Defamation - Pleadings - Imputation of criminal offence - Whether imputations clearly untenable or manifestly groundless - Understanding of ordinary reasonable reader - Aggravated and exemplary damages - Lack of an apology

Finance Brokers Control Act 1975

First defendant's application to strike out dismissed

Second defendant's application to strike out dismissed

Second defendant's application for summary judgment dismissed

Armitage v Double Bay Newspapers Pty Ltd, unreported; SCt of NSW; No 13056; 26 September 1991

Australian Consolidated Press Ltd v Uren [1966] HCA 37; (1966) 117 CLR 185

Emerson v Walker & Ors [1999] WASC 265

Heytesbury Holdings Pty Ltd v City of Subiaco & Anor (1998) 19 WAR 440

Jones v Skelton [1963] 1 WLR 1362

Monte v Mirror Newspapers Ltd [1979] 2 NSWLR 663

Rantzen v Mirror Group Newspapers Ltd [1993] EWCA Civ 16; [1994] QB 670

Slatyer v Daily Telegraph Newspaper Co Ltd [1908] HCA 22; (1908) 6 CLR 1

Taylor v Jecks (1993) 10 WAR 309

1 HASLUCK J: The plaintiff has brought claims in defamation against the two defendants. The defendants have applied to strike out various paragraphs of the statement of claim on the grounds that the pleading fails to disclose a reasonable cause of action or will prejudice, embarrass or delay the fair trial of the action. This is the second occasion on which the application has come before me and I must therefore commence by summarising the procedural history of the matter.

2 The circumstances giving rise to the claims and the principles bearing upon a striking-out application in defamation are described fully in my previous judgment in this matter which was handed down on 29 June 2000. I will not repeat what I said on that occasion other than in summary form. It follows that the reasoning reflected in the earlier judgment should be regarded as forming part of the present reasons for decision. Further submissions have now been made by counsel for the respective parties, but I have not been persuaded to change or modify any of the views I expressed on the previous occasion. I did not make final orders at that time in anticipation that the matter would be brought on for hearing again in due course. Accordingly, the orders to be made upon the handing down of this judgment will constitute the entire range of orders made in response to the various applications before me.

3 The plaintiff in this matter, Douglas James Shave, is a member of the Legislative Assembly of Western Australia and Minister for Fair Trading. The first defendant is the publisher of The West Australian newspaper. The second defendant, James Andrew McGinty, is a member of the Legislative Assembly and a senior figure in the State parliamentary opposition.

4 In mid-February 2000, Mr McGinty wrote a letter to the Commissioner of Police asking that certain matters involving Mr Shave's handling of his portfolio be investigated. Mr McGinty's letter - described in the statement of claim as the "first words" - enclosed a copy of a letter written to The West Australian newspaper written by Mr Shave and referred to Mr McGinty's belief that there might have been a breach of secrecy provisions of the Finance Brokers Control Act 1975 by officers of the supervisory Board. The letter signed by Mr McGinty included these words: "In any event, by writing the letter, Mr Shave was an accessory after the fact to a serious breach of the legislation he has a duty to uphold." Mr McGinty called upon the Police Commissioner to investigate the matter.

5 The statement of claim contains a plea, reflected in par 3 and par 9 of the claim, that Mr McGinty delivered a copy of the letter to the defendant newspaper and that republication by the newspaper was the natural and probable consequence of the delivery.

6 Shortly afterwards, The West Australian newspaper published a report referring to the fact that Mr McGinty had written the letter in question. The newspaper report included a heading "Shave 'Broke' Secrecy Rule" and referred to "a possible breach" of the Finance Brokers Control Act involving Fair Trading Minister, Doug Shave. According to the newspaper report, Mr Shave had said that he was aware of the secrecy provision. The information in question had been conveyed to him by the Ministry, not by a member or officer of the Board. The newspaper report quoted the passage from Mr McGinty's letter just mentioned in which it was said that "Mr Shave was an accessory after the fact to a serious breach of the legislation". The words comprising the newspaper report are called the "second words".

7 When the application to strike out came before me on the first occasion, it became apparent that counsel for the plaintiff had drawn the statement of claim without having had access to the exact text of the McGinty letter. This meant that the version of the letter pleaded in the original statement of claim did not correspond with the letter actually written. I note, however, that the passage concerning the "accessory after the fact" allegation did correspond to the letter actually written and the tenor of the two letters was the same.

8 Against this background, various facets of the application to strike out were adjourned in anticipation that counsel for the plaintiff would seek leave to amend the statement of claim. However, as the first defendant's application to strike out the defamatory imputation contended for by the plaintiff in par 7 of the claim was unaffected by these events, I heard argument from the parties in regard to that aspect of the matter.

9 Paragraph 7 of the statement of claim at that time contained a plea that the second words complained of in their natural and ordinary meaning meant and were understood to mean that Mr Shave had committed a criminal offence by breaching the provisions of the Act.

10 In the course of my first judgment, I noted that an imputation will be defamatory if it tends to lower the plaintiff in the estimation of right-thinking members of society. I noted also that the question whether words which are complained of are capable of conveying a defamatory meaning is a question of law and is therefore one calling for a decision by the court. It is generally accepted that in a defamation action a party is entitled to have the imputations for which it contends left to the trier of fact for the ultimate decision. However, pleadings asserting imputations will be struck out on an interlocutory application where the imputations are clearly untenable or manifestly groundless.

11 I also drew attention to various cases, including Mirror Newspapers Ltd v Harrison [1982] HCA 50; (1982) 149 CLR 293, which indicate that special care has to be exercised where the words complain of concern, inquiries or investigation. I noted, however, that the decided cases appear to draw a distinction between reports which are thought to do no more than state that a person is under investigation (such reports being characterised as not capable of bearing a defamatory meaning) and cases where the report asserts directly, or by clear implication, that the plaintiff has been involved in acts amounting to a criminal offence (reports of the latter kind being capable of conveying a defamatory meaning).

12 In the final analysis, I concluded that the second words were capable of conveying a defamatory meaning of the kind pleaded in par 7 of the statement of claim, having regard especially to the passage in Mr McGinty's letter containing the "accessory after the fact" allegation. The allegation in question seemed to lie at the heart of the newspaper report. I held that it would be open to the ordinary reasonable reader to conclude as a matter of broad impression that, notwithstanding certain complexities, the newspaper report had revealed that Mr Shave was an accessory after the fact to a serious breach of the legislation. To that extent at least it could be said that he had committed a criminal offence. Accordingly, I was not prepared to strike out par 7 of the statement of claim on the grounds that it failed to disclose a reasonable cause of action.

13 By the time the matter came before me again, counsel for the plaintiff had prepared a minute of amended statement of claim which took account of some of the matters I have just mentioned. The plaintiff's minute pleaded the full and exact text of the McGinty letter, including, as previously, the quoted passage concerning the accessory after the fact allegation. In par 4, the first words in their natural and ordinary meaning were now said to contain two imputations, namely, that Mr Shave was an accessory after the fact to a breach of the provisions of the Finance Brokers Control Act and had thereby committed a criminal offence (par 4.1); or alternatively, that Mr Shave had so conducted himself to give rise to a suspicion on reasonable grounds that he was an accessory after the fact to a breach of the provisions of the Act and had thereby committed a criminal offence (par 4.2).

14 Paragraph 7 was amended to plead that the second words in their natural and ordinary meaning mean (as pleaded formerly) that Mr Shave had committed a criminal offence by breaching the provisions of the Act (par 7.1); or alternatively, that Mr Shave had so conducted himself to give rise to a suspicion on reasonable grounds that he had committed a criminal offence by breaching the provisions of the Act (par 7.1).

15 Paragraph 9 remained the same. Paragraph 12 was not amended and continued to reflect a claim against Mr McGinty for aggravated damages in respect of the first words.

16 In par 13, the minute contained an expanded plea in support of a claim for aggravated damages against the defendant newspaper in respect of the publication of the second words. Reference was made in par 13.1 and par 13.4 [sic] to an allegation that Mr Shave had sought an apology from the defendant newspaper and to an allegation that the defendant newspaper knew that the second words did not accurately report the contents of the McGinty letter. The plaintiff also relied upon a plea that notwithstanding knowledge of these matters the defendant newspaper would not publish an apology and retraction.

17 In par 14, the plaintiff relied upon the matters just mentioned and some additional matters in support of a claim for exemplary damages in respect of the second words. The additional matters included reference to an exchange of letters dated 17 February 2000 in which the defendant newspaper was said to have sought and obtained information from Mr Shave about the matters in controversy. This set the scene for a plea in par 14.4 that at the time of publication the defendant newspaper knew that Mr Shave had not contravened the provisions of the Act. Further, it was known to the defendant newspaper that Mr McGinty did not complain that Mr Shave, acting as principal, had breached the provisions of the Act. In the alternative, the plaintiff pleaded that the first defendant was recklessly indifferent to the truth or falsity of the second words complained of.

18 Counsel for the plaintiff applied for leave to amend the statement of claim in terms of the minute I have just described. Argument before me proceeded upon the basis that in conjunction with the application for leave to amend, I should also deal with the applications to strike out, upon the basis that the minute represented the plaintiff's statement of claim. This meant that a range of orders could be handed down at the same time.

19 I note in passing that although Mr McGinty's formal application to strike out was confined to par 4, par 7 and par 9 of the claim, he challenged the adequacy of the plea against him in par 12 for aggravated damages in the course of argument. I have treated this matter as being in issue also.

20 It follows from the preceding narrative that formal orders are now required in regard to the following issues arising from the plaintiff's minute of amended statement of claim:

1. Mr McGinty's application to strike out par 4 concerning the imputations (pleaded in par 4.1 and par 4.2) said to be inherent in the first words.

2. The defendant newspaper's application to strike out par 7 concerning the imputations (pleaded in par 7.1 and par 7.2) said to be inherent in the second words.

3. Mr McGinty's plea to strike out par 9 concerning the republication issue.

4. Mr McGinty's application to strike out par 12 concerning the claim against him for aggravated damages.

5. The defendant newspaper's application to strike out par 13 concerning the claim against it for aggravated damages.

6. The defendant newspaper's application to strike out par 14 concerning the claim against it for exemplary damages.

7. The plaintiff's application for leave to amend in terms of the minute.

21 I will deal with each of these matters in turn. Before doing so, however, I digress briefly to deal with the application for summary judgment brought against the plaintiff by Mr McGinty on the grounds that the plaintiff in the original statement of claim had purported to plead a letter that was not actually written by Mr McGinty. In the course of argument, Mr McGinty indicated that he would not persevere with the application in question if it transpired that the plaintiff's action was reasonable and permissible in the circumstances.

22 Counsel for the plaintiff argued that the steps taken were permissible. He relied upon the following passage from Gatley on Libel and Slander (9th ed) at par 26.16:

"Sometimes the plaintiff will have real difficulty in ascertaining the precise words of the libel. The court will not, save in very exceptional circumstances, grant premature discovery to enable the plaintiff to set out the libel in his statement of claim. If he is unable to set out the very words of the libel owing to the fact that the holder of the defamatory letter or other document refuses to hand it over to him, or to give him a copy, or to reveal its contents, the appropriate course is to insert in the statement of claim the closest approximation which he can make of the actual words used. In due course he should apply for discovery or serve the holder of the document (if he is a stranger to the action) with a subpoena duces tecum."

23 In the circumstances of this case, where it became apparent from the discussion before me at the first hearing that counsel for the plaintiff did not have access to the letter actually written until after the action was commenced, I consider that the steps taken by counsel for the plaintiff were reasonable and permissible. I have already observed that there was not a great deal of difference between the letter actually written and the purported text presented in the original statement of claim. It therefore seems to me that the steps taken by the plaintiff in formulating its pleading were in accordance with the practice outlined by Gatley. It follows that I will dismiss Mr McGinty's application for summary judgment now that the text of the letter actually written is before the court, as pleaded in par 4 of the minute of amended statement of claim.

1. The Second Defendant's Application to Strike Out Par 4

24 Mr McGinty submitted that the letter he wrote to the Police Commissioner was incapable of conveying any defamatory imputation of and concerning the plaintiff, Mr Shave. He argued that par 4 should be struck out on the grounds that it did not disclose a reasonable cause of action. He said that the words complained of (called the "first words" in the claim) had to be considered in their context which was a letter written by a Shadow Minister to the Police Commissioner, drawing his attention to a possible breach of s 88 of the Finance Brokers Control Act 1975. This was accompanied by a request that the matter be investigated.

25 Mr McGinty acknowledged that the letter contained the passage I mentioned earlier in which it was suggested that Mr Shave was an accessory after the fact to a serious breach of the legislation. Mr McGinty submitted that this passage was doing no more than seeking to define the sort of matters that should be inquired into in the event of the Police Commissioner deciding to undertake an investigation. In other words, the author of the letter was simply reminding the prospective investigator that he should also look at the question of whether Mr Shave was an accessory, even if it be determined that any breach of the Act had been perpetrated by some other person.

26 Mr McGinty had indicated at the first hearing before me that he intended to rely upon the decided cases referred to by counsel for the first defendant concerning this area of the law, that is to say, cases such as Mirror Newspapers Ltd v Harrison (supra) and Lewis v Daily Telegraph Ltd [1964] AC 234. These cases support the view that a report which does no more than state that a person has been arrested and has been charged with a criminal offence is incapable of bearing the imputation that he is guilty or probably guilty of that offence. The ordinary reasonable reader is mindful of the principle that a person charged with a crime is presumed innocent until it is proved that he is guilty, with the result that he will not necessarily assume that the person concerned is guilty.

27 Mr McGinty submitted that when the request contained in his letter was read in context, as indicated earlier, an ordinary reasonable reader would suspend judgment and not assume that Mr Shave had breached the legislation or was an accessory after the fact.

28 In my first judgment, which was directed to an imputation referable to the first defendant in par 7, I concluded that the newspaper report was capable of conveying a defamatory meaning. It emerges from my judgment that, in the final analysis, I gave particular weight to the headline and to that portion of the newspaper report in which it was said, quoting directly from Mr McGinty's letter, that: "In any event, by writing the letter, Mr Shave was an accessory after the fact to a serious breach of the legislation he has a duty to uphold." This seemed to be an assertion of fact that Mr Shave, if nothing else, was an accessory after the fact to a breach of the legislation and had thereby committed a criminal offence.

29 I recognise, of course, that there are significant differences between a situation in which a portion of the McGinty letter is being quoted out of context in a newspaper report suggesting that Mr Shave had broken the law and a situation in which the letter in question is directed to the Police Commissioner, and is arguably confined to a request that the matter in issue be investigated. Nonetheless, in my view, one cannot ignore the explicit language of the accessory after the fact passage. It stands out in a comparatively short letter as an assertion that, if nothing else, Mr Shave was an accessory after the fact to a serious breach of the legislation. In this context, where court proceedings are not in progress and formal processes, such as arrest and bail are not taking place, an ordinary reasonable reader could conclude that a criminal offence has been committed. That is why the matter is being turned over to the Police Commissioner. I noted in my first judgment that the term "accessory after the fact" is well-known and would be understood by the ordinary reasonable reader as a reference to collateral conduct amounting to a criminal offence.

30 Accordingly, as to this aspect of the matter, I am not prepared to strike out par 4.1 of the statement of claim on the grounds that it fails to disclose a reasonable cause of action. Further, the imputation is pleaded precisely and should not be struck out as a plea likely to prejudice, embarrass or delay the fair trial of the action.

31 In Singleton v Hudson (1998) 20 WAR 191, Owen J held that an imputation of guilt was different from an imputation of reasonable suspicion that an offence has been committed. He held the latter imputation is not necessarily included in the former. The evidence required to justify each imputation would be substantially different, and it was therefore not repetitive for a plaintiff to add to his or her statement of claim a plea in the alternative concerning reasonable suspicion of the kind that appears in par 4.2 in the present statement of claim. Accordingly, I hold also that par 4.2 of the statement of claim should not be struck out.

2. First Defendant's Application to Strike Out Par 7

32 I have already noted that the imputation pleaded in par 7.1 of the minute of amended claim (being the former par 7) should not be struck out for the reasons set out fully in my first judgment. Paragraph 7.2 now contains an additional imputation that Mr Shave had so conducted himself to give rise to a suspicion on reasonable grounds that he had committed a criminal offence by breaching the provisions of the Act. It follows from the observations I have just made concerning Singleton v Hudson (supra) that, in my view, a plea in these terms is appropriate.

33 Accordingly, the first defendant's application to strike out par 7 will be dismissed.

3. Second Defendant's Application to Strike Out Par 9

34 Paragraph 9 contained an allegation that the natural and probable consequence of Mr McGinty's decision to deliver a copy of his letter to the Police Commissioner to the defendant newspaper was that the newspaper would republish the substance of the same.

35 It is apparent from my first judgment and earlier discussion that the letter formed part of a current or potential controversy with political implications that was bound to find its way into the public domain. The letter suggested that two senior politicians from opposing sides were interested in the controversy. In these circumstances, republication was a likely consequence of the delivery and I am therefore not satisfied that this plea should be struck out.

4. Second Defendant's Application to Strike Out Par 12

36 Mr McGinty submitted that the claim for aggravated damages pleaded in par 12 should be struck out on the grounds that it failed to disclose a reasonable cause of action. He drew attention to the fact that the only matter being complained of was that Mr Shave had sought an apology and that Mr McGinty had failed and refused to provide such an apology.

37 Before turning to the adequacy of the pleading, it will be useful to refer to the principles bearing upon the distinction between aggravated damages and exemplary damages. I note in passing that O 20 r 9(3) provides that a claim for exemplary damages or a claim for aggravated damages must be specifically pleaded, together with the facts on which the party pleading relies.

38 There is a functional distinction which is usually drawn between these two categories of damages. Aggravated damages are given to compensate the plaintiff when the harm done to him by a wrongful act was aggravated by the manner in which the act was done, whereas damages of the latter kind are intended to punish the defendant and presumably to serve one or more of the objects of punishment, namely, moral retribution or deterrence. Uren v John Fairfax&Sons Pty Ltd [1966] HCA 40; (1966) 117 CLR 118 at 149.

39 There is a wide range of circumstances which might warrant an award of aggravated damages, encompassing both conduct in the publication of the defamatory material and conduct thereafter. Damages will be aggravated only by conduct which is unjustifiable, improper or lacking in bona fides. A failure to apologise does not of itself necessarily justify an award of aggravated damages. Ronci v Nationwide News Pty Ltd & Anor, unreported; SCt of WA; Library No 960340; 21 June 1996. Also see Metaxas v West Australian Newspapers Ltd, unreported; SCt of WA; Library No 970411; 18 August 1997.

40 The usual formula, in the case of exemplary damages, is that damages of this kind will be awarded in circumstances in which there is a conscious wrongdoing in contumelious disregard of another's rights or in circumstances in which it is open to the jury to find that the defendant recklessly and arrogantly attacked the plaintiff's reputation for the purpose of publishing a sensational story to attract the custom of newspaper readers. Whitfeld v De Lauret & Co Ltd [1920] HCA 75; (1920) 29 CLR 71. Exemplary damages are designed to punish the wrongdoer regardless of any effect of the wrong upon the plaintiff. Ronci v Nationwide News Pty Ltd & Anor (supra).

41 Steytler J observed in Oracle International Pty Ltd v West Australian Newspapers Ltd, unreported; SCt of WA; Library No 970696; 11 December 1997 that he would be loath to say that a failure to apologise could never give rise to exemplary damages. Much might, in the end, depend upon the circumstances. If the case was one in which an apology was self-evidently called for and there was a conscious decision, notwithstanding that fact, to refuse to make an apology, then that might ground an award of exemplary damages. It is also apparent from that case that, although the same facts may provide the basis for an award of both aggravated and exemplary damages, it is appropriate to plead the claims for aggravated and exemplary damages arising from the same set of facts in separate paragraphs.

42 Against the background of this discussion, I must now return to Mr McGinty's application to strike out par 12 of the claim. It is apparent from the facts and matters pleaded in support of the claim for aggravated damages that Mr Shave relies essentially upon Mr McGinty's refusal to publish an apology. The plaintiff does not set out any additional factors to be considered such as a lack of bona fides or some improper purpose. It is apparent from the statement of claim generally that Mr McGinty submitted his letter to the Police Commissioner, being a party with authority to inquire into a breach of the law. Most citizens understand that if they have some reason to believe that laws are being broken, they should refer the matter to the police.

43 I have already noted in my review of the decided cases that a refusal to provide an apology of itself does not necessarily justify an award of aggravated damages. In the circumstances of the present case, Mr McGinty is entitled to argue that he should not be expected to provide an apology for acting in accordance with a responsible citizen's understanding of what is to be done when he believes a law is being breached. In the present case, however, it is apparent from the pleading as a whole that the failure to apologise occurred in circumstances where a copy of Mr McGinty's letter had been delivered to the defendant newspaper. Against this background, I do not consider that the plaintiff's claim against Mr McGinty for aggravated damages as reflected in par 12 can be characterised as untenable. I am not satisfied that it should be struck out.

5. The First Defendant's Application to Strike Out Par 13

44 I have already noted that facts and matters pleaded in par 13 in support of a claim for aggravated damages by Mr Shave against the defendant newspaper include a request for an apology, and the first defendant's supposed knowledge that its report did not accurately reflect the contents of Mr McGinty's letter and conveyed an imputation that Mr Shave had breached the Finance Brokers Control Act while acting as a principal. The particulars also included reference to the first defendant's alleged refusal to apologise, notwithstanding its knowledge of the matters just mentioned.

45 Particulars of this kind take the case beyond the situation I referred to when discussing Mr McGinty's objection to the claim. In this case more is alleged than a mere failure to apologise. The combination of facts and matters relied on suggest the presence of an improper purpose in that the defendant newspaper by its report was minded to embellish and exaggerate some of the constituents of the story it had in mind to publish.

46 I am therefore not satisfied that the claim for aggravated damages against the first defendant should be struck out on any of the bases contended for by the first defendant.

6. First Defendant's Application to Strike Out Par 14

47 Again, I have already set out the constituents in summary form of the plaintiff's claim against the defendant newspaper for exemplary damages as reflected in par 14 of the statement of claim.

48 In par 14.1, it says that the second words purported to report the substance of a complaint made by Mr McGinty to the Police Commissioner, but did not, as the first defendant knew, accurately report the contents of Mr McGinty's letter and conveyed an imputation that Mr Shave had breached the Act while acting as a principal.

49 In par 14.2 and par 14.3, the plaintiff asserts that by letter dated 17 February 2000 the first defendant requested information of Mr Shave bearing upon the matters in issue and was provided with such information by a letter of the same date from the plaintiff.

50 In par 14.4, it is alleged that at the time of the publication of the second words complained of the defendant newspaper knew that Mr Shave had not contravened the provisions of the Act, the allegation that he had done so was untrue, and that Mr McGinty had not complained that Mr Shave had breached the Act while acting as a principal. It is said further that the defendant newspaper was recklessly indifferent to the truth or falsity of the second words complained of.

51 The decided cases note that exemplary damages are available in circumstances in which there is a conscious wrongdoing in contumelious disregard of another's rights or in circumstances in which it is open to the jury to find that the defendant recklessly attacked the plaintiff's reputation for the purpose of publishing a sensational story.

52 Against the background of the decided cases, I am not satisfied that the claim for exemplary damages reflected in par 14 can be characterised as untenable in its entirety or as to any part of the claim. Each constituent of par 14 is relevant to and plays a part in underpinning the claim for exemplary damages. Accordingly, I will dismiss the first defendant's application to strike out par 14 of the claim. The claim is formulated precisely and cannot be regarded as prejudicial, embarrassing or likely to delay the fair trial of the action.

7. The Plaintiff's Application for Leave to Amend

53 I described the circumstances in which the plaintiff's minute of amended statement of claim was brought into being earlier in this judgment. Argument proceeded before me at the second hearing upon the basis that the plaintiff had notionally been allowed leave to amend in terms of the minute as a means of drawing together the various applications to strike out, and with a view to orders being made that would take effect at a single moment in time upon the handing down of this further judgment.

54 It follows from my earlier rulings that, in my view, the claims reflected in the plaintiff's minute of amended statement of claim are sufficiently pleaded. It is generally inappropriate to allow leave to amend in terms that are at risk of being struck out later. In this case, however, as it turns out, a dilemma of that kind does not arise. Accordingly, I will allow to the plaintiff leave to amend in terms of the minute of amended statement of claim.

55 In summary, then, I will make orders dismissing the applications to strike out par 4, par 7, par 12, par 13 and par 14 of the amended statement of claim. I will hear further submissions from the parties as to what programming orders should now be made so that the action can proceed.