Ariix LLC v Mahilall

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FEDERAL COURT OF AUSTRALIA

Ariix LLC v Mahilall [2014] FCA 429

Citation: Ariix LLC v Mahilall [2014] FCA 429
Parties: ARIIX LLC v DHANEEL MAHILALL
File number: NSD 1370 of 2013
Judge: RARES J
Date of judgment: 27 March 2014
Legislation: Competition and Consumer Act 2012 (Cth) s 18, Sch 2
Cases cited: Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 applied
CSR Ltd v Resource Capital Australia Ltd (2003) 128 FCR 408 referred to
Madden v Seafolly Pty Ltd [2014] FCAFC 30 applied
Morgan v Fry [1968] 2 QB 710 applied
Palmer Bruyn and Parker Pty Limited v Parsons (2001) 208 CLR 388 referred to
Ratcliffe v Evans [1892] 2 QB 524 referred to
Reg v Hillier (2007) 228 CLR 618 applied
Date of hearing: 24, 25, 26, 27 March 2014
Place: Sydney
Division: GENERAL DIVISION
Category: No catchwords
Number of paragraphs: 102
Counsel for the Applicant: Ms K Morgan
Solicitor for the Applicant: Henry Davis York
Counsel for the Respondent: The respondent appeared in person

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1370 of 2013
BETWEEN:

ARIIX LLC
Applicant
AND:

DHANEEL MAHILALL
Respondent

JUDGE:

RARES J

DATE OF ORDER:

27 MARCH 2014

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The applicant file and serve proposed orders to give effect to the reasons of Rares J delivered on 27 March 2014, on or before 1 April 2014.

THE COURT ORDERS THAT:

2.The respondent file and serve proposed orders to give effect to the reasons of Rares J delivered on 27 March 2014, on or before 12:00 pm on 3 April 2014.

3.The proceedings be stood over until 4 April 2014.   

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1370 of 2013
BETWEEN:

ARIIX LLC
Applicant
AND:

DHANEEL MAHILALL
Respondent

JUDGE:

RARES J

DATE:

27 MARCH 2014

PLACE:

SYDNEY

REASONS FOR JUDGMENT
(REVISED FROM THE TRANSCRIPT)

  1. The applicant, Ariix LLC, is a limited liability company organised under the laws of the State of Utah in the United States of America.  It develops and distributes health and wellness products, such as nutritional supplements, energy supplements, water filters and health foods.  It does so using multi-level marketing, or MLM.  Multi-level marketing involves distributors being paid commissions on both the products they sell and the products sold by other distributors in their respective organisations.  Ariix has offices in the United States, Japan, Hong Kong and Taiwan, but not in Australia.   During 2012, its annual revenue was approximately USD32 million, and its products were sold in 14 countries.  These proceedings involve a number of very serious allegations made on the internet in the first half of July 2013 against Ariix, senior officers of Ariix and some of its distributors.

  2. The respondent is Dhaneel Mahilall.  He denies that any of the things of which Ariix complains were done by him.  He asserts…

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Details
Case
[2014] FCA 429
Decision Date

CaseChat Overview and Summary

In the case of Ariix LLC v Mahilall, the plaintiff, Ariix LLC, sought relief from the defendant, Mr Mahilall, for defamatory conduct and interference with economic relations. The plaintiff alleged that the defendant had engaged in a campaign of defamation and harassment through various online platforms, causing significant disruption to Ariix LLC's business operations and reputation. The court was tasked with determining whether the defendant was responsible for the conduct and whether the plaintiff had suffered economic loss as a result.

The primary legal issues before the court were whether the defendant was indeed responsible for the defamatory conduct and whether the plaintiff had suffered any economic loss due to the defendant's actions. The court had to evaluate the evidence presented by both parties, including witness testimonies, emails, and online communications, to determine the veracity of the claims made by both sides. Additionally, the court needed to assess whether the defendant's denial of involvement was credible given the circumstantial evidence linking him to the conduct.

In its reasoning, the court examined the totality of the evidence presented, including the defendant's conduct and the immediate cessation of the complained-of activities upon being served with ex parte injunctions. The court found that the defendant's denials lacked coherence and that the circumstantial evidence strongly suggested his involvement. Notably, the court rejected the defendant's claim of an imposter, pointing out the improbability of someone else hijacking his email accounts, Facebook page, and computers without his knowledge. The court also highlighted the defendant's failure to seek corroborative evidence from email providers to support his denials. Ultimately, the court concluded that the concatenation of the evidence demonstrated the defendant's responsibility for the conduct.

The court found that the defendant was indeed responsible for the defamatory conduct and interference with economic relations. Consequently, the court issued an order for the defendant to pay damages to the plaintiff, Ariix LLC, for the economic loss suffered due to the defamatory conduct. The court also issued an injunction preventing the defendant from engaging in similar conduct in the future.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

On 14 August 2013, the arbitrator appointed by ICANN to deal with the complaint made by Ariix as to the use of the ariixcorporate.com URL determined that the URL should be transferred from the respondent to Ariix. However, the respondent did not participate in the arbitration and has not transferred the URL.Mr Yates’ evidence Mr Yates gave evidence, in his first affidavit sworn 2 October 2013, that he had been Ariix’ chief financial officer and a manager since the company had been incorporated on 4 January 2011. He said that he had held a position of vice president and chief financial officer for Usana from September 2008 to January 2011. In cross-examination, he admitted that he had in fact ceased to work at Usana on 10 May 2011. Mr Yates described some of the disruption that Ariix had experienced, internally, and also externally with its distributors, as a result of Mr Mahilall’s activities in early to mid-July described above. He said that Ariix’ customer services had spent the first half of July 2013 having to deal with queries from customers and distributors about various emails from Mr Mahilall, and the Facebook and YouTube publications. He said that Ariix’ information technology staff had spent some time dealing with the internet consequences of that conduct, as had Mr Jones. He said that, on 10 July 2013, Ariix had hired Mr Osorio to attempt to minimise any negative effect on it on the internet, and had paid him USD4,500 for that activity. Mr Yates said that, in his experience, negative publicity had the potential to dissuade prospective customers from considering Ariix and to discourage new distributors from joining it. However he gave no evidence, in any admissible form, of any economic loss suffered by Ariix, either actual or prospective. Importantly, Mr Yates said that, on 17 July 2013, at about shortly after midnight in Utah, Dr Cooper called his mobile phone, then added Mr Jones on another phone, and they had a conference call. Dr Cooper had arranged to have them join the call he planned to make to Mr Mahilall on his Australian mobile number. Dr Cooper then called Mr Mahilall and a conversation took place. Only Dr Cooper spoke and the respondent was not informed that any other persons were listening on the phone. Mr Yates’ evidence of that conversation was first given in his affidavit of 13 November 2013 that was sworn after the respondent’s affidavit of 1 November 2013. Mr Yates said that after Dr Cooper had identified that he was talking to the respondent, they had a conversation, relevantly, to the following effect:“Dr Cooper: Is this Dhaneel Mahilall?The respondent: Yes.Dr Cooper:My name is Fred Cooper. I don’t know if you actually know who I am, but it would seem that you do. I am the CEO of Ariix. I am calling about the website you have created and all the threatening and offensive emails you have been sending to our Representatives. But first, could you please tell me what I have done to you to make you contact our employees, representatives and customers?The respondent: I want to sell the Ariix Corporate website.Dr Cooper:I understand, but why have you attacked us like this?The respondent: I just want to sell the website.Dr Cooper:You have made that very clear, and you have demanded an exorbitant fee. How much will it really take to get this site from you?The respondent: Well, the price goes up daily, and continue to do so. Today, the price is $400,000.Dr Cooper:If I paid this, what would it get me?The respondent: You will get the website.Dr Cooper:Anything else?The respondent: You won’t hear from me again.Dr Cooper:What does this mean?The respondent: I will stop the emails and take down the videos if the $400,000 is paid.Dr Cooper:Which videos?The respondent: The ones with the man and woman complaining about Ariix.Dr Cooper:Will you stop emailing our leaders and not post any more videos, including through this Cassie person?The respondent: Yes it will all stop.Dr Cooper:Are you sure? Will it definitely all stop if we pay the $400,000?The respondent: I can assure you that it will all stop. You have my word.Dr Cooper:How do we know that you are the one controlling all of this? What if you are just trying to get money out of us and then nothing changes?The respondent: No, I have complete influence over all of it, I can make it all go away.Dr Cooper:Why would you lie about me when you don’t even know me? What did I ever do to you?The respondent: I want to sell the website.Dr Cooper:OK. We understand. We will have to meet to consider what you have proposed. Goodbye.The respondent: Goodbye.” (emphasis added)The respondent’s evidence

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

After Chris Nielsen, one of the solicitors acting for Ariix, had given evidence in the case and been cross-examined, the respondent sent a derogatory email to him. The email contained an attachment that comprised various cut and paste representations of a former Australian politician, Pauline Hanson, and derogatory references to Mr Nielsen that the attachment attributed to her.Consideration At the end of the day, a striking feature of this case is that the respondent’s denials of any involvement in the conduct complained of do not appear to have any coherence with the immediate cessation of all of the activity complained of very soon after he had been served with the ex parte injunctions on 17 July 2013, and the absence of any suggestion that further threats or activity of this kind has occurred since the respondent was served. Whoever was conducting the activity in the first half of July 2013 came from Sydney. That is because a number of the emails internally state localities in that city. I have formed the view that I cannot accept any of the evidence of the respondent unless it is corroborated independently by other evidence. He is, as I have said, an intelligent person. He has engaged in a number of activities that make it plain that he was the person behind the conduct complained of. It is beyond belief that someone could have effectively hijacked all of the respondent’s email accounts, his Facebook account, and computers, and produced what occurred in either or both December 2012 and July 2013 without the respondent having any contemporaneous awareness of it. The present proceedings involve in one sense a circumstantial case being made by Ariix. That is because the respondent raised the issue of a possible imposter and no independent forensic evidence has linked him directly as the author or instigator of much of the conduct complained of. In evaluating whether an inference or finding of responsibility can be made against a respondent in such a case, a court can weigh the united force of all of the circumstances put together. It is not appropriate to isolate each instance relied on without considering the admissible evidence as a whole. The Court must not look at the evidence in a circumstantial case in a piecemeal way: Reg v Hillier (2007) 228 CLR 618 at 638 [48] per Gummow, Hayne and Crennan JJ. I find that the concatenation of material associated with the respondent being the source demonstrates that, indeed, it was him. Moreover, it is also telling that he did not attempt, with all his resourcefulness, to obtain evidence even from the providers of the various email accounts, such as Gmail or Hotmail, that were in his own name that he had created, or the others in names resembling his to establish a basis for his denials of being responsible for the emails coming from those sources. I reject his claim that an impersonator engaged in the conduct complained of including organising the YouTube videos. The respondent had considerable resource in computer technology and use. For example, he took down or removed his own name from his Facebook page after the conduct complained of and substituted another name, Dma Hilal, on that medium in its place. However, the respondent denied that he had a Facebook page at all, although at one point he lapsed into an admission that he did, as I find to be the case. The Facebook page of Dma Hilal uses the same URL as the respondent had using his own name, Dhaneel Mahilall, when he posted the Facebook message of 7 July 2013 to Mr Wilson. That message demanded USD160,000 as the then -rice for the ariixcorporate.com domain name. The same source also messaged the “Ariix Products are terrible” video on 7 July 2013 on Mr Wilson’s Facebook account.