On 3 July 2024 HHJ Parkes KC handed down judgment on a strike out application in Pacini & Anor v Dow Jones & Co Inc [2024] EWHC 1709 (KB). The case will be of interest to anyone thinking about the complex relationship between defamation, privacy and data protection in English law.
Among other things, it provides the clearest indication yet from the High Court that the issue of reputational harm damages in non-defamation actions is unsettled and requires resolution by an appellate court.
Background to the Pacini litigation
The facts of Pacini are somewhat complex. In short, the case involves a claim brought by two investment bankers in relation to two articles published in the Wall Street Journal in 2017 and 2018 which they allege contains inaccurate and misleading information about them.
In extensive pre-action correspondence which begun before the first article was even published, solicitors on behalf of the claimants (and the XIO group of companies of which they were formerly senior executives) repeatedly threatened to bring defamation proceedings against Dow Jones (which publishes the Wall Street Journal) ([16]-[30]). This correspondence expressed concerns about the publication of material alleging that a Chinese billionaire Mr Xie Zhikun had a relationship with XIO or its affiliates or had invested in the group. Such allegations were said to be seriously defamatory and would result in substantial financial losses (see e.g. [21]). According to the claimants (as made clear from their later pleadings), the two articles falsely suggested that they were party to a conspiracy to defraud Xie Zhikun of nearly $1 billion and that they had deliberately failed to make proper disclosures to US authorities (see particularly [22], [27], [40]-[41]).
Defamation, as is widely known, has a 1-year limitation period, compared to the usual 6-year period for most other torts. Despite repeated threats, no defamation proceedings were ever issued ([30]). However, in March 2023, exactly 6 years after the publication of the first article, the claimants issued a UK GDPR claim against the defendants ([38]). Among other things, the claimants said that the defendant had breached the UK GDPR by failing to process their personal data fairly and failing to ensure the data was accurate or to erase or rectify inaccuracies ([42]).
Importantly, while the claimants amended their Particulars of Claim to delete allegations they had initially made that the articles were defamatory ([42]), they maintained that they were entitled to compensation for the damage to their reputation suffered as a result of the wrongful processing of their data ([43]). In addition to reputational harm damages, the claimants also sought compensation for their anxiety, humiliation and distress ([43]).
The strike out application and decision
In response, Dow Jones brought a strike out application arguing that the UK GDPR claim constituted an abuse of process. Dow Jones’ principal argument was that the claim was in reality ‘a statute-barred defamation complaint disguised as a claim for data protection and brought under a false flag to avoid the rules that apply to defamation claims’ ([55]). As HHJ Parkes explained, wrapped up in this central issue was the question, best considered separately, of whether a claim for damage to reputation can be made in data protection proceedings ([56]).
In the alternative, Dow Jones argued that the claim amounted to a Jameel abuse of process (Jameel v Dow Jones [2005] EWCA Civ 75) ([57]). This was because the claimants could not hope to achieve a tangible or significant benefit from the litigation, given the ‘nugatory reputational impact’ on the claimants, the ‘very low’ levels of publication, the inability of the relief sought to limit the availability of the articles in other jurisdictions, the fact that the allegations were a matter of public record, as well as the costs and delays associated with the proceedings ([112]).
HHJ Parkes refused to strike out the claim on either ground. On the central issue of whether this was an action in defamation dressed up as a data protection claim, the Judge accepted the claimants’ submissions that he could not go behind the evidence they had provided in response to the strike out application ([87]). This included statements from both claimants that potential investors have refused to do business with them, particularly since 2021, because of concerns arising from the article and their desire to have the inaccurate processing of their data stopped as a result ([50]-[52]).
HHJ Parkes was greatly sympathetic to Dow Jones’ contentions that the claimants’ repeated threats of defamation proceedings suggested their long-standing concern was the damage to their reputation and that no explanation had been provided for their failure to bring a defamation claim at the time of publication ([86]). Ultimately, however, HHJ Parkes found that if the claimants’ evidence was correct, the problems which drove them to litigation only became critical after the limitation period for defamation expired ([90]). It would be wrong to summarily deny the claimants access to the court to make that case using an action which was otherwise legitimately open to them ([90]), particularly in light of the high hurdle that needs to be surmounted to strike out a claim for abuse (discussed at [62]-[63] and [84]).
As to Dow Jones’ alternative argument that the claim constituted a Jameel abuse, HHJ Parkes rejected the proposition that the claim had little prospects of success or that what was being sought did not have real value for the claimants ([117]). On the evidence available, while the page views of the articles were low in recent years (approximately 50 per year in 2022 and 2023 compared to thousands of views before 2022), the extent of publication could not be said to be de minimis, especially given that it would not have taken many views for the claimants to face problems in the investment management world ([113]). Dow Jones’ points about lack of extra-territorial impact and the availability of public judgments were also rejected, and the costs of the proceedings could not be said to be disproportionate to the relief sought ([115]-[117]). The result is that it would also be wrong to strike out the claim on Jameel grounds ([118]).
The Judge held that the UK GDPR claim could therefore proceed, starting with a trial of preliminary issues including the meaning of the ‘personal data’ ([119]-[120]). Identifying the meaning of the data using the same approach as defamation would be consistent with the approach taken in other cases, including Aven v Orbis [2020] EWHC 1812 (QB) and NT1 v Google [2018] EWHC 799 (QB).
The reputational harm damages issue
The most interesting aspect of the judgment, which is likely to have broader implications beyond the case, is HHJ Parkes’ separate and careful discussion of the issue of reputational harm damages in claims other than defamation. The key conclusion which the Judge comes to is that the state of the law on this issue is currently ‘uncertain and in flux’, and so ‘probably requires the attention of an appellate court’ ([107]). As such, it would be wrong to summarily dismiss a claim for reputational harm damages in a data protection action as an abuse of process.
Certainly in more explicit terms than can be observed in any previous judgment, HHJ Parkes identifies that the High Court has taken different approaches to the issue of reputational harm damages in non-defamation claims, particularly in recent misuse of private information cases. This precisely mirrors an argument I have made previously in an article in the Journal of Media Law where I pointed out that the High Court is currently divided on this question and that it is ripe for consideration by the Court of Appeal or Supreme Court. According to the Judge, there was no reason in principle why a different approach on reputational harm damages should be taken in misuse of private information cases and data protection claims, given that both actions are centrally concerned with giving effect to an individual’s right to privacy ([103]).
In broad terms, the three different approaches which appear to have been taken in the recent misuse of private information case law are as follows (see Pacini at [105] and my own similar categorisation in the JML). The first approach is that reputational harm damages can be awarded in a privacy claim even if the allegations are true (see Mann J’s decisions in Richard v BBC [2018] EWHC 1837 (Ch) and Hannon v News Group Newspapers Ltd [2014] EWHC 1580 (Ch)). The second approach is that reputational harm damages can only be awarded if the defendant is given the opportunity to run the defences they would have been able to run if the claim had been brought in defamation, most importantly the defence of truth (see e.g. Nicklin J at first instance in ZXC v Bloomberg LP [2019] EWHC 970 (QB)). The third approach is that damages for reputational harm should never be available in such situations (which Warby J said he would have held in Sicri v Associated Newspapers Ltd [2020] EWHC 3541 (QB) had he not been able to decide the case on a narrower basis).
ZXC was of course a case that ultimately went to the Supreme Court (ZXC v Bloomberg LP [2022] UKSC 5). However, damages were not at issue on appeal. Lords Hamblen and Stephens (with whom the other judges agreed) expressed reservations about the extent to which the approach taken to defamation damages should impact damages in misuse of private information cases, but ultimately said it was inappropriate to address this in the judgment and that the point may merit consideration in a future case ([79]). HHJ Parkes in Pacini (at [106]) characterised this as a ‘warning shot’ from the Supreme Court, presumably as it seems to be further confirmation that the issue of reputational harm damages is currently unsettled.
How should an appellate court resolve this issue?
Following the decision in Pacini, it is now perhaps only a matter of time before an appellate court will have to deal squarely with the question of whether reputational harm damages are available in a non-defamation claim. Whether that point arises first in a data protection or misuse of private information case, the Court of Appeal or Supreme Court will need to grapple with the competing approaches adopted in the High Court’s decisions in Hannon, Richard, ZXC and Sicri. Central to any such determination will also be the current status (and applicability in the privacy context) of the Court of Appeal’s 1993 decision in Lonrho plc v Fayed (No 5) [1993] 1 WLR 1489, where it had been unanimously held that, as a general rule, damages for injury to reputation could only be recovered in defamation.
In the article cited above in the Journal of Media Law, as well as a subsequent piece in the same journal following the Supreme Court’s decision in ZXC, I have developed the argument that reputational harm damages should not be available in a claim other than defamation. While my discussion has been in the context of the misuse of private information tort, the basic thrust of the argument applies equally to data protection.
In my view, the key to unlocking the problem of reputational harm damages is to recognise two important points. The first point is that the concept of ‘reputation’ is operating in different ways in the tort of defamation compared to misuse of private information/data protection. Defamation, although it is universally equated with reputation, is not concerned with protecting a person’s reputation generally i.e. how the individual is thought of by others in society. Rather, the ‘core’ interest protected by the tort is an aspect of reputation – it is a person’s specific interest in not being judged by others on false facts. By contrast, misuse of private information and data protection can afford protection for a person’s reputation in the more general sense. However, reputation is only a ‘subsidiary’ interest protected by these actions.
The second important point is to appreciate that damages for reputational harm are a particular species of damages, which I call ‘interference damages’, awarded by courts for interference with the ‘core’ interest protected by certain torts. Where interference damages are available, they correspond directly with the core interest which the tort protects, and are awarded only in circumstances where the precise conditions for liability are met.
As I argue more fully in the pieces, damages for harm to reputation are the interference damages for the tort of defamation. To award these damages in other causes of action would be to run roughshod over the careful and limited way the law has chosen to protect the ‘core’ interest underlying the defamation tort. One key concern here, particularly relevant to misuse of private information cases, is that a claimant would be able to circumvent the truth defence. This is less relevant in a case like Pacini concerning the inaccurate processing of data where the falsity of the information still needs to be established (and indeed the claimant rather than defendant bears the burden of proof of doing so ([75], [107])). However, there are still other important hurdles in defamation law which can be bypassed if reputational harm damages were available in data protection. Chief among them is defamation law’s short 1-year limitation requirement.
As courts have previously articulated, the entire purpose of the short limitation period in defamation is that one should seek to vindicate attacks on their reputation swiftly (see e.g. Austin v Newcastle Chronicle & Journal Ltd [2001] EWCA Civ 834 at [38]). It would be deeply at odds with this rationale if a claimant were able to wait 5 further years after the expiry of this shorter limitation period, and still recover damages for injury to their reputation through a data protection or misuse of private information claim. Pacini itself seems to be squarely on point in this regard where, on the evidence in the strike out application, the claimants provided no reason why they had waited several years to bring a claim despite repeated threats to issue defamation proceedings around the time of publication ([53], [86]). Were reputational harm damages eventually to be awarded in this situation or a comparable one, it would strongly undermine the careful and limited way the law of defamation has evolved over time to protect reputational interests.
Dr Jeevan Hariharan is a Lecturer (Assistant Professor) in Private Law at Queen Mary University of London.
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