For lies to be malicious falsehood, they must refer to your interests, says High Court

Marathon Mutual, a mutual protection fund specialising in insuring care homes, is suing a former director for libel, slander and malicious falsehood over letters and phone conversations in which he allegedly bad-mouthed the business he had left.

A second company, Regis, managed the Marathon mutual protection fund and also sued the man, a Mr Waters, over his remarks.

Waters applied to bar Regis from taking action against him, arguing that it had no right to take action because his words were not directed at it.

The High Court has said that that part of the case can be tried because in referring to Marathon's business, Waters was referring to something which could be seen as the subject matter or materials of Regis's business. It could not, the Court said, be barred from taking action.

Marathon claimed that Waters contacted its clients claiming that insuring through Marathon would leave clients without any insurance cover and that he had set up the business and had control of it taken from him by its management.

The Court said that when it comes to malicious falsehood, an aggrieved party does not have to be named.

Judge Moloney QC, sitting as a judge of the High Court, said that malicious falsehood is often described as a species of defamation but is materially different in law. "Really their main common feature is that both protect against injury occasioned by the publication of damaging words to third parties," he wrote. "Defamation is a tort of strict liability, whose essence is the protection of reputation, and in which damage is presumed. Malicious falsehood is an action on the case, whose key features are proof of falsity, a high level of culpable specific intent, and actual pecuniary loss in consequence."

He said that because defamation protects the reputation, a claimant must prove that at least some of those to whom the words were published were able to identify him as the person defamed. That is not always necessary with malicious falsehood, he said.

"Although in many cases of malicious falsehood the Claimant will be named, or otherwise identifiable by the same routes as in defamation, it is not an essential element of the cause of action that he be personally identifiable," said Judge Moloney.

"In trade libels ('slander of goods') malicious falsehood about a product will entitle its manufacturer to recover, simply because people ceased to buy it, not because they identified him as the maker and shunned him in consequence," he said.

But he said that there "must be some reference, direct or indirect, in the words complained of to the claimant or to his business, property or other economic interests, though it is not necessary to go further and establish identification of the claimant in the minds of the publishees."

Applying that test to the current case, he said that Regis had grounds to challenge the defendants at trial.

"Regis itself is plainly not expressly or impliedly referred to," he said. "But … its business is the management of mutual protection funds, in particular Marathon."

"It appears to me to be arguable that those funds could be viewed as the subject-matter or materials of its business, standing in a position in relation to Regis closely analogous to the goods of a manufacturer or the properties of a landowner," said Judge Moloney. "If so, an attack on them might therefore also be an attack on Regis's business."

He said that this might bring Regis "within the wide reference limits applicable to malicious falsehood", even though they might not be brought "within the narrower limits of the identification requirement of defamation".

Editor's note: The judgment is available via LexisNexis, which requires a subscription. The citation is: Marathon Mutual Ltd and another v Waters and another [2009] EWHC 1931 (QB). The judgment is dated 31st July 2009.