Re.Group Pty Ltd v Kazal

GRIFFITHS J: 1 On 2 December 2016, the applicants, Re.Group Pty Ltd and Mr Naveen David Singh, commenced proceedings in this Court in which allegations are made against the two respondents of breach of copyright and also injurious falsehoods. The two respondents are brothers named Adam and Charif Kazal. The originating application was accompanied by a detailed statement of claim bearing the same date. I will come back and say a little bit more about the statement of claim and the allegations that are made against the two respondents shortly. 2 On 2 December 2016, Flick J made orders for short service and also ordered that the interlocutory application, which was filed on the same day, be returnable for hearing at 2.15 pm today. 3 The matter has come before me as duty judge. Mr Leopold SC, who appeared with Mr Jedrzejczyk for the applicants, sought to rely upon an amended interlocutory application. The amended interlocutory application seeks various orders. They include orders restraining the first and second respondents respectively from using photographs of Mr Singh, copies of which were annexed to the originating application. The basis for the claim for interlocutory relief in respect of the two photos relates to the law of copyright. Orders were also sought in orders 3 and 4 of the amended interlocutory application that the photographs be removed within 48 hours. 4 The applicants seek further interlocutory relief pertaining to their claims of injurious falsehood, which relate to various representations identified in the statement of claim. The representations differ in respect of the first and second respondents. In the case of the first respondent (i.e. Adam Kazal), the alleged representations attributed to him are said to have been made during the period 28 October 2016 to 1 December 2016 inclusively. 5 It is alleged that these representations have appeared at various times on vehicles which have been seen in various parts of Sydney, including parked outside the offices of the first applicant, in Bligh Street, Sydney. It is convenient to interpolate at this stage that the second applicant, Mr Singh, is the managing director of that company. The representations that are alleged to have been made by the first respondent also extend to matters which have appeared on posters, which it is alleged have been affixed to electricity and telephone poles, light poles, and signposts in various locations around eastern Sydney, and throughout the suburb of Woollahra, and environs. 6 Some of the representations are said to relate to the fact that Mr Singh is a senior executive who has an association with the first applicant. It is alleged that the members of the public who had knowledge of that association are persons who are identified in paragraph 19 of the statement of claim. 7 The second representation pleaded against Adam Kazal is that he has published to a wider section of the public harmful allegations which are to the effect that Mr Singh is a thief who stole $180 million from his business partners. 8 It appears that, as background to the current proceedings in this Court, there is a long history of "discontent" between the two respondents and Mr Singh, as well as another gentleman called Mr David. The discontent, which is described by Mr Leopold SC as something of a business "imbroglio", goes back to events which apparently occurred in the Cayman Islands. It appears that Mr Singh, Mr David, and the two Kazal brothers, and perhaps other persons, were involved in some business activities which resulted in litigation in the Cayman Islands. According to the statement of claim the litigation in the Cayman Islands resulted in at least two decisions of the Grand Court of that jurisdiction, and it is pleaded, in effect, that the outcome of those proceedings was not relevantly adverse to the interests or reputation of either Mr Singh or Mr David. 9 It is perhaps convenient to also interpolate at this point that I was informed from the bar table that there are separate proceedings in the Court which have been commenced by Mr David against the same two respondents who are respondents to the proceedings here. 10 I was also told from the bar table that, by consent, Rares J, in whose docket those other proceedings currently are, made orders by consent on 11 November 2016. Those orders were directed to the second respondent in those proceedings, who is the first respondent in these proceedings, namely, Mr Adam Kazal. Interlocutory injunctive relief, substantially similar but not identical to that which is sought by the applicants in the proceedings before me, was granted. I was also informed from the bar table that apparently there are some proceedings that are likely to come before his Honour later this week, on Friday, in which there may be an allegation that Mr Adam Kazal is in contempt of those orders. Nothing more needs to be said about that because those matters are not relevant to the interlocutory application which is currently before me. 11 It is appropriate to say a little more about the allegations raised in the statement of claim against the second respondent, Mr Charif Kazal. The allegations relating to injurious falsehood commence at paragraph 35 of the statement of claim, and they run through to paragraph 60. There is no need to set out those allegations in full. In brief terms, it is alleged that Mr Charif Kazal is responsible for making various representations which are said to involve injurious falsehoods against both the first and second applicants. In the case of the first applicant, there are some 13 representations that are complained about. And in the case of Mr Singh there are also 13 such representations. 12 Just to give some flavour of the nature of the alleged representations, it is pleaded, for example, in paragraph 36 of the statement of claim that the second respondent has published various representations which are directed at Mr Singh in particular and which have appeared on the website with the URL http://www.kazalfamilystory.com. Those representations include claims that Mr Singh is a corporate thief, that he has committed crimes by stealing from Mr Charif Kazal and another of his brothers, Tony Kazal, which crimes are said to have warranted Mr Singh's imprisonment. 13 There are also claims concerning representations which are alleged to have been made in respect of the first applicant. One of those claims is that the first applicant employs Mr Singh as his senior executive, and that Mr Singh has stolen Mr Charif Kazal's and Tony Kazal's shares in a company which presumably forms part of the Cayman Islands imbroglio to which I made reference earlier. The claims of stealing and of being a thief are repeated throughout the pleaded representations, including a claim, in paragraph 45, that Mr Singh stole $180 million from Adam and Tony Kazal. 14 The applicants relied upon two affidavits sworn by their solicitor, Mr Nicholas Perkins. Annexed to Mr Perkins' first affidavit is a series of annexures. They include examples of the posters that have allegedly been published around parts of Sydney. The posters on their face would appear, at least at this stage of the proceeding, to indicate that there is some substance in the claims that are pleaded in the statement of claim. It may well be that there are full and true answers to those claims, but at the current stage of the proceeding, and in circumstances where the respondents have not filed any evidence in opposition to the material which is relied upon by the applicants, I take that into account for the purposes of determining the application for interim relief. 15 One such poster, for example, shows a photograph of both Mr David and Mr Singh, and contains the wording "exposed - the corporate thieves". It also includes statements such as "robbed their business partners of $180 million" and says "don't be their next victim". At the bottom of the poster, reference is made to being able to "read the full story" at the website referred to above. Mr Adam Kazal's name appears immediately after that statement. 16 There are also numerous photographs of white commercial-type vans which are parked in various locations, including immediately outside the premises of the first applicant, in Bligh Street, Sydney, as well as at various other locations in the eastern suburbs of Sydney. 17 The vans have conspicuously displayed over them large statements, including statements along the lines of those to which reference has been made in the posters - i.e. references to "corporate thieves", "don't be their next victim", "fraudsters" (with Mr Singh's name appearing immediately beneath it), "$180 million theft", as well as a statement that "all involved to be exposed". At the back of one of the vans, there are photographs of Mr David and Mr Singh against which appears the word "fraudsters" against both their profiles, and both are then described as being "a con artist". 18 Also in evidence is a series of correspondence between the parties which might appropriately be described as letters before action, and responses thereto. 19 I should mention at this point that, when the matter was called for hearing at 2.15 pm today, Mr Rasmussen, who appeared for the first respondent, asked for more time to put on evidence. I understood this to be a reference to evidence that would go to the issue of whether or not the claims made against the first and second applicants were false. When pressed he said that he formally applied for the proceeding to be adjourned. The application was refused. As noted above, the matter was listed for hearing last Friday to proceed today at 2.15 pm. It is also relevant that where, as is evident from the seriousness of the representations and statements that are pleaded in the statement of claim (which are supported, on their face at least, by the annexures to Mr Perkins' affidavits) that serious allegations had been made against the first and second applicants which, on their face, are highly detrimental to the business image and business activities of the first applicant, together with Mr Singh, who is its managing director. Although the first and second respondents indicated a willingness to proffer undertakings relating to the publication of the photographs which are the subject of orders 1 and 2 in the amended interlocutory application, they were not prepared to give similar undertakings in respect of either the removal of those photographs, as sought by orders 3 and 4 of the amended interlocutory application, and they strongly resisted any injunctive relief being granted in respect of the alleged injurious falsehoods. For those reasons the application for an adjournment was refused. 20 Having regard to the fact that the first and second respondents have indicated a willingness to proffer undertakings along the lines of orders 1 and 2 in the amended interlocutory application which relate to the copyright claims, it is appropriate, having regard to the urgency of the matter and the time of day, that I concentrate on that part of the relief which is sought which relates to the allegations of injurious falsehood. 21 Before I deal with that, it is appropriate to outline at this stage some general principles relating to injurious falsehood, noting in particular that one of the main contentions advanced by Mr Rasmussen, and also by Mr Potter who appeared for the second respondent, was that the parts of the statement of claim concerning injurious falsehood ought to be regarded as contrived. 22 This contention was made on the basis that it would have been open to Mr Singh at least to have brought proceedings for defamation. It was submitted that the claims have been brought by the first and second applicants under the umbrella of injurious falsehood in order to avoid the constraints upon gagging writs being issued in such proceedings. For reasons which I will outline below I reject the claim that these proceedings ought to be viewed as a contrivance. 23 The leading authority on injurious falsehood in Australia at present is the decision of the High Court in Palmer-Bruyn and Parker Pty Ltd v Parsons [2001] HCA 69, 208 CLR 388. Mr Potter, who represented the second respondent, helpfully drew the Court's attention to the summary of the history of injurious falsehood set out in the judgment of Gummow J, commencing at [57]. 24 As is well known, there are four key elements to the tort of injurious falsehood. They are: first, there must be a false statement of or concerning the plaintiff's goods or business; secondly, there must be publication of that statement by the defendant to a third person; thirdly, there must be malice on the part of the defendant; and fourthly, there must be proof by the plaintiff of actual damage which may include a general loss of business suffered as a result of the statement. 25 In [58] of Gummow J's judgment, his Honour referred to an earlier English decision in Joyce v Sengupta [1993] 1 WLR 337; 1 All ER 897, reiterated the relevant elements of the tort and then added that it was for the plaintiff in an injurious falsehood case to: establish falsity, malice and special damage, burdens not imposed upon the plaintiff by defamation. 26 Significantly, Gummow J then said that (footnotes omitted): On the other hand, the inhibition upon the use of the injunction to restrain further publication of defamatory material does not apply to injurious falsehood; a rationale for the distinction is said to be that the latter tort protects proprietary and commercial rather than personal interests. 27 There are cases to similar effect in the New South Wales Supreme Court. It is sufficient for current purposes to refer to the decision of Davies J in Menulog Pty Ltd v TCN Channel Nine Pty Ltd [2012] NSWSC 247. In that case, his Honour set out the relevant principles at [21]-[23] as follows: 21 In relation to whether an injunction should issue at all in the type of case such as the present, the authorities have distinguished between cases of defamation and cases where injurious falsehood is claimed. The usual restraint exercised for the grant of injunctive relief in defamation cases does not apply with the same force in cases of injurious falsehood: AMI Australia Holdings Pty Ltd & anor v Fairfax Media Publications Pty Ltd & ors [2010] NSWSC 1395 at [39]; Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388 at [58]. 22 In AMI Brereton J identified at [29] the 4 elements of the tort of malicious falsehood as follows: (1) a false statement of or pertaining to the plaintiff's goods or business; (2) publication of that statement by the defendant to a third person; (3) malice on the part of the defendant; and (4) actual damage as a consequence. 23 Argument before me focussed on the first and third of those elements and, in particular, on the issue of malice and whether the Plaintiff had shown that there was an arguable case of malice. The Defendant correctly submitted that, unlike in defamation, in injurious falsehood the Plaintiff bears the onus of proving falsity. In that regard it is worth considering what Brereton J said in AMI: [30] In injurious falsehood, unlike in defamation, the plaintiff bears the onus of proving falsity [Palmer Bruyn , 406 [58]]. From time to time, AMI's submissions slipped into the form that there was no evidence to support or justify an imputation, and therefore that it was false. This is not the way in which the tort of injurious falsehood works; unlike in defamation, where it is for a defendant to justify an imputation, in injurious falsehood the plaintiff must prove the imputation to be false. However, the absence of evidence to justify a falsehood is not without significance: where there is nothing to justify it, it may take very little to establish, on balance, that the imputation is false. 28 Other cases which stand for similar principles as those identified by Davies J include the decision of Harrison J in Beechwood Homes (NSW) Pty Ltd v Camenzuli [2010] NSWSC 521; the decision of McCallum J in Neville Mahon v Mach 1 Financial Services Pty Ltd [2012] NSWSC 651; and the decision of Brereton J in AMI Australia Holdings & Anor Pty Ltd v Fairfax Media Publications Pty Ltd [2010] NSWSC 1395. My attention was also drawn to an earlier decision of Hunt J in Swimsure (Laboratories) Pty Limited v McDonald [1979] 2 NSWLR 796, which may state a more conservative approach to that which is reflected in the subsequent cases referred to above. 29 Turning to the issue whether or not there is a serious question to be tried in respect of the claims of injurious falsehood against the two respondents, I deal with the four elements identified above which make up the relevant tort. In my view, sufficient evidence has been adduced in the Court by the applicants to establish, on a prima facie basis, that false statements have been made pertaining to both the first and second applicant's business. As Mr Leopold SC emphasised, the gravamen of the various pleaded representations is directed very much to business or commercial matters. That is reflected in the various examples given above of the statements which have, for example, appeared on the website, on the vans and in the other representations which are pleaded. Significant, to my mind in this context too, is the fact that the vans have reportedly been seen parked not only outside Mr Singh's private residence, but also, more significantly perhaps, immediately outside the premises of the company of which he is both managing director and a shareholder. 30 The second element is publication of a statement by the defendant to a third person. Again, it seems to me plain, at least on a prima facie basis, that the representations that are pleaded in the statement of claim are representations which have been published to sections of the public by the first or second respondent respectively. 31 As noted above in respect of the senior executive representation, that publication may have only been to a small circle of people. But in the case of the other pleaded representations, the publication is very much to the world at large, as is reflected by the ubiquitous nature of the posters and the mobility of the vans displaying the statements which form part of the representations complained about. Also relevant is the encouragement given to those who happen to see the posters or signs to follow up the accusations by further reference to the website identified above. 32 As to the third element, i.e. malice on the part of the defendant, I accept Mr Leopold's submission that, at this stage of the proceeding, there is prima facie evidence of malice. That is particularly so by reference to the prima facie fact - which was not contested - that the proceedings in the Cayman Islands have not resulted in findings which would provide any basis to suggest that there is any substance in the very serious, perhaps almost the most serious type of allegations that one could conceive of, being made against an individual heavily involved in business and commercial activities as is the case with Mr Singh. 33 The fourth element is also adequately established at this stage of the proceedings (i.e. on a prima facie basis) concerning actual damage as a consequence of the injurious falsehoods. The damage that has occurred, and I accept is also threatened to continue to occur unless the behaviour is restrained, includes the necessity for Mr Singh to engage various persons to seek to deal with these serious allegations and claims being made against him, including media advisors and also security personnel. I accept Mr Leopold's submission that, given the nature of the business activities of the first applicant and its involvement in recycling and other infrastructure projects, together with the very strong allegations being made against Mr Singh, existing and prospective business partners may well be influenced by that and make decisions which would not be in the commercial interests of either the first or second applicants having regard to the most serious claims being made against Mr Singh personally. 34 Turning to the balance of convenience, it seems to me that, while the Court generally hesitates to restrain individuals being able to exercise their rights of freedom of speech, nevertheless this is a case where injunctive relief properly should lie. This is partly by reference to the relative strength of the prima facie case which I have summarised above. Also relevant is the resistance of both the first and second respondents to interlocutory relief being granted in respect of that aspect of the case that relates to injurious falsehood. Furthermore, if one compares the relative inconvenience of the restraints which would be imposed upon the respondents by the grant of interlocutory relief with the inconvenience to the first and second applicants, were the respondents to continue unrestrained to publish the types of statements to which I have made reference above, I have no doubt in concluding that the balance of convenience strongly favours the applicants. 35 For all those reasons, I am satisfied that this is an appropriate case in which to grant interlocutory relief in the terms sought in the amended interlocutory application. 36 The Court will make the orders set out in the amended interlocutory application. Costs of the interlocutory application will be costs in the cause. There will also be an order that there be liberty to apply on the giving of 48 hours' notice. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Griffiths.