Manefield v Child Care NSW - [2010] NSWSC 1420 - NSWSC 2010 case summary — Zoe

NSWNSWSC

Manefield v Child Care NSW

[2010] NSWSC 1420

Supreme Court of NSW|2010-12-15|Before: Kirby J, Paris J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2010-12-15

Before

Kirby J, Paris J

Source

Original judgment source is linked above.

Judgment (50 paragraphs)

[1]

Background. 6 Mr Manefield is a man aged 47 years. He is married with five children. His background was in marketing and information technology. In 1993, or thereabouts, he sent his oldest child to pre-school at Westmead. The pre-school was part of the Kindergarten Union, a community based, not-for-profit organisation, that operates approximately 130 pre-schools and a number of long day care centres. 7 Mr Manefield was impressed by the organisation and joined the Parent Committee (T 10). In time, he became the pre-school's representative on the Council of KU Children's Services. He became aware that the Board of KU Children's Services was looking for members. He was encouraged by the Director of the pre-school his child attended to apply. Because of his background in marketing and information technology, he was "snapped up" (T 11). He became a board member in 1994. By 2001, he was the President of the organisation and remained in that office for five or six years. 8 The offices he held with KU Children's Services were honorary positions. To earn his living he worked as a consultant to Telstra. He also had a car rental business. However, through his association with KU Children's Services, he became passionate about early childhood learning programmes. He recognised from his reading, that intervention, to correct difficulties that children experience with learning, was fundamental. There were enormous benefits from early intervention, both for the child and ultimately for society. 9 Mr Manefield determined upon a career change. In 2005 he applied for a position as Chief Executive Officer of the National Family Day Care Association. He was placed on a short list, but not selected. He was told that he was "the runner-up".

[2]

Employment by Child Care New South Wales. 10 Ms Bernadette Dunn of Macarthur Management Services was a member of the interviewing panel. She knew the President of Child Care NSW, Mr Vic Laurence. She became aware that Child Care NSW was looking for an Executive Officer. Mr Manefield was contacted and asked whether he would be interested in such a position. He said that he was. He was then interviewed by Mr Laurence and the Vice President, Mr Wilson. In January 2006 he met the incoming President, Ms Lyn Connolly, and was interviewed by her. He was then offered the position of Executive Officer and began work on 7 February 2006. He was to receive a salary package of $100,000, including superannuation. He resigned from his position with the Kindergarten Union Board. 11 On the day that Mr Manefield commenced work he was handed a Contract of Employment, which he read and signed (Ex E). There was to be a probationary period of five months (Clause 1) and the contract could be terminated, either for misconduct or by either party "on 24 hours written notice or payment in lieu of notice" (Clause 6). Clause 10 included the following: (Ex E) "10 Association Information By signing this agreement you agree to the Confidentiality provisions set out in Schedule 3 of this Agreement. ..." 12 Schedule 3 of the agreement contained a number of provisions. It identified the information that may be disclosed to an employee in the course of his employment, in these words: (Ex E, Sch 3) "1. In the course of your employment with Child Care New South Wales, Child Care New South Wales may elect to disclose information of the following types to the Employee: Financial, technological, strategic or business information; Research, development, operational, legal, marketing or accounting information; Technology and intellectual property rights; Customer and supplier information; and Other information specifically marked as being confidential." 13 Such information was to be regarded as "Confidential", subject to defined exceptions. The agreement provided as follows: "2. All such information (whether or not about Child Care New South Wales or related companies, its customers & business associates) will be 'Confidential Information' for the purposes of this agreement unless it: Is trivial in nature; Is already public knowledge when it is disclosed to the Employee; Becomes public knowledge after it is disclosed to the Employee other than because of a breach of confidentiality by the Employee or a person to whom the Employee discloses it; or Is in, or comes lawfully into, the possession of the Employee other than because of a breach of confidentiality by some other person." 14 The schedule then included a prohibition on disclosure, as follows: "3. In return for Child Care New South Wales disclosing any Confidential Information to the Employee, the Employee agrees that: The Employee Must Always Keep Information Confidential The Employee must hold the Confidential Information in strict confidence and must take all steps necessary to preserve its confidentiality. ... All of these restrictions will continue even if the Employee's employment ends or this agreement is terminated." 15 Finally, the agreement included the following provision: "3. Ownership of Results Any information or intellectual property developed or created by the Employee using the Confidential Information will itself be Confidential Information and will be the property of Child Care New South Wales." 16 Mr Manefield's employment continued on the same terms beyond the five month probation period. One of his responsibilities under Schedule 1 of the Contract of Employment was defined in these terms: (Ex E, Sch 1) "For the initial period it will be the Executive Officer's responsibility to promote the benefits of this organization and to increase membership by providing extra services to the members." 17 The primary role of Child Care NSW was to act as the employer's representative in industrial matters (T 14). Advice was provided to child care centres and long day care centres, over the phone, as to wages and conditions under various awards. Information seminars were conducted from time to time for persons interested in owning a child care centre. 18 When Mr Manefield began work, the membership database was in a "mess" (T 14). It was not clear how many members there were, or who they were. There appeared to be 300, or perhaps 400 members. Some were companies, others were sole traders. Some operated through partnerships and others through a trust. The complexities of these arrangements added to the confusion. With the assistance of consultants, a database was set up to identify members. By the time his services were terminated, almost two years after his commencement, the membership had increased to about 650 members (T 15). 19 Child Care NSW operated through an executive committee of ten members. During Mr Manefield's time as Executive Officer, the President was Ms Lyn Connolly and the Vice President, Ms Vicki Skoulogenis. Both owned child care centres or long day care centres. Mr Manefield reported to the committee each month. He was required to manage the association's staff and provide the President with advice and support (T 16). He was also required to represent Child Care NSW at meetings with state and federal governments. 20 Towards the end of 2007, Mr Manefield became aware that there was some dissatisfaction with him on the part of the President and Vice President. Ms Vicki Skoulogenis sought a meeting to discuss the financial status of the organisation (T 16). The meeting took place on 14 November 2007. Mr Manefield was asked to explain why the cash reserves were so low. He told the Vice President that money had been paid in advance for the forthcoming annual conference, which was scheduled for early 2008. Income would be provided by participants in that conference. 21 On 21 November 2007, a letter was sent to Mr Manefield from "Vicki and Lyn", the Vice President and President respectively. The opening paragraph was in these terms: (Ex F) "To get a clearer prospective on what is actually occurring within CCNSW, with permission from Lyn, I have conducted a phone interview with the office staff and asked some general and specific questions. After the interviews Lyn and I have some grave concerns thus have come up with some specific directions to take place immediately to save the reputation and financial position which we are in." 22 There followed a number of directions, which included that all cheques written by the organisation were to be approved by either the President or the Vice President. The newsletter was not to be published, and no consultants were to be engaged. 23 The letter thereafter provided a brief explanation of "some concerns the office staff have" in respect of four issues:

[6]

The final issue concerned the 2008 conference. Both the President and Vice President were "not confident and are not convinced we should proceed due to our financial position as to date". The letter included the following additional statement: "Conference very expensive and if we make a loss like last year CCNSW will not exist. Our position is to stop now and not proceed. What expenses will we be charged with?" 24 The letter ended with the following words: "As the above reads quite negative can I please assure you that your efforts have not gone unnoticed. Your performance is of a high standard and I truly believe you will continue to give CCNSW all your best. Please understand me when I question the above as an executive officer I represent all our members and at this stage staying afloat is of the extreme importance. Lets work together with the above changes and see the year through with some relief and re-evaluate in the new year." 25 On 3 December 2007, Mr Manefield responded to the letter at length, providing general comments before addressing each issue of concern. His reply included the following commentary upon the organisation's finances: (Ex F, p 1) "It appears to me that the main concern that you both share is the financial performance of the Association. This concern has been particularly triggered by the level of cash in the day-to-day bank account. The arrival of a substantial bill from Sane Event Management now means that we have to dip into the reserves. This apparently sudden need to use the cash reserves quite understandably concerned you. However, you will see from the attached Profit & Loss and Balance Sheet that we are in a strong financial position. The year-to-date surplus as at the end of October, 2007 is just over $50,000. The Balance Sheet shows that we have net assets of over $220,000. In liquidity terms, the Balance Sheet shows that we have a working capital of just on $200,000." 26 The letter dealt with the database in these terms: (p 5) " Database. The quote from Matthew (OHS Audit) was for $2,500. This quote only included long day care centres from NSW. The database purchased via OM Solutions delivered address and contact details for all family day care schemes, OOSH services and long day care centres across Australia. The cost was $3,500. I made the judgment that this represented significantly better value overall." 27 An outline of plans for the future was then provided. The response by Mr Manefield also dealt with the conference schedule for 2008. His reply included these words: (p 6) "' Conference very expensive and if we make a loss like last year, CCNSW will not exist.' The loss on the conference last year was estimated at around $50,000. Given the net assets of the organization, I cannot see how such a loss would cause CCNSW to cease to exist. 'Our position is to stop now and not proceed. What expenses will we be charged with?' Apart from the loss of reputation, the financial consequences of cancelling the conference would be substantial." (emphasis in original) 28 There followed details of the financial cost of cancelling the conference. 29 The letter included the following "closing comments": (p 7) "Thank you for your positive comments with respect to my performance. I share your view that I have performed well and that I have, and always will have, the interests of CCNSW in the forefront of all my thinking and activities. As outlined above, I do not think that we are in any danger of not 'staying afloat'. I hope I have demonstrated that things may not be as bad as they originally seemed. Clearly there are a number of key projects that need my focus in the short term (eg Guild)." 30 On 15 December 2007, Mr Manefield was called to a further meeting with Ms Connolly and Ms Skoulogenis. The President told him that he was not to tell other members of the executive committee of the Vice President's fax (of 21 November 2007) and his own response. Ms Manefield endeavoured to reassure the President and Vice President that the association was in a "quite good financial state" (T 20). The fax, he believed, was based upon a misunderstanding of the cash flow. Recounting the conversation, Mr Manefield said this: (T 20) "A ... I explained to them again that of course we were running down the cash reserves, we had expenses that we had to pay for the conference and they necessarily came up early in the timeframe, and then basically from December onwards into January we would start reaping and generating the revenue as we sold the stands, the sponsorship packages and tickets to the conference. I said 'Look, let me take you through the financial statements and I'll show you'. At that point Lynne said 'I don't understand financial statements and that's why I have Vicki to help me with this sort of stuff'. I said 'Look it's very simple, I don't have to use technical accounting terms, I can just tell you in very straightforward ways that this is what we can do' and at that point they both shouted at me and said 'Look we don't want to see the financial statements'. ..."

[19]

Q. And what did you do; well, before I ask you that, first, was it the same concept that you raised earlier with Child Care NSW or was it a different concept? A. It was an extension of the concept. The concept that I then carried forward with was based on the comments by the Prime Minister of the time a few months previously regarding the idea of an integrated children's services hub where all the different types of children's services and also paediatric health services could be brought together in one location, and the idea behind that was that the identification of learning difficulties sometimes had medical causes, and be able to have speedy and quick referrals to medical practitioners, quickly and rapidly develop a program that could then help those children over their obstacles, and there were programs well proven about these things but getting access to these services was quite difficult, making an agreement of early learning professionals and the medical practitioners to work together so they could help children a lot ... " 43 In a draft letter, to which I will shortly make reference, Mr Manefield described the nature of the services he saw Early Learning Australia providing, in these terms: (Ex B) "Early Learning Australia has been formed to support the development and improvement of integrated Early Learning Services that meet the needs of Australian children and their families. There are three key ways we plan to do that: 1. Firstly, by working with all levels of government to develop consistent national standards for all types of Early Learning. We also need to ensure that services are developed only where there is a real need. This will require a coordinated planning approach across all levels of government. This two pronged approach is essential to ensure that high quality, affordable (services) are accessible to all Australian families in a way that communities can support. 2. Secondly, by providing services and products to Early Learning services all over Australia to make it easier for them (to) deliver the high quality Early Learning programs that they do. These services and products will cover the necessities, as well as innovative items that will further enhance the Early Learning programs in these services/centres. We will use the buying power of 8000+ Early Learning services to obtain great deals from suppliers. 3. Thirdly, by developing systems and training for service operators to show them how to run multiple services types within their service and integrate those services with playgroups, health services and parenting support." 44 The company limited by guarantee under the Corporations Act 2001 (Cth) was registered, with the name "Early Learning Australia" (T 24). It was to be a national body, rather than an association registered under the New South Wales Act. Mr Manefield was appointed its Executive Officer, although without salary until such time as the company could afford to pay him. He began meeting possible partners in a range of services required by those engaged in child care, including paying child care fees online, selling nappies at good prices and so on (T 24).

[20]

A planned media launch. 45 Mr Manefield and those associated with Early Learning Australia saw themselves as working in co-operation with Child Care NSW and equivalent associations interstate, as well as other organisations concerned with child care. He thought it prudent to write to each of these organisations, including Child Care NSW, in advance of the planned media launch, identifying the concept. His letter was despatched on Friday 4 July 2008, almost two months after his termination. It was framed with the following purpose in mind: (T 25) "Q. Yes, now, what prompted you write the letter which is now Exhibit B to Child Care NSW? A. I wanted to make sure that they understood before we did any major launch in the media that Early Learning Australia was not about trying to destroy the idea of child care centres or long day care but more that it was the idea of extending the idea of what a long day care centre is into an idea that it could be this multi-services hub, and I also wanted them to understand that I saw this as a complementary and a supplementary activity to what they were doing which was primarily an employer representative organisation on industrial matters and that I wasn't, was helping to do a national organisation of buying services and promoting this concept of the integrated children's services hub. (Exhibit B shown)" 46 The letter of 4 July 2008 opened with these words: (Ex B) "Early Learning Australia has been formed to support the development and improvement of integrated Early Learning Services that meet the needs of Australian children and their families. The idea of integrating different childrens services with playgroups and health professional services is not new. There are a number of places where this is already happening. These 'one-stop-shops' or 'childrens service hubs' have been operating for some time. As well, many Long Day Care centres have been networking with their local health professionals for many years. As a result, many children have benefited from early detection of developmental issues and their lives (and the lives of their families!) have been greatly improved. But all of this is ad-hoc and there is no national framework to ensure that such benefits reach all Australian children - not just the 21.1% of 0-5 year olds that attend Long Day care centres." 47 Reference was then made to a speech of Prime Minister Rudd, where he spoke of the creation of high quality, affordable, parent/child centres, "one stop shops for parents with young kids". The letter then described the services that Early Learning Australia intended to provide: (Ex B) "Early Learning Australia wants to provide those Early Learning services/centres with the information they need to make informed decisions on the best way for them to participate in the emerging integrated Early Learning services model. The other key thing that we want to do (is) to improve and increase the level of services available to Early Learning services/centres in Australia. By representing those 8000+ childrens services to suppliers we (will) be able to negotiate much better deals for the sector as a whole and improve access to a wider range of services and products. We believe that the best way for all of this to happen is for us to work with your association, and the associations representing the other service types, to develop the resources and systems to help service operators develop an integrated model that works for their community." 48 The letter concluded by making reference to a draft letter that Early Learning Australia intended to send to service operators. It said this: (Ex B) "To give you a sense of how we intend to communicate this idea to the Early Learning services around Australia, I have attached a draft letter to service operators. I will call in the next few days to set up a mutually convenient time to meet with your Executive Committee to discuss the opportunities for working together. In the meantime, if you have any questions please call me on 0408 974 454." 49 Reference has been made to the draft letter (supra [43]). Having set out the specific areas in which Early Learning Australia would be offering services, it described its philosophy in these terms: (Ex B) "Early Learning Australia believes that these support networks should be developed and supported at the national level by government and the health professional associations related to early childhood health. Early Learning Australia also supports the view that all types of Early Learning services need to work together to develop a strong voice on behalf of the children and families that benefit from attending their programs. That is why Early Learning Australia is a national organisation that welcomes members from any state/territory, any service type and any ownership type (ie community based or private). Those who engage in argument and derogatory comment based on state-based issues or whether a centre is privately owned or community owned are missing the point. Only if we all work together to advocate for changes to the current system that support Early Learning programs will we achieve a consistent, accessible Early Learning framework for all Australian children. Early Learning Australia exists to support that objective. We look forward to working with you." 50 The defendant lost no time in responding. On the following Monday, 7 July 2008, Child Care NSW sent the letter to all, or almost all, of its 650 members under the signature of the NSW Executive Committee. For convenience, in this chronological survey of relevant material, I repeat the letter forwarded by the association to its members. I have identified each paragraph with a number so that the text may be readily referred to in the discussion that follows: (Ex A)

[21]

"Dear Child Care Operators, 1. As some of you may be aware, Mr Bruce Manefield is no longer in the position of Executive Officer of Child Care NSW. 2. A decision to terminate Mr Manefield's services was taken by the Executive following a meeting between nominated representatives of the Executive and our Industrial Relations Advisor, Mr Peter Rochfort, with Mr Manefield on Friday 9 May, 2008. 3. Members should be advised that Mr Manefield remains under ongoing duty of confidentiality to the Child Care NSW in terms of information to which he has become privy by virtue of and during the course of his employment, relating to the affairs, both financial and commercial, of the Child Care NSW and of its members. This information includes, but is not limited to, membership lists. We have reason to believe that Mr Manefield is in the process of contacting members, and we suspect that he is availing himself of confidential information in order to do so. 4. Members are advised to respond cautiously to any approach by Mr Manefield, or any person acting in connection with Mr Manefield, particularly given the legal ramifications which may arise. 5. Your Executive is conscious of the difficulties which Child Care NSW has faced over the past couple of years, which have impacted in one way or another on all of us. We are now taking the steps necessary to resolve this impact and to see Child Care NSW restored to the pre-eminent position it holds in the child care community. 6. The infrastructure of Child Care NSW and its ability to represent our membership effectively remains sound. However, in order to achieve our objectives, the Executive continues to rely upon the support of you, the membership. 7. There are a number of looming challenges, particularly given the priorities of the (relatively) new Federal government. There is a lot of impetus being given to changing the regulatory basis under which the industry operates, including, for example, the industrial framework. 8. We have at our disposal, the infrastructure, the resources and the personnel which will enable and equip us to face the challenges ahead far better than any alternative body, and we ask you not to be deluded into thinking otherwise. 9. We, the Executive, invite you to refer any contact from Mr Manefield, or any entity with which Mr Manefield is associated, to any member of the Executive, who will respond as necessary. 10. We are also contacting Mr Manefield directly to remind him of his legal obligations. Kind Regards Child Care NSW Executive Committee" 51 Mr Manefield had no advance warning. Although he had provided his mobile number in the letter he had sent the previous Friday, no-one from Child Care NSW telephoned him beforehand, or at any stage (T 25). On the day of his termination he left his laptop in the office (T 25). He did not retain any membership list or any confidential material. He first learned of the publication on 10 July 2008, in circumstances that I will later describe. 52 The letter from Child Care NSW stated in its final paragraph that it would be contacting Mr Manefield to remind him of his legal obligations. No such contact was made. No letter was received. However, the defendant, on discovery, disclosed the following draft letter, that was never sent: (Ex D)

[23]

Were the imputations conveyed? 55 The test is well known, but worth repeating. The attributes of the ordinary reasonable reader were summarised by Hunt J in Farquhar v Bottom [1980] 2 NSWLR 380: (at 386) "This ordinary reasonable reader does not, we are told, live in an ivory tower. He can, and does, read between the lines, in the light of his general knowledge and experience of worldly affairs: Lewis v Daily Telegraph Ltd (supra at 258); Jones v Skelton (supra at 650); Lang v Australian Consolidated Press Ltd ([1970] 2 NSWR 408 at 412). It is important to bear in mind that the ordinary reasonable reader is a layman, not a lawyer, and that his capacity for implication is much greater than that of the lawyer: Lewis v Daily Telegraph Ltd (supra at 277); Morgan v Odhams Press Ltd ([1971] 2 All ER 1156 at 1163); Lang v Australian Consolidated Press Ltd ([1970] 2 NSWR 408 at 412); Middle East Airlines Airliban SAL v Sungravure Pty Ltd ([1974] 1 NSWLR 323 at 340). ... " 56 Imputation (a) is in these terms: (a) The plaintiff is an untrustworthy person prepared to use devious and underhand means to take members away from the defendant. 57 In support of the submission that the matter complained of would provide the ordinary reasonable reader with that meaning, the plaintiff relied especially upon paragraphs (3), (4) and (10). Paragraph (4), according to the plaintiff, was an instinctive warning to members that they should respond cautiously to Mr Manefield, it being suggested that he was ignoring his legal obligations and was untrustworthy. 58 The defendant did not make submissions in respect of each imputation, beyond an assertion that no such imputations had been conveyed. Whilst the defendant acknowledged that the material was capable of giving rise to each imputation, it said that only a reader avid for scandal would draw from the letter any of the meanings asserted by the plaintiff. 59 Dealing with these arguments, and rearranging the imputation, it can be broken down into the following elements: First, that Mr Manefield had the objective of taking members away from the defendant. Secondly, that in doing so, he was prepared to use devious and underhand means. Thirdly, that Mr Manefield was thereby demonstrated to be an untrustworthy person. 60 Dealing with the first element, the letter as a whole certainly gives the impression that the association felt itself under threat. It had "over the past couple of years" faced difficulties, which had impacted on everyone. The executive was conscious of those difficulties (para (5)). There were a number of looming challenges (para (7)). Nonetheless, the executive reassured its members that it had the ability to continue to represent them "far better than any alternative body". The letter included: "8. We have at our disposal, the infrastructure, the resources and the personnel which will enable and equip us to face the challenges ahead far better than any alternative body, and we ask you not to be deluded into thinking otherwise ." (emphasis added) 61 The words emphasised are important. The fear was competition from an alternative body. Mr Manefield, members are told, is in the process of contacting members (para (3)). They are advised to "respond cautiously" (para (4)). Indeed, members should refer any contact to the executive, who will respond as necessary (para (9)). They should not be deluded into thinking that Child Care NSW is incapable of meeting the challenges ahead (para (8)). 62 The ordinary reasonable reader, I believe, would infer that Mr Manefield's objective was to undermine, and ultimately replace, the association by attracting its membership. The first element is established. 63 The second element involved the means Mr Manefield was prepared to employ to obtain his objective. The imputation uses the words "devious" and "underhand". One meaning of "devious" is "not straightforward, tricky, deceptive and deceitful" (Macquarie Dictionary). "Underhand" is "not open and above board, but secret crafty or dishonourable, slyly". Here, notwithstanding the use of the word "suspected", there is the clear impression that, having been dismissed from the job, Mr Manefield had available to him and was using information that was confidential (para (3)). It is information he should not have had. Having such information, and using it, was deceitful. He was acting improperly, such that there may be legal ramifications unless caution were exercised (para (4)). Further, in his contact with members, he may delude them into believing that the association was unable to cope with the challenges that lie ahead (para (8)). The implication is, that to engender such delusions, he would provide misinformation or would lie about the association, when the truth was that the association had the infrastructure, the resources and personnel to meet those challenges. Such conduct may be described as "devious" and "underhand". The second element, I believe, has been established. 64 The third element is simply the product of the first two. Mr Manefield, in such circumstances, is a person who can accurately be described as untrustworthy. That is, he is not worthy of their trust, such that caution should be exercised should he approach. Members, exercising caution, should refer him to the executive, so that they may respond. 65 I accept that Imputation (a) has been conveyed. 66 Imputation (b) is in these terms: (b) The plaintiff is a dishonest person prepared to deceive the defendant's members. 67 The plaintiff, in support of this imputation, relied especially upon paragraphs (3), (4) and (8) set out above. It was submitted that the word "deluded" was a synonym for "deceived". Hence, it was being suggested that Mr Manefield was a deceitful person, a dishonest person, endeavouring to delude members of the association concerning the capacity of the association to meet the challenges of the future. 68 So the elements of Imputation (b) are: First, that the plaintiff is a dishonest person. Secondly, and he is a person prepared to deceive the association's members. 69 Dishonesty is different from, although kindred to, untrustworthiness. Mr Manefield was subject to an ongoing duty of confidentiality in respect of financial and commercial information to which he had been exposed (para (3)). He was suspected of improperly using such information (para (3)). His abuse was not limited to membership lists. It extended to other financial and commercial information that was confidential, and that he was bound to keep confidential. He was about to be reminded of his legal obligations. There may be legal ramifications in dealing with him (para (4)). Members should therefore respond cautiously to any approach (para (4)). The ordinary reasonable reader, I believe, on the basis of this material, would have the firm impression that Mr Manefield was dishonest. To have confidential information in his possession after his termination, and to use it, was dishonest. 70 Dealing with the second aspect, (although relevant also to dishonesty) paragraph (8) sets out the association's fear, were members incautiously speaking with Mr Manefield. He is likely to spread misinformation or to lie to them, representing that an alternative body can better meet their needs than Child Care NSW. It asks members "not to be deluded" by his representations. The ordinary reasonable reader would, I believe, have the firm impression that Mr Manefield was prepared to deceive them as to the capacity of the association to deliver. Imputation (b), in my view, is conveyed. 71 Imputation (c) is as follows: (c) The plaintiff had attempted to deceive members of the defendant. 72 The plaintiff particularly relied upon paragraph (8) to establish this imputation, in the context of the letter as a whole. 73 What evidence is there, within the letter, that the plaintiff had already acted to deceive members? Reference has been made to the threat the executive of the association perceived, that Mr Manefield was seeking to take members from the association (supra [61]). Paragraph (8) anticipates his modus operandi, that by misinformation or lies, by what is colloquially known as "white anting", he would attempt to delude members into believing that the association could not meet the challenges of the future. The letter states that the executive had reason to believe that Mr Manefield "was in the process of contacting members" (para (3)). So the process of deception had begun, requiring caution (para (4)). Members were counselled to refer any contact from Mr Manefield or his organisation to a member of the executive. Applying the test, I accept that the imputation was conveyed. 74 Imputations (d) and (e) may conveniently be dealt with together. They are: (d) The plaintiff had breached the obligation of confidentiality which he owed to the defendant. (e) The plaintiff had breached his legal and contractual obligations to his former employer. 75 The plaintiff, in argument, relied especially on paragraph (3) in respect of Imputation (d) and the last sentence of that paragraph. In respect of Imputation (e), the plaintiff pointed to paragraphs (3), (9) and (10) as being especially relevant. 76 Dealing with these imputations, they refer respectively to a breach of the obligation of confidentiality (Imputation (d)) and a breach of Mr Manefield's "legal and contractual obligations to his former employer" (Imputation (e)). So there are three concepts, confidentially, legal obligations and contractual obligations. The letter refers to the duty of confidentiality (para (3)) and the legal obligations that Mr Manefield is to be reminded of (para (10)). There is no reference, as such, to "contractual obligations". There is, however, a reference to the duty of confidentiality arising from information received "in the course of his employment" with the association (para (3)). The ordinary reasonable reader would understand that he was under a contractual obligation to maintain secrecy. He should not be in possession of confidential information, having been terminated and left the association's employ. 77 Paragraph (3), however, is framed in terms of "we suspect that he is availing himself of confidential information". It does not assert, in terms, that he had breached his obligations of confidentiality or his legal and contractual obligations to his employer. Would the ordinary reasonable reader, reading between the lines, nonetheless understand that he had done so? The reader is told that he was terminated (para (2)). He or she is also told that he was privy to confidential information, financial and commercial (para (3)). The reader is told that the information included, but is not limited to, membership lists (para (3)). There was also reference to the fact that he was in the process of contacting members (para (3)), and that the executive suspected he was availing himself of the confidential information in doing so (para (3)). 78 The ordinary reasonable reader would also understand that Mr Manefield, having been terminated, is now on his own. He would naturally conceal his possession of confidential information and the fact he was using it. I believe the reader would also assume that the Executive Committee had put 2 + 2 together. It was obvious what he was doing. Accordingly, the Executive Committee had resolved to remind him of his legal obligations (para (10)). Members, meanwhile, were advised to respond cautiously to his approach, "particularly given the legal ramifications that may arise". They were invited to refer any contact from Mr Manefield, or his organisation, to the executive. 79 I believe the ordinary reasonable reader would take away the clear message that Mr Manefield had breached his obligations of confidentiality and his legal and contractual obligations to his former employer. The imputations are conveyed. 80 Finally, Imputation (f) is in these terms: (f) The plaintiff by his mismanagement and incompetence had damaged the standing of the defendant in the childcare community and created the difficulties which it had faced." 81 In support of that imputation, the plaintiff drew attention to the opening paragraph of the letter, where it was said that Mr Manefield was no longer in the position of Executive Officer of Child Care NSW (para (1)). The decision had been taken by the executive to terminate his services following a meeting on 9 May 2008 of members of the executive with the Industrial Advocate, Mr Rochford (para (2)). The following paragraph, according to the plaintiff, is especially important: "5. Your Executive is conscious of the difficulties which Child Care NSW has faced over the past couple of years, which have impacted in one way or another on all of us. We are now taking the steps necessary to resolve this impact and to see Child Care NSW restored to the pre-eminent position it holds in the child care community." 82 Dealing with these submissions, the imputation identifies two things concerning Mr Manefield, that is his management and his incompetence, that were said to have had two consequences: first, they had damaged the standing of Child Care NSW in the child care community; and secondly, they had created the difficulties which Child Care NSW had faced. 83 There is, of course, no question that Mr Manefield managed the association. The decision by the executive, in conjunction with Mr Rochford, to terminate his services, had been taken almost two months before. The letter does not state the reason for termination. However, "terminate" is a strong word. The association did not use a softer expression such as "left our employ", or "no longer working for us". "Terminate" is an execution, a dismissal, swift and final. Reading between the lines, the ordinary reasonable reader would assume that he had been dismissed for incompetence or worse. The impression of incompetence, as the likely explanation, was reinforced by paragraph (5). So that his incompetence, whilst managing the association, would have been conveyed. 84 Further, I believe the ordinary reasonable reader would understand from paragraph (5) that, as a result of Mr Manefield's mismanagement and incompetence, its standing had slipped. Having taken the first step, that is getting rid of Mr Manefield, Child Care NSW was now in the position where it needed to take steps to restore the association to the pre-eminent position it had held. The ordinary reasonable reader would understand that responsibility for the difficulties members had faced over the last couple of years could be laid at the door of Mr Manefield, through his management and incompetence. 85 I accept, therefore, that Imputation (f) was conveyed, so that all Imputations (a) to (f) were, in my view, conveyed. All were clearly defamatory. 86 I therefore turn to the defence of qualified privilege at common law.

[24]

Qualified privilege at Common Law. 87 Three issues arise in the context of qualified privilege at Common Law, as set out by Simpson J in Megna v Marshall [2010] NSWSC 686: (at [50]) "50. ... a defence of qualified privilege at common law involves three strands of inquiry: identification of an occasion of qualified privilege by reference to all of the circumstances in which the communication is published, including, particularly, the subject matter of the communication: this involves the identification of a duty or interest in the publisher to communicate with respect to that subject matter, and the identification of a reciprocal interest in the recipient in receiving a communication with respect to that subject matter; determination whether the content of the communication was relevant, germane or sufficiently connected to that occasion or subject matter; (only if both occasion and relevance are established), determination whether ... the occasion was misused, or used for an ulterior or extraneous purpose, such as to give rise to a finding that the publisher was actuated by express malice ." (emphasis in original) 88 Dealing first with the concept of a privileged occasion, discussion usually begins with the statement of principal by Parke B in Toogood v Spyring (1834) 1 Cr M & R 181 at 193; 149 ER 1044 at 1050: "In general, an action lies for the malicious publication of statements which are false in fact, and injurious to the character of another (within the well-known limits as to verbal slander), and the law considers such publication as malicious, unless it is fairly made by a person in the discharge of some public or private duty, whether legal or moral, or in the conduct of his own affairs, in matters where his interest is concerned . In such cases, the occasion prevents the inference of malice, which the law draws from unauthorized communications, and affords a qualified defence depending upon the absence of actual malice. If fairly warranted by any reasonable occasion or exigency , and honestly made, such communications are protected for the common convenience and welfare of society; and the law has not restricted the right to make them within any narrow limits." (emphasis added) 89 In Roberts v Bass [2002] HCA 57; (2002) 212 CLR 1, Gaudron, McHugh and Gummow JJ restated the principle in these terms (identifying Adam v Ward (1917) AC 309 at 334, per Lord Atkinson and Toogood v Spyring (supra) as the sources): (at [62]) "The common law protects a defamatory statement made on an occasion where one person has a duty or interest to make the statement and the recipient of the statement has a corresponding duty or interest to receive it. Communications made on such occasions are privileged because their making promotes the welfare of society. But the privilege is qualified - hence the name qualified privilege - by the condition that the occasion must not be used for some purpose or motive foreign to the duty or interest that protects the making of the statement." 90 Here, the suggestion is a "community of interest" between the association and its members. In Hunt v Great Northern Railway Co [1891] 2 QB 189, Lord Esher MR said this, in respect of such a case: (at 191) "... The occasion had arisen if the communication was of such a nature that it could be fairly said that those who made it had an interest in making such a communication, and those to whom it was made had a corresponding interest in having it made to them. When those two things co-exist, the occasion is a privileged one, and the question whether it was or was not misused is an entirely different one." 91 "Interest", as the defendant points out, is broadly defined. In Bashford v Information Australia (Newsletters) Pty Ltd [2004] HCA 5; 218 CLR 366, Gummow J said this: (at [148]) "148 ... it is clear that the recipients of the defamatory imputation contained in the relevant article possessed a corresponding interest in the subject-matter to which the imputation related. In Howe & McColough (1910) 11 CLR 361 at 398, Higgins J noted: 'The word 'interest', as used in the cases, is not used in any technical sense. It is used in the broadest popular sense, as when we say that a man is 'interested' in knowing a fact - not interested in it as a matter of gossip or curiosity, but as a matter of substance apart from its mere quality as news.' In the same case, Higgins J justified the existence of a requisite interest on the part of the recipients of the defamatory communication in the following way: 'When information is given to these men as to the solvency of a buyer, it is not given to them as idle gossip; it is for solid business uses.'" 92 In Bashford Gleeson CJ, Hayne and Heydon JJ noted that the principles are stated "at a very high level of abstraction and generality" (para [10]). Expressions such as "public or private duty, whether legal or moral" and "the common convenience and welfare of society" (and one may add "community of interest"), are very broad concepts and difficult to apply (para [10]). Definition and guidance are to some extent provided by two concepts, the first being the need to have regard to the "circumstances of the case" and the second, "the public interest". As to the first, Dixon J in Guise v Kauvelis (1947) 74 CLR 102, said this: (at 116) "The very width of the principles governing qualified privilege for defamation makes it more necessary, in deciding how they apply, to make a close scrutiny of the circumstances of the case, of the situation of the parties, of the relations of all concerned and of the events leading up to and surrounding the publication." 93 As to the need to consult the public interest, Jordan CJ in Andreyevich v Kosovich (1947) SR (NSW) 357, said this (referring to the defendant): (at 363) "... it was necessary that they should show by evidence that both the givers and the receivers of the defamatory information had a special and reciprocal interest in its subject matter, of such a kind that it was desirable as a matter of public policy, in the general interests of the whole community of New South Wales, that it should be made with impunity, notwithstanding that it was defamatory of a third party." 94 More recently, the public interest was given some prominence (as I will later describe) in Aktas v Westpac Banking Corp Ltd [2010] HCA 25, by the majority (French CJ, Gummow and Hayne JJ). Reference was made (at para [22]) to Justin v Associated Newspapers Limited ((1966) 86 WN (Pt 1) (NSW) 17 at 32; (1967) 1 NSWR 61 at 75). Walsh JA, in that case, said that the "broad principle" underlying qualified privilege is that occasions exist in which it is desirable, as a matter of public policy, that freedom of communication should be given priority over the right of the individual to protection against loss of reputation. 95 But, even after using "the circumstances" and the "public interest" to refine the issue, large choices remain concerning an appropriate level of abstraction when dealing with: whether there is a community of interests between the publisher and the recipients, and whether extending the privilege to such circumstances is in the public interest. 96 The difficulties are illustrated by Bashford (supra) which concerned a newsletter on occupational health and safety published to subscribers. A company controlled by Bashford and his wife was found, by the Federal Court, to have been liable to pay damages and costs. The publishers of the Bulletin reported the case, referring to Mr Bashford, rather than his company, thereby defaming him. The publishers, in their defence, relied upon qualified privilege at common law. Gleeson CJ, Hayne and Heydon JJ took a broad view of the community of interest between the publisher and subscribers. They said this, referring to the leading judgment in the Court of Appeal: (at [12]) "[12] In the Court of Appeal, however, a deal of attention was directed to identifying the circumstances which made the occasion of publication a privileged occasion. Five features of the circumstances of publication were noted by Hodgson JA who, in this respect, stated the reasons of the Court. First, occupational health and safety was identified as a matter of importance for the common convenience and welfare of society. Secondly, the communication of matters relevant to that issue to persons responsible for occupational health and safety was said to promote that common convenience and welfare. Thirdly, it was noted that the respondent's publication was a subscription periodical distributed to persons responsible for occupational health and safety, and not to a wider audience. Fourthly, it was said that having accepted subscriptions, the respondent was morally and legally obliged to publish for its subscribers matters of significance on the topic. Finally, it was said that the Federal Court's decision on the claim made by ACOHS for damages for contravention of s 52 was a matter of significance on the topic of occupational health and safety." (footnotes omitted) 97 Thereafter, in addressing the issues arising under qualified privilege, their Honours said this: (at [23]-[24]) "[23] Was there, in this case, that reciprocity of duty or interest between maker and recipient of the matter of which complaint was made which would make the occasion of its communication privileged? What legal, social, or moral duties or interests were engaged between the respondent as publisher and those subscribers to whom it published its Bulletin? [24] The respondent described its Bulletin, on the masthead of the publication and in the advertising material it distributed, as a 'plain English guide to workplace health and safety'. The subscribers to the Bulletin were persons responsible for health and safety in the workplace, not any wider audience. By accepting subscriptions, the respondent undertook to publish a periodical of the kind it described - a guide to workplace health and safety. The subject of the guide was rightly identified in the Court of Appeal as important to society as a whole. The dissemination of information about that subject to those responsible for it was rightly held by the primary judge and the three judges in the Court of Appeal as advancing the common convenience and welfare of society. ..." 98 McHugh J (diss), on the other hand, said this: (at [37]) "[37] The majority decision holds that an occasion of qualified privilege arises when matter is voluntarily published to subscribers concerning a subject of public interest, if the subscribers have a business or professional responsibility for that subject. If they have that responsibility, the occasion is privileged even where, as here, the subject matter is described at a high level of abstraction - 'occupational health and safety' or a 'guide to workplace health and safety'. It is possible to imagine more abstract statements of a subject of public interest, but there is certainly nothing concrete in the description of the subject matter in this case. Thus, the majority decision appears to protect the extensive publication of defamatory statements, true or false, that can be related to a widely defined subject of public interest when they are published to persons who have some responsibility for matters falling within the subject of interest." 99 Moving to the second issue, that is the need for the defamatory statement to be relevant to the communication which is privileged, Jordan CJ in Mowlds v Fergusson (1939) 40 SR (NSW) 311, having identified the circumstances in which an occasion of qualified privilege arises, said this, referring both to relevance and the malice which will destroy the privilege: (at 318) "... and if he restricts himself to a communication which is capable of serving the purpose of the occasion and is made with no other object than that of serving that purpose, he incurs no liability for libel or slander to any person of whom his communication may be in fact defamatory. ..." 100 In Adam v Ward (supra [89]), Earl Loreburn referred to the issue of relevance in these terms: (at 320) "But the fact that an occasion is privileged does not necessarily protect all that is said or written on that occasion. Anything that is not relevant and pertinent to the discharge of the duty or the exercise of the right or the safeguarding of the interest which creates the privilege will not be protected. ..." 101 His Lordship stated the issue of relevance in these words: "... whether or not the defendant has published something beyond what was germane and reasonably appropriate to the occasion ..." 102 Lord Dunedin, in the same case, said this: (at 327) "If the defamatory statement is quite unconnected with and irrelevant to the main statement which is ex hypothesi privileged, then I think it is more accurate to say that the privilege does not extend thereto than to say, though the result may be the same, that the defamatory statement is evidence of malice." 103 Simpson J in Megna v Marshall (supra [87]) illustrated the concept with the following example: (at [72]) "72. The relevance principle may be illustrated in this way: ordinarily speaking, discussion during the course of a Council meeting would attract privilege. The occasion confers a privilege upon the members of the Council, so that they may freely, openly and honestly exchange information and express views on matters relevant to Council business. For that purpose, the occasion is privileged. But the privilege conferred on specific communications is limited to those that are relevant to or have the necessary connection with Council business. If a defamatory statement is made that is not relevant to the business of the Council, while the occasion may be privileged, the specific communication is not. ..." 104 The focus is upon the imputation and whether it falls within the umbrella of the privilege, or whether the imputation is not relevant and, therefore, not covered by the defence (Bashford (supra [91]), per Gummow J at [135]). The umbrella of qualified privilege arises through the necessary reciprocity of interest and duty between the publisher and recipient. That being the context, Tobias JA in Fraser v Holmes [2009] NSWCA 36, said this: (at [37]) "37 ... Accordingly, the imputations, to be relevant to the subject matter of that occasion, must not be ' truly unconnected ' with that subject matter, as Hodgson JA described the test in Bashford v Information Australia (Newsletters) Pty Ltd [2001] NSWCA 470 at [43], or as Sheller JA stated the test at [2], must be ' germane and reasonably appropriate to the occasion. '" (italics in original) 105 Most of these formulae for identifying relevance can be traced to the speeches in Adam v Ward (supra [89]). In Bashford, Kirby J said this: (at [194]) "194 All of these formulae are attempts to define the boundaries of discussion that is truly within the scope of the matter of public interest, so as to exclude the introduction of extraneous, irrelevant or marginal and gratuitous imputations that unacceptably do harm to the reputation and honour of an individual. Scientific precision is impossible by the use of such formulae. In every case a judgment is evoked. ..." 106 Although relevance is a requirement and a separate question, the introduction of extraneous matter upon a privileged occasion may also afford evidence of malice (Adam v Ward (supra [89]), per Lord Finlay at 318). I will deal with the issue of malice below. 107 The defendant has the onus of establishing that the defamatory imputations were published upon a privileged occasion and were relevant to that occasion. But once these requirements are satisfied, a number of things flow. First, the contents of the communication are protected, including the defamatory imputation, whether they be true or false and whether "harsh or hasty" (Huntley v Ward (1959) 6 CB (NS) 514 at 517), whether reasonable or unreasonable (Roberts v Bass (supra [89]), per Gleeson CJ at [14]). The privilege protects the communication whether "it be expressed as a fact or as an opinion" (Megna v Marshall (supra [87]) at [59]). Secondly, there is a presumption that the defendant publisher believed the truth of what was published. In Morgan v John Fairfax & Sons Limited (1990) 20 NSWLR 511, Hunt J said this: (at 542) "The common law presumes the existence of such a belief in the truth (where it is relevant) as soon as the occasion of qualified privilege has been established, and it requires the Plaintiff then to establish its absence (as constituting malice)."

[25]

Submissions of the parties. 108 It was, according to the defendant, a classic case of qualified privilege, a communication between an association and its members. No-one, apart from members, received the letter. The defendant made the following submission: (p 5) "7 ... All the recipients would have an interest in knowing of the internal affairs of the company, its management, the capabilities and the conduct of its managers to (sic). The Plaintiff himself has established an interest between the communicator (the Defendant) and the recipients." 109 It was also said that, apart from the reciprocity of interest, there was a duty to advise members of the termination of Mr Manefield's employment. 110 Counsel for Mr Manefield acknowledged that, at first blush, the circumstances would appear to be a case of qualified privilege. If one assumed, for the purposes of argument, that the information conveyed by the letter were true, including the imputations, and then asked the further question whether the defendant had a duty or interest to convey that information to members, the answer would be in the affirmative. 111 However, on closer analysis, especially in light of the High Court's recent decision in Aktas v Westpac Banking Corporation Ltd (supra [94]), there was no such occasion. First, there was no duty to apprise members of the termination of Mr Manefield. There may have been some interest in letting members of the association know of his termination in May 2008. However, by 8 July 2008, when the letter was sent, the information was stale. At that point there was no interest in members receiving that information. Its inclusion in the letter had another purpose. 112 Secondly, Aktas emphasised the distinction between the underlying facts, that create the occasion of qualified privilege, on the one hand, and on the other, the material conveyed by the communication on such an occasion. The underlying facts, to create the occasion, must exist. They must demonstrate the reciprocity of interest and the desirability, as a matter of public policy, that, in the general interests of the whole community, the communication should be made with impunity (Aktas [34]). In other words, errors can be made in a communication sent on a privileged occasion. However, the publisher cannot be mistaken concerning the facts said to exist that give rise to the privileged occasion, that is the facts that prompt the communication. 113 Aktas was an action in defamation by a customer of the bank who had drawn a number of cheques. The cheques were regular on their face and there were funds within the account sufficient to meet each cheque. The bank, however, dishonoured the cheques, endorsing them "return to drawer". It did so by mistake. In an action for defamation, it relied upon the defence of qualified privilege at common law. French CJ, Gummow and Hayne JJ (forming the majority) identified the issues in these terms: (at [26]) "26 Was communication of dishonour of the cheques made on an occasion of qualified privilege? Was there an occasion where there was a duty or an interest in making and receiving the defamatory communications?" 114 The underlying fact that prompted the communication was that, through an error of procedure, Westpac determined that there was no money in the account. In that context, their Honours said this: (at [28]) "28 If there were funds to meet the cheque, and the cheque was otherwise regular on its face, there was no reason for Westpac, as the paying bank, to make any communication about the fate of the cheque. ..." 115 Having referred to the words of Jordan CJ in Andreyevich v Kosovich (supra [93]), their Honours said this: (at [32]) "32 The point made by Jordan CJ may be put interrogatively, by adopting and adapting what Gummow J said in Bashford v Information Australia (Newsletters) Pty Ltd , so as to ask whether the particular relationship between Westpac and the persons receiving a notice of dishonour was one in which the advantages which the law deems are to be had from free communication within such a relationship should enjoy a significance over and above the accuracy of a defamatory imputation conveyed by a notice of dishonour, in this case that Homewise had issued a valueless cheque." 116 The majority then identified matters "of the first importance" in answering that question: (at [33]-[34]) "33 In assessing that question, it is, as remarked above, of the first importance to recognise that there will be a communication between a bank and the payee of a cheque drawn on that bank, if and only if the bank wishes to refuse to pay the cheque. That is, there will be an occasion for communication if and only if the cheque is to be dishonoured. 34 What then are the advantages to society from providing for freedom of communication between bank and payee on such an occasion, which outweigh the need for accuracy in conveying a defamatory imputation? What is the special and reciprocal interest in the subject matter of the communication which makes it desirable as a matter of public policy that, in the general interests of the whole community, the communication should be made with impunity, notwithstanding that it is defamatory of a third party." 117 Authorities dealing with "mistakes" and other matters were then examined. Their Honours concluded by saying: (at [40]) "40 ... More fundamentally, however, to focus upon notions of 'mistake' distracts attention from the need to identify whether, as a matter of public policy, in the general interests of the whole community, qualified privilege should attach to the occasion of such a communication. No such public interest was identified in argument." 118 On the absence of public interest, the majority then added: (at [41]) "41 The absence of such a public interest in Davidson , and in this case, can be demonstrated by the absence of any reciprocity of interests between bank and payee. The bank has an interest in communicating because it refuses to pay. But the payee has no interest in receiving a communication of refusal to pay a cheque which is regular on its face in a case where the drawer of the cheque has funds sufficient to meet its payment. And where a notice of dishonour is defamatory, the defamation will lie in the assertion either that the cheque is not regular, or that the drawer does not have funds sufficient to meet the payment ordered on the cheque. When a notice of dishonour is defamatory, the communication goes beyond informing the recipient that the bank refuses to pay the cheque; the communication gives the bank's reason for refusal. The defamatory imputation will be found in that reason, not in the bare fact of refusal. That being so, it is wrong to identify some community of interest in the communication actually made as arising out of a need or desire on the part of the bank to say that payment is refused or as founded in some more general notion of the payee needing or wanting to know 'the fate' of the cheque. As explained earlier, the bank acts as it does in what it perceives to be its interests. And for the payee of the cheque, there will be no need for any communication from the bank about the fate of the cheque, if it is met on presentation." (emphasis added) 119 Finally, their Honours said this: (at [42]) "42 ... To hold that giving notice of dishonour of a cheque is an occasion of qualified privilege is not conducive to accuracy on the part of banks faced with the decision to pay or dishonour a cheque as soon as reasonably practicable. To hold banks responsible to their customers not only in contract, but also for damage to reputation, is conducive to maintaining a high degree of accuracy in the decisions that banks must make about paying cheques." 120 Here, on the plaintiff's case, one may infer that the executive of the association felt threatened by competition, which they perceived Mr Manefield represented. An examination of Mr Manefield's letter of the previous Friday (Exhibit B (supra [46]-[49])), however, demonstrated that Mr Manefield was proposing an organisation directed towards entirely different ends. He was not planning to establish himself as an industrial association, registered in the State, representing child care centres. He was proposing a federal corporation providing specific and identified services (supra [43]). Those services would supplement and compliment the services already available to child care centres, to enable them to better fulfil their role. The executive may mistakenly have thought it necessary or desirable to communicate with members. However, what interest did members have in such a communication, designed as a pre-emptive strike against Mr Manefield's organisation, that was wrongly perceived as providing competition and a potential threat? There was, according to the plaintiff, no such interest. It may be different were there some basis, on the evidence, for the association thinking that Mr Manefield was going to solicit, illegitimately, its members. Here, according to the plaintiff, there was no such basis. As in Aktas, making a mistake in the premise which prompts the communication, does not give rise to an occasion of qualified privilege. 121 Dealing with these submissions, what were the circumstances giving rise to the communication?

[26]

The circumstances of the publication. 122 The court, in its determination of whether there is an occasion of qualified privilege, is enjoined to "make a close scrutiny of the circumstances of the case, of the situation of the parties, of the relationship of all concerned and of the events leading up to and surrounding the publication" (supra [92]). Here, the only evidence is that of Mr Manefield and the documents tendered and made exhibits. That evidence has been set out in [10]-[52]. A short summary of that material may assist. I believe the following to be uncontroversial: First , the defendant is an employers' association in New South Wales, representing the industrial interests of approximately 650 child care centres and long day centres throughout New South Wales (supra [1]). I infer that members pay an annual subscription. In return, they receive advice concerning the operation of awards and industrial issues. Presumably the association makes representation on behalf of members when awards affecting the child care industry are renegotiated. Secondly , Mr Manefield was appointed as the Executive Officer of the association. He began work on 7 February 2006, having signed a written agreement (Ex E). He was appointed subject to a five month probation period. At the expiration of that period (nothing having been said to the contrary), he was confirmed in the job. He remained in the job a little over two years. Thirdly , the relationship between Mr Manefield and the executive (principally the President, Ms Connolly, and the Vice President, Ms Skoulogenis) was not without its difficulties. In November 2007, Mr Manefield became aware that there was dissatisfaction with his management. Meetings were arranged. Correspondence was exchanged and there were discussions in which the President and Vice President expressed concern about the association's financial viability. Mr Manefield endeavoured to reassure the executive members with whom he was dealing, that there was no reason for alarm. Fourthly , one of the tasks undertaken by Mr Manefield was to clean up the "mess" concerning the membership database. When he was appointed it was not clear who the members of the association were. A consultant was hired. The problem was addressed. A database was developed that provided information concerning each member. The membership grew from approximately 400 members to approximately 650. Fifthly , in March/April 2008, Mr Manefield attended a meeting with representatives of Child Care NSW, Child Care Victoria and Child Care Queensland, to discuss the possibility of a federal umbrella organisation. The name "Early Learning Australia" was discussed and received support from those present. Sixthly , Mr Manefield, after the meeting, spoke to the President of Child Care NSW. He offered to register the name, Early Learning Australia, to secure it for the federal body, if it went ahead. The President told him that she did not like the name. She directed him to concentrate on other things. He did not speak to representatives of Victoria or Queensland. Seventhly , on 9 May 2008, Mr Manefield was called to a meeting attended by a few executive members and Mr Rochford, an Industrial Advocate. He was told that he was not doing the job that he was employed to do. On 16 May 2008 his services were formally terminated. He left his laptop computer. He left the office. He did not take with him any confidential information. Specifically, he did not take a copy of the membership list that had been developed. Eighthly , Mr Manefield was then unemployed. He met with a number of people in the child care industry with whom he had developed a relationship. The decision was taken to establish a federal corporation limited by guarantee, to provide specific services to child care centres to enable them each to operate as a "multi-services hub", identifying and addressing children's learning needs. The corporation was registered under the name of Early Learning Australia. Ninthly , the new organisation planned a media launch on Friday 4 July 2008. In advance of the launch, Mr Manefield, on behalf of Early Learning Australia, wrote to organisations concerned with child care throughout Australia, including Child Care NSW. He suggested a meeting to discuss ways in which they could work together. He indicated he would contact them in the near future. He provided his mobile telephone number. Tenthly , on Monday 7 July 2008, without having met and without warning to Mr Manefield, the defendant Child Care NSW despatched to its members the letter that is the matter complained of (Ex A). 123 There is a further matter that is arguably relevant. Those who wrote the letter obviously knew Mr Manefield. Whatever their views about his capacity to do the job as Executive Officer, they would, no doubt, have recognised his qualities. He presented well. As a witness he was smooth, articulate and impressive. He plainly had a passion for child care. He had a deal of charm. He presented as a person who, were the occasion to arise, would be a formidable opponent.

[27]

The question of confidentiality. 124 The matter complained of repeatedly referred to Mr Manefield's obligations of confidentiality, which continued notwithstanding his termination (cf Ex E, Sched 3; supra [14]). Paragraph (3) spoke of "information to which he has become privy by virtue of and during the course of his employment, relating to the affairs, both financial and commercial, of the Child Care NSW and of its members." The letter continued: "... We have reason to believe that Mr Manefield is in the process of contacting members, and we suspect that he is availing himself of confidential information in order to do so." 125 The draft letter addressed to Mr Manefield, disclosed on discovery but never sent (supra [52]), required him to do a number of things. He was to "immediately cease and desist from any further activity in the name of Early Learning Australia". The letter added that, by his activities, he was acting in breach of the confidentiality provisions of his contract of employment "insofar as you are using confidential information gained by you whilst in the said employ, information which is not otherwise available". The letter added: "The information being used clearly and unambiguously paraphrases decisions taken by CCNSW and others in meetings which were held privately and intended to be availed by the various Associations participating in the meeting, and not for the persons attending the meeting ..." 126 It is not easy to understand what was being said. The author(s) of the letter was/were not called. Nothing of substance was put to Mr Manefield about using information or paraphrasing decisions, apart from the name, Early Learning Australia. In the end, there appeared to be two possible complaints: First, the possession and use of the membership lists. Secondly, the use of the name "Early Learning Australia" as the name of his organisation, when that name had been floated and given some support (perhaps even a resolution) as a possible name for a yet to be formed federal umbrella organisation. It will be remembered, however, the President of Child Care NSW said that she did not like the name and rebuffed the invitation to register it in order to secure it. 127 Dealing first, with membership lists, child care centres are businesses listed in the phone book. The details in respect of each is publicly available information, which the Contract of Employment recognised as an exception to the confidentiality requirements (Sched 3, Cl 2, supra [13]). The draft letter to Mr Manefield, that was not sent, likewise recognised the exception when it referred to "information which is not otherwise available". No doubt Mr Manefield, examining the phone book, could, upon the basis of knowledge acquired during his time as Executive Officer of the association, discriminate between child care centres that were members and those that were not members. However, plainly there is no prohibition against his using that knowledge. Once terminated, it was not confidential information. In Weldon & Co v Harbinson [2000] NSWSC 272, Bryson J said this: (at [68]) "68 In his very extensive references to judicial decisions the plaintiff's counsel took me to the classification of confidential information made by Goulding J in Faccenda Chicken Ltd v Fowler [1985] 1 All ER 724; (1984) ICR 589 at 598-599, to the treatment of Goulding J's classification by the Court of Appeal of England in that case ([1987] Ch 117) and to later discussion of that treatment by the Court of Appeal of New South Wales in Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317. Information relating to the names and contact details of clients falls within Goulding J's second class: 'information which the employee must treat as confidential (either because he is expressly told it is confidential, or because from its character it obviously is so)' but which he is free to use after his employment has terminated." 128 His Honour added: (at [70]) "70 In the words used by Gleeson CJ (dissenting) in Wright v Gasweld at 330: 'I would also regard information as to the identity of customers as of a low order of confidentiality.' A former employee's entitlement to use knowledge which the former employee remembers, and the absence of an entitlement to make notes and lists while in the employment and take them and use them, are very long established and are not open to doubt or debate. They were recognised in the judgment of Harvey CJ in Eq in Ormonoid Roofing & Ashphalts Ltd v Bitumenoids Ltd & Ors (1930) 31 SR (NSW) 347: see particularly 354-356. In my view the plaintiff's claim to restrict the defendant's access to clients fell to be decided within these limits, and the plaintiff's claim that it should be inferred that the defendant had removed the list of customers was of very high importance in this regard." 129 Incidentally, there was no basis upon which the association could lawfully stifle competition from Mr Manefield after his termination, if he chose to offer it. There was no restraint of trade clause in his Contract of Employment (Ex E). Nor would one be implied. Bryson J, in the same case, said this: (at [69]) "69 ... The entitlement of a former employee to enter into competition, and to use the former employee's knowledge of the identity of clients and their interest in obtaining goods or services of the relevant kind is very clearly established, and in my view there is no room for the implication of any contractual term restricting competition or use of that information, or for the imposition of a similar restriction by employing equitable principles." 130 Turning then to the name Early Learning Australia, the position is more complex, although I believe reasonably clear. Mr Manefield was asked who coined the name, Early Learning Australia. He said he did so, "quite some time beforehand" (supra [34]). That is perhaps unsurprising. Early learning, in the context of child care, had become his passion. He said he spoke to Frank Guzmano about the issue. On the evidence, the only confusion concerned who proposed the name, Early Learning Australia, to the meeting of interstate child care associations. Mr Manefield, in chief, said that he had done so (supra [31]). In cross examination it was suggested that Frank Guzmano had done so. Mr Manefield acknowledged that was "totally possible" (supra [33]). It was put, without objection, that the minutes (which were not tendered, nor indeed shown to Mr Manefield) recorded that it was Frank Guzmano. Mr Manefield said that he could not recall who mentioned it first, but he did refer to the name (supra [35]). 131 That being the context, was the name confidential information? I do not believe it was. Although the name may possibly have been incorporated into the minutes of a meeting in respect of the proposed organisation that, in my view, does not make the information confidential. Mr Manefield was under no contract with Child Care Victoria or Queensland. His contract was with Child Care NSW. He attended the meeting in that capacity. If, as I believe, he coined the name well before the meeting, it was not intellectual property developed by an employee using confidential information (Ex E, Sched 3, Cl 3 (supra [15]). No confidential information had been used to develop the name. His employer chose not to register the name and indeed disparaged the name. In my view, once he had been terminated he was free to use the name. 132 These are the circumstances in which the matter complained of was published.

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The public interest. 133 In Aktas (supra [115]), the majority posed the question: (at [32]) "... whether the particular relationship between Westpac and the persons receiving a notice of dishonour was one in which the advantages which the law deems are to be had from free communication within such a relationship should enjoy a significance over and above the accuracy of a defamatory imputation conveyed by a notice of dishonour ..." 134 In that case, the relationship between Westpac and the person who received the notice of dishonour was impersonal and transitory. Indeed, it ended with the communication that the bank made, once it made its decision. Here, the relationship between the association and its members was very different. The association existed for the benefit of its members. Its members operated child care centres. No doubt they became members on application. They remained members upon payment of a subscription. It was the function of the association to advise in respect of issues relevant to the operation of child care centres and the association itself, especially industrial issues. It was an ongoing relationship. The executive of the association was made up of persons from the industry who operated child care centres or long day care centres. The association had a small staff. It had a low budget. One would infer that there was no lawyer on staff, although the association had access to an Industrial Advocate. The communication was confined to members. There was no suggestion of a broader dissemination. 135 The defendant suggested, in these circumstances, that the reciprocity of interest should be defined at a high level of abstraction, that is, a communication concerning the internal affairs of the association, its management and the capabilities and conduct of its managers (supra [108]). Plainly, on the defendant's case, the communication was on an occasion of qualified privilege. 136 The plaintiff argued, applying Aktas, that no such occasion had arisen. The association, having ignored the text of Mr Manefield's request, then chose to communicate on an issue of their own making (cf Hilbery J in Davidson v Barclay's Bank Ltd (1940) 1 All ER 316 at 322). There was no reciprocity of interest and no public interest in extending the privilege to the communication. One can see the force of that argument in the context of imputation (a). Confining one's focus to that imputation for the moment, one can immediately see the interest of the association in conveying such an imputation. They had reason to fear Mr Manefield, if he were minded to compete with them. But the association's subjective view is not determinative, just as Westpac's view, based upon a mistake, did not establish a community of interest between the bank and the person who presented the cheque to be honoured. Here, the only evidence from which a reciprocity of interest can be deduced is the testimony of Mr Manefield and the exhibits, especially his letter of Friday 4 July 2008 (Ex B) and the association's response, sent to members the following Monday (7 July 2008) (Ex A). No-one from the defendant was called, for instance, to say that the association had information that Mr Manefield had spoken to members and revealed his true ambition, that was to set up an organisation in competition with the association, that would illegitimately take members from it. No-one from the defendant gave evidence that, knowing Mr Manefield as they did, and reading between the lines of his letter of 4 July 2008, his true agenda was otherwise than as he had stated. 137 What interest did members of the association have in receiving a communication that imputed that Mr Manefield was a person prepared to use devious and underhand means to take members away from the association, when there was no evidence that he had such an objective? The only evidence (both from Mr Manefield himself and from the terms of his letter of 4 July 2008 (Ex B) is that he intended the operation that he had established to complement and supplement child care associations, thereby enabling child care facilities to operate more effectively. To achieve that objective, he openly sought the co-operation of child care centres and associations, including the defendant, and the opportunity for discussion. On the face of these documents, there was no hint of competition. Further, conveying such an imputation was liable to stifle competition when there is no public interest in doing so. Indeed, the public interest is in fostering competition. 138 Such an argument, relying upon Aktas, has force, had the communication been confined to imputation (a). However, the matter complained of was a letter. It canvassed a number of issues. As I will shortly explain there was, I believe, a community of interests between the association and members in respect of many of these issues, and the communication was relevant to those issues. 139 Associations, such as Child Care NSW, fulfil an important social and legal role. They exist to inform and assist members. As a generality, adopting the formula in Justin v Associated Newspapers Limited (supra), it is desirable, as a matter of public policy, that freedom of communication should be given priority over the rights of the individual to protection against a loss of reputation (supra [94]). 140 There was a community of interests between the association and its members in notifying members that Mr Manefield had been terminated. The delay in his termination did not make such information irrelevant. There was also such an interest in the association communicating its suspicions and (reading between the lines) the imputation of its certainty, that Mr Manefield was using confidential information. There was a community of interest in warning members that Mr Manefield may be in contact with them and, were there such contact, that they should exercise caution because, in the association's view, he was of doubtful probity. Hence, the communication (Ex A) was made on a privileged occasion, and imputations (b) to (e) inclusive were relevant to that occasion. 141 The disparaging imputation concerning Mr Manefield's management of the association and his responsibility for its decline (imputation (f)), was arguably not relevant. However, applying the formulae, it could not be said to be "truly unconnected" with the subject matter, or not germane and reasonably appropriate to the occasion (supra [37]). Accordingly, in my view, that part of the publication giving rise to imputation (f) and imputation (f) itself, came within the umbrella of the defence (supra [104]; cf Bashford (supra) per Gummow J at 135). 142 The remaining imputation ((a)), as I have already explained, is a horse of a different colour. On that issue, there was neither a community of interest, nor a public interest, in extending the umbrella of qualified privilege to such a communication. However imputation (a) does not stand alone. It was part of a letter published on a privileged occasion, the real issue being its relevance to that occasion. Can it be said that imputation (a) was truly unconnected with the subject matter of the privileged occasion, or not germane or reasonably appropriate to that occasion (supra [37])? I have not found that an easy question to answer, although I am inclined to the view that it was irrelevant. Nonetheless, having found that imputations (b) to (f) were communicated on a privileged occasion, it is convenient that I approach the issue of malice on the footing that all imputations, including imputation (a), were published on a privileged occasion and relevant to that occasion.

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Express malice. 143 A helpful summary of the principles relating to malice is set out by Tobias JA (McColl and Basten JJA agreeing) in Fraser v Holmes [2009] NSWCA 36 at [50] ff. Reference is made (at [42]) to the speech of Lord Diplock in Horrocks v Lowe [1975] AC 135, where the following was said: (at 149/150) "... For in all cases of qualified privilege there is some special reason of public policy why the law accords immunity from suit - the existence of some public or private duty, whether legal or moral, on the part of the maker of the defamatory statement which justifies his communicating it or of some interest of his own which he is entitled to protect by doing so. If he uses the occasion for some other reason he loses the protection of the privilege. So, the motive with which the defendant on a privileged occasion made a statement defamatory of the plaintiff becomes crucial. The protection might, however, be illusory if the onus lay on him to prove that he was actuated solely by a sense of the relevant duty or a desire to protect the relevant interest. So he is entitled to be protected by the privilege unless some other dominant and improper motive on his part is proved. 'Express malice' is the term of art descriptive of such a motive. Broadly speaking, it means malice in the popular sense of a desire to injure the person who is defamed and this is generally the motive which the plaintiff sets out to prove. But to destroy the privilege the desire to injure must be the dominant motive for the defamatory publication; knowledge that it will have that effect is not enough if the defendant is nevertheless acting in accordance with a sense of duty or in bona fide protection of his own legitimate interests. The motive with which a person published defamatory matter can only be inferred from what he did or said or knew. If it be proved that he did not believe that what he published was true this is generally conclusive evidence of express malice, for no sense of duty or desire to protect his own legitimate interests can justify a man in telling deliberate and injurious falsehoods about another, save in the exceptional case where a person may be under a duty to pass on, without endorsing, defamatory reports made by some other person. Apart from those exceptional cases, what is required on the part of the defamer to entitle him to the protection of the privilege is positive belief in the truth of what he published or, as it is generally though tautologously termed, 'honest belief'. If he publishes untrue defamatory matter recklessly, without considering or caring whether it be true or not, he is in this, as in other branches of the law, treated as if he knew it to be false. But indifference to the truth of what he publishes is not to be equated with carelessness, impulsiveness or irrationality in arriving at a positive belief that it is true. ..." (emphasis added) 144 The leading Australian authority is Roberts v Bass (supra [89]) where Gaudron, McHugh and Gummow JJ summarised the principles in these terms: (at p 31) "76 Improper motive in making the defamatory publication must not be confused with the defendant's ill-will, knowledge of falsity, recklessness, lack of belief in the defamatory statement, bias, prejudice or any other motive than duty or interest for making the publication. If one of these matters is proved, it usually provides a premise for inferring that the defendant was actuated by an improper motive in making the publication . Indeed, proof that the defendant knew that a defamatory statement made on an occasion of qualified privilege was untrue is ordinarily conclusive evidence that the publication was actuated by an improper motive. But, leaving aside the special case of knowledge of falsity, mere proof of the defendant's ill-will, prejudice, bias, recklessness, lack of belief in truth or improper motive is not sufficient to establish malice. The evidence or the publication must also show some ground for concluding that the ill-will, lack of belief in the truth of the publication, recklessness, bias, prejudice or other motive existed on the privileged occasion and actuated the publication. ... even if the defendant believes that the defamatory statement is true, malice will be established by proof that the publication was actuated by a motive foreign to the privileged occasion. That is because qualified privilege is, and can only be, destroyed by the existence of an improper motive that actuates the publication." (bold emphasis added) 145 The Honours added: (p 38/39) "97 Because honesty is presumed, the plaintiff has the onus of negativing it. That is to say, the plaintiff must prove that the defendant acted dishonestly by not using the occasion for its proper purpose." 146 In Gross v Weston [2007] NSWCA 1, Hunt AJA helpfully set out the propositions emerging from Roberts v Bass in these terms: (at [52]) "(1) Except where the defendant was under a legal duty to publish the matter complained of, the defendant's knowledge that it was false is ordinarily conclusive evidence that the publication was actuated by an improper motive. (2) Recklessness in the publication of the matter complained of does not establish knowledge of its falsity unless it amounts to wilful blindness on the part of the defendant which the law equates with knowledge. (3) Recklessness - when present with other evidence - may nevertheless be relevant to whether the defendant had an improper motive which actuated the publication. (4) If a plaintiff's case rises no higher than evidence that the defendant did not have a positive belief in the truth of what he published, there is no evidence that its publication was actuated by an improper motive. (5) The absence of a positive belief in the truth of what was published may nevertheless be relevant - with other evidence - to whether the defendant's improper motive actuated the publication, but it will not establish that fact by itself." (Emphasis added) 147 Most recently in Aktas, French CJ, Gummow and Hayne JJ said: (at [17]) "... 'actual malice' and 'express malice' identify a purpose or motive that is foreign to a privileged occasion and actuates the defamatory publication, so as to destroy what otherwise would be a defence of qualified privilege." 148 Let me then turn to the submissions of the parties. Submissions of the parties on malice. 149 According to the plaintiff, the improper purpose of the defendant may be inferred from a number of circumstances. First, the disproportionate nature of the association's response to Mr Manefield's letter of Friday 4 July 2008, was evidence that an improper purpose was being served. His letter was mild in its terms. It was despatched, not only to Child Care NSW, but to other similar organisations throughout Australia. It announced the formation of a new body and the objectives of that body. It suggested that the new organisation would be in a position to assist child care operators in the delivery of certain identified services. An opportunity for discussion was sought. A mobile telephone number was provided. 150 The association's response, the following Monday, was sent without warning to Mr Manefield, or the organisation Early Learning Australia. It was despatched to all, or almost all, members of Child Care NSW. It imputed that Mr Manefield was untrustworthy and dishonest, amongst other things. The imputations it conveyed were not obscure. They were the imputations apparent to the ordinary reasonable reader from the natural and ordinary meaning of the words of the matter complained of. The defendant has not said that it did not mean to convey any of those meanings. 151 Secondly, there was a striking omission from the letter (Ex A). It made no reference whatever to the content of Mr Manefield's letter the Friday before. That, according to the plaintiff, was very significant. The association chose not to communicate Mr Manefield's proposal even though, on its face, it made suggestions designed to assist child care centres in identifying children in need and in addressing those needs, amongst other things. Such matters would surely have been of interest to the association's members. The question therefore arises: why did they not tell their members? The omission, according to the plaintiff, was a further demonstration that the defendant was serving some other motive, an improper motive. 152 Thirdly, there was, on the evidence, absolutely no basis for the imputations that were made throughout the letter. Mr Manefield was not using confidential information, whether membership lists or the name, Early Learning Australia. He was not in breach of his contract of employment or his obligations of confidentiality. 153 The plaintiff acknowledged the distinction between material that was objectively untrue and material that was untrue to the knowledge of the defendant, the latter being evidence of malice. The suggestions made by Mr Manefield in his letter of Friday 4 July 2008 (Ex B) do not support a suggestion of dishonesty or breach of confidentiality or the other matters imputed. There was, to use a colloquialism, a complete "disconnect" between the plaintiff's letter on the Friday (Ex B) and the defendant's response the following Monday (Ex A), the latter being sent to members. Mr Manefield asked for co-operation and discussion concerning specific issues. The defendant, ignoring those issues, wrote to members upon entirely different issues, imputing dishonesty and other base motives to Mr Manefield. The circumstances in which Exhibit A was drafted and sent to members were within the knowledge of the defendant. Yet there was simply no explanation. Certainly the plaintiff has the onus on the question of malice, that is, proving an improper purpose. Nonetheless, in contrast to Fraser v Holmes (supra), there was, in this case, a failure by the defendant to explain the "disconnect" when an explanation was called for. It was submitted that that failure may be taken into account when determining whether the defendant was actuated by malice. 154 Fourthly, taking these matters in combination with the text of the defendant's letter (Ex A), one would infer that the association's dominant motive was to stop Mr Manefield in his tracks. The improper purpose was to stifle competition, most readily seen from para [8] and imputation (a): "8. We have at our disposal, the infrastructure, the resources and the personnel which will enable and equip us to face the challenges ahead far better than any alternative body, and we ask you not to be deluded into thinking otherwise ." (emphasis added) 155 It was a pre-emptive strike against Mr Manefield and his organisation. The method was to smear Mr Manefield by imputations of dishonesty and untrustworthiness and to impute breaches of confidentiality and his employment contract. The improper motive, as it happened, was later stated in express terms in the last paragraph of the draft letter to Mr Manefield that was never sent. That paragraph was in these terms: (Ex D) "You are placed on further notice that unless we receive your unequivocal and irreversible undertaking that you will cease your soliciting child care operators in the way you are doing at present, CCNSW will commence legal action against (you) seeking to obtain an injunction restraining you from further activity which (is) in breach of your obligations to observe an ongoing duty of confidentiality, together with an order for payment (of) the costs involved in taking such action and for damages to the extent they are identified." 156 Mr Manefield, was perfectly entitled to compete with the association for members after his termination, had that been his intention. However, that was not his intention. His intention was to address different needs of child care operators, which he identified. 157 There was, incidentally, no evidence that, at the date of the association's letter to members (7 July 2008), Mr Manefield "was in the process of contacting members" of the association, as asserted in the association's letter (Ex A). His letter of the previous Friday (4 July 2008) had foreshadowed such contact in the future, attaching "a draft letter to service operators" (Ex B). Accordingly, there was no basis for the assertion in the matter complained of. 158 Counsel for the defendant, in response, emphasised that the law presumed an honest belief on the part of the defendant in respect of the material published. The plaintiff must prove the contrary (Horrocks v Lowe (supra), per Lord Diplock at 510). The defendant drew attention to the judgment of Gaudron, McHugh and Gummow JJ in Roberts v Bass where they said this: (at 38) "96 ... honesty of purpose is presumed in favour of the defendant. It is for the plaintiff to prove that the defendant did not use the occasion honestly or, more accurately, for a proper purpose." 159 Carelessness by a defendant, even irrationality, will not prove malice (Roberts v Bass (supra) at [103]). The plaintiff, it was suggested, had not adduced any evidence that the defendant knew that its letter to members was false. The written submissions of the defendant added the following: "14 The matter complained of presumed that the Plaintiff would carry through his actions set out in his e-mail of [date] (Exhibit B). The Plaintiff gave no evidence that he told any officer of the Defendant that he would not send the letter until he heard from them about his proposal." 160 There was, according to the defendants, no evidence to suggest the defendant was conducting a vendetta against the plaintiff, or sought to attack him (T 72). As an ex employee, the defendant understood that Mr Manefield was privy to confidential information. They believed that he was trying to use that material to create an organisation which they, themselves, were seeking to set up. One should infer that they saw themselves as protecting a genuine interest. Their purpose was not to stifle competition, although that may have been an incidental consequence of their actions (T 72). Here the plaintiff, according to the defendant, has simply identified a consequence of the defendant's actions, rather than the reason for that action. There may, indeed, have been adverse consequences for the plaintiff, but that was not their purpose (T 73). Counsel for the defendant acknowledged that, in determining whether the response of the defendant was disproportionate, any evaluation must take account of the imputations that were in fact conveyed (T 74).

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Was there malice? 161 What was the association's purpose, when responding to Mr Manefield's letter of Friday 4 July 2008, by immediately despatching to its members its letter of Monday 7 July 2008 (Ex A)? Two broad possibilities were canvassed in submissions. 162 According to the plaintiff, the letter from the association was a pre-emptive strike. Its objective, which predictably succeeded, was the still birth of the organisation, Early Learning Australia. The means by which it sought to achieve that objective was to blacken the name of Mr Manefield, such that members of the association would have nothing to do with him. He would thereby lose a fundamental part of his potential constituency. That purpose was illegitimate. It was aimed at stifling competition. It would have the effect of denying members benefits that Early Learning Australia was potentially in a position to deliver. 163 The alternative case, put on behalf of the defendant, was that the purpose of the letter was far more prosaic. The association sought to convey information of interest to its members. It was legitimate to inform members of Mr Manefield's termination. Many would have had dealings with him. It would no doubt be of real interest to them. But more than that, the association had reason to believe that Mr Manefield was using confidential information, gathered whilst he was the Executive Officer, "to create an organisation which they, themselves were seeking to set up" (supra [160]). The association's objective was not to harm him. Rather, that was an incidental consequence. Their focus was upon protecting their own legitimate interests, as they saw them. 164 Dealing with these possibilities, there are problems with the defendant's argument. There was, on the evidence, no real definition concerning the role and function of the proposed federal umbrella organisation, discussed at the meeting of the New South Wales, Victorian and Queensland Child Care associations attended by Mr Manefield. Certainly the name, Early Learning Australia, had been discussed at that meeting. It may even have been incorporated into a resolution that the federal organisation, if established, should have that name. The name was an attempt to "re-brand" the service offered by child care operators, signalling that its child care centres were far more than child minders. All that may have been said, but no attempt was made in the cross examination of Mr Manefield to suggest that the services he was proposing were the very services discussed at the meeting of the projected federal umbrella organisation. 165 It may be accepted that the executive of the association wrongly believed that the name, Early Learning Australia, was confidential information, or even the intellectual property of the association. However, there is no basis, on the evidence, for the suggestion that the executive believed that the association had any legitimate claim or grievance in respect of the areas of interest Mr Manefield had identified in his letter of Friday 4 July 2008 (Ex B) (supra [43]). The ideas he canvassed, as he said himself, were not new. They were directed towards the objective described by the Prime Minister as the "one stop shop", the multi-service hub, where all services relevant to the needs of children would be available under the one roof. 166 It appears that Mr Manefield may even have transplanted to Early Learning Australia one idea which he had attempted to implement (one gathers without success) in Child Care NSW in his time as Executive Officer. One of the services that Early Learning Australia intended to offer to child care centres was the use of bulk purchasing power in respect of recurring items, such as nappies. It will be remembered that, in the draft letter attached to the letter he sent Child Care NSW, Mr Manefield identified one of the services of Early Learning Australia in these terms: (Ex B) "2. Secondly, by providing services and products to Early Learning services all over Australia to make it easier for them (to) deliver the high quality Early Learning programs that they do. These services and products will cover the necessities, as well as innovative items that will further enhance the Early Learning programs in these services/centres. We will use the buying power of 8000+ Early Learning services to obtain great deals from suppliers." 167 Mr Manefield had apparently attempted to develop similar ideas, without success, when Executive Officer of Child Care NSW. He gave the following evidence: (T 14) "A ... The other thing that I had said that I would do when I joined the association is try to increase the revenues by providing a number of other services, such as group buying of nappies is one example, but I continued to be frustrated in that in the sense -- Q. I'm not asking you about that at the moment. A. Sorry." 168 After his termination, one infers that he identified that area as an area of neglect. It therefore provided an opportunity for his new organisation. He said this: (T 24/25) "A. Yes, well, my role was that I was the executive officer of Early Learning Australia, I was acting in an honorary capacity because there was no funds at that stage, and I was basically still living off my termination payment and my, I started then to commence meetings with possible partners of a range of services like payment services for paying your child care fees on-line, things like that, or that sold nappies so that we could get nappies at good prices for the child care centre services.

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Q. I take it that there's a very large market, number of nappies, child care centres? A. It's a big deal, yes, a lot." 169 There was nothing whatever confidential in respect of such a proposal. There could be no legitimate objection on the part of the association to Mr Manefield, or his proposed organisation, pursuing that objective and offering it to members of the association. Indeed, you would expect the mothers and fathers who used child care centres to welcome such an initiative. It had the potential to reduce the price of common recurring items, such as nappies. You would also expect that child care centres, that is the members of the association, would be interested in such a proposal. The plaintiff submitted, and I accept, that it was odd and instructive in these circumstances that, in communicating with members, the association said nothing concerning these and other services Mr Manefield and Early Learning Australia were hoping to market. The communication by the association to members, although a response to Mr Manefield's letter of the previous Friday, was plainly directed towards another purpose. 170 I have accepted that the executive of the association, or the author of the letter, may have honestly (although wrongly) believed that the name Early Learning Australia was confidential information, or even the association's intellectual property, so that it should not have been used by Mr Manefield. It is instructive to ask, in these circumstances, how you would have expected the association to have acted, had it entertained such a belief. You would have expected the association or its lawyers, in such circumstances, to have contacted Mr Manefield or Early Learning Australia asking them to change the name and undertake not to use the name, Early Learning Australia, in the organisation they intended to launch. You would not have expected the association, in pursuit of that issue, to write to members in the terms it chose, unless its objective was, as the plaintiff suggests, to poison the minds of members against Mr Manefield, so they would have nothing to do with his corporation. In other words, you would not have expected the association to write to its members in the terms it did unless its objective was to emasculate Mr Manefield's company in advance of its projected launch, robbing it of its potential customer base. 171 There is a further matter that pointed to an improper purpose on the part of the defendant. It is, I believe, a matter of some importance. It concerns the delay between the termination of Mr Manefield on 16 May 2008, and the occasion that the association chose on Monday 7 July 2008 to apprise members of that fact (Ex A). I have held that there was, even in July 2008, a community of interest between the association and its membership advising members that Mr Manefield had been terminated (supra [140]). Nonetheless, you would ordinarily have expected the association to have done that some time soon after, that is in May 2008. It was relevant information. Further, if the executive believed that Mr Manefield was responsible for the decline of the association in the two years or so that he had been in charge, it was legitimate that they should say that to members and reassure them that, with his departure, the association was now on an even keel. 172 However, the association did not communicate these matters in a timely way, soon after they occurred. They did not do so until Mr Manefield resurfaced on Friday 4 July 2008, proposing an organisation, Early Learning Australia. For the reasons I have given, the circumstances and the text of the letter suggest that they saw Mr Manefield's organisation, and perhaps Mr Manefield himself, as some sort of threat. These were the circumstances in which they chose to inform members of the events of six weeks before. But their real purpose was not to inform. Their purpose was to blacken Mr Manefield's name so that members would have nothing to do with him. By this means they would remove the threat of competition, which they perceived that he or his organisation represented. 173 In short, I accept the plaintiff's arguments. I accept that the occasion was used for an improper purpose and that it was the dominant purpose. It was not the communication of information to members upon matters in respect of which they had a community of interest. Their purpose was the stifling of competition, and in that they succeeded. The organisation was, indeed, still born. Mr Manefield gave up. He did not pursue his objective, because he saw that it was pointless. 174 I therefore find malice, which defeats the privilege. I turn, then, to the question of damages.

[33]

Damage to reputation. 177 Mr Manefield, at the time of publication, was a man aged 45 years. From about 1992, he had significant exposure to the child care industry through his five children. His children attended Kindergarten Union, community based centres. At the urging of the Director of the pre-school his oldest son attended, he sought a position on the board of Kindergarten Union (supra [7]). He was made a board member in 1994 and the President of the Kindergarten Union in 2001 (supra [7]). He remained President until shortly before his commencement with Child Care NSW in February 2006 as its Executive Officer. 178 The position of Executive Officer with the defendant was his first paid position in the industry (T 32). His salary package was approximately $100,000 per annum, including superannuation and benefits. He acknowledged that, before joining Child Care NSW, his reputation in the child care industry was amongst community based organisations (T 45). 179 The publication was limited to the 650 or so members of the association. The letter was first drawn to Mr Manefield's attention on 10 July 2008 by Mr Colin Mead, one of the Directors of Early Learning Australia. Mr Mead owned a child care centre and had received it by email (T 26). A couple of days later, Ms Nesha O'Neill contacted him. She said that she had received the letter from the association, both by email and then through the post. She said that she was dumbfounded and astonished that the association could be so stupid (T 29). Mr Manefield, in that context, said this: (T 29) "A. Well, I felt a little bit supported by that in the sense that I agreed with that, it seemed a rather reckless thing to do, but I didn't feel that much better, because the letter was out and it was clear that, you know, she heard, Nesha told that she heard that other people had received it, they had rung her and asked her what it was about." 180 Mr Manefield also gave the following evidence: (T 29) "Q. Right; did anyone else contact you, did anyone else say anything to you about the fact that they'd received the letter, received and read the letter? A. Well, yeah, about five months ago I met a guy I knew on the street who'd been doing some admin work. The first thing he said when, he asked this, look, two years after they'd gone out, he said, oh, what was that very strange letter that went out about you taking a membership list?

[38]

Q. Do you ascribe that fact that it didn't go ahead to this letter, the effect of that letter of 7 July? A. Well, yes, because the small number of inquiries we were getting on the web site basically trickled down to nothing." 183 Although the publication was limited to the approximately 650 members of the association, counsel for Mr Manefield submitted that it was a publication to the very audience that Mr Manefield saw as his future. Publication in that context, in some respects, it was submitted, could be far more damaging than publication through the mass media about people who were unknown, from walks of life that had no particular relevance to the audience. Here, according to the plaintiff, the damage to reputation was significant. Mr Manefield gave up his passion. He recognised the reality, that he had no future in the child care industry. 184 The defendant, in contrast, said that whilst the publication may have hurt Mr Manefield's feelings, there had been no damage to his reputation. No witnesses had been called on his behalf on the question of reputation. There was no evidence from which it could be inferred that the plaintiff had been shunned or avoided. The defendant said this: (p 2) "8 The Plaintiff gave evidence of conversations with three people, none of whom were called to give evidence that they believed the allegations in the letter to be true and thought the less of the Plaintiff. Indeed the evidence of their reaction to the matter complained of could be understood to be evidence that they did not believe the allegations made in the matter complained of. Nesha O'Neill - 'she was dumbfounded that they were so stupid' Colin Mead - 'extra-ordinary that it was sent out' Tony Woodlam - 'strange letter sent around about you'" 185 The defendant acknowledged the presumption of damage. However, counsel submitted that it was "not absolute and has its limits". The submission continued: (p 1) "4 ... It has been shown to have limits in its application in cases of mass media publication where it can be shown that the Plaintiff is unlikely to have had a substantial or any reputation in the jurisdiction and where it can be shown that there was a limited publication. It is in such circumstances considered by the Courts to be an abuse of process ( Jameel v Dow Jones [2005] QB 946)." 186 In argument, counsel for the defendant drew attention especially to paragraphs [55] to [60] in Jameel v Dow Jones. Paragraph [55] is in these terms: (at 966) "55 There have been two recent developments which have rendered the court more ready to entertain a submission that pursuit of a libel action is an abuse of process. The first is the introduction of the new Civil Procedure Rules. Pursuit of the overriding objective requires an approach by the court to litigation that is both more flexible and more proactive. The second is the coming into effect of the Human Rights Act 1998. Section 6 requires the court, as a public authority, to administer the law in a manner which is compatible with Convention rights, in so far as it is possible to do so. Keeping a proper balance between the article 10 right of freedom of expression and the protection of individual reputation must, so it seems to us, require the court to bring to a stop as an abuse of process defamation proceedings that are not serving the legitimate purpose of protecting the claimant's reputation, which includes compensating the claimant only if that reputation has been unlawfully damaged." 187 That introductory paragraph, referring to statutes having operation in the United Kingdom, makes it clear that the material that follows has no relevance to this trial. Mr Manefield certainly sustained damage to his reputation. I accept the plaintiff's submission (supra [183]) that, although the audience was limited, the damage was considerable, because it was the audience he needed to impress if he was to have a future in the child care industry. He quickly recognised, after what had been said about him, that he had no future. 188 Let me move to the evidence in respect of the hurt to his feelings.

[41]

Q. And how did you feel about it going to every child care centre in New South Wales? A. Well, I was devastated, because it meant that New South Wales being one of the largest states was effectively, everybody's warned off being involved in this early learning concept that we were trying to start up and, you know, I thought that was really unfair and unfortunate, that we weren't going to be able to discuss and all the work that I'd done was effectively going to go to waste." 191 Mr Manefield was then taken to the text of the letter (Ex A) and the suggestion in paragraph [3] that he was "availing himself of confidential information in order to" contact members of the association. He said: (T 27) "Q. The suggestion is that you'd taken a customer list, or membership list? A. Well, the next paragraph, which makes sure I had to respond cautiously, implies that if in fact they did engage with me they would be subject to legal action themselves, and I thought that was very unfair on them, because I thought, well, even if they're interested in what we're doing they're going to stay away from it and then I thought, well, that means that they might be able to read the web site but that's about it, nobody's going to join, nobody's going to get the benefit of trying to work through ideas about how that could turn into a long day care integrated children's services hub." 192 The plaintiff's attention was drawn to paragraph [5], which spoke of the difficulties experienced by the association in the past "couple of" years and the steps being taken to restore it to its pre-eminent position. He gave his reaction as follows: (T 27) "A. Well, again, it was a little bit more subtle but I felt that, I felt that in the context of the letter this implied that I had been a party to Child Care NSW going down and that, and that now that I was going that Child Care NSW could be restored to its previous, you know, pre-eminent position and I felt that reflected on me when I was, you know, I felt that I'd done a lot of very good work to try and help people understand the benefits of child care et cetera." 193 Finally, his attention was drawn to the last two paragraphs of Exhibit A. He said this: (T 27) "A. The last, oh, well, basically it was very clear that if anybody heard from me or any organisation I was associated with, you know, just don't talk to him, flick it back to us, flick it back to us and we'll sort him out, and again it was like, you know, just stay away from him." 194 One by one, he denied the truth of each imputation (T 27/28). His evidence was not challenged. He spoke of the anguish occasioned by this litigation (T 30). 195 Mr Manefield described the aftermath of the letter, and his abandonment of Early Learning Australia: (T 30)

[46]

Aggravated damages. 198 To justify an award of aggravated damages, the aggravating conduct of the defendant must be improper, unjustifiable, or lacking in bona fides (Trigell v Pheeney (1951) 82 CLR 497). Such conduct justifies an increase in the damages awarded. The damages are compensatory in nature. The misconduct must have caused additional harm to the plaintiff. Sometimes the harm will be in the nature of an increase in the emotional distress caused to the plaintiff by the publication. It may, in addition, enlarge the reputational damage suffered. 199 The plaintiff identified a number of bases upon which aggravated damages were claimed. They were: First, his knowledge of the falsity of the imputations. Secondly, the malice of the defendant in seeking to harm him by publication of the matter complained of. Thirdly, the late application by the defendant to amend its defence, to assert truth in respect of certain imputations. 200 Each of these matters was said to have increased the hurt occasioned by the publication. 201 The defendant's conduct, in publishing its letter to members (Ex A) to ensure that Mr Manefield's proposed corporation never became airborne, was unjustifiable. I accept that the imputations were false to his knowledge and that that increased his hurt. I also accept that the hurt was aggravated by his knowledge that the defendant had set out to harm him by its publication, made without consultation or warning. 202 Turning to the third particular, the defendant made an application to Nicholas J to amend its defence to allege truth and plead contextual truth. The imputations that the defendant sought to justify were: (d) The plaintiff had breached the obligation of confidentiality which he owed to the defendant. (e) The plaintiff had breached his legal and contractual obligations to his former employer. 203 The matter had been set down for hearing on 5 July 2010, after assurances from both parties that it was ready for trial. The trial was fixed for 22 November 2010. Nicholas J refused the application to amend. Mr Manefield said, and I accept, that the application added to his annoyance and hurt. 204 The plaintiff is entitled to aggravated damages in respect of the matters identified.