GONSALVES v DEBRECZINI

LOWER COURT District Court JURISDICTION : LOWER COURT DC 4701/99 FILE NUMBER(S) : LOWER COURT Twigg DCJ JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40257/02

MASON P BEAZLEY JA GILES JA

Monday 17 February 2003 Dolores GONSALVES v Peter Lewis DEBRECZINI

1 MASON P: An application for leave to appeal was heard concurrently with the appeal. 2 The opponent sued the claimant and her husband in the District Court for defamation. The claim succeeded against the claimant and damages were assessed at $50,000. The claim against Mr Gonsalves failed and there was a verdict for the defendant. In each instance costs followed the event. 3 Hereafter I shall refer to the opponent as the plaintiff and the claimant as the defendant. 4 The plaintiff is a licensed real estate agent and the owner of Clover Real Estate trading as The Professionals at Menai. 5 In January 1998 there was an incident which caused considerable distress to the defendant. She and her husband had been clients of the plaintiff, who was acting as their agent for sale. During the course of this transaction the plaintiff learned that Mr and Mrs Gonsalves were dealing directly with the vendor of a block of vacant land which they were anxious to secure in order to build a home. The plaintiff beat them to the contract, apparently "gazumping" his own clients. 6 In about January 1998, after she had been "gazumped", the defendant approached the plaintiff's sales manager, Ms Vicki Fisher, and told her: I will sue him. I will not stop at this and I'm going to tell everyone I know what he has done until I destroy him or close his business.

7 Mr and Mrs Gonsalves commenced proceedings in the Equity Division. There was a hearing in late 1998 that culminated in a reserved decision of Young CJ in Eq delivered on 4 December 1998. The proceedings were dismissed. Young CJ in Eq found that the plaintiff "knew that what he was doing was not completely according the Hoyle", but nevertheless acquitted him of the charges of breach of fiduciary duty. This was an unexpected and devastating blow for Mr and Mrs Gonsalves. 8 The judgment was reported in the Sydney Morning Herald on 5 December 1998 and in a local newspaper on 15 December 1998. In each case the report included additional remarks critical of the plaintiff's conduct, attributed to the defendant. The defendant made no bones about her acute sense of (justifiable) grievance about the plaintiff's conduct and its impact in depriving her and her husband of the opportunity to acquire their "dream home". 9 Three claims of defamation were pleaded in the District Court proceedings that give rise to the present application. Each involved the publication of clearly defamatory material to clients of the plaintiff who had listed property for sale in the Alford's Point/Illawong Peninsular area. 10 Each instance of defamation occurred at a time when a For Sale sign was erected in that person's front lawn showing the address of the plaintiff's agency. 11 The first incident occurred in late October or early November 1998. It involved Mr Hoddinet. 12 Mr Hoddinet answered the door bell at his front door. He spoke to a female person whom he had not met before but whom he later identified as the defendant. A dispute at trial as to whether the person was the defendant was resolved in the plaintiff's favour and the finding is no longer challenged. The substance of the conversation (as pleaded) was: I was driving past and noticed the "For Sale" sign on the lawn. I had a previous bad experience with that organisation, and feel obliged to make you aware of the risks you're taking by staying with them as your agents. We retained them to sell our property, and in the process we had a number of most unsatisfactory experiences, particularly in relation to items being stolen during inspections. Subsequent to one visit, conducted by the Manager, I found that some expensive perfume had been taken; and other items had been removed from drawers that had obviously been searched. We have had discussions with them about it, and there is a court case pending. You cannot trust any of them, but the Manager is the worst. He would say and do anything to get what he wants. It was him that went through our house. You would be better off getting another agent as you are running the risk of having difficulties like we experienced. I would certainly not use them again, and you should think carefully about your position.

13 The judgment is not specific as to the terms of the conversation found to have taken place, but it was common ground in this Court that we may proceed on the basis that it was substantially as it had been pleaded. 14 It was also common ground that the statement to Mr Hoddinet carried the following imputations which were defamatory of the plaintiff: (a) that he is a thief, (b) that he is likely to steal from the homes of his customers, (c) that he cannot be trusted and (d) that his customers should have no dealings with him. 15 At the very least, this incident showed that the defendant was "maintaining her rage" in late 1998 and that she was prepared to harm the plaintiff by making false and defamatory statements about him. 16 The defendant had not identified the plaintiff in terms. On appeal she argued that it was not open to the judge to find that the plaintiff had been defamed. This was because he was the owner of the business, not its Manager and because of evidence that there were other "managers" in the business. These persons were employees with the position of "sales manager" and "customer service manager". The Court indicated that it was not disposed to grant leave to appeal on this issue, having regard to the evidence of Mr Hoddinet which showed that he identified the plaintiff as "the principal" (Tr page 3) and "the manager" (Tr page 17) of the real estate agency at the time. This evidence, taken with that of Mr Hoddinet as a whole, clearly supports the conclusion that he reasonably inferred that the defendant was speaking about the plaintiff when she approached him at his front door. Furthermore the "sales manager" and "customer services manager" were females, whereas the object of the defamatory words was male in the conversation pleaded. 17 The second and third incidents occurred in January 1999, ie after the judgment in the Equity Division and the publicity which it generated. 18 Clients of the plaintiff, Mrs Hambly and Mr Stojanovski had their properties at Illawong and Alford's Point respectively listed for sale with the plaintiff. Signs in their front yard clearly identified the plaintiff and his firm as the agents to be contacted in connexion with the sale. Both Mrs Hambly and Mr Stojanovski found packages on their front step or in their letterbox. Each contained a video tape and a note which read: Your estate agent has filed for bankruptcy. Your money is not in safe hands. Call your solicitor and cancel your contract before it is too late. There are many honest agents in the area to help you.

19 The note was undoubtedly defamatory and there is no continuing issue about the identification of the plaintiff as one of the persons defamed by the contents of the packages. 20 The liability issue fought at trial was whether the plaintiff established on the balance of probability that the defendant had published the matter complained of. 21 The defendant did not dispute that she bore a serious grudge against the plaintiff, nor did she assert lack of opportunity to deliver the offending material. She simply swore that she was not responsible for it. 22 This denial was not accepted by the primary Judge, but it is not suggested that its rejection in itself establishes the positive case that the plaintiff had to make. 23 It is curious that the video tape was not put into evidence even though it was marked for identification. Nor was evidence given by Mrs Hambly or Mr Stojanovski about its content or subject matter beyond what may possibly be inferred from a remark of Mr Stojanovski (whose English was less than perfect) which suggested that in some way it referred to the plaintiff. This is something that I would be prepared to infer in any event, given that the tape accompanied the note, but that hardly takes the matter very far. In cross-examination, the defendant agreed that there had been a television program shown in December 1998 dealing with the litigation in the Equity Division between herself and the plaintiff. It is quite possible that the tape was taken from that telecast, but it would be to trespass beyond inference into speculation for this fact to be found, especially in a context where the plaintiff refrained from putting the tape into evidence (cf Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389). In the end, little turns upon this because I could not be satisfied that this would establish the defendant's involvement even if this fact were added to the others upon which the plaintiff relies. 24 The reasoning of the trial judge on the critical issue is expressed in the following terms: 3.2 The Second Defendant I have already indicated that there is no question in my mind of the identification of the Second Defendant by any of the witnesses involved in the defamatory allegations. Whilst Mr Stojanovski may have difficulty in expressing himself, I am comfortably satisfied that the Second Defendant was the person who left the chocolate box with video and defamatory note. I reject the suggestion of the Defence, through the witnesses MacKenzie, Daniel Perkins and Christie Lee Gonsalves that it was more likely Mark Hopper, a disgruntled former employee of the Plaintiff, who distributed the material. Mark Hopper could not be found and did not give evidence. No inferences adverse to either party should be drawn from his absence. Yet the evidence that remains throws up a hint that may have given Hopper a motive and opportunity to distribute the material. I am not satisfied that he did distribute that material. Indeed I am comfortably satisfied that the Second Defendant was the person who, with a vengeful motive, distributed the material, intending to get back at the plaintiff for the hurt he had caused her.

25 The plaintiff properly concedes before us that this reasoning is "not entirely satisfactory". 26 There may be some typographical error in the passage quoted. Alternatively, some confusion may be a product of the history of the trial in the District Court. The hearing took place on 9 June 2000 and 13-14 August 2001. Judgment was reserved to 12 November 2001. (It is however clear that the primary Judge had the benefit of a transcript when he came to deliver judgment.) 27 As will shortly become apparent, the question ultimately turns upon inferences to be drawn from facts which were never in issue or are no longer in issue. The reasoning is deficient because earlier findings in the primary judgment - about which there is no complaint - make it plain that neither Mrs Hambly nor Mr Stojanovski saw the person who delivered the package to their home. There is no direct evidence that it was the defendant or her agent. 28 The parties were entitled to know the reasoning process whereby the conclusion adverse to the defendant emerged by way of inference. The bald language of the passage I have set out might convey to the uninstructed reader that it proceeded in part from an assessment of the sworn testimony of some witness whose evidence on oath was preferred to the defendant's denial on oath. Yet there was no such evidence and it is not suggested that the rejection of the defendant's denial can, in the circumstances of this case, be converted into proof of the contrary proposition. 29 Another unsatisfactory feature of the passage is its capacity to imply that rejection of the defence case (which suggested that the disgruntled former employee Mr Hopper was responsible for the offending material) tipped the scales of probability against the defendant. This may not be what his Honour intended. But it is another unfortunate feature of the reasoning lying at the core of the judgment regarding the second and third incidents of defamation. 30 In light of the well-known principles about the judicial duty to disclose the essential steps in reasoning (see Pettitt v Dunkley [1971] 1 NSWLR 376 and the cases following it) the verdict cannot stand as regards these causes of action. 31 The defendant submits that it is open to this Court to uphold the appeal and enter a verdict in her favour on these causes of action if the evidence is insufficient to sustain them. She further submits that a verdict for the plaintiff is not an available option, because that would involve this Court forming a view on the credibility of the defendant's sworn denial, something which we cannot do with only the transcript to examine. I do not understand the plaintiff to dispute these propositions. I accept them in any event. 32 Should there be a new trial? Or is the totality of the evidence such that this Court on a re-hearing can determine that there is insufficient evidence to establish on the balance of probabilities the critical step in the plaintiff's case? 33 The plaintiff submits that there should be a new trial because the Court could infer that the defendant published the offending material in light of:

(1) the earlier threat by the defendant to Mrs Fisher;

(2) the evidence as to the intensity and duration of the defendant's grudge against the plaintiff and her demonstrated motive to harm him and his business interests;

(3) the fact that all three incidents of defamation could be inferred to have been responsive to the presence of the plaintiff's For Sale signs outside the respective premises; (4) the defendant's willingness to participate in the criticism of the plaintiff through the media (especially in light of her threat made to Ms Fisher in January 1998); and

(5) the Hoddinet incident. 34 As to the Hoddinet incident, it had been common ground at trial that a conclusion adverse to the defendant on that issue was capable of being used in relation to the circumstantial case raised against her concerning the other two incidents. On appeal, the defendant sought to resile from this, contending that s98 of the Evidence Act 1995 precluded such use of the Hoddinet incident. Notwithstanding some debate about the scope and application of s98, I am prepared to assume in the plaintiff's favour that the Hoddinet evidence can also be used to indicate the defendant's preparedness to take her hostility to the level of making false and defamatory statements to the plaintiff's clients with the intent of harming his relationship with them and his reputation generally. The real question is whether the Hoddinet evidence allows one to infer the defendant's agency in publishing to Mrs Hambly and Mr Stojanovski, when added to the other material, assuming its capacity to be used without contravening s98(2). 35 In my opinion, the five matters listed do not provide sufficient evidence to base an inference in the plaintiff's favour that the defendant published the offending material to Mrs Hambly or Mr Stojanovski. Suspicion and inference are different matters. The plaintiff remained on the wrong side of the line between conjecture and "a reasonable basis for a definite conclusion affirmatively drawn" (West v Government Insurance Office of NSW (1981) 148 CLR 62 at 66, citing Dixon CJ in Jones v Dunkel (1959) 101 CLR 298 at 304-5). In so concluding, I particularly observe the different content of the defamatory material published to Mrs Hambly and Mr Stojanovski when compared to what Mr Hoddinet was told by the defendant. 36 In light of this conclusion the verdict for the plaintiff on the counts involving Mrs Hambly and Mr Stojanovski must be set aside and, in lieu, a verdict for the second defendant Mrs Gonsalves should be entered. The award of damages is swept away in the process, not just as a matter of form but also because the primary judge made no attempt to differentiate among the damages flowing from the three separate defamatory publications. If the parties are unable to agree as to those damages there must be a new trial on the issue of the damages flowing from the Hoddinet defamation. As indicated previously, the finding of liability with respect to that Hoddinet defamation remains undisturbed. 37 In these circumstances it is unnecessary to address the defendant's criticisms of the $50,000 damages assessment and the reasoning upon which it is based. One can expect that in a new trial the parties will pay attention to the issues ventilated on both sides during the hearing of this application. 38 Since each party has had partial success in these proceedings I would make no order as to the costs in this Court. 39 I propose the following orders:

1. Grant leave to appeal, except in relation to the publication to Mr Hoddinet.

3. Set aside verdict, judgment and order against the second defendant.

4. In lieu thereof: (i) enter a verdict for the second defendant in relation to the publication to Mrs Hambly and Mr Stojanovski; (ii) order a new trial limited to the damages payable with respect to the publication to Mr Hoddinet; (iii) order that the costs of the first trial and the limited new trial as between the plaintiff and the second defendant are to be determined by the judge hearing the limited new trial.

5. No order as to the costs of the proceedings in the Court of Appeal. 40 BEAZLEY JA: I agree with Mason P. 41 GILES JA: I agree with Mason P.

Last Modified: 03/25/2003 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.