Middendorp Electric Co Pty Ltd v Sonneveld [2001] VSC 312

Supreme Court of Victoria|2001-08-30|Before: Gillard J

SLANDER - elements of claim - whether defamatory - whether actionable per se - evidence in mitigation - prior convictions recorded after the defamatory publication - relevance to issue of damages - no special damage proven - assessment of general damages. INJURIOUS FALSEHOOD - elements of proof - no special damage - claim failed.

In this proceeding, issued by writ, the plaintiff sought an injunction, both interlocutory and permanent, to restrain the publication by the defendant of libellous material, together with damages. The plaintiff issued the writ on 12 May 1997. It obtained an interlocutory injunction, ex parte, from Beach J, on 12 May 1997, restraining the defendant from publishing the alleged defamatory material. The parties appeared before His Honour on 19 May 1997, and His Honour continued the injunction and adjourned the application to 16 June 1997, when Chernov J granted an injunction pending the determination or further order. The defendant did not appear on the return of the summons before Chernov J, who ordered him to pay the costs of the day.

The proceeding came on for hearing on 25 November 2000, and Ashley J granted leave to the plaintiff to discontinue its claim pursuant to the Rules. No order for costs was made.

The defendant, in his first defence, made a claim for damages for defamation against the plaintiff. The defence and counterclaim was subjected to a number of strike out applications and eventually, the defendant filed another defence and counterclaim on 13 October 1999. It is that counterclaim which is the subject of this proceeding.

The plaintiff, Middendorp Electric Co Pty Ltd ("Middendorp"), is a large wholesale supplier of electrical parts and equipment through a variety of outlets in this State. It mainly sells its products to electricians and electrical contractors. At all relevant times, it had a store at Hastings, and also stores at Frankston and Mornington, which are located approximately 20 kilometres from the Hastings store.

The defendant, David Sonneveld ("Mr Sonneveld"), is and was, at all material times, a licensed electrical contractor who, for many years prior to February 1997, had a running account with Middendorp at its Hastings shop. In February 1997, Mr Sonneveld traded in partnership with his wife under the name of Jade and other names, as an electrical contractor. From time to time, the firm engaged other electricians and electrical contractors to assist it with its work.

Mr Sonneveld counterclaims, seeking damages from Middendorp for alleged slander and injurious falsehood, arising out of a conversation which occurred on or about 2 February 1997.

On 31 January 1997, the head office of Middendorp in Brunswick sent an account to Mr Sonneveld for the period ending 31 January 1997. Across the base of the account was the word "OVERDUE". The document revealed that the sum of $4,129.34 had been outstanding for a period of 90 days or longer. The total amount of the indebtedness was $11,822.23. At that time, the credit arrangement for Mr Sonneveld was "strict 90 days" maximum. According to the terms, should his account exceed 90 days at any time, his account would incur the status of "stop credit" until the arrears were paid.

On any view, the account was overdue, contrary to the trading terms, and Mr Sonneveld owed at least the sum of $4,129.34.

On 2 February 1997, or thereabouts, a conversation took place between an employee of Middendorp, Mr Paul Smith, at the Hastings shop, with an electrical contractor, Mr Paul Dawson. On that day, Mr Dawson was performing work for Mr Sonneveld. It is alleged that Mr Smith told Mr Dawson words to the effect that, Mr Sonneveld was not paying his sub-contractors and "make sure you get your money in each week because Dave Sonneveld is a slow payer".

Mr Dawson, on returning to the site, told Mr Sonneveld what Mr Smith had said. Later that day, discussions took place between Mr Sonneveld and Mr Smith and also between Mr Sonneveld and the manager at Middendorp Hastings, Mr Graeme Lincoln. It is clear that Mr Sonneveld was upset by what had been said, and it appears that he threatened to take Middendorp to court.

Mr Sonneveld retained a firm of solicitors, a letter was sent demanding an apology with a draft attached, but nothing was resolved.

In March 1997, Middendorp wrote letters demanding that Mr Sonneveld pay his account, and at the beginning of April 1997, issued and served a complaint in the Magistrates' Court at Melbourne seeking the recovery of the sum of $11,822.23. Mr Sonneveld was annoyed by this complaint, as it was his opinion that he was not liable to pay the full amount because of the terms of his credit arrangement.

During March-April 1997, discussions and correspondence took place between Middendorp and Mr Sonneveld in an endeavour to settle the dispute, but to no avail.

On 9 May 1997, a round table conference took place between the parties and their respective lawyers, but nothing was achieved.

Mr Sonneveld decided to take matters into his own hands, and prepared a circular, which he forwarded to his solicitor for consideration and correction. Evidently, the solicitor, Ms Jillian Brann, told him not to send it as it was defamatory. Mr Sonneveld sent a copy of the document to Middendorp.

The document, on its face, was defamatory of Middendorp. On 12 May 1997, it issued a writ and obtained, on the same day, an ex parte injunction from Beach J restraining Mr Sonneveld from distributing it. The summons was returnable on 19 May 1997, when Mr Sonneveld appeared. His Honour continued the injunction and adjourned Middendorp's summons to 16 June 1997. Mr Sonneveld did not appear before Chernov J on that date, and His Honour granted the injunction, pending the determination of the proceeding or further order, and ordered Mr Sonneveld to pay the costs of the day.

By this time, Mr Sonneveld had engaged the services of the Electrical Trades Union and representatives of the Union, and Middendorp negotiated a settlement in principle but Mr Sonneveld rejected the terms.

Mr Sonneveld did not file a notice of intention to defend in the Magistrates' Court, and on 17 July 1997, an order was made against him in the sum of $11,822.23, together with interest of $457.47 and costs in the sum of $654.50, in default of filing the notice of defence. Mr Sonneveld did not seek to have the order set aside.

Middendorp's proceeding did not progress until the Litigation Support Group revived the proceeding in September 1998.

The plaintiff filed its statement of claim on 19 October 1998, and Mr Sonneveld filed his defence on 21 December 1998 and pleaded a counterclaim. Middendorp sought a permanent injunction but did not seek any damages. As I have already stated, his defence and counterclaim were subjected to a number of interlocutory attacks and eventually, he filed an amended defence and counterclaim on 13 October 1999. That is the counterclaim before the Court.

Middendorp, at the trial before Ashley J, on 22 November 2000, successfully applied for leave to discontinue its proceeding and Mr Sonneveld's counterclaim was adjourned.

Mr Sonneveld has not had a solicitor for some years, and has prepared his pleadings and other court documents himself. He appeared unrepresented at the hearing.

The counterclaim is hardly a model pleading, and is defective in a number of respects.

With respect to the claim in slander, he has failed to identify to whom the words were allegedly spoken, he has not pleaded that they were published of him or of him in the way of his business, nor has he pleaded the alleged defamatory imputations. Whilst alleging that he was seriously damaged, he has not pleaded any special damage. He has not pleaded that the alleged slander was actionable per se.

He was requested to give particulars of damage, and he responded in his further and better particulars by stating -

"6. Damages for the defamation of my professional standing and reputation including loss of income and potential income from trading in the manner I was until aged 65 years could amount to M$100 as I was moving into International projects."

In his relief clause, he claims damages for defamation in the form of slander. There is no reference to damages for injurious falsehood.

However, arguably, he also makes a claim for damages for injurious falsehood. He has asserted in his counterclaim that the words spoken by Mr Smith were false and malicious, that they were calculated to cause pecuniary damage and that he has seriously suffered damage, including considerable distress and embarrassment. The statement of claim is defective, in that it does not claim special damages, which is essential to aver and prove in a claim for injurious falsehood.

Despite the deficiencies in the counterclaim, it appeared to me that the counterclaim did plead the two causes of action, and Mr Sonneveld informed the Court that he wished to claim damages pursuant to both causes of action. Mr Panna stated that he thought the claim was for slander, but I did point out to him that paragraph 7 asserted an alternative claim, namely, that the "said words were calculated to cause pecuniary damage to I the defendant in my said business".

Accordingly, I told Mr Panna and Mr Sonneveld that I would proceed on the basis that he was also making a claim for injurious falsehood.

In its defence to the counterclaim, Middendorp, whilst putting Mr Sonneveld to his proof, admitted that Mr Smith was employed as a salesman at the Hastings branch, and that he did tell Mr Dawson words to the effect that he should get his money in, as Mr Sonneveld was a slow payer, and to be careful. Middendorp claims that the publication was protected by qualified privilege, and alleged that Mr Sonneveld has not suffered any loss or damage by reason of the words spoken. It is also contended by Middendorp that the words were not capable of bearing any defamatory meaning.

Finally, Middendorp has pleaded certain facts in mitigation of damage, namely, that in December 1996, Mr Sonneveld refused to pay a sub-contractor and the latter informed electricians in the area that he had refused to pay; also that he was a difficult person to work for. Secondly, that on 14 April 1998, Mr Sonneveld was convicted at the Magistrates' Court of three charges of stalking the said sub-contractor, Mr Adrian Bricknell, by falsely and publicly accusing him of being a paedophile and publishing a notice in the Hastings area asserting that he was a paedophile. It is contended that Mr Sonneveld had the reputation of a common, vicious liar and a person with whom decent people would not want to have any dealings. In fact, Mr Sonneveld was convicted of two charges.

I did raise with Counsel whether it was open to Middendorp, in answer to the claims, to plead and rely upon the first category of facts in mitigation in the absence of any plea of justification. The facts pleaded refer to a specific instance rather than facts concerning general reputation. It will be necessary to consider the issues hereafter.

In order to prove a case in slander, it is necessary for a plaintiff to prove -

(i) that the words complained of were published of the plaintiff;

(ii) that the words were defamatory of him;

(iii) that the defendant was responsible for the publication; and

(iv) unless the words are actionable per se, that the plaintiff suffered special damage.

It is contended by Mr Sonneveld, even though it does not appear in his pleading, that the words are actionable per se, in that the words disparaged him in the way of his trade, business and calling. If the plaintiff proves that the words complained of affect the plaintiff in his trade, business or calling and directly tend to prejudice him, then the plaintiff does not have to prove actual damage. The words must be shown to have been spoken of the plaintiff in relation to his trade, business or calling and to be such as would prejudice him therein. See Alexander v Jenkins (1892) 1 QB 797 at 800.

Mr Sonneveld has not alleged any special damage.

Even though Mr Sonneveld has not alleged, in his counterclaim, that Mr Smith was acting in the course and scope of his employment when he spoke the words complained of, nevertheless, it was accepted by Middendorp that, at all relevant times, he was acting in the course and scope of his employment.

In answer to the allegations made, Middendorp does not deny that the words complained of were published of Mr Sonneveld or that Middendorp was responsible for the publication. However, it denies that the words were defamatory of him and further denies that the words were spoken in reference to Mr Sonneveld's trade, business or calling. It is asserted that he is not entitled to damages in the absence of evidence of any special damage.

In addition, Middendorp alleged that the words were spoken on an occasion which is protected by qualified privilege.

A plaintiff seeking damages for injurious or malicious falsehood has to prove -

(i) that the words complained of were untrue;

(ii) that they were published maliciously; and

(iii) that the plaintiff suffered special damage.

It is necessary to prove special damage. Compare the position in England where statute has changed the law obviating the necessity to prove special damage in cases, inter alia, where the words are calculated to cause pecuniary damage to the plaintiff in respect to his calling or trade. See s.3 of the Defamation Act 1952 (England).

"That an action will lie for written or oral falsehoods, not actionable per se, nor even defamatory, where they are maliciously published, where they are calculated in the ordinary course of things to produce, and where they do produce, actual damage, is established law. Such an action is not one of libel or of slander, but an action on the case for damage, wilfully and intentionally done without justification or excuse, analogous to an action for slander of title. To support it, actual damage must be shown for it is an action which only lies in respect of such damages as actually occurred." - See Ratcliffe v Evans (1892) 2 QB 524 at 527. (Emphasis added).

Also see Royal Baking Powder Company v Wright (1900) 18 Rep Pat Cas at 104 per Lord Halsbury LC, and also Sungravure Pty Ltd v Middle East Airlines [1975] HCA 6; (1975) 134 CLR 1 at 13-14.

Actual damage is the gist of the action - see Ratcliffe v Evans, supra, at pp.531-2.

Middendorp has put Mr Sonneveld to his proof in respect of this claim, denying that the words were defamatory or that they were published maliciously, and further alleging that he did not suffer any special damage.

The defence of privilege is open in an injurious falsehood claim as in an action for defamation. See Wren v Weild (1869) LR 4 QB 730 at 737, and Halsey v Brotherhood (1881) 19 Ch D 386 at 388.

But it appears that the defence is only open in slander of title claims. That is, words which disparage a person's title to any property, real or personal. The two authorities just mentioned were slander of title claims. It is difficult to see how the defence could be open in an injurious falsehood claim, where the words injure a person in the way of his business, trade or calling, because it is necessary for a plaintiff to prove malice. As a matter of principle, malice defeats a defence of qualified privilege. If the plaintiff has already proven malice, then the defence is defeated before it is considered. Compare the 8th ed. of Gatley on Libel and Slander with the 9th ed., paragraphs 310-11 and 20.19 respectively.

Mr Sonneveld, in his reply, put in issue all matters pleaded in the defence, but did not plead malice as an answer to the qualified privilege defence.

However, as he has pleaded falsity and malice in his statement of claim, and further, the defendant to the counterclaim, Middendorp, has pleaded in its defence that the words were spoken without malice towards Mr Sonneveld, in my opinion, it is open to him to argue that if qualified privilege is established, it has been defeated by malice, even though he should have pleaded it in his reply.

Mr Sonneveld called a number of witnesses in his case who are, or were, former employees of Middendorp. In addition, he gave evidence. He also called a number of electrical contractors who operated in the Hastings area during 1996-1998.

Mr Sonneveld is one of those witnesses whose evidence has to be carefully scrutinised and weighed. He is clearly very bitter, as a result of the dispute with Middendorp, and feels that he has been badly done by. However, the way he gave evidence tended to suggest that he would say anything, on oath, if he thought it would assist his case. He informed the Court that at the hearing on the return of the interlocutory summons for an injunction before Beach J, Mr Panna, an experienced member of Counsel, informed His Honour that Middendorp was claiming M$80 for damages for defamation. At that stage, there was no evidence of publication of the circular prepared by Mr Sonneveld and his solicitor, save to Middendorp itself, and Middendorp made application in order to restrain Mr Sonneveld from publishing the contents to anyone. There would be no basis for damages. On any view, to make such an assertion was unnecessary on an application for an interlocutory injunction, but it is bordering on absolute nonsense to suggest that anybody could claim M$80 for damages for defamation where there had been no publication. I raised these matters with Mr Sonneveld when he gave his evidence, suggesting that if it had been said, Beach J would have said, "It was rubbish", and further, that it was unlikely that any counsel would ever say that. Despite my clear indication to him that I did not believe his evidence, he reasserted on oath that in fact it had been said. Later, when cross-examined by Mr Panna, he was unsure whether Mr Panna said it to the Court or only to Mr Sonneveld. I reject his evidence. It was untrue.

He also did not miss an opportunity to run down Mr Bricknell in evidence, and I had to warn him that it was not appropriate for him to make wild allegations of criminal wrongdoing against Mr Bricknell in the Court when such allegations were irrelevant.

On 14 April 1998, Mr Sonneveld was convicted at the Frankston Magistrates' Court of two charges of stalking Mr Adrian Bricknell. The basis of the charges were that he had placed approximately eight to ten notices in the Hastings area asserting that Mr Adrian Bricknell was "a low life pederfile (sic) stalking out children in this area" and gave Mr Bricknell's address. When pressed as to why he did this, he stated that his solicitor, Ms Brann, had told him to do it. He asserted that she said it would be a good idea to "step him down a few cogs, basically to say that he's not as almighty as he seems running around." He did say that she did not tell him to state that Mr Bricknell was a paedophile, in the notice. Preceding this incident were steps taken by Mr and Mrs Bricknell to bring to the attention of Mr Sonneveld's wife that he was having an affair. There was no doubt that there was no love lost between Mr and Mrs Bricknell and Mr Sonneveld. It may be remembered that Mr Bricknell was the one whom Mr Sonneveld refused to pay in December 1996 and who informed others that Mr Sonneveld was not paying his debts.

Having informed the Court of the serious allegation that his solicitor suggested he do this, he persevered with the assertion, despite the apparent incredulity displayed by the Court.

"I am more concerned about some serious things you are saying about your solicitor, Mr Sonneveld. You must appreciate that you are on oath in this Court and you are not to say things about other people who are not here to defend themselves and you have just suggested something reasonably serious against a lawyer. Is it true that she told you to go and put notices up about Mr Bricknell?"

Ms Brann was called by Mr Sonneveld. The passages were put to her and she denied ever making such a suggestion. Indeed, the evidence established that Mr Sonneveld had no contact with Ms Brann in early 1998, and when he was charged with the offences, he engaged Ms Brann's partner, Mr Crowther, who looked after the matters.

I accept the evidence of Ms Brann. Mr Sonneveld told a deliberate untruth to the Court.

During March-April 1997, Mr Nicholas Middendorp attempted to resolve the dispute with Mr Sonneveld. The former arranged a meeting to be held either on 23 or 24 April 1997. Having informed Mr Sonneveld of the proposed meeting, Mr Sonneveld sent a fax to him, indicating that he would not attend any meeting and that he would see him in court. By this time, Mr Sonneveld had taken it upon himself to threaten Middendorp with the distribution of a document, which arguably was defamatory of Middendorp. Mr Middendorp had requested to see a further draft of the document and in his facsimile of 21 April 1997, Mr Sonneveld informed him that he would see it when everybody else saw it.

It appears that around this time, Mr Sonneveld sent the notice to Ms Brann for her consideration. Mr Sonneveld gave evidence that Ms Brann looked at the document, sent it back with a few minor amendments and told him that he could send out the notice. He gave evidence that she saw no problem with sending it out and that that was her advice. It was put to him that that was incorrect. On any view, the document was clearly defamatory of Middendorp and subsequently, was the basis of the document which was the subject of the order made by Beach J, restraining Mr Sonneveld from distributing it.

Ms Brann, who was called by Mr Sonneveld, informed the Court that she did speak to Mr Sonneveld on 23 April 1997, and read out a note of a telephone conversation she had with Mr Sonneveld, which was as follows -

"Advised him that fax could see him sued - defamatory - told him I'd spoken to counsel. Needed to settle down. Intent on sending to Nicholas, told him unwise and at the end of the day wouldn't assist his position."

She reiterated that she did not tell him that he should send the notice. I accept her evidence. Again, in my opinion, Mr Sonneveld told a deliberate untruth to the Court.

During cross-examination, Mr Sonneveld changed his evidence if he thought it was appropriate, sparred with cross-examining counsel, did not answer the question and on occasions, took the opportunity to make unsubstantiated serious attacks upon a number of people. He, on occasions, vehemently denied a matter until confronted with a document which showed that he could not have been correct. Despite this, he prevaricated and gave evasive answers. All told, in my view, he was an unsatisfactory witness.

By reason of the way he conducted the case, and his evidence, I came to the conclusion that Mr Sonneveld was obsessed with his dispute with Middendorp. His obsession, his dislike of Middendorp and their lawyers, and his bitterness towards those who had advised him in the past, namely, his solicitor Ms Brann, and union officials, meant that his judgment was clouded, his memory was affected and, in his own mind, he was convinced of the truth of his version. There were a number of instances of doubtful evidence.

All told, he was an unsatisfactory witness whose evidence had to be closely scrutinised, and I came to the conclusion that his evidence should not be accepted unless it was corroborated by some objective fact.

Mr Sonneveld presently resides just out of Torquay and is an electrician by occupation.

He was born on 15 January 1966 and was raised in Tyabb. He spent most of his adult life in the areas surrounding Hastings. He is presently aged 35 years.

He completed his apprenticeship as an electrician in 1988. He commenced business as an electrical contractor in partnership with his wife from their residential premises in Bittern in about 1990.

He had many and substantial contacts in the electrical industry throughout the area. He performed electrical work building machinery, doing maintenance-type work, and was doing the electrical work on ships coming into and out of Western Port. He also looked after the tug boats, jetties and shipping facilities. In addition, he was building machines for Crib Point Engineering and doing general installation and maintenance work throughout the area. He had specialist skills in various areas and was considered a competent, careful and able electrician.

From time to time, he engaged other electricians and electrical contractors to assist him performing contracts for others.

Prior to 2 February 1997, he engaged short term labour with minimal notice. By way of example, an oil tanker would come in at 3.00 a.m. and by 6.00 a.m., would require eight electricians to do the job. He employed other electricians and electrical contractors to carry out the work. He was able to do so at short notice.

Mr Sonneveld conducted a successful business. Copy tax returns revealed a steady increase in income and in the year ending 30 June 1997, he had a gross income of $185,169. He continued to have a successful business until the latter part of 1998. He eventually left the area in August 1999 and eventually settled near Torquay. In late 2000, he suffered from depression and since then, has worked on and off.

The evidence established that as an electrician, he was very good and very capable, and had an ability to work on large, difficult and complicated machinery.

Middendorp is and was, at all material times, a large wholesale supplier of electrical parts and equipment through a substantial number of outlets in this State. It mainly sells products to electricians and electrical contractors.

At all relevant times, Middendorp had a store in Hastings, which supplied electricians and electrical contractors working in the area. The nearest competitor store was in Frankston, some 20 kilometres away, or at Mornington, which is also some 20 kilometres away. Hastings had a population of about 10,000, but taking into account the surrounding areas, the figure was in the region of 30-40,000. There were a number of industries in the area which attracted electricians. In February 1997, housing was just starting to develop in the area.

In February 1997, there were two employees at the Hastings store. The store was a place where electricians visited and discussed various matters with each other and staff. It was the one place in the area where electricians might meet and talk. It was also a place where a contractor could ascertain the availability of contract labour. All electricians in the area purchased their materials and equipment from the Hastings shop, many had running accounts and most enjoyed discount benefits.

On 2 February 1997, there were two employees at the Hastings store, Graeme Lincoln, who was the manager, and Paul Smith, who was an experienced employee. The latter had worked at Hastings for about eight years. He subsequently moved to the Frankston store.

Mr Lincoln had been working at the Hastings store for approximately ten years prior to February 1997.

Mr Sonneveld frequented the Hastings store often and sometimes, almost every day. Messrs Lincoln and Smith were aware that, from time to time, Mr Sonneveld used sub-contract labour.

During the period July to September 1996, Mr Sonneveld employed Adrian Bricknell, from time to time, as contract labour. Mr Bricknell was an electrical contractor who conducted his own business. He had just started his business. He was employed on a casual sub-contract-type basis, from time to time, by Mr Sonneveld. He continued to employ him through to December 1996. Mr Sonneveld alleged that Mr Bricknell was stealing from him and poaching work. Mr Sonneveld said that he was stealing work. It was somewhat difficult to understand the real basis of Mr Sonneveld's complaint. It would appear that, from time to time, when Mr Bricknell was working on behalf of Mr Sonneveld at a particular job, he would invoice for the work himself. Mr Sonneveld also said that he was booking out hours that were, in his words, "non-existent". In other words, he was charging Mr Sonneveld for work that was not done. In December 1996, Mr Sonneveld terminated his employment. It was in relation to a job at Jack Thompson Engineering.

Mr Sonneveld stated that he did not pay the full amount of Mr Bricknell's claims, and the parties entered into a dispute. He said that about $200 was held back.

Mr Sonneveld asserted that when he and Mr Bricknell were in dispute, he invited Mr Bricknell to come around and sort it out at his home.

It was difficult to ascertain, from Mr Sonneveld's evidence, what the precise nature of his dispute was with Mr Bricknell. He was quick to allege that Mr Bricknell had been sacked from BHP as an employee, was quick to assert that Mr Bricknell had stolen things, and asserted that Mr Bricknell had stolen from him, poached his work and charged him for work he had not done.

Mr Sonneveld called Mr Bricknell as his witness. Mr Bricknell gave a different version to that given by Mr Sonneveld and, I am satisfied, was a witness of truth. Where his evidence differs from Mr Sonneveld's evidence, I accept Mr Bricknell's evidence. Mr Bricknell is an electrical contractor who runs his own business from Crib Point. In February 1997, he had been running his business for a relatively short period. In the latter half of 1996, Mr Bricknell, from time to time, was engaged by Mr Sonneveld to assist him with his work.

During the latter part of 1996, Mr Sonneveld engaged Mr Bricknell to assist him doing work at Jack Thompson Engineering. At one stage, Mr Sonneveld was not available because he was away from the area. An empoloyee from Jack Thompson rang Mr Bricknell, who had been recommended by Mr Sonneveld to do some work. Mr Bricknell attended at Jack Thompson Engineering, and explained that he was unhappy doing the work which Mr Sonneveld normally did. However, they requested him to do the work and he did so. Later, when Mr Sonneveld returned to the area, he was critical of Mr Bricknell for doing the work and abused him. The work was done during November 1996. Despite being abused by Mr Sonneveld, the latter engaged Mr Bricknell to do work in December. He forwarded two invoices to Mr Sonneveld on 9 and 13 December for $135 and $655 respectively. On 14 December, Mr Sonneveld paid $150 off the second account.

Mr Bricknell gave evidence that between 15 and 20 December, he chased Mr Sonneveld for the money by contacting him by telephone. Mr Sonneveld refused to pay and on about the fourth occasion that he rang, Mr Sonneveld said words to the effect - "No, I'm not going to pay you because you're a client-stealing arsehole and you're lucky I don't take you to court and take your house off you."

There were other threats. Thereafter, the parties fell out. Mr Bricknell did not work for him again. Mr Bricknell stated, and I accept his evidence, that Mr Sonneveld said that he did not have the money at the time to pay, in any event.

In January 1997, Mr Bricknell told a variety of people of his dispute with Mr Sonneveld. He told fellow electrical contractors, he told Mr Paul Smith, and as he said, he told anybody who asked him about working with Mr Sonneveld.

Mr Bricknell knew Mr Smith as an employee at the Middendorp shop in Hastings. He had the usual relationship with Mr Smith of an electrical contractor who visited the store often and who would talk to the staff.

Mr Bricknell has not been paid the outstanding amount. He approached the Electrical Trades Union in early 1997, but the union was unable to give him any assistance.

The evidence established that where things were discussed in the Hastings area, they had the potential to pass around what was a fairly small community. Mr Bricknell gave evidence to the effect, and I am satisfied, that the reputation of Mr Sonneveld in December 1996 was that he was a good electrician but a difficult and awkward person to work for, and amongst contractors who had performed work for him, he was considered to be difficult to please.

At the end of January, Mr Sonneveld was involved in a large job and needed labour. He rang around. He was getting no response to his requests.

He retained Mr Paul Dawson, whom he had known for many years. They had done their apprenticeship together. Mr Sonneveld was a couple of years ahead of Mr Dawson. Mr Dawson is aged about 30 and has two children. He is and was an electrical contractor and operated his own business. Mr Sonneveld had employed him over three to four years. Sometimes, he employed him a few times a month. He employed Mr Dawson about a week before 2 February 1997. He was paying him $25 per hour. The arrangement was that he was paid monthly, though Mr Sonneveld said that if he had asked for money earlier, it would have been paid.

On 2 February 1997, Mr Sonneveld sent Mr Dawson to the Middendorp shop in Hastings to pick up some materials. He spoke to the employee, Mr Smith, whom he knew. They had a relationship which was more than an acquaintance between a shop assistant and customer. At one time, Mr Dawson had engaged Mr Smith to work for him on a job. Mr Smith had, on one occasion, delivered materials to Mr Dawson. However, they did not socialise. Mr Sonneveld called Mr Smith as a witness.

Mr Paul Smith gave evidence of the discussion at the Hastings shop between him and Mr Dawson. Mr Smith saw Mr Dawson at the serving counter and asked him "how things were going". He said that he was working local and requested cable cuts. The two of them then went to the back of the shop and, according to Mr Smith, the following conversation took place -

"Mr Smith said to Paul Dawson, 'I hear you've been working for David Sonneveld' and Paul said, 'Yes'. He said, 'Paul, just be a little bit careful, I've heard that David Sonneveld is a slow payer. I know of two guys that are still waiting for payment from David.' Mr Smith said, 'One of them is Robbie Byrnes and the other is Adrian, Adrian's Electrics.' Mr Smith said, 'It might be a good idea if you asked David at the end of each week if you can get a payment and that way you can keep on track with your account.' He then added, 'I'm only telling you this for your own benefit'."

According to Mr Smith, Mr Dawson did not say much, listened, got the cable, was invoiced and left.

Mr Dawson was also called by Mr Sonneveld, and he gave his version of the conversation. In addition, he had sworn an affidavit at the request of Mr Sonneveld, which was filed with the Court, and he gave a version in that document. The plaintiff, Middendorp, in its defence to the counterclaim, also admitted a version of the conversation.

Mr Dawson said that Mr Smith stated, "mentioned to me about David being a slow payer and not paying other contractors, sub-contractors."

In cross-examination, Mr Dawson stated that Mr Smith did refer to his account and that after the conversation took place, Mr Smith said words to the effect, "I just want to make sure you get all your money". Mr Dawson understood that to mean, so that he was able to pay his account. He said that Mr Smith told him that Adrian Bricknell had not been paid by Mr Sonneveld. He was uncertain whether Mr Smith said he was a bad payer or a slow payer.

In an affidavit sworn by Mr Dawson on 21 December 1998, he swore that the conversation was in these terms -

"Paul, make sure you get your money each week because I heard Dave Sonneveld is a slow payer."

In its defence, Middendorp admitted words to the effect -

"Paul, make sure you get your money each week because I've heard Dave Sonneveld is a slow payer. Just be a bit careful. I've heard of two guys that have worked for Dave and both have had problems receiving payments. It might pay for you to ask for a cheque or payment at the end of each week so you can keep up with your own account. Adrian is still having trouble getting money from Dave for work he has done. Paul, I'm saying this for your own benefit so just be a little careful."

The admission made in the defence is similar to the evidence of Mr Smith.

In my opinion, the most likely version of the conversation was that deposed to by Mr Smith in his evidence. However, in my opinion, he told Mr Dawson that Mr Sonneveld was a bad payer. Mr Dawson said he did. I am satisfied that he said that, because it fits in with the sequence of events and the views expressed by Mr Bricknell that Mr Sonneveld would not pay him. As Mr Dawson said, "The conversation lasted about five minutes", and in giving his evidence, he was doing his best to remember what was said. I was impressed by Mr Dawson's honesty whilst giving evidence.

Although Mr Sonneveld asserted often to the Court, whilst presenting his case and giving evidence, that others had been told by Mr Smith the same matters that he had told Mr Dawson, there was no evidence to establish any other communication by Mr Smith to any other person. I accept Mr Smith's evidence that he did not tell others of Mr Sonneveld's attitude to paying his sub-contractors.

The evidence clearly established that Mr Bricknell told others during January 1997, and if others were aware of the facts concerning the attitude of Mr Sonneveld to paying a sub-contractor, I am satisfied that it came from a source other than Mr Smith. This case is concerned with one communication.

I accept Mr Smith's evidence that he told Mr Dawson about Mr Sonneveld because he believed that two other persons had been waiting for payment from Mr Sonneveld. He felt he had to tell Mr Dawson because he liked him, he was young and had just commenced his own business. He did not want to see Mr Dawson in a position similar to Mr Bricknell or Mr Byrnes, having to wait for money. It was not his intention to spread any malicious rumours.

When Mr Dawson returned to the work site, he told Mr Sonneveld what he had been told by Mr Smith. He conveyed to him that he was considered a "slow or bad payer" and that he had better make sure that he got his money each week.

Mr Dawson gave evidence that what was said to him did not affect him, that he trusted Mr Sonneveld, that he was not worried by what he was told, that he continued to work for him and was happy with the payment arrangements. Mr Sonneveld was annoyed by what he was told.

Later, on 2 February, Mr Dawson returned to the store and spoke to Mr Lincoln, and apologised for what he had started by this time. Mr Sonneveld had made contact with Mr Lincoln. This is denied by Messrs Lincoln and Smith. It is unnecessary to resolve the conflict. Later, Mr Lincoln told Mr Smith that he had spoken to Mr Sonneveld and that he was threatening to sue Middendorp. Mr Smith, later that day, telephoned Mr Sonneveld on his mobile phone and suggested that they get together and work out the problem, but Mr Sonneveld was volatile and abrupt and said, "You guys are gone". Mr Smith asked Mr Sonneveld whether it was some form of joke and Mr Sonneveld said, "You're gone", and hung up. That was the last time Mr Smith had any discussion with Mr Sonneveld.

Some two or three days later, Mr Smith spoke to Mr Dawson and informed him that he was annoyed that he had told Mr Sonneveld, because it was said in confidence.

Mr Lincoln rang Mr Sonneveld later on 2 February and, I am satisfied, attempted to pacify Mr Sonneveld, who responded by saying, "I'll see you in court". I am satisfied that Mr Lincoln offered to make an apology in the days that followed 2 February, during discussions with Mr Sonneveld. This was not acceptable to Mr Sonneveld.

Mr Sonneveld had a running account with Middendorp which permitted him credit at the Hastings shop. In July 1995, his credit terms were that he was permitted a strict 90 days' maximum credit from 1 August 1995.

"Should accounts exceed 90 days at any time, our system will insert a status of 'stop credit' until arrears are paid. Our opinion is that these terms are still most attractive."

As at 31 January 1997, the total amount owing by Mr Sonneveld was $11,822.23. Of this amount, $4,129.34 had been outstanding for a period in excess of 90 days. His last payment was made on 7 January 1997 in the sum of $2,000 and during the month of January 1997, Mr Sonneveld purchased goods to the value of approximately $4,500. On one view of the credit terms, the amount outstanding as at 1 February was $4,129.34, but on another view of the facts, the credit was stopped at that date. The evidence revealed that after 1 February 1997, Mr Sonneveld did not purchase any more goods from Middendorp. He did not attempt to make any further payments in the following months.

In the days that followed 2 February 1997, I am satisfied that discussions took place between Mr Lincoln and Mr Sonneveld, but Mr Sonneveld throughout adopted the view that an apology was inappropriate and that Middendorp had to fix the problem. When asked what he meant by "fix it", Mr Sonneveld said, in evidence, that he expected a properly worded retraction and apology which would be prominently displayed in the shop at Hastings and also in a local paper. In my opinion, from an early stage of the dispute, Mr Sonneveld also wanted compensation.

Mr Sonneveld engaged a solicitor in Hastings called Jillian Brann and Associates. From a time shortly before 11 February 1997, Ms Brann handled the matter on his behalf. She briefed Mr Bristow of Counsel, who gave advice and drafted a letter of demand and a form of apology and retraction.

On 17 February 1997, Mrs Brann sent a letter to Mr Lincoln at the Hastings shop requesting a retraction and apology. The letter went on to state -

"At this time we are focussing on allaying the damage and we hope with your co-operation this may be possible. We have put the mitigation of losses ahead of any assessment of damages incurred or losses already suffered."

Earlier in the letter, it was asserted that Mr Sonneveld was unable to find sufficient sub-contractors to work for him to complete current and proposed contracts, and went on to state -

"Last week alone our client found himself in the position of having to say no to a contract from Ford valued at $40,000 as a direct result of the labour position."

The letter clearly conveyed to the reader that not only was Mr Sonneveld seeking a retraction and an apology, but he was contemplating making a substantial claim for damages.

The letter has to be considered in light of the evidence that Mr Sonneveld gave that he was not interested in claiming damages, and only became interested in damages in late 1998. This is despite the fact that he made a number of statements in the following months where it was clear that he was after compensation. His denials reflect on his credibility.

It is pertinent to observe that Mr Sonneveld took no steps at this time, or thereafter, to inform fellow contractors that the rumours were untrue, or to reassure contractors that if he employed them, they would be paid promptly. The steps that were available to him, if he had thought about it, would have been a notice in the local paper and letters to fellow contractors to nip "the rumours in the bud". He took no steps to do this. He frankly admitted that he gave no thought to doing that. These matters are relevant to the question of damages, if damages are to be assessed.

Attached to the letter of demand was a draft retraction and apology. A request was made to display the document at the store. Upon receipt of the letter, Mr Lincoln referred the matter to head office. The notice of retraction was headed "Draft".

Mr Sonneveld gave evidence that the document was in fact displayed in the shop, on the glass door, for a few hours shortly thereafter.

Both Mr Lincoln and Mr Smith denied that the document was displayed at the shop. I accept their evidence. I do so for a number of reasons. First, there was no reason why Mr Sonneveld would return to the shop. He was in a state of war with Middendorp. He was annoyed. He did not purchase any materials after 31 January 1997. He was, without doubt, in a state of dispute with Middendorp after 17 February. Secondly, the document was headed a draft, and it is clear from the terms of the letter of demand and the document itself, that the question of its final form was a matter of discussion between the parties. Indeed, later evidence showed that there were discussions between the parties as to the form of any retraction and apology. Thirdly, Mr Lincoln, as manager of the shop, would not have any authority to take the matter into his own hands, especially as he had referred the matter to head office, which took over the dispute.

Finally, Ms Brann gave evidence that she did speak to Mr Lincoln, who told her that he had referred the matter to head office.

On 24 February 1997, Middendorp wrote to Ms Brann, denying that Mr Smith had made any derogatory comments about the financial status of Mr Sonneveld but admitted that he had advised Mr Dawson, as a friend, that regular weekly invoices might assist him in his cash flow.

The letter concluded with some wise advice which, with the benefit of hindsight, should have been followed -

"If Mr Sonneveld has a sub-contractor who is being derogatory, he should undertake his own remedies."

No doubt this was a reference to Mr Bricknell.

On the same day, Ms Brann wrote to Middendorp and threatened to issue proceedings against it.

Mr Sonneveld did not pay any money off his Middendorp account, and it referred the recovery of the account to a firm of solicitors, Robert Richter & Associates, who, on 11 March, wrote a letter of demand to Mr Sonneveld. On 18 March, Mr Andreola, of Middendorp, spoke to Mr Sonneveld, who informed him that he had every intention of paying the account but because of the other legal issues pending, it would be to the advantage of Middendorp to withhold action to see what transpires.

This supports the conclusion that Mr Sonneveld was after a large sum of compensation, most likely commensurate with his outstanding account.

On 20 March, Middendorp forwarded a letter of demand requiring payment of $7,313.70 by 2 April 1997.

Mr Sonneveld did not respond to the demand and on 2 April 1997, a complaint was issued in the Magistrates' Court for $11,822.23. This was in fact the amount of his account. Mr Sonneveld was annoyed by the claim because he believed that the full amount was not due, because of the credit arrangement. On any view, the sum of $4,129.34 was due and owing, and arguably, the whole was owing due to the fact that Mr Sonneveld had failed to pay the amount due on 31 January 1997. In any event, Mr Sonneveld did not file a notice of intention to defend and did not take any step to contest the claim.

Mr Sonneveld was annoyed by the receipt of the complaint, which was served some time prior to 7 April 1997. On that day, Mr Sonneveld sent a facsimile to Middendorp's Credit Manager, Mr Andreola, in which he made reference to the alleged defamation and indicated that he had not decided whether he would make a claim for damages in court, but had decided to play Middendorp at their game to see how they liked it. He stated in his fax -

"I've drafted a small notice which I have the intention of posting to 'all' electrical contractors in Victoria, post it in all your oppositions' stores and have it appear in as many papers as possible informing people of the truth. This has come about as I don't think what your company has done to mine is very funny and I will be compensated one way or another."

The document set out the facts as Mr Sonneveld had understood them in relation to the alleged defamatory communication, and the notice concluded -

"THEREFORE BEWARE OTHER FELLOW ELECTRICAL CONTRACTORS AS THE NEXT BUSINESS THEY DESTROY MAY BE YOURS."

On any view of the facts, an exaggerated statement.

Mr Nicholas Middendorp contacted Mr Sonneveld to see whether the dispute could be resolved.

On 11 April, Mr Sonneveld sent a facsimile to Mr Middendorp stating that he sought to reinstate his reputation, and he then concluded the letter by saying -

"As regards to the last letter to Ray Andreola it was an indication of my attitude toward your company and a statement of what has taken place. The publicly released version will be constructed by my advertising company and will be seen at the time if necessary."

Mr Middendorp responded by stating that he was seeking legal advice and that upon receipt, he wished to arrange a meeting to work towards a resolution.

On 18 April, Mr Sonneveld followed up with another facsimile, threatening to give the notice to his printing company and to have 10,000 fliers printed and distributed. He asserted that Middendorp had more than enough time to consult their lawyers. On 21 April 1997, Mr Middendorp informed Mr Sonneveld that advice had been received, and suggested one of two days for a meeting. He also requested Mr Sonneveld to fax him "your final draft of your 'Flier' which your printing company has approved to print."

On the same day, Mr Sonneveld sent back a facsimile refusing to meet, stating that he expected to see him in court and noting that Middendorp was not interested in the damage he had suffered. He ended by saying that he would take his own steps to obtain satisfaction. His final paragraph stated -

"In regards to a copy of the draft you will see it at the same time as everyone else."

On or about 23 April, Mr Sonneveld sent the proposed "flier" to Ms Brann for consideration, and as I have already stated, she told him that it was defamatory and he should not use it. Mr Sonneveld, on the afternoon of 23 April, sent a facsimile to Mr Middendorp, threatening to send out the flier which was now headed -

"TO ALL ELECTRICAL CONTRACTORS PURCHASER'S AND ELECTRICIANS ALERT - ALERT - ALERT"

He stated that he was proposing to distribute the document at the end of the week, and that he would hold off until 8.00 a.m. on Friday.

The document is defamatory and asserts, inter alia, that Middendorp fabricated a lie that he did not pay his sub-contractors and proceeded to inform other contractors and sub-contractors; that the lie had gone through the entire area and warned everybody that the next business that Middendorp might destroy might be "yours".

Middendorp engaged its present solicitors and the firm, Vann Fisher & Associates, made contact with Ms Brann. Discussions took place and a meeting was arranged for 9 May 1997, in order to resolve the dispute. The meeting took place on the morning of 9 May, and present were Mr Sonneveld and Mr Nicholas Middendorp, and their lawyers. Nothing was resolved at the meeting.

That afternoon, Mr Sonneveld sent a facsimile in which he stated that it would appear that he would have to see Middendorp in court "the long way round" and attached, what he described as, the "modified version of our reputation clearing campaign". Attached to it was another form of the "Alert - Alert - Alert" document. It was, on any view, defamatory.

Later that day, Middendorp's solicitors approached Ms Brann, asking for an undertaking that the document would not be distributed, otherwise Middendorp would go to court.

On the following day, Saturday 10 May, Mr Sonneveld sent a facsimile to Middendorp, stating that he would hold off until Wednesday, as requested, but went on to say -

"But in regards to the court order being obtained be aware this is like putting down the shovel you're digging the hole with and hiring an excavator. Note the changes to our campaign."

On Monday 12 May, Beach J granted an interim injunction, ex parte, restraining Mr Sonneveld from distributing any defamatory document. On 14 May, Ms Brann told Vann Fisher that she no longer acted for Mr Sonneveld. On 19 May 1997, the interim injunction came back before the Court, and Mr Panna of Counsel appeared for Middendorp, and Mr Sonneveld attended. Beach J continued the injunction and adjourned the proceeding until 16 June 1997 to enable Mr Sonneveld to obtain assistance from the Electrical Trades Union ("ETU"). On 27 May 1997, Ms Brann ceased to act for Mr Sonneveld.

During the period June to early August, the ETU attempted to negotiate a resolution of the dispute between the parties, and discussed the terms of a retraction and an apology, and the terms to settle the proceeding.

On 16 June 1997, Chernov J granted an interlocutory injunction, pending trial. Mr Sonneveld did not appear. He was ordered to pay the costs of the day.

On 17 July 1997, an order was made in default in the Magistrates' Court against Mr Sonneveld for $11,822.23, together with interest and costs, making a total of $12,934.20. Mr Sonneveld was informed of the order on 21 July and a request was made for payment.

Middendorp had discussions with the ETU and eventually, an agreement, in principle, was reached and a deed of release was prepared.

On 19 August 1997, the ETU sent a letter to Mr Sonneveld enclosing the release.

The letter informed Mr Sonneveld that the union believed it had exhausted the negotiations and attached the deed of release. The letter then went on to provide -

"If you choose not to accept this final offer you will be free to pursue any claim against Middie's, as you would see fit."

The Union offered to introduce him to its lawyers, but was not prepared to meet any costs.

Mr Sonneveld was not prepared to sign the release because it contained a clause charging his property for the payment of the debt. Further, he was not prepared to pay interest on his outstanding account, nor was he prepared to pay costs ordered against him in the Magistrates' Court and by Chernov J.

The terms offered by Middendorp to compromise the dispute were fairly generous. Mr Sonneveld was permitted to pay off his outstanding account, including the costs and interest, over 18 months, without any interest. He was required to pay the costs of the Supreme Court proceeding, of $1,200, over a period of two months. Middendorp agreed to file a discontinuance in the proceeding and a vacation of the orders made against him, upon payment. The deed of release did seek to charge Mr Sonneveld's property with the performance of his obligations.

Despite the fact that he did not agree with the clause relating to a charge or the payment of interest and costs, Mr Sonneveld did not take any step to continue the negotiations but chose to refuse to settle. On 24 August 1997, he informed Middendorp that he was not prepared to agree and blamed the ETU because of the extra costs. He stated that he was proposing to tell the media about the saga, and then stated -

"MIDDENDORP ELECTRIC CO SCREWS AND THEN BACK DOORS IN COURT DAVID SONNEVELD WITH THE ASSISTANCE OF THE ETU. I MAY EVEN FROM THIS RECEIVE THE COMPENSATION I SHOULD.

WHAT A STORY."

On 18 September, Middendorp's solicitors requested Mr Sonneveld to sign the release, otherwise steps would be taken to enforce the orders against him. On 3 October 1997, Mr Andreola wrote to Mr Sonneveld and demanded that he pay some of the account.

Nothing more occurred in the Supreme Court proceeding until September the following year.

However, in the meantime, Mr Bricknell and Mr Sonneveld crossed horns again.

In or about March 1998, Mr Bricknell formed the view that he should inform Mr Sonneveld's wife that her husband was having an affair. Contact was made with the sister of Mrs Sonneveld. Mr Sonneveld found out and became annoyed, and posted the notices about Mr Bricknell, which I have referred to earlier. On 15 April 1998, Mr Sonneveld appeared in the Frankston Court on two charges of stalking. The substance of the charges was the posting of the notices. Mr Sonneveld admitted to the police that he had posted the notices in the area. He consulted Mr Crowther, who, at that stage, had become a partner of Ms Brann. He appeared on his behalf. Mr Sonneveld pleaded guilty at the Court. The charges were found proven and he was given a suspended sentence. On 17 April, Mr Sonneveld obtained an intervention order against Mr Bricknell.

In September 1998, Mr Crowther approached Middendorp's solicitors, suggesting a settlement, but Mr Sonneveld, some days later, telephoned Mr Janover of Middendorp's solicitors and stated that he was to ignore what Mr Crowther had stated in the letter and that he wanted damages.

Nothing more occurred in the Supreme Court proceeding or Mr Sonneveld's claims for a period of some 12 months.

The litigation was revived through the Litigation Support Group and as a result, on 19 October 1998, Middendorp filed a statement of claim in which it sought a permanent injunction, but did not claim damages. On 21 December 1998, Mr Sonneveld, acting for himself, filed a defence and a counterclaim. The counterclaim sought damages for defamation. It is pertinent to observe that the first claim in a court by Mr Sonneveld for damages for defamation was some 22 months after the alleged defamatory communication.

Mr Sonneveld's defence and counterclaim was struck out in March and also in June 1999. In August 1999, Mr Sonneveld left the Bittern-Hastings area and eventually settled in Torquay. He left because his business was failing and he was unable to get work.

During the period from December 1999 to 4 March 2000, Mr Sonneveld sent abusive and insulting letters to Middendorp and its solicitors. He repeated the performance between May and June 2001, when he sent another series of correspondence to a variety of people which was also abusive and insulting.

On 22 November 2000, the proceeding came on before Ashley J, and Middendorp, as plaintiff, sought leave to discontinue its claim, pursuant to Rule 24.5.02 of the Rules of Court, on the basis that it did not wish to proceed. At that stage, it was claiming a permanent injunction. Due to the passage of time, it was unnecessary to continue with the claim. His Honour granted leave to discontinue and no order was made as to costs.

The defence and counterclaim filed by Mr Sonneveld on 13 October 1999 was not the subject of any attack, and it is that counterclaim which is before the Court.

It will be necessary to further consider the facts when considering and determining some of the issues in the proceeding.

In his counterclaim, Mr Sonneveld pleaded that the words complained of were published to a number of persons. However, the evidence established only one communication, namely, by Mr Smith publishing the words to Mr Dawson, on or about 2 February 1997.

Mr Sonneveld did not plead any false innuendos, and there was no suggestion that he wished to rely upon any extrinsic facts to establish a claim based on the true innuendo.

Mr Sonneveld has proven that the words complained of were published of him, and that Middendorp was responsible for the publication. Although his counterclaim did not plead that Mr Smith was acting in the course and scope of his employment when he published the words, Middendorp did not, in its defence, deny that he was acting in the course and scope of his employment and further, no submission was put to the Court that he was not so acting.

This brings the Court to the real issue in Mr Sonneveld's case, namely, were the words defamatory of him?

"Where no true innuendo is pleaded and the published words clearly relate to the plaintiff, the issue of libel or no libel can be determined by asking whether hypothetical referees - Lord Selborne's reasonable men ... or Lord Atkin's right thinking members of society generally ... or Lord Reid's ordinary men not avid for scandal - would understand the published words in a defamatory sense. That simple question embraces two elements of the cause of action: the meaning of the words used (the imputation) and the defamatory character of the imputation." - per Brennan J in Reader's Digest Services Pty Ltd v Lamb [1982] HCA 4; (1982) 150 CLR 500 at 505-6.

His Honour's remarks also apply to a claim in slander.

In determining the meaning of the words used, the words must be understood in their normal, natural and every day sense, subject to the context and the circumstances. In Stubbs Limited v Russell (1913) AC 386, Lord Shaw said at p.398 -

"Is the meaning sought to be attributed to the language alleged to be libellous one which is a reasonable, natural or necessary interpretation of its terms?"

But in considering the meaning of the words, the Court takes into account the circumstances of the publication and what would be known and understood by those who heard the words. All circumstances which were known to the publishee are relevant so as to place the tribunal of fact in a position to determine how the publishee understood the words. What meaning the words would have conveyed to the mind of the publishee - see ibid.

The law has always permitted evidence as to the circumstances of the publishee and his understanding of the words. In the ancient case of Harrison v Thornborough (1712) 10 Mod 197 at 198; 88 ER 691, the Queens Bench Court said -

"The rule therefore that has now prevailed is, that words are to be taken in that sense that is most natural and obvious, and in which those to whom they are spoken will be sure to understand them. ... The signification of the words 'gone off' are very well known among merchants."

The courts do not strain to find an innocent meaning for the words prima facie defamatory, neither will the courts put a forced construction on the words which may fairly be deemed to be harmless.

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