Reachlocal UK Ltd & Anor v Bennett & Ors

On judgment in default, the court gives the claimants the relief to which they are entitled on their statement of case. A corporate claimant may recover general damages for defamation, principally for injury to reputation and vindication, although it cannot recover for injured feelings. A reasoned judgment following default may provide only limited vindication. Special damages may include loss of future contracted business and reasonable mitigation costs, but sums paid to customers after they have firmly decided to leave are not recoverable where their mitigating effect is speculative. The assessment must reflect causation, the gravity and reach of the allegations, and the need for proportionate vindication.

The claimants, companies in the ReachLocal group, sued the defendants for defamation, malicious falsehood, breach of confidence and breach of contract. The alleged campaign involved mass emails, telephone calls, press releases, website publications and social media posts accusing the claimants of dishonest and deceptive business practices.

Judgment in default of defence had been entered against four defendants. The present hearing concerned assessment of damages and final injunctive relief. The central issues were the meaning and scope of the publications, the defendants’ liability, the losses caused by the defamatory campaign, reasonable mitigation, and the appropriate level of general damages and vindication.

1. Default judgment and liability. Under CPR 12.11(1), the court gave such judgment as appeared appropriate on the claimants’ statement of case. The pleaded publications established a continuing campaign conveying meanings that the claimants operated dishonestly, deceived customers, concealed advertising expenditure and employed people without relevant skill. The first, fourth and fifth defendants were liable jointly and severally on the pleaded joint-enterprise case, together with the second defendant if he was a separate person.
2. Slander and statutory threshold. The two specifically pleaded telephone calls disparaged the claimants in their business and were actionable without proof of special damage under s.2 of the Defamation Act 1952. The first claimant was the company principally referred to and damaged. Applying s.1(1) and (2) of the Defamation Act 2013 in the context of the default judgment, the second claimant received only nominal general damages because the publications were unlikely to have been understood as referring to it and the judgment had already assumed that the serious-harm threshold was met.
3. Special damages. The first claimant recovered £302,431.78 for unpaid future advertising cycles cancelled after the defendants’ publications. A 20 per cent discount was applied because customer decisions were also influenced by harassment and confidentiality concerns. The court allowed £60,728 in customer credits and £66,600 for public-relations work as reasonable mitigation. It disallowed £146,576 in refunds paid to customers who had firmly decided to leave, since those payments were unlikely to mitigate the immediate loss and any longer-term benefit was speculative.
4. General damages and vindication. A company may recover general damages for injury to its trading reputation and vindication. The relevant considerations included the gravity of the allegations, their prominence and circulation, repetition, publication to customers and professional audiences, and the risk of internet dissemination. The first claimant was awarded £75,000 and the second claimant £100. The final injunction for the first claimant was granted in the terms sought; final injunctions for breach of contract and confidence were also justified, subject to finalising their terms.

First-instance judgment. No appellate history was stated in the judgment.