Wyatt Gallagher Basset (PNG) Ltd v Diau [2002] PNGLR 43 (16 August 2002)

NATIONAL COURT OF JUSTICE

WYATT GALLAGHER BASSETT (PNG) LIMITED

v

BENNY DIAU; and
MORESBY CLAIMS ADJUSTMENT PARTNERS LTD

Waigani: Kandakasi J
27 June; 16 August 2002

DEFAMATION –Letter to statutory authority making false allegations – Whether that amounts to defamation? – If defamatory whether protected under s 11 of the Defamation Act?

DAMAGES – Damages for defamation – Measure of damages – Actual costs and or expenses incurred and general damages for costs and injury to reputation and or good will in the case of a business – Plaintiff already awarded damages in related action against a different party also for defamation set in motion by the defendant's publication – Separate cause of action.

Facts

The plaintiff sued the defendant for damages for defamation contained in letters sent by the defendant to the Insurance Commissioner alleging that the defendants were engaged in the manipulation of the insurance adjusters industry through unfair practices, secret commissions and collaborating with others to force the defendants and others out of the insurance adjusters market. The facts complained of were stated as facts when in fact they were not. The defendants did not dispute that the material complained of was defamatory but claimed, however, that there was no defamation as the letters were not published to persons other than the Insurance Commissioner, who is the regulator of the industry and needed to know the matters raised for the purposes of its official duties of regulating the industry. Alternatively, they argued that even if the letters were defamatory, they were protected by Section 11 of the Defamation Act, as the letters were written in good faith to get redress for what they believed were wrongs. They further argued that the claim is, in any case, res judicata because the plaintiff was already awarded damages in an action against the Insurance Commissioner arising out of the same publication.

Held

1. The defendants published the letters containing defamatory material of the plaintiffs to the Insurance Commissioner: Pullman and Another v Walter hill & Co., Limited [1890] UKLawRpKQB 193; [1891] 1 QB 524 applied; Huth v Huth [1915] 3 KB 32; Powell v Gelston [1916] 2 KB 615; Colthard v South Australia [1995] SASC 4927; [1995] 63 SASR 531 distinguished.

2. The qualified privilege under Section 11 of the Defamation Act is available only in circumstances where the publication was made in good faith and the person making the publication was acting honestly and on reasonable grounds believing that what was published is true and necessary for the purpose of redress of a wrong to him or for the public interest or good. Colthard v South Australia [1995] SASC 4927; [1995] 63 SASR 531; Pullman and Another v Walter Hill & Co., Limited (supra) and Adam v Ward [1916-17] All E.R. Rep. 159; Penton v Calwell [1945] HCA 51; [1945] 70 CLR 219; PNG Aviation Services Pty Ltd & Ors v Michael Thomas Somare & Ors (unreported Judgement (20/12/1996) N1493 discussed. The defendants did not act in good faith.

3. The defence of res judicata cannot be raised and sustained if it has not been specifically pleaded: Motor Vehicles Insurance (PNG) Trust v John Etape [1995] PNGLR 214; Motor Vehicles Insurance (PNG) Trust v James Pupune [1993] PNGLR 370 applied. The defence of res judicata cannot also be sustained where the parties to the proceedings were different and there were two separate instances of defamation of the plaintiff by the Insurance Commissioner and the defendant.

4. The damages that are recoverable by a company in a defamation suit are only for financial loss, as a company cannot be injured in its feelings but the injury may extend to loss of goodwill: PNG Aviation Services Pty Ltd & Ors v Michael Thomas Somare & Ors (supra).

5. A lawyer who misleads the Court in his submissions fails in his duty to the Court and can be referred to the Lawyer's Statutory Committee to be dealt with appropriately.

Papua New Guinea cases cited

Carmelita Mary Collins v Motor Vehicles (PNG) Insurance Trust [1990] PNGLR 580
James G. Koimo v The Independent State of Papua New Guinea [1995] PNGLR 535.
Motor Vehicles Insurance (PNG) Trust v John Etape [1995] PNGLR 214.
Motor Vehicles Insurance (PNG) Trust v James Pupune [1993] PNGLR 370.
National Airline Commission v Lysenko [1990] PNGLR 226.
PNG Aviation Services Pty Ltd & Ors v Michael Thomas Somare & Ors (unreported judgement delivered on 20/12/96) N1493.
PNG Aviation Services & Ors v Somare & Ors (2000) unreported SC658.
Repas Waima v Motor Vehicles Insurance Trust [1992] PNGLR 254.
Yange Lagan & 58 Others v The State (1995) unreported N1369.

Other cases cited

Adam v Ward [1916-17] ALL E.R. Rep. 159.
Brunsden v Humphrey [1884] UKLawRpKQB 158; [1884] 14 QBD 141.
Colthard v South Australia [1995] SASC 4927; [1995] 63 SASR 531.
Huth v Huth [1915] 3 KB 32.
Powell v Gelston [1916] 2 KB 615.
Penton v Calwell [1945] HCA 51; [1945] 70 CLR 219.
Pullman and Another v Walter Hill & Co., Limited [1890] UKLawRpKQB 193; [1891] 1 QB 524.

Counsel

I. Molly QC and Mr. D. Lightfoot, for the plaintiff.
Mr. Nalawaku, for the defendants.

16 August 2002

Kandakasi J This is a claim for damages for defamation by Wyatt Gallagher Bassett (PNG) Limited ("the plaintiff"). It carries on business in Papua New Guinea ("PNG") as a loss adjuster. Mr. Benny Diau is the managing director of Moresby Claims Adjusters Partners Limited ("MCAL") formerly Freemans Port Moresby Ltd, ("together, the defendants"). MCAL is a competitor to the plaintiff. By letters dated 25 February 2000 and 6 March 2000, the defendants wrote to the Insurance Commissioner concerning the plaintiff ("the letters"). The letters stated that the plaintiff was responsible for manipulating the adjusters industry through unfair practices, secret commissions and collaboration with others to force the defendants and others out of the market. The words complained of were stated as facts when in fact they were not.

The defendants do not dispute that the material stated in the letters were defamatory. They claim, however, that there was no defamation as the letters were not published to persons other than the Insurance Commissioner, who is the regulator of the industry and needed to know the matters raised for the purposes of its official duties of regulating the industry. Alternatively, they argue that even if the letters were published and the plaintiff was defamed, they are protected by s 11 of the Defamation Act 1962, as the letters were written in good faith to get redress for what they believed were wrongs. Further, they argue that the claim is res judicata because the plaintiff was already awarded damages in an action against the Insurance Commissioner arising out of the same publication.

Hence, the issues presented before this Court for determination are these:

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 defendants, is the defence of qualified protection under s. 11 of the Defamation Act 1962, available to the defendant?
3. Depending on the answers to questions 1 and 2 above, what are the plaintiff's damages?
4. Whether this action is res judicata?

The Facts

Evidence for the plaintiff came from Mr. Donald Robert Muir. As for the defendants, the evidence came from Mr. Benny Diau. From these evidences, the facts are not in any serious contest.

The plaintiff has been in the loss adjusting business for a good number of years in the country up to now. They carry out loss adjustments on nearly everything except for radiation related incidents as they do not have the expertise. Most of the work is in the motor vehicle, marine and fire related loss areas. According to Mr. Muir, most loss adjusters start their career as panel beaters, especially in the motor vehicle and marine related areas. Becoming a lost adjuster is the ultimate in those professions.

Most of the plaintiff's work and, therefore, clients come from insurance houses. It has about 80% of the loss adjusting business in the country. On the other hand, the defendants are newcomers to the business and are competitors of the plaintiff.

Concerned with what the defendants believed to be a serious and unfair imbalance in the level of loss adjusting work received between the plaintiff and nationally-owned competitors like the MCAL, its managing director Mr. Diau wrote the letters to the Insurance Commissioner. The respective letters in relevant parts read:

Letter dated 25 February 2000

"RE: SERIOUS FINANCIAL DISADVANTAGE CAUSES TO MY COMPANY BY A FOREIGN ENTERPRISE WYATT GALLAGHER BASSET WITH SEVEN APPROVED LABOUR POSITION

Since colonial days up until now, not one expatriate in the Insurance Industry has trained or assisted a Papua New Guinean in Loss Adjusting Business, they have kept this business far away from all Papua New Guinean Nationals therefore only FOREIGN ENTERPRISES were operating in this field and all monies (Millions of Kina) were remitted abroad for the last 25 years or so.

I am the first Papua New Guinean National to actively get involved in the business of loss adjusting in Papua New Guinea and this Foreign company is doing everything under the sun to shut me out.

During the past few years the above company, WYATT GALLAGHER BASSET has caused me serious financial disadvantages by employing an excessive amount of expatriates and monopolising the market.

This company originally operated as International Adjusters Partnership and change that name to WYATT GROUP and subsequently to WYATT GALLAGHER BASSET.

This company has Seven approved Labour Positions, the expatriates employed by the company are mainly panel beaters and their qualifications and experience do not correspond to the positions for which Labour approval was obtained, the Labour approvals are for Managers, Insurance and Superannuation and this description does not correspond to Loss Adjusters and Motor Vehicle Assessors (panel beaters) employed by this company.

I am very surprised how this company can have seven approved Labour Positions when the major insurance companies in this country only have one expatriate each working for them.

Further details are given below:-

1. QBE Insurance One expatriate

2. Pacific MMI One expatriate

3. American Home One expatriate

4. Mitsu Marine and Fire Insurance One expatriate

5. Zurich Pacific Insurance One expatriate

6. Pan Asia Pacific Insurance One expatriate

7. HIH Insurance One expatriate

During the past 15 to 20 years this company has monopolised loss adjusting business and remitted millions of kina out of this country. Now they are manipulating to shut down my company and another National Loss Adjuster Company by corroborating with their associates in the Insurance Industry.

This company has no proper localisation program and has never ever sent a national overseas for further training for the past 15 years or so. We as a national company have sent two National Loss Adjusters to Australia or upgrading their skills with one attached to Brisbane and the other at Toowoomba within our last seven years of operations.

This company continues to employ a large number of expatriates just to remit millions of Kina abroad at the same time collaborating to cause National companies financial loss. They pay their salaries in Australian Dollars and also following the fly in fly out system as all these expatriates families are all Australian residents.

We also have reasons to believe that the Wyatt Group has manipulated and prevented us from getting work from Pacific MMI, American Home and Zurich Pacific. These three Underwriters do not give work to us and therefore we miss out work from about 40% to 50% of the market for loss adjusting.

We are aware that Persan Loss Consultants & Adjusters are also having serious difficulties in getting work due to manipulation by the Wyatt Group.

As a citizen of this country I request you to consider the above and allow the Wyatt Group to have only one expatriate General Manager in this country. We could then compete with this company on an equitable basis.

I would appreciate your urgent attention to this matter and I am willing to provide any additional information required by you.

..."

Letter dated 6th March 2000

"RE: SERIOUS FINANCIAL DISADVANTAGE CAUSES TO MY COMPANY BY A FOREIGN ENTERPRISE WYATT GALLAGHER BASSET WITH SEVEN APPROVED LABOUR POSITIONS

I refer to the above matter and wish to submit the following additional information:-

During the year 1999, received 860 assignments and the total turnover of K635,000.00.

In year 2000 we would only get about 400 jobs due to the current monopoly situation enjoyed by Wyatt Group.

We estimate that the Wyatt Group received about 1800 to 2000 assignments in 1999 and the turnover of that company in 1999 has to be over K3,5 million.

Additional information is given below regarding fees and expenses charged by the Wyatt Group:-

Average invoice including fees, expenses and tax for 1999

	Motor	Non-Motor	Workers Compensation Excluding Workers Compensation
Wyatt Group	K 1,900.00	K2,250.00	K 2,500.00
Freemans	K 850.00	K 900.00	K 800.00

Underwriters who gave 100% of their work to Wyatt Group:-

Pacific MMI

We understand that David Randle has instructed his staff to give all the work to Wyatt Group.

Underwriters who give more than 90% of their work to the Wyatt Group.

Zurich Pacific

American Home

About three years ago Zurich Pacific removed us from their panel of loss adjusters without giving us any reason.

The last job we received from American Home was in May 1992. Our various efforts with the Management of American Home to get work that company have been unsuccessful.

Underwriters who give more than 50% of their work to the Wyatt Group.

QBE Insurance

Mitsui Marine and Fire

HIH Insurance

Underwriters who do not give any work to Freemans:-

Pacific MMI

American Home

Zurich Pacific

Underwriters who give more than 50% of their work to Freemans:-

Tower Insurance

Workers Mutual Insurance

Unless restrained, the Wyatt Group will in the year 2000 get about 2,500 assignments and would have a turnover exceeding K5 million. They would employ at least six expatriates and there would be additional loss adjusters frequently flying in from Brisbane.

Currently, the Wyatt Group handles almost all the claims for the Corporate Clients such as the Pacific Finance Group to Companies including the PNGBC, rural Development /Bank, Motor vehicles Insurance Ltd, Steamships Group of Companies, Air Niugini, all the commercial Banks, Seetu Kui, Boroko Motors, Porgera Joint Venture, Ramu Sugar, Coca Cola, Bishop Brothers, the Kenmore Group, Chemcare Pharmacy, National Housing Corporation, Lae Builders and Contracts, NCDC, Courts Furniture, Coecon, Collins & Leahy, all the major hotels and all the shipping companies, etc.

The underwriters and the brokers gradually transferred the above amounts to the Wyatt Group during the past two years and the National Loss Adjusting companies would feel the full impact of loss of business only in the year 2000.

The corporate clients of Freemans are only the TST and Super Value Group of Companies.

It appears that Peter Hind and Eric Harris of AON Risk Services channel claims relating to their client's direct to the Wyatt Group.

All Expatriate Marine Surveyor employed by the Wyatt Group handles almost all the marine claims (Hull and Cargo) for which a loss adjuster has to be appointed.

We believe that unlicensed overseas loss adjusters are still used by some local underwriters. We also believe that GAB Robins still has access to adjust claims in this country.

If no urgent action is taken, the Wyatt Group will control 80% to 90% of the loss adjusting market in this country by the end of the year 2000.

The long term repercussions would include the following:-

1. The National Loss Adjusting companies will suffer a natural death. They will not get the opportunity to expand and to save money to train the National Staff.

2. The invoices of the Wyatt Group could include substantial hidden costs to account for the commission payments they make either locally or overseas to their business associates and friends who direct business to them.

3. The policyholders would suffer since the premiums would increase due to the very high cost of serving claims when the Wyatt Group is involved.

There would be an artificial increase in the loss ratio, which would result in an increase in premiums for the policyholders.

5. Millions of kina would be repatriated out of Papua New Guinea, which would adversely affect the economy of the country. This has already happened during the past 20 to 25 years.

6. The local Insurance Industry would pay for the bills of the Wyatt Group loss adjusters who fly in and fly out from Brisbane. We also suspect that some reports of the Wyatt Group PNG are done in the Wyatt Group head Office in Brisbane.

7. The shareholders of the Wyatt Group are Australians and Americans. Their dividends have to be paid in Australian and American Dollars and therefore a decline in the Kina value would have an immediate increase in the Wyatt invoices. However, if the Kina appreciates the invoices would not be reduced.

8. The underwriters get used to the very high invoices of the Wyatt Group and it becomes the normal fees and expenses in loss adjusting for foreign owned companies in PNG.

9. Many underwriters have been very inconsistent in their support of the National Loss Adjusting Companies. Either they do not support them at all or they withdraw the little support when the Wyatt Group influences them.

The above facts have made it very difficult for National Loss Adjusting Companies to have a business plan, to expand and to spend money on staff training. Life has been very uncertain for them since they are at the mercy of some underwriters and the Wyatt Group.

Many leading underwriters have failed to be good corporate citizens by supporting National Loss Adjusting Companies and by sharing the loss adjusting work they have. They have blatantly discriminated National Loss Adjusting Companies and have very clearly given the impression that they (The Underwriters) have nothing to do with the National Loss Adjusting Companies."

According to Mr. Diau's own evidence, these letters were written without first ensuring that what was being stated did have the necessary factual foundations. The intent was to get the Insurance Commissioner to do something about the imbalance, in terms of seeing his company and other nationally owned loss adjusters receiving an increased amount of loss adjusting work. He admitted to not having any idea as to the level of the plaintiff's operations and the number of expatriate and local employees it had, the number of nationals it had and was training, its level of income and profit margin and how its income and or profits were applied. He also admitted to having no knowledge of when and how the plaintiff manipulated the industry to get a majority of the loss adjusting work and how the plaintiff secured its work. He was, therefore, not able to substantiate any of his allegations by any facts or evidence.

Mr. Muir gave evidence of the plaintiff having a total of five expatriates and twelve nationals in its employ through most of its Port Moresby and Lae offices and having trained a number of nationals in the job. He also testified that the plaintiff has not made any large remittance of money out of the country in the way the defendants alleged. He also gave evidence of all married expatriate employees having their wives in the country except for one or two who were forced to have their wives overseas due to a criminal attack on her. But that did not require the plaintiff to have in place a fly-in-fly-out operation. Mr. Muir stated that if the defendants cared to ask for such information, they could have been provided to the defendants but no such requests were made of them.

There is no dispute that once, the Insurance Commissioner received these letters, he acted on them. In the process, he also ended up defaming the plaintiff by his own conduct. The plaintiff successfully sued the Insurance Commissioner. Mr. Justice Los found for the plaintiff on the 4 June 2002, awarding a total of K384, 000.00 in damages. Of that, K90, 000.00 was for injury to reputation and loss of good will.

Mr. Muir says he put in about K36,000.00's worth of time and energy in a bid to prevent further loss and damage to the plaintiff as soon as the plaintiff became aware of the defendant's letters. A further K4,500.00 in secretarial time and energy was incurred. This represented an actual loss of business in those terms. On top of that, Mr. Muir says, the plaintiff suffered injury to its reputation and goodwill as a result of defendants letters. He says the Insurance Commissioner and others are not able to view the plaintiff in the same light as they used to prior to those letters.

In addition to these facts, there is no dispute between the parties that, the insurance industry is regulated or governed by the Insurance Act 1995. The Insurance Commissioner, who is appointed under s 5 of that Act, administers the Act and its compliance with persons involved in the industry. By reason of that, there is also no dispute that it is entitled to receive all information including complaints affecting the industry and the provisions of the Act in particular.

Generally

Defamation is tort at common law. The relevant principles governing the law on defamation were adopted into our jurisdiction by virtue of section 9 and Schedule 2.2 of the Constitution. As Justice Sheehan said in PNG Aviation Services Pty Ltd & Ors v Michael Thomas Somare & Ors (unreported judgement delivered on 20/12/96) N1493:

"the Defamation Act (Ch 293) which consolidates the law on defamation protects the rights of individuals to their good reputation. It restates the essential common law principles in statutory form. It is the substantive law of defamation, but without provisions for such matters as procedure, damages or even the absolute protection of Parliamentarians for speeches in the House, the Act is not an exhaustive code in the way that Australian statutes on which it is modelled are said to be codes. Accordingly where the act is not specific then common law not inconsistent with the Act is relevant. English decisions pursuant to schedule 2.2 of the Second Schedule of the Constitution are therefore authoritative, while Australian decisions and those of other jurisdictions maybe persuasive."

The law on defamation and the Defamation Act prohibits a person, in effect, from unlawfully publishing a defamatory matter against a person. It follows, therefore, that a defamatory publication is unlawful unless the publication is protected, privileged or excused by law. A company, as in the PNG Aviation Services (supra) case, or an individual who is unlawfully defamed and suffers in the consequence loss and injury to his or her reputation is entitled to damages.

First Issue: Publication

As earlier noted, the defendants' first 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 the 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 defendants' arguments proceed on the well-accepted principle that, in order for there to be a case of defamation, there must be publication of the alleged defamatory material to a third party. These principles are stated in a large number of cases, including Pullman and Another v Walter Hill & Co., Limited [1890] UKLawRpKQB 193; [1891] 1 QB 524, per Lord Esher at p. 527; Huth v Huth [1915] 3 KB 32, per Lord Reading CJ at p.39; Powell v Gelston [1916] 2 KB 615, per Bray J. at p.619; and Colthard v South Australia [1995] SASC 4927; [1995] 63 SASR 531, per Debelle J at p.555, which the defendants rely on. In so far as is relevant, s 4 of the Defamation Act restates these principles and the defendants also rely upon parts of that section.

The plaintiff, on the other hand, argues that there was publication of the letters by reference to the undisputed fact of the defendants writing the letters to the Insurance Commissioner, who is a third party, or a person other than the plaintiff, about which the defendants wrote the letters.

The issue of whether or not the letters were published in order to amount to defamation is dependent on whether or not I find that the Insurance Commissioner is a third party. A determination of this issue is guided by what the cases the defendants refer to and rely upon and others say about this issue.

In Pullman and Another v Walter Hill & Co., Limited (supra), the managing director of the defendant company dictated a letter alleging false pretence against the plaintiffs to his secretary who typed it out. Unknown to the defendants, the plaintiffs were in partnership with others. The letter was opened by a clerk in the ordinary course of business and was read by two other clerks. The trial court found there was no publication. On appeal, however, the Court of Appeal reversed that decision and held that there was defamation.

Despite these aspects of the case clearly appearing from the judgement, counsel for the defendants, in his submission, omits the fact of the appeal and a reversal of the trial court's judgement. His submission also omits important and relevant parts of Lord Esher M.R.'s judgement that says, in respect of the case before him, at page 527:

"If the writer of a letter shews (sic) it to his own clerk in order that the clerk may copy it for him, is that publication of the letter? Certainly it is shewing (sic) it to a third person: the writer cannot say to the person to whom the letter is addressed, " I have shewn (sic) it to you and to no one else". I cannot, therefore, feel any doubt that, if the writer of a letter shews (sic) it to any person other than the person to whom it is written, he publishes it. If he wishes not to publish it, he must, so far as he possibly can, keep it to himself, or he must send it himself straight to the person to whom it is written. There was therefore in this case a publication to the type-writer."

In the earlier part of his judgement, his Lordship asked the question at the same page: "What is the meaning of publication?" His answer to that question was:

"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; for you cannot publish a libel to a man himself."

Lopes L.J., one of the other two members of the Court of Appeal, also asked, what is the meaning of the term publication? His answer to that question was: "The communication of the defamatory matter to a third person." He then went on to say:

"Here a communication was made by the defendants' managing director to the type-writer. Moreover, the letter was directed to the plaintiff's firm, and opened by one of their clerks. The sender might have written "Private" outside it, in order to prevent its being opened by the plaintiffs' clerks. The defendants place the letter out of their control, and took no means to prevent its being opened by the plaintiff's clerks. In my opinion, therefore, there was a publication of the letter, not only to the type-writer but also to the clerks of the plaintiff's firm."

This case makes it clear that an author of a defamatory letter marked "private" or "confidential" may still be found to have published the letter if he has taken no step to have it delivered directly to the person of whom it has been written. The fact that the letter is marked "private" or "confidential" is of no benefit to the author if such a letter gets in the hands of a third party in the ordinary course of business. That amounts to publication. The case also makes it clear that if the letter gets dictated to or is typed for the author by a third person such as a secretary, that, in itself,amounts to publication.

In the next case of Huth v Huth (supra), the defendant, who was the husband of Mrs. Huth, sent her, through an unsealed envelope a written communication containing some defamatory material. The letter was intended for Mrs. Huth and the writer had no knowledge or foresight of someone else reading it. In breach of his duties, a butler at the house where Mrs. Huth stayed took the letter out and read it. Mrs. Huth's children brought an action for libel. The trial court dismissed the action for lack of evidence of publication by the defendant. The decision was affirmed on appeal.

The rational behind this judgement was that the writer of the letter did not have in his contemplation that the butler would take the letter and read it in breach of his duties. The letter was intended for Mrs. Huth and her alone. There was an argument made for a finding in terms of there being a publication made to the post office because the stamp was only half a penny and that the letter was unsealed. That argument was rejected because of lack of evidence of that being in the normal course of business of the post office and that an employee of the post office had read it.

In Powell v Gelston (supra), Bray J held that there was no publication and, therefore, no defamation. That was in a case of a father who was staying with his son and, contemplating on buying a house from the plaintiff in answer to the plaintiff's advertisement, instructed his son to make certain inquiries of the plaintiff. The son wrote to the defendant making the necessary inquiries in confidence and promising not to let the plaintiff know that the defendant had written. The son used his own name and address. The defendant replied to that letter and it reached the son's address when the son was out. The father got it and read it. The defendant knew nothing about the father and the son or them staying together or that the father or anybody else would read the letter. The letter was intended only for the son. The plaintiff contended that the letter was published and contained some defamatory material.

The court held that there was no publication and therefore no defamation. At pages 619 and 620 the court reasoned:

"There is no doubt that to give a cause of action there must be a publication by the defendant. That is the foundation of the action, and publication to the plaintiff is no publication.

...

"In this case the defendant was asked by the son to answer the questions in confidence, and the son promised that he would not let the plaintiff know that the defendant had written. The son was asking for an answer that he and he alone would see. The answer of the defendant was intended for the son alone.

"Under these circumstances, I cannot hold that the defendant was responsible for the publication to the father. There was therefore no publication of the libel..."

This case might appear to be in conflict with Pullman and Another v Walter Hill & Co., Limited (supra), in that the letter was read by a person other than the person to whom it was written. However, a closer look at the two cases reveals no conflict. In Pullman and Another v Walter Hill & Co., Limited, the defamatory letter was dictated to a secretary and, in the ordinary course of business, persons other than those of whom it was written of read it. In Powell v Gelston (supra), there was no evidence of the letter being dictated to a secretary or a secretary writing it for the author and that an ordinary course of business existed. The letter was addressed to an individual at his personal address without knowledge or reasonable foresight of someone other than the addressee reading it.

Finally, in Colthard v South Australia (supra), both Pullman and Another v Walter Hill & Co., Limited and Huth v Huth were cited by Debelle J. In that case, certain personal opinions and beliefs adverse to an Aboriginal community were made at a meeting convened between, representatives of the Commonwealth and the South Australian State governments and a group of Aboriginal people. The Aboriginal community, which was the subject of the adverse comments, was not represented at that meeting. Minutes of that meeting were taken but were not to be circulated publicly. A report was duly prepared and filed and kept away in a departmental filing cabinet. Sometime later, the report was taken and an unauthorized publication took place. The respondent was sued, amongst others, for defamation.

The trial judge dismissed the action on the basis that the respondent did not publish the defamatory material. On appeal, the Supreme Court of South Australia, affirmed the trial courts decision to dismiss the action because it agreed there was no publication by the respondent.

This judgement, in my view, is in line with the principles enunciated in the English cases, as is represented by the judgement in Pullman and Another v Walter Hill & Co., Limited (supra), and the others. The principle is that before a defendant in an action for defamation can be held liable, there must first be proof and a finding that the defendant published the defamatory material. That is in addition to establishing that the material complained of is defamatory.

The defendants referred me to these cases in support of their case. I fail to see how these cases are of assistance to them. These cases, in my view, make it abundantly clear that if the publication of a defamatory material is to a person other than the person defamed or the alleged defamatory material is published of, it meets the third party requirement for there to be defamation. In Pullman and Another v Walter Hill & Co., Limited (supra), as the court found, the secretary to whom the defendant's managing director dictated the defamatory letter was a third party and so were the clerks in the plaintiffs' firm. The case says clearly that even labeling the letter with the words "Private" would not have come to the aid of the defendant. This was because he failed to deliver the letter directly to the plaintiffs, especially when it was reasonable to expect in the normal course of business that the letter would be read by a clerk in the firm.

The case of Huth v Huth (supra) shows that where a defamatory letter intended for the person of whom it is posted and sent to that person's residential address, there is no reasonable expectation that a person other than the person to whom it is addressed will read it. Servants serving at a house are not expected, in the normal course of business, to take such a letter and read it. It follows, therefore, that if a person other than the person to whom it is addressed and who is not within the reasonable foresight of the author to read it reads such a letter, there is no publication by the author. The other case of Powell v Gelston (supra) confirms this.

Only the case of Colthard v South Australia (supra) would appear to come a bit closer to the case before me. This is so only to the extent that it involves a report compiled for the government or a public authority. This case is, however, distinguishable from the present because the action was against the government who was the recipient of the report. It kept it in a secured, locked room, inaccessible to the public. The report was taken and distributed unlawfully by an unknown person. The action was rightfully dismissed because the government did not publish it or authorise its publication.

The case before me is one in which two defamatory letters were written to the Insurance Commissioner. The Insurance Commissioner is not the plaintiff or the defendant. He is therefore a person other than the plaintiff of whom the letters have been written. I have no doubt whatsoever that the Insurance Commissioner is a third party. It received communication about the plaintiff and not about himself. I therefore find that the defendants published the two defamatory letters to the Insurance Commissioner. Hence, I find that the plaintiff has met the requirement for it to show that the letters, apart from being defamatory, were published to a third party. It is not necessary to have any regard to the defendant's argument that the plaintiff has failed to establish by any evidence as to who else the letters were published.

However, for completeness, I make these additional observations. The letters were typewritten. There is no evidence before me that the two letters, which are long, were typed out by Mr. Diau himself. I also note that they were on MCAL's letterhead and concerned its core business of loss adjusting. It is, therefore, reasonable to infer that the letters were written out in the normal course of business by a secretary typing it out. So, the letters got published to the secretary in the first place. It is also reasonable to infer that since the letters were not hand-delivered to the Insurance Commissioner, the Insurance Commissioner's private secretary or clerk also read them, as was the case in Pullman and Another v Walter Hill & Co., Limited (supra). Hence, in my view, the letters were published again at this point to another third party.

Second Issue: Qualified Protection under s 11 of the Defamation Act

Having found that the letters were published to the Insurance Commissioner who is a third party, the next question is, was the publication permitted or excusable by the law? More specifically, the question is whether the defence of qualified protection under s. 11 of the Defamation Act raised and relied upon by the defendants is available to them.

The defendants' argument here 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 authorised 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 and/or civil liabilities?

The Insurance Act 1995, is silent on these questions. We therefore turn to the Defamation Act, in particular s 11. The provision in question reads:

"11. Qualified protection: excuse.

(1) For the purposes of this Act, it is a lawful excuse for the publication of defamatory matter if the publication is made in good faith—

(a) by a person having lawful authority over another in the course of a censure passed by him on the conduct of the other person in matters to which the lawful authority relates; or

(b) for the purpose of seeking remedy or redress for some private or public wrong or grievance from a person who has, or whom the person making the publication believes on reasonable grounds to have, authority over the person defamed with respect to the subject-matter of the wrong or grievance; or

(c) for the protection of the interests of the person making the publication or of some other person, or for the public good; or

(d) in answer to an inquiry made of the person making the publication relating to a subject as to which the person by whom or on whose behalf the inquiry is made has, or is believed on reasonable grounds by the person making the publication to have, an interest in knowing the truth; or

(e) for the purpose of giving information to the person to whom it is made with respect to some subject as to which that person has, or is believed on reasonable grounds by the person making the publication to have, such an interest in knowing the truth as to make his conduct in making the publication reasonable under the circumstances; or

(f) on the invitation or challenge, express or implied, of the person defamed; or

(g) in order to answer or refute some other defamatory matter published by the person defamed concerning the person making the publication or some other person; or

(h) in the course of, or for the purposes of, the discussion of some subject of public interest, the public discussion of which is for the public benefit, and if, so far as the defamatory matter consists of comment, the comment is fair.

(2) For the purposes of this section, a publication is made in good faith if—

(a) the matter published is relevant to the matters the existence of which may excuse the publication in good faith of defamatory matter; and

(b) if the manner and extent of the publication do not exceed what is reasonably sufficient for the occasion; and

(c) if the person by whom it is made—

(i) is not actuated by ill-will to the person defamed, or by any other improper motive; and

(ii) does not believe the defamatory matter to be untrue."

Relying on s 11 (1)(b), (c) and (e) and 2 (a), (b) and (c), the defendants argue that the materials in the letters were intended for the Insurance Commissioner alone. He has an interest in knowing what is happening in the industry for which he is the overall administrator by law. The communication, therefore, was privileged.

The plaintiff's response to that argument is that the defendants have not pleaded or proved the words were true. It points to the uncontested evidence of Mr. Muir that there is no truth in letter of the publications. In support of that argument, the plaintiff points to a passage in Duncan & Neil at page 51, which reads:

"The law presumes that defamatory words are false and the plaintiff need do no more than prove that defamatory words have been published of him by the defendant: it is for the defendant to prove the words are true, if he can."

The plaintiff also argues that since the defendants have raised a defence of qualified privilege under section 11 of the Defamation Act, the onus is firstly on the defendants to establish the publications were made on an occasion of qualified privilege. Reference is made to the Australian Defamation Law and Practice, para 14,085. It goes on to argue that only after this onus is discharged does the question of good faith arise going by the authority of the Supreme Court judgement in Yakham v Merriam (No. 2) (1999) SC 617. In the end, it argues that the defendants have failed to establish that the publications were made in good faith.

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., Limited (supra), and Adam v Ward [1916-17] ALL E.R. Rep. 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 or 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 an important principle underpinning a claim for qualified privilege. It takes a person years if not a lifetime, to build up a reputation in society and or a goodwill for a business. But it takes only a careless stroke of a pen or a simple unguarded utterance of a word to destroy all of that in no time. Therefore, the law has developed in the way it has to protect a person's reputation and the goodwill of a business so as to ensure nobody publishes anything adverse against another, unless it is true and made in good faith or is made without malice. This is why the authorities such as Penton v Calwell [1945] HCA 51; [1945] 70 CLR 219 and in our jurisdiction PNG Aviation Services Pty Ltd & Ors v Michael Thomas Somare & Ors (supra) make it clear that the defence of privileged protection can be lost if the defamer is actuated by malice. So the protection is there only as long as the author of the defamatory material acts in good faith; that is to say truthfully and honestly with no intent to destroy the party being defamed, irrespective of to whom it is made. This is why, even in criminal cases, the law allows for damages for any false or malicious prosecution.

The opposite of acting in good faith is acting in bad faith, or what is normally referred to as malice. Where a defendant fails to plead and establish by appropriate evidence that he acted in good faith, the only conclusion open in such circumstances is bad faith.

Noting the importance of the law on defamation and the rationale behind it, Order 8 Rule 85 requires a defendant in a defamation case to "specifically plead any defence of protection, justification or excuse of law." If such a defence is raised, it must be pleaded with particulars (r.86). This is a mandatory requirement that must be met. If a defendant does that and the plaintiff says it was not published in good faith, then the next rule (r.87), requires the plaintiff to plead with particulars the absence of good faith. In my view, these rules give effect to the substantive law as discussed above.

In the present case, I accept that the defendants' original defence failed to plead anything in terms of O.8 r. 85. That was, however, changed when they filed the Notice of Amendment to their defence on the 22nd of June 2000. They amended their defence to plead the qualified protection under s 11 of the Defamation Act. The plaintiff responded to that with its reply filed on the 25th of June 2002. In view of this I reject the plaintiff's argument that the defendants have failed to plead protection under s 11 of the Defamation Act.

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 with 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 checking 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 the 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 defendants beliefs. They were, instead, stated as facts.

Under cross-examination, Mr. Diau said his main reason for writing the two letters in the way that he did was to get the Insurance Commissioner to doing something about the imbalance in the level of work they received from the insurance houses compared to that of the plaintiff. Although Mr. Diau avoided saying the actual words under cross-examination, the defendant's objective behind the letters was to get the insurance houses to give them more and thereby reduce the level of work the plaintiff was receiving. Clearly, therefore, the defendants were actuated by their desire to get more work from the insurers through the Insurance Commissioner's intervention. In so doing, they were trying to bypass the market forces that determine who gets what work and for how much and from whom in a free economy such as ours. Certainly, the Insurance Commissioner has no power and interest in seeing who gets what level of loss adjuster's jobs from the insurers apart from his interest in seeing that only duly licensed loss adjusters get loss adjuster's jobs. As long as a person is a licensed loss adjuster, he or she is eligible to receive and perform loss adjustments jobs. The onus is on such a person to convince the clients that he can do the job better and more economically. Naturally, clients would turn to service providers who can better deliver the services in terms of price, timeliness, competence and so forth.

These factors might as well mean no job and business for one competitor as against another, which might even lead to a closure of one's business. Should such a result occur, that would be the natural consequence of fair competition unless there is actual proof of unfair and questionable conduct on the part of a competitor, which might give rise to a complaint to the appropriate authorities for appropriate intervention. Being a national or a citizen of a country does not mean that such a person is automatically entitled to be given the preference. In my view, what it really boils down to is the level of competence and commitment and ability to deliver the kind of goods and services required in a timely manner. If a national has these qualities, no doubt the market's forces will see to all or a majority of the job or business going to such a person. The mentality of nationals saying "because I am national, I must get all the job or business without the necessary expertise and competence" has no basis in our society. If a national is appropriately qualified and has the necessary expertise and competence to perform any given task, he or she should have no difficulty in securing a job or business. Publishing highly defamatory and damaging material for a greater or increased share of work or business is bad business. As such, it has no place in our society.

In these circumstances, I find that the defendants did not act in good faith. Instead, I find that they acted under malice. Mr. Diau did not have an honest and reasonable belief that what he was about to say both on his and that of MCAL's behalf were true. He was reckless as to the truth or otherwise of what he wrote. He had no way of knowing whether what he said was true or not yet he stated his allegations as matters of fact. They were so understood by the Insurance Commissioner, who acted on them and further defamed the plaintiff for which he has been found liable. I find, therefore, that the defence of qualified protection under s 11 of the Defamation Act 1962 is not available to the defendants. Hence, I find them liable to the plaintiff in damages.

Third Issue: Damages

This leads me to the next issue: of what are the plaintiff's damages? The law is that the damages that are recoverable by a company in a defamation suit are only for financial loss. The reason for this is simple: "A company cannot be injured in its feelings, it can only be injured in its pocket ... The injury need not necessarily be confined to loss of income. Its goodwill may be injured." Gately on Libel and Slander, Seventh Edition, para 891 and PNG Aviation Services & Ors v Somare & Ors (unreported Supreme Court judgement) SC 658.

The uncontested evidence from Mr. Muir for the plaintiff is that the company suffered financial loss in responding to the accusations put to the Insurance Commissioner. These were expenses that followed from the defendant's publications. There is also uncontested evidence that the publication reflected adversely on the reputation of the plaintiff. That sounds in damages for loss of goodwill.

According to Mr. Muir's evidence, the plaintiff lost both managerial and secretarial time. Managerial time taken is K36,000.00 and secretarial time is K4,500.00, bringing the total time lost, and therefore costs or loss of income, K40,500.00. These are specific and special losses.

In addition to that, I find that the plaintiff has suffered a loss and injury generally to its goodwill due to the defendant's unfounded defamatory publications. The Insurance Commissioner is the regulator of the insurance industry, responsible for licensing and for administration of the Act. His perception of the plaintiff has changed. He accepted the accusations of the defendants as truths, given the way in which they were stated, and he acted on them. The defamation within the insurance industry by reason of that publication could not have been worse. I consider this case comes closer to PNG Aviation Services & Ors v Somare & Ors (supra Supreme Court judgement): see page 12, in this regard. The case in all circumstances, justifies a substantial award of damages for goodwill and injury to the plaintiff's reputation. The plaintiff is asking for K50, 000.00

The defendants are not raising any substantial argument against an award of damages to the plaintiff. Their only argument is that whether or not damages should be awarded is within the Court's discretion. That includes the discretion to make an award either above or below what is claimed. I accept that there is discretion when it comes to the question of whether or not damages should be awarded once liability has been established. But this discretion is conditional on a number of factors, chief of which is evidence before the Court. The question of whether or not damages should be allowed and at what amount is dependent on the evidence before the Court apart from other considerations. If the evidence shows loss and damage has been suffered as a result of the defendants' action, damages must follow. If the evidence supports the award of damages and at what amount, a Court has no choice but to order such damages.

In this case, the plaintiff's amended statement of claim as filed on 21 December 2001 has no prayer for relief. This was amended without any objection of the defendants to include a prayer for damages, interests and costs. These items were included in a draft amended statement of claim attached to an application for leave to amend which was granted. The uncontested evidence for the plaintiff has established its damages on the balance of probabilities. The plaintiff is therefore entitled to the damages in the sums of K40,500.00 for actual costs or expenses it has incurred and K50, 000.00 for injury to its reputation and goodwill. In arriving at that award, I have had regard to the award of damages in the PNG Aviation Services & Ors v Somare & Ors (supra Supreme Court judgement), where the Supreme Court considered an overall award of K50,000.00 in damages by the National Court was too low and had the damages substantially increased to over K1,000,000.00. I have also had regard to the fact that as a result of the defendants' action, the Insurance Commissioner took certain steps that were injurious of the plaintiff. The plaintiff has secured a judgement against the Insurance Commissioner. This obviously means the relationship between the Insurance Commissioner and the plaintiff is not the same as it was prior to the publication of the defamatory material against the plaintiff. This leads me to the final issue of res judicata and unjust enrichment.

Final Issue: Res Judicata and Unjust Enrichment

On this issue, as noted, the defendants point to the judgement of Justice Los in WS. No. 446 of 2000 where the plaintiff was awarded a total of K384,000.00. The argument is that this is a repeat of the same action by the plaintiff but this time against them. Consequently, it is argued that the plaintiff cannot claim the same loss from the defendant as this would amount to double compensation or unjust enrichment.

The principles governing the doctrine of res judicata are well settled. A clear statement of that in our jurisdiction is in the case of National Airline Commission v Lysenko [1990] PNGLR 226, per Los J. at page 230 in the Supreme Court. He adopted a passage from Halsbury Laws of England (4th ed), Vol. 16 par 1528, under the subheading "essential of res judicata" stating:

"In order that a defense of res judicata may succeed it is necessary to show not only that the cause of action was the same but also that the plaintiff has had an opportunity of recovering [that is, it being open to him on the pleadings] and but for his own fault might have recovered in the first action that which he seeks to recover in the second. A plea of res judicata must show either an actual merger, or that the same point has been actually decided between the same parties."

His Honour made reference with approval to a passage from the judgement of Andrew AJ in the National Court. In that passage, Andrew AJ had made reference to Bower and Turner, The Doctrine of Res Judicata (2nd ed, 1969) at 375 which quoted the leading case of Brunsden v Humphrey [1884] UKLawRpKQB 158; [1884] 14 QBD 141 at 146. The quoted passage from that judgement was: "Two actions may be brought in respect of the same facts giving rise to two distinct causes of action."

Andrew AJ added:

"But if only the facts are identical, but these identical facts give rise to substantially one and the same ground of complaint, the plea of former recovery prevails, notwithstanding there may be technical and formal differences between the two causes of action or that the two remedies may be called by different names, the test is whether it is merely an attempt to recover, on the original cause of action, under some heading of damage not previously involved."

In support of their argument, the defendant refers to these authorities. They have also referred to the judgements of Justice Injia in James G. Koimo v The State N1322 and Yange Lagan & 58 Others v The State N1369. In those cases, Mr. Justice Injia refused to make separate awards for breach of the plaintiff's constitutional rights after having made awards which were reflective of those breaches.

In the present case, I reject the defendants' claim of this action being res judicata for two reasons. First, they have not pleaded this issue in their pleadings. The law on pleadings is well settled. Unless a point is sufficiently pleaded, there can be no evidence led to prove it no relief granted. This is clearly stated in the Supreme Court judgements in Motor Vehicles Insurance (PNG) Trust v John Etape [1995] PNGLR 214 at p.221 and Motor Vehicles Insurance (PNG) Trust v James Pupune [1993] PNGLR 370 at pp. 373 –374. These judgements re-affirmed what was always the position at common law and consistently applied in a large number of cases in our country. The list of such cases is long, but reference need only be made to cases like that of Repas Waima v Motor Vehicles Insurance Trust [1992] PNGLR 254 and Carmelita Mary Collins v Motor Vehicles (PNG) Insurance Trust [1990] PNGLR 580 at p. 582 for examples only. It follows, therefore, that the defendants are not at liberty to raise this issue and succeed.

The second reason is a more fundamental one and it goes to the merits of the defence raised. The claim under WS 446 of 2000 was against the Insurance Commissioner, Mr. Salamo Elema, for defamation. The basis of that action was for the Insurance Commissioner's own defamatory action in deliberate correspondence, though set in motion by the defendants' letters, the subject of these proceedings. He accepted the defendant's allegations as facts and entered into correspondence with the insurers. The Insurance Commissioner was found liable to the plaintiffs in this case, who were also the plaintiffs in the earlier proceedings against the Insurance Commissioner for his defamatory conduct. The defendants were not parties to those earlier proceedings and certainly their letters, the subject of these proceedings, were not in issue before the Court in the earlier proceedings.

On these facts, I find that the parties in the earlier proceedings were not exactly the same as in the case before me. I also find that only if the defendants' publication of the letters and their effect were pleaded and the defendants in the present case were also named in the earlier proceedings and a decision was made, the matter could have become res judicata. Further, I find that the earlier proceedings were not based on the same transaction or incident on which the present case is based. Instead, I find that there were two separate instances of defamation of the plaintiff by the Insurance Commissioner and the defendants in this case. The only relationship, if any, between the two incidents is that the actions of the Insurance Commissioner was set in motion by the acts of the defendants in the present case. It does not follow, however, that that gave rise to only one cause of action. This is unlike a case in which the same facts give rise to two different causes of action. Rather, this is a case of related facts giving rise to separate conducts by different persons against the same victim, the plaintiffs.

In the end result, I order judgement for the plaintiff in the sum of K40,500.00 for damages incurred and a further K50,000.00 for injury to the plaintiff's reputation and goodwill, giving a total of K90, 500.00. I also order interest at 8% on the judgement from the date of judgement. Cost will of course follow the event.

Lawyers Conduct

Finally, I consider that the conduct of the defence counsel, Mr. Nalawaku, particularly in relation to his submissions based on the case of Pullman and Another v Walter Hill & Co., Ltd (supra), misleading and failing in his duty to the Court. This may amount to a breach of the professional conduct rules. I therefore consider this to be a serous misconduct. I therefore order that he be referred to the Lawyer's Statutory Committee to be dealt with appropriately.

Lawyers for the plaintiff: Pacific Legal Group.
Lawyers for the defendants: Paul Paraka Lawyers.