves mainly around the issue of the appropriate remedy that should and can be pursued in the courts in claims involving defamation. As the Claimant had not obviously suffered damage from the alleged slander (and the Court commented on the difficulty of doing so) the Court believed that the remedy of an injunction was an unsuitable one.

This case illustrates that both individuals and companies must be careful about what statements they make in public. Potentially defamatory statements can, such as in the present case, result in an action for defamation in the courts.

UPDATE: “We understand that Citation will be seeking to appeal the High Court Judgment”