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Corporate defamation: reputation, rights and remedies

Published online by Cambridge University Press:  02 January 2018

Gary KY Chan
Gary KY Chan*
Affiliation:
Singapore Management University
*
Gary KY Chan, Singapore Management University, School of Law, 60 Stamford Road, Singapore 178900, Singapore. Email: garychan@smu.edu.sg
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Abstract

This paper examines fundamental issues concerning a corporation's right to sue for defamatory attacks on its reputation, the scope of the right and the remedies available. It first outlines the opposed positions in England and Australia, respectively. It also argues that a corporation, save for a government corporation that exercises governmental functions based on markedly different rationales, should have the right to sue in defamation premised on the concept of corporate reputation as property and for the purpose of vindicating its reputation. On the question of remedies, a corporation should be entitled to recover special damages as reparation for damage to reputation provided they are proved. This paper considers, instead of presumed damages, alternative remedies for vindicating corporate reputation. Finally, it examines the business and non-business reputations of both trading and non-trading corporations in relation to claims for damages.

Type
Research Article
Information
Legal Studies , Volume 33 , Issue 2 , June 2013 , pp. 264 - 288
Copyright
Copyright © Society of Legal Scholars 2013

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Footnotes

*

The author would like to acknowledge funding for this project from the Office of Research, Singapore Management University.

References

1. National Union of General and Municipal Workers v Gillian [1946] KB 81. For a historical background, see, generally, Patfield, F ‘The origins of a company's right to sue for defamation’ (1994) 45 Northern Ireland Legal Quarterly 233 Google Scholar.

2. South Hetton Coal v NE News [1894] 1 QB 133 (‘South Hetton’).

3. Jameel v Wall Street Journal Europe Sprl [2007] 1 AC 359 (‘Jameel’).

4. See s 12 of the Irish Defamation Act (No 31 of 2009), which states that ‘a body corporate may bring a defamation action under this Act in respect of a statement concerning it that it claims is defamatory whether or not it has incurred or is likely to incur financial loss as a result of the publication of that statement’. Cf s 6 of the New Zealand Defamation Act 1992, which states that proceedings for defamation brought by a body corporate shall fail unless the body corporate alleges and proves that the publication of the matter – (a) has caused pecuniary loss; or (b) is likely to cause pecuniary loss – to that body corporate.

5. John Feo v Pioneer Concrete (Vic) Pty Ltd [1999] 3 VR 417 (‘John Feo’) at [57] per Winneke J.

6. Western Australian Defamation Law, Committee Report on Reform to the Law of Defamation in Western Australia, September 2003 at [25].

7. Revised Outline of a Possible National Defamation Law, dated July 2004.

8. See Rolph, D ‘A critique of the national, uniform defamation laws’ (2008) 16 TLJ 207 at 215–220Google Scholar.

9. The Supreme Court of New South Wales in Redeemer Baptist School Ltd v Graeme Francis Glossop 20074/05; 20077/05, 2006 NSWSC 1201 (Unreported Judgment, 16 November 2006) held at [21] that the word ‘persons’ in the statute should be given its natural and ordinary meaning and includes individuals who are employees and non-employees.

10. CLWA (ACT) s 121(2); DA (NT) s 8(2); DA (NSW) s 9(2); DA (Qld) s 9(2); DA (SA) s 9(2); DA (Tas) s 9(2); DA (Vic) s 9(2), DA (WA) s 9(2).

11. ‘Free speech is not for sale’, 10 November 2009, available at: http://www.libelreform.org/the-report

12. House of Commons Culture Media and Sport Committee, ‘Press standards, privacy and libel’, Second Report of Session 2009–10, Vol 1 at [178].

13. See the Defamation Bill, cl 11, available at: http://www.publications.parliament.uk/pa/ld201011/ldbills/003/11003.1-7.html#j11, s 11.

14. Cf New Zealand Defamation Act 1992, above n 4, s 6.

15. Ministry of Justice, ‘ Draft Defamation Bill: Consultation ’, Consultation Paper CP3/11, March 2011, at [138].

16. Ibid, at [142].

17. Jameel, above n 3, at [26] per Lord Bingham; [101] per Lord Hope; [120] per Lord Scott. See also Ballina Shire Council v Ringland 83 LGERA 115 at 162 per Mahoney J (‘Ballina Shire’).

18. Jameel, above n 3, at [91] (emphasis added).

19. ‘Local authority v critical ratepayer: a suit in defamation’ (1972A) Cambridge Law Journal 238.

20. Jameel, above n 3, at [154]. See Lewis v Daily Telegraph [1964] AC 234 at 262, that a company ‘can only be injured in its pocket’ and that the ‘injury need not necessarily be confined to a loss of income. Its goodwill may be injured’.

21. Post, Rc ‘The social foundations of defamation law: reputation and the Constitution’ (1986) 74 California Law Review 691 CrossRefGoogle Scholar.

22. Ibid, at 696. But see McNamara, L Reputation and Defamation (Oxford: Oxford University Press, 2007) pp 38–42 CrossRefGoogle Scholar, rejecting the concept of reputation as property.

23. McNamara, above n 22, pp 44–51 (advocating a broader conception of ‘honour’ among ordinary people, and not merely aristocrats).

24. Milo, D Defamation and Freedom of Speech (Oxford: Oxford University Press, 2008) pp 30–33 CrossRefGoogle Scholar; McNamara, , above n 22, pp 42–43 Google Scholar (honour and dignity as part of the personality of an individual living in a society).

25. Milo, above n 24, pp 32–33 (that modern egalitarianism cannot ‘tolerate’ the conception of reputation as honour).

26. See Oster, J ‘The criticism of trading corporations and their right to sue for defamation’ (2011) 2 Journal of European Tort Law 255 at 278CrossRefGoogle Scholar (that corporate reputation is based on the property rationale rather than honour and dignity).

27. Rolph, above n 8, at 216–217.

28. Ministry of Justice, above n 15, at [143].

29. Article 1 of the First Protocol to the ECHR (which refers to the right of ‘legal persons’ to ‘possessions’); Van Marle v the Netherlands , 26 June 1986, Nos 8543/79, 8674/79, 8675/79 and 8685/79, s 41 (on the protection of goodwill in business). See Oster, above n 26, at 263.

30. Metropolitan Saloon Omnibus Co v Hawkins [1859] 4 H & N 87 at 90.

31. Dixon v Holden [1868–1869] 7 LR Eq 488 at 492 (emphasis added).

32. Ibid.

33. Spoorbond v South African Railways [1946] AD 999 at 1010–1011 (‘Spoorbond’) (emphasis added).

34. Jameel, above n 3, at [91] per Lord Hoffmann; [120] per Lord Scott.

35. Ibid, at [158].

36. Derbyshire County Council v Times Newspapers Ltd [1993] 2 WLR 449.

37. Ibid, at 456.

38. Ibid, at 458. Cf s 12 of the Irish Defamation Act, above n 4. To the extent that the term ‘body corporate’ includes local authorities that are duly incorporated, the section provides for an even broader corporate right to sue in defamation than the current English common law position. See McGonagle, M amd Brody, A ‘The Irish Defamation Act 2009: too little, too late?’ (2010) 15 Communications Law 43 at 44Google Scholar.

39. Ibid, at 459. The Derbyshire principle does not, however, prevent the councillors and executives, if their individual reputations are targeted in the defamatory statement, from suing in their individual capacities.

40. Ibid, at 456.

41. Ibid.

42. Goldsmith v Bhoyrul [1998] QB 459 at 463. The political party was established as a company limited by guarantee.

43. As an exception, the Derbyshire principle was applied to a government corporation in British Coal Corporation v NUM, 28 June 1996, unreported, though it was not democratically elected.

44. Mahoney JA dissenting.

45. Ballina Shire, above n 17. See Mullany, Nj ‘“Governing reputation” and local government corporations’ (1995) 111 Law Quarterly Review 206 Google Scholar.

46. However, the claim in malicious falsehood was allowed by the court (Kirby P dissenting).

47. Ballina Shire, above n 17, at 124–125.

48. Ibid, at 141.

49. Ibid, at 144. Mahoney JA (dissenting) was concerned with the uncontrolled power of the media to publish defamatory statements of public authorities if the Derbyshire principle were applied in New South Wales (ibid, at 158), and doubted whether the use of public funds to sue in defamation has deterred criticism of public authorities in the territory (ibid, at 159–160).

50. John Dixon and British Columbia Civil Liberties Association v the Corporation of the City of Powell River [2009] 94 BCLR (4th) 106, 310 DLR (4th) 176 (British Columbia Supreme Court); Halton Hills (Town) v Kerouac [2006] 270 DLR (4th) 479; Montague (Township) v Page [2006] 79 OR (3d) 515; 139 CRR (2d) 82 (Ont SCJ) at [29].

51. Canada had initially adopted the position that a municipal corporation could sue for defamation in respect of its governing reputation: Prince George (City) v British Columbia Television System Ltd [1979] 95 DLR (3d) 577.

52. Spoorbond, above n 33.

53. Ibid, at 1013.

54. John v MGN Ltd [1997] QB 586; Carson v John Fairfax & Sons Ltd [1993] 178 CLR 44.

55. Whether the damage is the ‘natural and probable result’ of the allegedly defamatory words. See Mullis, A and Doley, C, Carter-Ruck on Libel and Privacy (New York: Lexis-Nexis, 2010) at para 15.57Google Scholar.

56. Chakravarti v Advertiser Newspapers Ltd [1998) 193 CLR 519 at 559.

57. Milo, above n 24, p 40.

58. Downtex Plc v Andrew James Flatley [2004] EWHC 333 (QB) at [28].

59. McDonald's Corporation v Steel and Morris [1999] EWCA Civ 1144 (31 March 1999, unreported) (‘McDonald's Corporation’); Hays plc v Jonathan Hartley [2010] EWHC 1068 (‘Hays plc’) at [24].

60. Collins Stewart Ltd v Financial Times Ltd [2006] EMLR 5 at 11.

61. Purnell v Business Magazine Ltd and another [2008] 1 WLR 1 (‘Purnell’) at [9] per Laws LJ (citing Neill LJ's statement in Rantzen v Mirror Group Newspapers (1986) Ltd [1994] QB 670 at 696).

62. Ibid, at [38] per Chadwick J.

63. Applause Store Productions Ltd v Raphael [2008] EWHC 1781 (QB) at [76].

64. Emphasis added. The passage by Lord Hailsham in Broome v Cassell was also cited in Purnell, above n 61, at [8].

65. Ratcliffe v Evans [1892] 2 QB 524 at 528.

66. See also the US decision of Diplomat Electric, Inc v Westinghouse Electric Supply Company [1967] 378 F 2d 377 at 382, citing Maytag Co v Meadows Mfg Co 7 Cir 1930, 45 F 2d 299 at 302.

67. The exceptions are: (a) imputations that the claimant committed a crime punishable with imprisonment (Gray v Jones [1939] 1 All ER 795); and (b) imputations that the claimant is suffering from a serious contagious disease.

68. Defamation Act 1952, s 2. The other statutory exception refers to words spoken and published which impute unchastity or adultery to any woman or girl pursuant to the Slander of Women Act 1891.

69. Slipper v BBC [1991] 1 QB 283 at 300.

70. Downard, Pa, Libel (New York: Lexis-Nexis, 2nd edn, 2010) p 231. See also Vaquero Energy Ltd v Weir [2006]Google Scholar 5 WWR 176 at [18].

71. Walker v CFTO Ltd [1987] 59 OR (2d) 104, 37 DLR (4th) 224.

72. Ibid, at [31].

73. See also Barrick Gold Corporation v Lopehandia [2004] 239 DLR (4th) 577 at [49].

74. Jameel, above n 3, at [13] (citing Kay Lj in South Hetton, above n 2, at 148); John Feo, above n 5, per Winneke J.

75. Witzleb, N and Carroll, R ‘The role of vindication in torts damages’ (2009) 12 Tort Law Review 16 at 34Google Scholar; Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419 at [1527].

76. Robins v Kordowski [2011] EWHC 1912 at [82].

77. Loutchansky v Times Newspapers Ltd (No. 2) [2002] QB 783 at [100].

78. Mahfouz v Brisard (No. 3) [2006] EWHC 1191 (QB) at [22] (the foreign claimant's application for a declaration of falsity in summary procedure was rejected on the grounds that its purpose was to deploy the declaratory order in foreign jurisdictions). But see Mahfouz v Brisard (No. 1) [2004] EWHC 1735 (QB) (declaration of falsity).

79. Ni Raifeartaigh, U, ‘Fault issues and libel law: a comparison between Irish, English and United States law’ (1991) 40 International and Comparative Law Quarterly 763 at 782CrossRefGoogle Scholar.

80. See Mullis, A and Scott, A ‘Reframing libel: taking (all) rights seriously and where it leads’ (2012) 63 Northern Ireland Legal Quarterly 5 at 19–20Google Scholar; Milo, above n 24, pp 273–278.

81. Mullis and Scott, above n 80, at 23.

82. Sim v Stretch [1936] 2 All ER 1237 at 1240 per Lord Atkin.

83. Yousopoff v Metro-Goldwyn-Mayer Pictures Ltd [1934] 50 TLR 581.

84. Parmiter v Coupland [1840] 6 M&W 105.

85. Jameel, above n 3, at [95] (emphasis added).

86. Ibid, at [96].

87. Ministry of Justice, above n 15.

88. Ibid, at [4]. See also Thornton v Telegraph Media Group Ltd [2010] EWHC 1414 (QB) (requiring a ‘threshold of seriousness’ as to the defamatory nature of the statement); Daniels v British Broadcasting Corporation [2010] EWHC 3057 at [50] (threshold of seriousness ‘implicit’ in the ‘approach of the ordinary reasonable and sensible man’); Jameel v Dow Jones & Co 2005] QB 946 (requiring a real and substantial tort).

89. Jameel v Dow Jones & Co, above n 88.

90. Ibid, at [69]. See also Hays plc, above n 59, at [59] and [60] (corporate claimant's action was an abuse of process as the damages claimed had no vindicatory value); Phillip Wallis, GHP Securities Limited v Justin Meredith [2011] EWHC 75 (QB) at [60] (abuse of process as defamatory allegation published only to the claimant's solicitor who was of the view the allegation was false and as such, vindication would be ‘illusory’ or at best ‘minimal’). Cf Lewis v Commissioner of Police of the Metropolis, Baroness Buscombe, Press Complaints Commission [2011] EWHC 781 at [105]–[107] (no abuse of process due to potential vindication of reputation against defendant at trial).

91. Jameel, above n 3, at [91].

92. Ibid.

93. ‘Free speech is not for sale’, above n 11.

94. Meaning ‘improper motive’ in Balden v Shorter [1933] Ch 427 at 430 per Maugham J; and ‘want of honest belief in the truth of the statement’ in Greers Ltd v Pearman and Corder Ltd [1922] 39 RPC 406 at 417 per Scrutton LJ.

95. Rolph, above n 8, at 216–217.

96. SCAG Working Group of State and Territory Officers, Proposal for Uniform Defamation Laws, July 2004 at [4.5].

97. Jameel, above n 3, at [158].

98. House of Commons Culture Media and Sport Committee, above n 12, at [177]–[178].

99. Ministry of Justice, above n 15, at [138].

100. Steel and Morris v United Kingdom [2005] 41 EHRR 22 (‘Steel and Morris’). On the domestic front, see the series of court decisions in McDonald's Corporation, above n 59; and [1995] 3 All ER 615; [1997] EWHC QB 366.

101. The denial of legal aid per se in defamation proceedings does not constitute a violation of Art 6: McVicar v United Kingdom [2002] EHRR 22.

102. Steel and Morris, above n 100, at [95].

103. Ibid.

104. The awards were £36,000 (against Steel) and £40,000 (against Morris), respectively.

105. Steel and Morris, above n 100, at [96].

106. Ibid, at [94].

107. McDonald's Corporation, above n 59.

108. See, eg, Lingens v Austria Application No 9815/82 [1986] 8 EHRR 407; [1986] ECHR 7 (8 July 1986) (that freedom of political debate is the ‘very core’ of the concept of a democratic society under Art 10; and defamed politicians should display a ‘greater degree of tolerance’ as compared to private individuals); Steel and Morris, above n 100.

109. Reynolds v Times Newspapers Ltd [2001] 2 AC 127 (‘Reynolds’); Flood v Times Newspapers Ltd [2012] UKSC 11.

110. Joseph v Spiller [2010] 3 WLR 1791.

111. Steel and Morris, above n 100; Markt Intern and Beermann v Germany [1989] 12 EHRR 161 at [33]–[38].

112. See Oster, above n 26, at 273 (arguing that publications concerning corporations should satisfy the public interest element under the Reynolds privilege).

113. McDonalds' Corporation, above n 59.

114. Courts may make no order as to costs or an order for the plaintiff to bear costs where the damages award is a derisory sum: Pamplin v Express Newspapers Ltd [1988] 1 WLR 116.

115. See Howarth, D ‘Libel: its purpose and reform’ (2011) 74 Modern Law Review 845 at fn 178CrossRefGoogle Scholar.

116. At the time of completing this paper, amendments to the Legal Aid, Sentencing and Punishment of Offenders Bill, including the proposals for reforming CFAs in Part 2 (‘Litigation Funding and Costs’) were being debated at the ‘ping-pong’ stage between the House of Commons and the House of Lords. See also MGN Ltd v UK [2011] 1 Costs LO 84 (ECHR) (Application No 39401/04, 18 January 2011) (while CFA served a legitimate aim of providing public access to legal services for civil litigation, the award of success fees was not a proportionate means of achieving aim).

117. See Mullis, A and Scott, A ‘Something rotten in the state of English libel law? a rejoinder to the clamour for reform of defamation’ (2009) 14 Communications Law 173 at 180Google Scholar; Howarth, D ‘The costs of libel actions: a skeptical note’ (2011) 70 Cambridge Law Journal 397 CrossRefGoogle Scholar.

118. Reynolds, above n 109, at 202 (the uncertainty of a court decision, together with the expense of court proceedings, may ‘chill’ the publication of statements by defendants).

119. Civil Procedure Rules SI 1998/3132, Pt 1.4(1), as amended.

120. Defamation Act, s 8; Civil Procedure Rules, Pt 53.2.

121. King v Telegraph Group Ltd [2005] 1 WLR 2282.

122. Ibid, at [99].

123. Tierney v News Group Newspapers Ltd [2006] 4 Costs LR 606 at [13].

124. Ibid.

125. This stipulation applies generally and not merely to defamation cases. See also the pre-para 23A.1 CPD decision in Smart v East Cheshire NHS Trust [2004] 1 Costs LR 124 (cost-capping only where there is a real and substantial risk that costs will be disproportionately or unreasonably incurred, and that the risk cannot be controlled by conventional case management together with a detailed assessment of costs after a trial).

126. Peacock v MGN Ltd [2009] 4 Costs LR 584 at [22].

127. Ibid.

128. CP 4/09, 24 February 2009.

129. Ibid, at para [27].

130. Ibid, at para [28].

131. Lownds v Home Office (Practice Note) [2002] 1 WLR 2450 at [32].

132. The Stationery Office, 2009 at para 5.13.

133. Civil Procedure Rules, R 3.4.

134. Pedder v News Group Newspapers Ltd [2004] EMLR 19. The main allegation for the application to strike out the claim as an abuse of process was that the claimant was seeking to re-litigate an issue already decided in a prior action.

135. Ibid, at [41].

136. The Commissioners of Inland Revenue v Muller & Co's Margarine Limited [1901] AC 217 at 223–224 per Lord Macnaghten.

137. Empirical data indicate that reputational harm may impair goodwill based on evidence of reputational penalties imposed by the stock market on firms accused of misconduct, or whose reputations were tainted. De Villiers, M ‘Quantitative proof of reputational harm’ (2010) 15 Fordham Journal of Corporate and Financial Law 567 at 588Google Scholar.

138. Fombrun, C and Van Riel, C ‘The reputational landscape’ (1997) 1 Corporate Reputation Review 5 at 10CrossRefGoogle Scholar. See Gottschalk, P Corporate Social Responsibility, Governance and Corporate Reputation (New York: World Scientific, 2011) p 28 CrossRefGoogle Scholar (corporate reputation as the ‘overall estimation and judgment of an organization that is held by its internal and external stakeholders based on the corporation's past actions and expected future actions and behaviour’).

139. Hays plc, above n 59.

140. Multigroup Bulgaria v Oxford Analytica Limited [2001] EMLR 28 at [28].

141. But see contrary view espoused by Howarth, above n 115, at 874 (that corporations have no social relations and therefore, its economic losses are never consequential on social harm).

142. See also Afia, J and Hartley, P ‘Lord Lester's Defamation Bill 2010: a practical analysis’ (2010) 2 Journal of Media Law 183 at 188Google Scholar.

143. Langvardt, Aw ‘A principled approach to compensatory damages in corporate defamation cases’ (1990) 27 American Business Law Journal 491 CrossRefGoogle Scholar.

144. Ibid, at 516.

145. Ibid, at 519.

146. Ibid, at 529.

147. Ibid, at 528–529.

148. Jameel, above n 3, at [26].

149. Ibid, at [121].

150. In this respect, s 6 of the New Zealand Defamation Act 1992 (above n 4), which requires, for a corporate defamation action, proof that the publication in question has caused pecuniary loss or is likely to cause pecuniary loss to the body corporate, should not be followed.

151. Herzfeld, P ‘Corporations, defamation and general damages: back to first principles’ (2005) 10 Media and Arts Law Review 135 Google Scholar.

152. See, generally, Tan, E ‘Corporate social responsibility’ in Chan, Gky and Shenoy, Gtl (eds) Ethics and Social Responsibility: Asian and Western Perspectives (Chicago, IL: McGraw Hill, 2nd edn, 2011) pp 211–253 Google Scholar.

153. Examples of social enterprises adopting corporate forms include company limited by guarantee, company limited by shares, community interest company; other non-corporate forms include the industrial and provident societies and registered charities. See Report on the State of Social Enterprise Survey 2011, available at: http://www.socialenterprise.org.uk/uploads/files/2011/11/fightback_britain1.pdf, at 52.

154. See Social Enterprise UK, Social Enterprise Explained, available at: http://www.socialenterprise.org.uk/uploads/files/2011/11/social_enterprise_explained.pdf, at 4 and 11.