Facts

The plaintiff, Golden Field Glass Works Company Limited (“GFGW”), was a company with a business of designing, manufacturing and installing glass furnishings and fittings, and had undertaken works for well-known brands. GFGW had been serving a company C (the client) as one of its main customers.

The defendant was employed by GFGW as a glass installation worker since 2007. On 22 March 2010, the defendant sent an email message to C, which stated that GFGW had caused a great waste of resources, including glass pieces and manpower, leading to a rise in the cost of its products.

GFGW alleged that such a message also suggested that GFGW needlessly increased its costs and thereby passed on the cost of the waste to its customers, implying C as one of them. It submitted that the message was false and defamatory, and that the defendant published it maliciously; GFGW was seeking compensation for the damages caused by it.

The defendant claimed that much of the glass disposed of by GFGW due to being the wrong size could have been salvaged by machining. GFGW argued that the processed glass could withstand no further grinding as there was a risk of it becoming more fragile as a result.

The defendant relied on the defence of justification (that the message was true in its natural and ordinary meaning), and qualified privilege, on the basis that the defendant and C had an interest in the information disclosed in the message. The defendant further challenged GFGW’s claim that the message caused its loss of business.

Legal principles

A defamatory statement is one which injures the reputation of another by exposing them to hatred, contempt, or ridicule, or which tends to lower them in the esteem of right-thinking members of society. In determining the meaning of the alleged defamatory words, it is normally construed what, according to their natural and ordinary meaning, they convey to the mind of an ordinary, reasonable, fair-minded reader. The governing principle is reasonableness.

The article that contains the defamatory statement must also be read as a whole and the intention of the publisher is irrelevant. For defences in relation to defamation, such as justification and qualified privilege, the law requires that the person giving the information is not acting with malice, and the burden of proof is always on the defendant.

Decisions

After considering the relevant legal principles, the court held that an ordinary and reasonable reader might naturally think that GFGW would most probably pass the cost of the waste on to its customers, and that it would be reasonable for a customer who read the message to worry that such costs would be ultimately borne by them. Moreover, as GFGW is a business entity, a message attacking its efficiency in management and planning is an allegation which would, no doubt, lower GFGW in the estimation of right-thinking members of society.

The defendant tried to argue that the message was true or fair in its natural and ordinary meaning. However, the court ruled that there was insufficient evidence to prove this.

He also failed to rely on the defence of qualified privilege, which requires some interests to be protected. Its notion is to protect the public interest where honest freedom of communication is desirable, and the test is whether most right-minded people, were they in the defendant’s position, would make the communication under the same circumstances. The court did not accept that the defendant had an interest in making negative comments in the message for the purpose of seeking employment, as the two had no causal connection. The court ruled against the defendant and ordered him to pay HK$100,000 to compensate for the damages to GFGW, in order to restore its reputation as much as possible to where it had originally been.

Take away points for HR professionals

Defamation includes communication of false information about a person, either deliberately or with reckless disregard of its falsity.

There are some important points for HR to note:

• A company can be held vicariously liable for any of its employees who spread false or defamatory information if the employee is found to be acting within the scope of their duties in making the statement.
• Workplace gossip can entail a host of problems, including defamation. Employers should make an effort to strongly discourage workplace rumours by sending a clear message that spreading them is not acceptable, or they might include guidelines in employee handbooks or a code of conduct for the purpose of deterrence.
• When a complaint about a person or the person’s conduct or character is made, there is a possibility that the complainant will lead an action for defamation if the damaging information has been disseminated. An employer or employees might also face such a risk when they attempt to deal with a complaint internally. Hence, it is better for a manager to inform a complainant that it is in the complainant’s best interest not to discuss the complaint or related information with the wider workgroup. However, if the complaint is a genuine and honest one, which seeks information and support from the appropriate people, there is a low risk of a defamation action. To help avoid the danger of defamation claims, all staff within an organisation should be aware of the reporting and handling procedures for complaints and grievances.
• HR should remind employees of their duty of fidelity and their duty not to disclose confidential information. It is important to review employment contracts to ensure that there are express confidentiality provisions to ensure that certain confidential information regarding the company is not disclosed during or after the termination of employment.

Potential grey areas

Many sources, in determining potential defences of defamation, might come under grey areas. Generally, privilege is more likely to apply if the statement comes from a public figure acting in their official capacity. It is less likely to apply where the figure is more private, or where the report is more preliminary or is inaccessible to the public.

It must also be understood that confidentiality breaches and defamatory comments are risks inside and outside the workplace, including conduct on social media.

Social networking sites have permanently blurred the line between work and play. Potential for damages is also higher because people now have the capacity to reach more people. Employers are more likely to find themselves accountable for the actions of employees. Hence, employers must make sure that employees actually know what is expected of them and the consequences of misusing social media to prevent any potential legal liabilities.

(This article, written by our Partner Mr Dominic Wai and our Summer Intern Ms Hilary Sun, is also published in the September 2017 issue of Human Resources, the Official Journal of the Hong Kong Institute of Human Resource Management.)