Whistleblowers and the Law of Defamation: Time for Statutory Privilege?

David Lewis

Professor of Employment Law
Middlesex University

d.b.lewis@mdx.ac.uk

Copyright © David Lewis 2005
First Published in the Web Journal of Current Legal Issues

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Abstract

This article is based on the premise that whistleblowers can play a valuable role in modern society. The UK Public Interest Disclosure Act 1998 (PIDA 1998), which only applies to workers and requires that disclosures are made in "good faith", makes no mention of the law of defamation. This article considers the impact of the law relating to libel and slander on actual and potential whistleblowers. It is observed that those who are not covered by PIDA 1998 are particularly exposed - if they cannot prove the truth of their allegations their motives may be examined in an action for defamation. The author concludes that it would be consistent with the principle of freedom of expression if statutory privileges were introduced and if Parliament removed the requirement of "good faith" for a disclosure to be protected under PIDA 1998.

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Contents

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Introduction

There is no universally accepted concept of whistleblowing. A broad definition would encompass all disclosures of malpractice, as well as illegal acts or omissions. The charity Public Concern at Work offers help and free legal advice to people who have "a concern that something seems to be seriously wrong, illegal or dangerous which threatens the public interest".

Those who report a concern about wrongdoing promptly may give the recipient the opportunity to correct it before the matter escalates. Thus, in a workplace context, whistleblowing can be viewed as part of a strategy to maintain and improve quality. Indeed, from this perspective, it may well be appropriate for employers to offer rewards to those who disclose malpractice. As well as helping to expose financial scandals, like those which occurred at BCCI, Barlow Clowes, Doncaster Council and with the Maxwell pensions, in some situations whistleblowing may be vital to preserve the health and safety of the general public. For example, the investigation into the Herald of Free Enterprise disaster in 1987 found that employees had aired their concerns on five previous occasions about the ship sailing with its bow doors open. A member of staff had even suggested fitting lights to the bridge to indicate whether the doors were closed. The inquiry concluded: "If this sensible suggestion...had received the serious consideration it deserved this disaster might well have been prevented."

The stated aim of PIDA 1998, which inserted a new Part IVA into the Employment Rights Act 1996 (ERA 1996), is "to protect individuals who make certain disclosures of information in the public interest". It sets out the type of disclosure(2) that can give rise to protection (a 'qualifying disclosure'); the circumstances in which a 'qualifying disclosure' will be protected (a 'protected disclosure'); and the workers(3) to whom the protection applies. Two points should be noted about this legislation. First, it does not give rights to those who do not have an employment relationship, for example, members of the public.(4) Second, the statute makes no reference to the law of defamation.(5)

Defamation law seeks to balance the individual's interest in preserving reputation and the public interest in freedom of speech. In the important case of Reynolds v Times Newspapers Ltd, Lord Bingham C.J. (on behalf of the Court of Appeal) acknowledged that "the common convenience and welfare of a modern plural democracy such as ours are best served by an ample flow of information to the public concerning, and by vigorous public discussion of, matters of public interest to the community. By that we mean matters relating to the public life of the community and those who take part in it.".(6) He used the expression "public life" widely so as to include matters such as the governance of public bodies, institutions and companies as well as the conduct of government and public administration. Both this court and the House of Lords appreciated the "chilling effect" of the threat of libel actions on freedom of expression. (7)

One practical problem is that sometimes the facts that would justify a defamatory publication are known to be true but admissible evidence capable of proving them is unavailable.(8) This might well inhibit those who are deliberating about whether to report a concern. More disturbing is the position of those who are required by contract or legislation (9) to disclose information. The common law implies that "senior" employees and those with fiduciary duties should report wrongdoing (10) but there is nothing to prevent express terms being inserted to compel all employees to make disclosures.(11) The purpose of such provisions would seem to be that suspicions should be conveyed and disclosers are not expected to be able to prove the truth of their allegations. However, if a defamatory statement is published and its truth cannot be established, its maker may have to rely on the vagaries of fair comment and privilege (see below).

According to the Faulks Committee, "the law of defamation has two basic purposes: to enable the individual to protect his reputation, and to preserve the right of free speech."(12) It is suggested that, while PIDA 1998 attempts to balance the public interest with that of employers, it simply ignores the conflict inherent in the law of defamation and how it might impact on actual or potential whistleblowers. Equally, the law of defamation does not currently recognise that since 1998 Parliament has indicated that certain types of disclosure are deemed to be in the public interest.(13) This article proposes that the "chilling effect" of uncertainty should be dealt with by legislative change.

Are Whistleblowers Likely To Defame?

Where defamation is alleged, the first step is to consider the ordinary and natural meaning of the words used and what an ordinary person will infer.(14) Thus there can be no doubt about the situation where a whistleblower reports that a person "is a thief". Equally, statements of opinion may be defamatory. For example, if a concern is raised that a person "should be investigated because of doubts about their honesty". More contentious is the situation where allegations are made about the probity of a department containing more than one individual. Here it will have to be determined whether the words in fact refer to the claimant.(15)  Where a disclosure is made it is highly likely that there will be sufficient publication for the purposes of libel or slander.(16) Indeed, if allegations are channelled through a procedure (17), republication is foreseeable.

In Friend v Civil Aviation Authority, a number of senior employees had written memoranda which were highly critical of the claimant.(18) Amongst other matters, it was alleged that he was incapable of doing his job and had made improper or fraudulent expenses claims. These statements formed the basis of formal disciplinary proceedings against him. Having failed to obtain compensation for unfair dismissal, Captain Friend issued writs for defamation against both his employer and the authors of the memoranda. Because the limitation period in respect of the original publication of the memoranda had expired, Friend sought to rely on their republication to the members of the internal disciplinary and appeals panels. The Court of Appeal held that employees who accept a disciplinary code as part of their contract of employment consent to the republication of an accusation as part of that process even if the accusations were false or malicious.(19) However, it was only the republication which was covered by the employee's consent. Thus workers could sue for defamation based on the evidence given at internal disciplinary hearings.

If individuals are to be exposed in this way, two important questions need to be addressed. First, should employers be vicariously liable for defamatory statements made in the course of employment? In Riddick v Thames Board Mills, the Court of Appeal considered (obiter) whether a company would be liable when two employees who were motivated by malice slandered the claimant in a report to a personnel officer. Lord Denning M.R. suggested that "a master should not be liable for a confidential report made by one of his servants about another, even though that servant was malicious in making it". However, Stephenson L.J. disagreed and Waller L.J expressed no opinion on this point.(20) Thus a person who is defamed may need to identify precisely who was responsible for a defamatory report and then decide whether or not it is worth suing. Second, if workers are required or encouraged to make disclosures through a designated procedure,(21) in what circumstances should they be indemnified by their employer against possible claims for defamation? (22) The Civil Liability (Contribution) Act 1978 enables an employee who is liable along with the employer to seek a contribution or indemnity. However, this issue might be dealt with more sensibly by individual or collective bargaining. The fact that a report is made in confidence does not necessarily mean that the author will not be identified. Thus it is suggested that trade unions should negotiate procedures which indemnify disclosers who demonstrate that they had reasonable grounds to believe that the information supplied was true.(23)

Despite the recommendations of the Faulks Committee, the law of defamation still distinguishes between libel and slander.(24) In a libel action the claimant does not have to prove any loss, merely that the words used tended to lower his or her reputation. By way of contrast, a person who alleges slander must normally prove special damage, for example, loss of employment.(25) Thus whistleblowers, who are often encouraged to put their concerns in writing, might be sued even though no actual harm was suffered. However, those who only make an oral disclosure, for example via a telephone 'hotline', may have more protection. In addition to the fact that the contents of the conversation will have to be proved, special damage may not always be established.(26) However, section 2 of the Defamation Act 1952 provides that slander is actionable per se where the words were "calculated to disparage the claimant in any office, profession, calling, trade or business".(27) Serious allegations about personal dishonesty or incompetence could obviously be damaging but whistleblowers might argue that they were intending solely to report a concern and not to damage the subject of it. Unfortunately a laudable motive is unlikely to prevent a defamatory statement from being actionable.(28)

Of greater consolation is the fact that it is now recognised that the freedom to express criticism of democratic institutions means that it is against the public interest for local authorities, government-owned corporations and political parties to have the right to bring actions for defamation.(29) However, individuals working within such organisations whose reputation is impaired can still commence proceedings.(30) The implication for whistleblowers could not be clearer. So far as possible, allegations in these sectors should be expressed as suspicions about the conduct of the institution rather than identifiable persons. It goes without saying that this may not be particularly helpful to the recipient of any concern who feels an investigation is appropriate.

What Defences Might Be Available To Whistleblowers?

If a defendant can prove the substantial truth of the words complained about the defence of justification is established.(31) This is so even if the defendant did not believe the words to be true. Since there is an obvious public interest in knowing the truth, there is normally no examination of why the truth was revealed.(32) Similarly in relation to alleged breaches of confidence, the common law allows a public interest defence even though a disclosure may have been spiteful. Thus in Re a Company's Application, the High Court refused to grant an injunction preventing an employee in the financial services sector from disclosing confidential information about his company to a regulatory body, notwithstanding that the disclosure might be motivated by malice.(33) By way of contrast, the PIDA 1998, affords protection if the worker "reasonably believes" that the information "tends to show" one or more of the types of wrongdoing specified in section 43B ERA 1996 (34) and the disclosure is in "good faith".(35)  Thus the PIDA 1998 puts more emphasis on the worker's motive than the veracity of the information. The rationale for tolerating some factual inaccuracy is that whistleblowers are being encouraged to air their suspicions. They are merely the messengers and it is task of the recipient of the information to assess whether the concern is well founded. By way of contrast, defamation law focuses primarily on the message and only if substantial truth is not established does the motive of the messenger become an issue.

Another defence in the law of defamation is that everyone is allowed to comment so long as the subject is a matter of public interest and the views were honestly held.(36) The public interest has never been satisfactorily defined for these purposes but it is clear that it is to be broadly construed. Thus in London Artists Ltd v Littler, Lord Denning said: "Whenever a matter is such as to affect people at large, so that they may be legitimately interested in, or concerned at, what is going on; or what may happen to them or others; then it is a matter of public interest on which everyone is entitled to make fair comment".(37) This would clearly cover the management of public institutions.(38) Nevertheless if the claimant proves that the defendant was actuated by malice this defence will fail. Thus the distinction between fact and comment is fundamental to defamation law but it can be difficult to draw in practice.(39) As indicated above, section 43B(1) ERA 1996 lists the types of disclosure that will qualify for protection. However, it also requires "reasonable belief" and "good faith" and it would appear that the onus is on the worker (as claimant) to establish both elements.

The common law recognises that there are occasions when the recipient has a special interest in learning the honest opinion of another even if the views expressed are potentially defamatory and cannot be proved to be true. Where the public interest outweighs the need to protect reputation the situation is treated as privileged. In certain circumstances the need for unrestrained expression is so great that absolute privilege is available. Thus the Bill of Rights 1688 and the Parliamentary Papers Act 1840 protect statements in Parliament together with reports published by either House. Absolute privilege also applies to solicitor-client communications(40) and the statements made by judges, advocates, juries and witnesses in the course of judicial and quasi- judicial proceedings.(41) In Mahon v Rahn (No.2), the Court of Appeal acknowledged that the flow of information to financial regulators might be seriously impeded if informants feared that they might be harassed by libel proceedings. It was held, therefore, that a document created during the course of an investigation by a financial regulator attracted absolute privilege.(42) Executive privilege is available where an official makes a statement to another in the course of duty. However, it is not clear how senior such officials must be.(43)

More frequently available is the defence of qualified privilege but this will be defeated if the claimant shows that the defendant acted maliciously. In Adams v Ward Lord Atkinson stated that an occasion is privileged: "where the person who makes the communication has an interest or a duty, legal, social or moral, to make it to the person to whom it is made, and the person to whom it is made has a corresponding interest in receiving it".(44) More recently, Lord Nicholls indicated in Reynolds v Times Newspapers that the interest-duty approach "should not be allowed to obscure the rationale of the underlying public interest on which privilege is founded. The essence of this defence lies in the law's recognition of the need, in the public interest, for a particular recipient to receive frank and uninhibited communication of particular information from a particular source".(45) Thus there are many situations where this form of privilege applies, for example where information about suspected crimes or misconduct by public officers is supplied to the appropriate authorities(46) or employment references are written.(47) The courts have frequently emphasised that these categories are not closed and much will depend on the current social conditions.(48)

As regards malice, if it can be shown that the desire to injure was the dominant motive for using the words qualified privilege is removed.  Similarly, if the defendant did not believe the words to be true or used them recklessly ie without caring whether or not they were true. However, as Lord Diplock emphasised in Horrocks v Lowe, indifference to truth should not be equated with carelessness, impulsiveness or irrationality: "despite the imperfection of the mental process by which the belief is arrived at it may still be 'honest', that is, a positive belief that the conclusions they have reached are true. The law demands no more".(49) It is interesting to compare this approach with the approach taken in the PIDA 1998 case of Street v Derbyshire Unemployed Workers Centre.(50) Here the Court of Appeal stated that employment tribunals should look for the "dominant" or "predominant" purpose of a disclosure and that honesty alone was not necessarily sufficient to establish "good faith".

In concluding his speech in the Reynolds case, Lord Nicholls provided a non-exhaustive list of matters that might be taken into account when deciding whether the defence of qualified privilege was available to the media.(51) At least in theory, the common law of defamation gives no special rights to the media.(52) Thus it is worth examining to what extent these guidelines would ensure that qualified privilege will be available to whistleblowers. The first two criteria are the seriousness of the allegation and the nature of the information and the extent to which it was of public concern. In relation to workers, the list of qualifying disclosures in Section 43B ERA 1996 all involve potentially serious matters. However, a failure "to comply with any legal obligation" does not necessarily refer to serious breaches of the law.(53) Further, in relation to public disclosures, Section 43G(3)(b) ERA 1996 expressly states that regard shall be had to "the seriousness of the relevant failure" and Section 43H ERA 1996 is solely concerned with "exceptionally serious failures".

Lord Nicholls' third and fourth criteria are the source of the information and the steps taken to verify it. We have already mentioned that PIDA 1998 only offers protection to workers and even this is removed by sections 43G and 43H ERA 1996 if a public disclosure is made "for purposes of personal gain". Similarly, in defining qualifying disclosures, a worker must have a "reasonable belief" that "the disclosure tends to show" one of the matters specified in Section 43B(1) ERA 1996. However, it should be noted that section 43F ERA 1996 (disclosures to prescribed persons) and sections 43G and H ERA 1996 (public disclosures) all require the worker to reasonably believe "that the information disclosed, and any allegation contained in it, are substantially true".

In relation to the fifth matter, "the status of the information", section 43F ERA 1996 (disclosure to prescribed persons) requires the worker to reasonably believe that "the relevant failure falls within any description of matters in respect of which that person is so prescribed". One of the conditions mentioned in section 43G(2) ERA 1996 (a public disclosure) is that "the worker has previously made a disclosure of substantially the same information to his/her employer" or to a prescribed person. In addition, section 43G(3) ERA 1996 states that in assessing the reasonableness of a disclosure

"regard shall be had, in particular to,-.(d) whether the disclosure is made in breach of a duty of confidentiality owed by the employer to any other person, (e) any action which the employer or prescribed person has taken or might reasonably be expected to have taken as a result of the previous disclosure.and (f).whether in making the disclosure to the employer the worker complied with any procedure whose use by him was authorised by the employer".

The sixth guideline is the urgency of the matter. The relevant statutory provisions here are Section 43G(3) ERA 1996, which states that in assessing the reasonableness of a disclosure regard shall be had in particular to: "(c ) whether the failure is continuing or likely to occur in the future", and Section 43H ERA 1996 which is concerned solely with exceptionally serious failures. Lord Nicholls' seventh, eighth and ninth points relate solely to newspaper etc articles but the final matter referred to was "the circumstances of the publication, including timing". In this respect it should be remembered that neither sections 43G and H ERA 1996 protect disclosures made "for the purposes of personal gain" and that, apart from disclosure "in the course of obtaining legal advice",(54) the PIDA 1998 requires disclosures to be made in "good faith".

Thus it can be argued with some confidence that workers who make protected disclosures under the PIDA 1998 will be entitled to rely on qualified privilege if sued for defamation. More troubling is whether those who are considering making such a disclosure are aware that this defence is available and the position of whistleblowers who are not workers or who do not satisfy the requirements of the PIDA 1998. The former situation might be dealt with by providing that statutory privilege is available (see below). However, where the PIDA 1998 is inapplicable, it would seem that those who tell the truth cannot be sued for defamation but have no specific statutory protection against victimisation.(55) It might be argued that Article 10 of the European Convention on Human Rights (see below) requires that Parliament should do more to safeguard both workers and non-workers who exercise the right to freedom of expression.

The Potential Impact of the Human Rights Act 1998 (HRA 1998) and the Freedom of Information Act 2000 (FOIA 2000)

Section 3(1) HRA 1998 requires courts and tribunals to give effect to primary and subordinate legislation in a way which it is compatible with the European Convention on Human Rights (ECHR) "so far as it is possible to do so". In addition, section 6(1) HRA 1998 makes it "unlawful for a public authority to act in a way which is incompatible with a Convention right". Article 10(2) states that: "Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers". However, Article 10(2) refers to the necessity for restrictions on this freedom in order to, inter alia, protect "the reputation or rights of others". These provisions suggest that public authorities should be particularly tolerant of whistleblowing. More generally, section 12 HRA 1998 might be used to resist ex parte hearings in defamation cases. This applies where "a court is considering whether to grant any relief which, if granted, might affect the exercise of the Convention right to freedom of expression".(56) According to section 12(3), "No such relief is to be granted so as to restrain publication before trial unless the court is satisfied that the applicant is likely to establish that publication should not be allowed".

Section 2(2)(b) FOIA 2000 also requires the public interest to be weighed in relation to the disclosure of information. More specifically, section 79 FOIA 2000 provides that

 "where any information communicated by a public authority to a person (the applicant) under section 1 was supplied to the public authority by a third person, the publication to the applicant of any defamatory matter contained in the information shall be privileged unless the publication is shown to have been made with malice".

This affords no protection to those who provide information to public authorities and such people will have to hope that the data protection principles and the law of confidence inhibit the republication of defamatory statements.(57)

Conclusion

The author endorses the view that "sunlight is the most powerful of all disinfectants".(58) Unfortunately both the law of defamation and the PIDA 1998 can dilute the solution or even neutralise it. In relation to the former, unless factual truth is established or absolute privilege applies, the question of motive can be brought into play. Thus, while a malicious and inaccurate disclosure in Parliament, judicial or quasi-judicial proceedings cannot give rise to an action for defamation, in other circumstances those who cannot prove the truth are vulnerable to allegations of malice. (59)

We have observed that the "good faith" of a worker is an issue in almost all types of disclosure covered by the PIDA 1998. While it is correct that some attacks on reputation are "of interest" to the public rather than "in the public interest", all protected disclosures under the PIDA 1998 are deemed to be in the public interest.(60) However, for the purposes of this statute, truth is not enough. This situation must be regarded as unsatisfactory because it can inhibit the raising of a concern for fear that the discloser's motives will be questioned. For example, an employer could argue that the worker would not have alleged breaches of health and safety laws but for the fact that he or she had been denied promotion (or pay rise etc). Similarly, in Street's case (supra), where it was alleged that her manager had failed to comply with his legal obligations, the claimant's disclosure was not treated as "protected" simply because she was found to have been motivated by personal antagonism towards him.(61) However, is it not to be expected that a failure to remedy a perceived injustice might engender considerable resentment or antagonism? In the non-employment context, it might be asked whether the public interest lies in encouraging citizens to report their suspicions of child abuse or discouraging the raising of such a concern unless the truth of the allegation or the absence of bad motive can be demonstrated? (62)

In evaluating the risks they are taking whistleblowers need to be aware of the potential legal actions to which they may be exposed. (63) For this reason, action is needed to deal with the "chilling effect" of the uncertainty generated by the current law of defamation. It seems fairly clear that the common law would allow citizens who report wrongdoing to rely on qualified privilege if truth cannot be established. However, it is one thing to have a defence available and another for potential whistleblowers to be aware of it and to have the resources to invoke it if necessary in a court of law. At present there is a presumption that civil legal aid should not be granted in relation to defamation claims, although provision is made for discretionary "exceptional funding".(64) However, in Steel & Morris v UK, the European Court of Human Rights held that the lack of legal aid for the applicants in the action brought against them by McDonalds violated both Article 6 of the ECHR (the right to a fair trial) and Article 10 (see above).(65) According to this judgment, if a State enables corporate bodies to protect their reputation "it is essential, in order to safeguard the countervailing interests in free expression and open debate, that a measure of procedural fairness and equality of arms is provided for".

In the author's view, the availability of legal aid in defamation cases is likely to have have only a marginal impact on those considering whether to make a disclosure. There is a much stronger case for using legislation to provide absolute or qualified privilege for whistleblowers.(66) Anecdotal evidence suggests that both actual and potential whistleblowers have been bullied into silence by threats of libel proceedings.(67) Thus it is desirable to have statutory intervention in order to confirm and highlight the existence of the defence even when such privilege may exist at common law. Amendments to the ERA 1996 would be the appropriate method in relation to workers and those not covered by this statute could be given rights via new legislation. Statutory qualified privilege might be regarded as the norm. However, since "good faith" is an essential ingredient of a protected disclosure, absolute privilege might be available where the requirements of PIDA 1998 are met.(68)  Alternatively, in order to avoid protecting internal disclosures of a relatively trivial nature, for example a technical breach of contract, the ERA 1996 might be amended to provide absolute privilege only for external disclosures made in accordance with sections 43F, 43G or 43H ERA 1996 (disclosures to prescribed persons and public disclosures).

If statutory privileges are not introduced, it is suggested that the "good faith" requirements in Part IVA of ERA 1996 should be removed. Such an approach was recently endorsed by Dame Janet Smith:

 "If the words 'in good faith' were removed from the PIDA, the test under the PIDA would be brought more closely into line with the test for malice in defamation proceedings. It would seem to me to be desirable that the tests should be as close as possible so that a person thinking of making a report can be safely advised about his/her position in respect of both types of proceedings."(69)

This might seem fairly radical but workers would be still be constrained by a number of factors. First, Part IVA ERA 1996 provides that a disclosure must be based on "reasonable belief" in order to qualify for protection. Second, malicious disclosures would be inhibited both by the possibility of disciplinary action being taken by the employer and by defamation claims being brought by those whose reputations had been affected. (70) If these words are not deleted it should be expressly stated that the onus is on employers to prove a worker's lack of "good faith". It is recognised that these proposals would alter the balance of the law but this would be consistent with the climate of opinion in relation to both freedom of expression generally and whistleblowing in particular.