Kaplan v Go Daddy Group & 2 Ors [2005] NSWSC 636 | Case summary

3528/05 Adam Kaplan & Anor v The Go Daddy Group Inc & 2 Ors JUDGMENT 1 HIS HONOUR: This is an application to extend until further order an interlocutory injunction granted by Mr Justice Hamilton on an ex parte application on 17 June 2005. His Honour's orders have subsequently been extended on two occasions until today. The injunctions restrain the second defendant by himself, his servants and agents, from maintaining the domain or displaying the material contained in that domain or similar material on any internet site. His Honour also ordered that the second defendant instruct the first defendant to shut down the domain forthwith. 2 The first plaintiff, Mr Kaplan, is a director of the second plaintiff, which trades under the name Hunter Holden. On 17 June 2005, that is the same day as that on which ex parte relief was obtained, Mr Kaplan discovered a domain called hunterholdensucks.com. 3 On 6 June 2005, the second defendant, Mr English, had used the services of the first and third defendants to establish a blog website under that domain name. A blog website is one which enables anyone with internet access to post comments. The site is registered in the name of a US company, T Group Holdings LLC, which is controlled by Mr English. He deposes that the website was established as an unrestricted website, meaning that there were no controls on the posting or removal of items by any visitor to it. 4 The second plaintiff carries on business as a dealer for Holden motor vehicles at St Leonards in Sydney. Since February 2005, Mr English has been in dispute with the second plaintiff over a motor vehicle which he left for servicing and which was stolen from the premises. The second plaintiff put the matter in the hands of its insurers and arranged a replacement vehicle until the matter was finalised. The insurer sought to settle the claim without an admission of liability and offered to pay what it claims was the indemnity value of the vehicle at the time of the loss. Mr English has not accepted the offer and his dispute with the second plaintiff is unresolved. 5 The domain name of the website Mr English established, was hunterholdensucks.com. He denied that he used the name intending to disparage the second plaintiff or its business or products, but that evidence is not credible. According to him, the only part of the website for which he was responsible was the name which appears in large letters, "Hunter Holden Sucks" and the invitation which follows to, "Share your comments about Hunter Holden Automotive here". 6 Mr Kaplan printed out a copy of the website page on 17 June 2005. Apart from the heading and the invitation to post comments, the page consisted of a number of postings each of which was introduced by its own headline. The postings then invited comments on the material posted. 7 There were 6 such postings, all between the hours of 01:49 and 02:07 on 9 June 2005. In order, they were introduced by the following headings: Car Stolen, Fraud, Overcharging, Management, Adam Kaplan owner of Hunter Holden Automotive Direct Contact Details, and Warranty Issues. The second last of these headings contained a posting giving Mr Kaplan's mobile and direct phone numbers. 8 Under the heading "Car Stolen" there was a statement "Adam Kaplan, director of Hunter Holden Automotive refuses to admit liability for the theft of motor vehicle stolen from St Leonard's dealership". Under the heading "Fraud" there was a statement "People say that overcharging on customer cars is rife at Hunter Holden." To this was added a comment later on the same day purportedly from an N Barnier, which made complaints about service and about defects in accessories in a used car which she had purchased. Her comment made no complaint about fraud or overcharging. In July, 2004, Ms Barnier had posted that comment to a different website called "Complaints Corner" at MotorsSM.com. Her complaint was resolved. She did not post her old comment to the website established by the second defendant. 9 Mr English professed ignorance of how the comment was posted. He denied having any involvement in its posting. He denied posting any of the headings or comments on the website, except that he said that he responded to the comment under the heading "Car Stolen", by adding a comment "My car was also stolen from St Leonards". 10 Having gone to the trouble of establishing the website under a disparaging name in a way which invited disparaging comments, it is difficult to fathom why he should have confined himself to such a benign observation. 11 There is a serious question to be tried as to whether the second defendant is responsible not only for the establishment of the site, but for all of the headings and comments posted on it. That is so despite his denial of having been responsible for such postings. The fact that the comments were all posted at about 2am on 9 June invites an inference that one person was responsible for them all. 12 The second defendant has an unresolved dispute with the second plaintiff. In my view, he established the site for the purpose of disparaging the second plaintiff, its business and products. I draw that last conclusion from his use of the name Hunter Holden Sucks. Mr English said in evidence, although not in these precise words, that the expression carried no adverse imputation in his mind. I do not believe that evidence. 13 There is a strong prima facie case that the website was established by the second defendant with a malicious intent, and for the purpose of damaging the second plaintiff's business. There is a serious question to be tried that he also posted the headings and comments to the website. However, that does not mean that the plaintiffs are necessarily entitled to a continuation of the injunction. 14 If the second plaintiff's only complaint was that it had been defamed, it might face difficulties in obtaining an injunction to restrain the continued publication of defamatory material or the publication of new defamatory material. That is not to say that the principles which govern the grant of interlocutory injunctions in defamation cases become irrelevant because the second plaintiff did not address an argument based on its having a cause of action in defamation. I return to this question later. Suffice it to say for the moment, that in defamation cases, an interlocutory injunction is only granted in very clear cases and with caution lest its grant interfere with the right of the community in general to discuss, in public, matters of public interest and concern. (Chappell v TCN Channel 9 Pty Limited (1988) 14 NSWLR 153 at 163 to 164. 15 Before Hamilton J, the plaintiffs appear to have put their case on the basis that there was a prima facie case that the second defendant had contravened s 42 of the Fair Trading Act 1987 (NSW). However, that was not the cause of action on which the plaintiffs relied before me. That may be because the plaintiffs may have perceived difficulties in establishing that the representations, which the plaintiffs says are misleading and deceptive, were made in trade or commerce. 16 At the hearing before me, the plaintiffs contended that the second defendant should be restrained from committing and threatening to commit the tort of injurious falsehood. 17 The second defendant's first position was that he was entitled as of right to have the ex parte injunction discharged on the ground that there had been a concealment of material facts when the injunction was obtained from Mr Justice Hamilton. The alleged concealments were, first, that the comment from Ms Barnier had not been made up, but was a comment which she had previously posted to another website. Mr Kaplan was aware of that at the time of the application. In his affidavit, which was read before Hamilton J, he deposed to having been informed by Ms Barnier that she was unaware of the site and had not made a post on the site. 18 The second alleged non-disclosure was that the statement that Mr Kaplan refused to admit liability for the theft of motor vehicles stolen from the St Leonards dealership was true. 19 The third alleged non-disclosure was that the balance of the contents of the website was not disclosed to his Honour. 20 In Trewenack v Clippers Anchorage Pty Ltd (1983) Ritchie Practice Decisions 13,030, Powell J, as his Honour then was, said that: "A party applying to a court ex parte for the grant of an injunction in his favour... is bound to bring to the notice of the court to which he applies all facts material to the determination of his right to that injunction, and a party fails in that duty unless he brings to the notice of the Court all material facts known to him which might afford to the intended defendant, if he were aware of it, a defence to the application. Since this is in effect the condition upon which such applications are entertained and such injunctions are granted, prima facie in a case in which the duty has not been fulfilled, the defendant against whom such an injunction has been granted is ex debito justitiae entitled to have it discharged."

21 A non-disclosure will not be material unless it is likely to influence the Court in acceding to the application (see cases cited at Ritchie para 28.1.3). 22 If an ex parte injunction is dissolved on the ground of concealment, the plaintiff is not precluded from making another application for an injunction on the merits. 23 The last matter of alleged non-disclosure was not even arguably a relevant non-disclosure. It was plain from the affidavit before Hamilton J, that the plaintiffs had not reproduced the whole of the website. The defendant has not pointed to any other information on the website that may have afforded him a defence. 24 The other alleged non-disclosures are not material. As to the first, the fact that Ms Barnier had posted a complaint made nearly a year before on a different website, being a complaint which had nothing to do with fraud or overcharging, does nothing to lessen the sting of the inference that the second defendant was responsible for the statements which appeared. 25 As to the second alleged non-disclosure, it was not the whole truth for the website to state that Mr Kaplan had not admitted liability for the theft of motor vehicles. In relation to Mr English, the whole truth was that the matter had been placed in the hands of insurers, who, without admitting liability, had made an offer of what they contended to be the indemnity value of the vehicle, which was an offer Mr English had not accepted. There were other cases where vehicles had been stolen where Mr Kaplan agreed he had not admitted liability. As he carried insurance he could hardly be expected to do so. He said that the other such cases had been satisfactorily resolved. I do not consider that there was any material non-disclosure before Mr Justice Hamilton. 26 I return to the issue of whether there is a serious question to be tried that the second plaintiff has a cause of action in tort for injurious falsehood. The elements of that tort are that the second defendant has published statements which are false, that the false statements concern the business or property of the plaintiff, that they were published maliciously, and that they are calculated in the ordinary course of things to produce, and that they do produce, actual damage. Such damage must have been wilfully and intentionally caused by the defendant's publication. (Ratcliffe v Evans [1892] 2 QB 524 at 527 to 528; Ballina Shire Council v Ringland (1994) 33 NSWLR 680 at 692 to 694; Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388 at paras 1, 52, 57, 114, 154 and 192.) 27 Although no special damage has yet been demonstrated an injunction can lie to restrain the commission of the tort, to prevent such damage (Swimsure Laboratories Pty Ltd v McDonald [1979] 2 NSWLR 796 at 802). 28 The only element of the tort that could be disputed is whether what the second defendant has published was false. As Hayne J said in Palmer Bruyn & Parker Pty Ltd v Parsons at paragraph 154, "If there is no false statement made it is not enough to establish injurious falsehood to show that the plaintiff is held up to ridicule." In the same way, it is not enough for the plaintiffs to show that the website was established maliciously for the purpose of disparaging the second plaintiff to its injury. To succeed at a final hearing the second plaintiff must show that the statements the second defendant published were false. 29 However, in identifying the statements published, the second plaintiff is not confined to the literal words of the representation. It would be sufficient if the words used conveyed an imputation which was false. (Haines v Australian Broadcasting Corporation (1995) 43 NSWLR 404 at 409 to 410; Palmer Bruyn & Parker Pty Ltd v Parsons at paragraphs 34 and 157). 30 The first question is what did the second defendant publish? 31 He admittedly published the name of the site and the headline to the site "Hunter Holden Sucks". 32 There is also a serious question to be tried that he was the author of the other headings and comments on the site to which I have referred. 33 Even if he was not the author of those headings and comments, there is still a serious question to be tried as to whether he published the statements which appeared on the site. He established the site and thereby invited disparaging comments. He maintained some control over the site. He said that he, along with anyone else, could remove any of the comments from the site. The extent of his control over what was, or was not, published, was not fully explored, but it is seriously arguable that he was at least as much in control of the site and responsible for what appeared on it as was the internet service provider in Godfrey v Demon Internet Limited [2001] QB 201; [1999] 4 All ER 342, or the proprietors and secretary of a golf club which allowed a defamatory statement to remain on a notice board in Byrne v Deane [1937] 1 KB 818; 2 All ER 204. In Godfrey v Demon Internet Limited, it was held that an internet service provider was a publisher at common law of the defamatory comments posted on the site by an unknown user. 34 It is arguable that the words "Hunter Holden Sucks" convey the imputation that the business of Hunter Holden is poorly managed, and that it provides poor products and services. There may be other available imputations which are disparaging of the business and products of the second plaintiff. There is a serious question to be tried that such imputations are false. 35 There is also a serious question to be tried that the other comments and headings on the site which state or imply that the second plaintiff engages in fraud, and that overcharging of its customers is rife are false. As I have said, there is a serious question to be tried that the second plaintiff is the author or publisher of those comments. 36 There is therefore a serious question to be tried that the second defendant has committed and threatens to commit the tort of injurious falsehood. 37 The balance of the convenience is all one way. The second defendant would suffer no damage if the injunctions are continued. On the other hand, if the injunctions are dissolved, the second plaintiff may suffer substantial damage which it could never prove as potential customers may be deterred from visiting it. 38 It was submitted for the second defendant that an injunction should not lie to prevent him and members of the public from exercising their right of free speech to comment on the second plaintiff's services and business. In Swimsure (Laboratories) Pty Ltd v McDonald, Hunt J, as his Honour then was, said that the concepts of free speech and discussion and liberty of the press had little relevance to an action for slander of goods. That action is one variety of the tort of injurious falsehood. His Honour said that some of the other categories of injurious falsehood may not be exempt from the special rule that applies in defamation cases. 39 The plaintiff cannot avoid that special rule merely by framing its case, not in defamation, but in another tort. 40 The basal reason why the "special rule", applicable to defamation actions, was held to be inapplicable in Swimsure (Laboratories) Pty Ltd v McDonald, was that the slander of the plaintiff's goods involved no matter of public interest or concern. Hunt J said (at 801): "It is difficult, if not impossible, to see how these concepts of free speech and discussion and the liberty of the press can be involved in the ordinary slander of goods action. The conflict in defamation actions between the plaintiff's right to his unblemished reputation and the defendant's right publicly to discuss all matters of public interest, simply does not arise in an action for slander of goods. The issue is not whether the defendant in disparaging the plaintiff's goods had a right or privilege to do so, but rather whether he has done so maliciously and whether in doing so he has caused actual damage to the plaintiffs." 41 Here there is a prima facie case of falsity and malice to establish a case of injurious falsehood. 42 There is a prima facie case that the second defendant seeks to use the internet to publish anonymously false and misleading disparagements of the plaintiff following his dispute with it. The comments and headings on the website are posted anonymously. The evidence was not clear as to the extent to which the very establishment of the website was done anonymously. The plaintiffs identified the second defendant as the creator of the website by deduction, he being the person who made the complaint about the stolen car. 43 The name of the website and the comments posted on it do not relate to matters of public interest or concern any more than did the defendant's comments about the plaintiff's goods in Swimsure (Laboratories) Pty Ltd v McDonald. 44 Accordingly, I do not consider that the special rule which applies in defamation cases in relation to matters of public interest and concern, preclude the grant of an interlocutory injunction. 45 The orders made by Hamilton J should continue until further order, subject to consideration of their terms. The injunction in paragraph 3(b) of his Honour's orders has been complied with and is spent. 46 The second defendant justifiably complained as to the form of the latter part of the injunction in paragraph 3(a) which restrains him from displaying the material contained in the domain, or similar material, on any internet site. The evidence has not disclosed what was all of the material on the site. As the site has now been closed, it would be well nigh impossible to enforce an injunction in those terms. 47 However, I consider that a modified form of paragraph 3(a) should be made, to restrain the defendant, not only from maintaining the current domain, but from establishing or maintaining an internet website of the same or similar name. I also consider that the second defendant should be restrained from publishing false statements of or concerning the second plaintiff. 48 It is true that an injunction in those terms would go wider than the cause of action in injurious falsehood which requires that the second plaintiff establish additional elements. However, interlocutory injunctions may be granted, in appropriate cases, in such wider terms. In this case, I consider that there is strong evidence of the second defendant's malicious intent and the likelihood of special damage being occasioned to the second plaintiff if he publishes false statements concerning it. 49 For these reasons, I discharge the injunction granted by Mr Justice Hamilton on 17 June 2005 and continued to today. Upon the plaintiffs by their solicitor giving to the Court the usual undertaking as to damages, I order that until further order, the second defendant by himself, his servants and agents be restrained from maintaining the domain or establishing or maintaining an internet website of the same or similar name, and from publishing false statements of or concerning the second plaintiff. 50 On the question of costs, the second defendant asked for costs of the application. For the reasons I have given, I do not consider he is entitled to that order. Alternatively, the second defendant submitted that he was entitled to his costs of an appearance on 21 June 2005 when the matter was adjourned whilst the plaintiff obtained further evidence, and so that Mr Kaplan, who was in Melbourne could attend, to be cross-examined. The plaintiffs were forced to bring the proceedings urgently, and I consider that it cannot really fairly be said that the plaintiffs should be forced to bear their own costs, or pay the second defendant's costs for that day. The plaintiffs seek their costs of the interlocutory hearing. Although, as I have said, the conduct of the second defendant which has brought about the proceedings is deserving of criticism, I do not consider that to be a sufficient ground for not applying the usual rule on such an application, that costs of the interlocutory application be costs in the proceedings. The costs will be costs in the proceedings. 51 These orders may be entered forthwith.

Kaplan v Go Daddy Group & 2 Ors

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