Citation : WALTER -v- BUCKERIDGE & ANOR [2005] WASC 112

Defamation - Pleading defamatory imputation - Whether necessary in this case - Whether pleading should be struck out

First Applicant : Mr W S Martin QC & Ms J L Johnson

Second Applicant : Mr W S Martin QC & Ms J L Johnson

Chakravarti v Advertiser Newspapers Ltd (1998) 193 CLR 519

Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716

Jones v Skelton [1964] NSWR 485

Lewis v Daily Telegraph Ltd [1964] AC 234

Mayfield-Smith v Mirror Newspapers Ltd [1982] 2 NSWLR 419

Monte v Mirror Newspapers Ltd [1979] 2 NSWLR 663

Taylor v Jecks (1993) 10 WAR 309

Wilson v Metaxas [1989] WAR 285

Askew v Morris [2004] WASC 43

Askew v Morris [2005] WASCA 59

Brilliant Digital Entertainment Pty Ltd v Universal Music Australia Pty Ltd [2004] FCA 448

Carpathian Resources v Geological and Corporate Management Pty Ltd [2005] WASCA 104

Gascoine v McGinty (1995) 14 WAR 542

Gumina v Williams (No 2) (1990) 3 WAR 351

1 STEYTLER P: The background to this application for leave to appeal is set out in the judgment of Pullin JA. It essentially raises two issues. Both arise out of the pleading of a statement of claim in defamation proceedings brought by the respondent against the applicants. In it, the respondent complains of an article published by the applicants in about December 2003 in the second applicant's newsletter, the "BGC Bulletin". It contains the following paragraph:

"2003 has been the toughest year of my working life but much has happened. During the year we purchased the 50% of J-Corp that we did not own. This was very unpleasant business where during the accountancy investigation, large amounts of theft by Julian Walter were unearthed."

The respondent pleaded that, in their natural and ordinary meaning, these words meant and were understood to mean that he "had stolen large amounts of money from J-Corp, and had thereby committed a serious criminal offence". The first issue is whether or not this imputation is capable of arising from the words complained of. A Master of this Court held that it is and the applicants contend that he erred in doing so. The second issue is whether the words "and had thereby committed a serious criminal offence" are, embarrassing and irrelevant surplusage. The Master held that they were not and, again, the applicants contend that he erred in doing so.

2 As to the first issue, the test of reasonableness for determining whether or not an imputation is capable of arising is well-known: Jones v Skelton [1964] NSWR 485 at 491; Lewis v Daily Telegraph Ltd [1964] AC 234 at 277 and Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716 at 1719 - 1720 per Gleeson CJ, McHugh, Gummow and Heydon JJ (although, see the comments of Kirby J in that case at 1722 - 1723 concerning the "fiction" of the ordinary reasonable reader). It is also settled that an imputation will be struck out only if it is plainly incapable of being conveyed by the words complained of or, to use the words of Hunt J in Monte v Mirror Newspapers Ltd [1979] 2 NSWLR 663 at 675, if the imputation is "so clearly untenable that it cannot possibly succeed": Taylor v Jecks (1993) 10 WAR 309 at 313. In Favell, Gleeson CJ, McHugh, Gummow and Heydon JJ, at 1719 [6], approved the following extract from the judgment of McPherson JA in the Queensland 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."

3 In this case the article does not say what was stolen and, as counsel for the applicants pointed out, there are many things that may be stolen other than money. However, as Pullin JA has mentioned, the investigation which is said to have uncovered the theft was described as an "accountancy" investigation and not a stock-take. Moreover, large "amounts" of theft are said to have been unearthed. While it is true that accountancy investigations might uncover thefts of items other than money, and while the word "amounts" might refer to money or to other items, this context might, in my opinion, lead an ordinary, reasonable reader to infer that it was solely money that had been stolen. The ordinary reader, unlike lawyers (who are apparently never ordinary, reasonable readers), does not draw implications only if they are both necessary and reasonable: Lewis, at 277; Favell at 1720. It consequently seems to me that the Master was right in his conclusion that it was inappropriate to strike out the imputation upon the ground that it is incapable of arising.

4 As to the second issue, the law as regards the pleading of irrelevant and embarrassing material has adequately been summarised by Anderson J in Taylor, above, at 319, being one of the cases relied upon by the applicants in this respect. While I am inclined to doubt that the reference to "a serious criminal offence" adds much to the pleaded imputation, I agree with the Master's conclusion that the introduction of these words introduces no relevant embarrassment in the sense discussed by him in [19] - [20] of his reasons. As he pointed out, the addition of the quoted words will not give rise to a dispute as to what it is that the applicants must prove in order to justify the pleaded imputation. I am unable to see why they should give rise to any other form of embarrassment. Consequently, even if these words are irrelevant and should, on that account, have been struck out, a failure to reverse the decision in this respect would not give rise to any substantial injustice: Wilson v Metaxas [1989] WAR 285 at 294. I should add, in this respect, my respectful endorsement of the comments made by Kirby J in Favell at 1722 to the effect that courts should discourage, or minimise, the

impediment to a fair trial presented by the process of "trial by interlocutory ordeal", which is especially prevalent in defamation proceedings.

5 I would dismiss the application for leave to appeal.

6 PULLIN JA: This is an application for leave to appeal against the decision of Master Newnes who granted leave to amend the statement of claim in this action.

7 The respondent's action is for damages for defamation. The relevant part of the pleading reads as follows:

"1. At all material times the Plaintiff was the managing director of JWH Group Pty Ltd.

2. At all material times the First Defendant:

2.1 was and is a director of the Second Defendant;

2.2 was and is the Executive Chairman of the Second Defendant;

2.3 was and is a director of J-Corp Pty Ltd.

3. At all material times the Second Defendant:

3.1 was and is a proprietary limited company duly incorporated in the State of Western Australia;

3.2 was and is a publisher of the 'BGC Bulletin' magazine; and

3.3 had and has the First Defendant as a director, and as its Executive Chairman.

4. In or about December 2003 the First and Second Defendants published, in the December 2003 edition of the Second Defendant's newsletter, the 'BGC Bulletin' ('the BGC Bulletin'), and by way of an article authored by the First Defendant and entitled 'Christmas Foreword', the following words of and concerning the Plaintiff.

'2003 has been the toughest year of my working life but much has happened. During the year we purchased the 50% of J-Corp that we did not own. This was very

unpleasant business where during the accountancy investigation, large amounts of theft by Julian Walter were unearthed.'

6. In its natural and ordinary meaning, the Defamatory Publication meant and was understood to mean that the Plaintiff had stolen large amounts of money from J-Corp, and had thereby committed a serious criminal offence."

8 The parties agreed that the hearing of the respondent's application for leave to file a statement of claim and to have the minute containing the proposed statement of claim stand as a statement of claim ought to be heard, in effect, as a strike-out application. The issue at the hearing of the application was therefore whether par 6 of the proposed statement of claim (ie the respondent's pleaded imputation) was liable to be struck out by reference to the principles and tests applicable to O 20 r 19. The Master dismissed the appellant's objections.

9 The Master first dealt with the appellant's contention that the meaning, that the respondent had stolen large amounts of "money", was not reasonably open on the words complained of. He said in [16] of his reasons:

"In my view, the existing imputation is arguably conveyed by the words complained of. It is the case, as submitted by senior counsel for the defendants, that an investigation by accountants is not necessarily restricted to questions of money, but it is, in my view, clearly arguable that a reasonable reader would regard such an investigation as connected with the accounts of the company and with its funds."

10 In [17] the Master then turned to the contention that the words "and had thereby committed a serious criminal offence" was surplusage and embarrassing. In [17] to [19] the Master referred to the authorities including Taylor v Jecks (1993) 10 WAR 309 and Mayfield-Smith v Mirror Newspapers Ltd [1982] 2 NSWLR 419. In the latter case, the pleaded imputation had resulted in unnecessary detail that added nothing to the imputation, but which might lead to a dispute at trial as to whether or not those additional facts were material to what must be proved by the defendants in order to justify the truth of the imputation. For that reason it was embarrassing.

11 Then at [20] and [21] of his reasons the Master said:

"20 I do not consider that the imputation, as proposed to be amended, falls into that category. I accept the plaintiff's submission that the reference to 'a serious criminal offence' is plainly a reference to the alleged theft referred to in the preceding words of the imputation. What is then pleaded may be, as submitted by senior counsel for the defendants, simply an adjectival characterisation of the preceding words, but it does not give rise to the difficulties, identified in the cases to which I have referred, which have caused irrelevant detail to be struck out. That is, it does not introduce material that may give rise to disputes at trial as to what the defendants must prove in order to justify the imputation. Indeed, if, as submitted on behalf of the defendants, the amendment is simply an adjectival characterisation of the preceding words then the proof of the alleged theft would necessarily be proof of the offence and no difficulty could arise. In any event, I do not consider that the proposed amendment would give rise to any real embarrassment to the defendants.

21 Moreover, there, is in my view, force in the plaintiff's contention that the amendment sought to be made adds to the sting of the libel."

12 The proposed grounds of appeal are in the following terms:

1 The Learned master erred in law in granting leave to the plaintiff to amend the statement of claim in a defective form. The proposed statement of claim was defective in that the imputation pleaded in paragraph 6 of the proposed statement of claim did not arguably arise from the terms of the publication pleaded in paragraph 4 of the proposed statement of claim. Leave ought not to have been granted to file or amend a statement of claim in a form that was liable to be struck out.

Particulars

The imputation pleaded in paragraph 6 of the proposed statement of claim included the words 'of money'.

2 The Learned Master erred in law in granting leave to the plaintiff to amend the statement of claim in a defective form. The proposed statement of claim was defective in that the imputation pleaded in paragraph 6 of the proposed statement of claim was vague, embarrassing or contained irrelevant detail. Leave ought not to have been granted to file or amend a statement of claim in a form that was liable to be struck out.

Particulars

The imputation pleaded in paragraph 6 of the proposed statement of claim included the phrase 'and thereby committed a serious criminal offence'."

13 The appellants contend that theft may be theft of property other than money, and that the pleaded imputation is an artificial limitation on the plain meaning of the words. Counsel for the appellants also contended that this was a case where it was unnecessary to plead an imputation separate from the words themselves. I will first deal with the latter contention. In Monte v Mirror Newspapers Ltd [1979] 2 NSWLR 663 at 678, Hunt J said:

"What the plaintiff must plead as the imputation upon which he relies is, in my opinion, the precise act or condition asserted of, or attributed to, him, or with which he is charged. Words are but instruments which men use to express and convey their meaning: Lewis v Daily Telegraph Ltd [1964] AC 234, but, outside of legal documents, it is recognized that words are imprecise instruments for that purpose: Slim v. Daily Telegraph Ltd [1968] 2 QB 157. Yet it is the meaning alleged to have been conveyed by the words, rather than the words themselves which it is important to have precisely defined in the imputation complained of by the plaintiff. In very few cases would it be sufficient merely to repeat the wording of the matter complained of itself. Very rarely is that act or condition stated expressly in the matter complained of; rather it is more usually implied or to be inferred: Jones v Skelton [1963] SR (NSW) 644; 80 WN 1061. The charge is often to be read only between the lines: Lewis v Daily Telegraph Ltd [1964] AC 234; or by insinuation. As Lord Devlin said in that case, a derogatory implication may be so near the surface that it is hardly hidden at all, or it may be more difficult to detect. But this is not to suggest, his Lordship said, that, where the words are plain, a rhetorical type of imputation should be alleged. The requirement that the plaintiff specify his imputation in the statement of claim should not of course, be construed as an invitation to dress up the matter complained of in fanciful and ingenious terms: Grubb v Bristol United Press Ltd [1963] 1 QB 309. But I maintain that, in very few cases, will the words be plainly expressed as a charge against the plaintiff, so that a mere repetition of the words in the matter complained of will be a sufficient compliance with r 11(2)."

14 In this case the allegation was that there was (or were) "large amounts of theft". It is not expressly said what was stolen. It is therefore a case where it is certainly permissible and probably necessary to plead the imputation.

15 It is quite true, as the appellant contends, that the word "theft" involves theft of property. It may refer to theft of money or it may mean theft of property other than money. However, the reference to "large amounts of theft" must be read in context. The surrounding words reveal that the investigation was an investigation by accountants. It was not during a stock take that the theft was uncovered. Ordinary readers may conclude that accountants' investigations are concerned with money matters. The Master was only concerned with whether the words were "capable" of giving rise to the pleaded imputation. In Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716 at [6], in the majority judgment, the following passage from McPherson JA's judgment in the Court of Appeal was quoted with approval. He said:

"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."

16 While I am referring to Favell, I should mention that, in the majority judgment at [11], it was said, by reference to Lewis v Daily Telegraph Ltd [1964] AC 234 at 277, that:

"... whereas, for a lawyer, an implication in a text must be necessary as well as reasonable, ordinary readers draw implications much more freely, especially when they are derogatory."

The majority in the High Court said that this was "an important reminder for judges".

17 In my opinion, this is a case where reasonable minds may differ about the imputation. The appellants have not demonstrated that the Master's decision was wrong or attended by sufficient doubt to warrant the grant of leave based on the matters raised in the proposed ground of appeal 1.

18 In relation to this proposed ground the appellants submit that the pleaded imputation refers to the act of stealing. The appellants submit that the imputation pleads the precise quality or act of stealing, and that it was unnecessary to further embellish the plea by inclusion of the phrase "and had thereby committed a serious criminal offence". The submission is that this adds nothing to its meaning, that it is unacceptable given its level of generality and that the phrase is repetitive and otiose and therefore embarrassing.

19 This submission ignores the fact that theft may be so serious that it may be the subject of indictment in a superior court. It may be less serious and dealt with by a Magistrate's Court. Thus, stealing may be regarded as serious or less serious. If there are large amounts of theft, then it would be open to a reasonable reader to conclude that the theft alleged was a serious criminal offence.

20 I also agree with the Master's reasoning in [20] of his reasons. This is not a case where the additional words would give rise to a false issue which will produce the need for extra evidence. In my opinion the appellants have not shown that the Master's reasons are wrong or attended by doubt.

21 Even if I were wrong in reaching the above conclusions, I do not consider that there will be any injustice in leaving the Master's decision undisturbed. It appears that the only consequence which would flow from allowing the appeal or disallowing it would be in relation to the pleadings. That is, because the appellants contend, and the respondent's counsel agreed, that if the appellants wish to plead justification on the basis that there was theft of property other than money, then because it would address the common sting, the appellants will be able to do so using a Polly Peck defence. See generally Chakravarti v Advertiser Newspapers Ltd (1998) 193 CLR 519; "Halsburys Laws of Australia" 145 - 1030. Thus, whether the appellants' pleaded imputation was about theft of money or theft of property, the same matters will be raised in the defence. That is, if the appellants were faced with a plea that the large amount of theft related to property, they would be permitted to justify this by pleading the theft of property (including money); and if the pleading remains as it is, the plea of justification may relate to the theft of money and the theft of property (other than money) may be pleaded as a Polly Peck defence.

22 So, as far as the respondent is concerned, if it be found at trial that the imputation was that the respondent was involved in theft of property (and not just money), then this would not be fatal to the respondent because such an imputation would not be more serious than the pleaded imputation.

23 All of this suggests that the strike-out application, and this application for leave to appeal, is a storm in a teacup. Justice Kirby in Favell's case expresses the view that excessive refinement of pleading issues is to be discouraged and that courts discourage or minimise such impediment. I agree.

• Proposed ground1
• Proposed ground of appeal 2
• Injustice