mahonIt is well known that a plaintiff has very little chance of getting an injunction to restrain the publication of defamatory matter.  Courts will usually say that damages are an adequate remedy. It is also well known that the Defamation Act provides that, for the most part, a company cannot sue for defamation in Australia.  So what does a company do? Injurious falsehood is the go. A company can sue if there is a false malicious publication and it causes actual financial loss to that company. Very difficult, especially proving malice and especially financial loss, but unlike defamation, the chance for an injunction is greatly increased.

So if all a defamation plaintiff wants is an injunction, why not try and dress up the claim as an injurious falsehood one? The answer is that if you do, your fate will be pretty much the same as Neville Mahon earlier this year: struck out.

The case of Mahon v Mach 1 Financial Services ([2013] NSWSC 10) related to a claim for injurious falsehood arising out of the publication of a large number of emails concerning the plaintiff on two “wikifrauds” websites. Initially, in December 2011, the plaintiff got an interlocutory injunction restraining the defendants from maintaining the websites or publishing like material and also ordering them to shut down the websites  ([2012] NSWSC 651).

Three months later, the plaintiff filed his statement of claim. The defendants then applied to strike it out. The basis was that the claim did not set out the actual loss that the plaintiff would have suffered, had it not been for the injunction. After the plaintiff provided further particulars, the matter came back before Her Honour Justice McCallum, and the question was whether it disclosed a cause of action in injurious falsehood. The plaintiff only asked for a permanent injunction to restrain the injurious falsehoods and no claim was pressed in defamation.

The plaintiff is a property developer in Fiji. He was the director of 2 companies, Denarau Investment Ltd and Denarau International Ltd. Neither of these companies was a party to the case. Denarau Investments was the developer of the Denarau Resort on Denarau Island in Fiji. It marketed and sold villas. The alleged injurious falsehoods concerned the Hilton Denarau Resort in Fiji.

The alleged injurious falsehoods were statements that the plaintiff:

  • Diverted monies otherwise payable to villa owners;
  • Bribed or corrupted police working in the Fijian court system;
  • Is a crook;
  • Engaged in illegal activity;
  • Engaged in underhanded business deals;
  • Concealed illegal activity or underhanded business deals;
  • Has been a party to a conspiracy of concealment of illegal activity or underhanded business deals.

The defendants argued that this was just a defamation claim masked as a claim for injurious falsehood. So the plaintiff needed to establish an argument that he actually suffered loss, had the injunction not been granted.

The plaintiff provided particulars of loss that related to various companies with trust structures and beneficial interests, and which related to various property developments in Australia, New Zealand and Fiji. But could not identify any personal loss to himself.

As a result, he could not make out an argument that he suffered any loss. The Fiji Hilton was the only property identified that had any connection with the plaintiff, but the particulars did not reveal any direct commercial interest held by the plaintiff. The shareholding was neither held nor controlled by the plaintiff.

On considering the particulars and further evidence from the plaintiff, Her Honour concluded that the case was

a transparent device to obtain a permanent injunction in what is, in substance if not in form, an action to vindicate the plaintiff’s personal reputation with no anchor in any tangible proprietary or commercial interest of his.” [18].

The case was not brought to protect any commercial interest, but only the plaintiff’s personal interest. So the statement of claim was struck out, victory for “Wikileaks” and the ingenious injurious falsehood argument brought to heel. Whether the plaintiff now brings a case for defamation remains to be seen.

This post originally appeared on the Defamation Watch blog and is reproduced with permission and thanks