Practice and procedure - Defamation - Pleading - Innuendo - Ambiguity in innuendo plea - "Fraudulently" - Application to strike out whole plea

Aqua Vital Australia Ltd v Swan Television & Radio Broadcasters Pty Ltd [1995] ATR 62,709

Foord v John Fairfax & Sons Ltd, unreported; SCt of NSW; (Hunt J); No 2045 of 1986; 27 February 1987

Gascoine v McGinty (1995) 14 WAR 542

Lewis v Daily Telegraph Ltd [1963] 1 QB 340

Mirror Newspapers Ltd v Harrison [1982] HCA 50; (1982) 149 CLR 293

Nationwide News Pty Ltd v Abboud, unreported; FCt SCt of WA; Library No 960710; 12 September 1996

Peters v R [1998] HCA 7; (1998) 151 ALR 51

R v Cushion (1997) 150 ALR 45

1 ANDERSON J: This is an application to strike out a statement of claim, or parts of it, in defamation proceedings. The defendant is the publisher of The West Australian newspaper and on 31 October 1998 it published a page 1 story as follows:

THE family of jailed entrepreneur Alan Bond has assumed ownership of a 16th century manor and rural estate in England worth about $10 million which has eluded Bond's corporate and personal creditors who are owed billions of dollars.

Investigations by The West Australian have revealed how both the freehold and leasehold titles over the 400ha Upp Hall estate in Hertfordshire were transferred out of Bond Corporation and into a $2 Bond shelf company through a series of confidential corporate manoeuvres.

The Upp Hall transactions centred around Lindsey Trading Properties, a company controlled by Jurg Bollag - the elusive Swiss financier identified as the central figure in a four-year Australian Federal Police investigation into allegations that Bond concealed assets and income from his bankruptcy creditors.

With Mr Bollag's involvement, the Upp Hall estate has been effectively quarantined from Bond's bankruptcy creditors. The collapse of the Bond empire left public and private creditors more than $3 billion out of pocket.

Upp Hall came under the scrutiny of Federal police, who raided the property and seized documents in 1995 while investigating links between Bond and Mr Bollag.

But the police's Operation Oxide was abandoned this month after Mr Bollag used the Swiss legal system to help frustrate repeated attempts to examine him under oath.

Upp Hall, two hours drive from London, includes equestrian stables, eight estate houses and other farm buildings.

Documents obtained by The West Australian reveal freehold ownership of Upp Hall has been transferred from Lindsey Trading Properties to Sunland Nominees - a $2 shelf company whose

directors and shareholders are Bond's former wife Eileen and son John.

The documents also reveal Upp Hall's leasehold title has been transferred to Sunland Nominees from Dallhold subsidiary, Dallhold Estates (UK).

The Upp Hall estate was owned by Bond Corp subsidiary Wydgee Pastoral Co until July 1987, when freehold title was transferred to Mr Bollag's Lindsey Trading Properties for a reported consideration of $5.1 million.

According to English court documents, the Upp Hall leasehold held by Dallhold Estates (UK) attracted offers of up to $3.5 million while Dallhold was in liquidation.

Local council clerk Pauline Dye confirmed the Bond family had sold most of the farmland around the manor. She estimated the land could be worth up to $5500 an acre - valuing the 400ha at about $5.5 million.

2 This page 1 story was followed up on page 8 of the same paper with the following article:

Jurg Bollag linked to deals keeping estate in family hands

CREDITORS of Alan Bond's failed business empire might well be perplexed at how something as conspicuous as a 16th century manor on a 400ha estate could evade two liquidators, a bankruptcy trustee and a team of federal police investigators.

That is what has happened with the Upp Hall estate in the Hertfordshire village of Braughing, which has slipped through the grasp of Bond's corporate and personal creditors and into his family's private investment fortune.

Even now the transfer of Upp Hall into Bond family company Sunland Nominees is public knowledge, there seems little creditors can do to reverse it.

Unlike Bond's former $7 million mansion in Dalkeith - which was quarantined from Bond's creditors in a family trust - the Upp Hall manor and estate was originally owned by Bond's public flagship, Bond Corp.

It was an asset of Bond Corp subsidiary Wydgee Pastoral Co until July 1987.

Freehold title was then transferred to Jurg Bollag's Panamanian-based Lindsey Trading Properties, for a purported consideration of $5.1 million.

Bond's bankruptcy trustee Robert Ramsay would later question where Lindsey Trading Properties got its money from for several big Bond transactions, like the Upp Hall deal. The leasehold title had earlier been assigned by Bond Corp to Dallhold Estates (UK), a subsidiary of the Bond's private family company Dallhold Investments.

Bond's daughter Susanne was later to claim in court proceedings to have been granted a rent-free lifetime tenancy at Upp Hall by Dallhold Estates (UK).

According to creditors' reports, when Dallhold Investments liquidator John Lord contemplated selling the Upp Hall leasehold to help salvage something for Dallhold creditors owed about $520 million, it attracted offers of up to $3.5 million.

However, Mr Bollag was making the sale of the leasehold very hard.

He launched legal action in England to wind up Dallhold Estates (UK) in a bid to trigger a default clause in its Upp Hall lease.

Such a default would have seen the leasehold title revert to its freehold owner, Mr Bollag's Lindsey Trading Properties, for no charge.

When the Bond family struck its 1994 settlement with Dallhold's creditors, the deal also extinguished all outstanding legal claims such as the Upp Hall leasehold dispute.

The Upp Hall leasehold was later transferred back into the Bond family's direct ownership via Nemrod Pty Ltd (as trustee for the Susanne Bond Investment Trust) and finally Sunland Nominees.

Documents obtained by The West Australian reveal this coincided with the transfer of Upp Hall's freehold title from Mr Bollag's Lindsey Trading Properties to Sunland Nominees.

Australian Securities and Investments Commission records show Anglo Irish Bank Corp was involved in financing both transactions for the Bond family.

The involvement of Lindsey Trading Properties in the Upp Hall deal was one of many Bollag-Bond transactions investigated by the Australian Federal Police during the four-year Operation Oxide.

The federal police also had tapes of interviews conducted by Bond author Jarnie Fawcett with the late Tony Weatherald, a Melbourne businessman who acted as a go-between for Bond and Mr Bollag on several big projects.

In the tapes, Mr Weatherald speaks of how Mr Bollag boasted of the transactions.

Bond's bankruptcy trustee Robert Ramsay established other links between the Bond family and Mr Bollag's Lindsey Trading Properties during his investigations, which ended in 1995 when Bond was discharged from bankruptcy.

In a confidential November 1994 report to creditors, Mr Ramsay said Lindsey Trading Properties had lent $11.5 million to bond trust company Armoy Pty Ltd in 1991 to buy farming properties in WA.

Lindsey Trading Properties had also bought a condominium in Vail, Colorado, from Dallhold Investments as part of a $US3 million loan offset deal.

'It would be useful to know where Lindsey Trading got its money from in the first place,' Mr Ramsay wrote in his report.

Braughing Parish Council clerk Pauline Dye said various members of the Bond family continued to stay at the Upp Hall manor, the most recent being Bond's son Craig Bond this month.

'The whole family has visited there over a number of years for protracted terms,' she said.

Mrs Dye said the Bond family members were well regarded in Braughing because they always used the local services and hired local staff. Bond will be in prison until at least April 2001 on fraud convictions.

Neither Operation Oxide chief Kelvin Kenney, Bond Corp liquidator Richard England nor Mr Ramsay would comment."

3 Separate causes of action are maintained in respect to each article, but the innuendo in respect to each article is in the same terms. It is pleaded in par 5 and par 11 respectively, in the statement of claim. I shall set out par 5 which refers to the page 1 article. That article is referred to in the statement of claim as "the first matter complained of" and the page 8 article is referred to as "the second matter complained of":

"5. The first matter complained of meant and was understood to mean in its ordinary and natural meaning that the plaintiff had been a party to a scheme to fraudulently move a $10 million asset out of the reach of Alan Bond's personal and corporate creditors."

4 The defendants make two complaints in respect of the innuendo paragraph. In the first place, they contend that neither article gives rise to an imputation of fraudulent conduct. Secondly, they submit that the innuendo plea is embarrassing in that it is ambiguous.

5 It is appropriate to deal with the second contention first. The ambiguity complained of by Mr Le Miere QC is that it is not clear which of the following propositions are being put forward by the plaintiff:

(i) That the words complained of mean that in participating in a scheme that had the effect of moving an asset beyond the reach of creditors the plaintiff acted fraudulently;

(ii) that the words complained of mean that the plaintiff participated in a scheme which contained fraudulent elements and therefore acted fraudulently.

6 I accept the defendants' submission that the innuendo plea is ambiguous in this respect. It could mean one or other of (i) or (ii). They are not the same allegations. Different defences are available according to which innuendo is alleged. If the plaintiff is putting his case in terms of the innuendo (i), the defendants might wish to confess and avoid. They might wish to admit that the articles mean that the plaintiff participated in a scheme to place assets beyond the reach of creditors, but deny that an allegation of participation in such a scheme imputes fraudulent conduct. On the other hand, if the plaintiff puts his case on the basis of an innuendo in terms of (ii), the defendants might wish to deny that the articles carry that imputation.

7 The difficulty comes from the use of the word "fraudulently". The defendants' application should be acceded to, to the extent that the word "fraudulently" in the innuendo paragraphs (ie, par 5 and par 11) should be struck out. There should be liberty to replead within 10 days.

8 The defendants contend that it must follow that the paragraphs which plead the material facts in support of aggravated and exemplary damages should also be struck out, as they depend upon the innuendo paragraphs remaining intact. I am not sure about that. I think the pleas in support of the claim for aggravated and exemplary damages only fall if the whole of the innuendo pleas are struck out, which they are not. Only the word "fraudulently" has been struck out. I have not heard argument as to whether the imputation that remains (that is, the pleaded innuendo with the exception of the word "fraudulently") is an imputation of defamatory conduct. If it is, then it may well be that the paragraphs pleaded in support of the claim for aggravated and exemplary damages can stand.

9 The only order I am prepared to make on this application is that which I have indicated; namely, that the word "fraudulently" be struck out of the innuendo paragraphs, with liberty to replead.

10 I am inclined to the view that the plaintiff must pay the defendants' costs of the strike-out application. If counsel for the plaintiff wishes to persuade me otherwise, I will hear the parties. If not, I invite the parties to send down a minute of orders giving effect to this judgment.