Chetwynd v Armidale Dumaresq Council

Chetwynd v Armidale Dumaresq Council - [2010] NSWSC 690 - NSWSC 2010 case summary — Zoe

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JUDGMENT 1 HIS HONOUR: In these proceedings the plaintiff Brian Chetwynd sued the defendant the Armidale Dumaresq Council ("the Council" or "the defendant") for publishing allegedly defamatory matter in November 2007. 2 The plaintiff was a member of the Council between 2000 and 2008 and was Mayor between 2000 and 2005. In 2005 he was a member of an advisory committee set up by the Council ("the Advisory Committee") in relation to the New England Regional Art Museum (NERAM). 3 On 11 July 2005 the plaintiff attended meetings of the Advisory Committee and then of the Council. Complaints were subsequently made about the plaintiff's conduct at the meeting of the Advisory Committee and in early 2007 a committee ("the Code of Conduct Committee") was set up to investigate these complaints. 4 The Code of Conduct Committee prepared a report which contained a number of adverse findings about the plaintiff's conduct at the meeting of the Advisory Committee on 11 July 2005. This report was included in the agenda contained in a notice of a meeting of the Council to be held on 26 November 2007. The notice of meeting including the agenda was sent by the Council to all members of the Council, to a number of members of the Council's staff, to some members of the public and to a number of representatives of the media. It was this distribution of the agenda which was alleged by the plaintiff to have been the publication by the Council of defamatory matter about him. 5 Subject to minor qualifications, the defendant did not dispute that the imputations alleged by the plaintiff had been conveyed and that the imputations conveyed were defamatory of the plaintiff. However, the defendant raised defences of justification (s 25 of the Defamation Act 2005 - "the Act"), absolute privilege (s 27 of the Act), publication in a public document (s 28 of the Act), common law qualified privilege, statutory qualified privilege (s 30 of the Act) and common law fair comment. A defence of honest opinion (s 31 of the Act) was raised at the hearing but later withdrawn. 6 In his amended reply the plaintiff in reply to the defence under s 28 of the Act alleged that the defamatory matter had not been published honestly for the information of the public and in reply to the defences of common law qualified privilege, statutory qualified privilege and common law fair comment alleged that the Council had been actuated by express malice in the publication of the matter complained of. 7 The evidence in the proceedings was extensive. Witnesses who gave oral evidence for the plaintiff were the plaintiff himself, the plaintiff's wife, Mrs Beverly Roobol who was a member of the Council from 2001 to 2008 and Mrs Margaret Wolfer who gave brief evidence on an aspect of damages. 8 Witnesses who gave oral evidence for the Council were members of the Council at relevant times Mr Ducat, Mr Whan, Mr Waters and Mr Maher; employees of the Council, Mr Harvey, Mr Hadfield, Ms George and Mrs Stachiw; a solicitor who was a partner in Phillips Fox Ms Judith Healy; a solicitor who was a member of the Code of Conduct Committee Mr Singh; and an employee of an information technology firm Mr McLachlan. 9 Apart from the oral evidence a large number of documents were admitted into evidence. 10 There are some disputed questions of fact which I will endeavour to resolve later in this judgment. However, many facts were not disputed or were clearly established by the evidence. A number of facts were established by the file notes, letters and oral evidence of Ms Healy of Phillips Fox. No suggestion was made at the hearing that any of the evidentiary material from Ms Healy was otherwise than completely reliable. I will now set out some of the undisputed or clearly established facts. When I refer to a document I am recording that a document in those terms came into existence and not that facts asserted in the document are necessarily true.

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These concerns include the serious following facts: · The claim that the Director treats staff (including volunteers) and the public very poorly and in such an inappropriate and bullying way that the staff have informed me that they intend to resign if the Director's employment is not terminated. For example, the staff asked for a meeting with me only and the Director found out about this and told the staff that they were not to meet with me, unless the Director was present. · The Director denied to me (contrary to what a staff member had informed me) over the telephone today, that the Director had prevented the staff from meeting with me, without the Director being present: · The Director declines to assist the Consultant, Mr Garry Slocombe (who has been appointed on a short term basis) to consider the financial position of the Museum and its structure, as a matter of urgency. · The Director is frequently not present in the museum during business hours. Given the above, I intend to consider whether the Director has committed wilful breaches of the employment contract and also whether the Director has committed misconduct. Resolution Propose to consider, as a matter of urgency, whether the Director has committed wilful breaches of the employment contract/and also whether the Director has committed misconduct and whether therefore the employment contract should be terminated immediately." 16 I infer that a meeting of the Advisory Committee was held on 5 July 2005 and that the plaintiff spoke at the meeting in accordance with the notes which had been prepared by Ms Healy. 17 On 7 July 2005 Ms Healy sent a letter of advice to the plaintiff. A later letter sent on 11 July 2005 was in identical terms, apart from some additions to the later letter. As the letter of 11 July 2005 was the focus of submissions at the hearing and as I will be setting out the letter of 11 July 2005 in full, I will not set out the terms of the letter of 7 July 2005. 18 On 8 July 2005 Ms Healy had a telephone conversation with the Council's general manager Mr Burns, who informed her that an emergency meeting of the Council would be called for Monday 11 July 2005. On the same day Ms Healy had a telephone conversation with Del Bennett, a volunteer at NERAM, concerning the behaviour of Dr Lally. 19 At 11:46 am on 11 July 2005 Ms Healy emailed to the plaintiff two documents, being a letter of advice and Ms Healy's notes of her conversation with Del Bennett. The letter of advice was in the following terms:- "Termination of Employment Agreement between you and New England Regional Art Museum Reserve No. 96366 (NERAM) and Janice Lally, dated 29 June 2004 We have been asked to advise on the termination of the Employment Agreement of Dr Lally (Agreement). Terms of the Agreement The Agreement is between NERAM and Dr Lally, the Director of NERAM.

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Accordingly, I confirm that your Agreement and your employment as Director of NERAM, is terminated with immediate effect, pursuant to Clause 11.2 (c) and 11.2 (e). Further or alternatively, to relying on clause 11.2 (c) and 11.2 (e), termination with immediate effect is occurring on the basis that you have repudiated your obligations pursuant to the Agreement." 32 On 12 July 2005 a letter in the terms drafted by Ms Healy, which was signed by the plaintiff, was personally delivered to Dr Lally by the plaintiff. 33 After the dismissal of Dr Lally three letters expressing concern about her dismissal were written. 34 One letter dated 24 July 2005 was from Associate Professor Kerry Dunne to the Minister for Local Government. Professor Dunne expressed her concern about the possible deleterious effects of the dismissal on the Museum. The only reference to the plaintiff was that "while the Mayor might not be at liberty to comment on the situation publicly, it is imperative that there be transparency in the case, because otherwise NERAM's reputation will be damaged…" 35 Another letter dated 12 August 2005 was from Mr Bob Baxter, a member of NERAM. In his letter Mr Baxter pointed to the situation of conflict for Dr Lally which had been created by the appointment of a business manager. In his letter Mr Baxter said that "in my almost 40 years of experience in public and private sector employment practices I have never seen a termination notice based on such flimsy and vague reasons and with no prior advice or notice". 36 In a letter to the manager of the Investigation and Review Branch of the Department of Local Government, which was undated but which was received on 16 September 2005, Jane Hall said:- "I wish to express my deep concern at the recent summary dismissal of the Director of the New England Regional Art Museum, Dr Janice Lally, by the Armidale Dumaresq Council. The Council's actions have been far from transparent: both in the press and at a NERAM committee meeting which was attended by well over a hundred concerned members and friends of the Gallery, Mayor Chetwynd has consistently refused to answer any questions about the reasons for Dr Lally's dismissal. I am concerned that due process has not been followed and I ask the Investigation and Review Branch of the Department of Local Government to look into this matter during its upcoming investigation of the Armidale Dumaresq Council." 37 In August 2005 Dr Lally brought proceedings in the District Court against the Council for breach of contract. 38 In September 2005 the plaintiff did not seek re-election as Mayor but remained as a Councillor. 39 The plaintiff declined to provide a statement for use by the Council in defending Dr Lally's proceedings. Phillips Fox gave advice that in their opinion the Council had little chance of successfully defending the proceedings and that it was imperative that the proceedings be settled. In May 2006 the proceedings were settled, on terms that the Council pay Dr Lally $80,000 and her costs, later agreed at $40,000. 40 In March 2006, while the court proceedings by Dr Lally were still pending, a report by the Department of Local Government into the Council was issued. In the report it was noted:- "The former Mayor was Council's representative on the trustee committee. The termination of the former director of New England Regional Art Museum is the subject of a current legal challenge, involving Council. Council should seek advice on whether it can refer concerns about the former Mayor's actions in his capacity as Council representative on the NERAM trust to the conduct committee while legal action is under way or if it should wait until any legal action is finalised (Recommendation 40)." 41 On 20 June 2006 the general manager of the Council Mr Burns wrote a letter to the Mayor Councillor Ducat referring to Recommendation 40 in the report and noting that the proceedings by Dr Lally had been finalised and saying that:- "This now allows Council through its Code of Conduct Committee to consider Cr Chetwynd's role relating to the following matters:

The recruitment process of the employment/ engagement of the business manager.
The dismissal of the former Director Ms J Lally." 42 On 11 July 2006 Mr Ducat sent an email to an officer of the Department of Local Government inquiring about "our way forward with the issue of a Code of Conduct complaint against the former Mayor Councillor Brian Chetwynd". 43 On 31 July 2006 Mr Burns made a record that he and Mr Ducat had contacted the Department of Local Government about a report of a Code of Conduct Committee into a complaint against Councillor Walford, asking whether the report could be dealt with in private or whether the complaint could be withdrawn. Mr Burns recorded that "(the Departmental officer)…advised that it is too late to go back. Once a review has commenced there is an obligation to place the matter before Council upon a breach being determined. Also the matter needs to go in open Council". 44 On 20 December 2006, after a delay of some months, the Director General of the Department of Local Government wrote a letter to Mr Burns, in which he noted that the court proceedings (by Dr Lally) had been finalised and added:- "The Minister for Local Government and the department received three complaints about the conduct of the Mayor in this matter. As contemplated in the recommendation, the conduct of Clr Chetwynd as outlined in these complaints should be examined by you and, if appropriate, referred to council's conduct committee. To that effect, I am attaching the three complaints received." 45 Mr Burns considered it inappropriate that he should investigate the conduct of the plaintiff and did not carry out any investigation. 46 Some steps were taken to form a Code of Conduct Committee to inquire into complaints against the plaintiff. 47 On 5 February 2007 the Council received a letter from Councillor Waters dated 2 February 2007. Parts of this letter were as follows:- "TO: The Armidale Dumaresq Council Code of Conduct Committee

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I further note that you intend for the Conduct Committee to meet on the 8th March 2007. Considering the above, I would contend that any such meeting, would be a blatant attempt to further compromise my position." 54 A meeting of the Code of Conduct Committee at which Mr Ducat, Mr Whan and Mr Werren and Mrs Stachiw as administrative support were present was held on 8 March 2007. The Minutes of the Meeting recorded that Mr Werren was welcomed as an independent representative on the Committee. It was decided that a letter should be sent to the general manager asking why he has proceeded as he had. A detailed paragraph by paragraph response to the plaintiff's letter of 5 March 2007 was discussed, as follows:- "Response to Cr Chetwynd: Para 1: The complaint from the Department of Local Government was received by the General Manager and referred to the Code of Conduct Committee via the Mayor. It is clear that the Department of Local Government requested the matter to be dealt with by the Code of Conduct Committee and that the Department be advised of the outcomes of the investigation. Para 2: Procedures have been followed according to the Code of Conduct Handbook. Clause 10.12 states: "enquiries made by the general manager, an independent person or the conduct committee". Para 3: The Committee had its first meeting on 8 March 2007 and will be commencing an investigation into the four written complaints. The committee will examine the documentation, conduct an investigation and ensure that Cr Chetwynd is kept informed of progress. Procedural fairness will be applied according to Clause 10.12 of the Handbook. Para 4: As previously explained, the delay in dealing with this complaint can be attributed in part to the Department of Local Government's letter not being received by Council until 22 December 2006. A further delay has been experienced due to appointment of an Independent Representative on the Committee. Now that Mr Kip Werren has accepted the appointment, the Committee will be taking action to investigate this matter without further delays. Para 5: The complaint from Cr Waters was referred to the Code of Conduct Committee by the General Manager. Cr Chetwynd was advised of the intention to include Cr Waters' complaint with the other complaints received from the Department and due process will be followed in dealing with all complaints under the Code of Conduct Handbook. The Committee determined that following this meeting, a copy of Cr Waters' complaint will be provided to Cr Chetwynd. Para 6: The Committee will reconvene on 16 March 2007 to consider the specific written complaints in this matter. The Committee will follow the procedures under Clauses 10.7,10.11 and 10.12 of the Handbook. Para 7: At all times, Council was the client of Moin and Associates and there was no conflict of interest for the purposes of the Solicitor's Professional Rules of Conduct. Furthermore, Mr Kip Werren does not have an interest in the matter." 55 On 12 March 2007 Mr Ducat wrote a letter to the plaintiff as a progress report on the Code of Conduct investigation. In this letter Mr Ducat said:- "The Code of Conduct Investigation Committee met at 8am on Thursday 8 March 2007. The Committee was in receipt of your letter dated 5 March 2007 and considered the contents before progressing with other discussions.

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Mr Kip Werren, the other independent representative, has assured the Committee that there is no actual or perceived conflict in this matter. Moreover, while noting the concerns expressed in your letter, the Committee will continue with its inquiries and the newly constituted Committee will meet as soon as Mr Singh has familiarised himself with the documentation." 56 On 28 March 2007 Mr Ducat wrote a further letter to the plaintiff. In the letter Mr Ducat informed the plaintiff that the Committee now consisted of Mr Ducat, Mr Whan and two independent representatives Mr Werren and Mr Singh. The first meeting of the newly constituted Committee had been held on 22 March 2007. Action would be taken to obtain further and better details of the complaints. 57 Over a period of some months letters were written on behalf of the Committee to various persons requesting them to provide statements about inter alia the dismissal of Dr Lally. These letters were written to members of the Council, employees of the Council and persons associated with NERAM. Replies were received from many of these people. 58 A reply dated 13 April 2007 was received from the general manager Mr Burns. In his reply Mr Burns said that the plaintiff had told him that there were problems with Dr Lally, which were stated by the plaintiff to be:-

The staff were ready to walk out and they were dissatisfied with Dr Lally's performance
The volunteer base was decreasing and if Dr Lally did not leave the place would not have any volunteers left. 59 Mr Burns said that the plaintiff had made a comment "something like 'she has to go or there will be no NERAM operation left'". 60 Mr Burns said in his letter "when the matter was considered at Council the former Mayor and Trust Chair Councillor Chetwynd did most of the talking to convince the other councillors to support the dismissal". 61 On 23 April 2007 the plaintiff wrote a letter to Mr Ducat. In this letter the plaintiff said "I have never met Mr Werren and my objection is based solely on his connection with Moin and Associates and his conflict in my view is both actual and perceived". In this letter the plaintiff complained about what he said was the delay in investigating the complaints, he criticised the Committee for not acting in accordance with the Code of Conduct, he accused Mr Ducat of "making up your own rules" and of writing responses to the plaintiff's letters which contained "meaningless and verbose rhetoric" and he expressed the view that the Committee was not properly formed. 62 The plaintiff concluded the letter by saying:- "More than enough time has elapsed for you to carry out these simple processes and I have been very patient over this time, albeit that I have alleged complaints against me. Regretfully, I must take the view that your Committee is not properly formed under the Code and is not following procedural fairness and therefore the veracity of any decision could hardly be taken seriously. Further, in light of your inaction, I now formally object to your membership of the Committee on the basis that, in my view, you have breached Section 10.12 (amongst others) of the Code of Conduct.

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We will contact you again regarding progress following the next meetings scheduled for 18 and 31 May 2007." 66 On 6 June 2007 Mr Ducat wrote a letter to the plaintiff. In this letter Mr Ducat identified three issues stating the relevant sections of the Code of Conduct and stating "allegations/questions to be answered". Issue 1 was "the dismissal of Dr J Lally". Issue 3 was "the proceedings of the meetings of the NERAM Advisory Committee and Council on 11 July 2005". It is unnecessary to refer in detail to issue 2, which was "the appointment of Mr G Slocombe as business manager". 67 The parts of the letter dealing with issues 1 and 3 were as follows:- Issues Relevant Code of Conduct Section Allegations/Questions to be answered The Committee is investigating the Mayor's actions in the dismissal of Dr Lally. Please outline the procedure that you adopted in the dismissal of Dr Lally. Specifically, did you take action within the jurisdiction of the Mayor under the Local Government Act 1993 in dealing with staff issues? The Committee is investigating the Mayor's actions in the dismissal ofDr Lally. 1. The dismissal of Dr Lally Please outline the procedure that you adopted in the dismissal of Dr Lally. Specifically, did you take action within the jurisdiction of the Mayor under the Local Government Act 1993 in dealing with staff issues? 4.4, 4.6, 4.7, 5.1, 5.4, 5.5, 5.6, 5.9 (a) There is evidence before the Committee to suggest that you had telephone conversations with Phillips Fox on 11 July 2007, prior to the meetings with NERAM and Council on 11 July 2005. Was that advice received by you in the telephone conversations relayed to the Councillors at the meeting? (b) Did you accurately represent to the meeting the substance of the written and verbal legal advice received by you prior to the NERAM and Council meetings relating to the potential liabilities which could be incurred by Council as a result of the dismissal of Dr Lally? 4.1-8, 5.1-6, 8.1-3, 8.6-7 (c) It is alleged that Councillor Maher was heard to ask you during one of the meetings whether it was the opinion of Council's solicitors that "natural justice and procedural fairness" had been followed and that you answered "Yes". 3. The proceedings of the meetings of the NERAM Advisory Committee and Council on 11 July 2005 Could you please advise the Committee of your recollection of this issue?

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c) In respect of Issue 3 - proceedings of the meetings of the NERAM Advisory Committee and the Council meeting on the 11th July 2005. Are these allegations in respect of any actions that may have been, or are alleged to have been taken by me? If so, please provide full details in accordance with my request in 3) above. If not, then please provide any information that you rely upon in respect of those Sections of the Code of Conduct stated therein. Further, and in respect to each particular point of Issue 3, I advise and/or request: i.) In respect of part (a), I request that you provide full details in respect of any alleged telephone conversations and further that you provide any evidence that you rely upon in respect of any statements about alleged conversations being "relayed to the Councillors." ii.) In respect of part (b), are you alleging that I did not accurately represent the substance of any written or verbal advice that you allege I received? If so, please provide full details of the allegations. If not, please provide the substance of the information upon which you rely. Further, are you alleging that I may or could be responsible for any "potential liabilities that could be incurred by Council, as a result of the dismissal of Dr Lally?" If so, please provide full details of any such allegations). If not, then please provide the substance of the information upon which you rely. iii) In respect of part (c), are you alleging that Cr. Maher asked me a particular question and that I allegedly provided the answer of 'yes'? If so please provide the full details of any alleged conversation, or questions, when and where they are alleged to have taken place and in the presence of whom, as well as any statement of fact upon which you rely. If not, please provide the substance of any information upon which you rely. iv) In respect of part (d), are you alleging that Cr. Waters asked certain questions in respect of "legal exposure" and "a claim by Dr. Lally," to me and that I answered in a particular manner? lf so, please provide the exact details of any alleged conversations or questions, when and where they are alleged to have taken place and in the presence of whom, as well as any statement of fact upon which you rely. If not, please provide the substance of any information upon which you rely."

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71 The plaintiff asserted near the end of the letter that he was prepared to answer "in a true and proper manner" any definite allegations made against him, provided that appropriate evidence was supplied. 72 The Committee prepared a document described as a Notes and Action Plan, which was progressively updated. In the Plan an "Actions/Task" to be performed was described and a note made of the date on which it was completed. 73 On 14 June 2007 a letter was written to the plaintiff on behalf of the Committee which had been drafted by Mr Singh. The letter contained the same three issues as had been set out in the letter of 6 June 2007 but references were made to numerous specific documents relating to each issue. For example, a number of documents were specified in relation to each of pars (a), (b), (c) and (d) of Issue 3. 74 On 28 June 2007 the plaintiff wrote a letter to Mr Ducat. In the letter he complained that he had not been provided with "any definitive allegations and the appropriate evidence". He queried the use in Mr Ducat's letter of 14 June 2007 of the expressions "allegations/questions" and "issues". He asserted that the documents provided were "selective" and appeared to be "either hearsay, speculation or supposition". The plaintiff asked that the complaints made against him be clearly identified. As to the three letters of complaint sent to the Department he asserted that none of them contained any complaint against him and asked whether any of Associate Professor Dunne, Mr Baxter and Ms Hall had made a complaint against the plaintiff. As to the complaint by Mr Waters he said "I deny the allegation" (that he had provided misleading information to the meetings on 11 July 2005) and he asked that Mr Waters clarify his complaints and be "absolutely specific". The plaintiff demanded to know why information about telephone call details had been supplied by the general manager to Mr Waters. The plaintiff sought more information in relation to the statements made by Ms George and by Ms Jennifer Hughes. 75 On 20 July 2007 a letter nine pages long, which had been drafted by Mr Singh was sent to the plaintiff on behalf of the Committee. In the letter it was asserted that the plaintiff's letter of 28 June 2007 had been "unresponsive" to the three issues. It was suggested that the plaintiff's options were to clearly deny an allegation and provide reasons, clearly partially accept an allegation and provide reasons or clearly totally accept an allegation and provide reasons. In the absence of any clear statement, it would be assumed by the Committee that the plaintiff neither denied nor accepted an allegation. 76 In relation to each of the three issues the letter summarised at length "background evidence" and "matters of concern worthy of investigation". Clauses of the Code of Conduct which it was alleged the plaintiff had breached were specified. As to each allegation the plaintiff was asked "how do you respond to this allegation?". The letter asked the plaintiff to respond to allegations - "please only make responses to the allegations listed above…all comments, requests and observations should be drafted clearly in separate correspondence". 77 A two-line reply was received from the plaintiff dated 5 August 2007. The plaintiff said "I acknowledge receipt of your letter above (the Committee's letter of 20 July 2007). I reject the allegations therein". 78 From time to time the Committee received replies from persons to whom it had written asking for information, including replies from Mr Burns (13 April 2007), Ms George (27 May 2007), Mr Waters (15 June 2007), Mr Maher (2 July 2007 and 18 July 2007) and Mr Hadfield (22 August 2007). 79 On 4 September 2007 a letter was written by Mr Ducat on behalf to the Committee to the plaintiff. In the letter the plaintiff was informed that "the Committee has formed interim conclusions as to the viability of the allegations made against you". The clauses of the Code of Conduct which the Committee had concluded on an interim basis that the plaintiff had breached were specified and the plaintiff was given "a further opportunity to put your case forward in regard to the Committee's interim conclusions". The letter continued:- "Attached to this letter is the evidence the Committee has relied on and you may be able to provide some further guidance of the weight the Committee should place on the evidence". 80 On 12 September 2007 the plaintiff wrote a letter to Mr Ducat referring to the Committee's letter of 4 September 2007. The plaintiff complained that his previous letters complaining about the process (in which the Committee was engaging) and requesting information and documents had not been answered. The plaintiff asserted that the Committee had been "very selective" about who it had sought information from and had forwarded a selection of documents to those persons "to help you in refreshing your memory". The implication in the plaintiff's letter was that the informant's recollections might have been improperly influenced by the selective documents sent to them. 81 On 14 September 2007 Mr Ducat wrote a letter to the plaintiff. In the letter Mr Ducat said "it is the opinion of the Committee that you have been given all relevant documentation that has been considered by the Committee in the assessment of the complaint against you". It was pointed out that the plaintiff as a Councillor had the ability to access Council's records. The final paragraph of the letter read as follows:- "The Committee will meet on 28 September 2007 with an aim to finalise the report to the October Ordinary Council Meeting. Any statement or information you may wish to provide should be submitted to the Committee by 5pm on 25 September 2007". 82 On 17 September 2007 a rough draft of a report by the Committee was distributed to members of the Committee by Mrs Stachiw. The document was only four pages long. The nature of the material to be inserted in a final report was indicated by entries such as "Committee's findings by Alex (Singh) and Kip (Mr Werren) "… "comment by Alex and Kip". 83 On 28 September 2007 the plaintiff wrote a letter to Mr Ducat asserting that his requests for documents and information had been ignored and that, accordingly, he was not able to provide any appropriate response to the letter of 14 September 2007. 84 A draft of the report of the Committee was emailed to members of the Committee on 28 September 2007. 85 On 9 October 2007 a letter was sent by the Committee to the plaintiff, which was in the following terms:- "CODE OF CONDUCT COMPLAINT INVESTIGATION, RECOMMENDATION 40 OF THE PROMOTING BETTER PRACTICE REVIEW - NERAM STAFFING

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Please be advised that I do wish to make some comments for your consideration. In this regard, I note that you have included as an attachment, an Index of all documents. I understand than in accordance with Clause 11 of the Handbook, that such documents will be referred to me as the person complained about. I note that a considerable number of documents on the Index have not been referred to me. I do acknowledge that previously, you have referred a number of documents to me, but many of those that have not been referred to me, are of crucial importance and include documents that I have previously requested, but not been supplied." 90 Subsequently in the letter the plaintiff expressed the wish to go through the index documents and identify the documents not previously supplied to him and to request that he be supplied with those documents. He requested an extension of time in which to comment on the report. The concluding paragraph of the letter was in the following terms:- "In view of the fact that the finding of the Committee is "sufficiently serious" against me, I would appreciate if my request for an extension of time could be granted. I await your reply and thank you for your consideration." 91 On 19 October 2007 Mr Ducat sent an email to the plaintiff. In this email Mr Ducat said:- "It is the Code of Conduct Committee's ('the committee') understanding that all relevant documents that the Committee has relied upon in making its interim findings have already been given to you. However, in order to expedite the matter, the committee will again provide all the relevant documents that the committee has relied upon to you on 24 October 2007. For our records we request that you sign a check list of the documents upon receipt." 92 In the email the time for the plaintiff to make comments was extended to 1 November 2007. 93 On 24 October 2007 Mr Ducat wrote a letter to the plaintiff confirming that the documents (with a single exception) would be made available to the plaintiff that day. The plaintiff was asked to submit any written comments by 1 November 2007. 94 The documents referred to in the index of documents were actually collected by the plaintiff on 25 October 2007, when he signed the index sheet as requested (the documents had in fact been made available to the plaintiff on 24 October 2007). 95 In a letter dated 30 October 2007 to Mr Ducat the plaintiff asserted that some of the documents had not previously been supplied to him and, having examined some of those documents not previously supplied to him, he requested further documents, which he would need time to examine. He requested an extension of time for making comments to 26 November 2007. 96 On 1 November 2007 Mr Ducat wrote a letter to the plaintiff listing eight documents which Mr Ducat said had not previously been provided to the plaintiff. Mr Ducat said that these documents "relate to information supplied on request by the Committee as part of the investigation process". In the letter the plaintiff was granted an extension of time to 9 November 2007, "after which the Committee will consider your submission". 97 On 5 November 2007 the plaintiff wrote a letter to Mr Ducat. In the letter he asserted that the extension of time granted was not sufficient - he had not previously been supplied with other documents "apart from those listed in Mr Ducat's letter of 1 November 2007". In a paragraph of the letter the plaintiff complained that not all of the documents said in the letter of 4 September 2007 to have been attached to that letter were so attached. The plaintiff complained that he had not been provided with all documents and had thereby been denied natural justice. Having examined the documents supplied, the plaintiff observed that there were several errors in the list - "first the document no 17 does not even relate to the matter about me. Document no 15 is not complete, in that only pages 1 to 3 have been produced. There are two documents no 48. Document no 56 is badly copied and parts are unreadable". 98 On 5 November 2007 the plaintiff wrote a long letter to the general manager requesting a long list of documents, described in fairly general terms. For example, the first class of documents was described as follows:- "All documents relating to any communications with respect to NERAM that Council (yourself in particular) had with Forsyth's Accountants and in particular, Mr Bob Finch, between the 1st February 2005 and the 31st July 2005. This includes: a) Correspondence b) Emails c) Records of telephone conversations d) Records of personal meetings e) Documents relating to financial records" 99 On 5 November 2007 the plaintiff communicated with Mrs Stachiw, repeating the complaints he had made in his letter to Mr Ducat of 5 November 2007. On 6 November 2007 Mrs Stachiw sent an email to the plaintiff supplying copies of documents and further information. The plaintiff responded, saying "I have all of the documents now". 100 On 7 November 2007 Mr Ducat sent an email to the plaintiff saying that the Committee had agreed to extend the time for the plaintiff to make comments to 13 November 2007 and that no further extension would be considered. 101 On 13 November 2007 the plaintiff wrote a letter to Mr Ducat, which was in the following terms:- "Re: Code of Conduct Committee

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I await your acknowledgement of receipt of this letter by return and your response to the above, as a matter of urgency." 102 On 14 November 2007 Mr Ducat wrote a letter to the plaintiff replying to the plaintiff's letter of 13 November 2007. Mr Ducat's letter simply stated that "the Committee notes your concerns expressed in points 1-6 and 8 and has considered the issues raised and that "the Committee will not be granting any further extensions". In an email to the plaintiff Mr Ducat said that he had passed the plaintiff's request to the general manager and "he is hoping to have the requested material (that is available) to you early next week". 103 On 19 November 2007 the general manager wrote a long letter to the plaintiff. In the letter the general manager gave details of what he said was his (limited) involvement in the events of 2005. The final paragraph of the letter was in the following terms:- "The Mayor provided a letter dated 13th November 2007 to me and as requested, within the attachments, are the minutes and agendas for the extra-ordinary meeting held on the 11th July 2005, as well as the NERAM Advisory Committee meeting held on the same day. The meeting was not taped and there are no file or minute notes (only kept until the minutes have been confirmed), on the Trim system." 104 On 20 November 2007 the plaintiff wrote to Mr Ducat saying that Mr Ducat's response to the plaintiff's letter of 13 November 2007 "appears to me to be denying me procedural fairness. I believe that documents I have requested are critical in this matter. Accordingly, I advise that I am seeking legal advice in respect of this matter". 105 An agenda for the meeting of the Council to be held on 26 November 2007 was distributed. Item 8 in the agenda included "Code of Conduct complaint against Cr Chetwynd - Recommendation 40 of Department of Local Government Better Practice Review 2006". The report of the Code of Conduct Committee was set out on pages 8-16 of the agenda. Pages 8-16 of the agenda are set out in a schedule to this judgment. According to an answer by the defendant to an interrogatory from the plaintiff the agenda was distributed to the following:- Members of the Public Means Rosemary Mort (PR Officer Hon Richard Torbay MP) Email Armidale War Memorial Library Hard copy Customer Service Centre for public exhibition Hard copy Lee McDougall (ADC's Contract Media Consultant) Email and hard copy Fay Griffiths (Councillor Mentee) Hard copy Jeff Parker (Visually Impaired Member of Public) Email Media Lou Danielli (Print Media/TV) Email Emelia Rixon (ABC TV) Email Richard Standley (ABC TV) Email Suzanne Hill (ABC TV) Email Peter Barrett (Armidale Express News Editor) Email and hard copy Serin Trump (Armidale Independent News) Email Emma Gibbs (Northern Daily Leader) Email NBN Television Email Councillors Brian Chetwynd Hard copy Peter Ducat Hard copy Ken Waters Hard copy James Maher Hard copy Brian Kelly Hard copy Beverley Roobol Hard copy Roger Patricks Hard copy Herman Beyersdorf Hard copy Margaret Walford Hard copy Council Staff Hard copy Shane Burns, General Manager Hard copy David Steller, Acting Director Engineering and Works Hard copy Steve Gow, Director Planning and Environmental Services Hard copy Keith Lockyer, Chief Financial and Information Services Mgr Hard copy Rhonda Stachiw, Manager Administration Hard copy Jane Guilfoyle, Manager Community Services Hard copy Stuart Allardice, Manager Tourism Hard copy Chris Foord, Aged and Disability Coordinator Hard copy Poh Woodland, Public Relations Manager Hard copy Works Coordination Centre Hard copy

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106 On 23 November 2007 Mr Harvey sent an email to Mrs Stachiw saying:- "I have a clear recollection of the Mayor Cr Chetwynd addressing the meeting (of the Council on 11 July 2005) and saying I have legal advice that is so confidential that I cannot give it to you, you will have to trust me on this matter. At the time the statement and Council's acceptance of it surprised me and I mentioned this to other senior staff after the meeting as I have never before witnessed such behaviour at a Council meeting." 107 On 26 November 2007 the plaintiff through his lawyers obtained an ex-parte injunction from the Supreme Court restraining the Council from considering the item in the agenda for the meeting to be held that night, being the Code of Conduct Committee report into the allegations against the plaintiff. In compliance with the injunction, the Code of Conduct Committee report was not considered at the meeting of the Council held that night. 108 On 29 November 2007 the Council gave undertakings to retrieve, and it took steps to retrieve, copies of the Code of Conduct Committee report which had been distributed. On 29 November 2007 the general manager directed that the Code of Conduct Committee report be removed from the Council's website. 109 Further documents were filed in the Supreme Court proceedings commenced by the plaintiff. On 29 February 2008 orders were made by consent but without admissions that the Code of Conduct Committee report be set aside, that the membership of any new Code of Conduct Committee should not include any person who was a material witness to any conduct the subject of allegations against the plaintiff, that the allegations referred by the Department of Local Government and the allegations by Mr Waters be considered separately by a delegate appointed by the general manager of the Council and that, if the delegate determined that both sets of allegations should be referred to a Code of Conduct Committee, they should be referred to separate Code of Conduct Committees. 110 In March and April 2008 a report of the Code of Conduct Committee into an allegation against Councillor Roobol was dealt with "in private". 111 Another Code of Conduct Committee was appointed to investigate the complaint that the plaintiff had acted in breach of the Council's Code of Conduct at the meetings held on 11 July 2005. At the hearing of these proceedings this Code of Conduct Committee was often referred to as "the second Code of Conduct Committee". This Committee comprised persons who I was informed were officers of the Department of Local Government. The Committee received written statements and interviewed the plaintiff and the general manager. 112 The second Code of Conduct Committee produced a report dated 21 August 2008 which became exhibit K at the hearing. The Committee's conclusion was that "the Committee does not find that Cr Chetwynd…acted in breach of the Code of Conduct". 113 Key paragraphs in the executive summary in the report of the second Code of Conduct Committee are:- "The Committee find that the legal advice dated 11 July 2005 (marked draft) provided by Phillips Fox Lawyers to Council was provided to Councillors during the meeting which occurred on 11 July 2005. This legal advice is important as it briefs those who read it with the financial implications of proceeding with the proposed dismissal of a staff member. …. Once it is determined that the advice was made available to the meeting or even that it existed, the onus falls upon each and every Councillor to satisfy themselves as to the contents of the advice. Clauses 9.2 and 9.5 of the Code of Conduct make it clear that each Councillor had a right to read the legal advice and a personal responsibility to satisfy themselves as to any matter which related to their decision." 114 The results of the second Code of Conduct Committee inquiry were reported extensively in the media in the Armidale area.

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Clause 9.5 of the Code of Conduct, which was also referred to at the hearing, was in the following terms:- "Councillors have an obligation to properly examine and understand all the information provided to them relating to matters that they are dealing with to enable them to make a decision on the matter in accordance with council's charter." The meetings on 11 July 2005 116 What happened and particularly what was said at the meetings of the Advisory Committee and the Council on 11 July 2005 is critical to the outcome of these proceedings. The two subjects on which the Code of Conduct Committee made adverse findings against the plaintiff in its report were the dismissal of Dr Lally and the conduct of the plaintiff at the meeting of the Advisory Committee. The two subjects are closely connected. At the meeting of the Advisory Committee the Committee resolved that Dr Lally's contract of employment be terminated and at the subsequent meeting of the Council the Council resolved that the Committee's recommendation (that Dr Lally be dismissed) be endorsed. 117 Of the meetings the meeting of the Advisory Committee was by far the more important. The meeting of the Committee lasted from 5:45 to 7:20, whereas the subsequent meeting of the Council lasted barely eight minutes. When I subsequently refer in this part of my judgment to "the meeting", I am referring to the meeting of the Advisory Committee. 118 As I have already noted, neither of the two sets of minutes of the meeting of the Committee records in any detail what was said at the meeting and there is no other contemporaneous record of what was said. Evidence was given at the hearing by persons who were present at the meeting of their recollection of what was said at the meeting and it will be necessary to examine this evidence in some detail. 119 Before conducting this examination, I will make some observations about the Phillip Fox letter of 11 July 2005. The letter was sent twice on 11 July 2005 and a substantially similar letter had been sent on 7 July 2005. I set out the terms of the letter of 11 July 2005 earlier in this judgment. 120 I am conscious that for some purposes what is material is how the letter was understood by persons present at the meeting, rather than how a lawyer would construe it. Nevertheless, I consider that it would be sufficiently clear to any person, whether a lay person or a lawyer, reading the letter with some care, that in the letter Phillips Fox advised that, if Dr Lally had committed serious breaches within clause 11.2(c) of the employment agreement, then pursuant to clause 11.2(c) of the agreement NERAM could terminate the agreement; however, there is a heavy burden on any employer to justify summary dismissal of an employee; that Phillips Fox were concerned that the Council might not have sufficient evidence to justify summary dismissal; that Phillips Fox were concerned that the matters about which the Council was complaining might not be sufficiently serious to justify summary dismissal; that, if the circumstances were so serious as to justify summary dismissal, the agreement should be terminated immediately; however, "at the very least" or as a matter of prudence, a letter should be sent to Dr Lally setting out the Council's concerns and giving Dr Lally an opportunity to respond; that, if NERAM terminated the agreement, Dr Lally might bring common law proceedings for breach of agreement claiming damages for the balance of the fixed term of her contract or make an unfair contracts claim under the Industrial Relations Act; and that, if NERAM terminated the agreement, the best result would be a negotiated settlement. 121 In the covering email Ms Healy said that she would shortly be sending to the plaintiff a draft letter to Dr Lally and later that day she sent a draft letter to the plaintiff, not summarily dismissing Dr Lally, but giving Dr Lally an opportunity to respond to the complaints against her and warning her that, if she did not respond or her response was unsatisfactory, NERAM intended then to terminate the agreement. 122 The Phillips Fox letter to the plaintiff did not advise that the Council had grounds for summarily dismissing Dr Lally and the letter did not set out "options" for the Council, in the sense of setting out alternative courses of action, none of which was clearly preferable. 123 Oral evidence about the meeting on 11 July 2005 was given in the plaintiff's case by the plaintiff himself and Councillor Roobol and documentary evidence was given by Councillor Walford and the general manager Mr Burns. Oral evidence about the meeting was given in the defendant's case by Councillors Waters, Maher, Whan and Ducat and by members of the Council's staff and there was also documentary evidence.

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The general manager Mr Burns 150 Mr Burns did not given oral evidence at the hearing. I do not consider that I should draw a Jones v Dunkel inference against either party, because Mr Burns was not called as a witness for that party, particularly as there was documentary evidence from Mr Burns. 151 There was admitted into evidence a letter written by Mr Burns to the first Code of Conduct Committee and a transcript of notes of an interview of Mr Burns by members of the second Code of Conduct Committee. 152 In his letter of 13 April 2007 to the first Code of Conduct Committee Mr Burns said in part:- "The former Mayor, Councillor Chetwynd was in frequent contact leading up to the dismissal with Ms Judith Healy at Phillips Fox Solicitors receiving advice with respect to dismissing Dr Lally. Councillor Chetwynd, during this period, came to me saying that he needed my support to dismiss Dr Lally. After advice was received from Judith Healy at Phillips Fox that Council as trustee had a slim chance in defending an unfair dismissal claim if she were to be dismissed, I stated to Councillor Chetwynd that the Trust should try to manage her out over time through her continued refusal to carry out instructions and build a case which would be more defensible. Councillor Chetwynd stated that if she did not go, the Museum would 'implode'. When the matter was considered at Council the former Mayor and Trust Chair Councillor Chetwynd did most of the talking to convince the other councillors to support the dismissal. When I was asked for my comment, I advised that I can only comment on what I had experienced and this was that Dr Lally had failed to comply with an instruction to cooperate with the business manager and had also failed to converse with the business manager prior to submitting the funding applications. While I held reservations about the dismissal, I was relying on the advice from the former Mayor Councillor Chetwynd that it was as bad as he was making out and subsequently she had to leave." 153 When he was interviewed by the second Code of Conduct Committee on 11 August 2008 Mr Burns said that he was sure that at the meeting all the councillors had the Phillips Fox legal advice and that the plaintiff offered time to read the advice and councillors took that time. When asked whether the plaintiff had misled councillors about the legal advice Mr Burns said "not that I recall".

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Evidence in chief 169 Councillor Maher believed that the Phillips Fox letter and the draft letter to Dr Lally had been available at the meeting on 11 July 2005. 170 At the meeting the plaintiff had been "arguing for the termination of Dr Lally". 171 Councillor Maher said that at the meeting the plaintiff had said "that he'd had a very busy day with communications backwards and forwards between himself and the solicitor at Phillips Fox whose name was Judith Healy". Councillor Maher's evidence continued:- "He had already (at the meeting) recommended the termination of Dr Lally and I had still had my concerns, so I asked a couple of questions. Firstly, I asked the Mayor, did he believe that she had sufficient natural justice and secondly, did the lawyer believe she'd had sufficient natural justice and to both questions he said "Yes"." 172 Councillor Maher said that when he had asked these questions the plaintiff had had a bit of paper in his hand and he was shaking it around and "I was under the impression that that was some advice that had come through by fax or whatever". 173 Councillor Maher gave evidence that the plaintiff had said that "legal advice she (Ms Healy) had given him on the phone (was) that we could terminate her because she had been given natural justice". 174 The following question and answer occurred in the evidence in chief:- "Q. How did you perceive what he said orally, given what you could read on the written letter? A. Well, I believe it contradicted the earlier advice, but he said things had been moving rapidly, he had several phone calls backwards and forwards and, you know, we were led to believe that the advice was that she should be terminated, or could be terminated." 175 Councillor Maher concluded his evidence in chief by saying:- "I was the last councillor to come on board, if you like, to vote for a termination. As I said, there were two councillors away. I felt that Councillor Chetwynd would have preferred to have a unanimous decision about this. Given the advice that I had received at that meeting, I thought well, you know, who am I to argue if she has been given natural justice and there are reasons to terminate, then I guess I'll have to vote in favour of it."

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Evidence in chief 178 Councillor Whan received at the meeting the agenda, the Phillips Fox letter and the draft letter to Dr Lally. 179 At the meeting the plaintiff said "she has to go". 180 Mr Whan read the Phillips Fox letter "to some extent" and understood that "it was saying that we should take caution, that we should in fact give Dr Lally some time to answer the allegations and that she should be allowed to write back to the council in answer to those questions." 181 The plaintiff said that "he had more recent verbal advice from the solicitors, that in fact contradicted what was in the written advice and that in fact we had every ground to dismiss her immediately and that is what he believed should happen." 182 At the meeting "councillor Chetwynd left the mayor's chair and stood in the middle of the circle and walked around brandishing a piece of paper and in a very forthright manner saying what he believed should happen." 183 Mr Whan gave further evidence as follows:- "He actually told us that he would give us a copy of the piece of paper at the beginning of the meeting but legal advice was that that piece of paper must be handed back in and that we could not keep it. ….. Yes we did see it for a period of time. ….. I can't remember exactly what was written on it but it certainly contradicted the written advice that was in our council papers and basically said that they believed that or somebody believed that it was quite legal for us to dismiss Dr Lally immediately and that there would be no consequences or very few consequences." 184 Mr Whan himself did not ask any question at the meeting. However "councillor Maher in particular said "can we be assured Mr Mayor that procedural fairness is being followed with what we are proposing to do… He assured councillor Maher that procedural fairness was being followed." 185 The following question and answer occurred in the evidence in chief:- "Q. When it came time to vote what were you influenced by? A. Very much so by counsel Chetwynd's assurances and the more recent verbal advice that he had apparently received."

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Evidence in chief 191 The Phillips Fox letter was available to Councillor Ducat at the meeting. He received it either shortly before the meeting commenced or at the meeting. He thought that he had received the draft letter to Dr Lally at the same time as he received the Phillips Fox advice. 192 There had been only one issue at the meeting, whether Dr Lally should be dismissed. 193 Councillor Ducat said in his evidence:- "My recollection is that he (the plaintiff) spoke for most of the time of the Advisory Committee meeting which I think went for an hour or an hour and a half or so." 194 At the meeting the plaintiff had put forward a definite point of view, which was that "irrespective of the advice we had, which was saying that Mrs Lally should be given procedural fairness and time to reply, there was an urgency in relation to something being done with NERAM… he said that he had more current advice than the advice we had, that advice was wholly confidential, he wasn't able to give it to us". 195 Councillor Ducat's understanding of the advice in the Phillips Fox letter of 11 July was "we should give her the opportunity to respond to the allegations or the comments that had been made about her standard of management, and not to proceed without doing that". 196 Councillor Ducat said that "he had a piece of paper - now I'm not sure whether it was one piece or a few pieces, a piece of paper he was referring to as the advice that he had. I'm not sure whether that was his handwritten notes of the advice. It would have to be that, because I believe it was only telephone advice he had from his solicitor". 197 Councillor Maher asked a question whether Dr Lally had been given procedural fairness and the plaintiff answered that she had. 198 Councillor Ducat's recollection was "that Councillor Waters was worrying about council's liability of whether we were able to do this without putting council at risk of being involved in legal actions…and the plaintiff's answer was "that it was highly unlikely that there would be a claim from Dr Lally…and that if there was, it would be unlikely that she would have any recourse on council". 199 Councillor Ducat's understanding was that this answer was "part of the legal advice (the plaintiff) had through the day because it was very much contrary to what we had in writing in front of us".

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Consideration 213 I am in agreement with the second Code of Conduct Committee in that I am satisfied that copies of the Phillips Fox letter of 11 July 2005 were distributed to councillors at or shortly before the commencement of the meeting of the Advisory Committee. This conclusion is supported by the evidence of the plaintiff and Councillors Roobol, Maher, Whan and Ducat and the only evidence to the contrary is Councillor Waters' evidence, which I consider I should reject. I accept that, the Phillips Fox letter having been provided to councillors, councillors were under an obligation to properly examine and understand it (clause 9.5 of the Code of Conduct). Some time was allowed to councillors, even if only during the meeting, to read the letter. 214 Another part of the evidence of a witness for the defendant which I consider I should reject is Councillor Whan's evidence that at the meeting a piece of paper containing legal advice was handed out by the plaintiff to the other councillors but required by the plaintiff to be returned to him. This evidence is not supported by the evidence of any of the other witnesses. 215 I have, however, reached the conclusion that I should accept much of the other evidence of the defendant's witnesses about what they say the plaintiff did and said at the meeting and reject evidence by the plaintiff which is inconsistent with that evidence. 216 By the time of the meeting the plaintiff strongly desired to dismiss Dr Lally. The plaintiff's evidence that by early July he was merely coming to the conclusion that there was no other option but to get rid of Dr Lally understated his true state of mind. In cross-examination he made a concession that it was quite probable that he said to the meeting that there would be no organisation (NERAM) left, if Dr Lally was not got rid off. In his letter of 13 April 2007 to the first Code of Conduct Committee the general manager said that the plaintiff had said to him that he needed the general manager's support "to dismiss Dr Lally". 217 The plaintiff chaired the meeting; he was the person who, to the knowledge of the others present, had been in communication with Ms Healy; and he was the person who did most of the talking at the meeting. This finding is supported by much evidence, including the account given by the general manager in his letter of 13 April 2007. 218 In addressing the meeting the plaintiff endeavoured to convince the other councillors that it was necessary to summarily dismiss Dr Lally. In reaching this conclusion I have taken into account evidence to the contrary, including the evidence of Councillor Roobol that the plaintiff's conduct at the meeting was "very open" and the evidence of Councillor Walford that there had been "full frank open discussion". However, this evidence is outweighed by the concessions made by Councillor Roobol in cross-examination, the evidence of the defendant's witnesses, the evidence of the general manager and the likelihood of the plaintiff's strong desire that Dr Lally be summarily dismissed affecting what he said at the meeting. 219 The Phillips Fox letter of 11 July 2005 did not support Dr Lally being summarily dismissed. On the contrary, the letter advised against Dr Lally being summarily dismissed and, instead, advised that Dr Lally should be accorded procedural fairness by sending her a letter, which was drafted by the lawyers, giving Dr Lally an opportunity to reply to the complaints against her. 220 The evidence of Ms Healy, Mr Hadfield and Ms George establishes that, before the meeting on 11 July 2005, the plaintiff appreciated that the letter of 11 July 2005 did not, by itself, support the summary dismissal of Dr Lally. 221 There was not really any dispute at the hearing that at the meeting Councillor Maher asked a question to the effect of whether Dr Lally had received procedural fairness. Councillor Maher was described by the plaintiff as being "reasonable". He was not a member of the group of councillors who, the plaintiff said, usually opposed him. 222 That question having been asked by Councillor Maher, it is probable that something was said by the plaintiff to remove, or at least alleviate, Councillor Maher's concern about whether procedural fairness had been granted. What the plaintiff said was likely to have been that procedural fairness had been granted and/or that the Council's lawyers had advised that procedural fairness had already been granted to Dr Lally. 223 It is inherently likely that someone at the meeting asked the plaintiff questions about the Council's legal liability, in the event of Dr Lally being summarily dismissed. Phillips Fox had advised in their letter that, if Dr Lally was summarily dismissed, she might bring court proceedings. 224 More generally, given the contents of the letter of 11 July 2005 and the (correct) understanding of the letter by Councillor Roobol, Councillor Maher, Councillor Whan and Councillor Ducat, it would be difficult to explain how all of those councillors eventually voted in favour of the resolution summarily dismissing Dr Lally (at either or both of the meeting of the Advisory Committee and the meeting of the Council), unless the plaintiff conveyed to the meeting that he had received further advice from the Council's solicitors which was more favourable than was the letter of 11 July 2005 to Dr Lally being summarily dismissed. 225 On the plaintiff's own evidence at the present hearing, he misrepresented the advice given in the letter of 11 July 2005. It would have been a misrepresentation of the advice to assert that in the letter the solicitors were presenting "options" or "alternatives". The part of the letter on which the plaintiff placed most reliance, that is the part reading "strictly speaking if circumstances are so serious as to justify summary dismissal the contract should be terminated immediately…"did not express any opinion on whether circumstances were in fact so serious as to justify summary dismissal. Elsewhere in the letter the solicitor expressed concern about whether summary dismissal was justified. 226 I am satisfied that, in his desire to convince the other councillors that Dr Lally should be summarily dismissed and conscious that the letter of 11 July did not support summary dismissal, the plaintiff seriously misrepresented the advice which had been received from the Council's lawyers by conveying that he had received more recent, oral advice in a telephone conversation he had had with Ms Healy, which went beyond the written advice and provided greater support for summarily dismissing Dr Lally but which had to remain confidential. 227 A further reason for rejecting the plaintiff's evidence is the successful attack which was made at the hearing on the plaintiff's general credibility. Counsel for the defendant identified a number of matters as to which he submitted, and I consider established, that the plaintiff's evidence was demonstrably untrue. 228 Of particular importance was evidence of the plaintiff denying that he had received with the letter of 9 October 2007 and the email of 10 October 2007 a copy of the draft report said to have been attached to the letter and the email, which, although not identical with, was substantially similar to, the Code of Conduct Committee's final report. This denial was important to the plaintiff's case on damages in the present proceedings, because it is part of the plaintiff's case on damages that the distribution of the final report by the Council on or about 23 November 2007 came as an unexpected shock to him, causing him considerable upset and distress. 229 I am satisfied that there was attached to the letter and the email a copy of the final report in an advanced state of preparation. I base this finding on the terms of the plaintiff's letter of 18 October 2007 in reply to the letter of 9 October 2007, in which he refers to the Committee making adverse finding against him; refers to those findings being "sufficiently serious", which is clearly a reference to a part of the report and not, as the plaintiff asserted, a reference to parts of clause 11 of the Code of Conduct; and the absence of any complaint in the plaintiff's letter that the draft report had not been attached, whereas on other occasions the plaintiff had been quick to castigate the Council for not having sent him documents alleged to have been sent. 230 An alternative assertion was made by the plaintiff that, although some draft of the report might have been attached to the letter and the email, it was not the advanced draft but an earlier draft of September 2007. The earlier draft was only a template with many parts remaining to be filled in and, had it been the document attached, it would surely have provoked comments by the plaintiff in his letter of 18 October 2007. 231 Ultimately, evidence by Mrs Stachiw established beyond doubt that there had been attached to the letter and the email a copy of an advanced draft of the Committee's report. 232 Apart from the findings I have already made, I am satisfied that:- 1. Councillor Waters asked questions to the effect of what was the Council's exposure if Dr Lally was dismissed and what was the Council's legal advice relating to any possible claim by Dr Lally and that the plaintiff answered to the effect that it was unlikely that Dr Lally would bring any claim and that, if she did, the Council would win. 2. Councillor Maher asked whether sufficient natural justice had been given to Dr Lally and whether the Council's lawyers considered that Dr Lally had been given sufficient natural justice and the plaintiff replied in the affirmative to both questions. The plaintiff waved a piece of paper, which he said confirmed the solicitor's advice that natural justice had been given. 3. The plaintiff made misleading statements about the advice which had been received by him from the Council's lawyers, representing that advice later than the letter had been received from the lawyers, which was confidential and which was more favourable to Dr Lally being summarily dismissed than was the letter of 11 July 2005.

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Imputations 233 In the amended statement of claim the plaintiff pleaded 15 imputations, as follows:- "(a) The Plaintiff had engaged in conduct that breached the Council's Code of Conduct. (b) The Plaintiff contravened the local Government Act, Associated Regulations and Council's relevant administrative requirements. (c) The Plaintiff engaged in conduct which was improper or unethical (page 13 Committee's findings, page 15 Committee's findings). (d) The Plaintiff engaged in conduct which was an abuse of power or otherwise amounted to misconduct (e) The Plaintiff engaged in conduct which compromised or involved discrimination, disadvantage or adverse treatment in relation to employment. (f) The Plaintiff made misleading statements which led to adverse treatment in relation to Dr Lally's employment (g) The Plaintiff engaged in conduct which involved himself in unauthorised operational activities relating to Dr Lally's employment. (h) The Plaintiff engaged in conduct which was an abuse of power and improper or unethical. (i) The Plaintiff took irrelevant matters into consideration when advising Councillors of the legal position in dismissing Dr Lally. (j) The Plaintiff failed to present all relevant facts to Councillors. (k) The Plaintiff failed to act in good faith. (I) The Plaintiff misrepresented the legal advice to Councillors. (m) The Plaintiff conducted himself disgracefully in respect of the dismissal of Dr Lally. (n) The Plaintiff denied Dr Lally procedural fairness. (o) The Plaintiff's conduct was so serious as to warrant the matter being referred to the Department of Local Government." 234 Almost all of the imputations were taken directly from pages 15 and 16 of the agenda, adopting the language actually used in the agenda. It would seem that a number of the imputations did not differ in substance from other imputations. See Uniform Civil Procedure Rules Pt 14 r 14.30(3). However, no application was made to me to strike out any of the imputations. 235 Counsel for the defendant accepted that all of the imputations pleaded were conveyed, apart from imputation (m), that is that the plaintiff conducted himself disgracefully in respect of the dismissal of Dr Lally, an imputation alleged to have been conveyed by the agenda as a whole. In my opinion, the agenda as a whole did convey that imputation. 236 Counsel for the defendant accepted that all of the imputations were defamatory of the plaintiff, except for imputations (g), (i) and (j). In my opinion, all of these three imputations were likely to cause ordinary reasonable persons to think less of the plaintiff and were therefore defamatory. 237 I will now proceed to consider the defendant's defences.

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(a) The appointment of the Council as the corporate trustee of NERAM (b) The plaintiff's insistence that all communications between NERAM and the Council be through him (c) The Phillips Fox letter of 11 July 2005 (d) The telephone advice given by Ms Healy to the plaintiff (e) The plaintiff's conversations with Mr Hadfield and Ms George (f) The questions asked by Councillor Waters and Councillor Maher at the meeting on 11 July 2005 and the answers given by the plaintiff to those questions and the assertions made by the plaintiff at the meeting about having received legal advice different from the advice in the letter of 11 July 2005 (g) The resolution that Dr Lally be dismissed and the dismissal of Dr Lally (h) The telephone conversation between the plaintiff and Ms Healy on 12 July 2005 and the letter of 12 July 2005 from Ms Healy to the plaintiff (i) The complaints by Dunne, Baxter, Hall and Waters (j) The letter of 20 December 2006 from the Department of Local Government (h) The reference of the complaints to the Code of Conduct Committee (l) The investigation by the Code of Conduct Committee and the report of the Code of Conduct Committee 242 On the basis of the findings of fact already made by me earlier in this judgment, I find that the defendant has established all of the particulars of justification. 243 I further find that the defendant has established that all of the imputations were substantially true, even though some of the imputations are to be regarded as statements of opinion rather than statements of fact. There was some discussion at the hearing about whether, where an imputation contained an alternative (for example imputation (h)), it was sufficient for the defendant to prove the truth of one of the alternatives or whether it was necessary for the defendant to prove the truth of both of the alternatives. It is unnecessary for me to resolve this issue, because I am satisfied that, where an imputation contained alternatives, both the alternatives were true. 244 My decision that the defence of justification has been established for all of the imputations is sufficient to dispose of the case. However, in accordance with the usual practice of trial judges, I will proceed to consider the rest of the defences raised by the defendant, on the assumption that the defence of justification has not succeeded.

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Defence of publication of public documents 250 The defendant pleaded a defence of publication of a public document pursuant to s 28 of the Defamation Act. Section 28(1) of the Act provides that it is defence to the publication of defamatory matter, if the defendant proves that the matter was contained in a public document. 251 The expression "public document" is defined in sub-s 4 of s 28 so as to include a number of types of documents. The only part of sub-s 4 which was pleaded in the amended defence was par (d), which provides that "public document" includes, so far as is relevant, any document issued by a local government "for the information of the public". However, at the hearing counsel for the defendant also sought to rely on par (c), which includes any report or other document that under the law of any country is authorised to be published, and two parts of par (e), namely "any record or other document open to inspection by the public that is kept…(ii) by a statutory authority of an Australian jurisdiction or…(iv) under legislation of an Australian jurisdiction". 252 I was not referred by either counsel to any authority on s 28 of the Defamation Act. 253 I do not consider that the agenda fell within par (d). It seems to me that par (d) requires that the purpose of informing the public be a principal purpose for the issuing of the document and such a requirement would not be satisfied in the present case, even though some copies of the agenda were sent to the media and to "members of the public", such as the Armidale library and the Customer Service Centre for public exhibition. Nor do I consider that the agenda published by the Council could be regarded as being, within par (e), a record or other document "open to inspection by the public" which was "kept" by the Council. 254 As to par (c), counsel for the defendant sought to apply a line of argument which he had advanced earlier in his written submissions in relation to the defence of common law qualified privilege. Concisely stated, the argument was that by virtue of certain provisions of the Local Government Act and the Local Government (General) Regulation the report of the Code of Conduct Committee was required to be included in an agenda for a meeting of a Council, which would be available to the public at the Council's office and at the meeting, which would itself be open to the public. Particular reliance was placed on s 9 of the Local Government Act. 255 However, even if all these steps in the argument are accepted, it does not seem to me that the report of the Code of Conduct Committee would be "authorised" to be published within par (c). In my opinion, par (c) is limited to some specific report or document or some specific class of reports or documents which are expressly authorised by the law to be published. 256 I reject the defence under s 28 of the Defamation Act.

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The defence of qualified privilege at common law 257 It is a condition of qualified privilege at common law (leaving aside the extension of common law qualified privilege in Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 that the maker of the defamatory statement should have had a duty or interest to make the statement and the recipient of the statement should have had a corresponding interest or duty to receive it. See for example Adam v Ward [1917] AC 309 at 334 per Lord Atkinson; Roberts v Bass (2002) 212 CLR 1 at [62] 26 per Gaudron, McHugh and Gummow JJ. 258 In Bennette v Cohen [2009] NSWCA 60 Ipp JA, with whom in this part of his judgment Campbell JA agreed, noted at [14] that in Bashford v Information Australia (Newsletters) Pty Ltd (2004) 218 CLR 366 Gummow J had quoted what Jordan CJ had said in Andreyevich v Kosovich and Publicity Press (1938) Pty Ltd (1947) 47 SR (NSW) 357 at 363, that in order for the defendants in that case to succeed on a defence of qualified privilege:- "[I]t was necessary that they should show by evidence that both the givers and receivers of the defamatory information had a special and reciprocal interest in its subject matter, of such a kind that it was desirable as a matter of public policy, in the general interest of the whole community of New South Wales, that it should be made with impunity, notwithstanding that it was defamatory of a third party." 259 In the present case it is necessary to distinguish between the four classes of persons to whom, according to an answer by the defendant to an interrogatory from the plaintiff, the agenda containing the report of the Code of Conduct Committee was distributed, namely "members of the public", "media", "councillors" and "Council staff". 260 It was conceded by counsel for the plaintiff that the defence of qualified privilege should succeed in relation to the distribution of the agenda to members of the Council. It also appeared to be conceded, and I would in any event hold, that the defence of qualified privilege should succeed in relation to the distribution of the agenda to the members of the Council staff, all of whom held senior positions and had a sufficient interest in receiving information about the business proposed to be dealt with at a meeting of the Council. What was disputed by counsel for the plaintiff was whether the defence of qualified privilege should succeed in relation to the distribution of the agenda to the members of the public to whom it was sent and the representatives of the media to whom it was sent. 261 In support of his submission that publication to the members of the public and to the representatives of the media was protected by qualified privilege, counsel for the defendant propounded an elaborate argument, to which I have referred earlier in this judgment. On the basis of the Local Government Act including ss 9, 10, 10A, 371 and 440 and of the Local Government (General) Regulation, the Code of Conduct and the Code of Meeting Practice as adopted by the Council, counsel submitted that the Code of Conduct Committee was under a duty to submit to the Council a report of its investigation into the complaints relating to the plaintiff, that the Council was under a duty to consider the Committee's report, that the only way in which the Council could consider the report was at a meeting of the Council, that in order for there to be a meeting of the Council there had to be a notice of the meeting, that it was necessary that the notice of meeting of the Council contain an agenda of the business to be dealt with at the meeting, that if the business to be dealt with included consideration of a report it was necessary that the report be included in the agenda and that the agenda for a meeting of the Council had to be available to the public, both before and at the meeting. 262 I would accept most of the steps in this argument, although I note s 9(2A) and s 10A of the Local Government Act. However, even if all the steps in the argument are accepted, I do not consider that the argument establishes the necessary reciprocity of duty or interest between the Council and the members of the public or the representatives of the media to whom the agenda was distributed. On counsel for the defendant's argument, the sending by a council of an agenda containing defamatory matter to any member of the public or any representative of the media would be protected by qualified privilege. 263 I do not consider that the sending of the agenda to the members of the public or the representatives of the media was protected by qualified privilege under any principle of ancillary privilege (Gatley 14.71) or any principle of its having been reasonable to take the risk of publication to persons not having a sufficient interest (Gatley at 14.73). 264 I am, accordingly, of the opinion that the defence of qualified privilege at common law fails in relation to the distribution of the agenda to the members of the public and the representatives of the media. However, the defence succeeds in relation to the distribution of the agenda to the councillors and the members of Council staff. As explained in Gatley in footnote 436 on p 505 the publication between the Council and the councillors and the members of the Council staff remains privileged, notwithstanding the excessive publication to persons not having a sufficient interest. 265 So far in this part of my judgment I have not considered the extension to qualified privilege at common law created by the High Court in Lange, whereby qualified privilege extends to a communication made to the public on a government or political matter, including discussion of government or politics at a local government level. 266 The High Court in Lange held that a condition of this extended category of common law qualified privilege is that the defendant's conduct in publishing the defamatory matter should have been reasonable in all the circumstances. In discussing this condition the High Court referred to s 22 of the New South Wales Defamation Act 1974, which was substantially similar to s 30 in the present New South Wales Act (statutory qualified privilege). 267 It was common ground at the hearing before me that the condition of the extended category of common law qualified privilege in Lange is the same as the condition in s 30 of the Defamation Act that the conduct of the defendant in publishing the defamatory matter should have been reasonable in all the circumstances and in their submissions both counsel dealt with this condition almost entirely in relation to the defence of statutory qualified privilege. I will myself deal with it in my consideration of statutory qualified privilege.

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The defence of statutory qualified privilege ( Defamation Act s 30) 268 Section 30(1) of the Defamation Act provides:- "(1) There is a defence of qualified privilege for the publication of defamatory matter to a person (the recipient ) if the defendant proves that: (a) the recipient has an interest or apparent interest in having information on some subject, and (b) the matter is published to the recipient in the course of giving to the recipient information on that subject, and (c) the conduct of the defendant in publishing that matter is reasonable in the circumstances." 269 Section 30 (3) of the Act provides:- "(3) In determining for the purposes of subsection (1) whether the conduct of the defendant in publishing matter about a person is reasonable in the circumstances, a court may take into account: (a) the extent to which the matter published is of public interest, and (b) the extent to which the matter published relates to the performance of the public functions or activities of the person, and (c) the seriousness of any defamatory imputation carried by the matter published, and (d) the extent to which the matter published distinguishes between suspicions, allegations and proven facts, and (e) whether it was in the public interest in the circumstances for the matter published to be published expeditiously, and (f) the nature of the business environment in which the defendant operates, and (g) the sources of the information in the matter published and the integrity of those sources, and (h) whether the matter published contained the substance of the person's side of the story and, if not, whether a reasonable attempt was made by the defendant to obtain and publish a response from the person, and (i) any other steps taken to verify the information in the matter published, and (j) any other circumstances that the court considers relevant." 270 The defence of statutory qualified privilege is not subject to the requirement of reciprocity which applies to common law qualified privilege. The statutory defence is subject to the requirement that the recipient of the publication have an interest or apparent interest in having information on a subject. 271 It was submitted by counsel for the defendant that the statutory defence is available, as regards all recipients of the information, even if not all the recipients have the requisite interest, provided that the extent of the publication was reasonable. As authority for this submission counsel cited Austin v Mirror Newspapers Ltd (1984) 2 NSWLR 383 at 390 per Glass JA. However, Glass JA was relying on s 20(3) of the 1974 Defamation Act, which does not appear to have any equivalent in the present Act. Nevertheless, counsel for the plaintiff in his written submissions accepted that "this defence applies to widespread publication such as to the general public and/or the media". 272 The submissions of both counsel were directed to whether, as required by s 30(1)(c), the conduct of the defendant in publishing the defamatory matter was reasonable in the circumstances. It is to be observed that the defendant who published the defamatory matter was the Council, which is the only defendant in the proceedings, and not the Code of Conduct Committee. 273 Apart from referring to the factors listed in sub-s(3) of s 30, counsel referred to the judgment of Hunt AJA in Morgan v John Fairfax & Sons Limited (1991) 23 NSWLR 374 at 387-388, a judgment on the corresponding requirement in s 22(1)(c) of the 1974 Act at a time when there was no equivalent in the 1974 Act to s 30(3) of the present Act, and to a part of the judgment of the High Court in Lange at p 574, where their Honours said:- "Whether the making of a publication was reasonable must depend upon all the circumstances of the case. But, as a general rule, a defendant's conduct in publishing material giving rise to a defamatory imputation will not be reasonable unless the defendant had reasonable grounds for believing that the imputation was true, took proper steps, so far as they were reasonably open, to verify the accuracy of the material and did not believe the imputation to be untrue. Furthermore, the defendant's conduct will not be reasonable unless the defendant has sought a response from the person defamed and published the response made (if any) except in cases where the seeking or publication of a response was not practicable or it was unnecessary to give the plaintiff an opportunity to respond." 274 Counsel for the defendant submitted that a consideration of the various factors demonstrated that the conduct of the defendant in publishing the agenda was reasonable. 275 The principal submissions made by counsel for the plaintiff in support of the general submission that it had not been established that the conduct of the defendant in publishing the agenda was reasonable, were that two members of the Code of Conduct Committee who prepared the report (Councillors Ducat and Whan) were politically hostile to the plaintiff and because they had been present at the meetings on 11 July 2005 should not have been members of the Committee; that the report did not disclose these matters affecting Councillors Ducat and Whan; that the defendant had denied the allegations against him but the report did not publish his denials; that the report contained a large number of adverse findings against the plaintiff; that the plaintiff may not have received the draft of the report said to have been attached to the letter of 9 October 2007 and the email of 10 October 2007 and that, in any event, there were substantial differences between that draft and the final report; and that the report, at the time it was published, was merely a report to the Council, which Council would have to consider and might reject. 276 As to the factors in s 30(3) of the Defamation Act I find that:-

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(a) The matter published was of public interest (b) The matter published related to the performance by a Mayor of a Council of his public functions (c) The defamatory imputations in the matter published were serious (d) The matter published did distinguish between allegations and facts which the Committee considered had been proved (e) There was not a pressing need in the public interest for the matter to be published before it was considered by the Council (f) This factor was not applicable (g) The sources of the information in the matter published were the large number of persons who had supplied information to the Code of Conduct Committee, the integrity of many of whom was not challenged (h) I will defer this factor for separate consideration (i) The Code of Conduct Committee had taken many steps over a number of months to verify the information which was contained in the matter published 277 As to the factors identified in the passage in the judgment of Lange which I have quoted, I find that the members of the Code of Conduct Committee and the Council had reasonable grounds for believing that the imputations were true, had taken proper steps to verify the accuracy of the material and did not believe the imputations to be untrue. I will defer for separate consideration the remaining requirements in the passage from the joint judgment. 278 A further factor relied on by counsel for the defendant, which I accept, is the restrained nature of the language in the report (confining the terminology used for adverse findings to the precise words of the Code of Conduct). Although I have rejected, in part, the defence of qualified privilege at common law, I consider that the matters referred to by counsel for the defendant in his submissions about the requirements of the Local Government Act and the Local Government (General) Regulation constitute a factor supporting the making of a finding that the conduct of the defendant in publishing the agenda was reasonable. 279 As to the matters relied on by counsel for the plaintiff, I have found that the draft report said to have been attached to the letter of 9 October 2007 and the email of 10 October 2007 was in fact attached. Although there were some differences between that draft report and the final form of the report, the differences were not substantial. 280 Messrs Ducat and Whan should not have been members of the Committee, because they had personal knowledge of what had happened at the meetings on 11 July 2005. On the other hand, there were two independent members of the Committee Mr Werren and Mr Singh, who did most of the drafting of the Committee's report. I accept and take into account that the report made a large number of adverse findings against the plaintiff, all of which were based on the same subject matter, and that the report was a report to the Council which the Council would have to consider and might reject. 281 Matters which were particularly the subject of controversy at the hearing were par (h) of s 30(3) and the last sentence in the passage from the judgment of the Court in Lange. 282 I find that the Code of Conduct Committee made a number of attempts, which were reasonable attempts, to obtain from the plaintiff a response setting out his "side of the story", for example in its letters of 6 June 2007 and 4 September 2007, but the plaintiff did not provide any such response. Accordingly, it was not possible for the Code of Conduct Committee to include the substance of any version from the plaintiff in its report. 283 It is true that on about three occasions the plaintiff wrote to Mr Ducat as chairman of the Committee, saying that he denied or rejected the allegations against him. On each occasion the denial or rejection was a bald statement by the plaintiff, unsupported or only slightly supported by any evidence or reasoning. In my opinion, the fact that the Code of Conduct Committee did not include in its report a sentence to the effect that the plaintiff denied the allegations against him would not prevent the conduct of the Council in publishing the agenda being reasonable in the circumstances. 284 Having considered all the factors, I have concluded that the conduct of the defendant in publishing the agenda was reasonable in the circumstances and that the defence of statutory qualified privilege has been made out.

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The defence of fair comment at common law 285 It was common ground at the hearing that the defence of fair comment at common law relates to imputations rather than to the defamatory publication generally. Both counsel made submissions about the conditions of a defence of fair comment. These conditions include:- 1. The imputation is an expression of opinion (a comment) and not a statement of fact. This depends on whether the ordinary, reasonable recipient of the publication would understand that an opinion was being offered, as distinct from a statement of fact being made. Channel Seven Adelaide v Manock (2007) 232 CLR 245 at [36] 264 per Gummow, Hayne and Heydon JJ. 2. The facts on the basis of which the comment is made must be expressly stated in the same publication as that in which the comment appears or, if not expressly stated, be clearly referred to or be notorious (Channel Seven Adelaide v Manock especially at [49] 272 and [72] 283-4). 3. The opinion and the facts on which it is based must not be so mixed up in the publication that a recipient could not distinguish between them. Australian Defamation Law and Practice par (13015) at p 8554. 4. The facts on which the comment is based must be true: Australian Defamation Law and Practice par (13055) at p 8567. 5. The comment must relate to a matter of public interest: Australian Defamation Law and Practice par (13035) at p 8560. 6. The opinion must be one which an honest or fair-minded person might reasonably form on the facts: Channel Seven Adelaide v Manock at [90] 290. 7. The opinion expressed must be genuinely held: Australian Defamation Law and Practice par (13075) at p 8575. 286 In the present case the conditions of the defence to which most of the parties' submissions were directed were the first and second conditions I have stated, that is that an imputation should be an expression of opinion and not a statement of fact and that the facts on the basis of which the opinion was formed (or the comment made) should be expressly stated or clearly referred to. 287 In a letter of 12 April 2010 the defendant's solicitors provided particulars of which parts of the Code of Conduct Committee's report the defendant alleged were statement of fact. In this letter the defendant's solicitors said that the following parts of the report were statements of fact. All of pages 8 to 12 On p 13 - the first, second and third paragraphs (the first two paragraphs having bullet points) and the text of clause 5.1 of the Code of Conduct. On page 14 - the text of clause 5.5 of the Code of Conduct and the first two paragraphs under the heading "Pt 3: Cr K. Waters complaint" On page 15 - the text of clause 5.1 of the Code of Conduct, the text of clause 5.5 of the Code of Conduct and in the paragraph commencing "Cr Chetwynd misled councillors…", the second and fourth sentences. On page 16 - the text of clause 8.1 of the Code of Conduct and the paragraph commencing "The Committee also notes under s 439…" 288 It was the defendant's case that all the other parts of the report were expressions of opinion. The other parts of the report are the Committee's findings on pp 13, 14, 15 and 16 of the report and the Committee's conclusion on p 16 of the report. 289 Counsel for the defendant submitted that the Committee's findings and conclusion were expressions of opinion, that the facts on the basis of which the opinions had been expressed were sufficiently stated or referred to in the report, that the other conditions of the defence were satisfied and that the defence of fair comment was established. 290 It was submitted by counsel for the plaintiff that the findings stated in the report were not expressions of opinion but statements of fact and would be so regarded by the ordinary, reasonable reader and that, even if the findings were expressions of opinion, the facts on which the opinions were based were not sufficiently stated or referred to in the report. The facts stated in the report were insufficient to form a basis on which a fair-minded person might reasonably have formed the opinions. 291 It is often difficult to determine whether an imputation is a statement of fact or an expression of opinion. As pointed out in Gatley at par 12.6 on p 339:- "A statement which might be regarded as one of fact but which is an inference from other facts stated or referred to may be a comment for the purposes of the defence. Though "comment" is often equated with "opinion" this is an over-simplification. More accurately it has been said that the sense of comment is "something which is or can reasonably be inferred to be a deduction, inference, conclusion, criticism, remark, observation, etc"." 292 At [35] 263-264 of the joint judgment in Channel Seven Adelaide v Manock their Honours said in part, omitting some citation of authority:- "A "discussion or comment" is to be distinguished from "the statement of a fact". "It is not the mere form of words used that determines whether it is comment or not; a most explicit allegation of fact may be treated as comment if it would be understood by the readers or hearers, not as an independent imputation, but as an inference from other facts stated"… Cussen J described the primary meaning of "comment" as "something which is or can reasonably be inferred to be a deduction, inference, conclusion, criticism, judgment, remark, observation, etc": Clarke v Norton [1910] VLR 494 at 499. It follows that a comment can be made by stating a value judgment, and can also be made by stating a fact if it is a deduction from other facts. Thus, in the words of Field J: O'Brien v Marquis of Salisbury (1889) 6 TLR 133 at 137: … [C]omment may sometimes consist in the statement of a fact, and may be held to be comment if the fact so stated appears to be a deduction or conclusion come to by the speaker from other facts stated or referred to by him, or in the common knowledge of the person speaking and those to whom the words are addressed and from which his conclusion may be reasonably inferred. If a statement in words of a fact stands by itself naked, without reference, either expressed or understood, to other antecedent or surrounding circumstances notorious to the speaker and to those to whom the words are addressed, there would be little, if any, room for the inference that it was understood otherwise than as a bare statement of fact. [Emphasis added.]." 293 In my opinion, the findings and the conclusion stated in the report are not independent imputations standing alone but inferences, conclusions or judgments drawn from other facts and would be so understood by the ordinary reasonable reader and are, accordingly, "comments" for the purposes of the defence of fair comment. This conclusion is assisted by the use in the report of the words and expressions "finding", "the Committee was of the view", "it would seem", "the Committee determined", "the Committee found", "the Committee's conclusion" and "the Committee's view". Where a finding involved the making by the Committee of a value judgment, for example the finding that the plaintiff's conduct was improper or unethical, the Committee's finding is even more clearly an expression of opinion. 294 I have already referred to the defendant's solicitor's letter identifying which parts of the report the defendant asserted were statements of fact. These parts of the report include the "factual scenario" on pages 10 to 13 of the report. The factual scenario included the following assertions of fact:- that the delegations conferred on the plaintiff did not extend to operational issues; that Ms Healy gave advice on the telephone to the plaintiff against summarily dismissing Dr Lally and that there was a prospect of having to pay out the full term of Dr Lally's contract, if she was summarily dismissed; that the plaintiff understood that there were not sufficient grounds to summarily dismiss Dr Lally; that the plaintiff received a letter from the Council's solicitors advising against summarily dismissing Dr Lally and advising that Dr Lally should be accorded procedural fairness; that the plaintiff told a Council staff member that, while the letter of advice might not have provided solid legal grounds for summarily dismissing Dr Lally, the plaintiff had received verbal, that is oral, advice that there were grounds for dismissing Dr Lally but that the verbal advice could not be put in writing; that at the meeting on 11 July 2005 Councillor Waters asked what was Council's exposure to a claim, if Dr Lally was dismissed, and what was the legal advice about any possible claim by Dr Lally and the plaintiff answered that it was highly unlikely that Dr Lally would make a claim and, if she did, the Council would win; and that at the meeting on 11 July 2005 Councillor Maher asked whether sufficient natural justice had been given to Dr Lally and whether the Council's solicitors considered that sufficient natural justice had been given to her and that the plaintiff answered "Yes" to both questions. 295 In my opinion, the facts stated in the report provided a sufficient basis for the Committee to make the findings it did. In my opinion, it was not necessary for the Committee to set out in the report the contents of all of the documents considered by the Committee in the course of its investigation. A list of the documents was set out in an attachment to the report and, accordingly, these documents were clearly referred to. 296 I consider that all of the other conditions for a defence of fair comment are satisfied and I hold that the defence of fair comment is established in relation to those parts of the report which were comment, being the Committee's findings on pages 13, 14, 15 and 16 of the report and the Committee's conclusion on page 16 of the report.

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Malice 297 In his amended reply the plaintiff alleged that the defendant its servants and agents were actuated by malice in the publication of the matter complained of. Thirty-two particulars of alleged malice were provided. If malice is established by the plaintiff, it would defeat the defences of qualified privilege at common law, statutory qualified privilege and fair comment at common law. 298 The onus is on a plaintiff to prove that the publication of the defamatory matter complained of was actuated by malice. In Roberts v Bass, a case concerning qualified privilege, Gaudron, McHugh and Gummow JJ said at [75] 30:- "An occasion of qualified privilege must not be used for a purpose or motive foreign to the duty or interest that protects the making of the statement. A purpose or motive that is foreign to the occasion and actuates the making of the statement is called express malice. The term "express malice" is used in contrast to presumed or implied malice that at common law arises on proof of a false and defamatory statement. Proof of express malice destroys qualified privilege. Accordingly, for the purpose of that privilege, express malice ("malice") is any improper motive or purpose that induces the defendant to use the occasion of qualified privilege to defame the plaintiff." 299 At [76] 31 their Honours said:- "But, leaving aside the special case of knowledge of falsity, mere proof of the defendant's ill-will, prejudice, bias, recklessness, lack of belief in truth or improper motive is not sufficient to establish malice. The evidence or the publication must also show some ground for concluding that the ill-will, lack of belief in the truth of the publication, recklessness, bias, prejudice or other motive existed on the privileged occasion and actuated the publication." 300 I do not propose to traverse all of the numerous and somewhat repetitive particulars of alleged malice. I will refer to some only of them, which appear to me to include the particulars which were actually pressed.

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Damages 302 I have upheld in whole or in part a number of the defendant's defences. Accordingly, there will be a verdict for the defendant and the plaintiff has no entitlement to damages. Although I have decided that the plaintiff should not succeed, it would be in accordance with usual practice for me to assess what damages I consider the plaintiff should have recovered, had he been successful, in case I am subsequently held to have been wrong in holding that the plaintiff should not succeed. 303 However, in the present case it appears to me that there would be serious practical difficulties in my attempting to make an assessment of damages. These difficulties stem from the number of imputations, the number of defences, the impossibility of predicting on what imputations the plaintiff might succeed and the fact that many of the findings I have made are on matters which are relevant to both the determination of a defence or defences and the assessment of damages. In the circumstances, I propose to collect what appears to me to be the most important evidence relating to damages and to make findings about that evidence. 304 An important matter in any assessment of damages would be the extent of the publication of the defamatory matter, that is the agenda. 305 Earlier in this judgment I referred to an answer by the defendant to an interrogatory which showed that the agenda was distributed to six individuals and bodies described as "members of the public", eight individuals representing ABC Television or local newspapers, the members of the Council and ten members of the Council staff (including the Works Coordination Centre). Almost all of the hard copies distributed to councillors and about a dozen of the hard copies distributed to other recipients were returned and shredded in 7 December 2007. 306 In cross-examination the plaintiff conceded that, so far as he was aware, there had not been any publication in any newspaper or any broadcast on television or radio of the report of the Code of Conduct Committee. If there had been any such publication or broadcast, it is likely that the plaintiff would have become aware of it. 307 The plaintiff said in his evidence in chief that the report had been published on the Internet at the Council's website, so that it could be read "anywhere in the world". The plaintiff said that the report had been on the Internet for about ten days after the initial publication. Mrs Roobol said in her evidence that more than one person had told her that they had seen the report on the Internet. 308 However, Mr McLachlan, an employee of an information technology firm, gave evidence that he had searched the database of documents that had been made available for public view on the website of the Council. Mr McLachlan gave evidence that his search disclosed that there had been two documents entitled "Agenda Ordinary Council Meeting 26/11/07" on the website, namely:-

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A document first uploaded on 21 November 2007 and removed on 29 November 2007. At the time it was removed this document included in the index a reference to the Code of Conduct complaint against the plaintiff but did not include any part of the Code of Conduct Committee's report. Mr McLachlan was unable to say whether the document had ever been in any different form between 21 November 2007 and 29 November 2007. 2. A document first uploaded on 29 November 2007 and still remaining on the website, which did not contain any reference to the complaint against the plaintiff in the index and did not include any part of the Code of Conduct Committee report. 309 The plaintiff's written submissions contained inconsistent submissions about whether the report had been published on the Internet. In one part of the submissions it was complained that the report had been published on the Internet. In another part of the submissions it was submitted, on what I consider to be a quite inadequate evidentiary basis, that an employee of the Council had been directed not to publish the report on the Internet and this showed that a similar direction could have been given not to publish the report in the copies of the agenda which were distributed. 310 I accept, as was submitted by counsel for the plaintiff, that, in addition to the distribution of the report to the persons named in the answer to the interrogatory, there would have been a "grapevine" effect, especially in a small regional town like Armidale. 311 Oral evidence about damages was given in the plaintiff's case by the plaintiff himself, his wife, Mrs Roobol and a witness Mrs Wolfer, who gave her evidence by telephone. 312 Evidence that the plaintiff had suffered a loss of reputation was given by the plaintiff himself, his wife, Mrs Roobol and Mrs Wolfer. The plaintiff said in evidence:- "… I was well known in the area. A lot of people knew me either to speak to personally or who know from - in my activities in the council or simply know me from media reports and whereas those people would in the normal course of events said "Hello", or perhaps stop to have a conversation and it was extremely noticeable that as the ensuing time went on people would even cross the road to avoid to say 'hello', they would walk in a different direction in the supermarket alley or simply ignore me, and I recall a circumstance only very recently with a group of people that I know very well, were associated with NERAM, were out sitting at a next table in a restaurant to myself, my wife and two other people, and they completely ignored me, walked past me, with - I looked at them and they had disdainful looks on their face." 313 The plaintiff gave further evidence that when he had gone shopping people would avoid him or walk in a different direction, that neighbours did not speak to him unless they had to, that he no longer received invitations, including invitations to Council's functions and that he had previously often been mentioned (favourably) in the media on many occasions as Mayor or as a participant in community activities. The plaintiff said that he had received telephone calls asking whether what had been written about him was true and that he had also received anonymous telephone calls, making threats or saying that he had got his just deserts or that he was a "troublemaker". 314 The plaintiff attributed his defeat in the Council elections held in 2008 to the publication of the agenda. 315 The plaintiff's wife gave evidence that persons had said to her "what's all this in Council? Your husband's a trouble maker". 316 Mrs Roobol gave evidence about the plaintiff's previous reputation, as follows:- "His reputation was extremely good. He was known as a community member. He actually saved Armidale's iconic collection, the Hinton collection. He spoke, gave submissions for that and spoke there. He was known as an open-door mayor where community people could go to him and he would listen to whatever they had to say. He was very popular. He had high ratings." 317 Mrs Roobol gave evidence about the plaintiff's reputation since November 2007 as follows:- "He lost a lot of credibility in the community because that was a devastating report that found him guilty. Many people commented on it. Many people made phone calls, a lot of gossip, because we are only a small regional city and they believed that if there was a formal report there and he was found guilty, that he would be guilty." 318 Mrs Wolfer gave evidence that "the general consensus around town was that he was doing a great job as Mayor" but from the end of 2007 "the general feeling of the community is just a demise of him and his character". 319 I accept that the plaintiff formerly had a high reputation and that he suffered a serious loss of reputation, that the serious loss of reputation was largely connected with the dismissal of Dr Lally and that the publication of the report with its many adverse findings contributed to the plaintiff's loss of reputation. 320 However, I do not consider that all of the plaintiff's loss of reputation should be attributed to the publication of the agenda. I am satisfied that the plaintiff had already suffered some loss of reputation before the publication of the report. The summary dismissal of Dr Lally had aroused deep concern among members of the Armidale community (see the letters of complaint from Bob Baxter and Jane Hall). The plaintiff was perceived as having in large measure been responsible for the dismissal of Dr Lally (see for example recommendation 40 of the Department of Local Government Report). It is likely that the facts that Dr Lally had brought court proceedings against the Council for breach of contract, that the plaintiff had declined to make a statement for the purpose of the Council defending the proceedings and that the proceedings had been settled on terms favourable to Dr Lally became well known in the Armidale community. 321 Evidence about injury to the plaintiff's feelings was given by the plaintiff and the plaintiff's wife. 322 The plaintiff gave the following evidence about his reaction when he first read the Code of Conduct Committee report on or about 23 November 2007:- "I was absolutely devastated. I was very upset. All I could think about was all of the work I'd done over many years and that someone or some people could go to the extent of putting such lies forward and I just was shaking, and I thought about the effort and the time that I'd put into Local Government, 5 years as mayor, the business I had in the community which I'd been there for 25 years. I had a good reputation and in one swoop it was killed, it was gone." 323 The plaintiff confirmed early in his cross-examination that the publication of the report in November 2007 had been quite unexpected by him. 324 The plaintiff gave further evidence that the Committee's findings in the report were "absolutely false", "just lies". He had asked the Committee to treat him fairly but "they ignored everything, they went ahead and they produced this document in the public arena". His denials had not been published and he had not been given any opportunity to provide a defence. 325 The plaintiff gave evidence that he had suffered further upset because of the way in which the defendant had conducted itself since the publication of the agenda, in pleading and maintaining that the imputations were true and in declining to tender an apology after the termination of the equity proceedings and after the report of the second Code of Conduct Committee. 326 The plaintiff's wife gave evidence that when the plaintiff read the report:- "He was absolutely horrified. He's really never been the same since. He couldn't believe that he'd been - that someone could write those things, and since then he just is a different person." 327 The plaintiff's wife added:- "Physically he couldn't care less what he looked like. He's got broken teeth. He's got long hair. He couldn't care less." 328 I accept that the plaintiff has suffered severe injury to his feelings. However, as in the case of the claim for loss of reputation, I do not consider that all of the injury to the plaintiff's feelings should be attributed to the publication of the agenda. 329 It is untrue that the findings by the Committee in its report were quite unexpected by the plaintiff. As referred to earlier in this judgment, I am satisfied that the plaintiff had, notwithstanding his denials, received a copy of a draft report in an advanced state of preparation containing the principal findings which were made against him in the final report, as an attachment to the letter of 9 October 2007 and the email of 10 October 2007. In these circumstances, I do not accept that the publication of the report on or about 23 November 2007 had such a dramatic impact on the plaintiff as he claimed. 330 I would reject, unconditionally, some of the matters said by the plaintiff to have increased the injury to his feelings. It is not true that the Committee "ignored everything" or that the plaintiff was not given an opportunity to provide a defence. 331 Some of the other matters said by the plaintiff to have increased the injury to his feelings depend on the imputations against him being false.

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Judgment (215 paragraphs)

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Cases Cited (8)

Cited By (1)