Lower Murray Urban and Rural Water Corporation v Di Masi, Belbin & Marciano [2014] VSCA 104

Lower Murray Urban and Rural Water Corporation v Di Masi, Belbin & Marciano [2014] VSCA 104 | Case summary | Zoe

[13]

Dear Customer,

CLOSURE OF THE FIRST MILDURA IRRIGATION TRUST

My decision to close down the First Mildura Irrigation Trust (FMIT) has understandably generated a great deal of debate in the Mildura community, and concern among former FMIT customers wanting assurances about accessing their legal entitlements to water.

My primary concern in making this decision was to safeguard the interests of those Mildura residents who depend on FMIT for irrigation services. To that end, I have provided guarantees that prices will not rise above those already approved by the Essential Services Commission, Victoria's independent price regulator, for the next five years.

I have also provided guarantees that FMIT staff would have their jobs protected. And I have decided to appoint an FMIT customer to the Lower Murray Water Board, so that the Board has the direct benefit of your perspectives when making decisions.

Highly emotive and selective accounts of recent events have sought only to deflect scrutiny away from those responsible for FMIT's demise. I believe that you deserve better and that is why I am writing to you to explain the reasons for my decision.

My decision was based in part on the fact that the FMIT Board members broke the law by investing $2.2 million of Victorian Government money without Treasury approval. The specific law broken was the Borrowing and Investment Powers Act 1987.

The Government loaned this money to FMIT to invest in upgrading local irrigation infrastructure, for the lasting benefit of its members. Instead, the FMIT Board invested the money in the United States sub-prime mortgage market, where it lost $2 million of its value.

This was a serious breach of trust with local irrigators, who should have been able to rely on the Board to manage the Trust's finances responsibly and within legal limits. It also reflected an entrenched disregard for the governance and financial processes required of all water authorities to ensure that public money - your money - is being used appropriately.

This bad investment in turn led to the Board seeking Government approval to borrow another $2 million, taking its customers even further into debt, simply to raise cash for its day-to-day operations. This move crystallised concerns about its short to long-term viability.

Reports by Deloitte and the Essential Services Commission had raised serious concerns about FMIT's viability and its commitment to properly manage its affairs. Specifically, FMIT's small size made it acutely vulnerable to the impacts of drought and climate change, with reduced rainfall leading to lower allocations and therefore revenue.

Furthermore, demographic changes and urban encroachment around Mildura will reduce irrigated land in FMIT's district, further undermining its capacity to trade its way out of debt in the medium to long term.

I came to Mildura twice to meet the Board to discuss these matters. I gave the Board ample time and opportunities to address the issues. Unfortunately, the Board's responses indicated that it did not take these matters seriously and I had no choice but to shut down the Trust in the interests of local irrigators and the wider Victorian community. I have visited Mildura since then, and met with irrigator representatives to discuss the best way forward.

Since making the decision, further irregularities in the former FMIT's management have come to light. For example, in June this year, the Board approved secret, last-minute adjustments to senior management contracts in the event of FMIT being taken over.

These adjustments provided termination payouts more than double those allowed in the Government Sector Executive Remuneration Panel's guidelines. I also understand that tax was not withheld from the payouts, as required under Australian taxation law.

The Victorian Government and Lower Murray Water are now considering the options to recover this money so that it can be used to the benefit of all former FMIT customers, not just a few former staff.

Also enclosed is a letter from Lower Murray Water, detailing the way forward for former FMIT customers and providing assurances about pricing and delivery arrangements over coming months and years. I will encourage you to contact Lower Murray Water direct to discuss any queries.

FMIT customers and Mildura in general have much to look forward to, despite the difficult conditions caused by the ongoing drought. The Victorian Government has secured a Commonwealth commitment of up to $103 million for irrigation upgrades in the area, including in the First Mildura Irrigation District. We now all need to work together to make the most of this opportunity to secure a sustainable future for you and your family.

[93]

The first question, concerning the defence raised under s 28 of the Defamation Act, concerns the meaning of the word 'issued' in the definition of 'public document' in s 28(4)(d). In particular, the question is whether the letter written by Mr Holding was 'issued' by the government (or by an officer, employee or agency of the government).
The various definitions of 'public document' in s 28(4) differentiate between a document which is 'published' (subparagraph (a)), a document which is 'issued' (subparagraph (d)), and a document which is 'kept' (subparagraph (e)). Unsurprisingly, the Defamation Act, and s 28, use the verb 'publish' in the sense in which it is understood in defamation law, as connoting the communication of defamatory material, about a person, by a defendant to another person.
Section 28(4)(e) contemplates circumstances in which a record or any other document is 'kept' by an Australian jurisdiction, a statutory authority, a court, or under legislation of an Australian jurisdiction, and which becomes published. Similarly s 28(4)(d) contemplates documents, which may be 'issued' by a government (or an officer, employee or agency of the government), and which are published.
Clearly, a document may be kept without being published; conversely, a document may be published without being kept. Similarly, the verb 'issue' and the verb 'publish' are not synonymous. Not every document published by a government, or by an officer, employee or agency of the government, would, per se, be issued by the government (or by the officer, employee or agency of the government). Conversely, while a document issued by the government may thereby be published by the government, it does not follow that each document, issued by a government (or an officer, employee or agency of the government), is thereby 'published' as that word is understood in defamation law.
It is important, in construing 'issued', to bear in mind the context in which that word is found. In particular, it is significant that s 28(4)(d) only applies to a document which has been issued by a government (or by an officer, employee or agency of the government), and to a document which has been so issued for the information of the public. Ordinarily, when a government, or an agency, issues a document, it is for the purposes of giving or pronouncing a mandatory direction, or for disseminating a particular warning. Thus, in the context of the operations of governments and agencies of government, a health department might issue a relevant warning; likewise the Bureau of Meteorology might issue a storm warning. Similarly, as I stated, a document issued may contain a mandatory direction or command. Thus, a writ of summons may be issued; directions, edicts and proclamations may, equally, be issued.
The factor, which is common to each of those usages of 'issued', in the context of a governmental document, is to be found in the official nature of the document, and in the manner in which the document itself is made public. That construction is reinforced by reference to the other defined meanings of 'public document' in s 28(4). Each of the documents, referred to in the other subparagraphs of the definition, are formal, official documents. Thus, subparagraph (a) relates to reports or papers published by a Parliamentary body, or records of the proceeding of a Parliamentary body; subparagraph (b) relates to judgments, orders or other determinations of courts and tribunals; subparagraph (c) relates to reports or other documents authorised to be published, or required to be presented or placed, before a Parliamentary body by the law of any country; subparagraph (e) refers to records or other documents open for inspection by the public, which are kept by an Australian jurisdiction, an Australian statutory authority, an Australian court, or under legislation of an Australian jurisdiction.
That construction of 'issued', in s 28(4)(d), gains some support from the judgment of Jordan CJ in Campbell v Associated Newspapers Limited[11]. That case concerned the construction of s 29(1)(g) of the Defamation Act 1912 (NSW), which provided a defence for the publication, in good faith, of '... any notice or report issued for the information of the public ... '. In construing that phrase, Jordan CJ stated:[12]

[97]

The second issue, concerning s 28(4)(d), related to the construction of the phrase 'for the information of'. As I have noted, Dr Collins submitted that the question, whether the document was issued 'for the information of' the public, is to be determined objectively, without regard to the subjective intentions of the author, or of the agency, which issued the document.
As a matter of plain construction, the phrase 'for the information of the public' qualifies the passive verb 'issued'. In that way, it describes the purpose served by the issue of the document by the government (or by an officer, employee or agency of the government). In other words, the phrase is not descriptive of the document itself, but, rather, it prescribes the purpose or reason for the issue of the document.
An inquiry, as to whether the document was issued 'for the information of the public', must, necessarily, involve some determination of the purpose of the issue of the document. Even if, as Dr Collins has submitted, the purpose of the issue of the document is to be ascertained by reference to the document and the background circumstances, the court would, by that process, be drawing an inference, from those factors, as to the purpose of the particular agency or person, who issued the document.
There is nothing in s 28(4)(d) which restricts such an inquiry to an examination of the document alone. Indeed, Dr Collins recognised the artificiality of such a narrow proposition. He submitted that the question, whether the document was issued for the information of the public, could be determined, not only by reference to the document, but also by reference to the effect, which the document had on the minds of persons to whom the document was published. In that respect, Dr Collins referred to and relied on the evidence of a number of witnesses, who regarded the letter as Mr Holding's attempt to provide an explanation for his decision to close the FMIT. Dr Collins also accepted that the question, whether the document was issued for the information of the public, is to be determined by reference to the background circumstances in which the document was issued.
Pausing there, if, as Dr Collins submits, it were permissible to determine the question, whether the document was issued for the information of the public, by reference to the effect which the document had on the minds of the recipients of it, there is no logical reason why it would not be permissible to ascertain the purpose of the issue of the document by reference to the intention of the person issuing it. If the subjective effect of the document on the minds of the recipients is a relevant factor to take into account, in determining whether the document was issued for the information of the public, equally, or indeed even more so, it would be relevant to take into account any evidence concerning the actual purpose of the agency or the person who was responsible for the issue of the document.
Dr Collins submitted that a construction of the phrase 'for the information of the public', which involved an inquiry into the subjective intention of the agency or person responsible for the issue of the document, would introduce a degree of uncertainty into the application of the defence under s 28(4)(d), which could not have been intended by the legislature. In particular, he submitted that such a construction would leave any republisher of the document (such as a media outlet) at the whim of the subjective intention of the agency or person, who originally issued the document.
There are, in my view, two answers to that proposition. First, the degree of uncertainty involved in such a construction would be considerably less than the uncertainty which would result if (as Dr Collins submitted) the question, whether the document was issued for the information of the public, is to be determined by reference to the effect which the document had on the minds of the recipients of it. Secondly, and more importantly, the uncertainty, contended for by Dr Collins, is more apparent than real. If the verb 'issued' is construed in the manner in which I have already concluded, there would be few government documents, containing information, which would not be issued for the provision of that information to the public. In other words, any uncertainty of the kind contended for by Dr Collins would only result if, contrary to my earlier conclusion, the verb 'issued' were to be construed as synonymous with 'published'. Otherwise, if the verb 'issued' is properly construed, ordinarily, if not almost invariably, a document 'issued' by the government (or an officer, employee or agency of the government), which contained information, would manifestly be issued for the provision of that information to the public.
Dr Collins' principal submission, on this aspect of the construction of s 28(4)(d), was that if the question whether the document was issued for the information of the public is to be determined by reference to the subjective intention of the agency or person responsible for issuing it, there would be a necessary tension between subsection (4)(d), and subsection (3), of s 28.
I do not accept that there is any such tension, or anomaly, in cases in which someone, other than the original author of the document (for example a media outlet), publishes it, and seeks to rely on s 28(4)(d). In such a case, the protection afforded by s 28(1) would apply, provided that the document, which was so republished, was a document which was originally published for the purpose of providing the information in it to the public. In such a case, s 28(1) would protect the re-publisher of such a document, unless the plaintiff, pursuant to subsection (3), is able to demonstrate that the republisher did not publish the document honestly for the information of the public or the advancement of education. In other words, provided that the document was originally issued for the information of the public (that is, for the purpose of providing that information to the public), the document may be republished with impunity, unless the plaintiff is able to prove that the re-publisher did not publish the document honestly for the information of the public or the advancement of education. In that way, the two subsections work harmoniously, and there is not, as contended by Dr Collins, any tension between them.
On the other hand, it is correct, as Dr Collins has contended, that s 28(3) would have no function in a case where the plaintiff sued the original agency or person, who was responsible for issuing the document, and where the agency or person sought to bring the document within s 28(4)(d). In such a case, in order that a defence based on s 28(1) and s 28(4)(d) succeed, the person or agency, responsible for issuing the document, would be required to prove that the document was issued for the information of the public. Thus, in such a case, a plaintiff would not need to resort to s 28(3). The onus of proof of the purpose of the agency or person, responsible for the original issuing of the document, would lie on that agency or person.
However, such a conclusion would not, as Dr Collins submitted, 'deprive' subsection (3) of any effect. First, as I have already observed, subsection (3) has potential application in all cases in which a plaintiff sues the republisher of a document which falls within s 28(4)(d). Secondly, s 28(3) would also have potential application in cases of the publication (or republication) of any document falling within subparagraphs (a) to (c) and (e) to (g) of the definition of 'public document' in subsection (4). Indeed, the documents defined in s 28(4)(a)(c) and (f) are documents which are 'published' by a particular agency or institution. Section 28(1) provides a defence to the publication, by those agencies and institutions, of such documents. In each such case, the plaintiff would be entitled to invoke s 28(3) in response to such a defence.
Thus, I do not accept the contention that s 28(3) would be deprived of effect, if the phrase, 'for the information of the public', in s 28(4)(d), was construed so as require the defendant to establish that the document in question was published for the purpose of providing the information, in it, to the public.
For those reasons, I do not accept the submission by Dr Collins that, in an appropriate case, evidence, and a verdict by a jury, as to the subjective purpose of the original author of a document, issued by a government (or by an officer, employee or agency of the government), is irrelevant to determining whether that document was issued 'for the information of' the public. As I stated, ordinarily, the purpose of the agency or person, who issued the document, be ascertained by a process of inference in the document, and, if necessary, from the surrounding circumstances. However, in such a case, such an inference would be directed to ascertaining the specific purpose for which the agency or person, responsible for the document, issued it.
In the present case, having considered the document, the relevant background circumstances, and Mr Holding's evidence, the jury, in answer to Question 7, found that the defendant had not established that a substantial purpose, a principal purpose, or the principal purpose, of Mr Holding, in disseminating the document, was to provide information to any of the following persons, namely: the former customers of FMIT; the customers of the merged FMIT and Lower Murray Water; an appreciable section of the general community in and around Mildura; or the general community in and around Mildura. For the reasons I have stated, I consider that that finding, as to Mr Holding's purpose in disseminating the document, is relevant to, and conclusive of, the question whether the letter published by Mr Holding was issued by him 'for the information of' the public for the purposes of s 28(4)(d). Based on the jury's finding, the answer to that question must be in the negative.[15]

[99]

The third issue, concerning the application of s 28(4)(d), is whether the document was published by Mr Holding for the information of 'the public'. As I stated, Dr Collins submitted that the phrase 'the public', in that context, means an appreciable section of the general community, to be contrasted with an individual or a group of individuals in their capacity as individuals, or an internal group of which the author of the document in question is a part. On the other hand, Mr Gilbertson submitted that, while 'the public' may consist of an appreciable section of the general public, it could not consist of a closed class, the identity of all members of which could be ascertained.
In my view, the construction contended for by Dr Collins is too wide, in that it embraces groups of persons who would not, ordinarily, be properly understood to constitute 'the public'. When pressed, Dr Collins accepted that his definition of 'the public', for the purposes of s 28(4)(d), would have the result that a letter written by the Attorney-General to each member of the Victorian Bar would constitute a document published by the Attorney-General 'for the information of the public'.
The shortcoming in Dr Collins' definition is that, by definition, a communication, specifically confined to a group of individuals, who form part of a group, could not, in ordinary parlance, be understood to be a communication for the information of 'the public'. Thus, in the example to which I have just referred, a letter written by the Attorney-General, the distribution of which was confined to members of the Victorian Bar, could not sensibly be understood to be a communication 'for the information of the public'.
In construing 'the public', it is important not to disregard the context in which it is found in s 28(4)(d). In particular, it is necessary that the document be issued by the government (or an officer, employee or agency of the government) for the information of 'the public'. Certainly, a document may be publicly issued, which only affects, or indeed is directed to, a particular group of the public, such as the consumers of a particular product or service. However, such a document would be issued for the information of 'the public', notwithstanding that only a specific group, or confined number, of the 'public' may be affected by or interested in it.
For the purposes of s 28(4)(d), 'the public' need not necessarily be constituted by the whole of the Victorian public. Certainly, in its context, a document would be issued by the government for the information of the public, if it was issued or published to members of a geographic region or locality, such as, in this case, the Mildura community. The feature of such a document, which would constitute it a communication for the information of 'the public', is that it is distributed to, and for the information of, the whole of the relevant community. That construction, in my view, is consistent with the ordinary sense in which 'the public' is understood, and indeed reflects the first definition of 'public' in the Macquarie Dictionary, namely: 'of, relating to, or affecting the people as a whole or the community, state or nation: public affairs'.
Such a construction of the phrase 'the public', in subsection (4)(d), is supported by the use of the word 'public' in other provisions in the Act. Section 28(4)(e) provides that a 'public document' means any record or other document 'open to inspection by the public' that is kept by an Australian jurisdiction, an Australian statutory authority, an Australian court, or under legislation of an Australian jurisdiction. In that context, the phrase 'the public' clearly means the people or the community as a whole, as distinct from a closed confined class of the community. Section 29(1) of the Act provides a defence for the publication of a fair report of 'any proceedings of public concern'. Section 29(4) defines the phrase 'proceedings of public concern'. Subparagraphs (a) to (g) and (n) of s 29(4) all refer to proceedings 'in public' of institutions such as international conferences, courts or arbitral tribunals of any country, inquiries, proceedings of local government, or proceedings of a law reform body of any country. In that context, the phrase 'proceedings in public' clearly connotes proceedings which are open to the community or people as a whole, as distinct from being open only to an appreciable, but select, group of people.
The three cases, to which Dr Collins referred, and which construe 'public' in different statutory contexts, are of only limited utility. The construction given to that word in each case must, necessarily, depend upon its particular statutory context. However, in any event, they provide little support to the construction contended for on behalf of the defendant.
In Biga Nominees Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia, the plaintiff claimed an exemption from sales tax in respect of a forklift used by it in the operation of its railway terminal. It claimed that exemption on the basis that the forklift was used exclusively 'in connection with the ... operation or maintenance ... of a railway providing, primarily and principally for use by the public, a service of transport of ... goods'. Southwell J held that the forklift was not used 'exclusively in connection with the operation of a railway'. His Honour further considered that, if the plaintiff was operating a railway, the railway was providing a service 'primarily and principally for use by the public' within the meaning of the specified exemption. His Honour reached that conclusion because the plaintiff had advertised the service in a manner which made it probable that those members of the public, interested in container railway transport, would be aware of the service, and the plaintiff had a large number of such customers. In other words, Southwell J reached the conclusion that the service operated by the plaintiff was for 'use by the public', because it was available to particular consumers in the public who wished to use its service.
In Lee v Evans, the defendant was convicted by a magistrate of an offence under s 4(a)(i) of the Registration of Business Names Act 1928 to 1961 (SA), for making use of or reference to a business name in an invitation 'to the public' to deposit money with, or lend to, that entity. In that case, the appellant had approached two members of the public, who were previously unknown to him, and invited them to invest in his company. He then approached two other unknown persons, with a similar invitation. The High Court held that the appellant had not made an 'invitation to the public', because his invitation had only been addressed to specific individual persons in the public. In other words, while the persons approached by the appellant had been selected from the public, the invitation, made by the appellant to them, was not an invitation 'to the public', but, rather, was made to a specific person who formed a member of the public.
In Rank Film Production & Ors v Collins S Dodds, the owners of copyright in certain films sought a declaration that the screening by an occupier of a motel of movies, by means of a video cassette recorder connected to television sets in various rooms, without a licence to do so, was an infringement of the copyright, on the basis that the motel proprietor had, contrary to s 86(b) of the Copyright Act 1968 (Cth) caused the film to be 'seen in public'. Rath J granted the declaration. His Honour held that, although the films were screened in the privacy of the individual motel rooms, nonetheless they were 'seen in public'.
In Rank Film Productions, as Rath J noted, the rights which the plaintiffs were seeking to vindicate were their valuable proprietary rights. The question, in effect, was whether the defendant, by its conduct, had injured the ability of the plaintiff to exploit its proprietary rights for profit. It was in that context that the phrase 'in public' was construed by Rath J. The essential distinction, for the purposes of copyright law, was, on the one hand, between the display of the film in a domestic setting, and, on the other hand, the display of the film to persons who, as guests of the motel, saw it as members of a section of the public. Understood in that context, there is little in the decision in the Rank Film Production case which lends support to the construction contended for on behalf of the defendant.
In the present case, the letter, written by Mr Holding, was specifically sent, on his instruction, to those persons who, at the time of the closure of FMIT on 15 August 2008, were customers of FMIT. The information was issued for their information, and for their information alone. That group of persons was a closed class, the identity of each member of which could be ascertained at the time at which Mr Holding caused the letter to be sent to them. In that way, if Mr Holding did 'issue' the letter, he did not do so 'for the information of the public', but, rather, for the information of each individual customer of FMIT at the time of its closure.[16]

[143]

In my view, it is impossible to divorce subjective considerations from a proper determination as to whether the conduct of the defendant, in publishing the letter, was reasonable in the circumstances. Subparagraphs (g) and (i) of s 30(3) each necessarily involve a consideration of matters, such as the knowledge of the defendant of the facts which are alleged in the matter published by it. Subparagraph (g) concerns the sources of the information in the matter published, and the integrity of those sources. It would be unreal - and probably unfair - to confine the consideration of the integrity of a journalist's sources to objective considerations; rather, clearly, it would seem that the author of defamatory material must, in addressing that point, be entitled to adduce evidence as to his or her estimate and understanding of the integrity of the sources. Subparagraph (i) concerns steps taken by the defendant to verify the information in the matter published. The adequacy of the steps, taken by a defendant to verify the information in the matter published, must depend on the knowledge, by that defendant, of the information contained in the matter published, and the knowledge, by the defendant, of facts which verify or substantiate the information contained in the matter published. An assessment of the sufficiency of the steps, taken by a defendant to verify the information contained in the matter published, must depend upon the state of knowledge of the defendant of the information contained in the matter published, and on the factual material in the possession of the defendant, which supports (or contradicts) that information.
Further, although knowledge by a defendant, that allegations contained in matter published by it are untrue, is, almost invariably, conclusive evidence of malice, it is not the equivalent of malice. Rather, to prove malice, a plaintiff must satisfy a jury that the dominant motive of the defendant was an improper motive, which was ulterior to any duty or interest of the defendant in publishing it.[54] Thus, if the concept of reasonableness, for the purposes of s 30(1)(c), includes a consideration of subjective matters, such as the state of knowledge and understanding of a publisher of the information contained in the matter published, there would be no inconsistency between s 30(1)(c) - which requires the defendant to prove that its conduct in publishing the material was reasonable - and s 30(4), which places the onus of proof of malice on the plaintiff.
Indeed, I observe that the submissions made by Dr Collins themselves made relevant the question as to the purpose or intent of the defendant in publishing the letter. He submitted that, in determining, for the purposes of subparagraph (i) of s 30(3), whether the defendant had taken steps to verify the information in the material published, it is relevant to take into account the fact that the defendant was not the author of the letter, but, rather, that it was only the republisher of it. That submission, itself, must make relevant the verdict by the jury in answer to Question 10(a), that the defendant had not established that it placed the letter on its website without intending to endorse the allegations made by the Minister. The effect of that verdict was that the defendant did not just republish the letter, without intending to endorse the allegations in it.[55]

[156]

The question, which Tugendhat J was required to determine in Bray was, of course, different to the question to be determined in the present case. In that case, the question was whether a privilege, which existed at the time of uploading a document onto a website, might later expire, and be unavailable to a defendant, at a subsequent date. In this case, the question is whether the issue of reasonableness, in s 30(3), is to be determined by reference solely to the date upon which the defendant uploaded the material onto the website.
In the course of his submissions, Dr Collins acknowledged that the principles, stated by Tugendhat J, would need to be qualified in circumstances where a defendant, having uploaded material to the internet at a time when it was reasonable, subsequently consciously made a decision to keep the material on the internet, in circumstances in which the defendant had learnt that the material was now 'unarguably false'.
I do not consider that the principle stated by Tugendhat J in Bray v Deutsche Bank would apply, absolutely, and in an unqualified form, to the determination, for the purposes of s 30(1)(c), of whether the conduct of the defendant in publishing the matter was reasonable in the circumstances. Certainly, it would be relevant for the defendant to establish that, at the time at which the material was uploaded onto the internet, the defendant's conduct in publishing the material in that manner was reasonable in the circumstances. It would also be relevant to take into account the type of considerations referred to by Tugendhat J, and by Dr Collins in his submissions. However, ultimately, the test prescribed by s 30(1)(c) is whether the conduct of the defendant 'in publishing' the matter was reasonable in the circumstances. In the case of a publication on the internet, the publication occurs at the time at which the material is communicated to the mind of the particular recipient. The conduct of the defendant, which brought about that publication, took place, in this case, in September 2008. However, it also continued, in the act of the defendant maintaining the letter on its website for a period of almost two years, up to the time at which it was published to the four recipients of the letter in this case. Thus, in order to satisfy s 30(1)(c), the defendant must establish that its conduct in uploading the letter onto the internet, and in maintaining it on the internet for the ensuing two years, was reasonable in the circumstances.[67]

[163]

Pausing there, based on the foregoing analysis, I am satisfied that the conduct of the defendant in publishing the letter was not reasonable, if (as Dr Collins has submitted) such an assessment is to be made as at September 2008, and if it is to be made only by reference to 'objective' factors.
At the time at which Mr Leamon uploaded Mr Holding's letter onto the defendant's website, the subject matter of the letter was of public interest. However, Mr Holding's letter was already in the public domain, and there was no need for the defendant to further publish it. The letter related to the performance by the plaintiffs of their public functions as members of the Board of FMIT, but it did not relate to their continuing performance of those functions, as they were no longer Board members of FMIT.
On the other hand, the defamatory imputations contained in the letter, published by the defendant, were particularly serious. They were expressed, in the letter, as statements of fact, rather than as expressions of conclusion or opinion. The positive, factual tone of the letter added to the verisimilitude of the allegations in it, which defamed the plaintiffs. At the time at which the defendant uploaded the letter onto its website, it had in its possession, and indeed Mr Leamon had looked at, documents which would have demonstrated that the allegations, contained in the fifth, sixth, seventh and eighth paragraphs of the letter, were factually wrong and misleading. Yet, the defendant took no steps, at all, to verify those allegations. In publishing the letter, as the jury found in answer to Questions 2 and 10, the defendant endorsed the allegations made by Mr Holding in the letter. Notwithstanding the grave nature of the imputations contained in the letter, the defendant did not, at all, attempt to obtain the plaintiffs' response to them.
The omission by the defendant to verify the allegations contained in the letter, and to seek the plaintiffs' account, is at its starkest in the case of Mrs Prevedello,[73] who was not a member of the Board until well after the time at which the monies had been invested with Grange Securities. The fact that the defendant published Mr Holding's allegations concerning her in the letter, without any substance at all, is a further illustration of the lack of reasonableness of the conduct of the defendant in publishing the letter.
For those reasons alone, and confining my consideration to the time at which the letter was uploaded onto the internet, and disregarding any subjective factors, I am not satisfied that the conduct of the defendant, in publishing the letter on its website, was reasonable in the circumstances. On the contrary, I am satisfied that the conduct of the defendant in publishing Mr Holding's letter on its website, at that time, was not reasonable.[74]

[186]

Mr Lee, who is, and at the material time was, Chairman of the Sunraysia Irrigators Council, stated that he spoke about the letter, which he had seen on the internet, at at least one or two of the subsequent meetings of the Council. He said that ordinarily such meetings are attended by about 30 or 40 members. Mr Lee stated '... it was certainly a point of discussion at at least one or two of those meetings'.
Mr Dichiera, who is a horticulturist and viticulturist, stated that, after he had seen the letter on the internet in July 2010, he commented on it to his wife and his children. He also said that he spoke about it to other growers, whenever he came across a 'mate'. He gave an instance of a conversation, which he had had with a neighbour, with whom he had discussed the letter, in circumstances in which both of them expressed some surprise that there had not been a letter of amendment or retraction of it. He said that he could not put a number on the amount of growers, to whom he had spoken about the letter after he had seen it on the internet, but he said that it would crop up from time to time in response to newspaper articles concerning water issues. He said that sometimes the letter was raised in jest, provoking comments to the effect that there was a lost investment which was not really lost.
The evidence, to which I have just referred, establishes that Mr Lee and Mr Dichiera spoke to other growers, and other members of the Mildura community, about the letter, after they had seen it on the internet. Further, the evidence also establishes that discussions of the type, which Mr Lee and Mr Dichiera had with other members of the community, were likely to have revived the memories of those persons of the contents of the Minister's letter, which had earlier been published, by the Sunraysia Daily News, in 2008. As Mr Lee stated in cross-examination, the Minister's letter had been the subject of ongoing discussion since 2008. The allegations contained in the letter, and the circumstances leading to the closure of FMIT, had been the subject of hot public debate in 2008, which had continued for some time.
The evidence also satisfies me that, once Mr Lee and Mr Dichiera had discussions with other members of the community, concerning the letter published by the defendant on its website, it is likely that discussion of that matter would have spread to a reasonable extent in the Mildura community. In the context of the antecedent publicity given to the allegations made by Minister Holding about the plaintiffs, it is most probable that those discussions would, inter alia, have concerned the allegations in the letter published by the defendant on the internet. In cross-examination, Mr Marciano, somewhat graphically, described the process of dissemination, by a process of hearsay, of such matters in a rural community. Mr Marciano was asked whether, if he wanted to get information out concerning the FMIT to the whole of the Mildura public, he could do that by sending a letter just to FMIT irrigators. Mr Marciano responded:

[192]

As I have already stated, the evidence, elicited in the cross-examination of Messrs Belbin, Di Masi and Marciano, did not prove the truth of the critical allegation contained in the first two imputations, namely that the Board members had invested the monies, borrowed from the Victorian Government. Secondly, the cross-examination did not prove that, when the investment was made, the plaintiffs knew that Grange Securities was lending funds to the United States sub-prime mortgage market. Thus, in terms of the second imputation, the defendant has failed to prove, not only that the plaintiffs invested the borrowed monies, but that they invested it in the United States sub-prime mortgage market.
Dr Collins submitted that the first two imputations related to the reputations of each of the three plaintiffs for compliance with legal obligations, and for financial responsibility. He submitted that the matters elicited in cross-examination, which I have already summarised, demonstrate very serious financial irresponsibility by Messrs Belbin, Di Masi and Marciano, which, he asserted, was a direct cause of the failure of FMIT. In essence, as I stated, Dr Collins submitted that those three plaintiffs do not deserve an unblemished reputation for compliance with legal obligations, for financial responsibility, or for good corporate governance.
The submission, made by Dr Collins, substantially overstates the effect of the evidence elicited from the three plaintiffs in cross-examination. Certainly, the evidence establishes, and indeed it was accepted by Mr Di Masi and Mr Marciano, that there were shortcomings by the then members of the Board in the performance of their functions. The Board members should have known, but did not know, of the terms of the Order in Council dated 5 April 2007, which prescribed the investments, which might be made by FMIT in respect of funds borrowed by it from the government. Further, when the finance manager of FMIT reported having placed the funds, borrowed from TCV, with Grange Securities, the Board ought to have ascertained just how Grange Securities was investing, or intending to invest, those funds.
However, those observations fall well short of sustaining the proposition relied on by Dr Collins. First, the undisputed evidence was that, at that time, Grange Securities was understood to be a reputable investment broker. It had sourced investments on behalf of a number of clients, including FMIT, for some years. There was no evidence which, in any way, ought to have put the members of the Board of FMIT on notice that Grange Securities was placing, or might place, the monies, borrowed from TCV, in high risk investments. Secondly, the placement of those investments with Grange Securities must be considered in the then context, and not, solely, with the wisdom of hindsight. The undisputed evidence (of Mr Belbin) was that he ascertained, later in 2007, that a large number of government business organisations had invested monies with Grange Securities, and that those investments had been approved. Based on that advice, Mr Belbin wrote to the Treasurer seeking approval to hold the Grange Securities investments.
Thirdly, it is an overstatement to maintain that the shortcomings of the Board members, to which I have referred, directly caused the failure of the Trust. In his letter, Mr Holding gave, as a reason for his decision, the fact that the Board had invested the money, borrowed from TCV, with the United States sub-prime mortgage market. However, as I have already pointed out, that statement was factually incorrect; the Board did not make the investment. Further, there is no evidence that, if the Board, on learning of the investment, had made appropriate inquiries of the finance manager, FMIT would have recovered the investment. The only evidence, as to that issue, is that in July 2007 FMIT drew down $2,000,000 of the funds invested with Grange Securities, in order to pay for some of the irrigation works, which it was then undertaking. That evidence, without more, is an inadequate basis for an inference that if the Board had made appropriate inquiries of the finance manager, the balance of the monies, invested with Grange Securities, would have been recovered. The proposition made by Dr Collins, in that respect, is based on speculation, and not on evidence.
As I stated, the evidence, which was elicited from Mr Belbin, Mr Di Masi and Mr Marciano in cross-examination, does demonstrate shortcomings by those plaintiffs, as members of the FMIT Board, in the discharge of their roles. Those shortcomings were not insignificant. However, even taken at their highest, the shortcomings by those three plaintiffs, in the performance of their functions as Board members, were substantially less serious than the unsubstantiated defamatory allegations published by the defendant of and concerning them, as reflected in the first two imputations found by the jury.
It is one matter to allege that the plaintiffs failed in their duties as members of the Board, first, by not ascertaining the legal restrictions on investments which might be made by FMIT, and, secondly, by not inquiring of the finance manager of FMIT as to the investments which Grange Securities had made, or was intending to make, with monies borrowed by FMIT from the government, and that thus the plaintiffs failed to ascertain that the investments made by Grange Securities were contrary to the legal limits contained in the Order in Council and prescribed under the BIP Act. It is an entirely different, and far more serious, matter for the defendant to allege, as it did, that: each of the four plaintiffs broke the law by investing $2.2 million of Victorian Government money without Treasury approval; and that each of the four plaintiffs acted irresponsibly and outside the law by investing money loaned from the Victorian Government in the United States sub-prime mortgage market. In that way, in my view, the matters elicited in cross-examination from the three plaintiffs do not have a material effect in mitigating the damages to be awarded to the plaintiffs.
As I have already observed, in relation to the third imputation, the evidence adduced in cross-examination does establish that, in June 2008, the Board did approve adjustments to the provisions of the contracts of four senior officers, which entitled those officers to substantial termination payments, if FMIT were taken over during the next twelve months. Those changes, approved by the Board, were not consistent with the Victorian Government Sector Executive Remuneration Policy guidelines. The Board did not advise the Minister, or his Department, of the changes to the contracts.
However, as I have also stated, those facts do not, in substantial measure, meet the fundamental sting of the third imputation, namely that the Board acted in a sinister and furtive manner which was in total disregard of its corporate responsibilities. Rather, as I have already noted, the uncontested evidence of the three plaintiffs was that the changes to the contracts were made for a good commercial purpose, namely, in order to ensure that FMIT retained important members of staff at a time when the loss of the services of any of them might have been critical. In that way, the matters established in cross-examination, fall well short of justifying the sting of the third imputation, particularly in the context of the letter of the Minister which was published by the defendant.
For those reasons, I am not persuaded that the matters, elicited by the defendant in cross-examination, mitigate the damage occasioned to Messrs Belbin, Di Masi and Marciano as a result of the defamatory imputations published of them by the defendant.[95]

At a glance

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Before

Source

Judgment (277 paragraphs)

Parties

Legislation Cited (5)

Cases Cited (16)