Sydney Security Services Pty Ltd v iGuard Australia Pty Ltd

[2016] NSWSC 1808

Supreme Court

New South Wales

Medium Neutral Citation:	Sydney Security Services Pty Ltd v iGuard Australia Pty Ltd [2016] NSWSC 1808
Hearing dates:	7 December 2016
Decision date:	07 December 2016
Jurisdiction:	Common Law
Before:	McCallum J
Decision:	Plaintiff’s application for injunctive relief granted; defendants restrained from publishing specified imputations; defendants restrained from deleting, altering or modifying any system recording publication of specified imputations
Catchwords:	INJUNCTIONS – application for interlocutory injunction to restrain publication of allegedly defamatory material – caution to be exercised – public interest in free speech – weight to be given to that consideration where alleged publisher denies publishing any matter defamatory of the plaintiff
Legislation Cited:	Defamation Act 2005 (NSW), s 25
Cases Cited:	ABC v O'Neill (2006) 227 CLR 57; [2006] HCA 46
Category:	Procedural and other rulings
Parties:	Sydney Security Services Pty Ltd (plaintiff) iGuard Australia Pty Ltd (first defendant) Christopher James Clifford (second defendant)
Representation:	Counsel: A Hughes (plaintiff) (ex parte)   Solicitors: MN Lawyers & Associates Pty Ltd
File Number(s):	2016/36532

Judgment

1. HER HONOUR: By summons filed 6 December 2016, Sydney Security Services Pty Ltd seeks urgent interlocutory relief on an ex parte basis to restrain the defendants, iGuard Australia Pty Ltd and Mr Christopher Clifford, from publishing allegedly defamatory material concerning the governance of Sydney Security.

2. Dr Hughes, who appears for Sydney Security, noted a preliminary matter by way of disclosure. Section 9 of the Defamation Act 2005 (NSW) provides that a corporation has no cause of action unless it was an “excluded corporation” at the time of publication of the matter complained of. Sydney Security is probably an excluded corporation; it certainly had fewer than ten employees at that time. However, the company, which carries on the business of providing security services, also retains security personnel on a contract basis as needed. Dr Hughes disclosed that, if such personnel are to be included within the count of persons the corporation “employs”, it would be necessary to check records to be confident that number is not greater than nine. That issue is addressed further below.

3. The circumstances in which the application is brought may be summarised as follows. The sole director of the plaintiff company is Ms Anwar Abud. Ms Abud was formerly married to Mr Ben Roberts. As I understand the evidence, they are not yet divorced but their relationship has come to an end and final property orders have been made in the Federal Circuit Court of Australia. Prior to their separation, Mr Roberts conducted a different security business through a company known as Sargent Security (Aust) Pty Ltd, which is now in liquidation.

4. The defendant iGuard conducts a security business in competition with the business currently conducted by the plaintiff company. The second defendant, Mr Clifford, was formerly an employee of the plaintiff and a shareholder in that company; he now works for iGuard.

5. Ms Abud first developed concerns that the plaintiff company was being defamed when, in August of this year, her office received a phone call from a client the terms of which suggested confusion between the identity of the plaintiff and Sargent Security, the business formerly conducted by Ms Abud's estranged husband. The plaintiff's national manager, Mr Peter Harris, subsequently met with Mr Shannon, also a former employee of Sargent Security now employed by iGuard, to discuss Ms Abud’s concern that the plaintiff was being defamed by Mr Clifford. Mr Shannon denied that either iGuard or Mr Clifford had been defaming the plaintiff. That meeting occurred in mid-November 2016.

6. On 29 November 2016 Mr Greenwood, yet another former employee of Mr Roberts at Sargent Security now involved with iGuard, sent an email to one of the plaintiff's customers attaching an extract from a report from Deloitte, the firm of the liquidator of Sargent Security. The email in terms equated Sargent Security with the plaintiff company. The extract from the Deloitte report attached to the email made specific reference to Ms Abud. The email, drawing on that single page of what was plainly a lengthier report, asserted that "funds have been sent to Sydney Security ($745,677) and the matter has now been referred to the Supreme Court to investigate allegations of tax evasion and misappropriation of Commonwealth funds".

7. The email was forwarded to Mr Jason Saba who responded to the author of the email, Mr Greenwood, requesting him not to forward information of that nature in the future and pointing out the distinction between Sydney Security Services (the plaintiff) and "Sydney Security Protection", the entity referred to in the Deloitte report as having received the funds. Mr Greenwood responded explaining that the information was not sent in order for iGuard to win work but because iGuard felt that the client deserved "to be provided with full disclosure as to who exactly it is you are engaging to supply your security needs".

8. After further purported explanation as to the significance of the extract from the Deloitte report, the email concluded:

Given the fact that this individual [evidently a reference to Mr Roberts] is under investigation by the Supreme Court for not meeting pay and super obligations for his employees or taxes for the Commonwealth of Australia we felt that it was necessary to inform FDC of the fact that you have engaged this phoenix company.

9. The emails are plainly capable of being defamatory of Sydney Security Services Pty Ltd and indeed of doing considerable commercial damage to that company.

10. The plaintiff contends that the emails convey the following defamatory imputations:

1. that Anwar Abud is the wife of Ben Roberts;

2. that the plaintiff is a phoenix company of Sargent Security;

3. that the plaintiff or its directors have been involved in tax evasion;

4. that the plaintiff or its directors have been involved in misappropriation of Commonwealth funds.

11. The first imputation, which relates to Ms Abud rather than the plaintiff company, may for present purposes be put to one side. I am satisfied that the emails are reasonably capable of conveying each of the other three imputations complained of.

12. A more difficult question is whether it is appropriate to grant an injunction restraining iGuard and Mr Clifford from publishing those imputations where that relief is sought on an urgent ex parte basis. Dr Hughes provided a helpful outline of submissions summarising the relevant principles. The submissions referred to the decision of the High Court in ABC v O'Neill (2006) 227 CLR 57; [2006] HCA 46 at [19] as follows (citations omitted):

The principles were discussed, for example, in Chappell v TCN Channel Nine Pty Ltd (a decision referred to by Crawford J in a passage quoted above), National Mutual Life Association of Australasia Ltd v GTV Corporation Pty Ltd, and Jakudo Pty Ltd v South Australian Telecasters Ltd. As Doyle CJ said in the last-mentioned case, in all applications for an interlocutory injunction, a court will ask whether the plaintiff has shown that there is a serious question to be tried as to the plaintiff's entitlement to relief, has shown that the plaintiff is likely to suffer injury for which damages will not be an adequate remedy, and has shown that the balance of convenience favours the granting of an injunction. These are the organising principles, to be applied having regard to the nature and circumstances of the case, under which issues of justice and convenience are addressed. We agree with the explanation of these organising principles in the reasons of Gummow and Hayne JJ, and their reiteration that the doctrine of the Court established in Beecham Group Ltd v Bristol Laboratories Pty Ltd should be folIowed. In the context of a defamation case, the application of those organising principles will require particular attention to the considerations which courts have identified as dictating caution. Foremost among those considerations is the public interest in free speech. A further consideration is that, in the defamation context, the outcome of a trial is especially likely to turn upon issues that are, by hypothesis, unresolved. Where one such issue is justification, it is commonly an issue for jury decision. In addition, the plaintiff's general character may be found to be such that, even if the publication is defamatory, only nominal damages will be awarded.

13. It follows from the material I have recited that I am satisfied there is a serious question to be tried as to the plaintiff's entitlement to relief on a final basis. Further, there must, I think, be a real question as to whether damages would be an adequate remedy in circumstances where there would appear to be a real risk that the impact of the defamatory publications will be to dissipate the plaintiff's current client base.

14. A more difficult question is to consider the balance of convenience. On the one hand there is enough of a hint in the Deloitte report to suggest the prospect that the defendants could seek to defend the three imputations (b), (c) and (d), or at least imputation (b), on the grounds of truth under s 25 of the Defamation Act. The authorities in this area of jurisprudence have emphasised the fact that the court should not pre-empt the prospects of success of a truth defence.

15. It is not possible to assess the likelihood of such a defence being pleaded or successful in the case of an application brought ex parte. Conversely, however, I have regard to the fact that the defendants evidently deny any involvement in defaming the plaintiff. It seems unlikely that the defendants will seek to plead the defence of truth to publications they deny making.

16. A further consideration, as indicated in the principles stated by the High Court set out above, is the public interest in free speech. That is ordinarily a compelling consideration, particularly in the case of an application to restrain the publication of material of public interest in the mass media. As submitted by Dr Hughes, however, it is a weaker consideration in the case of a publication of the present kind which, rather than being something in the nature of the free discussion of matters of public interest, appears to have its origin in a commercial dispute between competitors.

17. A further consideration is the short period of time for which the injunction would be granted before being brought back before the court after the defendants have been served. The shortness of that period will mean that the interference with the defendants’ freedom of speech will be small whereas the protection that will be afforded to the plaintiff in the face of what appears on its face to be a potentially damaging campaign could be significant, particularly at this time of year.

18. It remains to consider the issue of s 9. It was noted during argument that, apart from any cause of action in defamation, the plaintiff may have an alternative cause of action in injurious falsehood. Further, as already noted, the plaintiff is probably an excluded corporation. I do not think the matter disclosed by Dr Hughes should preclude the plaintiff from obtaining the relief sought.

19. On balance, I am persuaded that it is appropriate to grant the relief sought for a short period but to bring the proceedings back before the court promptly so as to afford the defendants an opportunity to be heard as to whether the injunction should be continued.

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Decision last updated: 19 December 2016