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Injurious falsehood

AMI Australia Holdings Pty Ltd & anor v Fairfax Media Publications Pty Ltd & ors [2010] NSWSC 1395. Brereton J. 2.12.10.

 

29 The elements of the tort of malicious falsehood comprise:

(1) a false statement of or pertaining to the plaintiff’s goods or business;

(2) publication of that statement by the defendant to a third person;

(3) malice on the part of the defendant; and

(4) actual damage as a consequence: Ratcliffe v Evans [1892] 2 QB 524, 527-8; Sungravure Pty Ltd v Middle East Airlines Airliban SAL (1975) 134 CLR 1; Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388, 404 [52] (Gummow J), 425 [114] (Kirby J)].

30 In injurious falsehood, unlike in defamation, the plaintiff bears the onus of proving falsity: Palmer Bruyn, 406 [58]]. From time to time, AMI’s submissions slipped into the form that there was no evidence to support or justify an imputation, and therefore that it was false. This is not the way in which the tort of injurious falsehood works; unlike in defamation, where it is for a defendant to justify an imputation, in injurious falsehood the plaintiff must prove the imputation to be false.

However, the absence of evidence to justify a falsehood is not without significance: where there is nothing to justify it, it may take very little to establish, on balance, that the imputation is false.

31 Again unlike in defamation, in injurious falsehood malice is also an essential element of the cause of action, to be proved by the plaintiff.

While the notion of “malice” in the context of this tort is not easy to define: Schindler Lifts Australia Pty Ltd v Debelak (1989) 89 ALR 275, 291 (Pincus J), it is a question of motive, intention or state of mind and it involves the use of an occasion for some indirect purpose or indirect motive such as to cause injury to another person: British Railway Traffic & Electric Co Ltd v CRC Co Ltd & London County Council [1922] 2 KB 260, 269; Browne v Dunn (1893) 6 R 67, 72; Dickson v Earl of Wilton (1859) 1 F&F 419, 427; (1859) 175 ER 790; Stuart v Bell [1891] 2 QB 341, 351; Shapiro v La Morta [1923] All ER Rep 378; Schindler Lifts Australia Pty Ltd v Debelak, 291.

The English Court of Appeal has said that the criteria for malice in injurious falsehood are the same as at common law for libel and slander: Spring v Guardian Assurance PLC [1993] 2 All ER 273, 288; reversed on other grounds: Spring v Guardian Assurance PLC [1995] 2 AC 296].

Its content has been variously described as “an intent to injure another without just cause or excuse” or “some indirect, dishonest or improper motive”: J Fleming, The Law of Torts, 9th ed (1998) LBC Information Services at 780; Palmer Bruyn, 423 [108] (Kirby J), or “a purpose or motive that is foreign to the occasion and actuates the making of the statement”: cf Roberts v Bass (2002) 212 CLR 1, 30; [2002] HCA 57, [75] (Gaudron, McHugh & Gummow JJ). It involves that the statement was made mala fide or with a lack of good faith.

In this context, while a person who acts in good faith is not liable: Joyce v Sengupta [1993] 1 All ER 897, malice may exist without an actual intention to injure: Wilts United Dairies Ltd v Thomas Robinson Sons & Co Ltd [1957] RPC 220; Wilts United Dairies v Thomas Robinson [1958] RPC 94].

32 As motive must often be inferred from what the defendant did or said or knew, malice is commonly proved by inference: Horrocks v Lowe [1974] 1 All ER 662, 669 (Lord Diplock). Malice may be inferred from the “grossness and falsity of the assertions and the cavalier way in which they were expressed”: Joyce v Sengupta, 905-6. Proof that the defendant knew that a statement was untrue is ordinarily conclusive evidence that its publication was actuated by an improper motive: Roberts v Bass, 31 [76].

On the other hand, mere lack of affirmative belief in truth is insufficient of itself to establish malice: Roberts v Bass, 31 [78]. But malice can be inferred not only where the false publication was made with knowledge of its falsity, but also where it was made with reckless indifference as to whether it was true or false: Schindler Lifts Australia Pty Ltd v Debelak, 291; Browne v Dunn, 72; Greers Ltd v Pearman & Corder Ltd (1922) 39 RPC 406, 417; Shapiro v La Morta; Kaye v Robertson (1990) 19 IPR 147, 152; Joyce v Sengupta, 905.

The defendants submitted that mere recklessness was insufficient to found a conclusion of malice, citing Roberts v Bass, in particular the following passage (at 32, [77]-[78]):

"If the defendant knew the statement was untrue when he or she made it, it is almost invariably conclusive evidence of malice. That is because a defendant who knowingly publishes false and defamatory material almost certainly has some improper motive for doing so, despite the inability of the plaintiff to identify the motive: Clarke v Molyneux (1877) 3 QBD 237, 247; Mowlds v Fergusson (1939) 40 SR (NSW) 311, 329.

"In Barbaro v Amalgamated Television Services Pty Ltd, Hunt J said that “In some of the older authorities, an absence of honest belief on the part of the defendant is treated merely as some evidence of an indirect motive which alone is said to constitute express malice, but the better view, in my opinion, is to treat the two as different kinds of malice”.

"His Honour cited no authority for this novel proposition. Some years later, in Hanrahan v Ainsworth (1990) 22 NSWLR 73, 102-103, Clarke JA said that, since Horrocks, “It has been accepted that if it is proved that a person has made a defamatory statement without an honest belief in its truth or for a dominant improper purpose ... malice will be made out”.

"The knowledge and experience of Justice Hunt in defamation matters is well recognised.

"But with great respect to His Honour and Clarke JA, they erred in asserting that lack of honest belief defeated a defence of qualified privilege. There is no basis in principle or authority for treating knowledge of falsity or lack of honest belief as a separate head of, or equivalent to, malice.

"In the law of qualified privilege, the common law has always regarded malice as the publishing of defamatory matter with an improper motive.

"Knowledge of falsity is “almost conclusive evidence” that the defendant had some improper motive in publishing the material and that it actuated the publication.

"That judges have treated knowledge of falsity as almost conclusive evidence of malice is no ground, however, for treating it as a separate head of, or equivalent to, malice. In some circumstances, lack of honest belief in what has been published may also give rise to the inference that the matter was published for a motive or purpose that is foreign to the occasion of qualified privilege.

"Nothing in Lord Diplock’s speech in Horrocks supports treating the defendant’s knowledge or lack of belief as a separate head of, or equivalent to, malice. Indeed, Lord Diplock expressly said [1975] AC 135, 149-150,  that, if it is proved that the defendant did not believe that what he or she published was true, it was “generally conclusive evidence” of improper motive.

33 However, while holding that mere absence of an honest belief in truth is insufficient, that passage does not establish that reckless indifference will not suffice. In Kaye v Robertson, Glidewell LJ (with whom Bingham and Leggatt LJJ agreed) said that it sufficed to infer malice that the words were calculated to produce damage and the defendant either knew them to be false or was reckless as to whether they were false or not (at 152):

"Malicious Falsehood. The essentials of this tort are that the defendant has published about the plaintiff words which are false, that they were published maliciously, and that special damage has followed as the direct and natural result of their publication. … Malice will be inferred if it be proved that the words were calculated to produce damage and that the defendant knew when he published the words that they were false or was reckless as to whether they were false or not.

34 The same view was expressed in Spring v Guardian Assurance PLC [1993] 2 All ER 273, in which the Court of Appeal cited the chapter dealing with malicious falsehood in JCC Gatley, P Lewis, JE Previte and RW Ground, Gatley on Libel and Slander, 8th ed (1981) Sweet & Maxwell at [303]):

The malice essential to support the action is some dishonest or otherwise improper motive. Such a motive will be inferred on proof that the words were calculated to produce actual damage, and that the defendant knew that they were false when he published them, or was recklessly indifferent as to whether they were false or not.

35 In Palmer Bruyn, Callinan J said that knowledge that a statement was untrue, or recklessness as to its truth, was sufficient to establish malice: Palmer Bruyn, 447 [192]-[194]. In Schindler Lifts, the applicants submitted that there was malice consisting in three elements: an attempt by the respondent to attract business from the applicants, a purpose of damaging the applicants commercially, and knowledge that the disparagement of the applicants was false. The respondents contended that there was no malice, because they said they had a reasonable basis for believing the truth of the statements, the making of which was motivated purely by a desire to get the business. Pincus J accepted that knowledge of falsity or recklessness would suffice:

The decision in De Beers Abrasive Products Ltd v International General Electrical Co of New York Ltd [1975] 1 WLR 972, ... was given on an application to strike out a pleading. It contains, however, a useful review of English authority to that date concerning statements of the kind here in issue. It is unnecessary to summarise Walton J’s account of the cases. What it demonstrates is that the respondents’ assertion that they merely wished to get business is no defence. ... In the case just discussed, the court did not determine whether a lack of belief in the truth of what was said was necessary in order to show malice. The decision of the Court of Appeal in Shapiro v La Morta (1923) 40 CLR 201 bears on that point. There, Scrutton LJ (at 203) referred to authorities which: “... suggests that if the defendant is speaking in furtherance of his own business or interest and honestly believes what he says to be true, in contrast with deliberate intention to injure the plaintiff, either with knowledge that the statement is untrue or with reckless indifference to whether it is true or false, then either there is no cause of action or the defendant has a “just cause or excuse”.” Scrutton LJ appeared to act on the view just mentioned, but Atkin LJ merely assumed, without deciding, that the necessary element is either knowledge of falsity or recklessness. ... I therefore accept that the necessary mental element is as contended for by the applicants – ie knowledge of falsity or recklessness.

36 In my opinion, the above authorities establish that although mere carelessness or lack of honest belief in the truth of what is published is not conclusive of malice: Roberts v Bass, [78], reckless indifference as to the truth of what is published, as well as knowledge of its falsity, will justify an inference of malice.

37 Generally speaking, in the tort of malicious falsehood, the relevant damage must be harm of a kind intended, or of a kind which is the natural and probable consequence of the false statement: Palmer Bruyn & Parker Pty Ltd v Parsons, 411-12, [73-75] (Gummow J), 396-7 [13-14] (Gleeson CJ). The law does not require “special” damage, but “actual” damage, which may include a general loss of business.

This was established by the seminal judgment of Bowen LJ in Ratcliffe v Evans, in which his Lordship explained that the expression “special damage”, in this context, included any actual and temporal loss which has, in fact, occurred (at 527-529, 533):

That an action will lie for written or oral falsehoods, not actionable per se nor even defamatory, where they are maliciously published, where they are calculated in the ordinary course of things to produce, and where they do produce, actual damage, is established law. ... To support it, actual damage must shewn, for it is an action which only lies in respect of such damage as has actually occurred. It was contended before us that in such an action it is not enough to allege and prove general loss of business arising from the publication, since such general loss is general and not special damage, and special damage, as often has been said, is the gist of such an action on the case. Lest we should be led astray in such a matter by mere words, it is desirable to recollect that the term “special damage”, which is found for centuries in the books, is not always used with reference to similar subject-matter, nor in the same context. At times ... it is employed to denote that damage arising out of the special circumstances of the case which, if properly pleaded, may be superadded to the general damage which the law implies in every breach of contract and every infringement of an absolute right. ... In all such cases the law presumes that some damage will flow in the ordinary course of things from the mere invasion of the plaintiff’s rights, and calls it general damage. Special damage in such a context means the particular damage (beyond the general damage), which results from the particular circumstances of the case, and of the plaintiff’s claim to be compensated, for which he ought to give warning in his pleadings in order that there may be no surprise at the trial. But where no actual and positive right (apart from the damage done) has been disturbed, it is the damage done that is wrong; and the expression “special damage”, when used of this damage, denotes the actual and temporal loss which has, in fact, occurred. Such damage is called variously in old authorities, “express loss”, “particular damage” … “damage in fact”, “special or particular cause of loss”

...

The term “special damage” has also been used in actions on the case brought for a public nuisance, such as obstruction of a river or a highway, to denote that actual and particular loss which the plaintiff must allege and prove that he has sustained beyond what it sustained by the general public, if his action is to be supported, such particular loss being, as is obvious, the cause of action ... In this judgment we shall endeavour to avoid a term which, intelligible enough in its particular context, tends, when successively employed in more than one context and with regard to different subject-matter, to encourage confusion in thought. The question to be decided does not depend on words, but is one of substance. In an action like the present, brought for a malicious falsehood intentionally published in a newspaper about the plaintiff’s business – a falsehood which is not actionable as a person liable, and which is not defamatory in itself – is evidence to shew that a general loss of business has been the direct and natural result admissible in evidence, and, if uncontradicted, sufficient to maintain the action?

...

An instructive illustration, and one by which the present appeal is really covered, is furnished by the case of Hargrave v Le Breton 4 Burr 2422, decided a century and a half ago. It was an example of slander of title at an auction. ... This case shews, what sound judgment itself dictates, that in an action for falsehood producing damage to a man’s trade, which in its very nature is intended or reasonably likely to produce, and which in the ordinary course of things does produce, a general loss of business, as distinct from the loss of this or that known customer, evidence of such general decline of business is admissible.

38 The requirement for “actual damage” does not, however, preclude the grant of injunctive relief to restrain a threatened publication, in which circumstance it will suffice to establish a reasonable probability, as opposed to the actual incurring, of such damage, as McCallum J recently illustrated in Australand Holdings Ltd v Transparency & Accountability Council Inc [2008] NSWSC 669, granting a final injunction to restrain a threatened publication disparaging of a building company (at [169]) (emphasis added):

As to the question of damage, the amended defence concedes, in effect, that a general loss of business would be suffered if future publication were permitted. [Counsel for the plaintiff] submitted that the absence of evidence of actual loss could be explained by reference to the fact that an injunction restraining publication was swiftly sought by Australand and ordered by this Court. I am satisfied that there is a reasonable probability that actual damage to the plaintiff would result if the statements were permitted to be published.

39 It has been said that the special rules relating to the grant of injunctive relief in defamation cases cannot be avoided by the expedient of framing the plaintiff’s case in injurious falsehood rather than in defamation: Fraser v Evans [1969] 1 QB 349, 362; Woodward v Hutchins [1977] 1 WLR 760, 764; [1977] 2 All ER 751, 755; Swimsure (Laboratories) Pty Ltd v McDonald [1979] 2 NSWLR 796, 800; Church of Scientology of California Incorporated v Reader’s Digest Services Pty Ltd [1980] 1 NSWLR 344, 350-1; Broderick Motors Pty Ltd v Rothe (1986) Aust Tort Rep ¶80-059].

Typically, injunctions have been granted in injurious falsehood cases where questions of public interest, free speech and discussion and liberty of the press are not involved: Swimsure (Laboratories) Pty Ltd v McDonald, 801; Broderick Motors Pty Ltd v Rothe, 68,103; Kaplan v Go Daddy Group [2005] NSWSC 636, [40]-[42].

But High Court authority now recognises that the restraint exercised in the grant of injunctive relief in defamation cases does not apply, at least with the same force, in cases of injurious falsehood.

In Palmer Bruyn & Parker Pty Ltd v Parsons, Gummow J said that the inhibition on injunctive relief to restrain further publication of defamatory material does not apply to injurious falsehood (at 406, [58]) (emphasis added):

Whilst the same factual matrix may found actions in both defamation and injurious falsehood, there are important distinctions between them. In Joyce v Sengupta, Sir Donald Nicholls V-C said:

The remedy provided by the law for words which injure a person’s reputation is defamation. Words may also injure a person without damaging his reputation. An example would be a claim that the seller of goods or land is not the true owner. Another example would be a false assertion that a person has closed down his business. Such claims would not necessarily damage the reputation of those concerned. The remedy provided for this is malicious falsehood, sometimes called injurious falsehood or trade libel. This cause of action embraces particular types of malicious falsehood such as slander of title and slander of goods, but it is not confined to those headings.

It is for the plaintiff in injurious falsehood to establish falsity, malice and special damage, burdens not imposed upon the plaintiff by defamation. On the other hand, the inhibition upon the use of the injunction to restrain further publication of defamatory material does not apply to injurious falsehood; a rationale for the distinction is said to be that the latter tort protects proprietary and commercial rather than personal interests.

40 In Australian Broadcasting Corporation v O’Neill [2006] HCA 46; (2006) 227 CLR 57, Gummow and Hayne JJ said that where causes of action lay in the same situation for both defamation and injurious falsehood, an injunction might be granted in respect of the injurious falsehood claim (at [56], 79): The qualification expressed by Lord Cairns LC allowed, for example, for injunctive relief in respect of those torts of slander of title and slander of goods, where property interests were involved, and which were classified as “trade libel”, and later, after Ratcliffe v Evans, were developed as the tort of injurious falsehood, elements of which were malice and special damage.

The logical consequence was that, where causes of action both for defamation and injurious falsehood lay in the same situation, an injunction might be granted in respect of the injurious falsehood claim.

41 And recently, in Beechwood Homes (NSW) Pty Ltd v Camenzuli [2010] NSWSC 521, Harrison J, with reference to that passage, and having pointed out (at [11]) that in Australand McCallum J granted a final injunction in an injurious falsehood case without referring to any need to consider issues of freedom of speech or special considerations applicable to the exercise of discretion in the circumstances, concluded that any special rules applicable to attempts to restrain a defamation did not apply in a case of injurious falsehood (at [18]):

The facts of this case, although specifically different from those with which her Honour was concerned, are similar in form and effect. It does not appear to me that the present case is one in which the plaintiff has illegitimately formulated its case so as to avoid what would otherwise be a fatal impediment to success. I do not consider that any special rules that apply in cases concerned with attempts to restrain a defamation apply in cases of alleged injurious falsehood.

42 I have found it useful to consider each of the imputations generally as follows:

(1) the content and meaning of the imputation;

(2) whether it has the necessary quality of confidentiality, including the iniquity exception;

(3) whether Fairfax and the journalists knew or ought to have known that its communication to them involved a breach of confidence; and

(4) whether the imputation is false.

The issue of malice is best considered subsequently, in the context of my other conclusions in respect of all of them.

 

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