HER HONOUR: These are proceedings for defamation arising out of remarks made by the well-known radio presenter, Mr Ray Hadley, on his morning show on Radio 2GB. The segments of the broadcast sued on discussed the governance of Parramatta Leagues Club, evidently in the context of a forthcoming meeting of the Club to elect a new board. Mr Steven Sharp was and apparently remains the incumbent chairman of the board. Mr Tom Issa was and remains a director. They bring the proceedings against Harbour Radio Pty Ltd, the corporate proprietor of radio station 2GB and against Mr Hadley.
The defendants' defences include a defence of contextual truth under s 26 of the Defamation Act 2005 (NSW). The plaintiffs object to the form of the defence. This judgment determines that objection.
Section 26 provides:
26 Defence of contextual truth
It is a defence to the publication of defamatory matter if the defendant proves that:
(a) the matter carried, in addition to the defamatory imputations of which the plaintiff complains, one or more other imputations ("contextual imputations") that are substantially true, and
(b) the defamatory imputations do not further harm the reputation of the plaintiff because of the substantial truth of the contextual imputations.
Reference should also be made to the provisions of the Uniform Civil Procedure Rules 2005 (NSW). Rule 14.30 requires a plaintiff to specify the imputations upon which he or she relies and further imposes a requirement that each imputation relied upon by a plaintiff must differ in substance from any other imputation relied upon by him or her. Rule 14.33 contemplates a similar obligation on a defendant to specify any contextual imputation relied upon by the defendant.
In the present case, the defendants have specified a single contextual imputation alleged to be conveyed in respect of each of the two plaintiffs. The plaintiffs move to have that contextual imputation struck out on the grounds that it does not differ in substance from the plaintiffs' imputations and, therefore, cannot meet the requirement of the section that it arises "in addition to" the plaintiffs' imputations. Alternatively, the plaintiffs contend that the contextual imputation could not meet the requirement of s 26(b), loosely referred to as the "swamping" effect.
Before turning to consider those contentions, it is appropriate to record some of the relevant history of the jurisprudence regarding the defence under s 26. Prior to the introduction of the 2005 Act, proceedings for defamation were governed by the Defamation Act 1974 (NSW). Under that Act, a plaintiff had a separate cause of action for each imputation arising from the matter complained of. The 1974 Act also included a defence of contextual truth, contained in s 16 of that Act. Because each imputation gave rise to a separate cause of action, a defendant had to defend each imputation separately. In that legal context, it was accepted that a defendant was entitled to adopt any of the plaintiff's imputations as a contextual imputation to defeat a different plaintiff's imputation.
According to the judgment of McColl JA in Fairfax Media Publications Pty Ltd v Kermode [2011] NSWCA 174; 81 NSWLR 157 at [70], the proposition that a defendant was entitled to "plead back" a plaintiff's imputation as a contextual imputation was first approved by Hunt J in Allen v John Fairfax & Sons Ltd (Supreme Court of New South Wales, Hunt J, 2 December 1988, unreported). His Honour said:
"A defendant is always entitled to adopt any of the plaintiff's imputations as a contextual imputation and to plead a defence of contextual truth based upon that imputation to the cause of action based upon another of the plaintiff's imputations. Similarly, the defendant is always entitled to adopt any of the plaintiff's imputations as one or more of its group of contextual imputations where it relies upon the combined effect of the truth of that group of imputations and so effecting the plaintiff's reputation that the plaintiff's imputation to which that group of contextual imputations is pleaded did not further injure that reputation..."
Under the 2005 Act the plaintiff has a cause of action in respect of the matter complained of, not in respect of each individual imputation carried by the matter complained of. In Kermode, the Court of Appeal held that in that different legal context the purpose or proper construction of s 26 of the 2005 Act could not be discerned from the jurisprudence regarding s 16 of the 1974 Act. It was held in Kermode that, contrary to the position that obtained under the 1974 Act, a defendant in proceedings governed by the 2005 Act cannot "plead back" any plaintiff's imputation in accordance with the procedure approved by Hunt J in Allen.
One practical effect of that change in the law is that, whereas the 1974 Act (in combination with the requirement that a plaintiff's imputations each differ in substance from the other) encouraged the distillation of a claim to a smaller number of imputations, the 2005 Act encourages their proliferation. A plaintiff now has an incentive to trawl the matter complained of for every pleadable imputation so as to foreclose the risk of facing a contextual truth defence. A defendant in turn has an incentive to discern even further different meanings. That was probably an unforeseen consequence of the 2005 Act. It may be doubted whether Parliament intended to create a defence that has a tendency to enlarge the scope of defamation proceedings. Certainly the risk of complication and proliferation of issues in defamation proceedings is inimical to objects stated in s 3 of the Act. A purposive construction of the Act, having regard to those objects, would suggest a narrower construction of the defence.
Such an approach would in turn appear to accord with the remarks of the Attorney-General in the second reading speech, set out in Kermode at [37] as follows:
"Clause 8 will bring a significant but very welcome change to New South Wales law. Under the present New South Wales law each defamatory imputation or meaning gives rise to a separate cause of action. In all other jurisdictions it is the publication of defamatory matter that gives rise to the action. In a speech to university students some years ago the former Supreme Court defamation list judge, the Hon. Justice David Levine, RFD, lamented the 'excruciating and sterile technicalities' that result from making the imputation the cause of action. His Honour said:
'Fortnight after fortnight I have to deal with arguments concerning whether a pleaded imputation is proper in form and is capable of arising from the relevant publication ... The amount of the court's time, let alone litigants' resources, expended profligately in the determination of what words, sentences and phrases mean is positively scandalous: and this is at the initiation of proceedings ... Matters of principle have been elevated to an obsessive preoccupation, the playthings of forensic ingenuity, fantasy and imagination at the expense of the early, quick and cheap litigation of real issues that affect the people involved in libel actions ... The question is not simply what does a publication mean and whether what it means is defamatory. The jury has to determine, in the no doubt novel environment for the jurors of the courtroom and the jury room, whether the words that constitute the imputation carefully crafted by lawyers are in fact carried by the publication complained of to ordinary reasonable people.'
Clause 8 will finally put an end to the needless complexity that His Honour described. Clause 8 reflects the position at common law by making it clear that it is the publication of defamatory matter that is the basis for a civil action for defamation. ...
Clause 25 sets out the defence of justification ... [which]... reflects the defence of justification at general law, where truth alone is a defence to the publication of defamatory matter. Perhaps the single greatest obstacle to uniform defamation laws over the past 25 years has been the inability of the States and Territories to reach agreement in relation to the truth defence. [The Attorney General then explained the divergence between the common law and statutory jurisdictions and why, '[d]efendants are much more likely to invoke other defences, such as fair comment or honest opinion, where the truth of the publication is not the central issue']. I fully expect that the proposed change to the law will pass largely unnoticed.
Clause 26 provides for a defence of contextual truth. There is already a defence of contextual truth under the existing New South Wales Act. The purpose of the defence is basically to prevent plaintiffs from taking relatively minor imputations out of their context within a substantially true publication."
The risk of complication and proliferation of the issues in defamation proceedings is in my respectful opinion compounded by a further aspect of the defence under s 26 explained in the recent decision of the Court of Appeal in Fairfax Media Publications v Zeccola [2015] NSWCA 329. In that case at first instance I had struck out a contextual imputation on the basis that it did not meet the requirement of s 26 that it be an "other" imputation capable of arising "in addition to" the plaintiff's imputations.
The Court of Appeal overturned my decision, holding that the contextual imputation was capable of meeting the requirements of the section. The decision in Zeccola holds that the scope of the defence is broader than I had previously understood it to be by reference to my purposive construction of the Act. In order to appreciate the potential breadth of the defence in accordance with the principles stated by the Court of Appeal in Zeccola, it is informative to look at the contextual imputation allowed in that case.
The plaintiffs' imputation was that each plaintiff acted wrongfully in permitting Palace Films to withhold returns due to producers of successful films. The contextual imputation was that each plaintiff permitted Palace Films to default on its payment obligations to producers of Australian films.
I was not persuaded that the contextual imputation could meet the requirement of s 26 that it be an "other" imputation capable of arising "in addition to" the plaintiffs' imputations. I considered that the sting of each was not of a different kind but was essentially the same, being an allegation of failure to meet obligations duly undertaken in respect of the distribution of films.
The Court of Appeal held that the contextual imputation was an imputation of general financial default which was capable of being substantially different from the specific instances of such default selected in the plaintiffs' imputations. On that basis, the Court was satisfied that it would be open to a jury to conclude that the contextual imputation differed in substance from the plaintiffs' imputations and that I had erred in striking out the contextual imputation.
The discussion of that issue in the Court of Appeal's judgment focussed on the language of earlier cases on the nature of the requirement that a contextual imputation differ in substance from the plaintiff's imputations. There had, in the jurisprudence, developed a description which evolved into something of a test for a contextual imputation that it must "differ in kind" from the plaintiff's imputations. Whether or not that was the approach adopted in every case and however the requirement of difference is described, the experience of Zeccola reveals that a list judge must take a cautious approach before striking out a contextual imputation on the grounds that it is incapable of complying with the requirements of the section.
As already noted, my approach at first instance in Zeccola was probably informed by a purposive construction of the section and, in particular, my understanding that the purpose of the section was to prevent a plaintiff from avoiding serious stings by selective pleading. As suggested by the Court of Appeal at [66]-[68], my thinking on the proper construction of the section had been refined (and may have been expressed more clearly) in my later judgment in Bateman v Fairfax Media Publications Pty Ltd (No 3) [2014] NSWSC 1601. My approach in both cases must be taken to have been rejected by the Court of Appeal in Zeccola especially at [73] per McColl JA (Macfarlan JA agreeing at [112]) where her Honour said:
Further, with respect, I do not understand to what part of s 26 McCallum J was referring in Bateman when her Honour found that "on the proper construction of the section" a "differ in substance" test was not a sufficient exposition of the s 26 criterion. To the extent if at all, her Honour's statement leaves room for a "differ in kind" test as a free-standing criterion, I would respectfully disagree, for the reasons I have given. In my view the text of s 26 does not support that conclusion.
In the result, it is now established that it is open to a defendant to plead, as a contextual imputation, any imputation that differs in substance from the plaintiff's imputations and that any temptation to impose any larger requirement (in the interests of simplicity) must be resisted.
The imputation specified as a contextual imputation in the present case is that each plaintiff "breached his duties as a director of the Parramatta Leagues Club Ltd". The permissibility of that imputation is to be assessed against the plaintiffs' imputations and particularly those which relate to the plaintiffs' conduct in their respective capacities as chairman or director of the club. In particular, each of the plaintiffs has specified the following imputation as to the first and third matters complained of:
That he, as a director of the Parramatta Leagues Club, has been so incompetent and derelict in his duties that he should be removed from the board;
and, as to the fourth matter complained of:
That he, as a director of the Parramatta Leagues Club, has been so incompetent and derelict in his duties that it warrants his removal and the NRL to take control of the board.
As submitted by Mr Richardson, who appears for the defendants, it must, following Zeccola, be taken to be the law that a general imputation, assuming it is capable of arising, differs in substance from a more specific imputation pleaded by a plaintiff. That is the effect of the Court's discussion at [79]-[84] of the judgment, recently applied by me in Cornwell v Channel Seven Sydney Pty Limited [2015] NSWSC 1673 at [10]-[15].
Mr Richardson submitted that the imputations specified by the plaintiffs, which refer to a dereliction of duties, include additional concepts of incompetence and warranting removal from the board. He submitted that all of the imputations specified by the plaintiffs otherwise contain concepts which are additional to and distinct from the general contextual imputation pleaded (that each plaintiff breached his duties as a director of the club). In other words this is a case, as in Cornwell, where a general contextual imputation has been pleaded in defence of more specific imputations pleaded by a plaintiff. In my view, it must be accepted that the contextual imputation does differ in substance from the plaintiffs' imputations.
Separately, it was contended that the contextual imputation is not capable of arising in addition to the plaintiffs' imputations. As submitted by Mr Richardson, in light of the Court's ruling in Zeccola, that also must be taken not to be correct. As already explained, the Court specifically rejected the imposition of any requirement that there be a difference in kind in imputations. More importantly, as I have endeavoured to explain, the Court's decision reveals that the content of the requirement that an imputation be an "other" imputation is less onerous than I had previously apprehended.
The final objection raised by the plaintiffs relates to what has been referred to as the "swamping" effect. In particular, it was submitted that the defence could not succeed in circumstances where the plaintiffs complain of more serious imputations, including imputations of making false allegations to the public that they are liars and, as to the second plaintiff, that he is so contemptible that he is not worth knowing.
The plaintiffs submit that the allegation captured in the contextual imputation is simply incapable of having the so-called "swamping" effect. As submitted by Mr Richardson, however, the difficulty with that contention is that the task for the tribunal of fact raised by s 26(b) is not to compare imputation with imputation but to consider the matters proved by the evidence and to consider whether, in the circumstances established, any imputation complained of by the plaintiff does not further injure his reputation: John Fairfax Publications Pty Ltd v Blake (2001) 53 NSWLR 521 at [4]-[6] per Spigelman CJ; Rolfe A-JA agreeing at [70]. There is good reason based on that authority for a list judge to stay his or her hand in striking out a contextual imputation before those matters are determined by the tribunal of fact.
A consideration of the matters pleaded to support the defence in the present case reveals that there are likely to be, if those matters are proved, substantial considerations for the jury to take into account. The particulars of truth are the same as the particulars of contextual truth. The matters appearing from page 8 of the defence and following raise serious allegations against the plaintiffs going to a variety of alleged breaches of directors' duties. The alleged breaches are of different kinds ranging from matters dealing with the salary cap, a particular player, allegations of other salary cap breaches, a failure to obtain an insurance policy for a particular injured player and matters relating to directors' remuneration and expenses.
It is inappropriate in my view to attempt to judge the likelihood or capacity of those matters to have the effect articulated in the section. For those reasons, I am not persuaded that it is appropriate to strike out the contextual imputation at this stage of the proceedings.
The defendants have indicated in correspondence that they would accede to what is becoming common practice in this list that, where a plaintiff wishes to appropriate a defendant's contextual imputation, the defendant consents to that course on the basis that the right is reserved to challenge the appropriation at trial in the event that evidence of the substantial truth of the contextual imputation and the plaintiff's knowledge of that truth is adduced. That was the approach taken by me in the matter of Pahuja v TCN Channel Nine Pty Limited [2015] NSWSC 164 at [3], at the urging of the parties in that case.
Having made that indication, Mr Richardson made a formal submission that the authorities which allow a plaintiff to appropriate a contextual imputation are wrong. He accepted, however, that that submission could only be made as a formal submission in this Court, there being appellate authority to the contrary in Kermode at [88]-[89]; approved in Holt v TCN Channel Nine Pty Ltd [2014] NSWCA 90 at [23] per Macfarlan JA; Gleeson JA agreeing at [90]; Sackville A-JA agreeing at [94]-[95].
In the circumstances, the appropriate course in my view is for the Court to note the submission by way of formal qualification to the basis on which the defendants consent to any appropriation by the plaintiffs of the contextual imputation in their pleadings.
[2]
ADDENDUM
I have this afternoon determined an application by the plaintiffs to have the defendants' contextual truth defence struck out. The application was refused and it would ordinarily follow that the plaintiffs should pay the defendants' costs.
Mr Lewis, with commendable ingenuity, submitted that the Court might exercise its discretion to order otherwise on the basis that the defendants made a formal submission against the inevitable consequence of that ruling, which is that the plaintiffs will now appropriate the contextual imputation. I do not think that is sufficient reason to deprive the defendants of the ordinary costs result.
Accordingly, I order the plaintiffs to pay the defendants' costs of the application today.
[3]
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Decision last updated: 11 March 2016