Jones v Aussie Networks Pty Ltd

Case [2018] QSC 219

SUPREME COURT OF QUEENSLAND

CITATION:

Jones & Anor v Aussie Networks Pty Ltd & Anor [2018] QSC 219

PARTIES:

RHYS EDWARD JONES

(first plaintiff)
AUSTRALIAN SHAREHOLDER CENTRE PTY LTD
ABN 53 138 723 412
(second plaintiff)

v
AUSSIE NETWORKS PTY LTD
ABN 44 124 401 734
(first defendant)
JOSEPH KEITH EIBY

(second defendant)

FILE NO/S:

BS No 12056 of 2013

DIVISION:

Trial Division

PROCEEDING:

Trial

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

2 October 2018

DELIVERED AT:

Brisbane

HEARING DATE:

9-11, 19 October 2017

JUDGE:

Douglas J

ORDER:

1. The plaintiffs’ claims are dismissed.

2. The parties will be heard as to the form of the order and as to costs.

CATCHWORDS:

DEFAMATION – STATEMENTS AMOUNTING TO DEFAMATION – IN GENERAL – where the first defendant operated an online investments and stock market discussion forum – where the first plaintiff was the director of the  second plaintiff, which operated a stock trading business – where a user posted on the forum asking for ‘thoughts, experiences and advice’ regarding the second plaintiff – where the second defendant responded to the post – whether the second defendant’s post was defamatory of the first plaintiff

DEFAMATION – OTHER DEFENCES – HONEST OPINION – where the second defendant’s post referred to, and was based upon, research that the second defendant had conducted – whether the defendants could rely on the defence of honest opinion

DEFAMATION – PRIVILEGE – QUALIFIED PRIVILEGE – IN GENERAL – where the second defendant’s post was aimed at providing information in response to the user’s question – whether the defendants could rely on the defence of qualified privilege   

DEFAMATION – DAMAGES – GENERAL DAMAGES – ASSESSMENT – IN GENERAL – where only a small number of people identified the first plaintiff in the second defendant’s post – where the post did not cause the people who identified the first plaintiff to think less of him – whether the first plaintiff was entitled to damages for any defamation

TORTS – MISCELLANEOUS TORTS – OTHER ECONOMIC TORTS – INJURIOUS FALSEHOOD – where the second defendant’s post stated an incorrect fact about an entity related to the second plaintiff – whether the defendants had committed injurious falsehood – whether the plaintiffs were entitled to damages for any injurious falsehood

TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – CONSUMER PROTECTION – MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS – APPLICATION OF PROVISIONS TO PRESCRIBED INFORMATION PROVIDERS – where the first defendant operated an online forum – whether the post by the second defendant on that forum contravened s 18 of the Australian Consumer Law – whether s 19 of the Australian Consumer Law applied – whether the first defendant carried on the business of providing information – whether the second defendant’s post had been in the course of carrying on a business of providing information

Australian Consumer Law (Cth), s 18, s 19
Defamation Act 2005 (Qld), s 30, s 31

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AGLC
Jones v Aussie Networks Pty Ltd [2018] QSC 219
Case
[2018] QSC 219
Decision Date

CaseChat Overview and Summary

In the matter of Jones v Aussie Networks Pty Ltd, the plaintiffs sought damages for defamation, injurious falsehood, and misleading and deceptive conduct. The case arose from a comment posted by Joseph Eiby, the director of Aussie Networks Pty Ltd, on an online forum. The plaintiffs, Mr Jones and Australian Shareholder Centre Pty Ltd, alleged that the comment made by Mr Eiby defamed them, stated an incorrect fact maliciously, and misled the public. The court was tasked with determining whether the comment constituted defamation, whether the defendants could rely on the defences of honest opinion and qualified privilege, and whether the plaintiffs were entitled to damages for any defamation or injurious falsehood. Additionally, the court had to assess whether the comment contravened the Australian Consumer Law.

The court found that the comment made by Mr Eiby did not amount to defamation as it was protected by the defences of honest opinion and qualified privilege. The comment was an opinion based on research conducted by Mr Eiby and was aimed at providing information in response to a user's question on the forum. The court held that the defence of honest opinion was made out, as the comment was an opinion based on proper material, even though it was not reasonable for Mr Eiby to believe that he had conducted proper research. The court also found that the comment was protected by qualified privilege, as it was made with a duty to provide information to the user and others interested in the topic.

Furthermore, the court held that the plaintiffs were not entitled to damages for defamation, as the comment did not cause any harm to the plaintiffs' reputation. Only a small number of people identified Mr Jones in the comment, and the comment did not cause those people to think less of him. The court also found that the plaintiffs were not entitled to damages for injurious falsehood, as the comment did not state an incorrect fact maliciously. Although the comment contained an incorrect statement about the relationship between TruMarkets and Iron Claw Investments, it was not actuated by malice.

Lastly, the court held that the comment did not contravene the Australian Consumer Law, as it was not made in the course of carrying on a business of providing information. The court found that the first defendant did not carry on the business of providing information, and therefore, the provisions of the Australian Consumer Law did not apply to the comment.

In conclusion, the court dismissed all the claims brought by the plaintiffs, finding that the comment made by Mr Eiby was protected by the defences of honest opinion and qualified privilege and did not amount to defamation or injurious falsehood. The court also found that the comment did not contravene the Australian Consumer Law. The plaintiffs' claims were dismissed, and the parties were to be heard as to the form of the order and as to costs.

Orders

Orders of the court

1. The plaintiffs’ claims are dismissed.

2. The parties will be heard as to the form of the order and as to costs.

Background

Background to the litigation

Aussie Stock Forums was an internet forum used by individuals to post comments and information on topics related to the stock market and investments. The website was owned by Aussie Networks Pty Ltd, the first defendant, whose sole director and shareholder was Joseph Eiby, the second defendant. A comment by Mr Eiby on the forum has attracted claims for damages for defamation and for misleading and deceptive conduct on behalf of Mr Jones, the first plaintiff, against both defendants and damages for injurious falsehood and for misleading and deceptive conduct on behalf of Australian Shareholder Centre Pty Ltd (“ASC”), the second plaintiff, again against both defendants. I have concluded that all the claims fail. The publication and background facts On 18 June 2013 at 2.17 pm, a user of the forum, “steve85” posted a note seeking information about ASC. Mr Jones, the first plaintiff, was its director. The note read:“Australian Shareholder CentreI was wondering whether anyone has used ‘Australian Shareholder Centre’ and their experiences and thoughts?Essentially I am currently using margin lending and my own investments. While this year has been good, overall I have not gone too well as I just dont [sic] have enough time looking at the market. I was looking around and came across Australian Shareholder Centre (I believe based out of gold coast).They trade in CFDz which I am aware are higher risk but they rely heavily on trailing stock losses to mitigate risks. I got the sales pitch which, if believed, would yield close to 50% (which obviously rang some alarm bells). They provided me access for a limited period to their members area and I went through all of their trade recommendations for the year so far. In essence, this year they have achieved losses on 56% of their trades (from my own calculations). However, on the plus side, after brokerage etc, it would have yielded approximately $2000 profit thus far. This isn’t far off other years they claim. This is in their A and B categories (essentially trading CFDs on ASX, NYSE and London).My concerns:- obviously the extremely high return is of concern- I can not find any reviews of them on the net. Some further searching identified they are a legitimate business IAW ASIC and australian business register and used to trade as Trumarket a number of years ago which hasn’t got a good wrap on this forum.- There is an extremely high set up cost of between $5000 and $7000Reasons I am contemplating it:- my own analysis of their trade recommendations year to date does demonstrate a high rate of return in line with what they are claiming.- I want to get out of self managed investments as I don’t have time and look at a medium to high risk place to park some of my savings that is fully managed.Any thoughts, experiences and advice is greatly appreciated.” Mr Eiby, using the handle “stockGURU” replied at 9.41 pm on the same day in this comment which gave rise to the claims by the plaintiffs:[1][1] The line numbering is that used in Annexure “A” to the fourth amended statement of claim (the “FASOC”). It is convenient to reproduce the numbering as many of the submissions were relevant to particular lines of the comment. “12 Re: Australian Shareholder Centre3 Hi Steve,4 The following is my assessment of Australian Shareholder Centre:5 Red flags6● Domain privacy is enabled to hide ownership details on the domain name.7● You cannot view the website without entering your name and mobile phone number.8Well, you can, but I’ll get to that in a minute.9● Company registered and run out of the Gold Coast.10● No upfront information about the cost of services. It looks like you register your11interest and then get a phone call with the hard sell.12 But let’s look a little deeper. Australian Shareholder Centre Pty Ltd was previously known as13 TruMarkets Pty Ltd, an advisory firm that closed its doors and sold its customers to another14 business by the name of Iron Claw Investments Pty Ltd, trading as Active Traders. You can15 read about Active Traders here and here. At the second link you will see a user named ‘Chris16 Harris’ offering a positive review of Active Traders, who then mysteriously disappears after17 promising more updates. More than likely this is someone associated with the company who18 is posting to try and make it seem that the company is generating good returns. Then the19 victims start showing up.20 Australian Shareholder Centre Pty Ltd and Iron Claw Investments Pty Ltd (Active Traders)21 have the same director and are both authorised representatives of AFSL holder Conquest22 Markets Pty Ltd. Conquest Markets has the same address as Australian Shareholder Centre23 Pty Ltd just different suite numbers. Can you see a pattern emerging?24 My opinion: Stay far away from Australian Shareholder Centre, Active Traders, and25 Conquest Markets. There is something very shady going on here. My guess is that Active26 Traders received a lot of complaints and they have set up a new company and website27 (Australian Shareholder Centre) to shift the business to. It looks like the exact same offering,28 just a new company name, website and phone number. My guess is that it’s only a matter of29 time until the victims of Australian Shareholder Centre start showing up on forums telling30 their stories. Don’t be one of them!31 P.S. To view the Australian Shareholder Centre website without surrendering your name and32 mobile phone number, just disable JavaScript in your browser. In Firefox you do this by33 going to Tools - > Options - > Content, then uncheck the ‘Enable JavaScript’ box.34”

Evidence

Evidence Before The Court

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Decision

Reasons for decision

In my view that was unreasonable in the circumstances, particularly having regard to the nature of the opinions expressed in the comment. There was no suggestion that there were time constraints affecting his ability to respond to the question on the forum. I see this inquiry as being rather different from the inquiry whether the opinions expressed by Mr Eiby were based on proper material. Accordingly, in my view, this defence is not made out.Conclusion in respect of the claim for damages for defamation Because of my view that the defence of honest opinion has been made out the first plaintiff’s claim will be dismissed. I shall assess damages, however, later in these reasons should the matter go on appeal.Injurious falsehood The claim for damages for injurious falsehood is brought only by ASC. It is necessary for ASC to show, therefore, as Gleeson CJ said in Palmer Bruyn & Parker v Parsons, that the defendants maliciously published a false statement about it, its property or business and that actual damage resulted from such publication.[23] In the same decision Gummow J expressed the elements of the action in similar terms:[24]“(1)a false statement of or concerning the plaintiff’s goods or business;(2) publication of that statement by the defendant to a third person;(3) malice on the part of the defendant; and(4)proof by the plaintiff of actual damage (which may include a general loss of business) suffered as a result of the statement.”[23] Palmer Bruyn & Parker v Parsons (2001) 208 CLR 388, 393 at [1] per Gleeson CJ.[24] See Palmer Bruyn & Parker v Parsons (2001) 208 CLR 388, 404 at [52]; see also the similar views expressed at 437 at [154] per Hayne J and 447 at [192] per Callinan J. A more elaborate test was expressed by Kirby J involving seven different elements but it was not supported by the majority. One of his Honour’s elements was that the false statement was calculated to induce others not to deal with the plaintiff or was otherwise likely to damage ASC. [25] [25] Palmer Bruyn & Parker v Parsons (2001) 208 CLR 388, 425 at [114]. Clearly the statement was published. Was it false?False statement The plaintiffs’ submissions focussed to a large extent on the truth or falsity of the imputations it sought to draw from the facts set out in the comment. One needs to focus, however, on the truth of the factual elements contained in that comment. The particular false fact that has been identified is that TruMarkets closed its doors and sold its customers to Iron Claw trading as Active Traders. In fact, TruMarkets changed its name to ASC. It did not sell its clients to Active Traders in spite of what had been said on its website at one stage. Statement likely to damage It was submitted for the defendants that, if it were necessary to consider Kirby J’s formulation of the appropriate elements of the cause of action, the publication was not calculated to induce others not to deal with ASC nor was it otherwise likely to damage ASC. Rather, Mr Eiby’s motivation was to provide information about ASC to both steve85 and others interested in knowing more about it. Objectively speaking, however, it seems to me that the comment was likely to damage the plaintiff because of the opinions expressed including advising readers to stay far away from ASC and that there was something very shady going on. Assuming, therefore, if it is a necessary ingredient of the cause of action that the document was otherwise likely to damage the plaintiff,[26] one needs to consider whether it was actuated by malice.[26] Compare Kirby J’s formulation of the elements of the tort in Palmer Bruyn & Parker v Parsons (2001) 208 CLR 388, 425 at [114] item (3) with the views expressed by the majority.Malice

Ratio Decidendi

Legal Principle Established

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