Neville Mahon v Mach 1 Financial Services Pty Ltd

Supreme Court of NSW|2012-06-05|Before: McCallum J, Garling J

Judgment 1These are proceedings for injurious falsehood arising out of the publication of a large number of emails concerning the plaintiff posted on two wikifrauds websites. The plaintiff is a property developer based in New Zealand. The first defendant is alleged to be the registrant of the two domain names in question, "wikifrauds.net/NevilleMahon.html" and "wikifrauds.diariobit.es/NevilleMahon.html" ("the websites"). The second defendant is a director of the first defendant and the sole editor of the websites. The third defendant is alleged to be the present proprietor of the websites. 2The remaining defendants are alleged to be the authors or original publishers of the emails. The plaintiff alleges that the first, second and third defendants republished the emails on the websites. 3The proceedings were commenced by summons filed on 25 November 2011 and amended on 2 December 2011. The relief sought in the amended summons was calculated to shut down the websites on an interlocutory basis and contemplated that the claim would then proceed on pleadings. 4On 7 December 2011, Garling J granted the interlocutory relief sought. His Honour made orders against the first, second and third defendants restraining those parties from maintaining the websites or publishing like material concerning the plaintiff; requiring them to do all things necessary to shut down the websites and requiring them to do all things necessary to cause the removal of the links to the websites from specific internet search engines. The injunctions were granted until further order. 5On 26 March 2012 the plaintiff filed his statement of claim. The application before the Court is the defendants' application to have part of that pleading struck out. 6The relief sought in the notice of motion filed on 18 April 2012 is as follows.

The amended statement of claim (sic) and in particular those paragraphs pertaining to a claim of injurious falsehood be struck out by reason of it being (a) vexatious, (b) embarrassing, (c) disclosing no cause of action.
The plaintiff pay the plaintiff's costs (sic) of: (a) its application fixed in the sum of $7,500; (b) the injunction made 7 December 2011 fixed in the sum of $27,500. 7Although the motion refers to an amended statement of claim, the only pleading in the proceedings is the statement of claim to which I have already referred. 8The basis on which the pleading is challenged is the contention that it does not adequately plead the element of damage. 9It was common ground at the hearing that actual damage is an element of the tort. Mr Catlin, who appears for the defendants, cited the well known passage from the judgment of Bowen LJ in Ratcliffe v Evans [1892] 2 QB 524 at 527 to 528, where his Lordship said: That an action will lie for written or oral falsehoods, not actionable per se nor even defamatory, where they are maliciously published, where they are calculated in the ordinary course of things to produce, and where they do produce, actual damage, is established law. Such an action is not one of libel or of slander, but an action on the case for damage wilfully and intentionally done without just occasion or excuse, analogous to an action for slander of title. 10As noted by Mr Catlin, that passage has been taken to be an accurate statement of the law respecting injurious falsehood in Australia: Palmer Bruyn & Parker Pty Ltd v Parsons [2001] HCA 69; (2001) 208 CLR 388 at [57] per Gummow J. 11The plaintiff acknowledges that no actual damage has been pleaded. The only pleading of damage in the statement of claim appears at paragraph 32, which states that the matters complained of "were calculated to cause pecuniary damage to the plaintiff in respect of his business as a property developer". 12By way of explanation Mr Narayan, who appears for the plaintiff, explained that the only relief that will be sought by the plaintiff is a permanent injunction to restrain the alleged injurious falsehoods. Mr Narayan acknowledged that the statement of claim also pleads a cause of action in defamation and, further, that the relief claimed includes damages. However, he stated that, upon further reflection and in light of the interlocutory relief granted by Garling J, the plaintiff has decided to abandon the claim in defamation and to abandon any claim for damages. 13The defendants' motion invokes the Court's power under r 14.28 of the Uniform Civil Procedure Rules 2005. Mr Catlin acknowledged that, in order to have the pleading of the cause of action in injurious falsehood struck out under that rule, the defendants had to demonstrate that the claim is so clearly untenable that it cannot possibly succeed, in accordance with the test stated in General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 at 130 per Barwick CJ. 14The application seemed to raise two discrete complaints as to the element of actual damage in the plaintiff's claim. Before turning to those points I should observe, in fairness to the defendants' legal representatives, that the plaintiff does not appear to have communicated his intention to abandon the claim for damages and the claim in defamation until 28 May 2012, when he swore an affidavit to that effect. At the time the notice of motion was filed on 18 April 2012, so far as the material before me reveals, the defendants thought that those claims would be maintained. That thinking continued to pervade the defendants' submissions in support of the application even after the plaintiff's revised position was made clear.

No pleading of actual damage 15The defendants' first complaint relates to the absence of any pleading of actual damage. In my view, that is not a basis for concluding that the claim cannot succeed in the present case, notwithstanding the fact that damage is an element of the cause of action. 16The question whether the Court has power to grant an injunction in the absence of evidence of actual loss was considered by Hunt J in Swimsure (Laboratories) Pty Ltd v McDonald [1979] 2 NSWLR 796 at 802D. Acknowledging earlier English authority to the contrary, his Honour noted that s 66 of the Supreme Court Act 1970 permits the grant of an interlocutory injunction to restrain any threatened or apprehended injury "as well in a case where the injury is not actionable unless it causes damage as in other cases". His Honour expressed the view, at pain of earning the description of being "a liberal (i.e. woolly-minded) judge" that: It would be a strange result that such relief, designed as it is to prevent injury, could not be granted until after the injury had occurred ... 17His Honour proceeded on the basis that it was sufficient that the plaintiff had established: On the evidence, that there is a reasonable probability that actual damage will result to the plaintiff from the continued publication of the statements in question. 18Hunt J noted that the authorities prior to the amendment of s 66 were to the contrary, but compared the remarks of McCardie J in British Railway Traffic & Electric Co Ltd v CRC Co Ltd and the London County Council [1922] 2 KB 260 at 272, 273. In that case, McCardie J refused an injunction partly on the basis that no damage would necessarily arise from the publication in question. However, in so finding, his Honour expressed the view that an injunction might properly be granted without proof of special damage before the commencement of proceedings, where such damage would either necessarily or probably result: at 272.6. His Honour said: The main object of an injunction is to prevent a man from doing that which will presumably give a cause of action to a plaintiff. It deals with a future rather than an existing cause of action. 19The defendant sought to find support for the contrary position in the proposition that "only a present right will be protected, not an inchoate future right", citing Glamagard Pty Ltd v Enderslea Productions Pty Ltd (1985) 1 NSWLR 138. I do not think that decision has any relevance to the present question. The plaintiffs were the registered owners of designs registered under the Designs Act 1906 (Cth) but also the applicants for registration of other designs and for the grant of certain patents. To the extent that the application sought to restrain infringement of the rights as to which the plaintiffs were only applicants (and not yet registered owners), McLelland J held (at 140C): The power of the Court to grant final quia timet relief has never been extended to cases where the threat of infringement is not of a present, but only of an inchoate future right or interest, and the same limitation must necessarily apply to interlocutory relief. 20The present case is not concerned with an inchoate future right or interest, but with the plaintiff's existing interest in the conduct of his business. (In Palmer Bruyn, Gummow J planted the seed for an argument that the tort may in any event be broad enough to include any damaging falsehood which interferes with prospective advantage: at [60]). 21It may be acknowledged that, in Swimsure, Hunt J was concerned with an application for an interlocutory injunction. The present application is concerned with the pleading of a claim for a final injunction. Curiously, s 66 of the Supreme Court Act makes no express reference to final injunctions. Section 66(1) confers power to restrain injury "by interlocutory or other injunction". However, that expression appears to be intended to cover the universe of injunctions, including the final relief sought by the plaintiff in the present case. 22The proposition that a final injunction may be granted in the absence of proof of actual loss and on the strength of the probability that loss would occur if the injunction were not granted was applied by me in Australand Holdings Ltd v Transparency & Accountability Council Inc [2008] NSWSC 669 at [169], cited with approval by Brereton J in AMI Australia Holdings Ltd v Fairfax Media Publication Pty Ltd [2010] NSWSC 1395 at [38]. 23It follows, in my view, that the statement of claim is not liable to be struck out for want of pleading of actual damage.

Nature of the interest sought to be protected 24The defendants' submissions appeared to raise a second, more subtle complaint concerning the absence of specificity in the plaintiff's evidence as to any actual commercial activity of his that has been targeted and threatened by the publications complained of. Mr Catlin noted, by way of contrast, the particularity of the business interests considered in other injurious falsehood cases including the decision in Swimsure and also in Beechwood Homes (NSW) Pty Ltd v Camenzuli [2010] NSWSC 521 at [15] per Harrison J and Kaplan v Go Daddy Group [2005] NSWSC 636 per White J. 25The publications in the present case are concerned with the development of the Hilton Denarau Resort on Denarau Island in Fiji. In his affidavit sworn in support of the interlocutory injunction granted by Garling J, Mr Mahon stated that the developer of the resort was Denarau Investments Ltd and that the developer appointed Denarau International Ltd to manage the resort. The affidavit goes on to describe a dispute which subsequently arose between the manager and owners of villas at the resort. 26It is not possible to glean from that material the precise proprietary or commercial interest of the plaintiff sought to be protected in the proceedings. The defendants should not have to speculate on that issue or accept affidavits as a substitute for proper particularisation of the case. Paragraph 32 of the statement of claim is, in my view, wholly inadequate for the purpose of putting the defendants on notice as to the case they have to meet on the question whether there is a reasonable probability that actual damage will result to the plaintiff from the continued publication of the statements in question. 27However, since the defendants have never sought particulars as to the basis for that contention, I do not think it is appropriate to strike out the pleading at this stage. I propose as a first step to direct the plaintiff to provide proper particulars. 28In that context, it should be noted that, as explained by Brereton J in AMI Australia Holdings Pty Ltd at [37], the law does not require proof of "special damage" in the sense of the loss of any individual client or contract but only "actual damage", which may include a general loss of business. In the present context, it would appear on those principles to be enough if the plaintiff can establish that a general loss of business would probably result from the continued publication of the statements in question. 29The problem remains, however, that the plaintiff has not articulated any particulars of his personal business interests, as opposed to those of the companies named in his affidavit. I do not think the broad assertion that he is a property developer is sufficient to put the defendants on notice of the case they will have to meet in that respect. Detailed particulars of the facts, matters and circumstances relied upon to establish the probability of actual loss will have to be provided.

Defamation by another name 30A separate complaint raised in the defendants' submissions is the contention that this is a defamation claim masked as injurious falsehood. It is necessary to explain why that is perceived as a vice. 31To restrain an alleged defamation necessarily restrains free speech to an extent. For that reason, it is well recognised that the power to restrain the publication of allegedly defamatory matter must be exercised "with great caution, and only in very clear cases": Swimsure at 799E. In that decision, Hunt J explained that the public interest in unfettered free speech has produced the principle that, in defamation actions, there is a special exception from the ordinary "balance of convenience" rule in applications for interlocutory injunctions. The exception operates so as to afford substantial weight to the value of free speech when weighing the respective inconvenience or prejudice to the parties. 32Hunt J noted in that context that a plaintiff cannot avoid the special exception merely by framing his case, not in defamation, but in injurious falsehood or some other cause of action. His Honour cited two decisions of the English Court of Appeal in support of that principle: Fraser v Evans [1969] 1 QB 349 at 362 and Woodward v Hutchins [1977] 2 All ER 751 at 755. 33Fraser v Evans was a case involving claims in both defamation and breach of confidence. The plaintiff, Mr Fraser, sought an interlocutory injunction against the editor of the Sunday Times to restrain the publication of an article concerning a confidential report he had prepared for the Greek government. The Court of Appeal held that Mr Fraser could not get an injunction in defamation, having regard to "the importance in the public interest that the truth should out": at 360G per Lord Denning MR; Widgery LJ evidently agreeing at 364B; Davies LJ not deciding. 34The injunction was sought in the alternative on the grounds of breach of confidence. The Court rejected that argument on the basis that the only duty of confidence was owed to the Greek government, which did not seek to restrain the publication. 35Separately, the publisher had submitted that, as no injunction should be granted to restrain the apprehended defamation, likewise no injunction should be granted on the grounds of breach of confidence (at 362D): The plaintiff should not be able to avoid the salutary rule of law in libel by framing the case in breach of confidence. 36Since the appeal was disposed of on a different basis, the Court did not consider it necessary to deal with that point. Lord Denning said (at 362E): I can well see that there may be cases where it would be wrong to grant an injunction on breach of confidence when it would not be granted on libel: but I can equally well see that there are some cases of breach of confidence which are defamatory, where the court might intervene, even though the defendant says he intends to justify. 37Woodward v Hutchins was a case in which a group of "pop stars" evidently believed that their public image was a wholesome one. Their former manager approached the Daily Mirror and revealed surprising details of their having actually behaved pretty badly from time to time. The pop stars sued in libel, breach of contract and breach of confidence. An interlocutory injunction was granted at first instance but discharged by the Court of Appeal. Relevantly for present purposes, Lord Denning said: the plaintiffs' real complaint here is that the words are defamatory; and as they cannot get an interlocutory injunction on that ground, nor should they on confidential information. 38There may be force in the contention that the plaintiff's real complaint is that the words are defamatory in the present case. The plaintiff relies upon the same meanings for the cause of action in injurious falsehood as for the cause in defamation, which is no longer pressed. Most of those meanings relate to the plaintiff's character personally and may well be matters that sound in damage to reputation rather than damage to any business or proprietary interest. Whether that is so will no doubt become clearer upon the provision of the particulars I propose to direct. 39However, subject to the need for the plaintiff to articulate an arguable basis for establishing that element of the claim, the consideration identified by Lord Denning in the two cases to which I have referred is ultimately a factor to be considered in the exercise of the discretionary power to grant injunctive relief. It is not relevant on the present application, which is concerned with the form of the pleadings. It is a point which might have been taken at the time when the interlocutory injunction was contested before Garling J and it will no doubt be raised at the point when the claim for final relief is determined. In my view, however, it is not a strike-out point.

Conclusion 40During the hearing of the defendants' motion, I indicated my tentative view that the plaintiff should be directed to provide particulars of the commercial and proprietary interests of the plaintiff which he contends would probably be harmed by the falsehoods alleged. Mr Narayan responded by asking whether the relevant proprietary and commercial interests necessarily have to be in Australia. I granted leave to the parties to put on further written submissions on that issue. 41Each of the parties has provided careful written submissions directed to that question. After considering those submissions, I have concluded that it is premature to determine any question relating to the issue raised by Mr Narayan. The statement of claim alleges publication in the State of New South Wales. Since the relevant publications are Internet publications, that is to be taken as an allegation that the material complained of was downloaded on to the computers of people in New South Wales: Dow Jones & Co Inc v Gutnick [2002] HCA 56; (2002) 210 CLR 575 at [44] per Gleeson CJ, McHugh, Gummow and Hayne JJ. Until the plaintiff has provided particulars as to the actual damage to his business interests that would probably have resulted from continuation of the publications restrained by Garling J, it is not possible to know what force there is in either parties' submissions on that question. 42Accordingly, the only order I make at this stage is to direct the plaintiff to provide particulars of the facts, matters and circumstances on the basis of which he contends that actual damage to his business or proprietary interests would probably result from the continued publication in New South Wales of the alleged false representations complained of. 43The defendants' notice of motion should be stood over to a date convenient to the parties after the provision of those particulars.

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: 28 June 2012

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