[1990] HCA 47
Bashford v Information Australia (Newsletters) Pty Ltd (2004) 218 CLR 366
[2004] HCA 5
Boensch v Pascoe (2019) 268 CLR 593
[2019] HCA 49
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Briginshaw v Briginshaw (1938) 60 CLR 336
[1938] HCA 34
Campomar Sociedad, Ltd v Nike International Ltd (2000) 202 CLR 45
Source
Original judgment source is linked above.
Catchwords
[1990] HCA 47
Bashford v Information Australia (Newsletters) Pty Ltd (2004) 218 CLR 366[2004] HCA 5
Boensch v Pascoe (2019) 268 CLR 593[2019] HCA 49
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Briginshaw v Briginshaw (1938) 60 CLR 336[1938] HCA 34
Campomar Sociedad, Ltd v Nike International Ltd (2000) 202 CLR 45[2000] HCA 12
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337[1982] HCA 24
Devries v Australian National Railways Commission (1993) 177 CLR 472[1993] HCA 78
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
Fox v Percy (2003) 214 CLR 118[2003] HCA 22
Godfrey v Henderson (1944) 44 SR (NSW) 447
Horrocks v Lowe [1975] AC 135
House v The King (1936) 55 CLR 499[1936] HCA 40
Jones v Dunkel (1959) 101 CLR 298[1959] HCA 8
KSMC Holdings Pty Ltd t/as Hubba Bubba Childcare on Haig v Bowden (2020) 101 NSWLR 729[2020] NSWCA 28
Marks v GIO Australia Holdings Limited (1998) 196 CLR 494[1998] HCA 69
Massoud v Nationwide News Pty LtdMassoud v Fox Sports Australia Pty Ltd (2022) 109 NSWLR 468[2022] NSWCA 150
Onassis v Vergottis [1968] 2 Lloyds Rep 403
Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388
[2001] HCA 69
Papaconstuntinos v Holmes a Court (2012) 249 CLR 534
[2012] HCA 53
Ratcliffe v Evans [1892] 2 QB 524
Roberts v Bass (2002) 212 CLR 1
[2002] HCA 57
SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323
TCN Channel Nine Pty Ltd v Anning (2002) 54 NSWLR 333
[2002] NSWCA 82
Telegraph Newspaper Co Ltd v Bedford (1934) 50 CLR 632
[1934] HCA 15
The Checkout Pty Ltd v Cordell Jigsaw Productions Pty Ltd
Morrow v Cordell Jigsaw Productions Pty Ltd (No 13) [2022] NSWSC 444.
The Checkout Pty Ltd v Cordell Jigsaw Productions Pty Ltd
Morrow v Cordell Jigsaw Productions Pty Ltd (No 14) [2022] NSWSC 835
The Checkout Pty Ltd v Cordell Jigsaw Productions Pty Ltd
Wraydeh v Nationwide News Pty Ltd (2021) 105 NSWLR 254
[2021] NSWCA 153
Yorke v Lucas (1985) 158 CLR 661
Judgment (9 paragraphs)
[1]
The application for leave to appeal against the Costs judgment
[2]
Whether leave to appeal ought be granted
There are considerable obstacles in the way of an application for leave to appeal against a costs order. Ordinarily it is only appropriate to grant leave where there is an issue of principle, a question of general public importance, or an injustice which is reasonably clear, in the sense of going beyond what is merely arguable. It is not sufficient merely to show that the trial judge was arguably wrong: Wentworth v Rogers (No 3) (1986) 6 NSWLR 642. Where (as here) the decision under appeal is a decision made in the exercise of the Court's costs discretion (under s 98 of the Civil Procedure Act 2005 (NSW)), it is necessary to point to a House v The King (1936) 55 CLR 499; [1936] HCA 40 error. This requires the Court to be satisfied that the judge acted upon a wrong principle, took into account extraneous or irrelevant matters, mistook the facts, failed to take into account a material consideration, or where upon the facts the outcome is unreasonable or plainly unjust. Only if the decision is attended with sufficient doubt to warrant its reconsideration on appeal will leave be granted.
Mr Katekar argued that, by the time the offer was made on 1 November 2019, Giant Dwarf's claim against CJZ had been finally articulated (that CJZ had breached the Share Sale Agreement by refusing to sign the Quit Claim) and CJZ's response had also been articulated in its letter of 19 June 2019 (that it was not obliged to sign the Quit Claim and that it had been misled into executing the Share Sale Agreement). Mr Katekar submitted, in effect, that the error highlighted in the passage extracted above from his Honour's reasons caused the primary judge's discretion as to costs to miscarry in the House v The King sense and that, accordingly, this Court should re-exercise the costs discretion on a basis which reflected the true position. Mr Katekar also relied on the primary judge's finding at [76] of the Costs judgment:
"By this point, Mr Murray had made clear that he believed that Mr Morrow may have misled him in the circumstances leading to the execution of the Share Sale Agreement and may have acted in breach of his duties as director of the Joint Venture Company."
I accept Mr Katekar's submission that the primary judge's discretion miscarried. Hamish Fraser's letter of 19 June 2019 articulated comprehensively CJZ's and Mr Murray's claim against Mr Morrow and Giant Dwarf and refuted, also comprehensively, Mr Morrow and Giant Dwarf's claim against them. In this sense, the primary judge relevantly "mistook the facts". It was not to the point that, as at 1 November 2019, CJZ's cross-claim had not been brought since CJZ's offers included a release from all claims which it could have brought against Giant Dwarf, Mr Morrow or the Joint Venture Company. Both the 18 October and 1 November 2019 Calderbank offers invited Giant Dwarf to accept terms that reflected the fact that its claim that CJZ had breached the Share Sale Agreement for refusing to execute the Quit Claim would fail and offered mutual releases (which were contained in the Quit Claim, which CJZ was offering to sign). Thus, it was irrelevant that, for example, the implied term (which formed part of the case on reasonable expectation of disclosure) had not yet been formulated, since a general release was offered.
I consider that leave to appeal against the costs order ought be granted because of the particular circumstances of the present case, more fully referred to below, but which include the offeror's detailed expatiation of the legal position well in advance of the hearing, which was vindicated in the primary judge's reasons and the significant compromise reflected in the offer.
[3]
The re-exercise of the costs discretion
In these circumstances, it is necessary to exercise the discretion afresh. In my view, the relevant offer is that of 1 November 2019 because the offer of 18 October 2019 was withdrawn before its expiry date.
The policy behind the awarding of costs on an indemnity basis as a consequence of a Calderbank offer is to encourage the parties to assess the strengths and weaknesses of their respective cases (including at an early stage). The principle was articulated in SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37], where Giles JA said:
"The making of an offer of compromise in the form of a Calderbank letter (from Calderbank v Calderbank (1976) Fam 93), where the offeree does not accept the offer but ends up worse off than if the offer had been accepted, is a matter to which the court may have regard when deciding whether to otherwise order, but it does not automatically bring a different order as to costs. All the circumstances must be considered, and while the policy informing the regard had to a Calderbank letter is promotion of settlement of disputes an offeree can reasonably fail to accept an offer without suffering in costs. In the end the question is whether the offeree's failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure …"
Ms Chrysanthou submitted that it was not unreasonable for Mr Morrow and Giant Dwarf to reject the 18 October 2019 and 1 November 2019 Calderbank offers because they could not be expected to give up potentially valuable claims (such as the claim for damages against CJZ for breach of the Share Sale Agreement). She contended, orally:
"Hindsight reasoning in relation to whether a party has engaged in an unreasonable failure to accept an offer is not of assistance. One must have regard to the position the person was in at that time. … coming to the end of the case and saying, you lost the case, therefore you should have known to accept the offer in the first place, doesn't make a lot of sense."
Further, Ms Chrysanthou submitted that there was a very significant distinction between Mr Morrow's offer of 20 June 2019 and Mr Murray's offer of 1 November 2019 despite their apparent similarities. Mr Morrow's offer of 20 June 2019 limited the format fee (expressed as a percentage of the co-producer cash budget) to "subsequent series of The Checkout", whereas Mr Murray's offer of 1 November 2019 extended the format fee to "subsequent series of The Checkout and/or on series 1 and 2 of any alternative consumer affairs program produced by [the Joint Venture Company], [Giant Dwarf] or any affiliated company, subsidiary, or any third party producer or production partner of [the Joint Venture Company], [Giant Dwarf] or Julian Morrow". Ms Chrysanthou, in somewhat hyperbolic oral submissions, described Mr Murray's offer as "absurd" and said that it had the effect that Mr Morrow "can never make a consumer affairs show again."
[4]
Application for leave to adduce further evidence
By notice of motion filed on 11 May 2023, the cross-appellants sought leave to adduce further evidence which comprised emails from Mr Murray sent between 9 March 2023 and 24 March 2023. The purpose of the notice of motion was to support the cross-appellants' claim that the undertaking given by Mr Murray on his own behalf and on behalf of CJZ and noted by the Court in the Defamation proceedings (that he would not publish any statement to the effect that the plaintiff [Mr Morrow] engaged in fraud against the first defendant (CJZ)) was insufficient and that this Court ought grant injunctive relief instead.
As Mr Murray and CJZ have been successful in their appeal against the orders made in the Defamation proceedings, there is no basis on which the Court could order injunctive relief instead of the undertaking. In these circumstances, I propose that the notice of motion be dismissed. Further, it is necessary to release Mr Murray from the undertaking which the primary judge noted in (3) of the orders made in the Defamation proceedings on 23 June 2022, as, the appeal having been allowed, there is no longer any basis for requiring the undertaking.
[5]
Proposed orders
For the reasons given above, I propose the following orders:
[6]
In proceedings 2022/214060 (the Commercial proceedings)
1. Dismiss the cross-appeal.
2. Grant leave to the applicants to appeal in respect of costs.
3. Set aside orders (7) and (8) made by Stevenson J on 23 June 2022 in proceedings 2019/343896 and in lieu thereof make the following order:
Order the second and third plaintiffs to pay the first and second defendants' costs of the proceedings (including the amended summons and amended cross summons) on an indemnity basis.
1. Subject to (5), order the respondents to pay the applicants'/appellants' costs of the appeal.
2. If any application is to be made for a different order for the costs of the appeal, direct that the party send by email a notice of motion, together with any evidence and submissions in support, to the Associate to the Presiding Judge within 14 days hereof.
[7]
In proceedings 2022/214083 (the application for leave to appeal against orders made in the Defamation proceedings)
1. Grant leave to appeal on grounds 1, 2, 4, 6, 7, 8, 9 and 10 but otherwise refuse leave to appeal.
2. Allow the appeal.
3. Set aside orders (1), (2), (3) and (4) made by Stevenson J on 23 June 2022 in proceedings 2020/264993 and in lieu thereof make the following orders:
1. Judgment for the defendants.
2. Subject to (c) below, order the plaintiff to pay the defendants' costs of the proceedings.
3. If any application is to be made for a different order for the costs of the Defamation proceedings, direct that the party send by email a notice of motion, together with any evidence and submissions in support, to the Associate to the Presiding Judge within 14 days hereof.
1. Subject to (5), order the respondents to pay the applicants'/appellants' costs of the appeal.
2. If any application is to be made for a different order for the costs of the appeal, direct that the party send by email a notice of motion, together with any evidence and submissions in support, to the Associate to the Presiding Judge within 14 days hereof.
3. Release the second defendant from the undertaking given by him on his own behalf and on behalf of the first defendant, the making of which was noted by the primary judge in (3) of the orders and notations made on 23 June 2022.
[8]
Adamson JA's reasons with respect to findings of fact challenged in ground 7 of the cross-appeal
Para Finding of primary judge Material facts the cross-appellants contend the Court below should have found Reasons of Adamson JA
3 Both Mr Morrow and Mr Murray are legally qualified, although neither is currently in practice as a lawyer. Mr Murray held a current solicitor's practising certificate from July 2021 (T346.31-48). Finding correct but fact immaterial. When he was cross-examined, Mr Murray explained that he obtained a practising certificate because it was more cost-effective to be able to sign the chain-of-title documents himself (as a solicitor) rather than to retain one to sign them for him (the ABC apparently required the documents to be signed by a solicitor).
[9]
Amendments
18 July 2023 - "23 June 2023" replaced by "23 June 2022": Coversheet - Decision; [3], [342]
"Defamation Act 1974" replaced by "Defamation Act 2005": Coversheet - Legislation; [248(1)]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 18 July 2023
Corporations Act 2001 (Cth), s 461(1)(k)
Defamation Act 2005 (NSW)
Evidence Act 1995 (NSW), ss 64(3), 69, 136
Parliamentary Privileges Act 1987 (Cth), s 16
Supreme Court Act 1970 (NSW), s 75A
Cases Cited: Abalos v Australian Postal Commission (1990) 171 CLR 167; [1990] HCA 47
Bashford v Information Australia (Newsletters) Pty Ltd (2004) 218 CLR 366; [2004] HCA 5
Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34
Campomar Sociedad, Ltd v Nike International Ltd (2000) 202 CLR 45; [2000] HCA 12
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24
Devries v Australian National Railways Commission (1993) 177 CLR 472; [1993] HCA 78
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
Godfrey v Henderson (1944) 44 SR (NSW) 447
Horrocks v Lowe [1975] AC 135
House v The King (1936) 55 CLR 499; [1936] HCA 40
Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8
KSMC Holdings Pty Ltd t/as Hubba Bubba Childcare on Haig v Bowden (2020) 101 NSWLR 729; [2020] NSWCA 28
Marks v GIO Australia Holdings Limited (1998) 196 CLR 494; [1998] HCA 69
Massoud v Nationwide News Pty Ltd; Massoud v Fox Sports Australia Pty Ltd (2022) 109 NSWLR 468; [2022] NSWCA 150
Onassis v Vergottis [1968] 2 Lloyds Rep 403
Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388; [2001] HCA 69
Papaconstuntinos v Holmes a Court (2012) 249 CLR 534; [2012] HCA 53
Ratcliffe v Evans [1892] 2 QB 524
Roberts v Bass (2002) 212 CLR 1; [2002] HCA 57
SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323
TCN Channel Nine Pty Ltd v Anning (2002) 54 NSWLR 333; [2002] NSWCA 82
Telegraph Newspaper Co Ltd v Bedford (1934) 50 CLR 632; [1934] HCA 15
The Checkout Pty Ltd v Cordell Jigsaw Productions Pty Ltd; Morrow v Cordell Jigsaw Productions Pty Ltd (No 13) [2022] NSWSC 444.
The Checkout Pty Ltd v Cordell Jigsaw Productions Pty Ltd; Morrow v Cordell Jigsaw Productions Pty Ltd (No 14) [2022] NSWSC 835
The Checkout Pty Ltd v Cordell Jigsaw Productions Pty Ltd; Morrow v Cordell Jigsaw Productions Pty Ltd (No 14) [2022] NSWSC 835
Universal Cargo Carriers Corp. v Citati [1957] 2 QB 401
Watson v Foxman (1995) 49 NSWLR 315
Wentworth v Rogers (No 3) (1986) 6 NSWLR 642
Wraydeh v Fairfax Media Publication Pty Limited; Wraydeh v Nationwide News Pty Ltd (2021) 105 NSWLR 254; [2021] NSWCA 153
Yorke v Lucas (1985) 158 CLR 661; [1985] HCA 65
Category: Principal judgment
Parties: Proceedings 2022/214060
CJZ Pty Ltd (First Applicant / First Cross-Respondent)
Nicholas Harvey Murray (Second Applicant / Second Cross-Respondent)
Giant Dwarf Pty Ltd (First Respondent / Second Cross-Appellant)
Julian Francis Xavier Morrow (Second Respondent / Third Cross-Appellant)
The Checkout Pty Ltd (First Cross-Appellant)
Solicitors:
Bird & Bird (Appellants / Cross-Respondents)
Kay & Hughes (Respondents / Cross-Appellants)
File Number(s): 2022/214060; 2022/214083
Decision under appeal Court or tribunal: Supreme Court
Jurisdiction: Equity
Citation: The Checkout Pty Ltd v Cordell Jigsaw Productions Pty Ltd; Morrow v Cordell Jigsaw Productions Pty Ltd (No 13) [2022] NSWSC 444
The Checkout Pty Ltd v Cordell Jigsaw Productions Pty Ltd; Morrow v Cordell Jigsaw Productions Pty Ltd (No 14) [2022] NSWSC 835
Date of Decision: 13 April 2022; 23 June 2022
Before: Stevenson J
File Number(s): 2019/343896; 2020/264993
HEADNOTE
[This headnote is not to be read as part of the judgment]
This appeal arises out of a dispute relating to the production and broadcast of the ABC television program, The Checkout. CJZ Pty Ltd (CJZ) and its director Nicholas Murray sought leave to appeal, and The Checkout Pty Ltd, Giant Dwarf Pty Ltd (Giant Dwarf) and its director Julian Morrow cross-appealed, against orders made in two proceedings referred to as the commercial proceedings and the defamation proceedings, which were heard together.
In the commercial proceedings, The Checkout Pty Ltd, Giant Dwarf and Mr Morrow claimed damages alleging that CJZ had breached the Share Sale Agreement and that CJZ and Mr Murray had engaged in misleading and deceptive conduct and committed the tort of injurious falsehood against Mr Morrow. These claims were dismissed. CJZ cross-claimed seeking an order that the Share Sale Agreement be rescinded on the basis that it had been induced to execute it as a consequence of Mr Morrow's misleading or deceptive conduct. On the cross-claim, the primary judge found that Giant Dwarf had breached the joint venture agreement and engaged in misleading or deceptive conduct, that Mr Morrow had breached his duty as a director of the joint venture company and engaged in misleading or deceptive conduct and that the Share Sale Agreement ought be rescinded.
In the defamation proceedings, Mr Morrow claimed damages against CJZ and Mr Murray in respect of statements Mr Murray had made orally and in writing to the ABC about Mr Morrow. CJZ and Mr Murray relied on defences of justification, qualified privilege and honest opinion. Mr Morrow alleged express malice to defeat the defence of qualified privilege. The primary judge found that each of the matters complained of was defamatory and that only the defence of justification was made out in respect of two matters complained of. His Honour entered judgment for Mr Morrow and ordered CJZ and Mr Murray to pay general damages of $30,000 and aggravated damages of $5000 with interest, and Mr Morrow's costs of the proceedings.
CJZ and Mr Murray sought leave to appeal against the orders made in the defamation proceedings, on the basis that the primary judge erred in determination of the defence of qualified privilege, and the costs orders made against them in the commercial proceedings, submitting that they were entitled to indemnity costs on the basis of three Calderbank offers. Giant Dwarf and Mr Morrow cross-appealed on the grounds that the primary judge erred in ordering recission of the Share Sale Agreement, because it proceeded upon erroneously finding the conduct of Giant Dwarf and Mr Morrow was misleading or deceptive, that Mr Morrow breached his duties as a director of the joint venture company and that there was an implied term of the joint venture agreement. The cross-appellants also filed a notice of motion for leave to adduce further evidence comprising emails sent by Mr Murray in March 2023.
The Court held (Adamson JA, Ward P and Mitchelmore JA agreeing), dismissing the cross-appeal and allowing the applicants' appeals:
Commercial proceedings
Dismissing the cross-appeal
Misleading or deceptive conduct
(1) The primary judge was correct to find that Mr Morrow implicitly represented that his sole representation in wanting the Share Sale Agreement executed was to obtain access to the PDV rebate, and that his failure to disclose his negotiations with the ABC constituted misleading or deceptive conduct: [119], [121], [134].
(2) The effect of the order for rescission of the Share Sale Agreement was to deprive Mr Morrow and Giant Dwarf of the fruits of their misleading and deceptive conduct and to put the parties in the same position as if the wrongful conduct had not occurred: [142]. In circumstances where the primary judge had power to make an order for rescission and neither the injured parties nor the wrongdoer has proposed any other viable substantive relief, an order for recission is appropriate: [143].
Marks v GIO Australia Holdings Limited (1998) 196 CLR 494; [1998] HCA 69 at [41] (McHugh, Hayne and Callinan JJ), applied.
(3) It is not necessary to decide whether the primary judge erred in finding an implied term as this was not a claim in contract for breach of an implied term and the reasonable expectation of disclosure was otherwise established: [131]-[133].
Damages for injurious falsehood
(4) The cross-appellants were required to prove that the alleged injurious falsehoods were a substantial factor in causing them economic loss: [307]. The primary judge correctly found that Mr Morrow was the operative cause of the cross-appellants' loss. It was therefore not necessary to address the other grounds of the cross-appeal against the dismissal of the claim for injurious falsehood: [310].
Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388; [2001] HCA 69, distinguished.
In relation to costs (application for leave to appeal)
(5) Leave to appeal against the costs order ought to be granted because the primary judge's discretion miscarried and his Honour relevantly mistook the facts: [330]-[331].
Wentworth v Rogers (No 3) (1986) 6 NSWLR 642; House v The King (1936) 55 CLR 499; [1936] HCA 40, applied.
(6) CJZ and Mr Murray's letter of 19 June 2019 (via their solicitor) provided a detailed explanation as to why the claims against them would fail, which was vindicated by the primary judge's findings. Had Giant Dwarf accepted CJZ's subsequent offer of 1 November 2019, it would have been in a better position. On this basis, Giant Dwarf and Mr Morrow ought pay the applicant's costs of the commercial proceedings on an indemnity basis: [338]-[340].
Defamation proceedings
(7) The primary judge erred in his application of the test for qualified privilege which was whether the communication was published on a privileged occasion and was relevant to the occasion: [250].
Horrocks v Lowe [1975] AC 135 at 149; Roberts v Bass (2002) 212 CLR 1; [2002] HCA 57 at [75] (Gaudron, McHugh and Gummow JJ); Wraydeh v Fairfax Media Publication Pty Limited; Wraydeh v Nationwide News Pty Ltd (2021) 105 NSWLR 254; [2021] NSWCA 153 at [44] (Simpson AJA, Bell P and Gleeson JA agreeing); Bashford v Information Australia (Newsletters) Pty Ltd (2004) 218 CLR 366; [2004] HCA 5 at [9]-[10] (Gleeson CJ, Hayne and Heydon JJ).
(8) The common law defence of qualified privilege is defeated by "express malice" if the dominant purpose of the communication was an improper purpose foreign to the privileged occasion: [251]. Express malice for the purposes of defeating qualified privilege is a different concept from malice for the purpose of aggravated damages: [259].
(9) Mr Murray established the defence of qualified privilege in respect of each of MCOs 3, 4, 5 and 6. Mr Morrow did not discharge his onus of proving express malice: [290].
Cross-appellants' Notice of Motion (leave to adduce further evidence)
(10) As Mr Murray and CJZ have been successful in their appeal against the orders made in the defamation proceedings, there is no basis on which the Court could order injunctive relief instead of the undertaking. The notice of motion therefore ought to be dismissed: [341]-[342]. Mr Murray ought be released from his undertaking.
Disputed facts and inferences about the Duck Inn meeting
The primary judge did not accept the reason Mr Morrow gave for not disclosing the discussions in (7) above to Mr Murray. Instead, his Honour found that it was more probable that Mr Morrow did not raise them because it would have been inconsistent with "drawing a line" under the joint venture to indicate that he was currently discussing the prospect of reinstating The Checkout with the ABC ([270]). It is significant that, while Mr Morrow's motive for not raising his communications with the ABC was relevant to the primary judge's assessment of his credit, it was not necessary to prove his intent in order to establish that his conduct was misleading or deceptive since the test is objective (although it can more easily be inferred that it was misleading or deceptive, if it was intended to mislead or deceive: Yorke v Lucas (1985) 158 CLR 661 at 666 (Mason ACJ, Wilson, Deane and Dawson JJ); [1985] HCA 65; Campomar Sociedad, Ltd v Nike International Ltd (2000) 202 CLR 45; [2000] HCA 12 at 63 (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ)).
Mr Murray said, in paragraph 149 of his affidavit of 4 June 2020, that at the Duck Inn meeting Mr Morrow had told him that he was finding "making TV so unpleasant … that [he] never want[ed] to work in TV again" and that he could "get by doing corporate speaking gigs". Mr Murray's evidence was that he regarded this comment as incompatible with Mr Morrow having discussions with the ABC about The Checkout or another consumer affairs show.
In response Mr Morrow deposed (in paragraph 216 of his affidavit of 14 December 2020):
"In reply to paragraph 149 of the Murray Affidavit, as at 19 February 2019 the ABC had not told me 'that the ABC wanted a consumer affairs show' or that it 'wanted The Checkout again'. I did not say that I 'did not want to work in television any more'."
[Bold emphasis added.]
At first instance, Mr Morrow admitted that the statement in bold was not true. The primary judge found that the discussions between the ABC and Mr Morrow on 19 and 20 December 2018 and 13 February 2019 showed that the ABC was "open to the possibility of there being a further series of The Checkout, although no decision had yet been made about that" ([279]). The primary judge found that Mr Morrow's evidence as to this matter was untrue to his knowledge ([281]).
The primary judge accepted Mr Murray's evidence that Mr Morrow had said, at the Duck Inn meeting, that he never wanted to work in TV again. His Honour did so on the basis of Mr Murray's evidence (including his demeanour in the witness box), finding that he was "very confident that his recollection was correct" ([283]). His Honour also took into account the contents of an email sent by Mr Murray to Michael Easton (Mr Morrow and Giant Dwarf's then solicitor) on 13 June 2019, in which Mr Murray said, in part:
"At the initial meeting Julian said that making TV was so unpleasant that he never wanted to work in TV again and would be happy to get by doing corporate speaking."
The finding of reasonable expectation
The primary judge found further:
"538 It must follow from this that Mr Murray and [CJZ] had a reasonable expectation that Giant Dwarf would comply with this term and disclose the opportunity that I have found had been presented.
539 It may be that, throughout this period, Mr Murray's state of mind was that The Checkout was 'not coming back' and that it was 'dead'; as evidenced by Mr Campbell's statement immediately before Mr Simon Fraser's meeting with Mr Morrow, Ms Crouch and Ms Chen on 22 February 2019 and Mr Murray's statement to Mr David Knox on 17 March 2019. But that confirms, rather than contradicts, that there was a reasonable expectation on the part of Mr Murray and [CJZ] that Mr Morrow reveal that the opportunity had arisen and that there was a significant prospect of The Checkout 'coming back'."
The cross-appellants challenged the finding at [537] and contended that, instead of that finding, the primary judge ought to have found as follows:
"At all times before executing the Share Sale Agreement, [CJZ] and Mr Murray relied on information obtained directly from the ABC (and not disclosed to Mr Morrow or Giant Dwarf) in making their assessment of the likelihood of the ABC funding a further series of The Checkout. [CJZ] obtained legal advice about the terms of the Share Sale Agreement before executing it.
Mr Murray reviewed, multiple times, the terms of the Share Sale Agreement, including the reference to the production of future series of The Checkout and Giant Dwarf's exclusive rights, before executing it.
In executing the Share Sale Agreement, Mr Murray relied on information and representations made by the CEO of [CJZ], Matthew Campbell."
The cross-appellants also challenged the finding at [538] that Mr Murray and CJZ had a reasonable expectation that Giant Dwarf would comply with the implied term and disclose the opportunity which had been presented (the reasonable expectation finding). Ms Chrysanthou contended that the primary judge ought to have found, instead, that:
"At all times during the Joint Venture Agreement or alternatively after 22 February 2019, Mr Murray or [CJZ] did not have an expectation that Giant Dwarf or Mr Morrow would inform [CJZ] or the Joint Venture Company if Giant Dwarf had an opportunity to produce a television program that was not The Checkout."
Ms Chrysanthou contended that the implied term finding was fundamental to the reasonable expectation finding, which in turn formed the basis for the finding of misleading or deceptive conduct. She submitted that the implied term finding ought be set aside and that, if it were, the reasonable expectation finding and the finding of misleading or deceptive conduct could not stand.
Mr Murray's email to Mr Carrington dated 20 June 2019 (MCO 4)
On 20 June 2019 Mr Murray sent an email to Mr Carrington as follows:
"I thought I should give you an update on our discussions with Julian regarding sorting out [T]he Checkout debacle.
Here at [CJZ] we have dedicated the entire last week trying to grapple with the problem we find ourself in. Julian has also changed lawyers and we faced a barrage of legal letters, threats and deadlines from the new legal team. On Monday three of us (Simon Fraser our CFO, Mandy Chapman in house lawyer and me) spent all day at our external lawyer's office including the afternoon in a delightful settlement conference with Julian and his lawyer.
From that meeting and with additional information gleaned since, we have been able to put a settlement proposal to Julian yesterday. While I don't know the prospects of that offer, in our view we've put a reasonable resolution on the table which is capable of being accepted by Julian.
We didn't expect to find ourselves in this position, and it arises purely because Julian had revived the show while engaged in negotiations with us about us transferring our 50% share in the [Joint Venture Company] to Julian's company for nothing. We would never have given him the shares had we known about the resurrection of the show (about which Julian was obliged to inform us, but didn't).
We are aware of the ABC's looming Monday deadline to sign the quit claim document and our efforts this week have been to try to achieve that by resolving all of the issues. We are hoping that can be done without Julian commencing legal proceedings - despite his repeated threats to do so.
If the show can't proceed due to the dispute, then we are truly sorry. It isn't our intention to be difficult, but we have a genuine grievance arising from Julian's conduct. Our current position is supported by a key business partner of Julian's too. So we stand by our position.
Hopefully you will have clarity one way or the other shortly. Many thanks for your patience."
[The primary judge's reasons emphasised the defamatory imputations by red underlining (in bold above).]
MCO 4 arises in connection with the application for leave to appeal against the orders in the Defamation proceedings (which are considered separately below). Ms Chrysanthou separately challenged the primary judge's finding at [820] (ground 7, fact 35) that:
"… Mr Reucassel [who was identified as the key business partner of Mr Morrow] expressed some support for Mr Murray's 'current position' of not executing a Quit Claim."
The primary judge's finding was based on Mr Murray's evidence (extracted at [819]) that:
"[Mr Reucassel] said - when I told him that we - it didn't look like we were going to be signing the quit claim, he said these words: 'Go for it.'"
The test for the common law defence of qualified privilege
The test the primary judge applied is set out above. In effect, the primary judge found that although the ABC had an interest in the parties' entitlement to produce the television series for it, it had no specific interest in the details of the dispute and therefore there was no reciprocity of interest for the purposes of qualified privilege with respect to MCOs 3-6. For the reasons which follow, this was not the correct question. Instead of asking whether the recipient was interested in receiving the particular statements which comprised the publication, his Honour should have determined whether the defendant had proved that:
1. the communication was published on a privileged occasion; and
2. the communication was relevant to the occasion.
The common law defence of qualified privilege is defeated by a particular kind of malice, sometimes referred to as "express malice": Horrocks v Lowe [1975] AC 135 at 149, approved in Roberts v Bass (2002) 212 CLR 1; [2002] HCA 57 at [75] (Gaudron, McHugh and Gummow JJ). To prove express malice, the plaintiff must prove that the dominant purpose of the communication was unrelated to the privileged occasion: that is, that the dominant purpose was an improper purpose, being a purpose which was foreign to the privileged occasion.
The identification of the privileged occasion and whether the communication was related to the privileged occasion
The first step, the identification of a privileged occasion, requires consideration of the communality, or reciprocity, of interest between the publisher (in this case, Mr Murray) and the recipient (the ABC) in the subject matter of the communication (rather than the precise terms of the communication): Wraydeh v Fairfax Media Publication Pty Limited; Wraydeh v Nationwide News Pty Ltd (2021) 105 NSWLR 254; [2021] NSWCA 153 at [44] (Simpson AJA, Bell P and Gleeson JA agreeing).
An occasion will be privileged if a person has an interest or duty of a legal, social or moral nature to make a statement on an occasion and the recipient has a corresponding interest or duty to receive it: Bashford v Information Australia (Newsletters) Pty Ltd (2004) 218 CLR 366; [2004] HCA 5 (Bashford) at [9]-[10] (Gleeson CJ, Hayne and Heydon JJ). The concept of reciprocal duty and interest is a broad and general one and is founded on public utility: Telegraph Newspaper Co Ltd v Bedford (1934) 50 CLR 632 at 657 (Evatt J); [1934] HCA 15. The circumstances of the case, the situation of the parties, the relations of all concerned and the events leading up to and surrounding the publication are all relevant to the identification of the occasion and the determination whether it is privileged: Bashford at [10].
In Papaconstuntinos v Holmes a Court (2012) 249 CLR 534; [2012] HCA 53, the plurality (French CJ, Crennan, Kiefel and Bell JJ) said of present relevance at [38]:
"The modern emphasis in the formulation of the defence of qualified privilege is upon duties and interests rather than the state of mind of the defendant, the latter of which would include the defendant's motive. If the defendant has a legitimate interest which the defendant seeks to protect in making the defamatory statement, the occasion for the privilege arises. There is no case which holds that self-interest operates as a disqualification or requires something more, such as some compelling need or urgency, to justify a statement …"
[Footnote omitted.]
The second question, which is one of characterisation is: was the communication related to the privileged occasion.
Whether qualified privilege is defeated by malice because the plaintiff has proved that the publisher's dominant purpose in publishing the communication was foreign to the privileged occasion and therefore improper
Where a communication attracts qualified privilege, there is a presumption of honesty on the part of a publisher which casts on the plaintiff the onus of rebutting the presumption: Roberts v Bass at [96]-[97].
In KSMC Holdings Pty Ltd t/as Hubba Bubba Childcare on Haig v Bowden (2020) 101 NSWLR 729; [2020] NSWCA 28 (KSMC) at [59]-[61], this Court (Payne JA, Basten and White JJA agreeing) summarised the principles on proof of malice to defeat qualified privilege:
"59 The respondent was obliged to establish a predominantly improper motive in publishing the matter complained of and overcome the presumption that the publisher acted honestly, that is, with a proper purpose: Roberts v Bass (2002) 212 CLR 1; [2002] HCA 57 at [96]-[97].
60 Proof of ill-will, prejudice, bias, recklessness, lack of belief in truth or some motive other than duty or interest for making the publication is insufficient of itself to establish that malice actuated the publication: Roberts v Bass at [74]-[76] (Gaudron, McHugh and Gummow JJ); Fraser v Holmes (2009) 253 ALR 538; [2009] NSWCA 36 at [50]-[68] (Tobias JA with whom McColl and Basten JJA agreed); Cush v Dillon at [27].
61 A plaintiff has a heavy onus to discharge to establish malice. Malice is a serious matter and the principles set out in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-363; [1938] HCA 34 apply to such a finding."
It is also of significance that the plurality (Gaudron, McHugh and Gummow JJ) said in Roberts v Bass at [103]-[104]:
"103 Carelessness of expression or carelessness in making a defamatory statement never provides a ground for inferring malice. The law of qualified privilege requires the defendant to use the occasion honestly in the sense of using it for a proper purpose; but it imposes no requirement that the defendant use the occasion carefully. Even irrationality, stupidity or refusal to face facts concerning the plaintiff is not conclusive proof of malice although in 'an extreme' case it may be evidence of it. And mere failure to make inquiries or apologise or correct the untruth when discovered is not evidence of malice.
104 Finally, in considering whether the plaintiff has proved malice, it is necessary that the plaintiff not only prove that an improper motive existed but that it was the dominant reason for the publication. In Godfrey, Jordan CJ said:
'It is of the utmost importance in the case of statements made on occasions of qualified privilege, that the privilege which the law casts around such statements should not be nullified by a readiness to treat as evidence of express malice destroying the privilege anything which does not definitely, and as a matter of commonsense, point to the actual existence of some express malice which was really operative in the making of the statement; and substantial evidence is required, not surmise or a mere scintilla: Oldfield v Keogh. Any other approach to the subject would in substance destroy the doctrine of qualified privilege altogether.'"
[Footnotes omitted.]
MCO 5: email dated 5 July 2019 from Mr Murray to the ABC
In MCO 5, Mr Murray continued to update the ABC about the dispute. The additional statement which had not previously been made referred to "[Mr Murray and CJZ's] allegations against [Mr Morrow] and Giant Dwarf of fraudulent misrepresentation".
The primary judge rejected the defence of qualified privilege on the following basis (which I have found, for the reasons given above, to be erroneous) at [854]:
"There can be no question here of any defence of qualified privilege as Ms Carnabuci had made it perfectly clear in her email, to which Mr Murray was replying, that the ABC did not 'wish to have any involvement in the dispute between you'. The ABC had no interest in receiving an email in the terms of Mr Murray's email of 5 July 2019."
The primary judge's findings on the defence of justification for MCO 5 at [840]-[847] have been extracted above. In substance, his Honour found that "the ordinary reasonable reader" would understand "fraudulent misrepresentation" to mean a knowingly false statement. As referred to above, Ms Chrysanthou relied on this finding in support of her submission that, as MCO contained a false statement by Mr Murray, the defence of qualified privilege, if established, would be defeated by malice.
Mr Murray was cross-examined extensively on MCO 5. He said that he used the word "allegations" to qualify "fraudulent misrepresentations" to make it clear that they were just allegations at that time. He agreed that he did not press such allegations in the Defamation proceedings. Mr Murray explained that he was making allegations but referring in the same sentence to documents which he did not then have (correspondence between Mr Murray and the ABC) which would be capable of proving or disproving the allegations (see the text of MCO 5 set out above). He accepted that he was alleging fraudulent misrepresentations but said that the ABC itself would know whether there were actually fraudulent misrepresentations because the ABC would know whether Mr Morrow was negotiating with them about the return of The Checkout before 8 April 2019 (the date he signed the Share Sale Agreement). Mr Murray confirmed in cross-examination that his purpose in writing to the ABC was to obtain from them the relevant documents (communications between the ABC and Mr Morrow about the return of The Checkout before 8 April 2019). He denied that his purpose was to "shame" Mr Morrow. Indeed, when Ms Chrysanthou put to him that MCO 5 was a "gratuitous attack on [Mr Morrow] in order to harm him", Mr Murray responded that if that was the case he would have sent it to a "wide distribution list" rather than to "one person at the ABC".
It is not to the point that Mr Murray did not press the allegations of fraudulent misrepresentations in the Commercial proceedings. The statutory prohibition on misleading or deceptive conduct in trade and commerce was a significant advance in the law in that it did not require proof of intent, in contrast to fraudulent misrepresentations. It would appear that Mr Murray appreciated that an allegation of fraudulent misrepresentation implies that the representor believed the representation to be false at the time it was made. Indeed, this was his belief. He had learned that Mr Morrow had been negotiating with the ABC for a future series of The Checkout prior to 8 April 2019 in circumstances where Mr Morrow had, at the same time, been representing to him that there was no real prospect of that occurring. Mr Murray's evidence was that he believed the allegation (of fraudulent misrepresentation) to be true but that he could not actually know as he did not have the documents (which were in the ABC's possession) which were necessary to prove or disprove it.
The cross-appeal against the rejection of the claim for damages for injurious falsehood
The grounds of cross-appeal relating to this claim are as follows:
"1. The primary judge erred in characterising [IFs 1, 2 and 8] as 'to an extent' false in circumstances where [they] were false: Judgment [1001], [1007] and [1024].
2. The primary judge erred in failing to determine that [CJZ] was actuated by malice in making the IFs.
3. The primary judge erred in finding that [Mr Murray] was not actuated by malice in making [IFs 1, 2, 3, 8, 9 and 11] Judgment [1002], [1007], [1025], [1031] and [1040]; cf [875],[892] and [993].
4 . The primary judge erred in failing to determine that [Mr Murray] was actuated by malice in making [IFs 4, 5, 12, 13, 14 and 15].
5 . The primary judge erred in determining that the loss and damage of [Giant Dwarf and Mr Morrow] was caused other than by [CJZ's and Mr Murray's] publication of the IFs: Judgment [958] - [968], [973], (986] - (988] and [1059] - [1060].
6. The primary judge erred in failing to determine the cross-appellants ' claims for loss in injurious falsehood, which loss ought to have been determined in the amount of:
(a) [The Joint Venture Company]:
(i) $1,000,000 in respect of income from the Production Company Overhead for 4 further series of The Checkout;
(ii) an amount to be determined by the court in respect of damage to goodwill;
(b) [Giant Dwarf]:
(i) $730,400 in respect of loss of income from provision of Production Facilities for 4 further series of The Checkout or The Help Desk;
(ii) $485,600 in respect of loss of income from providing the services of a Series Producer and Production Manager on 4 further series of The Checkout or The Help Desk; and
(iii) an amount to be determined by the court in respect of damage to goodwill;
(c) [Mr Morrow]
(i) $596,640 being the loss of income in respect of working as Executive Producer on 4 series of The Checkout or The Help Desk;
(ii) an amount to be determined by the court in respect of damage to reputation.
…
7A. The primary judge erred in finding on the evidence before him that [IFs 3, 4, 5, 12, 13, 14] were not false.
…"
The key challenge in the cross-appeal relating to the injurious falsehood claim is ground 5, which challenges the primary judge's finding that the cross-appellants had not established that any of the IFs had caused any loss suffered by them. In order to address the cross-appeal, I propose to address this challenge first.If it is not made out, there is no utility in addressing the other grounds since the claim for damages for injurious falsehood must fail as the cross-appellants were required to prove that they had suffered actual loss as a result of the IFs (see the list of elements of the tort of injurious falsehood at [985] of the primary judge's reasons, which were said to be common ground).
The Costs judgment
On 16 June 2022, there was a further hearing day for submissions on the appropriate orders, including costs. On 23 June 2022, the primary judge delivered the Costs Judgment: The Checkout Pty Ltd v Cordell Jigsaw Productions Pty Ltd; Morrow v Cordell Jigsaw Productions Pty Ltd (No 14) [2022] NSWSC 835. It is necessary only to address those aspects of his Honour's orders which are the subject of the application for leave to appeal by Mr Murray and CJZ.
Before the primary judge, Mr Murray and CJZ relevantly submitted that they were entitled to indemnity costs of the Commercial proceedings on the basis of either of their three Calderbank offers dated 19 June 2019, 18 October 2019 and 1 November 2019.
The offers, together with other relevant correspondence, are set out below.
It is true, as Ms Chrysanthou submitted, that for Mr Morrow and Giant Dwarf to accept the offer of 1 November 2019 would have required them to relinquish their damages claim for alleged breach of the Share Sale Agreement, which they must have assessed as having some value to warrant its being brought. On the other hand, acceptance of the offer would have freed Mr Morrow and Giant Dwarf from the joint venture agreement and given them control of the Joint Venture Company, to the exclusion of Mr Murray. It was an offer which delivered almost everything Mr Morrow wanted in terms of a future business model and was made at a time when Mr Morrow may have been able to salvage his relationship with the ABC (which he had harmed by his conduct relating to The Help Desk). The offer represented a very substantial compromise on the part of Mr Murray and CJZ, particularly having regard to their legal position, which was relatively strong and was, as I have said, vindicated by the primary judge.
I reject Ms Chrysanthou's argument that the 1 November 2019 Calderbank offer was "absurd" or uncommercial. It made allowance for the real prospect that, instead of recommissioning The Checkout for another two series, the ABC would decide to commission another consumer affairs show, such as The Help Desk. What the 1 November 2019 offer did was to give Mr Murray a return on the first two series of any such substitute program. There was no indication that the ABC had any appetite for The Checkout as well as another consumer affairs program. It had, as early as 9 March 2019, approved the proposal of a further two series of a consumer affairs show. When the 1 November 2019 offer is viewed by reference to the surrounding circumstances (which include the terms of Mr Morrow's 20 June 2019 offer, which was substantially similar but limited to The Checkout), I consider it to have been unreasonable of Mr Morrow not to accept the 1 November 2019 offer.
It would, in my view, be unreasonable and plainly unjust to deprive Mr Murray and CJZ of their costs on an indemnity basis, particularly in circumstances when their offer of 1 November 2019 had been preceded, in the open letter of 19 June 2019. In that letter, Hamish Fraser's detailed explanation (by reference to the facts and legal authority) as to why Mr Morrow and Giant Dwarf's claims against them would fail was vindicated by the primary judge's findings (which have not been disturbed on appeal) as follows:
1. the Quit Claim went beyond the scope of the Share Sale Agreement;
2. the Share Sale Agreement did not require Mr Murray to sign the Quit Claim;
3. Mr Murray and CJZ were induced by Mr Morrow and Giant Dwarf's misleading or deceptive conduct into entering into the Share Sale Agreement;
4. but for Mr Morrow and Giant Dwarf's misleading or deceptive conduct, Mr Murray and CJZ would not have entered into the Share Sale Agreement; and
5. neither Mr Murray nor CJZ was in breach of the Share Sale Agreement or had repudiated that agreement by either refusing to sign the Quit Claim or by refusing to "stand by" the Share Sale Agreement.
As I have said, had Giant Dwarf accepted CJZ's offer, it would have been in a better position and CJZ would not have incurred substantial costs in defending itself against the claim in the Commercial proceedings and successfully prosecuting its cross claim for rescission of the Share Sale Agreement. Further, Giant Dwarf ought to have accepted that its claim was doomed to fail for the reasons given by Hamish Fraser (and subsequently the primary judge) and accepted CJZ's offer.
For these reasons, I consider that the application for leave to appeal in the Commercial proceedings ought be granted and that the appeal ought be allowed. Instead of the costs order that was made, the order should be that the respondents pay the applicants' costs of the Commercial proceedings on an indemnity basis.
20 During those negotiations, Mr Morrow did not mention to Mr Murray that he was, at the same time, in effect negotiating with the ABC to re-badge his proposed Are You Being Served program as the seventh series of The Checkout, subject only to a successful culmination of his negotiations with Mr Murray concerning [CJZ's] shares in the Joint Venture Company. During the negotiations between CJZ and Giant Dwarf about the Share Sale Agreement, Mr Morrow was not negotiating with the ABC to "re-badge" Are You Being Served? as The Checkout Series 7. This finding appears at the beginning of the primary judge's reasons in a summary of the significant events which led to the proceedings and therefore must be read in light of the more detailed findings made later in the judgment. The expression "rebadge" ought, in this context, not be read as implying that Are You Being Served was in substance the same as The Checkout, but rather that they were both consumer affairs shows which were substitutable for each other in the sense that the ABC would only broadcast one consumer affairs show.
86 Proposed cl 28 was included in the drafts as a "boilerplate" provision and was not intended by either Mr Morrow nor Mr Murray to reflect or record their relationship as joint venturers. It was a common understanding of Giant Dwarf and CJZ at all times before 8 April 2019 that there was no fiduciary relationship between the parties. Clause 28 was contained in a draft agreement which was never signed and was inconsistent with the parties' agreement to enter into a joint venture, which imposed fiduciary duties.
152 CJZ'S "flirtation" in 2018/2019 with the possibility that CJZ would pitch to the ABC a consumer affairs show to be tentatively described as "Fraud Squad" did not have significance in this case. In 2018/2019 CJZ worked to create a new consumer affairs show "Fraud Squad" to be produced exclusively by CJZ. Factual finding reflected the primary judge's advantage in hearing and seeing the witnesses and his acceptance of Mr Murray's evidence that nothing came of the possibility, which was, in any event, not pitched to the ABC.
252(d) There is no obvious reason why Mr Munro would, a day after the meeting, have misremembered or misquoted what had been told to him by Mr Carrington or Mr Huddleston about the meeting. The email on 14 February 2019 from Peter Munro to Emma McDonald refers to a meeting on 13 February 2019 which Mr Munro did not attend. The primary judge's finding reflected his understanding that Mr Munro was not present at the meeting and had been told what had happened by Mr Carrington and Mr Huddleston, who were present.
270 If, as Mr Morrow said, he thought that Giant Dwarf was entitled to make a consumer affairs project without reference to the Joint Venture Company or CJZ, consistently with his understanding of the terms of the Joint Venture Agreement, there was no reason for him not to mention to Mr Murray those communications. A more likely reason for Mr Morrow not to have said anything to Mr Murray about this was his understanding that the ABC remained open to the possibility of recommissioning The Checkout; a matter that [the primary judge found] Mr Morrow did not wish to raise with Mr Murray in the context of "drawing a line" under the joint venture. Giant Dwarf was entitled to make a consumer affairs project without reference to the Joint Venture Company or CJZ provided the new project did not use the intellectual property of the Joint Venture Company. The finding is supported by Mr Morrow's admissions contained in his email dated 4 June 2019, which is set out at [202] and [586]. The fact for which the cross-appellants contended is not inconsistent with the primary judge's finding about the reason for Mr Morrow's non-disclosure to Mr Murray about the possibility of the ABC recommissioning The Checkout. No error has been shown in the primary judge's finding.
285 [The primary judge found] this email to be a reasonably contemporaneous confirmation of the correctness of Mr Murray's recollection about what Mr Morrow said about this. Mr Murray's email dated 13 June 2019 is not a reasonably contemporaneous record of what Mr Morrow said to Mr Murray on 19 February 2019. Mr Murray's email of 13 June 2019 did not need to be "reasonably contemporaneous" with the conversation of 19 February 2019 to be admissible under s 64(3) of the Evidence Act. It was open to the primary judge to regard the email as "reasonably contemporaneous". No error has been demonstrated.
287 Mr Morrow's denial of having said words to this effect [that he never wanted to work in television again] should, in my opinion, be seen in the context of his immediately preceding, and false, evidence that the ABC had not told him, as at 19 February 2019, that it wished to present a consumer affairs show. After the meeting on 13 February 2019 with the ABC executives Michael Carrington and Richard Huddleston, Mr Morrow did not have a clear sense of what the ABC wanted in terms of a new consumer affairs television project or whether the ABC did in fact intend to air a prime time consumer affairs television project in the second half of 2019 (ExA04.1256 para 106). Factual finding reflected the primary judge's advantage in hearing and seeing the witnesses and his acceptance of Mr Murray's evidence. The finding was immaterial, except as to Mr Morrow's credit, because the primary judge found that Mr Murray did not rely on it: [531].
287 I find that Mr Morrow did say the words attributed to him by Mr Murray. Mr Morrow did not say to Mr Murray on 19 February 2019 that he "never wanted to work in television again". See above, for fact 8.
287 They cannot have reflected his true state of mind. They must have been said to deflect Mr Murray's attention from the prospect of Mr Morrow's further involvement in any potential recommissioning of The Checkout. On 19 February 2019, Mr Morrow described the non-television projects he was working on to Mr Murray and told him he was focussing on those projects. He also referred to other television projects Giant Dwarf had in development that he was supporting. (ExA04.1401-2) See above, for fact 8.
331 It was Mr Morrow's state of mind as at 25 February 2019, and the fact, that no agreement, whether in principle or otherwise, had been reached between the two parties at this time. It was Mr Morrow's state of mind after 22 February 2019 that there was an agreement in principle between Giant Dwarf and CJZ about the terms on which CJZ would exit the Joint Venture Company. The primary judge's finding has not been shown to be in error, and was correct for the reasons given by his Honour at [322]-[331].
It was Simon Fraser's state of mind after 22 February 2019 that Giant Dwarf and CJZ were "broadly in agreement" on the terms on which CJZ would exit the Joint Venture Company (ExA10.4017).
341-342 The language Mr Morrow used in a telephone conversation with Mr Murray on or around 5 or 6 March 2019 was apt to suggest to Mr Murray that Mr Morrow's motivation to "progress the deal" was the PDV Offset. The language Mr Morrow used in his communications with Mr Murray and CJZ in relation to "progressing the deal" was not apt to suggest to Mr Murray or CJZ that the PDV Offset was the sole purpose of or motivation for the Share Sale Agreement. Mr Morrow and Mr Murray gave conflicting accounts about subsequent telephone conversations between them (ExA04.1263, ExA04.1404, ExA05.1637). Mr Murray accepted that on 27 February 2019, Mr Morrow rejected his offer of a short term loan from the Joint Venture Company to Giant Dwarf to repay the Netflix loan. Mr Murray's evidence (ExA05.1637) was that Mr Morrow said "we may as well sort it all out at once rather than having to have two different transactions". The two different transactions Mr Morrow was referred to were: (a) the Joint Venture Company paying Giant Dwarf its share of the Series 5 & 6 PDV Rebate; (b) the sale of CJZ's shares in the Joint Venture Company to Giant Dwarf. Mr Murray gave evidence of a further conversation with Mr Morrow on 5 or 6 March 2019 (ExA05.1639), which Mr Morrow said was an account of the 27 February 2019 conversation. If a second conversation occurred on 5 March 2019, it happened in the context of the 27 February 2018. In that context, the language Mr Murray ascribed to Mr Morrow was not misleading. The primary judge's finding was consistent with the chronology and the objective probabilities. Mr Morrow's continued reference to the need to progress the transfer to enable him to access his share of the PDV rebate was a constant theme of his communications with Mr Murray about the share transfer. No error has been shown in the primary judge's finding, which was correct, about Mr Morrow's attempts to "manage the message" ([297]).
352 Mr Morrow was not correct to say to the ABC that Giant Dwarf and CJZ had "reached agreement on the terms for [CJZ] to exit The Checkout's production company". It was accurate for Mr Morrow to say to the ABC on 8 March 2019 that Giant Dwarf and CJZ had "reached agreement on the terms for [CJZ] to exit The Checkout's production company" and that the parties were "in the process of formalising" that. The primary judge's finding, which was correct, was based on the timing of Mr Morrow's meeting with the ABC on the morning of 8 March 2019 ([347]-[351]) at which this statement was made and the receipt later on 8 March 2019 of the email from CJZ which confirmed the terms on which CJZ was prepared to sell its share in the Joint Venture Company (set out at [332]).
385 Ms Pincus's statement that she and Ms Waite had formed a view that Mr Morrow's proposed Are You Being Served show was sufficiently similar to The Checkout to constitute a 'spinoff' justified an inference that this was the ABC's apprehension about the matter. Are You Being Served? would not have been not a spinoff of The Checkout under the definition of "spinoff" in The Checkout Series 6 contract (ExA07.2763). The terms of primary judge's finding at [385] indicate that his Honour did not purport to address whether the proposed show was in fact a spin-off but rather, that his Honour understood the basis for the ABC's apprehension (which, in turn, explained the ABC's sensitivity to issues about the ownership of intellectual property). No error in the primary judge's finding has been demonstrated.
404 As Ms Pincus's documents were created during, and then immediately after the conversation, I think it likely that they are the most accurate record as to what was said. Ms Pincus did not give evidence about the circumstances in which her handwritten notes were made, or the purpose they were made for. Ms Pincus handwritten notes are not the most accurate record as to what was said. They were admitted subject to a limitation pursuant to s 136 of the Evidence Act. The limitation imposed by the primary judge affected admissibility under s 69 of the Evidence Act but did not affect the admissibility of the document pursuant to s 64(3). Ms Pincus' notes about what was said at the meeting between herself and Mr Morrow were admissible under s 64(3) of the Evidence Act to prove what Mr Morrow said at the meeting (since he was called to give evidence). It was not disputed that Ms Pincus made her notes contemporaneously. The primary judge's finding has not been shown to be in error.
404 As Mr Morrow did not dispute the accuracy of those notes, and notwithstanding the limited basis upon which [the primary judge] admitted them, [the primary judge inferred] that they [were] an accurate record of what was said. Ms Pincus' handwritten notes were admitted subject to a limitation pursuant to s 136 of the Evidence Act and cannot be taken to be an accurate record of the conversation on 28 March 2019. Mr Morrow's account differed from Ms Pincus' notes. As for (15) above.
428 Mr Morrow's evidence confirms the accuracy of Ms Pincus's note, and makes clear that Mr Morrow's state of mind at this point was that there was a "genuine prospect", to use the words of his email to Mr Murray of 13 June 2019 … and an "opportunity" (for the purposes of the implied term of the Joint Venture Agreement …) to produce a further series of The Checkout. To the extent Mr Morrow's affidavit evidence differs from Ms Pincus' notes, Mr Morrow did not accept the accuracy of Ms Pincus' notes. The conversation between Mr Morrow and Ms Pincus on 28 March 2019 did not give rise to any obligations under the Joint Venture Agreement. This factual finding reflected the primary judge's advantage in hearing and seeing Mr Morrow give evidence and be cross-examined. The primary judge accepted Mr Morrow's concession in cross-examination (referred to at [427]) as his Honour was entitled to do.
465 There is no suggestion in the evidence that Mr Murray saw the "fundamental purpose" of the Share Sale Agreement to be as Mr Morrow stated. Mr Murray's account of the conversation with Mr Morrow at the Duck Inn on 19 February 2019 (ExA05.1634) was Mr Morrow said "it's probably a good time to draw a line under the Joint Venture and also deal with the IP rights in the show in the unlikely event it returns." [267] When [465] is read as a whole, it is plain that the primary judge was juxtaposing Mr Morrow's fundamental purpose in seeking the Share Sale Agreement (to be able to produce further series of The Checkout in a more profitable way (because he would not have to pay 40% of the profits to Mr Murray)) with Mr Murray's ignorance of that purpose. No error has been shown.
At all times from 19 February 2019, Mr Murray understood that the purpose of the discussions between Giant Dwarf and Cordell was to end CJZ's involvement in the Joint Venture Company and to deal with the parties' rights in relation to potential future series of The Checkout.
When Mr Morrow spoke to Mr Murray on 19 February 2019 and 27 February 2019 (and 5 or 6 March 2019, if that occurred), Giant Dwarf and the ABC were not in a state of advanced negotiations in relation to a new consumer affairs television project.
465 Mr Murray had no knowledge of Mr Morrow's communications with the ABC, nor of the advanced state of his negotiations with them. On 28 February 2019, Mr Morrow's state of mind was that there had been "no meaningful progress" in the discussions with the ABC The primary judge, in [465] was addressing Mr Murray's state of knowledge as at the time the Share Sale Agreement was entered into (this being a crucial finding for the misleading or deceptive conduct claim). His Honour's finding was correct.
about a new consumer affairs television project and he was concerned he was "being strung along" by the ABC: (ExA10.4041).
483 Certainly, by 1 April 2019 Mr Morrow must have seen that there was an "opportunity" and a "genuine prospect" of the ABC agreeing that the new consumer affairs show could be called The Checkout; and that this was an opportunity that was available not only to him, or to Giant Dwarf, but also to the Joint Venture Company. On 19 February 2019, Mr Morrow advised Mr Murray that:(i) Giant Dwarf would not agree to further production of The Checkout while CJZ remained a shareholder of the Joint Venture Company, and (ii) Giant Dwarf would instead make a new consumer affairs program instead of The Checkout. This is addressed in Adamson JA's reasons at [97]-[98].
After 22 February 2019, an opportunity for there to be a seventh series of The Checkout could not arise unless Giant Dwarf withdrew its veto on further production of The Checkout. By no later than 22 February 2019, Giant Dwarf had exercised its right to veto further production of The Checkout and/or communicated to CJZ an intention to veto further production of The Checkout.
484 Mr Morrow did not wish the Joint Venture Company to pursue that "opportunity" so long as Mr Murray was the director of the Joint Venture Company and CJZ was its 50% shareholder. He asked the ABC to not inform Mr Murray of the opportunity. Mr Morrow asked the ABC not to inform CJZ that the ABC was in discussions with Giant Dwarf about a new consumer affairs television program. This is addressed in Adamson JA's reasons at [97]-[98].
At all times from 2018, it was a common assumption of Giant Dwarf and CJZ that the Joint Venture Agreement did not require a party to inform the other about an opportunity to make a television program which was not The Checkout.
On 19 February 2019, Mr Morrow advised Mr Murray that:
486 Mr Morrow, however, had done this without revealing to his fellow director, Mr Murray, his plans to cause the opportunity to become available and, once it was (i) Giant Dwarf would not agree to further production of The Checkout while CJZ remained a shareholder of the Joint Venture Company, and The primary judge's finding at [486] is a conclusion based on a number of anterior findings, which are correct. See also Adamson JA's reasons at [99]-[101].
available, to appropriate it for the benefit of Giant Dwarf. (ii) Giant Dwarf would instead make a new consumer affairs program instead of The Checkout.
Mr Morrow did not plan to, and did not, appropriate an opportunity of The Checkout for the benefit of Giant Dwarf.
501 In March 2019, an opportunity arose for there to be a seventh series of The Checkout. See findings contended for at paragraph [J483] above. The finding was plainly correct and supported by the evidence of what Mr Morrow knew of the ABC's intentions in March 2019.
Mr Morrow became aware of the opportunity for Giant Dwarf to produce a new consumer affairs program as a result of communications from David Anderson to Mr Morrow in his capacity as a director of Giant Dwarf, not in his capacity as a director of the Joint Venture Company.
501 Mr Morrow became aware of that opportunity by reason of discussions that he had had, in the eight months leading to March 2019, with officers of the ABC. On 14 August 2018, the ABC Managing Director indicated publicly on ABC Radio that there was an opportunity for The Checkout to return to ABC television after July 2019: ExA09.3588. The finding at [501] set out in (24) was correct and would not appear to be genuinely in dispute.
On 25 September 2018, the ABC Managing Director indicated publicly on ABC News Breakfast (ExA09.3628) that the ABC intended to pursue a consumer advocacy on television "whether it's The Checkout or another program in the future."
501 He had those discussions in his capacity as a director of the Joint Venture Company. On 19 September 2019, the ABC Managing Director Mr Anderson telephoned Mr Morrow about an opportunity to make a new consumer affairs television program: ExA04.1250. This is a legal conclusion which was open to the primary judge and which was correct having regard to the ambit of the joint venture between Giant Dwarf and CJZ with respect to The Checkout.
Mr Anderson contacted Mr Morrow on 19 September 2019 in his capacity as managing director of Giant Dwarf.
501 Through those discussions, an opportunity arose that Mr Morrow should have, as a director of the Joint Venture Company, disclosed to the Joint Venture Company and thus, to his fellow director, Mr Murray. The Joint Venture Agreement did not give rise to an obligation of a shareholder to inform the Joint Venture Company of an opportunity to make a television program that was not The Checkout. As for (25).
512 …what Mr Morrow asserts he told Mr Murray on 19 February 2019 was apt to lead Mr Murray to the conclusion that Mr Morrow was not yet in discussions with the ABC and that he would not be taking any steps to seek to revive production of The Checkout until the posited share sale transaction had been consummated. What Mr Morrow asserts he told Mr Murray, and in fact said, on 19 February 2019 was not apt to lead Mr Murray to the conclusion that Mr Morrow was not yet in discussions with the ABC. The finding at [512] is a conclusion which follows from the primary judge's findings. No error has been shown in this finding which is consistent with the objective probabilities and the evidence.
522 Mr Morrow did not say in any of those communications that his only reason for seeking to have Giant Dwarf acquire CJZ's shares was to access the PDV Offset. But the emails were apt to, and I have found calculated to, create that impression and to convey that access to the PDV Offset was Mr Morrow's only immediate motivation. Mr Morrow did not represent that his only immediate motivation for entering into the Share Sale Agreement was to enable Giant Dwarf to access its share of the PDV Offset rebate. The finding at [522] is based on earlier findings at [257], [258], [265], [266], [294], [301], [342], [438] [439], [451], [465], [512]-[522]. The finding was open to his Honour and reflected his advantage in seeing and hearing the witnesses, and in particular Mr Murray and Mr Morrow.
528 Mr Morrow did make the "PDV Representation" to CJZ. Mr Morrow did not make the "PDV See reasons of Adamson JA at [119].
Representation" to CJZ.
535 Mr Morrow's silence in the period from 19 February 2019 to 8 April 2019 concerning the progress and status of his negotiations with the ABC, combined with his "half truth" communications with Mr Murray in the meantime, constituted misleading or deceptive conduct. At all times before executing the Share Sale Agreement, CJZ and Mr Murray relied on information obtained directly from the ABC (and not disclosed to Mr Morrow or Giant Dwarf) in making their assessment of the likelihood of the ABC funding a further series of The Checkout. CJZ obtained legal advice about the terms of the Share Sale Agreement before executing it Mr Murray reviewed, multiple times, the terms of the Share Sale Agreement, including the reference to the production of future series of The Checkout and Giant Dwarf's exclusive rights, before executing it. In executing the Share Sale Agreement, Mr Murray relied on information and representations made by the CEO of CJZ, Matthew Campbell. See reasons of Adamson JA at [121].
538 Mr Murray and CJZ had a reasonable expectation that Giant Dwarf would comply with this term and disclose the opportunity that [the primary judge] found had been presented. At all times during the Joint Venture Agreement or alternatively after 22 February 2019, Mr Murray or CJZ did not have an expectation that Giant Dwarf or Mr Morrow would inform CJZ or the Joint Venture Company if Giant Dwarf had an opportunity to produce a television program that was not The Checkout. See reasons of Adamson JA at [131]-[134].
540 I see nothing in any of the evidence to suggest that Mr Murray should have, himself, made enquiries of Mr Morrow or the ABC between 19 February 2019 and 8 April 2019. Mr Murray did not make enquiries of Mr Morrow and/or the ABC between 19 February 2019 and 8 April 2019 about the possibility of making another series The Checkout. It was common ground that Mr Murray did not make such enquiries during that period. The primary judge was correct to regard this matter as confirming Mr Murray's expectation that if there was a genuine prospect of The Checkout being made again, Mr Morrow would tell him about it.
On 14 June 2019 (ExA12.5348), Giant Dwarf proposed a resolution of the impasse in relation to the execution of the Quit Claim which reserved CJZ's rights to pursue claims not related to the "Checkout IP", a proposal CJZ rejected. The Breach Notice dated 19 June 2019 (ExA 12.5363) issued by Giant Dwarf to CJZ stated (in para 20) that CJZ's "communications with the ABC and dealing with our client evidence a clear intention to rescind or not be bound by the terms of the SSA" and identified the conduct evidencing that intention.
670 CJZ did not repudiate its obligations under the Share Sale Agreement. By letter dated 19 June 2019 (ExA12.5373), CJZ expressly refused to stand by Unnecessary to decide in light of Adamson JA's reasons to dismissing the cross-appeal from the order for rescission. However, it is addressed in reasons of Adamson JA at [184]-[185].
the validity of the SSA.
676 Mr Murray, it appears correctly, took that to be a dishonest answer and the settlement "fell over" as a result. Mr Murray was incorrect in his belief that Mr Morrow gave a dishonest answer on 17 June 2019 to a question about how many series of The Checkout the ABC was proposing to commission. See reasons of Adamson JA at [169].
820 Mr Reucassel expressed some support for Mr Murray's "current position" of not executing a Quit Claim. Mr Reucassel did not express support for Mr Murray's position of not executing a Quit Claim. The statement in Mr Murray's email to Mr Carrington on 20 June 2019 that his position of not executing a Quit Claim was supported by a director of Giant Dwarf was false. ExA14.6278-81. See reasons of Adamson JA at [190]-[192].
940 Mr Murray did not allege fraud against Mr Morrow in these proceedings and has not been able to justify the allegations of fraud made in these two emails. Mr Murray alleged fraud against Mr Morrow repeatedly in the proceedings without justification. See reasons of Adamson JA at [234].
963, 968 There is no evidence to suggest that anything Mr Murray said led Mr Morrow to reach any such conclusion or a change in the After Mr Murray's communications to the ABC, the ABC offered Giant Dwarf substantially less favourable terms for a new consumer affairs program. See reasons of Adamson JA at [239].
ABC's position.
998 Mr Morrow did not call Mr Reucassel to contradict that evidence, notwithstanding the fact that, as I have said, Mr Reucassel is a director and shareholder of Giant Dwarf. Mr Reucassel was not a director of Giant Dwarf at any time from 2019 onwards. In Mr Reucassel's communications with Mr Ben Kay (ExA14.6278-81), Mr Reucassel did not agree with Mr Murray's claims about Mr Reucassel's conduct. This finding is related to fact 35 above: see the reasons of Adamson JA at [190]-[192].
Mr Reucassel was a director of Giant Dwarf at the relevant time (2019); therefore although there is a slight error in the primary judge's use of the present tense, it is immaterial.
1002 I see no basis to conclude that Mr Murray was actuated by malice in making this statement. Indeed, Mr Murray's evidence as to what Mr Reucassel said to him provides some basis for it. Mr Murray was actuated by malice towards Mr Morrow at all times on and after 21 May 2019. Not necessary to decide as causation not established.
1006 I see no reason to doubt that Mr Reucassel did make this statement to Mr Murray. Craig Reucassel did not recently before 21 May 2019 ask CJZ or Mr Murray to take over management and production of The Checkout. Not necessary to decide as causation not established.
1007 [A]lthough it was untrue to the extent it referred to "the recent past", [the primary judge did] not find it was made maliciously. Mr Murray was actuated by malice towards Mr Morrow at all times on and after 21 May 2019. Not necessary to decide as causation not established.
1044-45 …when read in the context of the whole email, it is clear that Mr Murray is referring to the possibility of subpoenas being served on the ABC were he to commence proceedings against Mr Morrow, Giant Dwarf and the Joint Venture Company, and of the ABC thereby incurring expense. Mr Murray's statement was thus not only true, but it was prescient. Mr Murray made a false representation that if the ABC commissioned The Checkout or any other consumer affairs programs involving Mr Morrow or Giant Dwarf without the involvement or consent of CJZ, CJZ would cause the ABC to suffer commercial damage. Not necessary to decide as causation not established.
The primary judge found this email to be "a reasonably contemporaneous confirmation of the correctness of Mr Murray's recollection about what Mr Morrow said about this" ([285]). The primary judge also took into account Mr Morrow's false evidence in the paragraph of his affidavit extracted above and found that, for Mr Morrow to say that he never wanted to work in television again, "cannot have reflected his true state of mind" ([287]).
Ms Chrysanthou contended that the primary judge's finding that Mr Morrow had said at that meeting that he would not work in television again was erroneous. She argued that the email sent on 13 June 2019 could not be regarded as "reasonably contemporaneous" and that it was, in effect, glaringly improbable that Mr Morrow would have said any such thing.
I consider that it was open to the primary judge to make the finding at [287] that Mr Morrow had said that he never wanted to work in TV again. The assessment of credibility at first instance involves a number of factors, which include consistency of the statement with other statements and with the surrounding circumstances, motive and any corroboration which may be available: see generally Onassis v Vergottis [1968] 2 Lloyds Rep 403 at 431 (Pearce LJ); Watson v Foxman (1995) 49 NSWLR 315 at 318-319 (McLelland CJ in Eq). His Honour's careful reasons on this question indicated that he took into account the motive of Mr Morrow (which the primary judge found was to make Mr Murray believe that the purpose of the joint venture had come to an end so that he, Mr Morrow, could gain control of the Joint Venture Company); the fact that Mr Morrow had been prepared to make one knowingly false statement (that the ABC had not told him that it wanted a consumer affairs program or that it wanted to broadcast The Checkout again) and Mr Murray's apparently firm recollection of what Mr Morrow had said, which was confirmed by his email in June 2019. I have no reason to doubt the correctness of the primary judge's finding, which also reflected his Honour's advantage in seeing and hearing the witnesses: Abalos v Australian Postal Commission (1990) 171 CLR 167 at 179 (McHugh J); [1990] HCA 47; Devries v Australian National Railways Commission (1993) 177 CLR 472 at 478-479 (Brennan, Gaudron and McHugh JJ); at 479-481 (Deane and Dawson JJ); [1993] HCA 78; Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [41] (Gleeson CJ, Gummow and Kirby JJ); at [93] (McHugh J).
Ms Chrysanthou submitted that the primary judge had failed to apply the five criteria for the implication of a term articulated in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283 (approved in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24):
"(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract."
Ms Chrysanthou submitted that the implied term found by the primary judge:
1. was neither reasonable nor equitable because Giant Dwarf and CJZ were competitors who retained the right to produce rival shows;
2. was unnecessary since the Joint Venture Company was the only entity which was entitled to produce The Checkout because it owned the intellectual property rights to the program and whether it did so or not depended on whether CJZ (Mr Murray) and Giant Dwarf (Mr Morrow) could agree to do so;
3. it was not capable of clear expression, as evidenced by the different ways in the which the implied term was formulated throughout the primary judge's reasons; and
4. it was contrary to the express terms of the joint venture agreement and, in particular, the right of each party to veto further production of The Checkout and the term that its sole purpose was to produce The Checkout and no other program.
In response, Mr Katekar contended that:
1. the primary judge was correct to find that the implied term was necessary to protect the parties' rights in the joint venture and that it was not to the point that the joint venture could have acted to enforce breach of its intellectual property rights (if both parties had agreed to co-operate for that purpose, which was not a given, in light of the shareholders' power of veto);
2. the shareholders' power of veto was not inconsistent with an obligation by, say, Giant Dwarf, of an obligation to inform CJZ of an opportunity to produce a new series of The Checkout; and
3. there was no error in extending the implied term to "an equivalent or similar show".
However, Mr Katekar also contended that although the existence of an implied term was a sufficient condition to give rise to a reasonable expectation of disclosure (so as to render failure to disclose misleading or deceptive), it was not a necessary condition because there were several bases on which a reasonable expectation of disclosure could arise and that these were also accepted by the primary judge.
It is not necessary to decide whether the primary judge erred in making the implied term finding. The finding is not determinative as this was not a claim in contract for breach of an implied term. Rather, it was a claim for rescission as a consequence of misleading or deceptive conduct which was said to arise from non-disclosure in circumstances where there was a reasonable expectation of disclosure such as to render non-disclosure misleading or deceptive (for the reasons I have given above and also for those which appear below).
The primary judge found, in my view correctly, that the reasonable expectation of disclosure arose not only from the putative implied term, but also from:
1. the PDV representation;
2. the nature and purpose of the joint venture agreement (to produce The Checkout) and the shareholding and identity of the directors of the Joint Venture Company (who owed fiduciary duties to act in its interests);
3. the information to which Mr Morrow was privy as a director of the Joint Venture Company as a consequence of his communications with the ABC about recommissioning The Checkout in the near future;
4. the steps which Mr Morrow took to ensure that Mr Murray, also a director, did not learn of his discussions with the ABC which bespoke an intention to mislead and deceive Mr Murray (who knew that The Checkout had been "axed" in July 2018) into believing that there was no genuine prospect of The Checkout returning in the near future; and
5. the circumstance that misleading or deceptive conduct can more readily be inferred when there is an intention to mislead or deceive (see the authorities referred to above).
Whereas the putative implied term principally arose from (2) above, the reasonable expectation of disclosure, the failure to disclose and the finding of misleading or deceptive conduct arose from each of (1)-(5). Thus, while the implied term required disclosure (which necessarily gave rise to a correlative expectation of disclosure), it was by no means the only source of the requirement or the correlative expectation, given the matters referred to above. I consider that the primary judge's findings as to the reasonable expectation of disclosure were amply warranted by the evidence. No error has been shown.
For the reasons given above, none of the various challenges made to the finding that Mr Morrow and Giant Dwarf engaged in misleading or deceptive conduct to induce, and which had the effect of inducing, Mr Murray and CJZ to enter into the Share Sale Agreement on the terms provided by that agreement has been made out.
The primary judge explained his conclusion in [820]:
"Although Mr Reucassel was then a director and shareholder in Giant Dwarf, Mr Morrow did not call him to contradict this evidence. I see no reason to doubt it. Assuming that Mr Reucassel did say the words attributed to him by Mr Murray, it shows that Mr Reucassel expressed some support for Mr Murray's 'current position' of not executing a Quit Claim."
Although the primary judge used the word "assuming", it is plain that his Honour accepted Mr Murray's uncontradicted evidence of what Mr Reucassel had said to him and also (by implication) drew the Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 inference that, if called, Mr Reucassel's evidence would not have assisted Mr Morrow. No error in this finding has been shown.
Nor do I consider this finding to be impugned by Mr Reucassel's response to Mr Kay's email (both dated 12 May 2020) in which Mr Kay asked him to confirm whether, as at 20 June 2019, he "had expressed to CJZ that [he] supported their position in the dispute regarding CJZ's exit from [the Joint Venture Company]." Mr Reucassel responded:
"On the day that the initial TV deal fell over I spoke to Julian and Nick and implored them both to make the show happen. It seemed to be against both of their interests, and all of the staff's interests, for it not to go ahead. My position to both sides has consistently been that the show should go ahead. But I have not become involved in the details and am unaware of what CJZ's position regarding CJZ's exit from [the Joint Venture Company] is, nor how I could have supported it."
It was open to the primary judge to accept Mr Murray's evidence of his conversation with Mr Reucassel (set out above). Mr Reucassel's email shows an understandable reluctance to go onto the record in support of either side but does not gainsay his expression of limited support to Mr Murray in the conversation to which Mr Murray referred. For these reasons, the challenge to [998] (ground 7, fact 38) also fails (the balance of this challenge is addressed in the table at the conclusion of these reasons).
On 27 June 2019, Mr Murray asked the ABC for copies of correspondence with the Joint Venture Company, on the basis that he had, until 8 April 2019, been one of its directors. The ABC refused ([681]-[682]).
I note that at first instance, the parties agreed on the applicable principles and the relevant authorities and that there was a distinction between malice for the purposes of qualified privilege and malice for the purposes of aggravated damages. On appeal, there was a departure from this position by Ms Chrysanthou who maintained, "malice is malice is malice", which I understood to be a submission that a finding of malice for the purposes of aggravated damages was tantamount to a finding of malice to defeat the defence of qualified privilege. In so far as I have understood the submission, I reject it. Malice for the purposes of defeating qualified privilege is a different concept from malice for the purposes of aggravated damages.
In these circumstances, it cannot be inferred that Mr Murray knew the allegation to be untrue for the purposes of express malice. Indeed, there were grounds for him to believe it to be true since Mr Morrow had in fact been speaking to the ABC about bringing The Checkout back at the very time when he had been telling Mr Murray to the contrary. Just as there is a significant difference between suspicion and belief (George v Rockett (1990) 170 CLR 104 at 115-116; [1990] HCA 26), there is a significant difference between belief and knowledge.
The primary judge's finding about what an "ordinary reasonable reader" (which was made in the course of determining whether the defence of justification was made out) would understand by the statement is not to the point. What is relevant for a determination of malice in this context is Mr Murray's state of mind. What he was trying to do in sending MCO 5 was to obtain documents from the ABC to determine one way or the other what the true facts were with a view to resolving the issue relating to the validity of the Share Sale Agreement with Mr Morrow. This was central to the occasion of qualified privilege. He was, at that time, making several allegations against Mr Morrow, all of which, but for the fraudulent misrepresentation, were pressed in the Commercial proceedings and made out.
In these circumstances, Mr Morrow failed to discharge the onus of proving an improper motive for MCO 5. Accordingly, Mr Murray was entitled to the benefit of qualified privilege and is not liable in defamation for MCO 5.
Ms Chrysanthou submitted that the primary judge had erred by addressing only the economic loss suffered by Mr Morrow and Giant Dwarf and making no finding as to the economic loss suffered by the Joint Venture Company.
The primary judge referred only to Mr Morrow and Giant Dwarf when finding that neither had established loss as a consequence of the IFs. However, it is, in my view, inconceivable that a different conclusion in respect of the Joint Venture Company could be reached as the Joint Venture Company was, after 8 April 2019, under Mr Morrow's control (since Mr Murray was no longer a director from 9 April 2019 and CJZ was no longer a shareholder). Therefore the findings relating to the reason why The Checkout (or any other show associated with Mr Morrow) was not broadcast were relevant to the question of whether economic loss had been established to be the result (in terms of the natural and probable consequence) of the injurious falsehood.
Ms Chrysanthou also submitted, in reliance on Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388; [2001] HCA 69 (Palmer Bruyn), that it was not necessary for the cross-appellants to established that their loss was actually caused by the alleged IFs but that it was sufficient if they established that:
1. loss was in fact sustained (because the ABC did not commission The Checkout or The Help Desk); and
2. the loss was intended by Mr Murray; or
3. the loss was the natural and probable consequence of making each IF.
I am not persuaded that Palmer Bruyn provides any support for the proposition that it is enough for a plaintiff to prove that the loss in fact sustained was intended by the maker of the injurious falsehoods in circumstances where the plaintiff cannot show that the loss was the natural and probable consequence of the injurious falsehoods and, indeed, a substantial cause.
In Palmer Bruyn, McDonald's had retained Palmer Bruyn to provide surveying services for the preparation of a development application for a new restaurant at Wallsend near Newcastle. Before the Council meeting to decide the issue, one Councillor created a hoax letter on Palmer Bruyn's letterhead falsely suggesting (among other things) that the recipient Councillor would receive "4 Big Macs and 2 choc sundaes per week" if he supported it.
The local newspaper reported the details of the hoax letter in an article which was not critical of Palmer Bruyn. The article caused McDonald's to reconsider its retainer of Palmer Bruyn and terminated the contract. Palmer Bruyn sued the author of the hoax letter for injurious falsehood. The issue in that case was not whether Palmer Bruyn's loss of the McDonald's contract was caused by the falsehoods in the hoax letter, but whether its author should be held liable for that loss when he had no intention of causing it. This required consideration of the sufficiency of the connection between the publication of the false statement and the damage caused by it, which was a question of "remoteness".
In Palmer Bruyn at [57], Gummow J (with whom Gleeson CJ agreed) approved the statement in Ratcliffe v Evans [1892] 2 QB 524 at 527-528 that:
"an action will lie for written or oral falsehoods, not actionable per se nor even defamatory, where they are maliciously published, where they are calculated in the ordinary course of things to produce, and where they do produce, actual damage …"
Gummow J continued at [73]:
"… Where it is established by evidence that the defendant intended to cause the harm that eventuated, and provided the other elements of the tort are satisfied, the defendant will generally be held liable for that harm. …"
His Honour said at [75]:
"… At least in the context of injurious falsehood, the question of whether there is a sufficient relation between the damage 'intended' and the damage suffered will generally depend upon whether the damage suffered was the 'natural and probable result' of the false statement."
Gummow J stressed the significance of the concept of "natural and probable result" in [81] where his Honour said:
"Where there is a finding that the wrongdoer 'intended' a certain consequence, the issue of whether the wrongdoer should be liable for a consequence different in kind will depend largely … upon the relation of that which the wrongdoer intended to the consequences which actually resulted. This relation will generally be assessed by asking whether the damage was the 'direct and natural result' of the publication of the falsehood."
In Palmer Bruyn, the harm was neither intended by the author of the hoax letter, nor was the harm the "natural and probable result" of its publication. Gummow J also addressed the applicable principles of causation in such a case and, at [96], confirmed the principle that "the publication of an injurious falsehood is a legal cause of pecuniary loss if 'it is a substantial factor in bringing about the loss' …".
Thus, although the hoax letter "caused" the loss of Palmer Bruyn's contract with McDonald's in the "but for" sense (since but for the letter, the newspaper article would not have been written and McDonald's would not have been concerned about the adverse publicity and would not have terminated its contract with Palmer Bruyn), this was insufficient to establish liability for the tort of injurious falsehood.
In the present case, the cross-appellants were required to prove, in accordance with Palmer Bruyn, that the alleged IFs were a substantial factor in causing them economic loss. The question of remoteness (which was a live issue in Palmer Bruyn) did not arise in the present case because the primary judge found that the reason the ABC did not recommission The Checkout was because the parties could not resolve their dispute over the Share Sale Agreement ([716], [731], [958] and [1060]). This dispute also included Mr Murray's refusal to sign the Quit Claim (which was found to be justified). Thus, the primary judge was satisfied that the operative cause of this aspect of the loss claimed by the cross-appellants was not the IFs.
As to the second aspect of the loss claimed, the primary judge found that the reason the ABC refused to commission The Help Desk was because of Mr Morrow's own conduct, which was unrelated to anything Mr Murray had said or written ([729] and [731]). Thus, Mr Morrow was the operative cause of the cross-appellants' loss.
The primary judge's reasoning and conclusion are in accordance with the principles in Palmer Bruyn, which have been cited and applied by this Court: see, for example, TCN Channel Nine Pty Ltd v Anning (2002) 54 NSWLR 333; [2002] NSWCA 82 at [100] (Spigelman CJ, Mason P and Grove J agreeing). Accordingly, ground 5 of the cross-appeal has not been made out.
In these circumstances, it is not necessary to address the other grounds (1, 2, 3, 4, 6 and 7A) of the cross-appeal against the dismissal of the claim for injurious falsehood since the rejection of ground 5 is dispositive of this aspect of the cross-appeal: Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49 at [7]-[8] (Kiefel CJ, Gageler and Keane JJ), [101] (Bell, Nettle, Gordon and Edelman JJ) and applied by this Court in Massoud v Nationwide News Pty Ltd; Massoud v Fox Sports Australia Pty Ltd (2022) 109 NSWLR 468; [2022] NSWCA 150 (Leeming JA, Mitchelmore JA and Simpson AJA agreeing).