Hugmonster - v.old Smith & Hogan, I would have thought that the law may have moved on, especially with the new statute (that I haven't read yet, but will when I visit the Bodleian on Monday).
The chat room is an interesting matter since for most people there is no way of recovering the material displayed once off screen, other than going to the owner of the server. Since servers seem to be all over the place this could make it difficult for a plaintiff to sue unless he/she had witnesses who would substantiate what was said. The problem is all these anonymous handles that make tracing people difficult and very expensive (but not impossible).
The important thing to remember is that if you aren't rich you won't be able to sue since there is no legal aid (poor people's reputations are clearly not worth defending). Also, a poor person may libel others, but is unlikely to be sued since he has no assets to sue for. The solution for the aggrieved party is an injunction which, if breached, would be a criminal matter or contempt.
For those who might wonder about the Human Rights legislation and freedom of speech and it's possible effect:
Article 10
1. 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. This Article shall not prevent States from requiring the licensing of broadcasting, television or cinema enterprises.
2. The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or the rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary.
Hope this is of interest.