Heartcheck Australia Pty Limited v Channel 7 Sydney Pty Limited

Australian Broadcasting Corporation v O'Neill [2006] 80 ALJR 1672 Bonnard v Perryman 1891 2 Ch 269 CASES CITED : Church of Scientology of California Incorporated v Reader's Digest Services Pty Limited (1980) 1 NSWLR 344 Hemmes v Seven Network Ltd [2000] NSWSC 246 Lincoln Hunt (Aust) Pty Limited v Willessee (1986) 4 NSWLR 457 Redeemer Baptist School v Glossop [2006] NSWSC 1201

PARTIES : Heartcheck Australia Pty Limited v Channel 7 Sydney Pty Limited

COUNSEL : D. Caspersonn (Plaintiff) T. Blackburn SC with R. Hardcastle (Defendant)

SOLICITORS : Paul Bard Lawyers (Plaintiff) Mallesons (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

2007/12639 HEARTCHECK AUSTRALIA PTY LIMITED v CHANNEL 7 SYDNEY PTY LIMITED

JUDGMENT 1 HIS HONOUR: On Friday 25 May 2007 Heartcheck Australia Pty Limited (Heartcheck) obtained an order restraining Channel 7 Sydney Pty Limited (Channel 7) from broadcasting a segment of a proposed television programme entitled Today Tonight until noon on 28 May 2007. On that date the matter was returned before me as Duty Judge. Heartcheck's legal representatives were provided with a viewing of the segment in its then extant form. Consequently, an application was made to amend the originating process by adding a further plaintiff Jacov Vaisman (Vaisman) alleging that certain defamatory imputations concerning him were contained in the intended broadcast. The amendment was permitted. 2 At the conclusion of the hearing I ordered that the previously granted injunction be dissolved and declined to grant similar relief to either plaintiff and indicated that, although the matter was interlocutory, I would publish an outline of my reasons. These are they. 3 I adopt the approach articulated by Hunt J in Church of Scientology of California Incorporated v Reader's Digest Services Pty Limited (1980) 1 NSWLR 344 @ 349 viz: "I accept as settled law that the power to grant interlocutory injunctions in defamation cases must be exercised with great caution, and only in very clear cases. A plaintiff must establish that a subsequent finding by a jury that the matter complained of was not defamatory of him would be set aside as unreasonable; that there is no real ground for supposing that the defendant may succeed upon any defence of justification, privilege or comment, and that he, the plaintiff, is likely to recover more than nominal damages only. In particular, questions of privilege and malice are not normally appropriate to be decided upon an interlocutory application. Nor will an injunction go which will have the effect of restraining the discussion in the press of matters of public interest or concern." 4 Nothing in the subsequent majority judgments in Australian Broadcasting Corporation v O'Neill [2006] 80 ALJR 1672 detracts from the validity of that précis. 5 The action by Heartcheck faced an initial hurdle which in my view was not overcome. The Defamation Act 2005 applied and relevant conditions included: "9 Certain corporations do not have cause of action for defamation (1) A corporation has no cause of action for defamation in relation to the publication of defamatory matter about the corporation unless it was an excluded corporation at the time of the publication. (2) A corporation is an excluded corporation if: (a) the objects for which it is formed do not include obtaining financial gain for its members or corporators, or (b) it employs fewer than 10 persons and is not related to another corporation, …….. (4) In determining whether a corporation is related to another corporation for the purposes of subsection (2) (b), section 50 of the Corporations Act 2001 of the Commonwealth applies as if references to bodies corporate in that section were references to corporations within the meaning of this section." 6 The proviso in subsection (1) legislates an exception to a general rule and in accord with the ordinary canons of statutory interpretation, the onus of demonstrating that the exclusion applied would be on the party asserting it, in this case Heartcheck. 7 Heartcheck sought to rely on s 9 (2)(b). It was not suggested that s 9 (2)(a) could be applicable. On the interlocutory hearing evidence as to the nature of the engagement of persons in Heartcheck's operations was not presented but submissions were made on the basis, without concession on the part of Channel 7, that there were fewer than ten among the large number of medical practitioners and others who were "employed" in the sense of s 9 (2)(b). Were it necessary to express a conclusion, I would be of the same view as Nicholas J in Redeemer Baptist School v Glossop [2006] NSWSC 1201 that the relevant issue is whether or not, as a matter of fact, the number of persons whose services the corporation used in its business were fewer than ten. Section 9 (2) (b) has two requirements, the second being that Heartcheck was not "related to another corporation". 8 Subsection (4) directs attention to s 50 of the Corporations Act 2001 viz: " CORPORATIONS ACT 2001 - SECT 50 Related bodies corporate Where a body corporate is:

(b) a subsidiary of another body corporate; …… the firstmentioned body and the other body are related to each other." 9 An applicable definition of a subsidiary is found in s 46 of which subsection (a)(iii) is relevant: "46. What is a subsidiary A body corporate (in this section called the first body ) is a subsidiary of another body corporate if, and only if: (a) the other body: ……. (iii) holds more than one-half of the issued share capital of the first body (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital)." 10 The evidence is that there are a total of one hundred shares issued in Heartcheck. There are no other issued shares. A corporation (Direct Management Consultants Pty Limited) holds sixty five shares thus fulfilling the requirement in s 46 (a)(iii) of the Corporations Act. The parenthetical exclusion in s 46 (a)(iii) cannot be applicable as all one hundred shares are similarly held, the balance in parcels of twenty five and ten shares respectively, by other corporations. The exclusion would operate in respect of shares to which voting rights did not attach but all one hundred total issued shares are similarly held. A corporation cannot operate unless shares with voting rights attached exist, and it follows that these one hundred shares must have such rights. 11 The consequence of this tracing is that Heartcheck is deprived of a cause of action by s 9 (1) of the Defamation Act because it is not an excluded corporation. This opinion is, of course, expressed in the context of an interlocutory application and as one of the reasons contributing to the decision to refuse to continue injunctive orders and not for final judgment. 12 In closed court, in the form in which it then was, the intended segment was played and I have viewed it. It is not appropriate because I did not hear argument upon it to determine provisionally whether the subject matter (assuming it is later published in the same form) is capable of sustaining the imputations asserted by Vaisman. It suffices to operate upon an assumption. 13 What is plain is that there is currently public interest about the subject of the matter complained of which is, in brief, the attraction of patients by advertising and other means to undergo medical examination of particular kinds, the appropriateness of such examinations and the charging for these to the public purse by way of the Medicare scheme. The proposed segment includes comment expressing concern about these matters by the Federal Minister for Health and a medical professor speaking on behalf of Australian and New Zealand cardiologists. 14 Insofar it may be hypothesized that, if broadcast, there was publication of defamatory imputations as asserted in the amended summons, I consider that there is no reason to regard potential damages as an inadequate remedy in this case. 15 The discretion to grant injunctive relied is required to be exercised with great caution and only in very clear cases: Bonnard v Perryman 1891 2 Ch. 269. I perceive it would amount to a high level of interference with the right of the community in general to discuss and be informed of the matters of concern above described to restrain discussion in the media of them. 16 I should record that counsel for the plaintiffs referred me to the decision in Hemmes v Seven Network Limited [2000] NSWSC 246 where an injunction was granted. That case is distinguishable from the present in many respects not the least being the focus upon intended publication of allegations of paternity relating to a single person, whereas the instant matter involved the wide advertising of activities and hence focus upon the interests of a multitude of potential patients who might be attracted to use Healthcheck's services. 17 I did not find it necessary to explore theoretical issues as to imputations and defences in the light of my conclusion for the reasons above expressed that the present case is far distanced from being in the category of the clear case where interlocutory injunctive relief should be granted. 18 The defendants sought costs of the interlocutory hearing and it was agreed that I should deal with these when these reasons were published. 19 Counsel for the plaintiff submitted that some guidance could be obtained from Lincoln Hunt (Aust) Pty Limited v Willessee (1986) 4 NSWLR 457 where, refusing an interlocutory injunction against feared trespass, Young J referred to the "ordinary rule" that costs of such application should be costs in the cause. I note the statement by the solicitor for Channel 7 in his affidavit that it is his client's intention to defend any defamatory imputations which may be published on the basis of truth and comment. As above stated I did not find it necessary in this case to make provisional assessments in those regards. In all the circumstances, I consider it appropriate that costs be costs in the cause. 20 Formally then, I publish the reasons for my orders made on 28 May and I order that the costs of the interlocutory proceedings be costs in the cause. ` **********

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