This week the Victorian Supreme Court brought out the red flags. It was the same red flag that legal authorities required to be waved by a walking person in front of the devilish new contraption called the automobile.
This week it was the Internet.
Justice Hedigan was hearing a case brought by the Melbourne businessman and flamboyant owner of the Melbourne Football Club, Joseph Gutnick. Gutnick was suing for defamation over an article published in the Wall Street Journal. In normal circumstances, he would have no action in Victoria because the Wall Street Journal is not published there. However, the Wall Street Journal and its investment advisory magazine, Barrons, is published on the internet — some free and some by subscription.
Mr Gutnick argued that the availability of the publication on the internet meant it that it was published in Victoria and so he could sue in the Victorian Supreme Court and avail himself of at the Victorian defamation law.
The publisher of the Wall Street Journal, Dow Jones and Company, argued that it did not publish in Victoria but that its publication was made in New Jersey where its web server was situated. To the extent there was any publication in Victoria that was an act of publication by the people who downloaded the material via the internet the Web server, Dow argued.
Mr Gutnick argued that he preferred to take his action in Victoria because that is where he does most of his business. No doubt his legal advisers told him that he would have a better chance of success in Victoria than he would in New Jersey. This is because the United States is a free-speech jurisdiction, whereas Victoria and all the other Australian jurisdictions (with the possible exception of the ACT) do not have freedom of speech. And in the case of the ACT it was only this week that the defamation law was changed to give more emphasis for freedom of speech. (More of that in another column).
The Wall Street Journal published an article which, according to Gutnick, alleged that Gutnick was the biggest customer of the jailed money launderer and tax evader Nachum Goldberg and that Gutnick was masquerading as a reputable citizen when he was a tax evader who had laundered large amounts of money through Goldberg and had bought his silence. Dow Jones asserted that the worst that the article imputed was that Gutnick was a devious businessman who should be investigated by US regulators and at that US investors should beware of Gutnick-promoted shares in various US funds because US-based religious charities had been used to manipulate the price of stocks Gutnick had promoted in the US, arranging it for the charities to make profits but leaving other investors to suffer losses.
In Victoria, Dow Jones would have to prove the truth of any of the defamatory imputations made it out in the article. Under US law, Dow Jones’s task would be easier. It would not have to prove truth but rather only prove that it had acted reasonably, had an honest belief in what it published and it was acting without malice.
The difficulty with the truth requirement is that it is very costly and uncertain. For example, the coroner’s court in the ACT has spent three years attempting to get it to the truth of the hospital implosion at the cost of millions of dollars and we are no nearer the goal. The no negligence test, as used in the US, focuses on the conduct of the journalist or publisher and demands that they behave reasonably. It is the same sort of test imposed upon doctors, other professionals, and drivers on the roads. In Australia, however, the costly requirement of proving truth — with all the pitfalls of evidence law which results in so much being excluded – means that publishers are often at cowed into silence and often society suffers.
This week’s case will have a chilling effect on US publishers. If the Victorian case is upheld on appeal it means that every internet publisher will have to satisfy the standards of the strictest regime if it is to escape liability. It means that a US publishing company with assets in Australia might well feel it is better to deny access by Australian internet users to information on its Web server.
By and large, Australian courts and Australian law impose a strict burden on publishers and are quick to find defamatory imputations and award a high amounts of money in damages for their publication. Americans are often at a loss to understand this because they have a constitutional right of freedom of speech. America works on the basis that speech should be free unless there is a very good, proven cause for it to be restricted. Australia on the other hand, works on the basis that you publish at your peril; that there is no inherent merit in publication information and speech and that unless you can defend everything you published as truth or an accurate report of Parliament or court, then you will be liable.
Given the Australian bias against freedom of speech, it may be that this judgment is not overturned on appeal. That would be a shame because if it stands it will inhibit what has to date been a liberating and free domain. It will drag lawyers, costs and fears into what had hitherto been a free forum. Moreover, it might make Australia an internet laughing-stock and cause us to be ostracized and shut out from the internet sites of mainstream publishers in the US and elsewhere.
It is absurd or to say that the Dow Jones company published in Victoria when all it did was store material on its computer in New Jersey. The fact that that Victorians sitting at home use their computers to access that material and convert it into words on their screens is surely similar to a Victorian buying a paper copy of the Wall Street Journal in New Jersey and bringing it home to Victoria. No one would suggest that a hard-copy transmission of information was a publication by the Wall Street Journal in Victoria.
In this age of globalisation the big players should not be able to have it both ways. They should not be allowed to play in the big global markets in New York and elsewhere and then scurry back to seek the protection of restrictive local laws. With any luck, freedom to operate in the deregulated markets without restrictive local laws will come with a concomitant exposure to free criticism, not only from the likes of the Wall Street journal, but also protest groups.
The red flag imposed this week will be a short-lived anachronism.