A man in a grey business shirt looks sideways. Someone has placed a hand over his mouth.

“You can’t say that!”: A guide to non-disparagement clauses

James Ferguson, ||

Co-authored by Bailey Fraser and Jace Coaldrake-Redhouse

You may have come across a clause in a contract, agreement or deed called a “non-disparagement clause” and been unsure what it means. Broadly speaking, a “non-disparagement clause” prevents one party from making disparaging comments about the other.

Breaching a non-disparagement clause can have serious consequences. This was recently highlighted in the high-profile Supreme Court of NSW dispute between Network 10 and its former employee and political commentator, Dr Peter van Onselen.[1]

The background

From 2010, Dr van Onselen regularly appeared on Network Ten programs, such as The Project and The Sunday Project, as a political commentator and host. He was employed as Political Editor for the Network in late 2018. In early 2023, the Network made his position redundant and entered into negotiations regarding his terms of departure.

On 3 March 2023, the Network and Dr van Onselen entered into a deed which included a clause titled “7. Non-Disparagement.” The clause stated that:

7.1[Dr van Onselen] agrees not to disparage the [Network] …or make any statement or publication, or author any other person to disparage or make any statement or publication, whether oral or in writing, which may or which does in fact bring the [Network] or any [of its related bodies corporate, such as US Holding company Paramount] into disrepute or ridicule or which may otherwise adversely affect their respective reputations.

The claim

On 2 June 2023, the Network sued Dr van Onselen for an article published in The Australian newspaper, ‘Paramount woes raise questions about long term viability of Network 10’. The Network sought a declaration that Dr van Onselen had breached the Non-Disparagement Clause and an order that he be restrained from making any further publications disparaging the Network.

The Network argued that Dr van Onselen had breached the Non-Disparagement Clause by disparaging:

  1. the Network’s financial position
  2. the viability of Paramount (the Network’s US-based parent company)
  3. its Australian brand
  4. its management.[2]

Dr van Onselen defended the proceedings. He argued that he had not disparaged the Network or Paramount within the meaning of the Non-Disparagement Clause because:

  1. his statements in the Article were made in good faith
  2. the true purpose of the Non-Disparagement Clause was to stop negative commentary about his employment with the Network
  3. the Article merely re-states publicly available information
  4. the Network’s reputation had already been tarnished by previous expositions of the same facts.[3]
The decision

Chief Justice Hammerschlag rejected Dr van Onselen’s defence and found in favour of the Network. In making a declaration that Dr van Onselen had breached the Non-Disparagement Clause, his Honour considered that the Deed, and Non-Disparagement Clause, is to be given a “business-like interpretation” and considered that the meaning of the words used is determined objectively by asking “what a reasonable businessperson would have understood [the words] to mean.”[4]

His Honour went on to find that:

  1. The Non-Disparagement Clause which was agreed upon made no exception for disparagement which may be fair comment or within reason.[5]
  2. Good faith, and Dr van Onselen’s occupation, had no bearing on the question of whether the Article met the contractual description of disparaging the Network.[6]
  3. The words used in the Article – including terms such as “plummeted,” reference to the possibility of the Network “limping along with little attention paid to it by its big overseas owners (or its domestic competitors to be frank),” and discussion of Dr van Onselen’s personal experience in walking away from the Network – were something not any other journalist could have written and wasn’t a mere recitation of publicly available information.[7]
What this means for you

What you can and cannot say after agreeing to a non-disparagement clause can have serious consequences. The Network and Dr van Onselen’s case provides helpful guidance on how a non-disparagement clause will be interpreted by a Court. It also reveals important mistakes that can be avoided if you are subject to a non-disparagement clause.

If you are entering into a document which requires you to be bound by a non-disparagement clause, you should seek legal advice before signing. However, if you have already signed and are unsure about what you can and cannot say, please contact our Litigation & Dispute Resolution team for help and guidance.

 

[1] Network Ten Pty Limited v van Onselen [2023] NSWSC 829.

[2] Network Ten Pty Limited v van Onselen [2023] NSWSC 829 at [43].

[3] Network Ten Pty Limited v van Onselen [2023] NSWSC 829 at [47].

[4] Network Ten Pty Limited v van Onselen [2023] NSWSC 829 at [69].

[5] Network Ten Pty Limited v van Onselen [2023] NSWSC 829 at [70].

[6] Network Ten Pty Limited v van Onselen [2023] NSWSC 829 at [72].

[7] Network Ten Pty Limited v van Onselen [2023] NSWSC 829 at [83] – [88].

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