Plaintiff v Defendant

(a) The plaintiff is not a fit and proper person to be President of the PSPA;

(b) In causing $200,000 of parents' money to be transferred to an account outside the School's control, the plaintiff acted dishonestly;

(c) In order to avoid accountability for the PSPA's finances, the plaintiff caused $200,000 of parents' money to be transferred to an account outside the School's control;

(d) The plaintiff has engaged in conduct as President of the PSPA that is so reprehensible that he caused the responsibility of the PSPA executive to act as a liaison between parents and the School to be taken over by the Deputy Principal.

3 The plaintiff applies to strike out, pursuant to r 23.02, those paragraphs of the defence that plead a defence of honest opinion under s 31 of the Defamation Act 2005 ('Act') in respect of imputations (a), (b) and (d).

4 The defendant alleges that imputation (a) is an opinion that was 'based on proper material, namely material that is substantially true'. A similar allegation is made in respect of imputations (b) and (d), save that in each case the defendant has reframed the imputation that is alleged to be an honest expression of opinion contending that the reframed imputation is a permissible nuance of that pleaded by the plaintiff.

5 The crux of the dispute lies in the particulars given of the allegation that the opinion was based on proper material. The defendant contends that it is unnecessary that proper material on which the opinion was based be stated or referred to in the publication or be notorious.

6 In respect of imputation (a), the particulars of the basis for the opinion consist of 11 sub-paragraphs said to be of facts that are substantially true. The plaintiff contends that the sub-paragraphs mostly make multiple allegations that are not allegations of fact. These particulars are set out below.

7 In respect of imputation (b), the defence relevantly alleges that the letter carried the imputation that the plaintiff acted contrary to the best interests of the School, which imputation is alleged to be a permissible nuance of the imputation that the plaintiff acted dishonestly when he caused $200,000 of parents' money to be transferred to an account outside the School's control. The particulars of the defence are that the plaintiff caused all of the money held by the PSPA in two National Australia Bank accounts to be transferred to a Bendigo Bank account of which the plaintiff and his wife were authorised signatories without an executive meeting of the PSPA, knowledge of the School appointed members of the PSPA or first informing the defendant or the School's administration. The defendant contends that the effect of that conduct was to prevent the School from being in a position to exercise any financial oversight over the PSPA and to remove the School executive from involvement in the financial governance of the PSPA. The particulars do not engage with the plaintiff's state of mind.

8 In respect of imputation (d), the defendant alleges, as a permissible nuance of the plaintiff's pleaded imputation, that the Deputy Principal was appointed to be the School liaison officer and the PSPA's point of contact in order to attempt to prevent further harm to the reputation of the School. This nuanced imputation is said to be an opinion based on material that is substantially true namely:

(a) that the plaintiff shared in the objective of and participated in the campaign including by engaging in the conduct referred to in sub-paragraphs (d) to (h), which are set out in the next paragraph;

(b) the plaintiff on numerous occasions has refused to meet with the defendant to try and resolve the ongoing issues;

(d) the conduct particularised had the effect of harming the reputation and standing of the School;

(e) in order to attempt to prevent further harm to the reputation and standing of the School, on or about 20 May 2015 the Board of the School appointed the Deputy Principal as alleged.

9 The particular of the facts that are substantially true and the basis for the opinions are:

(a) The PSPA is an incorporated association and is governed by a Constitution which is registered with Consumer Affairs Victoria (Constitution). Clause 3 of the Constitution sets out the purposes of the PSPA, which include assisting and supporting the School and supporting the aims and objects of the School.

(b) From at least early 2015 onwards, the plaintiff has been aware that some parents, members of staff, former members of staff, former students and members of the PSPA want the defendant to resign or be removed from his position as Principal of the School, and have advocated among themselves and publicly with a view to achieving that objective (Campaign). The Campaign has had a destabilising effect on the School and has damaged the reputation and standing of the School, and is inconsistent with the purposes of the PSPA.

(c) From at least early 2015 onwards, the plaintiff has shared the objective of, and participated in, the Campaign.

(d) The plaintiff's involvement in the Campaign included attending a meeting on 31 March 2015 in order to discuss action that might be taken against the defendant with a view to removing him as Principal.

(e) The plaintiff also authorised or condoned the circulation of the PSPA Letter without first informing the defendant or seeking his response, despite the fact that the PSPA Letter contains serious allegations against him.

(f) The plaintiff also disclosed the contents of the PSPA Letter to attendees of the meeting on 31 March 2015 without first notifying the defendant or seeking his response despite the fact that the PSPA Letter contains serious allegations against him.

(g) The plaintiff also disclosed the contents of the PSPA Letter to Wayne Murray by email on 7 April 2015 without first notifying the defendant or seeking his response, despite the fact that the PSPA Letter contains serious allegations against him.

(h) On or about 16 April 2015, in furtherance of the Campaign, the plaintiff provided comment to a journalist from the Leader newspaper which he intended to culminate, and which in fact culminated, in an article being published in the newspaper on 21 April 2015 that was damaging to the reputation and standing of the defendant and the School.

(i) The Campaign had the foreseeable effect, which was intended by the plaintiff, of:

(i) generating negative publicity for the School that damaged its reputation and standing in the community, including reports published in the Leader newspaper; and

(ii) comments being uploaded onto Twitter and thereby widely disseminated which were damaging to the reputation and standing of the School and the defendant.

(j) Despite having raised serious allegations against the defendant in the PSPA Letter, the plaintiff on numerous occasions has refused to meet with him to try to resolve the ongoing issues.

(k) On 8 May 2015, without an executive meeting of the PSPA, knowledge of the School-appointed members of the PSPA, or first informing the defendant or the School's administration, the plaintiff caused all of the money which had previously been held by the PSPA in two National Australia Bank accounts, totalling approximately $200,000, to be transferred to a Bendigo Bank account to which the plaintiff and his wife were authorised signatories.

10 Section 31 of the Defamation Act 2005 is in the following terms:

31 Defences of honest opinion

(1) It is a defence to the publication of defamatory matter if the defendant proves that -

(a) the matter was an expression of opinion of the defendant rather than a statement of fact; and

(b) the opinion related to a matter of public interest; and

(c) the opinion is based on proper material.

...

(4) A defence established under this section is defeated if, and only if, the plaintiff proves that -

(a) in the case of a defence under subsection (1) - the opinion was not honestly held by the defendant at the time the defamatory matter was published; or

...

(5) For the purposes of this section, an opinion is based on proper material if it is based on material that -

(a) is substantially true; or

(b) was published on an occasion of absolute or qualified privilege (whether under this Act or at general law); or

(c) was published on an occasion that attracted the protection of a defence under this section or section 28 or 29.

(6) An opinion does not cease to be based on proper material only because some of the material on which it is based is not proper material if the opinion might reasonably be based on such of the material as is proper material.

11 The plaintiff contends that it is a requirement of a s 31 defence that the facts upon which the opinion is alleged to be based must either appear in the publication or be notorious. The plaintiff submits that with two exceptions,[1] the facts on which the opinions are alleged to be based do not appear in the letter of 20 May 2015, and are neither otherwise apparent to the reader nor alleged to be so. Additionally, it is not open to the defendant to contend the contrary.

12 In support of this contention the plaintiff first relied on Herald & Weekly Times Pty Ltd v Buckley,[2] in which Nettle, Ashley, and Weinberg JJA rejected the proposition that under the statutory defence of honest opinion it is necessary only to show that the opinion is honestly based on 'proper material' that, according to counsel, need not be known to the reader:[3]

First, we do not consider that there is any difference between the common law and the statute as to the need for facts on which a comment or opinion is based to appear in the publication or otherwise be apparent to the reader. The idea of expanding the defence of comment or opinion to cases where the facts are unspecified and unknown was rejected by the Law Reform Commission (on whose report the legislation is largely based), and there is nothing in the proposal for uniform defamation laws released by the States and Territories in July 2004 or in the proposed Bill which they released in November 2004, or in the explanatory memorandum or second reading speech which suggests any difference in that respect. To the contrary, all the indications are that the two were meant to be the same.

13 The plaintiff submitted that this statement was part of the ratio of the case, as it formed part of the path of reasoning which led to the Court rejecting the applicant's contention that there were material differences between s 31 and the common law defence of fair comment. Alternatively, it was submitted that if this extract was not part of the ratio of the case, it was seriously considered dicta.[4] On the former basis I am bound to follow the decision by the principles of stare decisis and on the latter basis I am bound to follow the decision unless satisfied that it is plainly wrong.[5]

14 Secondly, the plaintiff contends that in the recent case of Harbour Radio Pty Ltd v Ahmed,[6] and consistently with Buckley which it did not cite, the NSW Court of Appeal said:

It is sometimes said that the facts upon which the opinion is based must be stated in the publication, or must be notorious. That is for two reasons. First, such a circumstance is likely to allow the reader (or listener) to distinguish more readily between fact and opinion. Secondly, it allows the reader or listener to judge the validity of the opinion. These functions are closely related, as appears from the following passage in the reasons of Gleeson CJ in Manock:

"However, to satisfy the requirements for the defence, it is not necessary that the facts upon which the comment is based be stated in the terms of the communication itself. The rationale is also satisfied if, to use the language of the majority in Pervan, the facts are 'sufficiently indicated or notorious to enable persons to whom the defamatory matter is published to judge for themselves how far the opinion expressed in the comment is well founded'. It is more accurate, therefore, to describe as conventional a case where the facts upon which the comment is based are stated in the terms of the communication, or are sufficiently indicated or notorious to enable persons to whom the defamatory matter is published to identify it as comment on those facts and to assess for themselves whether the facts support the comment. If the purported facts upon which the comment is based are not true, the defence does not lie. Hence, Bingham LJ's summation that 'comment may only be defended as fair if it is comment on facts (meaning true facts) stated or sufficiently indicated.'"

The question whether the proper material need be identified in the publication at all was noted, but not resolved, by Le Miere J in Marshall v Smith. It was common ground in the present case that an expression of opinion without reference to the facts on which the opinion was based will not fall within the terms of the defence. That is because par (c) in each of subs 31(1), (2) and (3) requires that the opinion is "based on" proper material. That must be "material" that is "substantially true". In Visscher v Maritime Union of Australia (No 6), Beech-Jones J noted that to qualify as "proper material" on which an opinion may be based the material, if not shown to be substantially true, must have been published on an occasion of privilege or have otherwise attracted a defence under s 28 or s 29 of the Defamation Act. That language, he suggested, may indicate that the material on which the relevant opinion is based must be stated or indicated within the publication which included the defamatory matter. (Citations omitted)

15 Thirdly, the plaintiff invites me to reject the defendant's contention that Buckley is wrong. He submits that, as a matter of statutory construction, the conclusion expressed in Buckley, considered in its context, which includes the legislative history and extrinsic materials, is correct.[7] The plaintiff submitted that the expression 'based on proper material' in s 31 is ambiguous, and suggested three possible interpretations of this expression:

(a) material that appears in the matter complained of or is otherwise known to the reader;

(b) material that is relied on by the defendant, in forming the opinion, from whatever source and whether or not if appears in the matter complained of or is otherwise known to the reader; or

(c) facts which are capable of supporting the opinion, whether or not they were actually relied upon by the defendant.

16 The plaintiff submits that the context of the section and the extrinsic materials at the time the Act was passed justify the interpretation that 'based on proper material' refers to material that appears in the matter complained of or is otherwise known to the reader. In support of this submission the plaintiff relies on the following:

(a) the Australian Law Reform Commission opinion that 'the weight of the comment can only judged if the basis is disclosed. Defamatory comment in vacuo is hardly desirable'[8];

(b) the Attorney-General's Department's Report, Revised Outline of a Possible National Defamation Law[9] which states '[t]he Act attempts to capture the essence of the defence at common law in codifying the defence of honest opinion'. The defendant would be required to show that 'the opinion was based on facts expressly or impliedly referred to in the matter, or generally know at the time of the publication'[10];

(c) there is no indication in the Second Reading speech to the Defamation Bill 2005 (Vic) that there was a legislative intention to 'make a radical change to the law relating to comment';

(d) the statement in the Explanatory Memorandum to the Defamation Bill 2005 (Vic) that the defences in clause 31, 'at least in relation to opinions personally held by the defendant, largely reflect the defences of fair comment at general law'[11]; and

(e) either of the alternative constructions of the expression would render s 31(6) unintelligible. The plaintiff noted that if the opinion can be held in vacuo, without reference to facts stated or generally known, it is problematic how s 31(6) was intended to operate or does operate.

17 Alternatively, the plaintiff contended that the following particulars of the defence are not facts and should be struck out:

18 The plaintiff further submitted that the meaning in paragraph 7D(a) of the defence (set out at paragraph [7]) is not a permissible variant of the plaintiff's imputation pleaded in paragraph 7(b) of the statement of claim. A defendant may plead a meaning not more serious and not substantially different from the meaning pleaded by th[12]plaintiff.12 The plaintiff submits that the defendant's pleaded imputation:

(a) is incapable of being found by jury not to be substantially different from the plaintiff's meaning[13]; and

(b) 'acted contrary to the best interest of the School' lacks the moral turpitude which forms part of the concept of 'dishonestly', and is a substantially different concept.

19 The defendant's primary submission is that for the purposes of the statutory defence under s 31, the facts upon which the opinion is said to be based do not need to be stated or referred to in the publication, or be notorious. This is for the following reasons:

(a) no such requirement is expressed by the plain wording of s 31. Contrary to the plaintiff's submissions, there is no ambiguity in the terms of s 31;

(b) such a requirement was expressly included in the draft Bill proposed by the Australian Law Reform Commission[14] and in the version of the defence recommended by the Commonwealth Attorney-General's Department[15], yet it was not ultimately included in the Act. If legislation was to be passed, 'importing this honest opinion defence for the policy reasons outlined, it would be clearly stated.' Accordingly it can be inferred that the legislature did not intend to incorporate this requirement into the provision;

(c) the passage in Buckley relied upon by the plaintiff is obiter dicta that does not bind a judge, and is in any event wrong in light of the above matters and should not be followed.

20 The defendant further submitted that the question of whether the facts pleaded in the honest opinion defence must be stated, referred to or notorious to the reader of the letter dated 20 May 2015 ought to be determined at trial, for the following reasons:

(a) there would be no prejudice to the plaintiff in determining this matter at trial as the facts pleaded are material to the qualified privilege defence and so would be adduced before the Court at trial in any event;

(b) if this Court is in fact bound by the statement in Buckley, it is appropriate for the matter to be argued and adjudicated upon at trial to preserve the defendant's ability on appeal to contend that Buckley was wrongly decided on that point; and

(c) interlocutory adjudication on this question may lead to an appeal on an interlocutory ruling on a matter that could be appropriately dealt with at trial without prejudicing the plaintiff. This would be contrary to the just, efficient, timely and cost effective resolution of the real issues in dispute in this proceeding.

21 In addition, should it be found that there is a requirement that 'the facts on which the comment is based are sufficiently indicated or notorious'[16] is imported into s 31, the question of whether the facts pleaded in paragraphs 7C(d)(iii)(A)-(I) and (K), 7D(f)(ii)(A)-(B), and 7F(f)(ii)(A), (C) and (D) of the defence are referred to or notorious to the reader of the letter dated 20 May 2015 is a question for the jury at trial.

22 Finally, the question of whether paragraphs 7C(d)(iii)(B)-(E, (H)-(I), 7D(f)(ii)(B) and 7F(f)(ii)(A) and (D) of the particulars to the defence are facts is a question for the jury at trial.

23 The defendant indicated that if his construction submission failed, he would seek leave to amend his defence to contend that either the facts upon which they defendant relies appeared in the letter of 20 May 2015 or were notorious. The defendant was invited by the court to identify the form of any proposed amendment but none has been shown to the plaintiff or the court and any question of leave to amend the defence will be dealt with on its merits if the occasion arises. That prospect of amendment is of no relevance on this application.

24 For the following reasons pursuant to r 23.02, I will strike out paragraphs 7C, 7D and 7F of the defendant's defence dated 17 August 2015.

25 There is no merit in the defendant's submission that an interlocutory ruling on these matters may hinder achieving the overarching purpose in this litigation. Nor am I persuaded that there would no prejudice to the plaintiff if this matter is dealt with at trial. The parties are entitled to understand the issues to be determined at trial, by reference to pleadings and particulars that conform to principle. The defendant's submission misconceives what was made clear by Gleeson CJ in Goldsmith v Sandilands.[17] The Chief Justice said:

The facts in issue in a civil action case emerge from the pleadings, which, in turn, are framed in the light of the legal principles governing the case. Facts relevant to facts in issue emerge from the particulars and the evidence. The function of particulars is not to expand the issues defined by the pleadings, but "to fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial". The function of evidence is to advance, or cut down, the case of a party in accordance with the rules of statute or common law that determine the nature of the information a court will receive. The primary rule of evidence is that a court will receive, and will only receive, evidence that is relevant to the issues as defined by the pleadings.

26 Further, whether the facts that form the basis of the defence are referred to in the letter or are notorious is not an issue presently raised on the pleadings and cannot therefore be said to be a matter for the jury at trial. I do not accept the submission that there would be no prejudice to the plaintiff in determining this matter at trial as the facts pleaded are material to the qualified privilege defence. The particulars of the defendant's claim that his conduct in publishing the letter was reasonable in the circumstances do not reveal any reliance on the facts said to constitute the basis for his honest opinion. The pleading of the qualified privilege defence does not make evidence of those 'facts' relevant and admissible.

27 The statement of principle in Buckley that is relied on by the plaintiff is part of the ratio of that case. It is a binding authority and I must follow it. In any event, I do not accept the submission that Buckley was wrongly decided. Furthermore the statement of this principle in Ahmed, although not expressly referencing Buckley, consistently interprets an identical provision in uniform national legislation. Trial judges of this court recognise the authority on such matters of interstate intermediate appellate courts.[18] I am far from satisfied that the decision in Ahmed was plainly wrong.[19] With respect, I consider that each of Buckley and Ahmed correctly construes the phrase 'based on proper material' in s 31.

28 I need not address the defendant's submission that had the Court's attention in Buckley been drawn to the omissions from the extrinsic materials and the changes from the draft legislation to its final form identified by the defendant in his submission, the Court would not have reached the conclusion that it did. Nonetheless, I will give brief reasons why I reject the submission on its merits.

29 It does not follow from the content of earlier draft Bills, that because the Act did not contain an express requirement in s 31 that the foundational facts for the opinion be referred to or stated in the publication, or be notorious, the legislature intended that there be no such requirement. The reasons, if any, for differences between a recommendation, a bill and the final text of the Act are not clear, nor is the process by which the text of the Act reached its final form. Put at its highest, an inference can be drawn that a specific recommendation of the Law Reform Commission was not adopted. In many other respects, the final legislation varied from drafts.

30 The defendant submits that had the legislature intended to include this requirement in s 31, it would have expressly stated it. Given the common law rule, had the legislature wanted to radically change the operation of the defence, the Act could have stated that that 'based on proper material' can include matters known only to the publisher that were never known by the reader, but it does not.

31 If the defendant's submission was correct, the necessary implication is that parliament intended that the opinion could be based upon material that was proper, in the sense that it was substantially true or was published on an occasion that attracted one or other of the defences, regardless of whether it was known to the reader of the opinion. That construction of the expression could make out an honest opinion defence on the basis of a subsequently discovered fact. Recognising the difficulty presented, counsel contended that a party would only be entitled to plead a fact on which the opinion was based, and not a subsequently discovered fact, but defendant's argument does not admit this restriction into the provision as he would construe it.

32 Another difficulty with the defendant's proposed construction is, as the plaintiff identified, how s 31(6) would intelligibly operate. For the reasons given by the plaintiff, I consider that this provision cannot sensibly operate if the defendant's construction is accepted.

33 In order to rely on s 31 in respect of these imputations, the opinion must be based on proper material that appears in, or is referenced in, the publication, or otherwise be notorious. Although it was foreshadowed that should they be unsuccessful in this application the defendant would contend that the facts upon which the opinion was based were notorious, the defence, as particularised, does not make the allegation and no proposed form of amendment was proffered to the court. Consequently, I can only consider whether the foundational facts appeared in, or are referenced by, the letter of 20 May 2015.

34 With the exception of the matters stated in the particulars at sub-paragraphs 7C(iii)(J) and 7F(ii)(B) (which is the same matter in each case[20]), none of the facts on which the opinion is said to be based appear in or are referenced by the letter of 20 May 2015. The matter that is evident from the letter is that the plaintiff on numerous occasions has refused to meet with the defendant to try to resolve the ongoing issues, which, if true, is not capable of supporting the opinions expressed in the imputations.

35 Paragraphs 7C, 7D and 7F of the defence do not disclose a defence and will be struck out. As the particulars fall with the defence, it is not necessary to consider the application to strike them out.

36 Although it is also unnecessary to resolve the application to do so, I will offer a brief comment on the alleged permissible nuanced imputation given in paragraph 7D(a) of the defence. The defendant pleads that 'in causing $200,000 of parents' money to be transferred to an account outside the School's control, the plaintiff acted contrary to the best interests of the school.' The plaintiff's pleaded imputation is that 'in causing $200,000 of parents' money to be transferred to an account outside the School's control, the plaintiff acted dishonestly.' Self-evidently, 'dishonestly' and 'contrary to the best interests of the school' are substantially different concepts.[21] As the plaintiff submitted, it is clear what may need to be proven to establish 'dishonestly' and the allegation is of a specific state of mind. On the other hand, 'contrary to the best interests of the school' is an ambiguous phrase of many possible interpretations that may lack the element of moral turpitude inherent in 'dishonestly'. The defendant cannot seek to justify a substantially different and less serious imputation in this manner. The imputation plead by the defendant is an impermissible nuance of the imputation in paragraph 7(b) of the statement of claim.

[1] The particulars at paragraphs 7C(iii)(J) (reproduced at paragraph [9](j) above) and 7F(ii)B (which is in identical terms).

[2] [2009] VSCA 75; (2009) 21 VR 661.

[4] Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89, 151 [134], 159 [158].

[6] [2015] NSWCA 290, [41]-[42].

[7] Citing Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 250 CLR 503, 519 [39]; Thiess v Collector of Customs [2014] HCA 12; (2014) 250 CLR 664, 671 [22]; Di Paolo v Salta Constructions Pty Ltd [2015] VSCA 230, [38]-[39] (Osborn and Kyrou JJA).

[8] Australian Law Reform Commission (Unfair Publication: Defamation and Privacy, Report No 11 (1979) [130].

[11] Explanatory Memorandum, Defamation Bill 2005 (Vic) cl 31.

[12] David Syme & Co Ltd v Hore-Lacy (2001) 1 VR 667, 675-6, 684, 686-7, 688-9; Hore-Lacy v Cleary [2007] VSCA 314; (2007) 18 VR 562, 569; Setka v Abbott [2014] VSCA 287, [34]-[68].

[13] Setka v Abbott [2014] VSCA 287, [160], [162]-[163], [190].

[14] Australian Law Reform Commission (Unfair Publication: Defamation and Privacy, Report No 11 (1979) [130], draft Bill at clause 13.

[15] Revised Outline of a Possible National Defamation Law (July 2004) draft Bill, clause 11.

[16] Pervan v North Queensland Newspaper Co Ltd [1993] HCA 64; (1993) 178 CLR 309, 327; Channel Seven Adelaide Pty Ltd v Manock [2007] HCA 60; (2007) 232 CLR 245.

[17] [2002] HCA 31; 76 ALJR 1024; 190 ALR 370, [2].

[18] Farah Constructions [2007] HCA 22; (2007) 230 CLR 89, 151 [134], 159 [158].

[20] 'Despite having raised serious allegations against the Defendant in the PSPA Letter, the Plaintiff on numerous occasions has refused to meet with him to try to resolve the ongoing issues'.

[21] David Syme & Co Ltd v Hore-Lacy (2001) 1 VR 667, 675-6 (Ormiston J), 684, 686-7, 688-9 (Charles JA); Hore-Lacy v Cleary [2007] VSCA 314; (2007) 18 VR 562, 569; Setka v Abbott [2014] VSCA 287, [34]-[68] (Warren CJ, Ashley JA).