SUPREME COURT OF JUSTICE

moresby claim adjustment partners ltd; and
benny diau

v

wyatt gallagher basset (png) limited

waigani: amet cj; kapi dcj; sakora j

15 August 2003

DEFAMATION – Libel – Letter to Insurance Commissioner making false allegations – Whether there was publication? – Qualified protection under s 11 of Defamation Act – Whether the statements made in good faith.

DAMAGES – Damages for Defamation – Damages for actual loss and loss of good will.

Facts

The second appellant in letters addressed to the Insurance Commissioner made various allegations of impropriety against the respondent, a rival company that led the Commissioner to investigate the allegations. In a claim for defamation the National Court found the appellants liable for publishing defamatory material in respect of the respondent and awarded K90,000.00 in damages. The appellants appealed against liability and the damages awarded. They sought to overrule the judges" finding that there was publication of the defamatory statements and his holding that the statements were not protected by the qualified protection of the Defamation Act.

Held

1. The evidence established that there was publication to the Insurance Commissioner.

2. The publication was not made in good faith to be accorded qualified privilege.

3. The Judges' award of K50,000.00 in respect of the injury to the reputation and goodwill of the respondent was not an excessive award.

Papua New Guinea cases cited
Coyle v Henao [2000] PNGLR 17.
PNG Aviation Services Pty Ltd & Ors v Michael Thomas Somare & Ors N1493 (1996) Unreported.

Other case cited
Adam v Ward [1916-17] All E R 159.
Powell v Gelston [1916] 2 KB 615.
Pullman and Another v Walter Hill & Co. Ltd [1891] 1 QB 524.

Counsel
N Nalawaku, for the appellants.
I Molloy, for the respondent.

15 August 2003
By the court. This appeal is against a decision of the National Court (Kandakasi J) in which the Court found Moresby Claim Adjustment Partners Ltd (first appellant) and Benny Diau (second appellant) liable for defamation against Wyatt Gallagher Basset (PNG) Ltd (respondent). 

The facts giving rise to this cause of action are briefly these. The second appellant is the Managing Director of the first appellant which carries on business in insurance loss assessing, adjusting and surveying services. The respondent is engaged in the same line of business. 

In letters dated 25th February 2000 and 6th March 2000 addressed to the Insurance Commissioner, the second appellant wrote of the respondent the words:

"…Wyatt Gallagher (PNG) Ltd is breaching the Labour Laws…failingto train employees…engaging unqualified expatriates…and offering employees of insurance companies bribes and inducements to obtain work" 

It is alleged that these letters were received by the Insurance Commissioner and this resulted in an investigation. It is not necessary to refer to the details of the investigation for the purposes of the appeal before us.

The National Court found the appellants liable for publishing defamatory material in respect of the respondent and awarded K90,500.00 in damages. The appellants appealed against the whole of the decision on the following grounds:

"1.0 Publication

1.1 His Honour, the trial judge after having made a finding of fact that the Insurance Commissioner was responsible for the general administration of the Insurance Act thus entitled to receive all information including complaints affecting the industry.

(a) erred in law in making a finding that the Insurance Commissioner was a third party not entitled to receive such information when there was evidence that the defamatory material were intended and addressed to him in his official capacity hence no publication, Powell v Gelston [1916] 2 KB 615;

(b) erred in law in finding that there was publication when case law showed there is no publication where a defamatory material is read by a person other than the person whom the publication was intended, Huth v Huth [1915] 3 KB 32;

(c) erred in law in making a finding that the Insurance Commissioner was a third party when he was not within the meaning and spirit of section 11 of the Defamation Act.

(d) In the alternative, even if the Insurance Commissioner was a third party, the trial judge erred in law in finding that there was publication of the defamatory material to the Insurance Commissioner when evidence showed that the Insurance Commissioner had an interest in the subject hence entitled to receive such communication in confidence in respect of matters affecting the insurance industry. Powell v Gelston [1916] 2 KB 615.

1.2 His Honour erred in law in drawing an inference that the letter was typed by the Secretary of the appellants, thus publication at that stage, although having made a finding of fact that there was no evidence as to who typed out the two (2) letters containing the defamatory matter to constitute publications.

1.3 The trial judge erred in law in drawing an inference that the Insurance Commissioner's Secretary or a clerk in the Insurance Commissioner's Office read the defamatory letter hence publication when there was no evidence showing the mode of delivery of the letters to draw such inference.

1.4 His Honour the trial judge erred in law in stating that it was not necessary for the Court to have regard to the defendant's argument that the plaintiff/respondent has failed to establish by way of evidence publication.

(a) when there was no single evidence from the plaintiff/respondent or all that the defamatory letters were copied or circulated to persons other than the Insurance Commissioner,

(b) when there was no evidence from the plaintiff that it did in fact have copies of the defamatory letters mailed or delivered to it,

(c) when the only evidence for the plaintiff from Mr. Muir was that he only saw the copies of the two defamatory letters for the first time in Court at the time of trial when giving evidence,

(d) had the trial judge regard to the facts set out in paragraphs (a), (b) and (e) (c) herein, the Court could have arrived at a different conclusion.

2.0 Qualified Protection – section 11, Defamation Act.

2.1 His Honour, the trial judge, erred in law and in fact in making a finding that publication of the defamatory material by the appellant was not protected by the defence of qualified protection under section 11 of the Defamation Act in that.

(a) His Honours failed to establish that the publication was made on protected occasion before deciding the question of good faith; PNG Aviation Services Pty Ltd & Ors v Michael Thomas Somare & Ors N1493 (1996) Unreported.

(b) The occasion on which the publication was made was protected or privileged under Section 11(b), (c) and (e) of the Defamation Act in that the Insurance Commissioner was entitled to know and have access to such information in his official capacity in confidence.

(c) The occasion on which the publication made was privileged in that the first defendant and the Insurance Commissioner had a common interest in the subject published about.

3.0 Res Judicata

3.2 The trial judge erred in law in making a finding that the respondent's claim was not res judicata in that:

(a) There was evidence before the Court that a judgement had been entered in the plaintiff's favour for the sum of K384,000.00 in proceedings WS No. 446/2000 on 4 June, 2002 when pleadings in the current matter had closed and the matter was ready for trial on 27 June, 2002.

(b) There was evidence before the Court showing that the respondent was already awarded damages for the sum of K384,000.00 in proceedings WS No. 446/2000 against the Insurance Commissioner for alleged defamation arising from the same set of facts in the instant proceedings.

(c) The injury to reputation or goodwill can be done only once and that once damage is done, there is no more reputation or goodwill capable of being damaged;

(d) The publication of the defamatory materials were done once thus the damages suffered by the plaintiff/respondent is one and the same and therefore cannot claim for the same injury from two (2) different defendants as such is unjust enrichment.

4.0 Damages

4.3 The trial judge erred in fact and in law in finding that the plaintiff suffered special damages in the sum of K40,500.00 in that there was no evidence before the Court showing any correspondence from the plaintiff to the Insurance Commissioner by way of response to the appellant's two (2) letters dated 25 February and 6 March, 2000 the subject of the defamation proceedings.

4.4 The trial judge erred in fact in finding that the plaintiff lost managerial and secretarial time worth K40,500.00 when there was no independent evidence before the Court showing loss of such time.

4.5 The trial judge erred in fact in finding that the Insurance Commissioner's perception of the respondent changed after receiving the defamatory letter from the appellants when there was no evidence before the Court as to the Insurance Commissioner's reactions.

4.6 The trial judge erred in law and in fact in holding that a substantial award of damages justified for damage to goodwill and injury to reputation of the respondent when there was no evidence to show the actual loss of goodwill and injury to reputation of the respondent.

4.7 The trial judge erred in fact and in law in awarding general damages of K50,000.00 when there was no evidence to show the respondent had suffered such a loss.

5.0 Referral of lawyer to Lawyers Statutory Committee

5.1 His Honour erred in concluding that Mr Jack Nalawaku is guilty of improper conduct as a Lawyer for misleading the Court with a case reference and referred him to the Lawyers Statutory Committee, when there was no evidence for such conclusion and secondly without giving Mr. Nalawaku a right to be heard."

The parties did not dispute that the words stated in the letters were defamatory. The issues before the trial judge were:

1. Whether the letters to the Insurance Commissioner were published within the meaning of the term publication as is known in a defamation case?

2 If the letters were published and amounted to defamation against the appellants, is the defence of qualified protection under s 11 of the Defamation Act available to the appellants.

3. The appropriate damages

Publication
The parties do not dispute as to what constitutes publication in law. It is sufficient to refer to Gatley on Libel and Slander, 7th edn, paragraph 221 as to the requirements of publication:

"221. General Principles No civil action can be maintained for libel or slander unless the words complained of have been published. 'That material part of the cause of action in libel is not the writing, but the publication of the libel.' By 'publication' is meant 'the making known of the defamatory matter, after it has been written, to some person other than the person of whom it is written. If the statement is sent straight to the person of whom it is written there is no publication of it.' The uttering of a libel to the party libelled is clearly no publication for the purposes of a civil action. A communication of the defamatory matter to the person defamed cannot injure his reputation though it may wound his self-esteem. A man's reputation is not the good opinion he has of himself, but the estimation in which others hold him. If then the libellous matter be delivered only to the plaintiff himself there is no publication, and therefore no action can lie."

The appellants raised several grounds of appeal in respect of publication. We note that counsel for the respondent contends that these grounds are misconceived. Counsel for the appellants did not take up these grounds in submissions before us. Therefore we will not address them.

However, counsel for the appellant's complaint is that while the second appellant admitted to writing the two letters, there was no evidence before the Court below that these two letters were ever received by the Insurance Commissioner. He therefore submits that there was no publication. 

We would dismiss this submission at the outset. As counsel for the respondent rightly pointed out, there was no dispute that the Insurance Commissioner received these two letters. This is apparent from Mr Nalawaku's own statement at the trial (page 223 of the record):

"Nalawaku. But your Honour, what we are saying is that evidence led on behalf of the plaintiff, they have not established who are the persons apart from the Insurance Commissioner and that the plaintiff themselves had access to this letter,…" (Our emphasis)

There was no question that the Insurance Commissioner received these letters. This fact can also be confirmed by the evidence of the second appellant in his affidavit sworn on 17th June 2002 and filed in this proceeding. At paragraph 4 he states:

"I am aware of having written two (2) letters dated 25th February and 6th March 2000 respectively to the Insurance Commissioner in respect of certain issues which I honestly and strongly believed were unfair practices by the Plaintiff particularly in the loss adjusting business."

At paragraph 8 he states:

"As a result of my two (2) letters, an investigation was carried out by the Insurance Commissioner and a report issued dated 1st August 2001, a copy of which was made available to me and as annexed to this Affidavit and marked 'Annexure 'B'"

In addition, counsel for the respondent pointed out numerous references in the transcript where the fact of the Insurance Commissioner receiving these two letters is confirmed. We do not find it necessary to cite all these references. We are satisfied that the fact of the letters being received by the Insurance Commissioner was not an issue at the trial and there is ample evidence confirming this fact.

The nature of the appellant's submission before the trial judge is accurately set out in the reasons for decision by the trial judge:

"…the defendant's argument is that, there was no publication of the letters and therefore no defamation. This is so, they argue, because the letters were written to the Insurance Commissioner and was not copied to any other person or public at large. The letters were marked confidential and addressed only to the Insurance Commissioner. The letters were intended for him and he alone received them in his official capacity as Insurance Commissioner and therefore not a third party. There is no evidence of the letters being copied or circulated to any other person including even the plaintiff. The defendants point to Mr Muir's evidence that he saw a copy of the letters in question for the first time in court during the time of his evidence. This, the defendants argue, shows that the letters were not published."

The main thrust of the appellants' case in the Court below was that the Insurance Commissioner was not a third party as the letters were addressed and intended for him. This is evident from what Mr'Nalawaku stated to the trial judge on page 224 of the record:

"The general rule is that for there to constitute defamation, there must be publication of the material complained of to parties other than the plaintiff or the party to whom the material was intended."

We agree that publication of defamatory material to parties other than the respondent is a correct proposition of law. However, the statement that publication of defamatory material to a party other than "the party to whom the material was intended" is a wrong proposition in law. This was a reference to publication of the defamatory material in respect of the respondent to a person other than the Insurance Commissioner. The defamatory matter related to the respondent and the question is whether the Insurance Commissioner is a third party.

The trial judge in our view correctly decided that the Insurance Commissioner is a party other than the respondent about whom the letters were written. There is no appeal against this finding.

For the reasons we have stated above, there is no basis for the submission that there was no evidence of publication to the Insurance Commissioner. We would dismiss the grounds relating to the issue of publication.

Qualified protection – section 11 of the Defamation Act

The issue under this provision was clearly stated by the trial judge:

"The defendants' argument is that, the letters were written to the Insurance Commissioner disclosing information he was entitled to receive under the Insurance Act 1995. That argument follows on from the acceptance by both parties that the Insurance Commissioner is a statutory authority, whose duty it is to regulate the insurance industry in terms of the Insurance Act 1995. I have no difficulty accepting the argument that the Insurance Commissioner is entitled to know and should be in a position to receive complaints and other information about the industry he is in-charge of. But the question is, does this necessarily mean that he is authorized to receive information or allegations that are false and highly defamatory of a participant or a person who has an interest in the insurance industry. If so, does it necessarily follow that people who provide such information are protected from criminal or civil liabilities?"

The trial judge then addressed the issue in these terms:

"Section 11 of the Defamation Act provides the circumstances in which a person may be excused from publishing defamatory material of another. These principles, as already noted, have been extracted from a large number of cases including some of the cases the parties have referred me to such as Pullman and Another v Walter Hill & Co. Ltd (supra), and Adam v Ward [1916-17] All E R 159. But underlying all of these is the requirement that the publication must be made in good faith. This means acting 'honestly and on reasonable grounds' believing that what is published is true and necessary for the purposes of his redress of a wrong to him or her or for the public interest good see Lord Atkinson at page 173 in Adam v Ward (supra). The Supreme Court in the Merriam case repeated this, citing Lord Atkinson in Adam v Ward with approval."

This is a correct statement of the law. The question was whether the appellants published the defamatory materials in good faith? The trial judge held:

"The case is therefore, left to be determined on the basis of the evidence before me. The evidence on point is clear. Mr Diau admitted under cross-examination that he did not believe in the truth of any of the things he said in his two letters to the Insurance Commissioner. He did not even care or pause before putting pen to paper to verify or establish the factual foundations of what he was about to set out in his letters. He did not ask and or inquire from any of the relevant authorities for the relevant and necessary information before writing to the Insurance Commissioner. There was nothing preventing the defendants from asking the Department of Labour and Employment for information on the number of expatriates that the plaintiff was employing and then check with the plaintiff if the expatriates were employed in the positions approved by that Department. Similarly he could have inquired of the Internal Revenue Commission and the Central Bank for information on how much the plaintiff may have sent out of the country. As for the allegation concerning manipulation of the industry to secure all the loss adjustment work they did not ask of the insurance houses relationship with the plaintiff and how was it that plaintiff was receiving about 80% of the work. The letters were not made in terms of an allegation only that needed to be investigated and confirmed or that they were only the defendant's belief. They were instead, stated as facts." 

We agree with counsel for the respondent that the issue was not whether the publications were made on an occasion of qualified privilege. The trial judge accepted "the argument that the Insurance Commissioner is entitled to know and should be in a position to receive complaints and other information about the industry he is in charge of." The question was whether the publications were made in good faith. The grounds of appeal have not challenged this finding by the trial judge. We would dismiss these grounds of appeal.

Counsel for the appellants abandoned the grounds of appeal in respect of res judicata.

Damages

The trial judge awarded damages under two heads:

1. Financial loss that flowed directly from the publications for K40,500.00 

2. Injury to reputation and goodwill for K50,000.00

In relation to the first head of damage, counsel for the appellants abandoned the ground of appeal in respect of lack of evidence of any response by the respondent to the letters containing the defamatory materials. We therefore do not consider this particular ground. 

The balance of the grounds in respect of this head of damage alleges errors of findings of fact on the financial loss to the respondent. We agree with counsel for the respondent that there was sufficient and uncontested evidence and it was open to the trial judge to make the findings. There is no merit in this ground and we would dismiss it.

The only ground that remains to be considered is in relation to the award of K50,000.00 in respect of injury to reputation and goodwill. We are not satisfied that the award of K50,000.00 is an excessive award having regard to other awards (Coyle v Henao [2000] PNGLR 17.) We would dismiss this ground of appeal.

In addition the appellant raised a question relating to the remarks made by the trial judge on a matter of referring counsel for the appellants to the Lawyers Statutory Committee. This is not a matter that should concern the Court in this appeal. It is a matter for another tribunal.

In the result we would dismiss the appeal with costs to the respondent.

Lawyers for the appellants: Paul Paraka Lawyers.
Lawyers for the respondent: Pacific Legal Group.