A judge has found that Asic, which was being sued for defamation by a trader, was protected by qualified privilege
The corporate regulator has defeated a defamation claim brought against it by the head of a sharemarket trading company in a case that bolsters the defence of qualified privilege.
Qualified privilege protects publication of otherwise defamatory material if the publisher has a duty or interest to publish the material and the person to whom the publication is made has a reciprocal duty to receive it. But courts have consistently set the bar so high that it has been largely useless to media organisations.
The ruling comes as the federal and state governments consider changes to Australia’s defamation laws following criticism that the current regime has had a chilling effect on free speech.
Canadian Daniel Schlaepfer, who owns Cayman Islands-based Select Vantage, accused the Australian Securities and Investments Commission (Asic) and its head of market supervision, Greg Yanco, of defaming him by warning local brokers not to deal with him during phone calls and meetings in November 2014.
Schlaepfer claimed Yanco defamed him during the calls and meetings by accusing him and Select Vantage of market manipulation and said Asic’s action destroyed his business in Australia after brokers refused to deal with him.
But on Tuesday New South Wales supreme court judge Des Fagan found that Yanco did not identify Schlaepfer or Select Vantage when talking to the brokers, and that even if he did it was true that Schlaepfer knew that the company didn’t do enough to prevent traders rigging the market.
Fagan also found that Yanco’s communications with the brokers, during which he warned them that they might be approached by a risky but high-paying client looking for direct access to the market, were protected by common law qualified privilege.
“The occasion of Mr Yanco’s conveying to the brokers that Asic was concerned about the trading behaviour of a client who may be looking to engage their DMA [direct market access] services was privileged by the community of interest of himself and the listeners,” Fagan said in his judgment.
“The occasion protected his communications even if they conveyed defamatory meanings with respect to Mr Schlaepfer.”
Fagan also said that Yanco’s statements were protected by qualified privilege provisions in the Defamation Act, but these findings will be less useful to media defendants because they rely on Asic’s role as a market regulator.
“A great deal of damage could be done to the reputation of the stock exchange if Mr Yanco should be required to gather more extensive evidence than he did before warning other brokers,” Fagan said.
A spokesman for Select Vantage said: “[The company] does not accept the findings against its traders but notes the finding that Mr Schlaepfer was not knowingly involved in any market manipulation. We are reviewing the 118-page judgment to consider an appeal on various grounds.”