CHAPTER 13 - SPECIAL SUBJECTS AND ISSUES

 

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13.3    DEFAMATION AND QUALIFIED PRIVILEGE                                       Page 2 of 5               

 

13.3.8    Defences available to creditors

 

This page of the chapter examines the most important defences available to creditors: "truth", "truth and public interest/public benefit" and "qualified privilege". It does so in the following order:

Truth - in Victoria, South Australia, Western Australia and the Northern Territory.

Truth and public interest/public benefit - in New South Wales, Queensland, Tasmania and the Australian Capital Territory.

Qualified privilege and malice - under common law (Vic., SA, WA, the NT and the ACT).

Qualified privilege and good faith - under the Codes (Qld and Tas.)

Qualified privilege and malice - in NSW.

13.3.9    Truth

In Victoria, South Australia, Western Australia and the Northern Territory truth is an complete answer (defence) to a civil action for defamation. In other words, if the statement complained of is true the person defamed will not recover damages. But it is up to the defendant to prove the truth of the statement. It is not necessary to establish the literal truth of the precise statement made. It is enough to prove that the "substance" or "sting" of the defamatory statement is true. Hence a statement that a man is a habitual liar was proved true by showing that on repeated occasions he made false statements without an honest belief in their truth. Erroneous details which do not aggravate the defamatory allegation may be ignored. Hence a statement that a man had been convicted of travelling in a train without a ticket and fined #9 and three weeks' imprisonment in default, was proved true by showing that he was sentenced to two weeks' imprisonment in default. Where the statement complained of consists of several distinct allegations, the truth of each one must be established. However where, in view of the proved allegations in a statement, the unproved allegations have caused no appreciable damage, the compensation awarded will be moderate. For instance, where a man described another as a blackmailer, liar and swindler who had entered the country illegally, he was held liable for damages of only #100 because he could not prove the last, and relatively least infamous, of the allegations. On the other hand, if each allegation has a common "sting" and the truth of the "sting" is established, that will be a complete defence. For example, if a statement alleges that a man has defrauded 10 named companies but the publisher of the statement can only prove that the man defrauded 9 of them, the imputation - i.e. of dishonesty - will have been proved true.

13.3.10    Truth and Public Interest

In New South Wales, Queensland, Tasmania and the Australian Capital Territory truth is not a complete defence to an action for defamation; in addition to being true, a defamatory statement must be on a subject of "public interest" (NSW) or for the "public benefit" (Qld, Tas. & ACT). Public interest is a slightly wider concept than public benefit. But at the core of both is a belief that purely private facts (such as a person's relationship with members of his or her family) should not be publicly disclosed. Moreover even public facts (such as a criminal conviction) should not publicly disclosed if the disclosure is an unwarranted resurrection of some long forgotten misdeed. The rules about truth summarised under the previous heading (xxxx), also apply to the defamation laws of Queensland and the Australian Capital Territory. They apply in New South Wales and Tasmania too, but with one exception: where the statement complained of consists of several distinct allegations the defence of truth does not fail if the untrue allegations do not materially injure the victim's reputation, having regard to the truth of the other allegations.

13.3.11    Qualified privilege and malice under common law

In States and Territories where the common law of qualified privilege applies in civil defamation (Victoria, South Australia, Western Australia, the Northern Territory and the Australian Capital Territory) a privileged occasion has been described as: "... an occasion 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 so made has a corresponding interest or duty to receive it. This reciprocity is essential."

The occasions of qualified privilege that are likely to arise in communications by creditors during insolvency administrations may be classified as follows:

(a) Statements made in the performance of a duty

A statement made in the performance of any legal, moral or social duty attracts the protection of qualified privilege provided it is made to a person having a corresponding interest or duty to receive it. The foundation of the privilege is the duty to protect the lawful interests of another. The first question to be determined is whether one of these duties - legal, moral or social - exists. (The other question is whether the recipient has a corresponding interest or duty to receive the statement. If he or she does not, the privilege fails. A mistaken belief, however reasonable, that the recipient has the requisite interest or duty is no excuse. This rule applies to all occasions of qualified privilege under common law.) Establishing a legal duty is usually fairly simple. But determining whether an alleged moral or social duty actually exists can be difficult. A moral or social duty is not one which is enforceable by legal proceedings, whether criminal or civil. The test to be applied is whether the average Australian of ordinary intelligence and moral principle would recognise such a duty. Of course, over the years the courts have made many decisions which serve as a guide. Typical examples of occasions where a social or moral duty has been said to exist are:

A character reference of a former employee given by his or her former employer to a person contemplating offering the employee a job. A report to a businessman concerning the financial standing of a person with whom he intends to do business. A warning by a solicitor to a client in protection of the client's interests. A report by an employee to his employer concerning matters entrusted to the employee. A statement to the appropriate authorities with a view to detecting a crime.

The social or moral duty of a person to give information about a crime has been expressed as follows:

"When it comes to the knowledge of anyone that a crime has been committed, a duty is laid on that person, as a citizen of the country, to state to the authorities what he knows respecting the commission of the crime; and if he states only what he knows and honestly believes, he cannot be subject to an action of damages merely because it turns out that the person as to whom he has given the information is, after all, not guilty of the crime."

Except where a confidential relationship exists between the publisher and the recipient - e.g., solicitor and client, employer and employee, parent and child - or where the publisher has a duty to give information about a crime, the law acknowledges more readily a duty to make a statement if it is made in answer to a specific inquiry rather than volunteered. The fact that a statement has been volunteered may lead to the inference that the publisher was actuated by malice (see xxxx).

(b) Statements made in the protection or furtherance of a public interest

In this category protection is given to complaints and the like addressed to the proper authorities concerning a matter in which the public in general has a legitimate interest. It is essential that the statement be made to the proper authorities. Generally speaking this means that the complaint must be made to a person who is in a position to give redress or whose duty it is to inquire into the matter. However privilege sometimes extends to protect a statement made to a person who, though not in a position to deal with the matter himself or herself, is a suitable person to whom to make the complaint.

Specifically included in this category are statements made in order to procure the redress of public grievances, or to secure the punishment of criminals. Hence every person may inform the police of suspected crimes, or address to his Member of Parliament any grievance concerning a public official. But the underlying motive must be redress or the investigation of a complaint and not a mere excuse for invective against the individual concerned.

Accusations of crime will only be privileged if made with the honest desire of promoting investigation into the alleged crime or prosecuting the alleged offender. In addition - and this is of particular relevance to creditors - it appears such accusations will be privileged if made with the honest desire recovering property or proper compensation.

(c) Statements made in the protection or furtherance of a common interest

Publication of an untrue defamatory statement is privileged if it is on a subject in which the publisher and the recipient share a common and corresponding interest. Usually the common interest arises from an association between the parties for business purposes. "Interest" means "real and direct personal, trade, business or social concern(s)", "such as would assist in the making of important decisions or determining of a particular course of action". No privilege will attach where the common interest is one which springs from idle gossip or curiosity only.

There have been many decisions by the courts on when a common interest arises. The following examples are relevant here:

Case A The shareholders of a company were presented with a report of a committee of investigation into the company's affairs. It contained a scathing attack on the ability and honesty of the company's manager/treasurer, claiming, for example, that "if the accounts had been designed to be kept in a way which should mystify the most expert accountant, greater success could not have been achieved". This and other parts of the report were also published in a newspaper. The court found that publication in the newspaper was not justifiable. But as to the publication to shareholders (which the manager/treasurer did not challenge) the court said, in effect, that such publication would be privileged unless actuated by malice.

Case B A shareholder of a company called a meeting of shareholders and at the meeting accused a director of improper conduct, claiming the director had acted contrary to the company's interests by purchasing land which he knew the company would require (the company had given notice to buy, and could have purchased for #2,000) and had then caused a claim to be sent in for #20,000, thus benefiting himself at the expenses of the company. The court said: "The matter was certainly one of great interest and importance to shareholders, and the discussion or publication of the results to them would have been excused". However, the shareholder had invited others, including newspaper reporters, to the meeting. This, said the court, meant that the publication was not privileged.

Case C A railway company published in a monthly circular to its employees the names of employees who had been dismissed together with a description of the offences they had committed. One of the dismissed employees sued for defamation. The court found that the was protected by qualified privilege as a communication of common interest. In giving reasons Lord Esher, M.R., said: "Can anyone one doubt that a railway company, if they are of the opinion that some of their servants have been doing things which, if they were done by their other servants, would seriously damage their business, have an interest in stating this to their servants? And how can it be said that the servants to whom that statement is made have no interest in hearing that certain things are being treated by the company as misconduct, the consequence of which would be dismissal from the company's service? "

Case D In comment during a case about the publication in a newspaper of a shareholder's comments on the company's management, Evatt, J. said: "It may be conceded that the disclosure within reasonable limits of a shareholder's criticisms of the internal management of the company in which he is interested can create an occasion of privilege. That is because some distinct advantages to all concerned in the company may flow from the free and untrammelled discussion of its affairs amongst its shareholders". But as to publication in a newspaper, the court held that this was not the proper vehicle for ventilation of the shareholder's grievances.

Case E The trustees of a friendly society prepared a report on the activities of the general secretary of the society. A meeting of the society's committee was convened to consider the general secretary's terms and conditions of service and tenure of office. The report, which defamed the general secretary, was read to the committee. At the court hearing (where the main question was whether one of the trustees had acted maliciously) all parties to the case conceded, and the court ultimately found, that the occasion was one of qualified privilege.

Cases involving creditors There appears to be no reported legal case on defamation and qualified privilege at a meeting of creditors. However the characteristics of meetings of shareholders and meetings of creditors are similar enough to permit an assumption that the law of defamation in relation to one also applies to the other. After all, both are recognised gatherings of persons who have a common interest.

Publication to "outsiders" Some of the cases mentioned above have been primarily about publication to or by persons other than those with a common interest (usually newspaper reporters). It is worth looking at the law on this point in more detail because sometimes such persons are present at meetings of creditors. For convenience they will be referred to hereafter as "outsiders".

In one of the abovementioned cases (case B) qualified privilege was lost because the publisher had invited outsiders to the meeting. But would it have been different if someone else had invited them, or if they simply had come into the meeting and been permitted to stay? The question is important because if the mere presence of an outsider destroys the qualified privilege otherwise offered by the occasion, discussion could be stifled (unintentionally or deliberately) or members of the group could be liable for damages.

Fortunately the answer appears to be that the presence of outsiders - or, more specifically, journalists - does not necessarily take away qualified privilege. In a case where a member of a board of guardians of a parish said, at a board meeting at which reporters were present, that the clerk to the guardians had been "robbing public money", the judge said:

"If the words had been spoken at a meeting where only guardians were present, it is not denied that the occasion would be privileged .... As a fact, there were other persons than guardians present ... if they were ratepayers, they were persons in whose interest the guardians were discussing the question .... and I cannot for a moment doubt that the privilege was not taken away by their presence. But I will assume that the persons present, in addition to the guardians, were not ratepayers: it is suggested that they were reporters: but if that were so, it would in my opinion make no difference. If a person whose duty it is to make a statement to certain persons calls in other persons to whom he owes no duty to make the statement, in order that those other persons may hear it, I should be inclined to say (though it is unnecessary to the decision of the present case) that it would not become his duty to refrain from making his statement to the proper persons, but that there would be evidence of malice in his making it in the presence of others who might promulgate it. In the present case it must be assumed that the defendant did not call in reporters .... What, then, was his position? He could not order them out of the room, for there were several guardians present, and we must assume that the reporters were allowed to be present by the guardians as a body, over whose acts the defendant had no control; he could not prevent the reporters being present. Was, then, his duty to the guardians and to the ratepayers generally taken away by the presence of those other persons who were not called in by him and over whose presence he could exercise no control? The question answers itself: the presence of these persons left his duty to discuss the matter untouched; the occasion was privileged for the performance of that duty, and the privilege was not taken away by the presence of such people under such circumstances".

These remarks show the importance, if privilege is to remain, of a publisher's lack of control over the decision to let outsiders be present when a defamatory statement is made. Applying this principle and logic to creditors meetings, it would seem that before a creditor makes a defamatory statement he or she should ask whether there are any outsiders present and, if there are, ask that they be excluded from the meeting. If necessary a motion to this effect should be moved. Then, even if the required majority do not agree and the outsiders remain, it seems the publisher will still be protected by qualified privilege (perhaps also because he or she is not intentionally communicating with them - see xxxx).

Of course, if outsiders are excluded the risk they introduce is avoided altogether. Therefore unless there is an important reason for them being at the meeting, it would be in the creditors' interests to have them excluded before the meeting gets under way, or at least before the meeting starts to hear statements by creditors.

Continued ... THIS CHAPTER ON DEFAMATION AND QUALIFIED PRIVILEGE CONTINUES ON THE NEXT PAGE WITH AN EXAMINATION OF PUBLICATIONS ARISING OUT OF MEETINGS.

 

 

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