Defamation - Application to strike out "Polly Peck" plea in defence - Principles applicable to "Polly Peck" defence - Imputations of guilt of certain conduct pleaded by plaintiff - Whether defendant can plead and seek to justify meanings that plaintiff was suspected or suspected on reasonable grounds of that conduct - Turns on own facts

1 NEWNES J: This is an application by the plaintiff to strike out the parts of the defendant's defence comprising what is commonly known as a "Polly Peck" plea.

2 In the action, the plaintiff claims damages for defamation. The plaintiff alleges that in The West Australian newspaper of 4 March 2006 an article defamatory of him was published by the defendant. The terms of the article are set out in my earlier judgment on an application by the defendant to strike out parts of the statement of claim: Elliott v West Australian Newspapers Ltd [2006] WASC 222. I will not repeat them.

3 The plaintiff pleads that the article, in its ordinary and natural meaning, meant and was understood to mean that the plaintiff:

"4.1 dishonestly profited from using information concerning contracts between Fortescue and Chinese investors which would have an adverse effect upon the price of Fortescue shares when made available to the market, by selling Fortescue shares just prior to the release of that information;

4.2 illegally profited from using information concerning contracts between Fortescue and Chinese investors which would have had an adverse effect upon the price of Fortescue shares when made available to the market, by selling Fortescue shares just prior to the release of that information;

4.3 abused his position as a director and deputy chairman of Fortescue for personal gain, by using information gained by virtue of holding those positions concerning contracts between Fortescue and Chinese investors which would have an adverse effect upon the price of Fortescue shares when made available to the market, to sell Fortescue shares just prior to the release of that information;

4.4 told a deliberate untruth by stating that he had no knowledge, at the time of selling his Fortescue shares, of the existence of the contracts between Fortescue and the Chinese investors."

4 In its defence, among other things, the defendant denies that the words bore or were capable of bearing any of the meanings pleaded by the plaintiff. It does not plead a defence of justification to those meanings. However, it pleads, in the alternative, that if the article was defamatory in its ordinary and natural meaning, then it bore only the following meanings, which meanings are true in substance and in fact:

"6.1 ASIC was investigating whether the plaintiff, as one of the directors of FMG [Fortescue Metals Group Ltd] had illegally profited from using information concerning contracts between FMG and Chinese investors which would have an adverse effect upon the price of FMG shares when made available to the market, by selling FMG shares, just prior to the release of that information;

6.2 there were reasonable grounds for ASIC investigating the plaintiff's sale of some FMG shares on 18 March 2005 whilst he was a director;

6.3 there were reasonable grounds to suspect that the plaintiff as a director of FMG had illegally profited from using information concerning contracts between FMG and Chinese investors which would have an adverse effect upon the price of FMG shares when made available to the market, by selling FMG shares, just prior to the release of that information."

5 There are then set out, by way of particulars of justification, particulars of the investigation by ASIC and the matters relied upon as "reasonable grounds" in par 6.2 and par 6.3.

6 The plaintiff seeks to strike out par 6 of the defence on the ground that it discloses no reasonable cause of defence or is embarrassing.

7 It was submitted by Senior Counsel for the plaintiff that in pleading a "Polly Peck" defence a defendant was limited to imputations that were not substantially different from the imputations pleaded by the plaintiff.

8 Whether or not a "Polly Peck" imputation is substantially different from the plaintiff's imputations can be tested by considering whether the former is an imputation upon which the plaintiff would be entitled to a verdict at trial even though the plaintiff had not pleaded it. The question can be framed as whether the defendant's imputation involves a substantially different factual basis, or evidential or factual enquiry at trial, than the plaintiff's imputation.

9 It was submitted that when so considered the defendant's imputations were substantially different to the imputations pleaded by the plaintiff. While the plaintiff had pleaded imputations of guilt in par 4 of the statement of claim, the imputations pleaded by the defendant were imputations of the plaintiff being the subject of investigation, there being reasonable grounds for such an investigation, and of there being reasonable grounds to suspect the plaintiff of unlawful conduct. Senior Counsel said it was notable that the most serious imputation pleaded by the defendant, the plea in par 6.3 of the defence, did not even rise to the level of a plea that there were reasonable grounds to believe the plaintiff was guilty of the conduct referred to.

10 Senior Counsel argued that the defendant's imputations plainly raised different and false issues. The issue raised by the plaintiff in the present case is not whether he was being investigated in relation to, or was suspected of having engaged in, the conduct referred, but whether he had in fact engaged in it.

11 Senior Counsel also argued that the imputation pleaded in par 6.2 of the defence was embarrassing as it failed to plead the precise act or condition attributed to the plaintiff.

12 Senior Counsel for the defendant submitted that the plaintiff's approach was not consistent with a strong body of authority in Western Australia, including at appellate level.

13 Senior Counsel relied, in particular, on the judgment of McLure J (as her Honour then was) in Nationwide News Pty Ltd v Moodie [2003] WASCA 273; (2003) 28 WAR 314. In that case McLure J considered that there were three possible tests open as to the permissible ambit of a "Polly Peck" imputation, being:

(a) any imputation for which the plaintiff might contend at trial, including, but not confined to, a nuance or variant, not substantially different or more serious than that pleaded by the plaintiff;

(b) a less injurious meaning of the same kind as a meaning pleaded by the plaintiff;

(c) a nuance or variation, not substantially different from or more serious than that pleaded by the plaintiff.

14 Her Honour considered that it remained an open question in Western Australia whether the last of those, the test formulated in David Syme & Co Ltd v Hore-Lacy [2000] VSCA 24; (2000) 1 VR 667, was unduly narrow, having regard to the reasons of the majority in Chakravarti v Advertiser Newspapers Ltd (1998) 193 CLR 519.

15 Senior Counsel for the defendant submitted that it did not matter in this case which test was applied: the imputations pleaded by the defendant were open on all three. He argued that the plaintiff's contention was effectively that where a plaintiff pleads an imputation to the effect that he was guilty of conduct, it is not open to a defendant to plead an alternative imputation at a level lower than guilt since the latter is not contemplated in the former. That, it was submitted, was contrary to an established line of authority in this State. Senior Counsel referred to Gumina v Williams (No 2) (1990) 3 WAR 351, Ronci v Nationwide News Pty Ltd [2001] WASC 239, Vitale v Bednall [2001] WASC 278, Moir v Flint [2002] WASC 48 and Mickelberg v Hay [2006] WASC 285.

16 It was submitted that it was open to the tribunal of fact at trial to find that the article conveyed an imputation of a lesser degree of seriousness, and the fact that the plaintiff's imputations were pitched at a higher level of seriousness did not preclude that outcome. The meanings pleaded by the defendant were reasonably open on the words complained of and were a permissible plea.

Is the defendant's "Polly Peck" plea objectionable?

17 It has for some time now been a requirement of pleading in defamation cases in this State that the plaintiff must plead the false innuendos on which he or she relies, unless the defamatory meaning is so clear that it is obviously unnecessary to do so. In Taylor v Jecks (1993) 10 WAR 309, Anderson J (with whom Kennedy and Franklyn JJ agreed) pointed out (at 316) that the imputations pleaded by the plaintiff will be canvassed at trial as being what the plaintiff claims to be the essence of the libel and the cause of his hurt. Or as it was put by Brennan CJ and McHugh J in Chakravarti (at 531 - 532), where the plaintiff pleads a false innuendo, the plaintiff gives a shape and focus to the cause of action.

18 It has also been accepted, however, that at trial the tribunal of fact is not tied to the precise meaning pleaded by the plaintiff. In Taylor v Jecks, Anderson J said (at 316 - 317):

"Usually the jury will be asked to find whether the words complained of bear all or any of the meanings set out for them by the Judge. Usually the Judge, in formulating the various imputations for the jury to consider, will have close regard to the pleadings or, at all events, to those imputations on which issue has been fairly joined at trial. Of course, it is accepted that the plaintiff is not tied to the precise meaning set out in his pleading, nor is the jury confined to the precise meaning as formulated for them by the Judge. This latitude is usually conveyed to the jury by the addition to the questions put to the jury of the phrase 'or any similar meaning defamatory of the plaintiff' ... I think it is more often than not the case that the jury will be asked to find for or against specific imputations that will have been formulated for them by the Judge with the assistance of counsel and by reference to the pleadings, or any imputations similar to those imputations, rather than that they will be asked simply to say at large whether the materials are defamatory of the plaintiff."

19 The relatively modern practice of a defendant pleading a meaning of the words complained of different to that of the plaintiff and then justifying that meaning has its origins in the decision of the English Court of Appeal in the well-known case of Polly Peck (Holdings) Plc v Trelford [1986] QB 1000. The practice has been the subject of controversy ever since.

20 The issue of whether or not a "Polly Peck" plea is a permissible form of defence has, at least for the present, been resolved in this State by the decisions of the Full Court in Gumina v Williams (No 2) and Nationwide News Pty Ltd v Moodie. It is clear from those cases that such a plea is permissible. The extent to which a defendant who pleads such a defence can depart from the defamatory meanings pleaded by the plaintiff has not, however, been definitively resolved.

21 The English approach, based on the judgment of O'Connor LJ in Polly Peck (Holdings) Plc v Trelford, is stated in Gatley on Libel and Slander, 10th ed at par 11.14(4), to be that "the scope of the plea of justification does not depend upon the meaning of the words complained of pleaded by the claimant but upon the meaning which the words are reasonably capable of bearing."

22 In Chakravarti v Advertiser Newspapers Ltd (supra), Brennan CJ and McHugh J firmly rejected the principle that a defendant could plead and justify a meaning not pleaded by the plaintiff. Their Honours considered (at 528) that "the Polly Peck defence or practice contravenes the fundamental principles of common law pleadings. In general it raises a false issue which can only embarrass the fair trial of the action." In considering the extent to which a plaintiff might seek a verdict on a meaning different to the meaning he or she has pleaded, Brennan CJ and McHugh J considered that a plaintiff might rely on a nuance of the meaning pleaded provided it was not unfair to the defendant to do so. But a plaintiff would not be entitled to rely on a meaning which was not pleaded if it so altered the substance of the meaning that the defendant would have been entitled to plead a different issue, to adduce different evidence or to conduct the case on a different basis.

23 Gaudron and Gummow JJ did not deal specifically with the entitlement of a defendant to plead an alternative meaning. On the question of the extent to which a plaintiff might depart from his or her pleaded imputations, their Honours said:

"As a general rule, there will be no disadvantage in allowing a plaintiff to rely on meanings which are comprehended in, or are less injurious than the meaning pleaded in his or her statement of claim. So, too, there will generally be no disadvantage in permitting reliance on a meaning which is simply a variant of the meaning pleaded. On the other hand, there may be disadvantage if a plaintiff is allowed to rely on a substantially different meaning or, even, a meaning which focuses on some different factual basis. Particularly is that so if the defendant has pleaded justification or, as in this case, justification of an alternative meaning. However, the question whether disadvantage will or may result is one to be answered having regard to all the circumstances of the case, including the material which is said to be defamatory and the issues in the trial, and not simply by reference to the pleadings."

24 Kirby J too did not discuss the entitlement of a defendant to plead an alternative meaning, but on the issue of the extent to which a plaintiff may depart from their pleaded imputations, considered that the trial Judge was not bound to confine the jury to the imputations pleaded. His Honour said (at 580):

"In an attempt to reconcile the desirable encouragement of particularisation of claims, the avoidance of 'trial by ambush' and the consideration of the entirety of the publication in question, courts will uphold the discretion of the trial judge, including a discretion to confine parties to the imputations pleaded where that is required by considerations of fairness. However, a more serious allegation will generally be taken to include a less serious one unless the latter is of a substantially different kind."

25 The permissible ambit of a "Polly Peck" defence was subsequently considered by the Court of Appeal of Victoria in David Syme & Co Ltd v Hore-Lacy (supra). Having reviewed the decision of the High Court in Chakravarti, Ormiston JA said (at [21] - [22]):

"It would therefore seem desirable, if it was not already required by authority, both that defendants should plead the meanings by way of false innuendo or imputation which they place upon the publication relied upon and that they should plead justification in terms which makes clear the version or versions of meaning of the publication to which that justification is directed. Whatever criticisms the minority levelled at the practice, it seems fortunately restricted to defamation actions and Chakravarti would at least restrict the extent to which imputations and false innuendoes which depart from those pleaded may be relied upon at trial. It would seem, moreover, that even the majority would permit a very limited departure from the case pleaded by the plaintiff; in other words, the jury will have to be told that they cannot find for the plaintiff unless they agree with the meaning or one of the meanings put forward on behalf of the plaintiff, or unless the meaning they would give the publication was only a nuance or variant, not substantially different or more serious from that proposed by the plaintiff.

If that be correct, then a defendant should not need to, nor be permitted to, plead or rely on a meaning other than one which is not more serious and otherwise is not substantially different."

26 In the same case, Charles JA said (at [53] - [54]):

"The principal criticisms of the practice sanctioned in Polly Peck, of permitting a defendant to plead and justify a meaning different from that contended for by the plaintiff are that such an approach allows the defendant to raise false issues which can only embarrass the fair trial of the action and will on occasions unfairly prevent a plaintiff from pursuing a claim in defamation, in the manner explained by Brennan, C.J. and McHugh, J. in Chakravarti (at [8] - [12]). The setting up of false issues by the defendant in this way may well make admissible a substantial body of evidence that would otherwise be irrelevant and thus greatly lengthen proceedings. But it seems to me that the same criticisms would not hold good if the defendant were limited to justifying a meaning which was one upon which the plaintiff might himself obtain a verdict on the pleadings as they stand.

Nor should a defendant be unfairly prejudiced if the defendant were limited to pleading a meaning which was sufficiently close (in the manner already suggested) to the plaintiff's meanings, so that the plaintiff himself could succeed upon that meaning on the pleadings as they stand. If the defendant is limited to pleading a meaning on which the plaintiff would be permitted to go to the jury, a false issue is not thereby raised. The issues are instead identified and confined, to the benefit of the court and the parties. Of course, if the plaintiff cannot make good a meaning amongst those identified, his action must fail, and the defendant has no need to plead any other meaning."

27 In Nationwide News Pty Ltd v Moodie (supra), all the members of the Full Court agreed that in a "Polly Peck" defence a defendant was not entitled to plead an imputation which was outside the imputations upon which the plaintiff would be entitled to obtain a verdict at trial. Beyond that, however, there was some difference of approach.

28 Having considered the judgments in Chakravarti v Advertiser Newspapers Ltd, Anderson J said (at 318 - 319):

"At the risk of over-simplification it seems to me that these judgments can safely be reduced to at least this proposition: that a defamation case will not be permitted to go to the jury, or to judgment, on an alternative meaning which is substantially different from or more serious than the false innuendos pleaded in the statement of claim.

...

Accepting that it is still permissible in Western Australia for defendants to advance a Polly Peck defence I can see no good reason why a defendant should be permitted to advance as a positive ground of defence an alternative imputation not relied on by the plaintiff and on which the plaintiff cannot obtain a verdict and then seek to justify that meaning. Surely as in all classes of case the defendant in a defamation action is required to meet the plaintiff's claim."

29 Anderson J then referred to David Syme & Co Ltd v Hore-Lacy (supra) and adopted the statements by Charles JA which I have set out above.

30 Steytler J (as his Honour then was), having reviewed a number of authorities including Chakravarti and Hore-Lacy, said (at 328):

"There being no clear majority in Chakravarti against the continuance of the pre-existing practice, in this State, of pleading so-called 'Polly Peck' defences, that practice should be permitted to continue, in my opinion, at least until there has been further guidance from the High Court. However, the extent to which a defendant will be permitted to plead defamatory meanings different from those pleaded by the plaintiff will be constrained by the extent to which the plaintiff might himself or herself be permitted to rely, at the trial, upon imputations other than those pleaded by him or her.

No purpose can be achieved by allowing a defendant to plead, and seek to justify, a meaning different from that or those which might be found by a jury in favour of the plaintiff. If the plaintiff cannot succeed on a particular imputation which is different to that pleaded by him or her, then, to allow a defendant to plead that imputation, and seek to justify it, can only result in the creation of a false issue and prejudice to the proper trial process. On the other hand, if the defendant is able to justify a defamatory meaning which differs from that pleaded by the plaintiff but which might be found by a jury on the strength of the plaintiff's own pleading, then there is a basis for saying that the defendant can, and should, plead that alternative meaning and also the matters upon which it relies in contending that it is able to justify it. In this way the issues might be defined more precisely and there would be clear benchmarks against which the relevance of evidence might be assessed. I should add, as regards the concept of 'fairness' or 'disadvantage', that it can never be fair or advantageous to a plaintiff, or to the trial process itself, to permit a defendant to plead, and seek to justify, a meaning which could plainly not be found by a jury on the plaintiff's pleading."

31 Steytler J concluded that in the case before him the meanings pleaded by the defendant were "comprehended within the meanings" pleaded by the plaintiff. His Honour further found that the meanings were also less injurious and could not be said to be substantially different from those pleaded by the plaintiff or to focus on some different factual basis. His Honour concluded:

"It consequently seems to me that the meanings pleaded by the [defendant] are meanings which might be found by a jury in favour of the [plaintiff] on the strength of the [plaintiff's] own pleadings and that there is no unfairness or disadvantage to the [plaintiff], or to the trial process, in allowing the [defendant] to plead them and to seek to justify them."

32 McLure J (as her Honour then was) repeated the view she had expressed in earlier cases (see Vitale v Bednall (supra), Moir v Flint (supra)) that it was arguable that Ormiston JA's formulation in Hore-Lacy ("a nuance or variation, not substantially different or more serious from that pleaded by the plaintiff") was unduly narrow, having regard to the reasons of the majority in Chakravarti. Her Honour considered that the majority in Chakravarti and the Full Court in Gumina had accepted the correctness of the statement of law by Lord Diplock in Slim v Daily Telegraph Ltd [1968] 2 QB 157 (at 175) that a plaintiff may contend at trial that, even if the words do not bear the defamatory meaning alleged in the statement of claim to be the ordinary and natural meaning of the words, they nevertheless bear some other meaning less injurious to the plaintiff's reputation but still defamatory of him.

33 McLure J said that the High Court in Chakravarti had focused on procedural fairness. Her Honour referred to the judgment of Gaudron and Gummow JJ in Chakravarti for the proposition that there would be no disadvantage in allowing a plaintiff to rely on meanings which were comprehended in or less injurious than the meaning pleaded in the statement of claim and there would generally be no disadvantage in pleading reliance on a meaning which is simply a variant of the meaning pleaded; the question whether disadvantage will or may result is to be answered having regard to the circumstances of the case, including the material which is said to be defamatory and the issues in the trial, and not simply by reference to the pleadings.

34 McLure J added (at 335) that, on her understanding of the reasons in Chakravarti, disadvantage to the defendant is an additional limiting factor on the extent to which a plaintiff can depart from his pleaded imputations, not a factor intended to widen the plaintiff's (and in turn the defendant's) opportunities to depart from them. Her Honour concluded that in the case before her, the defendant's imputations were not substantially different from or more serious than the imputations pleaded by the plaintiff.

35 In Advertiser-News Weekend Publishing Co Ltd v Manock [2005] SASC 82, the Full Court of the Supreme Court of South Australia held that a "Polly Peck" defence was a permissible defence in South Australia. Doyle CJ (with whom Vanstone and White JJ agreed), having reviewed a number of the authorities including Chakravarti, Hore-Lacy and Nationwide News Pty Ltd v Moodie, made the following observation (at [72]):

"I doubt whether the propositions formulated by Charles JA [in Hore-Lacy] are inconsistent with the observations of Brennan CJ and McHugh J in Chakravarti about pleading a Polly Peck defence, because to the extent that a plaintiff may be permitted to depart from the meaning pleaded, fairness requires that the defendant be permitted to anticipate and deal with the alternative meaning. In that context the expression 'alternative meaning' is something of a misnomer. An alternative meaning that can be pleaded and justified by the defendant can be no more than a shade or nuance of the meaning pleaded by the plaintiff, and so in substance (as it seems to me) the alternative meaning must be close to or the same as the meaning pleaded by the plaintiff."

36 His Honour said (at [75]) that he agreed in principle with the views expressed by Brennan CJ and McHugh J in Chakravarti in relation to the pleading of a "Polly Peck" defence, subject to the limited exception recognised by Charles JA in Hore-Lacy. Doyle CJ then went on to state his view as to the law in relation to a "Polly Peck" defence (at [76] - [82]). The passage is lengthy, but I think it is appropriate to set it out in full. It is as follows:

"Once the plaintiff pleads a meaning on which the plaintiff relies, that pleading will identify the meaning of which the plaintiff complains, and delimit the boundaries within which the action is to be fought. Although it is the publication of the defamatory material that is the tort, the function of the pleading is to identify the field of inquiry at the trial.

It appears to be generally accepted that once the plaintiff has pleaded the meaning on which the plaintiff relies, the plaintiff will not be entitled to seek a verdict on a different imputation. On that all members of the High Court agreed in Chakravarti. That is subject to the qualification that another defamatory meaning might be relied on by the plaintiff, when it is a mere shade or nuance of meaning, provided that the defendant suffers no prejudice, embarrassment or unfair disadvantage as a result: Brennan CJ and McHugh J at [24] - [25], Gaudron and Gummow JJ at [60] and Kirby J at [139] sub-paras 3 and 4.

Accordingly, there can be no unfairness to the defendant in not allowing the defendant to justify a meaning that, because it differs from the meaning pleaded by the plaintiff, the plaintiff would not be permitted to advance a trial. That is what the Judge has decided here.

While on the question of the ability of the plaintiff to depart from a pleaded imputation, I record my agreement with the following observation made by McLure J in Nationwide News at [94]:

'On my reading of the reasons in Chakravarti, disadvantage to the defendant is an additional limiting factor on the extent to which a plaintiff can depart from his pleaded imputations not a factor that is intended to widen the plaintiff's (and in turn the defendant's) opportunities to depart from them.'

In my respectful opinion the observations of Brennan CJ and McHugh J are supported by practical considerations. The approach that they take is conducive to the fair conduct of a trial. I agree with them that under the law as stated in Polly Peck it appears open to a defendant to plead and justify meanings that differ from the meaning on which the plaintiff relies, resulting in the introduction of evidence that will increase the length of the trial, may tend to cloud the issues, and may work to the unfair prejudice of the plaintiff.

The latitude that the principle stated in Polly Peck allows will lead to defendants re-stating defamatory imputations at higher levels of generality, then seeking to justify the more general imputation by evidence that does not bear directly on the matter of which the plaintiff complains. On that point it is pertinent to recall the observation by Gleeson CJ in Drummoyne Municipal Council v ABC [1990] 21 NSWLR 135 at 137:

'Almost any attribution of an act or condition to a person is capable of both further refinement and further generalisation.'

For these reasons, as a matter or principle, as a matter of fairness and having regard to the public interest in the efficient conduct of a trial, the law as stated by O'Connor LJ in Polly Peck should not be applied in this State. A preferable approach is that adopted by Charles JA in Hore-Lacy at [53] and [54]."

37 In the Australian Capital Territory, a similar view appears to have been adopted. In John Holland Group Pty Ltd v John Fairfax Publications Pty Ltd [2006] ACTSC 108, Connolly J referred to and applied the reasons of Doyle CJ in Advertiser-News. Connolly J concluded (at [16]) that:

"[T]he only permissible alternative imputation that may be pleaded by a defendant in a defamation action is one that would otherwise be open to the plaintiff to succeed on the pleadings as they stand, that is, when it is a mere shade or nuance of meaning."

38 In Betfair Ltd v Nason [2006] ACTSC 111, Gray J (at [32]) reached the same conclusion.

39 In Robinson v Laws [2003] 1 Qd R 81, the Court of Appeal of Queensland held that a "Polly Peck" defence was not available in that State.

40 As I understand the decision of the Full Court in Moodie, there is no binding majority view as to the principles to be applied in determining the permissible ambit of a "Polly Peck" plea. Anderson J expressly adopted what Charles JA had said in Hore-Lacy; Steytler J, while not expressly adopting what Charles JA had said in Hore-Lacy, expressed views which appear to be to a similar effect; and McLure J, while expressing reservations as to the views expressed by Ormiston JA in Hore-Lacy, found it unnecessary to reach any concluded view on the issue. Different views have been expressed by Judges of this Court at first instance.

41 It seems to me that the weight of authority in Australia now clearly favours the view expressed by Ormiston JA and Charles JA in Hore-Lacy. That view has been expressly adopted by the Full Court of South Australia in Advertiser-News Weekend Publishing Co Ltd v Manock, at first instance by the Supreme Court of the Australian Capital Territory in Betfair Ltd v Nason and John Holland Group Pty Ltd v John Fairfax Publications Pty Ltd, and at first instance by the Tasmanian Supreme Court: Caccavo v Daft [2006] TASSC 36.

42 As there is a common law of Australia, rather than a common law of each Australian jurisdiction, in the absence of a binding decision at appellate level in this State I should follow the decisions in Hore-Lacy and Advertiser-News Weekend Publishing Co Ltd v Manock, those being decisions of intermediate appellate courts, unless I am convinced that those decisions are plainly wrong: Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22 at [135]. I do not consider them to be wrong. On the contrary, with great respect, it seems to me that they are correct and I would therefore follow them. I would respectfully adopt what was said by Charles JA in Hore-Lacy at [53] - [54] and by Doyle CJ in Advertiser-News Weekend Publishing Co Ltd v Manock at [72], [76] - [82].

43 Accordingly, in my view, in the present case the bounds of a permissible "Polly Peck" plea are set by the meanings pleaded by the plaintiff and any other meanings upon which the plaintiff may obtain a verdict at trial on his pleading as it stands. The defendant cannot expand the area of controversy by pleading and seeking to justify meanings which go beyond those confines. To do so is to raise a false issue.

44 The plaintiff is entitled to obtain a verdict at trial upon any of his pleaded meanings or any meaning which is a nuance or variant of a pleaded meaning, being a meaning not substantially different from or more serious than a pleaded meaning. There is, in addition, a further overriding limitation that the plaintiff will not be permitted to rely upon an unpleaded meaning where to do so would be unfair to the defendant.

45 The defendant may therefore plead and justify only a meaning that is a nuance or variant of a meaning pleaded by the plaintiff, being a meaning not substantially different from or more serious than the plaintiff's pleaded meaning, and on which the plaintiff would be entitled at trial to seek a verdict on the basis of the plaintiff's pleaded meanings.

46 I do not consider that any of the meanings pleaded by the defendant arguably fall within that description. That conclusion, however, is not essential to my decision. In my view, on the basis of any of the views expressed in Moodie as to the permissible ambit of a "Polly Peck" plea, the imputations pleaded by the defendant in this case are not permissible.

47 The question of whether an imputation of reasonable suspicion of guilt is open as a "Polly Peck" defence where the plaintiff's imputations are of guilt was considered in Gutnick v Dow Jones & Co Inc (No 4) [2004] VSC 138; (2004) 9 VR 369. In that case, the plaintiff had pleaded four imputations to the effect that he had engaged in certain conduct. The defendant sought, by way of a "Polly Peck" defence, to plead imputations to the effect that the plaintiff was reasonably suspected of that conduct and that there was reason to investigate whether he had engaged in two other types of conduct.

48 Bongiorno J observed that, whereas the defendant's imputations were in each case imputations of reasonable suspicion, the issue raised by the plaintiff's imputation was not whether he was suspected of particular, arguably reprehensible, conduct, but whether he had actually engaged in that conduct. His Honour referred to the distinction between statements of guilt and of suspicion drawn in the judgments of Lord Reid (at 260) and Lord Hodson (at 275) in Lewis v Daily Telegraph Ltd [1964] AC 234, and to Shah v Standard Chartered Bank [1998] EWCA Civ 612; [1999] QB 241 where May LJ said (at 266):

"A publication that a person is guilty of something differs from a publication that there are reasonable grounds to suspect that he is guilty. Each is normally capable of being defamatory. The second will usually be less serious than the first. To justify the first publication, you have to establish that the person is guilty. To justify the second publication, you have to establish that there are objectively reasonable grounds for suspicion."

49 Bongiorno J concluded that the imputations of reasonable suspicion of guilt sought to be pleaded by the defendant were not a permissible variant or nuance of meaning of the imputations pleaded by the plaintiff and raised quite different cases.

50 I would respectfully agree with that view in relation to the three imputations pleaded by the defendant in the present case. I do not consider that any of the defendant's imputations of suspicion are a nuance or variant of any of the meanings of guilt pleaded by the plaintiff, but rather are substantially different imputations raising quite different cases. In addition, in my view, the imputation of reasonable grounds for suspicion pleaded by the defendant in par 6.3 of the defence also plainly does not fall within either of the other two, broader, tests applicable to a "Polly Peck" plea referred to by McLure J in Moodie. It is not an imputation of the same kind as an imputation of guilt. Nor does it depend upon the same evidentiary basis. It is not an imputation for which the plaintiff might arguably seek a verdict at trial on the imputations currently pleaded in the statement of claim. Even less are the imputations pleaded by the plaintiff that he was guilty of certain conduct of the same kind as an imputation of an investigation into whether the plaintiff had engaged in that conduct (pleaded in par 6.1 of the defence) or an imputation that there were reasonable grounds for ASIC to investigate the plaintiff's conduct (pleaded in par 6.2 of the defence).

51 In the course of argument, Senior Counsel for the defendant placed considerable reliance upon the decision of Hasluck J in Mickelberg v Hay (supra). In that case, the plaintiffs had pleaded an imputation that the words complained of meant that the plaintiffs and each of them had committed as criminal acts each of the "Perth Mint swindle offences". The second defendant sought to plead, as a "Polly Peck" defence, an imputation that there were reasonable grounds to believe that the plaintiffs had each committed the Perth Mint swindle offences. Hasluck J reviewed a number of authorities and concluded (at [70]) that by such a defence a defendant was entitled to justify alternative meanings that are less injurious and not substantially different to those pleaded by the plaintiff.

52 Hasluck J concluded that an imputation of reasonable grounds to believe that the plaintiffs had committed the offences was a less injurious assertion, but not one that was substantially different to the imputation of guilt contended for by the plaintiffs. His Honour accordingly refused to strike out the plea.

53 In the present case it is, I think, unnecessary to express any view as to the test which his Honour applied to determine whether a "Polly Peck" plea is permissible. There seems to me to be a significant difference between, as in Mickelberg v Hay, an imputation of reasonable grounds to believe that the plaintiff is guilty, and in this case, (at its highest) an imputation of reasonable grounds to suspect that the plaintiff is guilty. Even if the former is not substantially different to an imputation of guilt, in my view the latter clearly is. In any event, to the extent there may be similarities between the imputations pleaded by the defendant in that case and those in issue in this case, I would, with respect, take a different view to that reached by Hasluck J. I consider that the various imputations of suspicion pleaded by the defendant in this action are substantially different from the imputations of guilt pleaded by the plaintiff.

54 I consider that the imputations pleaded in par 6 of the amended defence are not arguably open to the defendant to plead by way of a "Polly Peck" defence and that the plaintiff's objections to them have been made out.

55 I would therefore strike out par 6 of the amended defence.