Australian Chinese Community Association of New South Wales Ltd v Pun

District Court of NSW|2017-03-09

New South Wales Court of Appeal, 30 July 1998, unreported) Royal Society for the Prevention of Cruelty To Animals New South Wales v Mal Davies [2011] NSWSC 1445 Sergi v Australian Broadcasting Commission [1983] 2 NSWLR 669 Sungravure Pty Ltd v Middle East Airlines Airliban SAL (1975) 134 CLR 1 The Mekong Club v 2KY Broadcasters Pty Ltd (Supreme Court of New South Wales, 30 April 1996, unreported) University of Salford v Duke [2013] EWHC 196 Vacik Distributors v ABC [2000] NSWSC 732 Viney v TCN Channel Nine Pty Ltd [2006] NSWSC 1273 Texts Cited: Brown, Law of Defamation: Canada, United Kingdom, Australia, New Zealand, United States 2nd. Ed. (Carswell, 2017) Poynder, "Literary Extracts", 1844, vol 1 Category: Procedural and other rulings Parties: Plaintiff: Australian Chinese Community Association of New South Wales Ltd First Defendant: Anthony Pun Second Defendant: Maggie Wu Third Defendant: Daphne Lowe Fourth Defendant: Peter Yau Kwok Wong Fifth Defendant: Maria Chan Sixth Defendant: Phil Chau Seventh Defendant: Man Yee Leanfore Eighth Defendant: Min Xian Huang Representation: Counsel: Plaintiff: Mr M Richardson First, Second, Fifth, Sixth and Eighth Defendants: Mr Y S Chen Third, Fourth and Seventh Defendants: Ms L Evans

The application before the court

These are proceedings for defamation for publication by the defendants of a letter to Mr Chris Hayes MP, the member for Werriwa. The matter complained of (portions of which are set out in a schedule at the end of this judgment) is stated to have been sent to Mr Hayes because he employ a Mr Wong, who is asserted to have some association with the plaintiff ("ACCA"), an organisation "in turmoil" over the past eight months, details of which are then set out.
The defendants challenged the form and capacity of the imputations pleaded and on 15 December 2016 McLoughlin SC DCJ set that application down for hearing on 9 March 2017. These are reasons for my rulings in relation to the form and capacity of the imputations pleaded.
Before the argument commenced, Ms Evans sought an adjournment of her clients' form and capacity arguments in order to bring an application for summary dismissal as an abuse of process on the principles set out in University of Salford v Duke [2013] EWHC 196. My reasons for refusing that application are set out at the end of this judgment.

The imputations pleaded in the statement of claim

The current statement of claim (served on the defendants on 6 December 2016 but not filed until 6 March 2017) sets out the following imputations (at paragraph 5): 1. --- 1. The plaintiff is an organisation in crisis, whose funds are repeatedly misappropriated and whose staff and members and routinely mistreated; 2. The plaintiff is an organisation crippled by an incompetent Board and staff and by inadequate financial controls and supervision; 1. The plaintiff is so dysfunctional an organisation it warrants investigation by numerous government agencies; 2. The plaintiff breached its duties to the government by spending $20,000 of government grants on staff bonuses; 3. The plaintiff is a publicly funded organisation whose Board members misappropriated $6,000 of its funds to give to groups of members to buy votes; 4. The plaintiff is a publicly funded organisation whose Board members misappropriated its funds by transferring $3,000 to a private bank account of the Secretary without a proper invoice or quotes; 5. The plaintiff is a publicly funded organisation whose Board members misappropriated its fund by spending them on legal advice for personal matters; 6. The plaintiff is a publicly funded organisation whose Board members have attempted to stack its membership list; 7. The plaintiff is an organisation in which mature aged female members are routinely bullied, intimidated and harassed; 8. The plaintiff is so dysfunctional an organisation that a female staff member hired by the GM without panel interview or Board approval could embezzle $240,000 of the plaintiff's funds, without any explanation being provided to the Board; 9. The plaintiff is so dysfunctional an organisation that the President of the Board has acquiesced to the harassment of a senior staff member by the General Manager; 10. The plaintiff is such a disgraceful organisation that any person with a future interest in public office should not serve on its Board.

The tests to apply to challenges to imputations

The test to apply to challenges to capacity in a r 28.2 separate trial (r 28.2 Uniform Civil Procedure Rules 2005 (NSW) ("UCPR")) is set out in Corby v Allen & Unwin Pty Ltd [2014] NSWCA 227. The principles of law, and the relevant test to apply, relate to the capacity of imputations to arise "of and concerning" each of them, to use the words of the headnote summary. The words "of and concerning" the plaintiff and the test in Corby v Allen & Unwin Pty Ltd generally do not require further explanation but, in light of certain submissions made by the defendants, it is helpful to set these out in more detail than would otherwise be the case.
Although care must be taken to consider multiple plaintiffs individually, an imputation may be conveyed of one or more plaintiff. Unlike the present case, in Corby v Allen & Unwin Pty Ltd there were multiple plaintiffs, and one of the questions was which imputations were conveyed in relation to which plaintiff. This demonstrates the importance of sheeting home each imputation pleaded to the party (or each of the parties) pleading it, as an imputation that is not conveyed "of and concerning the plaintiff" cannot be conveyed as all. However, where there is only one plaintiff, and there are also imputations conveyed concerning other persons who have not commenced proceedings, that does not mean that the imputations cannot also be conveyed of and concerning the plaintiff who has commenced proceedings.
When carrying out this exercise, it is important to note that the capacity of imputations may be a matter of general impression, rather than depending upon a close and careful reading of the matter complained of. Where the matter complained of is written in a sensational tone and is suggestive that there is more to the story, the court may be more ready to find that an imputation is reasonably capable of being conveyed. In Corby v Allen & Unwin Pty Ltd the Court noted that the reader was invited to adopt "a suspicious approach" (at [152]) by the insinuations and suggestions of the matter complained.
Finally, the exercise is one of generosity, rather than parsimony, in relation to the capacity of imputations at a separate trial level (at [135]). The reasons for the Court of Appeal setting aside the first instance judge's rejection of certain imputations by reason of the "whole tenor" of the matter complained of (at [154]) are of particular relevance here. I particularly note the following instructions to judges at [133]-[138]: "[133] The judge's function at the capacity stage is to determine "the outside boundaries of the possible range of meanings and [set] the 'ground rules' for the trial": P Milmo and WVH Rogers, Gatley on Libel and Slander (11th ed 2008, Sweet & Maxwell) ("Gatley"), at [3.13] (see also [32.5]) citing Mapp v News Group Newspapers Ltd [1998] QB 520. [134] That standard by which the issue of law raised by the separate trial was to be determined was addressed in Favell v Queensland Newspapers Pty Ltd [2005] HCA 52 ; (2005) 79 ALJR 1716 ("Favell") where the plurality (Gleeson CJ, McHugh, Gummow and Heydon JJ, Kirby J generally agreeing) approved the following statement by McPherson JA in the Court of Appeal: Whether or not [the pleading] ought to and will be struck out [as disclosing no cause of action] is ultimately a matter for the discretion of the judge who hears the application. Such a step is not to be undertaken lightly but only, it has been said, with great caution. In the end, however, it depends on the degree of assurance with which the requisite conclusion is or can be arrived at. The fact that reasonable minds may possibly differ about whether or not the material is capable of a defamatory meaning is a strong, perhaps an insuperable, reason for not exercising the discretion to strike out. But once the conclusion is firmly reached, there is no justification for delaying or avoiding that step [at] whatever stage it falls to be taken. (Emphasis added) [135] Accordingly, the capacity determination is "an exercise in generosity not parsimony"; while it involves a "matter of impression … the impression is not of what the words mean but of what a jury could sensibly think they meant": Berezovsky (at [16]) per Sedley LJ delivering the judgment of the court. Implicit in Sedley LJ's observation, is that the question of course is "what a jury could sensibly think [the words] meant" to the ordinary reasonable reader. [136] One reason "great caution" is mandated at the capacity stage, is because the conclusion which necessarily underpins a determination that the matter complained of is not capable of conveying the pleaded imputations is that "no reader could reasonably understand the words to bear any meaning outside the range delimited … by the judge; and that it would be 'perverse' for any jury to do so": Jameel v Wall Street Journal Europe SPRL [2003] EWCA Civ 1694 ; [2004] EMLR 89 ("Jameel") (at [9]) per Simon Brown LJ (Mummery and Mance LJJ agreeing). [137] Thus, the focus should be on the fact that the decision deprives the plaintiff of the opportunity to present his or her case to the jury, the importance of whose constitutional role in this area as representatives of the community is frequently emphasised: see John Fairfax Publications Pty Ltd v Rivkin [2003] HCA 50 ; (2003) 77 ALJR 1657 ("Rivkin") (at [2]) per Gleeson CJ (who also agreed with Callinan J); (at [184]) per Callinan J. The significance of the jury's role warrants the application of a "high threshold of exclusion": Jameel (at [14]) per Simon Brown LJ [138] In Favell (at [14]-[15]), the plurality appeared to apply a capacity test which asked whether challenged imputations "could reasonably be found by a jury". This is the test adopted in this court: see Marsden (at 164) per Hunt CJ at CL (Mason P and Handley JA agreeing); Griffith v John Fairfax Publications Pty Ltd [2004] NSWCA 300 (at 19); Malcolm v Nationwide News Pty Ltd [2007] NSWCA 254; (2007) Aust Torts Reports 81-915 (at [14]) per Beazley JA (Basten JA and McClellan CJ at CL agreeing). It is consistent with the test applied when determining generally whether a case should be left to a jury: see Naxakis v Western General Hospital [1999] HCA 22 ; (1999) 197 CLR 269 (at [16]) per Gaudron J; (at [45]) per McHugh J; (at [66]-[67]) per Kirby J; cf Gleeson CJ (at [1]); Callinan J (at [117]-[123]). Naxakis concerned the test to be applied when directing a jury at the close of evidence to enter a verdict in favour of the defendant. Whether or not the Naxakis approach is strictly that which should be applied at a capacity determination was not argued. In any event the court is bound to follow Marsden."
As I have set out in my reasons for rulings below, this is where the generalised submissions made by the plaintiff to any imputation pleaded by the plaintiff being incapable of arising fell into error. This question needs to be addressed in relation to each imputation, and the exercise is one of generosity, and not parsimony.
Finally, any challenge to the capacity of the matter complained of to convey one (or all) of the imputations pleaded must be determined in accordance with these principles (as the highlighted portion of [134] above makes clear, the judge must take this step), and not recent English authority on proportionality issues. This means that the first step in the proceedings is to identify the imputations and whether each of those pleaded arises of and concerning the plaintiff.
The relevant principles in relation to challenges to the form of imputations are summarised by Beach J in Gant v The Age Pty Ltd [2011] VSC 169 at [40] as follows: "[40] Many authorities have dealt with the rules relating to the pleading of imputations. Whilst whether an imputation has been properly pleaded is to be determined as a matter of practical justice, the following propositions emerge from the authorities: (a) First, distinct meanings should be pleaded - and the test for distinctiveness is whether the evidence required to justify each meaning would be substantially different. (b) Secondly, distinct meanings should be distinctly pleaded - because of the potential for a rolled up plea to cause confusion. (c) Thirdly, an imputation must express the precise act or condition asserted of or attributed to the plaintiff or of which the plaintiff is charged. (d) Fourthly, an imputation should represent the final distillation of the alleged defamatory meaning."
In the present case, the objections taken include complaints that the imputations are "rolled up" and contain more than one sting, or are so vaguely phrased as to be ambiguous. I note, however, that one challenge made on behalf of the defendants has no basis, namely the imputations are in passive form, an objection rarely raised after the peremptory dismissal of such an objection by the New South Wales Court of Appeal in Sergi v Australian Broadcasting Commission [1983] 2 NSWLR 669 at 671 per Hutley JA ("This is not a valid reason"). These objections were, however, abandoned during the argument.
The appropriate manner in which to plead imputations containing an act or condition of a company is central to the determination of the form and capacity of the imputations pleaded, so I will commence with a consideration of the relevant principles.

Form and capacity issues where the plaintiff is a company

While corporations "have neither bodies to be punished, nor souls to be condemned" (Edward, First Baron Thurlow, cited in Poynder, "Literary Extracts", 1844, vol 1), they have reputations which may be tarnished. In The Mekong Club v 2KY Broadcasters Pty Ltd (Supreme Court of New South Wales, 30 April 1996, unreported, at pp. 5 - 6), Levine J noted the following helpful analysis by Hunt J of imputations capable of arising in relation to a corporate body: "I do not agree that the ordinary reasonable viewer must be taken as realising the distinction in law between a corporate structure and those who are its directing mind and will; cf Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd (1915) AC 705 at 713; Tesco Supermarkets Ltd v Nattras (1972) AC 153 at 170-171. They may have done so, but that is a jury question. A trading corporation may be defamed by an imputation which reflects upon the dishonest or improper way in which it conducts its business: South Hetton Coal Co Ltd v North-Eastern News Associated Ltd (1894) 1 QB 133 at 139; Barnes v Sharpe (1910) 11 CLR 462 at 474, 478-479, 485-486."
Although corporate bodies have no personal reputation entitlement to claim hurt feelings (Kingsfield Holdings Pty Ltd v Rutherford [2016] WASC 117 at [422]; ABC v Comalco Ltd (1986) 12 FCR 510), a company in business may maintain an action for defamation where the imputations arising relate to the company's conduct of its affairs by questioning, for example, its competence or honesty (Chinese Herald Ltd v New Times Media Ltd [2004] NZLR 749), or assail its management, business methods or violation of the law (Royal Society for the Prevention of Cruelty To Animals New South Wales v Mal Davies [2011] NSWSC 1445 at [34] - [42]; see generally Brown, Law of Defamation: Canada, United Kingdom, Australia, New Zealand, United States 2nd. Ed. (Carswell, 2017) at 4.3(b)(iv)). That can include an entirely passive imputation, such as portraying an airline being hijacked by terrorists, if it suggests that the airline is unusually vulnerable to hijacking: Sungravure Pty Ltd v Middle East Airlines Airliban SAL (1975) 134 CLR 1.
There must, however, be a connection between the act or condition and the company. For example, it is not defamatory to say of a corporation such as a bank that it had been providing help to Al Qaeda terrorists where there was no suggestion of corporate knowledge (as opposed to that of some individual) in the matter complained of (Al Rajhi Banding & Investment Corp v Wall Street Journal Europe SPRL [2003] EWHC 1358 (QB); Ma Ching Kwan v John Fairfax Publications Pty Ltd (New South Wales Court of Appeal, 30 July 1998, unreported, at p. 9). Whether or not an imputation of corporate knowledge or activity arises will depend upon the terms of the matter complained of.
The defendants initially challenged whether defamatory imputations can arise in relation to a company at all. For the reasons set out above, this submission is misconceived. In their letter dated 1 March 2017, the solicitors for the plaintiff made this point by listing a series of defamation proceedings where a corporation has been awarded damages.
Ms Evans's response to this submission is that the plaintiffs in those cases were awarded damages only because the director or some other person had also sued (for example, Vacik Distributors v ABC [2000] NSWSC 732), and that this was the only basis upon which imputations of and concerning the company also arose. This is also incorrect. First, it is not necessary for an individual to sue as well as the company for imputations about the company to arise and second, imputations must arise "of and concerning" each of the plaintiffs in such a case.
A good example of a case where the imputations were all about the director and not about the company may be seen in Fakhoury & Anor v John Fairfax Publications Pty Ltd [2003] NSWSC 561. Both the director and the company both brought proceedings for defamation. In the course of the capacity argument, Levine J struck out the claim by the company entirely, on the basis that no imputations were conveyed of and concerning the company, noting: "[5] It is appropriate to deal with the first objection taken by the defendant. Simply stated, it is that this matter complained of is incapable of carrying any imputation of the second plaintiff, the company Prestige Cranes Pty Ltd. There is a reference at lines 24 - 25 of the article capable of referring to the second plaintiff "Prestige Cranes", and possibly at lines 30-33. It is submitted that the latter reference does not seem to have any particular relevance. I add that no conclusion can be drawn that the company referred to in the second extract is in fact the second plaintiff. There is no other reference in the matter complained of to the second plaintiff. It is submitted that this material, taken at its highest, as part of the whole of the matter complained of and the matter of course itself, is incapable of carrying any imputation of the corporate plaintiff. There is no suggestion that the company itself was responsible for any of the conduct which was the subject of the evidence of the Royal Commission. [6] The article makes clear that the first plaintiff owns the second plaintiff (line 24). As was submitted for the plaintiffs it is implicitly stated that the second plaintiff was a company engaged in building and construction. One would have thought from the name of it, especially in context, that it was quite clear. It was also suggested that lines 2 - 4 indicate that the first plaintiff's company had participated in the Angel Place building project. The only thing I am prepared to say about that component of the plaintiffs' submission is that leaving aside "unprescribed Viagra", which can only relate presumably to persons rather than corporate entities, "extortion and intimidation, money laundering and pay-offs" are generalised and could be described as "species neutral". [7] It was next submitted for the second plaintiff that if the acts of the first plaintiff are not imputed to the second plaintiff (possibly on an alter-ego basis) then the reference to the second plaintiff in the article is meaningless. [8] I do not consider it an aid to the determination of whether or not this whole article is capable of defaming the corporate plaintiff to ask a question to the effect "well, why is this corporate plaintiff mentioned?" That question could lead to endless speculation, rational and irrational, reasonable and unreasonable. However, the second plaintiff is mentioned, that is the factor of importance. Speculation as to why it is mentioned cannot answer the primary question. I reject the submission that the clearly asserted connection between the first and second plaintiffs in line 24 (which is no more than that the first plaintiff was the owner of the second) leads to an "irresistible inference" that references to the first plaintiff are references to the second. [9] A fair and reasonable reading of this short piece on a reasonable basis, points to the involvement of "persons" in the various activities to aid other "persons", rather than corporate entities. [10] I hold that the matter complained of is incapable as a matter of law of carrying imputations 4(f) - (j) and will enter a verdict for the defendant in respect of each of them."
Although Ms Evans did not refer to this decision, it is directly in point. If, on a capacity basis, imputations do not arise of and concerning the company which brings these proceedings (ACCA), that is the end of its claim, whether other persons have sued or not. However, the separate determination of capacity needs to proceed for any such ruling to be possible.
There can be no doubt that, in an appropriate case, where a corporation pleads imputations which are not reasonably capable of being conveyed, whether the director sues or not, those imputations can be struck out and, if no other imputations are capable of arising, that may be the end of the proceedings. What the court cannot do, however, is to deny a corporation (or a person) about which (or whom) imputations may be capable of being conveyed to bring a claim because another person (or corporation) is the main target and that person (or corporation) has not sued. This is where the principles of proportionality applied by Eady J in University of Salford v Duke depart from the law in Australia, where the concept of significant harm has no place in defamation law.
In University of Salford v Duke, defamation proceedings were commenced by the University of Salford against an academic, Dr Duke. The publication in question was a lively criticism of university academics as "big-wigs" and a "load of old bill-hooks", in which reference to the University of Salford was considered by Eady J to be "incidental". The proceedings brought by the university were struck out, not because of the absence of any imputations, but in accordance with the principles outlined by the Court of Appeal in Jameel (Yousef) v Dow Jones Inc [2005] EWCA Civ 75; [2005] QB 946; [2005] 2 WLR 1614 ("Jameel"). Eady J was satisfied that the imputations conveyed about the university failed the significant harm test, adding: "It [the university] is by no means the "villain of the piece"; indeed, it is portrayed almost as a "victim" in the sense that its best interests are being damaged by those identified as the culprits."
That decision is of no assistance to the defendants for three reasons: 1. Jameel principles of proportionality have not been accepted in defamation proceedings in Australia; 2. Even if Jameel principles were applicable, the first step is to determine what imputations are conveyed of and concerning the plaintiff; and 3. The content of the matter complained of, starting from the description of the plaintiff as an organisation "in turmoil", followed by a list which starts with "the governance of ACCA" and then finishes with a linked reference to the third defendant's successful litigation against "ACCA" is unlikely to be an article which conveys no defamatory imputations against the plaintiff. That is particularly the case given the tone of the publication, which conveys not merely suspicion but guilt in relation to conduct which is at best "improper" and at worst "embezzlement", in an article where the plaintiff is named ten times (as "ACCA" or by its full name) and referred to as the "Association" or a community organisation another four times, and where all other persons referred to are identified by their position in ACCA.
I propose to consider each of the imputations individually and to deal with each of the objections to form and capacity raised by the defendants.

Imputation 5(a)(i)

The objection to the form of this imputation being rolled up was overcome by the removal of the second half of the imputation so that it reads "the plaintiff is an organisation in crisis, whose funds are repeatedly misappropriated".
Ms Evans submitted that any imputation that the company was "in crisis" and that the misappropriation was "repeated" was "pitched too high". She also submitted that no imputation of wrongdoing was imputed to the company, which was portrayed as the innocent victim of its Board and/or General Manager.
The company is described in the opening paragraph as having been "in turmoil" for the past eight months, with "a litany of malpractices" of a financial nature, as set out in the ten points below (including "embezzlement" (point 10) and "misuse" of government funds as well as its own money (points 4 and 7)). This is not conduct attributed to others; the plaintiff company is referred to by its full or abbreviated name or as a community association more than a dozen times. These statements reflect upon what Levine J called "the dishonest or improper way in which it conducts its business" (The Mekong Club v 2KY Broadcasters Pty Ltd at p. 6).
As to whether an imputation of misappropriation is conveyed, the sums involved are large ($20,000; $152,000; $6,000; $3,000; $240,000) and there are references to the "litany of malpractices" as well as to the company's investigation by "several government agencies", particularly in relation to government funds. These are sufficient in terms to support such an imputation on the Corby test.
This imputation, in its revised form, is reasonably capable of being conveyed.

Imputation 5(a) (ii)

This imputation (which was misnumbered in the statement of claim) was withdrawn.

Imputation 5(b)

Ms Evans challenged the word "dysfunctional" as not arising, not being defamatory and as ambiguous.
As to form issues, whether it is defamatory to say of a company that it is "dysfunctional" is a jury question. The reasons for claiming this word is ambiguous were not explained.
As to capacity, Ms Evans raised, in relation to capacity, the same issue as was raised in relation to all other imputations, namely that the matter complained of conveyed that the General Manager and/or the Board were the miscreants and the company was the innocent victim.
However, as was the case with imputation 5(a), the reference to "several government agencies" investigating "numerous" complaints is capable of painting a picture of corporate wrongdoing on a mass scale where the subject of the investigation is the corporation in question. The references to ACCA's "governance problems" (point 1), "lack of procedural fairness in dealing with Board resolutions" (point 2), "improper financial procedure" (point 5) and "employment of staff without interview or Board approval" (point 6) paint a picture of a company not performing its proper or intended function, which is captured by the word "dysfunctional". This wide range of problems is attributed to ACCA rather than to any individual.
Applying the principles set out in Corby, this imputation is reasonably capable of being conveyed.

Imputation 5(c)

This imputation is drawn from the references in point number 3 to "unspent government grants" and to "unspent funds usually returns [sic] to the funding body". The duties in question are the duties to return the unspent money instead of using $20,000 of it for staff bonuses. The reference to "improper suggestions" adds little clarity but a lot of suspicion. An imputation to this effect clearly arises and, while the language of the imputation is very general, it need only be as specific as the matter complained of: Drummoyne Municipal Council v Australian Broadcasting Corporation (1991) 21 NSWLR 135 at 137 per Gleeson CJ.
As to Ms Evans' objections to identification of the company as the culprit, corporate misuse of funds it has received from a government body is conduct by a corporation that is capable of the defamatory meaning pleaded.
This imputation is reasonably capable of being conveyed.

Imputation 5(d)

Ms Evans challenged whether such an imputation could be defamatory, submitting that merely buying something did not have any sinister meaning. However, the suspicious tone of the matter complained of is reasonably capable of conveying that votes are not something a company should buy in its ordinary course of business. Whether this imputation is capable of defamatory meaning will be a question for the jury.
As to capacity, to "buy votes" with company funds (which funds are asserted to be "public money") is reasonably capable of conveying an imputation that company funds have been misappropriated. As to whether this imputation is conveyed of and concerning the plaintiff, the company's money is being used for this purpose, and there are references to corporate financial governance problems in point 1 of the ten points.
This imputation is reasonably capable of being conveyed.

Imputation 5(e)

The continued reference to "public money" in imputations come from the reference to "public money" in point 4, where it is used to describe "ACCA's funds". Mr Richardson submits that this ingredient goes beyond the imputation arising from point 4 and into other imputations where there is a reference to misuse of the plaintiff's funds. Given the terms of the matter complained of, where this statement is not restricted to this particular paragraph, I consider that this is permissible.
Ms Evans again submitted that "misappropriated" was too high a word and that what was conveyed was simply that the money was used for something else. She also submitted that the imputation, if conveyed, was not defamatory.
While the matter complained of uses the word "improper", this is in the context of company (and, following on from point 4 of the letter, public money) being transferred to a private account in circumstances where the relevant financial records were not kept. On the Corby test, this imputation is reasonably capable of being conveyed.
Whether such an imputation is defamatory will be a matter for the jury or tribunal of fact. Applications to strike out imputations on the basis they are not capable of being defamatory should only be brought in the clearest of cases, and an imputation of misappropriation is not one of those cases.

Imputation 5(f)

It is defamatory to say of a company which allows the misuse of "ACCA funds" (i.e. company funds) for private legal costs. The word "private" suggests it is used for non-company purposes. That means the company funds are being used by members or Board members, in circumstances where the plaintiff's financial governance problems are referred to in the first of the ten points. As to "public funds", I repeat my findings as set out above.
This imputation is reasonably capable of being conveyed.

Imputation 5(g)

This imputation was redrafted during oral submissions; the amended text is noted in the orders.
Ms Evans objected to the word "stack" (which I note comes from the matter complained of) as not being defamatory and as lacking in precision.
This is an example of the words of the matter complained of encapsulating the meaning. The concept of stacking a meeting or a company is sufficiently clear and pejorative in nature for the defendants' challenges to form and defamatory meaning to be rejected. Again, the reference to ACCA's governance and transparency problems (which occur in paragraph 1 as well as paragraph 8) show that this is a company problem, and are not the conduct of some individual or individuals where the company is a mere victim.
This imputation is reasonably capable of being conveyed.

Imputation 5(h)

The sole objection raised in correspondence was that this imputation was not defamatory. Any imputation of sexual harassment is one which should be left to the jury or tribunal of fact for such a determination.
Ms Evans submitted that this imputation was incapable of arising in relation to the plaintiff because the harassment in question was carried out by individuals. However, I consider the implication is that the ACCA is an organisation which permits the routine bullying, intimidation and harassment of females of any age. The ordinary reasonable reader would assume that if this conduct was occurring as often as the matter complained of appeared to imply, there was something wrong with the ACCA for these events to be happening.
Ms Evans also submitted that there was only one or at best two cases and that "routine" was pitched too high. However, the use of "females" in the plural, the reference to three different kinds of misconduct ("bullying, intimidation and harassment"), the reference to Union intervention for a senior staff member (second paragraph) who may or may not be the same person referred to at the bottom of page 1 and the reference to the Union stepping in in relation to another male member (top of page 2) suggest a culture of abuse and intimidation permeates the ACCA.
This imputation is reasonably capable of being conveyed.

Imputation 5(i)

Ms Evans challenged this imputation as being rolled up. An imputation is permissible where the various concepts in it convey a characteristic of the plaintiff even where the imputation as a result consists of several components: Viney v TCN Channel Nine Pty Ltd [2006] NSWSC 1273 at [15] - [21]. As to "dysfunctional", I repeat my earlier observations.
Ms Evans submitted that this imputation could only be conveyed about the General Manager and not about the plaintiff. However, this imputation captures the sting that the dysfunctional nature of the company allowed this series of wrongdoings to occur. This is the imputation arising of and concerning the plaintiff, and not in relation to the General Manager.
This imputation is reasonably capable of being conveyed.

Imputation 5(j)

This imputation was redrafted during oral submissions. Once again, it is an imputation based on the dysfunctionality of the ACCA, and is thus an imputation arising of and concerning the company.
This imputation is reasonably capable of being conveyed.

Imputation 5(k)

This imputation arises from the final part of the matter complained of, where the defendants warn Mr Wong against any association not only with the Board or directors but also with "community associations" such as the ACCA, in that he risks being "jointly liable" in relation to such breaches. Crucially, the matter complained of goes on to give, as an example of what will occur, a reference to the third defendant's litigation against the ACCA. The warning to Mr Wong to avoid any involvement in "these community association controversies" is a warning to stay away from the plaintiff in the clearest terms.
This imputation is reasonably capable of being conveyed.

Further orders

As a result of these rulings the plaintiff must file an amended statement of claim. This is an opportunity for the plaintiff to correct not only its typing errors and imputations but also to provide a retyped and properly numbered schedule for the matter complained of (by paragraphs) and to delete its claim for aggravated damages.
The statement of claim filed on 6 March 2017 contains a claim for aggravated damages. The plaintiff is a corporation and the general rule is that aggravated damages are not available. In Heli-Muster Pty Ltd v Johnson Wire Forming Pty Ltd (Supreme Court of New South Wales, 13 October 2000, unreported), Levine J noted: "[40] Here, of course, the plaintiff is a corporation and thus no component of the "hurt to feelings" can be available to it (Royal Society for the Prevention of Cruelty to Animals v 2KY Broadcasters Pty Ltd (1988) A Def R 50,030 at 40,163). Sub-particular (a) relating to the falsity of the imputations raises a false issue. Normally a non-corporate plaintiff legitimately can raise in aggravation of damages that that plaintiff's hurt was increased by that plaintiff's knowledge of the falsity of the imputations. It was rightly argued on behalf of the defendant that particulars (b) and (c) if available on the issue of damages would go to ordinary compensatory damages. The order I propose to make is that the particulars purportedly given in aggravation of damages are struck out."
Mr Richardson told the court that the plaintiff's solicitors had previously conceded in correspondence that their client was not entitled to aggravated damages and that the claim must have been included in the statement of claim in error.
As the claim has nevertheless been maintained since that time, and is contained in a court pleading, for the avoidance of doubt I propose to note that it is withdrawn and strike it out, to avoid confusion at the hearing.
The other issue before the court was the defendants' application to adjourn the imputations argument so that an application to strike out the plaintiff's claim as an abuse of process could be brought.

The defendants' application to adjourn the imputations argument

Although not ordered to do so by the timetable, the plaintiff's solicitors provided answers to the defendants' objections to the form and capacity of the imputations. That letter was sent on 1 March 2017. It is unclear why no order to reply to those submissions was included in the timetable orders of 15 December 2016. District Court Civil Practice Note 6 requires both parties to provide outlines of the issues for the purpose of such arguments. It is a helpful way of reducing the time spent in argument in court.
Ms Evans submitted, however, that the submissions in the 1 March 2017 letter "totally changed" the nature of the proceedings before the court and that she was unready to meet the response to the letter. Part of her application included a dispute as to the nature of the applications before the court and how those applications came to be listed for argument, so I will start by describing the circumstances leading to McLoughlin SC DCJ's listing, on 15 December 2016, of these proceedings in the Defamation List today for argument.
As noted at the commencement of this judgment, there have been delays in the conduct of this litigation, principally by the plaintiff. Since these proceedings had their first listing date on 11 August 2016, the plaintiff has amended the statement of claim twice (2 November and 6 December 2016, the latter not being filed until 6 March 2017, in breach of the 15 December 2016 orders).
On 24 November 2016 I ordered the relevant defendants to serve their objections to the statement of claim by 1 December 2016 and the plaintiff to serve its response by 9 December 2016. Instead, the plaintiff served a proposed amended statement of claim under cover of a letter answering previous objections to their imputations and how these had been addressed, to which the defendants took objection in their letter of 14 December 2016. These submissions did, however, specifically refer to what Ms Evans identified to me as "the University of Salford argument" (University of Salford v Duke), which is that "imputations (a), (d), (e), (f), (g) and (i) were "not defamatory because they refer to acts or conditions referable to individuals or members of the Board (i.e. they are not conveyed against the plaintiff) and because they portray the plaintiff as the victim of the conduct alleged (i.e. they are not defamatory of the plaintiff)." This extract from the letter sent by the solicitors for the defendant specifically identified University of Salford v Duke as the authority for this submission.
When these proceedings were listed before McLoughlin SC DCJ on the following day (15 December 2016), his Honour set down for hearing (on 9 March 2017) the challenges identified in the defendants' correspondence to the plaintiff's imputations and the issue of the costs thrown away by reason of the latest changes to the statement of claim. The plaintiff was directed to file that statement of claim within seven days. The plaintiff did not do so until 6 March 2017, but nothing turns on this. The problem is the 1 March 2017 letter the plaintiff's solicitors forwarded to the defendants' solicitors. Ms Evans submitted that she needed to address this letter by submitting that the matter complained of defamed the General Manager of the plaintiff company, and not the plaintiff company (which was the innocent victim) and that the claim by the plaintiff was thus an abuse of process.
The first problem is the timing. Ms Evans' application was very late; it was brought on the day of a hearing which had been fixed three months beforehand. The adjournment was initially consented to by the defendants, and Ms Evans submitted that I should accede to the parties' wishes.
However, ss 56 - 62 Civil Procedure Act 2005 (NSW) require me to take into account the convenience of the court as well as that of the parties. Ms Evans' proposal that the application be stood over for a a week or even a month not possible because of other argument listings and my own circuit commitments.
Applications to adjourn hearings on the day of the hearing are not permitted in the District Court, and applications to adjourn arguments on the day of the hearing should be discouraged in all but the clearest cases. The District Court Defamation List is a busy list (Ghosh v Ninemsn Pty Ltd (2015) 90 NSWLR 595 at [53]) and time is at a premium. While District Court Civil Practice Note 6 is in more flexible form than its Supreme Court equivalent (which requires the parties to be ready for imputations arguments on the first return date), that flexibility should not be taken advantage of by last-minute applications for adjournments. I particularly note that this argument had been specially fixed for 9 March 2017 by McLoughlin SC DCJ on 15 December 2016, which is three months ago, and Ms Evans had had the plaintiff's solicitors' letter of 1 March 2017 for a week.
Nevertheless, an adjournment on the day in those circumstances could be granted if there was a sufficiently good reason. The real problem is that Ms Evans' application for adjournment was made without any good reason, in that it was based on a misconception of the questions of law before the court. Those questions were the form and capacity of imputations of and concerning this plaintiff (the ACCA), and would have to be determined before any University of Salford v Duke application for summary dismissal (whether on the basis of proportionality or otherwise) could be brought. As to whether any imputations arose of and concerning the plaintiff, this issue needed to be determined in accordance with the principles set out in Corby v Allen & Unwin Pty Ltd and not in accordance with English authorities on proportionality and substantial harm.
It is still possible for the defendants to bring an application that the proceedings be struck out as an abuse of process. The first issue the court would consider, on any such application, is the nature and content of the imputations conveyed of and concerning the plaintiff by the matter complained of. For that reason, Ms Evans' submission that an imputations argument was not necessary was misconceived.

Costs

Ms Evans asked me to reserve the question of costs of this application, on the basis that the plaintiff's prior delays and amendments to pleadings more than outweighed the defendants' lack of success in this application. I declined to do so, on the basis that the costs of the previous delays were reserved by McLoughlin SC DCJ and can be dealt with on another occasion, whereas the costs of today are a separate issue. The plaintiff has been dilatory in its conduct of these proceedings prior to Mr Richardson being briefed, and there will be costs thrown away by reason of the prior amendments to the statement of claim, which have been substantial, but these can be determined on another day.
As the plaintiff has been almost entirely successful in the applications under UCPR rr 14.30 and 28.2, costs of the argument should follow the event.

Orders 1. Strike out the particulars of aggravated damages in the Further Amended Statement of Claim. 2. Grant leave to the plaintiff to amend imputation 5(a)(i) to read "The plaintiff is an organisation in crisis, whose funds are repeatedly misappropriated." This imputation is reasonably capable of being conveyed. 3. Imputation 5(a)(ii), which has been withdrawn, is struck out. 4. Grant leave to the plaintiff to amend imputation 5(b) to use the word "several" in the place of "numerous"; this imputation is reasonably capable of being conveyed. 5. Imputation 5(c) is reasonably capable of being conveyed and defamatory. 6. Imputation 5(d) is reasonably capable of being conveyed. 7. Imputation 5(e) is reasonably capable of being conveyed and defamatory. 8. Imputation 5(f) is reasonably capable of being conveyed and defamatory. 9. Imputation 5(g) as amended ("The plaintiff is an organisation whose Board members have attempted to stack its membership list.") is reasonably capable of being conveyed. 10. Imputation 5(h) is reasonably capable of being conveyed. 11. Imputation 5(i) is reasonably capable of being conveyed. 12. Imputation 5(j) as amended ("The plaintiff is so dysfunctional an organisation that the President of the Board has knowingly tolerated the harassment of the senior staff member by the General Manager.") is reasonably capable of being conveyed. 13. Imputation 5(k) is reasonably capable of being conveyed. 14. Objections to the form of imputations 5(a) to 5(k), save for the amendments to the imputations noted above, dismissed. 15. Plaintiff's Second Further Amended Statement of Claim in 7 days. 16. Defence 6 weeks thereafter. 17. Matter stood over for further directions to Thursday 18 May 2017 in the Defamation List. 18. Defendants are to pay the plaintiff's costs of this application.

Schedule For the last eight months, the Australian Chinese Community Association of NSW (ACCA) has been in turmoil with allegations that the Board, of which your staff member Mr Adrian Wong is a Director, has committed a litany of malpractices. Therefore the purpose of this letter is to alert you of [sic] the involvement of Mr Wong and hope you will give him wise counsel. We were advised that our concerns, listed below, are within the jurisdiction of several government agencies and it is expected they will soon launch investigations into these matters. The media has expressed an interest and will do an expose if and when we forward all relevant information and evidence of wrong doing. However, we would not do this until appropriate investigations have been conducted. The Union has already stepped in to protect a senior staff member who has been bullied and harassed by the General Manager with the apparent acquiescence by [sic] the President of the Board. Since March 2015, there have been numerous complaints and concerns to government agencies about the following: 1. The governance of ACCA which include [sic] incidents of non-transparency in decision making (both in administration and financial [sic]); 2. Lack of procedural fairness in dealing with Board resolutions against individuals; 3. Improper suggestions in using $20,000 of unspent government grants totalling $152,000.00 for staff bonuses (unspent funds usually returns [sic] to the funding body); 4. Misuse of ACCA's funds (considered public money) of $6,000 to groups of members without their application or acquittal of the money spent in an attempt to buy votes; 5. Improper financial procedures involving internet transfer of money ($3,000) to a private bank account of the Hon Secretary without proper invoice or quotes; 6. Employment of staff without interview or Board approval; 7. Misuse of ACCA funds to get legal advice on private matters; 8. Non-transparent control of membership list and stacking with hundreds of members; 9. Bullying intimidation and harassment of mature aged female members of the Association and these cases are now in the hands of lawyers for women's women's [sic] rights; and finally 10. No explanation to the Board in regard to what appears to be prima facie a case of embezzlement of $240,000 of Association funds by a female staff member hired by the General Manager without panel interview or Board approval. In May 2015, a senior member of staff was severely stressed by the General Manager Ted Seng, and felt so imposed upon to [sic] make an open and unprecedented complaint in writing to the Board about his harassment and procedural unfairness when management attempted to silence him with the use of a so-called "independent" auditor, who has shown bias in refusing him a witness during an interview. The evidence given in the staff member's letter corroborates all of the above concerns. The Union has stepped in to assist the senior staff member when "adverse action" was applied to him by a warning letter and a threat of dismissal. Should the complaints be proved by government agencies that ACCA directors are in breach of relevant Acts, all Directors will be jointly liable and such breaches may be referred to a law enforcement agency. The final outcome could be particularly adverse to all Directors with this information becoming public knowledge. The staff member Mr Adrian Wong is a bright young man with a good future and we do not wish to see a young man's reputation damaged as a result of being used by others in ACCA. If Mr Wong wishes to seek public office in the future, he should re-examine his relationship with the Board. A proven charge of complicity with the Board would likely compromise his career. It is unfortunate that community organisations do have conflict and sometimes it takes good people to stand up in court to ensure the organisation behaves itself. ACCA lost a Supreme Court case in 2010 and had to foot a legal bill of close to $100,000 when the Executive decided to expel prominent members of the community from ACCA. See: Daphne Lowe v Australian Chinese Community Association of NSW (No 2) [2010] NSWSC 1375 (1 December 2010). We believe many in public office would chose [sic] to avoid being involved in these community association controversies and many local Councillors, State MPs and Federal MPs have said to us that this is the wisest thing to do. And we agree. It would be good for Mr Wong to adopt the same attitude. We would be happy to meet with you to discuss the matter and we will bring with us evidence of our concerns. We thank you for taking the time to read and consider the contents of this letter. Kind regards Yours sincerely [Defendants] All signatories are Members of ACCA Ltd. Correspondence to Mrs Maggie Wu [address]

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: 23 March 2017

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