HomeInsightsCorporate claimants and the serious harm test

Mr Justice Warby continues his work in making sense of the ‘serious harm’ test introduced by the Defamation Act 2013. In the judgment in Undre & Down to Earth v London Borough of Harrow [2016] EWHC 931 (QB), given yesterday, he made clear the sort of convincing documentary evidence or expert evidence of financial loss that was needed by corporate claimants. In the case, the company (which operated a restaurant) provided a ‘net sales summary’, which was politely termed ‘inherently unhelpful’ by the Judge. It showed only revenue and told the court nothing about costs or profit. Since special damages in defamation claims are only allowed for loss of profit (or increased losses) the evidence needed to be far more thorough. The Judge expressed surprise that no permission for expert evidence had been sought, when evidence on profit margins in the restaurant trade, seasonal fluctuations etc. were obviously relevant to an understanding of the claim as to loss.

The judgment also gives a useful reminder that not every derogatory statement about someone who runs a company will defame the company itself and careful consideration needs to be given before a corporate claimant is joined as a party to proceedings. For a claim to be valid (1) the words complained of must refer to the company; and (2) they must convey a defamatory meaning about the company.