John Fairfax Publications Pty Ltd v ACP Publishing Pty Ltd [2005] ACTCA 12

Court of Appeal (ACT)|2005-04-01|Before: Crispin P, Marshall JJ, Whitlam J

1. The appellant appeals against a judgment of Whitlam J given 25 June 2004, in which his Honour found that the appellant had defamed the respondent by an article published in the Sydney Morning Herald on 16 December 1999 and awarded damages in the sum of $113,500.

2. The matter complained of was contained in an article concerning marketing that appeared under the headline "Sex, scandals and the year of dot.coms". The introductory paragraph of the article was broken up into sections relating to incidents said to have occurred during each month of that year. The section appearing under the subheading, "February", commenced with the matter complained of, which was in the following terms:

Woman's Day launched its own television show, which was tipped to deliver 50,000 more magazine sales a week. Publisher Australian Consolidated Press and the Nine Network, both subsidiaries of Kerry Packer's publicly listed Publishing and Broadcasting, joined forces to launch Woman's Day ET hosted by entertainment reporter Richard Wilkins and Marie Patane. The show was axed in November. Woman's Day sales dropped an average 236,255 copies a week in the six months to June 30.

3. It was not disputed that the appellant was the publisher of the Sydney Morning Herald and that the respondent was the publisher of Woman's Day.

4. The statement of claim alleged that the matter complained of conveyed the following imputations:

(a) that the plaintiff so poorly managed the publication of Woman's Day magazine that its circulation fell by more than 200,000 copies over a 6 month period;

(b) that the plaintiff was an undesirable company with which to place advertising in its magazine, Woman's Day, because that magazine had suffered a disastrous slump.

5. After referring to the submissions of counsel, his Honour dealt with the suggested imputations in the following passage:

6. In my opinion, the impugned piece does invite the ordinary reasonable reader to draw a link between the launch of the television show and the drop in sales. The imputation is plainly conveyed that the marketing exercise in question was a failure which caused a monumental drop in sales in the period of just four months. That is the obvious point of contrasting the sales objective of 50,000 extra copies in February with the 'average' fall in sales over the first six months of 1999 and of mentioning the subsequent cancellation of the television show in November. The implication of managerial incompetence on the part of the plaintiff is overwhelming. The publisher of a magazine is responsible for its sales and marketing just as an editor is responsible for the editorial copy. In that way, therefore, the imputation pleaded in paragraph (a) of poor management in the 'publication' of the magazine is made out. It may be that this meaning is more refined than the meaning pleaded in that paragraph. If so, it is simply a variant upon which the plaintiff may rely in accordance with the principles of pleading explained in Chakravarti v Advertiser Newspapers Ltd (1998) 193 CLR 519. On the other hand, I do accept counsel's submission that the matter complained of is not capable of conveying the imputation pleaded in paragraph (b).

7. Counsel for the first defendant submitted that the matter complained of was not disparaging of the plaintiff's reputation. It was submitted that it was not defamatory to say of a person that a commercial strategy failed. That may be so. However, once it is accepted that an imputation of managerial incompetence was conveyed, I think such an imputation is plainly defamatory. Defamation embraces disparagement of reputation in trade and business. Sales figures are the life- blood of a magazine. The ridicule implicit in the contrast between the goal for increased sales or 50,000 copies and the massive drop in average sales of 236,255 copies is calculated to damage the reputation of a corporate publisher of magazines."

6. Mr Reynolds SC, who appeared for the appellant with Mr Glasson, submitted that his Honour had fallen into error in finding that imputation (a) had been conveyed by the matter complained of. He accepted that it had been open to his Honour to find that the ordinary reasonable reader had been invited to draw a link between the television show and the drop in magazine sales and that as a marketing exercise it had been a failure which had caused a monumental drop in sales. He argued, however, that there was nothing in the matter complained of that could have fairly conveyed an imputation that the drop in sales had been attributable to poor management of the publication of the magazine. Imputation (a) did not assert or imply that the decision to launch the show had been inherently ill conceived, let alone demonstrative of poor management, or that the respondent had subsequently been guilty of poor management in relation to the production of the show. Nor did it include any statement suggesting that the drop in circulation may have been attributable to inadequacy in the management of the magazine or any other fault on the part of the respondent.

7. On the other hand, Mr McClintock SC, who appeared for the respondent with Mr Richardson, submitted that the finding that imputation (a) had been conveyed had not only been open to his Honour, but inevitable. He argued that the mere fact of what he described as a "catastrophic" drop in circulation following a management decision to embark upon a television programme "tipped" to deliver 50,000 more sales per week, was sufficient to convey such an imputation. At least within a corporate context, such a substantial fall would, in the absence of an alternative explanation, clearly give rise to such an imputation. The imputation emerged with added clarity due to the nature of the article, the prominence given to the statement that the magazine had launched its own television show, the contrast between the anticipated increase in sales and the enormous drop that actually occurred and the note of ridicule which he submitted emerged from the language used in the article.

8. The general principles applicable to issues of this kind were summarised by Lord Reid in Lewis v Daily Telegraph Ltd [1964] AC 234 in the following passage at 258-259:

There is no doubt that in actions for libel the question is what the words would convey to the ordinary man: it is not one of construction in the legal sense. The ordinary man does not live in an ivory tower and he is not inhibited by a knowledge of the rules of construction. So he can and does read between the lines in the light of his general knowledge and experience of worldly affairs . . . . What the ordinary man would infer without special knowledge has generally been called the natural and ordinary meaning of the words. But that expression is rather misleading in that it conceals the fact that there are two elements in it. Sometimes it is not necessary to go beyond the words themselves, as where the plaintiff has been called a thief or a murderer. But more often the sting is not so much in the words themselves as in what the ordinary man will infer from them, and that is also regarded as part of their natural and ordinary meaning . . . Ordinary men and women have different temperaments and outlooks. Some are unusually suspicious and some are unusually naïve. One must try to envisage people between these two extremes and see what is the most damaging meaning they would put on the words in question.

9. See also Slatyer v Daily Telegraph Newspaper Co Ltd [1908] HCA 22; (1908) 6 CLR 1 at 7_; Sim v Stretch_ (1936) 52 TLR 669 at 671; Farquhar v Bottom [1980] 2 NSWLR 380 at 386; Amalgamated Television Services v Marsden (1998) 43 NSWLR 158 at 170 and Steiner Wilson & Webster Pty Ltd v Amalgamated Television Services Pty Ltd [1999] ACTSC 123.

10. The hypothetical ordinary reader has been variously described as a "reasonable reader", a "right-thinking [member] of society", an "ordinary man, not avid for scandal" and sometimes as a "reader of average intelligence". Special knowledge is excluded and so are extremes of suspicion or cynicism on the one hand or naivety and disbelief on the other: Chakravarti v Advertiser Newspapers Ltd (1998) 193 CLR 519 per Kirby J at par 134.1.

11. In deciding whether any particular imputation is capable of being conveyed by the material in question the issue is whether it is "reasonably so capable, and any strained or forced or utterly unreasonable interpretation must be rejected" (see Hunt CJ at CL in Amalgamated Television Services v Marsden at 170). However, a wide degree of latitude will be attributed to the capacity of the ordinary reasonable member of society to draw adverse imputations where the language employed has been imprecise, ambiguous or loose: Amalgamated Television Services v Marsden at 165 and Chakravarti v Advertiser Newspaper Ltd at par 134. 2.

12. The nature of the publication may be a material consideration in determining whether imputations are capable of being conveyed by the words employed. The reasonable reader of a "sensational" article may be permitted to engage in a certain amount of "loose thinking" whilst the reader of a non-sensational article should be taken to apply a greater degree of analytical focus: Steele v Mirror Newspapers Ltd [1974] 2 NSWLR 348 at 373.

13. Mr Reynolds also relied upon a suggested principle that the ordinary reader will be presumed not to draw "inference on inference". Whilst this submission is frequently made in cases of this nature, such a formulation is potentially misleading. The legal test is simply whether the material in question was reasonably capable of conveying the relevant imputation and the significance of any distinction between primary and secondary inferences must be considered in the context of that test. There may be many circumstances such as those arising in Mirror Newspapers v Harrison [1982] HCA 50; (1982) 149 CLR 293, in which a primary inference could fairly be drawn from the published material but a secondary inference said to arise from the first could not be regarded as an imputation reasonably drawn from that material. At the other extreme, there may be circumstances in which the second inference would be regarded an almost inevitable corollary of the first. In the latter event, there would be no rational reason to act upon some perceived truism that a reasonable reader would lack the intellectual acuity to draw it. As Hunt CJ at CL explained in Amalgamated Television Services v Marsden at 166, the real point of distinction lies between what the ordinary reasonable reader could understand from what the defendant has said in the matter complained of and the conclusion which such a reader might reach by taking into account his or her own belief which has been excited by what was said.

14. An imputation must, of course, reflect some meaning fairly attributable to the words in question, albeit as Lord Reid pointed out in the passage we have quoted, the most damaging meaning an ordinary reasonable reader would attribute to them. Hence, as Hunt CJ at CL observed, it is the former, not the latter, concept that is relevant. This distinction is of some importance in the present case.

15. Having considered the competing arguments of counsel, we have concluded that the matter complained of, read in the light of these principles, did not convey imputation (a). It did not expressly allege poor management, or indeed, make any reference to management. It certainly did not allege that the circulation of the magazine had fallen as a result of poor management of the publication of Woman's Day.

16. Mr McClintock submitted that it had been open to his Honour to consider whether the matter complained of conveyed an imputation that the magazine circulation had fallen as a result of any poor management decisions, whether in deciding to launch the television programme or by subsequent decisions relating to that programme, even if unrelated to the actual publication of the magazine. He submitted that it is sufficient that any such imputations were substantially similar to those pleaded and that the court looks to the substance of the imputation pleaded rather than the precise words employed in the pleading: Morosi v Mirror Newspapers [1977] 2 NSWLR 749 at 771 and Chakravarti v Advertiser Newspapers Ltd per Gaudron and Gummow JJ at par 60 and Kirby J at par 139. Even a different nuance of meaning may be relied upon if not unfair to the defendant to allow the plaintiff to depart from the meaning pleaded: Chakravati v Advertiser Newspapers Ltd per Brennan CJ and McHugh J at 533 (see also the judgments of Gaudron and Gummow JJ at 546).

17. We accept this submission. However, we are unable to accept that the matter complained of conveyed any imputation that the drop in circulation of the magazine was causally related to poor management on the part of the respondent. It contained nothing to suggest anything more than that a business strategy adopted by the respondent had proven a dismal failure. It did not suggest that at the time it agreed to launch the show, the respondent should have realised that it would deter people from purchasing the magazine rather than attract new readers or that the decision otherwise reflected poor management. It did not suggest that the Nine Network, with whom it joined to launch the programme, had obviously lacked experience in television broadcasting, that the journalists engaged to present the programme had obviously been inappropriate presenters or that the respondent should have known that the format would be unpopular. Nor did it suggest that some management decision on the part of the respondent had caused or contributed to the apparently adverse impact of the programme. Indeed, there is no reason to suppose that an ordinary reader, informed that the respondent had joined with the Nine Network to launch the show, would have assumed that the respondent, which was a publisher of print magazines, would have managed the show rather than the television network, which would obviously have had more experience in that area.

18. Whilst Mr McClintock protested that these points had not been put to his Honour, he did not suggest that the appellant should not be permitted to take them on appeal or that any prejudice would thereby result. The fact that they were not taken at the trial of the action may suggest that his Honour did not have all of the assistance he could have expected but is of no present relevance. In any event, we think that they do no more than to reveal some of the logical impediments that lie in the path of Mr McClintock's contentions. It is true, of course, that the hypothetical ordinary reasonable reader might not have approached the matter in such an analytical manner, but such a reader must be presumed to have approached it fairly. In our opinion, the ordinary reasonable reader would not have made the logical leap suggested by Mr McClintock.

19. Since we are satisfied that imputation (a) was not conveyed, the appeal must be upheld.

20. The respondent also filed a cross appeal against his Honour's finding that imputation (b) had not been conveyed by the matter complained of. In our view, this must fail. The matter complained of may have implied that if the television programme was intended as an advertising measure to promote the sales of the magazine, then it was an abject failure. However, it contains no statements that could fairly be taken to convey any imputations concerning the effectiveness of advertising other products in the magazine.

21. Mr McClintock submitted that the reference to a sudden dramatic drop in circulation was sufficient to convey the imputation. We are unable to agree. There is nothing in the matter complained of that would, in our opinion, cause the ordinary reasonable reader to even turn his or her mind to this question.

22. It is true that a reader with some involvement in the advertising industry might have thought that the suggested drop in circulation would make the magazine less attractive as a venue for advertising though, as his Honour suggested, it seems unlikely that potential advertisers would have relied upon circulation figures suggested in a newspaper article. However, even if a reader had formed such a conclusion, it would have been reached by taking into account his or her own belief excited by what was said in the matter complained of. As Hunt CJ at CL pointed out in Amalgamated Television Services v Marsden, such a possibility should not be confused with an imputation being conveyed by the article itself.

23. In our opinion his Honour was right that imputation (b) had not been conveyed by the matters complained of.

24. In view of the conclusions we have reached on these issues, it is unnecessary to consider the other issues raised by the parties.

25. The appeal will be upheld, the cross appeal dismissed, judgment set aside and, in lieu thereof the respondent's claim will be dismissed. The respondent will be ordered to pay the appellant's costs of the action, as well as the costs of the appeal and cross appeal.

I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.

Cross Respondent: Mr G Reynolds SC with Mr R Glasson

Cross Appellant: Mr B McClintock SC with Mr M Richardson

At a glance

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Judgment (13 paragraphs)

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Cases Cited (4)