Cryptoassets and divorcing a ‘Cryptoqueen’: Part l - Identification, valuation and preservation
Since implementation of the new Defamation Act 2013 earlier this year, legal commentators have been anxiously awaiting the first judgments on the new provisions. Will they provide us with clarity?
One such new provision is section 1(1) of the Act, which states 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 new threshold is realistically set for claimants by this “serious harm” test?
We now have the first decision on that question in Cooke and Anor v MGN ( EWHC 2831 (QB).
Briefly, the case related to an article in the Sunday Mirror about the TV programme “Benefits Street.” The article was focused on Paul Nischal, described as a “Tory millionaire”, and the properties which he rented out to benefit claimants on the street. The article’s theme was landlords making a profit from low income tenants. The article also however briefly mentioned that “three more homes in the road … are owned by the Midland Heart housing association. Its chief Ruth Cooke, 45, earns £179,000 a year and lives in a large house in Stroud."
Ms Cooke and Midland Heart brought a defamation claim against the Mirror Group. Whilst there was no dispute with the factual accuracy of the statement, the claimants alleged that the article carried the meaning that Midland Heart, owned or run by Ms Cooke, was one of the disreputable, well-off private landlords of rented properties on James Turner Street who "rake it in" by letting out squalid and sub-standard houses to people in receipt of housing benefit and overcharging in rent.
The defendant applied for a determination of the preliminary issues of what meaning was actually carried by the article, and also whether or not there had been sufficient “serious harm” to the claimants. If they did not pass this threshold test, the claim would now fail under the new law.
Statements for the claimants included evidence that following publication, three professional contacts mentioned the article in communications with them; and one of these indicated that it was "awful" that the claimants were associated with disreputable landlords. They also stated that any suggestion that Midland Heart fails in the delivery of services is bound to cause those who award contracts and grants to question whether the claimant should receive public money. But it was conceded that to date Midland Heart was not aware of any contract being lost.
The claimants submitted that in the nature of this type of matter, the actual and likely serious harm to the claimants' reputations will be in the estimation of those who do not know them personally, but will now know them as 'dodgy landlords' associated with Benefits Street. Evidence from these unknown persons would in practice be almost always impossible to obtain. The Court was asked to take account of the propensity of defamatory statements "to percolate through underground channels and contaminate hidden springs". It was argued that the Court should employ the traditional approach of assessing the seriousness of the allegations, and the extent of the circulation, rather than requiring analytical evidence of harm.
The defendant’s position broadly was that if there were no tangible adverse consequences to the claimant by the time of a determination, many months after publication, it is difficult to see on what basis the claimant could establish that serious harm had been caused. They suggested that if there had been serious harm, it would be visible via social media accounts, online reviews, customer helplines and staff feedback.
They also referred to an apology which they had published to stem any harm. The apology included the facts that Midland Heart is a not for profit housing and care charity, and any surplus made by it is reinvested into its homes for the benefit of its customers. They had stated that Midland Heart and Mrs Cooke take their responsibility to support customers and the communities they live in very seriously.
In answering the “serious harm” question, the Judge observed that there were some kinds of allegations where extensive evidence would not be necessary to satisfy the “serious harm” test. He gave the examples of where a national newspaper falsely accuses someone of being a paedophile or a terrorist. However this was not that sort of case.
Assessing the facts, the Judge found that the apology “was sufficient to eradicate or at least minimise any unfavourable impression created by the original article in the mind of the hypothetical reasonable reader who read both”. The article had also been amended online. This left only a residual class of people who had read the original article but not the apology. In light of the fact that the claimants accepted that there was no specific evidence of serious harm to their reputations, the Judge found this was not a case in which serious harm could be inferred.
In conclusion, not much clarity is added to the law by this decision. In particular no clear guidance has been given as to what evidence can and should be obtained to prove serious harm to a reputation. In general though, we can say that the threshold on serious harm has been raised, making it more difficult for some claimants to succeed in defamation actions.
Ultimately, each case will now need to be carefully assessed by lawyers at the outset to establish how much evidence of harm to reputation is needed, and what evidence can practically be obtained.
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