Defamation law and the commercial real estate sector seem like odd bedfellows. Why would laws which exist to protect reputation have any relevance to activities such as selling, leasing or letting property?
The reality is that any business in any sector can become embroiled in a defamation dispute. That might be, for example, because the business has been the subject of false allegations by a competitor in the market and action is required to remedy the harm caused. Or it might be that an employee has posted something on social media that gets themselves and the business into hot water. Either way, you’ll be turning to defamation law to understand your position.
Take the recent case of Rafique and another v Association of Community Organisations for Reform Now Ltd and another [2022] EWHC 414 (QB). The claimants were a property management company and its director. They brought a claim in defamation (among other things) against a former tenant and a community group/organisation for low-income people. The claim concerned a campaign embarked on by the defendants after the former tenant had unsuccessfully sought the return of her deposit after entering into a tenancy agreement.
Another example is Triplark Ltd v Northwood Hall (Freehold) Ltd and another [2019] EWHC 3494 (QB), which involved a claim by a company that owned 30 flats in a block in north London against those attempting to implement a scheme for a collective enfranchisement of the property’s leaseholders. The claims concerned material circulated by the defendants to occupants of the flats which, the claimants argued, contained allegations about them which were seriously defamatory.
Understanding how a business can protect its reputation, and equally how it can take steps to avoid defaming others, can therefore be an important tool in its armoury.
The basics
Defamation is the umbrella term for libel and slander. Libel is concerned with defamatory words published in permanent – usually written – form, whereas slander is concerned with words published in transient form, generally the spoken word. Defamation law enables people and companies to obtain compensation and other relief when their reputation has been harmed by false allegations. The law has developed incrementally over many years. The complexity with defamation law lies in striking the correct balance between the right to protect reputation and the equally important right to freedom of expression.
A claim in defamation can be brought by an individual or a company, though not by government or political bodies. The claimant has to show that the statement in question is about him/her/it, has been published to a third party and is defamatory.
For a statement to be defamatory, it has to “lower the claimant in the estimation of right-thinking members of society” and cause, or be likely to cause, serious harm to the claimant’s reputation. If the claimant is a company, the serious harm has to be in the form of serious financial loss.
Importantly, not all defamatory statements are unlawful. It all depends on whether the defendant has a defence. There are various defences to defamation claims, including:
n Truth: where the defendant can show that the statement is substantially true.
n Honest opinion: where the defendant can show that the statement was a statement of opinion rather than fact, that it indicated the basis of the opinion, and that an honest person could have held that opinion based on facts that existed at the time.
n Publication on a matter of public interest: where the defendant can show the statement was in the public interest and that the defendant reasonably believed that publishing the statement was in the public interest.
n Qualified privilege: where the defendant had a legal, social or moral duty to make the statement (and made it without malice) and the recipient of the statement had a corresponding interest in receiving it (eg reporting a suspected crime to the police).
The general rule is that a claim in defamation needs to be brought within a year of the statement in question being published.
Avenues of redress
In our hypothetical case study (see box), Innocent has understandably not wanted to take any action that might generate further publicity of the allegations. That is often a sensible strategy. But there sometimes comes a point where the scales tip the other way – usually when allegations have started to circulate widely or there has been a clear financial detriment to the business. In these scenarios, rebutting the allegations publicly and seeking vindication of your reputation can become the driving factor.
If Host continues to refuse to disclose the identity of the author(s), Innocent could apply for a court order requiring it to do so. Once Innocent has the identities of the authors, it could write to them to set out their demands, ie a retraction and apology and payment of costs and compensation to reflect lost revenue. It could write in a similar fashion to Host on the basis that, once Host had refused to remove the posts, it too had become liable as a publisher of the defamatory statements. In the event that the author(s) or Host refuse to comply with Innocent’s demands, Innocent could choose to commence defamation proceedings against them. The remedies that Innocent could seek include damages, an injunction prohibiting further publication, an order to publish a summary of the court’s judgment and an order to remove the defamatory statement.
However, before taking any action in defamation, businesses should give very careful thought to the possible consequences. Defamation claims are notoriously expensive. Even if you win, and the other side is ordered to pay your costs, you would generally only expect to receive about two thirds of your outlay, and the damages you receive may well not cover the shortfall.
So, entering into the proceedings for purely financial reasons would probably be unwise. It is usually only worth litigating if the allegations are so damaging that you feel it is critical to your business to obtain a court judgment in your favour vindicating your reputation (and, of course, that you have good prospects of success).
Hypothetical case study
Innocent Ltd is a developer and operator of student accommodation across a number of sites in the North East.
On 30 April 2021, Innocent became aware of a series of posts placed on a popular online forum run by Host Inc alleging that a number of properties in the Innocent portfolio are subject to material breaches of fire safety regulation and that Innocent has done nothing to address the problem because it is in financial difficulty. Innocent maintains that the statements are untrue. The original posts were submitted to the Host platform anonymously, but they have gathered significant interest and have been referred to on local radio and been re-published in local newspapers.
Since the date of publication, Innocent’s sales and marketing team have seen a significant number of enquiries focused on fire safety measures and letting figures have declined.
Innocent believes that a competitor is responsible for the negative campaign but has no evidence for this. Host has declined to comply with written requests from Innocent to remove the statements. Until now, Innocent has sought to avoid bringing further attention to the subject by issuing proceedings. Innocent now believes it must take action because it is in the process of an urgent re-structuring and the adverse publicity could prejudice that transaction. It wishes to: force Host to disclose the identity of the author(s) of the defamatory posts; require the author(s) to acknowledge that their statements were untrue; and pursue the author(s) and Host for damages and legal costs.
Samantha-Jayne Millington and Rebecca Kirtley are trainee solicitors at Bristows LLP
