Supreme Court of WA|2004-10-19|Before: Mr P, Steytler J

Clover Bond Pty Ltd as Trustee for the Cool Clear Water Unit Trust v Carroll [2004] WASC 216 (19 October 2004)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : CLOVER BOND PTY LTD as Trustee for the Cool Clear Water Unit Trust -v- CARROLL [2004] WASC 216

BETWEEN : CLOVER BOND PTY LTD as Trustee for the Cool Clear Water Unit Trust

Defamation - Slander - Words spoken of plaintiff in the way of its business and trading reputation - Qualified privilege - Whether requisite reciprocity of duty and interest - Whether defendant's language went beyond reasonable requirements of occasion - Assessment of damages

Adam v Ward [1917] AC 309

Aqua Vital Australia Ltd v Swan Television and Radio Broadcasters Pty Ltd, unreported; SCt of WA (Steytler J); Library No 950545; 11 October 1995

Australian Broadcasting Corporation v Comalco Ltd (1986) 12 FCR 510

Brown v Marron [2001] WASC 100

Cassell & Co Ltd v Broome [1972] UKHL 3; [1972] AC 1027

Derbyshire County Council v Times Newspapers Ltd [1992] UKHL 6; [1993] AC 534

Dunford Publicity Studies Ltd v News Media Ownership Ltd & Anor [1971] NZLR 961

Hebditch v MacIlwaine [1894] 2 QB 54

Heytesbury Holdings Pty Ltd v City of Subiaco (1998) 19 WAR 440

Horrocks v Lowe [1975] AC 135

Howe & McColough v Lees [1910] HCA 67; (1910) 11 CLR 361

Jones v Skelton [1963] 3 All ER 952

Lange v Australian Broadcasting Corporation [1997] HCA 25; (1997) 189 CLR 520

Lewis v Daily Telegraph Ltd [1964] AC 234

Marks v Construction, Mining, Energy, Timber Yards Sawmills and Woodworkers Union of Australia (WA Branch) (1995) 14 WAR 360

Morgan v Odhams Press Ltd [1971] 1 WLR 1239

Sim v Stretch [1936] 2 All ER 1237

Stephens v West Australian Newspapers Ltd [1994] HCA 45; (1994) 182 CLR 211

Stuart v Bell [1891] 2 QB 341

Theophanous v Herald & Weekly Times Ltd [1994] HCA 46; (1994) 182 CLR 104

Australian Capital Television Pty Ltd v Commonwealth [1992] HCA 45; (1992) 177 CLR 106

Australian Consolidated Press Ltd v Uren [1966] HCA 37; (1966) 117 CLR 185

Barnes & Co Ltd v Sharpe [1910] HCA 26; (1910) 11 CLR 462

Carson v John Fairfax & Sons Ltd [1993] HCA 31; (1993) 178 CLR 44

Essey v Harding [2002] WASC 209

Hall-Gibbs Mercantile Agency Ltd v Dun [1910] HCA 66; (1910) 12 CLR 84

Herald & Weekly Times Ltd v McGregor [1928] HCA 36; (1928) 41 CLR 254

Humphries v TWT Ltd [1993] FCA 577; (1993) 120 ALR 693

Kiam v Neill (1996) EMLR 493

Linotype Co Ltd v British Empire Type-setting Machine Co Ltd (1899) 81 LT 331

London Artists Ltd v Littler [1968] EWCA Civ 3; [1969] 2 QB 375

National Mutual Life Association of Australasia Ltd v G T V Corp Pty Ltd [1989] VicRp 66; [1989] VR 747

South Hetton Coal Co Ltd v North Eastern News Association Ltd [1894] 1 QB 133

Sungravure Pty Ltd v Middle East Airlines Airliban SAL [1975] HCA 6; (1975) 134 CLR 1

Taylor v Hamilton [1927] SASR 314

Triggell v Pheeney [1951] HCA 23; (1951) 82 CLR 497

1 COMMISSIONER ZILKO SC: In this action the plaintiff seeks damages in respect of words spoken by the defendant which are said to be defamatory of the plaintiff.

2 The plaintiff is the trustee of the Cool Clear Water Unit Trust which at all material times has carried on the business of supplying and maintaining water filtration systems under the name "The Cool Clear Water Company". At all relevant times the defendant operated a retail and service centre for water treatment products known as "Unicorn Water Purification & Filtration".

3 In early 2002 Investwise Australia Pty Ltd trading as Home Choice Central ("Home Choice Central") went into receivership and then into liquidation owing a substantial sum of money to Service Finance Corporation Ltd. With the concurrence of the liquidator, who was appointed as such on 16 May 2002, Service Finance Corporation Ltd engaged the plaintiff in about May 2002 to service and maintain water filtration equipment supplied by Home Choice Central. By the terms of the agreement between the plaintiff, Home Choice Central and Service Finance Corporation Ltd the plaintiff was retained to service the relevant equipment and ensure that it was maintained in good working order and condition. Under these arrangements the plaintiff would invoice Service Finance Corporation Ltd which in turn would pay the plaintiff a fee at rates specified in the agreement. The agreement was still on foot in late October 2002.

4 The plaintiff alleges that on or about 29 October 2002 the defendant spoke and published the following words of the plaintiff in the way of its business to Tim Parker, the accounts administrator of Service Finance Corporation Ltd:

"(a) I am assisting disgruntled customers of Home Choice Central with regard to their water systems;

(b) The Cool Clear Water Company is not correctly fitting water purification units;

(c) The Cool Clear Water Company is negligent and is in contravention of health regulations;

(d) the workmanship of The Cool Clear Water Company in fitting water purification units is questionable and sub-standard; and

(e) I am initiating an investigation action with the trade body being the Water Filter Association into The Cool Clear Water Company and your company ought do the same."

5 It is further pleaded that in their natural and ordinary meaning, the above words meant and were understood to mean that:

(a) The Cool Clear Water Company was negligent in respect of the installation of water filtration and purification systems;

(b) The Cool Clear Water Company was in contravention of health regulations in respect of the installation of water purification systems;

(c) the quality of the purification and or filtration systems installed by The Cool Clear Water Company was questionable;

(d) the workmanship of The Cool Clear Water Company in the installation of purification and or filtration systems was also questionable and sub-standard; and

(e) Service Finance Corporation Ltd ought investigate The Cool Clear Water Company's business practices through the Water Filtration Association.

6 The plaintiff says that its reputation both as a company and as a hirer of water purification units has been seriously injured and it has suffered considerable distress and embarrassment by reason of the defendant's conduct. Further or alternatively, it is pleaded that the words were calculated to disparage the plaintiff in its trade or business and that unless restrained the defendant will further publish or cause to be published the same or similar words defamatory of the plaintiff. The plaintiff seeks damages and an injunction to restrain the defendant from further speaking or publishing the same or similar words concerning the plaintiff.

7 In his defence, the defendant admitted that he was a business rival of the plaintiff (although it should be said that he sought to resile from this admission in his evidence). Although he also admitted that a telephone conversation took place with Mr Parker on or about 29 October 2002, he denied using the words complained of in the statement of claim. The particulars of the telephone discussion as pleaded by the defendant are set out in par 6 of the defence and there is nothing defamatory of the plaintiff therein. Thus it follows that the defendant denies that any of the words spoken by him during the telephone conversation bore or were understood to bear or were capable of bearing the meanings pleaded in the statement of claim or any meaning defamatory of the plaintiff.

8 Further or alternatively, the defendant pleads that if the words spoken by him are held to be defamatory of the plaintiff, those words were published on an occasion of qualified privilege. No particulars were sought or given in respect of this plea. However, at the commencement of the trial I sought clarification from counsel for the defendant as to the basis of the qualified privilege and was informed that it was two-fold. As I understood what counsel said, firstly the words spoken were for the benefit of the public at large in that it was important that the installation and service of water purification systems was undertaken properly to prevent contamination of the water and potential ill-health to consumers. Accordingly, the defendant was performing a duty when he spoke to Mr Parker on the telephone. Secondly, the defendant contended there was a common and corresponding interest between him and Service Finance Corporation Ltd that the water purification industry was not damaged by individuals drinking contaminated water thereby causing the health authorities to become involved or litigation to take place.

9 There was one other plea raised in the defence which was to the effect that the defendant believed his actions were reasonable and justified. Particulars were given of this plea. However, the law does not recognise such a defence in an action for slander. This was, I think, conceded by counsel for the defendant in his closing submissions. In the circumstances, there are six issues for my determination. First, were the words alleged to have been spoken by the defendant in fact spoken to Mr Parker on or about 29 October 2002? Second, if the words were spoken, are they capable of conveying the defamatory meaning ascribed to them by the plaintiff? Third, if so, do they bear that meaning? Fourth, if the words were spoken and are defamatory, were they published on an occasion of qualified privilege? Fifth, if the occasion was privileged, has the privilege been destroyed by malice on the defendant' part? Sixth, if the plaintiff succeeds in its action, what are the damages to which it is entitled?

10 Whilst a common law libel is always actionable, as a general rule slander is not actionable per se such that a person slandered can only succeed on proof of special damage. However, there are four categories of case in which slander is actionable per se and in those cases the plaintiff's cause of action will be complete upon proof of publication of the defamatory words. One of those categories involves words which are calculated to injure the plaintiff's reputation in the way of its trade or business as distinct from, in the case of a natural person, its reputation as such. Although the plaintiff pleads that it has suffered distress and embarrassment, it is clear that damages may not be awarded to a corporate plaintiff other than for its trade reputation and goodwill (Heytesbury Holdings Pty Ltd v City of Subiaco (1998) 19 WAR 440 at 464; Australian Broadcasting Corporation v Comalco Ltd (1986) 12 FCR 510 at 586-587). Corporations cannot suffer injured feelings such as distress and embarrassment (Lewis v Daily Telegraph Ltd [1964] AC 234 at 362). Ignoring the distress and embarrassment pleaded by the plaintiff and acknowledging that the case involves the publication of words which are alleged to injure the plaintiff in its business and trading reputation, the plaintiff is in my view entitled to bring the action without proof of special damage.

11 If the words alleged by the plaintiff are found to have been spoken, I must determine whether the pleaded imputations arise from those words. In this respect I refer to the frequently quoted extract from the judgment of the Privy Council in Jones v Skelton [1963] 3 All ER 952 at 958 which is in the following terms:

"It is well settled that the question whether words which are complained of are capable of conveying a defamatory meaning is a question of law and is therefore one calling for decision by the court. If the words are so capable then it is a question for the jury to decide whether the words do in fact convey a defamatory meaning. In deciding whether words are capable of conveying a defamatory meaning the court will reject those meanings which can only emerge as the product of some strained or forced or utterly unreasonable interpretation. In Capital & Counties Bank v Henty & Sons (1882) 7 App Cas 741 at 745 Lord Selborne LC said: 'The test, according to the authorities, is, whether under the circumstances in which the writing was published, reasonable men, to whom the publication was made, will be likely to understand it in a libellous sense.'

The ordinary and natural meaning of words may be either the literal meaning or it may be an implied or inferred or an indirect meaning: any meaning that does not require the support of extrinsic facts passing beyond general knowledge but is a meaning which is capable of being detected in the language used can be a part of the ordinary and natural meaning of words. See Lewis v Daily Telegraph Ltd [1964] AC 234. The ordinary and natural meaning may therefore include any implication or inference which a reasonable reader guided not by any special but only by general knowledge and not fettered by any strict legal rules of construction would draw from the words. The test of reasonableness guides and directs the court in its function of deciding whether it is open to a jury in any particular case to hold that reasonable persons would understand the words complained of in a defamatory sense."

Although Jones v Skelton dealt with a question of libel, the same principles apply to an alleged slander.

12 Accordingly, If I find that the imputations do arise from the words complained of, I must then determine whether they are in fact defamatory of the plaintiff. As I have indicated above, words which are calculated to disparage or injure a corporate plaintiff in the way of its trade or business are defamatory of that plaintiff. One may ask, would the words tend to lower the plaintiff in the estimation of right-thinking members of society generally or, looked at in a slightly different way, would the words have the effect of making people reluctant to deal with the plaintiff? (Sim v Stretch [1936] 2 All ER 1237 at 1240; Derbyshire County Council v Times Newspapers Ltd [1992] UKHL 6; [1993] AC 534 at 547). In either case the words will be defamatory. I will deal with the question of whether the words were spoken and, if so, the imputations arising therefrom before I proceed to the question of qualified privilege.

13 The plaintiff called two witnesses. Edward Anthony Hayes gave evidence about the relationship between the plaintiff and Service Finance Corporation Ltd arising from the collapse of Home Choice Central. Mr Hayes also gave evidence about the nature of the plaintiff's business, in particular the fact that it supplied and thereafter serviced and maintained water filtration and purification systems. It was clear from the evidence of Mr Hayes that the arrangements whereby the plaintiff was retained by Service Finance Corporation Ltd to service and maintain systems provided by Home Choice Central to its customers were made at some stage in the first half of 2002.

14 The plaintiff's other witness was Timothy James Johnson Parker referred to in the statement of claim as Tim Parker. Mr Parker was at the time of the conversation with the defendant the accounts administrator at Service Finance Corporation Ltd and handled the accounts of Home Choice Central customers. He explained that Service Finance Corporation Ltd was a financier and it was his task in managing the above accounts to collect fees that were owing to Home Choice Central by its customers.

15 Mr Parker said that he had spoken briefly to the defendant on two occasions prior to the conversation which is the subject of these proceedings. On or about 29 October 2002 the defendant again telephoned Mr Parker. As a result of what was said by the defendant, Mr Parker made notes of the conversation whilst it was taking place. During examination-in-chief he said that he made the notes immediately after the conversation. Later in his evidence he clarified this by saying that during the conversation he noted particulars of what was said especially when the plaintiff's name was raised and the defendant was suggesting that the plaintiff had not carried out its duties correctly. He took notes during the conversation itself and then made a summary of those notes immediately after the conversation ended. He said that the words pleaded in the statement of claim were those spoken by the defendant of and concerning the plaintiff.

16 When the conversation had finished Mr Parker telephoned John Haladin, an officer of the plaintiff, and told him what the defendant had said. On either 17 or 18 December 2002 he wrote to the plaintiff setting out in writing what the defendant had said. In his evidence he explained that he composed his letter to the plaintiff from the notes made by him during and after the conversation. He said that there was no difference between the notes taken by him and the contents of his letter to the plaintiff. I should add for completeness that Mr Parker is no longer employed by Service Finance Corporation Ltd.

17 The defendant gave evidence himself and called one other witness. In his own evidence the defendant explained that he had operated Unicorn Water Purification & Filtration for several years and had a retail showroom. Although he sold various systems to the public, the substantial majority of his work both in 2002 and now was directed to service of filtration and water purification systems. He said that in 2002 he received complaints from a number of Home Choice Central customers that following the collapse of Home Choice Central their systems were not being serviced and maintained properly. As a result of this, he saw an opportunity to increase his business by taking over the obligations for service and maintenance of those systems. In an attempt to win the service work he telephoned PKF Chartered Accountants which he understood was handling the Home Choice Central customers. It seems that the liquidator of Home Choice Central is a partner of that firm. He was told by someone at PKF that he should telephone the plaintiff and he did so. However, the person to whom he spoke in the plaintiff's office told him to call Mr Parker. That is how the conversation in question came about.

18 The defendant denies speaking of the plaintiff in the way alleged or even mentioning the plaintiff in his conversation with Mr Parker. He said there would be no reason to refer to the plaintiff. The defendant explained in some detail what he spoke about with Mr Parker. It was, he said, directed to obtaining the service business and also to explain to Mr Parker the importance of regularly maintaining the systems being used by Home Choice Central customers. He said that he told Mr Parker at one stage that if he did not believe him he should consult a lawyer or an officer, whom he named, of the Department of Health. He also recalls telling Mr Parker about his duty of care to the Home Choice Central customers. There were some areas of agreement between Mr Parker and the defendant which arose during cross-examination of each of them. However, the defendant denied making any of the statements concerning the plaintiff that are set out in the statement of claim. Very shortly after his conversation with Mr Parker ended, the defendant said that he received a telephone call from an employee of the plaintiff who was apparently very angry about the defendant's conversation with Mr Parker. This call only lasted a few minutes.

19 In a limited sense the defendant's evidence was corroborated by Adele Neumann, an employee of the defendant. She has been so employed since 1996. She and the defendant met in 1993 and were involved in a de facto relationship until 1999. Although she and the defendant said the de facto relationship had ended, they both acknowledged that they lived together as friends in the same house. Ms Neumann confirmed that there had been a number of complaints from Home Choice Central customers. She also confirmed the importance of properly maintaining and servicing the type of units held by these customers.

20 She said she recalled the conversation between the defendant and Mr Parker although she did not explain why she recalled it. She was sitting at the receptionist's desk in the defendant's business premises. The desk was about eight feet behind the door of the defendant's office when he made the telephone call. The door was open and she could hear what he was saying. About half way through the conversation she went into the defendant's office. She said that she did so because the defendant was no longer discussing service issues but was dealing with other matters. However, she did not elaborate on what those other matters were. She said that she mouthed the word "Servicing" to the defendant in order to get him back on track. Ms Neumann recalled that after the conversation with Mr Parker, the defendant received another call. The person calling appeared to be angry and was shouting so loudly that Ms Neumann could hear him. Ms Neumann was taken to each of the words alleged to have been spoken in the statement of claim. She either denied that they were spoken or said that she did not hear those words being spoken. She conceded that she and the defendant had discussed his conversation with Mr Parker, probably after the writ was received in 2003. She did not make notes of what she heard at the time of the conversation or at any later time.

21 Mr Parker and the defendant agreed that the conversation became heated. Mr Parker described himself as being intimidated by the defendant's tone and language. The defendant described Mr Parker as becoming upset during the conversation. The defendant thought that Mr Parker became particularly upset when the defendant referred to Mr Parker's duty of care. The defendant said he used this term on two or three occasions during the conversation. Ms Neumann also referred to the defendant using the term. Notwithstanding this evidence, reference to the defendant's use of the term "duty of care" is not to be found in the quite detailed particulars of the telephone conversation set out in par 6 of the defence. Moreover, Mr Parker was not asked in cross-examination whether that term had been used by the defendant. It is a particular term with legal connotations. If the defendant could recall using the term when he gave his evidence, presumably he recalled using it when he instructed his solicitors as to the particulars of the conversation for the purpose of preparing his defence. If it has only come to his recollection since the defence was filed, this was not explained by the defendant.

22 In the course of the trial I observed Mr Parker, the defendant and Ms Neumann as they gave their evidence and listened to the way in which that evidence was given. Since the conclusion of the trial I have carefully considered their evidence in deciding whether the conversation took place as alleged by the defendant and Ms Neumann or by Mr Parker. In this regard I accept the evidence of Mr Parker. He was clear as to what he was told by the defendant and had the benefit of making notes both during the conversation and immediately after it finished. Those notes were then transferred to the letter sent to the plaintiff on 17 or 18 December 2002. Although counsel for the defendant was critical of Mr Parker for destroying the notes, his explanation that he destroyed them only after preparing the letter because the letter reflected what the notes contained was in my view reasonable. Mr Parker was cross-examined at some length by counsel for the defendant but would not be moved from his evidence that the words set out in the statement of claim were in fact spoken by the defendant. I also note that immediately after the telephone call from the defendant, Mr Parker telephoned Mr Haladin at the plaintiff's office to tell him what had occurred. This would seem to be an extraordinary thing for Mr Parker to do if the defendant had not referred to the plaintiff at all, as the defendant alleges, or if the defendant had not referred to the plaintiff in a disparaging way. It also explains why someone from the plaintiff's office, perhaps Mr Haladin, telephoned the defendant a few minutes later.

23 Insofar as the defendant is concerned, I could not feel the same degree of assurance about his evidence. The defendant was certain about how the conversation ensued but he took no notes of it either at the time or a fortnight later when he received a letter from the plaintiff's solicitor demanding an apology. The defendant is working entirely from his memory and, to put the best light on his evidence, perhaps he has reconstructed what transpired with the passage of time. The absence of any reference to the term "duty of care" in the defence tends to reinforce my view that over time the defendant has rationalised what took place in order to couch it in innocent terms or, alternatively, to attract the benefit of the defence of qualified privilege.

24 With regard to Ms Neumann's evidence, it is instructive to consider one exchange with counsel for the defendant during her examination-in-chief:

"Do you recall Mr Carroll mentioning Cool Clear Water or Cool Clear Co at any stage?---No, I don't. He was specifically referring to Home Choice throughout the conversation because, you know, those were the customers that were at issue that had the systems that we were trying to gain to do some servicing.

Why can you be so sure that he didn't say Cool Clear Water or Cool Clear Co?---Well, to me that would have basically been an odd thing for him to come out with because the customers were from Home Choice, it was a situation where we knew they were in receivership and trying to work towards gaining some customers or, you know, helping out there. If he'd have mentioned any other water filtration company during the course of the conversation I would have immediately started to think, 'Well, there isn't an opportunity here for us, something's already been arranged,' or whatever, so that didn't come up and he basically - they weren't mentioned at all.

So you didn't hear Mr Carroll at any stage during that conversation mention Cool Clear Water or Cool Clear Co?---No."

25 The first answer given in the exchange with counsel for the defendant is to the effect that Ms Neumann does not recall whether The Cool Clear Water Company was referred to by the defendant. The second answer suggests that by a process of deduction achieved with the benefit of hindsight Ms Neumann has concluded that the defendant had no reason to refer to The Cool Clear Water Company and therefore did not refer to it. The third answer, given in response to a leading question as it was, does not detract from the first two answers. Putting the most favourable interpretation on Ms Neumann's evidence, I think it is probable that she no longer has any actual recollection of whether the defendant referred to The Cool Clear Water Company in his telephone conversation with Mr Parker but, in the course of time either alone or in discussions with the defendant, she has convinced herself that the defendant did not refer to the Cool Clear Water Company.

26 For the above reasons I accept Mr Parker's evidence wherever it conflicts with the evidence of the defendant or Ms Neumann and I am therefore satisfied that the words alleged to have been spoken by the defendant were in fact spoken. As to whether the pleaded imputations arise from the words complained of, I am satisfied that those imputations do arise from the words spoken. The imputations are a very short step indeed from the actual words spoken. Do the words convey a defamatory meaning insofar as the plaintiff is concerned? In my opinion each of the imputations pleaded in the statement of claim which I have found to have arisen is defamatory of the plaintiff. By using language which meant that the plaintiff was negligent in the installation of water filtration and purification systems, that it had contravened health regulations in respect of those installations, that the systems installed by the plaintiff were of a questionable quality, that the plaintiff's workmanship in installing those systems was questionable and sub-standard, and that some form of investigation ought to be undertaken of the plaintiff's business practices, the defendant defamed the plaintiff in its business and its trading reputation.

27 Having decided that the words spoken by the defendant are defamatory of the plaintiff, I now turn to the question of whether the publication of the words occurred on an occasion of qualified privilege.

28 The protection afforded by qualified privilege is usually explained by reference to Lord Atkins' comments in Adam v Ward [1917] AC 309 at 334:

"A privileged occasion is, in relation to qualified privilege, 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."

See also the well-known formulation of Parke B to like effect in Toogood v Spyring [1834] EngR 363; (1834) 1 Cr M & R 181 at 193. I do not understand the defendant to suggest that he had a legal interest or duty to speak the words complained of. His duty, if any existed, rests on what may be regarded as a social or moral duty based upon a belief that the interests of the public were to be served by speaking the words complained of. The defendant must establish that he had an interest or duty, social or moral, to make the comments he did regarding the plaintiff to Mr Parker and that Mr Parker had a corresponding interest or duty to receive those comments. The reciprocity demanded by the law has been described as a common interest or a community of interest but need not be a pecuniary interest (Howe & McColough v Lees [1910] HCA 67; (1910) 11 CLR 361 at 369; Marks v Construction, Mining, Energy, Timber Yards Sawmills and Woodworkers Union of Australia (WA Branch) (1995) 14 WAR 360 at 366-367). However, the interest must be a definite one rather than something which is vague or insubstantial. It must be a matter of fact rather than a matter of conjectural curiosity (Marks at 367). Nevertheless, as the rule is grounded in notions of public policy and convenience, the categories in which it can be called into aid are not closed. New occasions for its application will arise with changing social conditions (Howe at 369).

29 Whether or not there is a duty to speak is a question of law to be determined objectively in accordance with the circumstances of each case. Where the court has to consider whether a particular occasion is privileged, it is necessary to take into account the circumstances surrounding the origin and publication of the defamatory words, in order to ascertain whether the necessary conditions are satisfied by which protection can be obtained (Watts v Time Newspapers Ltd [1997] QB 650 at 660).

30 The question is not whether the defendant believed, on reasonable grounds, that he had a duty to speak to Mr Parker about the matters the subject of their conversation as I have found it occurred, rather the question is whether the duty actually exists (Stuart v Bell [1891] 2 QB 341 at 349, 356). The defendant's state of mind may be important in deciding issues of proportionality, improper purpose or malice but it is not relevant to whether the occasion was or was not privileged (Marks at 368; Stephens v West Australian Newspapers Ltd [1994] HCA 45; (1994) 182 CLR 211 at 238). The same approach is to be adopted in determining whether or not Mr Parker had a relevant interest in receiving the defendant's communication (Hebditch v MacIlwaine [1894] 2 QB 54 at 59).

31 No privilege will arise if the circumstances prevailing at the time of the communication do not warrant the protection of the alleged common interest by the means employed. If the publisher goes beyond the requirements of the occasion, the privilege will be lost (Guise v Kouvelis [1947] HCA 13; (1947) 74 CLR 102 at 110). In Adam v Ward (supra), Earl Loreburn said this at 321:

"The judge has to consider the nature of the duty or right or interest and to rule whether or not the defendant has published something beyond what was germane and reasonably appropriate to the occasion, or has given to it a publicity incommensurate to the occasion. For a man ought not to be protected if he publishes what is in fact untrue of someone else where there is no occasion for his doing so, or when there is no occasion for his publishing it to the persons to whom he in fact publishes it."

32 The question of whether the circumstances in which the communication was made warrant the protection of the common interests said to exist and whether the defendant's conduct is sufficiently proportionate to the occasion to warrant the protection afforded to him by the qualified privilege is a question for the Court. It is not necessary to determine the existence of malice, which may destroy any qualified privilege, until a decision has been made that the qualified privilege did exist. If there is found to have been no privilege, that is the end of the matter. If the occasion was privileged, however, the fact that some information is outside the bounds of the privilege or irrelevant to the occasion of privilege will not of itself destroy the privilege. Nevertheless, the inclusion of irrelevant matters may indicate that the occasion was used for an improper purpose or it may afford evidence of malice (Dunford Publicity Studies Ltd v News Media Ownership Ltd & Anor [1971] NZLR 961 at 968-969). In the end it is the case that the defamatory material will only be protected by the qualified privilege if it is relevant to the matters at the heart of the duty or interest (Adam v Ward at 349).

33 If it becomes necessary for me to consider the question of malice, I note that the law provides a broader meaning of the term malice than one finds in a common dictionary. As the High Court has said, malice "embraces ill-will, spite and improper motive" (Theophanous v Herald & Weekly Times Ltd [1994] HCA 46; (1994) 182 CLR 104 at 137). One must ask, has the defendant misused the occasion by reason of an improper motive on his part? If it is established that the statements are defamatory but that they were spoken on an occasion of qualified privilege, the onus lies on the plaintiff to establish malice in order to defeat the privilege.

34 The relationship between malice and qualified privilege has been the subject of a number of decisions. In Horrocks v Lowe [1975] AC 135, Lord Diplock set out the relevant principles and these are to be found in a summarised form in Gatley on libel and slander 10th ed, at par 16.3. Those principles have been approved by the High Court (eg Lange v Australian Broadcasting Corporation [1997] HCA 25; (1997) 189 CLR 520 at 572) and judgments of this Court (eg Aqua Vital Australia Ltd v Swan Television and Radio Broadcasters Pty Ltd, unreported; SCt of WA (Steytler J); Library No 950545; 11 October 1995 at 46; Brown v Marron [2001] WASC 100 per Owen J at 62-63).

35 A number of those principles are relevant to the present circumstances. First, a publisher is entitled to be protected unless some dominant improper motive on his or her part is established. This usually involves proof that the publisher was not using the occasion honestly for the purpose for which the law provides protection but was actuated by some indirect motive unconnected with the privilege. An example which Gatley provides at par 16.5 is when a defendant's dominant motive is to obtain some private advantage unconnected with the duty or the interest on which the privilege is based. Second, knowledge that a statement will injure the plaintiff does not destroy the privilege if the defendant was using the occasion for its proper purpose. This is to be looked at in the context of the first proposition regarding the defendant's dominant motive. Third, if it can be proved that the defendant did not believe that what he published was true, that is generally conclusive evidence of express malice because no sense of duty or desire to protect his own legitimate interest can justify the defendant in telling deliberate and injurious falsehoods about another. Fourth, and in a similar vein, if the defendant publishes untrue matter recklessly, without caring whether it is true or false, he is to be treated as if he knew it was false. However, falsity or indifference to the truth is not to be equated with carelessness, impulsiveness or irrationality in arriving at a belief. Fifth, positive belief in the truth of what is published will usually protect the defendant unless he can be proved to have misused the occasion. The Court should be slow to draw the inference that the defendant has misused the occasion. Finally, where the defendant believes in the truth of what he has published and conduct extraneous to the privileged occasion is not relied on, the plaintiff can only succeed if he shows that the publication contains irrelevant matter, and that it can be inferred that the defendant did not believe it to be true or realised that it was irrelevant and brought it in for some improper motive. The Court should also be slow to draw this inference.

36 I now return to the circumstances of this case in order to determine whether the statements made by the defendant were fairly warranted by the occasion and thus attract the defence of qualified privilege. In answering that question I am prepared to accept, albeit with some reluctance, that Mr Parker had an interest in the welfare of Home Choice Central customers. My reluctance stems from Mr Parker's role which was confined to collecting payment of accounts from those customers and was unrelated to the maintenance and service work undertaken in respect of their systems. However, on balance I think there is enough in his duties to establish the requisite interest. Did the defendant have a common and corresponding interest in the welfare of those customers? In this respect I take into account the defendant's evidence, corroborated as it was by Ms Neumann, that there had been a number of complaints by members of the public that they were unable to obtain service and maintenance of their Home Choice Central systems. In his evidence the defendant made the point that as far as service of the equipment is concerned it was important that everyone in the industry saw service as important because the alternative was for the industry as a whole to get "a bad name". This may have been a legitimate starting point for the defendant to establish that his conversation with Mr Parker was privileged.

37 However, in determining whether the defence of qualified privilege is available to him, I am also mindful of the defendant's evidence that he was primarily motivated to telephone the liquidator and then Mr Parker because of his desire to obtain new customers. He referred to the possibility of "a couple of hundred" customers who would need servicing of their units. I find that this was uppermost in his mind when he spoke to Mr Parker. I also find that he was intent upon persuading Mr Parker that he was better placed to service and maintain the systems of Home Choice Central's customers than the plaintiff. Whatever occurred to cause the conversation to become heated is not known but in the course of attempting to persuade Mr Parker of the merits of his business over that of the plaintiff, the defendant spoke of the plaintiff in the terms pleaded in the statement of claim. In light of the above findings and having considered the circumstances surrounding the conversation between the defendant and Mr Parker, I am not satisfied that the defendant telephoned Mr Parker in the discharge of a moral or social duty to protect the public from the risks of contaminated water by using Home Choice Central systems which were not properly serviced or maintained. The defendant's singular desire was to win the work of the Home Choice Central customers and in order to do so he resorted to defaming the plaintiff. As was said in Adam v Ward, a man ought not be protected if he publishes what is in fact untrue of someone else when there is no occasion for him to do so. In speaking of the plaintiff as he did, the defendant's intemperate language went well beyond the reasonable requirements of the occasion. As a consequence of these matters I am satisfied that the occasion was not privileged.

38 That disposes of the liability issue. However, if I had found that the defence of qualified privilege had been established by the defendant, I would nevertheless have also found that the defendant was not using the occasion honestly for the purpose for which the law provides protection but was actuated by an indirect motive not connected with the privilege, namely, a desire to damage the plaintiff's reputation and standing in the eyes of Mr Parker in an attempt to persuade him to allow the defendant to have the service and maintenance work then being undertaken by the plaintiff. The defendant spoke of the plaintiff recklessly and was indifferent to the truth of what he had to say. On the defendant's own evidence none of the Home Choice Central customers complained about the plaintiff in the language conveyed by the defendant to Mr Parker. In my opinion these matters would establish malice on the defendant's part such that any qualified privilege which may have existed was lost.

39 I now turn to the damages to which the plaintiff is entitled as a result of the defendant's conduct. The plaintiff seeks damages based on its alleged loss of reputation both as a company and as a hirer of water purification units. Damages are at large and there is no room for any objective computation of the same (Cassell & Co Ltd v Broome [1972] UKHL 3; [1972] AC 1027 at 1071). Although damages are at large, they should nevertheless operate so as to vindicate the plaintiff in the eyes of the public. However, no compensation can be awarded to the plaintiff for injury to its standing in the community as distinct from its business reputation. As mentioned earlier in these reasons the plaintiff has no feelings which can be injured. The loss for which it is to be compensated is solely the loss of its business reputation and goodwill.

40 In assessing the damages in this matter I have had regard to the very limited publication made by the defendant. It was to Mr Parker alone. The only persons that Mr Parker advised of the defendant's comments were the plaintiff itself (through Mr Haladin) and Mr Parker's general manager. It seems that little damage was caused to the plaintiff because shortly after the comments were made, in December 2002, the plaintiff and Service Finance Corporation Ltd entered into further commercial arrangements for their mutual benefit. Accordingly, when I consider the gravity of the defamation and the extent of its damage to the plaintiff, I must conclude that it was at a very low level on both counts. Whilst it is not necessary for a plaintiff to adduce evidence of actual loss or harm in order to recover damages in a defamation action, it is the case that where the publication is to a handful of people, as in this case, damages will be modest and may be further reduced if none of those people believed in the truth of the material (Morgan v Odhams Press Ltd [1971] 1 WLR 1239 at 1262). I infer from the commercial arrangements made between them in December 2002 that Service Finance Corporation Ltd did not think much less of the plaintiff as a result of the defendant's conduct. In Heytesbury Holdings Pty Ltd v City of Subiaco the publication of the libel was limited to a servant or servants of each of three media outlets and to the defendant's media consultant. None of the media outlets republished the offending material. In those circumstances, the Court held that the plaintiff was entitled to little by way of damages notwithstanding that the libel was relatively serious. Taking these matters into account Steytler J concluded that $5,000 was the appropriate sum to compensate the plaintiff and to vindicate its reputation. Similarly, in Brown v Marron Owen J had to consider the gravity of a libel which was communicated to three people who were members of a golf club committee. Despite the serious nature of the libel, Owen J awarded the plaintiff $7,500. There are, of course, many other cases in which publication of the defamatory material is to a much wider audience and understandably damages awarded in those cases have been considerably higher than the above amounts. However, this is not such a case.

41 Taking all matters into account, particularly the very limited publication of the defamatory words, I consider that the appropriate award of damages is $5,000. That sum will be inclusive of interest. In addition to damages, the plaintiff also seeks an injunction to restrain the defendant by himself, his agents, servants or otherwise from further speaking or publishing or causing to be published the said or similar words defamatory of the plaintiff. No evidence was led from the plaintiff or anyone else that the defendant was likely to speak of the plaintiff in the same or similar words in the future. I am mindful of the fact that the plaintiff did not seek injunctive relief shortly after 29 October 2002 and indeed these proceedings were not commenced until some 10 months later. There is no evidence of any genuine fear on the part of the plaintiff that the defendant will defame it in the same or similar terms and it would not be a proper exercise of my discretion to grant an injunction in such circumstances.

Clover Bond Pty Ltd as Trustee for the Cool Clear Water Unit Trust v Carroll [2004] WASC 216

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Clover Bond Pty Ltd as Trustee for the Cool Clear Water Unit Trust v Carroll [2004] WASC 216 (19 October 2004)

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Cases Cited (18)