Marathon Mutual Ltd & Anor v Waters & Ors

In malicious falsehood, the claimant need not be identifiable in the minds of those who received the words. The words must, however, contain some direct or indirect reference to the claimant, or to the claimant’s business, property or other economic interests. Mere consequential economic loss resulting from a falsehood directed at another person or business is insufficient. The reference requirement is wider than in defamation and may be satisfied where an attack on the subject matter or materials of a claimant’s business indirectly attacks that business. At the strike-out stage, pleaded facts are assumed to be true and the claim should proceed if that connection is reasonably arguable.

The defendants applied for directions and for the striking out under CPR 3.4(2)(a) and (c) of parts of the amended claims brought by Marathon Mutual Ltd and Regis Mutual Management Ltd. Marathon alleged defamation and malicious falsehood arising from a circular and telephone statements concerning its financial position and insurance cover. Regis alleged malicious falsehood only, claiming consequential loss because it managed Marathon and received a management fee linked to Marathon’s income.

The defendants accepted that Marathon’s pleading required substantial amendment but argued that Regis had no cause of action because the words did not refer to Regis. The central issue was whether personal reference to the claimant was an essential element of malicious falsehood.

1. Nature of the tort. Malicious falsehood is materially different from defamation. It requires proof of falsity, a high level of culpable intent and actual pecuniary loss. Unlike defamation, personal identification by the publishees is not invariably required.
2. Reference requirement. The court rejected the broad submission that any false and malicious words causing a direct economic loss could found a claim. Some direct or indirect reference must exist to the claimant, or to the claimant’s business, property or other economic interests. The reference may be indirect and need not identify the claimant to the publishees. The wider limits applicable to malicious falsehood therefore extend beyond the identification requirement in defamation.
3. Authorities and corporate loss. The principles concerning separate corporate personality in Adelson v Associated Newspapers, Collins Stewart v Financial Times and Johnson v Gore Wood did not govern. The alleged losses arose from a contractual management relationship rather than common ownership or shareholding, and were separate losses.
4. Application. Although the words did not expressly or impliedly refer to Regis, the pleaded case made it arguable that the mutual protection funds were the subject matter or materials of Regis’s management business. An attack on those funds might therefore amount to an indirect attack on Regis’s business. Regis was not struck out and was permitted to seek permission to re-plead.
5. Marathon was directed to re-plead each cause of action separately, with full particulars of falsity, express malice and special damage. No special damage was to be claimed for the conversation with Mr Shepherd, since the pleaded facts could not establish such loss.

This was a first-instance application concerning the amended particulars of claim. The defendants’ time for service of defence was extended pending determination of the applications.