Plaintiffs v Defendant

1 On 13 October 2004 the plaintiffs sued the State of New South Wales for defamation in respect of statements made by a spokesman for the New South Wales government to the effect that the plaintiffs operated an illegal gambling business by offering facilities for "spread betting" to their clients. This form of betting and the advertising of it was said by the spokesman to contravene a number of New South Wales statutory provisions because neither of the plaintiffs were registered bookmakers nor had either of them received approval to offer this form of gambling.

2 Initially the New South Wales government pleaded justification in respect of the spokesman's statement. This plea led to there being a trial of a preliminary issue pursuant to RSC r 47.04, as to whether the plaintiffs' activities were illegal, having regard to the fact that they were licensed as securities dealers under the relevant provisions of the Corporations Act 2001 (C'th) and spread betting involved dealing in securities.

3 On 24 March 2006 this Court determined that preliminary issue in the plaintiffs' favour. It held that if the plaintiffs' activities meant that they required a licence under New South Wales gaming legislation to advertise and engage in spread betting such legislation was ineffective in their case having regard to the securities dealers licence issued pursuant to Commonwealth legislation which they held. The judgment on that question sets out the circumstances in which the plaintiffs carry on their business, describes the concept of spread betting and explains why a securities dealers licence exempts the plaintiffs from New South Wales gaming laws.[1] There is, accordingly, no need to dwell on these aspects of the case further.

4 Following the trial of the preliminary issue, the defendant amended its defence to delete its pleas of justification but left intact a number of pleas which might, for convenience, be called pleas of fair comment - the name usually used in those jurisdictions where, at the relevant time, such defences were regulated by the common law rather than by statute.

5 As the plaintiffs relied upon causes of action arising from republication of the spokesman's statements in The Australian newspaper, which is published in every State and Territory, it was necessary for the defendant to plead fair comment and each of its statutory variants to seek the protection of the defence in every jurisdiction. In respect of publication in Victoria and South Australia (the common law states) the defendant pleaded:

"10...

(a) ...

(b) the said matter complained of was fair comment on a matter of public interest."

Although set out separately, a similar plea was made in respect of publication in the Australian Capital Territory. In each of these jurisdictions the common law prevailed with respect to this defence.

6 In respect of publication in New South Wales it pleaded:

"11...

(a) ...

(b) so much of the matter complained of as comprised words attributed to 'a spokesman for NSW Gaming Minister Richard Face' that those parts:-

(i) related to matters of public interest;

(ii) amounted to comment;

(iii) that comment was the comment of the defendant or alternatively of a servant or agent thereof;

(iv) was based on proper material for comment and upon no other material or, in the alternative, was based to some extent on proper material for comment and represented an opinion which might reasonably be based on that material to the extent to which it was proper material for comment.

..."

7 In respect of publication in Queensland and Tasmania, it pleaded:

"12. ...

(a) ...

(b) ...

(c) ...

(d) the publication was made in good faith in the course of, or for the purposes of, the discussion of some thing the subject of public interest, the public discussion of which was for the public benefit and in so far as the defamatory matter consisted of comment, the comment was fair;

(e) the publication was fair comment respecting the public conduct of any corporate entity, that is the Plaintiffs, which takes part in public affairs, or respecting the character of any such entity, so far as the entity's character appears in that conduct."

8 As to publication in Western Australia the defendant pleaded as follows:-

"13. . . . . . . . . . . . . . . . . . . . . . . . . .

(b) the said matter complained of was fair comment on a matter of public interest;

(c) the publication was fair comment respecting the public conduct of any corporate entity, that is the plaintiffs, which takes part in public affairs, or respecting the character of any such entity, so far as the entities character appears in that conduct.

The same plea was made with respect to publication in the Northern Territory.

9 The defendant provided particulars of its defences of "comment" and "fair comment" as follows:

1. The paragraph 'a spokesman for New South Wales Gaming Minister Richard Face said IG had illegally advertised its service in the State' and the words 'we have no doubt it is illegal and we have told ASIC' the spokesman said comprised expressions of opinion and were therefore comment.

2. The words 'this was because the firm was not a licensed bookmaker and had not received approval to offer its form of gambling' comprised statements of fact and were proper material for comment because those facts were accurately stated."

10 The plaintiff complains that these defences, supported as they are by the particulars provided, are bad in law and should be struck out. The defendant seeks to maintain them as viable defences to the claims made against it.

11 The plaintiffs' principal contention in support of its application to strike out each of the defendant's pleas of comment and fair comment is that the facts upon which the comment is based are untrue and that, accordingly, the defence cannot succeed. The defendant maintained that the facts were true but that even if the opinions expressed by the Minister's spokesman were erroneous, as this Court's judgment of 24 March 2006 established, such error was irrelevant. They were still (fair) comment. Objective inaccuracy, submitted the defendant, is irrelevant.

12 These contentions raise questions as to whether and to what extent facts supporting a comment must be objectively true to enable a defendant to succeed on a plea of (fair) comment and whether the facts set out in the particulars relied upon here by the defendant are true to a sufficient extent to permit its various defences of (fair) comment to remain on the record.

13 Sometimes referred to as the bulwark of free speech, the defence of fair comment answers a libel provided it is a comment and not a statement of fact, that there is a basis for it, either contained in or referred to in the matter complained of, and that it is a comment on a matter of public interest.[2]

14 It may be assumed for present purposes that the matters pleaded by the defendant in its particulars as comments are capable of being found by a tribunal of fact to be expressions of opinion although they could also be statements of fact. Even though the question of illegality with respect to the plaintiffs' advertising and their gambling activities could probably be determined as objective facts, in the context in which they were asserted by the defendant's agent they could be expressions of opinion as claimed. See Telnikoff v Matusevich .[3]

15 The reason that the Ministers spokesman's comments can be accepted as expressions of opinion is because of the very clear statements of fact upon which they are based - namely that the plaintiffs were not licensed bookmakers and had not received approval to offer their form of gambling.

16 That the facts upon which a comment is based must be true to support a defence of "fair" comment is axiomatic. In support of this proposition the plaintiffs rely upon an unqualified statement of Marks J to that effect in Herald and Weekly Times Ltd v The Guide Dog Owners and Friends Association [4] and a statement by Collins MR in Digby v Financial News Ltd [5] in the following terms:-

"Comment, in order to be fair, must be based upon facts, and if a defendant cannot shew that his comments contain no misstatements of fact, he cannot prove a defence of fair comment. The usual way to begin such a plea is by asserting that the facts upon which the comment is based are true, that is, that the defendant has made no misstatements in formulating the materials upon which he has commented. If the defendant makes a misstatement of any of the facts upon which he comments, it at once negatives the possibility of his comment being fair."

17 To these cases may be added Joynt v Cycle Trade Publishing Co, Hunt v Star Newspaper Company Ltd and Australian Broadcasting v Comalco Ltd [6]

Were the facts true?

18 The defendant has, in its defence, identified the facts upon which it says the Gaming Minister's spokesman commented as being part of the words attributed to him in the article in The Australian. They were that "the firm was not a licensed bookmaker and had not received approval to offer its form of gambling".

19 The defendant submitted that this statement is literally true. The plaintiffs were indeed not licensed bookmakers and had not received any approval from the State of New South Wales to offer their form of gambling. But to argue that the statement is a statement (or two statements) of fact without qualification does violence to what the speaker is actually conveying by the words which he used. The argument that there is no implied qualification inherent in the statement is misleading. The words used carry a necessary implication that both a bookmaker's licence and approval from the State of New South Wales were prerequisites to the engaging in and the advertising of spread betting services in that State. In fact, neither precondition is necessary, provided the person who engages in and/or advertises spread betting is the holder of a relevant licence issued by ASIC under the Corporations Act 2001 (Cth). The statement must be understood as if the words ". . . both of which were required by law" or some similar phrase was appended to it. It cannot be understood otherwise.

20 Read in the only sensible way possible the statement of facts relied upon by the defendant is untrue in both its elements. That the Minister's spokesman may have thought it true is irrelevant. It cannot support a defence of fair comment at common law. Accordingly, insofar as the defendant's defence pleads fair comment in answer to the plaintiffs' claim in those jurisdictions in which this aspect of defamation is governed by the common law, that plea and the particulars supporting it must be struck out as not affording an arguable answer to the plaintiffs' claim.

21 It remains to examine the question as to whether the plea and the particulars have any efficacy with respect to those parts of the plaintiffs' claim which relies upon the law of jurisdictions in which the common law has been modified by statute.

New South Wales

22 Mr McClintock QC argued that the defence of comment preserved by the Defamation Act 1974 (NSW) requires only that the comment be based on "proper material for comment" or be based "to some extent on proper material for comment".

23 Section 30 of the New South Wales Act provides a definition of "proper material for comment". In the context of this case it means material which, at common law, would, because it consists of statements of fact, be material on which comment might be based for the purposes of the defence of fair comment on a matter of public interest. The section goes on to make various modifications to the common law position but not, it would appear, in any way material to the present case. Unless the material upon which the comment sought to be defended constitutes a good basis for fair comment at common law the defence cannot succeed.

24 If the statement of facts relied upon by the defendant is untrue it could not constitute proper material for comment as required by s 30. Even if Mr McClintock's submission that partial accuracy is enough to raise the defence under the New South Wales statute, as the particulars are untrue in both their aspects, that argument too must be rejected. Nor does his reference to Hill v Comben[7] avail him anything in this context. The reference to truth in the judgment of Davies and Pincus JJA in that case was made in the course of considering whether the "rolled up plea" was an appropriate plea of fair comment under the relevant provisions of the Criminal Code of Queensland.

25 The falsity of the facts upon which the comments sought to be defended are based renders the defence inapplicable as far as publication in New South Wales is concerned. It must be struck out.

Queensland, Tasmania, Western Australia and Northern Territory

26 The legislative provisions in Queensland, Tasmania, Western Australia and the Northern Territory are in virtually identical terms. Whilst they set out a number of matters be taken into account in determining whether the public interest aspect of fair comment (which does not concern us here) can be established they do not alter the common law with respect to the foundational requirement that the basis of the comment sought to be defended must be appropriate. Accordingly, the defence of comment relied upon by the defendant with respect to publication in each of these jurisdictions cannot succeed. Those defences must be struck out.

Conclusion

27 Mr McClintock contended that this application should not be entertained at all at this stage because the validity of the defences of fair comment or comment may depend upon facts which have not yet been ascertained. But the defendant has provided precise particulars in its defence of the facts upon which it seeks to defend the Minister's spokesman's statement as a legitimate expression of opinion. By doing so it has, in effect, adopted the report in The Australian as being an accurate recounting of what the Minister's spokesman said, at least to the extent that it has quoted that report in those particulars. Had it wished to suggest otherwise it should have done so in its pleading so as to raise an issue appropriate for determination at trial. It has not done so. There is no reason why the defences pleaded which are ineffectual should not be removed from the record at this stage to permit the trial to proceed on the real issues between the parties.

28 Each plea of fair comment or comment in the defendant's current defence together with the particulars said to support those pleas should be struck out. Accordingly, paragraphs 10(b), 11(b), 12 (d) and (e), 13(b) and (c), 14(b) and 15(b) and paragraph D of the particulars set out after paragraph 15 of the Further Amended Defence of the defendant dated 4 May 2006 are struck out. The defendant is ordered to pay the plaintiffs' costs of this application to be taxed.

[1] [2006] VSC 108.

[2] Sutherland v Stopes [1925] AC 47, per Viscount Finlay at 62; Lyon v The Daily Telegraph Limited [1943] KB 746 per Scott LJ at 752 and 753; Limb v Daily Telegraph Limited [1968] 2 QB 157 per Lord Denning MR at 170.

[3] [1992] UKHL 2; [1992] 2 AC 343 per Lord Keith of Kinkel at 351 and per Lord Ackner at 357-8.

[4] [1990] VicRp 40; [1990] VR 451 at 466.

[5] [1906] 1KB 502 at 507

[6] [1904] 2 KB 292 at 298; [1908] 2 KB 309 at 317 and 320; (1986) 12 FCR 510 at 553-6 and 585.

[7] [1993] 1 QdR 603 at 606.