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Silencing lawsuits and immunity from defamation regarding letters before action

13.12.20 | 10:02  

Attached for your perusal is a memorandum on the subject of "Silencing lawsuits and immunity from defamation regarding letters before action", which we hope you will find to be of interest. You are welcome to contact our firm should you have any question or require any clarification regarding the contents of this circular.

Section 13 of the Prohibition of Defamation Law, 5725-1965 ("the Law") provides that various types of acts and verbal or written publications shall not constitute grounds for a defamation claim. One type of publication covered by this defense is a publication made a litigant or his lawyer during a legal proceeding (section 13 (5)). What then is the status of a warning letter sent before a legal proceeding is taken? Are its contents and the allegations made therein also covered by the publication during a legal proceeding defense? What is the legal position regarding a letter before action which did not did in the end culminate in the filing of legal proceedings? These were the issues addressed in the case before us [LCA 4512/20 Mano Maritime Ltd v. Ma'ayan Balas, Nevo, 14.10.20]    

It happened that a family took a cruise for a number of days on a ship operated by the "Mano Maritime" company ("the company").On one of those days, one of the daughters of the family fell and was injured, allegedly resulting in psychological and medical damage. Upon their return from the vacation, the lawyer of the minor's family sent a strongly worded letter to the company's offices detailing the incident and the damage caused to the minor. In addition, it was demanded that the company pay compensation to the minor and her family for the mental anguish caused to them and the expenses which they incurred as a result of the negligence of the company's employees. The company responded by filing a defamation claim in the amount of NIS 100,000 ("the claim") against the minor's parents ("the defendants"), on the grounds that the letter before action which had been sent to the company's offices constituted a false and defamatory publication which could tarnish the company's reputation and good name.

The defendants filed a motion in the court for dismissal of the claim in limine, on the grounds that it was a futile action designed to intimidate the family and dissuade them from filing a tort suit against the company. They further argued that a letter before action constitutes a "permitted publication" under section 13(5) of the Law, and therefore cannot serve as the basis for a defamation claim. Conversely, the company maintained that since the publication was not made "during a hearing" and that no legal proceedings were conducted between the parties (with respect to the allegations raised in the letter before action) the exception prescribed in section 13(5) did not apply.

The Magistrates Court accepted the family's position and held that case law had extended the defense against defamation claims, so that it would also apply to a letter relating to a legal proceeding, including letters before action (even if in the end no lawsuit was filed). The court further noted that the filing of the lawsuit by the company so soon after the warning letter was sent to it showed a lack of good faith which bolstered the feeling that this was a "silencing" lawsuit aimed at deterring the defendants from taking legal action against the company.

The company appealed this ruling to the District Court, which also upheld the rule that section 13(5) of the Law should be interpreted expansively, and that correspondence preceding legal proceedings, including letters before action, should also be regarded as a permitted publication. However, it also noted that this rule applied to cases in which a legal proceeding was eventually initiated between the parties, which had not yet happened in the current case. Finally, the court left this issue for further review, holding that in any event it did not have to be determined in the present case, since the defendants had declared their intention to file a lawsuit against the company in the near future.

The company did not despair, and filed a motion for leave to appeal to the Supreme Court, in which it was asked to clarify whether the immunity prescribed in section 13(5) of the Law also applies to warning letters which were not followed by the initiation of legal proceedings. Her Honor Justice Daphna Barak-Erez, who was required to address the issue, noted that it had already been determined that section 13(5) of the Law applied to any action taken in connection with the stages of legal proceedings, including written communications and letters before action, and not only what is said in the courtroom. The immunity likewise applies when the defamation claim was filed before the opening of the legal proceeding, provided that there is a clear connection between the legal proceeding which is expected to be opened and the submissions asserted in the letter.

Her Honor Justice Barak-Erez held that there was no need or justification to consider in this case the question of the immunity of letters before action which were not followed by the initiation of legal proceedings, since the defamation suit was filed less than two months after the event occurred and only around three weeks from the sending of the letter before action. In other words, by filing the lawsuit in such a short time the company did not leave the defendants an opportunity to file their tort claim against it (which was expected to be based, inter alia, on the allegations made in the letter before action). Moreover, the short period of time in which the defamation lawsuit was filed strengthens the contention that its real purpose was not to conduct a proceeding to protect the good name of the company, but rather to create an effect of intimidation and silencing against the family, which would deter them from conducting legal proceedings against it.

In conclusion, the judge held that sometimes letters before action allow parties to settle their disputes in a way that renders the filing of the legal proceeding superfluous. In order to maintain this prevailing practice, it is advisable to regard the contents of letters before action as a permissible publication even if no legal proceedings are subsequently instituted, and one should be wary of an interpretation that would petrify this technique and its concomitant advantages.