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Saturday, 26 September 2009

Corporations, Libel, and the BCA: Why Personality Goes A Long Way

A company can sue for libel under English law.

Usually this will mean a commercially-active company, with shareholders and dividends. These are known as private or publicly limited companies. The word Limited - so familiar that it is hardly noticed - has to be added to the company name so as to signal to investors and customers that the company members - the shareholders - only have limited liability in the case of business failure.

The limited company exists separate from its (company of) shareholders. It can enter into contracts and own property; it will legally exist, even if every shareholder died the next day; and it can sue and be sued, and also be prosecuted as a defendant under criminal law.

All this because a company in law is a corporation, and so has legal personality; and in law, as with dogs, personality can go a long way.



But there are other corporations which cannot sue for libel.

A local authority is a corporation. Like a limited company, it can contract and own property; it exists separate to the councillors and the officers; it can (generally) sue and be sued, and sometimes even prosecuted.

However, a local corporation cannot sue for libel, and nor can most other statutory corporations discharging public functions.

This is because of an important House of Lords decision reported in 1993.

Derbyshire County Council had sued the Times Newspaper for libel. As a corporation under English law, it was presumed that it could sue for libel. It had personality, and it had a reputation.

However, the House of Lords held - as a matter of principle - a local authority could not sue for defamation.

For a public body to do so would be an unwarranted and undesirable limitation upon freedom of speech.

This was not even a "defence" - the right to sue did not exist in the first place.

However damaging the allegation - and it was not doubted that a local authority had a reputation which could be defamed (ie, de-famed, or damaged) - the public interest meant that such actions could not be brought. And this ruling has been taken to mean by lawyers that no public authority - not just local authorities - can sue for libel.

And if a libel case cannot be brought, they cannot be threatened; and so there is not even a chilling effect.

Accordingly, I can type the following about a particular statutory corporation without any fear whatsoever:-

The General Chiropractic Council happily promotes (and regulates) bogus treatments for which there is not a jot of evidence.

I am safe because the GCC are a statutory corporation discharging a public function, and so I have the protection of the Derbyshire rule.

All this of course brings me to the British Chiropractic Association.

The BCA are suing Simon Singh for libel for saying about the BCA what I have just said about the GCC, but the BCA can sue because they are a company.

However, perhaps crucially, they are not a limited company. They do not have shareholders; they do not pay dividends; they do not make a commercial profit. They do not need to put the word "Limited" at the end of their name. It legally exists for a non-commercial purpose.

The BCA are a Company Limited By Guarantee. Their company details are here.

(It is interesting to read the examples in Wikipedia of other companies limited by guarantee.)

Such legal entities exist so that charities and non-profit entities can still have legal personality: so they can contract and hold property.

But should such entities really be able to sue for defamation? Or to have the benefit of a chilling effect which comes from being able to sue?

On one hand, they are indeed corporations with a reputation.

On the other hand, they are corporations legally structured so to give effect to non-commercial activities, usually promoting a public or charitable good. They are classed as "companies" really just as a matter of legal convenience.

Some may think that this makes companies limited by guarantee more akin to the public authorities barred from suing under the Derbyshire rule, rather than to commercial companies with shareholders and dividends.

There is (as far as I know) no legal authority directly on this point.

Simon Singh had asked the High Court to rule on this in the preliminary hearing, but there was an adjournment immediately after the unfavourable ruling on meaning.

The issue is therefore still entirely open, and so even if Simon Singh loses the Court of Appeal application on the meaning point, he can still ask for a High Court ruling on this "corporate point" - and in turn appeal any adverse ruling to the Court of Appeal.

The BCA do not really have a trading reputation to protect; they have legal personality just so to promote (happily or otherwise) chiropractic and their member chiropractors, both of which are health matters for legitimate public debate and scrutiny.

But if the House of Lords is correct in Derbyshire, why can I not then criticise the BCA when I can happily criticise the GCC for exactly the same failings?

Is this a bogus distinction?




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19 comments:

Jo said...

I enjoyed this :D
Fresh 'meat for the table' , ie something to enjoy chewing over, as my friend Anna would say.

Smouldering Stoat said...

A very important point, I think. The BCA claim a kind of regulatory status - at least as far as their members are concerned. But they can't have it both ways, to seek the status of both a quasi-public body but not to accept the legal consequences.

Moreover, how is one meant to quantify damages for a company which doesn't actually trade?

Zeno said...

Absolutely fascinating!

Can't wait to see the BCA's 2008 accounts, due 31 October.

Chris K said...

Fantastic point and one that only a lawyer could think of!

If I was a BCA member right now I think I'd be wishing really hard that your blog would just go away :D

P.S. This page seems to have refreshed 3 times hope it hasn't sent the message 3 times, if so I apologise!

Andy said...

There seems to be something fundamentally wrong with a system that doesn't bother to determine if a suit is possible until the suit itself has progressed into an offensively expensive exercise.

Jim said...

Good point, well made.

Fantastic post.

DrClaire said...

So, can such bodies be sued for libel in return?

Dr Aust said...

Yes, I'm interested in the answer to DrClaire's question too... especially as I am pretty sure the BCA rather obviously libelled Simon Singh in one of their press statements back in June.

PS Good to see you have not forsaken the blogosphere altogether, Jack.

Naomi Mc said...

I can see the argument but this would impact on other organisations that don't work as promoting/pseudo-regulatory organisations. Such as those campaigning organisations that are not (entirely) charities under the Charity Commission due to the political nature of their work. This would include organisations like Greenpeace and Amnesty International - both of whom should have the right to sue and both of whom certainly get threathened with libel regularly.

Jack of Kent said...

Hi Naomi

I am a huge fan of your brilliant blogsite, which I cannot recommend enough.

But I am afraid I disagree with you on this point.

I do not think Greenpeace and Amnesty International should be able to (threaten to) sue for libel.

Being able to sue for libel creates libel chill.

Given the public importance of the work of Greenpeace and Amnesty International, one should be able to criticise them without any fear of a libel claim. I happen to strongly support the latter charity (as you know) but that does not displace the general principle.

If any coroporation exists to influence public debate then it does so, in my view, at the cost of losing its right to sue its critics for libel.

This would not prevent individual officers of the charity being able to sue if appropriate; it would mean only the organiztion itself would be barred from threatening and suing its critics.

How can this not be correct position?

Best wishes, Jack

Jack of Kent said...

Hi Dr Aust and Dr Claire,

Such bodies can, as a general rule, be sued for libel.

Best wishes, Jack

Naomi Mc said...

Hi

Sorry, I don't think I was being clear. I can't envisage a situation where either Amnesty or Greenpeace would sue anyone for libel, particularly given the former's campaigning on freedom of expression. Just that this puts them in a situation where they can be sued but not be able to sue themselves. Is the argument therefore that they, and the BCA and GCC, should be exempt from libel law entirely? And that there are legal entities that live in a libel free vacuum?

Not saying that this is a bad thing, just is that the recommendation and what are the ramifications?

Naomi Mc

Kate said...

Picking up on Andy's comment, how can the case proceed (as it is doing) when the procedural point of whether the BCA is a body capable of suing hasn't been settled?

As a non-lawyer, I don't know how the order of issues being heard is decided, but it sounds as though this would be worth pursuing before any further appeal on meaning. If the court ruled in accordance with Derbyshire, presumably meaning would then be irrelevant.

baldywilson said...

Surely the key distinction between the GCC and the BCA (and Amnesty International and Greenpeace) is that the GCC is statutory corporation, whereas the BCA is not.

As I understand it, this means that the GCC must exist by law, whereas the BCA (etc) is not required to exist. Surely it is this requirement that the GCC exist that means it cannot sue for libel - because of the chilling effect of not being able to robustly criticise a government organisation?

If that's the key distinction, then the BCA cannot be considered a public body - under that definition - and can sue.

Jack of Kent said...

Hi Naomi

Just catching up with your second post.

All because Greenpeace and AI are unlikely to use a right to sue is not a reason for them to retain it. Indeed, it is as much an argument for it to be removed as it is redundant.

A non-commercial organization engaged in influencing public policy, or issues of public health or public safety, may well have legal personality for certain good purposes. I do not think they should be able to sue for defamation.

Do you agree so far?

Then the next question is whether they should they still be open to being sued for defamation?

In part, for me, this depends on the claimant. They should not be sued, in my view, by other organizations or companies. But particular real human beings may be able to sue.

However, I am interested in your idea of a libel free zone. It is provoking thoughts...

Jack

Ivan said...

Zeno said he can't wait to see the BCA's 2008 accounts, due 31 October. Certainly they are due by then, but I wonder whether they are actually due a month earlier.

The 2006 Companies Act is being brought into force bit by bit, and, I believe, finally comes fully into force on 1 October 2009, thus entirely superseding the 1985 Companies Act. I am a director of, and the company secretary of, a very small Company Limited by Guarantee, so I have to decide when I need to send the 2008accounts in by. Since, in the case of accounts made up to 31 December, the 1985 Act provides for an accounts return date of 31 October, but the 2006 Act provides for an accounts return date of 30 September, I was utterly confused as to whether if I waited beyond 30September I would be breaking the now fully implemented 2006 Act. On the precautionary principle, I sent them in by the earlier date. I couldn't even decide whether the various statutory statements we have to make had to be made under which Act, so I made them under both. Companies House accepted the accounts in that form.

Alex said...

I'm not sure I understand this post. Are you saying that if I said (to take an extreme example), "Derbyshire County Council are employing child slaves", and it wasn't at all true in any way, are you saying that DCC could not (and should not) be able to sue me for libel? Or if I made a similar accusation against Greenpeace? Or the GCC? Or the BCA (if Simon gets a favourable ruling)?

Nick said...

Some commercial organisations are companies limited by guarantee. Network Rail, for instance, or the sports bodies that organise international matches. They have a trading reputation that's capable of being damaged, even if any profit they generated isn't distributed to shareholders.

Incidentally, would malicious falsehood be an option for a statutory corporation?

NickA said...

I don't think (at least as far as defamation is concerned) that anything rests on the fact that the BCA is a company limited by guarantee rather than a company limited by shares. Normally both companies limited by guarantee and private companies limited by shares have to use "limited" as the last word of their name - but certain companies (such as charities) are exempted (see s60 CA 2006 - the BCA isn't a charity, so I assume it's exemption from having to use "limited" in its name is under the grandfathering provisions in s62 for certain "professional" associations).

Incidentally, guarantee companies can be commercial profit making concerns. Although the vast majority of guarantee companies are found in the "not for profit" sector (which is broader than just charities), there are number of guarantee companies that undertake business activities.