On 4 August 2010 the High Court of Australia gave judgment in the libel case of Aktas v Westpac Banking Corporation  HCA 25. In its first libel case since April 2009, by a majority of 3:2, the Court allowed Mr Aktas’ appeal and ordered Westpac Banking Corporation to pay Aus$50,000 in damages for defamation arising from its mistaken dishonouring of his company’s cheques.
In December 1997, Westpac mistakenly dishonoured 30 cheques drawn by the Homewise real estate agency, located in Auburn, Sydney. The plaintiff, Paul Aktas was the sole shareholder of Homewise. The cheques were mistakenly returned to Mr Aktas’ clients, mostly landlords, stamped “refer to drawer”. The jury found that this conveyed the defamatory imputation that Homewise had passed valueless trust account cheques and that Mr Aktas had caused this to happen. That was not the case, and Mr Aktas subsequently won a breach of contract case relating to the incident. His defamation proceedings failed before Fullerton J ( NSWSC 1261) and in the New South Wales Court of Appeal ( NSWCA 9) on the ground that Westpac had a defence of qualified privilege at common law.
In a joint judgment French CJ, Gummow and Hayne JJ held that there was no public interest protecting the bank’s communications to the payees, as payees have no interest in receiving notice of a refusal to pay a cheque where the drawer has sufficient funds to meet the payment. Reliance was placed on the English first instance decision of Davidson v Barclays Bank ( 1 All ER 316) in which it was held that the principles of qualified privilege were not engaged in respect of a communication of a notice of dishonour. They held that, in the general interests of the whole community, qualified privilege should not attach to the occasion of such a communication. They concluded
“To hold that giving notice of dishonour of a cheque is an occasion of qualified privilege is not conducive to accuracy on the part of banks faced with the decision to pay or dishonour a cheque as soon as reasonably practicable” ()
Heydon and Kiefel JJ both wrote powerful dissents. Their fundamental point was that the notice of dishonour was an ordinary business communication and there was an obvious “community of interest” (). The fact that Westpac made the communication as the result of a mistake did not deny the operation of the qualified privilege defence. As Kiefel J put it
“The question is whether, given the honest belief of its employee that the account could not be utilised to pay cheques, the bank could fairly be said to consider itself obliged to communicate its decision, a decision in which others were necessarily interested. In my view, the answer must be ‘yes'” 
This division of opinion is, perhaps, not surprising. There are diverging lines of authority in Australia. The Davidson case was considered in Ireland where a bench of four judges which divided on the question: Pyke v The Hibernian Bank Limited  IR 195. In Lloyds Bank plc v Rogers ( EWCA Civ 1277), Simon Brown LJ noted that “The correctness of Hilbery J’s decision in Davidson has been doubted and never yet tested.”
The approach of the majority – that a person cannot create an occasion of qualified privilege by making a mistake as to the underlying factual position – is one which, at first sight, seems inconsistent with principle. The doctrine of qualified privilege exists precisely to protect the free flow of communication in situations where the publisher and publishee have something relevant in common (a “community of interest” or a corresponding “duty” and “interest”). A bank and the payee of a cheque might be thought to have that reciprocity of interest such that communications between them would be protected by qualified privilege. If the bank had (mistakenly) thought that Mr Aktas was acting improperly by passing “bad cheques” then it would plainly have had the benefit of qualified privilege if it had reported the matter to the proper authorities. Why is the position any different when it gives notice of dishonour by mistake?
There is, however, a deeper issue of public policy underlying the majority’s judgment. They ask the question as to how the general interest will be best served in the circumstances of the case: by protecting bankers who make mistakes or customers who are defamed? Their conclusion is that the general interest favours protecting the customer. This is a finely balanced issue where the majority’s view appears, on balance, to have the support of the majority of judges and academic writers. The question as to how the issue would be decided in England and Wales is, nevertheless, unclear.