BETWEEN : NATIONWIDE NEWS PTY LTD (ACN 008 438 828)

INTERNATIONAL FINANCING & INVESTMENT PTY LTD (ACN 009 396 454)

Defamation - Privilege - So-called "Lange" defence - Article in newspaper about government agency inquiry and containing statements about respondent - Relationship between comments about agency and those about respondent - Whether article about government and political matters - Whether reasonable to publish material about respondent - Held relationship not sufficient to attract the privilege

Defamation Act 1974 (NSW)

Second Respondent (First Defendant) : No appearance

Appellant (Second Defendant) : Blake Dawson Waldron

Second Respondent (First Defendant) : Mallesons Stephen Jaques

Bellino v Australian Broadcasting Corporation [1996] HCA 47; [1995-1996] 185 CLR 183

Dunford Publicity Studios Limited v News Media Ownership Ltd (1971) NZLR 961

Guise v Kouvelis [1947] HCA 13; (1947) 74 CLR 102

Hart v Wren [1995] NTSC 107; (1995) 124 FLR 135

Hartley v Nationwide News Pty Ltd (1995) 119 FLR 124

Horrocks v Lowe [1975] AC 135

Jingellic Minerals NL v Abigroup Ltd (1992) 7 WAR 566

Lancashire County Council Police Authority; Ex parte Hook [1980] QB 603

Laughton v The Bishop of Sodor and Man [1872] EngR 35; (1872) LR 4 PC 495

Sefton v Baskin (1918) 37 NZLR 157

Wing Luck Foods v Lay Choo Lim [1989] WAR 358

1 PIDGEON J: I agree with the reasons published by Owen J and with the orders proposed.

2 IPP J: I have read the reasons to be published by Owen J. I agree with them and his Honour's conclusions. I have nothing further to add.

3 OWEN J: This is an application for leave to appeal and the substantive hearing of the appeal from an order of a Judge of this Court refusing the applicant (second defendant) leave to amend its defence in a defamation case. On 18 February 1998 the proceedings, in so far as they concern the second respondent (first defendant), were discontinued. Accordingly, the second respondent took no part in the appeal. It will be convenient for me to refer in these reasons to the applicant as "the appellant" and to the first respondent as "the respondent". Where it is necessary to refer to the second respondent I will call him "Mr Kent".

4 The respondent carries on business as a provider of home loans. Mr Kent was, at the relevant time, the manager of a bank which also provides home loans. The appellant is the owner and operator of a daily newspaper called "The Australian". The bank had set up what it called a "Home Loan Hotline" whereby customers, or prospective customers, could make inquiries about the availability of home loans from the bank and the terms upon which they might be procured. For the purpose of the application and this appeal it can be accepted that a representative of the respondent made a call on the bank's hotline and spoke to one of the bank's hotline operators and recorded that conversation. The respondent complained to the bank but was not satisfied with the response.

5 By one means or another, yet to be established, the matter came to the attention of the Australian Competition and Consumer Commission ("ACCC"), headed by Professor Allan Fels. It would appear that Professor Fels made certain public statements in relation to the matter. There was some media coverage of the matter, including publication of statements attributed to Professor Fels and to Mr Kent. Relevantly, on 18 December 1996 the respondent published in "The Australian" this article:

THE chairman of the Australian Competition and Consumer Commission, Professor Allan Fels, was asked yesterday to retract remarks which BankWest's senior management claimed implied they condoned the provision of incorrect information about financial packages offered by their home loan competitors.

In a day of drama following the ACCS's (sic) announcement that BankWest would offer compensation to borrowers who had been (sic) misled by the bank's Home Loan Hotline last July, BankWest's managing director, Mr Warwick Kent, said the approach by Professor Fels had been 'totally outrageous'.

Mr Kent alleged also that BankWest had been the subject of a 'sting' by a small competitor, WA Home Loans.

It was 'totally untrue' that the bank's management had adopted a deliberate strategy to falsify the benefits of packages offered by its competitors.

Mr Kent said 'it is quite beyond belief' that Professor Fels could arrive at such a conclusion which 'questioned the integrity of the management of the bank... I find this objectionable as it damages our reputation' Mr Kent said.

BankWest is owned by the Bank of Scotland and is Western Australia's largest lender of home loans.

Mr Kent claimed that in August, WA Home Loans came to the bank with what appeared to be transcripts of telephone conversations to the Home Loan Hotline.

The company demanded compensation from the bank, he said, for what it claimed was damage to its business.

After lengthy negotiations a settlement could not be agreed and Mr Kent said BankWest had only ever had one complaint about its Hotline and that was from WA Home Loans.

Mr Kent said it appeared that some incorrect information had been given out over the Hotline but that as soon as the complaint was received from WA Home Loans this had been rectified."

6 In par 4 of the statement of claim the respondent sets out the newspaper article in its entirety and pleads that it was published by the appellant of and concerning the respondent. The plaintiff pleads that the publication was defamatory of it, the sting of the defamation being that the plaintiff had attempted to extort money from the bank and, when that failed, that it had reported the matter to the ACCC out of malice and to place the bank under "unfair commercial pressure".

7 In its defence the appellant admits the publication but denies that the words complained of bear the imputations contended for or any defamatory meaning. It then pleads a Polly Peck defence by asserting an alternative meaning and seeking to justify the alternative meaning. Paragraph 8 of the defence, in its original form, contained a further defence of qualified privilege, but within a relatively limited focus. The respondent sought leave to amend par 8 of the defence so that it would read as follows:

"8. Further, the Newspaper Report was published on an occasion of qualified privilege.

(a) In December 1996 the chairman of the ACCC made public remarks about the plaintiff's complaint to the ACCC and the conduct of the Bank of Western Australia Ltd the subject of that complaint and complaints by others about that conduct.

(b) On 17 December 1996 the first defendant was interviewed by Nigel Wilson, a reporter employed by the second defendant.

(c) In the course of the interview the first defendant stated:

(i) the public remarks made by the chairman of the ACCC to the effect that the Bank of Western Australia Ltd had engaged in a deliberate management strategy to falsify the benefits of financial packages offered by its competitors were untrue.

(ii) the public remarks made by the chairman of the ACCC to the effect that there had been many complaints about the Bank of Western Australia Ltd giving false information by the Hotline were untrue and that the only complaint received by the Bank of Western Australia Ltd was from the plaintiff; and

(iii) the Bank of Western Australia Ltd had been the subject of a set up by the plaintiff which had caused persons to telephone the Hotline and record the conversations. The plaintiff then approached the Bank of Western Australia Ltd and stated that the Bank of Western Australia Ltd was giving out wrong information and the plaintiff wanted compensation.

(d) The Newspaper Report was a communication made to the public on a government or political matter.

(e) In the premises the second defendant was under a duty to disseminate the contents of the Newspaper Report and the public had an interest in receiving the content of the Newspaper Report.

(f) The publication of the Newspaper Report was reasonable in the circumstances.

(i) The second defendant believed the Newspaper Report to be true and had reasonable grounds for so believing.

(ii) The second defendant was not aware of any falsity of the Newspaper Report or any part of it.

(iii) The second defendant took proper steps so far as they were reasonably open, to verify the accuracy of the Newspaper Report.

(A) The information in the Newspaper Article was provided to the second defendant by the first defendant, the managing director of the Bank of Western Australia Ltd.

(B) The second defendant telephoned the chairman of the ACCC who said it was possible that the plaintiff had made the complaint to the ACCC because the first defendant had refused to compensate the plaintiff.

(C) The second defendant telephoned the plaintiff to seek a response to the matters raised by the first defendant but the plaintiff's telephone was not attended at the time of the second defendant's telephone call.

(D) The public remarks by the chairman of the ACCC about the plaintiff's complaint to the ACCC and the Bank of Western Australia Ltd's conduct the subject of that complaint had been the subject of press reports on 17 December 1996."

8 The purpose of the amendment proposed by the respondent was to expand the defence so as to rely upon the new or re-formulated ground of qualified privilege laid down in Lange v Australian Broadcasting Commission [1997] HCA 25; (1997) 189 CLR 520. The effect of the decision is to afford a measure of protection for communications made to the public on a government or political matter.

9 Before discussing the merits of the appeal I need to say something about what has become known as the Lange defence. It is an adaptation and extension of the common law defence of qualified privilege, as to which see, generally, Marks v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia (WA Branch) (1995) 14 WAR 360 at 336-39.

10 The genesis of the principle is to be found in Nationwide News Pty Ltd v Wills [1992] HCA 46; (1992) 177 CLR 1 and Australian Capital Television Pty Ltd v The Commonwealth [1992] HCA 45; (1992) 177 CLR 106. In those cases (but not without the expression of some differences of opinion) the High Court showed a willingness to imply an element of freedom of political communication as a constitutional issue. These cases involved the validity of items of federal legislation. The issue arose again in Theophanous v Herald & Weekly Times Ltd [1994] HCA 46; (1994) 182 CLR 104 and Stephens v West Australian Newspapers Ltd [1994] HCA 45; (1994) 182 CLR 211 in the context of defamation laws. The plaintiff in Theophonous was a federal politician, while the claimants in Stephens were members of the Western Australian Parliament.

11 Both cases were decided by a four to three majority. In Theophanous the Court found that, due in the main to the nature of representative government, there is implied in the Commonwealth Constitution a freedom to publish material discussing (among other things) government and political matters. However, to avail itself of the defence a publisher would have to establish that it was unaware of the falsity of the material, that it was not published recklessly and that the publication was reasonable in the circumstances. The majority also held that a publication that attracted the implied freedom could also be described as a publication on an occasion of qualified privilege. Historically, the common law regarded the qualified privilege as applying, in the main, to publications to a restricted audience. It had rarely applied the defence to communications to the public at large. The effect of Theopanous and Stephens was to expand significantly the common law "duty-interest" qualified privilege defence. This is because the implied constitutional freedom of communication rendered it unnecessary for the publisher to establish a duty to disseminate the information. In Stephens the Court extended the defence to discussion of political material concerning State or Territory matters.

12 Lange was also a defamation case. The publisher raised the statutory defence of qualified privilege under the Defamation Act 1974 (NSW) and in accordance with Theopanous and Stephens. The High Court, in a unanimous judgment, reconsidered the decisions in Theophanous and Stephens and declared the law as it affected the common law on qualified privilege as well as the statutory defence that was raised directly in the case. The Court reaffirmed that freedom of communication on matters of government and politics is an indispensable incident of the system of representative and responsible government created by the Constitution. Certain sections of the Constitution therefore protect freedom of communication between people concerning political or government matters. They do not confer personal rights on individuals. Rather, they preclude the curtailment of the protected freedom by the exercise of legislative or executive power. It is not an absolute protection. It is available only, and to the extent necessary, to achieve the stated goal. The common law, as well as Federal and State legislation, must also conform with the Constitution. In relation to defamation the common law provides to publishers who choose to plead, and who can establish, an appropriate defence an immunity to action brought against them. The common law can confer a head of privilege in terms that are broader than the constitutionally required protection but those terms cannot be any narrower.

13 In Lange, at 567, the Court said that two questions must be answered before the validity of a law (including a principle of the common law) can be determined. First, does the law effectively burden the freedom of communication about government or political matters either in its terms, operation or effect? Secondly, if so, is the law reasonably appropriate and adapted so as to serve a legitimate end the fulfilment of which is compatible with the maintenance of the constitutionally prescribed system of government? If the answers to those questions is "yes" and "no" respectively, the law is invalid. Translating that principle to defamation law the Court posed the question in this form:

"...the critical question ... is whether the common law of defamation as it has traditionally been understood ... [is] reasonably appropriate and adapted to serving the legitimate end of protecting personal reputation without unnecessarily or unreasonably impairing freedom of communication about government or political matters protected by the Constitution."

14 The Court went on to consider the validity of the common law defence of qualified privilege in accordance with those principles. In the result the Court was able to fashion a development of the doctrine that would accord with constitutional principles. The Court said, at 571:

"...this Court should now declare that each member of the Australian community has an interest in disseminating and receiving information, opinions and arguments concerning government and political matters that affect the people of Australia. The duty to disseminate information is simply the correlative of the interest in receiving it. The common convenience and welfare of Australian society are advanced by discussion - the giving and receiving of information - about government and political matters. The interests that each member of the Australian community has in such a discussion extends the categories of qualified privilege. Consequently, those categories now must be recognised as protecting a communication made to the public on a government or political matter."

15 It seems clear that the description of the defence as formulated in Theophanous has been discarded. Several propositions can be gleaned from the Lange judgment some of which are not relevant for present purposes. What is relevant is that there is a threshold question, namely, whether the material amounts to "information, opinions [or] arguments concerning government and political matters that affect the Australian people". The Court gave little guidance on that issue and it remains to be worked out on a case by case basis. It is also relevant that in order for a publisher to avail itself of the Lange defence it must establish that it was reasonable to publish the material. In relation to the concept of reasonableness, the Court had this to say, at 574;

"Whether the making of a publication was reasonable must depend on all of the circumstances of the case. But, as a general rule, a defendant's conduct in publishing material giving rise to a defamatory imputation will not be reasonable unless the defendant had reasonable grounds for believing that the imputation was true, took proper steps, so far as they were reasonably open, to verify the accuracy of the material and did not believe the imputation to be untrue. Furthermore, the defendant's conduct will not be reasonable unless the defendant has sought a response from the person defamed and published the response made (if any) except in cases where the seeking or publication of the response was not practicable or it was unnecessary to give the plaintiff as opportunity to respond."

16 Before turning to the merits of this appeal I should make two other comments of a general nature. This is an application for leave to appeal against an interlocutory order. The principles on which such applications proceed are so well known that I need not set them out. I will refer only to the dicta of Malcolm CJ in Wilson v Metaxas [1989] WAR 285 at 294. There is a related issue. The defendant is seeking leave to amend a pleading so as to introduce an additional matter of defence. This Court is not required to form a view on whether the Lange defence, if it were to be pleaded, would succeed at trial. Rather, the task of this Court is to ascertain whether in deciding that the defence as the appellant proposed to plead it was unarguable, the trial Judge fell into error.

The Trial Judge's Reasons and the Grounds of Appeal

17 The trial Judge declined to grant the appellant leave to amend par 8 on two bases. First, his Honour held that the publication was not "a communication on a government or political matter". A small part of the publication was about the work or activities of the ACCC or Professor Fels in is capacity as Chairman, which might constitute a communication on a government or political matter. But that was not enough. The substance or gist or gravamen of the publication was a commentary on the respondent's conduct. His Honour said that it was not enough to attract the defence of qualified privilege that on a particular occasion on which material is published about a person there is also publication of material that on its own might have been regarded as a communication concerning the activities of a government agency.

18 Secondly, his Honour ruled that, even if the occasion for publication was to discuss the activities of the ACCC or its Chairman, the innuendoes of and concerning the respondent could not be regarded as reasonable. The protection of qualified privilege is lost if the publication of the defamatory material is not reasonable.

19 There are, in effect, two grounds of appeal. First, that the trial Judge erred in finding that the argument that the publication is a communication on a government or political matter was untenable. Secondly, that his Honour erred in finding it was unarguable that the criterion of unreasonableness was satisfied in relation to the publication. I will deal with each in turn.

20 It is readily apparent that there are two aspects to the newspaper report. The first concerns the comments attributed to Mr Kent concerning the conduct of Professor Fels. The second relates to the contretemps between BankWest and the respondent. It can be assumed for the purpose of this appeal that the conduct of the Chair of a public body such as the ACCC constitutes "government or political matter". It can also be accepted, for the purposes of the appeal, that the criticism of the respondent by Mr Kent was defamatory. This is the context in which the argument arises whether the publication of the defamatory material is, or more accurately, could be, protected by the Lange defence.

21 The gravamen of the appellant's attack in this area is that his Honour wrongly concluded that the publication was essentially a commentary on the conduct of the respondent and that it was not capable of being regarded as a discussion on the work or activities of the ACCC or Professor Fels in his capacity as its chairman. Counsel for the appellant submitted that the publication was not a commentary on the respondent's conduct. It was important, counsel submitted, to identify the theme of the article. Central to the theme was the claim by the Bank, through Mr Kent, that remarks by Professor Fels implied that the Bank's management condoned the provision of incorrect information about financial packages offered by its competitors. Further, such implications were outrageous because they were based only on the complaint of the respondent. This complaint simply did not justify the remarks made by Professor Fels for two reasons, namely, it was the only complaint lodged and it was part of the sting said to have been perpetrated on the Bank by the respondent.

22 The issue is complicated by the fact that the theme, as enunciated in the preceding paragraph, does not emerge clearly from the minute of amended defence that the appellant submitted to the trial Judge. Paragraph 8 of the minute does not clearly identify the two criticisms that Mr Kent is said to have made of Professor Fels. Nor does the proposed pleading deal squarely with the use in the article of the word "sting". This is quite an important issue because it has previously been found that Mr Kent did not use the word "sting" in the interview with the reporter from the newspaper: International Financing and Investment Pty Ltd v Kent and Another, unreported; SCt of WA (Master Bredmeyer); Library No 970217; 8 May 1997.

23 Counsel for the respondent pressed a different view of the theme of the publication. He said that the substance of the article was that the respondent had embarked on a scheme to obtain a payment of money from the Bank dishonestly, deceptively and unfairly. This manifests itself in the use of the term "sting" in the article. The substance of the article is, counsel for the respondent submitted, not related to Professor Fels at all. It is a separate, unnecessary and independent allegation of serious misconduct against a third party, namely the respondent.

24 It has always been the case that the defence of qualified privilege requires a nexus between the occasion and the impugned material. It is based on an appreciation of the general welfare of society. In publishing material a person cannot go beyond what is legitimately required for the fulfilment of the interest sought to be protected. If the occasion was privileged, the inclusion of some information outside the ambit of the privilege, or irrelevant to the occasion of privilege will not of itself destroy the privilege. Defamatory material will only be protected by the privilege if it is relevant to the matters at the heart of the duty or interest: see Adam v Ward [1917] AC 309 at 349, citing Henwood v Harrison (1872) LR 7 CP 606 at 622.

25 It seems to me that these principles are equally relevant to the species of privilege involved in the Lange defence. The question therefore is whether the references to the conduct of the respondent are relevant, in the appropriate sense, to the comments that relate to the activities of the ACCC or of Professor Fels. It can be put in a slightly different way. Assuming for the moment that the theme as advanced by the appellant is accepted, is it relevant to a criticism of Professor Fels for the allegation to be made that the respondent was involved in a "sting" in accordance with the imputations for which the respondent contends in the statement of claim?

26 This is a value judgment that the trial judge was called on to make and which this Court must now make in assessing whether it should intervene. I have already stressed that the question is simply whether the position contended for by the appellant is arguable. I did not understand the appellant to say that the trial Judge misconceived this position and nor do I think that he did. It is also to be borne in mind that a Court should be slow to intervene at an interlocutory stage in a way that will deprive a party of putting a case that it wishes to put at trial: see Taylor v Jecks (1993) 10 WAR 309 at 319.

27 In my view the parts of the article that refer to the conduct of the respondent on the one hand and which comment on the actions of the ACCC and Professor Fels on the other are quite separate and distinct. It seems to me that a proper reading of the article as a whole compels the conclusion that it was not germane to the section about Professor Fels to make the separate and distinct allegation that the respondent had been involved in a "sting" against the Bank. The latter was not sufficiently connected to the former to make it relevant to the discussions about the appropriateness of the actions of Professor Fels. Accordingly, the impugned statements about the conduct of the respondent were not relevant to the communication about government or political matters. In my view arguments to the contrary are not tenable.

28 I have not been persuaded that the trial Judge was in error in the conclusion he reached on this issue. Accordingly grounds 1 and 2 in the draft notice of appeal could not be made out.

29 In view of the conclusion to which I have come on grounds 1 and 2, the Lange defence would simply not be available to the appellant. Accordingly, it is strictly unnecessary to deal with the issue of unreasonableness. However, I will make a few brief comments on that issue.

30 The trial judge held that the publication of the criticism by Mr Kent in relation to the conduct of Professor Fels concerning the Bank could not reasonably provide an occasion for the publication of material containing imputations against the respondent. This was because the statements about the respondent were not relevant and appropriate to the occasion of the privilege, that is, the communication of comments about Professor Fels.

31 In this sense the two limbs of the appeal are related. It is a question of degree whether the impugned comments are sufficiently related to the occasion to make it reasonable to proffer them in those circumstances. In this case, as I have already said, the two aspects were quite separate and distinct. In my view the trial Judge was right to conclude that in making the comments about the respondent's conduct when the occasion was, purportedly, one of communications concerning the activities of Professor Fels the appellant went beyond the bounds for which the privilege exists in a way that could not be argued to have been reasonable.

32 There is another matter. In par 8(e) of the minute of the proposed amended defence the appellant has said it believed the article to be true and had reasonable grounds for so believing. However, nowhere does it address the issue of the accuracy of the article or of the fact that it refers to a "sting" when that term was not used by Mr Kent.

33 Once again I am not persuaded that the trial judge erred in the conclusion to which he came on the issue of reasonableness. Grounds 3 and 4 have not been made out.

34 It is common ground that in deciding whether leave to appeal should be granted it is necessary for the appellant to demonstrate that:

35 (a) in all the circumstances the decision at first instance is attended with sufficient doubt to warrant it being reconsidered in Full Court, and

36 (b) substantial injustice would result if leave were refused supposing the decision was wrong; Wilson v Metaxas (supra) at 294, State of Western Australia v Bond Corporation (1991) 5 WAR 40, 53 - 57.

37 In this case, the application for leave to appeal and substantive appeal were heard together. I have not been persuaded that the trial judge was in error in reaching the conclusions that he did. In the circumstances, however, I would grant leave to appeal but dismiss the appeal.