Roger Pearson looks at case where false rumours about a competitor on an internet e-mail system cost a company dear.

The advent of e-mail has brought with it the worrying potential for an increase in libel. It has put the means of communicating in “publishable” form at the fingertips of millions throughout the world and created a new form of defamation – “cyberlibel”.

Anyone who doubts the libel potential of e-mail, whether on the Internet or on restricted circulation internal company systems, needs only to look at the recent settlement in the case of Western Provident Association v Norwich Union Healthcare and Norwich Union Life Insurance.

This was the first e-mail libel action to be brought by a corporate plaintiff and it is also believed to be the biggest cyber- libel case so far in the UK. The case was, until recently, a highly contested action in which top libel counsel Charles Gray QC and James Price QC were due to do battle at a High Court trial fixed for November.

In the event, Norwich Union agreed, in an out of court settlement, to pay pay £450,000 in costs and damages to settle Western Provident’s claim for libel and slander arising out of electronic messages on Norwich Union’s internal e-mail system.

The case makes clear to all who use e-mail in whatever form, internal or over the Internet, that if you defame some-one in an e-mail then it can be classified as a published libel and is actionable.

Libel and new technology litigation specialists Martin Kramer and David Engel of Theodore Goddard were instructed by Western Provident. The two are in no doubt that the case is a landmark action.

They say that lawyers have never been in any real doubt about the libel status of e-mail messages. But for those who use e-mail, Kramer and Engel say it has been a different matter.

“Many who use e-mail regard it more akin to a chat in the office corridor than the publication of a statement in a permanent form,” says Engel.

“The Western Provident case should serve as a warning to all who use the medium of the need for restraint in what they say on it. Any e-mail message, a personal note sent from a clerk to a secretary on an internal company e-mail system, has the potential to be defamatory.”

He adds: “It is important that employers, who could ultimately be sued over material put on their own e-mail systems or the Internet by their employees, should be aware of this risk and should alert their employees to the danger that their messages could give rise to legal action.”

Kramer says: “Potentially the system is a legal minefield if people use it as a medium for defamatory material.”

The case centred on rumours about Western Provident, one of Norwich Union’s major competitors in the field of private medical insurance. In 1995 it was rumoured that Western Provident was either insolvent or being investigated by the DTI, or both, and was in financial difficulty.

Staff at Norwich Union disseminated these rumours via their internal e-mail system. The libel action was launched after Western Provident got wind of what was happening and managed to trace the rumours to Norwich Union.

Obtaining proof of what had taken place proved something of a legal first. Although Western Provident knew what had taken place on Norwich Union’s e-mail system, it did not have the messages in its possession.

However, in an early interlocutory move before the writ was served, the matter was taken before Mr Justice Mance who ordered that the offending e-mails be preserved and that Western Provident be provided with copies of them.