£443,000 awarded in libel special damages claim
In ReachLocal UK Ltd and another v Jamie Bennett and others  EWHC 3405 (QB), the Claimants (both subsidiaries of an international online marketing group) sued for defamation following a campaign to discredit them by a former affiliate company and individuals connected to it. Emails were sent to customers of the Claimants suggesting that the Claimants were scamming or deceiving them and profiting from this deception. These were followed up by blog posts and telephone calls which made similar allegations. The Claimants, who obtained default judgment against four defendants, produced before the Court a spreadsheet showing profits lost where customers had cancelled advertising campaigns as a result of the libel, and future profits lost, where those same customers had previously committed to future campaigns for which they would now no longer subscribe. Discounting the total figure given by some 20% to account for those customers for whom other factors may have played a part, His Honour Judge Parkes QC (sitting as a Judge of the High Court) awarded £241,945.42. The Judge also allowed further damages of £60,278, in respect of sums paid to customers by the Claimants to convince them to remain, and £66,600, in respect of the costs incurred employing a public relations consultant to repair the reputational damage. Although both Claimants were bodies corporate and therefore unable to suffer the distress and embarrassment that afflicts individuals, and notwithstanding the size of the special damages award, the Judge recognised that substantial general damages were still required by way of vindication, in order to rebut the allegations made against them. Sums of £75,000 and £100 were awarded (the second Claimant, although the immediate parent of the first, did not trade in the jurisdiction and was therefore awarded only a nominal sum). Thus, a total damages figure of £443,923.42 was awarded.
The nature of defamation claims means that it is often difficult to show consequential, quantifiable loss and therefore, special damages claims are relatively infrequent. At the same time, general damages for defamation, even in serious cases, will usually be significantly less than the costs involved in obtaining judgment (even where the matter is resolved without a trial). This potentially serves to deter claimants and to instil confidence, or even complacency, in defendants. This case serves as a reminder that where consequential loss can be clearly demonstrated, the Court will not hesitate to award it, and will not reduce general damages as a result, even if the result is a very large total award. Given the burden of proving serious financial loss, or the likelihood of the same, now imposed on corporate claimants by s.1(2) Defamation Act 2013, one wonders whether such claimants will pursue special damages claims more determinedly than in the past. Parties should also remember that, even where special damages have not been pleaded, the Court may take a likely loss into account in the assessment of general damages (per Mr Justice Tugendhat in Cambridge v Makin  EWHC 12 (QB)).
Articles are intended as an introduction to the topic and do not constitute legal advice.