A Perverse Decision?
28 The second aspect of the appeal concerns the answers given to the questions by the jury. The jury found in answer to (d) that the matter complained of conveyed the imputation of incompetence in the specific respect alleged. Nevertheless the jury found that the imputation was not defamatory.
29 A similar issue arose in Cairns v John Fairfax & Sons Ltd [1983] 2 NSWLR 708. In that case a jury found that an imputation, to the effect that the plaintiff was "improperly involved in a romantic or sexual association", was not defamatory. The word "improper" in the question left to the jury is analogous, but not equivalent, to the word "incompetent" in the two imputations in the present case. In Cairns v Fairfax Hutley JA said at 710:
"It was accepted that to succeed the appellants had to show that upon the most favourable meaning of the imputation, to the upholding of the judgment, the second finding of the jury was perverse.
In my opinion this amounts to deciding that to say of a married woman (and also of a married man) that she (or he) has an improper romantic association with a married member of the opposite sex was necessarily defamatory. Not every statement that a person has done something improper is defamatory; for example, spitting in public is improper, but a jury's decision that a statement that ….spits in public was not defamatory could not be set aside as perverse. The imputation of criminality is not always defamatory ( Berry v British Transport Commission [1961] 1 QB 149 at 166), the imputation of mere impropriety must be in the same position.
The imputation of an 'improper' romantic relationship could cover a steep gradation of activity. Demonstrations of romantic interest by a married woman in a married man may be improper, in that they embarrass his wife, but a jury could think they did not defame him …
The imputation of an improper adulterous relationship would be harder to justify as not being defamatory, but the reputations of Antony and Cleopatra have not been lowered in the eyes of the public by their romance and in other days the title of the King's Mistress was one of honour …
In my opinion, the simultaneous finding that there was the allegation of improper adultery between the two appellants and the finding that this is not defamatory is unusual, but not perverse in these days. The judgment of the jury as to what is the effect on reputations of misconduct in the field of correct sexual morality is not likely to be rejected. It has been strengthened by the abandonment of official standards."
30 Mahoney JA also posed the relevant question in terms of whether or not the jury's verdict was "perverse" (at 718F). His Honour found that the word "improperly" in the imputation "conveyed no more than that the plaintiff's involvement in the association was contrary to the obligations of their marriages or, more accurately, that it was improper because it was so. It was not suggested that the involvement was improper for any other reason". (719B). His Honour concluded:
"It was, in my opinion, open to the jury to conclude that such a reader would not see every act or association which was inconsistent with the obligations of a man's marriage as being (to use a term which I mean for this purpose to be equivalent to defamatory) discreditable. There are, of course, some acts or associations inconsistent with the moral or social obligations of the marriage state which would be seen as necessarily discreditable. Not all of them must be seen to be so. Within …… limits, it is in such a case as this for the jury to determine what, in the relevant society, is the view of reasonable or right thinking people on such a matter. I do not think that the jury is this case would be going beyond proper limits if it concluded that not every breach of the relevant obligations of marriage would be discreditable.
But was it open to the jury to conclude that a sexual association in breach of such obligations would yet not be such? I think that it was. Such a question is not to be answered by reference to the current religious or ethical principles as such. The defamatory nature of the imputation is to be judged by reference to the general community standards … Such an association would, I think, be seen as contrary to the current religious or ethical principles, but it would be open to the jury to conclude for example, that the general community standards by which a sexual association is to be judged are not those of current religious or ethical principles. In my opinion, it would be open to the jury to conclude that a reasonable or right thinking member of the community would take the view that religious or ethical principles, as currently understood or propounded, impose too high or too rigid a standards of sexual morality and that the standards by which the community judges sexual associations are, if not lower and more flexible, at least different."
31 Samuels JA dissented. His Honour posed the test in terms of "Was the jury's verdict unreasonable?" (716G). His Honour held that the question:
"…admitted only of an affirmative answer; and the negative answer was, beyond argument, unreasonable. The imputation found alleged an association to which the jury attached a pejorative epithet - improper- and which was contrary to obligations undertaken to a marriage partner. I fail to understand how ordinary members of the community applying current community standards could fail to regard such an implication as defamatory." (717D-E)
32 This authority on the word "improper" is not determinative of a case involving the word "incompetent".
33 The use of the word "improper" in an imputation said to be defamatory poses particular difficulties as pointed out by Hunt J in Hepburn v TCN Channel Nine Pty Ltd [1984] 1 NSWLR 386 at 403-404 and Morris v Newcastle Newspapers Pty Ltd (1985) 1 NSWLR 260 at 271-272. See also Costello v Random House Australia Pty Ltd (1999) 141 FLR 367 at 379-381 per Higgins J.
34 In Hepburn, Hunt J referred to Cairns v John Fairfax and said at 403G:
"The difference between the views expressed by the members of the Court of Appeal related not to how the matter complained of should have been construed (for that task had already been carried out by the jury) but to how the imputation which the jury accepted would have been construed by that jury."
35 His Honour was concerned to establish the necessity for precision in the pleading of imputations. The same issue arose in Morris v Newcastle Newspapers where his Honour said:
"The description of the plaintiff's attempted intervention as 'improper' is, of course, one of very uncertain import. The trouble that can be caused by the inclusion of the word 'improper' in an imputation is well illustrated in the case of Cairns & Morosi v John Fairfax & Sons Limited [1983] 2 NSWLR 708; it is discussed in Hepburn v TCN Channel Nine Pty Limited [1984] 1 NSWLR 386 at 403-404. For this reason, the word 'improper' should not be used in imputations unless the context in which it is so used makes clear its intended meaning (and the degree of impropriety involved). Where the matter complained of itself uses the word 'improper', the pleaded imputation should be expressed in terms which demonstrate the precise sense (that is, the degree of impropriety) in which the plaintiff contends the word would have been understood …". (271F-G)
36 The issue in the present case turns on whether the word "incompetent", at least with respect to a corporation engaged in business, is of the same character as the word "improper".
37 The 9th edition of Gatley on Libel and Slander, London, (1998), states in par [2.7]:
"To say of a person carrying on any trade or profession, or holding any office, that he is incompetent at it, may not even lower him in the estimation of others, but the words will be defamatory because of the injury to his reputation in his trade, profession or office."
38 In pars [2.26] and following, the authors return to the proposition that an imputation that tends to injure a person's reputation in a business, trade, profession, calling or office is defamatory and say at [2.26]:
"To be actionable, words must impute to the plaintiff some quality which would be detrimental, or the absence of some quality which is essential, to the successful carrying on of his office, profession or trade."
39 At par [2.27] the authors conclude:
"It is not, however, necessary that there should be an imputation of conduct which is morally wrong, an imputation of incompetence will do: '… words may be defamatory of a trader or businessman or professional man, though they do not impute any known fault or defect of personal character. They can be defamatory of him if they impute lack of qualifications, knowledge, skill, capability, judgment or efficiency in the conduct of his trade or business or professional activity."
40 Later in par [2.27] the authors say:
"… if there is an imputation of misconduct or incompetence in the operation of a company's business that would be a libel on the company."
41 The test that must be met for this Court to interfere with a jury's verdict is a high one. The jury's finding must be rejected as perverse or unreasonable. The jury found that the matter complained of conveyed an imputation of incompetence with respect to the affairs of the business. The word "incompetent" did not appear in the matter complained of. This was the imputation found to be conveyed by the jury.
42 The word "incompetent" also appeared in imputation (c) which the jury found to be defamatory. I do not find there to be a necessary inconsistency between these two findings. This is not a case where the jury found an imputation to be defamatory but found republication of the same imputation not to be defamatory. (As in Dempster v Coates (NSW Court of Appeal, 11 April 1990, unreported)). The issue in this case is whether, there being an imputation of incompetence by reason of certain conduct, the jury must logically have concluded that the imputation, in the context, was defamatory.
43 The Appellants submit that the allegation of incompetence on the part of a producer of films is necessarily defamatory and the finding to the contrary is perverse and unreasonable. The Respondents submit that it was open to the jury to make the finding with respect to imputation (d). They submitted that the word "incompetent" was no more conclusive than the majority of this Court held the word "improper" to be in Cairns v John Fairfax.
44 TS Hale SC who appeared for the Respondents submitted that in accordance with the practice of this Court to require precision in the drafting of imputations, the balance of imputation (d) in the words "in that it failed to return monies to investors in any of the fifteen films", should be understood as if it were a "definition" of the term "incompetence". I do not agree that the use of a word like "definition" is appropriate. The additional words in the imputation refer to the manifestation of an "act or condition" of the First Appellant which the jury identified to be that of "incompetence". It is not correct to suggest that the jury's finding implied that the word "incompetence" was being used in some special sense. Rather, the natural and ordinary meaning of that word was satisfied by reason of particular conduct. The "act or condition" attributed to the plaintiff (see e.g. Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135 at 136-137), was that of incompetence by the conduct specified.
45 The defamatory sting is in the word "incompetent". It may well be that a failure to return money to the investors over the course of making fifteen films would not necessarily indicate anything adverse about the producer of those films. Film making is a notoriously difficult business particularly in Australia. Many films serve promotional or educational purposes with no objective of return of funds. Even, in the case of a film made for "investors", a failure to return money to investors may not be a manifestation of "incompetence" at all.
46 It would have been perfectly appropriate for the jury to find that an imputation of 'incompetence' was not in fact conveyed, by reason of the fact that the conduct specified in the pleaded imputation did not constitute "incompetence". Furthermore, there will be cases in which conduct of a particular character is found to manifest "incompetence" but incompetence in the specified respect is not defamatory. That may be so because incompetence of that character does not impinge on a person's reputation in a relevant way, e.g. to say a person is an incompetent golfer will not affect his or her trade reputation.
47 That cannot, in my opinion, be said of the imputation in the present case. The particular of the conduct relied on concerned the business affairs of the corporation in its dealings with "investors". That must, in my opinion, have an effect on the reputation of that corporation in its business affairs. The appeal should be allowed.