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Frustration at Late Payment of Bills Boils Over into High Court Libel Trial

Late payment of bills is a constant source of irritation in the business community but legal advice should always be taken to ensure that frustration does not boil over into unlawful conduct. In one striking case, annoyance at an outstanding debt led to the circulation of a defamatory email and a full-scale High Court libel trial.

Company A had employed the services of company B, but the latter’s invoices had remained unsettled for many months after their due date. The boss of company B ultimately sent an email to 26 companies that operated in the same field, warning them not to deal with company A on the basis that it could not pay its bills.

After company A launched defamation proceedings, the Court found that the natural and ordinary meaning of the email was that it was insolvent. Although it had been operating on a financial knife-edge, that allegation was materially inaccurate and libellous. The email had caused company A significant financial loss.

However, the Court also found that company A had operated a deliberate policy not to pay its bills on time. It was a case of ‘won’t pay’, rather than ‘can’t pay’. The contents of the email were very largely true and company A had repeatedly lied about the reasons for late settlement. Company B had acted in the honest belief that company A was insolvent and that it was under a duty to warn others. Company A’s compensation was, in the circumstances, assessed at a nominal £10.