James Phillips v Robab Pty Limited

Supreme Court of NSW|2013-05-28|Before: Rothman J

Judgment 1HIS HONOUR: The plaintiff, James Phillips, is an osteopath. For a period up to 10 March 2011, the defendants published a website that, according to the plaintiff, defamed him. The plaintiff seeks damages and initially sought a restraining order on the publication of the website. On or about 10 March 2011, the defendants removed the website. 2The defendants, Robab Pty Ltd, the first defendant, and CC Medical Offices Pty Ltd, the second defendant, operate or operated a business named City Clinic on the premises of which the plaintiff provided osteopath services to clients. The third and fourth defendants, Elizabeth Abbate and Brad Robinson, are directors of the first and second defendants and are alleged to be the authors of the website that has been impugned. 3The second defendant, CC Medical Offices, cross-claims against the plaintiff for damages for breach of confidence (also referred to herein as a breach of confidentiality), an account of profit and a restraining order as remedies for what it alleges was the plaintiff's breach of confidence by accessing patients' records and using them to contact patients to solicit their attendance at the plaintiff's own premises in competition with, and to the exclusion of, the defendants' business interests. 4By order of the Court, at an earlier interlocutory stage, the question of what, if any, damages arise from any breach of confidence is not a matter dealt within the current proceedings. In part, at least, the reason for such a separation of damages (which separation is an unusual course) is the necessity to order an account, one of the remedies for which the cross-claimant agitates.

Breach of Confidence 5Without in any way seeking to criticise counsel, the principles that apply to confidential information and its breach were not the subject of extensive submissions. Largely, the submissions dealt with the issue of the defamation, the defence of truth or contextual truth and made the submission that, if the allegations in the publication were true, then there had been a breach of confidence, without elaborating on the duty or its breach. 6There are some difficulties with that approach. The publication, with which I will deal shortly, is alleged to have imputed that the plaintiff was a thief and stole confidential patient records. The plaintiff alleges other imputations from the publication. The summarised imputation above is admitted by the second and fourth defendants. 7As will be seen from the analysis later in these reasons, no contractual relationship existed between the plaintiff and the defendants. The plaintiff was a subcontractor to a person, Mr James Pallett, who was in a contractual relationship with one or more of the defendants. Further, as the evidence establishes (and the fact is substantially uncontroverted), the plaintiff was provided with the information alleged to have been misused and which misuse gives rise to the breach of confidence. Moreover, an understanding of the contractual relations (and lack of them) may result in a finding that the joint owner of the information (James Pallett) provided the information. 8There may be a significant difference between an allegation of misuse of confidential information and a consequential breach of the duty of confidence from the stealing of information not otherwise provided. No party seems to have concentrated on any such difference. 9It is therefore necessary to deal with the duty of confidence and the means by which such duty may be breached. 10Notwithstanding the statement in St Thomas More's couplet, breach of confidence, in its earliest iterations, seem to be confined to employment and business relationship contexts. At one stage it was considered to be an adjunct to property rights. The modern approach is to treat it not as an adjunct to property, nor as an incident of contractual relations (be they employment or business), but rather as a separate head of equitable relief for the misuse of confidential information obtained in certain circumstances. Further, the law no longer seems to treat a breach of confidence as an example of a breach of fiduciary duty. 11In Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434, the requirements for breach of confidence were set out in a passage in the judgment of Gummow J at 443, in the following terms: "...[I]n order to make out a case for protection in equity of allegedly confidential information, a plaintiff must satisfy certain criteria. The plaintiff: (i) must be able to identify with specificity, and not merely in global terms, that which is said to be the information in question; and must also be able to show that (ii) the information has the necessary quality of confidentiality (and is not, for example, common or public knowledge); (iii) the information was received by the defendant in such circumstances as to import an obligation of confidence; and (iv) there is actual or threatened misuse of that information: Saltman Engineering Co Ltd v Campbell Engineering Co (1948) 65 RPC 203 at 215 Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39 at 50-1; O'Brien v Komesaroff (1982) 150 CLR 310 at 326-8. It may also be necessary, as Megarry J thought probably was the case (Coco v AN Clark (Engineers) Ltd [1969] RPC 41 at 48), and as Mason J (as he then was) accepted in the Fairfax decision was the case (at least for confidences reposed within government), that unauthorised use would be to the detriment of the plaintiff." 12It has also been described as information that is confidential in quality and imparted so as to import an obligation of confidence, in which circumstances equity will intervene to restrain the unauthorised use of the information to the detriment of the party that communicated it: see Coco v AN Clark (Engineers) Ltd (1968) 1A IPR 587, cited with approval in Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39 at 51. 13It is unnecessary to deal at length with whether the information, being the list of clients and their contact numbers, was received in circumstances that imported a duty of confidence or whether the material itself was of a kind to which a duty of confidence would attach. Each of those issues were conceded by the plaintiff/cross-defendant in these proceedings. 14Nevertheless, it is appropriate to note that information in the public domain or that is publicly known will not be information to which the duty of confidence would attach. Further, it is appropriate to remark that, generally, on the modern approach to breach of the duty related to confidential information, the duty attaches to "information which is the key to a profitable business in [the] industry and it is material which has been amassed by the [aggrieved party] so that the [aggrieved party] can run a competitive business in the industry": see Landmark Underwriting Agency Pty Ltd v Kilborn [2006] NSWSC 1108 at [60], per Young CJ in Eq. 15It is relevant to note, in the current context, that, even in the case of employment, the recreation of a customer list from memory is not a breach of the contract of employment. Nor is there any post contractual restraint on the use of such information, as long as the information has not been deliberately memorised or copied: Faccenda Chicken Ltd v Fowler [1987] Ch 117. 16Further, the extent to which the information, the use of which is sought to be restrained, is known outside the business, the extent to which its known within the business and measures to guard its secrecy are each matters to be considered in determining whether the material itself is confidential: Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 at 334, per Kirby P. There cannot be a greater degree of confidence imposed on persons with access to information, other than in peculiar circumstances such as attached to professional relationships such as doctor and patient and lawyer and client, than that which is imposed on an employee during or after employment. 17As earlier mentioned, there seems to be no contractual relationship between the plaintiff and the defendants or, more accurately, the cross-claimant and cross-defendant. Thus, the duty of confidence must be confined to an equitable duty and not one which derives from contract. 18Often, a significant element in the determination of whether there has been a breach of confidence the circumstance in which the person said to be in breach has received the information. In the proceedings before the Court in this matter, there are particular and peculiar aspects of that circumstance. As noted on a number of occasions earlier, the plaintiff and defendants do not have a contractual relationship. 19The contractual relationship exists between Mr James Pallett and the defendants (or one or more of them) and between the plaintiff and Mr James Pallett. This creates a complication because Mr Pallett, it is conceded, is at least the joint owner of the information that is said to be confidential. On one view, given the relationship between the various parties, it is Mr Pallett who provided the information to the plaintiff. 20A contractual analysis of the situation would require a conclusion that, if the defendants supplied confidential information to the plaintiff, they were doing so as an agent of Mr Pallett, the joint or sole owner of the information, and the person for whom the plaintiff performed work and for whose benefit the work was performed. 21Mr Pallett was not called in evidence. 22The foregoing is not intended to suggest that the cross-claimants could not restrain the plaintiff/cross-defendant from using confidential information of which it was the owner (albeit together with others). Nevertheless, if the information was, as a matter of law, provided to the plaintiff/cross-defendant by Mr Pallett, then the second defendant/cross-claimant is seeking restraint of a third party, who has gained access to the information lawfully (at least on one view of the evidence) and who is under no restraint, to the benefit of the second defendant/cross-claimant, as to the use of the information. 23It may well be that the breach of confidence requires the interposing of Mr Pallett as a party in the proceedings who, in turn, would need to cross-claim against the plaintiff/cross-defendant in order to ensure a proper basis for any appropriate remedy. 24The foregoing are difficulties of the Court's creation. The parties have not raised these issues. 25The failure of the parties to raise the issues is, to some extent, understandable. The allegation of the cross-claimant/second defendant is that the plaintiff "stole" the information and used it for his own benefit. The plaintiff denies any such theft. 26When the issues are put in that way, the factual scenario is one that does not allow for a third hypothesis. Nevertheless, even on the stark basis of the facts presented by each party in these proceedings, there may be issues associated with proper remedies that arise from findings that a breach of confidence has occurred, in the absence of Mr Pallett as party to the proceedings. 27These are matters that arise, more obviously, if and when damages are to be assessed. Given the concessions by the plaintiff/cross-defendant, they seem to be issues of concern to the Court and no one else.

Relevant Defamation Principles 28As earlier stated, the plaintiff, Mr Phillips, sues in defamation. There is also a cause of action under s 18 of the Australian Consumer Law 2012. Remedies sought are damages and a permanent injunction in the terms or to the same effect as the injunction issued on an interlocutory basis. 29The facts will be recited elsewhere. It is sufficient for present purposes to repeat that there was an internet publication which, according to the pleadings, was published by Mr Robinson (the fourth defendant) on behalf of the second defendant, CC Medical Offices Pty Ltd. I do not repeat the publication. 30It is sufficient, for present purposes, to recite that the plaintiff complains that the publication conveyed the following imputations: (a)The plaintiff is a thief; (b)The plaintiff dishonestly stole confidential information from the City Clinic in the full knowledge that he had no right to do so; (c)By his conduct in removing patient information without authority the plaintiff caused City Clinic to breach its privacy obligation to its patients. 31The defendants admit that Mr Robinson published the article and admit that the publication conveys the aforementioned imputations. 32No practical consequence arises from differentiating the conduct of Mr Robinson and the second defendant from the other defendants, at least at this stage of these reasons. There may be issues associated with which of the defendants bears the responsibility for paying damages, if any were to be awarded. 33The evidence before the Court is that persons downloaded or gained access to the impugned publication and, therefore, the imputations were published: Dow Jones & Co Inc v Gutnick [2002] HCA 56; (2002) 210 CLR 575 at [26]; David v Abdishou [2012] NSWCA 109 at [259]. 34The inference that persons read the publication on the internet is overwhelming. It is admitted that two of the defendants wrote the material and loaded it onto the internet. There is evidence of others reading material to that effect on the internet. The internet publication directed persons searching for the plaintiff's name (or more generally, for osteopaths in the city) to the impugned publication. I accept that there were persons that read the publication. 35It is manifest that the ordinary reasonable reader of the publication would draw the stated imputations from the publication. It is also manifest that the imputations, by any objective standard, are defamatory. 36The ordinary reasonable reader would consider the natural and ordinary meaning of the words in a defamatory sense. Those persons, being "right-thinking members of society generally" or "ordinary persons not avid for scandal" would understand the publication to mean that which is imputed (and admitted) and that the imputations are defamatory of the character of the plaintiff. 37By any ordinary moral or social standards, to call a person a "thief" (to use that example) must be defamatory: Reader's Digest Services Pty Ltd v Lamb [1982] HCA 4; (1982) 150 CLR 500. It is unnecessary to discuss these two issues. The plaintiff bears the onus to prove, on the balance of probabilities, the publication and the defamatory imputations. That burden has been satisfied. 38Before dealing with the defences, or the principles that apply to them, it is necessary to expand a little on the test in relation to those matters upon which the plaintiff bears the onus. It is trite that the test whether the publication is defamatory, or conveys defamatory imputations, is whether it could be reasonably postulated that "the ordinary reasonable reader" would consider that the publication conveyed the meaning alleged. 39The ordinary reasonable reader is said to be of fair average intelligence, fair-minded, not overly suspicious, not naive, not straining or forcing meanings, not "avid for scandal", and one who reads the entirety of the publication about which the complaint is made: Amalgamated Television Services v Marsden (1998) 43 NSWLR 158 at 165, per Hunt CJ at CL; Haddon v Forsyth [2011] NSWSC 123. 40In Marsden, Hunt CJ at CL said: "The ordinary reasonable meaning of the matter complained of may be either the literal meaning of the published matter, or what is implied by that matter, or what is inferred from it: Jones v Skelton (at 650; 1065). In deciding whether any particular imputation is capable of being conveyed, the question is whether it is reasonably so capable, and any strained or forced or utterly unreasonable interpretation must be rejected: Jones v Skelton (at 650; 1065). The ordinary reasonable reader (or listener or viewer) is a person of fair average intelligence, who is neither perverse (ibid at 7), nor morbid or suspicious of mind, nor avid for scandal: Lewis v Daily Telegraph Ltd (at 260). That person does not live in an ivory tower but can and does read between the lines in the light of that person's general knowledge and experience of worldly affairs." (Marsden, supra, at 165, some references omitted.) 41As earlier stated, relying on the judgment in Lamb, the process is one of ascertaining the objective meaning of the publication in its context and does not deal with subjective understanding; see Haddon per Simpson J at [16]. 42Lastly, in relation to the principles, it is clear, as earlier stated, that the publication is defamatory in that it has injured the reputation of the plaintiff, his standing amongst clients or potential clients and the community generally, and damaged the estimation that other people have of him. As a result of the publication, people are likely to think less of the plaintiff: Radio 2UE Sydney Pty Ltd v Chesterton [2009] HCA 16; (2009) 238 CLR 460 at 477, [36]. 43The plaintiff, having established publication, relevant imputations and the defamatory meaning of the imputations, has proved all that is necessary to succeed on defamation. It is then for the defendants to prove that one or more of the "defences" absolve the relevant defendants from liability. 44The defences upon which they rely are: substantial truth (s 25 of the Defamation Act); contextual truth (s 26 of the Defamation Act); statutory qualified privilege (s 30 of the Defamation Act); and qualified privilege under the common law.

45As earlier stated, the defence of substantial truth depends, fundamentally, on the factual context, with which I will deal later in these reasons. Nevertheless it is necessary to establish some principles. 46As s 25 of the Defamation Act makes clear (as does s 16), it is unnecessary for a defendant to establish the precise truth of every aspect of the imputation. It is only necessary that the defendant establishes that the matter about which the plaintiff complains is "substantially true": see s 25 and s 16(2)(b)(ii) of the Defamation Act respectively. 47"Substantially true" is defined in the Defamation Act as "true in substance or not materially different from the truth". The substantial truth of an imputation is proved if the main charge or gist of the libel is true or, as it has otherwise been described, "the 'essential' or 'substantial' truth of the sting of the libel" has been proved. Further, if the gist of the defamatory imputation were to be proved, there is no need to prove peripheral facts that are not otherwise pleaded as separately actionable. It is appropriate to set out the terms in ss 25 and 26 of the Defamation Act, which are as follows: "s 25 Defence of Justification It is a defence to the publication of defamatory matter if the defendant proves that the defamatory imputations carried by the matter of which the plaintiff complains are substantially true. s 26 Defence of contextual truth It is a defence to the publication of defamatory matter if the defendant proves that: (a) the matter carried, in addition to the defamatory imputations of which the plaintiff complains, one or more other imputations (contextual imputations) that are substantially true, and (b) the defamatory imputations do not further harm the reputation of the plaintiff because of the substantial truth of the contextual imputations." 48The notion of the substantial truth of the imputations pleaded by the plaintiff needs no further explanation. 49Contextual imputations raise other difficulties and, to some extent, counter-intuitive issues. The necessary pre-conditions to the establishment of a defence of contextual truth (as it is sometimes, somewhat loosely described) were discussed by the Court of Appeal in Besser v Kermode [2011] NSWCA 174; (2011) 282 ALR 314. 50Notwithstanding earlier practices, contextual imputations cannot include imputations that have been pleaded by the plaintiff and proved to be substantially true. Thus, the practice of "pleading-back" is not a practice supported by the provisions of s 26. The contextual imputation pleaded by a defendant must be "in addition to the defamatory imputations of which the plaintiff complains": see Besser. 51In Besser, at [78], McColl JA (with whom Beazley and Giles JJA agreed) said: "[78] This markedly different language highlights the sea-change the 2005 Act has wrought to defamation law in this state. Although s 26 created a new defence for all Australian jurisdictions other than this state, it is framed by s 8 in terms of the common law cause of action. A defence of contextual truth must defeat the whole defamatory matter (cause of action) of which the plaintiff complains, that is to say all of the plaintiff's stings: see [47] above. Thus s 26 postulates that the defence of contextual truth must carry contextual imputations "in addition to" those "of which the plaintiff complains". [79] Second, when the tribunal of fact comes to the weighing exercise the contextual truth defence entails (see [73] and s 26(b)) it must be able to conclude that because of the substantial truth of the contextual imputations "the defamatory imputations" - that is to say the plaintiff's cause of action - do not further harm the plaintiff's reputation. One again the focus is on comparing the defendant's contextual imputations with the plaintiff's cause of action. [80] Third, the use of the definite article in both subparagraphs of s 26 (the defamatory imputations) focuses attention on the plaintiff's imputations as a group - emphasising that the defence has to respond to all the plaintiff's imputations (cause of action). In contrast, s 16 of the 1974 Act used the indefinite article, directing the defence to "any imputation complained of", thus permitting the pleading-back of any other of a plaintiff's imputations to another. [81] Fourth, the words "in addition to", as the primary judge pointed out at [38] and [40], correctly in my view, cannot be "contorted to include imputations pleaded by the plaintiff". To conclude that the phrase "in addition to ... etc" connotes an imputation the plaintiff has not relied upon does no more than ascribe its ordinary meaning to it. This is reinforced by the use, in the same paragraph (s 26(a)) of further alternative language emphasising the distinction between the plaintiff's and the defendant's imputations: "one or more other imputations", the latter being defined as the "contextual imputations". Kaye J took the same approach to the construction of s 26 in the Defamation Act 2005 (Vic) in Newnham v Davis (No 2) [2010] VSC 94 at [48] - where the point presently under consideration did not arise. [82] Finally, I do not discern any legislative intention in the extrinsic materials to which I have referred that the s 26 defence was to continue the pleading-back practice which prevailed under s 16 of the 1974 Act. Rather, in my view, the structure of the 2005 Act and the language of s 26 belie any such intention. The New South Wales Attorney-General said, in the second reading speech to the Bill which became the 2005 Act, in reference to cl 26 that there would be a defence of contextual truth under the 2005 Act, that there had been one under the 1974 Act and that "[t]he purpose of the defence [was] basically to prevent plaintiffs from taking relatively minor imputations out of their context within a substantially true publication". That position is still open under s 26." 52With great respect to McColl JA, I agree with the analysis of what is required in order to establish a defence under s 26 of the Defamation Act and, even if I were not, would be bound to apply it. 53The defendants do not press the defence of statutory qualified privilege but press common law qualified privileged. In Cush v Dillon; Boland v Dillon [2011] HCA 30; (2011) 243 CLR 298, the High Court said: "[12] The defence of qualified privilege is based upon notions of public policy, that freedom of communication may in some circumstances assume more importance than an individual's right to the protection of his or her reputation. The question of whether the person making a defamatory statement was subject to some duty or was acting in the protection of some interest, in making the statement, is to be understood in this light. [13] It was therefore encumbent upon Mrs Dillon to establish that she had a duty to convey the information about the rumour to Mr Croft. She gave evidence that she felt such an obligation, but of course this could not be determinative of the question for the trial judge, namely whether there was a duty of a kind which created the occasion to make the statement, in which case the privilege attached to it. That question fell to be determined by a consideration of the positions of Mr Croft and of Mrs Dillon within the CMA, the nature and importance of the matters conveyed and the relationship of the defamatory statement to those matters. Mrs Dillon's evidence as to the sense of obligation she felt, if accepted, may be relevant to the question of malice. It will be necessary to say something more about the two questions and the relationship between them. [14] If the trial judge was satisfied that the occasion for a qualified privilege arose, it would then be necessary for Ms Cush and Mr Boland to prove that Mrs Dillon was actuated by malice in making the statement, in order to overcome the privilege. It may be seen from the passage from Toogood v Spyring above that the defence of qualified privilege is sufficient to overcome the law's presumption of malice (also referred to as "implied malice"), a presumption which is based upon the making of a false and defamatory statement. The protection given by the privilege is, however, lost if the person making the statement did so for an improper motive. "Express malice" is the term of art used to describe the motive of a person who uses a privileged occasion for some reason not referable to the duty or interest pursued. In the joint judgment in Roberts v Bass it was said that the privilege is qualified by the condition that the occasion must not be used for some purpose or motive which is foreign to the duty or interest which protects the making of the statement. [15] The trial judge did not determine the question whether the occasion for the making of the statement by Mrs Dillon to Mr Croft was a privileged one. His Honour proceeded directly to consider the issue of malice. But that question cannot be approached in isolation, independent of a determination of whether there was present in the circumstances a duty or interest which would support the privilege. A conclusion of express malice requires a finding that the maker of the statement was actuated by some improper purpose or motive, which is to say one not connected to the furtherance of the duty or interest so found. The nature and the extent of the duty or interest must be considered before the question of malice is addressed. In Roberts v Bass, Gleeson CJ observed that the "kind of malice that defeats a defence of qualified privilege at common law is bound up with the nature of the occasion that gives rise to the privilege"." (references omitted) 54In Cantwell v Sinclair [2011] NSWSC 1244, after reciting the controversy that was evident from a number of judgments of the High Court, intermediate Courts of Appeal and single judges as to the proper application of the defence of qualified privilege, the Court distilled that which had been clarified by the High Court in Dillon in the following way: "[113] The principles to be applied have, as is obvious from the citation of Dillon, above, been clarified: (i) Qualified privilege is based upon public policy, namely, in certain circumstances freedom of communication is a more important aspect of democratic government than an individual's right to protection of his or her reputation: Dillon, above, at [12]; (ii) It is first necessary for a trial judge to determine whether there was a duty of a kind which created the occasion to make the statement to which qualified privilege attaches: Dillon, above, at [13]; (iii) The determination of whether the occasion arose to which qualified privilege attaches is determined by consideration of the nature and importance of the matters conveyed, the relationship of the defamatory statement to those matters and the relationship between the maker of the statement and the person to whom the statement is made: Dillon, above, at [13]; (iv) The relationship between the maker and receiver of the statement is a requirement of a reciprocity of duty or interest necessary to attract the defence of qualified privilege, meaning, that the maker of the statement has a duty or interest in making it and the receiver of the statement has a duty or interest in receiving it: Dillon, above, at [12], [13], [32], [54]; Bashford, above, at [9], [10], [137]; Aktas, above, at [22], [41]; (v) Qualified privilege, if it were to exist, is defeated by an improper motive, otherwise termed "express malice", being a reason for the making of a statement not referable to the duty or interest pursued: Dillon, above, at [14], [29]; (vi) Qualified privilege is also lost for so much of the statement that is not relevant and pertinent to the discharge of the duty or the safeguarding of the interest: Dillon, above, at [19]; (vii) While knowledge that a statement is untrue may be evidence of malice, neither lack of belief in the truth of the statement nor objective falsity of the statement is sufficient to destroy qualified privilege: Dillon, above, at [28], [29]." 55That summary is still applicable. In Cantwell, I reiterated that which the High Court had discussed in Bashford v Information Australia (Newsletters) Pty Ltd [2004] HCA 5; (2004) 218 CLR 366 on the need to determine the reciprocity of interest with the appropriate level of detail and not simply to rely upon higher levels of abstraction under which all defamatory statements could be said to involve reciprocal interests. I rely on the discussion in Cantwell, without repeating same. 56There is one slight issue of controversy as to the approach in weighing the effect of the contextual imputation (or the facts, matters, circumstances giving rise to thereto) with the impugned defamatory imputations of which the plaintiff complains. In McMahon v John Fairfax Publications Pty Ltd (No 6) [2012] NSWSC 224, McCallum J held that the contextual imputation is measured against those imputations of which the plaintiff complains, which are untrue. That approach was not followed in the Queensland Court of Appeal in Mizikovsky v Queensland Television Ltd [2013] QCA 68. 57Counsel for the defendants/cross-claimant submits that the Queensland Court of Appeal is "plainly wrong" and should not be followed, citing Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89. The High Court in Farrah Constructions suggests that a single judge is entitled not to follow an intermediate Court of Appeal in another State, even one dealing with the same legislation, simply on the basis that it is "plainly wrong". 58While, at [135], the High Court in Farah Constructions does refer to "trial judges", it seems far more appropriate for such determination to be made by an appellate court in relation to another appellate court and likewise trial judges in relation to other trial judges. Nevertheless, the statement at [135] in Farah Constructions is a considered statement of the High Court. 59With great respect, the difficulty with the analysis of the Court of Appeal in Queensland in Mizikovsky is that it pays, it seems, insufficient regard to the terms of s 25, when dealing with the proper construction of s 26 of the Defamation Act. 60Legislation is intended to achieve harmonious goals. By operation of s 25 of the Defamation Act, it is a defence to prove that a defamatory imputation is substantially true. The policy behind such a proposition is that a true imputation is not defamatory or does not harm the reputation of the plaintiff. As a consequence, the defamatory imputations that are capable of further harming the reputation of the plaintiff are only those defamatory imputations that are untrue. True imputations are, in that sense, not defamatory. I will follow the approach adopted by McCallum J in McMahon.

Evidence and Witnesses 61A significant amount of the evidence adduced in these proceedings was irrelevant to that which ultimately affected any issue between the parties, except as to credibility of witnesses. Much of the evidence was by way of background. A significant aspect of the evidence adduced related to the relationship, if any, between the plaintiff and the defendants and negotiations for a contract under which the plaintiff would work as a contractor to the defendants, omitting Mr Pallett or any company associated with him. None of that latter evidence is relevant to any issue that is required to be decided by the Court, again, except as to credit. 62Notwithstanding attempts by the plaintiff and defendants to arrive at a proposal which each could accept, and which was acceptable to Mr Pallett, no such contract was effected. It is necessary to deal with some of the background, before detailing the evidence of the witnesses. 63The plaintiff had a background in dancing and martial arts and ultimately studied and obtained qualifications as an osteopath. Initially he worked in a number of places and ultimately in mid-January 2008 commenced work for Mr Pallett of Holistic Health. The relationship between the plaintiff and Mr Pallett was one of contractor and principal; not employment. 64Initially the plaintiff worked for Mr Pallett at York Street Clinic and then at High Street in Hunters Hill. The plaintiff continued to operate his own clinic in East Ryde. 65Ryde patients would make initial contact by telephone and communicate by text message. They would, generally, make contact with the plaintiff either by way of recommendation or from his business card. 66The relationship between the plaintiff and Mr Pallett was relatively courteous, but each would act and work independently of the other. 67It seems that the plaintiff became significantly popular with clients and increasingly unhappy in his working relationship with Mr Pallett. This occurred and peaked in or about mid-2010. At or about that time, the plaintiff had a conversation with the third defendant in which the plaintiff expressed his desire to "spread his wings" and intimated that he wished to contract directly with the defendants. There was a discussion about a new clinic to be opened by the defendants. 68Whether or not related to the foregoing conversation, in or about August 2010, Mr Pallett corresponded with the plaintiff outlining a proposal for the future of their relationship (Exhibit A, page 28-35) in which Mr Pallett recited that there was no written arrangement between him and the plaintiff and that their relationship should be reduced to writing. 69Mr Pallett described, in the correspondence, the relationship between him and the defendants, including some conclusions (without supporting material) relating to the contractual arrangement between City Clinic and Mr Pallett. This included Mr Pallett's "joint ownership" of the "Osteopathic Patient Base", which was stored by City Clinic and required to be provided to Mr Pallett and under which arrangement, it is said, City Clinic was not permitted to disseminate the patient information to any other party (Exhibit A, page 28). 70Apparently the contract between Mr Pallett and City Clinic began on 1 January 2009 with a duration, initially, of four years and Mr Pallett expressed the desire to exercise his option and extend the contract for a further four years thereafter (expiring 31 December 2016). Mr Pallett expressed the view that the contract he had with City Clinic applied not only to the King Street location from which they were currently operating, but any future City Clinic locations anywhere within Sydney. 71The terms of the letter suggest that Mr Pallett had an inkling (or had been informed) of the plaintiff's desire to exclude Mr Pallett from any arrangement between the plaintiff and City Clinic. 72Ultimately, Mr Pallett offered to restructure his business so as to take in other practitioners as Associate Partner, Junior Partner, Full Partner and Senior Partner. On the structure, as outlined in the proposal, each of the partnership levels would draw a percentage of net profits (after a 40% payment to a practitioner servicing a client and payment of 30% to City Clinic and any additional costs associated with the Osteopathy practice) of 5%, 10%, 20% and 30% respectively. Associate Partnership would involve no cost to the practitioner, but remaining levels of partnership would be based on a combination of time, performance and capital input. 73For obvious reasons of arithmetic, there could not be more than three senior partners. Presumably, it was envisaged there would be one senior partner and a number of partners at lower levels. As is made clear in the letter and the proposal, the motivation for it was, at least in part, the desire of Mr Pallett to retire, either in whole or in part, while continuing an income stream. In effect, Mr Pallett was suggesting that the plaintiff become some kind of partner and provide him (Mr Pallett) with equity for that "benefit". 74Mr Pallett's proposals were unacceptable (plaintiff XXN transcript 100, 11-14). This was an opinion expressed at the time to the third defendant. 75On or about 26 August 2010, Mr Pallett communicated a withdrawal of any previous offer to the plaintiff and offered him a locum contract, essentially continuing the current relationship, but to be formalised by a written agreement with a duration of 2, 3, 4 or 5 years, to be selected by the plaintiff. It is unclear what was being suggested would occur if that offer were refused. 76On 31 August 2010, the plaintiff declined the offer to enter into a locum contact for any extended period, or at all, if the contract were to be in writing (Exhibit A, page 39). The plaintiff was not prepared to commit to a contract for any extended period of time. 77On 7 September 2010, the plaintiff argued with Mr Pallett and Mr Pallett requested the plaintiff to leave City Clinic forthwith (Transcript 20, 41 and following). At the conclusion of the meeting, the plaintiff departed the location and telephoned the third defendant and thereafter had a conversation with the third and fourth defendants. The proposal of the third and fourth defendants in that conversation was that the plaintiff should return to City Clinic and they (the third and fourth defendants) would seek to resolve the situation with Mr Pallett. It is not clear what authority, if any, was being exercised by the third and fourth defendants when they suggested that the plaintiff return to work at City Clinic. 78Nevertheless, the plaintiff did return to work on 8 September 2010 and on 11 September 2010 the third defendant informed the plaintiff that a resolution had been reached. This involved the plaintiff remaining as a subcontractor to Mr Pallett until December, at which point the plaintiff would move to the Jamison Street Clinic which was, by then, to have been opened under a direct contract with City Clinic. No one suggests that the foregoing arrangements as to the plaintiff working at a yet to be opened City Clinic in Jamison Street was a binding contract on either the defendants (or any one of them) or the plaintiff. 79During the immediately following period, the plaintiff continued to work at City Clinic and took a number of other steps, including looking at options elsewhere (Transcript 28.19), seeking a webpage designer; responding to one or more advertisements; and applying for a Medicare provider number. The last mentioned step was taken on 23 September 2010. 80On or about 24 September 2010, the plaintiff informed City Clinic that he would not be taking patients beyond 30 September 2010. There is some controversy, with which I will deal later in these reasons, as to whether he asked for his appointments to be rescheduled for a period after 25 October 2010 when, it is alleged by an employee of City Clinic, he was to have returned from "leave". 81In any event, the plaintiff ceased treating patients at City Clinic on 30 September 2010. 82On 1 October 2010, the plaintiff signed a Room Licence Agreement with Elevate Performance and Health (Elevate), under which agreement the plaintiff licensed a room commencing 11 October 2010 for an initial period of 12 months and was provided with reception services and certain administrative services and facilities (Exhibit A, page 351-357). The plaintiff, under that contract, paid a rent of $720.00 per week plus 15% of any remaining amount of his earnings. 83On 5 October 2010, the plaintiff sent a text message to Mr Hooper (a patient of his at City Clinic) in the following terms: "Hey justin, moving my practice from city clinic to elevate performance and health centre, level 11, 8 spring street, 9252 XXXX, regards james" (Exhibit 2, altered to omit details of phone number) 84On or after 5 October 2010, City Clinic received one or more calls from patients informing them of a text message said to have been received by each of them from the plaintiff in or to the same effect as Exhibit 2. There is no record of these phone calls. 85On 7 October 2010, after an alleged telephone conversation between the fourth defendant and the plaintiff to which I will refer later in these reasons, one text message to Ms McCoy from the plaintiff was sent to City Clinic by Ms McCoy and reported to each of the third and fourth defendants. Apparently the fourth defendant rang the number and unsuccessfully attempted to speak to the plaintiff (who had not yet commenced work at Elevate) and had a heated discussion with the owner of Elevate. 86Later on that date, 7 October 2010, the plaintiff corresponded with City Clinic through the fourth defendant, and possibly the third defendant, informing them that he had decided to move on from City Clinic (Exhibit A, page 40). 87Apparently, text messages were received by a number of persons who had been patients of the plaintiff at the time he worked at City Clinic, although plainly some of them were patients of longer standing (i.e. persons who were patients of the plaintiff prior to the time he commenced work from City Clinic). 88The foregoing is intended to be, as neutrally as appropriate, a summary of the time line of the relevant events. It is necessary to make some comment on the evidence of individual witnesses. There were 25 witnesses, most of whom were clients or former clients of the plaintiff at the defendants' premises.

The Plaintiff, James Phillips 89Much of the evidence given by Mr Phillips has been covered in the summary already given. Mr Phillips gave evidence as to his background and how it was he came to commence work at City Clinic. The earlier mentioned discussion with Mr Pallett, in which Mr Pallett asked him to leave City Clinic, was the subject of some detailed evidence. 90On 7 September 2010, Mr Phillips met with Mr Pallett to discuss problems that Mr Phillips saw in the proposal that had been sent to him and to which an earlier reference has been made. Mr Pallett told him to collect his belongings and leave City Clinic. 91On leaving City Clinic, Mr Phillips rang Elizabeth Abbate, the third defendant, and the Managing Director of City Clinic. As earlier stated, Ms Abbate rang Mr Pallett as a consequence of the conversation with Mr Phillips and later called Mr Phillips to inform him that he would be staying to treat the patients that had already booked appointments. 92Ms Abbate was the person who first mentioned an offer of an arrangement directly with City Clinic for Mr Phillips when the Clinic at Jamison Street opened. 93There was significant evidence about the nature of the arrangement and the involvement of Mr Pallett in any such arrangement. While the discussions have some relevance in relation to the motivation of Mr Phillips to leave the City Clinic and/or the surprise with which that departure was met within the staff of City Clinic, there are no direct legal consequences as a result of the discussions that occurred and about which much evidence has been given. It may, depending on which account one accepts, affect credit. 94It is sufficient, for present purposes, to reiterate that Mr Phillips made clear to the defendants that he was not prepared to continue working for Mr Pallett. Much of the breakdown in the negotiations between City Clinic and Mr Phillips revolved around Mr Phillips' perception that Mr Pallett would continue to be involved, at some point, in any arrangement he had with City Clinic in any of the clinics they operated or may in the future operate. 95Towards the end of September, Mr Phillips noticed an advertisement in the Australian Osteopathic Association website for an Osteopath in the central business district. He rang and spoke to the Clinic owner, Daniel Carlin, and arranged a meeting in mid-to-late September. That meeting occurred. There were subsequent meetings. In the second meeting between Mr Carlin and Mr Phillips, Mr Carlin offered Mr Phillips a position at the Spring Street Clinic of Elevate, which Mr Phillips accepted. 96He signed a contact with Elevate on 1 October 2010, which was the third meeting he had with Mr Carlin. 97As to the use of the information, which is a far more relevant aspect to the proceedings, Mr Phillips attested to the fact that he had in his possession a number of business cards and notes from patients given to him prior to 30 September 2010, containing contact details. Those contact details included Mr Milton, Mr Grayson, Ms Kendall, Mr Harkings, Ms Medich, Ms Tyrell, Mr Johnston, Mr Yelland, Ms Monique, Mr Chamen, Ms Broughton and Mr Atkin. In relation to each of them, there was, according to Mr Phillips, no suggestion that their details were obtained from the records of City Clinic. 98Some of them were clients of Mr Phillips in Ryde and not through City Clinic, although their details may have been on City Clinic's records due to the fact that they would have been treated at City Clinic as well. Others willingly gave him business cards when they found out, during September, that he was leaving City Clinic. 99Mr Phillips attested to the fact that Mr Robinson, the fourth defendant and a Director of City Clinic, rang Mr Phillips on 6 October 2010 and left a message to return the call. When Mr Phillips returned the call, Mr Robinson said words to him to the following effect: "We want you to continue working with James Pallett." 100To which Mr Phillips replied in the negative. Other words were spoken, in or to the same effect, and Mr Phillips reiterated that he considered his relationship with Mr Pallett was "hopeless" and "unworkable" and he did not want anything to do with him going forward. 101The next day, 7 October 2010, Mr Phillips sent an email which is summarised below. 102It should be noted that emails of 10 September 2010 and 21 September 2010 from Mr Phillips to Mr Robinson indirectly corroborate the attitude Mr Phillips had to working with Mr Pallett and wanting a definite arrangement as to future working conditions and the basis upon which he would be operating (Exhibit A, 39A & 39B). 103On 7 October 2010, as earlier stated, Mr Phillips sent an email reciting that he was "to move on from City Clinic". Mr Phillips wished Mr Robinson and Ms Abbate every success and informed them he would leave the keycard downstairs from the Clinic. 104Just prior to receiving the email from Mr Phillips, City Clinic received information that Mr Phillips was establishing a Clinic or working from a Clinic in Spring Street on or from 11 October 2014. 105Generally, most of the examination and cross-examination turned on conversations that had occurred between the Directors of City Clinic and Mr Phillips during the course of September and whether Mr Phillips gave notice in September or in early October. 106Other than any possible effect it may have on the credit of witnesses, such issues are irrelevant to any issue the Court must decide. Mr Phillips had no obligation to give notice to City Clinic. He was engaged by Mr Pallett (or his company Holistic Health). As far as the Court is aware, no term of the contractual arrangements between Mr Phillips and Holistic Health or Mr Pallet involved the giving of notice of any specified duration, or at all. 107If, as is alleged by the defendants, Mr Phillips told them he was going on leave and would return on 25 October 2010, it was his right so to do. He may well have believed that at the time he had said it, if he were to have said it. 108Even if he were not to have believed it at the time he said it, there was no obligation of disclosure as to any future working arrangements into which Mr Phillips may have wished to enter. Of course, if he had lied, that would be a matter that, at one level, would affect his credit generally. But there is no obligation on Mr Phillips to tell City Clinic anything. 109Some of the cross-examination was extremely relevant to the issue with which the Court must deal. First, the examination confirmed that Mr Phillips received comments from others as to the existence of the website that he seeks to impugn in the defamation proceedings. Secondly, it is clear from the evidence of Mr Phillips (corroborated by other material, including other testimony) that a number of patients at City Clinic were patients of Mr Phillips prior to him operating out of City Clinic. 110Thirdly, it is also clear from Mr Phillips' evidence, and other corroborating material, that a number of patients seen at City Clinic were told by Mr Phillips that he was leaving City Clinic. 111It is also evident, from the evidence of Mr Phillips (and other material), that a number of text messages were sent during the period that includes early October 2010. The inference is that a number of text messages were sent to former clients at City Clinic (and elsewhere) for whom Mr Phillips had contact details. There would also have been a number of text messages sent by Mr Phillips in answer to messages received by him. The two categories are not mutually exclusive. 112Mr Phillips denied, a number of times, ever copying information from the records of City Clinic for the purpose of utilising the phone numbers of clients in order to entice them away from City Clinic to Mr Phillips' new premises. He vehemently denied copying records, accessing records (other than for legitimate purposes which were described) or removing records. 113Despite the criticism made of his evidence by the defendants, I take the view that Mr Phillips was an honest witness with a fallible, but generally reliable memory. He is a person who is unsophisticated in approach and disclosed, in the witness box, a short attention span. Where Mr Phillips could not recall events in detail or otherwise, he said so. Generally, I accept his evidence. 114It is clear, from the evidence that was adduced during the course of the proceedings, that clients built up a close relationship with their osteopath. It would be surprising if it were otherwise. Mr Phillips gave evidence that over the years he would have received text messages from clients and responded to them. For example, if there were a last minute cancellation or request for a last minute appointment (particularly if it were outside the hours that Mr Phillips was otherwise available). 115Mr Phillips gave evidence that he spoke to clients of City Clinic and told them that he would not be there much longer. Those conversations occurred in September. He testified to the fact that a number of the clients then gave him contact details, either a business card or a mobile phone. 116The defendants criticised this evidence on a number of bases. First, it is said that the incidents of text messages sent by Mr Phillips grew significantly in the period covering October. It can be accepted that, in establishing a new practice, Mr Phillips sent a significant number of text messages to those persons for whom he had a contact number. 117Against that assessment, the defendants put a number of matters. First, it is said that the fact, if it be the fact, that Mr Phillips contacted some patients in a legitimate manner, does not exculpate him from his conduct in contacting other patients in an illegitimate manner. The difficulty with that proposition is manifest. First, it assumes that contact with the other patients was done in an illegitimate manner (which is the very matter which is sought to be proved). Secondly, it reverses the onus. It is for the defendants to prove that Mr Phillips contacted persons illegitimately, namely, by removing or inappropriately copying the contact details from the records of City Clinic. It is not for Mr Phillips to prove otherwise. 118The second aspect that is used to undermine the credibility of Mr Phillips' evidence is the particular circumstances of the business card of Mr Atkin. Mr Phillips gave evidence that Mr Atkin provided him a business card in September of which, Mr Phillips said, he had a clear memory. 119The business card provided by Mr Phillips was a business card for a work address, which Mr Atkin, it is said, did not have in September 2010. This, it is said, is established by cross-examination (Transcript, 160). First, the cross examination does not establish the fact. It establishes a possibility. 120Secondly, Mr Phillips made clear, on a number of occasions, that he did not remember precisely who gave him business cards and when. The cross-examination gives rise to a number of possibilities. Assuming, without deciding, that the business address shown on the business card produced in relation to Mr Atkin was one that was not in use until May 2011, it is more than possible that Mr Atkin gave a business card in September 2010 that has been replaced as a consequence of further notice. The cross-examination and facts concerning Mr Atkin do not establish or, in the circumstances, disclose, lack of credit. 121The third matter addressed by the defendants in relation to this evidence is that it is accepted that some of the clients provided their business cards well before September 2010. I do not understand how this undermines the credit of Mr Phillips given what has already been said about his candid statement concerning the recollection of details in September 2010. The fact, if it be the fact, that some clients provided a business card prior to September 2010 is not a matter that affects Mr Phillips' credit. Moreover, no submission has been put that the use of the contact details given to Mr Phillips' prior to September 2010 was a breach of confidence or that Mr Phillips "stole" the information. 122The fourth aspect, upon which the defendants rely to undermine the credit of Mr Phillips and the version of events that he gave in evidence, was a criticism of the plaintiff's other witnesses on the basis that a number of them could not recall receiving a text message from Mr Phillips or could not recall giving Mr Phillips the business card or contact details or could not recall when the business card was given. 123The immediately preceding paragraph raises a number of interesting questions. The first of them is the not unexpected unreliability of witnesses, as the events occurred three years before evidence was given, and the events, at the time, would not have been significant. If all of them could remember these events, there would be real questions as to their veracity. 124More importantly, the evidence establishes that many former clients of City Clinic contacted Mr Phillips without ever receiving an SMS or text message. Of itself, that circumstance is not surprising. Evidence was adduced in these proceedings as to the importance of internet searches for these kinds of services, which is one of the reasons complaint is made about the impugned publication. 125The defendants have proved that 117 person who were previously in the records of City Clinic (either as clients or as clients of Mr Pallett or Mr Phillips and recorded by City Clinic) received osteopath services from Mr Phillips in the first three months of his operation at Elevate from 11 October 2010 to 31 December 2010 (see Exhibits 6, 5, and A). Notwithstanding that the defendants know the identity and contact details of each of these patients, none were called to give evidence in these proceedings. The inference must be that none of them are of assistance to the defendants' case. 126Evidence was adduced by a number of witnesses who were former patients of Mr Phillips and who said that they received a text message. Each initially attested to the fact that they had not given their contact details to Mr Phillips. After cross-examination, none of them were convincing as to their recollection. 127Mr Hooper, one of the witnesses to which reference was last made, ultimately conceded that Mr Phillips had informed him that he was leaving City Clinic and it was quite possible that he gave Mr Phillips his mobile contact details. While Richard Knox was not as initially definite, he too conceded the possibility that he gave Mr Phillips his mobile contact details in September 2010. 128Mr Kalantzis, a solicitor on the record for the defendants for a period during these proceedings, was also a patient of Mr Phillips and gave evidence. On the issue of contact by Mr Phillips to Mr Kalantzis, Mr Kalantzis said it was possible that he had given the number. It becomes more probable than not in circumstances where the mobile number used to contact him was not a number on City Clinics' computer data records. As a consequence, the allegation of the defendants that Mr Kalantzis was one of the persons whose contract details were "stolen" by Mr Phillips cannot be substantiated. On the contrary, to the extent Mr Kalantzis exemplifies what occurred, it shows that the contact details possessed by Mr Phillips were otherwise than that contained in City Clinic's records and were not "stolen". 129Ms Otavski received a text message and had not been treated by Mr Phillips during September 2010. In cross-examination Ms Otavski was not certain that the text was from James Phillips as distinct from James Pallett. Evidence in the proceedings was to the effect that Mr Pallett sent text messages at or about the same time as Mr Phillips. 130Nathan Bradley gave evidence. Mr Bradley was more concerned to finish his evidence than he was with the accuracy of his evidence. Mr Bradley would not concede that his memory may have been affected by the period of time that had elapsed. His answer to the question as to whether it was possible he had given his contact details to Mr Phillips was to the effect of: "What would you like me to say really?" 131Mr Bradley ultimately accepted the proposition that he gave out (or may have given out) his mobile. His evidence does not assist the defendants in their case. 132Ms Mackie's evidence in chief assisted the defendants' case. In cross-examination however, Ms Mackie conceded that in September 2010, she had a conversation with Mr Phillips to the effect that he was leaving City Clinic, or may be, and she may have given Mr Phillips her contact details at that point in time. Ms Kendall was in a similar situation. Her initial recollection was that she had received a text and had not given out her contact details to Mr Phillips. In cross-examination, she accepted that she had given Mr Phillips her business card and may well have given her personal mobile number. 133Lastly, there is the evidence of Ms McCoy. It must be said that Ms McCoys' demeanour was unusual in a number of respects. Her body language and the manner in which she, quite deliberately, avoided eye contact with Mr Phillips (or looking in his direction) was startlingly obvious. Her demeanour seemed to suggest an independent animosity to Mr Phillips. 134Nevertheless, I do not draw any inference that Ms McCoy was deliberately telling an untruth or dissembling. Ms McCoy was certain that she had not provided her contact details to Mr Phillips on 30 December 2010. This was a reconstruction based upon the way she said she felt after receiving the text message on 7 October. 135However, Ms McCoy had five appointments during September and may have provided those contact details in any one of these other four visits. Whatever be the situation, it is fair to say that whether or not Ms McCoy gave Mr Phillips her contact details would not have been a matter of much moment to her at the time it occurred. Indeed, it is the kind of matter that would be forgotten fairly quickly and, if she were to have forgotten it, would equally account for her reaction to receiving the text message. 136Overall, the evidence in relation to the text messages and their receipt, do not significantly affect the credit or truthfulness of Mr Phillips' evidence. 137Notwithstanding the other evidence upon which the defendants rely, I continue to consider Mr Phillips a truthful witness with a generally reliable memory, but not, as one would expect, as to the details of names and dates of the people with whom he had contact in September 2010.

Patient Witnesses 138Generally, the patient witnesses have been described in dealing with my attitude to the evidence of Mr Phillips. It is unnecessary to deal with them in any greater length, except as follows. Other witnesses were called, including in reply, and most of the witnesses fall into the categories already described, even if they have not been identified. There are some exceptions. 139Donald Hickson was an exception. He gave evidence wholly consistent with the version of events given by the plaintiff. He attested to some other material relating to conduct of the defendants in relation to persons ringing City Clinic and asking for Mr Phillips, but I do not see that evidence was particularly relevant to anything the Court has to decide. His memory was extremely good and his answers precise and direct. 140Generally the patient witnesses were honest and, other than the exceptions already mentioned, gave evidence to the best of their recollection, bearing in mind the duty to the Court to be as honest and as reliable as possible.

Elizabeth Abbate 141Ms Abbate has already been described in terms of her position within City Clinic and within the litigation. Her evidence predominantly concerned background information relating to the relationship between Mr Phillips and City Clinic; the relationship between Mr Phillips and Mr Pallett; and the relationship between Mr Pallett and City Clinic. 142Ms Abbate gave evidence regarding the conversations and proposals relating to agreements with Mr Phillips and Mr Pallett. Essentially, there was little dispute about the issues. Mr Phillips wanted to work in an arrangement without Mr Pallett. There was some discussion as to how that could be achieved. According to Ms Abbate, agreement was reached between her and Mr Robinson, on the one hand, and Mr Pallett, on the other, that on the opening of the new clinic in Jamison Street, there would be direct relationship between City Clinic and Mr Phillips, but Mr Pallett would receive an "override". An override, in that context, is a commission. 143On any analysis, there were difficulties between Mr Phillips and Mr Pallett. There were also some difficulties between Mr Pallett and City Clinic. Mr Phillips wanted to work without any involvement of Mr Pallett. The last arrangement proposed to Mr Phillips, described by Ms Abbate as proposed after agreement with Mr Pallett, involved Mr Pallett in the arrangement by virtue of commission. 144Ms Abbate also gave evidence as to the way in which the telephone system worked. This was relevant to some evidence relating to the capacity of Mr Phillips to make telephone calls from one of the treatment rooms. 145Most relevantly, Ms Abbate testified to the fact that the computer system that had operated recorded access by any person to the records of patients and recorded which person, if any, purported to print out a report of patients and contact details. It is not suggested that any report shows that Mr Phillips printed out a report of patients and contact details from the records of City Clinic. 146Further, and most relevantly, Ms Abbate gave evidence that between the early part and middle of September 2010, she entered Mr Phillips' treatment room and saw him seated at his desk in front of the computer. At that point in time he removed a sheet of a paper on which he had been writing and looked up at Ms Abbate in a manner that she described as "shocked". She was unable to ascertain what Mr Phillips had been doing. The Court is asked to draw the inference that this was an occasion on which Mr Phillips was copying data from the records. It is not suggested that the computer was open at the records. Nor, if the computer were open at all, that the screen was closed on Ms Abbate's entry into the room. 147If such an incident were to have occurred in middle of September 2010, it is more likely that Mr Phillips was dealing with Medicare, looking up advertisements, or a range of other matters other than copying information. 148No inference arises from that evidence as to the conduct of Mr Phillips. This is particularly so in circumstances where there is no evidence of any unauthorised access identified by the automatic reports that Ms Abbate says were produced and no evidence of whether the computer was on, what was on the screen, if the computer were on, or whether the screen was closed down by Mr Phillips when he was "discovered". 149Otherwise, Ms Abbate was, or seemed to be, an honest witness with a generally reliable memory.

Brad Robinson 150Mr Robinson's evidence and demeanour was not helpful to his case. On the essential facts, Mr Robinson added little weight. On a number of ancillary matters, Mr Robinson's evidence gave the impression that he was dissembling, mendacious and unreliable. 151Mr Robinson's evidence as to the publication of the blog is a fine example. The blog, a publication other than the impugned publication in these proceeding, was in terms identical (at least in part) to the impugned publication. Further, it had information in it which was known, on one view of Mr Robinson's evidence, only to Mr Robinson, Ms Abbate and Mr Pallett. On another view of Mr Robinson's evidence, it was also known to his friends. 152The later evidence was given at a time when it was clear that Mr Robinson felt he was under some pressure to admit that he wrote the blog. Ultimately, he suggested that approximately 30 friends were aware of the information previously attested to be within his, Ms Abbate's and Mr Pallett's knowledge only. The authorship of the blog goes to questions of aggravated damage. None of these friends were called to give evidence that they received the information that was included in the blog. 153His evidence of conversations with Mr Phillips, particularly relating to the start date of what was intended to be the Jamison Street clinic, was another example. Mr Robinson was cross-examined as to the start date or anticipated start date of Jamison Street. Mr Robinson gave evidence that he said to Mr Phillips that he expected Jamison Street to commence in December. At or about the same time that he says he was giving that start date to Mr Phillips he wrote an email (Exhibit A, 37A), which suggested that the start date would be October. When, in examination, he thought he was in some difficulty in relation to that discrepancy, his version of events was that he told Mr Phillips that the start would be "December or when Jamison Street was ready, whichever occurs first". 154Mr Robinson dissembled. He reconstructed in a manner that was wholly to his own benefit, would not answer questions directly, would answer questions facetiously and generally gave evidence that he considered to be in his favour, as distinct from that which he genuinely recollected was the fact. 155Otherwise, there is little in his evidence that is not otherwise covered in the recitation of facts that have already been included in these reasons for judgment.

Consideration 156I have already discussed the issues of publication and the imputations arising. There is little or no dispute as to these issues. The impugned publication was written by the fourth defendant, Mr Robinson, and placed on the internet by him. Mr Robinson was, in that respect, acting in his role in the management of City Clinic. The defendants have not sought to differentiate liability as between each of them. If it be necessary to differentiate it, I would determine that the material has been published by the fourth defendant and the second defendant. 157The imputations have been accepted as arising. The admission that the imputations arise is wholly appropriate. The imputations pleaded plainly arise from the publication. Further, using the tests already outlined earlier in these reasons, the imputations that are pleaded and arise from the publication are plainly defamatory. 158At [54], infra, I reiterate the principles summarised by me in Cantwell at [113]. Essentially, in order for the defendants' case for qualified privilege to succeed, they must establish a reciprocity of duty or interest necessary to attract the defence. Whether the statement is true or false, the maker of the statement must have a duty or interest in making it and the receiver of the statement must have duty or interest in receiving it. 159The circumstances of the publication of a document on the internet, for the world at large, militates against acceptance of the proposition that the intended receivers of the statement had a duty or interest in receiving it. I do not consider that the receivers of the statement had such a duty and, as a consequence, the defence of qualified privilege cannot succeed. 160The "defence", which occupied the most amount of time, was the allegation that the imputations were true. There must be some discussion about the meaning of the imputations in ordinary parlance and in law. 161The test, as earlier stated, is the meaning to be given by the ordinary reasonable reader (as that term is explained earlier in these reasons) and is the "natural and ordinary meaning of the words". 162A "thief" is a person who steals another person's property (The Australian Concise Oxford Dictionary, 4th Edition) and, even without Dictionary definitions, would be so understood. Stealing or theft involves the taking of something capable of being stolen, without the consent of the owner, and without a claim of right, with the intent of taking the goods permanently to deprive the owner of that material: Ilich v R [1987] HCA 1; (1987) 162 CLR 110. The foregoing is not only the legal definition, it is the ordinary meaning of the words. The Australian Concise Oxford Dictionary, 4th Edition, defines the word "steal" as "take another person's property illegally"; take "property etc without right or permission, especially in secret with the intention of not returning it". 163If, as is alleged, the plaintiff gained access to patient information, he did so because he was entitled to gain access to patient information. If, as is alleged, the plaintiff copied that information, he was not entitled to copy the information. 164If the plaintiff copied the information as hypothesised in the immediately preceding sentence, he may not have been "stealing" the information. By utilising such information (assuming, for the purposes of this statement only, that the information was copied) he has used confidential information in a manner that was a breach of the duty of confidence. 165A breach of confidence is not in the legal or ordinary sense "stealing". By misusing information he may have received legitimately the plaintiff does not become a "thief". Nor would he have stolen confidential information. 166Further, it would seem, although little has been put to the Court on this question, that sending a text to any person whose information he had gained in the foregoing manner would not be a breach of the privacy obligations of City Clinic. 167I accept, notwithstanding the formal definitions of "steal" and "theft", that a person can steal information, notwithstanding that the information stolen is still available to the original and rightful owner. In one sense, the "stealing of information" is an exception to the ordinarily understood term of stealing, which involves depriving the person of the goods or material with an intention of depriving them of it permanently. 168As earlier stated in these reasons, there was a time when confidence was thought to be adjunct to property rights and confidential information was seen as specie of property. In that sense, "stealing" information would be to take away the confidential property right and deprive the owner of the use of it permanently. Nevertheless, whether stealing information is an exception to the requirement to deprive the person of the goods stolen permanently, or whether in the case of information the copy is that which is taken away, of which the owner is deprived permanently, I am prepared to accept that if the information was obtained without authority, or for an unauthorised purpose, it would be theft. 169Assuming, for the remainder of this analysis, that a deliberate copying of the information on the record would also amount to stealing the information, the Court is required to come to a conclusion as to whether the imputations are true. 170Before doing so, it is necessary to reiterate that even an employee, whose duty, absent particular contractual obligations, is greater than the duty imposed upon third parties, including independent contractors, is not under a duty not to utilise this kind of employer information obtained during the course of employment. In other words, in the absence of a specific contractual obligation, an employee is entitled, after termination, to utilise for her or his own benefit the information as to client names and contact details that the employee garnered legitimately during employment. The employee is not entitled to print off a copy of clients. Nor is the employee entitled to memorise deliberately the names and contact numbers. Nevertheless, those names and numbers that have been volunteered by clients or otherwise remembered, in the ordinary course of employment, may be utilised by the employee after termination of employment for the employee's own benefit in, for example, a business established by the employee: Faccenda Chicken Limited v Fowler [1987] Ch 117; Riteway Express Pty Ltd v Clayton (1987) 10 NSWLR 238 at 240; and Landmark Underwriting Agency Pty Ltd at [61]. 171In the absence of express contractual obligations, the obligation on Mr Phillips can be no higher than that of an employee. There are no express contractual obligations. In those circumstances, Mr Phillips was entitled to utilise, for his own benefit, such contact details that he had obtained directly from patients during the course of his engagement at City Clinic, or otherwise obtained, either from memory or otherwise, in the ordinary course. 172I have concluded that the defendants have failed to establish, on the balance of probabilities, that Mr Phillips deliberately memorised or copied or printed out the records of City Clinic. Nor have they proved, on the balance of probabilities, that any records were obtained without authority; nor that Mr Phillips gained access to such records without authority. The defendants have failed to establish the defence of truth to any of the imputations pleaded. 173As a consequence of the foregoing, and my findings relating to the manner in which Mr Phillips obtained the contact details of the persons to whom he sent a text message, there has been no breach of confidence. 174Even though I have found against the defendants on breach of confidence, I shall make some comment on the nature of the remedies sought by the defendants. The remedy of equitable compensation, or compensation for breach of confidence, is an alternative remedy to an account of profits. A party cannot obtain both equitable compensation and an account of profits. 175When a party seeks an account of profits, it seeks, in essence, for the Court to hold that the wrongdoing has caused the wrongdoer to act "as agent" of the innocent party and has earned profits on behalf of the innocent party. 176An account of profits does not measure loss of the innocent party, but the profits from the wrongdoing: Dart Industries Inc v Decor Corp Pty Ltd [1993] HCA 54; (1993) 179 CLR 101; Warman International Ltd v Dwyer [1995] HCA 18; (1995) 182 CLR 544. 177In a case such as this, an account of profits may not be appropriate for two reasons. The first is there is some significant issue as to whether in earning the profits, if profits were earned, Mr Phillips would have been the "agent" of the defendants or of Mr Pallett. 178The second difficulty is the difficulty of principle in that, traditionally, an account of profits condones the infringement of the innocent party's rights and treats the wrongdoer as the agent of the innocent party for the purpose of making profits: Neilson v Betts (1871) LR 5 HL 1 at 22 affirmed in De Vitre v Betts (1873) LR 6 HL 319. 179The Victorian Court of Appeal examined this question in Edmonds v Donovan [2005] VSCA 36; (2005) 12 VR 513. It concluded that the remedy of equitable compensation was inconsistent with the remedy of an account of profits or a constructive trust. The Court determined that the choice of remedy was one for the Court, in which a significant factor would be the choice of the plaintiff and the plaintiff's election as to which of the inconsistent remedies it would seek to pursue. 180Nevertheless in these circumstances, if, contrary to the view taken by me above, any contact details were obtained illegitimately, those details would be merged into contact details obtained in circumstances that allowed the plaintiff to utilise the information. In those circumstances, an account of profits could not determine the profits made from those persons whose contact details had been obtained illegitimately. 181In the circumstances of the foregoing findings, the Court is required to assess damage in relation to the defamation. Further, the plaintiff seeks a permanent injunction to prevent the publication or re-publication of the defamatory material. 182Permanent injunctions of the kind sought are in a very different category to interlocutory injunctions sought pending the determination of defamation proceedings. Such permanent injunctions, as part of the final relief, are a more common feature of defamation proceedings than was previously the case. Such permanent injunctions have a particular use in circumstances where the defamatory material has been published on the internet and, therefore, can easily be republished. Given the terms of s 23 of the Defamation Act, a re-publication by the same defendant of the same mater cannot be the subject of further proceedings, except for leave of the court. In my view, it is appropriate to issue a permanent injunction to restrain publication of the material or imputations. Such injunction should, in the circumstances of this case, enjoin all of the defendants. 183In dealing with the assessment of damage, I do not consider this to be the most serious of defamations. The defamatory material was available to the public for a short period, during which, on the material before the Court, a number of people gained access to the publication. That number was not great. 184Further, I do not consider that the circumstances of the publication or the subsequent conduct of the parties (with the possible exception of the publication of the blog) was such as to give rise to aggravated damages. While I have no doubt that there were potential clients of Mr Phillips who were influenced by the publication in not utilising his services, Mr Phillips does not seek special damage and I do not consider, even if special damage were sought, that persons in that category were of a large number. 185As is clear from earlier comments, the relationship between osteopath and client is a close one. I expect that most clients who read this material would see it as "sour grapes". Nevertheless, it has damaged the reputation of the plaintiff and damages are appropriate. I do not consider that there has been a large grapevine effect. There may have been no such effect. 186In the circumstances, damages are assessed at $50,000.00. The plaintiff shall draft Short Minutes of Order reflecting that award and I will hear the parties on costs and interest. 187The Court makes the following orders: a.Judgment for the plaintiff; b.Judgment for the cross-defendant on the cross-claim; c.The second and fourth defendants shall pay the plaintiff $50,000.00 damages; d.The parties have liberty to address on interest and costs on a date to be set.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 November 2014

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (12 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (35)