George v Cannell and another [2024] UKSC 19

Fiona George sued Linda Cannell for malicious falsehood after false statements were made about post-employment contractual obligations. The Supreme Court held that section 3(1) of the Defamation Act 1952 renders malicious falsehood actionable per se, but damages for mental distress cannot be awarded where no financial loss was caused.

Facts

Fiona George worked as a recruitment consultant for LCA Jobs Ltd, owned by Linda Cannell. After leaving her employment in November 2018, she commenced work with Fawkes & Reece in January 2019. Her contract with LCA contained no post-employment restrictive covenant preventing her from soliciting LCA’s clients.

Linda Cannell discovered Ms George was soliciting LCA’s clients and made false statements to Matthew Butler (a client contact) and Graeme Lingenfelder (Ms George’s line manager at Fawkes & Reece), asserting that Ms George was breaching post-employment contractual obligations. The trial judge found these statements were false and made maliciously, as Linda Cannell knew there were no such contractual restrictions.

However, the judge also found that neither publication caused any financial loss to the claimant: Mr Butler had already decided not to do business with Ms George for unrelated reasons, and Mr Lingenfelder quickly discovered the truth when Ms George showed him her terms of employment.

Issues

Central Issue

Whether section 3(1) of the Defamation Act 1952 renders malicious falsehood actionable per se, such that liability can be established without proof of actual financial loss.

Secondary Issues

What is meant by words ‘calculated to cause pecuniary damage’ in section 3(1)?

Whether damages for mental distress can be awarded where no financial loss has been proved.

Judgment

On Actionability Per Se

The Supreme Court unanimously held that section 3(1) creates a presumption of financial loss where its requirements are satisfied, making the tort actionable per se in those circumstances. Lord Leggatt stated:

“The effect of section 3(1), where it applies, is to create a presumption of law that the publication of the words complained of has caused financial loss. This presumption is irrebuttable as far as liability is concerned but does not necessarily lead to an award of substantial damages.”

On the Meaning of ‘Calculated to Cause’

The Court held that the test is forward-looking from the time of publication, not historical. Lord Leggatt explained:

“The appropriate test in determining whether the words complained of ‘are calculated to cause pecuniary damage’ to the claimant is to ask whether, on the facts known or which should reasonably have been known to the defendant at the time of publication, it was objectively likely that the words published would cause financial loss.”

On Mental Distress Damages

The majority (Lord Leggatt, Lord Hodge, and Lord Richards) held that damages for mental distress cannot be awarded where no actual financial loss was caused. Lord Leggatt reasoned:

“It was neither the intention nor the effect of the 1952 Act to transform an economic tort into one which protects the claimant’s emotional wellbeing.”

Lord Hamblen and Lord Burrows dissented on this point, arguing that once the tort is actionable per se, mental distress damages should be available if proved, regardless of whether pecuniary loss occurred.

Implications

This judgment clarifies the scope of section 3(1) of the Defamation Act 1952 for the first time at the highest level. The decision confirms that malicious falsehood under section 3(1) is actionable per se, but maintains its character as an economic tort by limiting substantial damages to cases where financial loss is proved. The forward-looking test for ‘calculated to cause pecuniary damage’ focuses on facts known or reasonably known to the defendant at the time of publication, providing clarity for future cases. The majority’s rejection of mental distress damages where no financial loss occurred preserves the distinction between malicious falsehood and defamation.

Verdict: Appeal allowed. The Court of Appeal’s order for assessment of damages for injury to feelings was set aside. Judgment for the claimant was directed to be for nominal damages only, in the sum of £5.

Source: George v Cannell and another [2024] UKSC 19