What does the recent Supreme Court decision mean for malicious falsehood claims?

What are malicious falsehood claims?

Malicious falsehood claims are used to protect economic interests.  They involve claims for damages if false statements are published about you, your business, or your property with an improper or malicious motive that intends to cause harm.

Whilst they are sometimes brought alongside defamation claims (as both involve the publication of false statements), a malicious falsehood claim does not require proof of damage to reputation.  And until recently, the irrebuttable presumption of financial loss provided under section 3(1) of the Defamation Act 1952 could entitle you to more than nominal damages without you having to prove the actual financial losses suffered.

What did the Supreme Court clarify?

1. The irrebuttable presumption of financial loss remains.

The Supreme Court unanimously held that an irrebuttable presumption of financial loss remains when liability is established for malicious falsehood under section 3(1) of the Defamation Act 1952, i.e. it is sufficient to establish some financial loss even if, in fact, the falsehood, did not cause any loss. 

2. But there is no presumption as to the quantity of financial loss.

However, as the Supreme Court unanimously confirmed, there is no presumption as to the quantity of loss suffered as a result of a malicious falsehood.  It follows that in the absence of proof of the financial loss(es) suffered, a successful claimant will be limited to nominal damages (which were limited to £5 for Ms George in the instant case before the Supreme Court). 

3. Compensation (or damages) for injury to feelings should result from financial loss.

The Supreme Court also held by the narrowest majority that damages for injury to feelings could only be recovered if such injury was a result of the financial loss caused by a maliciously false statement.

This meant that Ms George was not entitled to further compensation (or damages) for any hurt and indignation caused by the publishing of false and malicious statements about her because her emotional distress was not a result of financial loss. 

And what does this decision mean in practice?

If liability is established in a malicious falsehood claim, all successful claimants will be entitled to nominal damages.  However, there is no presumption of financial losses beyond nominal damages.  So, claimants must now provide evidence of and/or prove the actual financial losses suffered to recover more substantive damages.  And damages for injury to feelings will only be recoverable if such injury is/was a result of the actual financial loss suffered.

Our Disputes team has significant experience advising businesses of all conceivable sizes, alongside other organisations and high-net worth individuals, within the UK and outside it, including helping them navigate all major arbitral and court fora. Our expertise includes bringing and defending defamation, misuse of private information, data privacy, breach of confidence and malicious falsehood claims, within the specialist courts, across a variety of sectors.  If you need help, please get in touch.