PK v BV

Defamation Act 1974 (NSW), s 16 LEGISLATION CITED: Defamation Act 2005 (NSW), ss 14, 15, 25, 26 and 33 Uniform Civil Procedure Rules 2005 (NSW), Part 36 r 16

Cohen v Mirror Newspapers Ltd [1971] 1 NSWLR 623 Cross v Queensland Newspapers Pty Ltd [2008] NSWCA 80 Herald & Weekly Times Ltd & Bolt v Popovic [2003] VSCA 161 Howden v Truth and Sportsman Ltd (1937) 58 CLR 416 CASES CITED: Howden v Truth and Sportsman Ltd (No 2) (1938) 38 SR (NSW) 287 John Fairfax Publications Pty Ltd v Zunter [2006] NSWCA 227 Searle v Mirror Newspapers Ltd [1974] 1 NSWLR 180 (CA) Trantum v McDowell [2007] NSWCA 138 Whelan v John Fairfax [2002] NSWCA 1028; (2002) 56 NSWLR 89

First Plaintiff: PK PARTIES: Second Plaintiff: AK Defendant: BV

COUNSEL: Plaintiffs: Mr C J Dibb Defendant: No appearance

SOLICITORS: Plaintiffs: Darryl Barlow & Co Defendant: No appearance

1. The plaintiffs, by way of statement of claim filed on 1 February 2008, bring proceedings for damages for defamation arising from two slanders published in Sydney, New South Wales. The defendant has pleaded defences of truth, contextual truth, triviality and unlikelihood of harm.

2. The proceedings are listed before the court today for a 4-day hearing. The defendant's solicitors filed a Notice of Ceasing to Act on 10 November 2008. The defendant's name has been called three times outside the court, twice, at 10:10am and most recently at 10:35am, and there has been no appearance on his behalf. The plaintiffs now bring an application to strike out the defence, not only by reason of the non-attendance of the defendant, but also on the basis that the defences, as pleaded, are hopeless.

4. On or about 12 February 2007 the defendant, while visiting a private home, had a conversation with a Ms BW to the following effect: Defendant: "Why are you still friends with those two?" BW: "P and A?" Defendant: "Yes, of course. They have stolen money from me. They are not trustworthy. They are both snakes. P is a con man. They are not really the people you think you know."
5. The plaintiff, in the statement of claim, pleads that this publication conveys the following imputations: (a) The first plaintiff stole money from the defendant. (b) The first plaintiff is not trustworthy. (c) The first plaintiff is a con-man. (d) The second plaintiff stole money from the defendant. (e) The second plaintiff is not trustworthy.
6. The second publication occurred on or about 15 February 2007 or at some other date early in the school term which commenced on 5 February 2007 in the grounds of a school. On this occasion the defendant had a conversation with a Ms SB to the following effect: Defendant: "I couldn't speak to you the other day because A was there. A and P have stolen a lot of money from us. Don't trust them. Watch your back. They will take you for all you have got." SB: "I haven't got anything. And that's all between you and them." Defendant: "Don't trust them. They have stolen a lot of money from us." Later he said: Defendant: "Don't trust P. P is a liar who has stolen a lot of money from us."
7. According to the statement of claim, about three days before the defendant has approached Ms SB in the company of the second plaintiff in the vicinity of a school and said words to the effect of, "I can't talk to you because she [meaning the second plaintiff] is here."

8. The statement of claim pleads that the second matter complained of conveys the following imputations: (a) The first plaintiff had stolen a lot of money from the defendant. (b) The first plaintiff would rob Ms SB if he got the chance. (c) The first plaintiff was a person who had used lies to steal a lot of money from the defendant. (d) The second plaintiff had stolen a lot of money from the defendant. (e) The second plaintiff would rob Ms SB if she got the chance.
9. The plaintiffs seek damages, included aggravated compensatory damages, on the basis of the falsity of the imputations.

10. On 7 November 2007 the plaintiffs' solicitor sent a notice of concerns pursuant to s 14 Defamation Act 2005 (NSW) saying the following: "We act for [PK] and [AK] in respect of proposed defamation proceedings against you.

Our instructions are that you have on numerous occasions and in the presence of numerous persons made statements defamatory of our clients. In particular, we are instructed that such statements by you have included statements to the effect that our clients are thieves and confidence tricksters. We are further instructed that you have refused to provide an undertaking that you will refrain from such conduct in future. Our clients are extremely concerned that you do not seem to be taking this matter seriously and you are continuing to engage in the conduct complained of. We are therefore instructed to place you on notice of the following:

1. We have been instructed in relation to proposed Defamation proceedings against you.

2. We have been provided with adequate funds in trust to fund the matter up to and including the commencement of proceedings.

3. We have taken initial instructions and propose to commence interviewing witnesses shortly.

We are further instructed that our clients wish to afford you one final opportunity to resolve this matter. In this regard our clients require a written retraction of the defamatory comments concerned in terms to be agreed upon, together with an undertaking to refrain from any such future conduct.

We hope to hear from you no latter than close of business on Wednesday next, 14 November 2007. In the event that we do not do so our instructions are to proceed without further notice to you.

We urge you to obtain legal advice in relation to this letter as a failure to respond appropriately on your part may prejudice your defence." 11. A reply to this letter was received on 12 November 2007. The solicitors for the defendant, Demaine & Associates, wrote as follows: "We refer to the above matter and to your letters [sic] to our clients dated 7 November 2007. We advise that we act on behalf of [BV] and [CV].

Our clients deny the allegations made by your clients and we are instructed that if any defamation proceedings are commenced that they will be strenuously defended.

We are instructed that Mrs [AK] has been making defamatory comments to friends of our clients. Our clients are currently obtaining statements from witnesses to support these allegations. Our clients are currently considering their rights in relation to defamation proceedings against your clients, and are conferring with counsel next week in relation to same." 12. On 1 February 2008 the statement of claim was filed. The matter came before the court on 15 February, when it was stood over for further directions to 18 April, and then again to 9 May 2008, when the court was told the parties were having discussions; the matter was stood over to 30 May. On each of these occasions the defendant was represented by Mr Ghioni, an agent for his solicitors, Demaine & Associates. On 30 May short minutes of order were handed up with a note that the parties were still negotiating, and requiring the defendants to file and serve a defence on or before 20 June 2008.

13. A defence was filed on 19 June pleading the following defences.

14. A defence of truth and contextual truth is pleaded. The particulars of justification relied upon are as follows: "i) In or about August 2005 the plaintiffs asked the defendant [sic] and the defendant agreed to loan without security certain moneys to the plaintiffs.

ii) The plaintiffs or each of them agreed to prepare a written document in relation to the said loan.

ii)[sic] In order to induce the defendant to make the loan, the plaintiffs and each of them made certain representations to the defendant which the plaintiffs knew or should have known were untrue and false and that the plaintiffs made such untrue and false representations with the intention that the defendant would be, and he was thereby induced to enter the lending transaction.

iii) The plaintiffs represented that they or both of them had expertise and knowledge sufficient to enable the preparation of proper and binding loan documents and that they would use their best endeavours to draw valid and effective documents.

iv) Despite the representation of the plaintiffs they and both of them in truth believed that the said documents were on their terms void for uncertainty.

v) The said documents were executed by and at the direction of the plaintiffs.

vi) The plaintiffs arranged and explained or instructed the defendant as to the manner and method of execution of the said loan documents in circumstances where the defendants [sic] knew or believed that the execution of the documents was defective and did not in their belief create to [sic] legally enforceable rights, or, upon becoming aware of the same failed to warn the defendant.

vii) In addition, the plaintiffs represented to the defendant [sic] that the plaintiffs and [sic] neither of them was able to provide security for the said lending.

viii) The plaintiff [sic] and both of them in truth knew that the plaintiffs did have assets which at all relevant times could have been used to secure the loan.

ix) Such representations with the knowledge of the plaintiffs was [sic] intended to, and in fact did, induce the defendant to enter into the lending transaction.

x) The plaintiffs and each of them represented that they would repay the loan in full on or before 12 December 2006.

xi) The plaintiffs did not repay the full loan on or before 12 December 2006 and either knew or should have known that they would have in truth been unable to do so.

xii) In the premises all and any of the imputations were true." Contextual truth and unlikelihood of harm

15. The defence of contextual truth is worded with similar vagueness. I will set it out in full: "8) Further and in the alternative as to all the imputations pleaded in respect of the matters complained of in the statement of claim:

each was published contextually by reason of the knowledge of those to whom the publication was made who knew and understood that context and the substantial truth of the imputations and all of them. Further and in the alternative any imputation which might be found were [sic] trivial and in the circumstance [sic] not matters which did or might injure the reputation of the plaintiff [sic].

9. Further and in the alternative any publication complained of was in circumstances where the failure of the plaintiffs to honour their representation [sic] to the defendant as to repayment of the loan was well known and the words of the defendant understood in that context."

16. I have set out these particulars in full so as to demonstrate the problems caused by the inadequate pleading of the defence of truth and contextual truth.

17. An additional defence emerges from the defence of contextual truth and that appears to be an attempt to plead s 33 Defamation Act, the defence of unlikelihood of harm or triviality as it is sometimes referred to. That is a matter which I will deal with as well when considering the application to strike out these defences.

18. Finally, there is a plea of offer of amends, and that is that the defendant has made to the plaintiffs an offer in writing to make amends pursuant to s 13 Defamation Act. It is necessary for me to set this out in full. The letter which is attached is dated 10 June 2008. Clearly it is out of time and I note that at no time when the matter was before me was there a request to extend time for this defence. It would have been a simple matter to request time to be extended but no application was made. I note that there was an earlier offer of amends made on 21 April 2008, but even this was out of time. However, the more serious defect is that neither of these offers, which is in identical form to each other, goes far enough to comply with s 15 Defamation Act.

19. The text of the offer of amends is as follows: "We refer to the above matter and advise that the Defendant makes the following offer to make amends pursuant to the provisions of Section 13 of the Defamation Act 2005 to the Plaintiffs:

1. The Defendant is prepared to sign an apology in the following terms:

"I, [BV], hereby unreservedly withdraw and retract any terms of personal criticism of the character of the plaintiffs in this matter made by me in discussions on 12 and 15 February 2007. I concede that at the time of the said statements I had no evidence or then current basis for making allegations of criminal behaviour against the plaintiffs."

2. The Defendant is prepared to pay the Plaintiff's [sic] legal party/party costs to the date of this offer either:

(a) As agreed; or (b) Absent agreement in such amount (if any) as determined by the Court as reasonable and justifiable costs and the court is fully informed of all correspondence between the parties." 20. I shall deal with each of these defences in turn.

21. The defence of truth has been comprehensively considered by the Court of Appeal in Cross v Queensland Newspapers Pty Ltd [2008] NSWCA 80 where the Court of Appeal, adopting the words of Dixon J in Howden v Truth and Sportsman Ltd (1937) 58 CLR 416, said at [71]: "The defence depends upon the substantial truth of the defamatory meaning conveyed by a libel. Every material part of the imputations upon the plaintiff contained in the words complained of must be true; otherwise the justification fails as an answer to the action."
22. The Court of Appeal in the course setting aside a finding in favour of the defendant by the trial judge (Cooper AJ) held that evidence of the truth of imputations needs to be set out in such a manner as to ensure that every material part of the imputation is true as otherwise the defence will fail, referring to Howden v Truth and Sportsman Ltd and Herald & Weekly Times Ltd & Bolt v Popovic [2003] VSCA 161.

23. The Court of Appeal considered the defence of contextual truth at [191]ff. Although the defences of truth and contextual truth in consideration in that case were drafted pursuant to the Defamation Act 1974 (NSW), the defence of contextual truth of the 2005 Act, which is modelled on s 16, is so similar that the same statements apply. The relevant comments made by the Court of Appeal in Cross v Queensland Newspapers Pty Ltd are as follows (at [196]-[200]): "[196] The appellant pleaded that the second publication conveyed two imputations: the first that the appellant was a " law breaker "; the second, that he was a " rip off merchant ". The trial judge found that the imputation that the appellant is a "rip off merchant" was a matter of substantial truth: see judgment [686]-[738]. The essential basis for his Honour's determination was that the appellant had systematically failed to make the required statutory superannuation contributions for the benefit of his employees and that this amounted to a " rip off " of his employees. A second basis for his Honour's finding was that the appellant had diverted funds away from one of his companies that was in liquidation.

[197] The appellant contended that on the assumption that his Honour erred in finding that the defence of truth was established in respect of the defamatory imputation, then the defence under s 16 to the contextual imputation must fail, because the contextual imputation was not capable of " swamping " the defamatory imputation. In short, it was submitted that the two imputations related to different aspects of the appellant's reputation and that he must have suffered some harm over and above the harm that he suffered from the contextual imputation, for which he was entitled to an award of damages.

[198] The respondent contended that this misstated the principles underlying the defence of contextual imputation. It was submitted that the correct approach was to consider two imputations that differed in substance and to then consider the matters that went to prove the substantial truth of the competing imputations in order to determine the impact of that material on the reputation of the appellant: see John Fairfax Publications Pty Limited v Zunter .

[199] There is no defence of contextual truth available in Queensland. However, if the defence of truth to the contextual imputation is made out, the respondent submitted that it was entitled to rely on the same material in the mitigation of damages in respect of the defamatory imputation in Queensland: Howden v Truth and Sportsman [1937] HCA 74; (1937) 58 CLR 416 at 431; Howden v Truth and Sportsman Ltd (No 2) (1938) 38 SR (NSW) 287 at 290; Cohen v Mirror Newspapers Ltd [1971] 1 NSWLR 623 at 627; John Fairfax Publications Pty Limited v Zunter at [50]; Whelan v John Fairfax [2002] NSWCA 1028; (2002) 56 NSWLR 89 at 102-108.

[200] The question as to whether the defence provided under s 16 has been made out involves, first, a factual enquiry and then an evaluative judgment as to whether, by reason that the contextual imputation is a matter of substantial truth, the imputation complained of does not further injure the reputation of the appellant. In my opinion, those matters cannot be determined without seeing and hearing the party defamed. If the Court was to enter upon the process of making findings on these matters for the first time it would be engaging not in an appellate process, but in a primary fact finding process. Whilst there are occasions when this Court does make its own findings of fact, I do not consider it appropriate to do so in a case such as this when there has been no primary determination by the trial judge. In short, I do not consider that an evaluation of the appellant's reputation should be made without hearing or seeing the appellant in evidence." 24. Mr Dibb submits, and I accept, that the particulars of truth fall very far short of justification for imputations which the defendant acknowledges, in the correspondence of his solicitor, are allegations of criminal conduct. As for the defence of contextual truth, what the pleader has attempted to do is not to plead that the truth of one or more of the imputations, would, if proved true, "swamp" the imputations not found to be true, but instead to rely on unspecified "context" knowledge. In other words, the persons to whom the publication was made knew facts which are not referred to, and their knowledge of these facts and what was in their mind in some way meant that they understood, from that unspoken context, what the defendant was actually referring to. What is asserted is that each of the persons to whom the matter complained of was published knew about the failed or unsatisfactory finance transaction and knew that this was in fact what the defendant meant. In the absence of extrinsic facts (which could not apply to contextual truth if they did not apply to the defence of truth) such a pleading is completely unacceptable.

An attempt is made in paragraph 9 of the defence to rely upon what seems to be an alleged notorious fact about the plaintiffs failing to repay a loan being well known. Again, this is not an appropriate matter for contextual truth, and the pleading is deficient. The addition of what appears to be an attempt to plead a s 33 defence in the middle of it just adds to the confusion.

The defendant is not present. He has been called outside court on two occasions, firstly at approximately 10:10am and secondly at approximately 10:35am. He has not appeared. He is not here to oppose the striking out of this defence and it would be possible for the plaintiffs to ask for the defence to be struck out on that basis alone. However, in the event that the defendant were to bring an application under Part 36 r 16 Uniform Civil Procedure Rules 2005 (NSW) or to seek, as Mr Trantum did in Trantum v McDowell [2007] NSWCA 138, to canvass these matters on appeal, it is appropriate that I should set out that, even if the defendant were here, the defences of truth are substantially flawed and very poorly particularised.

The requirement of a defendant to particularise a defence of truth is an essential part of defamation litigation. A defendant must give full particulars of truth and, where such particulars are not provided, the defendant's defence may be liable to be struck out: Searle v Mirror Newspapers Ltd [1974] 1 NSWLR 180 (CA).

Mr Dibb, in his very helpful submissions, has pointed out that the offer of amends falls far short of what is required.

Section 15 of the Defamation Act 2005 provides as follows: " 15 Content of offer to make amends

(a) must be in writing, and (b) must be readily identifiable as an offer to make amends under this Division, and (c) if the offer is limited to any particular defamatory imputations-must state that the offer is so limited and particularise the imputations to which the offer is limited, and (d) must include an offer to publish, or join in publishing, a reasonable correction of the matter in question or, if the offer is limited to any particular defamatory imputations, the imputations to which the offer is limited, and (e) if material containing the matter has been given to someone else by the publisher or with the publisher's knowledge-must include an offer to take, or join in taking, reasonable steps to tell the other person that the matter is or may be defamatory of the aggrieved person, and (f) must include an offer to pay the expenses reasonably incurred by the aggrieved person before the offer was made and the expenses reasonably incurred by the aggrieved person in considering the offer, and (g) may include any other kind of offer, or particulars of any other action taken by the publisher, to redress the harm sustained by the aggrieved person because of the matter in question, including (but not limited to):

(i) an offer to publish, or join in publishing, an apology in relation to the matter in question or, if the offer is limited to any particular defamatory imputations, the imputations to which the offer is limited, or (ii) an offer to pay compensation for any economic or non-economic loss of the aggrieved person, or (iii) the particulars of any correction or apology made, or action taken, before the date of the offer.

(2) Without limiting subsection (1) (g) (ii), an offer to pay compensation may comprise or include any one or more of the following:

(a) an offer to pay a stated amount, (b) an offer to pay an amount to be agreed between the publisher and the aggrieved person, (c) an offer to pay an amount determined by an arbitrator appointed, or agreed on, by the publisher and the aggrieved person, (d) an offer to pay an amount determined by a court.

(3) If an offer to make amends is accepted, a court may, on the application of the aggrieved person or publisher, determine:

(a) if the offer provides for a court to determine the amount of compensation payable under the offer-the amount of compensation to be paid under the offer, and (b) any other question that arises about what must be done to carry out the terms of the offer.

(4) The powers conferred on a court by subsection (3) are exercisable:

(a) if the aggrieved person has brought proceedings against the publisher in any court for defamation in relation to the matter in question, by that court in those proceedings, and (b) except as provided in paragraph (a), by the Supreme Court." 30. The matter complained of is pleaded to contain imputations of dishonesty of a criminal nature and also that the plaintiffs are not trustworthy and indeed would rob again if they got the chance.

31. This is not even a lukewarm apology. It is an apology that seeks to avoid the issue of criminality by instead making obscure references to not having evidence at the time, and the like. It reads very much like an apology where someone has their fingers crossed behind their back and is not really apologising at all. It is certainly well outside the spirit of s 15 which, in a sense, is more important than it being out of time. Had an application been made to make an offer of amends out of time it would, in circumstances where the parties were negotiating, have been looked at with some sympathy by the court. However, once again, the defendant is not here to raise any of these matters.

32. Accordingly, I strike out the offer to make amends. This means that the defendant's defence has been struck out in its entirety. Judgment can be entered for the plaintiffs with damages to be assessed. As the cause of action is the matter complained of, not the imputations, and as I am satisfied in any event that the imputations all arise, it is not necessary for me to deal with any pleadings issue arising from the imputations. The plaintiffs may now lead evidence on issues of damages.

33. Accordingly, the orders I make are as follows: (1) Defendant's defence is struck out and dismissed. (2) The defendant is to pay the plaintiffs' costs. (3) Until further order, an order that the names of the parties and any identifying factors not be published and that any publication in this court use a pseudonym PK for the first plaintiff, AK for the second plaintiff and BV for the defendant, and that the proceedings hereafter be known as PK v BV .

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.