Paragraph 9 of amended statement of claim struck out with leave to re-plead

Capitol and Counties Bank v George Henty & Sons [1882] 7 AC 741

Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135

Jones v Skelton [1963] 1 WLR 1362

Laurence v TVW Enterprises Ltd (1992) 6 WAR 289

Lewis v Daily Telegraph Limited [1964] AC 234

Mirror Newspapers Limited v Harrison (1982) 149 CLR 239

Monte v Mirror Newspapers Limited [1979] 2 NSWLR 663

Morris v Newcastle Newspapers Pty Ltd (1985) 1 NSWLR 260

Oracle International Pty Ltd v West Australian Newspapers Limited, unreported; SCt of WA (Steytler J); Library No 970696; 11 December 1997

Rasile v The Daily News Pty Ltd, unreported; SCt of WA (Master White); 24 November 1988

1 OWEN J: This is an application by the defendants to strike out a paragraph of the statement of claim in a defamation action.

2 The plaintiff is a member of the Commonwealth Parliament as a Senator for the State of Western Australia. The plaintiff also has an interest in a family farm. The first defendant is the publisher of a newspaper called the "Daily Telegraph". The second defendant is a journalist employed by the first defendant.

3 The 4 March 1998 edition of the newspaper contained an article attributed to the second defendant and entitled "MP gained from Lib grant" in these terms:

"LIBERAL MP benefited directly from a Howard Government environmental grant, it was revealed yesterday during Opposition questioning over the 'greenbarrel' affair.

WA Senator Winston Crane's family farm formed part of a catchment area that received a Natural heritage Trust landcare grant.

The $1.25 billion fund was formed from the proceeds of the sale of one-third of Telstra. But $9 out of every $10 so far has been spent in Coalition seats, prompting Opposition claims of rorting.

Senator Crane, a former National Farmers Federation president, admitted he gave a landcare briefing to Senator Hill last year. But he denied involvement in or knowledge of the funding application lodged by his sister-in-law Diane Crane.

'At the time I did the land care briefing I did not know they had put in for a grant,' Senator Crane said.

'I am very offended that these people would not check the facts before they make these slanders. You can have a go at me, but when you involve my family, you have another thing coming.'

Senator Crane said he was not involved in the day-to-day running of his property, which his son managed.

But the Opposition said the backbencher was compromised during the application process.

'Do you believe that if you have a government backbencher in a room when you're making decisions about such projects and grants that that represents a clear conflict of interest?' Opposition Senator John Faulkner said.

According to Senator Hill, 27 families within the catchment area had joined together to seek funding and only a corner of Senator Crane's property was included in the application.

In a separate development the Opposition claimed the Government used taxpayers' money to pay back a $52,900 Liberal Party donation from a millionaire farming family.

The grant was awarded to the Baillieu family's Woodhouse Pastoral Company after the Environment Minister personally intervened to overturn an initial rejection of the proposal.

Environment Minister Robert Hill denied knowledge of the donations or having ever met the Baillieu directors. ('The Article')"

4 In its original form par 9 of the statement of claim alleged a false innuendo, namely that the plaintiff had benefited directly from a government grant, had done so improperly by virtue of his public office and had obtained the benefit by virtue of advice he had given to the Minister administering the grants. On 16 December 1998 I ordered that par 9 be struck out. In summary, the reasons were:

5 (a) it could not be defamatory to say that a person had benefited from a government grant;

6 (b) the allegation of impropriety was not properly pleaded because it did not identify the precise act of condition with which the defendants were charged; and

7 (c) the connection between advice given to the Minister and the grant in respect of the plaintiff's farm did not appear to arise from the article.

8 Having ordered that par 9 be struck out I gave leave to the plaintiff to file a substituted amended statement of claim by 23 December 1998. On 6 January 1999 such a document was filed and served. The only change was the deletion of the original par 9 and the inclusion of a new par 9 in its place. The amended form of par 9 is in these terms:

"The Article meant and was understood to mean in its natural and ordinary meaning that the plaintiff as a Senator and having given advice about the suitable deployment of landcare grants to Senator Hill, a member of the government, the plaintiff had personally received a Natural Heritage Trust landcare grant in circumstances that clearly imputed to the plaintiff a conflict of interest in that he had obtained such benefit improperly by virtue of his public office as a Senator, and had obtained such benefit as a direct result of advice he had given to the Minister administering the funds , part of which he obtained."

9 In accordance with leave reserved in the 16 December 1998 orders, the defendants applied to strike out par 9 in its amended form. This is the application with which I am now dealing.

10 One area of attack mounted by the defendant was that the substituted statement of claim was filed out of time. I note the time of year and the relatively minor time lapse. I am anxious to deal with the substance of the dispute between the parties. I would be prepared, to the extent that it is necessary, to extend the time limited for the filing of the substituted document to 6 January 1999.

11 This is an application to strike out a pleading. A court will be slow to strike out a pleading where the result will, or may be, to prevent a party from bringing to the court for adjudication the substance of the claim it wishes to mount. Nonetheless, the other party has a right to know the case that it will have to meet and the pleading must sufficient for that purpose. If it is not, it must be struck out. In Smith v Littlemore (1996) 15 WAR 289 at 294-95 I gathered together the relevant general principles and authorities. I adopt, without repeating, what is said in that extract.

12 Paragraph 9 commences with the assertion that the plaintiff, as a Senator, had given advice to the Minister about the distribution of landcare grants and had personally received a grant. I accept the submission of counsel for the defendants that neither the giving of advice nor the receipt of the grant could, without more, bear a defamatory meaning. However, the plea then continues in two parts. The first is that the plaintiff, having given advice to the Minister, was in a conflict of interest position by obtaining a landcare grant improperly by virtue of his public office. Secondly, the plaintiff had obtained the benefit as a direct result of advice he had given to the Minister administering the funds, part of which he received.

13 In my view par 9, in its present form, cannot stand. There are several problems. The pleading of improper conduct in a defamation context is replete with problems: see, for example, Gascoine v McGinty (1995) 14 WAR 542 at 546-7. It is not clear from the plea where the actual impropriety lies. It is said that he improperly received a grant. But why is it "improper? Is it because he obtained the grant when he was in public office? Is it because he acted in a position of conflict of interest? Is it because he did so after having given advice on the very issue to which the grant related?

14 I think par 9 will have to be struck out. The next question is whether that is an end to the action or whether there is some way in which the plaintiff can plead a case that ought to be left for trial. I spent some time at the hearing exploring with counsel for the plaintiff the precise sting of the article so as to distil the defamatory imputation which the plaintiff would put to the trier of fact and so as to identify the meaning that the defendant would have to confront at trial.

15 This exchange that I had with counsel for the plaintiff sums up the position that was reached:

"[Counsel] Let me explain this in perhaps a little more detail. It was not improper for Senator Crane to give advice if he did not have a conflict of interest. It was not improper for Senator Crane to receive a grant that benefited his land if he had not given advice or if he had not had a conflict of interest but because those facts are relied in this case for the plaintiff, it is submitted that the plea is adequate and complete. ---

[Judge] So you say the sting --- is that he put himself in a position of conflict of interest by receiving a grant ---

[Counsel] No, he put himself in a conflict of interest by giving advice that a grant should be made that benefited him."

16 This last paragraph identifies the sting for which the plaintiff contends. The real mischief, according to the plaintiff, is the imputation that the plaintiff put himself in a conflict of interest position by giving advice that a land care grant should be made when that grant was to his benefit. It was to his benefit because his family farm was in the catchment area to which the grant related. The sting has to be seen against the background that the plaintiff is the holder of a public office, namely as a Senator for the State of Western Australia, that he has farming interests and that he gave a briefing on the subject matter of the grant to the Minister responsible for administering the fund from which the grant was made.

17 On one view of it questions of true innuendo might be seen to arise because the conflict of interest allegation can only be understood in the light of those other background facts. This is, I think, why some of the problems have arisen and it explains why the plaintiff has sought to include in the pleading those background facts which, as the solicitor for the defendant pointed out, could not of themselves bear a defamatory meaning. But I do not think this is in reality a case of true innuendo. It is, and remains, one of false innuendo because all of those background facts are set out in the publication itself.

18 The solicitor for the defendant submitted even if the plaintiff were to plead the sting in this refined way, namely of a conflict of interest by giving advice that a grant be made that benefited him, the statement of claim would still fail to disclose a reasonable cause of action. The defendant contends that this meaning is not open on the wording of the article. The words complained of say no more than that Senator Crane admitted he gave a landcare briefing. The defendant also says that there is no nexus, coming from the words of the article, between the giving of the briefing and the making of the grant. The solicitor for the defendant submitted that a reasonable reader would have to use prejudice or avarice rather than a fair reading to find any such nexus.

19 It is trite law that where part only of an article is said to be defamatory regard must be had to the whole article and the allegedly defamatory portion must be viewed in its context. I think this is especially so in this case.

20 The article refers specifically to a conflict of interest. The rejoinder of the plaintiff, namely that he did not know his family had made the application for the landcare grant at the time when he gave the briefing, is specifically included in the article. Nonetheless, conflict of interests is a phrase well known in common parlance. It is a serious allegation, especially for a person holding public office. It is, I think, also well known (as, for example, in the law relating to trustees and fiduciaries) that a conflict of interest can arise without any conscious wrongdoing on the part of the person against whom the conflict is alleged.

21 I must view it from the standpoint whether the trier of fact could (not would) conclude the words were capable of bearing the defamatory imputation for which the plaintiff contends. Would it be open to the ordinary person of average intelligence who has read the article without cautious and critical analytical care, who may engage in a certain amount of loose thinking but who is not avid for scandal to regard the article as defamatory in the sense contended for by the plaintiff? I think there is a very fine line here between the respective positions of the parties. On balance, and bearing in mind the cautionary warnings in the authorities against depriving a litigant of the opportunity of having its day in court, I think I should come down on the side of the plaintiff. A sting, as identified in the refined way during the hearing of this application, is not clearly untenable or manifestly groundless.

22 Paragraph 9 of the amended statement of claim will be struck out with leave to re-plead. While the plaintiff is not to be held to the exact wording of the sting identified during the hearing, I can say that if a defamatory imputation to that effect were to be pleaded I would not entertain a further application to strike it out on the ground that it failed to disclose a reasonable cause of action. Of course, it may fall foul of some other pleading rule.

23 Within 21 days the plaintiff will be at liberty to file a serve a further amended statement of claim in accordance with these reasons. The defendants will then have seven days within which to indicate, by memorandum, whether they have any further objections to the proposed further amended statement of claim.

24 If defendants file and serve such a memorandum, this application can be re-listed for further hearing and I will dispose of the matter. If no such memorandum is filed and served by the due date the plaintiff should then formally file and serve a further amended statement of claim in accordance with the minute.

25 The plaintiff must pay the defendants' costs of this application in any event. The costs are to be taxed if not agreed.