Mortimer v Nationwide News Pty Ltd

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

1 HIS HONOUR: The plaintiff brings proceedings in defamation against the defendant arising out of the publication of three articles in the Australian. The first matter complained of is an article published on 17 August 1999 the terms of which are set out in numbered paragraphs in schedule A to the statement of claim. 2 The second article was published on 2 September 1999 and is set out in numbered paragraphs in schedule B. 3 The third article was published on 12 November 1999 and is set out in numbered paragraphs in schedule C to the statement of claim. 4 In the ordinary course, the matter was the subject of consideration in the Defamation List. By letter dated 27 April 2000 the defendant indicated to the plaintiff's solicitors that it proposed to challenge each of the imputations pleaded in paragraphs 4, 6 and 8 of the statement of claim alleging that none of the imputations pleaded in those paragraphs were capable of arising. Other objections were foreshadowed which are not presently relevant. 5 The objections were, at the request of the defendant, fixed for a Pt 31 hearing on 12 May 2000. However that date proved to be unavailable and the matter was listed for argument on 26 May 2000. It was not reached on that day but was heard by Bell J on 30 May 2000. 6 Prior to the hearing, counsel for the defendant apparently telephoned junior counsel for the plaintiff and stated that the defendant did not seek to sustain its objections to all of the imputations referred to in the letter of 27 April 2000. The objections were confined to imputations 4(a), 4(d), 6(c), 6(d), 8(a), 8(c), 8(d), 8(e) and 8(f). 7 Bell J determined that imputations 4(a), 4(d), 6(c), 8(a), 8(c) and 8(f) should go to the jury but struck out the other matters. 8 Her Honour gave judgment on 4 July 2000 and stood the matter over for directions on 7 July 2000. On that day Kirby J granted leave to the plaintiff to file an amended statement of claim and the matter was stood over for further directions. On 4 August 2000, Levine J noted that the defendant had indicated it needed time to consider the amended statement of claim. The defendant was not then required to file a defence, but his Honour indicated that the defendant should consider the statement of claim and any concessions which it may be appropriate for it to make and, having done so, could then apply to have the matter listed for hearing. 9 A holding defence was filed by the defendant's solicitors on 29 September 2000. That defence, although conventional in form, contained one omission which I shall refer to later. 10 The matter was included in a call-up on 2 February 2001 and was fixed for hearing commencing on 22 May 2001. 11 There was no further contact between the solicitors for the parties until the evening of 15 May 2001. On that day a letter was forwarded by the defendants to the plaintiffs which included a notice under Pt 67 r 12A of the Supreme Court rules and indicated that arrangements had been made for the matter to be included in the defamation list for Friday, 18 May 2001. 12 The notice raised issues in relation to the form of imputations 4(a) and 4(b), and capacity issues in relation to imputation 6(b) and 6(d). Imputation 6(d) as pleaded in the amended statement of claim was different from that which had been previously considered by Bell J. 13 Both a supplementary notice and further supplementary notice under Pt 67r 12A were also served but these are no longer of consequence. 14 The matter came before me in the defamation list last Friday, 18 May 2001. There being insufficient time to deal with the matter that day, I stood it over to the trial which was fixed for Tuesday, 22 May. The matter did not come on for hearing on that day and Bell J adjourned it for hearing before me yesterday. 15 In response to the defendant's notice the plaintiff has filed a notice of motion seeking an order that the defendant's notice under Pt 67 r 12A be set aside and a declaration that the notice is an abuse of process. 16 Before me the defendant confined itself to an argument that imputations 6(b) and 6(d) should be struck out for the reason that the relevant imputation is not capable of being conveyed and is not capable of being defamatory. It is first necessary to consider the plaintiff's motions. 17 Part 67 r 12A of the Supreme Court rules provides a process whereby a defendant may raise an objection or other dispute in relation to a matter pleaded or particularised in a statement of claim. Strict time limits are provided and an outline of the submissions in relation to the dispute is required. Subrule 2 provides for a formal response from a plaintiff. 18 Where an objection is taken, the Defamation List Practice Note provides that the Defamation List judge will hear and determine any objection. The matter is determined in a separate trial pursuant to Pt 31 of the rules. The rules and Practice Note have been provided to ensure the efficient determination of defamation matters in the interests of the parties to a specific action and the effective despatch of the court's business. Any failure to comply with these requirements, unless adequately explained, is a serious breach of the obligations which parties and their legal advisers owe to the court and places an unnecessary burden on the administration of the court. 19 The plaintiff submits that, where in a defamation action objection has been taken to an imputation and the relevant questions of capacity determined, the defendant is estopped from raising any further objection, either to that imputation or any other, at a later point in the proceedings. It is submitted that the principles in Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589 are relevant. It is further submitted that it is unreasonable for the defendant to seek to raise these matters at this stage of the proceedings. It is submitted that the time for raising of objections was when the Pt 31 hearing occurred before Bell J. 20 The plaintiff submits that this approach is consistent with the decision in John Fairfax & Sons Limited v Foord (1988) 12 NSWLR 706 where the Court of Appeal considered the course of a trial conducted by Hunt J. It was submitted that the decision of Mahoney JA in that case should be understood to have concluded that the determination of an issue of capacity in a separate trial under Pt 31 r 2 had the consequence that the issue will become "res judicata so far as the trial of the action at first instance" is concerned at p 713 (see also Lloyd v David Syme & Co Limited (1985) 3 NSWLR 728). 21 In the alternative, the plaintiff submitted that the court should nevertheless decline to entertain the application to object to the imputations. 22 This submission was supported by reference to the decision of McLelland J in Brimaud v Honeysett Instant Print Pty Limited 19 September 1988, unreported, which is noted in Ritchie's Supreme Court Practice, Vol 2 [at para 13,047, at 8593]. In that case his Honour considered the character of an interlocutory order and said "Interlocutory orders, of their very nature, create no res judicata or estoppel, and the court retains jurisdiction to set aside, vary or discharge an interlocutory order up to the time of the final disposition of the proceedings. However, the general rationale of principles last referred to applies even in the case of interlocutory orders. It would be conducive to great injustice and an enormous waste of judicial time and resources if there were no limit on the power of party to have any interlocutory application or order relitigated at will." 23 The plaintiff also relies upon the decision of the Court of Appeal in Amalgamated Television Services v Marsden [1999] NSWCA 313 where the court approved the approach of McLelland J in Brimaud when considering an application to revisit a matter which had previously been determined at an interlocutory stage in the proceedings. McLelland J said: "In the present case I am dealing with an interlocutory order of a substantive nature made after a contested hearing in contemplation that it would operate until the final disposition of the proceedings. In such a case the ordinary rule of practice is that an application to set aside, vary or discharge the order must be founded on a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the court on the hearing of the original application." 24 For the defendant, it is accepted that, in relation to any imputation which was argued before Bell J, and in respect of which her Honour made a determination, no further objection may be advanced. However, it is submitted that as imputation 6(b) was not the subject of a determination by her Honour, and imputation 6(d) being a fresh imputation, could never have been the subject of determination by Bell J, the defendant is not estopped from raising an objection. It is further submitted that Pt 31 trials can never result in an Anshun estoppel and that because a Pt 31 trial is a trial of an interlocutory issue, the decision of the High Court in Bass v Permanent Trustee Co Limited (1999) 198 CLR 334 provides the appropriate principle. In that case in a joint judgment the court referred (at 360) to the decision in Fidelitas Shipping Co Limited v V/O Exportshleb [1966] 1 QB 630 where Diplock LJ stated: "Where the issues separately determined is not decisive of the suit, the judgment upon that issue is an interlocutory judgment and the suit continues. Yet I take it to be too clear to need citation of authority that the parties to the suit are bound by the determination of the issue. They cannot subsequently in the same suit advance argument or adduce further evidence directed showing that the issue was wrongly determined. Their only remedy is by way of appeal from the interlocutory judgment and, where appropriate, an application to the appellate court to adduce further evidence." 25 Accordingly, it is submitted that only if there has been a determination of an issue in interlocutory proceedings, will the parties be bound by that determination. In circumstances where the issue has not been litigated, although it could have been, it is submitted that no estoppel arises. 26 In my opinion the submission of the defendant should be accepted. Although the opportunity to argue the capacity of the relevant imputations was available before Bell J, because those proceedings were not decisive of the suit, the defendant could not be precluded from bringing further interlocutory proceedings to agitate different questions. Because the defendant accepts that it is bound by the decision of Bell J with respect to the imputations that were the subject of her judgment, it is unnecessary to consider whether these are circumstances which would allow the defendant to reargue those matters. 27 If the plaintiff's submission was accepted, the consequence would be that if there have been proceedings which considered issues of capacity with respect to any imputation, a defendant would forever be excluded from raising objections in relation to other imputations at a later stage. However, as the Pt 31 determination is only an interlocutory proceeding, and is not decisive of the suit, it must always be possible for a party to agitate an issue which has not been determined: see Fidelitas Shipping. An Anshun estoppel could not arise to preclude argument with respect to an interlocutory issue which was not, but could have been, raised. 28 If there is no estoppel the plaintiff further submits that because an opportunity has been previously available to the defendants to object to the imputations the bringing of an objection only days before the section 7A trial, is an abuse of process and should be struck out. The plaintiff points to the undoubted power of the court to control its own proceedings and submits that where a party in defamation proceedings has failed to comply with the practice note, the court should not entertain the application. This is particularly the case when the trial has been fixed for hearing and the raising of the objection at a late date may have the consequence of delaying the trial. 29 The defendant acknowledges that, by failing to raise these matters at an earlier hearing, it is in breach of the practice note and has failed to discharge the obligations which the court requires of it. However, it is submitted that because section 7A of the Defamation Act provides that the court and not the jury is to determine whether the matter complained of is reasonably capable of carrying the imputation pleaded by the plaintiff and whether the imputation is reasonably capable of bearing a defamatory meaning, these issues, once raised, must be determined by the court. 30 It is plain that the defendant should have sought to advance its objections to all of the imputations at the earlier hearing before Bell J. Even if that was not done it should have raised the objections well in advance of the trial. By delaying the matter until the days immediately preceding the trial the court is required to determine issues which can be complex and which should have been resolved before the matter was fixed for hearing. The consequence is that the orderly management of the jury process is made difficult and trials may have to be delayed or adjourned. The management of the court processes can be severely interrupted to the disadvantage of other litigants and with the likelihood of inconvenience to prospective jurors. 31 In State Pollution Control Commission v Australian Iron & Steel Pty Limited (1993) 29 NSWLR 487 the Court of Appeal reviewed the matters relevant to the exercise of the court's discretion to grant an adjournment. The trial judge had decided that to grant the adjournment would impede the efficient despatch of the business of the court. The Court of Appeal held that there was no error of law if the effect upon court administration was considered when forming a view as to whether an adjournment should be granted. 32 The High Court addressed similar issues, but in the context of the application by a party to amend a pleading in State of Queensland & Anor v J L Holdings Pty Limited (1997) 189 CLR 146. The issue was whether an amendment to a defence should be allowed in circumstances where it would be likely to result in a vacation of the trial date. The trial judge determined that maintaining the date was a more pressing consideration than a party's right to present a further defence. 33 The High Court held that although case management principles were important and relevant they could not be used to prevent a party from litigating an issue which was fairly arguable. The Court expressed the view that costs would normally be an adequate remedy for any prejudice caused to a party by an amendment. Otherwise the court said: "Justice is the paramount consideration in determining an application such as the one in question. Save insofar as costs may be awarded against the party seeking the amendment, such an application is not the occasion for the punishment of a party for its mistake or for its delay in making the application. Case management, involving as it does the efficiency of the procedures of the court, was in this case a relevant consideration. But it should not have been allowed to prevail over the injustice of shutting the applicant's out from raising an arguable defence, thus precluding the determination of an issue between the parties." (at p 155). 34 In the present case I am satisfied that the challenge brought to imputations 6(b) and 6(d) are not such that they could be said to be unarguable. Furthermore, the argument is confined and capable of being determined by the court without interfering with the trial process. Accordingly, although the conduct of the defendant in raising these issues so close to the trial, with consequential difficulty in the management of the trial processes is inappropriate, in the circumstances, the court should not deny the defendant the opportunity to argue these matters. 35 Although the plaintiff complained that it will be required to deal with these further arguments it cannot submit that it is embarrassed and unable to meet the arguments. There is no suggestion that in order to deal with the issues raised by the defendants an adjournment will be required or that any additional costs will be incurred by the plaintiff. 36 Accordingly, the plaintiff's motion must be dismissed. 37 Turning to the imputations which are challenged the question for me to determine is whether it is open to a jury to find that an ordinary reasonable reader would have understood the matter complained of in the defamatory sense pleaded. The ordinary reasonable reader does not live in an ivory tower, is a lay person, not a lawyer. Such a person is neither perverse, nor morbid, nor suspicious of mind, nor avid for scandal. He or she is a person of average intelligence who reads between the lines in the light of his or her general knowledge and experience of worldly affairs (Farquhar v Bottom (1980) 2 NSWLR 380; Amalgamated Television Services v Marsden (1998) 43 NSWLR 158). 38 Imputation 6(b) is in the following terms: "The plaintiff as Chairman of GIO fanatically opposed the AMP bid for ulterior motives rather than for shareholder protection." 39 It is submitted by the defendant that the only basis upon which the imputation is capable of being carried is paragraph 17 of the second article complained of. It is submitted that the phrase "raised questions" makes it plain that, at its highest, the second matter complained of conveys an imputation that the plaintiff so conducted himself as to raise a suspicion of failing to act for shareholder protection. It is submitted that it is incapable of conveying the pleaded imputation of guilt of such conduct. 40 The plaintiff submits that the whole of the article is relevant, not only paragraph 17. He submits that when the whole is reviewed the pleaded imputation is capable of being conveyed. 41 In my opinion the submission of the plaintiff should be accepted. It seems to me that a reading of the whole article, and in particular the discussion of the relationship between Mortimer and Macquarie Bank and the sacking of the GIO's previous advisers, Warburgs, together with the general discussion of the steps taken to defend the position, could together with paragraph 17 of the article, be capable of conveying the pleaded imputation. 42 The defendant submits that imputation 6(b) could not be defamatory. It is submitted that it is not blameworthy conduct for a company director to oppose a take over bid, nor can it be defamatory for him to do so fanatically. It is further submitted that it is a mistake to criticise a company director for failing to be concerned with the protection of shareholders when, so it is submitted, his primary duty is to the company and that duty may, in some circumstances, be discharged in a manner which is different from the manner appropriate for the discharge of duties owed to shareholders. 43 I do not accept the defendant's submission. In my opinion it is open to the jury to find that an imputation that there was fanatical opposition to a take-over for ulterior motives other than shareholder protection is capable of being defamatory. I add that it is difficult to identify how it could be that the interests of the company would be inconsistent with protecting the interests of shareholders. 44 Imputation 6(d) is in the following terms: "The plaintiff as Chairman of GIO acted contrary to the interests of GIO shareholders in sacking Warburgs and retaining Macquarie Bank." 45 This imputation is pleaded following the decision by Bell J to strike out the original imputation relating to this matter. In my opinion the imputation is capable of arising when paragraph 8 is considered in the context of the whole article. The statement in paragraph 8 states that Mortimer's relationship with advisers, Macquarie Bank, will also be an issue must be considered in the context of the whole article, which questions Mortimer's dealings with the take-over generally. In my opinion it is open to the jury to find the pleaded imputation. 46 I am also satisfied that the imputation is capable of being defamatory. In my opinion it is open to the jury to find that an accusation that the plaintiff acted contrary to the interests of shareholders, in the context of the pleaded article, is capable of being defamatory. It is not a matter of hard decisions being taken but rather that Mortimer failed in the obligations he owed to shareholders. 47 It follows that imputations 6(b) and 6(d) will go to the jury. 48 The defendant brought a further motion before me seeking leave to amend its defence. Evidence was provided that by oversight the defendant had failed to plead that the imputations in paragraph 6 of the amended statement of claim could not be defamatory. 49 The plaintiff opposed the application submitting that not only had the defendant had an ample opportunity to file a defence but had previously been required by Levine J to give specific consideration to its content before the matter could be fixed for a hearing. However, the plaintiff was not able to indicate any prejudice he would suffer, beyond the loss of the obvious forensic advantage, if the defendant was allowed to plead the amendments. There was no suggestion of any embarrassment in preparing for the trial or of any need for an adjournment. 50 I am satisfied that it is appropriate for me to allow the amendments. I accept that the failure to plead the relevant defence was an oversight and that, if I allow the amendment, no relevant prejudice will be caused to the plaintiff. 51 There remains an application by the plaintiff for an order for costs. It is submitted that the defendant's delay in bringing the objections and the filing of an amended defence has caused the plaintiff to incur costs which should be the subject of a separate order. 52 It would be usual for the costs of a Pt 31 trial to become the costs in the cause. The defendant submits that the issues which have been agitated, if agitated at an earlier time, would have carried the usual costs order. It is submitted that no additional costs have been incurred by reason of the raising of the issues at this late stage. As far as the plaintiff's motion is concerned the defendant was successful, as it was on its own motion to amend the defence. However, it failed in its objection to imputation 6(b) and 6(d). 53 In the circumstances I am not persuaded that the plaintiff should have a discrete order for the costs of these arguments. Although the matters should have been raised at an earlier point in time, for which the defendant's conduct deserves criticism, I am not satisfied that the plaintiff has incurred costs beyond those which it would have incurred in any event. Accordingly I make no order for the costs of the various matters considered in this judgment.

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