Orsborn v John Fairfax Publications Pty Ltd

Background 7 The second plaintiff is aged 53 and was a mortgage broker who, since 1999 until shortly after the publication of the article, had carried on business under the business name AAA Law Mortgages. 8 He had changed his name by deed poll on 8 March 1999 from his family name Geoffrey Michael King Orsborn to Geoffrey Michael King because his first wife "had associates that were doing finance and she did a lot of things that now - later on - I realised that they were wrong and she was also running around and doing lots of other things like borrowing moneys and so forth. So I ended up changing my name." He changed his name not so much to avoid financial liability but "just in the form of reputation." He said he continued to use his full name in relation to documents involving legal issues. 9 He married the first plaintiff, Paris King Orsborn, in December 2001. The first plaintiff worked as a receptionist/assistant at the office of AAA Law Mortgages. 10 John Moran and Marie Leighton owned a number of investment properties. One of these was a unit at Bondi Junction which they had purchased off the plan. The developer had provided $60,000 bridging finance which was due to be repaid on 24 March 2003. John Moran and Marie Leighton proposed to sell the property at auction on 12 April 2003. They needed to pay out the bridging loan in the interim. 11 John Moran and Marie Leighton contacted AAA Law Mortgages. Subsequently a loan application form was sent and completed on 10 March 2003. A conditional loan offer was then received from AAA Law Mortgages on 13 March 2003, signed and emailed back on the following day . A loan for $120,000 for 60 days at a rate of six percent per 30 days was agreed. The mortgage documents were executed by John Moran and Marie Leighton at a solicitor's office on 20 March 2003. It is common ground the $120,000 borrowed belonged to the first plaintiff. 12 That loan was used, in part, to pay out the developer. 13 The Bondi Junction unit did not sell at auction. John Moran and Marie Leighton were unable to refinance their investment properties on terms satisfactory to them. The debt to the first plaintiff was not repaid despite proceedings being commenced by the first plaintiff against them. Ultimately John Moran and Marie Leighton went into bankruptcy on 14 November 2004.

The meaning of the imputation 14 The language of the imputation is unambiguous. It is derived from paragraph 52 of the article. The only noticeable difference in detail between the paragraph and the imputation is that the paragraph specifies that John Moran discovered the lender was the wife of the second plaintiff when the mortgage was registered and he was sued by the first plaintiff. I accept the defendant's submission that it must establish a not insubstantial period of deception by concealment but not necessarily up to the time of registration of the mortgage and commencement of the lawsuit. In any event, the evidence of Mr Moran indicates that he did not become aware of the relationship until that time or subsequently.

Substantial truth 15 The first issue for determination is whether the imputation that the second plaintiff deceived John Moran by concealing that the money for the loan belonged to his wife, the first plaintiff, was substantially true. 16 There are three questions which fall to be determined in respect of this issue:

(a) did the second plaintiff disclose to John Moran that the loan moneys belonged to the first plaintiff who was his wife;

(b) if not, were those facts concealed by the second plaintiff;

Each of these questions is considered separately hereunder.

Did the second plaintiff disclose to John Moran that the loan moneys belonged to the first plaintiff, the second plaintiff's wife? 17 The plaintiffs alleged they directly informed John Moran that the loan moneys belonged to the second plaintiff's wife in that the second plaintiff gave evidence he told John Moran on 14 March 2003 in response to a question "Do you have any lenders?", "Paris, my wife, would be doing the moneys providing the valuations all stack up". The first plaintiff gave evidence that in mid March she said to John Moran when she answered the office phone "Hi John, it's Paris speaking here, Geoff's wife." 18 The first plaintiff also gave evidence that on 7 March 2003 when Marie Leighton rang AAA Law Mortgages she answered the telephone and said to Marie Leighton "I am Paris, Geoff's wife. You need to speak to my husband. I will get my husband to call you." The second plaintiff gave evidence that on or about 11 March 2003 he told Marie Leighton he had lenders and "My wife is one of the lenders". 19 John Moran gave evidence that he did not know until he signed the mortgage documents on 20 March 2003 that the lender was the first plaintiff and that he did not know at that time that the first plaintiff was the wife of the second plaintiff. The second plaintiff never used the name Orsborn in dealings with John Moran. John Moran denied that prior to signing the mortgage documents he had had a conversation with the second plaintiff or anyone else in which he was told the lender was the first plaintiff. He also denied he knew there was a Paris at AAA Law Mortgages until after he had signed the mortgage documents on 20 March 2003. 20 Marie Leighton also denied knowledge on her part. She said she had spoken to the first plaintiff about six times but the first plaintiff never used her full name. 21 By way of corroboration of his evidence, the second plaintiff referred to a letter for further and better particulars dated 27 July 2005 (Exhibit Y), which stated "The plaintiff informed Mr Moran that the loan was to come from his wife" and an affidavit (Exhibit V), sworn 2 May 2007, in proceedings by the first plaintiff against valuers in which he deposed: "Moran: 'Do you have a lender for this loan?' Geoff: 'Yes. My wife Paris King Orsborn is going to lend the money if the valuations stack up.'"

The first plaintiff, in an affidavit (Exhibit HH), sworn on 2 May 2007, deposed that "On or about 7 March 2003 I received a telephone call from Marie Leighton regarding a short term loan inquiry. Leighton: 'My name is Marie Leighton and my husband John Moran spoke with John Dickinson from Magney Mortgages who has given us your contact number. He said you do short term loans. Do you do short term loans?' Paris: 'Yes. My name is Paris King Orsborn. I am Geoff's wife. Can I take a message? He is not available right now.'"

As these assertions were made after these proceedings had commenced, I attach little weight to them save for noting the improbability that in either case the full name "Paris King Orsborn" would have been used and the variance between this reference and the evidence given at the trial. 22 I accept the evidence of John Moran and Marie Leighton on this issue. I prefer their evidence to that of the plaintiffs. There was no apparent reason to reject the evidence of John Moran and Marie Leighton; indeed, there was no serious attempt to attack the credit of Marie Leighton. 23 The evidence of the first plaintiff relates to situations in which she was taking calls in her role as receptionist for the business. It is unlikely in the extreme that she could now remember these conversations or the words used, particularly when so often in her evidence she was unable to remember matters less mundane and when she said in evidence she did not regard the disclosure of the marital relationship as being in any way important. 24 As regards the evidence of the second plaintiff, it is improbable that John Moran would have asked the second plaintiff on 14 March 2003 if he had any lenders, that being at a time after the conditional loan offer document had been accepted by John Moran and Marie Leighton and returned to him. 25 There is also a general credibility problem, particularly in relation to the second plaintiff. The second plaintiff gave evidence that in late 2004 he endeavoured to set up a law document filing service. He said he visited a large number of solicitors in attempting to market the business. He produced a bundle of solicitors' business cards which he said he had obtained on such visits. He gave evidence of his recollection of discussions with each solicitor. In each case he said the solicitor recognised him as having been referred to in the article and was not prepared to do business with him. He gave detailed evidence of his conversation with one particular solicitor. He identified the solicitor as a male person and referred to him as such during his evidence. The solicitor by that name at the firm, and whose name was on the business card, was in fact female. He gave evidence of being rejected by another firm by reason of the article. However, written on the back of the card was the real reason for his rejection: that the solicitor's firm had other people attending to this aspect of their business. The defendant called a number of solicitors who the second plaintiff had claimed to have spoken to and who essentially denied the second plaintiff's evidence, particularly that they had recognised him from the article and refused to deal with him because of it. This evidence illustrated that the second plaintiff was prepared to give evidence of conversations and other matters that were not based in fact. This, coupled with his general demeanour in the witness box, caused me to form an adverse view of his credit. Both plaintiffs appeared to consider where questions in cross examination were heading and to tailor their answers accordingly. Often this meant resiling from answers previously given. 26 The mortgage documents signed by John Moran and Marie Leighton on 20 March 2003 contained the full name of the first plaintiff as lender. In my opinion, this was not sufficient to disclose to John Moran that the lender was the wife of the second plaintiff. John Moran was not aware that there was a "Paris" at AAA Law Mortgages at the time of signing the documents. The second plaintiff had not used the surname Orsborn in dealings with John Moran. The name Geoff King had been selected by the second plaintiff to distance himself from the association between the name King Orsborn and his ex-wife. There was not such similarity in the names as to cause one to conclude there was a relationship between the plaintiffs. Although Marie Leighton was aware there was a "Paris" at AAA Law Mortgages and had a suspicion when she saw the mortgage documents that there may be a relationship between the first and second plaintiffs, she did not mention her suspicions to John Moran until after the mortgage documents were signed. 27 I find that the second plaintiff did not disclose to John Moran, and that John Moran did not know, that the moneys for his loan belonged to the second plaintiff's wife.

Was the fact that the loan moneys belonged to the first plaintiff, the second plaintiff's wife, concealed by the second plaintiff? 28 The Oxford Dictionary defines "conceal" as "to keep from the knowledge of others". The Macquarie Dictionary defines "conceal" as "to hide". 29 The plaintiffs submitted that, even if the Court should find that there had been no disclosure that the loan moneys belonged to the second plaintiff's wife, there was no concealment. 30 The defendant submitted the second plaintiff had concealed that the loan moneys belonged to the first plaintiff and that she was the wife of the second plaintiff. It submitted that conclusion should be drawn essentially from the matters which follow. 31 The first page of the conditional loan offer provided a space near the top of the page for the entry of the name of the lender. In the conditional loan offer sent to John Moran and Marie Leighton there was inserted in that space "TBA c/- AAA Law Mortgages, 332 Pitt Street, Sydney, 2000." "TBA" was accepted to mean "to be advised". 32 The defendant submitted that it would be misleading to insert "TBA" if, at the time of the issue of the document, a firm decision as to the identity of the lender had been made. It contended a firm decision had been made before the issue of the offer document. 33 The second plaintiff gave evidence that "TBA" implied that no final decision had been made as to who the lender was to be, that if a firm decision had been made he would not put "TBA" in there and that if there was a firm lender his or her name would have appeared in there. Later in his evidence he resiled from this position. 34 The second plaintiff denied that any determination had been made as to the identity of the lender before the loan offer was dispatched. He gave evidence that on 11 March 2003 he telephoned SC (a person who, from time to time, had moneys available for loan) and discussed with him lending to John Moran and Marie Leighton. He gave him an overview of the deal and SC indicated he was happy with it. The second plaintiff then gave the first plaintiff an overview of the deal and she indicated she was happy in principle to become a lender. As he then had two lenders in principle and the available funds, the second plaintiff generated a conditional letter of offer which he sent to John Moran and Marie Leighton. The first plaintiff asserted she had been in the office when the second plaintiff rang SC. 35 The second plaintiff gave evidence that he would insert "TBA" as, if he had a number of lenders some of whom dropped out, he would have to redo the letter of offer to correspond with the mortgage documents and by inserting "TBA" this problem was avoided. Twelve loan files of AAA Law Mortgages were produced. In the majority of the conditional loan offers contained therein "TBA" had been inserted in the space for the insertion of the lender's name. Two such offers had the lender's name (SC) inserted in that space. 36 The first plaintiff gave evidence she did not have a discussion with her husband about the possibility of lending $120,000 for a term of 60 days when she knew the loan offer had not gone out. If she discussed anything with him, it was after 14 March 2003. She did not read the document that went out and had no idea if "TBA" was written on it. She denied she was firmly determined as the lender before the loan offer went out on 12 March 2003. She said the valuations on the security properties had nothing to do with her decision to be the lender. 37 The second plaintiff gave evidence SC informed him on 13 March 2003 that he no longer wished to be involved in the loan. The conditional loan offer was accepted by John Moran and Marie Leighton on 14 March 2003 and faxed back to the second plaintiff on that day. 38 The defendant met this evidence by reference to materials and affidavits in other related proceedings. Those proceedings were by the first plaintiff against the valuer and by the first plaintiff against John Moran and Marie Leighton seeking, inter alia, rectification. It referred to an affidavit of the second plaintiff in the proceedings against the valuer (Exhibit V) which appeared to be in the nature of a chronology of events, and in which the second plaintiff deposed: "13. On 12 March, 2003 I had a brief discussion with Paris regarding the loan application received from Moran and Leighton. Paris said: ' I would consider lending the monies subject to the valuations and proof of what the level of the first mortgage is.' 14. A short time afterwards and upon receipt of and perusal of the valuations I had another meeting with Paris and presented the documents received from Moran and Leighton to her. Paris said to me words to the effect of: 'The deal looks all right. I will do it. Can you give instructions to Ghioni…for preparation of Mortgage documents for me as a lender.' … 18. On 12 March, 2003 AAA forwarded to the Defendants its Conditional Letter of Offer for finance for their perusal and consideration… The loan principal was for $120,000.00. It was an interest only loan proposal for a fixed term of sixty (60) days with an interest rate of 8.5% per thirty (30) days reducing to 6% per thirty (30) days and a requirement for prepayment of interest for the term." 39 On the face of it, this established the first plaintiff determined to make the loan on 12 March 2003 before the offer was forwarded to John Moran and Marie Leighton. However, the reference to the receipt and perusal of the valuations is misplaced as the valuations were obtained after 12 March 2003. Such evidence is inconsistent with the evidence of the first plaintiff that the valuations had nothing to do with her decision to be the lender. There was no reference to SC in the affidavit. 40 The defendant also relied upon pleadings and affidavit evidence in the action brought by the first plaintiff to obtain rectification of the mortgage documents by the addition of a further security. 41 The amended statement of claim in those proceedings (Exhibit 19), which was verified by the first plaintiff, stated in para 2C that "On or about 12 March 2003 prior to the Conditional Letter of Offer being sent to [John Moran and Marie Leighton] the [first] Plaintiff had a discussion with [the second plaintiff], [she] advised [him]…she would be prepared to lend $120,000 at a rate of six percent per 30 days for the term of the loan, 60 days, with interest prepaid to be secured over the properties at Bondi Junction, Neutral Bay and Surry Hills. [She] instructed [the second plaintiff] he could forward a Conditional Letter of Offer to [John Moran and Marie Leighton]. In accordance with the usual practice of the [first] plaintiff with AAA Law Mortgages, her name was not on the Conditional Letter of Offer, the lender being identified as 'TBA'. Upon acceptance of the Conditional Letter of Offer signed by the borrowers the name of the [first] Plaintiff was to appear in the mortgage documents to be prepared pursuant to the Conditional Letter of Offer."

The first plaintiff gave the following evidence when her attention was drawn to the document: "Q. If you read paragraph 2C in the ordinary way it reads, then it is true isn't it? A. Well it says the words it says. It's true, yes." 42 In an affidavit filed in those proceedings on 21 July 2004 (Exhibit 17), the first plaintiff said: "On 11 and 12 March 2004 [sic 2003] I had discussions with Mr Geoffrey King of AAA Law Mortgages. I considered the security properties and the fact that the defendants had by letters dated 10 March 2003, a copy of which is annexed hereto marked B1, indicated that they were selling a property at Bondi Junction which would enable repayment of the advance and a letter from Express Loans dated 11 March 2003, a copy of which is annexed hereto marked B2. The writing in the right-hand margin on page 16 and on page 17 was not on the document that I saw. I believe this was inserted by my husband sometime later on. The writing on the letter 'B2' is mine. Having considered all these matters, I determined that I would become the lender in the transaction and advised Mr King of that fact."

The first plaintiff gave the following evidence in respect of this document: "Q. Apart from the error in the first line of paragraph 4, that is 2004 should read 2003, the words in that affidavit are true; right? The words in that paragraph 4 with that minor amendment are true, right? A. Yes." 43 The first plaintiff succeeded in her claim for rectification. The trial judge declared that by operation of the offer of agreement dated 12 March 2003 and accepted on 14 March 2003 the first plaintiff was entitled to security over premises at Neutral Bay. 44 The second plaintiff sought to tender paragraphs 2, 4, 7-14 and 33 of an affidavit of the first plaintiff sworn on 2 May 2007 in the valuers proceedings pursuant to s 108(3) of the Evidence Act, 1995. The tender was opposed save as to paragraphs 4, 13 and 33. In my opinion, having regard to the nature of the cross examination and prior statements of the first plaintiff, the evidence should be admitted and I grant leave, pursuant to s 108(3)(a),(b) for that evidence to be adduced. The tendered material will become Exhibit HH. 45 In Exhibit HH the first plaintiff said she relied on the valuations in agreeing to lend the money. This would be consistent with her not determining to be the lender until after 12 March 2003. However, I attach little weight to these assertions as they were made in the proceedings against the valuers where it was important to stress reliance upon the valuations and also as they were made after the issues in the present proceedings had been joined between the parties. 46 I find that the first plaintiff had determined to be the lender to John Moran and Marie Leighton prior to the conditional offer being sent out on 12 March 2003. In these circumstances, the insertion of the letters "TBA" was misleading as it implied that at the time of the preparation of the conditional loan offer the identity of the lender had not been determined. 47 Marie Leighton gave evidence that on 13 March 2003 she called the second plaintiff by telephone and asked him who was the lender and what did "TBA" stand for. She said the second plaintiff told her he had access to private funds and did not know where the money was coming from at that stage. 48 The second plaintiff gave evidence he did not recall Marie Leighton ever asking him what "TBA" meant although he did recall a conversation with her where he had said "At this stage I am not sure who the lender is. We have access to private funds." 49 I accept the evidence of Marie Leighton. As I have accepted the first plaintiff had determined to be the lender prior to the conditional offer of loan being sent on 12 March 2003, I draw the conclusion that the second plaintiff was concealing the identity of the lender and his relationship with her from Marie Leighton and infer that he was also concealing the identity and relationship from John Moran 50 The second plaintiff used the name Geoff King in signing the conditional loan offer. This appears to be contrary to his alleged practice of using his full name in relation to documents involving legal issues. He asserted, in effect, that he did not regard the offer as of the type he would sign with his full name. I do not draw any inference from him signing the document "Geoff King". 51 I accept the submissions of the defendant as to the existence of fiduciary duties (as discussed in the Law of Agency, G.L. Dal Pont, paras 1.6, 1.28 and 10.9). I also accept there was an agency relationship between the plaintiffs which underscored the need for disclosure and that the nature of that agency was as attested to in Exhibit V, paras 10 and 88, and Exhibit HH, para 4. 52 The second plaintiff accepted he was the agent for John Moran and Marie Leighton during the course of the lending transaction. 53 The second plaintiff had joint financial obligations with his wife, they were signatories to joint bank accounts and the second plaintiff had an interest in his wife's financial wellbeing. In these circumstances, a conflict of interest was created in the event that the loan moneys were provided by the first plaintiff. It was necessary to disclose that fact to the borrowers. It was not wrong or improper or against the law that the broker arranged for the loan to come from his wife provided full disclosure was made. 54 The second plaintiff conceded he had a duty to exclude his own personal interest when acting for John Moran and Marie Leighton but not the interests of his family. However, he conceded he would be upset if he was selling his house and his real estate agent's wife bought it from him without him being informed she was his agent's wife. 55 The second plaintiff's evidence that when acting for John Moran and Marie Leighton as their mortgage broker he did not have to exclude the interests of his wife was, for a man engaged in the business of mortgage broking, a disingenuous answer. I do not accept it. 56 The second plaintiff's manufacturing in the witness box of evidence of the disclosure of the name of the lender and the marital relationship demonstrated a consciousness on the part of the second plaintiff that the appropriate behaviour would have involved the disclosure of the relationship of the plaintiffs and that it was the first plaintiff who was providing the funds. 57 The absence of any express disclosure, given there was ample opportunity for such disclosure to be made, raises the inference that such information was concealed. One opportunity for disclosure was that referred to in [47] above. I consider that the second plaintiff had a motive not to disclose because of a view it was better the borrowers not know his wife was the source of the funds, lest he lose the borrowers. 58 I infer from the whole of the evidence considered above that the second plaintiff concealed from John Moran that the money for his loan belonged to the second plaintiff's wife.

Was John Moran deceived by that concealment ? 59 The Oxford English Dictionary definition of "deceive" is "to ensnare; to take unawares by craft or guile; to overcome, overreach, or get the better of by trickery; to beguile or betray into mischief or sin; to mislead." The Macquarie Dictionary definition of "deceive" is "to mislead by false appearance or statement". 60 John Moran did not know of the relationship. He had a reasonable expectation that he would be informed if such a relationship existed. His evidence was that had he known the true position he would have been concerned and would have tried to find another mortgage broker to see if he was getting the best deal available from the second plaintiff. He was denied that opportunity. I find that he was deceived. Marie Leighton said she would not have gone ahead with the loan if she knew the lender was related to or had a connection with the broker. She would have asked for alternative quotes from another lender. 61 It was submitted for the second plaintiff that this evidence should not be believed because, having had his suspicions aroused following the signing of the mortgage documents, at no stage did John Moran ring the second plaintiff and ask as to his relationship with the first plaintiff. Nor did he make any other inquiry. In April 2003 John Moran and Marie Leighton asked the second plaintiff to arrange a loan of $1.33 million which the second plaintiff did at a rate of 7.7 percent with a large finance company. 62 John Moran gave evidence that he made no inquiry because he believed he was bound by the mortgage once the mortgage documents had been signed and the date for settlement with the developer was very close. I accept that evidence and his evidence generally on this issue.

Conclusion 63 In my opinion, the defendant has established that the imputation was substantially true.

Public interest 64 In London Artists Ltd v Littler [1969] 2 QB 375 Lord Denning MR said: "There is no definition in the books as to what is a matter of public interest. All we are given is a list of examples, coupled with the statement that it is for the Judge and not for the jury. I would not myself confine it within narrow limits. Whenever a matter is such as to affect people at large, so that they may be legitimately interested in, or concerned at, what is going on; or what may happen to them or to others; then it is a matter of public interest on which everyone is entitled to make fair comment." 65 In New South Wales it is not sufficient to show that the content of the publication generally was a matter of public interest. It is necessary for the defendant to establish that there is a matter of public interest and identify it; and to show that that imputation relates to that matter of public interest. There must be a connection between the defamatory imputation and the identified matter of public interest. It is not sufficient that the defamatory imputation appears in the publication that deals with matters of public interest; the imputation must be shown to "relate" to that matter. However, the concept of "relating" to a subject matter is one of considerable breadth - see Fawcett v John Fairfax Publications Pty Ltd [2008] NSWSC 139 at [112]. 66 In my opinion the regulation of the mortgage broking industry, including the defining of brokers' duties of disclosure and the avoidance of potential conflicts of interest, constitute matters of public interest and there is an appropriate connection between the defamatory imputation and those matters of public interest. 67 Accordingly, I find the necessary public interest is established.

Contextual imputations 68 The contextual imputations relied upon by the defendant were as follows: "A. The second plaintiff, in arranging a loan on behalf of John Moran as John Moran's broker, failed to ensure that John Moran knew that the second plaintiff himself stood to benefit from the loan transaction, because the lender of the funds, at high interest rates, was the second plaintiff's wife; B. Alternatively to (A), the second plaintiff acted deceitfully toward John Moran by concealing that the money for his loan belonged to the second plaintiff's wife; C. Alternatively to (B), the second plaintiff acted deceitfully toward John Moran by failing to disclose to him that the money for his loan belonged to the second plaintiff's wife; D. The second plaintiff behaved unconscionably in his dealings, with John Moran as Moran's mortgage broker." 69 As I have concluded the defence under s 15(2) has been successful, it is unnecessary to consider the s 16 defences.

Publication outside New South Wales 70 As truth is a defence in all States and Territories, the claims based on publication outside New South Wales must fail in the light of my prior findings.

Damages 71 In the event the matter goes further, I make the following comments as to damages.

General damages 72 In Jamoo v Nationwide News Pty Ltd [2004] NSWSC 126 Nicholas J set out the following relevant principles as to assessment of damages: "51 Section 46(2) Defamation Act 1974 (NSW) (the Act) provides that damages for defamation shall be the damages recoverable 'in accordance with the common law, but limited to damages for relevant harm'. 'Relevant harm' is defined as 'harm suffered by the person defamed' (s 46(1)(a)). 52 Section 46(3)(a) provides that damages for defamation shall not include exemplary damages, and sub-para (b) provides that such damages 'shall not be affected by the malice or other state of mind of the publisher at the time of the publication complained of or at any other time, except so far as that malice or other state of mind affects the relevant harm'. 53 In Rogers v Nationwide News Pty Ltd [2003] HCA 52, Hayne J, para 60 observed that: 'The three purposes to be served by an award of damages for defamation are identified in the joint reasons in Carson v John Fairfax & Sons Ltd : (i) consolation for the personal distress and hurt caused to the appellant by the publication; (ii) reparation for harm done to the appellant's personal, and in this case, professional reputation; and (iii) the vindication of the appellant's reputation. As pointed out in Carson : the first two purposes are frequently considered together and constitute consolation for the wrong done to the appellant; vindication looks to the attitudes of others'. (Footnotes omitted). 54 His Honour went on to point out (para 67) that assigning a money sum as sufficient to remedy personal distress, hurt and harm to reputation and to vindicate a plaintiff's reputation translates losses which have no market value into amounts of money. He said: '… But in neither defamation nor in other cases of non-pecuniary loss can any standard of evaluation be employed except one that is described in qualitative and therefore necessarily imprecise terms. The damages that may be awarded "are such as the jury may give when the judge cannot point out any measure by which they are to be assessed, except the opinion and judgment of a reasonable man"'. 55 I must also have regard to the requirements of s 46A of the act which provides: '46A Factors relevant in damages assessment (1) In determining the amount of damages to be awarded in any proceedings for defamation, the court is to ensure that there is an appropriate and rational relationship between the relevant harm and the amount of damages awarded. (2) In determining the amount of damages for non-economic loss to be awarded in any proceedings for defamation, the court is to take into consideration the general range of damages for non-economic loss in personal injury awards in the State (including awards made under, or in accordance with, any statute regulating the award of any such damages).'" 73 The second plaintiff gave evidence in relation to the hurt to his feelings caused by publication of the matter complained of. It was asserted that the hurt to the second plaintiff's feelings was increased by reason of his knowledge of the continued availability of the article on the internet. The evidence given by the second plaintiff that the continuing availability of the article on the internet had caused him upset and worry was by assent to a leading question to that effect. It was not persuasive of any significant hurt or distress. No evidence was called identifying any person who had in fact downloaded the article, read it and thought less of the second plaintiff. The second plaintiff also claimed damages for the absence of an apology. However, he gave no evidence of any hurt by reason thereof. 74 While evidence of hurt to the second plaintiff's feelings flowing from the imputation sued upon was minimal, the law presumes he has suffered damage and he is entitled to be compensated for it - Coyne v Citizen Finance Ltd (1990-1991) 172 CLR 211 per Mason CJ and Deane J at 216. 75 The second plaintiff gave evidence that he was feeling depressed (by which he meant sad) during the period from May 2004 to June 2005 and as a result did not get any work during that time and found it very difficult to attend job interviews. However he did not seek medical attention for his condition and was endeavouring by August/September 2004 to establish his new business LawDoc Xpress. 76 Aggravated damages may be awarded to compensate a plaintiff when the harm done to him by a wrongful act was aggravated by the manner in which the act was done - Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118 at 149. The second plaintiff's claim for aggravated damages was limited to a claim for extra hurt and upset suffered by reason of the falsity of the imputation if the defendant failed to prove the imputation was true.

Special damages 77 The second plaintiff claims continuing loss of income at the rate of $35,000 per annum plus increments for inflation and cost of living increases, it being alleged that $35,000 per annum would have been the earnings from his business which it is alleged was ruined by the publication of the article. 78 The business history prior to the publication of the article as disclosed by the evidence was:

(a) The second plaintiff conducted AAA Law Mortgages from 1999 until it ceased business shortly after publication of the article.

(b) In the 2001 and 2002 financial years a large part of AAA Law Mortgages' total turnover was due to the business activities of a consultant, to whom AAA Law Mortgages paid significant consultant's fees and commission. The consultant departed in the course of the 2002 financial year.

(c) In the 2003 financial year the second plaintiff was the only revenue-generating person for AAA Law Mortgages. In that year the gross revenue disclosed in his taxation records was $132,000 and the income before tax $25,000. The second plaintiff suggested he was renovating his home for some part of that year but could not explain why the gross revenue was higher for the December quarter when the renovations were being done than it was for the other quarters.

(d) No evidence was adduced as to the second plaintiff's income in the financial year ended 2004 even though the material was said to be with his accountant.

(e) There was a lack of any satisfactory evidence as to the second plaintiff's likely earnings but for the publication of the article. The evidence indicated AAA Law Mortgages was in decline in 2003 and there was no evidence of the 2004 figures to establish the decline had been arrested.

(f) The second plaintiff gave evidence that his seeking of accreditation with the Mortgage Industry Association of Australia (MIAA) was ruined as a result of the publication of the matter complained of. In circumstances where the second plaintiff has never had any contact with the MIAA or even made application for accreditation, his assertions concerning the impact of the matter complained of, let alone publication of the imputation, on his standing with the MIAA can be afforded little weight.

(g) He had proposed as at February 2004 to commence trading under the name of Mortgage Point and phase out AAA Law Mortgages. He had secured street front premises at Rozelle from which he proposed to conduct that business. 79 The business history since the article as disclosed by the evidence was:

(a) The second plaintiff was able to engage in the promotion of LawDoc Xpress by August/September 2004.

(b) Since the article was published he had worked for a company Annexus BT in a sales position for approximately three months in 2005. He was then employed by Sunshine Pacific as a business development manager earning $1000 a week for eight weeks. He was then employed by Jandson Homes from 25 July 2007 as a sales consultant with a base salary of $45,000. That employment terminated on 4 February 2008. He is presently completing a Diploma in Finance course at Bankstown TAFE. He has also attempted, unsuccessfully, to start new businesses, namely Mortgage Point, LawDoc Xpress, Invest for Lifestyle and Injuiced.

Causation 80 A major problem for the second plaintiff, in my opinion, is the question of causation. 81 A judge must ascertain the actual defamation and assess damages in relation to the injury caused by that defamation. It follows that the second plaintiff's hurt from the belief or knowledge that a person understood the matter to convey a meaning which is not open, or is substantially different from the found imputation, is not compensable - see Selecta Homes & Building Co. Pty Ltd v Advertiser - Weekend Publishing Co. Pty Ltd [2001] SASC 140 at [144] and Jamoo at [64]. 82 The most visible and central message from the article is the criticism it makes of the excessive interest rates charged by some "non conforming" lenders and/or mortgage brokers, the consequences of those interest rates and the need for regulation of the industry. The text of the article confirms its central message in para 47 where it is noted that there is no suggestion that AAA Law Mortgages broke the law "only that it steered him [John Moran] into a loan at usurious interest rates". 83 The second plaintiff specifically recounted instances of people speaking to him about the article. In none of those recounted conversations had the person said anything about the second plaintiff having deceived John Moran by concealing that the money for his loan belonged to his (the second plaintiff's) wife. Those reactions either were general comments about the article as a whole or focussed specifically on the concept of the second plaintiff "having ripped people off". 84 Paragraph 52 lacks prominence and impact. It is an incidental imputation arising from the publication. It was not among the numerous imputations pleaded by the second plaintiff in either his statement of claim or in the amended statement of claim. The imputation emerged for the first time upon the filing of the further amended statement of claim. The second plaintiff said in evidence the imputation was raised when he "reread the article", which suggests strongly that the imputation made little or no impression on his mind when the article was published. 85 The only evidence in the second plaintiff's case concerning the specific effect of the publication of the imputation was the unelaborated assent of the second plaintiff to his counsel's question "Could you just answer this question yes or no. Has the publication as an imputation caused you any anxiety, worry, depression, and upset, if you could just answer yes or no?" 86 The second plaintiff did not seek to adduce through the first plaintiff any evidence of the impact which the imputation or any part of it is said to have had upon the second plaintiff.

Conclusion 87 The award of general damages is ultimately a matter of impression, if the second plaintiff was entitled to a verdict, taking into account the matters to which I have referred, I would have awarded him $30,000 for all aspects of general damages, including the interstate and territorial defamations. 88 The second plaintiff's business was faltering before the article was published and it was unclear what the second plaintiff's prospects would have been had the article not been published. It can be accepted the article had an impact upon the business of AAA Law Mortgages. However that impact upon his business would have been the result of other aspects of the article rather than the imputation. The second plaintiff would have had a period when his work capacity was impaired. This was primarily between the date of the publication of the article and when he commenced to market LawDoc Xpress. Thereafter, in my opinion, had he wished he would have been able to return to the workforce and earn income commensurate with the loss he has claimed. I would have allowed $10,000 for some minimal impact of the imputation upon his work capacity. I would make no award for exemplary damages in those States or Territories where such a claim is available. The second plaintiff would have been entitled to interest on the verdict of $40,000. 89 I make the following orders:

1. Verdict and judgment for the defendant against the second plaintiff.

2. The second plaintiff to pay the defendant's costs. ********** ANNEXURE A

PARIS KING ORSBORN & ANOR v JOHN FAIRFAX PUBLICATIONS PTY LTD 20228/04

3 Once a mortgage broker could get almost anyone a loan. Now instant property millionaires can become overnight bankrupts - yet the industry carries on with virtually no regulation. Ben Hills investigates.

4 "With hindsight," sighs John Moran, rummaging through cartons of documents to find a copy of the mortgage, "that was the tipping point, the time we should have walked away from the deal."

5 It was February last year, and the young information technology whiz-kid and his pregnant partner, Marie Leighton, were due to come up with the money for a smart two-bedroom "sub-penthouse" in a new block of apartments in Bondi Junction, not far from Sydney's iconic beach.

6 They had agreed to pay $660,000 for the place, sight unseen, off the plan the previous year, signed a deposit bond and arranged to borrow 90 per cent of the money on a first mortgage with their bank, the National.

7. But as the date for the legal settlement drew closer, Moran and Leighton realised they were about $60,000 short and unable to raise the rest of the money from a conventional lender like a bank or building society.

8 It was then they turned to a mortgage broker to find them alternative finance - what's known in the trade as a "non-conforming loan", high-priced money from lenders with an appetite for risk.

9 That decision would not only cost them their life savings and help break apart their relationship, but now threatens them both with bankruptcy.

10 Because the loan they have defaulted on is costing them a staggering 102 per cent a year - about $300 a day - at a time when normal mortgage rates are around 6.5 per cent, and even people with poor credit records and little income can borrow for a tenth of that.

11 Karen Cox gulps audibly down the phone when I tell her the figure.

12 "I am honestly horrified," she says. "I have never heard of that rate of interest and that level of fees before."

13 Cox probably knows more about the seamy underside of Australia's $150 billion a year property lending industry than anyone. She is the co-ordinator of the Consumer Credit Legal Centre, which last year produced a definitive 141-page report highly critical of mortgage broking for Australia's corporate watchdog the Australian Securities and Investments Commission. 14 That report documents the exponential growth of the industry, the high interest rates and fat trailing commissions, and the near-total lack of regulation of the brokers or consumer protection for the borrowers.

15 "While prices were rising, the true cost of these loans was hidden - everyone was a winner," she says. "But now prices are coming down, we are going to be seeing a lot more cases like this."

16 At the time of the report, the industry had come from nowhere to control nearly a third of the home lending market during the great gung-ho property boom of 1996 to 2003. Since then, Cox estimates that almost 50 new brokers have set up shop every week; today there are anywhere from 15,000 to 20,000 (no one even knows the exact number) around the country.

17 In every suburb of Sydney, they have hung out their shingles, offering dream deals to people desperate to jump on the property bandwagon. Check the advertising in the tabloid newspapers in every capital.

18. "Bad Credit - Good News. We Can Do What The Banks Can't," says one. "Bank Refused You? Behind In Your Mortgage? We're Here To Help," offers another. In Europe, Britain, Canada and even laissez-faire America, where state and federal laws prohibit "predatory" loans, the industry is subject to government regulation.

19 But not in Australia. Brokers here are not controlled by ASIC and can exploit loopholes to put themselves beyond the reach of even the states' Uniform Consumer Credit Code.

20 This, then, was the jungle John Moran and Marie Leighton walked into.

21 Looking through the ASIC report on the industry, Moran says: "It's pretty amazing - just about everything they point out there that can go wrong did go wrong for us."

22 In the mid-1990s Moran, now aged 40, and Leighton (also an IT worker) came to Australia from New Zealand looking to cash in on the high-tech boom.

23 And for a while it seemed they had the magic touch. At one stage Moran was earning $250,000 a year and Leighton was on a $125,000 package. They were awash with cash, and like so many Australians "looking for some tax-effective way to invest our surplus for the future…negative gearing seemed the way to go."

24 "I was the property guru, John looked after the finances," Leighton says.

25 In 1998, they bought their first investment property, a bedsit in Neutral Bay, for $220,000.

26 Then a one-bedroom apartment came up in an art deco restoration in Surry Hills called Valentinos which set them back $290,000 - a good deal, because with it came a parking space on a freehold title. In June 1999, still on a roll, they splashed out $351,000 on a three-bedroom villa in Gladesville. This was to be the family home (the couple has three children).

27 But property prices were still booming, and they sold it for $475,000 less than a year later to buy an apartment on the Gold Coast.

28 Interest trap…John Moran on the balcony of his Bondi Junction investment property, for which he sought a non-conforming loan.

31 'While property prices were rising, the true cost of these loans was hidden - everyone was a winner."

33 That apartment - on the 20th floor of a tower block called Pacific Views, almost on the sand at Main Beach - turned out to have a poorer return than they had expected, but once again when they came to sell it they found they had made a decent profit, about $120,000 in two years.

34 Up to this point, they had used deposit bonds - borrowing the deposit for off-the-plan units - and borrowings from a conventional lender, National Australia Bank.

35 But then the apartment in Bondi Junction came along, and things began to go pear-shaped for the would-be property tycoons.

36 In August 2002, Moran lost his lucrative job with Hewlett-Packard. He found other work in the IT industry, but that bubble had burst and he had to take a serious haircut on the salary. Then Leighton fell pregnant again - she had the baby early last year - and with the pressure of that and their financial problems, had a breakdown. She has been unable to work since.

37 When they were unable to settle on the Bondi Junction apartment, they first got temporary finance from the developer, and were then steered to a mortgage broker named AAA Law Mortgages. By then, they needed about $100,000 to complete the purchase, pay their lawyers and pay off some credit-card debts Moran had racked up. They ended up borrowing $120,000 in March last year, which included a fat commission for AAA.

38 Before we go any further, it's important to note that, in the absence of any government concern, the mortgage broking industry has been attempting to regulate itself. The main industry body is the Mortgage Industry Association of Australia, comprising brokers, bankers and other lenders.

39 The MIAA says it believes government regulation is the ultimate answer. But until that happens - a discussion paper is now circulating among federal and state consumer affairs and fair trading ministers - it has been trying to improve standards among its 7500 members.

40 You don't have to look far to see the need for improvement. Mike Barrett, Macquarie Bank's head of mortgage operations, runs a $12 billion book of thousands of property loans, 90 per cent of which are negotiated through brokers. He is also on the MIAA's council.

41 He says in recent times the bank has detected more than 30 cases of fraud among brokers it dealt with - mostly mis-stating income or employment on loan applications from borrowers who do not fit the bank's lending criteria. He says he has taken three cases to the police - but they took no action "because the fraud wasn't big enough, or it didn't fit their criteria".

42 Barrett says he would be surprised if other lenders, particularly so-called low-doc lenders who require less evidence of repayment capacity, were not being harder hit - particularly as there is relentless pressure on lenders to offer "one hour approvals", where the application may be processed electronically and not checked by a human being until later.

43 According to a report by the Australian Prudential Regulation Authority, each Australian bank has stopped dealing with an average of 70 brokers in recent years because of malpractice. However, their names and the nature of their transgressions are not made public, and there is nothing to stop them continuing to do business.

44 Among the case histories of fly-by-night brokers and dodgy practices collected for the ASIC report is one of a man who lost his licence as a financial adviser for stealing his clients' money. He simply switched to mortgage broking, where no licence is required.

45 The MIAA has supported the establishment of a consumer credit ombudsman with power to mediate claims - though only up to $100,000. A firm of private investigators has been contracted to investigate complaints and a tribunal set up to discipline members who stray from the association's code of conduct, which covers such matters as disclosure of commissions, training of brokers (at present none is required) and dispute resolution. But the association's chief executive, Phil Naylor, admits that all this has been seen as a toothless tiger by victims of unscrupulous brokers because the rules apply to fewer than half of Australia's brokers who are members of the association - and the sole sanction is expulsion from the association.

46 Only now is the MIAA planning to "name and shame" the very first naughty broker it has expelled in 22 years.

47 There is no suggestion that AAA Law Mortgages, which arranged John Moran's loan, broke the law - only that it steered him into a loan at usurious interest rates. The business is now located in Rozelle, in Sydney's inner west, and is owned by a 49-year-old Singapore-born man named Geoffrey Michael King-Orsborn, who also uses the name Geoff King. Contacted by phone, King-Orsborn refused to comment and hung up. He did not respond to a fax inviting his comments.

48 AAA advertises that it can give "one-hour approval" for loans, without high brokerage fees, to desperate borrowers, including people in arrears with their mortgages, people who have writs or judgements against them, people who are bad credit risks, even those with the "sheriff at the door".

49 When Moran went to King-Orsborn for a loan - it was all done by phone and fax, Moran never met him or went to the AAA office - he was offered $120,000 (which included more than $10,000 in expenses and commissions) at 6 per cent a month (72 per cent a year), rising to 8.5 per cent a month (102 per cent a year) if he defaulted on the loan, secured by unregistered second mortgages over the apartments at Neutral Bay, Surry Hills and Bondi Junction.

50 But that was only a temporary loan, for two months; before then, King-Orsborn said he would organise a permanent mortgage on more favourable terms. That offer, when it came, was at 9 per cent annual interest (still considerably over the odds), and it carried an extraordinary $70,000 in "loan expenses" and "brokerage" - 10 times the industry average of 0.5 to 0.7 per cent.

51 Moran said "thanks, but no thanks" to this offer, and defaulted on his repayments to AAA.

52 It was then - when they registered mortgages on his properties and sued him in the Supreme Court for the $181,000 to which the loan had grown - that Moran discovered the real lender. The money belonged not to a bank or other financial institution but to Paris King-Orsborn, the broker's wife.

53 Moran says he has made several offers to negotiate a settlement, which have been rejected.

54 He is facing the prospect that if he cannot overturn the AAA mortgages, his three highly mortgaged apartments, with a book value of about $1.3 million, may be worth less than nothing to him.

55 He would have no alternative but to declare bankruptcy.

56 Phil Naylor, while sympathising and conceding the AAA interest rate is "a rip-off", says that because the broker is not a member of the industry association, there is nothing he can do.

57 And because Moran was required to sign a declaration that it was a "business loan", he can't interest the Office of Fair Trading.

58 His only hope is to fight the case in court - he is claiming that the transaction is "unconscionable". But his money is running out, and his attempt to sell the Bondi Junction property failed when the highest bid at auction was less than he paid for it.

59 For its part, AAA Law Mortgages seems determined to pursue its claim.

60 In a letter, King-Orsborn accused Moran and his partner of misleading him and said: "At no time has Geoff King or AAA Law Mortgages acted unconscionably in their dealings…the allegations [you] are making have no substance and in my opinion [have been] fabricated to hide [your] negligence avoiding [your] obligations to a mortgagee."

61 Marie Leighton, struggling to come to terms with the fact they may lose everything, still insists that the Bondi Junction property that brought them undone was a good purchase. In five years, it will be worth $1 million, she says.

62 Sobbing over the phone, she says: "We were two hard-working, successful people. We are educated, smart, we pay our taxes, and for the past seven years we have invested in property to provide a future for us and our children.

63 "Now I see it all crumbling in front of me… We know we owe money, but not this amount."

64 Bondi bind…John Moran couldn't sell his flat for enough. ---------------------

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