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Did the Minister of Commerce defame Green Acres?

By Steven | January 8, 2008

On Summer Report this morning, the chief executive of ironing franchise Green Acres accused Commerce Minister Lianne Dalziel of defaming his company. He said she told a bunch of scammed investors that Green Acres was under investigation by the Serious Fraud Office. In fact, he said, it was the fraudulent franchisee who was under investigation, not the company, which had lodged the complaint in the first place. He called for Dalziel to apologise.

This raises an important question: why the hell is an ironing franchise calling itself “Green Acres”? [Update: I gather Green Acres is primarily a gardening and lawn maintenance franchise]

There’s also an interesting defamation issue here. Did Dalziel defame the company?

Probably not. But the media might be doing so.

First, a few lawyerly caveats. I don’t know what Dalziel told the meeting of franchisees. I don’t know the scope of the SFO’s investigation. I don’t know the precise relationship between the alleged scammer and the company, though chief exec Andrew Chisholm was anxious to let us know that he was not an employee but a contractor. There’s an interesting legal issue about whether the company can be held responsible for the conduct of one of its franchisees (and much will turn, I expect, on the degree that the actions of the company helped defrauded franchisees to think that the scammer was acting on its behalf) – but I’d need to know a lot more before addressing that.

The starting point: it probably is defamatory to say that a company is under investigation for fraud if it isn’t. The company would have to prove financial loss (or likely financial loss), but if the allegation reflects on particular people (such as the CEO), they would only need to show that the defamatory words were conveyed. Of course, this will depend on what the Minister said and what the SFO is investigating.

An aside: if it is defamatory to talk about the SFO investigation without making it clear that it’s into the man and not the company, it looks like National has made the same mistake.

But the Minister almost certainly has a defence: qualified privilege. This defence (not to be confused with the Lange defence, which is a sub-species) used to baffle me as a law student. It applies when one person has a “social, moral or legal” duty or interest to convey some information, and someone else has a corresponding interest or duty in receiving it. What does that mean? It’s best explained by example. If you dob me in to the police for running a meths lab, and it turns out you got it wrong, I won’t be able to sue you for defamation, as long as you haven’t acted vindictively. You’ve got a social or moral duty or interest in tipping off the police. They have a corresponding duty to receive such information. On the other hand, if you went to the media, the courts would say that you’d exceeded your privilege: the whole public don’t have a corresponding interest in this information. You’d probably lose the defence.

Here, the Minister of Commerce’s responsibilities include helping fraud victims. She spoke to them alone, it seems (it might be different if there were reporters present). If she got some facts wrong about the scope of the SFO investigation, it doesn’t matter, because they were spoken on a privileged occasion.

If the Minister spoke “maliciously” she could lose the privilege. Malice means, essentially, bad faith; having an ulterior purpose. Although there was a political component to the meeting, I’d be very surprised if it could be shown that the Minister’s statement was malicious.

Still, this defence doesn’t protect the media from making the same statement. Nor does it protect disgruntled franchisees from saying that the scammer was an employee (as one said on NatRad this morning) if in fact he wasn’t, or that Green Acres have been slow to act, if in fact they haven’t.

The media are potentially in the gun for reporting such comments, though things get complicated here. They’d have a goodly range of arguments: bane and antidote, honest opinion, an expanded Lange defence, defence against attack, neutral reportage… which I’m not going to go into here. Perhaps most powerful of all is the fact that not many people sue for defamation.

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