Directors and defamation: If there's malice involved, say goodbye to qualified privilege

In Smith v Stevens,1 the Western Australian Supreme Court considered whether the defence of qualified privilege could be made out in relation to the emailing of a document which was allegedly defamatory of some directors of a corporation, on the basis that the common interest in the giving and corresponding receiving of the document was the corporate governance of the Corporation.

Facts

All parties to this case were directors of the Wintawari Guruma Aboriginal Corporation RNTBC (Corporation).  Mr Smith and Mr Camille, the manager of the Corporation, were the plaintiffs in the action and Mr Stevens was the defendant.

The publication the subject of this dispute was an email attaching a document entitled ‘WGAC directors meeting Wednesday the 1st of April 2015’ (Document), which Mr Stevens sent to Mr Bevan, another director of the corporation, Mr Camille, Ms Camille, who was employed by the Corporation in an administrative capacity, Mr Smith, and six other directors of the Corporation.

The Document included statements which Mr Smith and Mr Camille alleged were defamatory of them.  The pleaded defamatory imputations included that they:

  1. had mismanaged and inappropriately dealt with the affairs and resources of the Corporation;
  2. were deceitful in setting up another company, and had inappropriately caused a trust associated with the Corporation to pay money to that company;
  3. had breached the duties they owe to the Corporation in their capacity as director of the Corporation;
  4. are dishonest;
  5. are criminals; and
  6. had a conflict of interest which they refused to declare.

Whilst Mr Smith and Mr Camille invited the defendant to apologise for publication of the Document, no apology was given.  As a consequence, Mr Smith and Mr Camille commenced their actions seeking damages for defamation and injunctions restraining the defendant from further publishing the statements complained of.

Decision

At trial, Mr Stevens did not defend the case on the basis that the statements he published were true.  Rather, he raised the defence of qualified privilege, relying primarily on the common law defence and also on the defence under s 30 of the Defamation Act 2005 (WA).  For this defence to be made out, both the maker and recipient of a defamatory statement must have corresponding duties and interests in what is conveyed.  The interest may be founded in a duty to speak and to listen to what is conveyed.2  Mr Stevens claimed that both he and the recipients of the attachment had a common interest, being the corporate governance of the Corporation.

The plaintiffs denied that the defence of qualified privilege was made out, stating even if it was, that it was not available to Mr Stevens because he was motivated by malice when making the statements; that is, he made the statements for an improper purpose with the intent to injure the plaintiffs’ reputations.  The qualified privilege defence is defeated if the plaintiff can show the defendant published the matter complained of maliciously.

The court narrowed the issues down to four points:

  1. Were the statements made by the defendant in the Document defamatory of the plaintiffs?
  2. Were the statements made on an occasion which was privileged?
  3. Does the defence of qualified privilege fail because the defendant was actuated by malice when making the statements?
  4. If the defence of qualified privilege fails what damages should be awarded

Were the statements made by the defendant in the Document defamatory of the plaintiffs?

The court found that the statements were defamatory of Mr Smith and Mr Camille, with the following defamatory imputations being conveyed by the Document:

  1. The plaintiffs mismanaged the affairs and resources of the Corporation;
  2. The plaintiffs are dishonest; and
  3. Were the statements made on an occasion that was privileged? 

Were the statements made on an occasion that was privileged?

The court held that the Document was published on an occasion of qualified privilege.

The Document was sent by Mr Stevens in his capacity as a director of the Corporation to the recipients in their capacity as directors and the subject matter of the attachment was the affairs of the Corporation, in particular governance issues.

Mr Stevens had a duty in communicating his concerns about the management of the Corporation to the other directors and they had a corresponding interest in being informed of his concerns.

Does the defence of the qualified privilege fail because Mr Stevens was actuated by malice when making the statements?

The court closely considered the principles and relevant authorities applicable to malice in the context of the defence of qualified privilege, reinforcing that the privilege is not absolute, and if a person misuses the privilege, they will lose the benefit of it.

The court noted that express malice will be found where a purpose or motive that is foreign to the occasion actuates the making of the statement.3  Publishing untrue defamatory matter recklessly, without caring or considering whether it be true or not, will mean that that person is treated as if he knew it to be false.4  It is only where his desire to comply with the relevant duty or to protect the relevant interest plays no significant part in his motives for publishing what he believes to be true that ‘express malice’ can be found.5

The court was satisfied that Mr Stevens was actuated by malice in the form of an intention to injure Mr Camille’s reputation.  As a consequence, the defence of qualified privilege failed, both in common law and under section 30 of the Defamation Act  2005 (WA).

His Honour’s reasons for coming to this conclusion included:

  1. Mr Stevens admitted that he had prepared the Document because he considered he was being attacked by Mr Camille and had to retaliate ‘somehow'
  2. Mr Stevens did not make sufficient enquiries about many of the allegations that were made; and
  3. Mr Stevens did not attend many directors meetings and did not have an explanation as to why he did not attend.

What damages were awarded? 

Mr Camille was awarded $10,000.00 in damages.  The court made this assessment because the Document was sent to six people, who were unlikely to have given the allegations any weight.  However, he did give evidence of the stress that the defamatory allegations caused him.

Mr Smith was awarded $3,000.00 in damages as he did not attend the trial and there was no evidence of the defamatory statement on him.

An injunction restraining Mr Stevens from repeating the defamatory allegations was not granted as the court was not satisfied that there was a material risk that they would be repeated, and was concerned about the possibility that an injunction might impede lawful debate about the affairs of the Corporation.

Lavan comment 

This case is a reminder of the difficulty in making out other defences to defamation if the defence of truth cannot be made out.  Directors should be cautious about sending potentially defamatory information or statements to their co-directors or other staff about personnel in the company if they have not made the relevant enquiries to ensure that the information is true.

AUTHOR
Cinzia Donald
Partner
AUTHOR
Ahshiba Sultana
Senior Associate


FOOTNOTES

[1] [2018] WASC 95.

[2] Papaconstuntinos v Holmes a Court [2012] HCA 53.

[3] Roberts v Bass [2002] HCA 57.

[4] Horrocks v Lowe [1975] AC 135, 149.

[5] Horrocks v Lowe [1975] AC 135, 149.