Fiona George v Linda Cannell & Anor

Section 3(1) of the Defamation Act 1952 establishes a forward-looking test for malicious falsehood. A claimant need not prove actual pecuniary loss. It is sufficient to show that, viewed objectively and in context at the time of publication, financial loss was an inherently probable consequence of the false and malicious words.

The assessment is contextual and must consider the claimant, the publisher and the publishees. The claimant must plead the nature and mechanism of the likely loss. Damages are compensatory. They may include compensation for distress or injury to feelings even where no actual pecuniary loss ultimately occurred, depending on the circumstances.

The claimant, a recruitment consultant, sued after her former employer alleged to one of her clients and her new employer that she had breached post-employment restrictions. The High Court found the publications defamatory, false and malicious, but dismissed the malicious-falsehood claims because no special damage had been proved and the requirements of section 3(1) were not satisfied. The meaning of the publications had earlier been determined at a preliminary trial: [2020] EWHC 3386 (QB).

On appeal from the final judgment, [2021] EWHC 2988 (QB), the issues were whether section 3(1) required proof of actual financial loss, and whether damages for distress could be awarded where no actual pecuniary loss had occurred.

The appeal was allowed. Lord Justice Warby gave the leading judgment, with Lord Justices Snowden and Underhill agreeing.

1. Construction of section 3(1). The statutory language, the common-law context and the Porter Committee report showed that section 3(1) was intended to remove the need to plead and prove actual loss as a historical fact. The test is forward-looking. “Calculated to cause pecuniary damage” means objectively likely or probable, rather than merely possible. The court applied the reasoning in Ferguson v Associated Newspapers Ltd and Tesla Motors Ltd v BBC (No 1), properly understood.
2. Context and pleading. The assessment is not wholly abstract. It must take account of the claimant’s identity and characteristics, the circumstances of publication, and the identities and essential characteristics of the publisher and publishees. The claimant must plead the nature of the likely damage and the causal mechanism, but need not prove that the loss actually occurred.
3. Application. Alleging to a new employer and a customer that a commission-based recruitment consultant had breached restrictive covenants had an inherent tendency to cause financial loss through lost commission. Both publications therefore satisfied section 3(1).
4. Damages. Damages for malicious falsehood are compensatory and cannot be awarded simply for reputational harm. However, injury to feelings or distress is a recognised possible head of loss. Following Khodaparast v Shad, the court declined to rule out such an award merely because no actual pecuniary loss occurred. The amount remained for assessment according to the facts and could be modest.

The High Court’s initial conclusion in favour of liability was restored. Judgment was entered for the claimant for damages, including compensation for injured feelings, to be assessed, and the matter was remitted for that assessment.

1. Court of Appeal (Civil Division): Appeal allowed. The High Court’s initial decision was restored, with damages including compensation for injured feelings to be assessed.
2. High Court, Queen’s Bench Division: The preliminary trial determined the meaning and defamatory character of the publications: [2020] EWHC 3386 (QB). At the subsequent trial, the claims were dismissed for failure to establish special damage or satisfy section 3(1) of the Defamation Act 1952: [2021] EWHC 2988 (QB).