Kermode v Fairfax Media Publications Pty Ltd

Reginald Lionel Kermode (Plaintiff) PARTIES : Fairfax Media Publications Pty Ltd (1st Defendant) Fairfax Digital Australia & New Zealand Pty Ltd (2nd Defendant) Linton Besser (3rd Defendant)

COUNSEL : Mr K P Smark SC (Plaintiff) Mr M A Polden (Defendants)

SOLICITORS : Pigott Stinson Lawyers (Plaintiff) Johnson Winter & Slattery (Defendants)

• 13 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

20497/09 KERMODE v FAIRFAX MEDIA PUBLICATIONS PTY LIMITED & ORS

JUDGMENT 1 HER HONOUR: These are proceedings for defamation brought by Mr Reginald Kermode against two companies in the Fairfax Group and a journalist arising out of the publication of a series of pieces concerning the propriety of Mr Kermode's business dealings in the taxi industry. 2 The defendants objected to the way in which Mr Kermode had pleaded his claim. Following an exchange of correspondence between the parties, Mr Kermode has proposed an amended statement of claim (MFI 1) which he now seeks leave to file. Leave is opposed by the defendants for the following reasons:

(a) as to two of the matters complained of, which are publications on the Internet, the "publication" on which Mr Kermode has chosen to sue consists of what might be termed the static contents of the relevant web page. The defendants contend that Mr Kermode is obliged, in addition, to plead material embedded within those pages by hyperlink as part of the relevant publication;

(b) the defendants have some objections to the imputations sought to be relied upon by Mr Kermode. Obligation to plead the hyperlinked material 3 The first matter complained of by Mr Kermode is an article that appeared in a printed newspaper published by the first defendant. There is no issue as to the way in which Mr Kermode has pleaded that publication. 4 The second matter complained of is an electronic version of the printed article (in substantially the same terms) which appears as a page on a website maintained by the second defendant. As is commonly the case with publications on the Internet, the web page includes a hyperlink or "multimedia" link embedded under the words "Find out how Reg Kermode got to the top, and read the documents which put him there". For the purpose of determining the present argument, the parties asked the Court to download that page, and the further page available through the hyperlink, from the Internet. That was done during the course of the hearing. 5 The link takes the reader to a separate web page, which has been pleaded as a separate publication by Mr Kermode (the third matter complained of). The defendants contend that Mr Kermode is obliged to plead the third matter complained of as part of the second matter complained of. 6 The web page which forms the third matter complained of includes a video concerning Mr Kermode, together with two series of further hyperlinks. The defendants contend that Mr Kermode is obliged to plead some, but not all, of those hyperlinks as part of the third matter complained of. On the left-hand side of the page, underneath the frame in which the video may be viewed, is the heading "The investigation". Under that heading, there is a catalogue of related articles, each identified by a headline, a date and a brief description of the contents. In each case, a link to the relevant article is embedded under those words. 7 The defendants do not contend that Mr Kermode is obliged to plead in full all of the material accessible via those links. Their position in respect of that material was confined to the contention that Mr Kermode was obliged to plead the words that appear on the web page itself (the headings, dates and brief descriptions of the articles). Mr Kermode is content to accede to that contention. 8 On the right-hand side of the web page is a second heading, "Investigation documents". Underneath that heading are five document titles with a hyperlink to each document. The defendants contend that Mr Kermode is obliged to plead, as part of the third matter complained of, the content of the material available through those hyperlinks, and not just the words that appear on the web page itself (the titles of the documents). Mr Kermode opposes that course. 9 As noted by Mr Smark, who appeared for Mr Kermode, the combined effect of the defendants' contentions is to require Mr Kermode to plead the second and third matters complained of, together with the contents of the five "investigation documents" embedded by hyperlink within the third matter complained of, all as a single publication. The Court was not taken to the contents of the investigation documents and no argument was put as to any impact that material might have on the determination of defamatory meaning in the present case. 10 Disputes as to what constitutes the relevant "publication" for the purpose of a defamation action derive from the principle that defamatory meaning must be determined by reference to the whole of what has been published. Written publications can take many forms and the precise delineation of a publication will not always be clear. As noted by Simpson J in Phelps v Nationwide News Pty Limited & Anor [2001] NSWSC 130 at [10], there is no categorical test for determining the boundaries of any particular publication. Her Honour said: "There will, no doubt, be many cases where reasonable minds might differ on the proper categorisation, and many where a reasonably minded person would recognise that either classification would be valid. In these cases, the plaintiff has the option as to the manner of pleading." 11 Phelps was a case in which the plaintiff had pleaded the synopsis of an article and the article itself (both appearing in the same edition of the newspaper) as separate publications. The defendant complained that the two items should have been pleaded as a single publication. The test applied by Simpson J at [30] was that it is not enough to establish that the two items could properly be seen as a single publication. It is only if that is "the only view reasonably open" that it is appropriate to compel a plaintiff to plead two items as one. 12 The test stated by Simpson J in Phelps was approved by the Court of Appeal in Australian Broadcasting Corporation v Obeid [2006] NSWCA 231; (2006) 66 NSWLR 605 at [69] per Tobias JA, Hodgson and Ipp JJA agreeing; see also Robinson v Brighton [2007] NSWSC 1125 at [10]-[14] per Nicholas J. 13 Mr Smark drew my attention to the additional comments made by Hodgson JA in Obeid at [4], where his Honour suggested a constraint on the plaintiff's freedom to choose the material he will sue on, namely, where his choice can be considered to complicate the proceedings unduly. Mr Smark submitted that no such consideration arises in the present case. On the contrary, the publications sought to be sued on by Mr Kermode lend themselves to simplicity, each consisting of the static contents of a single web page. Mr Smark suggested that it is, rather, the defendants' preferred choice of publication that would unduly complicate the present case. 14 Leaving that consideration aside, Mr Smark submitted that consideration of the two matters complained of as a single publication that also includes the five "investigation documents" is not the only view reasonably open. He submitted that Mr Kermode should be permitted to plead the two web pages separately and without the addition of any of the hyperlinked material. 15 Mr Polden, who appeared for the defendants, accepted that the applicable principles were as outlined by Mr Smark. He submitted, however, that in determining whether it is reasonably open to plead the publications as chosen by Mr Kermode, it is necessary to have regard to the following considerations:

(a) whether the terms of one publication invite the reader also to receive other material, or make apparent an intention that they be read together;

(b) whether there are direct internal references in one publication to the other such that the reader may be expected to read them together;

(c) the diversity of the content of the two publications. In that respect, Mr Polden submitted that, in the present case, there is identical material in the third matter complained of, which should be viewed as a more detailed version of the second matter complained of, so that it is appropriate to consider them as a single publication. 16 Mr Polden submitted that those are factors that have been present in successful "strike-in" applications and conspicuously absent when such applications have been unsuccessful. He referred me, in particular, to the decisions in Phelps; Sandilands v Channel Seven Sydney Pty Limited [2005] NSWSC 1250; Westerway v Jones and Radio 2UE Sydney Pty Ltd (Supreme Court of NSW, 20 August 1993, unreported) and Beran v John Fairfax Publications Pty Ltd [2004] NSWCA 107. 17 Mr Polden submitted that there are features of the web pages sued on in the present proceedings which amount, in effect, to an invitation to the reader also to receive the material available through the hyperlinks. In relation to the second matter complained of, he noted the content of the hyperlinked words, together with the fact that, when the cursor runs over those words, they light up or change colour and the cursor changes from an arrow to a pointing hand, so as to encourage the reader to pursue the link. 18 As to the third matter complained of, Mr Polden relied on the additional factor that the video itself depicts parts of the contents of the documents available through the hyperlinks. He submitted that that is a further invitation to view those documents in full. As noted by Mr Smark, however, the video itself does not expressly state that the documents it depicts may be viewed in full through the hyperlinks. 19 I accept that the factors relied upon by Mr Polden might encourage some readers to pursue some of the links, but I do not think it follows that the material identified by the defendants must be viewed as a single publication. 20 The cases relied upon by Mr Polden only serve to emphasise the degree of latitude a plaintiff has in choosing how to frame his case. The decision which provides the most support for the defendants' position is Beran. In that case, the Court of Appeal upheld the decision of the trial judge that the pleading of two sections of an article as separate publications was impermissible: at [56] per McColl JA, Mason P and Beazley JA agreeing. 21 It is difficult to compare that case with the present case because the decision in Beran turned on the manner in which the two articles were presented, which McColl JA concluded was such that the ordinary reader would have read them as one. The manner in which those articles were presented is of course not available to be assessed by me but it is clear from the description of that material in her Honour's judgment at [6]-[12] that the two parts were closely linked. 22 A critical consideration in the determination of the present question is the way in which people view material on the Internet. It is useful, in that context, to return to the discussion of the nature of the tort of defamation in the decision of the High Court in Dow Jones v Gutnick [2002] HCA 56; (2002) 210 CLR 575, particularly in the joint judgment (Gleeson CJ, McHugh, Gummow and Hayne JJ) at [25]-[27]. As stated there, the tort of defamation is concerned with damage to reputation, which is done when a defamatory publication is comprehended by the reader, listener or observer. 23 It was held in Gutnick that, in the case of publication on the Internet, it is only when material is downloaded onto the computer of the reader that there is a publication of that material for the purpose of the law of defamation: at [44] (joint judgment); Gaudron J agreeing at [56]; see also [124] per Kirby J and [184] per Callinan J. The issue arose in that case in the context of a dispute as to the place of the tort, but the analysis in the joint judgment is of general application. 24 Once it is appreciated that publication of a web page is complete when it is downloaded onto the reader's computer, it must follow, in my view, that it is open to Mr Kermode in the present case to plead each separate web page as a separate matter complained of. He would have a cause of action if a single person downloaded only that page (assuming it is defamatory), even if it contained the clearest invitation and internal reference to other material available on the same web site. In that event, damages would be confined to the harm suffered by reason of publication to that single person, but the cause of action would be complete. I express that view with some hesitation, however, since the parties did not raise the application of Gutnick and I have heard no argument as to the correctness of the view I have expressed. 25 In any event, even if that view is wrong, I am satisfied that it is open to Mr Kermode in the present case to plead the publications in the manner proposed in the amended statement of claim (subject to the concession referred to in [7] above). Following the hearing, Mr Smark (with leave) drew my attention to a similar determination in the decision of the Full Court of the Supreme Court of Western Australia in The Buddhist Society of Western Australia v Bristile [2000] WASCA 210. 26 In that case, a majority of the Court rejected an argument that separate files on an Internet site that were linked to one another should be regarded as one item for the purposes of the law of defamation. The majority held that the judge at first instance had been correct to regard the letter sued on, which was a separate web page, as a separate libel: at [10] per Anderson and Owen JJ. Wheeler J noted that there were reasons to regard the letter as a single publication, but expressed the view that the contrary position was arguable. Her Honour thought that the judge at first instance had been wrong to strike out part of the defence which sought to rely on three linked items as a single publication (described by the pleader as an "entire package of information"): at [47]-[48]. 27 In the present case, each publication sued on is the whole of the static contents of a single web page. In the case of each article there would, in my view, be a class of readers who would choose to download that single page and confine their reading to the contents of that page, without pursuing any hyperlinks. Each can certainly be read as a single item. 28 The alternatives are many, but the defendants rely on only one. It would be open to a reader browsing the Internet to download any combination of the links. The nature of Internet browsing is such that it is difficult to say what path of links might be followed on any site, regardless of any cross-referencing between the items in question. Some readers might work their way meticulously through every link. Some might download the precise combination contended for by the defendants in the present case, but that is plainly not the only reasonable view as to what constitutes the publication. 29 As acknowledged by Mr Smark, a corollary for Mr Kermode of proceeding as he has is that his cause of action is confined to publication to the class of readers that viewed each page on its own: Obeid at [4] per Hodgson JA; at [71] per Tobias JA. However, that is a choice that is open to him, in my view.

Imputations 30 The imputations pleaded by Mr Kermode in respect of the first and second matters complained of are: "(a) The plaintiff had obtained a 20 million dollar windfall for his companies by improperly influencing public servants and politicians in his favour by conferring benefits upon them; (b) Alternatively to (a), the plaintiff had attempted improperly to influence public servants and politicians in his favour by conferring benefits upon them; (c) The plaintiff had obtained millions of dollars worth of free taxi plates for his companies by giving gifts and jobs to public servants and donations to political parties." 31 The only objection made by the defendant in respect of those imputations is that imputation (c) does not differ in substance from imputation (a) (see rule 14.30 of the Uniform Civil Procedure Rules 2005). In my view, there is force in that contention. As submitted by Mr Polden, each imputation identifies substantially the same windfall benefit. In each case, the method of obtaining the benefit is the same. Further, it seems to me, the defamatory sting of each imputation is the same. Imputation (c) does not expressly refer to impropriety, but that is the implicit charge of the imputation. I do not think that Mr Kermode should be permitted to rely on both of those imputations. 32 In respect of the third matter complained of, the first two imputations relied upon by Mr Kermode are: "(a) The plaintiff had acted improperly in that he had caused large donations to be made to the Labor Party to maintain his companies' rights in about 11 million dollars' worth of free taxi plates; (b) Alternatively to (a), the plaintiff had acted improperly in that he had caused large donations to be made to the Labor Party in an attempt to maintain his companies' rights in about 11 million dollars' worth of free taxi plates" 33 Mr Polden submitted that imputation (a) is ambiguous in that it is unclear whether it is charged that maintaining the company's rights to the free taxi plates was the purpose or the result. The better reading, he submitted, is that it is the purpose, but in that event imputations (a) and (b) do not differ in substance. 34 Mr Smark sought to address that complaint by indicating that he would amend imputation (a) along the following lines: "(a) The plaintiff had acted improperly in that he had caused large donations to be made to the Labor Party and thereby maintained his companies' rights in about 11 million dollars' worth of free taxi plates; 35 In my view, an amendment to that effect would cure the vice complained of by Mr Polden. Mr Kermode should have leave to amend in accordance with Mr Smark's proposal. 36 The final complaint as to the imputations related to the third imputation alleged to arise from the third matter complained of, which is: "(c) the plaintiff kept taxis designed for disabled people off the road, in order artificially to maintain the value of taxi plates." 37 Mr Polden submitted that imputation (c) is incapable of being conveyed by the third matter complained of. He submitted that it is very unclear, from the contents of the matter complained of, who is alleged to have kept those taxis off the road.

38 The critical passage of the relevant piece is in the following terms: "BESSER: Despite the millions of dollars in effective subsidies sloshing around the industry, a report by the Equal Opportunity Commission in 2002, found Sydney had the lowest proportion of wheelchair taxis of all cities around the country. It had turned out that many of these specially designed taxis, were being kept off the road, which conveniently helped keep the value of taxi plates sky high. Kermode was grateful , showering the New South Wales Labour (sic) Party with more than $190,000 in declared political donations since 1999 and playing a role in the Taxi Council, pouring a separate $183,000 into party's coffers." (My emphasis) 39 It may certainly be accepted that there is no indication in that passage as to who it is alleged kept the taxis for disabled people off the road. The proposition that the article accuses Mr Kermode of doing so is undermined by the statement that Mr Kermode was grateful, apparently to someone else, for that situation. 40 Mr Smark submitted, however, that the whole tenor of the piece is its focus on the conduct of Mr Kermode. Mr Smark noted (perhaps only in passing) the extensive use of analogies with liquid in the discussion of Mr Kermode's financial dealings with government, with references to "millions of dollars in effective subsidies sloshing around", Mr Kermode's expression of gratitude by "showering" the Labor party with donations and "pouring" a separate amount into the party's coffers. Mr Smark submitted that the article plainly points to some wrongdoing on the part of Mr Kermode, although not clearly articulated. 41 The principal subject of the article is the allegation that Mr Kermode persuaded the State government to allow taxi companies to keep special taxi plates that had previously been handed out for free. The article explained that this was intended by the government to offset the costs associated with a proposed scheme to provide taxi transport for disabled people. The scheme would require taxi companies to modify some taxis. The agreement to allow the taxi companies to keep the special plates was to offset the costs of doing so. 42 In that context, the assertion that Mr Kermode was "grateful" might easily be read as a reference to his gratitude for the free plates, rather than his gratitude to the person who kept the taxis off the road. However, even if that is so, there is simply nothing in the matter complained of to suggest that Mr Kermode exercised any control over the amount of time spent on the road by taxis modified for use by disabled people, or even that he was in a position to exercise such control. The only reason suggested in the matter complained of for the lack of success of the scheme to provide taxi transport for disabled people is that taxi drivers were reluctant to drive those taxis, apparently because they earned less money driving them, due to the longer loading and unloading time of disabled passengers. 43 I am mindful of the onerous task facing a defendant who seeks to have an imputation struck out on the basis that it is not capable of being conveyed by the matter complained of. The test is whether the imputation objected to is reasonably capable of being conveyed by the matter complained of. In Favell v Queensland Newspapers Pty Ltd [2005] HCA 52, the High Court said: "Ultimately, the question is what a jury could properly make of it": at [17] per Gleeson CJ, McHugh, Gummow and Heydon JJ; (Kirby J agreeing "generally"). 44 In my view, however, that test is satisfied in the present case. The connection between Mr Kermode and the allegation that the modified taxis were being kept off the road is, in my view, so tenuous as to be incapable of being drawn by the ordinary reasonable reader. Mr Kermode should not have leave to include that imputation in the amended pleading.

Orders 45 The only order that needs to be made at this stage is that leave be granted to the plaintiff to file an amended statement of claim in accordance with these reasons. **********

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.