IMPACT OF DEFAMATION ON NEGLIGENT MISSTATEMENTS

• Author: TER KAH LENG
• Citation: (1996) 8 SAcLJ 68
• Date: 01 December 1996
• Published date: 01 December 1996

The maker of a negligent misstatement may be liable to the recipient or to the subject of the misstatement. The issue of negligence liability to a recipient has been canvassed before and decided upon by the Singapore court,1but in relation to the subject of a misstatement, the issue of negligence liability has yet arisen for consideration in Singapore, Overlapping the latter is the possibility of liability for defamation. This gives rise to the vexed question whether the availability of a defamation action should have any impact on the establishment of a duty of care in negligence on the maker of a misstatement to the subject of that statement. This problem has been considered extensively in New Zealand and in England.2This article compares and attempts to explain the difference of approach taken in these jurisdictions. This is done with a view to extracting from the authorities some broad statements of principle which might be of assistance in future cases arising in Singapore.

INTRODUCTION

The question has arisen more than once in New Zealand. There certain statements made by appellate judges suggest that a duty of care should be prevented from arising in negligence where there would be an overlap with the tort of defamation. The rationale appears to be that if a statement is considered not defamatory because the defence of qualified privilege applies, then the same statement should not attract negligence liability. To permit this would undermine the policy reasons3 behind allowing people in the relevant circumstances to communicate frankly and freely with one another about all relevant matters. The New Zealand cases were considered in Spring v Guardian Assurance plc,4 where the House of Lords departed from the views taken by the Court of Appeal in New Zealand. Their Lordships, by a majority, decided as a matter of principle that the availability of a defamation action should not prevent the imposition of a duty of care owed by an employer to an employee in respect of a negligently prepared reference.

NEW ZEALAND DEVELOPMENTS

In Bell-Booth Group Ltd v AG5 the plaintiff sued on statements made in a television broadcast that its product, Maxicrop, was ineffective for its claimed purpose. The plaintiff sued the Ministry of Agriculture and Fisheries and the Broadcasting Corporation for loss of reputation in defamation and in negligence. The claim in defamation was dismissed because the statements were found to be true. The claim in negligence, however, succeeded on the ground that the Ministry ought to have allowed the plaintiff a decent interval to withdraw Maxicrop from the market. The Court of Appeal disagreed with the trial judge and set aside the judgment on negligence. It addressed the issue whether a negligence action, based on injury to reputation, could succeed when a claim in defamation would have failed because the statements were true and therefore the defence of fair comment on a matter of public interest applied to defeat the claim. Cooke P, giving the judgment of the Court of Appeal, cited Hallet J’s statement in Foaminal Laboratories Ltd v British Artid Plastics Ltd6 which reflects the common understanding of the matter: “a claim for mere loss of reputation is the proper subject of an action for defamation, and cannot ordinarily be sustained by means of any other form of action.” Cooke P elaborated that “the law as to injury to reputation and freedom of speech is a field of its own. To impose the law of negligence upon it by accepting that there may be common law duties of care not to publish the truth would be to introduce a distorting element.” The Court of Appeal refused to “introduce negligence law into a field for which it was not designed and is not appropriate”7 because justice did not warrant an importation of negligence into this class of case. In the present case, once the Ministry had ample evidence that the goods were worthless, they were under a public responsibility to warn farmers and gardeners. Surely such a warning, motivated by public duty and not actuated by malice, should succeed neither in defamation nor on a tenuous allegation of negligence. To introduce a duty of care in this case would amount to the untenable proposition that a duty exists to take care not to injure the plaintiff’s reputation by true statements.

The decision in Bell-Booth was followed in Balfour v A G.8 Although the negligence action failed primarily on the issue of causation, the Court of Appeal reiterated the demarcation between defamation and negligence. In Balfour, the plaintiff schoolteacher sued the Department of Education in negligence and for breach of statutory duty, claiming that his prospects were seriously jeopardised by a memorandum in his file stating that he was

a long practising and blatant homosexual. In order to get round the proposition stated in Bell-Booth, the plaintiff argued that this was not a case of defamation nor a claim based on injury to reputation but one based on the judgment of the Department and the recording of that judgment in the file. Hardie Boys J, delivering the judgment of the Court of Appeal dismissed the argument, saying that the claim in negligence “came perilously close to defamation. Any attempt to merge defamation and negligence is to be resisted. Both these branches of the law represent the result of much endeavour to reconcile competing interests in ways appropriate to the quite distinct areas with which they are concerned but not necessarily appropriate to each other.”9 Leaving aside any consideration of defamation, the Court of Appeal concluded that policy reasons militated against the finding of a duty of care because the law must strike a balance between a teacher’s rights and the Department’s overall responsibilities. Particularly in the case of moral suitability, clear proof may not be available, yet to ignore possible warning signals may be irresponsible. More importantly, the Court of Appeal found that there was no evidence to show that the subsequent difficulties faced by the plaintiff were caused by the memorandum.

The issue of negligence liability in respect of an investigator’s reports was canvassed in South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd and Mortensen v Laing.10 In each case, it was alleged that as a result of the reports made by a fire-loss investigator under contract to the insurer concerning premises damaged by fire, the insurers rejected the insured’s claim. The question raised in South Pacific was whether the investigator’s duty of care in making the report extended to a creditor and shareholder of the insured. The claim was dismissed because no proximity could exist between the investigator and persons financially interested in the insured. Mortensen posed a more difficult question. It was whether a professional investigator, employed by contract by an insurer to inquire into and report on the cause of a fire on the insured property, owed a duty of care to the insured. The Court of Appeal unanimously decided in the negative for policy reasons. Firstly, the insured had a contractual remedy against the insurer for losses covered by the policy of insurance. For the alleged loss of reputation and loss of liberty, the plaintiff could bring proceedings for defamation and malicious prosecution, respectively. Secondly, to admit the negligence claim would have far-reaching consequences, going beyond reports by insurance investigators to possibly credit reports, media investigations and reports of events. The duty category would be uncertainly expansive with indeterminate consequences detrimental to the public interest. Finally, to allow an action in negligence would cut across established principles of law

in fields other than negligence. The investigator’s reports in Mortensen were privileged and not actionable in the law of defamation. It would therefore be unsatisfactory for the law to grant privilege with one hand and to take it away with the other hand by allowing a claim in negligence. Cooke P explained that...