HARVEY v JOHN FAIRFAX PUBLICATIONS PTY LIMITED

Court of Appeal (NSW)|2003-02-07|Before: Mason P, Sheller JA, Ipp JA, Kirby J, Bell J, Samuels JA

CITATION : HARVEY v JOHN FAIRFAX PUBLICATIONS PTY LIMITED [2003] NSWCA 70 HEARING DATE(S) : 7 February 2003 JUDGMENT DATE : 9 April 2003

JUDGMENT OF : Mason P at 1; Sheller JA at 35; Ipp JA at 36 DECISION : Appeal allowed in part. For further orders see par 34.

CATCHWORDS : Defamation - jury rejects all pleaded imputations - appeal - whether findings perverse - extent of new trial (ND) PARTIES : John HARVEY v JOHN FAIRFAX PUBLICATIONS PTY LIMITED FILE NUMBER(S) : CA 40721/01 COUNSEL : Appellant: B R McClintock SC Respondent: T D Blackburn/ A T S Dawson SOLICITORS : Appellant: Carneys Lawyers Respondent: Freehills

LOWER COURT Supreme Court - Common Law Division JURISDICTION : LOWER COURT SC 0002/98 FILE NUMBER(S) : LOWER COURT Kirby J JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40721/2001 CLD 20002/98

MASON P SHELLER JA IPP JA

HARVEY v JOHN FAIRFAX PUBLICATIONS PTY LTD JUDGMENT 1 MASON P: The Court is called upon to determine if a defamation verdict should be set aside because of unreasonable findings by a jury. 2 A lengthy article highly critical of the appellant was published in the Sydney Morning Herald on 20 September 1997. The heading, placed adjacent to a picture of Elle Macpherson, was THE MAN WHO SANK ELLE. The extended byline read: What do a beautiful supermodel, three premiers, 30 racing car drivers and millions of taxpayers have in common? They all wished they had never heard of a man named John Harvey. BEN HILLS explains.

3 The plaintiff pleaded five defamatory imputations. Bell J upheld three of them and struck out two, with leave to replead (Harvey v John Fairfax Publications Pty Ltd [2000] NSW SC 337). Those two imputations were pleaded afresh and all five imputations went to the jury at a trial under s7A of the Defamation Act 1974 presided over by Kirby J. 4 The questions put to the jury and answered in the negative were: 1. Has the Plaintiff (John Harvey) established that the matter complained of (that is, the 20 September 1997 Sydney Morning Herald article) conveyed the following imputations to the ordinary reasonable reader (or any imputations which are not substantially different from them): (a) The Plaintiff, in his operation of a farm, endangered public health. (b) The Plaintiff had so seriously mismanaged two companies of which he was a director as to make them insolvent. (c) The Plaintiff had behaved in so bad a manner as an employee of the NSW Premier, Nick Greiner, as to warrant his peremptory dismissal by Mr Greiner. (d) the Plaintiff had defrauded the company of which he was a director of $170,000. (e) The Plaintiff dishonestly refused to pay his just debts.

5 The jury did not answer the ensuing questions about the defamatory nature of the imputations. 6 A verdict and judgment in favour of the defendant with costs was then entered by Kirby J. 7 It is not suggested that the jury were misdirected. And there is no issue as to the legal standard to be applied by this Court in determining whether the answers were perverse and unreasonable. The appellant accepts that he must establish that the findings about the imputations were ones to which no reasonable person could have come (see generally Rivkin v John Fairfax Publications Pty Ltd [2002] NSW CA 87). The jury must be allowed great latitude, but if the case impugning the verdict is "clear and beyond argument" (Cairns v John Fairfax & Sons Ltd [1983] 2 NSWLR 708 at 716-7 per Samuels JA, citing Broome v Agar (1928) 138 LT 698 at 702 ) then the verdict may be set aside. 8 The heading and byline are sufficient to show that the article was an out and out attack on the appellant. That of course did not make it defamatory. 9 The alleged imputations must be considered in the context of the whole article (Greek Herald Pty Ltd v Nikolopoulos (2002) 54 NSWLR 165).

Imputation (a): The Plaintiff, in his operation of a farm, endangered public health. 10 The plaintiff relied upon the introductory material and the following paragraphs (emphasis added): 5. But it is the third part-owner who has been in the spotlight recently. John Thomas Harvey, former turkey farmer , dentist and guesthouse proprietor, confidant of premiers, consultant to some of the country's biggest businesses and sports promoter extraordinaire, must be wondering whether there is a curse attached to the Anitra-May after two of the companies of which he was a director went into liquidation and a third became embroiled in an ugly legal dispute. ….

Ian Lumsden, general manager of the local Yass Shire Council, says that Harvey was running about 1,000 turkeys in a paddock adjacent to the hotel and "it became a health issue because the residents got upset about the feathers blowing everywhere and turkey s--- getting into the creek". The Council took him to court and "we must have won because the turkeys disappeared". 12. Harvey was also a loser in his election campaign, but impressed the party nabobs sufficiently to be appointed Federal director of the NCP, the youngest in the party's history.

11 The appellant submits that this material incontrovertibly conveyed that: - the plaintiff was formerly a turkey farmer - he ran about 1000 turkeys in a paddock - his operation "became a health issue because the residents got upset about the feathers blowing everywhere and turkey s--- getting into the creek" - the Yass Shire Council took the plaintiff to court over the issue and won, thereby causing the turkeys to be removed. 12 I agree with this analysis. And I accept the appellant's further submission that the words quoted make it plain that the council-initiated litigation related to air and water pollution, as distinct from a mere town planning dispute. It does not presently matter whether the proceedings were asserted to be criminal or civil. 13 The respondent submits that it was open to the jury to conclude that the article did not impute that the appellant had actually endangered public health, this being the nub of the pleaded imputation. The article was reasonably capable of being seen as merely stating that the council simply responded to agitation from residents who were upset about the turkeys in the paddock and their proximity to the creek. 14 I cannot accept the respondent's submission, which ignores the particulars that the "health issue" involving air and water pollution was the cause of public upset which triggered the proceedings. The respondent's submission also fails to address the impact of the statements about the council having won the proceedings. In a nation subject to the rule of law one would not lightly infer that a journalist was suggesting that a court responded to no more than outraged public opinion. 15 Alternatively, the respondent submitted that the tone was whimsical and that Mr Lumsden's reported comments indicated that he saw the whole affair as slightly comical and somewhat trivial. It was a bureaucrat rolling his eyes at the ratepayer's provocation that had demanded court action. This submission must also be rejected in light of what I have already written. It really touches the issue of damages as distinct from the imputation conveyed by the article. 16 In my view, it was "clear and beyond argument" that the imputation was conveyed. It was not reasonably open to the jury to decide otherwise.

Imputation (b): The Plaintiff had so seriously mismanaged two companies of which he was a director as to make them insolvent. 17 The plaintiff relied upon paragraphs 5, 7, 18, 31-37, 38-48 of the article (emphasis added): 5. But it is the third part-owner who has been in the spotlight recently. John Thomas Harvey, former turkey farmer , dentist and guesthouse proprietor, confidant of premiers, consultant to some of the country's biggest businesses and sports promoter extraordinaire , must be wondering whether there is a curse attached to the Anitra-May after two of the companies of which he was a director went into liquidation and a third became embroiled in an ugly legal dispute. 7. Nor was there any vestige of the political wheeler-dealer who, for more than a decade, had the ear of some of the most powerful conservative politicians in the country - the former Federal Liberal leader Andrew Peacock and NSW premier Nick Greiner, for whom he worked; Victorian Premier Jeff Kennett and WA Premier Richard Court, from whom he wheedled more than $2million of taxpayers' money for sports promotions that ultimately flopped. 18. The most expensive memorial to Harvey's two years as the premier's right-hand man is the Eastern Creek raceway, for which Harvey justifiably claims credit. What began as a prestige project to capture a Grand Prix event for NSW without costing the taxpayer a cent ended up a fiasco devouring $90 million of public money and badly damaging Greiner's reputation for good management. 31. The venture that landed Harvey in the witness box of the Supreme Court last month was his next unsuccessful attempt to break into big-time sports promotion - a series of races between small Suzuki racing cars, staged in conjunction with nine race meeting around Australia in 1995. 32. The idea, actually, came from Neville Crichton, the governing director of Ateco Suzuki, the NSW distributor of the Japanese cars, and it was intended to give budding drivers a chance to break into racing. The drivers themselves would finance the event - 31 of them were recruited, each paying $30,000 in entry fees, which entitled them to keep the cars at the end of the series. 33. Crichton contracted a company called International Sports Services Pty Ltd (ISS) to promote and run the races. ISS was owned by Harvey and two friends. Bill O'Gorman (an entrepreneur who says he first brought Grand Prix racing to Australia) and Tim Michael, a former journalist and ministerial advisor whom Harvey had met while he was working for Greiner. 34. The three had planned to make "a modest profit" out of the exercise - and, indeed, at one stage the company had close to $1million in the bank. Extraordinarily, just a few months later, ISS hit a cash crisis , bills mounted up, the Confederation of Australian Motor Sport concelled the licence to run the event the following year, and O'Gorman and Michael had an administrator appointed. The company is now in liquidation with debts of more than $250,000 and no realizable assets that the liquidator has yet been able to find. 35. Crichton says that Ateco Suzuki had to bail the event out by paying tens of thousands of dollars in prize money unpaid by ISS. "The bills were not paid, the rules were changed; it was an absolute disaster", he fumes. "We went into it for the good of the sport and finished up with egg all over our face and involved in a massive legal battle we did not need." 36. Harvey's examination, instigated by the liquidator, attempted to get to the bottom of one key dispute in the fall of ISS - Harvey's withdrawal from the company, in June 1995, of two cheques totalling $170,000. Those cheques were paid to Ken Jarrett and a company controlled by Michael Sissian and were the price Harvey paid for his one-third share in the Anitra-May.

Harvey told the court that this was either money the company owed him, or an advance - and that his two co-directors were well aware of what he intended to do with it. This, Michael at least denies; he told the liquidator he signed a blank cheque (ISS cheques required two directors' signatures) and had no idea the money was to be spent on a yacht. The liquidator is still trying to decide what, if anything, should be done. 38. "Someone rings me up and asks me the name of my daughter's manager - what am I supposed to do?" Peter Gow, property developer, Cronulla Sharks rugby league president and father of Elle Macpherson, bristles at the suggestion that he played any part in arguably the most embarrassing episode of her brilliant career. 39. Gow has used John Harvey as a consultant on "a number of projects" and is one of the few people who still stick by him - but he denies he used his influence to bring him and Elle together. "He's a very entrepreneurial person", Gow says. "I feel he has been very malaligned [sic] over the whole thing". 40. It was just last November, with an election campaign about to get into full swing, when a beaming West Australian Premier, Richard Court, announced that Elle had agreed to lend her name to a WA entry in the Whitbread yacht race - and the rest of her to an $8million international advertising campaign for the WA Tourist Commission. "Elle perfectly complements the new Brand WA: fresh, natural and free-spirited", he gushed. 41. In fact, the ink was barely dry on the contract between the WATC and a company called Elle Racing Pty Ltd - the first two cheques, totaling $300,000, were given to the company on November 14, the day the election was called. But who exactly was behind Elle Racing Pty Ltd? 42. Company records show that it had a paid-up capital of just $11, and on that date there were three directors - John Harvey, his daughter Jayn, and his friend Andrew Buckland. There is no mention of Elle, though she was referred in publicity as "company president". 43. And there is also no corporate record of the "R Dixon" who countersigned the contract on the company's behalf. This turns out to be Roslyn Dixon, an accountant who was lodging at Harvey's house in Stanmore and who claims she was a director of the company at the time. Her appointment was not registered with the Australian Securities Commission, as required by law, "because I was in and out so quickly - I resigned about a week later". 44. A spokesman for the WATC (Court has now put a glacial distance between himself and the project) conceded that "with hindsight we should have made more checks" - on Harvey's commercial record and on the substance of the company. Because like a number of ventures with which Harvey has been associated, the project has now fallen in a heap . 45. The WA Government agreed to pay $1million - $600,000 was to go to Elle to star in the tourism commercials and $400,000 to a syndicate that Harvey said would raise the $12million needed to enter an all-woman crew in the Whitbread marathon. Only $540,000, however, had been handed over before the WATC tore up the contract on the ground of non-performance, and at Macpherson's direction the money went to Elle Racing. 46. "Elle herself never received a cent, as far as I know", says Patti Mostyn, her Australian agent. "She did everything she was contracted to do, and all we got was a lot of grief." 47. So what happened to the money? Some went to pay the crew Harvey hired for the challenge, though (they say) not enough - the trial yacht was "arrested" in Sydney when they claimed more than $100,000 in back pay and expenses. Some went to McConaghy's famous boatyard in Mona Vale, where the half-built Elle boat, which should have been launched last March, is now begging for a buyer to complete it, at a cost of a cool $1million. 48. Elle Racing Pty Ltd also settled a couple of private debts owed by Harvey. Tim Michale has one company cheque, signed by Harvey, for $1,000 - part payment of an unfair dismissal settlement. A solicitor representing Marie Faull, his ex-lover, received another Elle Racing cheque, for $2,124.21, to settle a court judgment against Harvey involving some of Faull's property he failed to return after they separated. 18 The appellant correctly observes that this material states that two companies of which he was a director had gone into liquidation, these being International Sports Services Pty Ltd (ISS) and Elle Racing Pty Ltd. 19 He further submits that the material imputes that insolvency led to the liquidation of the companies. I am prepared to assume the correctness of this proposition. 20 But the vital gap in the appellant's argument is the submission that it was perverse of the jury not to find that the article conveyed the imputation that both insolvencies stemmed from the appellant's serious mismanagement. There is definitely a whiff of this, but it is nowhere stated in terms. Nor is it implied by language obliging the jury to draw such an implication. It should also be observed that that the article makes it plain that the appellant was not the sole director of ISS or Elle Racing Pty Ltd.

Imputation (c): The Plaintiff had behaved in so bad a manner as an employee of the NSW Premier, Nick Greiner, as to warrant his peremptory dismissal by Mr Greiner. 21 The plaintiff relied upon paragraphs 17-19 and 22 which should be set out (emphasis added) : 17. Ken Hooper, Greiner's long-standing press secretary, says Harvey performed well as an "advance man" and was a "technological whiz", bringing the campaign into the electronic age by introducing mobile phones and faxes and other gadgetry. When Greiner won the election, his gadget man was appointed principal private secretary. Hooper and others on Greiner's staff say it was "the worst decision we ever made" .

The most expensive memorial to Harvey's two years as the premier's right-hand man is the Eastern Creek raceway, for which Harvey justifiably claims credit . What began as a prestige project to capture a Grand Prix event for NSW without costing the taxpayer a cent ended up a fiasco devouring $90 million of public money and badly damaging Greiner's reputation for good management .

Harvey became increasingly overbearing as the controversy dominated the headlines. "He and I clashed so many times it was like open warfare", says Hooper. "He's 6ft 3in and I'm only 5ft 8in but I remember once when he had been dynamiting me in the media I threatened to stand on a chair and knock his block off."

Eventually, things came to a climax. Hooper was sitting in Greiner's office one day when Harvey burst in and told his boss: "He's got to go, Nick. Either he [pointing at Hooper] goes or I do." Greiner, who had been writing at his desk, looked up and said: "John, would you collect your things on the way out and leave the car keys on the desk." Harvey turned white, spun on his heel, and walked out. 22 These paragraphs clearly support the imputation that the appellant's "employment" as principal private secretary was peremptory terminated. But the nub of the pleaded imputation is that this was a sacking which stemmed from the plaintiff's bad behaviour. Once again, the appellant's contention is suggested by the generally hostile tone of the article. Nevertheless, it was well open to the jury to accept the submission that the Premier took the opportunity which was presented by the appellant's agitated ultimatum. 23 The appellant submits that any reasonable reader knows that employees are only sacked on the spot if they have behaved in an extremely bad way. But the inference of "sacking" is problematic and the appellant's reasoning is circular. An alternative hypothesis appears on the face of the article: the appellant offered Mr Greiner two swords, one of which was pointed in his own direction, and thereby relieved the Premier of the need to consider a more drastic basis for solving an obviously difficult situation.

Imputation (d): The Plaintiff had defrauded the company of which he was a director of $170,000. 24

The plaintiff relied on paragraphs 36 and 37: 36. Harvey's examination, instigated by the liquidator, attempted to get to the bottom of one key dispute in the fall of ISS - Harvey's withdrawal from the company, in June 1995, of two cheques totalling $170,000. Those cheques were paid to Ken Jarrett and a company controlled by Michael Sissian and were the price Harvey paid for his one-third share in the Anitra-May.

Harvey told the court that this was either money the company owed him, or an advance - and that his two co-directors were well aware of what he intended to do with it. This, Michael at least denies; he told the liquidator he signed a blank cheque (ISS cheques required two directors' signatures) and had no idea the money was to be spent on a yacht. The liquidator is still trying to decide what, if anything, should be done. 25 The appellant submits that these paragraphs contain a specific allegation, virtually in terms, that the appellant embezzled $170,000 from ISS. The "bane" of paragraph 36 is not removed by the qualified "antidote" of paragraph 37. 26 The respondent submits that the article reports an assertion by the appellant of facts which are inconsistent with an imputation of fraud, together with a statement attributed to the liquidator to the effect that the critical truth of the position was yet to be decided. In these circumstances, it was fairly arguable that the article did not contain the pleaded imputation. 27 I accept the respondent's submission.

Imputation (e): The Plaintiff dishonestly refused to pay his just debts. 28 Paragraphs 20 and 21 are relied upon: 20. The turkeys, too, returned to rear their ugly heads. Hooper says that Harvey was in continual dispute with local tradespeople in the Yass area, and on one occasion a supplier obtained a garnishee on his wages over some unpaid-for turkey feed .

"He had all sorts of excuses - the feed was not delivered; it was wet; it was full of weevils; he wasn't going to pay- but at the end of the day we convinced him it wouldn't look too good if it got into the media, and it was quietly settled." 29 The appellant submits that any reasonable reader knows that a garnishee order is only issued after a failure to pay a debt resulting in a judgment which itself is unsatisfied. Here it was reported that it was for "unpaid-for turkey feed". The word "excuses" is necessarily pejorative and suggests that the appellant was evading payment of his debts by making spurious excuses. The article does not leave open mere forgetfulness or lack of funds as possible explanations for the failure to pay. 30 I do not accept this submission or the conclusion that it was not open to the jury, acting reasonably, to reject the imputation. The passage was capable of suggesting that the appellant was stubborn and unreasonable as regards his alleged financial obligations. But the jury were not bound to find that it imputed dishonesty in refusal to pay just debts. The suggestion is there, but the jury was entitled to reject the pleaded imputation.

Disposition 31 The appellant seeks only a new trial (cf Charlwood Industries Pty Ltd v Brent [2002] NSWCA 201 at [60]-[69]). The respondent strongly supports this outcome if perversity be established. 32 The appellant argues that established perversity in relation to a single imputation would entitle him to a new trial on all imputations. This proposition cannot be accepted. The authorities relied upon (Rivkin and Trustees of the Roman Catholic Church v Hogan (2001) 53 NSWLR 343) are distinguishable. In Rivkin, there was an inexplicable persistency in a series of unreasonable answers by the jury (see at [112]). In Hogan, there was a real chance that the error which affected the jury verdict in relation to one aspect of damages affected their conclusions on another aspect of damages. In other cases, a general new trial may be ordered because of material indicative of a jury compromise (see the discussion in Charlwood at [52]-[54]). 33 In the present case, only one finding has revealed real cause for concern and there is nothing about it that suggests cross-infection. 34 I propose the following orders:

Set aside the verdict and costs order entered by Kirby J.

Costs of the jury trial before Kirby J to be determined by the judge hearing the new trial.

Respondent to pay appellant's costs of the appeal, but to have a certificate under the Suitors' Fund Act 1951, if qualified. 35 SHELLER JA: I agree with Mason P. 36 IPP JA: I agree with Mason P. **********

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