Business Energy Solutions Ltd v BES Commercial Energy Ltd

This is an application for pre-trial directions in a claim for libel. The parties have agreed, in my view rightly, that there should be a trial of the preliminary issue of whether the publications referred to in the Particulars of Claim have caused or are likely to cause serious financial loss to the claimants pursuant to s.1(2) of the Defamation Act 2013. That is an approach which accords with what I said in Ames v The SpamhausProject Ltd [2015] EWHC 127 (QB), [2015] 1 WLR 3409 and Lachaux v Independent Print Ltd [2015] EWHC 2242 (QB), [2015] EMLR 28.

The issues in dispute today are two. First, the claimants seek and the defendant resists an order for the defendant to clarify or provide further information about his case on the issue whether the defendant’s statements complained of are defamatory and satisfy s.1(2). Secondly, the claimants seek an order that their application to strike out the defendant’s counterclaim should be listed for hearing at the same time as the preliminary issue trial unless the defendant discontinues the claim and pays the claimants’ costs.

The claim is brought by three energy companies against an individual, Mr. Scrivener, in respect of five posts published on two publicly acceptable discussion boards. The two discussion boards concerned are the Complaints Board web forum and the Money Saving Expert web forum. The defendant’s posts were part of a thread on the Complaints Board forum headed “BES and commercial energy - missold energy contract and prices”. The first of the five posts was published also in a thread on the Money Saving Expert forum entitled “Meter Registration Service??!!!” The posts were first published on dates between September 2014 and February 2015 and all remain online.

The claim was issued on 3rd March 2015. It is not necessary for the purposes of this judgment to set out in full the meanings attributed to the words complained of by the claimants. It is enough to say that the stings complained include using fraudulent and oppressive means to secure contracts with customers or apparent contracts with them, tampering with evidence relevant to those issues, extensive deliberate disregard of the claimants’ energy suppliers’ licences and various other forms of deception and dishonesty. It is accepted for present purposes by the defendant that the posts contain allegations of ripping off and scamming consumers.

A common law proof that the statements complained of did indeed convey stings to that effect would have been enough to establish liability, subject to any defence that the defendant might raise. The meanings all have a defamatory tendency according to the common law test, and that is not in dispute. But all these publications took place after the Defamation Act 2013 came into effect, raising the threshold of seriousness that a statement must cross in order to be actionable.

Section 1 of the 2013 Act lays down the serious harm requirement. Section 1(1) provides that:

“A statement is not defamatory unless its publication is caused or is likely to cause serious harm to the reputation of the claimant.”

Section 1(2) provides that:

“For the purposes of this section, harm to the reputation of a body that trades for profit is not ‘serious harm’ unless it has caused or is likely to cause the body serious financial loss.”

The claimants are all bodies that trade for profit, so both s.1(1) and (2) are applicable in this case. Accordingly, the Particulars of Claim allege, as they must nowadays, that the requirements of s.1 are satisfied.

Paragraph 15 of the Particulars of Claim alleges that the publication of the words complained of “has caused and/or is likely to cause serious harm to the trading reputation” of each of the claimants and it is pleaded at para.16.8 that the publication by the defendant of each of the said statements is:

“ . . . inherently likely:

(i)

to have caused and, for as long as it continues to be published, to continue to cause serious harm to the reputation of the Claimant to which the statement in question refers; and

(ii)

at the time it was first published and, for as long as it continues to be published, to cause the Claimant to which the statement in question refers serious financial loss.”

Particulars in support of those allegations are given in paras.16.1 to 16.7.

On 30th June the defendant, who was then acting as a litigant in person, served a defence of counterclaim. The defence raises five main issues: meaning, truth, honest opinion, public interest and, finally, whether the publication of the words complained of has caused or is likely to cause serious harm to the claimants’ reputations or serious financial loss so as to satisfy s.1(2).

Since 9th September 2015 Mr. Price QC and his firm (DPSA) have represented the defendant. The day after notifying the claimants’ solicitors Fieldfisher Waterhouse that they were acting for the defendant, DPSA wrote proposing a preliminary file on meaning and serious harm. Later the issue was narrowed by agreement to a trial on serious harm. This is clearly appropriate. No doubt if this matter was to go to a full trial the defence would be repleaded by Mr. Price, as he has made clear in correspondence. Nonetheless it is tolerably clear from reading the fairly lengthy defence as it stands that it is likely that substantive defences would be raised that would require reasonably extensive investigation and consideration of a number of factual issues and possibly matters of law. In contrast, the question of whether an publication satisfies the serious harm requirement is one that usually should require only a relatively narrowly confined enquiry and that is one reason why, in cases where substantive defences are pleaded, it is often convenient to provide for a preliminary issue trial, as has been agreed in this case.

Where it is clear that serious issues are likely to arise as to whether the serious harm requirement has been satisfied, it may be appropriate to order such a preliminary trial before the expense of preparing and serving a substantive defence has occurred, as took place in Lachaux. That course of action may have other advantages, such as preserving a defendant’s ability to make an offer of amends (see Lachaux para.168). That said, each case depends on its own facts, and the present case is one in which a defence has been pleaded at considerable length by a litigant in person prior to the instruction of lawyers. I take those particular circumstances into account in reaching my conclusions in this case.

The first issue is whether the defendant should be ordered to provide further information. The defendant accepts for the purposes of the preliminary issue trial that the words complained of bear the meanings complained of by the claimants. The defendant also accepts for the purposes of that trial that if the claimants establish their case under s.1(2) of the 2013 Act, that is sufficient to satisfy the requirement under s.1(1).

(I pause to observe that that is an assumption which the court is invited to make in this case and which I accept the court should make in this case. It is not been conceded, and I am certainly not deciding, that a publication which causes serious financial loss is always on that account to be treated as having caused serious harm to reputation. In that context, it is of some relevance to note that in the background in this case is a potential claim for malicious falsehood. My attention has been drawn to a letter written on behalf of the claimants on 22nd September 2015 drawing the attention of DPSA to the fact that on 18th September the claimant’s solicitors took the precaution of issuing proceedings against the defendant for malicious falsehood. They explained that they had done so “given in particular the legal uncertainties to which s.1 of the Defamation Act 2013 is currently giving rise.”)

However that may be, the effect of the position adopted by the defendant is that in practice the preliminary trial in this case will be concerned only with the question of whether the requirements of s.1(2) have been met. Those requirements can be met in more than one way. The publication may be shown to have caused serious financial loss, or to be likely to cause such loss, or both. The first limb of s.1(2) would appear potentially to be concerned with loss that has already occurred and a second limb with loss that has not occurred but which is likely to occur in future (cf. Cooke v MGN Ltd).

Here, perhaps a little unhelpfully, the pleaded case for the claimants in para.16.8 of the Particulars of Claim, that I have quoted above, uses the term “likely” in conjunction with an allegation that the publication has caused loss. In context, however, and as Mr. Busuttil made clear in the course of argument, the case of each claimant is that on the balance of probabilities (1) it has suffered actual financial loss which counts as serious within the meaning of s.1(2), and/or alternatively (2) it is likely or probable that it will suffer serious financial loss in the future, as a consequence of the publications complained of.

The defendant pleaded his case that there was no serious harm to reputation and no serious financial loss in his defence and in particular in paras.7 and 8, but on and since 10th September 2015 DPSA have set out in correspondence the position that the defendant now adopts on that issue. In a letter of 10th September it was made clear that it would be submitted that the claimant’s pleaded case, which is an inferential one, failed to disclose any proper basis for satisfying s.1(2). In a letter of 21st September this was elaborated upon and legal submissions to be advanced were set out, as followsw.

“4.1

The claimant must prove (a) that serious harm has been caused at the date of the determination or (b) that it is more probable than not that it will be caused after the date of the determination. It is insufficient to allege that such harm is inherently likely.

4.2.

In the case of a trading corporation this requires proof that (a) serious financial loss has been caused at the date of the determination or (b) that it is more probable than not that it will be caused after the date of the determination. This requires an identifiable financial loss to be alleged and proved, not merely a general assertion that it is likely that some people will have been put off doing business with the claimant.”

In Schedule A, supplied with the letter of 21st September, DPSA set out the defendant’s case in response to the factual allegations in para.16 of the Particulars of Claim. The basic method adopted was to break the claimants’ pleaded case down into its 23 individual sentences and to plead in response to each sentence an admission, denial or non-admission, together with a few further averments such as an averment of irrelevance.

In a Schedule B supplied under cover of a letter dated 28th September DPSA set out what were described as “relevant factual allegations advanced by the defendant on serious financial loss”. These are the allegations that the defendant seeks to prove. There are 24 paragraphs of them. They fall into three broad groups. The first group is concerned with the Complaints Board web forum, the second with the Money Saving Expert web forum and the third addresses the claimants’ case that the posts complained of are responsible for the prominence of negative search results in Google searches on the claimants’ name or search terms relating to them.

The character of the facts alleged in relation to the Complaints Board web forum can be gauged from the first few paragraphs. Paragraph 1of Schedule B alleges that the Complaints Board web forum thread that featured the posts complained of was commenced on 25th July 2012 by a named user with a post, the terms of which are set out. Schedule B goes on:

“2.

The Complaints Board thread contains 14 web pages of comments that follow on from the original posting referred to above by (the named poster). This equates to approximately 250 posts by around 85 users with around 18 posts displayed on each page.

3.

Save for a small number of posts the Complaints Board thread contains predominantly negative comments of a similar kind from individuals who have had dealings with BES.”

The second group of factual allegations relating to the Money Saving Expert web forum is of a similar character.

In correspondence complaint has been made that the defendant’s position lacks clarity. The response on behalf of the defendant is that it is sufficiently clearly set out.

It is paras.1 to 19 of Schedule B that have been the focus of Mr. Busuttil complaints in argument today. It is in these paragraphs that DPSA deal with the content of the two forum threads. Paragraphs 20 to 24 of Schedule B deal with the claimant’s case on the Google searches, and it is accepted that the defendant’s case is sufficiently clearly set out in that respect in those paragraphs.

On 29th September the claimants’ solicitors, Field Fisher Waterhouse wrote at para.4.2.1:

“Regarding paragraphs 1 to 19 of Schedule B, having regard to Warby J’s reasoning and ruling in paragraph [69]- [87], [154], [158]-[159] and [190(i)] of his judgment in Lachaux, we fail to understand the relevance in fact or law and/or the admissibility of these allegations to any issue that falls to be decided under s.1 of the Defamation Act 2013. We should therefore be obliged to receive a clear account of your client’s case on this point.”

The complaint was, therefore, about a lack of clarity as to the relevance and/or admissibility of the facts alleged. The response from DPSA to what was said in para.4.2.1 of the letter of 29th September was, so far as relevant, this on 1st October 2015:

“2.

Assuming a corporate claimant can succeed on section 1 without identifying any specific financial loss, the matters set out in Schedule B are probative of whether each of the specific publications complained of have caused financial loss to your clients and whether it can be properly characterised as serious.

3.

The issue in Lachaux and Dingle was causation in the context of injury to an individual’s reputation, not serious financial loss. Alternatively, with respect to Warby J, he was wrong.”

Mr. Busuttil submits that the defendant has provided scant useful information on the nature of its case and that it would further the overriding objective for the defendant to give a proper explanation of the matter at this stage. The application is for an order originally framed in the following terms, that by a stated date:

“ . . . pursuant to CPR 18.1 the defendant provides to the claimants (by way of clarification of or additional information in relation to his case comprised in Schedules A and B . . . a clear account of the precise nature of the defendant’s challenge to the claimants’ case on serious harm/serious financial loss under s.1 Defamation Act 2013, stating the legal and factual basis of that challenge.”

Mr. Busuttil submits that the claimants should not be expected to deal with matters on a speculative and hypothetical basis, particularly when the parties and the court are still in “relatively uncharted territory” so far as the requirements of s.1 of the Defamation Act are concerned.

Mr. Busuttil has made clear that his concern is to avoid what he calls “mission creep” and, with some justification, he points out that now that the practice indicated in Lachaux will often be for issues of this kind to be tried before a defence has been served, the question arises of how the court should ensure that the issues are properly crystallised in the absence of formal pleadings. In Lachaux defences had been served by two of the three defendants involved in the litigation, verified by statements of truth. To ensure clarity, directions were given by Nicola Davies J that the third of the defendants should serve a statement specifying any respects in which its position on the issues for trial differed from that of the other two: [2015] EWHC 915 (QB).

Mr. Busuttil submits that if there had been no defences at the time that Nicola Davies J was dealing with Lachaux she would doubtless have ordered the service of statements of case limited to the issue of serious harm. Mr. Busuttil therefore submits that an issue of general significance arises on this application, as to the procedural methods that should be adopted to crystallise the issues in advance of a preliminary trial on serious harm. In general, he has submitted, there should be a pleading verified by a statement of truth.

Mr. Price accepts that the powers conferred by part 18 of the CPR are wide enough to allow the court to make an order of the general nature of the one that is sought. He submits, however, that the necessity test should be strictly applied; that the order sought is too general in its formulation to be useful; and that satellite litigation is to be avoided generally and specifically in relation to issues under s.1 of the Act. In response Mr. Busuttil makes clear that he is not in the present case so much concerned with formality as substance. What he invites me to do is to take the view that he has not been given enough clarity as yet and that in some form the defendant should be ordered to provide further clarity.

I accept the submission of Mr. Price that it is undesirable for satellite litigation to be generated over matters such as this. Of course, a preliminary issue trial is still a trial, and needs to be properly prepared. Fairness and efficiency may require a directions hearing such as this if a party, be it the claimant or the defendant, fails in a serious way to disclose with clarity the case to be advanced. I agree with Mr. Busuttil that it is highly undesirable for the parties to arrive at trial with any significant degree of uncertainty about the nature of the case they are to meet factually and legally. But at the same time the parties and the court should be wary of engaging in skirmishes on procedural issues before a preliminary trial.

I can see the desirability in general terms of directions being given for issues as to serious harm to be pleaded in formal documents verified by statements of truth even if a formal defence is not to be served, but I do not consider that this is an appropriate case in which to attempt to lay down any general rules or guidance, given its particular circumstances. The critical aspects of the matter in this case from the claimants’ perspective are two. First, to ensure that they are not ambushed by evidence of fact which they could not reasonably have foreseen. Secondly, not to miss an opportunity to advance factual evidence in response by being kept in ignorance of some legal submission which might have made additional factual material relevant. I do not see either of those as significant risks at present.

There does not seem to me to be any real ambiguity or lack of clarity about the factual case that the defendant is seeking to advance, and none is suggested. The factual propositions in Schedule B, paras.1 to 18, are clear enough. I suspect that many of them will be agreed. The draft directions which the parties have agreed provide for the claimants to respond by way of a counter-schedule stating ,whether they admit, do not admit or deny those propositions and, if they deny them, why.

The defendant’s legal case is essentially as set out in DPSA’s letter of 1st October 2015. Mr. Price has made clear in the course of argument that the defendant’s case on this issue is as set out in correspondence and that the defendant will not be relying at the trial on anything said in the defence on this issue - except to the extent that it is consistent and in line with what has been set out in correspondence. The terms of the letter of 29^th September make clear that the claimants’ legal team consider the factual propositions to be relied on are legally irrelevant, but tend to undermine the complaint of lack of clarity. I consider the position adopted is clear enough.

The precise nature of the defendant’s case in legal terms will inevitably be set out in the skeleton argument for trial, for which the draft order makes provision. As I indicated in the course of argument, it seems to me that if there is any legitimate concern on the claimants’ part about being “bounced” by unexpected legal submissions, those concerns can be adequately met by an order that skeleton arguments be exchanged earlier than provided for in the order. The order provides for three days in advance of trial. There is to be some discussion about the timetable but I should have thought five to seven days with a provision for a reply skeleton to be served, if so advised, would meet any such residual concern. That seems to me to be a much more satisfactory solution in the particular circumstances of this case than an order in the general terms sought by the claimants’ application notice and I do not consider it appropriate to make that order.

Turning to the second issue, the counterclaim pleaded on 30th June 2015 sought damages for harassment and various other remedies, such as costs due to the charges for unwanted texts received while abroad. On 27th July 2015 Field Fisher Waterhouse issued an application seeking, among other orders, orders striking out the counterclaim and the entry of judgment for the claimants on the counterclaim. When DPSA came on the scene on 10th September they stated: “Our client will not proceed with his counterclaim.”

The response is the application made today by Mr. Busuttil on behalf of the claimants for an order that unless the defendant discontinues and agrees to an order that he pay the costs of and occasioned by the counterclaim to be subject to detailed assessment on a standard basis the claimants’ strike-out application should be adjourned to the trial of the preliminary issue. Mr. Price resists that application on the basis that it is calculated merely to add to costs and to achieve no useful purpose. He says that the defendant has indicated he will not proceed with the counterclaim and there is no point in proceeding with an application to strike it out. He indicates that if the claimants fail on s.1 the parties may be able to agree costs. He submits that it is arguable that the claimants should have sought a determination of serious harm before requiring the defendant to serve a defence and this should impact on costs.

In my judgment the appropriate course is to give the directions sought by Mr. Busuttil. That will ensure that a formal application of relevance is before the court at an appropriate time, and can be formally disposed of in whatever manner seems to be appropriate at that stage.

The costs of the counterclaim are the real issue. I make quite clear that in making that order I am not in any way encouraging the expenditure of any further resources on the application until after the court’s decision on the preliminary issue is known, by which I mean has been circulated in the form of a draft judgment. It is clear that the defendant will not be pursuing the counterclaim and there is absolutely no need for any resources to be devoted to the strike-out application until after the outcome of the preliminary issue trial has become known.