The old reciprocal duty-interest qualified privilege for a lawyer writing to another lawyer trick: Szanto v Melville [2011] VSC 574

Two lawyers were acting in relation to the sale of a number of apartments in Ascot Vale. One of them, the plaintiff, acted on behalf of the receiver in relation to the sale of those apartments. The receiver had been appointed by the second ranking secured creditor of the company. The defendant, the other lawyer, was the director of the third ranking secured creditor. Not the average plot for a defamation case.

What happened was that the defendant gave a number of ASIC “releases” to the plaintiff’s partner. These documents were ASIC forms necessary for the settlement of the sales of the apartments. Months later, the defendant wanted the releases back and the plaintiff, in the process of selling one of the apartments, asked for further information about why.

The defendant then sent the plaintiff a 58-page fax, attaching months of previous correspondence with the plaintiff’s partner, and apparently saying everything the plaintiff needed to know. After that, the lawyers kept writing to each other – the plaintiff asking why the defendant wanted the releases back, the defendant saying it was all in the 58-page fax, the plaintiff refusing to waste his time reading the 58-page fax, the defendant saying it was all in the 58-page fax….

Settlement approached and the lawyers’ letters culminated in the defendant deciding that he would dob the plaintiff in to a small number of others. He wrote to 3 other lawyers. They were involved in the apartment sales and the receivers. The defendant also threatened to write to ASIC. In the letter, he wrote that the plaintiff, in refusing to return the ASIC releases, was acting in breach of his duties as a lawyer and as an officer of the court.

The parties accepted that the letters were defamatory, but nevertheless there was a 7-day trial and for once, not all of the lawyers were the winners.

The defendant claimed he had a defence because the letter was published on an occasion of qualified privilege. He also claimed that the plaintiff’s claim was trivial and that the defendant had made an offer of amends. The plaintiff claimed that the defendant was actuated by malice and could not rely on the qualified privilege defence, which was what most of the trial was dedicated to.

While most of the 62-page judgment related to the background facts, Justice Kaye did address a broad range of matters.

Of interest was:

  • The plaintiff did not and as at the trial, still had not, read the 58 page fax;
  • After a thorough and careful analysis of the background circumstances, Kaye J concluded that the defendant had a duty to write to the other 3 lawyers (there was a dispute on foot) and those 3 lawyers had an interest in receiving the letter (they each had a legitimate interest in the settlement of the sales). The qualified privilege defence was made out;
  • The defendant genuinely believed in the truth of the letter, and regardless of the merits of that view, he did not have an ulterior purpose and so there was no malice;
  • The triviality defence failed. It could not be said that there was no real possibility of harm to the plaintiff’s reputation;
  • The offer of amends defence failed because there was no offer to correct or retract the defamatory letter by the defendant. The offer was a basic apology to the plaintiff.
  • Evidence was given by the 3 recipients of the letter and they all stated that they did not think any less of the plaintiff. In fact, one of them said that they thought less of the defendant. Perhaps the defendant could have sued himself?
  • Anyway, Kaye J went on to assess damages at $35,000 to vindicate the plaintiff’s feelings, since he was an upstanding member of the legal community and he was very upset. This was if the plaintiff had won, which he did not.

Regardless, the claim was dismissed, but one could not help but feel that Kaye J felt a little reluctant to deny the plaintiff. The last paragraph, number [182] was this:

The allegations made by the defendant in his letter of 13 August 2010 were defamatory of the plaintiff, and, as such, they are presumed at law, to be untrue. The defendant did not, in any way, seek to defend the allegations on the basis that they were true. The upshot of the case is that the defendant defamed the plaintiff to three members of the legal profession, and thereby impugned the reputation of an experienced and upstanding member of the legal profession. However, the defendant published those allegations on an occasion of qualified privilege. I am not satisfied that the defendant was actuated by any improper or ulterior motive in publishing those allegations. Thus, the defendant has a valid defence to the plaintiff’s claim, based on qualified privilege. It is for that reason, alone, that the plaintiff’s case against the defendant has failed.”

So the plaintiff is left with this … As agent 86 (and “Get Smart” viewers) would say: “Missed it by that much”.