Commercial Dispute Resolution
How to deal with a defamatory statement about your businessJuly 05, 2017
We all have days where we feel like letting off steam. But what can you do if someone decides to vent their feelings online at your company’s expense? The popularity of online reviews is fuelled by the use of smart phones, allowing posts to be made instantly, including the ill-advised 2am tweet, meaning that online defamation is becoming increasingly problematic for businesses.
You may have terms in your employment contracts or staff handbook that give you some recourse where an employee is to blame. But what if the comments are made by employees who have left or are on their way out, or by a disgruntled customer?
You are then left to deal with something that is potentially damaging to your business, which is already out there for public consumption.
The law may offer you recourse through the Defamation Act 2013 (“the Act”).
1) The “Serious Harm” requirement
Under the Act, you need to show that the defamatory statement has caused or is likely to cause “serious harm”.
For businesses, harm does not amount to “serious harm” unless it has caused, or is likely to cause, serious financial loss. You will need to PROVE that your company has suffered serious financial loss as a result of the defamatory statement.
Case example - “Serious Harm” in practice
Guidance on the serious harm requirement was given a few years ago in a case involving a legal services comparison website, where people bemoaned their bad experiences with solicitors. A small law firm demonstrated that it had lost a set of instructions from a client due to the statements left on the website.
The Court found that the loss of one high value instruction for a small law firm amounted to “serious financial loss”; the judge considered the fact that if you used a search engine to find the firm, the website came up in the top five results and was therefore likely to have a serious impact on the firm.
2) Was the defamatory statement ‘published’?
If you are bringing a defamation claim, you must show that the comments have been published to a third party and that the defendant published or is responsible for the publication of the words.
Publication is generally defined in the case of statements appearing in books or newspapers, publicly broadcast comments, or those that appear on popular websites.
3) How long do I have to bring a defamation claim?
Time is of the essence in defamation claims. There is a limitation period of one year, which means that you must issue a claim within a year of the defamatory statement being made or risk losing your ability to bring a claim.
Under the Act, if a person publishes a statement and subsequently re-publishes it, or a similar statement, the cause of action is treated as arising from the first date of publication.
As such, if a comment was first published on Twitter on 1 June 2017 and was re-tweeted on 2 July 2017, the limitation period will start to run from 1 June 2017 and you will have until 31 May 2018 to issue a claim.
4) I’ve made a claim for defamation. What defence can my opponent bring?
The most common defence is truth. The Act says that the defendant needs to show that the statement is “substantially true".
There is also the “honest opinion” defence. Here, the defendant would need to show that they truly believed what they were saying and that there was some fact which supported it at the time the statement was made.
Other defences are used less often, for example if the statement was made as a matter of public interest (which is probably most common in cases involving the press).
There are also some defences available to website operators if they can show that they are just an innocent disseminator of information.
5) What remedy will the court give me?
- The most common remedy is damages to compensate you for your loss and put you back to the financial position you would have been in had the defendant not made the defamatory statements.
More rarely, a court can award exemplary damages as a “punishment” where the person has deliberately made the statements to make a profit.
- Another remedy often sought is an injunction. A court will not usually grant an injunction to restrain someone from publishing something pending trial, but can grant a final injunction after trial to stop future publication of the comments or to stop similar comments being made.
In these cases, people often want the other side to say sorry. It is important to note that the court CANNOT force a defendant to correct a statement, but in practice parties often agree a published correction or apology.
6) What can we do to help you?
- Protect against defamation from employees: Our Employment team provide a range of employment contracts and social media policies. We can also advise about taking disciplinary action if the defamatory statement has already been made.
- Evidence: Obtain copies of the defamatory statements immediately and preserve the evidence. If the comments appear on Facebook or Twitter, get screenshots. You can also make a complaint to Facebook for example under their Community Service Standards which may assist in getting the defamatory material removed.
- Letters: We can write a legal letter requesting defamatory statements to be retracted. This notifies your opponent of your claim and gives them a chance to settle and take down the statements without going to court. Litigation is not cheap. You should be prepared to negotiate with the other party.
- What if your case goes to court? The defamation protocol is designed to help people avoid litigation where possible. It requires an early exchange of correspondence and, if appropriate, consideration of mediation or some other form of “alternative dispute resolution” with your opponents, which can help to settle cases early. However, if it is necessary to issue proceedings, our Dispute Resolution lawyers will support you every step of the way.
- Understand your options: Whilst effective, defamation is not the only recourse you may have to protect your business and its reputation. Other claims such as negligent misstatement may be cheaper and less risky, or it may be better to use sensible PR in dealing with less serious risks.