Public hearing maintained despite fear of reputational damage

Public hearing maintained despite fear of reputational damage

Published:

Author: Kath Livingston

When disputes escalate to court proceedings, it is not uncommon for the Statements of Case to contain pointed allegations of misconduct or impropriety.

These can be directed against companies, providing some degree of anonymity for the individuals concerned, but there remains risk of damage to corporate reputation. They can also be directed against named individuals, whether or not they are parties to the action.

Under defamation law as it stands* a complainant need only demonstrate publication, of something defamatory, about him, in order to found a defamation complaint.

The problem for the complainant here is that when the allegations are made in the course of court proceedings - either in court or in the documents prepared for court - the defence of absolute privilege applies, meaning you cannot sue in defamation.

Privacy please?
So what if you are to be accused of impropriety in court, which is of course an arena to which the public and the media have full access? You cannot sue in defamation. So can you at least require that the hearing be held in private, to spare your blushes?

This was the question that came before the Court of Appeal in the recent case of Global Torch Limited v Apex Global Management Limited and others [2013] EWCA Civ 819

The case involved cross petitions for unfair prejudice, presented by the parties as rival shareholders in a company called Fi Call Ltd.

As is often the case in litigation of this type, the petitions contained allegations of misconduct. Global Torch, its directors and shareholders, applied for hearings to be held in private, arguing that publicity would defeat the object of the hearing, and that the interests of justice required that the hearing be in private.

The Court of Appeal disagreed.

Paying heed to the importance of ensuring open justice - emphasised by the House of Lords in Scott v Scott (1913) AC 417 and the variety of relevant European Convention Rights (fair trial, privacy and freedom of expression) - it held that on any application for a private hearing, the court must consider whether there is sufficient public interest in maintaining the open justice principle to justify the resulting curtailment of the competing rights (here, the appellants' privacy/reputational rights under Article 8). The Court recognised the potential for reputational damage, but also noted that allegations of serious misconduct are typical of many cases.

In any court case, the trial affords the parties the opportunity for vindication, where allegations are false. And so, in the absence of evidence that the court process was being abused by the making of knowingly false allegations, there was public interest in maintaining open justice and no justification for departing from that with a hearing in private.

Freedom of expression versus protection of reputation
The decision is perhaps not surprising; as the law continues to grapple with balancing freedom of expression (and in this case open justice) and protection of reputation, the focus increasingly is on the former.

And of course the concept of absolute privilege in the context of court proceedings has been enshrined in the law for decades.

So the message for warring parties contemplating court proceedings and with dirty linen to wash is clear - the court system is, and shall remain, very much open and public.

Alternative routes available
Note that an option to consider, if you can agree it, is to utilise instead an alternative dispute resolution method such as arbitration or mediation, both of which have the advantage of privacy.

If you need help with a dispute you are involved in, or advice about alternative dispute resolution or any of the issues discussed above, please get in touch.

* See http://www.shoosmiths.co.uk/client-resources/legal-updates/all-change-please-defamation-act-2013-5471.aspx for our briefing on how the law will change when the new Defamation Act 2013 comes into force.