Sydney Security Services Pty Limited v iGuard Australia Pty Limited (No 2) [2016] NSWSC 1849

Supreme Court New South Wales

Medium Neutral Citation: Sydney Security Services Pty Limited v iGuard Australia Pty Limited (No 2) [2016] NSWSC 1849 Hearing dates: 15 December 2016 Decision date: 15 December 2016 Jurisdiction: Common Law Before: McCallum J Decision: Order 1 made 7 December 2016 continued until the next date before the court. Order 2 dissolved. Costs reserved. Catchwords: DEFAMATION – excluded corporations – where plaintiff company wholly-owned by another company – not an excluded corporation

INJUNCTIONS – where ex parte application granted on basis of apprehended cause of action for defamation – whether injunction should be continued on basis of cause of action for injurious falsehood Legislation Cited: Corporations Act 2001 (Cth), s 50 Defamation Act 2005 (NSW), s 9 Cases Cited: Sydney Security Services Pty Limited v iGuard Australia Pty Limited [2016] NSWSC 1808 Category: Procedural and other rulings Parties: Sydney Security Services Pty Limited (plaintiff) iGuard Australia Pty Limited (first defendant) Christopher James Clifford (second defendant) Representation: Counsel: M Navarrete (solicitor for the plaintiff) L Barnett (defendants)

Solicitors: MN Lawyers & Associates (plaintiff) Finne Roache (defendants) File Number(s): 2016/00365352

Judgment 1. HER HONOUR: On 7 December 2016, an application came before the Court ex parte for orders restraining the defendants from publishing specified imputations. I granted the relief sought, for the reasons stated in my judgment published that day: see Sydney Security Services Pty Limited v iGuard Australia Pty Limited [2016] NSWSC 1808. 2. I stood the proceedings over to today to afford the defendants an opportunity to be heard as to whether the injunction should be continued. The defendants have today opposed the continuation of the injunction. Ms Barnett, who appears for the defendants, noted that, in the ex parte application, Dr Hughes, who appeared for the plaintiff, disclosed a matter relating to the status of the plaintiff and, in particular, the issue whether it is an "excluded corporation" within the meaning of s 9 of the Defamation Act 2005 (NSW). 3. At that time, Dr Hughes' submissions were focused on the first element of the definition of an excluded corporation, namely, the requirement that the plaintiff be a corporation that employs fewer than ten persons. 4. At the time of the hearing, both Dr Hughes and I both overlooked the second element of the definition, which is a requirement that the plaintiff corporation not be related to another corporation. The Defamation Act provides in s 9(4) that, in determining whether a corporation is related to another corporation for the purposes of ss (2), s 50 of the Corporations Act 2001 (Cth) applies. That section defines related corporations to include a holding company of another body corporate. 5. The evidence before me in the ex parte application reveals that the plaintiff is wholly owned by another corporation, AAJJ Nominees Pty Limited. That further consideration makes clear that which was not clear to me at the time of the ex parte application which is that the plaintiff, contrary to the view I formed at the first hearing, is not an excluded corporation. It follows that it has no cause of action for defamation. 6. I did, in the earlier judgment, advert to the prospect of there being an alternative cause of action against the defendants at the suit of the plaintiff, namely, a cause of action in injurious falsehood. 7. Ms Barnett has addressed me this afternoon on that issue, contending that, even on a prima facie basis, there is no evidence capable of establishing the additional element of that cause of action of malice. Ms Barnett further submitted that there is no evidence capable of establishing actual damage as a result of any injurious falsehood. 8. I accept that the position viewed through the rubric of the cause of action of injurious falsehood suggests a weaker case than appeared when I heard the ex parte application. On balance, however, I am satisfied that there is enough in the evidence, albeit scant, to establish a prima facie case for injurious falsehood. 9. As to malice, that emerges by way of inference from the content of the emails themselves, considered in my earlier judgment. I judge that issue in the context recorded in my earlier judgment, namely, that the plaintiff and the first defendant are trade competitors in what appears from the correspondence to be a competitive field of business. 10. As to damages, whilst I accept that there is no direct evidence of any publication having been sent other than to the client whose email is included in the evidence on the ex parte application, there is conversely nothing in the material to explain why iGuard would choose only one of a number of mutual clients to contact in the terms it did. In my view, there is enough in the tone and content of the correspondence to apprehend a real risk of damage to the business of the plaintiff if the injunction is not continued. 11. Separately, Ms Barnett addressed me as to order 2 made on an ex parte basis, which restrained the defendants from deleting, altering or modifying any system recording publications of the alleged imputations specified in the application. Ms Barnett submitted that such an order should not be necessary, it being clear to both parties that, the proceedings having been commenced, each is under an obligation not to destroy any potentially pertinent evidence. 12. In my view, there is force in Ms Barnett's submission on that issue. I am persuaded that I should not continue order 2 made on the last occasion. I note, however, that today's proceedings have made clear to both parties their ongoing obligation not to destroy any potentially relevant evidence. In that context, I note that Ms Barnett has foreshadowed the prospect of a cross-claim by the first defendant against the plaintiff which the first defendant alleges has also made defamatory statements about it. 13. For those reasons, the orders today are that: 1. Order 1 made 7 December 2016 is continued until the next date before the court. 2. Order 2 is dissolved. 3. The costs of today are reserved. ****