Khor v Nationwide News Pty Ltd [1999] VSC 38

Supreme Court of Victoria|1999-02-26|Before: HEDIGAN, J.

Defamation - Whether imputations in statement of claim open - Not capable of being defamatory. Defence - Polly Peck plea - Particulars of claimed justification insufficient.

I do not intend to write extended reasons on this application. The debate is to be found in the transcript. There are two applications: one by the plaintiffs and one by the defendant. The plaintiffs' summons of 4th December 1998 is a summons to strike out paragraph 9 of the defendant's defence although essentially it is a summons for further and better particulars of the defence, the failure to deliver which has led to the strike-out application. The defendant's summons of 7th December 1998 is to strike out paragraphs 5(b)(i) and 6(b)(i) of the plaintiffs' amended statement of claim.

The plaintiffs' proceeding arises out of an article published in The Australian newspaper headed "Westpac Pulls Plug on $100m. City Hotel". The article went on to refer to the stopping of work on a four-star hotel development in the city of Melbourne's Chinatown, the collapse being triggered when Westpac withdrew financial support for the project, one of the largest in the Melbourne CBD. A copy of the article is annexed to these reasons. The plaintiffs are Mrs Khor and her partner Mr. Burr and the relevant company 222 Russell of which they are directors and which was the property development company for the hotel project venture. With respect to all plaintiffs it is alleged that the article was defamatory by reason of three imputations said to arise in its ordinary natural meaning:

(i) that they had lost the confidence and the financial support of the bankers in a very large property development project undertaken by them;

(ii) that they were business people whose creditworthiness was in serious doubt;

(iii) that they were in serious financial trouble as a result of their association with the collapse of one largest property developments ever undertaken in Melbourne.

It also claims that in addition to embarrassment and distress, the commercial reputation of all plaintiffs has been severely injured and that they have all suffered damages and will continue to suffer loss and damage.

The defendant denies the plaintiffs' imputations as being capable of arising from the publication. It alleges in paragraph 9 of the defence that in its ordinary and natural meaning the article meant and was understood to mean that Westpac Bank had withdrawn its financial support for a large city hotel building project the developer of which was the third plaintiff, a company in which the first and second plaintiffs were involved, and in this meaning the article was true in substance and in fact. This is the so-called Polly Peck plea in which the defendant raises its own imputations and meaning and justifies them.

Mr. Northrop for the plaintiff essentially put the argument that the plaintiff was entitled to have particulars of the justification contended for by the defendant, identifying the particulars sought as being particulars of the Westpac Bank's "withdrawal of its financial support" for the hotel being developed by the plaintiffs. Mr. D. Beach for the defendant argued that this went beyond seeking legitimate particulars of justification because it inevitably drew in the claim to know the defendant's evidence, he arguing that the phrase "withdraw its financial support" was uncomplicated and clear and that the plaintiffs as a consequence of that knew what the defendant's case was. He contended that the phrase was not vague in any way. He pointed out that they were the very words used by the plaintiffs in the statement of claim.

It appears to be non-contentious that the right to particulars of justification, either in a Polly Peck justification or justification of the plaintiffs' own imputations, exists and that they will ordinarily be given. Whilst the phrase "withdrew its financial support" is not a difficult concept, it does not follow that it may not require some elaboration to enable the plaintiff to know what it is the defendant is contending is true, that forms an element in the meaning of the phrase. In my view the plaintiff is entitled to know the reasonable factual sub-stratum of the generality encompassed by that language. The Bank is not a party to this litigation. The defendant claims that the "withdrawal" referred to is the meaning. I take the view that some particularity of that withdrawal of support, e.g. without limiting or extending the particularity such as withdrawal of overdraft or guarantee, or what other facility was supporting the debt etc. of the property be given. I direct that the defendant give further and better particulars of the acts, facts, matters and things that constitute the withdrawal of financial support pleaded in paragraph 9 of the defence.

The defendant claims that paragraphs 5(1)(b) and 6(1)(b) of the statement of claim should be struck out and, even if the imputations contended for by the plaintiffs are open, that those imputations are not capable of being defamatory of the plaintiffs because the statements, and the meanings allegedly arising from them, did not touch the plaintiffs in any way which might cause right-thinking people to think less of them. It was put that whatever the elusive phrase "lost the confidence of the banker" might mean, the thrust of the article was no more than that the economic climate prevailing was the cause of the events by which a bank had chosen to withdraw its support. It was submitted that nothing in the language of the article (or for that matter in the claimed imputation) was suggestive of dishonesty, mismanagement or financial incompetence by any of the plaintiffs. None of this, it was put, could diminish the reputation of the affected persons in the eyes of normal and reasonable members of the community. The fact that other lending institutions or persons, as it were, might draw away was irrelevant, that would simply be because such institutions have strict requirements before they would invest or continue investing. The submission of Mr. Beach on this point was, in effect, that it could not be defamatory to say that someone had been unlucky in the timing and choice of investment, so that its Bank exercised its right not to continue to fund it. The issue really was, he argued, whether the words conveyed some want of sound business judgment or that they implied incompetence. The imputation was not to that effect, he said. It was merely to the effect that they had been parties reliant upon the support of bankers on a $100m. city hotel. To the suggestion that the article implied virtual overnight withdrawal of support, with the implication of some conduct that required immediate intervention by the banker, his reply was that, if that if was the point, that should be the imputation pleaded rather than the relatively general and criticism-neutral language of the formulated imputation. He submitted, that something, whatever it might seek to be, would have to be added to the context before the relevant imputation of the plaintiffs could be considered to arise. Moreover, he said that the statement was not a general one but was tied to the losing of confidence in respect of a specific development. Thus, it did not relate to the plaintiffs' overall financial acumen or reputation but merely the loss of confidence in respect of one particular project. As such, it did not even mean that the bank no longer supported them generally.

Mr. Northrop argued that the words had a context arising from the words in the article itself. The article spoke not only of this particular development but spoke of sales falling through, leases failing and similar matters. He accepted, in his submission to me, that it would not be defamatory to say that the development of a building project had failed or that that an investment or venture had failed, because of an international financial crises. He submitted that the reputation of the developer is associated with the regard in which the developer is held by financial institutions, instancing the effect of official credit ratings on State, individual or corporation. He submitted that it was capable of being defamatory to say that a credit rating agency had downgraded somebody because it made people think the less of that organization as financial managers. Thus it was similarly capable of being defamatory to say that a bank had no confidence in the development or the developers. Presumably this meant that it would be defamatory for a bank, approached to fund a project, to announce that it was not going to do so or continue to do so. The submission, some of which was directed to the issue that market confidence in a developer was of great importance, seemed to confuse what was required for a statement to be capable of being defamatory with the desirability of developers never to be thought to be less than perfect. In my judgment, nothing in counsel's submissions amounted to a reasonable explanation of how it was capable of being defamatory to say of someone that they had failed in a financial venture, even though it might be unhelpful.

I have in a number of decisions examined the applicable law in relation to the striking out of imputations. I refer to my reasons in Watt v. Walsh (unreported, at 3798) in which I examined and applied the principles pronounced in cases such as Jones v. Skelton (1963) 3 All E.R. 952 at 958:

"The test of reason which guides and directs the court in its functioning of deciding whether it is open to a jury in any particular case to hold that reasonable persons would understand the words complained of in a defamatory sense."

Halls v. Daily Telegraph [1964] A.C. 234 at 258 (Lord Lewis):

"There is no doubt in an action for libel the question is what the words would convey to the ordinary man: it is not one of construction in a legal sense. The ordinary man does not live in an ivory tower and he is not inhibited by knowledge of the rules for construction so he can and does read between the lines in the light of his general knowledge and experience of worldly affairs."

Other statements see Mirror Newspapers Ltd. v. Harrison [1982] HCA 50; (1982) 42 A.L.R. 487 at 493; Slatyer v. Daily Telegraph Newspaper Co. [1908] HCA 22; (1908) 6 C.L.R. 1 at 7 and Drummoyne Municipal Council v. ABC (1990) 21 N.S.W.L.R., all cases which, in one form or another, involved the expression of views that consideration in deciding of whether an imputation is defamatory of a plaintiff is that of a reasonably-minded, reasonably-experienced reader. In Drummoyne Gleeson, C.J. adopted the test formulated by Hunt, J. in Wheelan v. John Fairfax (1988) 12 N.S.W.L.R. 148 at 155 that

"The issue which has to be decided ... is whether it is likely to be confused either at the pleading or at the trial the relation to the meaning for which the plaintiff contends."

I have come to the conclusion that the paragraphs ought to be struck out as not being capable of being defamatory of the plaintiffs. I do not find it difficult to accept Mr. Northrop's submissions that someone reading the article, particularly a financier, might be cautious about lending money to the plaintiffs. But in my judgment that is just as likely to be based upon not wanting to take risks with money, or having a very conservative or cautious view about investment, or any other of the multiple reasons which lending institutions, notoriously conservative and cautious, might take into account in determining to fund building development ventures. What is to be noted is that the imputations under attack do not imply any incompetence, dishonesty or unreliability in the plaintiffs. Moreover, the introduction of the vague phrase "lost confidence in" seeks to add a gloss to the withdrawal of finance cannot be that easily understood. Indeed, I note that counsel for the plaintiff could not articulate its meaning over and above "had a reason to withdraw finance". The language is criticism-neutral. It does not appear to me feasible to suggest that it could be defamatory to say of a borrower developing a building venture that his banker had withdrawn support. It is not complimentary and it might be damaging. But if the imputation contended for is open, it still must be disparaging of the plaintiff as being likely to cause ordinary persons in the community, taken in general, to think less of the plaintiff. See the discussion of this aspect by Hunt, J. in Boyd v. Mirror Newspapers Ltd. (1982) N.S.W.L.R. 449. The exceptions to this rule, that a non-disparaging imputation could be defamatory if it caused other persons to shun the plaintiff, are ordinarily confined to allegations of mental illness, instability, rape and matters connected with personal characteristics. See also Dawson Blood Stock Agency Pty. Ltd. & Ors v. Mirror Newspapers Ltd. (1979) 1 N.S.W.L.R. 16. Nothing in these claimed imputations queries the question of character and conduct of the plaintiffs.

Accordingly I direct that paragraphs 5(b)(i) and 6(b)(i) of the plaintiffs' statement of claim dated 18th December 1998 be struck out. However, having regard to some of the matters that passed in the course of the debate, it may be that there is a way in which the plaintiff might legitimately desire to put this point and I will grant leave to the plaintiffs to re-plead within 14 days in respect of the issues raised broadly by the claimed imputations.

I am of the view that no order for costs ought be made having regard to the result, but will hear counsel on costs, if they wish it.

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