Internet Libel: Gentoo v Pallion

April 9, 2008

Last week (3 April 2008), Peter Walls, the Chief Executive of the housing company Gentoo Group, accepted an out-of-court settlement of £100,000 damages for libel and harassment from a rival housing company and its owner. The settlement represents the highest payout to an Internet libel claimant to date and sends out a clear message to Internet users that online libels can be equally as damaging as serious allegations in newspapers.
The settlement marks the end of a two-year battle between Gentoo and the corporate defendant, Pallion Housing. Earlier this year, Pallion and its owner agreed to pay £19,000 damages to the company and several of its employees who had also been defamed and abused on the Internet. They have also been ordered to pay the substantial costs of the proceedings.
So why are the damages to be paid to Peter Walls so high? The answer lies in a number of factors.
The claims by Gentoo and its employees arose out of the activities of an anonymous group of individuals calling themselves ‘Dads Place’. This group were responsible for the publication of a seriously defamatory, abusive and scurrilous anonymous website, with an associated chat forum, newsletter and leaflets. The false allegations included fabricated stories of corruption and nepotism and were made as part of a campaign that lasted over a period of two years from April 2004 to about mid-July 2006. Mr Walls had to endure the campaign of harassment on a daily basis, not knowing what the Web site was going to say about him next.
In addition to the seriousness of the allegations, the Dads Place team took extensive steps to publicise the Web site and their other publications. E-mails and leaflets were targeted towards specific people and organisations that would have an interest in Gentoo’s activities. As a result, the Web site became a talking point in Sunderland and in the housing industry and Gentoo and Peter Walls in particular suffered substantial damage to their reputations.
The major problem for the claimants was that the campaign was conducted almost entirely anonymously. It took months of painstaking investigation involving a combination of high-tech computer forensic work and old-fashioned evidence gathering to reveal the identity of the people behind Dads Place and expose their ill-conceived motives.
Unfortunately, there are many companies and individuals who are being anonymously abused, defamed and threatened on the Internet, often by users of Web sites and discussion forums that claim respectability but disregard the laws of libel, privacy and harassment in the knowledge that only a very determined litigant would track them down. Many of the worst offenders are of limited means and, at least in terms of ability to pay costs and damages, not worth suing.
This raises the question of whether reform is required to give the Internet the same badge of respectability that is enjoyed by other forms of media, including the press (regulated by the PCC) and television companies (regulated by Ofcom). However, the Internet is of course an entirely different medium and the answer is far from straightforward, particularly given the global reach of the Internet and the many different foreign laws that can apply. Would extending the remit of Ofcom or the PCC, or developing a voluntary code of conduct, make any difference? In the June/July issue of Computers & Law, I will attempt to suggest some of the options for reform to address a problem that is set to continue for many years to come.

Ashley Hurst is an Associate in the Media Litigation department at Olswang, who acted for Gentoo and Peter Walls in the above case.