Two recent decisions, one from Britain and one from British Columbia, may assist a corporate party – be it a company, union, or charity – in obtaining damages after defamation harms its good name and goodwill.

A corporation, like an individual, may claim damages for harm to its reputation. But a corporation, like any defamation plaintiff, will often face difficulty proving specific losses founding special damages. As recognized in Hill v. Church of Scientology, [1995] 2 S.C.R. 1130, [1995] S.C.J. No. 64 “special damages for pecuniary loss are rarely claimed and often exceedingly difficult to prove” in defamation claims. Further, a special damages claim may release intimate financial records to the defendant, often hostile to, or in competition with, the plaintiff.

The law considers untrue attacks on a trade or profession particularly damaging, and prima facie defamatory. A plaintiff may claim damages “at large” without proving special damages, regardless of whether the defamation is spoken or written.

Nonetheless, a corporate plaintiff will traditionally receive negligible damages unless it can show clear financial injury arising from the statement. This is because of interpretations applied to older jurisprudence. The classic statement is found in Lord Reid’s speech in Lewis v. Daily Telegraph [1964] AC 234: “A company cannot be injured in its feelings, it can only be injured in its pocket. Its reputation can be injured by a libel but that injury must sound in money.” South Hetton Coal Co. v. North-Eastern News Association Ltd., [1894] 1 Q.B. 133 states that if the corporate plaintiff is unable or unwilling to prove special damages, “the amount likely to be awarded to a corporation may be small in commercial terms.” The leading Canadian case of Walker v. CFTO Ltd., [1987] O.J. No. 236 (C.A.) cited both of these cases in striking down a large award to the corporate plaintiff.

This frugal principle has been applied repeatedly in Canadian defamation cases. Bennett v. Sun Publishing Co. Ltd. (1972), 29 D.L.R. (3d) 423 (B.C.S.C.) and Johnson v. Jolliffe, [1981] B.C.J. No. 2157 (S.C.) awarded nominal damages of $100 to corporate plaintiffs who could not show special damages. Ho v. Ming Pao Newspapers (Western Canada) Ltd. [2000] B.C.J. No. 7 (S.C.) cited Bennett v. Sun in awarding nominal damages of $1,000; the court noted that the result might have differed had the successful party been a natural person rather than an association.

The recent decision of WeGo Kayaking Ltd. v. Sewid, [2007] B.C.J. No. 56 (S.C.) represents a movement from near-nominal general damages to more substantive general damages, even where the plaintiff corporation is unable to prove special damages in actual loss to the company’s bottom-line. In WeGo, the court rejected the corporate plaintiffs’ valuations for its claimed loss of customers and revenue due to the defendant kayak competitor’s defamatory website. Nonetheless, the court awarded substantial general damages of $100,000 to one plaintiff and $150,000 to the other.

This result is consistent with a recent trend towards more substantive corporate defamation damages, as seen in decisions such as A.T.U. v. I.C.T.U., [1997] A.J. No. 191 (Q.B.) ($200,000 general and $125,000 punitive damages to an union); Hiltz and Seamone v. Nova Scotia (Attorney General), [1999] N.S.J. No. 47 (C.A.) ($300,000 general damages to a firm of consulting engineers); and Barrick Gold Corp. v. Lopehandia [2004] O.J. No. 2329 (C.A.) ($75,000 general and $50,000 punitive damages based on an internet defamation campaign). The court in Hiltz and Seamone concluded that “[d]efamatory statements, such as in the present case, strike at the very foundation of the reputation and erode the confidence of the public in the defamed party, no less when it’s a corporation than when it’s an individual.” Barrick Gold expressly declined to follow jurisprudence that would reduce damages on the basis that a successful judgment sufficiently vindicates the corporate plaintiff’s reputation.

The recent House of Lords decision in Jameel v. Wall Street Journal Europe SPRL, [2006] UKHL 44 confirms that all plaintiffs, be they real persons or corporations, are to be equally treated in the assessment of damages. The majority, delivered by Lord Bingham of Cornhill, concluded that “… the good name of a company, is that of an individual, as a thing of value. A damaging libel may lower its standing in the eyes of the public and even its own staff, make people less ready to deal with it, less willing or less proud to work for it.” Lord Bingham found to be exaggerated arguments that corporate defamation claims would chill freedom of expression. That being said, where a corporation is unable to prove specific financial harm, “any damages awarded should be kept strictly within modest bounds.”

These recent decisions reinforce that a blanket distinction between natural and non-natural plaintiffs is not sensible. The transitory reputation of a corporation deserves protection. Indeed, the financial harm posed to its goodwill by defamation may be greater than that of an individual. The demolition through defamation of the reputation of, for example, an international food chain will result in greater financial loss than the destruction of a professional career. Businessweek recently published its annual list of the top 100 most valuable brand names. The name of perennial leader Coca Cola was valued at US$67billion; that of Google (at #24), at US$12billion.

These principles are consonant with the recognition in Hill that damages in defamation are difficult to prove yet are nonetheless real: “A defamatory statement can seep into the crevasses of the subconscious and lurk there ever ready to spring forth and spread its cancerous evil. The unfortunate impression left by a libel may last a lifetime...” In a rapidly-shifting marketplace, made more so by the infinite medium of the internet, a libel need not last a lifetime to harm a corporate reputation. A person, either natural or corporate, should not have insult added to injury through a token damages award.

Authors

David A. Crerar 
DCrerar@blg.com
604.640.4181

Michael A. Skene 
MSkene@blg.com
604.640.4248

Expertise

Corporate Commercial Litigation and Arbitration
Defamation and Media Law