Commercial disputes

The Risks of Social Media and the Value of an Apology
19 September, 2018

I'm sorry Sign

It was reported by The Guardian newspaper this weekend that controversial commentator Katie Hopkins has had to take steps to avoid bankruptcy following her costly libel case in 2017.

 

 

Ms. Hopkins was found to have defamed food writer Jack Monroe by falsely implying that Monroe supported the defacement of war memorials by protestors. It was reported that Monroe offered to settle the dispute before proceedings were issued if Ms. Hopkins issued an apology and made a small donation to charity.

 

The offer of settlement was rejected and a costly court case ensued, the outcome of which was an order that Ms. Hopkins pay £24,000 in damages and substantial legal costs.

 

The Hopkins case highlights not only the risks of misusing social media but also the high cost of failing to apologise early on when a mistake has been made.

 

An Apology

Most libel cases are settled before a claim is issued but if settlement is not possible and a claim is issued, as a defendant it’s still possible to make an ‘Offer of Amends’ before you file a defence. If accepted, the effect of the Offer is to bring an end to defamation proceedings. If not accepted, the Offer will provide a complete defence to a libel claim.

 

An Offer of Amends is made on the basis that you’ve made an innocent mistake in a statement you’ve made and you don’t wish to defend the claim.

 

It must be an offer to:

  • Make and publish a suitable correction and sufficient apology;
  • Pay compensation; and
  • Pay legal costs to the aggrieved party.

 

Conclusion

The 2017 Katie Hopkins libel case is a salient reminder of the potential damage that can be done in only 2 tweets of 140 characters.

 

Social media is a minefield of potential liability; the relative ease with which comments are made gives a false impression of content lacking seriousness, however even ‘throwaway’ comments can inflict considerable harm and incur liability for the author.

 

2 lessons from the Hopkins case:

  • Think twice before tweeting on an issue that has the potential to cause considerable harm, because the price of getting it wrong is a high one; and
  • There is a clear advantage in being able to say, “I’m sorry” early on. It may be costly to reach settlement but not as costly as defending a libel claim to trial.

 

Further reading

If you wish to know more, or to speak to us about how we could help you, you will find further guidance and our contact details on our page: Protecting your Reputation which now includes a Guidance Note on responding to a Defamation Claim.


Capturing and Preserving Evidence in Defamation Claims
10 September, 2018

One of the most common mistakes made in any dispute is to fail to Bird with fake newscapture and preserve evidence at an early stage.

 

Unless you’ve been involved in litigation before, capturing evidence at the outset might not be something that immediately comes to mind as being a critical first step.  However if the opportunity to capture important evidence is missed, a claim may be fatally harmed.

 

Capture Early

Seeking legal advice at an early stage is always recommended as it can help shape a robust dispute resolution strategy, but don’t let this delay you from gathering evidence. At any moment critical evidence may be removed, edited or deleted, particularly if the other side is aware of a dispute.

 

An example: Defamation on Twitter

If you have been defamed on Twitter, the initial priority may be a takedown of the offending comment(s). However, if you fail to capture and keep a copy of the comment before a takedown, it may be difficult or impossible to pursue a claim for damages. If a contract or job is lost as a result of the comment, for example, a claim for damages may be particularly important.

 

Therefore, before any contact is made with the author of the comments, or any takedown request is made to the platform, it is recommended that the offending comments are captured and preserved as dated screenshots.

 

Practical Tips: Capturing and Preserving Evidence

Screenshots are good evidence of content appearing on websites and social media.

 

When taking a screen shot try to include the date and time information as it appears on the main page of your computer’s operating system (Google should help you find the answer how to do this depending on your particular device if you’re unsure).

 

You may also wish to email the screenshots to your lawyer/accountant to ‘date stamp’ and preserve the evidence.

 

To capture video content, you may need to seek IT support if it is not obviously capable of being downloaded / stored.

 

A quick and easy low tech method of capturing the material can be to take a photograph of the screen or even of a video playing.

 

Evidence can make or break a claim (whether or not it goes to court). It also plays a key role in both the assessment of damages and the ability to secure other remedies from the Court, such as final injunctions, which may be critical to stopping further harm.  

 

If you take the time to capture and preserve evidence then you will make your lawyer’s job a lot easier.

 

For further information or advice on this topic then please visit our Protecting your Reputation webpage.


The Perils of Partnership Law
30 August, 2018

 

It is surprisingly easy to enter into a business partnership and you can do so with very little formality.  It can be as easy as saying the wrong thing in a business meeting, sending an email without thinking or can even be implied by a course of dealings.  If a partnership exists then others may have significant rights over how your business should be run and an entitlement to a share of any profit / assets.

 

The law that governs business partnerships was created over 100 years ago, in a less document heavy age.  Despite many calls to reform this legislation, it is still possible to enter into a business partnership without any formal documentation.  A partnership may be formed by people simply carrying on business together with a view to making a profit. 

 

Unless the partners have agreed otherwise all the profits of the partnership will be split equally between them and each partner will owe the other partners a duty to account for any profits they receive from the business.  

 

In the absence of an agreement, the law does not require the partners to share the work equally, or devote a set amount of time to the partnership.  So it can be the case that a ‘sleeping partner’ can claim years worth of partnership profits, without lifting a finger.  This can cause problems when the business has been built up over a number of years or if it includes valuable property, as any one of the partners can dissolve the partnership by giving notice.  This can cause significant problems for the other partner(s) if they cannot reach an agreement in relation to the value of the partnership assets, or if they can’t raise the cash to purchase the exiting partner’s interest.

 

With this in mind it is advisable for any persons who are trading together to enter into a contract to formalise this relationship.  If they intend to enter into a partnership then best practice is  to enter into a formal partnership agreement, but if not (and so as to minimise the risk of a claim), an agreement should be prepared confirming the nature of the  relationship and making it clear that no partnership is formed as a result of the business dealings.

 

A partnership is the simplest form of business relationship and can be entered into without any formality, but this can cause problems if the relationship is not documented properly or if the partners do not understand the consequences of the business relationship they are entering into.  Even if they are not trading as a partnership, it is important that business people understand partnership law so that they minimise the risk of a claim being made by an unscrupulous ‘partner’.

 

Please click the link if you would like some further information on partnership law or visit our website to see how we can help you in this area.


The potential for predictive coding to save time & costs!
26 July, 2018

Predictive coding can be used in litigation to help with the document review process in order to reduce time and costs.

 

Predictive coding is a machine-learning algorithm which learns why documents are being categorised in a certain way. It learns this from a sample of documents which have been reviewed by a lawyer. The information that the system learns from the sample documents can then be applied to all documents that need to be reviewed. Any relevant and irrelevant documentation can automatically be sorted without having been reviewed by human eyes.

 

In a recent case, law firm Bryan Cave Leighton Paisner LLP (BLP), used predictive coding to achieve a successful result in the High Court for their client, BCA Trading (BCA). The case involved an unfair prejudice claim and an extensive document review was required to prepare for trial.

 

Earlier in proceedings, BLP obtained a court order that allowed them to use predictive coding despite opposition from the other side. This culminated in a 12 day High Court trial where BLP achieved success for their client.

 

BLP have identified benefits to the use of predictive coding both in terms of cost and accuracy. They say that as a result of using this process they were ‘able to significantly reduce’ their clients costs.

 

BLP have also highlighted how this case has shown that ‘predictive coding can be deployed effectively during litigation’.

 

Predictive coding is widely used in the US, however, to date it has made slow progress in the UK, mainly because of concerns around missing critical documents in the review process. But surely machines are more accurate than human eyes which sift through documents for hours at a time?

 

This case is a significant development in the use of technology in the English legal system and promises benefits both in terms of accuracy and cost. It is therefore likely that the use of predictive coding will become much more prevalent in litigation in the future. However, using predictive coding in this manner is in its infancy and treated with caution by some.

 

Case: David Brown v BCA Trading Limited


How do the courts deal with the victims of invoice fraud?
17 July, 2018

We are continuing to regularly hear about incidents of invoice fraud as discussed in my previous article here.  The usual scenario is where a customer intends to make payment to a supplier but is instead

directed to make payment to a fraudulent third party, usually because the fraudster has intercepted the supplier’s emails or hacked either email account.  Although this type of fraud is common, there have been very few reported cases on it, which is why the recent case of J Brazil Road Contractors v Belectric Solar Ltd [2018] (Case No: C1EQ331C2 County Court at Canterbury 22 January 2018 WL 01993147) is of interest.

In this case it was found that the customer of a contractor had no defence to the contractor’s claim for payment of its bill where the contractor’s BT email account had been hacked and unbeknown to the contractor, the customer had received an email from the contractor’s email account directing them to make payment to the fraudster’s account which they duly did. The court found that both the customer and the contractor were innocent victims of the scam but the customer was still liable to pay the contractor.

In terms of court proceedings, the contractor issued a claim for payment and the customer filed a short defence to argue that payment had already been made.  The contractor applied for summary judgment which was granted on paper and the customer applied to set it aside – that application was unsuccessful.  The customer appealed and the appeal was dismissed.

 The arguments raised

 During the proceedings the customer put forward the following main unsuccessful arguments:-

  • The customer could rely on the fraudulent instructions because they purported to come from the contractor’s email address.
  • The use of the contractor’s email even by a hacker amounted to ostensible authority for which the contractor is responsible.
  • The case was one of public importance and therefore the case should go forward to trial.

It was found that:

  • Both the contractor and customer had been victims. 
  • The hacker was not an agent of either party.
  • The customer had not made payment.
  • There were insufficient grounds to argue that the case was one of public importance and the customer had no real prospect of defending the claim.

Interestingly the appeal judge commented on other possible arguments which had not been raised in the case but which might be of use in similar matters:

  • If would have assisted the customer if they could have shown that the contractor was already aware prior to payment by the customer that the email account had been hacked and was being used to divert invoice payments.
  • It is well known that emails are not secure and unless the contractor represented to the customer that its BT email account was secure, a defence based on estoppel (an argument that the contractor’s own actions for example by not sufficiently securing its email account, prevent it from seeking a remedy at court) would not succeed. 
  • To avoid summary judgment a customer could argue that disclosure of fraudulent activity on the account is required and this could be a compelling reason as to why the matter should proceed to trial.

 Take away points

 Customers and suppliers both need to be alive to the risk of invoice fraud and email hacking as both will potentially be victims.

  • It would be wise for suppliers to encourage their customers to contact them before making any payments and to make them aware of potential invoice fraud.
  • Customers should always telephone ahead to a verified person at their supplier before making any payment to check the account details with them.
  • If a supplier becomes aware that their emails have been hacked they should take immediate action to secure the email account and keep a written record of the steps taken.

See here for more tips on how to protect your business from this type of fraud and what action to take where funds have been paid out as a result of fraud.

 

 


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