3 Consultation issues|
Early resolution and cost control
74. As outlined in Chapter 1, the early resolution
of libel claims is both desirable in itself, to limit any unjustified
damage to reputation, and essential to the critical task of reducing
the unreasonably high costs involved. Changes to legal procedures,
whilst not a matter for the Bill itself, are nonetheless required
to fulfil this task and are rightly a key part of the Government's
consultation exercise. This section considers the limitations
of existing procedures for early resolution, examines the Government's
proposals in this respect, which we believe would go some way
to addressing the problem, and proposes a new framework for the
handling of defamation claims, based upon the presumption that
other means of dispute resolution should ordinarily be attempted
before going to court. Some of these changes may require amendments
to the rules governing civil procedure (the Civil Procedure Rules).
THE SCALE OF THE PROBLEM
75. The full costs of libel actions are not always
disclosed, which makes it difficult to obtain reliable statistics.
There are usually between two and three hundred cases started
each year, of
which only a handful ever reach a final trial at the High Court.
Senior members of the judiciary emphasised that a high proportion
of cases were already resolved at an early stage and did not appear
to view early resolution as a priority.
This perspective fails to recognise that even in cases which are
resolved before they reach trial at the High Court, costs for
a single party can amount to hundreds of thousands of pounds.
The Jackson Review estimated that damages awarded are unlikely
to average even £40,000, so it is very unlikely that this
sum would come close to covering the costs of most libel actions
(other than those which are quickly disposed of by the offer of
amends procedure). Subject to Conditional Fee Agreements (which
we discuss separately),
taking legal action for libel is well beyond the means of most
people, and successful claimants face the strong likelihood of
being significantly out of pocket.
Those who are unjustly threatened with legal proceedings often
face the stark choice between offering an undeserved settlement
and financial ruin. In these circumstances, it is understandablebut
wholly unsatisfactorythat many potential claimants and
defendants are unwilling to risk the cost of legal action in defence
of their reputation or right to free speech.
LIMITATIONS OF EXISTING MEANS OF
REACHING EARLY SETTLEMENT
76. There are a number of legal options designed
to help those who believe they have been defamed to avoid expensive
court action. Some of these appear to work more effectively than
others, as indicated below.
- Alternative dispute resolution.
The Pre-Action Protocol for Defamation, which sets out how both
parties should conduct the initial stages of any case, encourages
the parties to consider whether some form of alternative dispute
resolution procedure would be more suitable than litigation. The
Protocol is criticised by the Jackson Report for failing to ensure
that a claimant specifies the nature of the complaint in sufficient
detail, thereby undermining the chances of early resolution. The
Protocol also requires the court to have regard to any failure
to follow it when determining costs.
In practice, the Protocol is not always followed and failure to
adhere to it is rarely, if ever, punished by adverse financial
- Early determination of meaning.
A judge may make a determination of meaning at an initial hearing,
which may lead to early resolution in many cases, but may only
presently do so if trial by judge alone has been agreed or there
is no realistic prospect of a trial by jury being ordered. This
is often a difficult matter to assess at an early stage, which
undermines the prospects for early resolution.
- Offer of amends. A
defendant who has made an honest mistake or is unable or unwilling
to defend a libel claim may make an offer of amends,
which requires publication of an apology and the payment of compensation
and costs. This
procedure is frequently used and appears to work well.
- Summary disposal procedure.
This is another statutory procedure
that allows a judge to dispose of a case when either party has
no realistic chance of success. The judge can order the publication
of a correction or apology and award damages of up to £10,000.
In practice, this procedure is seldom used, possibly because other
procedures are available.
- Active case management.
Judges have wide powers to manage a case as it moves towards trial.
They may limit disclosure, order the trial of some issues before
others, and reduce the pleaded issues where that fits the overriding
objective. Weak case management was a frequent complaint in the
evidence we received, with a lack of determination on the part
of judges (and often the parties) to seek swift resolution cited
as a contributory factor. In view of the lack of action up to
now, there seems to be scope for much more robust case management,
although this will undoubtedly be easier once jury trials are
no longer a possibility in most cases.
A pilot of new costs management procedures was established in
2009 and is now due to conclude in the autumn of 2011.
- Summary judgment and strike-out powers:
The courts have powers to dismiss a claim or a defence (or parts
of either) in clear cases.
It was clear from the evidence we received that the
way these procedures currently operate does not provide reasonable
access to justice for all. There is agreement that significant
reform of procedures is required in order to achieve this goal.
THE GOVERNMENT'S PROPOSALS
77. The Government's proposals on early resolution
were informed by the report of the Early Resolution Procedure
Group and the
Jackson review of civil litigation costs. The proposals envisage
all defamation cases being channelled through a new process which
allows for key issues to be determined at an early a stage as
possible. The key issues involved are: substantial harm; meaning
(what the actual meaning is and whether this meaning is defamatory);
and fact/opinion (whether the words in question are a statement
of fact or an opinioncentral to the honest opinion defence).
The Government consultation suggests that other issues might also
be capable of determination at an early stage. These are:
- Public interest: whether or
not the matter is one of public interest, which affects the defences
- Privilege: whether the publication is protected
by absolute or qualified privilege (at common law or by statute).
As indicated in paragraph 22, some of these issues
may currently fall to be settled by a jury, so preventing early
determination by a judge. We agree with the Government's intention
of promoting early resolution by allowing the judge to determine
key issues in question at an initial hearingwithin a few
weeks, certainly not monthsand believe that this will go
a significant way towards improving the chances of early resolution.
78. The Ministry of Justice acknowledges that its
proposals have not yet been fully developed and translated into
provisions in the draft Bill or potential changes to the Civil
Procedure Rules. For example, it is prepared to "assess developments"
relating to the use of alternative dispute resolution.
The Government seems to envisage a two-stage process involving
an early oral hearing where the judge determines the substantial
harm test. If passed, this is rapidly followed by an initial case
management hearing to determine other key issues.
However, there will still be potentially large costs to both parties
incurred in preparing for initial hearings on substantial harm
and then the case management hearing. This creates the opportunity
for more wealthy parties to use rising costs as a weapon. The
changes to procedures proposed by the Government are largely a
tightening up of existing mechanisms: they cannot be seen as radical
and do not go far enough towards reducing costs to the extent
that legal action will be realistically accessible to the ordinary
A NEW APPROACH
79. We want to see the development of a culture in
which expensive legal action is the last rather than the first
resort. We believe that a tougher approach is required to ensure
that the potential for early resolution is properly explored in
all cases. There should be straightforward alternative means of
dispute resolution which form the starting point for any complainant,
unless there are exceptional reasons for going directly to court.
The advantages of using these alternatives to the court should
be sufficient to ensure that a far smaller number of claims ever
reach court in the first place, never mind proceed to full trial.
The approach we outline below is based upon some elements of existing
procedures, as improved by the Government's proposals, and some
new ideas that have emerged from the evidence we have gathered.
We propose an approach which is based upon strict enforcement
of the Pre-Action Protocol governing defamation proceedings, and
has three elements: a presumption that mediation or neutral evaluation
will be the norm; voluntary arbitration; and, if the claim has
not been settled, court determination of key issues using improved
procedures. We deal with each of these elements in turn.
Initial stages of action: mediation or evaluation
80. In a great many cases, statements that are regarded
as defamatory turn out to be based upon mistaken facts or assumptions,
or are interpreted as having a different meaning to the one intended,
or are meant as expressions of opinion but can arguably be interpreted
as statements of fact. In such cases, a simple phone call can
be enough to produce a suitable correction or clarification and
the case goes no further. It should often be possible to formulate
an apology, which, while not conceding the claimant's case as
necessarily correct, withdraws the sting attributed by the claimant
to the words. Often, the longer a complaint remains unresolved,
the more likely it is that costs may become a stumbling block
to settlement. These negotiated settlements are used all the time,
along with other means of alternative dispute resolution. Many
issues would be resolved if more newspapers devoted columns to
the publication of corrections and apologies and more organisations
made public apologies or retractions when they have made potentially
libellous statements in error. The Press Complaints Commission
mediates in some such cases of dispute but there are concerns
that it is not as effective as it could be and does not cater
for broadcasters and other platforms of publication.
81. The evidence we have received indicates that
individuals and organisations, or their legal advisers, are not
always willing to engage meaningfully in efforts to resolve disputes
in this type of constructive and low key manner. We believe that
some solicitors for both claimants and defendants are over-confrontational
in correspondence at these crucial early stages. The threat of
court action, however empty, is enough for many to give way, regardless
of the merits of their case. Whereas newspapers editors might
listen to reasoned requests from wealthy or litigious individuals,
large companies and politicians, they are perhaps less likely
to engage so constructively to complaints from ordinary citizens.
In many situations, a publisher may correctly identify the risks
of court action as low and refuse to engage constructively to
resolve a complaint in the knowledge that there is no requirement
to do so. To prevent this type of game-playing, the courts
should ensure that any failure to comply with the terms of the
Pre-Action Protocol could incur significant cost penalties.
82. We believe that ordinarily the first step
following the initial exchange of letters under the Pre-Action
Protocol should (in the absence of an offer of amends) be mediation
or assessment by a suitably qualified third party, known as "early
Mediation could take place under the umbrella of existing bodies
or a designated service established by the Government. We do not
wish to be too prescriptive but, in principle, the mediation
process must be swift, inexpensive and resistant to delaying tactics.
To counter this latter possibility, any failure to engage constructively
with the process should be punished if and when it comes to the
awarding of costs. If there has been no mediation or neutral evaluation,
the judge should have power to order it at the first hearing in
83. There will inevitably be some cases which do
not prove possible to resolve by mediation or early neutral evaluation.
Rather than such cases heading automatically to court, careful
consideration should always be given to pursuing the option of
voluntary independent arbitration. Arbitration can have a number
of advantages over court proceedings. Arbitrations can be arranged
and resolved more quickly than court proceedings. The parties
can choose which issues to seek to refer to arbitration and have
discrete issues determined in advance of mediation if they wish.
In some cases, the resolution of one or two issues at the outset
might help a mediation to resolve the whole case. Parties can
also choose what the procedures are to be, for example, whether
or not to have an oral hearing. The decisions of arbitrators are
generally appealable only in very limited circumstances. It is
up to the parties to agree on a choice of arbitratoror
an appropriate institution to appoint one, if this proves difficult.
Generally, proceedings in arbitration are confidential, which
is often useful in defamation cases, where the claimant in particular
does not want the damage caused by the original publication exacerbated
by further publicity. Finally, arbitration can save money, because
although the parties have to pay the arbitrator's fees, the parties
can limit the expense of the arbitration by carefully defining
particular issues to be referred or by adopting streamlined procedures.
Arbitration can bring access to justice within the grasp of the
ordinary citizen (especially important should Conditional Fee
Agreements in their current form be abolished) and may be vastly
cheaper than a single contested hearing in full legal proceedings.
84. We see value in there being a range of effective
arbitration options available. We heard a suggestion from editors
that newspapers would be open to a rapid and informal way of settling
disputes involving arbitration.
They pointed out that newspapers, particularly local ones, did
not have the resources to defend expensive libel claims in the
courts. There may be a case for a new voluntary forum or service
being established and funded by the media. Such a forum would
be more effective if it covered other communication platforms
too. We heard some, though not universal, support for this idea.
We encourage the Government to explore further the development
of a voluntary, media-orientated forum for dispute resolution
in the context of the current review of the regulatory regime
governing the media.
85. We recognise that it is an established right
under the ECHR of any individual to seek redress in the courts
and this must be preserved.
It is possible, whilst respecting this right, to encourage settlement
by alternative means which are more readily available to ordinary
citizens. Arbitration represents a cost-effective alternative
to the courts, and helps to reduce the impact of any financial
inequality between the parties. The financial and other incentives
to use arbitration must be strengthened as far as possible.
Proceedings reaching court
86. With an approach based upon on compulsory mediation
or early neutral evaluation, with arbitration as a further option,
we believe that even fewer cases would involve full court proceedings
than do so presently. The removal of trial by jury, save for exceptional
cases, combined with the early determination of key issues, will
promote swifter resolution in court. Even these reforms will not
necessarily prevent those cases going to trial from being prohibitively
expensive. To bring costs down further, more radical changes
to the way in which our courts operatenot just in defamation
caseswould need to be contemplated. Some suggestions include
the application of maximum hourly rates, mandatory capping of
recoverable costs, paper hearings with limits on written submissions
and changes to the Conditional Fee Agreement regime.
Such issues extend well beyond our brief. Nevertheless, we recommend
that the Government gives serious consideration to these and other
measures, which are essential if court costs are to be attacked
in a more radical and effective way. In the meantime, we believe
that more aggressive case management can help to minimise costs,
if it is applied fairly and consistently. Courts should
have the power to determine key issues which stand in the way
of early determination. As we mention in relation to the harm
test, we recognise that, to some extent, the early determination
of such issues may result in the "front-loading" of
legal costs, but in our view the overall benefits of early resolution
outweigh this potential downside.
We recommend that the Ministry of Justice and the judiciary
take measures to ensure that judges personally and consistently
manage defamation cases in a robust manner that minimises delays
and costs incurred by both parties.
SPECIALIST OR COUNTY COURTS
87. Some witnesses argued that costs would be reduced
if libel cases were generally dealt with by county courts rather
than the High Court.
Others favoured the establishment of specialist libel courts or
tribunals, in which specialist judges might be able to provide
We considered these options carefully. Our recommendations stem
from our core principles of reducing costs and increasing accessibility.
Once our proposals for clarifying and simplifying the law are
implemented, with jury trials in libel cases a rarity, and streamlined
procedures that encourage early resolution, we see no reason why
many smaller defamation cases should not be heard in county courts.
We accept that the most serious cases (and any defamation jury
trials) will still merit being tried by specialist High Court
judges in London. However, with some appropriate training, we
see no reason why there could not be a county court judge designated
to hear defamation cases in most major county court centres in
the regions. The availability of county courts to hear defamation
cases, particularly outside London, should increase accessibility
for ordinary citizens and would, in many cases, reduce costs as
well. The Ministry
of Justice should implement a pilot scheme to determine how this
proposal might work in practice.
REFORM OF CIVIL LITIGATION COSTS
AND ACCESS TO JUSTICE
88. The costs of pursuing and responding to libel
claims will be affected by the implementation of broader reforms
aimed at making the costs of civil litigation more proportionate,
which follow a report from Lord Justice Jackson.
The proposals focus on the cost of Conditional Fee Agreements
(CFAs) - often known as "no win, no fee" agreements.
These CFAs were originally introduced in the 1990s in order to
improve access to justice for those of ordinary means. Whilst
they have achieved this,
a side-effect has been a substantial increase in costs, as CFAs
may involve a "success fee" charged by the winning side's
lawyers of up to 100% of their costs, potentially doubling the
costs of libel action for a losing party. In order to protect
against the risk of incurring liability for the other side's costs
(if the case is lost), most parties on a CFA presently take out
insurance, known as "after-the-event" or ATE insurance.
The premiums for this insurance are also liable to be charged
to the losing party. The Jackson Report recommended that success
fees and the cost of ATE insurance should no longer be recoverable
from the losing party, while putting forward alternative proposals.
89. We are concerned that defamation law will become
even less accessible to the ordinary citizen because the Government
does not plan to apply to defamation all Lord Justice Jackson's
proposals that protect access to justice. For example, in respect
of personal injury claims, there will be a cap on the amount that
can be charged by lawyers as a success fee of 25% of the damages
cap does not apply to other civil claims, leaving the existing
costs associated with 100% success fees in place. The Government's
proposal to increase by 10% the level of general damages payable
in civil cases is designed to go some way towards helping parties
to pay for their own costs and to meet any success fee if they
win. There is also the argument that parties are likely to take
greater care over incurring costs when they are paying the costs
themselves. However, we do not believe that the 10% increase in
damages will be enough to make a difference, given that the average
level of damages in defamation cases is no more than £40,000,
and costs tend to be in measured in hundreds of thousands when
a case goes to court. The mechanism recommended by Lord Justice
Jackson to protect the less well-offknown as "Qualified
One Way Costs Shifting" (QOCS)will also not be available
in defamation cases under the Government's proposals. This mechanism
ensures that a claimant does not risk paying the costs of the
defendant if the claim fails, unless they can afford to do so
or have themselves acted unreasonably during proceedings.
We consider that the application of this form of protection to
defamation cases, as recommended by Lord Justice Jackson, may
go some way to towards addressing the financial inequality that
often exists. It is outside our remit to explore the impact
of the Government's separate proposals on civil litigation costs
reform in detail. Nonetheless we are sufficiently concerned about
them to ask the Government to reconsider the implementation of
the Jackson Report in respect of defamation actions, with a view
to protecting further the interests of those without substantial
Conclusions on procedural reform
90. We do not believe that the proposals the Government
has brought forward so far will, in themselves, deliver the improvements
to libel proceedings so as to make them genuinely within the grasp
of the ordinary citizen. We have set out a new, three-tiered approach,
based upon our core principles, designed to give everyone a realistic
chance to take action if they think they have been defamed and
to resist proceedings if they believe they have a valid defence.
Our proposed approach seeks to take libel disputes, for the most
part, out of the courts and into rapid, inexpensive, alternative
means of resolution. Access to the courts must be preserved, but
as a last, not a first resort. There will be penalties for those
indulging in legal game-playing and delaying tactics.
91. The Government will need to consult the judiciary
on how best to implement these changes but it is ultimately up
to Ministers to ensure that effective action is taken. While the
drafting of the Civil Procedure Rules is the responsibility of
we note that the Lord Chancellor has power effectively to direct
the Committee to make rules to achieve specified purposes.
We recommend that the Ministry of Justice prepares a document
setting out in detail the nature of the rule changes required
to ensure that the Civil Procedure Rule Committee will implement
the procedural changes we recommend in this section of our Report.
This document should be published at the same time as the Bill.
Publication on the internet
92. The internet has fundamentally changed the way
that we communicate. It has created a new online world in which
anyone can legitimately share information, engage in debate and
express their views. But, at its worst, it has also created a
platform on which people can break the law and cause harm, including
by making defamatory statements. Our law of defamation has not
been reviewed since the internet came into widespread use. This
has led to the Ministry of Justice consulting on whether the law
needs to be changed or clarified in the way that it applies in
93. We have heard that practical difficulties mean
relatively little, if anything, can be done to regulate the worldwide
web in the absence of international agreement.
We acknowledge the challenges that any national legislature
faces when acting alone in relation to a global issue but do not
regard these as an excuse for inaction. Our inquiry has revealed
broad agreement that the law of defamation should in principle
apply to publications on the internet in the same way that it
does to other more traditional forms of media. We agree that the
internet cannot be exempt from the law of the land, and that the
rule of law should apply to the fullest extent possible online.
We nonetheless recognise that the law needs to take account of
various distinct challenges that arise.
It is these issues we have sought to address, mainly by making
new proposals covering two areas. Specifically, we propose:
a) A new notice and take-down procedure to
cover defamation in the online environment; and
b) Measures to encourage a change in culture
in the way we view anonymous material that is user-generated,
including via social media.
94. We start this section by briefly considering
two aspects of the draft Bill that should help to address defamation
on the internet, namely the substantial harm test and the single
THE SUBSTANTIAL HARM TEST AND THE
95. When people are harmed by a defamatory statement
it makes no difference to them whether it happened online or offline.
Ultimately, defamation should be treated as defamation, irrespective
of the setting. Nonetheless, many derogatory and mocking statements
on blogs and social networking sites may be read casually, remain
fleeting in their impact and be given limited credence by readers
when compared, for example, to material published by reputable
Further, in many online situations the victim may be in a position
to reply rapidly by rejecting the criticism that is made, and
the publisher may also promptly withdraw, amend or apologise for
what was said. We intend these kind of considerations to be given
due weight when determining whether online material has caused
serious and substantial harm. There is already some judicial support
for this approach.
If this test is to serve its intended purpose then it must be
applied rigorously in relation to casual internet publications.
THE SINGLE PUBLICATION RULE AND
96. A defamation claim must be brought within one
year of the relevant material being published to prevent the publisher
facing open-ended liability for what was said in the past.
This straightforward and widely accepted principle does not operate
effectively in practice due to what is known as the multiple publication
rule, as explained in paragraph 55. In the online setting, it
means that every time an article is viewed it is treated as a
fresh publication with its own one year limitation period. In
effect, it exposes a publisher of archived online articles to
indefinite libel claims. We have already expressed our support
for the proposed single publication rule and recommended that
it be extended.
This should provide valuable additional protection to online publishers.
SOCIAL NETWORKING, ONLINE HOSTS
AND SERVICE PROVIDERS
97. A specific issue that arose time and again during
our inquiry was the legal liability of internet hosts and service
providers for defamatory material that is posted by online users.
There has been a substantial growth in user-generated material,
which ranges from posts on social media sites like Facebook and
Mumsnet to blogs and micro blogs such as Twitter, and user reviews
on sites such as Amazon and TripAdvisor. These new platforms have,
in effect, turned everyone into a potential publisher and massively
enhanced the ability of people to express their own views, well
considered or not.
98. Under the current law, online forums and hosts
(who are commonly referred to as "secondary publishers"
in this setting) are liable for statements made by their users
(who are the authors or "primary publishers") where
they fail to take down material once they know that it may contain
a defamatory allegation.
Specifically, if the host or forum leaves the material online
after receiving a complaint then they risk being treated as a
primary publisher of the defamatory statement. They then become
an attractive target for the person who was defamed due to their
ability to pay substantial damages. More specifically, service
providers and forums have told us that in many cases it is impossible
for them to know whether the material is libellous given their
limited knowledge of the background.
This further encourages service providers and online forums to
avoid legal liability by removing material whenever a complaint
is received, leading to many entirely legitimate comments being
99. A further difficulty is that once a host or site
owner employs moderators
or a monitoring system of any kind including a flag and report
system, they are at risk of losing their defence if the moderation
process leads to knowledge of, and therefore liability for, material
which is defamatory.
As the law stands, far from encouraging service providers to foster
legitimate debate in a responsible manner and removing the most
extreme material, it encourages them to ignore any dubious material
but then to remove it without question following a complaint.
This is contrary to the public interest and an unacceptable state
of affairs. The law should set out clearly the responsibilities
of service providers and encourage them to moderate public debate
in line with defamation law.
100. With this in mind, we recommend that the
Government takes action by:
- Ensuring that people who
are defamed online, whether or not they know the identity of the
author, have a quick and inexpensive way to protect their reputation,
in line with our core principles of reducing costs and improving
- Reducing the pressure on hosts and service
providers to take down material whenever it is challenged as being
defamatory, in line with our core principle of protecting freedom
of speech; and
- Encouraging site owners to moderate content
that is written by its users, in line with our core principle
that freedom of speech should be exercised with due regard to
the protection of reputation.
A NOTICE AND TAKE-DOWN PROCEDURE
101. We propose a new notice and take-down procedure,
as indicated in paragraph 93, designed to provide everyone with
easy access to the rapid resolution of disputes about online material.
It will also help promote a culture which downgrades the credibility
of anonymous online material, as discussed below.
102. We are concerned to address some of the problems
facing innocent victims of defamatory material on the internet.
In particular, a defamatory allegation can spread around the world
far more quickly than the victim can react. Posts and blogs are
also often written anonymously by users who adopt a generic username
and/or email address, or make use of encryption software to mask
their identity. Anonymity may encourage free speech but it also
discourages responsibility, as people feel free to make abusive
or untrue comments without fear of any comeback. We heard a mixed
range of views about the feasibility of identifying users by seeking
a court order against the host or internet service provider and
then investigating the person's "electronic fingerprint"
to reveal who and where they are.
It is clear that even where this process leads to the defamer's
identity being known, it is not quick, cheap, or guaranteed in
103. The challenges facing regulation of the internet
contribute to what some people have described as a new "Wild
West", in which law enforcement is failing to keep pace with
technology. Issues of this kind will not be solved overnight.
There is, and will be, cultural change as we adapt to the use
of new communication technologies. The law needs to respond to
this. The precise direction of this social change is unpredictable
but we believe it is possible, and desirable, to influence its
development, in part through legislative reform. Specifically
we expect, and wish to promote, a cultural shift towards a general
recognition that unidentified postings are not to be treated as
true, reliable or trustworthy. The desired outcome to be achievedalbeit
not immediatelyshould be that they are ignored or not regarded
as credible unless the author is willing to justify or defend
what they have written by disclosing his or her identity.
104. Contributions published on the internet can
be divided into those that are identifiable, in terms of authorship,
and those that are unidentified, as described above. In respect
of identified contributions, we recommend the introduction of
a regime based upon the following key provisions:
a) Where a complaint is received about allegedly
defamatory material that is written by an identifiable author,
the host or service provider must publish promptly a notice of
complaint alongside that material. If the host or provider does
not do so, it can only rely on the standard defences available
to a primary publisher, if sued for defamation.
The notice reduces the sting of the alleged libel but protects
free speech by not requiring the host or service provider to remove
what has been said; and
b) If the complainant wishes, the complainant
may apply to a court for a take-down order.
The host or service provider should inform the author about
the application and both sides should be able to submit brief
paper-based submissions. A judge will then read the submissions
and make a decision promptly.
Any order for take-down must then be implemented by the host or
service provider immediately, or they risk facing a defamation
claim as the publisher of the relevant statement. The timescale
would be short and the costs for the complainant would be modest.
105. In order to promote the cultural change we have
outlined above, we recommend that any material written by an
unidentified person should be taken down by the host or service
provider upon receipt of complaint, unless the author promptly
responds positively to a request to identify themselves, in which
case a notice of complaint should be attached. If the internet
service provider believes that there are significant reasons of
public interest that justify publishing the unidentified materialfor
example, if a whistle-blower is the sourceit should have
the right to apply to a judge for an exemption from the take-down
procedure and secure a "leave-up" order.
We do not believe that the host or service provider should be
liable for anonymous material provided it has complied with the
above requirements. If a person who has been defamed can go
on to establish the identity of the author (with the help of the
courts, online host or service providers) then they may take action
against the author in order to pursue a legal remedy for the harm
that they have suffered. Where this is not possible, we believe
that the law should provide that ordinarily internet material
from unidentified sources may not be relied upon by a defendant
or claimant in defamation proceedings. Any host or service provider
who refuses to take-down anonymous material should be treated
as its publisher and face the risk of libel proceedings, subject
to the standard defences and our proposals relating to leave up
orders. It is for the Government to make clear in the Bill any
exceptional circumstances in which unidentified material should
have evidential value for the purposes of defamation proceedings.
We do not pretend that we are advancing an ideal solution, still
less an instant one, but promoting cultural change is an achievable
goal that will minimise the damage inflicted by the mischievous
and the malicious. Our aspiration is that, over time, people will
pay less attention to and take less notice of material which is
106. This two-stage procedure should apply equally
to online sites that are moderated and those that are not. This
is necessary to correct the existing disincentive to online hosts
to moderate sites.
To achieve this, the Government will need to reform the Defamation
Act 1996 to the effect that secondary publisherssuch as
internet hosts or service providersshall not be treated
as becoming liable for allegedly defamatory statements solely
by virtue of having moderated the material or the site more generally.
Liability should be determined by the way in which the host or
service provider responds to a request for a defamation notice
or a take-down order.
107. The Government needs to frame a coherent
response to the challenge of enforcing the law in an online environment
where it is likely to remain possible to publish unidentified
postings without leaving a trace. As part of doing so, the Ministry
of Justice should publish easily accessible guidance dealing with
complaints about online material. We recommend that the Government
takes the necessary steps to implement the approach we outline.
108. The Ministry of Justice is consulting on the
right of corporations
to sue for defamation. At present, a corporation can bring a legal
claim where a defamatory statement is said to harm its trading
or business reputation.
The MoJ and several of our witnesses emphasised that corporations
can suffer serious injury when they are defamed and, some witnesses
stated that as a result corporations should continue to be protected
by the law without new restrictions being introduced.
In the worst case, for example, a false report that a corporation
is exploiting child labour, recklessly harming the environment,
or carelessly producing products that are unsafe, can weaken or
even destroy the business. This can lead to redundancies and financial
losses for anyone who trades with, or invests in, that corporation,
while leaving less choice for consumers.
Moreover the resulting financial loss is not recoverable by individual
employees or directors, even if they are also defamed.
109. In contrast, we heard recurring evidence from
other witnesses, including legal representatives and non-governmental
organisations that publishers are routinely and unfairly threatened
with libel proceedings by corporations who do not want negative
reviews or sensitive information to enter the public domain.
We have heard that this leads to publishers modifying, withdrawing,
or altogether avoiding publication, which harms their freedom
of speech and wider public debate.
This chilling effect is caused mainly by the high cost of defending
a libel claim against a well-resourced corporation that is using
expensive lawyers to pursue every available method to silence
the critical publisher.
In this respect, it is the inequality of financial means between
the corporation and the publisher that is at the heart of the
110. There is enormous variety in the size, available
resources and influence of corporations. Many multinationals and
large corporations now exercise significant power and influence
within society. They will routinely employ public relations advisors
and often have access to the media and expensive legal teams to
challenge criticism. This allows corporations to defend themselves
by attacking others. It is vitally important to the public interest
that their actions should be open to scrutiny and debate, particularly
to uncover suspected or actual wrongdoing and abuse of power.
On the other hand, many smaller corporations will not have substantial
resources to defend or promote themselves, and may rely heavily
on the strength of their commercial reputation to continue trading.
Irrespective of their size and available resources, all corporations
are different from individuals in that they do not have feelings.
The courts already take this into account when assessing damages
to be awarded to corporations, yet it does not follow that corporations
should in other respects have the same rights as individuals
to sue for defamation.
111. A number of witnesses called for a ban on defamation
claims by corporations. Others advocated the Australian approach
under which statutory corporations employing ten or more people
cannot sue in defamation, instead being left with alternative
remedies such as malicious falsehood.
The Australian prohibition does not apply to corporations which
do not trade for profit, including charities and non-governmental
organisations. The ban is proving effective at reducing the "chilling
effect" by enabling publishers, including the media, to report
more freely on the activities of corporations, although to what
extent it has encouraged irresponsible publications is difficult
to assess. It
would be helpful if the Ministry of Justice, and in due course
Parliament, took time to study the perceived advantages of the
Australian approach. Nonetheless, it is clear that there are objections
to this option. We are concerned that there will be circumstances
where even a large corporation should be entitled to seek redress
in the courts for what is otherwise irreparable and unjustified
commercial damage to its reputation with serious financial consequences.
In any event the attempt to exclude large corporations by reference
to criteria based solely on the size of their workforce is arbitrary
and liable to lead to anomalous consequences.
It would seem undesirable to create a situation in which a family
company with a low turnover employing ten people or more cannot
bring a libel claim, while a highly profitable company employing
nine staff is faced with no such restriction. Lord Lester concluded
that a fair dividing line cannot be drawn because any type of
ban on corporate libel claims will either be under or over-inclusive.
112. Furthermore, the Ministry of Justice has stated
that a ban in line with the Australian approach would be at risk
of being incompatible with the European Convention on Human Rights.
The main concern is that corporations would not be left with adequate
redress for the harm that is caused to their commercial reputation.
It has been widely doubted whether malicious falsehood provides
sufficient protection given the difficulty of proving malice,
which is tantamount to alleging dishonesty.
It is equally apparent that neither the MoJ nor Lord Lester views
the ability of directors to bring libel claims in their own name
as sufficient. An individual director or chief executive may have
a right to sue for libel where they are identified as being responsible
for the activity that is criticised, but that individual would
not be entitled to claim for the corporation's loss. Our attention
was drawn to existing competition and fair trading laws but, even
if these provisions might provide a viable alternative in some
situations, they do not readily protect the reputation of a corporation
that is defamed by someone who is not a business rival.
113. A number of witnesses favoured an alternative
approach, under which corporations could seek a declaration of
falsity from the court in relation to a libellous statement but
could not obtain damages.
This proposal is attractive insofar as it would help to vindicate
a corporation's reputation where it is harmed by a false allegation
but there are serious potential disadvantages with this approach.
For instance, it would not prevent corporations using the threat
of litigation to silence publishers, since the chilling expense
of a libel claim would be replaced by the chilling expense of
fighting a declaration, which would often be similarly costly
and complex to resolve. Furthermore, a declaration would not compensate
a corporation that suffers serious financial loss in consequence
of a defamatory statement, and introduce a new type of remedy
which is not presently available to individuals. We have already
explained our reasons for rejecting a wider scale introduction
of declarations of falsity for individuals at paragraph 36, including
on grounds of cost.
114. Lord Lester's Defamation Bill tackled the inequality
of financial means between corporations and lesser-resourced publishers
by requiring all corporations to prove "substantial financial
loss" or the likelihood of such loss as part of bringing
a libel claim.
This approach was supported by numerous witnesses for the reason
that it would help to prevent abuse of a corporation's financial
strength but without removing an effective remedy for serious
and unjustifiable harm to its commercial reputation.
The Ministry of Justice has stated that this type of restriction
is far more likely to be compatible with the European Convention
of Human Rights than a total ban, though it may potentially lead
to a front-loading of costs by requiring the evidence of harm
to be addressed at the outset.
We acknowledge this concern but note that proof of harm is a matter
which will always arise at an early stage in libel claims once
the Bill's substantial harm test is introduced. The potential
for an increase in costs at the outset is outweighed by the advantage
of halting claims where there is no sufficient damage. It is
unacceptable that corporations are able to silence critical reporting
by threatening or starting libel claims which they know the publisher
cannot afford to defend and where there is no realistic prospect
of serious financial loss. However, we do not believe that corporations
should lose the right to sue for defamation altogether. While
this would considerably strengthen the position of publishers,
it would fail to take adequate account of the harm that a serious
and irresponsible libel can cause to a corporation's business.
Where a libel leads to serious loss, there is no adequate alternative
remedy to a libel claim. Yet we do not agree with the Ministry
of Justice that corporations should continue to have an unrestricted
right to sue publishers. There is merit in continuing to explore
the Australian approach but on balance, we favour the approach
which limits libel claims to situations where the corporation
can prove the likelihood of "substantial financial loss".
This approach will provide greater protection to freedom of speech
but will not, in our view, remove necessary protection for the
reputation of corporations.
115. We acknowledge concerns that corporations may
find it difficult to prove actual financial loss.
Such a narrow test would risk creating injustice for corporations
that have suffered a serious libel without experiencing immediately
identifiable financial harm. For this reason we endorse Lord Lester's
proposal to permit corporations to rely upon likely financial
loss. We believe that in a serious case proof of a likelihood
of financial loss will often be a matter of legitimate inference
from the nature of the allegation and the extent of publication.
We make the following additional observations:
- The test of "substantial
financial loss" should focus on whether there has been, or
is likely to be, a substantial loss of custom directly caused
by defamatory statements.
This is because the impact of a defamatory statement reaches its
most serious, and hardest to mitigate, where it leads to a material
reduction in customer numbers and turnover more generally;
- In our view, neither mere injury to goodwill
nor any expense incurred in mitigation of damage to reputation
should enable a corporation to bring a libel claim.
The concept of goodwill is too vague and any corporation can decide
to create its own mitigation costs, for instance by spending money
on advertising to counter the impact of an allegedly defamatory
statement. Taking these matters into account would make the test
- A corporation should not be entitled to rely
on a fall in its share price to justify bringing a libel claim
since this loss is suffered by its shareholders rather than the
corporation itself. This appears to be settled law already; and
- Where a trading corporation can prove a general
downturn in business as a consequence of a libel, even if it cannot
prove the loss of specific customers or contracts, this will suffice
as a form of actual loss (albeit unquantified).
116. There is one additional and significant restriction
on corporate libel claims that we endorse: corporations should
be required to obtain the permission of the court before bringing
a libel claim. This would encourage robust and decisive action
by the courts to prevent trivial and abusive litigation from being
commenced at all, let alone continued for years. In deciding whether
to grant permission, the court would examine whether the corporation
can demonstrate an arguable case that it has suffered substantial
financial harm. It could also take into account alternative means
of redress available to the corporation; the size of the body
and area of operation; and the proportionality of allowing the
corporation to bring a claim by reference to the likely costs
of the proceedings alongside the level of harm suffered by the
corporation. This additional hurdle would also help to weaken
the impact of what has become a widespread tactic aimed at strong-arming
publishers into withdrawing publication, namely hiring expensive
lawyers to send aggressive letters threatening libel proceedings
imminently. Publishers who know that the corporation must face
judicial scrutiny before bringing a claim may feel better protected
against empty threats and more able to defend their position.
117. We have already set out our views on the importance
of reducing costs in libel proceedings, including through an early
resolution procedure, at paragraphs 79-86. It is important to
re-emphasise, however, that the Ministry of Justice and the
courts must be determined and creative in preventing corporations
from using the high cost of libel claims to force publishers into
submission. The requirement for a corporation to obtain prior
permission before bringing a libel claim provides the perfect
opportunity to control the corporation's recoverable legal costs
before they get out of hand, whether through cost capping or otherwise.
Judges must redouble efforts to make the most of their case management
powers by reducing the inequality of wealth that can exist between
corporations and publishers.
118. The reasoning behind our proposals on corporations
applies equally to other types of non-natural legal person that
trade for profit, such as Limited Liability Partnerships. In effect,
there is no practical distinction between them. However, the same
cannot be said about not-for-profit corporations, such as charities
and non-governmental organisations. For instance, there are many
non-governmental organisations that could suffer reputational
damage from a defamatory attack on the credibility of their work,
but this will not necessarily have a financial impact on their
resources and future capability. Similarly, we do not anticipate
that a charity would commit resources to bringing a libel claim
unless its failure to do so was likely to impact on its fundraising.
As such, charities may be better able than non-governmental organisations
to prove substantial financial loss, but we do not anticipate
them being able or willing to exploit the inequality of wealth
that underlies our recommendations on corporations more generally.
For these reasons, our proposal to introduce a test of "substantial
financial loss" applies only to corporations or other non-natural
legal persons that are trading for profit; it does not extend
to charities or non-governmental organisations. This must
not, however, open the door to abuse by enabling profit-led corporations
to launch trade associations for the purpose of bringing claims
that, in effect, protect their commercial interests. Trade
associations that represent for-profit organisations should be
covered by the new requirements that we propose.
118 Jackson Report, ch 32, para 2.11. Back
Q 615 [Mr Justice Tugendhat] Back
For example, Dr Simon Singh ran up costs of £250,000 in a
case lasting 3 years which was settled (in his favour) before
reaching full trial, Vol II, p403. Back
For most, legal action is only a realistic option because of the
possibility of recovering all costs via Conditional Fee Agreements
and After the Event Insurance, as discussed in paras 88-9. Back
Dr Simon Singh states that following his successful defence against
the British Chiropractic Association, he found himself £100,000
out of pocket, Vol II, p393. Back
Pre-Action Protocol for Defamation, para 3.7. Back
Early Resolution Procedure Group, Media Disputes & Civil
Litigation Costs, December 2010, para 4.3.5. Back
See paras 22-25 for discussion of jury trials. Back
Under section 2 of the Defamation Act 1996. Back
Section 2(4)(c) refers to "compensation (if any)", but
in practice compensation is invariably paid. Back
Ministry of Justice, Report of the Libel Working Group,
March 2010, p 35. Back
Under sections 8-12 of the Defamation Act 1996. Back
Cm 8020, para 133 Back
Q 486 [McNally], Q 488 [Clarke], Q 532 [Scotland]; Jackson Report,
ch 32, paras 6.3-4 Back
This Group, comprising of senior practitioners in the field of
media law, reported in December 2010. Its report is available
at http://www.carter-ruck.com/Documents//Early_Resolution_Procedure_Group_Report.pdf Back
See Annex D of the Government's consultation document (Cm 8020)
for further details of the proposals. Back
Letter to Committee from Lord McNally, dated 28 June 2011, Vol
II, p423-4. Back
As above, p421-3. Back
Mediation involves a third party without knowledge of the subject
matter to facilitate an agreement that must be reached between
the parties; early neutral evaluation involves an expert third
party (eg a judge or senior barrister), who can give an independent
view of the merits of both sides' case. This mechanism is already
used in commercial and family law. Back
Such as the Civil Mediation Council, for example. Back
Q 240 [Rusbridger] [Johnston] Back
Q 189 [Rusbridger], Vol II, p202 Back
The terms of reference of the Leveson inquiry, established in
July 2011, include press behaviour and regulation. Back
Article 6 of the ECHR. The requirement for compulsory mediation
does not breach this right because both parties still have the
right not to settle and take the matter to court. Back
See para 88 and, for example, the consultation response of the
Media Lawyers Association in relation to Civil Litigation Funding
and Costs in England and Wales, together with Re-framing Libel:
A practitioners perspective, by Hugh Tomlinson, paras 49-52
(available at http://reframinglibel.com/2011/03/17/reframing-libel-a-practitioners-perspective/). Back
Law Society, Vol III, p89 Back
Libel Reform Campaign, Vol II, p59 and p82 Back
Q 424, Vol II, p374; Sarah Jones of the BBC cited the example
of the Patent County Courts for the resolution of intellectual
property disputes. Back
The availability of county courts for defamation cases would
also mean that the applications on paper for take-down and leave-up
orders considered at para 104 below could be made by claimants
and defendants respectively to county courts in their region. Back
The Jackson Report, Reforming Civil Litigation Funding and
Costs in England and Wales, was published in January 2010;
the Government's response was published in March 2011, Cm 8041. Back
The argument is made that CFAs have been exploited by those able
to pay their costs, and encouraged the development of a "compensation
culture". See Jackson Report and Government Response, Cm
8041, March 2011, for a review of the arguments. Back
Dr Simon Singh, Appendix 1, Vol II, p397. The total costs incurred
by the winning party are not always recovered. Back
Other than those awarded for future care and loss. See Government
Response, Cm 8041, para 8. Back
Unreasonably includes acting fraudulently and frivolously. See
Government Response, Cm 8041, para 11. Back
Specifically, the Civil Procedure Rule Committee. Back
Under section 3A of the Civil Procedure Act 1997, inserted by
the Constitutional Reform Act 2005, section 15(1) and Sch 4, para
It could take the form of a draft notice to be given by the Lord
Chancellor to the Civil Procedure Rule Committee. Back
Q 130 and Q 132 [Christie-Miller]; Professor Ian Walden, Vol II,
Q 508 [McNally and Clarke]; Q 512 [Hunt]; Professor Ian Walden,
Vol II, p312. Back
This approach is reflected in a recent court decision in which
it was suggested that live online discussions should be treated
more like slander, or spoken defamation: Smith v ADVFN Plc
 EWHC 1797 (QB). This would mean that live online discussions
should only be actionable where-in line with slander following
the introduction of section 2 of the Defamation Act 1996-the words
suggest the commission of a criminal offence or are likely to
disparage the subject in any office, profession, trade or business. Back
Smith v ADVFN plc  EWHC 1797 (QB);  All ER (D) 335
(Jul), per Eady J. Back
Limitation Act 1980, section 4A. Back
See paras 58-9. Back
This is because the defences that are available to "secondary
publishers" under section 1 of the Defamation Act 1996 and
the Electronic Communications Regulations do not apply once the
secondary publisher has (actual) knowledge of the defamatory material. Back
Internet Service Providers' Association, Vol II, p305. Back
A moderator works for the site to ensure that contributors operate
within the site's guidelines and may, for example, remove inappropriate
Q 185 [Brett]; Q 405 [Jones]; Dr Ben Goldacre, Vol II, p380. Back
Mark Stephens suggested that the "electronic fingerprint"
of a publisher who makes defamatory allegations online can be
tracked, but Jeremy Clark-Williams (Q 133) doubted whether this
offers a reliable and accessible way of identifying the publisher. Back
Similarly, journalists may use social networking sites to obtain
information but they would not expect unsourced messages to be
reliable sources of accurate information for the purposes of broadcast
or publishing. See, for example, "Enfield. Not what you'd
think if you relied on Twitter", The Times, 9 August
The notice would be short and must explain that the material has
been challenged but need not include detail. This approach protects
the reputation of the complainant and warns readers that repetition
may be defamatory, but avoids the expense and delay of court proceedings.
We would expect the host or provider to publish clear instructions
for people who want to obtain a defamation notice and to provide
this service without charge. Back
This is broadly in line with the approach that is adopted in Spain. Back
The High Court does not have the resources to hear a large volume
of take-down applications and it would not, in any event, be a
sensible use of a senior judge's time. In line with our proposals
on early resolution, take-down applications should be decided
by a specialist judge in the county court. Back
The procedure for such an application would be paper-based and
similar to that for an application for a take-down order. Back
As set out in para 99. Back
Our discussion of corporations in this section includes all types
of non-natural legal person (e.g. limited liability partnerships,
public and private companies), except where we make it clear that
our recommendations are more narrowly targeted. Back
Jameel v Dow Jones  EWCA Civ 75;  QB 946; Note:
a public authority that is trading as a corporation is subject
to the rule in Derbyshire County Council v Times Newspapers
Ltd  AC 534,  1 All ER 1011 and may, in consequence,
be unable to bring a libel claim. Back
Q 536 [Straw]; Q 536 [Falconer]; Q 537 [Scotland]; Q 317 [Mackay]. Back
See Lord Bingham in Jameel, above, at paras 20, 23-25. Back
Q 97 [Stephens]; Dr Wilmshurst, Vol III, p 21 and his article,
The effects of the libel laws on science-a personal experience,
Radical Statistics, Issue 104, p13-23; Which?, Vol II, p246-247;
Mumsnet, Vol II, p263-264 and p267-268. Back
See the examples cited by the Libel Reform Campaign, Vol II, p83-84. Back
See, for example, the evidence of Dr Wilmshurst, Vol III, p21
and his article, The effects of the libel laws on science-a
personal experience, p 13-23. Back
See Jameel, above, at para 20. Back
Malicious falsehood requires the claimant company to prove that
the relevant statement was false, harmful and motivated by malice. Back
We are grateful to have received evidence on the implementation
of the Australian law from the Law Council of Australia, Business
Law Section, Media and Communications Committee, Vol III, p171. Back
In particular, there may not be a link between the commercial
power of a corporation and the number of people it employs. A
limit by turnover would be no better. There are also difficulties
in determining how such rules should be applied to holding or
subsidiary and associated companies (some of which may employ
persons overseas) with scope for abuse and expensive and time
consuming legal argument. Back
Vol II, p21 Back
Letter to the Committee from Lord McNally, Vol II, p430-435. Back
As above. Back
Q 600 [Tomlinson]; Q 600 [Tweed]; Q 151 [Christie-Miller]; Lord
Lester, Vol II, p25; Australian Media and Communications Committee,
p15; Lord McNally, Vol II, p435. The tort of malicious falsehood
does provide a potentially valuable ground for obtaining an injunction,
where the statement is demonstrably false and where any repetition
after notification of the claim would necessarily be malicious.
However, it will be difficult in many cases to prove that the
original publication was malicious. We note that some witnesses
were persuaded that malicious falsehood provides an adequate alternative
remedy: see, for example. Q 97 [Stephens]; Libel Reform Campaign,
Vol II, p84; Q 404 [Jones]. Back
See, for example, Libel Reform Campaign, Vol II, p84. Back
Clause 11 Back
See, for example, Liberty, Vol II, p236-238 and Which?, Vol II,
Vol II, p436-438; see also Jameel, above, at para 26. Back
Lord McNally, Vol II, p438; Q 151 [Christie-Miller]; Law Society,
Vol III, p99. Back