Hunt Australia Pty Ltd v Davidson's Arnhemland Safaris

Findings at Trial 16 The primary judge found, concerning the claim that the Minister had "asked us to pass on the information" contained in the Minister's letter: "…it was a falsehood deliberately made with the intention of causing harm to Mr Penfold and his business …" Mr and Mrs Davidson also attended a hunting show in Dortmund, Germany, in January 1995, and his Honour found that: "…they deliberately took copies of the letter for the express purpose of distributing it in the hope of thereby damaging the business of Hunt Australia and Mr Penfold." 17 The claim against Davidson's Safaris and Mr and Mrs Davidson pursuant to s 52 of the Trade Practices Act alleges that the Minister's letter contained material that was misleading or deceptive, and that their conduct in distributing the letter contravened s 52 of the Trade Practices Act. The materials said to be misleading and deceptive were pleaded to be: " …words to the effect that: 15.1 hunting in Arnhemland and for Banteng on Coburg Peninsula in Gurig National Park could only be accessed through bona fida licensed hunting safari operators … 15.2 Penfold and the Applicant could not be engaged by consumers to access hunting in Arnhemland and for banteng on Coburg Peninsula in Gurig National Park …" 18 The appellant at first instance pleaded that the words were misleading or deceptive in that: "…Penfold and the Applicant were in fact eligible to arrange and capable of arranging access to hunting both in Arnhemland and for banteng on Coburg Peninsula in Gurig National Park." 19 The primary judge found that: "Mr Penfold has the capacity to be devious" and that: "…he is a dogmatic man with a very aggressive personality. I can easily understand that he would be a person who offends others easily and without concern for those whom he offends."

THE APPEAL 20 The primary judge found that there was nothing in the Minister's letter that was misleading or deceptive or that was likely to mislead or deceive. His Honour found: "Properly understood, the Minister's letter was an accurate statement of the position relating to licensed safari tour operators in Arnhemland and the Coburg Peninsula." The appellant's contention is that this finding was wrong. 21 The crucial sentence of the letter is: "Mr Bob Penfold from Hunt Australia has currently no rights to operate in either of these two areas, which can only be accessed through the above bona fide licensed hunting safari operators." The appellant accepts that the first limb of that sentence is correct, namely, "Mr Bob Penfold from Hunt Australia has currently no rights to operate in either of these two areas". It is submitted that what follows is inaccurate because, for instance, if people in Europe contacted Mr Penfold, he could arrange through one of the named licensed operators for those European hunters to enter and hunt in the area: in short, the appellant submits that that sentence asserts that the two areas described cannot be accessed through Bob Penfold of Hunt Australia. The contention by the appellant is that the sentence, on its proper interpretation, meant "you can't get access if you go to Mr Penfold". However, the second aspect of that sentence, in our view, simply means what it says, namely, to access the two areas, one has to avail oneself of the services of the specified licensed hunting safari operators. 22 In our view, the conclusion of the primary judge that "there was nothing in the Minister's letter that was misleading or deceptive" was right, and we agree that "Properly understood, the Minister's letter was an accurate statement of the position relating to licensed safari tour operators in Arnhemland and the Coburg Peninsula". 23 The appeal must be dismissed with costs. It follows that it is unnecessary to consider the notice of contention seeking to challenge the quantification of damages for what was alleged to be misleading and deceptive conduct.

THE CROSS APPEAL 24 Apart from the appropriateness of the costs order, the cross appeal essentially is directed at four issues. The first is the question of whether the Federal Court had jurisdiction in the circumstances to entertain the defamation claim of the applicant. The second issue is whether the defamation found by the primary judge could, given its terms, be defamation of the corporate applicant, and whether the corporation could recover damages in respect of that particular defamation. The third issue concerns whether the primary judge was correct in dismissing the defence of qualified privilege on the basis of malice in the circumstances of the conduct of the case, including the pleadings. The fourth issue concerns the quantum of the award for defamation.

Jurisdiction of the Federal Court 25 The cross appellant claimed before the primary judge that the defamation action was not "associated with the Trade Practices claim and was not otherwise within the Federal Court's jurisdiction". That submission was repeated before us. The simple submission by the cross appellant is that the claim for damages for defamation is not a claim within the original jurisdiction of the Federal Court and is not within the Court's "accrued" or "associated" jurisdiction pursuant to s 32 of the Federal Court of Australia Act 1976 (Cth). 26 The question of whether a claim is within the jurisdiction of the Federal Court was the subject of observations by Mason J (with whom Stephen J agreed) in Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 at 512: "Once it is accepted, as it must be, that there is no special magic in the scope of those matters which involve the interpretation of the Constitution, the lesson to be learned from the authorities is that the Court having jurisdiction to determine a matter falling within ss 75 and 76 giving rise to the exercise of federal jurisdiction has jurisdiction to decide an attached non-severable claim. The classification of a claim as 'non-severable' does not necessarily mean that it is, or must be, united to the federal claim by a single claim for relief, though this is a common illustration of a non-severable claim. The non-severable character of the attached claim may emerge from other aspects of the relationship between the federal and the attached claim. For example, it may appear that the resolution of the attached claim is essential to a determination of the federal question. Likewise, it may appear that the attached claim and the federal claim so depend on common transactions and facts that they arise out of a common substratum of facts. In instances of this kind a court which exercises federal jurisdiction will have jurisdiction to determine the attached claim as an element in the exercise of its federal jurisdiction." 27 As to the application of that principle in the particular circumstances of a case, the majority of the High Court - Mason, Murphy, Brennan and Deane JJ - in Fencott v Muller (1983) 152 CLR 570 said, at 607: "Perhaps it is not possible to devise so precise a formula that its application to the facts of any controversy would determine accurately what claims are disparate and what claims are not. Whatever formula be adopted as a guide - and the formula of 'common transactions and facts' is a sound guide for the purpose - it must result in leaving outside the ambit of a matter a 'completely disparate claim constituting in substance a separate proceeding' (per Barwick CJ in Felton v Mulligan [(1971) 124 CLR at 373]), a non-federal matter which is 'completely separate and distinct from the matter which attracted federal jurisdiction' (per Murphy J in Philip Morris [at 521]) or 'some distinct and unrelated non-federal claim' (per Stephen, Mason, Aickin and Wilson JJ in Moorgate Tobacco [(1980) 145 CLR at 482])." 28 It was submitted by counsel for the cross-appellant, Mr N.J. Henwood, that the most expansive view of the "accrued jurisdiction" of the Federal Courtappears from the judgment of the majority in Stack v Coast Securities (No. 9) Pty Ltd (1983) 154 CLR 261, where Mason, Brennan and Deane JJ said at 294: "The first limb of s 86, being an exercise of the powers conferred by the constitutional provisions to which we have referred, must be read in the light of them. So read, it confers jurisdiction on the Federal Court to determine the non-federal aspects of a single justiciable controversy of which the issues raised under the Act form an integral part. There are two constituent elements in the jurisdiction which is thereby conferred: the first element comprises the federal issues which arise for determination under the federal law, eg, the issues which arise in these cases under ss 52, 53(aa) and 53A of the [Trade Practices]Act and damages for contravention; the second element comprises the non-federal issues, the suggestion here being that the issues arising in the actions for specific performance in the Supreme Court are non-federal aspects of a single controversy of which the federal issues form an integral part. For want of a better term it is convenient to refer to this second element as 'accrued jurisdiction'. In this, as in other cases, the recurrent problem is to identify what it is that falls within the Federal Court's accrued jurisdiction. The majority judgment in Fencott v Muller [(1983) 152 CLR at 608] provides this assistance in reaching an answer: 'What is and what is not part of the one controversy depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships. The scope of a controversy which constitutes a matter is not ascertained merely by reference to the proceedings which a party may institute, but may be illuminated by the conduct of those proceedings and especially by the pleadings in which the issues in controversy are defined and the claims for relief are set out. But in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and within the ambit of a matter'." 29 The question in the present case is whether the federal claim under the Trade Practices Act and the non-federal claim in defamation are "within the scope of one controversy". 30 In this case the defamation claim is not "a completely disparate claim constituting in substance a separate proceeding", nor is it "a non-federal matter which is completely separate and distinct from the matter which attracted federal jurisdiction". The claim for defamation arises out of the first letter in a series of correspondence fuelled by the mutually acrimonious relationship between the parties. The claim in defamation is based on assertions in the Davidsons' first letter to the Minister, which requests his "assistance" concerning the competence of Hunt Australia to engage in its business. It is the dissemination of the requested response from the Minister which founds the federal claim. It was well open to the primary judge to conclude, "as a matter of impression and practical judgment", that there was a common substratum of facts, and that the non-federal defamation matter was not "completely separate and distinct" from the Trade Practices Act matter. 31 There was no application for leave to appeal the decision of the primary judge in 1997 declining to strike out the defamation claim as being not part of a single controversy. That fact merely underlines our conclusion that the primary judge was correct, in the circumstances of this case, to decline to strike out the claim in defamation.

Qualified Privilege 32 The cross appellant submitted that Hunt Australia did not raise the answer of malice to the respondents' defence of qualified privilege in its pleadings, in breach of its obligations under O11 r10 of the Federal Court Rules, and that the trial judge should have rejected the appellant's submissions in relation to malice. The respondents before the primary judge had submitted that since the applicant had not raised the issue of express malice on the pleadings, it was not then open to the applicant to deny the defence of qualified privilege. The primary judge said: "I am not prepared to accept that submission; the issue of malice was alive at a very early stage in these proceedings. It was self-evident that it was the applicant's answer to the defence." 33 Issues between parties are to be determined not on some technical pleading basis, but on the realities of how the parties conducted the litigation and on the basis of what was, in truth, in issue between them. It was therefore open to the trial judge to find malice, so as to defeat the claim of qualified privilege. 34 Lord Diplock described the circumstance in which a claim to qualified privilege will be defeated by malice, in Horrocks v Lowe [1975] AC 135 at 149: "The public interest that the law should provide an effective means whereby a man can vindicate his reputation against calumny has nevertheless to be accommodated to the competing public interest in permitting men to communicate frankly and freely with one another about matters in respect of which the law recognises that they have a duty to perform or an interest to protect in doing so. What is published in good faith on matters of these kinds is published on a privileged occasion. It is not actionable even though it be defamatory and turns out to be untrue. … It is lost if the occasion which gives rise to it is misused. …In all cases of qualified privilege there is some special reasons of public policy why the law accords immunity from suit - the existence of some public or private duty, whether legal or moral, on the part of the maker of the defamatory statement which justifies his communicating it or of some interest of his own which he is entitled to protect by doing so. If he uses the occasion for some other reason he loses the protection of the privilege. So, the motive with which the defendant on a privileged occasion made a statement defamatory of the plaintiff becomes crucial." His Lordship described "express malice" as the term of art descriptive of the dominant and improper purpose which defeats the privilege. He continued: "…it means malice in the popular sense of a desire to injure the person who is defamed and this is generally the motive which the plaintiff sets out to prove. But to destroy the privilege the desire to injure must be the dominant motive for the defamatory publication …" 35 Here, the cross appellant submitted that the communication was motivated by a request from Mr Higgins of the Northern Land Council, as well as the respondents' own legitimate interests, and that Mrs Davidson genuinely believed the truth of the defamatory communication. 36 These submissions cannot stand against his Honour's finding, clearly open to him on the evidence before him, that Mrs Davidson's "dominant purpose in writing the letter was to cause harm to her competitor". His Honour also found that "Mr Higgins played no part in the composition of the letter nor its choice of language …" and that "he did not act with malice".

Defamation of Corporation 37 The cross appellant contends that the reference to Mr Penfold in the Davidsons' first letter did not amount to defamation of Hunt Australia and in any event, Hunt Australia can only recover damages for financial loss or damage in the way of its business, and the defamation complained of did not damage the appellant in the way of its business. 38 In Australian Broadcasting Corporation v Comalco Ltd (1986) 12 FCR 510, Neaves and Pincus JJ held that Comalco was entitled to be awarded compensatory damages for the injury to its reputation in the way of its trade or business, but as a body corporate it could receive nothing by way of solatium. The damages to be awarded are a recompense for harm measurable in money. 39 In Bognor Regis UDC v Campion [1972] 2 QB 169, Brown J said at 175: "Just as a trading company has a trading reputation which it is entitled to protect by bringing an action for defamation, so in my view the plaintiffs as a local government corporation have a 'governing' reputation which they are equally entitled to protect in the same way … I entirely accept the statement made in Gatley on Libel and Slander, 6th ed. (1967), p. 409, para. 890: 'A corporation or company cannot maintain an action of libel or slander for any words which reflect, not upon itself, but solely upon its individual officers or members.' Then there is a quotation: 'To merely attack or challenge the rectitude of the officers or members of a corporation, and hold them or either of them up to scorn, hatred, contempt, or obloquy for acts done in their official capacity, or which would render them liable to criminal prosecution, does not give the corporation a right of action for libel.' I stress the words 'solely' and 'merely' in those passages." 40 So, too, in Bargold Pty Ltd v Mirror Newspapers Ltd & Anor [1981] 1 NSWLR 9, Hunt J said at 10: "The article identifies the plaintiff company as being the 'latest venture' of Mr Alexander Barton who, it is said, runs the company with his son, Thomas Barton. A great deal of attention is paid by the article to Mr Alexander Barton personally. It is argued by the defendants that matter disparaging of Mr Barton is irrelevant to the question of what is disparaging of the plaintiff company. I accept that, where such matter reflects solely upon a director or an officer of a company, the company itself cannot complain of its publication, but the emphasis must be placed upon the word 'solely': Bognor Regis Urban District Council v Campion [1972] 2 QB 169 at p. 175. However, an imputation concerning such a director or officer may in many cases reflect also upon the company itself; whether it may or does must depend upon the part that director or officer is alleged to have played in the operations of the company and upon the extent to which the one is identified with or considered to be the alter ego of the other." 41 The finding by the primary judge in the present case on this aspect of the matter was: "I am satisfied that the Davidson's first letter defamed Hunt Australia by its references to Mr Penfold; he is not only the managing director of his company, he is its 'alter ego'; he and his company are so closely linked in the safari and hunting industry that they are identified as one and the same. It is for these reasons that an attack on the character and integrity of Mr Penfold is an attack on the character and integrity of Hunt Australia." His Honour's view was that a fair and reasonable reading of the letter conveyed the clear meaning that Hunt Australia was controlled and operated by a liar. His Honour also viewed the letter as suggesting "that Mr Penfold and Hunt Australia were a danger to the wellbeing of the tourism industry in the Northern Territory". The statement that Mr Penfold of Hunt Australia was a liar clearly reflected upon the company itself, and his Honour was entitled to find that Hunt Australia had been defamed and was entitled to be awarded compensation for injury to its reputation in the way of its business. After all, Mrs Davidson wrote to the Minister, seriously criticising Mr Penfold and Hunt Australia, and asking the Minister to act in a way likely to be detrimental to Hunt Australia. The Minister in fact acted adversely to Hunt Australia by responding, along the lines requested by Mrs Davidson.

QUANTUM 42 Apart from the matter of costs, the final question concerns the quantum of his Honour's award for defamation. The primary judge accepted that a company can only be compensated for injury to its trade, reputation or goodwill, relying on the observations of Lord Reid in Lewis v Daily Telegraph [1964] AC 234 where his Lordship said at 262: "A company cannot be injured in its feelings, it can only be injured in its pocket. Its reputation can be injured by a libel but that injury must sound in money. The injury need not necessarily be confined to loss of income. Its goodwill may be injured." 43 His Honour accepted the publication of the defamatory material was limited. He was prepared to accept that, notwithstanding that the letter was addressed to and only forwarded to the Minister, it was logical to assume that his advisers would also have been made aware of it and its contents. His Honour noted that the Minister did not hold Mr Penfold in high esteem prior to receipt of the letter. His Honour's view was that: "Whatever the Minister may have thought of Mr Penfold and his company before receiving the letter, the probabilities are that he would have thought less of them after reading the letter." 44 His Honour was prepared to accept that there was no proof of any actual damage suffered by Hunt Australia as a result of the publication of the letter to the Minister. His Honour's view was: "In my opinion, the limited extent of the publication, coupled with the lack of evidence about any actual loss suffered means that the award of damages should not be overly generous; on the other hand, one cannot overlook the serious nature of the libel. It was addressed to the Minister of the Crown who had the ultimate responsibility for the industry in which the applicant carries on business. I have concluded that an amount of $20,000 would be sufficient to constitute recognition of the nature of the defamatory statement and the identity of the party to whom it was made." 45 We were taken to a number of instances of the award of damages for defamation in the Northern Territory. The individual circumstances of each case are such that it is very difficult to gain any assistance in the present case from the amounts awarded in other and different circumstances. There is, of necessity, something of a broad brush approach to the amount of damages awarded in this case, but when one has regard to the fact that a serious defamation was made to the Minister of the Crown who had ultimate responsibility for the industry where Hunt Australia carried on its business, we are not persuaded that an award of $20,000 in those circumstances is so excessive as to call for appellate intervention.

COSTS 46 The final matter on the cross-appeal concerns the challenge to the costs order made by the primary judge, it being said that his Honour's order inadequately recognises the claim of the respondents to costs. Counsel for the cross appellant recognises the difficulties confronting him in an appeal in respect of what was "a matter of discretion". There is the further complication that a transcript of his Honour's decision on the question of costs is not included in the appeal book, or otherwise before us. It appears, however, from the submissions of counsel that his Honour made the order that he did, having regard to his view that there was no necessity for the respondents to engage interstate counsel or indeed senior counsel, so that fees over and above that which would have been appropriate for junior counsel were disallowed. Further, it is said that his Honour viewed the actions of the third respondent in writing the Davidsons' first letter, the defamatory letter, as instigating the whole proceedings. This was a view well open to the primary judge, and was not an irrelevant consideration on the question of costs. Further, his Honour was entitled to take into account the fact that a cross claim by the respondents was withdrawn only the day before the trial commenced. 47 On the limited material and the submissions before us, and having regard to his Honour's close familiarity with the conduct of this extensive litigation, there is simply no basis for suggesting that O'Loughlin J's discretion on the question of costs, in any way miscarried. 48 For the above reasons, the cross appeal should also be dismissed with costs. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Spender, Drummond and Kiefel.