Kelly v Fairfax Media Publications

[2012] NSWSC 690

Supreme Court of NSW|2011-05-11|Before: McCallum J, Gleeson CJ, Heydon JJ, Kirby J, McHugh JA, Samuels JA, Mahoney JA, Hunt J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2011-05-11

Before

McCallum J, Gleeson CJ, Heydon JJ, Kirby J, McHugh JA

Source

Original judgment source is linked above.

Judgment (13 paragraphs)

[1]

Judgment 1These are proceedings for defamation commenced against the proprietors of the Sydney Morning Herald in its print and Internet editions. This judgment determines a series of objections taken by the defendants to the imputations sought to be relied upon by the plaintiff. 2By agreement between the parties, argument on the objections proceeded by reference to a form of imputations propounded for inclusion in a proposed amended statement of claim. It was common ground that the test to be applied in determining whether to allow each proposed imputation was no different from the approach that would be taken to an application to have an imputation struck out of an existing pleading. 3As to objections on the grounds of capacity, the test is whether the imputation is reasonably capable of being conveyed by the matter complained of. Some guidance as to the application of that test may be found in the decision of the High Court in Favell v Queensland Newspapers Pty Ltd [2005] HCA 52 where the High Court said (at [17] per Gleeson CJ, McHugh, Gummow and Heydon JJ; Kirby J agreeing "generally"): Ultimately, the question is what a jury could properly make of it. 4As to objections based on the form of an imputation, the test is whether the imputation has a tendency to cause embarrassment in the proceedings. An ambiguous imputation is liable to be struck out on that basis: Singleton v Ffrench (1986) 5 NSWLR 425 (at 433G per McHugh JA; Samuels JA agreeing at 427C; Mahoney JA not deciding). That is the case even though the imputation may be pleaded in the very words published by the defendant: Whelan v John Fairfax & Sons Ltd (1988) 12 NSWLR 148 at 155E per Hunt J. In practical terms, the issue is "whether there is likely to be confusion either at the pleading stage or at the trial in relation to the meaning for which the plaintiff contends": Whelan at 155F. 5The plaintiff sues on five articles published over four days. Each article was published in the same or substantially the same form in print and on the Internet. The parties agreed that the Court's rulings in respect of the print versions of the articles would govern the pleading of the Internet publications. 6The subject matter of the first article was Mr Kelly's involvement, whilst he was a senior official at the Sydney Harbour Foreshore Authority, in the grant of a lease of a waterfront commercial property to the Kazal family. The article alleged that the Kazals took control of the lease "while secretly providing incentives" to Mr Kelly. The later articles addressed various different aspects of that basic theme. 7There was a measure of conflation in the defendants' objections. I have endeavoured to distil what I understood to be the essential points.

[4]

Whether imputations 7(b) and 7(c) differ in substance from 7(a) 14The defendants' second objection is that imputations 7(b) and 7(c) do not differ in substance from imputation 7(a) (in which event the plaintiff's reliance upon them would contravene rule 14.30(3) of the Uniform Civil Procedure Rules 2005). 15Alternatively, it was submitted that imputations 7(b) and 7(c) are contained within imputation 7(a) and should properly be regarded as "fall-back" imputations of less serious meaning (for my part, I would have thought 7(a) would be regarded as the fallback of less serious meaning). The defendants submitted that fallback imputations are correctly regarded as being different in substance from a more serious imputation (and so able to be separately pleaded) but must only be relied upon in the alternative, citing the decision of the Court of Appeal in Harvey v John Fairfax Publications Pty Ltd [2005] NSWCA 255 at [75] per Hunt AJA; Santow JA agreeing. 16Harvey was decided under the Defamation Act 1974, which created a separate cause of action for each separate imputation. It was in that quaint statutory context that the jurisprudence discussed by Hunt AJA at [75] to [77] evolved. In my view, however, there is still practical utility in the separate pleading of a lesser imputation. The requirement for adequate specification of the imputations relied upon derives from broader concerns, including fairness to a defendant and the need for clarity of the issues at trial: Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135 per Gleeson CJ at 136F. Indeed, it is difficult to see how else a case could be left to the jury so as to obtain a comprehensible verdict. What is clear, however, is that a fallback imputation should stand only as an alternative. 17The defendants submitted that, in ordinary English usage, a bribe is a benefit or incentive conferred in exchange for an improper advantage or benefit "provided or to be provided in return". Unusually, the defendants submitted that the first matter complained of could only be understood in that more serious sense, as meaning that the plaintiff in fact provided favourable treatment in return for bribes (however defined) from the Kazals. On that basis, and noting that the matter complained of makes reference to any allegation of bribery other than by the Kazal family, the defendants submitted that imputations (b) and (c) are contained within imputation (a) and are "nothing more than alternative ways of formulating the same imputation based on exactly the same words in the matter complained of and applying them in exactly the same way". 18Those words were drawn from the decision of the Court of Appeal in John Fairfax Publications Pty Ltd v Jones [2004] NSWCA 205 at [16] per Spigelman CJ. That case was of course concerned with the requirements of contextual imputations pleaded by a defendant in support of a defence of contextual truth under the Defamation Act 1974. For a plaintiff, it is enough that the imputations differ in substance: at [19] per Spigelman CJ 19The plaintiff submitted that imputation 7(a) conveys a different concept from imputations 7(b) and 7(c) in that imputations 7(b) and 7(c) suggest that the plaintiff was in fact suborned, whereas imputation (a) merely refers to acceptance of a gratuity with no favour in return. In my view, viewing the imputations in the context of the matter complained of as a whole, the only difference is one of the degree of seriousness of the conduct in question, which is in substance the same conduct. A person is corrupted upon acceptance of a secret benefit. If he in fact provides favourable treatment in return, that is properly regarded as a feature of aggravation of the corruption, since the law pay regards to consequences. However, it is the corruption of integrity upon acceptance of the benefit which is the essence of the sting. On that basis, I rule that imputation 7(a) be allowed to stand on the pleading. However, that imputation should be regarded as a fallback.

[6]

Imputation 7(d) 23Imputation 7(d) is: (d)that the plaintiff, while the second most senior official of the Sydney Harbour Foreshore Authority, was secretly and simultaneously an employee of members of a powerful property family which leased properties from that authority, which warranted a finding of corrupt conduct by the Independent Commission Against Corruption. 24The defendants' first objection was that the imputation rolls up two separate concepts of corruption and concealment, which is apt to confuse the jury. I do not accept that submission. The notion of corruption identified in the imputation comprehends the concealment of the relationship with the Kazals as an aspect of the corruption. It is not a separate sting, it is an aspect of the sting relied upon. 25The next objection was that the imputation does not identify the person against whom the finding of corrupt conduct would be made. I think it is tolerably clear from the context of the whole imputation that it refers to a finding warranted against the plaintiff but in any event, as noted on behalf of the plaintiff, that can easily be cured. 26The defendants' substantial complaint in respect of imputation 7(d) related to the use of the term "corrupt conduct". It was submitted that the conduct identified (of secretly being employed by a lessee of properties from the Authority) is not capable of amounting to corruption in the ordinary sense. It was further submitted that the reference to a finding of the ICAC suggested that the term "corrupt" was being used as a term of art in the imputation as opposed to being used in the ordinary sense of the word. 27The defendants submitted on that basis that the imputation fails to identify with reasonable precision the shade of meaning intended to be understood in the reference to "corrupt conduct". Reliance was placed upon the well known judgment of Gleeson CJ in Drummoyne where his Honour said (at 138F): Allegations of corruption have, in recent years, provided a fruitful source of controversy in this area of defamation law and practice. As Hunt J pointed out in Whelan and elsewhere, the word "corrupt" can have significantly different shades of meaning. This does not make it unusual, but, because it is a word the use of which is apt to give rise to allegations of defamation, it seems to have come in for a high degree of forensic exegesis. Depending upon the context, for example, it can mean that a person takes bribes, or that he abuses power entrusted to him, or that he improperly obtains private benefits from a public position. The range of possible meanings of the word when used in connection with public officials in this State has been substantially expanded by the enactment of the Independent Commission Against Corruption Act 1988 which defines "corrupt conduct" in a manner that goes well beyond the ordinary meaning of that expression and is notable for its generality and vagueness. 28In considering the application of those remarks, it is helpful to bear in mind the terms of the imputations rejected in that case, which were: (a)That the plaintiff had carried out its functions as a Council corruptly in respect o the development and expansion of the Birkenhead Point Marina. (b)That the plaintiff for reasons arising out of corruption victimised and harassed the proprietors and/or management of the Gladesville Marina. (c)That the plaintiff was a corrupt Municipal Council. 29Those imputations gave no content to the terms "corruptly", "corruption" and "corrupt". It was in that context that the existence of a possible range of meaning including the extended definition under the ICAC Act was referred to by the Chief Justice. 30I do not agree that the conduct identified in imputation 7(d) is not reasonably capable of constituting corrupt conduct in the ordinary English usage of that word, but in any event the imputation specifies the particular sense intended, which derives from the language of the matter complained of itself. The article implicitly assumes a definition of "corrupt conduct" such as to warrant an adverse finding by the ICAC. Paragraphs 26 and 27 of the first matter complained of state: Last year the Independent Commission Against Corruption told the [Sydney Harbour Foreshore Authority] "corrupt conduct is not likely to have occurred ... on the basis of the information before the Commission". But ICAC was not informed of the depth of Mr Kelly's relationship with those on the other side of the negotiating table and did not consider internal emails which demonstrate he was knowingly engaged in a secret deal with the Kazals. 31The suggestion that Mr Kelly's secret position of employment with the Kazals (in the circumstances identified) warranted a finding of corrupt conduct by ICAC thus comes from the article itself. The content of that suggestion is specified in clear terms in the imputation. To the extent that there is any imprecision in the shade of meaning of the phrase "corrupt conduct" (which I doubt), the pleader is constrained by the language of the matter complained of itself. The plaintiff is granted leave to amend so as to plead imputation (d).

[9]

Second matter complained of 39The second article sued on was published on 2 September 2010 under the headline "ICAC to investigate Rocks property deals". It is convenient to consider the first two imputations together. 40Imputation 10(a) is: that the plaintiff is corrupt in that, while a senior public servant, he accepted secret incentives in relation to property deals entered into by the Sydney Harbour Foreshore Authority. 41Imputation 10(b) is: that the plaintiff is corrupt in that, while a senior public servant, he provided favourable treatment to the Kazal family, a prominent tenant of the Sydney Harbour Foreshore Authority in exchange for a promise of a lucrative position with a Kazal associated company. 42The defendants submitted that imputation 10(b) is incapable of arising from the second matter complained of because it contains no suggestion that the plaintiff did anything in return for the incentives he accepted. I do not accept that submission. As stated above, the question is what the jury could properly make of the article as a whole. In its headline, the article announces an ICAC investigation into property deals. The only "property deals" identified in the article are leases of waterfront properties to the Kazals. The references to the leases are juxtaposed with a discussion of benefits received by the plaintiff from the Kazals. In my view, the article is reasonably capable of imputing a corrupt connection between the leases and the incentives allegedly provided to the plaintiff. 43Alternatively, the defendants submitted that, although imputation 10(a) is one of a general character defect in the nature of corruption, when read in the context of the matter complained of it is clearly based on the conduct specified with more particularity in imputation 10(b). On that basis, it was submitted that imputation 10(a) should properly be regarded as a fallback to imputation 10(b). In my view, there is force in that submission. Imputation 10(a) is in any event too vague, in my view, specifying no connection between the plaintiff's role and the deals entered into by the Sydney Harbour Foreshore Authority. I do not think it should be permitted to stand in its present form. However, a clearer form of the imputation could properly be relied upon as a fallback to imputation 10(b). 44Imputation 10(c) is: that the plaintiff took elaborate steps to conceal from the Sydney Harbour Foreshore Authority, his then employer, that he was travelling to the United Arab Emirates to discuss employment opportunities for himself with Charif Kazal, one of the Authority's highest profile tenants, because he knew that such conduct was corrupt. 45The defendants submitted that the imputation is incapable of arising, since the matter complained of makes it clear that the trip in question was taken during the plaintiff's holidays and for the purpose of reviewing the Abu Dhabi property market. In my view, the article clearly suggests that the stated purpose of the trips (to review Abu Dhabi's property market) was not the true purpose and that there was deliberate concealment by the plaintiff suggesting an awareness on his part of some wrongdoing. 46The article states that Mr Kelly "kept the travel quiet" and attributes that to his object of meeting "one of the Authority's highest profile tenants, Charif Kazal, whose family leases six properties in the Rocks, to discuss a potentially lucrative new business". The article concludes by stating that confidential emails "show Mr Kelly went to some lengths to hide his arrangements with the Kazals from his State Government employer". In my view, the article is clearly capable of conveying the imputation. It was further submitted that imputation 10(c) rolls up two imputations, one of corruption and the other of concealment. As indicated in respect of imputation 7(d) above, in my view concealment can be an integral part of, and properly comprehended within, the notion of corruption. As identified in argument, however, in this instance the imputation asserts concealment, and knowledge of corruption, on the strength of conduct that is not on its face corrupt. The plaintiff accepted on that basis that the imputation could be articulated with greater precision. That should be done in accordance with the above reasons.

[10]

The third matter complained of 47The third article was published on 2 September 2010 under the headline "Warnings over 'poor controls'". 48Imputation 13(a) alleged to arise from that article is: That the plaintiff, while the second most senior official at the Sydney Harbour Foreshore Authority, entered into a secret relationship with the Kazal family, one of the most controversial tenants of that Authority, thereby exposing the Authority to significant risks contrary to his obligations as the second most senior official of the Authority. 49The defendants object to that imputation on the basis that it is incapable of arising. It was submitted that the passages that were relied upon as conveying that imputation make it plain that the report, identifying the events leading to the significant risks arising out of poor internal controls, related to an earlier period, some six months before the plaintiff's alleged secret relationship with the Kazals. I do not think there is any force in that submission. 50The whole point of the article, as captured in the headline, is that the conduct of the plaintiff was an illustration of the systemic failure identified six months earlier. The article begins by reporting that a draft report in 2006 warned the Sydney Harbour Foreshore Authority that its dealings in respect of some waterfront properties "may not have been negotiated impartially and exposed the Government to significant risks". The clear import of the article is to suggest that the very kind of conduct identified in that report had continued and was manifested in the conduct of the plaintiff notwithstanding those warnings. 51Paragraph 14 of the articles states "a Herald investigation yesterday revealed that just six months after this report the organisation's second most senior executive, Andrew Kelly, entered into a secret relationship with one of the Authority's most controversial tenants, the Kazal brothers". In my view, the contention that the imputation is incapable of arising is untenable.

[11]

The fourth matter complained of 52The fourth article was published on 3 September 2010 under the headline "Property barons gave airline freebies to Labour minister". 53Imputations 16(a) and 16(c) are identical to imputations 7(a) and 7(b) in respect of the first matter complained of and were objected to on the same grounds. My rulings are the same as in respect of those imputations. 54Imputation 16(b) is: 16(b)That the plaintiff is corrupt in that, while a senior public servant, he was simultaneously and secretly an employee of a powerful property family who were tenants of the Sydney Harbour Foreshore Authority when he was responsible for that Authority signing a lucrative lease agreement with them. 55The defendants submitted that the imputation is ambiguous. First, it was noted that the specification of the corruption allegedly attributed to the plaintiff went no further than to identify temporal coincidence between the plaintiff's holding a position as a senior public servant and secretly being an employee of the Kazals. 56It was further submitted that the word "responsible" is a "weasel word". The plaintiff noted that those words are derived from the matter complained of, which states "In 2007 [Mr Kelly] was responsible for signing a lucrative lease agreement with the Kazals on behalf of taxpayers". However, as noted on behalf of the defendants, those words have been elided in the imputation into an allegation that the plaintiff was responsible for the Authority signing the lease, which creates confusion as to whether or not the plaintiff is said to have signed the lease himself. 57As noted above, an imputation is liable to be struck out as ambiguous although pleaded in the very words published by the defendant: Whelan v John Fairfax & Sons Ltd (1988) 12 NSWLR 148 at 155E per Hunt J. It is the duty of the pleader to distil the sense relied upon to the extent that it is capable of distillation. 58In my view, the structure of the imputation and its inclusion of the notion of "responsibility" for the Authority signing the lease does generate ambiguity and confusion. It could mean only that Mr Kelly bore administrative responsibility at the time of the alleged secret employment. It could mean something else. As it stands, the imputation is apt to cause embarrassment and should not be allowed. 59Further, there is some force in the suggestion that the precise form of corruption is not clear. At present, the imputation simply identifies two roles held by the plaintiff (he was an employee of the Kazals; he was responsible for the Authority signing leases). Any repleaded imputation should specify the corrupt act allegedly imputed by reason of his holding those two roles.

[12]

The fifth matter complained of 60The fifth matter complained of was published on 4 September under the headline "Friends in high places". 61Imputation 19(a) is: 19(a)That the plaintiff is corrupt in that, while a senior public servant at the Sydney Harbour Foreshore Authority, he accepted secret incentives from tenants of taxpayer owned properties in the Rocks. 62The defendants submitted that the imputation is ambiguous, since it is not clear whether it only means that the plaintiff accepted secret incentives or whether it suggests that he did something in return. I do not think the imputation has any ambiguity in that respect. In terms, it is confined to the former allegation. 63On that premise the defendants submitted that imputation 19(a) is a fall back to imputations (c), (d) and (e). For the reasons explained above in respect of the first matter complained of, I would accept that is so. 64Imputation 19(b) is: 19(b)The Plaintiff, while a senior public servant at the Sydney Harbour Foreshore Authority between 2005 and 2007, entered into a secret relationship with tenants of that Authority, the Kazal family, contrary to what he knew to be his obligations as a senior public servant. 65The placement of the commas generated some confusion but it was indicated at the hearing that it is intended to assert that the secret relationship was entered into during the period identified. 66The defendants submitted that the imputation is incapable of arising because the matter complained of makes plain that the secret relationship had only been in existence for four months as at August 2007. 67That submission was based on a passage of the matter complained of at paragraph 47 which says: Karl and France Dion signed and returned an "agreement for lease" on July 26 the following year. And in the days before August 22, Kelly, who had by then been keeping his secret for four months, put his signature next to Karl's and France Dion's on behalf of taxpayers. 68There is ample material elsewhere in the matter complained of to qualify or expand upon that statement. For example, paragraph 41 states "confidential documents demonstrate that Kelly was secretly associated with the family for at least a year before leaving the Sydney Harbour Foreshore Authority". 69Capacity objections should not be taken on the strength of selective reference to the matter complained of. In my view, the matter complained of is clearly capable of conveying the meaning that the impugned relationship evolved during the period identified. It is not the kind of thing that would be taken by the reader to have happened overnight. Imputation 19(b) should be permitted to stand. 70Imputation 19(c) is: The Plaintiff took some steps to conceal from the Sydney Harbour Foreshore Authority, his then employer, that he had entered into a secret relationship with tenants of that Authority, the Kazal family, because he knew that such conduct was corrupt. 71That imputation was objected to on the same grounds as imputation 10(c) above. The plaintiff accepted that the fate of the imputation should follow that of 10(c) and that it requires amended in accordance with the discussion above. 72Imputations 19(d) and 19(e) are: The Plaintiff, while a senior public servant at the Sydney Harbour Foreshore Authority, was involved in a corrupt relationship with members of the Kazal family, and by reason of that corrupt relationship, he sought to advantage the Kazal family at the expense of taxpayers by preparing a brief to the Authority proposing that the Kazal family pay it a rent of 8% of turnover of the property of 100 George Street, when the rental should have been 10% of turnover. 73Imputation 19(e) is: The Plaintiff, while a senior public servant at the Sydney Harbour Foreshore Authority, was involved in a corrupt relationship with members of the Kazal family, and by reason of that corrupt relationship, he assisted the Kazal family to obtain the benefit of millions of taxpayers' dollars for excessive renovations to properties leased to them by the Authority. 74It was acknowledged that those imputations should follow the fate of the discussion of imputations 7(e) and 7(f) above. 75I grant leave to the plaintiff to amend the statement of claim in accordance with these reasons.