Joseph & Ors v Spiller & Anor

A breach of a regulatory requirement does not make a contract or contractual term unenforceable unless the legislation expressly or by clear implication prohibits enforcement. The protective purpose of the Employment Agencies & Employment Business Regulations 2003 did not produce that consequence for a re-engagement term placed in a separate document. In defamation, publication should be considered as a whole: value judgments, inferences and recommendations may be comment rather than fact. Fair comment still requires public interest, recognisable comment, a basis in true or privileged facts, sufficient indication of those facts, and an honest, germane opinion. Under section 6 of the Deformation Act 1952, an old and unindicated breach could not support the defence.

The claimants, members of a musical group, alleged that statements published on the defendants’ website were defamatory. They claimed general damages and special damages for cancelled engagements. The defendants relied on justification and fair comment.

On an interlocutory application, Eady J struck out the fair comment and qualified privilege defences and parts of the justification defence: [2009] EWHC 1152 (QB). The defendants appealed on justification and fair comment. The central issues were whether non-compliance with regulation 14(2) of the Employment Agencies & Employment Business Regulations 2003 made a re-engagement term unenforceable, and whether the website publication could qualify as fair comment.

Disposition. The appeal was allowed on the regulation 14(2) issue and dismissed on the fair comment issue. The justification defence therefore remained available on the separate alleged Landmarc breach, subject to determination at trial.

1. Regulatory enforceability. The correct question was whether the statutory scheme expressly or by clear implication prohibited enforcement of the contract or term. The protective purpose of the Employment Agencies & Employment Business Regulations 2003, and the contemplation of a criminal sanction, did not by themselves exclude ordinary civil remedies or require partial enforceability.
2. Regulation 31 addressed terms expressly prohibited or made unenforceable by the Regulations. It did not determine whether the re-engagement clause was unenforceable because it appeared in a separate document. Applying the test stated by Devlin J in St John Shipping Corporation v Joseph Rank Ltd [1957] 1 QB 267, there was no clear implication that breach of regulation 14(2) made either the clause or the entire contract unenforceable. The defendants succeeded on this issue. Permission to add a late challenge to the ordinary construction of the clause was refused.
3. Fair comment. The words had to be read as a whole. A value judgment, an inference signalled as an inference from stated facts, and a recommendation to readers could constitute comment. The judge was therefore wrong to characterise the relevant words as necessarily factual.
4. The court adopted the five requirements identified in Tse Wai Chun Pau v Albert Cheng [2001] EMLR 31. The comment had to concern public interest, be recognisable as comment, rest on true or privileged facts, indicate those facts at least generally, and be an opinion which an honest person could hold and which was germane to the subject. Information about the reliability of artists serving the public was arguably in the public interest. Regulation 28 did not prevent that conclusion, although it might support a separate action.
5. Section 6. Section 6 of the Deformation Act 1952 could preserve fair comment despite an unproved factual allegation, but only having regard to the facts alleged or referred to in the publication and proved. The specific statement about contracts generally was plainly false. The real complaint concerned the re-engagement clause, which was not identified in the publication. The alleged 2005 Landmarc breach was remote, and contractual relations continued without complaint until the later dispute. A jury could not properly base fair comment on that breach. The strike-out of the fair comment defence was accordingly upheld.

• Court of Appeal (Civil Division) — In [2009] EWCA Civ 1075, the appeal was allowed on the effect of regulation 14(2) and dismissed on fair comment.
• Queen’s Bench Division — Eady J’s interlocutory judgment, [2009] EWHC 1152 (QB), struck out the fair comment and qualified privilege defences and parts of the justification defence.