Hyndes v Nationwide News Pty Ltd; Nationwide News Pty Ltd v Hyndes

Court of Appeal (NSW)|2012-09-05|Before: McColl JA, Basten JA, Hislop J

Mr K P Smark SC (Hyndes) Mr T D Blackburn SC/Mr D R Sibtain (Nationwide News Pty Ltd) Solicitors:

Kalantzis Lawyers (Hyndes) Ashurst Australia (Nationwide News Pty Ltd) File Number(s): CA 2009/297826 Decision under appeal Jurisdiction: 9111 Citation: Hyndes v Nationwide News Pty Ltd [2011] NSWSC 1443 Before: Hislop J File Number(s): SC 2009/297826

HEADNOTE [This headnote is not to be read as part of the judgment] The respondent published an article which referred to the appellant's association with a Mr Tim Gatland in 1996 while both were living in Bangkok. Mr Gatland had then been involved in acquiring a stake in a Thai finance company known as Thai Tanakorn Finance ("TTF"). The appellant instituted proceedings in the Supreme Court for defamation, pleading that two imputations arose from the respondent's publication: (i) that the appellant had knowingly assisted drug dealers by helping to lend them money, and (ii) that he had helped lend money to drug-dealing Thai officials while he was on leave from his employment at the Australian Embassy in Bangkok in 1996. The appellant had made statements in various places regarding the events of this period. The respondent raised a defence of truth, based almost entirely on those statements. The jury accepted that the imputations arose and that they were defamatory, but found that the imputations were substantially true. The appellant appealed as of right to this Court. Following the verdict, the respondent sought an order from the trial judge that the appellant pay its costs of the appeal on an indemnity basis from one of a number of dates on which it had made offers of settlement, pursuant to Defamation Act 2005 (NSW), s 40. The trial judge rejected the application, finding that the offers were not reasonable at the time that they were made and that the appellant's failure to accept the offers was not unreasonable. The respondent sought leave to appeal to this Court. The issues for determination on appeal were: (i) whether the jury's verdict that the imputations were substantially true was one no reasonable jury, properly directed, could have reached, and (ii) whether this Court should vary the trial judge's order in respect of indemnity costs. The Court held, dismissing the appeal and the application for leave to appeal: In relation to (i) (per McColl JA and Basten JA and Tobias AJA agreeing) 1 The appeal turned on whether the appellant could persuade the Court that the jury's verdict was one no reasonable jury, properly directed, could have reached, taking into account the requirement that in determining the appeal the Court must assume the jury took the most favourable view of the respondent's case a reasonable jury could take upon the evidence and that it was a matter for the jury, and not for this Court, to decide whether they accepted the appellant's evidence, drew from it the inferences he invited or whether they accepted any denials or explanations he gave: [4], [17] David v Abdishou [2012] NSWCA 109 applied. 2 The appellant's submissions invited the Court to transgress upon the role of the jury as the constitutional tribunal for deciding issues of fact: [8] Hocking v Bell [1945] HCA 16; 71 CLR 430 referred to. (per Basten JA; McColl JA and Tobias AJA agreeing) 3 There was ample evidence from which a jury could infer that the appellant had a sufficient degree of control to amount to assistance and helping with any lending, regardless of the formal legal status of the directors whose appointment the appellant was seeking to achieve: [41] 4 There was sufficient material to allow the jury to be satisfied that TTF lent money to drug-dealing Thai officials while the appellant was in control of the organisation: [48]-[51] In relation to (ii) (per Basten JA; McColl JA and Tobias AJA agreeing), 5 Whether or not the trial judge's determination was a discretionary determination in the strict sense, the assessment of reasonableness of the offers of settlement required familiarity with the material available to the trial Court. It would be an unusual case in which this Court would embark upon such an exercise in the absence of any issue of principle being raised and in the absence of any manifest error: [69]-[71] House v The King [1936] HCA 40; 55 CLR 499 referred to.

Judgment 1McCOLL JA: I have had the benefit of reading Basten JA's reasons in draft. The facts are sufficiently summarised in his Honour's reasons. I will refer to them only to the extent necessary to give context to my reasons. 2The appellant brought proceedings in defamation in respect of an article published by the respondent's newspaper, "The Australian", on 29 August 2008, the critical passages of which, and the two pleaded imputations, are set out in Basten JA's reasons. 3The proceedings were governed by the Defamation Act 2005. The respondent pleaded that the imputations of which the appellant complained were substantially true (s 25, Defamation Act), which defence the jury accepted it had established, thus leading to a verdict in the respondent's favour. The appellant appeals from that verdict pursuant to s 102 of the Supreme Court Act 1970. He complains, in effect, that the jury's finding in the respondent's favour was one that no reasonable jury, properly directed, could have reached: John Fairfax Publications Pty Ltd v Rivkin [2003] HCA 50; (2003) 77 ALJR 1657 (at [185]) per Callinan J (Gleeson CJ and Heydon J agreeing); John Fairfax Publications Pty Ltd v Gacic [2007] HCA 28; (2007) 230 CLR 291 (at [51]) per Gummow and Hayne JJ. 4The appellant does not complain in any respect about the trial judge's summing up. The appeal, accordingly, turns on whether the appellant can persuade the Court that the jury's verdict fell within the strictures referred to above, taking into account the requirement that in determining the appeal the Court must assume the jury took the most favourable view of the respondent's case a reasonable jury could take upon the evidence: David v Abdishou [2012] NSWCA 109 (at [205]). It was a matter for the jury, and not for this Court, to decide whether they accepted the appellant's evidence, drew from it the inferences he invited or whether they accepted any denials or explanations he gave: David v Abdishou (at [207] - [209]). To sustain his argument, it was necessary for the appellant to "so utterly destroy the [respondent's] narrative as to place it outside the competence of a jury to give any credence to the material parts of it": Hocking v Bell [1945] HCA 16; (1945) 71 CLR 430 (at 490) per Dixon J. 5Basten JA has set out the imputations the respondent successfully justified (at [13] below). As his Honour's reasons demonstrate, the appellant's written submissions sought to deconstruct those imputations into three elements ("drug dealing", "helping to lend money" and "control") and to contend that upon an analysis of the evidence relating to each, the respondent failed to prove each element so that it was not open to the jury to find either imputation was substantially true. 6The appellant accepted that aspects of the evidence to which Basten JA has referred in detail were capable of supporting the substantial truth of the imputations. These included the appellant's statements that: (a) "... the people who we were dealing with in Bangkok unfortunately were very unsavoury politicians/drug lords"; (b) "Many people wanted loans and we were not prepared to extend any loans in 1996, the second half of 1996, when we had influence over these decisions ... "; (c) "Interfin staff ruled the roost and were in full command of the operational functions of the company"; (d) "In the course of my duties I was to manage the process of this Australian finance company doing a joint venture with a Thai finance company and we acquired some shares and we got a certain amount of management control"; and (e) "This MP ... frequently visit[ed] the TTF office ... to recount to the Interfin team leader his latest tale of skulduggery in the golden triangle. Perhaps his only virtue was that he always told the truth. Nothing was sugar coated. He never talked about drugs and killing people, but you knew that was not very far under the surface from what was going on". 7The appellant submitted however that, even accepting it was open to the jury to reject his evidence, or accept it in a qualified way, when the evidence was properly analysed in context, his statements could not be seen to rise higher than belief or suspicion on his part as to whether any TTF client was a drug-dealer, as opposed to being evidence of the fact. Further, he contended that his evidence was imprecise as to the time when, as "Interfin team leader", he was able to influence the conduct of TTF and as to the extent of his (Interfin's) influence and did not constitute evidence of ability to make loans or that any loans had been made to more than one drug-dealer. Accordingly there was no, or no sufficient, evidence upon which the jury could find the imputations were substantially true. 8In my view, the appellant's submissions invited the Court to transgress upon the role of the jury as the constitutional tribunal for deciding issues of fact. As Latham CJ emphasised in Hocking v Bell (at 440 - 441): "Where there is a conflict of evidence it is not for the judge at the trial, or for any tribunal on appeal, to determine which witnesses should be believed - that is the responsibility of the jury ... Caution is necessary in applying the principle that a verdict may be set aside if it is against evidence and the weight of evidence. That principle must not be interpreted in such a manner as to deprive the jury of its right of believing one witness on one side against twenty (or any number) of witnesses on the other side." Latham CJ's statement is equally apposite where the evidentiary conflict involves the weight which should be given to aspects of one witness's evidence. 9In my view, there was, as Basten JA's reasons demonstrate, evidence the jury could have accepted, whether directly or as a matter of inference, that each of the elements of the imputations was substantially true. The appellant has not demonstrated that the jury failed to perform their duty. Accordingly, I agree, both for the reasons set out above and for Basten JA's reasons, that the appeal must be dismissed with costs. 10I would add that one of the difficulties with the appellant's approach was that it tended to assume that each element of the imputations had been given equal weight at the trial. That was not, however, as the appellant's counsel conceded, how the jury was addressed on those issues. Rather, in addressing the jury the appellant gave greater prominence to the issue of "helping to lend money" compared to that of "drug dealing". The former occupied at least 25 pages of the transcript of the appellant's counsel's address to the jury while the latter occupied only two. In the written submissions on appeal, the position was reversed with greater emphasis being given to the question of whether the respondent had established the "drug dealing" element. The weight the jury gave to the evidence, it might be expected, would have taken into account the appellant's approach to the respective elements of the imputations and the emphasis he gave in his address to the jury as to whether the respondent had established each element. 11As to the cross-appeal, I agree with Basten JA's reasons and the orders his Honour proposes. 12BASTEN JA: On 29 August 2008 The Australian published an article about two failed finance companies, known as Elderslie Finance Corporation and EC Consolidated Capital and certain persons allegedly involved with them at the time of their respective collapses. The article was principally about Peter Alexis George, who was reported to have left Sydney by yacht, two weeks earlier. The article also referred to a fellow former director of EC Consolidated Capital, Tim Gatland, who had disappeared in late 1996 and was believed to have been murdered in Thailand. Two critical paragraphs in the article read as follows: "Mr Gatland made headlines again in May last year when Australia's then deputy high commissioner in Sri Lanka, Matthew Hyndes, told the Industrial Relations Commissioner of his relationship with the conman. Mr Hyndes told the IRC in unrelated proceedings that via a company controlled by Mr Gatland, he had helped lend money to drug-dealing Thai officials while he was on leave from the Australian embassy in Bangkok in 1996." 13Dr Hyndes (the appellant) instituted proceedings in the Supreme Court for defamation. A jury held that two imputations arose from the publication and that each was defamatory. The imputations were: (i) that he had knowingly assisted drug dealers by helping to lend them money, and (ii) that he had helped lend money to drug-dealing Thai officials while he was on leave from his employment at the Australian embassy in Bangkok in 1996. 14The jury accepted the imputations arose and that they were defamatory. However, there was a verdict for Nationwide News Pty Ltd (the respondent) on the basis that it had made good its defence that the imputations were substantially true: see Defamation Act 2005 (NSW), s 25. The appeal was brought as of right from that verdict: Supreme Court Act 1970 (NSW), s 102. The grounds were that the jury's finding as to the defence was "unreasonable" or was "not open having regard to the course of the cross-examination of the plaintiff". In the course of argument, senior counsel for the appellant accepted that the appeal could only succeed on a view of the evidence most favourable to the respondent. That view did not depend upon the "course of the cross-examination of the plaintiff" and nothing turned on that aspect of the second ground, which was to be treated as a complaint that the findings were simply "not open" on the evidence. 15Prior to the trial, each side had made offers of settlement. The respondent relied upon six offers as being reasonable offers at the time each was made and asserted that the appellant had unreasonably failed to accept each offer. On that basis the respondent had submitted that it was entitled to costs assessed on an indemnity basis, pursuant to s 40(2)(b) of the Defamation Act. The trial judge, Hislop J, rejected that application: Hyndes v Nationwide News Pty Ltd [2011] NSWSC 1443. The respondent sought leave to appeal against the order dismissing its application for indemnity costs. 16For the reasons which follow, the appeal should be dismissed and the application for leave to appeal against the costs order should also be dismissed. In each case the appellant and applicant respectively must pay the other party's costs.

Nature of appeal 17At the trial, the appellant did not seek to have the defence of substantial truth withdrawn from the jury, nor did he take any objection to the directions given to the jury in respect of that issue. He says, correctly, that he is not precluded from appealing on the basis that there was in fact no evidence to support the defence or that the finding of the jury was unreasonable. Assuming, however, that there was some evidence to support the finding, the circumstances in which a jury verdict will be set aside are quite limited. They were recently reviewed by this Court in David v Abdishou [2012] NSWCA 109 at [203]-[212] (McColl JA, Beazley JA and Sackville AJA agreeing). It is not in doubt that if there be conflicting evidence, even if the preponderance, weight or strength of the evidence can properly be said to be against the finding made by the jury, nevertheless, it being the function of the jury and not the judge or the appeal court to determine the facts, the verdict must stand. 18If a verdict in favour of a party bearing the onus of proof is unsupported by evidence, a verdict may properly be entered by the appellate court in favour of the other party if the appeal is upheld, although the questions of intervention and consequent orders are separate as a matter of principle. In considering the latter issue, as Latham CJ noted, dissenting, but with the approval of the Privy Council on a further appeal, in Hocking v Bell [1945] HCA 16; 71 CLR 430 at 441-442: "If there is evidence upon which a jury could reasonably find for the plaintiff, unless that evidence is so negligible in character as to amount only to a scintilla, the judge should not direct the jury to find a verdict for the defendant, nor should the Full Court direct the entry of such a verdict. The principle upon which the section is based is that it is for the jury to decide all questions of fact, and therefore to determine which witnesses should be believed in case of a conflict of testimony. But there must be a real issue of fact to be decided, and if the evidence is all one way, so that only one conclusion can be said to be reasonable, there is no function left for the jury to perform, so that the court may properly take the matter into its own hands as being a matter of law, and direct a verdict to be entered in accordance with the only evidence which is really presented in the case...." That passage was approved by the Privy Council in Hocking v Bell (1947) 75 CLR 125 at 130-131 (in a judgment delivered by Viscount Simon). 19It was therefore sufficient in the present case if there were evidence capable of supporting the substantial truth of the imputations, even if it were of limited weight and was strongly contradicted by other evidence. In such a case, the appeal must fail.

Evidence in support of defence 20In substance, all of the evidence in question came from the appellant (the plaintiff in the Court below). The defendant's case of truth depended almost entirely upon statements which the appellant had made in other places. In the course of the appeal, the Court was taken to parts of the lengthy cross-examination of the appellant at trial, apparently to demonstrate that, to the extent he qualified, contradicted or sought to explain the evidence on which the respondent relied, such oral testimony was implausible or otherwise capable of being rejected by the jury. For present purposes, however, the cross-examination may be put to one side: the respondent did not obtain any further admissions and, to the extent that the appellant's explanations affected other parts of the evidence, it was a matter for the jury as to whether they accepted them or not. The verdict suggests that they did not and that should be assumed to be the case for the purposes of the appeal. 21In assessing the evidence relied upon by the defendant, it is necessary to deal separately with two categories of evidence, namely that supporting the view that the recipients of loan funds were drug dealers and that which demonstrated that the appellant himself was involved in "helping" to provide such assistance. However, the evidence in question is not readily separable into discrete categories and may conveniently be identified as a whole, before the separate inferences are discussed. 22By way of background, the appellant joined the Department of Foreign Affairs and Trade shortly after he had completed his tertiary education, in February 1992. He was posted to Bangkok in early 1994 where, by chance, he met an Australian friend, Tim Gatland. At some point in 1995 Mr Gatland told the appellant that he (Gatland) had acquired a leasing company and intended to set up an office in Bangkok. He invited the appellant to join the company, known as "Asset Risk Management" or "ARM". In September 1995 he sought leave from the Department to take up the commercial position after his posting was completed in early 1996. The request was granted and on 15 February 1996 the appellant signed an employment contract with ARM. 23At about the time his posting ended in April 1996, Mr Gatland told him that he was acquiring a stake in a listed Thai finance company known as "Thai Tanakorn Finance" or "TTF". Whilst working in Bangkok, the appellant had established a relationship with a young Thai woman, Issariyaporn Chulajata, who was referred to during the proceedings as "Issay". Mr Gatland proposed that the stake he intended to purchase in TTF be held by Ms Chulajata in her name, on trust. She agreed to that course and in due course was provided with a sum in Thai baht of about $A5 million: Tcpt, pp 38-39. 24The appellant asserted that in about April 1996 there was a financial scandal emerging in relation to the Bangkok Bank of Commerce ("BBC"), involving what he described as "really quite scandalous and improper loans" made by the Bank. The allegations also related to loans made to ARM, which were said to be in default. The appellant said that he told Mr Gatland that it would be preferable if the proposed investment in TTF did not involve ARM. Mr Gatland responded that he had "a finance company in Switzerland called Interfin Credit" which could undertake the transaction: Tcpt, pp 45-47. In a letter to the Australian Embassy written in October 1996, the appellant asserted that "[i]n the period April-June 1996 the Interfin Credit group and its Thai allies had acquired 47% of the shares in Thai Tanakorn Finance and were eager to exercise their rights to gain Board representation". The other large shareholding, apparently of equivalent size, was held by interests associated with the Thai Military Bank ("TMB"). 25There followed a struggle to obtain regulatory approval for the appointment of the new directors. In his letter of October 1996, the appellant referred to threatening phone calls and noted that he had "taken the precaution of posting a military guard outside my home at night". In November 1996 the appellant's friend, Mr Gatland (whom he was later to describe as a pathological liar, arms dealer and fraudster) disappeared and was presumed dead. In December 1996 the appellant returned to Australia and in April 1997 he recommenced work at the Department of Foreign Affairs and Trade. 26Upon his return to Australia, the appellant prepared a draft manuscript entitled "Uncle Tim". The existence of the manuscript first came to light when revealed by the appellant to a departmental officer conducting a security clearance in July 1997. He was provided with a copy immediately: Tcpt, p 84. On 9 September 1997, the appellant was questioned by two officers from the Department in relation to the contents of the "Uncle Tim" manuscript. 27On 3 July 1997 the appellant talked with a journalist from ABC Television in relation to a proposed Four Corners program involving Mr Gatland. He was interviewed, on condition of anonymity. The Four Corners program was broadcast on 15 September 1997: Tcpt, p 85. 28From 1997 to 2002, the appellant continued to work in the Department and undertook a doctoral thesis at the Australian National University, being awarded a PhD in July 2006. In the period of three and a half years prior to April 2008, the appellant was posted to Sri Lanka: Tcpt, p 87. However, at one stage he returned to Australia to give evidence in a case in the Industrial Relations Commission involving a claim of unfair dismissal by another departmental officer. 29On 29 August 2008 the article which became the subject of the present proceedings was published in The Australian, with the heading "Elderslie owner sails away as the heat rises". The focus of the article was a Mr George, who was described as "[t]he man behind the failed $200 million Elderslie Finance Corporation". He was said to have left the country two weeks earlier aboard his 24-metre yacht. Mr George was identified as a director of EC Consolidated Capital, a company which "purported to invest money on behalf of superannuation funds - from 1992 until 2003". It was placed in liquidation in 1997 amid concerns about "some $33 million of 'missing' superannuation funds". The article then noted that Tim Gatland had also been a former director of EC Consolidated Capital and had left Australia a year before the company was liquidated. He was described as "missing, believed murdered, in Thailand". The liquidator of the company was reported as saying that the majority of the funds "finished up in a Thai bank, never to be seen again." There followed the two paragraphs set out at [12] above. 30In the passages extracted below, the underlining is added to allow for easier reference to particular passages in the analysis which follows. 31The appellant gave evidence to the Australian Industrial Relations Commission on 21 May 2007. The extracts in evidence were directed to a statement about Thai politicians who had sought loans from TTF whilst the appellant was working there, as explained in part of his interview with the ABC. The relevant extract from the ABC interview was as follows: "By their own admission, they were using the loans to finance their political campaigns. In one case, an MP told me that he'd used some of the money to bribe officials to give him a road construction contract. Two or three of them were of particularly unsavoury character, people whom [sic] were on the list of MPs that the Americans wanted to have extradited to face drug charges. One of them came into my office and sat beside my secretary's desk and demanded that 30 million baht be handed over and he wasn't gonna leave until that happened. And he left later on that day with 30 million baht." 32The relevant extracts from the evidence before the Commission read as follows: "Would Thai businessmen or other individuals have cause to come to your office during the course of your employment with the company? - Occasionally, yes. And what would your dealings with them be? - It depended upon what the nature of their query was. Many people wanted loans and we were not prepared to extend any loans in 1996, the second half of 1996, when we had influence over these decisions because we were not satisfied that the balance sheet was in an appropriate form. ... This is what you say: Two or three of them were of particularly unsavoury character, people who were on the list of MPs that the Americans wanted to have extradited to face drug charges. Again that's a serious accusation to make, is it not, by a serving officer of the Department of Foreign Affairs and Trade, without authorisation? - I don't agree. You go on to say: One of them - That's one of the politicians:

came into my office and sat beside my secretary's desk and demanded that 30 million baht be handed over and he wasn't going to leave until that happened and he left later on that day with the 30 million baht. And it says here that that's about 1.2 million Australian dollars. Do you recall saying that on Four Corners? - I recall saying something like that, yes. And what you say, what you are saying actually occurred? It's a statement of fact? - It's actually the way it's read to me then it's possibly slightly misleading. Should we show you the video? - No, I don't need to see it, sir. I have a good recollection of what happened that day and in fact I was quite intimidated and concerned about the presence of this person in the office. I called the treasurer and we slipped out the back door and disappeared from the office for the rest of the day. I was told later that the chairman had extended a loan to this gentleman. Extended a loan to him? - Yes. You didn't tell the Four Corners programs that, did you? You simply said: One of them came into my office and sat behind my secretary's desk and demanded 30 million baht be handed over and he was wasn't going to leave until that happened. He left later on the day with 30 million baht. There is [no] suggestion that the gentleman came in. What you're suggesting there is wrong doing on the part of this gentleman, are you not? - Not at all. The gentleman you mean? No, the politician? - I'm sure he's entitled to apply for a loan from any financial institution he chooses. Exactly. So these are very serious allegations that you are making and now you are saying it's simply a loan the man was after? - Of course, it was a bank. ... So you're making these serious allegations? - I don't agree that I'm making serious allegations. These are statements of fact that are well known in Bangkok at the time. And you know, it was a bank and he's entitled, like any other person, to make an application. So you're saying he made an application? - I presume so. I never saw it, but I presume he did. And why haven't you mentioned any of that before today in [when?] you refer to this incident with your interview with Mr Kennedy, you refer to this incident in Four Corners and now for the first time, the first time, you say this was a loan. Why is that? - It was just implied that everyone understood that it was a bank and we make loans to people. So if you were to walk into Westpac and demand 1.2 million dollars they would just hand it to you later that day would they? - I don't follow. I don't agree with what you're saying." 33It is difficult to deal concisely with the contents of "Uncle Tim", which were available to the jury. Many of the statements concerning Gatland, for example that "[i]n 1995 the CIA was investigating Gatland for suspected involvement in shipping nuclear weapons out of eastern Europe" were unsupported, irrelevant for present purposes and at best speculative. However, in relation to financial activities in Thailand, there is a level of detail which would permit a jury to accept key aspects of the account. Thus, he described the first attempts to assess the financial state of TTF in the following terms (p 13): "A task force comprising ARM-cum-Interfin staff was brought in from Sydney to analyse the bad debt situation and advise on what could be done to improve collections. They were shocked to see that 15% of the book was non-performing (as opposed to the 1.2% disclosed in the Annual Report) and that the majority of the borrowers in default were Members of Parliament from the Golden Triangle wanted in the United States for drug smuggling. ... And these borrowers were not the type of people you could reason with. Requests for repayment of debts were either ignored or met with violent responses (use examples). Borrowers in trouble had put the funds to a variety of different uses. One MP claimed that he used the TTF money to buy votes in an election, bribe officials to give his construction company work and purchase land that the government would need to acquire in order to build a new train line through the Golden Triangle to China. This MP was an enterprising chap, no doubt, but hardly the type of customer Interfin was trying to encourage. But he was a fairly affable and easy to like character, frequently visiting the TTF office on the way from the airport to parliament to recount to the Interfin team leader his latest tale of skulduggery in the golden triangle. Perhaps his only virtue was that he always told the truth. Nothing was sugar coated. He never talked about drugs and killing people, but you knew that was not very far under the surface of what was going on. ... Another MP was actually in jail in Bangkok awaiting a judgement on an extradition order to the United States for conspiracy to import 20 tonnes of hashish when he was extended additional loans to, as the TTF loans officer described 'bribe the judge'. The attempt failed and the now ex-MP is serving 20 years in a Californian jail. ... Gatland insisted upon having trusted associates serve on the board of directors and in senior management positions in the company. He wanted 2 [Thai Military Bank] directors to go. Against advice from his staff on the ground, existing directors allied to Interfin were forced to resign and Gatland nominees put up in their place. The Managing Director, who was no ally of the TMB was forced to resign. Interfin went from controlling 5 of the 12 members of the Board to 2 of 7. The lever was a threat to requisition a shareholders meeting which would have fired all the TMB board members. Interfin staff ruled the roost and were in full command of the operational functions of the company. Day to day management was performed by section heads. Interim staff to jointly devise strategic plans to modernise operations and primary focus was placed on the recovery of bad debt." 34Referring to the fact that the Bank of Thailand had not approved the new directors Gatland sought to appoint to TTF, the appellant wrote (pp 18-19): "At some point in September, Gatland's enemies realised that the takeover attempt would fizzle if enough regulatory delays were put in the path of the foreign raiders and enough time was wasted. A formidable coalition of figures in the Bank of Thailand hell bent on preventing another [Bangkok Bank of Commerce] style debacle, senior figures in the Thai Military Bank who wished to preserve their franchise at TTF and their drug dealing provincial MP patrons who were angered at Gatland's attempts to cut off their access to funds at TTF formed against the Interfin interests. The game of cat and mouse between the Bank of Thailand, the TMB and several highly unsavoury underworld figures and Interfin staff ensued. Threats and intimidation from underworld figures followed. Several Interfin staff received death threats. ... Gatland's response was to try to push more and more past the TMB dominated management of TTF. For example, Interfin's attempt to wrest control of credit analysis function from a corrupt clique within TTF and instructions to senior management to slow down lending to customers already in default elicited a stern response from MP borrowers. Within a day of the announcement, senior executives at the Thai Military Bank telephoned Interfin staff relaying complaints from certain MPs who were notoriously bad at paying back their debts. TMB said these were long standing customers of the bank with good reputations who ought not to be treated in such a fashion. ... The only thing Interfin staff could do to stop the rot was to physically seize the loan files and lock them away. Gatland then devised a strategy to force the TMB to take back any non-performing loans that had been made as a result of recommendations by TMB staff and TMB appointed directors. The MPs responded by sitting outside the office of the Interfin team leader demanding that loan application files locked within be released and funds immediately paid out." 35The "Interfin team leader" was the appellant. As he explained in a security interview on 20 January 2004 (Tcpt, pp 34-36): "In the course of my duties I was to manage the process of this Australian finance company doing a joint venture with a Thai finance company and we acquired some shares and we got a certain amount of management control. Myself and some other representatives from Sydney were placed in management positions around the company and we began to run the process of trying to reel in the bad debt problem. We were told that the bad debt problem was about two per cent and when we got there it was perhaps 30 per cent, in May. By the end of 1996 it was more like 70% so we were not in the business of making new loans to anybody. A member of parliament who remains a member of parliament, perhaps solely because that provides him with immunity from prosecution and extradition to the United States ... presented himself at the door of my office and demanded 30 million baht. You know, I didn't think it was a smart thing to be talking about that with it being Matthew Hyndes, Foreign Affairs and Trade official on leave. It - the - perhaps an even more relevant question is, why I gave the interview in the first place? Tim Gatland was a friend of mine and I don't shy away from that. ... Well, there were two versions of the story that had been given to the Four Corners people. One by me on a backgrounding basis and another by other partners of Tim who would have tried to have pointed - painted a picture of where Tim and I were in Bangkok, spent 80 million dollars of their - of this company's funds and the board back in Sydney didn't know about it. Now, that was not - simply not the case. And I had contact with Four Corners over a period of months in the lead up to that story. I was trying to point them in the direction where they could find information. They asked me for an on air interview and offered the screening, cloaking the voice. It was done in the Regent Hotel in Sydney on the Sunday afternoon, during the winter of '97 and I saw no harm in that.... ... And the device of the cloak of the voice and the face was simply a protective measure because ... I'm sure that Tim was murdered in Bangkok and I don't - I didn't want to join him in meeting that fate. And the people who we were dealing with in Bangkok unfortunately were very unsavoury politicians/drug lords, some of whom still sit in cabinet, so there's a sensitivity and I didn't think it was a good idea for the family name and potentially the link to DFAT to emerge from that. ... Is there a suggestion that it's a lie, that this gentleman came to my office and wanted the 30 million? Because I can provide you with the names of people who can - who were there and who know that this gentleman was there and we know that - we know that he's dangerous. We - we weren't exactly happy about him being one of our borrowers, we were trying to get a better kind of clientele in." 36The appellant allowed his story to change in various respects as the occasion appeared to require. Thus, despite asserting in clear and emphatic terms that the member of parliament who had complained about lack of access to funds told him that he required a loan of 30 million baht, he gave the following evidence in cross-examination (Tcpt, p 265(10-(15)): "Q. Can we agree that he told you that he wanted to borrow 30 million baht? A. Look, I think the first time I heard of the number '30 million' was when Lily [the appellant's secretary] told me that he had been extended - that he had left with a cheque for 30 million dollars that afternoon. I do not believe that he said that to me in the meeting but, you know, that's my recollection." 37The appellant also prevaricated as to whether, when the managing director, Mr Chaiyot, was replaced, the new managing director moved into the office on the fourth floor of the TTF building or remained in accommodation elsewhere in the city whilst the appellant used the managing director's office. The following exchange took place (Tcpt, pp 167(40)-168(25)): "Q. And the new managing directors didn't move into the office on the fourth floor. He remained where he was in some office accommodation in another part of the city, is that right? A. Well yes. He never permanently moved over. He used the office on the fourth floor whenever he was in the building and - but he never permanently moved in. Q. He never permanently moved into the head office of TTF and he was the managing director, is that your evidence? A. No, he was appointed as a director to become the managing director and he ultimately was never approved by the Bank of Thailand. Q. Dr Hyndes, at transcript 137.7, line 7: 'In August another managing director was appointed.' That was your evidence yesterday, wasn't it? A. I'm not sure if I used the word 'appointed'. Q. Well, you did, Dr Hyndes. A. Ok. Well, you know, well, you know, a director is appointed. Notification goes to the Stock Exchange of Thailand. An application goes to the Bank of Thailand. It's a lengthy process to be approved and this gentlemen was never approved and a further managing director was appointed after him in I think it was in the latter part of October. A female officer associated with the Thai Military Bank was appointed. Q. Dr Hyndes, can you agree with this proposition, please: the new managing director, or what you now say was the new proposed managing director, stayed in his existing office accommodation in another part of the city and did not move into the head office of Thai Tanakorn Finance? Do you agree with that proposition? A. Yes, that's what happened. He never moved in. Q. The person who did move into the managing director's office, to Chaiyot's office, was you; correct? A. Well, you know, I used that office. I was the person who used it most in that period, in July, August, September." 38The evidence given by the appellant at the trial undoubtedly sought to diminish the significance of his role at TTF, including denials that he had any authority to approve or disapprove loans and that he was responsible for making any loans to persons he believed to be involved in drug dealing. On the other hand, in "Uncle Tim" he proved less resistant to such activities. Thus, in describing the final weeks of activity, in about October 1996, the appellant wrote (p 24): "The Interfin team leader was detached from normal duties to deal with the [Bank of Thailand] approval process as his sole task. Gatland authorised the team leader to offer a payment of $500,000 to the Deputy Finance Minister if the approvals could be made within the week. The Finance Minister was interested - he needed the dough - but said it may take longer than a week. But the Minister was able to help with immigration difficulties, having formerly served as Deputy Immigration Minister for some 6 months before. He wrote notes to officials on the back of his business cards to the effect that Interfin were a terrific bunch of people and all charges should be dropped. He also demanded and received a hefty donation for his re-election fund. ... Within 24 hours the Minister advised the Interfin team leader that no amount of money would secure the approval of the foreign directors. This was further confirmed by BoT officials refusing Interfin's offer for 3 new Mercedes 230E's to the faction that could push through the approvals." 39The jury might well have drawn a conclusion as to the credit worthiness of the appellant when comparing the apparent sensitivity revealed in the course of his security interview in relation to his status as an official with Foreign Affairs and Trade, on leave (see [35] above, first passage in quotation) and his apparent willingness to record without qualification or comment his role in attempting to bribe Thai ministers and, possibly, Thai bank officials.

(a) the element of control 40A common element of both imputations was that the appellant had knowingly assisted drug dealers by "helping to lend them money". The appellant challenged this element in two ways. First, he claimed that there was no evidence that money was lent to such persons or, if there were, such lending was not under his control. The lack of control was said to result, at least in part, from the fact that ARM had not been able to obtain control of the board by having its nominees accepted by Thai regulatory authorities as directors of TTF. 41There was, however, ample evidence from which a jury could infer that the appellant had a sufficient degree of control to amount to assistance and helping with any lending, regardless of the formal legal status of the proposed new directors. First, although the managing director was dismissed and a new appointment made, the appellant accepted that at least during July, August and September he was the one who primarily occupied the managing director's room: at [37] above. It was to him that the corrupt politician came demanding 30 million baht: at [31] above. 42Secondly, the assertion that he and Interfin staff were "not prepared to extend any loans in ... the second half of 1996, when we had influence over these decisions", constituted an acknowledgment that they did have such influence: at [32] above. 43Thirdly, the indication of displeasure from borrowers who were members of parliament at what was described as "Interfin's attempt to wrest control of credit analysis ... [and] to slow down lending to customers already in default" implied that a degree of control had been achieved: at [34] above. 44Fourthly, and more generally, the appellant expressly wrote in "Uncle Tim" that "Interfin staff ruled the roost and were in full command of the operational functions of the company": at [33] above, last underlined passage. 45Finally, the appellant described his own duties at TTF as being "to manage the process of [ARM] doing a joint venture with [TTF] and we acquired some shares and we got a certain amount of management control": at [35] above. 46By the time the appellant described the activities in which he was involved in Bangkok in 1996, while working for Mr Gatland, he had already formed the view that Mr Gatland was a liar, a conman and had been involved, not least in the course of his activities in Bangkok, in disgraceful activities which involved criminal conduct on a large scale, as explained in "Uncle Tim". On one view, the appellant had every reason to distance himself from those activities. The fact that, against his apparent interest, he continued to acknowledge, if not revel in, his own involvement, would have allowed the jury to accept his own description of his role as truthful and thus accept as substantially true any allegation that he had helped or assisted in providing funds through TTF.

(b) identifying recipients of loans 47In addition to denying any influence over the activities of TTF, the appellant separately sought to distance himself from the truth of the imputation that loans had been made to drug dealers or drug-dealing Thai officials. He did not deny that TTF had in the past made loans to such people: his position was, rather, that while he had a degree of control, no further financial accommodation was provided to such people and there was an attempt to steer the business of TTF away from persons of such "unsavoury character": see [31] above. 48There was, however, some lack of clarity as to whether the appellant's concern was really the character of the borrowers and their use of the funds for corrupt purposes, or the fact that they failed to repay moneys outstanding. On one view, the real concern was the high level of bad debts: see [33] above, first paragraph of quotation. The fact that the appellant appears to have been willing, at Mr Gatland's direction, to attempt himself to bribe Thai officials would have allowed the jury to be sceptical about any claim that TTF did not do business with drug dealers or drug-dealing Thai officials in the second half of 1996. 49Furthermore, there was no express statement that such activity ceased. Although the appellant sought to distance himself in various ways from the "loan" of 30 million baht to the member of parliament who approached him directly, the jury was entitled to accept the evidence that the request was made to him directly - see [31] above - and that he gave at least tacit approval for the loan, whilst not making the decision himself because he did not think that would be "a smart thing" to do as a DFAT official on leave: at [35] above, second emphasised passage. 50When describing his work at TTF, he stated that "the people who we were dealing with in Bangkok unfortunately were very unsavoury politicians/drug lords": at [35] above, penultimate paragraph in quote. The jury was entitled to infer from such statements that the "dealing" included making further loans, as it did with the example of the member of parliament seeking 30 million baht. The suggestion that he was the only such case was not consistent with the statement in the ABC interview set out at [31] above, where he is expressly stated to be one of two or three such persons. 51Although it may be said that the evidence is less explicit as to the number of drug dealers to whom loans were extended under the influence of the appellant, than it was as to his degree of control, there was sufficient material to allow the jury to be satisfied as to the substantial truth of the imputations as pleaded.

Conclusion 52There being material available to the jury from which it could reasonably be satisfied that the imputations were substantially true, the appeal should be dismissed; the appellant must pay the respondent's costs of the appeal.

Application - costs order 53The respondent, having succeeded at trial, was awarded its costs of the trial, to be assessed on the ordinary basis. However, relying principally upon s 40 of the Defamation Act, it had sought an order that the costs be assessed on an indemnity basis from one of a number of dates on which it made offers of settlement. Hislop J rejected the application for indemnity costs: Hyndes v Nationwide News Pty Ltd [2011] NSWSC 1443. 54Section 40 of the Defamation Act provides: "40 Costs in defamation proceedings (1) In awarding costs in defamation proceedings, the court may have regard to: (a) the way in which the parties to the proceedings conducted their cases (including any misuse of a party's superior financial position to hinder the early resolution of the proceedings), and (b) any other matters that the court considers relevant. (2) Without limiting subsection (1), a court must (unless the interests of justice require otherwise): (a) if defamation proceedings are successfully brought by a plaintiff and costs in the proceedings are to be awarded to the plaintiff-order costs of and incidental to the proceedings to be assessed on an indemnity basis if the court is satisfied that the defendant unreasonably failed to make a settlement offer or agree to a settlement offer proposed by the plaintiff, or (b) if defamation proceedings are unsuccessfully brought by a plaintiff and costs in the proceedings are to be awarded to the defendant-order costs of and incidental to the proceedings to be assessed on an indemnity basis if the court is satisfied that the plaintiff unreasonably failed to accept a settlement offer made by the defendant. (3) In this section: settlement offer means any offer to settle the proceedings made before the proceedings are determined, and includes an offer to make amends (whether made before or after the proceedings are commenced), that was a reasonable offer at the time it was made." 55The operative provisions for present purposes are s 40(2)(b) (the plaintiff having been unsuccessful) and sub-s (3) (the definition of "settlement offer"). As is clear from both limbs of sub-s (2), the operation of that provision is dependent upon a finding that costs "are to be" awarded in favour of the successful party. By necessary inference, the section assumes the operation of s 98 of the Civil Procedure Act 2005 (NSW) (providing that costs are in the discretion of the court) and r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") (requiring the court to order that costs follow the event, unless satisfied that some other order should be made). 56There are other provisions which permit special orders as to costs, including the rules relating to offers of compromise made under Pt 20, Div 4 of the UCPR and the general law principles in relation to Calderbank offers. There is nothing in s 40 which precludes, either expressly or by implication, the continued operation of those provisions. So much was assumed in the present case, where an alternative submission based on Calderbank principles was advanced, and in Davis v Nationwide News Pty Ltd [2008] NSWSC 946, where McClellan CJ at CL made an indemnity costs order by reference to a rejected offer of compromise made pursuant to r 20.26, applying r 42.14. 57While the rules with respect to offers of compromise are subject, generally, to the court otherwise ordering, and the terms of s 40(2) permit the obligations otherwise imposed on the court to be withdrawn where the court is satisfied that "the interests of justice require otherwise", these escape clauses were not called in aid in the present case. 58Otherwise, the principal difference between s 40(2) and offers of compromise under the UCPR is that the entitlement to indemnity costs under the UCPR is triggered by the offeree who does not accept failing to better the offer: UCPR, rr 42.15 and 42.15A. By contrast, under s 40, the contingencies upon which the entitlement depends are (a) that the offer was a reasonable offer at the time it was made and (b) the offeree unreasonably failed to accept the offer. 59It may be noted that s 40(2) does not deal in mirror terms with the case where the plaintiff is successful and the case where the plaintiff is unsuccessful. Thus, the entitlement in respect of a successful plaintiff is triggered not only by the failure of the defendant to accept a settlement offer made by the plaintiff, but also where the defendant has "unreasonably failed to make" a settlement offer. There is no equivalent in respect of the plaintiff, where the plaintiff has failed. Accordingly, in the present case, the issues are limited to the two set out in the preceding paragraph, in respect of offers made by the defendant. 60Although nothing appears to turn on it for present purposes, there are other respects in which the two provisions are not mirror images. Thus, paragraph (a) refers to the defendant failing to "agree to a settlement offer proposed by the plaintiff", whereas paragraph (b) refers to the plaintiff failing "to accept a settlement offer made by the defendant". It is doubtful whether these variations in language are significant in any circumstances. 61As the primary judge noted at [11], between the date the proceedings were commenced (27 August 2009) and the date the trial commenced (7 September 2011) the defendant made six offers of settlement. (In the same period the plaintiff made five counter-offers.) 62The first offer, made one month after the commencement of the proceedings, was an offer of amends by publishing a letter to the editor making a reasonable correction, together with payment of the plaintiff's expenses up to $5,000. The primary judge accepted the plaintiff's submission that it was not unreasonable for him to decline such an offer as it would have only partly vindicated his position and included no amount by way of compensation. Although the proposed appeal extended to that offer, no significant submissions were directed to it. 63The second offer by the defendant, made on 3 February 2010, was a Calderbank offer of $10,000 plus costs as agreed or assessed. The offer required that the proceedings be dismissed and that the plaintiff execute a form of release including an indemnity and confidentiality terms. The plaintiff's costs at that time were $17,000, so that the global offer was $27,000. 64The four subsequent offers made by the defendant were all inclusive of costs and subject to the same conditions, with the addition that the plaintiff was required to give a warranty that each of the alleged imputations was false. The most generous offer was that made on 4 March 2011, in an amount of $140,000 inclusive of costs, at a time when costs were said to be $97,000, thus allowing an amount by way of compensation of $43,000. 65Each of the offers required acceptance within a specified time (which varied between offers), but no complaint was made as to prejudice in that regard and the primary judge accepted that the times permitted by each offer were reasonable. He then approached the assessment of the offers on the following bases: (a) the requirement to warrant the falsity of the imputations was not unreasonable - [23]; (b) denying the plaintiff public vindication was not unreasonable - [23]; (c) in the absence of public vindication, a more generous amount of compensation was required than otherwise - [23]; (d) on the basis that the imputations were tolerably clear and defamatory, the reasonableness of the offers was to be assessed by reference to an estimate of the reasonable compensation, subject to a discount of 25% to reflect the possibility that the defence of substantial truth would succeed - [19] and [21]; (e) a fair assessment, albeit conservative, of the likely range of damages, undiscounted for the risk of failure, was $75,000-$125,000, giving a mid point of $100,000 - [20], and (f) that amount should be increased to allow for the absence of public vindication, the provision of the warranty and the entitlement of the plaintiff to indemnity costs from the date of his offer of compromise - [20]. 66Without making provision arithmetically for any of the uplift factors, a reasonable figure would therefore have been $75,000, making the highest offer (of $45,000) below a reasonable range. 67In those circumstances, the primary judge considered that the offers may not have been settlement offers because they were not reasonable at the time each was made (at [24]), but in any event the plaintiff's failure to accept the offers was not unreasonable: at [25]. The entitlement to indemnity costs under s 40 therefore was not engaged. 68The applicant's submissions, although comprehensive, raised no issue of principle in respect of the approach adopted by the primary judge. The highest the submissions rose was the challenge to the assessment of risk at 25% in circumstances where, it was submitted, the plaintiff inevitably faced substantial difficulties as to his credit-worthiness. As to that, the primary judge stated at [19]: "The result, at a practical level, depended almost entirely on the issue of the substantial truth of the imputations. As to this the defendant bore the onus of proof. The defendant had no eye witness or documents to provide direct evidence of the truth of the imputations. As against that there were admissions and inconsistencies in various documents which left open the possibility of a successful attack on the plaintiff's credit." 69As the applicant noted, there may be a real issue as to how the Court should approach such an appeal. Although the choice of a discount factor is not an exercise of a discretionary power in the sense accepted in House v The King [1936] HCA 40; 55 CLR 499, it does involve the selection of a point within a range of permissible options. On the other hand, if the question is more broadly identified as a challenge to the trial judge's finding of reasonableness, that is a binary determination, albeit one requiring an evaluative judgment. 70On any view the assessment required familiarity with the material available to the trial Court, in order to assess the reasonableness of the offer at the time it was made, guarding against the dangers of hindsight, which inevitably arose when the assessment was made after the conclusion of the trial. This Court was not invited to undertake any such exercise. 71It is sufficient for present purposes to say that it would be an unusual case in which this Court would embark upon such an exercise in the absence of any issue of principle being raised and in the absence of any manifest error. 72The primary judge correctly identified the legal principles and the relevant material and reasoned in an orderly, careful and manifestly sensible way to his conclusion. He adopted, appropriately, the same approach in applying Calderbank principles. In those circumstances, the proper approach for this Court is to refuse leave to appeal.

Conclusion 73The Court should make the following orders in respect of the application for leave to appeal against the refusal to award indemnity costs: (1) Refuse the application by Nationwide News Pty Ltd for leave to appeal. (2) Order that the applicant pay Dr Hynde's costs of the application. 74TOBIAS AJA: I agree with the orders proposed by Basten JA for the reasons he has expressed and for the additional reasons expressed by McColl JA.

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. Decision last updated: 01 November 2012

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