Ainsworth v. Burden [2006] NSWCA 199

Sergeant Osborne has interviewed Mr Burden who was unable to be specific in his allegations but generally outlined complaints which extend back to 1982. Many of these issues have been investigated before by Internal Affairs, the Ombudsman and raised in other various Court proceedings.

On 12 July 1993, Sergeant Osborne faxed the Nevada Gaming Control Board seeking information stemming from the complaint of Mr Burden and other matters which had been brought to our attention by him. (TAB 2). Coincidently, the Ainsworth group of companies had an application before the Nevada Gaming Control Board for a license to operate in that State which was listed for a final decision by the Gaming Commission on 28 July, 1993. I am informed now the matter has been put on hold because of Agents from the Nevada Gaming Control Board producing 'fresh material' to the Commission on that morning. The inference is that our inquiries prompted the action taken by the Nevada agents.

Mentioned in our fax to Nevada was we believed certain criminal charges were pending against the Ainsworth Group of companies in Nevada. This apparently is totally incorrect as far as Nevada is concerned but could apply to New Jersey. This is yet to be confirmed. (See Fax TAB 3).

On 5 August 1993, Mr Bill Brown, General Counsel for Aristocrat Leisure Industries came to this office and spoke with Inspector Wormleaton and myself. He outlined the series of events which occurred in Nevada and indicated his company were (sic) aware of Mr Hattons (sic) questions in parliament. Mr Brown expressed his concern that any action taken by us which suggested a review of Ainsworths (sic) suitability to hold a license may have a "domino" effect throughout the industry. This will also have an effect on other license applications the company has pending throughout the world.

I have no doubt this would be true. However, Mr Brown was informed our Command was conducting an inquiry in relation to a Question raised in parliament and a written complaint raising similar concerns. It was impressed upon Brown we are making inquiries initially to see if there are sufficient grounds to review the licenses in question.

Mr Brown expressed a wish to assist with any investigation where he could however at this stage that offer was not taken up.

Inquiries are continuing with Sergeant Osborne again interviewing Mr Burden trying to obtain specific areas of complaint and matters that have not already- been investigated.

I have this date been informed that two Nevada Gaming Control Board agents have arrived in Sydney, unannounced from my point of view, and are making inquiries re Ainsworth.

COMMENT I must preface my comments by saying I do not have a full appreciation of the years of conflict which have taken place between Mr Len Ainsworth, the Police Service and certain ex and serving members of the Service. Suffice to say that I am concerned that various forces might be at work to achieve certain outcomes which have a detrimental effect on one or more of the parties involved in this conflict at the expense of the Police Service.

When one looks at the timing of these issues being raised, and others over the years, the source of inaccurate information and the perceived consequences thereof, I have concerns this Command may be being manipulated. I am extremely conscious of remaining impartial in relation to all matters under investigation and reacting only to matters of FACT.

Whilst my concerns as outlined may be found to be 'unfounded', currently they are real and the preparation of this report is not a matter I have taken lightly.

RECOMMENDATION This submission is provided for the information of Commander Task Force Group and Operations Support.

The submission initiated by Detective Inspector Richardson, referred to as having been received on 21 June 1993, was not in evidence; and apparently was not made available to the appellant. 14 There was evidence of further steps then occurring in relation to the Nevada application. In about August 1993 there was an occasion, possibly two occasions, when Nevada authorities arrived unannounced in Sydney and asked the appellant for documents. On 19 August 1993, there was a telephone conference between Nevada authorities and the applicant and his legal adviser. It appears that a major topic of this conference was alleged dealings between the appellant and a Mr. Fullerton and a Mr. Wilner. In this conference, the appellant denied doing business with Mr. Wilner. 15 On 21 September 1993, the appellant attended before the Nevada State Gaming Control Board, and withdrew his application. 16 There is in evidence a report dated 16 February 1994 by Sergeant Osborne relating to "a major part of the matters raised" during the 19 August 1993 interview, principally being the appellant's association with Mr. Fullerton and Mr. Wilner. Sergeant Osborne in this report reached the conclusion that the appellant had a close association with persons of ill-repute, including Mr. Fullerton and Mr. Wilner; and that it appeared that the appellant had lied to the Nevada authorities in that regard (Blue 197e). However, it was later found in 2001 proceedings in the NSW Licensing Court that, although over the period 1978 and 1987 the appellant had business dealing with Mr. Wilner, his denial in the 19 August 1993 interview was not a deliberate falsehood. 17 On 5 April 1994, Detective Chief Inspector F. Mellis and Detective Senior Constable Paris were directed to investigate the respondent's allegations. Among other things they made enquiry of Detective Chief Inspector Allen, whose response dated 3 May 1994 included the following: Some of the issues raised have been subject to prior investigations and raised in various Court Jurisdictions. Irrespective of this, at the time of receiving Mr. Burdens complaint enquiries were commenced immediately to ascertain if there were any grounds to action Ainsworth's licence. I appointed Sergeant Murray Osborne to conduct preliminary enquiries and I oversaw his actions. These enquiries have not as yet been completed. 18 Detective Chief Inspector Mellis produced a report dated 3 June 1994. That report included the following passages: CIVIL ACTION TAKEN AGAINST AINSWORTH NOMINEES BY THE DEPARTMENT OF LAW AND PUBLIC SAFETY, DIVISION OF GAMING ENFORCEMENT, TRENTON, NEW JERSEY, U.S.A. 72. On the 12 July, 1993, Sergeant Osborne, Senior Investigator at the Gaming Appraisal Unit, State Licensing Investigation Command, forwarded a report to the Department of Law and Public Safety Division of Gaming Enforcement, Trenton, New Jersey for the attention of Mr. Bob Barsony. The report is now Attachment 'G'. The complaint has been laid against Ainsworth Incorporated, Charlie Dean, Lyndon Payne and Sheldon Hibargeer as a result of a number of salespersons in America entering into a business deal with a casino in the Caribbean which is contrary to the New Jersey Gaming Rules. The matter is still pending. The Ainsworth Nominees employees have been dismissed due to their actions.

73. In my opinion unless other information comes to hand from the New Jersey authorities, it is a long way removed from Mr. Ainsworth who would have little or no control of this type of action by his employees in America. I have spoken to Inspector Wormleaton, Acting Commander, State Licensing Investigation Command who stated this information is insufficient to consider Mr. Ainsworth's suitability to continue to hold a licence. At this time I do not intend to make any further inquiries. …

NEVADA GAMING CONTROL BOARD, INVESTIGATION DIVISION: 91. On the 12 July, 1993, Sergeant Osborne, Senior Investigator at the Gaming Appraisal Unit, State Licensing Investigation Command, forwarded a report to the Gaming Control Board, Investigation Division, Carson City, Nevada, USA for the attention of Mr. Keith Copher. In the report he states, "Recently it was brought to my attention that there are criminal matters pending against the Ainsworth Group of Companies in Nevada."

However in a report dated 6 August, 1993, submitted by Detective Chief Inspector W. AIlen, Commander, State Licensing Investigation Command, which is now Attachment 'M' on page 1, last paragraph, he states, "Mentioned in our fax to Nevada was, we believe, certain criminal charges were pending against the Ainsworth Group of Companies in Nevada. This apparently is totally incorrect as far as Nevada is concerned, it could apply in New Jersey. This is yet to be confirmed."

On the 16 February, 1994, Sergeant Osborne submitted a 6 page report concerning his investigation into Aristocrat Leisure Industries Pty. Ltd. Nevada Withdrawal Issue. That report is Attachment 'N' concerning an application by the Aristocrat Leisure Industries Pty. Ltd. previously known as Ainsworth Nominees Pty. Ltd. when they applied for a Manufacturers and Distributors Licence in Nevada, U.S.A. On the 21 September, 1993, Mr. Ainsworth requested withdrawal of all applications from the Nevada Gaming Licences. The Gaming Board agreed to accept the withdrawals but was prejudiced against Mr. Ainsworth and without prejudice to the rest of the individual applicants mainly the Ainsworth family members. The prejudice prohibits Mr. Ainsworth or the relevant companies from applying for a licence in Nevada for a period of 12 months.

The report speaks about a former employee of Mr. Ainsworth's named Graeme Fullerton. Fullerton was employed by the company between 1979 and 1986. It transpires that Fullerton had a criminal record dating from 1960 to 1967. It also discusses Mr. Ainsworth's association with Americans involved in "the gaming business in a similar business to that of Mr. Ainsworth. Those men are Lou WILNER, who is the owner of Willow Enterprises, Jerry ROTHBARD and Myron SUGERMAN. It is apparent according to the Sergeant's report that Mr. Ainsworth had an association with persons of ill repute which mainly occurred during the late 1970's.

On page 6 of the Sergeant's report he states, "If Mr. Ainsworth or any of his companies are still associated with Wilner or Sugerman, there is no evidence at hand to indicate such. It is reasonable to expect that if such associations still existed, clandestine arrangements would be in place to ensure that the association did not come under notice."

On the 9 March, 1994, Inspector Wormleaton, Acting Commander, State Licensing Investigation Command, commenting on the report submitted by Sergeant Os b orne as to the application to the Nevada Gaming Control Board. Inspector Wormleaton states, "I am of the opinion that the information contained within this file in isolation would not be sufficient to commence disciplinary proceedings against a Poker Machine or Approved Amusement Device Licences held by the subject company." Attachment 'O'.

I have read the reports submitted by Sergeant Osborne and I also agree with that given by Inspector Wormleaton that this is not sufficient to imply that Mr. Ainsworth is not a 'fit and proper' person to continue to hold a licence. 19 The letter to New Jersey referred to in par.[72] is not in evidence, and apparently not made available to the appellant. I have already referred to the documents mentioned in pars.[91], [92] and [93]. 20 In oral evidence before the jury, the appellant asserted to the effect that allegations in the respondent's letter were matters that had "all been heard before". 21 There was other evidence in the case, but the matters set out above (together with the evidence referred to in point [7] of Mr. Stitt's submissions) are the most significant in relation to the question in issue on this appeal.

SUBMISSIONS 22 Mr. Stitt QC for the appellant submitted that the test for determining whether a jury verdict in a civil trial should be set aside was that intervention was warranted where it was determined that the verdict was one that no reasonable jury could reach: John Fairfax Publications Pty. Ltd. v. Rivkin (2003) 77 ALJR 1657. 23 In order to make out a defence under s.13 of the Defamation Act, the onus was on the respondent to establish "that the circumstances of the publication of the matter complained of were such that the person defamed was not likely to suffer harm". This directs attention to the circumstances of the publication itself, not to the plaintiff's prior reputation or to the whole of the circumstances; and it directs attention to what is likely, not to what actually happens. Mr. Stitt referred to Morosi v. Mirror Newspapers Ltd. [1977] 2 NSWLR 749; Chappell v. Mirror Newspapers Ltd. (1984) Aust Torts Reports 80-691; King & Mergen Holdings Pty. Ltd. v. McKenzie (1991) 24 NSWLR 305 and Jones v. Sutton (2004) 61 NSWLR 614. 24 Mr. Stitt submitted that the following were the relevant circumstances of the publication: (1) The recipient was the Minister for Police, a person most likely to act upon statements or assertions in such a letter. (2) The letter was written to him in his official capacity, he being a person with power to investigate the serious allegations in the letter. (3) The respondent wrote the letter in the capacity of a "former Commander of the Licensing Investigation Unit", thus using his former title, position, prominence, and participation in the special unit with the responsibility of investigation of licensing matters, to give weight to his assertions. (4) The letter contained serious allegations against the appellant, namely that he was not a fit and proper person to be involved in the management of a company licensed in relation to poker machines, in circumstances where the question of fitness was at the heart of the regulatory regime. (5) The letter was expressed as an advice to the Minister that he should act further in respect of these matters. (6) The letter was sent just a couple of weeks before the finalisation of the appellant's application in Las Vegas. (7) There was evidence before the Court of a high degree of co-operation between regulatory regimes for poker machine licensing in different States and overseas countries, this being well-known in the industry, given by ALI's in-house Counsel, a former partner of Mallesons. (8) Any person with knowledge of or operating in the gaming industry would know that there was this networking and inter-relation between one regulatory authority and another. (9) In fact, as a result of the letter, there was communication between New South Wales and Nevada, which ultimately led to the withdrawal of the appellant's application: although actual consequences are not the test for s.13, they can shed light on what was in fact likely. 25 Having regard to these circumstances of the publication, Mr. Stitt submitted, a reasonable jury could not have concluded that the circumstances of publication were such that the appellant was not likely to suffer harm from the publication of a letter containing the serious defamatory imputations found by the jury.

DECISION 26 In my opinion, in addition to the circumstances referred to by Mr. Stitt, the following inferences were available on the evidence as to the circumstances of the publication: (1) Having received the question from Mr. Hatton in Parliament, the Minister for Police acting responsibly would promptly have instituted investigations into the subject of the question. (2) Accordingly, such investigations, probably by Detective Inspector Richardson, commenced not long after 24 April 1993, and accordingly were well under way by the time of the respondent's letter of 4 June 1993. (3) The respondent was not asked to give further information in connection with his letter until 5 August 1993, so that Detective Inspector Richardson's submission dated 21 June 1993 (not in evidence) was based more on his other enquiries than on the respondent's letter of 4 June 1993; and these inquiries produced information prompting Inspector Richardson to answer Mr. Hatton's question "Yes" (see third paragraph of W. Allen's document of 6 August 1993). (4) Sergeant's Osborne's two letters of 12 July 1993, respectively alleging criminal proceedings in New Jersey and Nevada, were not based on the respondent's letter or any information from the respondent, but from information coming from somewhere else, possibly from Inspector Richardson's enquiries. (5) Neither the respondent's letter nor his interview on 5 August referred to Mr. Fullerton or Mr. Wilner, so that the interest of the Nevada gaming authorities in those persons was not derived from the respondent's letter but from some other circumstances independent of the respondent's letter. (6) Thus, at the time the respondent sent his letter, there was already an enquiry under way as a result of Mr. Hatton's question; and matters of concern to the Nevada authorities (the existence of an enquiry, alleged criminal matters in New Jersey and Nevada, and the appellant's association with Mr. Fullerton and Mr. Wilner) were not raised as a result of the respondent's letter, but rather emerged from other circumstances existing at around the same time. 27 It does not appear that those propositions were put in just those terms to the jury. However, in my opinion the possibility of those inferences does show that it was open to the jury to reason that an enquiry into the appellant's fitness had already been instituted by the Minister for Police at the time the respondent sent his letter to the Minister; the letter itself did not allege criminality or dishonesty, but its thrust was to assert there should be an enquiry; matters raised in the letter had all been heard before; since the publication was to the Minister, the only likelihood of harm was through either initiating or adding fuel to an enquiry; because the enquiry was already under way and because the matters that actually caused concern to Nevada arose from circumstances independently of the letter, the letter did not either initiate or add fuel to the enquiry; and therefore the circumstances of publication were such that it was not likely to cause harm. 28 In my opinion, there would be nothing in that line of reasoning inconsistent with the cases relied on by the appellant; and the availability of that line of reasoning is enough to preclude this Court from concluding that no reasonable jury could make the finding under challenge.

CONCLUSION 29 For those reasons, in my opinion the appeal should be dismissed. In those circumstances, the respondent has indicated it would not proceed with the cross-appeal, and neither party took objection to the proposition put to them by the Court that, in those circumstances, the appropriate orders were as follows: 1. Appeal dismissed with costs. 2. Cross-appeal dismissed, with each party to bear its own costs to the extent that the overall costs of the appeal and cross-appeal have been increased by the bringing of the cross-appeal. 30 BRYSON JA: I agree with Hodgson JA. **********

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.