A recent High Court case has shed light on the test corporate claimants are required to meet when proving they have suffered ‘serious financial loss‘.
Previously believed to be a high hurdle, the decision highlights that financial loss must be assessed in the context of the particular claimant, meaning that the hurdle might not be quite as high as originally thought.
As we all know, the Defamation Act 2013 was a big change in the world of defamation and in particular the statutory serious harm threshold.
Not only must the court be satisfied that the publication “has caused or is likely to cause serious harm” to the claimant’s reputation under s 1 (1), but where the claimant is, a body that trades for profit, that such harm “has caused or is likely to cause the claimant serious financial loss” per s 1 (2).
The recent case concerned two separate claims, (1) a claim by Ms Tereza Burki against a dating agency, Seventy Thirty Ltd (70/30) for deceit and misrepresentation; and (2) whether reviews written by Ms Burki were defamatory.
This week’s column focuses on the second claim; however, for those who are interested, Ms Burki was successful in her claim against the agency.
Ms Burki joined the agency on the understanding that there was a database of wealthy men who had paid membership of and were actively participating in the agency’s services.
Deeming this not to be the case, Ms Burki wrote and published online two online reviews, one on Google and one on Yelp, which were in the Judge’s eyes ‘unarguably defamatory’.
Both reviews gave 70/30 just one star only. The Google review wrote, “A scam, no database, clients use to finance the lifestyle of founder, without consideration for results or even ambition to achieve such…”.
The Yelp review wrote, “a service which to me and four other clients – acquaintances of mine, is fraudulent, and solely focussed on getting their fee but far from giving anything back or delivering on their image skilfully created in the media”. No evidence was submitted to the court as to the readership of either review, but they were both available for a period of four months.
The key question was whether the reviews crossed the ‘high hurdle’ of “serious financial loss”, the judge having determined that the section 1(1) hurdle was met. A previous court had found that whether loss is “serious” must depend on the context and that the word “likely” in section 1(2) means “liable to, or having a tendency to“.
Sales figures provided in evidence did not suggest a decline in sales that could be linked to either review. However interestingly, in this case there was evidence that one prospective client who claimed to have been deterred by reading the Google review and this appeared to be the crux of the Judge’s decision.
The Judge considered that the loss of even one client and his fees would have been a serious financial loss to a company the size of 70/30; as such 70/30 has suffered “serious financial loss”, as all that had to be shown at this stage was a tendency. The Judge reached a similar conclusion on financial loss in respect of the Yelp review.
The Court awarded damages of £5,000, the judge commenting that the figure would have been far more substantial had Ms Burki not been able to partially support the allegation that the agency ran a “fraudulent” operation.
When the s1 (2) test was first introduced, it is originally envisaged that “serious financial loss” would be a relatively high hurdle to overcome.
This decision shows that the loss of just one customer can meet the text where in context, that loss is sufficiently serious to the company in question. Watch this space HTFP readers!