Defamation? Prove it!

In January, Nick Clegg announced plans to introduce sweeping changes to our much-criticised libel laws.

If the new legislation (currently being drafted) is passed, it could become harder for a company to sue to protect its hard-earned reputation from being defamed.

At present, the law recognises that corporate entities have reputations that are valuable and need to be protected. Therefore a company that brings a libel action now does not need to prove that it has suffered actual damage. The law assumes that the libel has caused injury to the company’s reputation and the trade or business it conducts.

This could change. A key proposal made in Lord Lester’s Private Members’ Defamation Bill is that a company should be required to prove that it has suffered, or is likely to suffer, substantial financial loss as a result of the defamation. If this proposal is adopted, clearly it will be much more difficult and costly for a corporation to bring a defamation claim.

Proving that a libel caused actual loss or was “likely” to do so could be extremely hard. Attempting to quantify the notoriously tricky area of ‘loss of goodwill’ would be harder still. It is likely that complainants would have to employ expensive experts to provide evidence on the complex issues of causation and loss.

If the new legislation goes ahead, the earliest that it could become law is May next year. Any businesses considering legal action would be well advised to crack on with it!

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