Malicious falsehood & illegal interference with business: C-Tech Laser Pty Ltd & Anor v Truong [2009] VSC 229 (15 June 2009)

June 21, 2009 |

Justice Beach continues to set a cracking pace in the judgment reaching and decision writing stakes with his, now typically, clearly written decision in C-Tech Laser Pty Ltd & Anor v Truong [2009] VSC 229 (15 June 2009) , and appeal from the Magistrates Court. Beach J together with the other recent appointments Judd, Vickery and Davies produce clear, concise and decisive judgments, much like Gordon J of the Federal Court.

In C-Tech Beach J considers the elements in a malicious falsehood claim. Malicious falsehood (also known as injurious falsehood) is not often pleaded. There was often no good reason to plead it because the facts generally supported a claim in defamation. The advantage of relying upon defamation was that it is actionable per se; with damages being at large. Further there is not need to prove malice in defamation. The reforms to Defamation with the Defamation Act 2005 means that, under section 9, most corporations are precluded from suing in defamation. With the amendment to the defamation law (in the main a great improvement) pleading malicious falsehood is a legitimate response to a tortious wrong. The issue of malice still provides evidential challenges however often evidence of the accompanying or subsequent behaviour of the putative defendant can be relied upon to draw that inference.

The facts

The Appellant’s causes of action were malicious falsehood and unlawful interference with business.

The Appellant pleaded (see par 4), by way of a counterclaim (the matter the subject of the Appeal), that the Respondent (and ex employee of the Appellant), had obtained a computer disc containing confidential information, to wit, the customer lists, from the Appellant and given it to the Appellants’ competitor. The competitor was an ex employer of the First Appellant. The alleged statements which were the basis of a claim of falsehood was to the effect that the information on the disc belonged to the competitor and they were being unlawfully accessed and used. The requisite pleaded malicious intention was for the statements to cause the competitor to taken legal action against the Appellant. As it turned out that happened with the Appellant settling the County Court action with the competitor on terms including a pay out of $90,000.

The finding

Malicious falsehood

Beach J, at paragraph 8 succintly summarises the elements of a malicious falsehood claim, as being:

8 The elements of the torts of malicious falsehood may be summarised as follows:

(1) The defendant published to a third party words which are false.

(2) The words refer to the plaintiff or his property or his business.

(3) The words were published maliciously.

(4) Special damage has followed as a direct and natural result of the publication of the words

Beach J held that the Magistrate’s decision below was fundamentally flawed because he dismissed the malicious falsehood claim on findings extraneous to the claim itself. The Magistrate found that the Appellant did not own the computer disc. The Magistrate made no finding on what if any statements were made, whether they were made by the Respondent and, if so, whether they were false. In this respect the reasons were inadequate. Beach said

In order to determine the malicious falsehood claim, the magistrate needed to make a finding as to the terms of the statement before then determining whether the statement he found to have been published was false. Further, in making a finding as to the statement actually published, the court below was required to determine whether the statements referred to in paragraph 22 of the appellants’ counterclaim had been made by Mr Truong. It was only when these issues had been determined that the court below could then proceed to the issue of falsity.

It was conceivable, Beach said (at par 11) that even if the customer list was owned by the competitor, it does not necessarily mean that it was being wrongfully used. Accordingly the findings made by the Magistrate did not necessarily preclude a finding of malicious falsehood.

Unlawful interference with business

Beach found that the fact the High Court in Sanders v Snell refrained from deciding whether a tort of interference with business is a recognised tort did not permit the Magistrates Court from stating “ is obvious that this court… should not attempt to determine this issue” (see par 7) and not considering the pleaded case. Until the High Court determines the question definitively the tort is recognised by the Victorian Supreme Court in Ansett (Operations) v Australian Federation of Air Pilotsdefinitively where it applied the United Kingdom authorities most authoritatively the House of Lords in Rookes v Barnard.

Issues worth considering

  1. The tort of malicious falsehood is a tort which requires the similar discipline as defamation claims. The statement must be analysed, the falsity identified and the malicious intent. It is an entirely distinct and unrelated action to a breach of confidence claim which seemed to lead the Magistrate astray.
  2. The tendency of the High Court since the Gleeson ascendancy has been to identify issues which may be worthy of further consideration in the right circumstances. Rather than a more expansive approach in judgments taken by the Mason and Brennan courts the current bench waits for the “right” case before properly considering an issue. An example of interest to me is the court’s tantalising commentary on an emerging tort of privacy in ABC v Lenah Meats in 2001. That hasn’t stopped their Honours from foreshadowing matters of interest. Those obiter (if that) comments in Sanders v Snell were taken too far by the Magistrates Court.

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