Factual and Procedural Background
The claimants are two companies within the ReachLocal group, a multinational online advertising and marketing services provider, with the first claimant being a UK subsidiary and the second claimant the main European subsidiary. The defendants include an English company, Your Online Digital Agency Ltd, which offers online marketing services, and several individuals associated with it, including a person holding himself out as its managing partner (the first defendant) and another individual (the second defendant) alleged to be an alias of the first defendant.
The claimants initiated proceedings for defamation, malicious falsehood, breach of confidence, and breach of contract, arising from a campaign of disparagement directed primarily at the claimants' customers. Interim injunctions were granted restraining the defendants from further defamatory publications and requiring the delivery of customer details. The defendants failed to file defences despite court orders, leading to judgment in default of defence against the first, second, fourth, and fifth defendants, with the claim against the third defendant compromised by a Tomlin order.
The claimants assert that the defendants obtained their customer database unlawfully and used it to solicit customers away, breaching a non-solicitation clause in a 2013 affiliate agreement between the first claimant and the fifth defendant. The claimants seek damages and final injunctive relief for defamation and breach of contract, having abandoned aggravated damages and malicious falsehood claims for present purposes.
Legal Issues Presented
- Whether the defendants are liable for defamation by publishing false and damaging statements about the claimants.
- Whether the defendants breached the non-solicitation clause of the affiliate agreement by soliciting the claimants' customers.
- The appropriate assessment of damages for defamation and the entitlement to final injunctive relief.
- The liability of the various defendants, including issues of joint authorship, publication, and conspiracy.
- Whether the second claimant, a Netherlands company not trading in the jurisdiction, is entitled to damages for defamation.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Bonnard v Perryman [1891] 2 Ch 269 |
Interim injunctions in defamation cases require a credible defence of truth to be unlikely. |
The court noted that the defendants had no credible defence, justifying the grant of interim injunctions. |
| Banco de Portugal v Waterlow [1932] AC 452 |
Reasonableness standard for mitigation of loss in damages claims. |
The court applied this standard in assessing the claimants' mitigation efforts and costs recoverable. |
| Jameel v Wall Street Journal [2007] 1 AC 359 |
Companies can recover general damages for defamation; damage must be financial. |
Confirmed the claimants' entitlement to general damages despite being corporate bodies. |
| Broome v Cassell [1972] AC 1027 |
Purpose of general damages includes vindication of reputation. |
The court acknowledged vindication as a key purpose of damages in defamation. |
| McLaughlin v Lambeth BC [2011] EMLR 8 |
Vindication includes reducing risk of future defamatory publications. |
Supported the court's approach to damages including vindication despite default judgment. |
| Purnell v Business Magazine Ltd [2008] 1 WLR 1 |
Reasoned judgments rejecting defences can provide vindication. |
The court noted that default judgment limits vindication effect but still considered damages. |
| John v MGN [1997] QB 586 |
Factors relevant to damages include gravity and extent of publication. |
The court took into account the seriousness and wide dissemination of defamatory material. |
| Jones v Pollard [1997] EMLR 233 |
Objective features of libel relevant to damages assessment. |
The court considered gravity, prominence, circulation, and repetition in awarding damages. |
| Clarke v Bain [2008] EWHC 2636 (QB) |
Difficulty of eradicating defamatory material from the internet. |
The court recognized the viral nature of online defamatory campaigns in assessing damages. |
| Cairns v Modi [2013] 1 WLR 1015 |
Online defamatory campaigns can easily go viral; relevant to damages. |
The court factored in social media dissemination in the damage assessment. |
Court's Reasoning and Analysis
The court analyzed the defendants' sustained campaign of defamatory publications, combining emails, telephone calls, press releases, and social media posts, targeting primarily the claimants' customers. The judgment in default of defence established the defendants' liability under CPR 12.11(1), entitling the claimants to relief on their pleaded case.
The court found that the defamatory meanings pleaded were established by the judgment and supported by the grant of interim injunctions, negating any credible defence of truth by the defendants. It concluded that the first defendant, acting with authority from the fifth defendant, and possibly the fourth defendant, were jointly liable, with an alternative conspiracy claim supporting joint and several liability.
The court addressed the second claimant's position, noting its limited trading activity within the jurisdiction and concluding that its damage was primarily nominal, given the serious harm threshold under the Defamation Act 2013.
On damages, the court carefully distinguished between immediate loss of revenue (disallowed due to prepaid advertising cycles) and future loss of revenue and profit from cancelled but unpaid advertising cycles, accepting a discounted figure to reflect other causative factors such as harassment and confidentiality concerns.
The court allowed recovery of reasonable mitigation costs including customer credits and public relations consultancy but disallowed refunds to customers who had firmly decided to leave, viewing these as commercially sensible but not reasonable mitigation.
In assessing general damages, the court applied established principles, emphasizing vindication and proportionality under Article 10 ECHR. It took into account the gravity and extent of publication, including social media dissemination, the serious nature of allegations, and the vulnerability of the claimant company due to its relatively recent establishment.
The court awarded substantial general damages to the first claimant and nominal damages to the second claimant, reflecting the differential impact of the defamatory publications.
Finally, the court granted final injunctions in line with prior interim orders and reserved detailed consideration of the second claimant's injunction position.
Holding and Implications
The court granted judgment in default of defence against the first, second, fourth, and fifth defendants for defamation, with damages to be assessed as outlined. The first claimant was awarded substantial general and special damages, and the second claimant was awarded nominal general damages. Final injunctions were granted to protect the claimants from further defamatory publications and breaches of contract.
The decision directly affects the parties by affirming liability and awarding damages and injunctions but does not establish new legal precedent. It reinforces established defamation principles, particularly concerning corporate claimants, the assessment of damages, and the court's approach to default judgments under CPR 12.11.