Out-Law News 3 min. read
17 Dec 2008, 4:22 pm
Tiscali was blocked from suing BT for defamation over a letter sent by BT to Tiscali's customers this summer. It has now been granted permission to sue BT after citing alleged breaches of business and consumer protection legislation over the letter.
Tiscali is owned by an Italian company whose chief executive told the Financial Times at the start of this year that the company was likely to be taken over by a rival.
BT wrote to all Tiscali's UK customers in July. The letter was headed: "Tiscali chief plots sell-off." It said: "We can understand why you're wondering what might happen to your Tiscali broadband service. And because no-one really knows the answer yet, it could be a good time to look at an alternative broadband service."
Tiscali lost its fight to sue BT over claims that the letter defamed it, but has won the right to bring a case that is based on alleged breaches of two sets of regulations that came into force this year: the Consumer Protection from Unfair Trading Regulations and the Business Protection from Misleading Marketing Regulations.
Tiscali will argue in the case that BT has breached these Regulations, and that this means that it has engaged in interference with its business by unlawful means.
Enforcement of the Regulations is limited to enforcement authorities such as the Office of Fair Trading, Trading Standards and Northern Ireland's Department of Enterprise, Trade and Investment. Individuals and companies are given no rights of action. However, Tiscali is relying on the tort, or civil wrong, of unlawful interference with a business.
"The central point of [Tiscali's] case is that there simply were no grounds for suggesting that the talk earlier in the year of a takeover, or the possibility of its coming to fruition in the medium term, provided any grounds for thinking that the broadband service would no longer be available to customers," said Mr Justice Eady in the High Court, giving permission for the case to continue.
"There is no reason to suppose that if [Tiscali] succeeds in establishing an infringement of these new regulations, aimed at the protection of consumers and businesses, this could not serve as 'unlawful means' for the purpose of establishing that tort," he said.
It is believed to be the first time that a company has taken action over another's alleged breach of the Regulations.
Tiscali is also claiming that BT's behaviour interfered unlawfully with its business through malicious falsehood.
To win on the issue of malicious falsehood Tiscali would have to prove that BT had acted dishonestly. The Regulations would not need such proof.
"It is interesting to see that the relatively unfamiliar concepts of 'honest market practice' and 'the general principle of good faith', which are both relevant to the concept of 'professional diligence' in […] the Consumer Protection Regulations, are construed in such a way that a breach may be found even in the absence of dishonesty as it is traditionally understood in domestic jurisprudence," said Mr Justice Eady.
"That is why Mr Spearman QC, on the Claimant's behalf, observed at the earlier hearing that infringement of the regulations would be easier for his client to prove than the ingredients of the tort of injurious falsehood (which do include the need to establish dishonesty)," he said.
Mr Justice Eady said an 'objective' test of dishonesty is a relatively new concept in English law.
"That is to say, in this context it is not necessary to demonstrate that at the time the offending statement was made its maker knew it to be false or had no honest belief in its truth," he said.
BT told the court that in order to win the case, Tiscali would have to prove that it had acted dishonestly or with indifference to the truth in sending the letter. Mr Justice Eady disagreed. "As I have indicated, that does not appear to be sound in law," he said.
In 2006, the High Court ruled in the case of Mennell v Stock that a breach of contract can also constitute 'unlawful means' for the purposes of claiming unlawful interference with a business, even where the claimant is not a party to the contract.