Chel v Fairfax Media Publications

Supreme Court of NSW|2017-02-06|Before: Beech-Jones J

Solicitors: Beazley Singleton Lawyers (Plaintiff) Banki Haddock Fiora (Defendants) File Number(s): 2011/409423

Judgment

This judgment sets out my reasons for certain rulings on the defence of contextual truth made during a defamation trial.

Whether the Contextual Imputation Needs to be Defamatory

Section 26 of the Defamation Act provides: 26 Defence of contextual truth It is a defence to the publication of defamatory matter if the defendant proves that: (a) the matter carried, in addition to the defamatory imputations of which the plaintiff complains, one or more other imputations (contextual imputations) that are substantially true, and (b) the defamatory imputations do not further harm the reputation of the plaintiff because of the substantial truth of the contextual imputations.
By its terms, s 26 does not specify that contextual imputations must be "defamatory". In McMahon v John Fairfax Publications Pty Ltd (No 3) [2012] NSWSC 196 at [18] ("McMahon (No 3)"), McCallum J agreed with so much of the judgment of Dalton J in Mizikovsky v Queensland Television Ltd (No 3) [2011] QSC 375 at [44] to [55] ("Mizikovsky (No 3)") that held it was unnecessary to pose a separate question for the jury as to whether a contextual imputation was defamatory because, as a matter of construction, s 26(a) did not require such an imputation to be defamatory. Subsequent to McMahon (No 3), this aspect of Dalton J's conclusion was affirmed on appeal: Mizikovsky v Queensland Television Ltd [2013] QCA 68 at [27] per Fraser JA with whom Holmes JA and Fryberg J agreed; ("Mizikovsky").
One rationale for this outcome raised in each of these judgments is that the question posed by s 26(b) does not require a comparison of imputation against imputation (McMahon (No 3) at [19] per McCallum J; Mizikovsky (No 3) at [50] per Dalton J; Mizikovsky at [22] per Fraser JA). Instead, in determining whether the defence should go to the jury, "the Court must focus on the facts, matters and circumstances said to establish the truth of the contextual imputation, rather than on the terms of the contextual imputation itself" (John Fairfax Publications v Blake [2001] NSWCA 434; 53 NSWLR 54 at [5], per Spigelman CJ with whom Rolfe AJA agreed at [70]; ("Blake")). This approach applies to s 26 of the Defamation Act (Born Brands Pty Ltd v Nine Network Australia Pty Ltd [2014] NSWCA 369; 88 NSWLR 421 at [73] to [74] per Basten JA with whom Meagher JA and Tobias AJA agreed; ("Born Brands")). It follows that there is no utility in imposing a requirement that the contextual imputation itself be defamatory because the jury is not considering the harm done to the plaintiff's reputation by the contextual imputation. Instead, the jury must consider the harm done to the plaintiff's reputation by the truth of the "facts, matters and circumstances" that establish the truth of the contextual imputation.
Nothing was raised on behalf of Ms Chel that warranted a different approach. In circumstances where the literal words of s 26 do not suggest that a contextual imputation must be defamatory, and that approach has an obvious rationale, I concluded that a contextual imputation need not be defamatory.

Truthful Defamatory Imputations and Section 26(b)

The first matter that required resolution on 24 February 2017 concerned the status under s 26 of the Defamation Act of an imputation pleaded by the plaintiff that has been found by the jury to be defamatory and substantially true. Section 26(a) of the Defamation Act refers to two types of imputations, namely, "defamatory imputations of which the plaintiff complains" and "one or more other imputations … that are substantially true". Is an imputation pleaded by the plaintiff which is defamatory, but found to be substantially true, the former, the latter or neither?
The respective position of the parties can be briefly stated. Mr Evatt contended that the imputations pleaded by the plaintiff, and found to be substantially true, played no role in the application of s 26. His approach means that they are neither "defamatory imputations of which the plaintiff complains" nor "one or more other imputations … that are substantially true". Senior Counsel for Fairfax, Mr Blackburn SC, contended that once a defamatory imputation pleaded by the plaintiff is found by the jury to be true, it is no longer an imputation "of which the plaintiff complains" but instead becomes "[an]other imputation ... that [is] substantially true". It follows, he submitted, that they thereby become "contextual imputations" for the purposes of s 26(b). Mr Evatt submitted that this construction was precluded by the Court of Appeal's judgment in Besser v Kermode (aka Fairfax Media Publications Pty Ltd v Kermode) [2011] NSWCA 174; 81 NSWLR 157 ("Kermode"). Mr Blackburn submitted to the contrary.

Authorities

The relevant authorities concerning s 26 of the Defamation Act 2005 are best described chronologically.
In Kermode, the Court of Appeal dismissed an appeal from a judgment of Simpson J that held that s 26 precludes a defendant from "pleading back" the plaintiff's imputations as contextual imputations. McColl JA described the common law's approach to contextual truth as well as the changes rendered by the Defamation Act 1974 (Kermode at [41] to [74]). In relation to the latter, her Honour noted that the cause of action was the imputation and not the matter complained of. This enabled a defendant to, inter alia, defeat a cause of action constituted by a particular defamatory imputation by pleading back one or more of the plaintiff's other imputations, justifying them and contending that, by reason of their truth, the plaintiff's reputation was not harmed by the defamatory imputation (Kermode at [74(d)]).
However, McColl JA emphasised that under the Defamation Act 2005 the cause of action is no longer each imputation but the entire matter complained of (at [75] to [77]). As for s 26, her Honour stated (at [81]): "…the words 'in addition to ...', [in s 26(a)] correctly in my view, cannot be 'contorted to include imputations pleaded by the plaintiff'. To conclude that the phrase 'in addition to … etc' connotes an imputation the plaintiff has not relied upon does no more than ascribe its ordinary meaning to it. This is reinforced by the use, in the same paragraph (s 26(a)) of further alternative language emphasising the distinction between the plaintiff's and the defendant's imputations: 'one or more other imputations...', the latter being defined as the 'contextual imputations'."
Her Honour did not discern from the extrinsic materials to the Defamation Act any legislative intention to permit the continuation of the practice of "pleading-back" (Kermode at [82]). Further, her Honour identified the mischief sought to be addressed by s 26 of the Defamation Act 2005 as remedying the defect in the common law position revealed by Plato Films Ltd v Speidel [1961] AC 1090 which applied in a number of Australian jurisdictions (at [85]). Her Honour observed (at [85] to [86]): "A defendant will be able to defeat a plaintiff's cause of action if its substantially true contextual imputation(s) outweigh the plaintiff's defamatory imputations. A plaintiff will not be able to avoid serious stings in defamatory matter by selective pleading. This represents a substantial advance for all jurisdictions other than New South Wales which had no contextual truth defence. In summary, a defendant seeking to justify the defamatory matter under the 2005 Act may take the following courses of action, some statutory, some based on the common law: (a) prove that the defamatory imputations carried by the defamatory matter of which the plaintiff complains are substantially true: s 25; (b) prove that rather than the defamatory imputations pleaded by the plaintiff, the defamatory matter carries nuance imputations which are substantially true; (c) to the extent that the defendant fails to establish all the defamatory imputations carried by the defamatory matter of which the plaintiff complains are substantially true, rely on those proved to be true in mitigation of the plaintiff's damages: partial justification; and (d) to the extent the defendant can not prove that the defamatory imputations carried by the defamatory matter of which the plaintiff complains are substantially true, prove that it carries contextual imputations that are substantially true, by reason of which the defamatory imputations do not further harm the reputation of the plaintiff: s 26." (emphasis added)
The emphasised portion of this passage appears to suggest that McColl JA accepted that the "defamatory imputations of which the plaintiff complains" in s 26 are only those of the plaintiff's imputations which are found to be defamatory but not substantially true. If that were not the case, then the fact that some of the plaintiff's imputations were defamatory and found to be true would not reduce the burden imposed on a defendant in seeking to establish a defence under s 26 as this passage appears to suggest ("to the extent").
Mizikovsky (No 3) was decided shortly after Kermode. Dalton J held that it followed from Kermode "that all the plaintiff's imputations found to be conveyed and defamatory are considered against the substantial truth of all the contextual imputations" irrespective of whether the plaintiff's imputations were substantially true or not (at [40]). It would follow from this conclusion that an imputation pleaded by the plaintiff and found to be substantially true nevertheless remains a "defamatory imputation of which the plaintiff complains" (s 26(a)). However, in McMahon v John Fairfax Publications Pty Limited (No 6) [2012] NSWSC 224 at [78] ("McMahon (No 6)"), McCallum J declined to follow this aspect of Mizikovsky (No 3). Her Honour found that s 26(b) was to be addressed in a manner that "disregard[ed] the [plaintiff's] imputations the jury found to be substantially true" (at [53] and [78]). In relation to Kermode, her Honour stated (at [74]): "I think it must be acknowledged that the decision in Besser v Kermode does not determine the present issue one way or the other. The ratio of that decision is that any plaintiff's imputations that are true cannot be taken into account on the defendant's side of the test in s26(b), since they are not 'other imputations' within the meaning of s26(a). The question in the present case is whether any plaintiff's imputations that are true can be taken into account on the plaintiff's side of that test in determining the 'further harm' issue." (emphasis in original)
Meanwhile in Queensland, the analysis of Dalton J at first instance in Mizikovsky (No 3) on this question was upheld on appeal. Fraser JA, with whom Holmes JA and Fryberg J agreed, held that no "other construction [was] fairly open on the statutory text" (Mizikovsky at [17]). However McMahon (No 6) was followed at first instance in New South Wales in Born Brands Pty Ltd v Nine Network Australia Pty Ltd (No 6) [2013] NSWSC 1651 at [121] ("Born Brands (No 6)") (per Adamson J) and James Phillip v Robab Pty Ltd [2014] NSWSC 1520 at [60] (per Rothman J). McCallum J followed McMahon (No 6) in O'Brien v Australian Broadcasting Corporation [2016] NSWSC 1289 at [161] ("O'Brien") which was published after the appeal judgment in Born Brands and The Federal Capital Press of Australia Pty Ltd v Balzola [2015] NSWCA 285 ("Balzola") discussed next.
This issue arose again in the appeal from the first instance decision in Born Brands (No 6). Basten JA (with whom Meagher JA and Tobias AJA agreed) stated that: "[O]n one view, the judgment [in Kermode] was confined to a pleading point and did not need to answer the separate question as to whether a defendant could nevertheless rely upon imputations which it had proved to be substantially true as overwhelming the defamatory effect of an imputation to which it had not pleaded or established a defence of substantial truth." (Born Brands at [82]).
His Honour then referred to the passage from Kermode at [86] extracted above (at [23]) and noted that there was some "uncertainty about the precise interrelationship" between the third and fourth courses of action. His Honour added that the propositions set out in Kermode at [86] "were not intended to be an exhaustive statement of the courses available to a defendant" and that "[o]ther defences are available in appropriate cases" (Born Brands at [83]).
Next, Basten JA set out the passages from the judgment on appeal in Mizikovsky that held that the plaintiff could deploy defamatory imputations found to be substantially true to defeat a defence of contextual truth (Born Brands at [84] to [85]). His Honour then stated (at [86]) that there was an alternative approach available to that stated in Mizikovsky, and suggested by Kermode, namely: "….that the tribunal of fact must consider holistically the effect of the defamatory matter on the reputation of the plaintiff, deciding at the end of the day whether, by reference to the imputations pleaded by both plaintiff and defendant, any imputations which have not been shown to be substantially true cause any further harm to the reputation of the plaintiff once the effect of the substantially accurate imputations has been assessed."
Basten JA noted that it was not appropriate to further address the debate in the cases concerning s 26 as "neither party sought to expose any inconsistency in the authorities" (at [88]). That said, it should be noted that the appeal in Born Brands was decided on a basis that was inconsistent with Mizikovsky. In Born Brands, Basten JA held that each of the four imputations pleaded by each appellant was conveyed (at [25] to [27]) and was defamatory (at [37]). His Honour also upheld a finding at first instance that the last three imputations were substantially true (at [53]). In rejecting a challenge to the trial judge's upholding of a defence of contextual truth, Basten JA (at [88]), referred to a finding of the trial judge in Born Brands (No 6) at [126] that was framed by reference to the approach stated by McCallum J in McMahon (No 6). This finding disregarded the defamatory imputations found to be substantially true and only addressed the effect on the plaintiff's reputation of the one defamatory imputation that was not found to be substantially true having regard to the truth of the contextual imputations pleaded by the defendant (Born Brands (No 6) at [126]). As noted, McMahon (No 6) departed from Mizikovsky (No 3) on this issue. In fact, the trial judge in Born Brands (No 6) had made an alternative finding upholding the defence of contextual truth by reference to the approach stated in Mizikovsky (No 3) (and Mizikovksy) (see Born Brands (No 6) at [127]). This was not relied on or referred to by Basten JA in dismissing the appeal.
In Balzola, Emmett JA and Sackville AJA refused leave to appeal from an interlocutory judgment that relied on Kermode and which granted a plaintiff leave to plead a defendant's contextual imputations as his own imputations and then struck out the defendant's contextual imputations. The applicant for leave sought to reargue the correctness of Kermode. Their Honours referred to the passage from Born Brands at [86] noted above and stated (at [25]): "In the light of these observations in Born Brands it is arguable that, even if a defendant cannot plead any of the plaintiff's imputations as a contextual imputation, the defendant may still be able to rely on the truth of those imputations as "overwhelming" any imputations not proved to be true. That is, a defendant may be entitled to show that the plaintiff's reputation has not been further harmed by the imputations not shown to be true, once the effect of the substantially true imputations has been taken into account."
In refusing leave their Honours noted that, if leave was granted, then while a challenge to Kermode "on the pleading question" might be rejected the issue raised by Born Brands may, nonetheless, remain to be resolved (at [29]). Their Honours added (at [29]): "The Court hearing the appeal may well take the view that it is premature to attempt to resolve these further issues in the absence of findings as to which, if any, of Mr Balzola's pleaded imputations (including Contextual Imputations (A) and (B)) have been proven to be true. The Court may also be reluctant to go beyond the pleading question because the other issues may never arise in the proceedings. Whether they do arise will depend on findings made at the hearing."
These observations leave one to speculate about how the issue stated in Born Brands at [86] could ever arise at a trial (and therefore be raised on appeal) if there is no permissible means of pleading a contextual truth defence that sought to take advantage of defamatory imputations pleaded by the plaintiff and found to be substantially true. An attempt by a defendant to particularise a defence of contextual truth by reference to Balzola, that is, by not specifically pleading a new imputation but simply notifying reliance by the defendants on such of the plaintiff's imputations which might be found to be substantially true, was rejected in Oscar Kazal v Fairfax Media Publications Pty Ltd [2017] NSWSC 44.
In the events that happened it was not necessary for me to dwell on a pleading conundrum that has resulted in a contention that at least two, and possibly five, Court of Appeal judges have found to be arguable being unable to be the subject of any form of pleading. In this case, Fairfax notified the plaintiff by letter well in advance of the trial that they would seek to argue that they should be allowed to deploy such of the plaintiff's imputations as were found to be substantially true as part of the defence of contextual truth. When the matter arose for argument, Ms Chel did not contend that she was taken by surprise by Fairfax's argument or that Fairfax should be prevented from arguing the point because it was not pleaded. It is therefore not necessary to decide whether a letter is a viable long term substitute for a pleading.

Consideration

The judgments noted above are not easily reconciled. At least three inter‑related issues relevant to the resolution of this question are raised, namely: the status of Mizikovsky in New South Wales, whether Kermode precludes an acceptance of Mr Blackburn's argument that a defamatory imputation pleaded by the plaintiff and found to be true is no longer an imputation of which the plaintiff complains, and whether it is possible that a defamatory imputation that is substantially true can be disregarded in applying s 26 as found by McCallum J in McMahon (No 6). I will deal with each of these issues in turn.
In Born Brands at [80], Basten JA queried whether judges at first instance in New South Wales are free to depart from the judgment on appeal in Mizikovsky by simply expressing a preference for the judgment of McCallum J in McMahon (No 6). As I understand it, his Honour was adverting to the obligation of intermediate appellate courts, and single judges, not to depart from the interpretation placed on uniform national legislation by the intermediate appellate court of another State "unless convinced that that interpretation is plainly wrong" (Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485 at 492; "Marlborough Gold Mines").
The difficulty for a judge at first instance in New South Wales approaching Mizikovsky in this way, however, is that they are also strictly bound by the judgments of the Court of Appeal in Kermode and Born Brands both of which are not consistent with Mizikovsky. With Kermode it is difficult to reconcile Mizikovsky with McColl JA's description of the fourth course of action open to a defendant (Kermode at [86(d)]). An acceptance of the approach stated in Mizikovsky would mean that, in a case where a defendant does not wholly succeed on a defence of substantial truth, the task of demonstrating that, because of the truth of the contextual imputations pleaded by the defendants, the defamatory imputations pleaded by the plaintiff do not further harm the reputation of the plaintiff, is not affected to any extent by the fact that some of the plaintiff's defamatory imputations were shown to be substantially true. The judgment of McColl JA in Kermode at [86(d)] suggests to the contrary (see [24] above). In Born Brands, Basten JA observed that the reasons in Kermode and Mizikovsky "may not be entirely consistent" with each other (at [86]).
With Born Brands, as noted at [30] above, the basis upon which the Court of Appeal in Born Brands dismissed so much of the appeal as concerned the trial judge's upholding the defence of contextual truth was itself inconsistent with Mizikovsky.
In the present case an adoption of the approach stated in Mizikovsky is problematic because it was an approach that neither party contended for. In any event, for the reasons set out below (at [42ff]), I respectfully consider that this aspect of Mizikovsky is "plainly wrong" (Marlborough Gold Mines at 492).
Although Born Brands did not revisit Kermode, Born Brands is authority for the proposition that the four alternatives stated by McColl JA in Kermode at [86] do not exhaust the use that can be made by a defendant of a finding that a defamatory imputation pleaded by a plaintiff is substantially true. Otherwise, each of Born Brands and Balzola suggest, or at least question, whether Kermode only established a rule of pleading. I understand the significance of that observation to be that, as Kermode concerned a pleading dispute, it was necessarily directed to a stage of litigation which was prior to any determination of the truth of an imputation pleaded by a plaintiff. This does not deny that Kermode is binding authority on the proper construction of s 26, it just means that care needs to be taken in identifying what construction Kermode is authority for. Accepting, as I do, that the analysis in Kermode concerned a pleading point, it follows that Kermode is binding authority for a construction of s 26(a) that precludes an imputation from simultaneously being both a "defamatory imputation of which the plaintiff complains" and "one or more other imputation … that [is] substantially true". However, as Kermode was directed to an argument at the pleading stage, it could not, and did not, address Mr Blackburn's contention that the proper construction of s 26(a) is such that, once an imputation has been found to be substantially true, it can no longer be an imputation of which the plaintiff complains. Accordingly Kermode does not preclude an acceptance of Mr Blackburn's argument.
As noted above, Mr Evatt contended that any defamatory imputation found to be substantially true should be disregarded in applying s 26. This was the conclusion of McCallum J in McMahon (No 6) and O'Brien. I respectfully disagree with this aspect of those decisions and the other first instance judgments that have followed McMahon (No 6). The text of s 26 does not contemplate the existence of a defamatory imputation found to be substantially true that is neither a "defamatory imputation of which the plaintiff complains" nor "[an]other imputation .. that [is] substantially true". A defamatory imputation found to be substantially true must be one or the other. It follows that Mr Evatt's argument was inconsistent with his reliance on Kermode. If Kermode had the effect for which Mr Evatt contended, then the defamatory imputations found to be true (ie (f) and (g)), would have to be considered with the defamatory imputations not found to be true (ie (a) and (b)). They would not be disregarded.
The construction suggested by Mr Blackburn is consistent with the language of s 26. While the word "complains" is not defined, nothing in the text of s 26 suggests that the imputations of which a plaintiff complains are fixed from the moment they are pleaded. Otherwise neither party suggested that any aspect of the legislative history of s 26 beyond that discussed in Kermode bore upon this issue.
Thus, the question of construction reduces to a consideration as to which of Mr Blackburn's construction or that adopted in Mizikovsky better accords with the objects of the Defamation Act 2005. Mr Blackburn's construction enables the jury to consider whether the truth of the facts, matters and circumstances affecting a plaintiff's reputation is such that no further harm is done to his or her reputation by the publication of defamatory imputations not shown to be true. This construction accords more with the judgment in Blake than the alternative of allowing the effect on reputation of adverse matters shown to be true pleaded by a plaintiff to be considered against adverse matters shown to be true pleaded by a defendant. Mr Blackburn's construction also respects the balance between freedom of expression and protection of reputation by adopting a discrimen of what has been shown to be true rather than who thought of the imputation first (Defamation Act 2005, s 3). The approach in Mizikovsky does not further those objects. I cannot conceive of any rational reason for allowing a plaintiff to rely on a set of damning imputations they pleaded that were also found to be true to defeat a defence of contextual truth.
It was for these reasons that I accepted Mr Blackburn's argument.

Necessity to Consider Effect on Reputation of all Defamatory Imputations

Mr Evatt objected to the form of the proposed question to be asked of the jury that reflected s 26(b) of the Defamation Act. He contended that the jury should be asked three questions namely, in respect of each of the three contextual imputations considered separately, whether all of the defamatory imputations considered together do not further harm the plaintiff's reputation, because of the facts and circumstances surrounding only that contextual imputation.
I rejected this contention. As noted, since the passage of the Defamation Act 2005 the cause of action for a plaintiff in defamation is the matter complained of and not the individual imputations (Defamation Act 2005, s 8). It follows that, for a defence of contextual truth to succeed, there must be a conclusion that "because of the substantial truth of the contextual imputations the defamatory imputations - that is to say the plaintiff's cause of action - do not further harm the plaintiff's reputation" (Kermode at [79] per McColl JA; emphasis added). This means that "the focus is on comparing the defendant's contextual imputations with the plaintiff's cause of action" ([id]; emphasis added).

Evidence of the Plaintiff's Reputation

I also ruled that the jury should not be instructed that, in considering the issue posed by s 26(b) of the Defamation Act, it should consider the evidence adduced concerning Ms Chel's reputation.
I so ruled because to instruct the jury in those terms would have been inconsistent with the manner in which the trial had been conducted. Throughout the trial, and with the acquiescence of the parties, the jury was instructed that any evidence adduced concerning Ms Chel's reputation, and the harm that was done to it by the publication of the article, were not matters that it needed to consider. The jury was instructed this was purely a matter for the trial judge to consider if and when it became necessary to assess damages. This instruction was reiterated in the summing up of the first phase of the trial [3] and no objection to that direction was raised by either party. This consensus was reinforced on the morning of Friday, 24 February 2017, when both Counsel submitted that the Court should not direct the jury to consider the evidence of Ms Chel's reputation when addressing the defence of contextual truth [4] . Mr Evatt later reversed his position and argued that it should be considered [5] . However by that time it was too late to direct the jury that it should consider this evidence.
This conclusion renders it unnecessary to determine whether, if the trial had been conducted differently, a direction to the effect that the jury should consider the evidence concerning Ms Chel's reputation and the harm done to it by the publication of the article should have been given to the jury. The Court was not referred to any authority concerning this issue other than the appeal judgment in Mizikovsky (at [26] to [27]). However, that passage did not address this issue. That said, I note that Dalton J in Mizikovsky (No 3) held that such a direction should be given (at [2] to [34] and [50]).

ANNEXURE A 7. Have the Defendants established that the following defamatory imputations do not further harm the reputation of the Plaintiff: (a) The Plaintiff engages in disgraceful conduct by allowing on‑stage sex at her nightclub. (b) The Plaintiff was a menace to patrons of her nightclub because she did not prevent drink spiking on the premises, because of the substantial truth of the following contextual imputations: A. The Plaintiff conducted a nightclub which was targeted by police as part of a crackdown on bikie gangs. (f) The Plaintiff breached her liquor licence because she hosted a party at her nightclub that involved strippers, dildos, whips and on‑stage sex. (g) The Plaintiff breached the council's development consent because she hosted a party at her nightclub that involved strippers, dildos, whips and on‑stage sex.

Endnotes

T 21/02/17 at 889.36
T 24/02/17 at 128:48
Summing Up p 26
T 24/02/17 at 127:50
T 24/02/17 at 137:10

Amendments 14 March 2017 - Minor typographical amendments 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: 14 March 2017

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