Association of Quality Child Care Centres of NSW v Manefield

Background facts 4The appellant is an incorporated employers' association. Its primary function was to act as the employers' representative in industrial matters. The appellant operated through an Executive Committee of 10 members. The respondent was employed as the appellant's Executive Officer from 7 February 2006 to 16 May 2008. During the period of the respondent's employment, the President was Ms Lyn Connolly and the Vice President was Ms Vicki Skoulogenis. 5As part of his employment, the respondent was required to manage the appellant's staff, to provide the President with advice and support, and to represent the appellant at meetings with state and federal governments. The respondent, with the assistance of consultants, set up a database to identify members, the membership records at the time being in a "mess". During the time the respondent was employed by the appellant, membership increased from between 300-400 to around 650 members. 6Towards the end of 2007, the respondent became aware that the President and Vice President were concerned with the appellant's financial position. The respondent was called to a meeting to explain, amongst other things, why the cash reserves were so low. There were other issues concerning the publication of the newsletter and the employment of consultants. 7In early 2008, there were discussions between the appellant and equivalent associations in Victoria and Queensland as to the formation of a federal umbrella organisation. During the course of this discussion, the question arose as to an appropriate name for a federal body. The respondent said that he proposed the name "Early Learning Australia". However, according to the respondent, the President of Child Care NSW told him not to register "Early Learning Australia" as a business name for the proposed national body. 8On 9 May 2008, the respondent was called to a meeting with three members of the appellant's Executive Committee, the President, the Vice President and Ms Nesha O'Neill. The industrial advocate for the appellant, Mr Peter Rochford, was also present. Mr Rochford informed the respondent that he would be dismissed as he was not doing the work he had been employed to do. 9On the following Monday, 12 May 2008, the respondent wrote to the President, the Vice President and Ms O'Neill by email, stating that he accepted the validity of the criticism that had been made that he was not spending sufficient time raising revenue and needed to spend less time on managing staff. He suggested as a "way forward" an immediate audit of the current finances. On 13 May 2008, he received an email from "Lyn and Vicki" that indicated his employment relationship with the Executive Committee of the appellant had "irrevocably broken down". On 16 May 2008, the respondent received a letter in which the termination of his employment was confirmed. His termination pay was enclosed. 10After his termination, the respondent maintained his interest in early childhood learning and, in conjunction with others, decided to establish a company, limited by guarantee, that was to provide specific services in the area of child care. The company was registered under the Corporations Act 2001 (Cth) with the name "Early Learning Australia". 11On 4 July 2008 the respondent sent an email to the appellant, outlining the function and services Early Learning Australia intended to provide vis-à-vis established interstate associations. The email attached a draft letter that Early Learning Australia intended to send to other service operators. The email and the attached draft letter are set out below: Email: "Dear Lyn Early Learning Australia has been formed to support the development and improvement of integrated Early Learning Services that meet the needs of Australian children and their families. The idea of integrating different childrens services with playgroups and health professional services is not new. There are a number of places where this is already happening. These 'one-stop-shops' or 'childrens services hubs' have been operating for some time. As well, many Long Day Care centres have been networking with their local health professionals for many years. As a result, many children have benefited from early detection of developmental issues and their lives (and the lives of their families!) have been greatly improved. But all of this is ad-hoc and there is no national framework to ensure that such benefits reach all Australian children - not just the 21.1% of 0-5 year olds that attend Long Day Care centres. When the Prime Minister put up his proposal for the 2020 Summit in April this year, it was centred around Children and Families. Part of what he said was that his 'proposal for Australia in the year 2020 is to create universal, high quality, affordable Parent and Child Centres for all 0-5 year old Australian children. ... These Parent and Child Centres will bring together maternal and child health, long day care and preschool into one stop shops for parents with young kids. ... This model would require partnerships between Federal State and local governments as well as existing private and community service providers.' To give you a sense of how we intend to communicate this idea to the Early Learning services around Australia, I have attached a draft letter to service operators. I will call in the next few days to set up a mutually convenient time to meet with your Executive Committee to discuss the opportunities for working together. In the meantime, if you have any questions please call me on xxxxxxxxxx. Best regards Bruce Manefield Chief Executive Officer Early Learning Australia 'Focused on Children - Australia's Future'" Draft of Early Learning Australia Letter: "Dear Early Learning Professional I am writing to you to let you know about a new organisation that has been formed to support high quality Early Learning services in Australia. Early Learning Australia has been formed to support the development and improvement of integrated Early Learning Services that meet the needs of Australian children and their families. There are three key ways we plan to do that:

1. Firstly, by working with all levels of government to develop consistent national standards for all types of Early Learning. We also need to ensure that services are developed only where there is a real need. This will require a coordinated planning approach across all levels of government. This two pronged approach is essential to ensure that high quality, affordable are accessible to all Australian families in a way that communities can support.
2. Secondly, by providing services and products to Early Learning services all over Australia to make it easier for them deliver the high quality Early Learning programs that they do. These services and products will cover the necessities, as well as innovative items that will further enhance the Early Learning programs in these services/centres. We will use the buying power of 8000+ Early Learning services to obtain great deals from suppliers.
3. Thirdly, by developing systems and training for service operators to show them how to run multiple services types within their service and integrate those services with playgroups, health services and parenting support. An integrated Early Learning service could take many forms. However a simple way to define an integrated Early Learning service could be: A children's service providing a range of service type including preschool, long day care, family day care, before and after school care playgroups integrated with early childhood health professionals and parenting advice/support. Of course, we acknowledge that many children's services are already 'integrated' in terms of linking to other services such as health professionals and other groups such as playgroups. However, we do know that it can be very hard work to get through the bureaucratic obstacles that can come up when you try and organise a maternal health nurse from the local health service, to give one example. Often the ability to access these types of resources rests solely on the personal networks of the leadership of the service/centre - who, as we all know, are often stretched to the limit. Early Learning Australia believes that these support networks should be developed and supported at the national level by government and the health professional associations related to early childhood health. Early Learning Australia also supports the view that all types of Early Learning services need to work together to develop a strong voice on behalf of the children and families that benefit from attending their programs. That is why Early Learning Australia is a national organisation that welcomes members from any state/territory, any service type and any ownership type (ie community based or private). Those who engage in argument and derogatory comment based on state-based issues or whether a centre is privately owned or community owned are missing the point. Only if we all work together to advocate for changes to the current system that support Early Learning programs will we achieve a consistent, accessible Early Learning framework for all Australian children. Early Learning Australia exists to support that objective. We look forward to working with you. Yours sincerely Bruce Manefield Chief Executive Officer Early Learning Australia"

The defamatory publication 12On 7 July 2008, the appellant sent on its letterhead, to its members, the following letter (each paragraph is numbered so as to cross-reference it with the pleaded imputations): "Dear Child Care Operators, (1) As some of you may be aware, Mr Bruce Manefield is no longer in the position of Executive Officer of Child Care NSW. (2) A decision to terminate Mr. Manefield's services was taken by the Executive following a meeting between nominated representatives of the Executive and our Industrial Relations Advisor, Mr Peter Rochfort, with Mr Manefield on Friday 9 May, 2008. (3) Members should be advised that Mr Manefield remains under ongoing duty of confidentiality [sic, as in original] to the Child Care NSW in terms of information to which he has become privy by virtue of and during the course of his employment, relating to the affairs, both financial and commercial, of the Child Care NSW and its members. This information includes, but is not limited to, membership lists. We have reason to believe that Mr Manefield is in the process of contacting members, and we suspect that he is availing himself of confidential information in order to do so. (4) Members are advised to respond cautiously to any approach by Mr Manefield, or any person acting in connection with Mr Manefield, particularly given the legal ramifications which may arise. (5) Your Executive is conscious of the difficulties which Child Care NSW has faced over the past couple of years, which have impacted in one way or another on all of us. We are now taking the steps necessary to resolve this impact and to see Child Care NSW restored to the pre-eminent position it holds in the child care community. (6) The infrastructure of Child Care NSW and its ability to represent our membership effectively remains sound. However, in order to achieve our objectives, the Executive continues to rely upon the support of you, the membership. (7) There are a number of looming challenges, particularly given the priorities of the (relatively) new Federal Government. There is a lot of impetus being given to changing the regulatory basis, under which the industry operates, including, for example, the industrial framework. (8) We have at our disposal, the infrastructure, the resources and the personnel which will enable and equip us to face the challenges ahead far better than any alternative body, and we ask you not to be deluded into thinking otherwise. (9) We, the Executive, invite you to refer any contact from Mr Manefield, or any entity with which Mr Manefield is associated, to any member of the Executive, who will respond as necessary. (10) We are also contacting Mr Manefield directly to remind him of his legal obligations. Kind Regards Child Care NSW Executive Committee" 13The respondent was not informed by the appellant that it was proposing to or had sent the matter complained of to its members. He first learned of it on 10 July 2008 from Mr Colin Mead, a Director of Early Learning Australia, who had received it by email. The trial judge found that, on leaving his employment on 16 May 2008, the respondent had left his laptop in the office and had not retained any membership list or confidential material. 14In the course of discovery, the existence of a draft letter that the appellant had written, but not sent to the respondent, was disclosed. The respondent relied upon the draft letter to establish malice. The draft letter was as follows: "Dear Mr Manefield I have received your e-mail promoting the concept of Early Learning Australia (ELA). I place you on notice that Child Care New South Wales (CCNSW) requires you to immediately cease and desist from any further activity in the name of Early Learning Australia. By your doing so, it is our view that you are acting in breach of the confidentiality provisions which comprised part of the terms and conditions of employment with CCNSW insofar as you are using confidential information gained by you whilst in the said employ, information which is not otherwise available. The information being used clearly and unambiguously paraphrases decisions taken by CCNSW and others in meetings which were held privately and intended to be availed by the various Associations participating in the meeting, and not for the persons attending the meeting who were in attendance in order for them to fulfil their administrative responsibilities only. You are placed on further notice that unless we receive your unequivocal and irreversible undertaking that you will cease your soliciting child care operators in the way you are doing at present, CCNSW will commence legal action against [you] seeking to obtain an injunction restraining you from further activity which [is] in breach of your obligations to observe an ongoing duty of confidentiality, together with an order for payment [of] the costs involved in taking such action and for damages to the extent they are identified. Yours sincerely, (President) Child Care New South Wales"

The pleaded imputations 15The respondent brought defamation proceedings against the appellant alleging that in its natural and ordinary meaning the letter conveyed the following defamatory imputations: "(a) The plaintiff is an untrustworthy person prepared to use devious and underhand means to take members away from the defendant. (b) The plaintiff is a dishonest person prepared to deceive the defendant's members. (c) The plaintiff had attempted to deceive members of the defendant. (d) The plaintiff had breached the obligation of confidentiality which he owed to the defendant. (e) The plaintiff had breached his legal and contractual obligations to his former employer. (f) The plaintiff by his mismanagement and incompetence had damaged the standing of the defendant in the childcare community and created the difficulties which it had faced."

The pleading of damage, qualified privilege and malice 16The respondent contended that the appellant's publication damaged the respondent's credit and reputation, particularly as an employee and executive within the child care industry and accordingly claimed damages. The respondent also claimed aggravated damages relying on the falsity of the imputations and malice on the part of the appellant. The pleading in respect of malice insofar as it related to aggravated damages was as follows: "[The appellant] through its executives committee bore spite and ill-will towards [the respondent] and wished to hurt and harm him by publication of the matter complained of. [The respondent] relies upon the following matters: (i) [The appellant] knew the imputations ... were false because it knew that [the respondent] had not breached any obligation which he owed to [it]. (ii) [The appellant] published the matter in question in order to damage [the respondent] and through him a competitor of [the appellant] and reduce its standing in the childcare community. (iii) The matter complained of is inherently and intrinsically malicious." 17The appellant pleaded, by way of defence, qualified privilege at common law: see the Defamation Act 2005, s 24, in the following terms: "The matter complained of consisted of information and advice relevant to the internal affairs of [the appellant]. [The appellant] published the matter complained of pursuant to a duty which existed between it and its members to inform its members of matters affecting the operation of [the appellant], and pursuant to a common interest between [the appellant] and its members as to matters concerning the operations of [the appellant]. [The appellant] published the matter complained of pursuant to a duty to protect the financial and business interests of [the appellant] and its members." 18The respondent pleaded by way of reply that the publication was actuated by express malice. No particulars of malice were pleaded in the reply. However, as explained below, the respondent subsequently provided particulars of malice to the appellant.

Ground 1: his Honour erred in finding that the matter complained of carried each of the pleaded imputations 19The appellant challenged his Honour's finding in respect of each imputation. In doing so, the appellant accepted that his Honour had appropriately referred to the "ordinary reasonable reader test" stated in Farquhar v Bottom [1980] 2 NSWLR 380. In Farquhar v Bottom Hunt J, at 386, stated the "ordinary reasonable reader test" in the following terms: "This ordinary reasonable reader does not, we are told, live in an ivory tower. He can, and does, read between the lines, in the light of his general knowledge and experience of worldly affairs: Lewis v Daily Telegraph Ltd ([1963] 1 QB 340 at 374); Jones v Skelton ([1963] SR (NSW) 644; 80 WN 1061 at 650); Lang v Australian Consolidated Press Ltd ([1970] 2 NSWR 408 at 412). It is important to bear in mind that the ordinary reasonable reader is a layman, not a lawyer, and that his capacity for implication is much greater than that of the lawyer: Lewis v Daily Telegraph Ltd (supra at 277); Morgan v Odhams Press Ltd ([1971] 2 All ER 1156 at 1163); Lang v Australian Consolidated Press Ltd ([1970] 2 NSWR 408 at 412); Middle East Airlines Airliban SAL v Sungravure Pty Ltd ([1974] 1 NSWLR 323 at 340) ... " 20However, the appellant submitted that his Honour's application of the test was only partially correct, as he had over-emphasised the ordinary reasonable reader's capacity to read between the lines and draw implications. The appellant contended that the basis of this error was his Honour's failure to give sufficient consideration to the nature of the publication, a matter relevant to the way that it would be read by the recipients. The appellant argued that the fact that the matter complained of was written to members of an industry association meant that the recipients would be less inclined to read between the lines and to draw implications. They would read the matter complained of with care and not speculate. They would pay careful attention to its detail: see Amalgamated Television Services Pty Ltd v Marsden (1998) 43 NSWLR 158 at 165. In that case, Hunt CJ at CL, after referring to the ordinary reasonable reader test in terms similar to the above, then stated: "The reader of a book, for example, is assumed to read it with more care than he or she would read a newspaper. The more sensational the article in a newspaper, the less likely it is that the ordinary reasonable reader will have read it with the degree of analytical care which may otherwise have been given to a book, and the less the degree of accuracy which would be expected by the reader. The ordinary reasonable reader of such an article is understandably prone to engage in a certain amount of loose thinking ..." (citations omitted) 21Hunt CJ at CL reiterated, at 166, that it is the test of reasonableness that guides the court in determining whether an imputation has been conveyed. As his Honour stated: "In determining what is reasonable in any case, a distinction must be drawn between what the ordinary reasonable reader, listener or viewer (drawing on his or her own knowledge and experience of human affairs) could understand from what the defendant has said in the matter complained of and the conclusion which the reader, listener or viewer could reach by taking into account his or her own belief which has been excited by what was said. It is the former approach, not the latter, which must be taken ..." 22It is necessary to consider this complaint against his Honour's finding in respect of each imputation.

Imputation (a): "[the respondent] is an untrustworthy person prepared to use devious and underhand means to take members away from [the appellant]." 23This imputation was principally based upon paras (3), (4) and (10) of the matter complained of. At trial, the respondent had submitted that para (4) was an instinctive warning to members that they should respond cautiously to the respondent, it being suggested that he was ignoring his legal obligations and was untrustworthy. 24In determining whether imputation (a) was conveyed, Kirby J, at [59], analysed its content as follows: "° First, that [the respondent] had the objective of taking members away from [the appellant]. ° Secondly, that in doing so, he was prepared to use devious and underhand means. ° Thirdly, that [the respondent] was thereby demonstrated to be an untrustworthy person." 25His Honour considered that the matter complained of as a whole conveyed the impression that the appellant felt under threat. The matter complained of specifically stated that the appellant had faced difficulties over the past couple of years (para (5)) and that there were "looming challenges" ahead: para (7). His Honour considered it was apparent from para (8) and particularly, the concluding words of that paragraph, that the appellant had a fear of competition from an alternate body. In the context of the matter complained of, the "alternative body" was the respondent's proposed business venture, Early Learning Australia. 26Against that background, his Honour noted that the matter complained of stated that the Executive Committee believed that the respondent was in the process of contacting members and was using confidential information to do so: para (3). Members were advised to respond cautiously to any such approach given the legal ramifications that may arise: para (4). Members were advised to contact the appellant if the respondent contacted them and the appellant would respond as necessary: para (9). 27His Honour concluded, at [62], that the ordinary reasonable reader would infer that the respondent's object was to undermine and, ultimately, replace the association by attracting its membership. His Honour considered, therefore, that the first of the three elements that he had identified within the imputation had been established. 28His Honour then dealt with the second element, the means the respondent was prepared to employ to obtain his object. His Honour considered that notwithstanding the use of the word "suspected" in the matter complained of, he was satisfied it gave the clear impression that the respondent was using the confidential information to which he had had access during the course of his employment with the appellant. The matter complained of conveyed the impression that the respondent's unauthorised use of that information was deceitful and that he was acting improperly. 29His Honour noted the reference in para (4) to possible legal ramifications and the reference in para (8) that members ought not to be deluded into thinking the appellant had the wherewithal to face the challenges ahead, better than any other organisation. His Honour accepted that it was appropriate to describe the conduct of which the appellant accused the respondent as "devious" and "underhand". His Honour found, therefore, that the second of the elements in the imputation had been made out. 30His Honour considered that the third element was simply the product of the first two elements, namely, that the respondent was thereby demonstrated to be an untrustworthy person. 31His Honour concluded that imputation (a) had been made out. 32Although the appellant complained that his Honour had reversed the order of the elements of imputation (a), it did not make any substantive submission on that point. Rather, in respect of the first element identified by his Honour, the appellant's complaint was directed to the finding that the appellant had a fear of competition from an alternative body and his Honour's conclusion that the ordinary reasonable reader would have inferred that the respondent's purpose was to "undermine, and ultimately replace" the appellant. It contended that the ordinary reasonable member of the appellant would understand that the appellant was merely stating that it was capable of looking after the needs of its members and that statements to the contrary should not be accepted. 33The appellant's complaint in respect of the second element was that, in the absence of any identification of the "devious and underhand means" in the matter complained of, the ordinary reasonable reader would not have found that meaning to have been conveyed. The appellant also submitted that the use of the word "deluded" in the matter complained of was equivalent to "being fooled" and would have been understood as such by the ordinary reasonable reader. 34The appellant finally relied upon the absence of the word "untrustworthy" to ground the submission that the ordinary reasonable reader would not have understood the letter to have conveyed imputation (a). 35The matter complained of informs the appellant's members of its suspicion that the respondent was using unauthorised means to contact them. The taking of confidential information from a former employer is rightly characterised as "devious and underhand" and a person who did so would properly be said to be "untrustworthy". The question which arises is whether the matter complained of conveys that imputation. 36In my opinion, there was no error in his Honour's determination that imputation (a) was conveyed. Whilst in part the matter complained of used the language of suspicion rather than direct accusation, it did so in circumstances where it stated that a decision had been made to terminate the respondent's services and that he was under continuing confidential obligations arising out of his employment. There is then a stated belief that the respondent was doing something, that is, he was in the process of contacting members. That is followed by a stated suspicion that he was doing something wrong, that is, using confidential information to do so. The assertion that the appellant was doing something is the sting that elevates what is expressed as a suspicion to something more. The final sting comes in the use of the word "deluded" in para (8), a word that bears a meaning of "to mislead the mind of judgement of; deceive": see Macquarie Dictionary, fifth ed. 37The ordinary reasonable reader, who would be a member of an association whose function was primarily to act on the behalf of its members in industrial and other related matters, would not read it in the benign terms suggested by the appellant. An association member would read this letter carefully. The matter complained of bore a stronger meaning than that argued for by the appellant. It expressly stated that it had the infrastructure, resources and personnel to equip it to face the challenges ahead "far better than any alternative body". This was a statement to the membership that there was a competitor who would want to take away its business. This meaning is conveyed by the words that the reader should "not be deluded" into thinking that the appellant was not able to best represent the interests of members in the current, difficult and challenging environment. 38Contrary to the appellant's assertion that such a reader would not read between the lines or draw implications that might be adverse to the respondent, the ordinary reasonable reader of the matter complained of would understand clearly that the appellant was conveying that the respondent was prepared to use devious and underhand means: viz, accessing the appellant's confidential database, for his own purposes, which was a purpose detrimental to the appellant. Such a person would be considered by the ordinary reasonable reader to be untrustworthy. By accessing the database that allegedly contained confidential information, the respondent was breaching the trust imposed in him as the senior employee of the appellant. In my opinion, this was a communication directed to alerting the membership that there the respondent was engaging in inappropriate conduct of the kind alleged. 39It follows that the appellant has not made out its challenge to his Honour's finding that imputation (a) was conveyed.

Imputation (b): "[the respondent] is a dishonest person prepared to deceive [the appellant's] members." 40The trial judge, at [68], considered that imputation (b) contained two elements: "° First, that [the respondent] is a dishonest person. ° Secondly, and he is a person prepared to deceive the association's members." 41His Honour found that paras (3) and (4) of the matter complained of would have conveyed to the ordinary reasonable reader that the respondent was subject to an ongoing duty of confidentiality with respect to the appellant's financial and commercial information; that he was suspected of improperly using such information, which extended beyond membership lists; that he was going to be reminded of his legal obligations; and that there may be legal consequences with respect to his suspected conduct and members should act with caution if approached by him. The cumulative effect of these implications would have been "the firm impression that [the respondent] was dishonest". As his Honour noted, to have confidential information in his possession after the termination of his employment was dishonest. 42His Honour identified para (8) of the matter complained of as relevant both to dishonesty and the second element of being prepared to deceive the association's members. His Honour reiterated that para (8) "sets out the association's fear" that the respondent was speaking to members and that the respondent was "likely to spread misinformation or to lie to [the members]". His Honour also relied on the phrase "not to be deluded" to find that the ordinary reasonable reader would have perceived that the respondent "was prepared to deceive them as to the capacity of the association to deliver". 43In challenging his Honour's finding in respect of this submission, the appellant again focussed on the language used in the matter complained of and more particularly, upon the absence of the words "dishonest person" and "prepared to deceive" alleged in the imputation. 44The appellant submitted that the matter complained of did not convey anything more than the suspicion that the respondent was using confidential information and thus an "allegation" that he was using confidential information would not have been conveyed to the ordinary reasonable reader. The appellant also contended that the trial judge's statement at [70], that the appellant's "fear" that members were speaking to the respondent, was not conveyed to the ordinary reasonable reader. Further, the appellant contended that the phrase "we ask you not to be deluded into thinking otherwise" would not convey anything beyond being "fooled into thinking otherwise". 45Much of what has been said in relation to imputation (a) applies to this imputation. For the reasons already given, the ordinary reasonable reader of this publication would understand the publication to be a statement that the appellant was dishonest. The appellant stated to its members: "we suspect that he is availing himself of confidential information". It was not necessary for the appellant to make the direct allegation that the respondent was using the confidential information. The language used was, in my opinion, sufficient to convey the imputation that the respondent was dishonest. The reference to "deluded" in para (8) supported the imputation of dishonesty for the reasons his Honour gave. 46The ordinary reasonable reader of the matter complained of would also understand that the appellant feared competition from an alternative body. In the paragraphs leading up to para (8), the appellant was asserting its ability to restore itself to a "pre-eminent position" in the child care community and to deal with "looming challenges". In my opinion, his Honour was correct in finding that the appellant feared competition. The appellant submitted that the matter complained of conveyed that it was concerned and was reassuring its members of its ability to deal with present and future challenges in the industry. "Concern" and "fear" are variants of the same concept. To have a concern would usually be understood as being less serious than having a fear. However, given the strength with which the appellant made its statements in the matter complained of, I do not consider that his Honour's finding that the appellant feared competition was wrong. 47It follows that I would reject the appellant's submission that his Honour erred in finding that imputation (b) was conveyed.

Imputation (c): "[The respondent] had attempted to deceive members of [the appellant]." 48The trial judge considered that para (8) anticipated the respondent's modus operandi. The matter complained of suggested that, by "white anting" the appellant, the respondent would attempt to delude members into believing the appellant could not meet the challenges of the future. His Honour pointed out that the matter complained of stated that the Executive Committee had reason to believe the respondent "was in the process of contacting members": para (3). His Honour stated that this was an allegation that the process of deception had begun and that members should respond cautiously, given the legal ramifications that may arise: para (4). 49In oral submissions, the appellant dealt with imputations (b) and (c) together as the arguments that could be advanced in respect of each were essentially the same. The arguments are a repetition of the appellant's submissions in respect of imputations (a) and (b) and particularly, the ordinary reasonable reader would not understand the word "deluded" to mean "deceive". I have already rejected those arguments. I would likewise reject the appellant's challenge to this imputation having been conveyed.

Imputation (d): "[The respondent] had breached the obligation of confidentiality which he owed to [the appellant]."

Imputation (e): "[The respondent] had breached his legal and contractual obligations to his former employer." 50The trial judge dealt with these two imputations together. His Honour noted, at [75], that the respondent had relied especially upon the last sentence of para (3) in respect of imputation (d) and upon paras (3), (9) and (10) in respect of imputation (e). 51His Honour identified the three concepts involved in the imputations, namely, confidentiality, legal obligations and contractual obligations. There was express reference to the first and second of these in the matter complained of, but not to the third, that is, to contractual obligations. However, given that there was a reference to the respondent's course of employment, his Honour considered that the ordinary reasonable reader would understand that the respondent was under a contractual obligation to maintain secrecy. I agree with this analysis. 52His Honour next observed that there was no direct allegation that the respondent had breached any of those duties. However, his Honour concluded, at [78], that the ordinary reasonable reader would "assume that the Executive Committee had put 2 + 2 together": that is, that it was obvious what the respondent was doing and the Executive Committee had decided to remind him of his legal obligations. There was also the warning to members to be cautious in dealing with the respondent because of the legal ramifications that may arise. His Honour found, at [79], that the ordinary reasonable reader would take away the clear impression that the respondent had breached his obligations of confidentiality and his legal and contractual obligations to his employer. 53The appellant contended that the absence of any reference in the matter complained of to legal and contractual obligations owed by the respondent meant that "a forced and strained interpretation" would have to be applied for the ordinary reasonable reader to find it conveyed imputations (d) and (e). The appellant again relied upon the nature of the communication, namely, a letter from an association to its members, submitting that the ordinary reasonable reader would read the words according to their express terms and not inferred the appellant was stating anything more. 54In my opinion, the trial judge was correct for the reasons he gave. The matter complained of conveyed the meaning that the appellant had ascertained ("reason to believe") that the respondent was contacting members and was doing so by using the membership list. In other words the association had assumed, wrongly as it turned out, that the respondent had accessed the membership list. That is, "had put 2 + 2 together". If the list was confidential, this would be a breach of his obligation of confidentiality arising out of his employment and would accordingly involve a breach of contractual or legal obligations. Again, it is my opinion that the nature of the matter complained of made it less likely that the ordinary reasonable reader would understand the matter complained of in the way contended for by the appellant.

Imputation (f): "[The respondent] by his mismanagement and incompetence had damaged the standing of [the appellant] in the childcare community and created the difficulties which it had faced." 55His Honour noted, at [82], that imputation (f) addressed the respondent's "management and his incompetence" that were said to have two consequences: "° first, they had damaged the standing of [the appellant] in the child care community; and ° secondly, they had created the difficulties which [the appellant] had faced." 56His Honour considered that the reference in the matter complained of to a decision having been taken to terminate the respondent's services involved the use of strong language, particularly in circumstances where no explanation was given for his termination. His Honour considered that reading between the lines, the ordinary reasonable reader would understand from the matter complained of that the respondent's services had been terminated for incompetence or worse. His Honour considered para (5) would have reinforced the reader's understanding that it was likely the respondent's services had been terminated for incompetence. 57His Honour then noted that the matter complained of, having informed readers that the appellant's services had been terminated, and having referred to the difficulties it had faced over the last couple of years, then stated that it was now in a position to take the steps necessary to "resolve the impact" those difficulties had had upon it and to restore itself to the "pre-eminent position" it held. 58The appellant submitted that the matter complained of did not convey that the respondent, whilst Executive Officer of the appellant, mismanaged the appellant; carried out his duties and responsibilities incompetently; by being guilty of mismanagement and incompetence, had damaged the standing of the appellant in the child care community; or created the difficulties which the appellant faced. The appellant also submitted that the word "terminate" would not have conveyed any particular impression as to why the respondent had been fired. 59The appellant further submitted that if the Executive Committee had wished to convey to its members that it had terminated the respondent services for mismanagement and incompetence it would have said so expressly. That, with respect, would be unlikely. The defamation bells would have tolled even more loudly had it done so. 60In my opinion, para (5) clearly conveyed the imputation alleged. First, as his Honour pointed out, there was the earlier reference to the fact the respondent had been terminated. His Honour was correct in describing the word "terminate" as a strong word, particularly in the context in which it was used. An employee may resign, or be made redundant, or no longer be employed, et cetera. But to say that an employee is "terminated" as a result of a decision made by the Executive Committee of an organisation conveys that there was some reason relating to misconduct or incompetence. 61The appellant, in para (5), then referred to the "difficulties" experienced over the past couple of years. The difficulties were not identified, but in the context of the last sentence of para (5), they were difficulties that were either not properly managed or had been caused internally. The period in which these difficulties occurred was the period of the respondent's employment. As it was the respondent's job to manage the affairs of the appellant, the imputation was of mismanagement and incompetence. This meaning was reinforced by that part of para (5) that asserted the appellant was now taking the necessary steps to put its house in order. The use of the word "now" in that context was, in my opinion, deliberate, to contrast what was to happen now that the respondent was no longer managing the appellant's affairs. In my opinion, his Honour correctly found that this imputation was conveyed. 62It follows that ground 1 should be rejected.

Qualified privilege 63The trial judge, at [142], found that imputations (b)-(f) were communicated on a privileged occasion. However, in respect of imputation (a), he considered that there was neither a community of interest, nor a public interest, so the "umbrella of qualified privilege" should not extend to that aspect of the communication. Although his Honour thought that imputation (a) was irrelevant to the privileged occasion, he found it convenient to approach the issue of malice on the footing that all imputations "were published on a privileged occasion and relevant to that occasion". 64By his notice of contention, the respondent contended his Honour should have held that none of the imputations were published on an occasion of qualified privilege.

Principles relating to qualified privilege 65Neither party took issue with his Honour's statement of the principles that govern the defence of qualified privilege. The respondent's challenge was in respect of his Honour's application of the principle. 66The classic statement of principle is found in Toogood v Spyring (1834) 1 Cr M & R 181 at 193; 149 ER 1044 at 1050, per Parke B: "In general, an action lies for the malicious publication of statements which are false in fact, and injurious to the character of another (within the well-known limits as to verbal slander), and the law considers such publication as malicious, unless it is fairly made by a person in the discharge of some public or private duty, whether legal or moral, or in the conduct of his own affairs, in matters where his interest is concerned. In such cases, the occasion prevents the inference of malice, which the law draws from unauthorized communications, and affords a qualified defence depending upon the absence of actual malice. If fairly warranted by any reasonable occasion or exigency, and honestly made, such communications are protected for the common convenience and welfare of society; and the law has not restricted the right to make them within any narrow limits." 67Toogood has been adopted and applied without demur ever since. In Roberts v Bass [2002] HCA 57; 212 CLR 1, Gaudron, McHugh and Gummow JJ observed, at [62] 26: "The common law protects a defamatory statement made on an occasion where one person has a duty or interest to make the statement and the recipient of the statement has a corresponding duty or interest to receive it (Adam v Ward [1917] AC 309 at 334 per Lord Atkinson). Communications made on such occasions are privileged because their making promotes the welfare of society (Toogood v Spyring (1834) 1 CM & R 181 at 193 per Parke B). But the privilege is qualified - hence the name qualified privilege - by the condition that the occasion must not be used for some purpose or motive foreign to the duty or interest that protects the making of the statement." 68That "reciprocity of duty or interest is essential" was again emphasised in Bashford v Information Australia (Newsletters) Pty Ltd [2004] HCA 5; 218 CLR 366 at [9] 373. Both parties accepted that this case raises a question of reciprocity or "community" of interest. 69In the early decision of Howe & McColough v Lees (1910) 11 CLR 361 Griffith CJ (with whom Barton J agreed) explained what was involved in the notion of interest, at 369-370: "... With regard to the privilege founded upon what is called interest it is contended that the person who makes the communication and the person to whom it is made must have a common interest. 'Community of interest' is, I think, a more accurate term ... The term 'community of interest' does not connote a joint pecuniary interest in property. Any legitimate object for the exercise of human faculties pursued by several persons in association with one another may be sufficient to establish community of interest. Again: 'interest' does not mean an interest in the particular subject matter as to which the communication is made, but an interest in knowing the fact communicated ... in other words, an interest in the subject matter to which the communication is relevant, as for instance the solvency of a probable customer." 70O'Connor J observed, at 377: "The interest relied on as the foundation of privilege must be definite. It may be direct or indirect, but it must not be vague or unsubstantial. So long as the interest is of so tangible a nature that for the common convenience and welfare of society it is expedient to protect it, it will come within the rule." 71Higgins J, at 396-398, explained the nature of the "interest" required to attract the privilege as follows: "What kind of interest is required? It certainly is not any proprietary interest; it need not even be any pecuniary interest ... The truth seems to be that the word 'interest', as used in the cases, is not used in any technical sense. It is used in the broadest popular sense, as when we say that a man is 'interested' in knowing a fact-not interested in it as a matter of gossip or curiosity, but as a matter of substance apart from its mere quality as news." 72Whether the party publishing and the recipient of defamatory material have a relevant reciprocity of interest requires close attention to the circumstances of the case, the relationship of the parties and the events surrounding the publication. In Bashford Gleeson CJ, Hayne and Heydon JJ held, at [26], that the necessary reciprocity of interest existed because it was only those persons responsible for occupational health and safety who subscribed to the newsletter and the newsletter dealt only with that subject. The narrowness both of the subject matter of the publication and of the readership of the newsletter in which the defamatory matter was published were central to this conclusion. (Bashford was recently considered by this Court in Holmes a Court v Papaconstuntinos [2011] NSWCA 59 (presently on appeal to the High Court). The question in Holmes a Court was whether, when the defence of qualified privilege was claimed in respect of a voluntary publication, the defendant had to establish that there was a "pressing need" for publishing the defamatory matter. The question of "pressing need" was not argued in this case.) 73In Aktas v Westpac Banking Corporation Ltd [2010] HCA 25; 241 CLR 79, the plurality, French CJ, Gummow and Hayne JJ, in dealing with the principles relating to qualified privilege, stated at [22] 89: "In Justin v Associated Newspapers Ltd, Walsh JA said that the 'broad principle' underlying qualified privilege is that occasions exist in which it is desirable as a matter of public policy that freedom of communication should be given priority over the right of the individual to protection against loss of reputation. It also has been said that the categories (if there be utility in a system of categories) of occasions of qualified privilege are not closed and cannot be rendered exact. Cases of reciprocity, or as Griffith CJ put it, 'community of interest', supply a recognised category, which in turn has an indeterminate reference. The limits of that range of reference in a given case are to be placed by regard to the 'broad principle' identified by Walsh JA and to the remarks of Dixon J in Guise v Kouvelis as follows: 'But the very width of the principles governing qualified privilege for defamation makes it more necessary, in deciding how they apply, to make a close scrutiny of the circumstances of the case, of the situation of the parties, of the relations of all concerned and of the events leading up to and surrounding the publication.' (citations omitted) 74The question in Aktas was whether a mistaken dishonour of a cheque had occurred on an occasion of qualified privilege. Their Honours, at [26] 91, posed as the relevant question: "Was communication of dishonour of the cheques made on an occasion of qualified privilege? Was there an occasion where there was a duty or an interest in making and receiving the defamatory communications?" 75In answering that question, the plurality stated: "[31] In Andreyevich v Kosovich, Jordan CJ pointed out that in deciding whether society recognises a duty or interest in the publisher making, and the recipient receiving, the communication in question, it is necessary to 'show by evidence that both the givers and the receivers of the defamatory information had a special and reciprocal interest in its subject matter, of such a kind that it was desirable as a matter of public policy, in the general interests of the whole community of New South Wales, that it should be made with impunity, notwithstanding that it was defamatory of a third party'. An appeal to this Court (Latham CJ, Rich, Starke, McTiernan and Williams JJ) was dismissed for short reasons given orally by Latham CJ. [32] The point made by Jordan CJ may be put interrogatively, by adopting and adapting what Gummow J said in Bashford v Information Australia (Newsletters) Pty Ltd, so as to ask whether the particular relationship between Westpac and the persons receiving a notice of dishonour was one in which the advantages which the law deems are to be had from free communication within such a relationship should enjoy a significance over and above the accuracy of a defamatory imputation conveyed by a notice of dishonour, in this case that Homewise had issued a valueless cheque." (citations omitted) 76The plurality, at [39], referred to Davidson v Barclays Bank Ltd [1940] 1 All ER 316 where Hilbery J had stated, at 322: "... you cannot, by making a mistake, create the occasion for making the communication, and what the bank seek[s] to do here is to create an occasion of qualified privilege by making a mistake which called for a communication on their part." 77The plurality, at [40] 93-94, warned that this statement could not be construed as a statement of a general principle that an occasion of qualified privilege did not arise where the publisher had made a mistake. Rather, the question was: "... whether, as a matter of public policy, in the general interests of the whole community, qualified privilege should attach to the occasion of such a communication." 78Their Honours, at [41] 94, considered that the absence of a public interest in Aktas could be demonstrated by the absence of any reciprocity of interests between bank and payee. Whilst the bank had an interest in communicating the fact of a dishonour because it refused to pay, the payee had no interest in receiving notice of the dishonour of a cheque which was regular on its face, in circumstances where the drawer of the cheque had sufficient funds to meet its payment. 79Reference should also be made to Megna v Marshall [2010] NSWSC 686 (presently on appeal to the Court of Appeal) where Simpson J, at [50], in a convenient summary identified three issues that arise in determining whether a defence of qualified privilege at common law has been made out: "... a defence of qualified privilege at common law involves three strands of inquiry: ° identification of an occasion of qualified privilege by reference to all of the circumstances in which the communication is published, including, particularly, the subject matter of the communication: this involves the identification of a duty or interest in the publisher to communicate with respect to that subject matter, and the identification of a reciprocal interest in the recipient in receiving a communication with respect to that subject matter; ° determination whether the content of the communication was relevant, germane or sufficiently connected to that occasion or subject matter; ° (only if both occasion and relevance are established), determination whether ... the occasion was misused, or used for an ulterior or extraneous purpose, such as to give rise to a finding that the publisher was actuated by express malice." (original emphasis)

Trial judge's reasons in respect of qualified privilege 80In the present case, Kirby J, at [122], referred to the requirement specified in Aktas to carefully scrutinise: "... the circumstances of the case, of the situation of the parties, of the relationship of all concerned and of the events leading up to and surrounding the publication" and noted that he had dealt with the evidence at [10]-[52]. His Honour then summarised the following uncontroversial facts: "First, [the appellant] is an employers' association in New South Wales, representing the industrial interests of approximately 650 child care centres and long day centres throughout New South Wales (supra [1]). I infer that members pay an annual subscription. In return, they receive advice concerning the operation of awards and industrial issues. Presumably the association makes representation on behalf of members when awards affecting the child care industry are renegotiated. Secondly, [the respondent] was appointed as the Executive Officer of the association. He began work on 7 February 2006, having signed a written agreement (Ex E). He was appointed subject to a five month probation period. At the expiration of that period (nothing having been said to the contrary), he was confirmed in the job. He remained in the job a little over two years. Thirdly, the relationship between [the respondent] and the executive (principally the President, Ms Connolly, and the Vice President, Ms Skoulogenis) was not without its difficulties. In November 2007, [the respondent] became aware that there was dissatisfaction with his management. Meetings were arranged. Correspondence was exchanged and there were discussions in which the President and Vice President expressed concern about the association's financial viability. [the respondent] endeavoured to reassure the executive members with whom he was dealing, that there was no reason for alarm. Fourthly, one of the tasks undertaken by [the respondent] was to clean up the 'mess' concerning the membership database. When he was appointed it was not clear who the members of the association were. A consultant was hired. The problem was addressed. A database was developed that provided information concerning each member. The membership grew from approximately 400 members to approximately 650. Fifthly, in March/April 2008, [the respondent] attended a meeting with representatives of Child Care NSW, Child Care Victoria and Child Care Queensland, to discuss the possibility of a federal umbrella organisation. The name 'Early Learning Australia' was discussed and received support from those present. Sixthly, [the respondent], after the meeting, spoke to the President of Child Care NSW. He offered to register the name, Early Learning Australia, to secure it for the federal body, if it went ahead. The President told him that she did not like the name. She directed him to concentrate on other things. He did not speak to representatives of Victoria or Queensland. Seventhly, on 9 May 2008, [the respondent] was called to a meeting attended by a few executive members and Mr Rochford, an Industrial Advocate. He was told that he was not doing the job that he was employed to do. On 16 May 2008 his services were formally terminated. He left his laptop computer. He left the office. He did not take with him any confidential information. Specifically, he did not take a copy of the membership list that had been developed. Eighthly, [the respondent] was then unemployed. He met with a number of people in the child care industry with whom he had developed a relationship. The decision was taken to establish a federal corporation limited by guarantee, to provide specific services to child care centres to enable them each to operate as a 'multi-services hub', identifying and addressing children's learning needs. The corporation was registered under the name of Early Learning Australia. Ninthly, the new organisation planned a media launch on Friday 4 July 2008. In advance of the launch, [the respondent], on behalf of Early Learning Australia, wrote to organisations concerned with child care throughout Australia, including Child Care NSW. He suggested a meeting to discuss ways in which they could work together. He indicated he would contact them in the near future. He provided his mobile telephone number. Tenthly, on Monday 7 July 2008, without having met and without warning to [the respondent], [the appellant] despatched to its members the letter that is the matter complained of (Ex A)." 81The trial judge observed, at [129], that as there was no restraint of trade clause in the respondent's contract of employment with the appellant, he was not precluded from competing with the appellant following the termination of his employment. 82Notwithstanding these findings, his Honour held that the matter complained of was published on an occasion of privilege. In arriving at this conclusion, his Honour drew a distinction between the relationship that had existed between the bank and the person who had received notice of the dishonoured cheque in Aktas and, in this case, the relationship between the appellant and its members. His Honour observed that the association existed for the benefit of its members and that its members operated child care centres. The members, presumably, became members upon application and they paid annual subscription fees. His Honour identified the function of the appellant as being to advise in respect of issues relevant to the operation of child care centres and the association itself, especially industrial issues. His Honour noted that the relationship between the appellant and its members was ongoing. The Executive Committee was made up of persons from the industry who operated child care centres or long day care centres. The appellant had a small staff and its communications were confined to members. There was no suggestion of a broader dissemination. 83No one from the appellant was called to give evidence. Accordingly, there was no evidence that the appellant had information that the respondent had spoken to members and revealed his supposed ambition to set up an organisation in competition with the appellant and that in doing so, he would, illegitimately, take members from it. His Honour observed, at [136], that no one from the appellant gave evidence that, knowing the respondent as they did and reading between the lines of his letter of 4 July 2008, his true agenda was other than as stated in that draft letter. 84The trial judge, at [137], posed the following question for consideration: "What interest did members of the association have in receiving a communication that imputed that [the respondent] was a person prepared to use devious and underhand means to take members away from the association, when there was no evidence that he had such an objective?" 85His Honour accepted, at [137], that on the face of the respondent's email communication and the draft letter, there was no hint of competition. Rather, his Honour accepted from both the respondent's evidence, the email and draft letter that he intended to establish an organisation to complement and supplement child care associations. 86His Honour also considered that associations such as the appellant fulfil an important socio-legal role and existed to inform and assist members. In that context, his Honour considered it was desirable, as a matter of public policy, that freedom of communication should be given priority over the rights of the individual to protection against a loss of reputation. His Honour considered that this was the effect of Aktas, which in turn had referred to the principles stated by Walsh JA in Justin v Associated Newspapers Ltd [1967] 1 NSWR 61 at 75; (1966) 86 WN (Pt 1) (NSW) 17 at 32. 87His Honour concluded, at [140]: "There was a community of interests between the association and its members in notifying members that [the respondent] had been terminated. The delay in [notifying] his termination did not make such information irrelevant. There was also such an interest in the association communicating its suspicions and (reading between the lines) the imputation of its certainty, that [the respondent] was using confidential information. There was a community of interest in warning members that [the respondent] may be in contact with them and, were there such contact, that they should exercise caution because, in the association's view, he was of doubtful probity. Hence, the communication (Ex A) was made on a privileged occasion, and imputations (b) to (e) inclusive were relevant to that occasion." 88His Honour also considered that imputation (f) was arguably not relevant but could not be said to be truly unconnected with the subject matter or not germane and reasonably appropriate to the occasion: see Bashford v Information Australia (Newsletters) at [135] 415. For that reason, his Honour considered that that imputation was also covered by the privilege.

The parties' submissions 89The appellant submitted that the trial judge correctly came to the conclusion that the communication of the matter complained of occurred on an occasion of qualified privilege, namely, that the relevant community of interest existed between the appellant and its members. In support of its contention, the appellant outlined two reasons why the matter complained of was not a disproportionate response to the receipt of the respondent's draft letter. First, the appellant asserted that the respondent's draft letter indicated that the appellant's members would receive a letter to the same effect. Therefore the Executive Committee had reasonable cause to inform its members that the respondent had been terminated and that his communications were in no way connected with the appellant. 90Secondly, the matter complained of informed the appellant's members that the Executive Committee had a suspicion that the respondent was availing himself of confidential information. The appellant contended that the matter complained of was an "appropriate way" to respond to the perceived "need to protect itself from any harm" that may have been caused by the respondent speaking to the appellant's members in a disparaging manner. 91The respondent submitted that Aktas is authority for the proposition that there must be a proper factual basis for finding a reciprocity of interest. In addition, there had to be a special and reciprocal interest in the subject matter of the communication, which made it desirable, as a matter of public policy, that the communication should be made with impunity notwithstanding its defamatory content. 92The respondent submitted that this case was similar to Aktas, in that there was no duty, at the time that the appellant published the matter complained of, to inform members of the termination of the respondent's services. There may have been some interest in informing the members of his termination at the time that that occurred. However, that information was stale by July when the matter complained of was published. The respondent submitted that there was no interest at that point of time in receiving that information, so that it could be readily inferred that reference to it in the matter complained of had another purpose. 93The respondent accepted that his Honour's summary of facts and circumstances (see at [80] above) correctly identified the relevant facts and circumstances of the publication, but said that the following matters should be noted as to the ninth matter identified by his Honour. First, there was in fact no media launch on 4 July 2008. Secondly, the reference to "organisations concerned with child care throughout Australia" was a reference to the interstate bodies comparable to the appellant to whom the respondent had sent the draft letter. It was not a reference to the members of the appellant. The respondent said that from his recollection he had sent it to the South Australian and West Australian associations. In any event, the respondent's letter forwarded to the appellant was a draft only. 94The respondent contended that as the respondent's draft letter forwarded to the appellant under cover of the email of 4 July 2008 was not circulated to the members of the appellant, there was no occasion for the appellant to write the matter complained of. The respondent further submitted that it was apparent from the terms of the letter that his proposed organisation was not setting up in competition to the appellant. Rather, the respondent, through his organisation, was proposing to provide a different range of services to the child care industry. The difference in the services to be provided by his proposed organisation was apparent from the terms of his draft letter. That letter has already been set out in full and it is sufficient at this stage to refer only to the fourth paragraph which stated: "An integrated Early Learning service could take many forms. However a simple way to define an integrated Early Learning service could be: A children's service providing a range of service type including preschool, long day care, family day care, before & after school care playgroups integrated with early childhood health professionals and parenting advice/support." By contrast, the appellant was essentially an industrial organisation. 95The respondent acknowledged that at the meeting in March/April 2008 between representatives of the New South Wales, Victorian and Queensland associations, there had been discussion about the formation of a federal umbrella organisation. The name "Early Learning Australia" was canvassed at that meeting, although there was an issue as to whether the respondent had first thought of that name or whether another employee had done so. It was not necessary for his Honour to resolve that factual question, as he found the name "Early Learning Australia" was not confidential information, nor was it intellectual property developed by the respondent during the course of his employment using confidential information. 96The respondent contended that the appellant had ignored his draft letter and his invitation to respond to it and had communicated to its members on an issue of its own making. The respondent argued that there was no reciprocity of interest and no public interest in extending the privilege to the communication.

Did his Honour err in finding that the defence of qualified privilege had been made out? 97I have not found this question to be without difficulty. There is merit in the respondent's submission that, in circumstances where the respondent had not sent the draft letter, which was attached to his email to the appellant, to any of the appellant's members, there was no occasion for the appellant to communicate with the members in the terms that it did. 98However, in the end result, I have concluded that there was no error in his Honour's conclusion that the defence of qualified privilege had been made out. The defence of qualified privilege is predicated upon there being a defamatory publication: see Bashford at [135] 415. Provided there is the necessary reciprocity, in this case, of interest, the occasion of privilege is not lost. As his Honour found, the appellant had an interest in informing its members that the respondent's services had been terminated. The members had a corresponding interest in knowing who was responsible for the management and general administration of the appellant. The members were entitled to know of any change in that position. Thus there was a reciprocal interest in the appellant informing, and the members being informed, that the respondent was no longer the Executive Officer. The fact that there was a two month delay in this information being provided to the members did not deprive the occasion of its privileged nature. 99Likewise, the appellant had an interest in informing members, and the members had a corresponding interest in knowing, that the respondent had accessed confidential information and was likely to be in the process of contacting members and that they should be cautious of any approach by him. The fact that the information was both wrong and defamatory did not deprive the occasion of its qualified nature. The appellant also had an interest in assuring its members that it was able to adequately represent their interests in the child care industry. The occasion of privilege was not lost merely because the appellant defamed the respondent in seeking to protect and promote its own reputation.

Malice 100His Honour held that the occasion of qualified privilege was defeated by malice as the occasion had been used for an improper purpose, namely the stifling of competition, which his Honour found was the dominant purpose of the publication. His Honour rejected the appellant's submission that the matter complained of was published for the purpose of information to members upon matters in respect of which they had a community of interest.

Principles governing malice 101The principles governing malice are well established and were not in dispute. Thus, in Roberts v Bass the plurality stated at [79] 32-33: "As we have said, malice means a motive for, or a purpose of, defaming the plaintiff that is inconsistent with the duty or interest that protects the occasion of the publication. It is the motive or purpose for which the occasion is used that is ultimately decisive, not the defendant's belief in the truth of the matter. As Cotton LJ said in Clark v Molyneux: 'The question is not whether the defendant has done that which other men as men of the world would not have done, or whether the defendant acted in the belief that the statements he made were true, but whether he acted as he did from a desire to discharge his duty.'" (Citations omitted) 102Their Honours, in an earlier passage, at [76] 31, had given a fuller explanation of how malice operates to defeat the defence of qualified privilege: "Improper motive in making the defamatory publication must not be confused with the defendant's ill-will, knowledge of falsity, recklessness, lack of belief in the defamatory statement, bias, prejudice or any other motive than duty or interest for making the publication. If one of these matters is proved, it usually provides a premise for inferring that the defendant was actuated by an improper motive in making the publication. Indeed, proof that the defendant knew that a defamatory statement made on an occasion of qualified privilege was untrue is ordinarily conclusive evidence that the publication was actuated by an improper motive. But, leaving aside the special case of knowledge of falsity, mere proof of the defendant's ill-will, prejudice, bias, recklessness, lack of belief in truth or improper motive is not sufficient to establish malice. The evidence or the publication must also show some ground for concluding that the ill-will, lack of belief in the truth of the publication, recklessness, bias, prejudice or other motive existed on the privileged occasion and actuated the publication. Even knowledge or a belief that the defamatory statement was false will not destroy the privilege, if the defendant was under a legal duty to make the communication. In such cases, the truth of the defamation is not a matter that concerns the defendant, and provides no ground for inferring that the publication was actuated by an improper motive. Thus, a police officer who is bound to report statements concerning other officers to a superior will not lose the protection of the privilege even though he or she knows or believes that the statement is false and defamatory unless the officer falsified the information. Conversely, even if the defendant believes that the defamatory statement is true, malice will be established by proof that the publication was actuated by a motive foreign to the privileged occasion. That is because qualified privilege is, and can only be, destroyed by the existence of an improper motive that actuates the publication." (citations omitted) 103The onus on proving dishonesty is upon the plaintiff: Roberts v Bass at [97] 38-39. 104Hunt AJA, in Gross v Weston [2007] NSWCA 1, at [52], summarised the principles to be derived from Roberts v Bass in the following propositions: "In my opinion, the joint judgment in Roberts v Bass is authority for the following propositions relevant to the present appeal: (1) Except where the defendant was under a legal duty to publish the matter complained of, the defendant's knowledge that it was false is ordinarily conclusive evidence that the publication was actuated by an improper motive. (2) Recklessness in the publication of the matter complained of does not establish knowledge of its falsity unless it amounts to wilful blindness on the part of the defendant which the law equates with knowledge. (3) Recklessness - when present with other evidence - may nevertheless be relevant to whether the defendant had an improper motive which actuated the publication. (4) If a plaintiff's case rises no higher than evidence that the defendant did not have a positive belief in the truth of what he published, there is no evidence that its publication was actuated by an improper motive. (5) The absence of a positive belief in the truth of what was published may nevertheless be relevant - with other evidence - to whether the defendant's improper motive actuated the publication, but it will not establish that fact by itself. (6) Where the plaintiff relies on the defendant's knowledge of the falsity of the matter complained of to establish an improper motive, it is unnecessary to identify that improper motive, as there can be no proper motive in those circumstances unless the defendant has a duty to publish the matter complained of." 105More recently, French CJ, Gummow and Hayne JJ stated in Aktas, at [17] 88: "... 'actual malice' and 'express malice' identify a purpose or motive that is foreign to a privileged occasion and actuates the defamatory publication, so as to destroy what otherwise would be a defence of qualified privilege ..."

The trial judge's reasons on malice 106As is apparent from his Honour's acceptance of the respondent's case and the rejection of the appellant's case on malice, the parties identified diametrically opposed purposes for the publication of the matter complained of. The purpose identified by the respondent was the illegitimate purpose of stifling competition. His Honour described it as a pre-emptive strike against the respondent's proposed business venture. If the appellant's purpose succeeded, the effect would be to deny the members the benefits that Early Learning Australia was potentially in a position to deliver. The respondent contended that the appellant sought to achieve its purpose by blackening his name so that the appellant's membership would not deal with him. Should that occur, he would have lost a fundamental part of his potential constituency. 107The appellant contended that the purpose of publishing the matter complained of was to convey information of interest to its members. That information included that the respondent's services had been terminated and that the appellant had reason to believe that he was using confidential information to create an organisation that the appellant was seeking to set up in conjunction with equivalent interstate organisations. The appellant contended there was no objective to harm the respondent. Rather, its focus was upon protecting its own legitimate interests as it saw them. Any harm to the respondent was merely an incidental consequence of the communication. 108In finding that the appellant had acted for an improper purpose, his Honour made the following observations. First, it was not apparent from the evidence what role and function the proposed federal umbrella organisation was intended to have. Nor was there any attempt in the cross-examination of the respondent to establish that the services he was proposing to provide were the same as those intended to be provided by a proposed federal umbrella organisation. 109Secondly, there was no evidence that the appellant's Executive Committee believed the appellant had any legitimate claim or grievance in respect of the areas of proposed activity outlined in the respondent's draft letter of 4 July 2008. In any event, those ideas were not new. The Prime Minister had made policy statements directed to a multi-service hub for child care services. 110Thirdly, although one of the proposed services identified by the respondent in his draft letter was an idea he had sought to develop whilst Executive Officer of the appellant, that idea had not been adopted. It was, therefore, an area he was free to develop. His Honour found there was no confidentiality attaching to such a proposal and there could be no legitimate objection on the part of the appellant to the respondent pursuing that concept. 111Fourthly, although his Honour was prepared to accept that the appellant may have had a mistaken belief as to the confidentiality of its membership list, there were alternate reasonable responses that the appellant could have pursued. The most obvious response would have been a communication to the respondent or Early Learning Australia requesting an undertaking not to use the name. It would not have been expected that the appellant would write to the members in the terms contained in the matter complained of, unless its objective was to poison the minds of members against the respondent so that they would have nothing to do with his proposed business. As his Honour stated, at [170]: "... you would not have expected the association to write to its members in the terms it did unless its objective was to emasculate [the respondent's] company in advance of its projected launch, robbing it of its potential customer base." 112His Honour also considered that the delay between the termination of the respondent's services and the date of the publication of the matter complained of, also pointed to an improper purpose, notwithstanding his earlier conclusion that the delay did not negative the "community of interest" such that it was proper for the appellant to inform its members of the termination of the respondent's services. 113His Honour concluded, at [172], that the real purpose in sending the letter complained of was "not to inform". Rather it was to blacken the respondent's name so that the appellant's members would not deal with him. In this way, the appellant removed the threat of perceived competition from the respondent's proposed business.

Admissibility and relevance of Exh D 114At trial, the respondent tendered an undated letter (Exh D) as relevant to malice. He relied on it in particular in support of his argument that the matter complained of was intended to be a pre-emptive strike against his proposed business, Early Learning Australia. Exhibit D, which had been produced by the appellant as part of its discovery, is set out above at [14]. 115The appellant objected to the tender. In the course of argument in relation to its tender, his Honour observed that Exh D was apparently the letter anticipated in para (10) of the matter complained of, which stated that the appellant "was contacting [the respondent] directly to remind him of his legal obligations". His Honour admitted the letter subject to relevance. 116By ground 6 of the appeal, the appellant contended that his Honour erred in admitting into evidence and accepting Exh D as relevant to malice. In his oral submissions, this challenge was expanded to include a complaint that his Honour had not in fact ruled on the question of relevance. As Exh D was an aspect of the respondent's case on malice, it is convenient to deal with the admissibility question before considering the appellant's other challenges to his Honour's determination on malice. 117Initially, the appellant argued that Exh D was inadmissible and irrelevant to determine the state of mind and motive of the appellant at the time of the publication of the matter complained of for the following reasons: "a. First, the author of the letter was not identified; b. The purpose for which the draft was produced was not identified; c. The letter was never deployed; d. There was no evidence that any member of the executive of the Appellant saw the letter or was involved in its drafting; and e. There was no evidence that any member of the executive of the Appellant saw the letter prior to the publication of the matter complained of." 118Underlying the appellant's challenge to the admissibility of Exh D was a submission that a plaintiff can rarely establish malice merely from the words of the matter complained of, unless there was something about the publication itself which demonstrated malice, such as the use of extreme language. The appellant referred to Roberts v Bass as illustrative of this principle, where the plurality stated, at [103], 41: "Carelessness of expression or carelessness in making a defamatory statement never provides a ground for inferring malice. The law of qualified privilege requires the defendant to use the occasion honestly in the sense of using it for a proper purpose; but it imposes no requirement that the defendant use the occasion carefully. Even irrationality, stupidity or refusal to face facts concerning the plaintiff is not conclusive proof of malice although in 'an extreme' case it may be evidence of it. And mere failure to make inquiries or apologise or correct the untruth when discovered is not evidence of malice." (citation omitted) 119It followed on this argument that if Exh D ought not have been admitted into evidence, there was no evidence, other than the matter complained of, to support a finding of malice. The appellant argued that the language used in the matter complained of did not fall into the exceptional category from which malice could be established. 120Some of the appellant's arguments on the admissibility question were established to be without merit and thus can be dealt with quickly. 121The first argument was that Exh D had not formed part of the respondent's pleaded case on malice and therefore his Honour should not have allowed the respondent to rely on it at trial. This submission overlooked, first, the provenance of Exh D, namely, as a discovered document in the appellant's discovery process and secondly, the respondent's particulars of malice, which referred to the intended reliance on Exh D. The appellant withdrew the argument. 122The second argument revolved around the issue of authorship, raised in para (a): see at [117] above. The respondent submitted that authorship of both the matter complained of and Exh D had been established in answers to interrogatories. The same person was the author of both documents. Upon taking instructions, senior counsel for the appellant also withdrew this argument. 123The next argument related back to the submission that his Honour had never resolved the question of relevance of Exh D. Senior counsel submitted that if Exh D was not relevant, it was not admissible: Evidence Act 1995, s 55. It is correct that his Honour did not make any express ruling as to the relevance of Exh D. However, his Honour expressly referred to Exh D, at [155], in the course of dealing with the respondent's submissions on malice. At [173], his Honour stated that he accepted the respondent's arguments. Had his Honour considered that Exh D was not relevant, it is likely that he would, either when dealing with the respondent's submissions or in expressing his own reasons, given that indication. In my opinion, it is apparent that his Honour had determined that it was relevant. 124It should also be noted that subsequent to the admission into evidence of Exh D, subject to relevance, the appellant did not refer to it again, notwithstanding that the respondent expressly relied upon it in final address. The only indication of any challenge was the appellant's submission that there was no evidence to establish that, in publishing the matter complained of, the appellant was trying to stifle competition. 125In my opinion, the appellant failed to establish that Exh D was wrongly admitted into evidence, or that its relevance had not been determined.

New argument on the appeal 126This leads to a more fundamental issue raised by the appellant on the question of malice. Although raised as a separate ground: ground 3, it is connected to the argument relating to the admissibility of Exh D. 127Ground 4 contained two separate grounds, in the following terms: "(i) His Honour erred in finding malice against a corporate publisher without (a) Identifying who were the relevant individuals who possessed the malicious state of mind; (b) Drawing a connection between those individuals and the publication of the matter complained of; and (c) Making findings on what information was before the relevant individuals at the time the decision was made to publish. (ii) His Honour erred, when making the finding of malice against the Appellant, in failing to connect the state of mind of the officers of the Appellant responsible for the publication ..." 128These grounds link with the issues raised in (d) and (e) of the submissions relating to the admissibility of Exh D. 129Notwithstanding that the appellant conceded it could not maintain that the author of Exh D was not identified, (para (a) of its argument on admissibility), it maintained its argument in relation to para (d), namely, that that there was no evidence that any member of the Executive Committee had seen Exh D. The appellant also submitted that there was no evidence that any member of the Executive Committee had approved Exh D. The appellant submitted the words, "President, Child Care New South Wales" appearing at the end of Exh D were insufficient to draw an inference that the document had been approved, either by the President or the Executive Committee. 130These submissions were at the heart of the error alleged in ground 4, that when the question in issue was the state of mind of a corporation, it was necessary to identify the person said to have the guilty or dishonest mind: see Waterhouse v Broadcasting Station 2GB Pty Ltd (1985) 1 NSWLR 58 per Hunt J at 72: "It should not be overlooked that what the plaintiff has to prove is a state of mind on the part of the defendant when it broadcast the report of which complaint is made in these proceedings. The defendant is a company and as such has no mind of its own; its mind must consequently be found in the servants or agents who were responsible for that broadcast. Whatever may have been the state of mind of other servants and agents of the defendant, or of the servants and agents of an associated company, is wholly irrelevant to that issue." 131It followed on the appellant's submission that the respondent had not proved Exh D was evidence of the appellant's state of mind. 132Senior counsel for the appellant conceded that this point had not been raised at trial and that he was thereby confronted with the principle in Coulton v Holcombe [1986] HCA 33; 162 CLR 1. In that case, the Court reiterated, at 8, the principle established in University of Wollongong v Metwally (No 2) [1985] HCA 28; 59 ALJR 481 at 483: "It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so." 133The appellant submitted that in the circumstances of this case, the "elementary principle" did not apply. It submitted that had this issue been raised at trial, it would have been raised for the first time in closing addresses. At that point, the respondent's case would have been closed. On this scenario, there would have been no evidence to identify the relevant servant or agent of the appellant whose state of mind represented the state of mind of the appellant for the purposes of establishing malice. There was thus no relevant prejudice that would forestall this Court in allowing the argument to be raised. 134This submission misunderstands the principle cited in Coulton v Holcombe. A party does not have a right to raise a new point on appeal simply because the facts in controversy have been found by the trial judge. This is so notwithstanding that the appellate court is exercising a rehearing function: see the Supreme Court Act 1970, s 75A. Rather, it is a matter for the court to determine whether it is in the interests of justice and expedient to determine the new point: see Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631 at 645-6; Australian Native Landscapes Pty Ltd v Minogue [2010] NSWCA 279. The same principle applies, a fortiori, where a plaintiff has closed its case, in circumstances where a point is taken for the first time in final address. 135Even assuming that it would have been open to the appellant to raise this issue for the first time in final address, it did not do so. This is surprising to say the least, if it was seriously in issue, as the appellant now contends. Whilst defamation cases are characteristically tactically driven, they are also fact saturated. Had the appellant sought to raise this point in final address, the respondent may have sought leave to re-open. It would have been for the trial judge to determine whether to grant that leave. By raising this issue for the first time on appeal, the respondent has been deprived of that opportunity. The appellant is thus met by the "elementary principle" relating to raising new issues on appeal and I am not satisfied that it falls into the exceptional category of case where that principle is overridden. 136Finally, I do not accept that proof of the state of mind of the relevant person would only have arisen in final addresses. If the matter was in issue, it was more likely to have been raised at the time of the tender of Exh D. 137In my opinion, the appellant should not now be able to argue that the respondent failed to prove the state of mind of the appellant. That prohibition, however, leaves extant the argument made at trial that there was no evidence to establish that, in publishing the matter complained of, the appellant was trying to stifle competition.

Conclusion on malice 138Once it is accepted that Exh D was admissible, his Honour's finding that the appellant's letter was motivated by malice was correct. Even without reference to Exh D, his Honour's reasoning, especially at [170]-[171], is unassailable. A reasonable response to the respondent's email would have been a return communication to the respondent raising those matters about which the appellant had concern: viz, the suspected use of confidential member lists and the use of the name "Early Learning Australia". Likewise, using the occasion to inform the members for the first time that the Executive Committee had taken a decision to terminate the respondent's services, was also indicative that the appellant's purpose in writing the letter was "to blacken [the respondent's] name", as the trial judge found. 139Senior counsel for the appellant also conceded that it was open to his Honour to infer that the matter complained of was sent with the authority of the Executive Committee. Once this concession was made, I am of the opinion that the same inference may be drawn in respect of Exh D. There is a connection between the matter complained of and Exh D in the sense already explained, namely that it correlated with what was forecast in para (10) of the matter complained of. It should also be noted that no member of the appellant's Executive Committee gave evidence: see Jones v Dunkel [1959] HCA 8; 101 CLR 298. Accordingly, the Court is more readily able to draw the inference to which I have referred. 140For these reasons, I reject the appellant's challenge to his Honour's findings of malice.

Challenges to findings of fact 141The appellant also purported to challenge certain findings of fact of the trial judge: see the Uniform Civil Procedure Rules 2005, r 51.36(2). The challenges were essentially challenges to his Honour's findings that were central to his determination and were the basis of the challenges in the notice of ground of appeal. For example, the first challenge was to his Honour's findings that the imputations were conveyed. Accordingly, it is not necessary to deal with the appellant's Schedules 1 and 2. However, it should be noted that this was not a proper utilisation of r 51.36(2): see Hamod v State of New South Wales [2011] NSWCA 375 at [774].

Damages 142The trial judge awarded the respondent damages in the sum of $150,000 including aggravated damages. His Honour observed that an award of general damages served three purposes: compensation for harm to reputation, compensation for hurt to feelings and compensation for vindication of reputation by showing the falsity of the allegations made against him: Carson v John Fairfax & Sons Ltd [1993] HCA 31; 178 CLR 44 at 60-61. His Honour noted that the award operated simultaneously in respect of all three purposes: Carson at 72. His Honour also noted that pursuant to the Defamation Act, s 35(1) and (3), the maximum award for non-economic loss, absent circumstances that warranted an award of aggravated damages, was $311,000. His Honour also noted that upon publication of a defamatory matter, damage was presumed. None of these principles were in dispute. 143His Honour accepted that the respondent sustained damage to his reputation. This was so notwithstanding that the publication was to a limited and relatively small audience. However, this was the respondent's target audience if he was to have a future in the child care industry. Damage was demonstrated by the fact that the business that the respondent proposed to conduct under the name "Early Learning Australia" ground to a halt. The respondent gave evidence that prior to the publication there had been some enquiries of the business on the website but after publication that "basically trickled down to nothing". The respondent also gave evidence that persons spoke to him about the matter complained of, in one case, approximately two years after it had been sent to the members of the appellant. 144His Honour also accepted the respondent's evidence as to the hurt to his feelings. In this regard, the respondent gave evidence that he was "devastated"; that he had to stop doing what he was "passionate about"; that after the publication of the matter complained of, "basically everybody in New South Wales thought I was a dishonest person"; that he was "bitterly disappointed" that he was not able to commence his business because he thought he had "a lot to offer"; and because he was one of the few people in the industry who had "commercial background and experience" that would assist promoting the early learning sector at the government level. He thought that the matter complained of was "unfair" and was designed to stop him pursuing his career in the early learning sector. He said he was "frustrated and disappointed that [he] was being prevented from trying to do good things". He said this was particularly so, given that in his approach to the appellant he had offered to try to work together. 145His Honour next considered whether the appellant was entitled to an award of aggravated damages. His Honour noted that to justify an award of aggravated damages, the aggravating conduct of the defendant must be improper, unjustifiable or lacking in bona fides: Triggell v Pheeney [1951] HCA 23; 82 CLR 497. Such misconduct had to cause additional harm to the plaintiff. 146His Honour concluded, at [201], that the appellant's conduct in publishing the matter complained of "to ensure that [the respondent's] proposed corporation never became airborne, was unjustifiable". His Honour accepted that the imputations were false to the respondent's knowledge and that that increased his hurt. His Honour also accepted that the hurt was aggravated by the respondent's knowledge that the appellant had set out to harm him by its publication, which have been made without prior consultation with or warning to him. 147In addition, after the matter was set down for hearing, the appellant made an application to amend its defence to allege truth and to plead contextual truth. The imputations sought to be justified were that the respondent had breached the obligation of confidentiality that he owed to the appellant and that he had breached his legal and contractual obligations to the appellant as his former employer. The application to amend was refused. Nonetheless, the trial judge found that the application added to the respondent's annoyance and hurt. 148The appellant submitted that his Honour erred in his award of damages in the sum of $150,000 and submitted that an appropriate award in this case, including for aggravated damages, was not greater than $25,000. In support of that submission, the appellant contended that the trial judge made the following errors. 149First, his Honour erred in taking into account in the assessment of general damages the fact that the respondent's proposed business was "stillborn", in circumstances where there was no claim for economic loss or special damages. 150Secondly, his Honour failed to take account or give sufficient weight to the following matters in his assessment of general damages: (a) that there has to be a rational relationship between the harm suffered and the amount of damages awarded: Defamation Act, s 34; (b) that there was no actual evidence that the respondent's reputation had been damaged; (c) that except for the failure to pursue the proposal to establish "Early Learning Australia" there was no evidence of the respondent being shunned and avoided; and (d) the fact that the respondent called no person close to him such as his wife or immediate family member to give evidence of the impact upon him of the matter complained of. 151The respondent submitted that the challenge to the award of damages should be dismissed as no error had been demonstrated in his Honour's discretionary award: see House v R [1936] HCA 40; 55 CLR 499. He pointed out that the damage to him was profound given the audience to whom the matter complained of was published, namely, the very group to whom the respondent had proposed to direct his business activities: see Reader's Digest Services Proprietary Ltd v Lamb [1982] HCA 4; 150 CLR 500 where Brennan J stated, at 507: "In making its assessment [of damages], a jury is properly assisted by evidence that the making of the defamatory imputation ... had an especially adverse impact upon the plaintiff's reputation in the eyes of some group or class in the community." See also Crampton v Nugawela (1996) 41 NSWLR 176, especially per Handley JA at 198 ff. 152In my opinion, his Honour's award of damages was generous and at (but not beyond) the upper end of the range of compensatory (including aggravated) damages which could legitimately have been awarded in the circumstances. After all, the matter complained of had a significant impact upon the respondent and, it may be inferred, given that enquiries to the Early Learning Australia's fledgling website dried up, to his reputation as an honest and competent operator in the child care business. I am therefore of the opinion that no error has been shown in his Honour's assessment, which involves the exercise of a wide discretion, to justify appellate intervention. His Honour was clearly impressed by the respondent as a witness and was entitled to accept his evidence as to hurt to his feelings and that his reputation had been damaged. Accordingly, I would dismiss this ground of the appeal. 153I propose the following order: Appeal dismissed with costs. 154McCOLL JA: I agree with Beazley JA. 155TOBIAS AJA: I agree with Beazley JA.

Amendments 08 May 2012 - "High Court" amended to "Court of Appeal" Amended paragraphs: 79 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. Decision last updated: 08 May 2012