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Written by P Keenan

 Written between 1990 and 1994

(Parts published for the first time on this site on 5/5/2007)





13.3    DEFAMATION AND QUALIFIED PRIVILEGE                                       Page 1 of 5                Caution long narrow


In accordance with the aims of this book the examination of this area of law concentrates on questions that arise when creditors communicate with the administrator, other creditors and regulatory authorities. Hence, except where their inclusion is essential for a broad understanding of the subject, parts of the law that are not likely to be relevant have been skimmed over or left out. For the same reason the discussion focuses on the doctrine of qualified privilege, because it, more than any other feature of the law, offers creditors protection from actions for defamation.


Some people who hear of the massive amounts awarded for defamation get nervous about publicly criticising others. Indeed, out of fear and uncertainty people often refrain from revealing information which is of vital interest to others. In insolvency administrations this reticence can be a real and costly hindrance, since administrators often look to creditors for information which might lead them to assets.


Fortunately the law recognises the inherent dangers in this situation:

"There are occasions when persons should be at liberty to express themselves freely even if in doing so a third person is defamed. Social and commercial life would become intolerable if no one were ever protected in making a statement reflecting upon another unless he could prove that statement to be true. There are obviously occasions ... when it is essential that a person should be able to state without fear of legal consequences what he honestly believes to be true".

It was largely to overcome these problems that the doctrine of privilege developed.


13.3.1    Qualified privilege - an introduction


For "the common convenience and welfare of society" the law protects untrue defamatory statements that are made on certain occasions. For example, in the chamber of Parliament a member may say anything about another person without having to establish that it is true. Similarly, in courts of justice witnesses and others involved may say whatever they like. This freedom or immunity is called absolute privilege.


On other, less important, occasions the same protection is available for untrue defamatory statements, but with one important qualification: the statements must serve the legitimate purpose of the occasion. Hence they must not be actuated by spite or ill-will or some other wrong or improper motive. This is known as qualified privilege.


Qualified privilege, the protection it offers to creditors and the variations in law throughout Australia are examined later in this chapter (see xxxx). Before doing that a few features of defamation law and some of the jargon repeatedly encountered need to be explained.


13.3.2    The law


Australia has three major systems of defamation law: common law, the Codes and partial codification (the NSW Defamation Act). Common law applies, with some statutory variations, in Victoria, South Australia, the Australian Capital Territory and the Northern Territory. The Codes apply in Queensland, Western Australia (except in some areas of civil defamation where common law applies) and Tasmania. The New South Wales law significantly modifies some aspects of the common law.


As a consequence of these different systems the law varies in some important respects from State to State. Where relevant these variations are noted throughout this discussion.


13.3.3    "Publication"


In defamation law the word "publication" has a special meaning. In common parlance it has the connotation of printing something in a newspaper, magazine or book. But in defamation law its meaning is much broader. For example, it includes the act of speaking as well as the act of writing a letter or report. In short, "publication" is the making known, or communication, of defamatory material to a person other than the person defamed.

(To be liable the publication itself must have been intended or negligent.)

Every person who repeats or republishes defamatory material is regarded as having published it himself or herself. Consequently, unless a defence is available (see xxxx), he or she is liable to the same extent as if he or she had originally published it.

In this summary the person who publishes (communicates to a third person) defamatory material is referred to as the "publisher". (The subject of the defamatory material - the person defamed - is referred to as the "victim" or the "plaintiff", whilst the third person is referred to as the "recipient".)


At creditors meetings the following persons may be "publishers":

  • a speaker at the meeting;

  • the author of a document prepared for the meeting;

  • the person who includes the comments or the documents in a   minute or report of the meeting; and

  • the administrator and chairperson.

For more on this area of publication see the comments on publication to "outsiders" (xxxx) and publication arising out of meetings (xxxx).


13.3.4    "Defamation"


In common law the best known definition of defamation is:

"A statement concerning a person which exposes him to hatred, ridicule or contempt, or which causes him to be shunned or avoided, or which has a tendency to injure him in  his office, profession or trade."

In the Codes "defamatory matter" is defined as:

"Any imputation concerning any person, or any member of his family, whether living or dead, by which the reputation of  that person is likely to be injured, or by which he is likely to be injured in his profession or trade, or by which other persons are likely to be induced to shun or avoid or ridicule or despise him".

(The reference in the second definition to persons "living or dead" does not mean that it is possible to defame a dead person. Rather it addresses the possibility that a defamatory statement primarily directed against a dead person might defame a living relative by damaging the living relative's reputation, etc.)


Although these definitions refer to statements about "persons", they apply also to statements about associations such as companies, local government bodies, professional associations and trade unions. Hence they too may sue for attacks upon their reputations. For instance, a trading company may complain of any defamation calculated to damage its business interests or goodwill, such as false imputations of insolvency, mismanagement or improper, unfair and dishonest conduct of its affairs. In this chapter, when referring to one who has or may be defamed, the words "person" and "victim" are used as compendious words encompassing individuals and associations.


For a statement to be held as defamatory of a person there is no need for it to refer expressly to the victim, as for example by using his or her name. So long as the statement is such that the ordinary listener or reader would reasonably understand the words as referring to him or her, he or she will have been defamed.

It is worth noting an assumption underlying the definitions of "defamation", namely, that the victim has a reputation to be damaged. If, for example, a person's reputation is that of a thief, a statement that he is one does not defame him.


13.3.5    Criminal defamation


In certain circumstances defamation (in any State or Territory) may lead to a criminal conviction. However criminal prosecutions are rare and are generally thought appropriate only:

  1. where the publisher makes the statement without any belief in its truth and with intent to cause serious harm to a person; or

  2. where the civil law cannot provide adequate compensation, such as where the publisher is bankrupt or has no means at all to meet an award of damages.

Because criminal prosecutions seldom occur, the discussion in this chapter is confined to civil defamation. Nevertheless most of the comment on defences to complaints of civil defamation are also applicable in the criminal sphere.


13.3.6    "Libel" and "Slander"


No outline of defamation would be complete without mentioning these two kinds of defamation. Generally speaking a defamatory statement is libel if in writing or another permanent form, but slander if oral or in a transient form.

However the distinctions between libel and slander are gradually losing their importance. In fact they have been abolished in all States and Territories except Victoria, South Australia, the Northern Territory and in civil actions in Western Australia.

Where the distinctions remain, the important differences are in the areas of damages and crime. In libel actions damage is presumed, but in slander it is only presumed in a number of excepted cases. As for crime, libel may be both a crime and a civil wrong, but slander is not normally a crime.

13.3.7    Defences

It does not necessarily follow that the publisher of a defamatory statement will be sued or that, if sued, he or she will have to pay damages to the victim. For, as already suggested, the law gives the publisher a number of defences. So if the publisher can avail himself or herself of at least one of those defences the victim's complaint will either not reach court or fail if it does.

The most common defences available are:

  • absolute privilege;

  • fair report/privileged report;

  • protected dissemination;

  • comment;

  • truth (or truth and public interest);

  • qualified privilege; and

  • triviality.

For various reasons the first four of these defences have little or no bearing on situations faced by creditors during insolvency administrations:

          "Absolute privilege" is restricted to statements made inside  the houses of parliament or inside a court of law.

          "Fair report" (sometimes called "privileged report" or  "protected report") is restricted to fair and accurate  reports of, for example, official proceedings of  parliaments, councils, courts and public inquiries and, in  some States and Territories, proceedings of public meetings  and general meetings of companies.

          "Protected dissemination" (sometimes called "innocent  dissemination") applies to distributors of newspapers,  magazines and books.

          "Comment" applies to matters of public interest - for  example, national and local government, public services and  institutions, and literary and artistic works - and to  public figures - for example, politicians and artists. The  affairs of a company (especially a private one) and its  officers would not normally fit into these categories. On  the other hand the conduct of an insolvency administrator  might. Therefore, later in this chapter the defence of  "comment" is discussed briefly from this angle (see xxxx).

Generally speaking "triviality" is, as the name suggests, designed to provide a defence to - and hence to discourage - trivial actions for defamation: those where the circumstances of the publication were such that the person defamed was not likely to suffer harm. "It would be particularly applicable to publications of limited extent, as, for example, where a slightly defamatory statement is made in jocular circumstances to a few people in a private home."  In theory it is a defence that may be available to creditors. However it is difficult to imagine an occasion amongst those which are the focus of this chapter where a creditor might seek or need to rely on this defence instead of the defence of qualified privilege.


(In the common law jurisdictions "triviality" is available for some instances of slander, but is not available for libel. In the other 4 jurisdictions statutory provision is made for such a defence.)


Most of the remainder of this chapter examines the most important defences available to creditors: "truth", "truth and public interest/public benefit" and "qualified privilege".


(Back to Table of Contents)                                   (Go to the SECOND page of this chapter on Defamation and Qualified privilege)