Carruthers Law

Undre & Anor v The London Borough of Harrow [2016]

May 2, 2016

In Undre & Anor v The London Borough of Harrow [2016] EWHC 931 (QB) (26 April 2016) the matter came before Mr Justice Warby and concerned the trial of preliminary issues in a libel action.  The issues were whether the words complained of referred to the Second Claimant,did they bear a defamatory meaning about the Second Claimant and if they did, had they caused serious harm to its reputation within s.1. of the Defamation Act 2013. The First Claimant was a restaurateur the owner of a restaurant in Kensington High Street called Down to Earth a vegan and vegetarian restaurant. The restaurant was operated by Down to Earth (Kensington) Limited until about 26 September 2013 when the First Claimant entered it into voluntary liquidation. The business continued, taken over by the Second Claimant (DTE London), which the First Claimant was also the owner, and a director. DTE London operated the restaurant from 26 September 2013

The First Claimant owned some farmland where he kept around 20 cows.  The Defendant prosecuted the first Claimant under animal welfare legislation that between January and February 2013 he neglected the animal’s welfare.  He was acquitted on one count and convicted on each of the other five. The District Judge sentenced him to a community order of 12 months and 120 hours of unpaid work.

On the 7th January 2014 the Defendant published a news release about the matter on its website, the issue before the court being that “the Mail Online and the Evening Standard had “used this false information to publish further articles causing further harm”. The letter asserted that “This untrue information published on your website has caused and is causing Mr Undre considerable financial loss.”  Mr Justice Warby observed the Second Claimant was not mentioned.

Mr Justice Warby at the start of the trial on the 18^th April 2016 dealt with an application by the Defendant for an order striking out the claim without a trial under CPR 3.4(2) (a). He considered this should have been heard on the 1^st May 2015 before Judge Eady and refused to hear it so late.

He also received a late application by the Claimants for permission to amend the Particulars of Claim but, even though it was a late application, he allowed this and gave them permission save for a sub-paragraph not relevant to the preliminary issues.  Paragraph 4 now read:

(1) that in their natural and ordinary meaning the words complained of “meant and were understood to mean that the first and second claimant’s neglect caused the death of three cows”; and

(2) that “the article implied that the second claimant was to some degree responsible for the well-being of the cows and the first claimant’s neglect.

He observed that where individuals and companies are co-claimants this may cause problems as to reference and meaning and, that not every statement about a person who operates a company, defames that company. A corporation cannot bring an action in respect of allegations made against its individual officers.

The Second Claimants case was, the Defendant had caused it serious financial loss by libelling the First Claimant where there are two requirements, the words must refer to the corporate Claimant and, carry a defamatory meaning about them.

In this matter, Mr Justice Warby did not consider the objective test of reference had been satisfied even though the restaurant had been mentioned a few times, nor did he think it necessary to decide whether there was a subjective test of reference, his views had not altered since Lachaux. There was nothing that a reasonable reader would extract from the words complained of which referred to the Second Claimant.

As to the natural and ordinary meaning of the words, he referred to the principles set out in Jeynes. In this matter, it was sufficient to say “that the court gives the words the meaning that they would convey to the ordinary reasonable reader, assuming that person reads the entire document complained of, and is neither unduly naïve nor avid for scandal”.  He considered the meaning of the news release referred to the First Claimant neglecting his cattle and three died. The issue was, did the same or similar meaning refer to the Second Claimant and he did not consider it did.

The news release focused on the behaviour of the First Claimant, not the Second Claimant. The Council leader in her document when praising the hard work undertaken had meant that “these animals’ suffering is over and their owner brought to justice”.  He did not consider that the reasonable reader would conclude that the Second Claimant was jointly responsible for the welfare and neglect of the cows.

He referred to Serious Harm to Reputation under s.1. of the Defamation Act 2013:

(1) A statement is not defamatory unless its publication has caused or is likely to cause serious harm to the reputation of the claimant.

(2) For the purposes of this section, harm to the reputation of a body that trades for profit is not “serious harm” unless it has caused or is likely to cause the body serious financial loss.

A body trading for profit has to prove that a statement has caused serious financial loss, the Second Claimant had to demonstrate serious financial loss arising from the publication complained of. Mr Justice Warby considered the Second Claimant could not demonstrate that the publication had caused serious harm to its reputation, it could not show any imputation defamatory of it. Even if they could find such an imputation, he was not satisfied it would have caused them serious financial loss.

He addressed whether financial loss had been proved. Their claim was, after the news release there were cancellations, they were less busy, a significant decrease in net sales since January 2014. He observed the evidence did establish the Defendant’s news release led to articles in the Evening Standard hard copy and online and the Mail online and were repeated on such places as twitter and Facebook, when some people cancelled and discussed boycotting the restaurant. He could not see this had caused serious loss of profit or any loss of profit emanating from the paragraph complained of about or as alleged about the Second Claimant. He found there to be two aspects, had the Second Claimant proved it had suffered serious financial loss and had it been caused by the imputation.

As to Serious financial loss he looked at whether the Second Claimant could prove that its financial situation had worsened since January 2014. He found the documentation unhelpful as it did not reveal to him sufficient information as to costs or profits.

The company provided a “net sales summary” prepared by its accountants said to be based on the credit card receipts and cash banked by the restaurant. However the judge stated it was not clear “what the sales are “net” of. The company had not put forward any profit and loss calculations. Nor any expert evidence nor any documentary evidence or calculations of the financial results for the restaurant when it was operated by DTE Kensington, to compare the before and after positions. DTE Kensington had not filed accounts which would have assisted.

He noted that their case was, there had been a recovery after January 2014 with increased net sales in February and an onward but uneven increase. The figures for that time in 2014 were below those for the year before in 2013 and losses continued beyond 2015. He considered the figures to be unclear and that the evidence did not show serious financial loss.

With regard to Causation he considered it very difficult to prove that the alleged libel had caused the loss of profit or financial loss.  In this case the business had been loss-making from the start under the other company name until its liquidation.  The prosecution and conviction would have made an impact. The trial and public judgment of the District Judge would lead to the circulation of the story about the First Claimant with whom the Second Claimant was connected.

He observed he would have rejected the Claimants case on Causation as to the period after the news release even if he thought there was financial loss as the evidence showed there was a lot of anger concerning the First Claimant’s conviction.

With regard to the second part of the case for serious financial loss and the occupation of the farmland by a squatter which left the Claimants without land to grow their organic crops, he did not consider the squatter was motivated by the alleged libel on the Second Claimant or that the consequences of his behaviour represented reasonable and foreseeable harm.

The third part of the case for serious financial loss concerned the loss of a business opportunity with a photographer who had proposed using the basement for exhibitions. It was clear that the person withdrew from the proposal after concern from Google search results, but Mr Justice Warby rejected this as “there is no evidence to enable me to disentangle in the claimant company’s favour the complex causation issues to which that gives rise”.

He concluded the Second Claimant was not defamed by the news release. The reasonable reader would not have looked at the Second Claimant as being responsible for the offences committed in January 2013 when at that time they were not carrying on the restaurant business.

It could not be proved that there had been “serious financial loss”. Republication of the news release in January 2014 may have financially impacted on the business but to what extent could not be found. He considered the most prominent causal factor was the customers shunning the business because of the First Claimant whose own reputation had been harmed with the other aspects of the Claimant’s case on damage failing for lack of proof of loss and /or causation.

He observed that the case raised the way preliminary issues should be examined on cases within s.1(2) of the Defamation Act 2013.  He said it would be preferable to have a single hearing, not only dealing with the threshold question but also to deliver a finding as to quantum of the loss which would likely increase costs because of the requirement for expert evidence.

He considered that all these issues will require due deliberation to ensure the right balance in individual cases. Costs in preliminary issue matters have been highlighted and he shared the view of Judge Dingemans that there should be costs budgeting for preliminary issue trials. Mr Justice Warby observed the Second Claimant had alleged special damage at the start of proceedings without giving details. The absence of such statements had not prevented him delivering a fair result on the issues but, a clearer understanding of what the issues were, given earlier, would have supported the overriding objective.