BETWEEN : EXIBIT EXHIBITIONS & PUBLISHING PTY LTD (ACN 089 992 110)

Defamation - Application to strike out statement of claim - Adequacy of plea of knowledge of extrinsic facts going to identification - Whether imputations capable of being conveyed - Whether embarrassing - Turns on own facts

Beran v John Fairfax Publications Pty Ltd [2004] NSWCA 107

Consolidated Trust Co Ltd v Browne (1948) 49 SR(NSW) 86

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

Gordon v Amalgamated Television Services Pty Ltd & Anor (1980) 2 NSWLR 410

Gumina v Williams (No 1) (1990) 3 WAR 342

Jones v Skelton [1963] 1 WLR 1362

Lewis v Daily Telegraph Ltd [1964] AC 234

Mirror Newspapers Ltd v Harrison [1982] HCA 50; (1982) 149 CLR 293

Monte v Mirror Newspapers Ltd [1979] 2 NSWLR 663

Ron Hodgson (Trading) Pty Ltd v Belvedere Motors (Hurstville) Pty Ltd & Ors (1971) 1 NSWLR 472

Taylor v Jecks (1993) 10 WAR 309

Tsvangirai v The Special Broadcasting Service [2002] NSWSC 532

Askew v Morris [2005] WASCA 59

Boral Besser Masonry Ltd v ACCC [2003] HCA 10; (2003) 215 CLR 374

Bristile Ltd v Buddhist Society of Western Australia Inc (2000) Aust Torts Reprots 81­548

Chapman v Australian Broadcasting Commission [2000] SASC 146; (2000) 77 SASR 181

Cock v Hughes [2001] WASC 24

Day v William Hill (Park Lane) Ltd ]1949] 1 KB 632

Dow Jones & Company Inc v Gutnick (2002) 210 CLR 575

Hall Chadwick Corp Finance (WA) Ltd v Axion Properties Ltd [2002] WASC 179

Heytesbury Holdings Pty Ltd v City of Subiaco (1998) 19 WAR 440

John Fairfax Publications Pty Ltd v Rivkin [2003] HCA 50; (2003) 201 ALR 77

Stokes v Cowan [2005] WASC 39

Wookey v Western Australian Newspapers Ltd [2004] WASC 96

1 MASTER NEWNES: On 9 June 2005 I heard an application by the defendant to strike out the amended statement of claim on the ground that it discloses no reasonable cause of action or, alternatively, is embarrassing. At the conclusion of the argument I ordered that the amended statement of claim be struck out, with leave to the plaintiff to replead, for the reasons indicated in the course of argument. The plaintiff has requested written reasons and these are those reasons.

2 In the amended statement of claim the plaintiff pleads as follows:

"1. The Plaintiff is a duly incorporated company.

2. The Defendant is an undischarged bankrupt.

3. Prior to the Defendant's bankruptcy the Defendant was the sole director of Consolidated Business Media Pty Ltd (In Liquidation) ACN 066 879 598 ('the Company').

4. Consolidated Business Media Pty Ltd prior to being placed into liquidation was in the industry of organising and managing exhibitions and events.

5. The Plaintiff is and was at all material times in the industry of organising and managing exhibitions and events and was the major competitor of the Company prior to the Company being placed into liquidation.

6. Gary Anderson is the official liquidator of the Company.

7. In a letter dated 4 February 2005 ('the letter') written and signed by the Defendant and addressed and set to the creditors of the Company, the Defendant wrote, printed and published to the creditors ('the Creditors') including Eastlake Pty Ltd of and concerning the Plaintiff, the following defamatory words:

'I am now bankrupt and the company is in liquidation. Both events I sincerely believe were caused by CBM's major competitor's continual harassment of CBM. It is the major competitor's harassment which has financially destroyed me and caused you loss.

It is that competitor who Mr Anderson, in his report, refers to as the two major creditors of CBM who have expressed an interest in funding a public examination. That competitor is a contingent creditor of CBM. That competitor made numerous claims over many years against CBM. The litigation which resulted led to such costs, in terms of legal fees, that CBM and I were financial [sic] ruined.

Mr Anderson rightly points out at the end of his report that the prospects of a return to CBM's unsecured creditors is remote. The only purpose of a public examination is for Media & Events' major competitor, the same major competitor who destroyed CBM and has caused you loss, is to continue to harass me. You should not be conned into funding that attack.'

Further particulars of the Creditors will be provided after discovery and interrogatories.

8. The said words, namely, 'major competitor's' in the first paragraph of the Letter, 'that competitor' in the second paragraph of the Letter and 'major competitor' in the third paragraph of the Letter, referred and were understood by the Creditors to refer to the Plaintiff.

Particulars

(i) The Plaintiff repeats paragraphs 4 and 5 above.

(ii) CBM is an abbreviation for Consolidated Business Media and is commonly understood by the Creditors as being referable to the Company.

(iii) The Plaintiff made numerous legal claims against the Company and the Defendant over several years.

(iv) Media & Events Australia Pty Ltd ACN 079 908 768 is in the industry of organising and managing exhibitions and events and is commonly referred to as Media & Events ('Media & Events').

(v) At all material times the Plaintiff was the major competitor of Media & Events.

(vi) By reason of the fact that the Creditors are or have been clients, suppliers and customers of the Plaintiff and attend creditors meetings in relation to the Company, they are aware of the matters pleaded at paragraphs 4, 5, 8(ii), 8(iii), 8(iv) and 8(v) above.

'I am now bankrupt and the company is in liquidation. Both events I sincerely believe were caused by CBM's major competitor's continual harassment of CBM. It is the major competitor's harassment which has financially destroyed me and caused you loss'

in their natural and ordinary meaning meant and were understood to mean:

(a) the Plaintiff continually harassed the Defendant and the Company;

(b) the Plaintiff's harassment was the sole reason for the financial ruin of the Defendant and the Company;

(c) the Plaintiff caused the Defendant to become bankrupt and caused the Company to be placed into liquidation;

(d) the Plaintiff was solely responsible for the loss caused to the Creditors.

10. Further or alternatively, the said words meant and were understood by the Creditors to mean:

(a) the Plaintiff continually harassed the Defendant and the Company;

(b) the Plaintiff's harassment was the sole reason for the financial ruin of the Defendant and the Company;

(c) the Plaintiff caused the Defendant to become bankrupt and caused the Company to be placed into liquidation;

(d) the Plaintiff was solely responsible for the loss caused to the Creditors.

Particulars to paragraphs 10(a) to (d)

(i) The Plaintiff repeats paragraphs 2, 3, 4 and 5 above.

(ii) CBM is an abbreviation for Consolidated Business Media and is commonly understood by the Creditors as being referable to the Company.

(iii) The Plaintiff made numerous legal claims against the Company and the Defendant over several years.

(iv) By reason of the fact that the Creditors are or have been clients, suppliers and customers of the Plaintiff and attend creditors meeting in relation to the Company and the Defendant, they are aware of the matters pleaded at paragraphs 2, 3, 4, 5, 10(ii) and 10(iii) above."

3 The plaintiff pleads in similar fashion, in respect of the second and third paragraphs of the words complained of, in pars 11 and 12, and pars 13 and 14 respectively.

4 In relation to the second paragraph of the words complained of, the plaintiff pleads that the words meant and were understood to mean "that legal fees paid by the company in relation to litigation involving the Plaintiff and the Company were the sole reason for the financial ruin of the Defendant and the Company".

5 In relation to the third paragraph of the words complained of, the plaintiff pleads the following imputations:

"(a) the Plaintiff continually harassed the Defendant;

(b) the Plaintiff was solely responsible for the financial ruin of the Company;

(c) the Plaintiff deliberately sought to cause the Defendant and the Company financial distress;

(d) the Plaintiff was solely responsible for the loss caused to the Creditors;

(e) the Plaintiff prosecuted illegitimate and improper claims without just cause against the Defendant and the Company and the purpose of a public examination was solely for the Plaintiff to harass the Defendant and not for the benefit of realising potential returns for the Creditors;

(f) the Plaintiff is deceitful, conniving, deceptive and dishonest."

6 The plaintiff then pleads in pars 15 and 16 of the statement of claim as follows:

"15. By reason of the matters pleaded in paragraphs 7, 8, 9, 10, 11, 12, 13 and 14 above the Plaintiff has been:

(a) greatly injured in its credit and reputation and in its industry;

(b) brought into hatred, ridicule and contempt;

(c) lowered in the estimation of its clients, suppliers and customers in its industry;

(d) exposed to being shunned and avoided, in not doing business with the Plaintiff, by its clients, suppliers and customers in its industry,

and the Plaintiff has thereby suffered loss and damage.

16. Further, the Defendant published the said words out of malevolence or spite towards the Plaintiff.

Particulars

(i) The Defendant is employed by Media & Events.

(ii) The Defendant's sole purpose was to undermine the Plaintiff as a former competitor of the Company and as a current competitor of his employer, Media & Events, as a mala fide justification for the Company's insolvency and for the Defendant's bankruptcy.

(iii) The Defendant was aware that by publishing the said words in the Letter to the Creditors, it would be a mass publication and could be prominently circulated to potential or existing clients, suppliers and customers of the Plaintiff thereby undermining the credit and reputation of the Plaintiff in its industry.

(iv) The Defendant was aware the Plaintiff's claims against the Defendant and the Company was not the cause, alternatively the sole cause, of the financial ruin of the Defendant and the Company.

(v) The Defendant was aware that the Plaintiff did not cause, alternatively was not the sole cause, of loss to the Defendant or the Company or the Creditors.

(vi) The Defendant did not hold the honest belief that the Company's liquidation and his bankruptcy was caused, alternatively solely caused, by the Plaintiff.

(vii) The Defendant did not hold the honest belief that the Company and his financial ruin were caused, alternatively solely caused, by the Plaintiff."

7 The first objection of the defendant was to the pleading in pars 2 to 6 of the amended statement of claim. It was argued that the pleas are relevant, if at all, only as extrinsic facts going to whether a reader of the letter who had knowledge of those facts would understand the plaintiff to be the "competitor" referred to in the letter. If the pleas are relied upon for that purpose, they are properly particulars and not material facts.

8 The plaintiff's counsel accepted that the pleas are relevant only to the question of identification of the plaintiff, but contended that they were properly pleaded as material facts or, alternatively, if they should be pleaded as particulars, there was no embarrassment caused to the defendant by the manner in which they are pleaded in the amended statement of claim.

9 In my view, the pleas should be pleaded as particulars of extrinsic facts relied upon for identification, not material facts, but I accept that the form of the pleading does not cause the defendant any real embarrassment and I would not strike out those paragraphs.

10 The next objection by the defendant was to the words "wrote, printed" in par 7 of the statement of claim. It was argued that the material fact is publication and that the words are therefore irrelevant and embarrassing. I accept that the words are unnecessary but, in my view, they do not cause the defendant any real embarrassment and I would not strike them out.

11 The defendant also objected to par 7 on the basis that it reproduced only part of the letter sent to the creditors of the Company. A full copy of the letter was produced on the hearing of the application. Counsel for the defendant referred to the oft cited passage in the judgment of Asprey JA in Ron Hodgson (Trading) Pty Ltd v Belvedere Motors (Hurstville) Pty Ltd & Ors (1971) 1 NSWLR 472 at 477A:

"If the alleged defamatory matter be contained within other written material, it is sufficient to set forth in the declaration the libellous passages only, provided that their meaning be clear and distinct. But, if the meaning of the passages taken singly is not clear or if the complexion of the imputation conveyed by the libellous passage is materially altered or qualified by other passages in the written material, the plaintiff must set out all of the passages in the written material which affects the sense of the alleged defamatory matter."

12 In Gordon v Amalgamated Television Services Pty Ltd & Anor (1980) 2 NSWLR 410, Hunt JA at 413B said that the justification for the rule is the principle that the effect of the matter complained of must be taken from the whole of what was published. His Honour concluded (at 414G - 415B) that it was unnecessary for the defendant to have to show that the additional passages must change the complexion of the imputation complained of and the test to be applied is whether any of the omitted parts is reasonably capable of materially altering or qualifying the complexion of the plaintiff's imputation. See also Tsvangirai v The Special Broadcasting Service [2002] NSWSC 532 at [12]; Beran v John Fairfax Publications Pty Ltd [2004] NSWCA 107 per McColl JA (with whom Mason P and Beazley JA agreed) at [48 - 52].

13 It was argued on behalf of the plaintiff that there was nothing in the balance of the letter which was capable of materially altering or qualifying the pleaded imputations. The other parts of the letter dealt with different matters.

14 I accept the plaintiff's submissions with one reservation. In the third paragraph of the words pleaded in par 7 of the amended statement of claim, reference is made to "Media & Events", a reference that is inexplicable until it is understood that earlier in the letter the defendant says that he is now an employee of Media & Events. Counsel for the defendant said he would give that matter further consideration. I think any problem in that respect is a matter properly left to await any further re-amended statement of claim.

15 The next complaint by the defendant was in respect of par 8 of the statement of claim. In substance, the defendant complained that it was not apparent from the plea in par 8(vi) why it is alleged that creditors would have been aware of the matters pleaded in pars 4, 5, 8(ii), 8(iii), 8(iv) and 8(v) simply because they "are or have been clients, suppliers and customers of the Plaintiff and attend creditors' meetings in relation to the Company". I understood counsel for the plaintiff to concede that the plea in par 8(vi) required further elaboration to make clear the basis upon which it is alleged that the creditors would have been aware of the matters referred to. In my view, that concession was properly made and, as it stands, I would strike out par 8 of the amended statement of claim.

16 It is necessary, before turning to the objections by the defendant to the imputations pleaded by the plaintiff, to say something about the form of the pleading in pars 9 to 14 of the amended statement of claim. In my view it is an unacceptable practice to plead the words complained of and then in subsequent paragraphs to plead in turn, as separate material facts, individual paragraphs of the words complained of and the imputations which are said to be conveyed by those individual paragraphs. The proper course is to plead the words complained of as a whole and the imputations which it is alleged were conveyed by those words. If, in an appropriate case, the plaintiff wishes, or is required, to give particulars of the specific passages in the words complained of said to give rise to each imputation, then that should be done by way of particulars. The pleading in its current form is apt to cause confusion and, in my view, is embarrassing.

17 The defendant submitted that the plea in par 9 (and its counterparts in pars 11 and 13 respectively) was not capable of being conveyed by the words complained of because a reader who did not know the extrinsic facts said to identify the plaintiff as the "competitor" referred to in the letter would not have understood the letter to refer to the plaintiff. There was simply nothing in the words complained of which was capable of causing such a reader to understand the letter as referring to the plaintiff.

18 It is, of course, well established that, where the words complained of do not on their face refer to the plaintiff, then the plaintiff must plead and prove that a person or persons to whom the words were published had knowledge of extrinsic facts which would cause them to identify the plaintiff as the person referred to: Consolidated Trust Co Ltd v Browne (1948) 49 SR(NSW) 86 at 89 per Jordan CJ. In the present case, there is nothing in the words complained of which would enable a reader, without knowledge of the extrinsic facts, to identify the plaintiff as the "competitor" referred to in the letter. Accordingly, in my view, pars 9, 11 and 13 do not disclose a reasonable cause of action and I would strike them out.

19 It is then necessary to turn to the imputations pleaded by the plaintiff in pars 10, 12 and 14 of the amended statement of claim. The defendant submitted that each of the imputations was either incapable of being conveyed by the words complained or was embarrassing.

20 The principles to be applied on an application of this sort are well established. Imputations will be struck out at this stage if they are plainly incapable of being conveyed by the words complained of: Gumina v Williams (No 1) (1990) 3 WAR 342 at 346; Taylor v Jecks (1993) 10 WAR 309 at 319.

21 The test to be applied in determining whether the defamatory imputations alleged are capable of being conveyed by the words complained of was discussed in the well-known passage from the judgment of the Privy Council in Jones v Skelton [1963] 1 WLR 1362 at 1370 - 1371:

"In deciding whether words are capable of conveying a defamatory meaning the court will reject those meanings which can only emerge as the product of some strained or forced or utterly unreasonable interpretation. In Capital and Counties Bank v George Henty & Sons [1882] 7 AC 741, 745 Lord Selborne LC said:

'The test, according to the authorities, is, whether under the circumstances in which the writing was published, reasonable men, to whom the publication was made, would be likely to understand it in a libellous sense.'

The ordinary and natural meaning of words may be either the literal meaning or it may be an implied or inferred or an indirect meaning: any meaning that does not require the support of extrinsic facts passing beyond general knowledge but is a meaning which is capable of being detected in the language used can be a part of the ordinary and natural meaning of words. See Lewis v Daily Telegraph Ltd [1963] 2 WLR 1063; [1963] 2 All ER 151 HL(E). The ordinary and natural meaning may therefore include any implication or inference which a reasonable reader guided not by any special but only by general knowledge and not fettered by any strict legal rules of construction would draw from the words. The test of reasonableness guides and directs the court in its function of deciding whether it is open to a jury in any particular case to hold that reasonable persons would understand the words complained of in a defamatory sense."

22 The person to whom it is alleged the words were spoken will be assumed to be a reasonable person, not unusually suspicious or unusually naive, nor avid for scandal. In Lewis v Daily Telegraph Ltd [1964] AC 234 Lord Reid said, at 258:

"There is no doubt that in actions for libel the question is what the words would convey to the ordinary man: it is not one of construction in the legal sense. The ordinary man does not live in an ivory tower and he is not inhibited by knowledge of the rules of construction. So he can and does read between the lines in the light of his general knowledge and experience of world affairs."

23 There is, however, an important distinction to be drawn between a person's understanding of a publication and judgments or conclusions which that person may arrive at as a result of his or her own beliefs and prejudices: Mirror Newspapers Ltd v Harrison [1982] HCA 50; (1982) 149 CLR 293 per Mason J at 301.

24 The imputation pleaded must specify "the precise act or condition asserted of, or attributed to" the plaintiff: Monte v Mirror Newspapers Ltd [1979] 2 NSWLR 663 at 678 and Taylor v Jecks (supra) at 319. The fact that the terms of the imputation are drawn from the words complained of is not enough, of itself, to establish that the imputation is unobjectionable. It is the meaning allegedly conveyed by the words, rather than the words themselves, which it is important to have precisely defined in the imputation: Monte v Mirror Newspapers (supra).

25 But as Gleeson CJ observed in Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135, at 137, the requirement that a plaintiff must "specify" the act or condition which he claims was attributed to him is one which, in its practical application, raises questions of degree. Almost any attribution of an act or condition to a person is capable of both further refinement and further generalisation. In any given case, a judgment needs to be made as to the degree of particularity or generality that is appropriate to the occasion, and as to what constitutes the necessary specificity. If a problem arises, the solution will usually be found in considerations of practical justice rather than philology. The nature of the words complained of is a relevant consideration in determining the specificity with which an imputation must be pleaded.

26 It was submitted on behalf of the defendant that the imputations, in pars 9 (a) and (b), and 10 (a) and (b) respectively, that the plaintiff had "harassed" the defendant and the Company, and that the plaintiff's "harassment" was the sole reason for the defendant's financial ruin; and, in pars 13 and 14, that the plaintiff had "harassed" the defendant, were not defamatory of the plaintiff or, alternatively, were unclear and therefore embarrassing. Counsel for the plaintiff responded that an allegation of harassment is an assertion that a person has committed a criminal or tortious act.

27 I do not accept the plaintiff's contention. In my view, a statement that a person has harassed another does not itself necessarily connote unlawful conduct. Harassment can take many forms. It is the case that some forms of harassment are proscribed by law. But harassment may take forms which, although they may be a source of irritation or annoyance, are not unlawful. In any event, the imputations do not specify with sufficient precision the nature or form of the harassment which it is alleged the words complained of attributed to the plaintiff. It is by no means clear from the imputations what conduct the plaintiff alleges a reasonable reader would have understood it had engaged in. The fact that the pleader has invoked words or concepts used in the words complained of is not, in the circumstances, an answer.

28 I therefore consider that the imputations in pars 9(a) and (b), 10(a) and (b), and 13(a) and 14(a) are embarrassing and I would strike them out.

29 It was submitted on behalf of the plaintiff that the imputations in pars 9(c) and (d), 10(c) and (d), 13(b), (c) and (d) and 14(b), (c) and (d) were not defamatory of the plaintiff. Counsel submitted that it was not defamatory, without more, to say that a competitor has caused a trading company's insolvency. That is commonly a result of successful, legitimate competition. Equally, a trading company could, by effective competition, be said to be solely responsible for the financial ruin of a competitor. It is also the case that in competing for market share in a perfectly legitimate way, it could be said that a company sought to reduce a competitor's sales and competitiveness and thereby to cause it financial distress.

30 I accept the defendant's submissions. If, as appeared from the submissions of counsel for the plaintiff on this application, the plaintiff contends that the words imputed some improper or unlawful conduct on the part of the plaintiff, I consider that the imputations in question, as they are presently framed, do not convey, or at least do not clearly convey, such meanings.

31 A similar objection was taken to the imputations pleaded in pars 11 and 12, that legal fees paid by the Company in relation to litigation between the plaintiff and the Company were the sole reason for the financial ruin of the defendant and the Company.

32 Once again, in my view it is not defamatory simply to say that the costs of litigation against another party were ruinous. If it is sought to be alleged that the words conveyed a meaning that the plaintiff had in some way behaved improperly or unlawfully in respect of the litigation which had the effect that the costs were ruinous, then that must be specifically asserted. As it is, I do not consider the imputation is defamatory and I would strike it out.

33 The defendant submitted that the imputations pleaded in pars 13(e) and 14(e) were embarrassing in that they rolled up a number of discrete imputations into one and, in addition, so far as it was regarded as a discrete imputation, the plea that the plaintiff prosecuted "illegitimate and improper claims without just cause" was not capable of being conveyed by the words complained of.

34 In the course of argument, I understood counsel for the plaintiff to accept that the imputation, as it was currently pleaded, was embarrassing and would require redrafting. That concession, in my view, was properly made, as it is clear the imputation rolls up a number of discrete imputations. I would therefore strike it out. Whether parts of the current imputation are capable of being conveyed by the words complained of is a matter that should await the reformulation of the plea.

35 It was submitted by the defendant that the imputation pleaded in each of pars 13(f) and 14(f) was not capable of being conveyed by the words complained of, and, in any event, rolled up a number of imputations and was embarrassing for that reason. Counsel for the plaintiff said that the imputation arose from the sentence "You should not be conned into funding that attack". When in the course of argument I suggested that the imputation bore the hallmarks of reference to a thesaurus, the plaintiff's counsel contended that the words "deceitful, conniving, deceptive and dishonest" had distinct meanings. But counsel was unable adequately to explain, in the context of the words complained of, what different meanings they bore. Moreover, if they are intended to bear distinct meanings, then the plea contains several discrete imputations rolled into one. In my view, the imputation is plainly embarrassing and I would strike it out.

36 The next complaint by the defendant was in respect of par 15 of the amended statement of claim. Counsel submitted that the reference in par 15(a), (c) and (d) to the plaintiff having been damaged "in its industry" appeared to plead a claim for special damages. Counsel for the plaintiff said that no claim for special damages was intended. In that respect, he acknowledged that the words in imputation (a) should be amended to read "greatly injured in its credit and reputation in its industry". Otherwise, on the basis of the acknowledgement by counsel for the plaintiff that no claim for special damages is made, I would not strike out par 15.

37 The final complaint by the defendant was in respect of par 16 of the statement of claim. There were two objections to that plea. First, it was submitted that it appeared to be the basis for a claim for both aggravated and exemplary damages and the two cannot be rolled up together, as the distinction between them is fundamental. Counsel for the plaintiff responded that the plea is for aggravated or exemplary damages, as appears by par (2) of the prayer for relief; that is, the pleas for aggravated and exemplary damages are in the alternative. The same facts are relied upon for both. I accept that the plea as so framed is not embarrassing and I would not strike it out on that basis.

38 The defendant's second objection was to the generality of the particulars of the matters relied upon for the claim for aggravated or exemplary damages. In my view, that objection is properly made. The plea in par 16 is, in effect, one of malice. The particulars given in sub-pars (ii) and (iv) to (vii) impute to the defendant, in effect, mala fides and dishonesty, but are pleaded in terms of general assertions as to the defendant's state of mind, without any particularity. In my view, the plea as it stands is simply too general and I would strike it out.

39 It was for those reasons that I ordered the statement of claim be struck out and the plaintiff have 21 days in which to file and serve any reamended statement of claim.