Edward Hayson v John Fairfax Publications Pty Ltd

Agar v Hyde (2000) 201 CLR 552 Armitage v Double Bay Newspapers Pty Ltd [Unreported, NSWSC, 26 September 1991] Australian Broadcasting Corp v Hodgkinson [2005] NSWCA 190 Brimson v Rocla Concrete Pipes Ltd (1982) 2 NSWLR 937 Douglas & Anor v John Fairfax & Sons Ltd & Anor (1983) 3 NSWLR 126 Favell v Queensland Newspapers Pty Ltd [2005] HCA 52 General Steel Industries Inc. v Commissioner for Railways (NSW) (1964) 112 CLR 125 John Fairfax Publications Pty Ltd v Blake (2001) 53 NSWLR 541 John Fairfax Publications Pty Ltd v Gacic [2007] HCA 28 CASES CITED : John Fairfax Publications Pty Ltd v Rivkin (2003) 77 ALJR 1657 Jackson & Ors v TCN Channel Nine Pty Ltd [Unreported, NSWSC, 17 October 1996] Lewis v Daily Telegraph Ltd [1964] AC 234 Marsden v Amalgamated Television Services Pty Ltd [Unreported, NSWSC, 17 December 1996] NRMA Insurance Ltd v Amalgamated Television Services Pty Ltd [Unreported, NSWSC, 14 July 1989] Peter Kent Development Pty Ltd v The Australia and New Zealand Banking Group Ltd [Unreported, NSWSC, 6 May 1980] Penthouse Publications Ltd v McWilliam [Unreported, NSWCA, 14 March 1991] Turner v Bulletin Newspaper Co Pty Ltd (1974) 131 CLR 26 Vella v John Fairfax Publications Pty Ltd [2000] NSWSC 615 Wickstead & Ors v Browne (1992) 30 NSWLR 1 Sergi v Australian Broadcasting Commission ([983] 2 NSWLR 669

PARTIES : Edward Hayson - plaintiff John Fairfax Publications Pty Ltd - defendant

COUNSEL : B R McClintock SC/M F Richardson - plaintiff T D Blackburn SC - defendant

SOLICITORS : Johnson Winter & Slattery - plaintiff Freehills - defendant

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION DEFAMATION LIST

20300/06 Edward Hayson v John Fairfax Publications Pty Ltd JUDGMENT 1 His Honour: The plaintiff has sued the defendant for the publication of an article in the edition of the newspaper "The Sydney Morning Herald" of 10-11 June 2006 under the heading "The brothel owner, league stars and a mystery betting plunge". The imputations relied upon are pleaded in para 3 of the amended statement of claim filed 25 October 2006. 2 In its defence filed 8 March 2007, the defendant has pleaded defences of truth, contextual truth and qualified privilege. In accordance with the relevant provisions of Uniform Civil Procedure Rules 2005 Pt 15, the defence includes particulars in relation to these defences. 3 The proceedings have not yet reached the stage where interrogatories have been administered or discovery has been given. 4 By notice of motion filed 22 June 2007 the plaintiff seeks orders that the defences of contextual truth pleaded in paras 5(a)(ii)-(vi) of the defence be struck out, and costs. 5 Relevantly, s 26 Defamation Act 2005 (the Act) provides: "26 Defence of contextual truth It is a defence to the publication of defamatory matter if the defendant proves that: (a) the matter carried, in addition to the defamatory imputations of which the plaintiff complains, one or more other imputations ( contextual imputations ) that are substantially true, and …" 6 In para 5 of the defence are pleaded the contextual imputations claimed to be carried by the matter complained of, and the allegation that each is substantially true. The contextual imputations are in the following terms: "(i) the plaintiff runs a brothel (ii) the plaintiff changed his name in order to deceive persons with whom he dealt, including the company regulator, about his status as an undischarged bankrupt (iii) the plaintiff changed his name with the intention of being unlawfully involved in the management of companies while an undischarged bankrupt (iv) the plaintiff so conducted himself as to give rise to a reasonable suspicion of participating in race fixing (v) there were reasonable grounds to suspect that the plaintiff was involved in race fixing (vi) the plaintiff behaved unscrupulously by manipulating the odds in a greyhound race." 7 As required under r 15.25, particulars of the facts, matters, and circumstances relied upon to establish the substantial truth of each contextual imputation are included in the defence. 8 The challenge to the contextual truth defence is two-fold. Firstly on grounds that contextual imputations (iv), (v) and (vi) are incapable of being conveyed by the matter complained of, and that (iv) and (v) are defective in form and/or do not differ in substance from each other. Secondly, on the ground that the particulars are incapable of establishing the substantial truth of each of contextual imputations (ii) - (vi) inclusive to which they refer so that, under r 14.28(1)(a) and (b), these contextual imputations should be struck out as disclosing no reasonable defence, or as embarrassing. Capacity 9 The issue of capacity proceeded as a separate question for decision under r 28.2. 10 The principles applicable to the correct approach of the court on the question of capacity are well known. A court must keep in mind that a reasonable person can and does read between the lines in light of his general knowledge and experience of worldly affairs, and will draw implications much more freely than a lawyer, especially when they are derogatory. Each alleged imputation is to be considered in the context of the entire article. One must try to envisage people between those who are unusually suspicious and those who are unusually naive and see what is the most damaging meaning they would put on the words in question. The question of meaning turns on what the publication, taken as a whole, conveys to the reasonable reader, and this must always be a matter of impression. Ultimately, the question is what a jury could properly make of it (see e.g. Lewis v Daily Telegraph Ltd [1964] AC 234, pp 258, 259, 277, 285; Favell v Queensland Newspapers Pty Ltd [2005] HCA 52, para 17). 11 The exercise of discretion in deciding whether or not an imputation should be struck out is to be undertaken with great caution. The applicable test remains as stated in General Steel Industries Inc. v Commissioner for Railways (NSW) (1964) 112 CLR 125, pp 129, 130 which requires demonstration that the case for the imputation is so obviously untenable that it cannot possibly succeed or is manifestly groundless. If reasonable minds may possibly differ about whether or not the matter complained of is capable of carrying a defamatory meaning, that would be "… a strong, perhaps an insuperable, reason for not exercising the discretion to strike out" (Favell, para 6). 12 It is also relevant to take into account the following passages from John Fairfax Publications Pty Ltd v Rivkin (2003) 77 ALJR 1657:

McHugh, J: "26 … The reasonable reader considers the context as well as the words alleged to be defamatory … The bane and antidote must be taken together. But this does not mean that the reasonable reader does or must give equal weight to every part of the publication. The emphasis that the publisher supplies by inserting conspicuous headlines, headings and captions is a legitimate matter that readers do and are entitled to take into account. Contrary statements in an article do not automatically negate the effect of other defamatory statements in the article."

Callinan, J: "187 Some other preliminary observations should be made. It is true that an article has to be read as a whole. But that does not mean that matters that have been emphasized should be treated as if they have only the same impact or significance as matters which are treated differently. A headline, for example, expressed pithily and necessarily incompletely, but designed to catch the eye and give the reader a predisposition about what follows may well assume more importance than the latter … The order in which matters are dealt with can be significant. The capacity of the first paragraph of an article, the "intro," to excite the reader's attention is a matter upon which editors place store. The language employed is also of relevance … True it may be that readers may take an article or articles on impression, but the fact that they may do so is likely to have the consequence that ideas and meanings conveyed by graphic language will create the strongest impressions. Of course publishers are entitled to use colourful and seductive language, but in using it they may run the risk of seducing readers into believing only what is colourful and on occasions scandalous, rather than the facts conveyed by straight reportage." 13 Contextual imputation 5(a)(iv) is: "(iv) the plaintiff so conducted himself as to give rise to a reasonable suspicion of participating in race fixing" 14 The plaintiff submitted that the publication could not be reasonably understood to mean that his activities gave rise to a reasonable suspicion of race fixing. It was put that the only relevant statement in the article, namely: "Hayson and one of his horse trainers, Tim Martin, are being investigated by NSW racing stewards over betting activities surrounding the debut run of a horse called Interfere."

concerned investigation over betting activities, and was incapable of suggesting "a reasonable suspicion of participating in race fixing". It was argued that there was no support for the suggestion of participation in race fixing, or for the suggestion that the plaintiff's conduct gave rise to a reasonable suspicion of it. 15 In my opinion there is sufficient material in the matter complained of for it to be open to a jury to find that a reasonable reader of the whole would conclude that the publisher is making an allegation of the plaintiff in terms of this imputation. This conclusion is readily reached having regard to the observations of Callinan, J in Rivkin para 187, to which I have referred. 16 With regard to the "race fixing" component, in my opinion it would be generally understood that betting activities are often closely connected with, or the result of, race fixing schemes. When considered in context, the statement that the plaintiff and one of his trainers are being investigated by NSW racing stewards over betting activities is capable of leading the ordinary reasonable reader to infer that he is suspected of participating in race fixing. 17 Arguably, ample support for the imputations is found in the passage commencing with the headline "The brothel owner, league stars and a mystery betting plunge" and ending with the words (l 45): "Let's just say that it is not in the interests of racing to have jockeys associating with a major punter at a venue that may be a brothel." 18 It is self-evident that, from the outset, the language is calculated to convey the impression that the plaintiff is an unsavoury character, a brothel owner, and a controversial punter who takes spectacular betting plunges. Suggestive of his participation in race fixing deals is the description of his association with jockeys by the provision of prostitutes, and the reported statement of chief steward Murrihy that such an association is not in the interests of racing. The immediate context in which the words "… betting activities surrounding the debut run of a horse called Interfere" appear includes the statement that the plaintiff was found guilty of illegal betting, and that he orchestrated a greyhound sting from which his betting activity resulted in winnings of $700,000.00. This material strongly reinforces the capacity of the whole passage to convey to the reader an allegation concerning the plaintiff's participation in race fixing. 19 It was also submitted that the allegation that the plaintiff's conduct gave "… rise to a reasonable suspicion" was incapable of being conveyed. It was put that the publication goes no further than stating that the plaintiff and his trainer were being investigated by racing stewards. It was put that to say no more than that there is an investigation is a statement incapable of suggesting to the ordinary reasonable reader that those conducting the investigation held a suspicion, reasonable or otherwise. 20 I do not accept these submissions. In my opinion, taken in context, the statement is arguably capable of supporting the inference that the plaintiff was being investigated because the racing stewards had reasonable grounds for suspecting him of participating in race fixing. Indeed, sufficient basis for that inference is to be found in the passage immediately following beginning with the words: "In May, Hayson was found guilty …" and ending with the words "… the Adelaide bookmaker Curly Seal has refused to pay". 21 The real question is as to the impression that the words are likely to make upon the reasonable reader. In this case its determination must be left to the jury. 22 Accordingly, I hold that contextual imputation (iv) is reasonably capable of being conveyed by the matter complained of. 23 The plaintiff also submitted that the imputation was defective in form, and should be struck out. It was put that the word "participating" was a weasel word which had a variety of meanings so that its use was ambiguous or equivocal. It was put that the imputation itself does not make clear the sense in which the word is to be understood, with the result that it lacked the requisite specificity. Accordingly, on the approach taken by Hunt, J in Armitage v Double Bay Newspapers Pty Ltd [Unreported, NSWSC, 26 September 1991] it should not be permitted. 24 I am unpersuaded that, having regard to the general tenor and language of the matter complained of referable to the plaintiff's betting activities, the imputation lacks precision by the use of the word "participating". In particular, the betting activities about which it is said the plaintiff and Mr Martin are being investigated are referred to in general terms, and specific conduct in relation to them is not identified. In the circumstances, I accept the defendant's submission that I should adopt the approach taken by Levine, J in Jackson & Ors v TCN Channel Nine Pty Ltd [Unreported, NSWSC, 17 October 1996] that where the tenor and thrust of the disparagement in the publication is in general terms, and nothing is said of specific activity, it is not required that the imputation specify some precise act or condition. (See also Vella v John Fairfax Publications Pty Ltd [2000] NSWSC 615, para 10.) 25 Ordinarily, the sense in which an imputation is to be understood will be clear from its terms considered with regard to the context provided by the publication. Relevantly in John Fairfax Publications Pty Ltd v Gacic [2007] HCA 28, Callinan, Heydon, JJ said: "194. … To say that because the words of an imputation may reasonably convey more than one defamatory meaning or impression, or that because implications, inferences and imputations suggest more than one meaning or successive meanings, they must be rejected, would be to introduce unnatural and excessive refinement to the basic factual question whether the words (or the imputation) have defamed the plaintiff. Published matter may well convey a duality of meanings and impressions, not necessarily exclusive of one another, and sometimes with one leading to another, successive, inevitable or almost inevitable one." 26 Accordingly, I reject the challenge as to form. 27 Contextual imputation 5(a)(v) is: "(v) there were reasonable grounds to suspect that the plaintiff was involved in race fixing" 28 The plaintiff's submissions on the capacity issue were substantially the same as those in respect of contextual imputation (iv). For the same reasons, I do not accept them. 29 The plaintiff also submitted that the use of the word "involved" rendered the meaning of the imputation ambiguous, uncertain, and defective in form. The submissions were the same as those in support of the attack upon the use of the word "participating" in contextual imputation (iv), and should suffer the same fate. 30 I also reject the plaintiff's contention that (v) does not differ in substance from (iv). In my opinion it is self-evident that it does. (Sergi v Australian Broadcasting Commission [1983] 2 NSWLR 669.) 31 Contextual imputation 5(a)(vi) is: "(vi) the plaintiff behaved unscrupulously by manipulating the odds in a greyhound race." 32 The plaintiff submitted that the publication was incapable of conveying an allegation that he "behaved unscrupulously". It was accepted that it was capable of suggesting that he manipulated the odds in a greyhound race. 33 The article plainly states (ll 35-42) that the plaintiff orchestrated a greyhound sting, and describes his betting activities connected with it. The term "sting" in this context may reasonably be understood to suggest that the betting arrangements were calculated to swindle or cheat the bookmakers. In my opinion it would be entirely reasonable for an ordinary reasonable reader to conclude that the publication was making an allegation in terms of this contextual imputation. Accordingly the objection should not be upheld, and I find that the publication is reasonably capable of conveying this contextual imputation. 34 For the above reasons the challenge to the contextual truth defence on grounds peculiar to contextual imputations (iv), (v), and (vi), fails. Particulars 35 The plaintiff submitted that the contextual imputations (ii) - (vi) inclusive should be struck out under r 14.28(1)(a) and (b) on grounds that they disclose no reasonable defence, or are embarrassing. The essential contention was that the facts and matters as pleaded in the particulars, if proved at the trial, were incapable of establishing the substantial truth of the contextual imputation to which they related. 36 The contextual truth defence under s 26 of the Act is pleaded as follows: "5. Further, and in the alternative to paragraph 4 above, the defendant says the matter complained of, in its natural and ordinary meaning: (a) carried, in addition to such of the imputations of which the plaintiff complains as are found by the jury to arise and be defamatory, the following imputations of and concerning the plaintiff …

(Imputations (i) - (vi) are pleaded as set out in para 6 of these reasons.) "(b) each of the Contextual Imputations is substantially true; (c) each of the Plaintiff's Imputations do not further harm the reputation of the plaintiff because of the substantial truth of the contextual imputations." 37 The pleading of causes of action and defences is governed by the provisions of UCPR Pt 14. Pleadings concerning defamation also attract the application of the rules in Div 6, Pt 14 which, relevantly are: "14.31 Defamation defences generally … (2) If the plaintiff in defamation proceedings complains of two or more imputations, the pleading of any of the following defences must specify to what imputation or imputations the defence is pleaded: … (b) a defence under section 25 or 26 of the Defamation Act 2005 , … 14.33 Defence of contextual truth … (2) Defence under Defamation Act 2005 . Subject to rule 14.31 (2), a defence under section 26 of the Defamation Act 2005 is sufficiently pleaded if it: (a) specifies one or more imputations on which the defendant relies as being contextual to the imputation in question, and (b) alleges each contextual imputation on which the defendant relies was substantially true, and (c) alleges that the imputation in question did not further harm the reputation of the plaintiff because of the contextual imputations on which the defendant relies." 38 The court's power to strike out a pleading is provided for by r 14.28(1). It permits an order striking out a pleading in which no reasonable cause of action or defence is disclosed, or where the pleading has a tendency to cause prejudice, embarrassment or delay in the proceedings, or is otherwise an abuse of the process of the court. 39 The court's power under this rule is limited generally, but not exclusively, to the way in which the pleading has been framed. (Peter Kent Development Pty Ltd v The Australia and New Zealand Banking Group Ltd [Unreported, NSWSC, 6 May 1980].) In Brimson v Rocla Concrete Pipes Ltd (1982) 2 NSWLR 937 the court dealt with an application under Supreme Court Rules 1970 Pt 15, r 26, which is in the same terms as r 14.28. Cross, J held that under this rule an order which summarily strikes out a pleading should only be made where the pleading itself is obviously defective. He said (p 942): "The mere fact that the case is weak and not likely to succeed is not a ground for striking out a validly formulated pleading. The provisions of the rule would seem to make clear that it is only when a pleading is defective, in that the pleading discloses no cause of action or the pleading tends to cause prejudice, embarrassment or delay, or the pleading is otherwise an abuse of a process of the court, that the court has the power to strike out the whole or part of the proceedings (see Dey v Victorian Railways Commissioners ( 1949) 78 CLR 62, at p 91) and, as I have already mentioned, though the court may receive evidence on the matter under this rule it must be remembered that that evidence is permitted to go only to the issue of whether the pleading is defective, not to whether the plaintiff's case is hopeless." 40 His Honour also pointed out (p 943) that where a party wants to attack, before trial, not its opponent's pleading but the opponent's case itself, it should move the court under SCR Pt 13, r 5 (now UCPR Pt 13.4) or invoke the inherent jurisdiction of the court that it be summarily dismissed. 41 UCPR Pt 15 is concerned with the pleading of particulars. Rule 15.1(1) states: "(1) Subject to this Part, a pleading must give such particulars of any claim, defence or other matter pleaded by the party as are necessary to enable the opposite party to identify the case that the pleading requires him or her to meet". 42 Under r 15.21(1)(c) and r 15.23(2) the necessary particulars relating to a defence of contextual truth include particulars of the facts, matters and circumstances on which the defendant relies to establish that the contextual imputations on which the defendant relies are substantially true. If expressed in an objectionable way particulars are liable to be struck out under the rules, but they are not to be pleaded to (Turner v Bulletin Newspaper Co Pty Ltd (1974) 131 CLR 26, p 80). 43 In my opinion, the pleading to which objection is taken is not defective in any way. It is plain that the defence is formulated in compliance with r 14.33(2), and, therefore, as the rule itself states, is sufficiently pleaded. Nor was it demonstrated that any of the particulars included in the defence under r 15.23(2) were objectionable or embarrassing on any basis. It follows that no order should be made under r 14.28 to strike out para 5(a)(ii) - (vi) of the defence as a defective pleading. 44 In effect, the application was for summary dismissal of the substantial part of the defendant's case on contextual truth. The relevant question is whether a discretionary order should be made on the ground that the particulars presently pleaded are incapable of establishing the truth, or substantial truth, of the contextual imputations to which they relate. 45 In my opinion, the application must be refused. It is an invitation to the court to undertake the empty exercise of evaluating the defendant's prospects of success with regard only to the facts and matters as presently described in the particulars. The invitation should be refused. 46 Analysis of the particulars discloses they are couched in terms which indicate they are a bare summary of issues to be raised based on information presently available to the defendant. Unsurprisingly, in the course of submissions the defendant foreshadowed the likelihood of amendment of the particulars by way of expansion and/or addition following further investigations, including completion of the interlocutory procedures of discovery and interrogatories. Such would accord with everyday experience. 47 The likelihood of amendment is, in my opinion, sufficient justification for refusing the order. This is because dismissal now would not preclude later revival by amendment, and thus is likely to be futile (see ss 64, 91(1) Civil Procedure Act 2005). Considerations of efficiency are also relevant to the exercise of discretion (see ss 56, 57, 60 Civil Procedure Act 2005). 48 A further significant consideration in dealing with an application such as this is the recognition by authority that there may be a discrepancy or variation between a party's case as pleaded (in the particulars) and as proved at trial. In Douglas & Anor v John Fairfax & Sons Ltd & Anor (1983) 3 NSWLR 126 Hunt, J observed (p 133): "The failure to supply particulars of a matter pleaded in support of a claim or a defence does not in ordinary circumstances of itself preclude a party leading evidence of that matter at the trial. Particulars once given cannot circumscribe or modify the cause of action sued upon: Mummery v Irvings Pty Ltd (1956) 96 CLR 99, at 110. Their function is simply to relieve the other party of the need to investigate the issues of fact not identified by the particulars, or to show what will be put forward as constituting the case which has been pleaded: ibid , (at 110); Anchor Products Ltd v Hedges (1966) 115 CLR 493, at 499. Where a party seeks to lead evidence in support of his pleaded case which is outside the particulars which have been supplied of that case, it is for the trial judge to consider whether such evidence unfairly amounts to a case of which the other party has had insufficient warning: Vlasic v Federal Capital Press of Australia Pty Ltd (1976) 9 ACTR 1, at 6. It is a matter within the discretion of the trial judge whether to permit the evidence (subject in some cases to an amendment of the particulars, but in any event subject to terms so as to meet any prejudice to the other party) or to hold the party whose particulars were deficient to the issues of fact to be investigated as limited by those particulars: Mummery v Irvings Pty Ltd (at 110); Leotta v Public Transport Commission of New South Wales (1976) 50 ALJR 666, at 668; 9 ALR 437, at 446. The exercise of that discretion must necessarily depend upon many things, including the amount of warning that the other party has had that such evidence was to be led. The relief which is granted to a party at the trial must be founded on the pleadings and not upon any particulars which have been given of the matters alleged in those pleadings: Dare v Pulham (1982) 57 ALJR 80, at 82; 44 ALR 117, at 121. What course should usually be followed by the trial judge in the various situations which may arise was discussed in Reiter v Publishing and Broadcasting Ltd [1983] 2 NSWLR 137(n). The subsequent decision of the High Court in Dare v Pulham does not alter my view as to the accuracy of what I said in that case."

49 Further support for my conclusion is provided by, e.g., Wickstead & Ors v Browne (1992) 30 NSWLR 1 in which the Court of Appeal considered the nature of the court's jurisdiction to dismiss summarily a plaintiff's action. Kirby, P said (p 5): "2. Common experience teaches that it is usually more efficient and just to consider the viability of a cause of action when the facts said to support it are adduced and the suggested action can be judged with a full understanding of all relevant evidence. Testimony gives colour and content to the application and development of legal principle. That is why leave is usually required for an appeal from interlocutory orders. Appellate courts, including this Court, will usually require evidence to be adduced and a trial concluded before considering the application of the law to that evidence. Out of the detail of the evidence ultimately proved, affecting the relationship of the respondent and the appellant, may arise a finding of a duty of care which the common law of negligence would uphold;"

Handley, JA and Cripps, JA said (p 11): "… By launching such an application a defendant undertakes the burden of establishing that there is no triable issue. On such an application the defendant bears the onus of proof and where the facts are peculiarly within the defendant's knowledge the plaintiff's action should not be dismissed because of gaps in the case if the necessary evidence might be obtained as a result of discovery or interrogatories."

(See also Agar v Hyde (2000) 201 CLR 552, para 64; Penthouse Publications Ltd v McWilliam [Unreported, NSWCA, 14 March 1991]; Brimson pp 944-949.) 50 In submissions I was referred by plaintiff's counsel to NRMA Insurance Ltd v Amalgamated Television Services Pty Ltd [Unreported, NSWSC, 14 July 1989]; Marsden v Amalgamated Television Services Pty Ltd [Unreported, NSWSC, 17 December 1996]; Australian Broadcasting Corp v Hodgkinson [2005] NSWCA 190; John Fairfax Publications Pty Ltd v Blake (2001) 53 NSWLR 541. I derived no assistance from them. 51 In my opinion, the plaintiff has failed to establish any ground upon which the contextual truth defences should be dismissed and/or struck out either under r 14.28 or in the exercise of the inherent jurisdiction of the court. The question was not one appropriate for separate determination under r 28.2. Conclusion 52 It is ordered that:

(1) the plaintiff's notice of motion filed 22 June 2007 be dismissed; and

(2) the plaintiff pay the defendant's costs of the notice of motion. **********

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