Packer v John Fairfax Publications Pty Ltd

LEGISLATION CITED : SCR Part 67 Rule 12A Trade Practices Act 1974

CASES CITED : Cowan v John Fairfax Group Pty Ltd, unreported, Levine J, 20 August 1993 Mirror Newspapers Ltd v Harrison [1982] HCA 50; 149 CLR 293

James Douglas Packer - Plaintiff PARTIES : John Fairfax Pubkications Pty Ltd - 1st Defendant Anne Lampe - 2nd Defendant (matter numbered 20328 of 2005)

COUNSEL : B McClintock SC - Plaintiff G O'L Reynolds SC - Defendants

SOLICITORS : Gilbert & Tobin - Plaintiff Banki Haddock Fiora - Defendants

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION DEFAMATION LIST

20324/05 20328/05 James Douglas Packer v John Fairfax Publications Pty Ltd

Proceedings numbered 20324 of 2005: 1 HER HONOUR: In proceedings numbered 20324 of 2005, filed on 29 September 2005, the plaintiff claims damages for defamation. He alleges that, by publication in a daily newspaper, the Sydney Morning Herald on 27 September 2005, and also on the internet on the same day, the defendant published four specified imputations, each of which defamed him. He relies on the natural and ordinary meaning of the words published, and also pleads, alternatively, that, by reason of extrinsic facts known to some readers, the words conveyed the defamatory imputations to those readers (true innuendo). 2 By notice pursuant to SCR Part 67 Rule 12A, the defendant objected to each of the imputations. It argued that three of the imputations are incapable of being conveyed by the matter complained of, that the same three imputations as pleaded are defective in form, and that the fourth is incapable of being defamatory. It seeks an order that paragraphs 4 (pleading that the words published in their natural and ordinary meaning conveyed the imputations alleged) and 5 (pleading true innuendo) of the statement of claim be struck out. 3 For the purposes of the present judgment only, publication and other factual matters may be assumed.

the matter complained of 4 The publication of which the plaintiff complains appeared as a news item on page 1 of the Sydney Morning Herald, under the headline: "The day Packer told me: We'll wipe you out".

The article which followed purported to report on litigation then taking place in the Federal Court of Australia. Under the headline was a photograph, identified in a caption as that of "Channel Seven's Kerry Stokes", who was later said to be the executive chairman of (television) Channel Seven. Underneath the photograph, in large white type on a black background, was the following: "'I've come to tell you that we're going to take the AFL rights off you. We're all going to get together to take those rights. We don't really want to do it but News are making us.'"

This passage was in single quotation marks. Underneath it, in slightly smaller type, was the following: "Kerry Stokes's version of what James Packer told him". 5 In the body of the news item appeared the following presently relevant passages: "James Packer has emerged as another key suspect in the developing drama of who killed C7, the pay TV channel once run by the 7 Network. … Mr Stokes recalled a meeting at his Sydney home in December 2000 when Mr Packer had said: 'I've come to tell you that we're going to take the AFL rights off you. We're all going to get together to take those rights.' … C7, which had held the AFL rights, closed down in May 2002. … According to Seven, News wanted to create monopolies for its half-owned pay TV sports channel Fox Sports and the pay TV retailer Foxtel, of which it owns 25%. … PBL [Publishing and Broadcasting Limited, identified earlier as the owner of the Nine Network] was apparently not the instigator, however. 'We don't really want to do it but News are making us,' Mr Stokes recalled Mr Packer saying about the AFL bid." 6 There was more in the item, to which it will later be necessary to make reference. It is apparent from a reading of the whole of the item that it was part of sequential reporting of the litigation mentioned, and assumed in the reader some familiarity with the nature and history of the proceedings, and the individuals and companies named.

Both in the matter complained of, and in argument, Publishing and Broadcasting Ltd was frequently referred to as "PBL". I will adopt the abbreviation. 7 I will deal with each of the criticisms of each of the imputations in turn. 8 In paragraph 4 of the statement of claim the plaintiff pleads that the publication in its natural and ordinary meaning conveyed four defamatory imputations. The four imputations pleaded in paragraph 4 are: "(a) that the plaintiff was prepared to unlawfully use the market power of Publishing and Broadcasting Limited to wipe out (eliminate) a competitor; (b) that the plaintiff had made a threat to Kerry Stokes that he would destroy him and/or his company; (c) that the plaintiff was prepared to breach those Australian laws which encourage competition by destroying ('wipe you out') a competitor; (d) that the plaintiff was a key suspect in the destruction of C7, the pay TV channel run by 7 Network." 9 In paragraph 5 the plaintiff claims, alternatively, that each imputation was conveyed to recipients of the matter complained of who had knowledge of certain specified extrinsic facts and circumstances. The facts and circumstances were particularised as:

(1) that the plaintiff was at all material times the Executive Chairman of PBL; (2) a wholly owned subsidiary of PBL has a 25% ownership interest in Foxtel; (3) in the proceedings the subject of the matter complained of, the 7 Network and other companies associated with Kerry Stokes had sued, amongst other parties, PBL for breaching the provisions of the Trade Practices Act 1974 by engaging in anti-competitive conduct including, specifically, aiding and abetting Foxtel in a misuse of market power. 10 During the course of argument, paragraph 5, but not the particularisation of the facts and circumstances thereto, was redrafted in recognition of defects in the way it was previously formulated. 11 Originally, paragraph 5 of the statement of claim was pleaded as follows: "In the alternative to paragraphs 4(a) and (c) above [i.e. imputations 4(a) and (c)], if it is found that the facts particularised below were not part of the general knowledge of the community nor matters of public notoriety, then the plaintiff says that each of the imputations pleaded in paragraphs 4(a) and (c) above were conveyed to the ordinary reasonable reader by reason of the asserted facts." 12 The second half of this paragraph is, on its face, a pleading of a true innuendo, and it is conventionally followed by the particulars of extrinsic fact, said to be known to some recipients of the matter complained of, which could convert an otherwise innocuous publication into a defamatory one in the minds of those recipients. However, the first half of the paragraph is not apposite to such a pleading and is, in my view, quite mysterious. After hearing argument, it appeared to me that it was intended to bolster the plaintiff's claim as to the natural and ordinary meaning of the contents of the matter complained of, and its capacity to convey the imputations pleaded. So to plead is, obviously, quite inappropriate. 13 That that was the intention of the pleader appears to be confirmed by the plaintiff's response to the defendant's Rule 12A Notice. 14 I accept that facts that are part of the general knowledge of the community or matters of public notoriety may be factored into the evaluation of whether the matter complained of is capable, in its natural and ordinary meaning, of conveying the defamatory imputations pleaded. Eventually, after a good deal of argument, senior counsel for the plaintiff sought leave to amend the opening part of paragraph 5 to read: "In the alternative to paragraphs 4(a) and (c) above, the plaintiff says that each of the imputations pleaded in paragraphs 4(a) and (c) above were conveyed to such persons who had knowledge of the following facts."

The transcript of the argument does not make plain that leave was granted to make that amendment. In case it is not clear, I now grant the necessary leave.

imputation (a): that the plaintiff was prepared to unlawfully use the market power of Publishing and Broadcasting Limited to wipe out (eliminate) a competitor

(i) capacity: 15 On behalf of the defendant it was argued that, for three reasons, the imputation was incapable of being conveyed by the matter complained of. The reasons advanced were identified as: "(a) The element 'unlawfully' is not present. (b) The element 'use the market power of PBL' is not present. (c) The element 'competitor' is not present." 16 Although, as I have indicated above, it was implicit in the item that the reader had some familiarity with the course of the proceedings to which it referred, the issue of capacity to convey pleaded imputations (in the natural and ordinary meaning of the matter complained of) must be determined solely on the basis of what is contained in the matter complained of (in the light of any notorious or generally known facts). 17 The oral argument put on behalf of the defendant in this respect was this: "First … 'market power' … is nowhere referred to. … Secondly [as to market power of PBL], … there is no indication in the article that Mr Packer controls PBL or even that he holds a position there, or is in a position to wield PBL's market power. ...

Thirdly … 'unlawfully'. That is not mentioned; there is no statement that Mr Packer acted unlawfully. There is no statement that PBL acted unlawfully. There is not even a statement in there that Mr Packer or PBL are a defendant in these proceedings.

With the word 'competitor', … there is no statement that Mr Packer is a competitor … it is not said that Mr Packer is a competitor of anyone and it is not said even that PBL is a competitor of anyone." 18 In support of the imputation, senior counsel for the plaintiff pointed to the words "we'll wipe you out", "key suspect", "billion dollar damages suit"; a reference to damages claimed against rivals of Mr Stokes; a reference to an intention (said to have been expressed by a different person) to destroy C7 (identified in the first substantial paragraph as a pay TV channel once run by the Seven Network); a reference to an intention to create monopolies, which, the argument ran, could be attributed to the plaintiff or PBL; and a suggestion that, although PBL was not the instigator of the plan, it was implied that it was a participant. 19 I am unimpressed with the argument that the words "unlawfully", "market power of PBL", and "competitor" are not specifically used in the item. The whole point of pleading imputations is to draw from the matter complained of a defamatory imputation which may not be explicit. 20 The tone of the article is to convey an accusation of unlawful conduct in competition between rival media organisations. This emerges, perhaps most clearly, from the passage which appears under the photograph, and which is repeated in the substance of the item, which attributes to the plaintiff a statement made to Mr Stokes that "we" were going to take the AFL rights, that "we're all" going to get together to take them; from the use of the words "key suspect"; from the use of the words "designed to destroy C7". Alone, perhaps this may be construed as tough but legitimate competition in a competitive business environment. But I am concerned with the capacity of the matter complained of to convey the imputations pleaded. In my opinion, as I have indicated, the tone of the article, with particular reference to those passages I have mentioned, is capable of conveying unlawfulness. 21 I am not, however, satisfied that the article is capable of conveying that part of the imputation that asserts that this would be done by the use of PBL's market power. The item is unspecific as to the power proposed to be used. In so far as the imputation includes the intention to use market power to achieve the stated purpose it will be disallowed. I will grant leave to amend. 22 That leaves the question of whether the element of "competitor", that part of the imputation that identified Mr Stokes as a competitor of the plaintiff, is capable of being conveyed. I am of the view it is so capable by reason of what is contained in the second paragraph. There Mr Stokes is said to have "pointed the finger at his opposite number" at PBL. This, in my opinion, is sufficient to identify the plaintiff and Mr Stokes as competitors. 23 I have concluded that imputation (a) requires some amendment, in the manner I have suggested, but is otherwise capable of being conveyed.

(ii) form: 24 Three criticisms are made of this imputation as to form. They are: "(a) The use of 'wipe out (eliminate)' is ambiguous and embarrassing. (b) The notion 'was prepared to breach' (sic) is ambiguous and vague and lacks the requisite degree of precision. (c) The split infinitive 'to unlawfully use' is embarrassing." 25 The first complaint must be upheld. The task of a pleader in defamation is to capture the act or condition said to be attributed by the matter complained of to the plaintiff. Providing a translation within the framework of the imputation is inappropriate. 26 In oral argument senior counsel for the defendant argued that the phrase "was prepared to …" is ambiguous and unclear. He proposed three possible meanings: "willing to", "has made preparations", and "has done in the past". He said: "To say of somebody who is a person who is prepared to murder his own father, it means that he murdered him." 27 I do not accept this. A person may be prepared to do something without having done it. 28 There is, however, some merit in the proposition that "prepared to" might mean either "willing to" or "has made preparation to", but that is to take the imputation in the abstract and without regard to the context in which it appears. However, recourse to the context does not cast any further light upon which meaning should here be attributed to the words. Sometimes, an apparent or potential ambiguity in an imputation may disappear when regard is had to the matter complained of. That is not so in this case. In my opinion this criticism is valid. If the plaintiff wishes to pursue an imputation of this kind, he will have to reformulate it to eliminate the ambiguity. 29 It is the third of the defendant's criticisms that strikes a chord in this heart. The plaintiff will be given leave to amend the imputation to remediate the split infinitive.

imputation (b): that the plaintiff had made a threat to Kerry Stokes that he would destroy him and/or his companies

(i) capacity: 30 The argument advanced on behalf of the defendant was that the element "threat" is not present in the matter complained of. 31 I reject this. The factual assertions made in the matter complained of, in the third, fourth and fifth paragraphs, were these:

(i) that the plaintiff told Mr Stokes that: "… we're going to take the AFL rights off you. We're all going to get together to take those rights.";

(ii) that the same month the Australian Football League and the National Rugby League awarded rights to broadcast matches on pay TV to two named media organisations;

(iii) that C7, which had held the AFL rights, closed down in May 2002. 32 In the seventh paragraph reference was made to another person, also identified as a media proprietor, organising bids for the football codes designed to destroy C7. This language was not attributed to the plaintiff in the matter complained of. However, the plaintiff was accused of telling Mr Stokes that he would not "be against" that media proprietor when it came to getting the NRL rights. 33 The Macquarie Dictionary (revised edition) 1985 contains the following definitions of "threat": "1. a declaration of an intention or determination to inflict punishment, pain or loss on someone in retaliation for, or conditionally upon, some action or course; menace. 2. an indication of probable evil to come; something that gives indication of causing evil or harm." 34 I accept that there is nothing in the matter complained of which could convey an imputation that the proposed course of action attributed to the plaintiff was in retaliation for or conditionally upon some action or cause undertaken by Mr Stokes. If the first meaning of "threat" were the only meaning, I would agree that the matter complained of is incapable of conveying that imputation. 35 However, the matter complained of is clearly capable of conveying an indication of probable evil to come or of causing evil or harm to Mr Stokes. The matter complained of is capable of conveying imputation (b).

(ii) form: 36 The criticism made as to form arises out of the use of "and/or". 37 In Cowan v John Fairfax Group Pty Ltd (unreported, Levine J, 20 August 1993) Levine J said: "The use of 'and/or' is embarrassing and amounts in effect to two imputations rolled into one."

But that was in relation to an imputation pleaded in the following terms: "That the plaintiff perverted the course of justice by concealing and/or giving false evidence in court." 38 That was a much clearer case. Two alternative (or cumulative) courses of conduct were said to be attributed to the plaintiff: concealing evidence and giving false evidence in court. 39 That is not the case here. The plaintiff has the task of translating what is published by the defendant into the imputations he claims have been conveyed. The precision with which a plaintiff is able to do this depends upon the clarity with which the matter complained of is expressed. There are occasions where it is the publisher who leaves the nature of the accusation ambiguous or unclear. Here, in the matter complained of, there is attributed to the plaintiff words given in direct speech, in which Mr Stokes is referred to as "you"; but this does not make clear whether the plaintiff is said to have been directing his remarks to Mr Stokes in his individual capacity, or as the owner or controller of a corporation or corporations, or both. 40 I do not think the defendant will have any difficulty in meeting this imputation framed as it is. I will permit this imputation to stand.

imputation (c): that the plaintiff was prepared to breach those Australian laws which encourage competition by destroying ('wipe you out') a competitor

(i) capacity: 41 Two issues are raised in respect of the capacity of the matter complained of to convey this imputation. The defendant argued: "(a) The element 'to breach those Australian laws which encourage competition' is not present. (b) The element 'competitor' is not present." 42 The second of these can be disposed of in the same way, and for the same reasons, as the same complaint which was made in respect of imputation (a). 43 There is, however, more substance in the first complaint. There is no reference in the matter complained of to any specific laws, or class of laws, and no reference to anything from which it could be inferred that the plaintiff, in order to achieve the goals attributed to him, intended to do so in breach of any specific class of laws. 44 This imputation is not capable of being conveyed. It will be struck out. It is therefore unnecessary to consider the complaints as to form.

imputation (d): that the plaintiff was a key suspect in the destruction of C7, the pay TV channel run by Seven Network 45 The complaint made about this imputation is that it is not capable of being defamatory. The argument that was put is that what was attributed to the plaintiff is no more than the rough and tumble of competitive business. Senior counsel went so far as to submit that there is a strong argument that such activity is "thoroughly praiseworthy in a businessman" in competition with another company. 46 In my opinion the matter complained of goes much further than attributing to the plaintiff vigorous competition in the media business world. Again, the words "key suspect" are material. So is language such as "killed C7", "destroy C7", and "pointed the finger". 47 The tone of the matter complained of is such that a reasonable reader may well have thought less of the plaintiff as a result of what was attributed to him. I will not interfere with imputation (d).

Proceedings numbered 20328 of 2005: 48 In proceedings numbered 20328 of 2005, filed on 30 September 2005, the plaintiff claims damages for defamation arising out of publication in the Sydney Morning Herald of 29 September 2005, and also on the internet on the same day. In paragraph 5 he alleges that these publications, in their natural and ordinary meaning, conveyed four imputations, each of which defamed him. It was subsequently made clear that the imputations numbered 5(a) and 5(c) are intended to be alternative to one another, as are the imputations numbered 5(b) and 5(d). 49 By Notice pursuant to SCR Part 67 Rule 12A, the defendant challenged each of the imputations, asserting that none is capable of being conveyed by the matter complained of, and raising criticisms as to the form of each. 50 The article appeared in the Business section of the newspaper, under the headline: "Packer man: One.Tel needed cash"

As with the matter complained of in proceedings numbers 20324 of 2005, the matter complained of is published as a news item, and refers to court proceedings, this time proceedings said to have been brought in this court by the Australian Securities and Investments Commission ("ASIC") against "former One.Tel chief Jodee Rich" and a Mark Silbermann, said to have been the former chief financial officer of One.Tel. As in the 20324 of 2005 proceedings, the item gives the impression of being one of a continuing series of articles purporting to report the litigation, and assumes in the reader a level of knowledge and of familiarity with the subject matter. A small photograph captioned as being the plaintiff accompanied the article. The caption identified the plaintiff , and posed the question: "… how early did he know the worst?" 51 A separate box was headed: "Ringing up the charges". 52 The body of article commenced with the following: "James Packer, chairman of Publishing and Broadcasting Limited and a former director of telecom One.Tel, was likely to have known as early as November 1999 that One.Tel was running short of money and needed a cash injection. That was 18 months before the company collapsed, at the end of May 2001." 53 The following relevant passages also appeared in the article: "ASIC is seeking declarations that One.Tel was trading while insolvent in the three months before it collapsed and wants Mr Rich and Mr Silbermann to pay compensation and be banned from serving as company directors. … Then Mr Williams [Mr David Williams, SC, counsel for Mr Rich] asked him [Mr Geoffrey Kleeman, PBL's chief financial officer] about a file note he had prepared which said the 'business needed a cash injection'. Mr Kleeman replied: 'If that's what it says.' And you told that to James Packer? - I may have, I just don't recall. Are you worried about giving some evidence that might implicate James Packer? - I am not worried about it. Your gave the file note to James Packer? - I just don't recall if I did. Asked by Mr Williams if it was likely he did, Mr Kleeman agreed it was."

In the box to which I have just referred three dot pointed factual assertions appeared. These were (my paraphrase): · Mr Kleeman was the first PBL witness to give evidence in the proceedings; · One.Tel collapsed in May 2001 after ASIC claimed it traded while insolvent for some months; · the plaintiff was expected to give evidence in November (of 2005). 54 The four imputations pleaded on behalf of the plaintiff are framed as follows: "(a) the Plaintiff had committed a serous breach of his duties as a director of One.Tel by knowingly permitting it to trade while insolvent (b) the Plaintiff through his neglect of his obligation as a director of One.Tel had caused the collapse of that company (c) the Plaintiff had behaved in such a way as to deserve to be accused of committing a serious breach of his duties as a director of One.Tel by knowingly permitting it to trade while insolvent (d) the Plaintiff had behaved in such a way as to deserve to be accused of neglecting his obligations as a director of One.Tel and thereby casing the collapse of that company" 55 As indicated above, imputations (a) and (c) are now said to be alternative to one another, as are imputations (b) and (d).

imputation (a): the plaintiff had committed a serious breach of his duties as a director of One.Tel by knowingly permitting it to trade while insolvent 56 On behalf of the defendant it was argued that this imputation is incapable of being conveyed for the following reasons: "(a) nowhere in the matter complained of is it asserted or inferred (sic) that One.Tel traded whilst insolvent. The matter does make reference to ASIC seeking declarations that One.Tel was trading while insolvent in the three months before it collapsed but that cannot support an assertion that One.Tel did actually trade whilst insolvent. (b) nowhere in the matter is it stated or inferred (sic) that the plaintiff 'knowingly' permitted One.Tel to trade whilst insolvent. That element is simply not there. (c) nowhere in the matter complained of is it stated or inferred (sic) that the plaintiff committed a serious breach of his duties as a director of One.Tel in any manner whatsoever." 57 It is true that the statement that ASIC was seeking a declaration that One.Tel was trading while insolvent does not permit an inference that that was the fact: Mirror Newspapers Ltd v Harrison [1982] HCA 50; 149 CLR 293. However, the matter complained of can, in relation to imputations, be confined too literally. There is more than this in the matter complained of. The opening paragraph contains an assertion that, to the probable knowledge of the plaintiff, One.Tel was "running short of money and needed a cash injection" eighteen months before its ultimate collapse. 58 Given a certain amount of loose thinking, and allowing for less than analytical reading of the matter complained of, in my opinion the flavour of the article is such that an ordinary reasonable reader would draw the inference that One.Tel had been trading whilst insolvent. So also could it be inferred that the plaintiff was aware of this. This, again, emerges from the opening paragraph, which I have extracted above, and also from the caption to the photograph: "… how early did he [the plaintiff] know the worst?" 59 In my opinion both of these aspects of the imputation are capable of being conveyed. 60 A final complaint is that there is no explicit reference in the matter complained of to "a serious breach" of director's duties on the part of the plaintiff. 61 I also reject this complaint. The plaintiff was identified as the former director of a failed company, who was said to know of its financial plight well in advance of its collapse; and it was said that the company continued to trade for eighteen months after he had that knowledge. An ordinary reasonable reader could infer that failure to act constituted a breach of director's duties.

imputation (c): the plaintiff had behaved in such a way as to deserve to be accused of committing a serious breach of his duties as a director of One.Tel by knowingly permitting it to trade while insolvent 62 Essentially the same argument was put in relation to imputation (c). Obviously, imputation (c) is of a lesser degree of gravity than imputation (a). 63 It was also put that there is nothing in the matter complained of that asserts anything about the plaintiff's conduct such as to indicate that he deserves to be accused of a criminal offence. 64 I reject that proposition. Indeed, once the conclusion is drawn that imputation (a) is available, there is nothing in the way imputation (c) is framed that would warrant a different conclusion. 65 An argument as to form in relation to imputation (c) was put. It was said that the phrase "had behaved in such a way as to deserve to be accused …" is vague and ambiguous and lacks the requisite degree of precision. 66 A distinction was sought to be drawn between the use of that phrase, and the more familiar, and accepted "the plaintiff so conducted himself as to warrant …" which has long been acceptable pleading. 67 I can see no difference in substance between the two phrases. I reject the complaint as to form. Imputations (a) and (c) will be allowed to stand, as alternatives.

imputation (b): the plaintiff through his neglect of his obligations as a director of One.Tel had caused the collapse of that company 68 It was argued that this imputation is incapable of being conveyed because: "(a) whilst the matter complained of does make reference to One.Tel collapsing in May 2001, nowhere in the matter complained of is it stated or inferred (sic) that this collapse was caused by the plaintiff. (b) nowhere in the matter complained of is it asserted or inferred (sic) that the plaintiff neglected his obligations as a director of One.Tel." 69 There is substance in the first of these complaints. There is nothing in the matter complained of from which it could validly be inferred, even allowing latitude for a great deal of loose thinking, that the plaintiff's action or inaction was causally connected to the ultimate collapse of One.Tel. 70 However, the same does not apply to the second complaint. The overall tenor of the article is that the plaintiff, identified as a director of the failed company, was aware of its financial disability. It does not require much input on the part of the reader to infer that this constituted a breach (neglect) of a director's duties or obligations. 71 The first complaint is fatal to the imputation. Imputation (b) will be struck out. 72 That makes it unnecessary to consider the complaint as to form.

imputation (d): the plaintiff had behaved in such a way as to deserve to be accused of neglecting his obligations as a director of One.Tel and thereby causing the collapse of that company 73 This imputation must fail for the same reason as imputation (b). It will be struck out. 74 ORDERS:

1. The plaintiff has leave to amend imputation 4(a); 2. imputation 4(c) is struck out; 3. liberty to replead.

1. Imputations (b) and (d) are struck out. **********

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.