King v Fairfax Media Publications Pty Ltd

Judgment 1HER HONOUR: These are proceedings for defamation arising out of the publication of a series of articles in the Australian Financial Review, the Sydney Morning Herald, the Age and the Canberra Times. In an earlier judgment in the proceedings, I determined the defendants' objections to the defamatory imputations pleaded by the plaintiff: see King v Fairfax Media Publications Pty Ltd [2014] NSWSC 490. The defendants have now filed their defence, which includes a defence of contextual truth under s 26 of the Defamation Act 2005. An element of that defence is that the matter complained of carried, in addition to the defamatory imputations of which the plaintiff complains, one or more other imputations defined in the section as "contextual imputations". 2The Uniform Civil Procedure Rules 2005 contemplate that the proper pleading of a defence under s 26 will include specification of the imputations relied upon by the defendant as being contextual to the plaintiff's imputations: see r 14.33 of the rules. In accordance with that requirement, the defendants have specified 7 contextual imputations allegedly carried by the matters complained of in the present case. The plaintiff objects to each of the contextual imputations on the grounds that they are imprecise and bad in form for that reason. Separately, the plaintiff submits that contextual imputation 6 is incapable of arising from the relevant matter complained of. This judgment determines those objections. 3Before turning to the plaintiff's individual objections, it is helpful to consider the operation of the defence of contextual truth. 4The tort of defamation provides a remedy for damage to reputation. Such damage is assessed by reference to the act or condition imputed to the plaintiff by the relevant defamatory publication. Section 25 of the Defamation Act 2005 provides a defence if the defamatory imputations complained of by the plaintiff are substantially true. Section 26 of the Act creates a defence if additional imputations not sued on by the plaintiff are substantially true and are such that the defamatory imputations complained of by the plaintiff do not further harm his or her reputation. The section provides: "It is a defence to the publication of defamatory matter if the defendant proves that: (a) the matter carried, in addition to the defamatory imputations of which the plaintiff complains, one or more other imputations ( "contextual imputations" ) that are substantially true, and (b) the defamatory imputations do not further harm the reputation of the plaintiff because of the substantial truth of the contextual imputations." 5The plain object of the section is to preclude a remedy based on the selection of discrete, indefensible defamatory imputations in the context of a publication in which the dominant harm to reputation is justified. An illustration of the sensible operation of the defence may be found in the decision of the Court of Appeal in State of New South Wales v Deren [1999] NSWCA 22. Mr Deren, who had previously admitted a "need to touch young girls in their private parts" and been convicted for sexual offences committed in Port Moresby in 1972, brought proceedings in defamation for a statement by police that he had participated on sexual assaults on young children attending a Sydney kindergarten in 1988. He sued on imputations specific to the Sydney kindergarten. The State relied on a defence of contextual truth, specifying a contextual imputation that he was a child molester. The Court of Appeal held that the trial judge was wrong to take the contextual truth defence from the jury: at [89] to [105] per Priestley JA; Powell JA agreeing at [135]; Stein JA agreeing at [152]. 6In Ange v Fairfax Media Publications [2010] NSWSC 645, Simpson J analysed the potential use of the defence to open up areas of the plaintiff's reputation studiously avoided by the plaintiff in his or her imputations. Her Honour explained that, whereas a plaintiff can avoid the trap of pleading an imputation in general terms which may be met by proof of conduct beyond that considered in the matter complained of, a defendant can introduce the same evidence by pleading a contextual imputation in the very general terms that the plaintiff has carefully avoided. Her Honour observed that, provided the defendant's contextual imputation is capable of being conveyed by the matter complained of, the Court has no supervisory role in its formulation (other than as to form) and, in particular, no power to direct the manner of pleading by reference to notions of fairness: at [61] to [72] especially [70] to [72]. 7There is some analogy between the defence relied upon by the defendant in Ange and the plea of contextual truth in the present case. In general terms, it may be said that, in the present case, the defendants' contextual imputations elevate to the general the very specific imputations pleaded by the plaintiff. But the plaintiff's objections to the defendants' contextual imputations do not rest on any departure from the principle stated by Simpson J in Ange (that the Court has no power to direct the manner of pleading by reference to the fairness of raising a general contextual imputation in response to a specific imputation pleaded by a plaintiff). Apart from the capacity argument in respect of contextual imputation 6, the plaintiff's objection to the defendants' contextual imputations is a narrow one. It is that each of the contextual imputations fails to comply with the requirement to be sufficiently precise and specific to avoid confusion in relation to the meaning contended for. 8Precision is an undoubted requirement of the imputations relied upon by the plaintiff: Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135 at 137-138 per Gleeson CJ; at 155F per Priestley JA. The decision in Drummoyne acknowledges that the appropriate degree of precision in any particular case is a judgment which will usually be made by reference to "considerations of practical justice rather than philology". 9The extent to which precision is equally a requirement of any contextual imputations relied upon by a defendant was considered by the Court of Appeal in Australian Broadcasting Corporation v Hodgkinson [2005] NSWCA 190. The Court expressly rejected the proposition that less precision and specificity is required for a defendant's contextual imputation than for a plaintiff's imputation: at [32] to [34] per Hodgson JA; McColl JA and McClellan AJA agreeing at [42] and [43]. 10At [31] of the judgment, Hodgson JA said: "But in my opinion, the question of whether the contextual imputation is sufficiently precise and specific raises considerations of "practical justice" as indicated by Drummoyne; and in this regard, it is relevant to consider to what extent this contextual imputation is based on material that supports it, otherwise than through the respondent's imputations and the appellants' other contextual imputations. If it is not supported otherwise than by inference from these other imputations, which the appellants can address directly, it could well be unjust to allow the appellants to defend on the basis of this contextual imputation by ranging widely over alleged discreditable conduct of the respondent having nothing to do with matters raised by the broadcast. " 11I would not understand those remarks to be inconsistent with the proposition recognised by Simpson J in Ange (with which I respectfully agree) that the Court has no supervisory role in the formulation of a contextual imputation and no power to direct the manner of pleading by reference to notions of fairness other than as to form. Precision, however, is a requirement as to form. The content of the requirement was summarised in Hodgkinson at [34] in the following terms: "So I think Blake requires that a contextual imputation be formulated so that facts, matters and circumstances that can be relied on to establish its truth bear a reasonable relationship both to the contextual imputation itself and to the published material relied on by the plaintiff." 12The plaintiff's objections must be determined in accordance with those principles. 13The first two contextual imputations relied upon by the defendants are pleaded as alternatives. They are: "1A The plaintiff conducted himself in such a corrupt manner as to make him unfit to hold the office of CEO of a large international company." "1B The plaintiff, the former CEO of a large international company, was unfit to hold that office." 14The defendants submitted that, in light of the number and variety of general references to corruption in the matter complained of, no further refinement of the allegation of corrupt conduct is possible. I do not accept that submission. The breadth of the range of conduct referred to in the matter complained of (much of which is attributed to Leighton rather than specifically to the plaintiff) if anything accentuates the practical unfairness of allowing an imputation in such general terms to stand. 15Turning to imputation 1B, as conceded in the plaintiff's written submissions, imputations alleging unfitness to hold a particular position have suffered a mixed fate. In Ainsworth v Burden [2000] NSWSC 105 at [6] to [9], Simpson J allowed a plaintiff's imputation "that the plaintiff was not a fit and proper person to be involved in the management of a company licensed in relation to poker machines". However, in Hodgkinson, a contextual imputation "that the plaintiff is not a fit and proper person to supervise other scientists" was struck out as imprecise. Those decisions reflect the obvious proposition that such cases will turn on their own circumstances. 16I am persuaded that, in the present case, the range of conduct potentially attributed to the plaintiff by the matters complained of is so broad that imputations alleging his unfitness to hold the office of CEO, without any further specification, fail to put the plaintiff on notice of the case he will have to meet and have the potential to cause confusion both at the interlocutory stage and in the trial. Further, it is difficult to see contextual imputations 1A and 1B as being supported otherwise than by inference from the plaintiff's more specific imputations: cf Hodgkinson at [31]. I am persuaded that those imputations are impermissibly precise. 17Contextual imputation 2 is: "The plaintiff has engaged in serious corporate misconduct with respect to Leighton Holdings' international empire." 18The phrase "serious corporate misconduct" is drawn in terms from the matter complained of but, as submitted on behalf of the plaintiff, that does not relieve the pleader of the obligation to distil the defamatory sting, as I held in Waller v Nationwide New Pty Ltd [2011] NSWSC 611 at [15] to [22]. I accept, on behalf of the plaintiff, that it is a phrase which lacks sufficient specificity. 19Contextual imputation 3 is: "The plaintiff committed multiple ethical breaches". 20That is perhaps the most imprecise of all of the contextual imputations relied upon by the defendants. It is an imputation of such broad and indeterminate sense as to be completely embarrassing (in the legal sense), in my view. 21Contextual imputation 4 is: "The plaintiff was grossly incompetent as a CEO in that he presided over a serious breakdown of corporate probity, governance and ethics within Leighton Holdings' international empire, which he failed to prevent." 22The plaintiff's objection to that imputation is that the words "presided over" are imprecise. In correspondence between the parties, the defendants specified that the phrase means that the plaintiff was at the helm and that the relevant events happened under his watch. It was specified that the word "presided" was not intended to connote any knowledge on his part. 23If the imputation were amenable to clarification in those terms, it may be doubted whether it would meet the requirement of s 26 that it be an imputation that arises "in addition to" the plaintiff's imputations. The plaintiff's imputation (m) is: "That the plaintiff's performance as CEO of Leighton was so grossly incompetent that he failed to prevent Leighton executives and employees from engaging in widespread bribery, corruption and cover-ups." 24However, that was not the plaintiff's complaint at this stage. In my view, the term "presided over" is impermissibly imprecise. 25Contextual imputation 5 is: "That the plaintiff has so misconducted himself as to warrant an investigation into that conduct by police and the corporate watchdog, the ASIC." 26The plaintiff objects that the words "misconducted himself" are imprecise and that the imprecision is exacerbated by the fact that the imputation refers to "an investigation into that conduct" without any specification of the conduct in question. 27The defendants submitted that an imputation of that kind has been held to be proper, in the decision of Hunt J in Armitage v Double Bay Newspapers Pty Ltd (unreported, NSWSC, Hunt J, 26 September 1991). However, that decision was concerned with allegations of corruption warranting investigation by the Independent Commission Against Corruption. In that circumstance, the reference to the relevant body (the Independent Commission Against Corruption) of itself lends meaning to the kind of conduct warranting investigation. I do not think that can be said in the case of ASIC (the Australian Securities and Investments Commission). The range of conduct able to be investigated by that authority is not suggested by its name, as in the case of ICAC. In my view, the imputation is impermissibly imprecise. 28Contextual imputation 6 is: "The plaintiff has so misconducted himself as to warrant an investigation into that conduct by the corporate watchdog". 29For the reasons set out in respect of contextual imputation 5 above, I consider that imputation to be impermissibly imprecise. Accordingly, it is not necessary to determine the capacity objection to that imputation. 30For those reasons, I am satisfied that each of the defendants' contextual imputations should be struck out.