Out-Law News 3 min. read

Bringing defamation case may have done company more harm than good, says expert

An aircraft charter company has recorded a "pyrrhic victory" in winning £10 in damages for defamatory comments made about the health of its finances by a rival aviation business, an expert has said.

In December 2013 Quick Air Jet Charter sent an email to 26 companies in the aviation industry in England and Wales which warned the recipients not to deal with FlyMeNow. It warned of "pecuniary difficulties" and said FlyMeNow had been unable to pay outstanding money owed to it, according to a judgment of the High Court in London.

Because the words complained of were published prior to 1 January 2014, the date on which the Defamation Act of 2013 came into force FlyMeNow sued Quick Air Jet Charter under English defamation laws that pre-date the Act.

The High Court ruled that Quick Air Jet Charter had defamed FlyMeNow with its comments, but determined that the comments it had made were not malicious. The judge, Mr Justice Warby, said Quick Air Jet Charter had "every reason" to believe that what it was saying was true.

Mr Justice Warby determined that the "natural and ordinary meaning" of comments made by Quick Air Jet Charter was that "it would be financially unsafe to do business with" FlyMeNow, and that Quick Air Jet Charter, with its comments, had claimed FlyMeNow was "a defaulter" that had not paid outstanding money owed to it because FlyMeNow was "insolvent" and "unable to pay all its debts as they fell due".

In his assessment of the case, Mr Justice Warby said that FlyMeNow's situation was "highly precarious", that it was "living from hand to mouth", and that it was "living on a knife-edge". He also said that companies dealing with FlyMeNow would be exposed to "significant financial risk".

However, the judge said the allegations that FlyMeNow had not paid debts owed to Quick Air Jet Charter due to insolvency had not been fully proven and described the allegation of FlyMeNow's insolvency as "a material inaccuracy". As a result he rejected Quick Air Jet Charter's defence of justification against defamation

Mr Justice Warby ruled, though, that FlyMeNow was "not entitled to any substantial damages" because, among other things, what Quick Air Jet Charter had said about it was "very largely true".

"[FlyMeNow] lied repeatedly to [Quick Air Jet Charter] about the reasons for non-payment of [Quick Air Jet Charter's] invoices," the judge said. "[FlyMeNow] thereby behaved disgracefully at the time. It has behaved disreputably and disgracefully since. In addition, its own conduct played a significant part in causing [Quick Air Jet Charter] to publish the untrue allegation of insolvency. My award by way of compensation and vindication is £10."

Defamation law expert Alex Keenlyside of Pinsent Masons, the law firm behind Out-Law.com, said: "This was something of a pyrrhic victory for FlyMeNow. Yes, the publication was found to bear the defamatory meaning pleaded by FlyMeNow that the words complained of alleged that it was insolvent; but the judge delivered a withering assessment of its conduct, both in the events leading up to publication and in the proceedings."

"The primary purpose of bringing a defamation claim is to obtain vindication of the claimant’s reputation. Despite winning on liability here, FlyMeNow may reflect that its reputation has in fact been further damaged by Mr Justice Warby's judgment, which of course will be accessible to all those who, for whatever reason, wish to find information about the company. As an aside, the judgment contains a detailed and helpful analysis of the defence of qualified privilege," he said.

Defendants can win immunity from liability for defamation where they can show that defamatory comments they made were made for "the common convenience and welfare of society", as Mr Justice Warby put it.

To benefit from the defence of qualified privilege in these kinds of cases, a defendant must have a social or moral duty to impart the information and the recipient must have a corresponding legitimate interest in receiving it, or they must share a common and corresponding legitimate interest in the subject-matter of the communication. If the defendant's dominant motive for the communication is improper, then the defence of qualified privilege fails.

Mr Justice Warby did not accept that Quick Air Jet Charter was under a moral or social duty to report on FlyMeNow's financial issues, nor did he accept that Quick Air Jet Charter and the recipients of the publication had a common legitimate interest in communicating about FlyMeNow's financial issues. He said it is "contrary to the public interest" to spread "false imputations of insolvency" and that Quick Air Jet Charter had been acting purely out of "self-interest" by circulating its defamatory email.

However, the judge rejected FlyMeNow's claims that there had been malice in Quick Air Jet Charter's comments. There had been "ample grounds for concluding that the reason [FlyMeNow] was not paying its debts to [Quick Air Jet Charter] was that it was unable to do so", the judge said.

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