Dennis v Australian Broadcasting Corporation [2008] NSWCA 37 | Case summary

Tuesday 1 April 2008 Dennis v Australian Broadcasting Corporation Judgment 1 SPIGELMAN CJ: The applicant seeks leave to appeal from two judgments of Nicholas J in the course of the conduct of the Defamation List of the Court. In the first judgment of 6 February 2007 his Honour held that certain imputations pleaded by the plaintiff be struck out on the basis that they were incapable of arising from the matter complained of. His Honour was there dealing with a separate question under r 28.2 of the Uniform Civil Procedure Rules. In the second judgment of 7 February, his Honour refused the applicant leave to file a Fifth Further Amended Statement of Claim. 2 The publication was a television broadcast of a programme entitled "The 7:30 Report". It concerned the failure of an investment scheme promoted by a company called Nu-Tec. In accordance with the Court's practice, the Statement of Claim identified each paragraph of the programme by a number. The principal focus of the broadcast was upon a Mr Gregory Symons, whose conduct is described in various ways, none of them flattering. 3 The only express references to the applicant are in pars [7] and [27] as follows: "[7] ROGER SMITH, FORMER NU-TEC COMPANY SECRETARY: Symons ran this very much as his own little empire. He and Noel Dennis had a controlling interest in the business. Gregory Symons had a team of people around him. But he played one off against the other and ran the whole show himself. Then it all went pear-shaped and Symons reverted to his usual modus operandi, which is to make the best out of it for himself." "[27] EMMA ALBERICI: Doubly foolish for hooking up with this man, Noel Dennis, co-guarantor on the $50,000 bank loan. Noel Dennis was on the Nu-Tec payroll as its legal adviser, though he hasn't practised as a lawyer since he was struck off in 1981 for misusing money on a trust account. He has been readmitted but he doesn't hold a practising certificate. Graham Thomas used his money from his property in Berry as security on the Nu-Tec loan. He was going to retire here but the bank has called in the loan Nu-Tec can't pay and Noel Dennis says he has no money so Graham Thomas risks losing his property." 4 The applicant places particular reliance on the reference to the fact that Symons and himself were together said to have "a controlling interest in the business". Reliance was also placed on the further reference to him as a "co-guarantor" and "legal adviser". It was, however, primarily the former which is particularised as involving the applicant in the numerous unflattering allegations made about the conduct of Mr Symons and Nu-Tec. 5 The four imputations which his Honour rejected were as follows: "3(b) The Plaintiff acquiesced in Nu-Tec cheating investors; 3(c) The Plaintiff acquiesced in the making of false statements by Nu-Tec in newsletters sent out to investors that Nu-Tec had secured supply contracts and sharing agreements with multi national companies; 3(f) The Plaintiff acquiesced in the making of false representations by Nu-Tec that it had ground breaking nuclear applications when in truth its technology did not exist; and 3(h) The Plaintiff acquiesced in the raising of money from 112 Australians by Nu-Tec without a prospectus when it was against the law to raise money without a prospectus." 6 His Honour's reason for ordering that the imputations be struck out were: "[8] The question of capacity to sustain an allegation of acquiescence on the part of the plaintiff in this case, in my opinion, depends upon whether or not the reasonable viewer would take it from the assertion that the plaintiff and Mr Symons had a controlling interest in the business. In other words, it is capable of leading to the conclusion that the plaintiff thereby knew what was going on in the affairs of the company, particularly at the direction of Mr Symons, and did not stop it, or protest about it, and in effect consented, tacitly or otherwise. [9] The plaintiff contended that it was sufficient for the purpose of capacity to assert, as the program did, that the plaintiff and Mr Symons had a controlling interest in the business, and that it would be reasonably open for the viewer to conclude that in effect the plaintiff permitted Mr Symons to do as he wished, to run it as his own, and therefore knew particularly of and consented to each activity encapsulated in the several relevant imputations. [10] In my opinion it would be wholly unreasonable to reach such a conclusion based on the content of the whole of this program, and with particular emphasis on the passages identified on behalf of the plaintiff. In my opinion the imputations which plead acquiescence would be the product of a strained and unreasonable interpretation of what was seen and heard on the program. It is significant, in my opinion, that nothing was said to the effect that Mr Dennis was a Director or involved in any way in the management or operations of the company, other than of course the statement that he was on the company's payroll as its legal advisor. [11] In my opinion the term 'controlling interest' would ordinarily be understood to be referring to the shareholding interest, the financial interest in the business held in this case by Mr Dennis and shared with Mr Symons. That reference is insufficient to support a conclusion that, for example, the program was saying, as imputation 3(b) alleges, that the plaintiff acquiesced in Nu-Tec cheating investors, or alternatively as imputation 3(f) suggests, that he acquiesced in the making of false representations by Nu-Tec that it had groundbreaking nuclear applications when in truth its technology did not exist. As I have indicated, in my view the fact that he was said to have a controlling interest in the organisation does not sustain the conclusion that he acquiesced in the particular activities of the company which the publication makes plain were effectively run by Mr Symons alone, as described in the imputations." 7 The relevant legal principles have recently been affirmed by the High Court in Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716. The respondent submitted that the test on a strike out application differed from that appropriate to a separate trial on the issue of capacity. There is, in my opinion, no material difference for present purposes. Nicholas J correctly stated the relevant principles, including by his reliance on Favell. It is unnecessary to set out his Honour's statement of the relevant legal principles. It is not challenged. 8 Whether or not an imputation is capable of arising from a publication is, to a significant degree, a matter of impression. The critical issue for present purposes is whether the reference to the applicant having "a controlling interest" with Mr Symons, as reinforced by the reference to him being Nu-Tec's "legal adviser", is capable of supporting an imputation of "acquiescence" on the part of the applicant, in the identified conduct of Mr Symons or of Nu-Tec. 9 Nicholas J was influenced by the fact that the words "controlling interest" would "ordinarily be understood" to refer to "the shareholding interest". That may be so. However, the "ordinary" understanding does not preclude a different meaning being conveyed. Furthermore, there is an important differentiating factor in this broadcast. The interest, said to be a "controlling interest", is shared with Mr Symons, whose control of the affairs of Nu-Tec was emphasised throughout the broadcast. 10 In my opinion, the allegedly shared nature of the "controlling interest", even if understood as a shareholding interest, could be found by a reasonable jury to suggest an implication of acquiescence. I am reinforced in this conclusion by the fact that the terminology of "controlling interest" is not necessarily limited, for the ordinary viewer, in the manner which his Honour held would "ordinarily" apply. Such a viewer, in the context of the transitory nature of a broadcast, could well understand the reference to encompass control of the conduct of the company, at least important conduct such as attracting investors. 11 It is the case that persons with a "controlling" financial interest may not exercise control over such important aspects of the company's conduct. However, they may do so. It is, in my opinion, reasonably open to a jury to find that the words were used in that sense on this occasion. 12 It is made clear in the publication as a whole, indeed in par [7] itself principally relied upon, that the affairs of the company were primarily conducted by Mr Symons - "his own little empire" and "ran the whole show himself". This factor, upon which the respondent relied, is not inconsistent with "acquiescence" in the conduct by a person with a shared "controlling interest". Indeed, it may well be reasonably seen by a jury to be a definitive manifestation of such acquiescence. 13 Counsel for the respondent submitted that the most that was open was an imputation that the applicant "failed to prevent" the criticised conduct. He submitted that a level of knowledge about the relevant conduct was required before a "failure to prevent" could become "acquiescence" and such knowledge was not expressly alleged in the broadcast. This involves the kind of fine distinction which continues to plague defamation pleading in a way which has been extirpated from other kinds of litigation. 14 It is not necessary to expressly allege knowledge where there is a perfectly open implication from an assertion about a person who is said to have a shared controlling interest with the person in day to day control. This implication is reinforced by the assertion that the person is the company's legal adviser. 15 Furthermore, it is by no means clear what kind of knowledge is encompassed within "acquiescence". Turning a blind eye may be enough. In my opinion, it is reasonably open to a jury to find knowing acquiescence on the part of a person in joint financial control with the person exercising day to day control, especially where the person is identified as the company's legal adviser. 16 Of course, a jury may find that the words "controlling interest", in the overall context, did not suggest "acquiescence" in the four kinds of conduct identified. However, in my opinion, it is open to a jury, properly instructed, to conclude that they do. 17 The appeal from the first judgment should be allowed. 18 His Honour's second judgment concerned an application to plead imputations which had earlier been abandoned by the applicant, as follows: "3(b) The Plaintiff cheated investors; 3(c) The Plaintiff falsely stated in newsletters sent out to investors that the management of Nu-Tec had secured supply contracts and sharing agreements with multi national companies; 3(f) The Plaintiff falsely represented Nu-Tec had ground breaking nuclear applications when in truth its technology did not exist; 3(h) The Plaintiff raised money from 112 Australians without a prospectus when it was against the law to raise money without a prospectus." 19 Mr C A Evatt, who appeared for the applicant in this Court, pressed this application even if he was successful on the first. He seeks to plead each active imputation - for example, "The plaintiff cheated investors" - and rely in the alternative on the indirect imputation - for example, "The plaintiff acquiesced in Nu-Tec cheating investors". 20 His Honour noted in his second judgment that the proposed imputations were in the same form as those contained in the applicant's Further Amended Statement of Claim filed on 18 September 2006. However, on 16 December 2006 the applicant filed a Second Further Amended Statement of Claim and these original imputations were not included. Nor were they included in the Third or Fourth Further Amended Statements of Claim. The applicant sought, however, to reintroduce them by way of the Fifth Further Amended Statement of Claim after his Honour had struck out the imputations in his judgment of 6 February 2007. 21 His Honour said: "[7] Today, the plaintiff seeks leave to file in court the fifth further amended statement of claim which, as I have indicated, repleads the imputations 3(b), (c), (f) and (h) as they originally appeared in the further amended statement of claim. [8] In my opinion, leave should not be granted to file the fifth further amended statement of claim. In my view, there comes a limit to which leave to replead in cases of this kind should be granted and that limit has been well and truly reached. I see no reasonable justification for allowing a further attempt to replead imputations. [9] Furthermore, I take into account the history that I have recited which shows that the plaintiff has had ample opportunity, if he wished, to seek to maintain the imputations as originally pleaded in the further amended statement of claim but has, apparently, made a forensic decision not to include them in any subsequent pleading." 22 This judgment is quite distinct from the first judgment. It is an interlocutory judgment on a matter of practice and procedure. This Court is very reluctant to interfere with such a decision. 23 It appears that his Honour had struck out certain imputations in other proceedings brought by Nu-Tec and a director of the company. Counsel who appeared in those proceedings also appears as junior counsel for the applicant. He formed the view that the reasoning in the earlier judgment would necessarily mean that his Honour would strike out the original imputations now sought to be restored. That is why they were removed. His Honour made no ruling to that effect and accurately described the earlier abandonment as a "forensic decision". 24 His Honour's second judgment did follow upon his decision to strike out the imputations, which this Court will restore. In one sense, the circumstances in which his Honour exercised the discretion to refuse to permit yet another amendment have changed. This could entitle the Court to re-exercise the discretion if this change, in all the circumstances, would make any difference. In my opinion it does not. 25 First, his rejection of the imputation played no part in Nicholas J's reasons on the amendment application. It would have been open for his Honour to say that if imputations at the level of "acquiescence" could not arise, as his Honour had held the previous day, then it was a fortiori that imputations alleging active conduct could not arise. However, his Honour did not rely on such reasoning. 26 His Honour exercised the discretion adversely to the applicant solely on the basis that the limit to which leave should be given to replead "has been well and truly reached" by the sixth pleading. He was, in my opinion, correct to do so. In any event, no error has been identified which would justify this Court interfering with the exercise of the discretion. 27 Secondly, the fact that the applicant will now have an opportunity to convince a jury that imputations which significantly overlap with those sought to be added as a preferred alternative makes it less, rather than more, appropriate to exercise a discretion in his favour. It may be that an active imputation would lead to a higher award of damages than the equivalent "acquiescence" imputation. But that is outweighed by the delay and prevarication that has occurred and the prospect of adding to the complexity and length of proceedings that have already taken too long before hearing. This could arise because the factual inquiry required for defences, for example, justification and qualified privilege, could be quite different for an active than for an "acquiescence" imputation. 28 The respondent invoked the authority of Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 in support of its ability to amend, even for the fifth time. Case management practices in all Australian courts have changed significantly in the decade since that judgment. Although it remains binding authority with respect to the applicable common law principles, the circumstances of the case were significantly different from those in the present case and do not dictate its outcome. In any event, such principles can be, and have been, modified by statute both directly and via the statutory authority for Rules of Court. 29 In this State J L Holdings must now be understood as operating subject to the statutory duty imposed upon the courts by s 56(2) of the Civil Procedure Act 2005, which requires the Court in mandatory terms - "must seek" - to give effect to the overriding purpose - to "facilitate the just, quick and cheap resolution of the real issues in the proceedings" - when exercising any power under the Act or Rules. That duty constitutes a significant qualification of the power to grant leave to amend a pleading under s 64 of the Civil Procedure Act. 30 Serving the overriding purpose is reinforced in defamation proceedings by the clear indication of Parliamentary intention with respect to the operation of the Defamation Act 1974, which provides that one of the objects of the Act is: "3(d) to promote the resolution of proceedings for defamation before the courts in a timely manner and avoid protracted litigation." 31 Similarly, the Defamation Act 2005 provides that one of its objects is: "3(d) to promote speedy and non-litigious methods of resolving disputes about the publication of defamatory matter." 32 On these principles it would have been open to Nicholas J as Defamation List judge to refuse to permit amendment before the Fifth Further Amended Statement of Claim. It was clearly open to his Honour to do so at that time and this Court should not interfere. 33 I propose the following orders:

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Dennis v Australian Broadcasting Corporation

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