Pillay T/As West Corp Mortgage Market v Nine Network Australia Pty Limited

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST

5084/02 RAY PILLAY T/AS WEST CORP MORTGAGE MARKET v NINE NETWORK AUSTRALIA PTY LIMITED JUDGMENT 1 HIS HONOUR: This is the hearing of an application for an interlocutory injunction to restrain a television program which is intended to be put to air tonight. The plaintiff is a mortgage broker who has recently entered the business of mortgage broking on his own account. The defendant is a television licencee which includes in its programming a program called "A Current Affair". There is a proposal to screen tonight a program in "A Current Affair" which will deal, according to the promotional material which has already been screened and was in evidence before me, with "the dirty business of banking, dodgy bankers faking documents and pocketing kickbacks, luring customers into loans they cannot afford". The promotional material contains scenes which have on them an image like that produced on a document by a large rubber stamp, reading "Undercover Investigation". In that promotional material which has been screened there are some images of the plaintiff, some of them taken in his office, and there are also some sound bites of speech by the plaintiff, taken in his office. It is common ground on this application that these sounds and images were obtained by a covert operation involving the use of a listening device. 2 The plaintiff has served on the defendant a notice requiring it to produce for the purposes of evidence a VHS video cassette recording of the segment of "A Current Affair" which was originally scheduled to be broadcast last night. There was no response to that notice to produce. I should explain the terms of that notice to produce by saying that it was originally proposed, by Channel 9, that the segment be broadcast last night, but more pressing news matters changed their programming priorities. 3 The plaintiff gives evidence that on 9 October 2002 three men came to see him about an loan, named Angelo, Leonidas and Paul Forbes. The people called Angelo and Leonidas both had the surname Kriticos. There was some discussion between the plaintiff and those three men about possibly obtaining a loan. It was on 10 October that it came to the plaintiff's attention that he might be the subject of a program in "A Current Affair". 4 The solicitor for Channel 9 has put on an affidavit which makes no secret whatever about what the defendant's intentions are. The program producer has told the Channel 9 solicitor that the program will convey imputations concerning the defendant to the effect that: "(a) he is a mortgage broker who obtains loans by fraudulent means; (b) he provides fake pay slips to mortgage lenders to obtain loans for borrowers who have no income; (c) that he charges borrowers an extortionate fee to obtain loans for them by fraudulent means." 5 That affidavit also accepts in terms that two conversations that were had between the plaintiff and Mr Leonidis Kriticos were recorded "with a listening device". 6 The affidavit sets out the substance of what the Channel 9 solicitor was told by Mr Leonidis Kriticos, and believes. It is that: "(a) he attended a meeting with the Plaintiff on Thursday, 3 October 2002 in the Plaintiff's office. Also present at the meeting was Angelo Kriticos, the uncle of Leonidas Kriticos: (i) at the meeting Angelo Kriticos told the Plaintiff that Leonidas Kriticos was a full time student with no income; (ii) Leonidas Kriticos told the Plaintiff that he wanted to obtain a loan; (iii) The Plaintiff told Leonidas Kriticos that he would obtain fake pay slips to arrange a loan for Leonidas but would require 50% of the loan as his payment; (iv) Leonidas Kriticos replied that he wanted to walk away with $10,000; (v) The Plaintiff told Leonidas Kriticos that he would also require $1,500 as an upfront payment and he would then organise fake pay slips and a fake employment status for a loan to be made available; (vi) During the meeting Leonidas Kriticos recorded the conversation with a listening device; (b) On the following day Leonidas Kriticos again met the Plaintiff in his office. Also present were Angelo Kriticos and Paul Forbes; (i) As Leonidas Kriticos walked to the Plaintiff's office with Angelo Kriticos, Angelo asked Leonidas to give him $200 and to give the Plaintiff $1,300; (ii) During the second meeting Leonidas Kriticos gave the Plaintiff $1,300 and the Plaintiff showed Leonidas a sample of fake pay slips which he would obtain to support the loan application; (iii) Leonidas Kriticos told the Plaintiff that he wanted to walk away with $10,000. The Plaintiff replied that a loan would be arranged in 4-5 days; (iv) During the meeting Leonidas Kriticos recorded the conversation with a listening device." 7 The plaintiff has filed an affidavit in reply which gives his account of the meetings with Mr Kriticos. That account is an account which is quite innocent. 8 There are two bases upon which the plaintiff claims an interlocutory injunction to prevent the broadcast taking place. The first is that the broadcast would involve a contravention of the Listening Devices Act 1984. The second is that the broadcast would involve the disclosure of confidential information. 9 The Listening Devices Act 1984 has as a crucial term the expression "private conversation". It is defined as: "any words spoken by one person to another person or to other persons in circumstances that may reasonably be taken to indicate that any of those persons desires the words to be listened to only: (a) by themselves; or (b) by themselves and by some other person who has the consent, express or implied, of all of those persons to do so." 10 Section 5 contains a prohibition on a person using a listening device to record a private conversation. That prohibition applies whether or not that person is a party to the private conversation. There is an exception in s 5(3)(b)(i), so that the prohibition does not apply to the use of a listening device if a principal party to the conversation consents to the listening device being so used and the recording of the conversation is reasonably necessary for the protection of the lawful interests of that principal party. 11 As well as s 5 imposing the prohibition on the initial use of a listening device, s 6 imposes a prohibition on knowingly communicating or publishing to any other person a private conversation or a report of a private conversation that has come to a person's knowledge as a result, direct or indirect, of the use of a listening device in contravention of s 5. Section 7 contains a prohibition on anyone who has been a party to a private conversation and has used a listening device to record it, whether in contravention of s 5 or not, subsequently communicating or publishing to any other person any record of the conversation made by use of the device. Section 8 of the Act prevents a person from possessing a record of a private conversation knowing that it has been obtained directly or indirectly by the use of a listening device in contravention of s 5. Section 10 makes a contravention of any of these sections an offence. 12 Section 11 imposes fairly substantial criminal penalties. On a summary conviction, a natural person can be subjected to a fine not exceeding forty penalty units or imprisonment for a term not exceeding two years. On a summary conviction a corporation can be subject to a fine not exceeding five hundred penalty units. On a conviction on indictment there can be a fine not exceeding one hundred penalty units or imprisonment for a term not exceeding five years or both. The notion of a "penalty unit" is explained by s 17 of the Crimes (Sentencing Procedure) Act 1999 as being (unless the contrary intention appears) the amount of $110. I see no contrary intention here. 13 Section 28 of the Listening Devices Act 1984 requires the written consent of the Attorney General for proceedings for an offence against the Act. 14 That Act also makes provision, in subsections 13 and 14, for evidence obtained by use of a listening device in contravention of s 5 to not be admissible in proceedings, and for other restrictions on admissibility of evidence obtained through the use of a listening device. There is a regime set up under the Act enabling warrants to be issued so that listening devices can be used legitimately. 15 It is section 6 which the plaintiff asserts would be breached by the proposed broadcast. The injunction is sought to stop that future breach of the law. 16 The procedure that is involved in obtaining an injunction for breach of a statutory provision is one which requires several stages to be gone through. The first stage is to decide whether the statute which has been allegedly infringed is one which creates a private right. Whether the statute creates a private right is a matter of construction of the statute. The way in which the court goes about that task of construction was explained by McHugh J in King v Goussetis (1986) 5 NSWLR 89 at 93 as follows: "The true basis of an individual's right to obtain an injunction to enforce a statutory obligation is no longer a matter of any doubt. In some cases the statute itself either expressly or by necessary inference may confer a private right on the individual to enforce the statutory obligation: Duchess of Argyll v Duke of Argyll [1967] Ch 302 at 341; Onus v Alcoa of Australia Ltd (1981) 149 CLR 27 at 66-68. With respect, however, the question whether the statute confers a private right of action is not to be answered, as Ungoed-Thomas J indicated in Duchess of Argyll v Duke of Argyll (at 341) by asking whether the enactment is for the protection of the public at large or for the benefit of a class of persons of which the plaintiff is a member: see the discussion by Brennan J in Onus v Alcoa of Australia Ltd (at 67-78). The grant of a private right by the statute does not depend on whether the statute is for the benefit of a class: O'Connor v SP Bray Ltd (1937) 56 CLR 464 at 477-478, 486-487; Onus v Alcoa of Australia Ltd (at 68). The answer to the question whether a statute confers a private right depends on "the nature, scope and terms of the statute, including the nature of the evil against which it is directed, the nature of the conduct prescribed, the pre-existing state of the law, and, generally, the whole range of circumstances relevant upon the question of statutory interpretation": Sovar v Genry Lane Pty Ltd (1967) 116 CLR 397 at 405 per Kitto J." 17 This is a process of construction analogous to the process of construction that is gone through by the court in deciding whether a statute ought be construed as conferring a private right for the purpose of the existence of the tort of breach of statutory duty. If there is a private right of a plaintiff created by the statute and it has been infringed, there can be no doubt about the standing of that plaintiff to apply for an injunction. 18 Mr Evans, for the plaintiff, submits that the Listening Devices Act confers a private right on someone who is party to a private conversation. He asks, rhetorically, what other point would there be in having a prohibition on using a listening device to record a private conversation, if it was not designed to protect the rights of the parties to that conversation. 19 I do not accept that the Act is one which is designed to confer a private right in that sense. It is common enough for legislation to be designed to protect some particular class of people, without there being an intention, thereby, to confer on them a private right of action. Further, the limitation on bringing proceedings conferred by s 28 is one which would be a very odd one if there were to be a private right of action to enforce the Act in the civil courts. As well, if there were to be the opportunity of enforcing this legislation by injunction, when there was nothing more established than a breach of the Act, there would be a serious cutting across of the law of confidential information - it would be much easier to obtain an injunction to restrain a breach of the Listening Devices Act then it would be to obtain an injunction to restrain a breach of confidential information - it would not be necessary to prove that the information that was communicated was confidential, nor would it be necessary to negative any suggestion that there was an iniquity involved in the subject matter of the conversation. 20 In The Commonwealth of Australia v John Fairfax and Sons Limited (1980) 147 CLR 49 at 50, Mason J said, concerning the statute that was there before him, that: "its provisions are appropriate to the creation of a criminal offence and to that alone. The penalties which it imposes are substantial. There is nothing to indicate that it was intended in any way to supplement the rights of the [plaintiff] to relief by way of injunction to restrain disclosure of confidential information or infringement of copyright. There is no suggested inadequacy in these two remedies which would lead me to conclude it is appropriate to regard [the section] as a foundation for injunctive relief."

Those remarks apply in the present case. 21 For those reasons I do not accept that the legislation confers any private right. 22 If the legislation does not confer a private right, standing to apply for an injunction then differs, depending upon whether the suit is brought by the Attorney General on the relation of some private litigant, or is brought by the private litigant himself. If the suit is brought by a private litigant himself, then the test for standing is that laid down by the High Court in Shop Distributive and Allied Employees Association v The Minister for Industrial Affairs (1995) 183 CLR 552, namely that the plaintiff should have "a special interest in the subject matter of the action". As their Honours stated in that case, the nature and subject matter of the litigation will dictate what amounts to a special interest. 23 The law that I have been considering so far relates to general propositions about when it is that an injunction can be obtained by someone to enforce a standard laid down in statute. There are special provisions which apply to statutory standards which are part of the criminal law. In The Commonwealth of Australia v John Fairfax and Sons Limited (1980) 147 CLR 39 at 49 Mason J said that the issue of an injunction to restrain an actual or threatened breach of criminal law is "exceptional". 24 The role of a civil court in granting injunctions concerning breaches of the criminal law must be very limited. Part of the reason was explained by McHugh J in Bateman's Bay Local Aboriginal Land Council v The Aboriginal Community Benefit Fund Pty Limited (1998) 194 CLR 247 at 275-276: "Absent interference or threatened interference with a private legal right, an ordinary member of the public generally has no standing in the civil courts. Those courts exist to protect the legal rights of individuals, not to ensure that individuals or public officials obey the law. Protecting the legal rights of individuals may often result in a civil court examining, restraining or directing the conduct of private persons or public officials. But such a result is merely an incident of the protection of the rights of the individual, except in those cases where the court is acting under a statute that gives it jurisdiction to review such conduct. It is a corollary of the proposition that the basic purpose of the civil courts is to protect individual rights that it is not part of their function to enforce the public law of the community or to oversee the enforcement of the civil or criminal law, except as an incident in the course of protecting the rights of individuals whose rights have been, are being, or may be interfered with by reason of a breach of law. Courts do not initiate prosecutions, for example; nor do they initiate civil actions. Traditionally, they have permitted their processes to be used only by a litigant who can demonstrate that the conduct of another person has invaded or threatens to invade some legal right of the litigant. The requirement of an interference or potential interference with a legal right of the plaintiff applies whether the defendant is a private citizen or a government official." (citations omitted) 25 The need for extreme caution in using the civil courts to enforce the criminal law has also been referred to by the House of Lords in Gouriet v Union of Post Office Workers [1978] AC 435. The factors which have been referred to there include the fact that granting injunctions might result in breaches of the injunction which may attract unlimited sanctions, including imprisonment, thereby imposing a much more severe penalty than Parliament has chosen, specifically, to impose for breach of the statutory standard. As well, there are problems about allegations of criminal activity being judged on the civil standard of proof, and by a civil court. 26 It is accepted that there are some circumstances where it would be appropriate for injunctions to issue. Viscount Dilhorne in Gouriet at 491 gave examples of cases where the penalties imposed for the offence have proved wholly inadequate to deter its commission. 27 As well, in John Fairfax Publications Pty Limited v Doe (1994) 37 NSWLR 81 Gleeson CJ regarded the fact that there had been both a contravention of the Telecommunications (Interception) Act 1979 (Cth) and a threat to publish material obtained through that contravention in a way likely to interfere with a person's right to a fair trial pending criminal proceedings as enough to decide that the court ought to interfere by granting an injunction to restrain publication of the material obtained through the Commonwealth interception. 28 The situation in the present case is one where I am not persuaded that it is appropriate for the court to intervene in the ordinary operation of the criminal law. There is a puzzle about how to regard the evidence in this case. It bears on the balance of convenience, which requires the Court to consider and compare the situation if the interlocutory injunction is refused but at a trial it turns out that the plaintiff had a right which was protectable by injunction, with the situation if the interlocutory injunction is granted but at a trial it turns out that the plaintiff had no right which was protectable by injunction. If the plaintiff's evidence about the conversations he had with Mr Kriticos is correct, this publication of them will, of itself, do him no harm. If the evidence of the solicitor for Channel 9 about the contents of those conversations is correct, then the publication of the contents could do him substantial harm. However, if the evidence of the solicitor for Channel 9 turns out to be correct, then that is a situation where a court would, on the basis of unclean hands, be unwilling to interfere. It is well established that a defence of unclean hands requires an immediate and necessary relation to the equity that is sued upon. If the informant of the solicitor for Channel 9 is correct in the account he gives of the conversation, then there has been an attempt to obtain benefits from a mortgage supplier or lender by fraud, and there has been a joint effort on the part of Mr Kriticos and the plaintiff to obtain those benefits. That joint effort is manifested in the very conversations that have been recorded, and concerning which the plaintiff seeks protection. When there has been joint effort of this kind to obtain an unlawful end, the law of confidential information would not extend its assistance to the conspirators, and neither would the fact that legislation sought to protect the privacy of conversations be a reason for an equity court to protect the privacy of the conversations by the additional means of an injunction. 29 Mr Evans says, in response, that even innocent statements can be distorted, by editing and context, to seem bad. Accepting that submission, it is still, in such a case, the editing and context which are the cause of the misleading impression so created, not the publication of the statement itself. 30 I should say that Channel 9 asserts that the recording was not prohibited by s 5, because the exception under s 5(3)(b)(i) applied. Hence, no breach of s 6 will occur if Channel 9 broadcasts the taped material. It is submitted that there might be circumstances in which it was reasonably necessary for the protection of the lawful interests of Mr Kriticos for him to tape the conversation that he had with the plaintiff, and that that gave protection to the overall taping. While it is true that sometimes a person who illicitly tapes a conversation for the purpose of self-protection might have the benefit of the exception under that section, there is no evidence before me at the moment to suggest that that was the purpose which Mr Kriticos actually had. For that reason I am not going to decide this application on the basis that that exception applies. 31 The second basis upon which the plaintiff seeks an injunction is that there has been a breach of confidence. The difficulty the plaintiff faces here is that the evidence does not establish that any aspect of the conversation was one which was either expressly or impliedly confidential. Counsel for the plaintiff submitted that there was some discussion of the rates and terms on which the plaintiff would be able to obtain finance. I would not accept that the rates and terms on which a mortgage broker could obtain finance were something which, from their intrinsic nature, would be regarded as confidential. They are chips which are often used openly in bargaining in the commercial world. Nothing is said on either accounts of the conversations which are in evidence before me to suggest that any express condition of confidentiality was imposed. The promotional material also showed a snippet of what looks like the plaintiff talking on the phone to another client. From the fact that it was recorded at all, I infer that that conversation was one which the plaintiff was willing to hold in the presence of Mr Kriticos. For that reason it is not confidential. As well, the content of that conversation with another client, as disclosed in the promotional material, is so trivial as not to be worth equity protecting. 32 For these reasons, it seems to me, that the claim based on alleged breach of confidence is one which fails to pass the test of raising a serious question to be tried. However, even if it were to be the case that there were to be some breach of confidence established, there would still be the difficulty that the evidence of the solicitor for Channel 9, raises material which is a prima facie case of conduct which is seriously wrongful, which is, in my view, sufficient to prevent any obligation of confidence arising in equity's inherent jurisdiction. 33 For those reasons I am not prepared to grant the injunction sought. 34 I order the plaintiff to pay the costs of the defendant for this application. **********

Last Modified: 10/23/2002 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.