SMEC Holdings Ltd v Boniface [2007] NSWSC 1402 | Case summary | Zoe

NSWNSWSC

SMEC Holdings Ltd v Boniface

[2007] NSWSC 1402

Supreme Court of NSW|2007-11-05|Before: Simpson J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2007-11-05

Before

Simpson J

Source

Original judgment source is linked above.

Judgment (112 paragraphs)

[1]

Background 6 It is necessary at this point to set out some factual background. While some of what follows may appear to have only marginal relevance to the issues outlined above, it will, in due course, be seen that a number of facts and circumstances were raised by the case as it was fought by the parties. 7 The proceedings arise out of a rather sorry state of affairs in SMEC. 8 SMEC is a private engineering company that derived from the Snowy Mountains Hydroelectricity Authority. In about 1991-1993 shares in SMEC were sold by the Commonwealth Government to SMEC employees. By SMEC's constitution, its shares may only be held by employees during the course of their employment, and must be disposed of within one year of termination of employment. 9 SMEC is the centre point of a number of related companies. The Group presently has about 2500 employees, and an annual turnover of $200 million. It undertakes engineering projects internationally, on its own behalf, and in association with organisations such as the World Bank, the Asian Development Bank, AusAid and others. 10 From 1993 until 2000 Mr Jack Boniface (the defendant's father) was Chairman of the Board of Directors and Chief Executive Officer of SMEC. In 1995 the defendant commenced employment in the company as a Project Finance Manager. 11 In 2000-2001 each of the individual plaintiffs held an executive position in SMEC, and each is, and has at relevant times, been a member of the Board of Directors. By profession, each of them is an engineer. 12 Over the years, two circumstances (of present relevance) arose that upset the equilibrium of the SMEC workplace. 13 In December 1997 the defendant was found to have pornography on his office computer. A policy was promulgated (by Mr Jack Boniface, in his capacity as CEO) concerning the use of Internet facilities. That issue then appears to have subsided. At some (unidentified) time, dissatisfaction began to emerge among some Board members relating to the chairmanship of Mr Jack Boniface, and his performance of his role as CEO. Early in 2000 the Board took the step of abolishing the position of CEO. Mr Jack Boniface remained as Chairman of the Board until the end of that year. He was not re-elected as Chairman. At the end of 2001 his four year term as director expired and, although he renominated, he was not re-elected to the Board. 14 He has brought proceedings (which are still current) against SMEC in the Industrial Relations Commission; and SMEC has initiated litigation against him in this Court. No further details of the latter matter emerged in the evidence. The former involves allegations of unfair dismissal. 15 In 2002 the position of CEO was reinstated, and Mr Busbridge took up that position. He also became Chairman of the Board of Directors. 16 From 24 November 2000 a series of anonymous email messages circulated within SMEC. In terms of time, they fall into three groups: four were circulated between 24 November 2000 and 10 January 2001; three were circulated between 16 July and 1 August 2001. Another email which was not circulated within SMEC and was therefore not discovered until later was sent to the World Bank on 15 February 2001. These constitute the defamatory publications upon which the plaintiffs sue. Their content and the imputations they conveyed will be detailed below. 17 In about January 2001 the defendant was again found, in breach of SMEC's promulgated Internet policy, to have pornographic images on his office computer. He was also suspected of having been responsible for the circulation of the emails which, to that date, numbered four. An investigation commenced into both matters. On 17 January 2001 the defendant's employment was terminated. There were then no further defamatory emails detected until July 2001, from which date another three were circulated. The eighth email (15 February 2001) was discovered because, in that month, senior officers of the World Bank, having received the email, instigated an investigation and met senior executives of SMEC in order to ascertain the truth of the matters raised. During the course of this meeting, the representatives of the World Bank told the SMEC representatives that the Bank had received an anonymous email, which he declined to show to the directors, but which he read to them orally. It is a fair inference that this email was the circumstance that precipitated the World Bank investigation. Subsequently, SMEC directors came into possession of a copy of the email which they recognised as being similar or identical in content to that read to them at the World Bank meeting. The copy they received had certain parts deleted. 18 On 15 July 2001 an ABC Radio National broadcast a programme known as "Background Briefing". The broadcast of that date was entitled "Doing Business Abroad: Ethical Dilemmas". It was presented by Nicole Johnston. The theme of the programme was, as its title suggests, ethical issues involved in international business; considerable attention was paid to the sometimes perceived need to, and the propriety of, paying commissions or bribes to individuals in positions to facilitate the securing of contracts. 19 Special focus was directed to SMEC. In particular, it was alleged that SMEC had dealt with a man called Pradeep Nair, who was on a World Bank black list, meaning that the World Bank would not deal with any organisation that engaged him. It was said that SMEC had dealt with Mr Nair, but the programme's presenter was careful also to point out that she could not say that this had occurred after his black banning. Also of importance was an express statement that there was no suggestion that SMEC had ever paid bribes. 20 The programme referred to financial difficulties in which SMEC, from time to time, found itself, which were attributed to cash flow problems resulting from frequently delayed payment by overseas customers. 21 Mr Jack Boniface participated in the programme. Although he was quoted in it, Mr Busbridge did not. 22 The Board of SMEC was unhappy about the overall tenor of the programme, or about specific parts of it, and sought legal advice. They were advised that it was not actionable. The defamatory publications 23 It is now convenient to set out the substance of the eight emails in question and the imputations found to have been conveyed.

[47]

The evidence in the trial 52 The evidence in the trial was in a relatively narrow compass. Oral evidence was given by each of the individual plaintiffs, and by Mr Evans, who is also a director of SMEC and managing director of one of its associated companies. All were credible witnesses. No real attack was made upon the credibility of any witness, although, on occasions, it was put that one or other was exaggerating the extent of hurt and distress suffered; and an attempt was made to call in question the motives of the three individual plaintiffs in bringing the proceedings. These attempts were unsuccessful. I accept all witnesses as truthful and I accept in totality their evidence. 53 Each attested to the good reputation of SMEC, and of the individual plaintiffs; and each plaintiff gave evidence of the stress, anxiety and concern he felt on becoming aware of the publications. I will refer to this evidence in more detail below. 54 Each plaintiff affirmed that all imputations against him were false. Certain accusations contained in various of the publications were also denied. 55 It will be convenient to refer in more detail to the evidence in dealing with the specific defences to the specific publications. 56 It is convenient here to note also one of the documentary exhibits. Extensive interrogatories were administered to the defendant. He gave a single global answer to all which was relevantly in the following terms: "1. … the Defendant does not admit publishing such matters and therefore he gave no consideration as to the possibility of the matters complained of conveying all or any of the imputations found by the jury. The Defendant did not intend the matters complained of to bear all or any of the imputations. He did not hold any belief in their truth or falsity and did not hold any opinions in the form of the imputations. The Defendant did not intend and did not convey any imputations and had no information in respect thereof. He did not make any enquiries and had no belief as to the accuracy of the statements in the matters complained of. He did not contact or attempt to contact the Plaintiffs. 57 Further, in correspondence between solicitors for the parties the solicitors for the defendant wrote (on 1 November 2007, Ex B): "The plaintiffs have not brought this claim to recover damages for defamation (because the defendant does not have the means to pay either damages or costs in the amount potentially sought by the plaintiffs) but for ulterior motives of getting back at and embarrassing Mr Jack Boniface, to crush and destroy the defendant and prevent him from assisting his father in litigation with the first plaintiff.

[58]

The most recent comprehensive statement by the High Court of Australia on the subject is to be found in Bashford v Information Australia (Newsletters) Pty Ltd [2004] HCA 5; 218 CLR 366. 61 Essential to the defence is the existence of an interest in the recipient in receiving a communication on the relevant subject matter, and a duty on the part of the communicator or publisher to make that communication to the recipient. In Adam v Ward [1917] AC 309 Lord Atkinson encapsulated, in the following terms, the circumstances in which an otherwise defamatory publication would receive the benefit of the defence: "A privileged occasion is … an occasion where the person who makes a communication has an interest, or a duty, legal, social or moral, to make it to the person to whom it is made, and the person to whom it is so made has a corresponding interest or duty to receive it. This reciprocity is essential." 62 That proposition was endorsed, as was the extract from Toogood v Spyring, in the joint judgment of Gleeson CJ, Hayne and Heydon JJ in Bashford. In that case, the judges forming the majority focussed upon the existence of "that reciprocity of duty or interest between maker and recipient". When the approach of the majority is contrasted with the dissenting approach of McHugh J, it can be seen that a fairly liberal approach must be taken to the determination of that question. Two things are clear: inaccuracy in a statement of fact, provided the statement is made bona fide, does not destroy the privilege: Bashford para 58; and the defendant must act bona fide in making the communication. 63 I have said enough about the principles concerning the determination of a plea of qualified privilege at common law. I turn now to the circumstances advanced on behalf of the defendant as entitling him to the benefit of the defence. 64 The principal contention put on his behalf was that all emails were sent predominantly to employees or former employees of SMEC. Included in this was the argument that each person so identified had an interest in the general subject matter of the management and administration of SMEC. This may be so in a general sense. It is not so in the sense in which the term "interest" is used in relation to a consideration of the defence of qualified privilege. It is not sufficient that the recipient be "interested" in a communication merely as a matter of gossip or curiosity; that person must have "an interest" in the communication as a matter of substance apart from its mere quality as news: Rumsey v Webb (1842) 1 Carr & M 104 at 105; London Association of Greenlands Ltd [1916] 2 AC 15; R v Rule [1937] 2 KB 375, cited in Gatley, para 14.13; Howe v Lees (1910) 11 CLR 361. 65 With one exception, I am unable to be satisfied that any recipient has been shown to have had an interest of the relevant kind. Certainly, if any of the imputations was true, it would be a matter of concern to employees of SMEC; and, equally certainly, if, for example, the imputations concerning corruption on the part of senior SMEC executives were true, it would have been the defendant's duty to communicate this information to relevant authorities. But those relevant authorities are not the workforce of SMEC; those individuals had no relevant interest (other than, perhaps as matters of gossip or curiosity) in receiving information of that kind; it has not been shown that any of them would have been in any position to act in any meaningful way upon the information. In the circumstances of this case, having regard to the nature of the imputations, this is one way of testing the issue of duty and interest. 66 The exception to which I referred is the first publication. The sole recipient of that email was Mr Bultitude. In my opinion, he falls into the category of a person having an interest of the appropriate kind, in receiving information of the sort that was contained in the email - if that information were communicated bona fide. 67 For this reason alone, I would reject this defence in respect of all publications except the first. But there are additional reasons why it must be rejected and these apply also to the first publication. Essential to the defence is that the defendant acted bona fide in making any communication under consideration. He has not given any evidence to establish his bona fides. To the extent that there is any evidence at all of his state of mind, it is contained in the global answer given to all interrogatories administered on behalf of the plaintiffs. This makes abundantly and explicitly clear that the defendant did not turn his mind to the question of the accuracy of the very serious allegations that he was making. He has not been shown to have acted bona fide or honestly. The first and fifth publications were blatant fabrications by the defendant. For this reason, also, the defence must be rejected. 68 Finally, the defence is defeated on proof that the defendant was actuated, in publishing the imputations, by malice. Again, the defendant has given no evidence in relation to this question. However, the history which I have recounted above leaves open a strong inference that he was acting out of revenge - revenge for his own disciplining as a consequence of his wrongful use of SMEC computers; and out of revenge for his father's loss of two positions, one as a Chairman of Directors, and as Chief Executive Officer. In the circumstances I feel comfortable in drawing the inference that this was the defendant's motivation. 69 Accordingly, in respect of each imputation, I reject the defence of qualified privilege.

[61]

Clarke v Norton [1910] VCR 494, cited in Gatley , para 12.6, and in O'Shane at [25]. 75 Whether what is published is held to be a statement of fact or expression of opinion is to be determined by reference to the defamatory imputations found to have been conveyed; the focus is upon the imputations, and not upon the language used in the publication of which complaint is made. 76 The distinction drawn between "comment" (or the expression of an opinion) and a "statement of fact" is deceptively simple. It is, in reality, not always easy to draw. Giles JA illustrated the distinction in para [28] of O'Shane. His Honour pointed out that an assertion that "X murdered his father" (in those terms) is likely to be regarded as a statement of fact; but may, where relevant facts are set out, be perceived as a conclusion or inference based upon those facts. In those circumstances the "assertion" may more accurately be characterised as the expression of an opinion. This shows that, although the characterisation as fact or opinion is to be made by reference to the imputation itself, the context from which it is drawn remains relevant and important. 77 For present purposes it is necessary to emphasise that, where the imputation is characterised, not as a statement of fact, but as an expression of opinion, for the defence to be made out it is necessary that the basis for the opinion (or conclusion or observation) expressed be identified or identifiable from within the publication itself. This may be achieved explicitly by the express statement of asserted facts upon which the opinion is based or by incorporation or reference to some external statement of the asserted facts. Essentially, this requirement exists to enable the recipient of the opinion to make a judgment as to its fairness or validity. If the foundational facts upon which the opinion is based are not ascertainable by the recipient, then he or she has no way of evaluating the opinion. Given that (as Giles JA pointed out) opinions may be expressed forcefully, trenchantly and even aggressively, and detrimentally to the reputation of the subject matter, it is an important component of the fairness of the balancing exercise that underlies the defence that the recipient be in a position to make that assessment. It is a fundamental requirement that the asserted facts upon which the opinion is based be accurately stated: see s 30(1). 78 In the present proceedings the defence of comment has been pleaded across the board, that is, to every imputation found by the jury to have been conveyed of the various plaintiffs. It is therefore necessary to undertake the exercise of determining whether, in its context, any imputation is properly characterised as a comment or expression of opinion; and, if so, whether it meets the test prescribed by s 30(3)(b). The defendant relies only upon sub-s (3)(b); that is, he asserts that the material upon which the comment (as contained in the imputations) is to some extent proper material for comment. It is also necessary for him to establish that the comment represents an opinion that might reasonably be based upon that material to the extent to which it is proper material for comment. 79 The exercise involves also a determination of the material set out or referred to in each publication and the extent (if any) to which that material is proper material for comment. 80 "Proper material for comment" is defined in s 30(1) as: "… material which, if [Division 7] had not been enacted, would, by reason that it consists of statements of fact … or for some other reason, be material on which comment might be based for the purposes of the defence or exclusion of liability in cases of fair comment on a matter of public interest." 81 In other words, the sub-section preserves, to some extent, the common law in relation to the defence of fair comment. 82 To recap: in order to make out a defence under s 30(3)(b) to any of the imputations, the defendant must surmount three hurdles: · he must prove that the imputation is properly characterised as the expression of an opinion, as explained in Clarke v Norton; · he must prove that the opinion expressed is based upon facts accurately stated, either in the publication from which the imputation is drawn, or by clear reference to such facts stated elsewhere (and thus ascertainable by the recipient); · he must show that the opinion is one that might reasonably be based upon those facts. 83 With those preliminary remarks I turn to each of the publications and the imputations held to have been conveyed.

[65]

(c) that each together with the other was going to pressure Mr Bultitude to resign by threatening to make allegations that Mr Bultitude had been rorting the system for years if Mr Bultitde did not resign. 85 On its face each of these imputations represents an assertion of fact. 86 That, however, is not sufficient; it is necessary to determine whether, in its context, any of the imputations is properly to be seen as a conclusion, or an opinion, drawn from material identified in the publication. 87 As set out above, the first publication is in two parts, consisting of two separate emails, sent, respectively, on 24 November 2000 and 30 November 2000. Only one assertion of fact is to be found in each: that Mr Busbridge had sent an email in the terms extracted - stating the intention of getting rid of Mr Bultitude, putting pressure on him to resign, and alleging that he had been rorting the system for years. That assertion was patently untrue, as is now common ground. 88 Contrary to the argument put on behalf of the defendant, the assertions of fact made by the author of the email were not, for example, that "JB" (Jack Boniface) would be gone by January or February, or that it would be easy to get rid of Mr Bultitude; those were assertions falsely attributed to an email said to have been sent by Mr Busbridge. The only relevant statement of fact contained in the emails the subject matter of the proceedings was that Mr Busbridge had made representations to that effect in an email to Mr Hitt. This cannot conceivably be the basis for the conclusions said to have been set out in the various imputations. Each imputation is in reality, as it appears to be, a statement of fact. The defence of comment fails at the first hurdle. 89 In any event, the patent falsity of the assertion makes it plain that it could not be proper material for comment; because the assertion was nothing but a fabrication, this was plainly known to the defendant, who has been found to have published the email. 90 In respect of the first publication the defence of comment wholly fails.

[66]

The second publication 91 The second publication conveyed imputations in substantially similar terms against each of the individual plaintiffs, Messrs Busbridge, Hitt and Percival, to the effect that each was knowingly involved in the illegal transfer of project payments; each covered up the illegal transfer of project payments; and each engaged in conduct that warranted investigation by the Australian Securities and Investments Commission (ASIC). In addition, the publication conveyed an imputation of Mr Busbridge that he knowingly covered up fraud committed by Messrs Hitt and Percival. 92 As was the case in respect of the first publication, each imputation is, on its face, framed in terms strongly suggestive of a statement of fact. However, it is necessary again to examine the content of the publication in order to determine that that is the correct construction. In the case of all imputations other than the last in respect of each plaintiff, the prima facie construction is the correct one. The email also contains the bald statement that illegal transfers of project payments were made by Messrs Hitt and Percival, and covered up by Mr Busbridge. This is not a publication which states facts from which the conclusion contained in the imputations is drawn. Accordingly, in respect of the first three imputations of Mr Busbridge and the first two of Messrs Hitt and Percival, the defence of comment must fail for this reason. 93 The final imputation, that the conduct of each plaintiff warranted investigation by ASIC, is in a different category. It is capable of being read, and, I have concluded, is properly read, as a statement of opinion. That does little to avail the defendant. The expressed opinion clearly purports to be based upon the preceding statement of fact, that illegal transfers of project payments were made and covered up. This assertion was false. The comment contained in these imputations is, therefore, not, to any extent, based upon proper material for comment. The defence of comment fails also in relation to these imputations. 94 So far as the second publication is concerned, the defence of comment fails.

[74]

105 There is an absence of apparent logic in the assertions made in the email. The author asserted that the valuation by Ernst & Young of SMEC at $9.6 million resulted in the diminution in SMEC's value by $4.4 million. Simple mathematics shows that the $4.4 million results from the deduction of $9.6 million from $14 million said to have been offered - it would seem that what the author intended to say was that, by rejecting the offer of $14 million, the committee had caused a loss to shareholders of that dimension, rather than that the valuation by Ernst & Young had that effect. 106 In any event the assertion that SMEC's bank may cancel credit facilities is entirely unsupported. I am satisfied that the defendant has failed to establish the truth of that proposition. It is on that basis, and only on that basis, that the defendant went on to express the view that SMEC would probably be liquidated. Accordingly, the defence of comment in respect of the first imputation defamatory of SMEC fails at the second hurdle. 107 A similar position applies in relation to the second imputation. The author appears to see a connection between the asserted rejection of an offer of $14 million, and a valuation of considerably less than that. He does not explain why, on a valuation of SMEC at $9.6 million, a declared dividend would not be paid. Although, as was the case in respect of the first imputation, I would accept that the second imputation is intended to represent the conclusion of the author of the email drawn from facts therein stated, the defendant has failed to prove that those facts were accurately stated. The defence of comment therefore also fails in respect of this imputation. 108 The third imputation defamatory of SMEC is in a different category. It is a statement of fact; there is nothing in the email to suggest that it represents the author's conclusion from facts therein stated. There is nothing to support the assertion that SMEC was having "substantial problems" with its bank. Accordingly, the defence of comment fails in respect of this imputation at the first hurdle. 109 The first imputation defamatory of Mr Busbridge is in two parts; it is that, as a director of SMEC, he put his personal interests above his responsibility to shareholders by rejecting the offer to purchase; and that the reality was that Mr Busbridge knew it was in the best interests of shareholders that the offer be accepted. 110 The first part, in my opinion, clearly comes into the category of comment; the second part less readily so. On balance, I am prepared to treat the whole of the imputation as the expression of a personal opinion based upon facts asserted in the publication. Essential to the opinion is the factual assertion that the purchase offer had been rejected; for reasons I have set out above, that assertion has not been, and cannot be shown to be true. For that reason, the defence of comment in relation to this imputation fails. 111 The second imputation is, I am satisfied, a statement of fact. It emerges from the opening line of the email: "What Peter and Andy don't want you to know". There is nothing that would warrant treating this imputation as anything other than a statement of fact; it is not, and cannot reasonably be construed as, a conclusion drawn from other material contained in the publication. The defence of comment fails in respect of this imputation. 112 The third imputation is, essentially, that Mr Busbridge "was a hopeless director of SMEC"; this, it was said, was because of his rejection of the purchase offer, making it probable that SMEC would be liquidated. 113 To describe somebody as "a hopeless director" is certainly, in my opinion, capable of being read as an expression of opinion, and is most readily seen in that light. I therefore proceed on the basis that this imputation is an expression of opinion as distinct from a statement of fact. However, for reasons already given, the defence of comment cannot succeed because the opinion is not based upon an accurate statement of facts. The defence fails in respect of this imputation. 114 The same applies to the final imputation, that Mr Busbridge "was a grossly incompetent director of SMEC"; this because he knew the offer to purchase was well above the valuation of the company and yet he rejected the offer. Although I accept that to describe a person as "a grossly incompetent director" is an expression of an opinion, in this case that opinion is not based upon facts accurately stated. The defence of comment fails in respect of this imputation.

[75]

115 The fifth publication conveyed two imputations defamatory of SMEC; six imputations defamatory of Mr Busbridge; and four imputations defamatory of Mr Hitt. It appeared over the signature of Neil Evans, alternate director. It was common ground that Mr Evans was not responsible for the email, and the jury found that it was in fact the defendant who was responsible. 116 The email contained the following (relevant) assertions of fact: · that an ABC investigative reporter published a report concerning SMEC's activities; · that, in that report, the reporter revealed criminal activities on the part of Messrs Busbridge and Hitt; · that, in the preceding week, Mr Busbridge had travelled to Kazakhstan; · that the author assumed that this was for the purpose of covering up his (criminal) activities; · that, for the purpose of that cover up, Mr Busbridge used SMEC funds; · that the asserted criminal activities of Messrs Busbridge and Hitt would lead to SMEC being black banned from all future work by the World Bank and the Asian Development Bank; · that Mr Busbridge had been undertaking business activities with Pradeep Nair; · that Mr Nair was the subject of a "life black ban" from the World Bank; · that Mr Busbridge had been dismissed from his employment with SMEC; · that Mr Hitt had been dismissed from his employment with SMEC. 117 The first imputation defamatory of SMEC was that it would be black banned from all future work with the World Bank and Asian Development Bank because of the criminal activities attributed to Messrs Busbridge and Hitt. This is, prima facie, a statement of fact. However, in its context, it is appropriately to be seen as a conclusion drawn from the supposedly factual assertions of criminal activities on the part of Messrs Busbridge and Hitt. Accordingly, I accept that the first imputation qualifies as a conclusion, or expression of opinion as distinct from a statement of fact. But, as the comment is not based upon facts accurately stated it fails at the second hurdle. I reject the defence of comment in relation to the first imputation defamatory of SMEC. 118 The second imputation more readily comes into the category of comment; it is an expression of opinion that SMEC ought to be investigated by federal police because of asserted criminal activities by Messrs Busbridge and Hitt. However, as before, the imputation is not based upon facts accurately stated and the defence fails at the second hurdle. 119 The final imputation defamatory of both Mr Busbridge and Mr Hitt was that each had engaged in criminal activities under the context of representing SMEC. This presents as a statement of fact. That perception is not altered by examination of the contents of the publication. There is nothing in the publication that identifies or refers to any activity on the part of either man which could give rise to a conclusion that either had engaged in any criminal activities. Examination of the context does not convert what is, on its face, a statement of fact, into the expression of an opinion. Accordingly, the defence of comment pleaded in respect of these imputations fails. I pass, for the moment, over the second and third imputations that defamed Mr Busbridge. The fourth imputation in his case, and the second imputation in Mr Hitt's case, are in identical terms, that is that criminal activities on their part under the context of representing SMEC should be investigated by the federal police, the World Bank and the Asian Development Bank. Consistently with the conclusions I have earlier reached, I accept that an assertion that particular activities ought to be so investigated is properly characterised as the expression of opinion. I have set out above the asserted facts upon which the opinion purports to be based. 120 None of these assertions was true, except perhaps that Mr Busbridge had travelled to Kazakhstan at the relevant time. But it was not true that he did do so in an attempt to cover up any criminal activities or that he had been engaged in criminal activities. Accordingly, in respect of each of these imputations the defence of comment fails at the second hurdle. 121 The fifth imputation in relation to Mr Busbridge, and the third imputation in relation to Mr Hitt, is that each had been sacked from his employment from SMEC. This is a statement of (asserted) fact; it does not qualify as comment. In any event it is and was quite untrue. The defence of comment fails in respect of these imputations. 122 The sixth imputation in respect of Mr Busbridge, and the fourth imputation in respect of Mr Hitt, are that each had lied by claiming to represent SMEC. These are clear statements of fact. They are not translated into conclusions or expressions of opinion by reference to any of the content of the publication. The defence of comment fails in relation to each. 123 The second and third imputations in respect of Mr Busbridge are that he went to Kazakhstan to cover up his criminal activities, and that he used SMEC funds for the same purpose. Each is an assertion of fact; neither qualifies as comment. Each is false and the defence could not pass the second hurdle. 124 In respect of the fifth publication the defence of comment wholly fails.

[76]

125 The sixth publication conveyed three imputations defamatory of SMEC, seven defamatory of Mr Busbridge, and two defamatory of Mr Hitt. 126 The first imputation concerning SMEC was that its financial position was so bad that it could not afford to pay declared dividends to shareholders. This derives from a single sentence in the publication which reads as follows: "If SMEC's financial position is so good why haven't the declared dividends been paid to shareholders." 127 The imputation itself is a clear statement of fact. It does not purport to be a conclusion based upon anything contained in the publication. It does not qualify as comment. The comment defence in respect of this imputation fails. 128 The second imputation in relation to SMEC is that it was going to collapse. That derives from the final sentence in the publication which reads: "I'm just glad that I don't own shares in SMEC, when is it all going to collapse." 129 This also is a clear statement of fact. The other purportedly factual assertions contained in the publication do not give any support to the imputation - that is, there is nothing in the publication that could lead to the view that what appears as a statement of fact is, in reality, a conclusion from stated facts. The defence of comment to this imputation fails. 130 The third imputation concerning SMEC is that it should be black banned by the World Bank and the Asian Development Bank. 131 This imputation has the flavour of an expression of opinion as distinct from a statement of fact. It derives from the following sentence: "As far as I can figure it from the evidence SMEC through Peter Busbridge was employing the services of a black banned person and should also be black banned for doing so." 132 I accept that, properly characterised, the imputation is the expression of an opinion. It purports to be based upon the author's claim that SMEC through Mr Busbridge was employing the services of a black banned person. It is necessary, therefore, to examine the truth of that asserted fact. Mr Busbridge denied, in cross-examination, that he had done so. That denial was unchallenged. The comment was therefore not based upon facts accurately stated. 133 Mr Busbridge was asked about this in the context of cross-examination related to the ABC Background Briefing program. Mr Busbridge acknowledged that there had been an association between SMEC and Mr Nair but said that this terminated upon his being black banned by the World Bank. It was incorrect to say that SMEC was employing the services of a black banned person - what might have been correct was to say that SMEC had employed the services of a person who subsequently became the subject of such a ban. There is a vast difference. The defence of comment to this imputation fails at the second hurdle. 134 The two imputations defamatory of Mr Hitt are substantially similar (if not identical) to two of the imputations defamatory of Mr Busbridge. They are that each of these plaintiffs was involved in bribery and corruption (although the imputation of Mr Busbridge is that he was involved in other bribery and corrupt activities which only he knew about); and that each should be sacked because of his involvement in bribery and corruption. 135 In each case, the imputation containing an assertion of involvement in bribery and corruption is a clear statement of fact. Each derives from the following passages in the publication: "I would also get some assurance if all the SMEC Holdings directors could sign a statement to the effect that SMEC and Peter Busbridge have had no involvement directly or indirectly in the bribery and corruption of government officials in winning projects.

[91]

It is a defence that the circumstances of the publication of the matter complained of were such that the person defamed was not likely to suffer harm." 150 The submissions advanced in support of this defence were succinct. They were, essentially, that all emails were "poison pen anonymous" communications and that it was unlikely that any recipient would place any trust or weight in them. When pressed about the response of the World Bank to the eighth publication (which is dated 15 February 2001, and is, for reasons earlier given, out of chronological sequence), counsel for the defendant pointed out two things: firstly, that the email was sent and received in February 2001, but the World Bank did not initiate enquiries until June or July of that year; and, secondly, that those enquiries coincided in time with the publication of the ABC broadcast, providing the basis for an inference that the investigation was causally linked to that broadcast rather than the email. Further, SMEC continued to do business with the World Bank. 151 The first part of the argument cannot be accepted. The emails, except for the eighth, were communicated to a closed circle, but a circle which consisted entirely or almost entirely of individuals closely associated with SMEC, whether by employment or some other close relationship. That concentrates the impact of the email. True it is, as was pointed out on behalf of the defendant, no witness was called to give evidence of taking any email seriously, or of thinking less of SMEC or any of the individual plaintiff as a consequence. Nor was there any evidence given by any of the individual plaintiffs of conduct from which such belief may have been inferred. 152 However, it is not possible to put entirely aside the content of the publications. It is to be remembered that they accused SMEC and its directors of illegal conduct of a very serious kind, and of corruption. The accusations were made repeatedly. It is impossible to think that they did not have some impact upon some recipients. 153 I also reject the second argument. While the announcement of the World Bank investigation followed closely upon the broadcast of the ABC programme and it is therefore difficult to disentangle the impact of that publication as distinct from the defendant's publication, it is not to be overlooked that the email sent by the defendant was sent directly to the World Bank and was quite explicit in its terms; the broadcast by the ABC was more general and there is no evidence that it came to the attention of the World Bank. 154 In any event, s 13 focuses upon the circumstance in which a publication is made. That is to be looked at prospectively, from the perspective available at the time of publication. In considering a s 13 defence it is inappropriate to apply a retrospective test of whether, post publication, any harm was in fact suffered. 155 Except in relation to the seventh publication, I reject the s 13 defence. Although no separate argument was addressed to this proposition, I have come to the view that the s 13 defence succeeds in respect of the seventh publication. 156 Two imputations, each of criminality, were held to have been conveyed of Mr Busbridge by this publication. This publication was published by the defendant only to Mr Busbridge himself. That does not constitute publication for the purposes of the law of defamation: Gatley, para 6.1. It was republished by Mr Busbridge, to the SMEC Board, pursuant to what he perceived to be his duty as a director. There is a discussion of the relevant principles in Gatley at para 6.12. But no argument was directed to this question and it would be inappropriate (especially in the light of the jury verdict and the Court of Appeal decision) to find other than that it had been published. 157 However, it is inconceivable that any harm could have been occasioned to Mr Busbridge's reputation by the publication by the defendant. 158 With the benefit of hindsight, much the same might be said of the publication of the first emails to Mr Bultitude alone. But, bearing in mind the prospective nature of the exercise, and the malicious nature of the untruth contained in the emails, I am not prepared to find that, at the time of publication, Mr Busbridge was unlikely to suffer harm to his reputation. That he in fact did not (as I will find below) is not material to the consideration of the defence.

[92]

Damages 159 On behalf of the defendant a somewhat unusual submission was put as a general proposition in mitigation of damages. It invoked principles of abuse of process stated by the High Court in Williams v Spautz [1992] HCA 34; 174 CLR 509; and by Hunt J (as he then was) in Packer v Meagher [1984] 3 NSWLR 486. In short, the submission was that the proceedings were an abuse of process because they were brought for a purpose other than to vindicate the reputations of the plaintiffs. Vindication of reputation was said by Hunt J in Packer to be "the fundamental purpose of civil defamation proceedings". A more detailed exposition of the law concerning abuse of process is to be found in Williams, but it is unnecessary to explore that here. The purpose other than vindication which it was contended lies at the heart of these proceedings was an attempt to compromise Mr Jack Boniface and to obtain evidence to use against him in the other litigation in which he and SMEC are engaged. In support of this argument, much was made of the contention (of which there was no evidence) that the defendant would be unlikely to be in a position to meet any award of damages, and the plaintiffs - or SMEC - would be considerably out of pocket as a result of their prosecution of their claims. 160 The evidentiary basis for these assertions is slender. Mr Busbridge acknowledged that he had made little or no enquiry as to the capacity of the defendant to meet any award of damages. 161 In cross-examination Mr Busbridge said: "We're still waiting for Mr Boniface [the defendant] to admit what he's done, complete and open, everything and he refuses to do that …" 162 He said that if the plaintiffs received "a full, complete disclosure" by the defendant, including an apology, and an admission of his conduct, he (speaking for himself) would be prepared to discontinue the action. He was not able to commit SMEC or the other plaintiffs to the same position. 163 Later, Mr Busbridge said that he believed that the defendant did not act alone in publishing the emails. He believed that Mr Jack Boniface had been involved, and possibly others within SMEC. 164 Mr Percival was asked directly, in cross-examination, why he was bringing the proceedings. He answered: "I'm bringing these proceedings because of the pain and anxiety that the publication of these matters caused to me personally and the potential damage to the company's reputation, as well as my own reputation, by this kind of matter." 165 When asked what he hoped to gain from the proceedings he said: "I want both myself and the company to be vindicated and it to be shown publicly that the information in these matters that we have complained of is not true. It would be nice to have an apology also." 166 He said that he was personally not looking for monetary compensation but believed that SMEC was so entitled. 167 The evidence is overwhelmingly in favour of the conclusion that the proceedings were brought for the precise purpose for which the law of defamation exists - that is, to vindicate reputations against unfounded allegations of misconduct. 168 In any event, I have difficulty in understanding the proposition that if proceedings are brought for an improper purpose, that bears upon the assessment of damages. Other remedies are appropriate where that is the situation. I reject the proposition. 169 That brings me to a consideration of the reputations of each of the plaintiffs, so far as the evidence allows that assessment to be made; and to the seriousness of the imputations conveyed, the extent of their circulation, and the likely effect upon those reputations.

[93]

The first plaintiff - SMEC 170 The appropriate means of awarding damages is to allow a separate sum in respect of all imputations conveyed by each publication - that is, in the case of SMEC, there ought to be four separate awards of damages. 171 There was abundant evidence that SMEC was a functioning, reputable and successful engineering company, doing business in Australia and overseas and with organisations such as the World Bank and the Asian Development Bank. SMEC was defamed by four of the eight publications. Broadly speaking, the imputations escalated in seriousness. The fourth publication conveyed imputations reflecting upon its financial stability; it was circulated to a lengthy list of individuals identified in the addressee line of the email. SMEC was the subject of two defamatory imputations in the fifth publication; the imputations were that it would be black banned because of criminal activities of its directors, and ought to be investigated because of its failure to identify criminal activities of its directors. This also went to an extensive list of recipients. 172 SMEC was the subject of three imputations conveyed by the sixth publication, two of which reflected on its financial position and one of which suggested that it ought to be black banned by the World Bank and the Asian Development Bank. It was defamed by the eighth publication which conveyed four imputations, possibly the most serious of all. These were that it arranged for a bribe to be paid on its behalf to obtain an advantage, that it made bribery payments, that it made illegal project payments and that it deliberately covered up bribery and illegal project payments in its books. 173 This was the email that was sent to and received by the World Bank. Although limited in the extent of its circulation, its impact was calculated to be, and was, intense. Mr Busbridge described the World Bank as "critical" to SMEC's international business. 174 Tangible evidence of damage for SMEC's reputation is to be found in the investigation undertaken by the World Bank. In saying this, I recognise the force of the argument put on behalf of the defendant (concerning the temporal coincidence of the publication of the email with the ABC broadcast), with which I have dealt above, in the context of the s 13 defence. 175 I do not discount the possibility that the ABC broadcast may have had some bearing upon the decision of the World Bank to investigate SMEC, but, notwithstanding the timing of the investigation, I think it vastly more likely that the investigation was a response to the email sent by the defendant. That is the obvious inference from what was said to Mr Busbridge by the World Bank representative. 176 There was also evidence of damage to SMEC's reputation from Mr Evans, who said that staff were "continuously asking questions" and were concerned about SMEC's long term viability. He also spoke of questions from clients.

[100]

Quantification · the first publication 200 In many respects the imputations conveyed of him in this publication were in identical or substantially similar terms to those of Mr Busbridge. There is no reason to differentiate between the two in terms of the damage done to their reputations. It is equally inconceivable that Mr Hitt suffered any damage to his reputation by this publication. I do not propose to award damages in respect of this publication. · the second publication 201 Although Mr Busbridge was defamed by four imputations in this publication, and Mr Hitt by only three, the sting is not distinguishable. I propose to award Mr Hitt the sum of $80,000 in respect of this publication. · the third publication 202 The imputations conveyed of Mr Busbridge and Mr Hitt are identical. I propose to award Mr Hitt the sum of $80,000. · the fifth publication 203 There is a slight variation in the nature of the imputations conveyed against Mr Busbridge and Mr Hitt in this publication. Although four of the imputations are virtually identical, there is no accusation of Mr Hitt that he travelled to Kazakhstan, or used SMEC funds for the purpose of concealing his criminal activities. I propose to recognise that by allowing a slightly smaller sum by way of damages. I will award the sum of $90,000 in respect of this publication. · the sixth publication 204 There is a significant distinction in the imputations conveyed against Mr Busbridge and Mr Hitt in this publication. Where seven defamatory imputations were conveyed of Mr Busbridge, only two were conveyed of Mr Hitt. These were, however, serious - that he was involved in bribery and corruption, and that his employment ought to be terminated for that reason. 205 I propose to recognise the distinction between the two by awarding significantly less to Mr Hitt in respect of this publication. It is necessary, however, to acknowledge the very serious nature of the two imputations conveyed. I propose to award the sum of $90,000. · the eighth publication 206 There is no discernible difference in the four imputations conveyed of Mr Busbridge and Mr Hitt in this publication. I propose to award damages in an identical amount, $110,000.

Parties

Applicant/Plaintiff:

SMEC Holdings Ltd

Respondent/Defendant:

Boniface

Cases Cited (7)

CITATION : SMEC Holdings Ltd v Boniface [2007] NSWSC 1402

Adam v Ward [1917] AC 309 Bashford v Information Australia (Newsletters) Pty Ltd [2004] HCA 5; 218 CLR 366 Boniface v SMEC Holdings Ltd [2006] NSWCA 351 Clarke v Norton [1910] VCR 494 Howe v Lees (1910) 11 CLR 361 CASES CITED : John Fairfax Publication Pty Ltd v O'Shane [2005] NSWCA 164 London Association of Greenlands Ltd [1916] 2 AC 15 Packer v Meagher [1984] 3 NSWLR 486 R v Rule [1937] 2 KB 375 Rumsey v Webb (1842) 1 Carr & M 104 Toogood v Spyring (1834) 1 CM & R 181; 149 ER 1044 Williams v Spautz [1992] HCA 34; 174 CLR 509

JUDGMENT 1 HER HONOUR: In these proceedings four plaintiffs - SMEC Holdings Ltd (trading as Snowy Mountains Engineering Corporation and SMEC), (to which I will refer as "SMEC"), Mr Peter Busbridge, Mr Ross Hitt, and Mr Geoff Percival - sue the defendant, Mr Glen Boniface, for damages for defamation arising out of a series of publications made in 2000 and 2001 by email. The second, third, and fourth plaintiffs are all directors and executives of SMEC. 2 A contested jury trial pursuant to s 7A of the Defamation Act 1974 was conducted in 2005, over a period in excess of two weeks; it resulted in answers favourable to all plaintiffs, establishing that, on nine different occasions, the defendant had published a variety of imputations that, in various ways, defamed the plaintiffs. The principal area of contest in that trial concerned that necessary element of the plaintiffs' case, that they had shown the defendant to have published each of the communications which contained the defamatory imputations. 3 An appeal to the Court of Appeal was successful only to a very limited extent; that Court held that the jury's verdict that the plaintiffs had proved that the defendant published the ninth matter which they complained was perverse. The Court set aside the judgment in relation to that publication. It upheld the jury verdict in relation to all other publications: Boniface v SMEC Holdings Ltd [2006] NSWCA 351. It ordered that the defendant pay 95 percent of the plaintiffs' costs of the appeal. 4 The present proceedings therefore concern the remaining eight publications. The defendant has pleaded the same defences to each: qualified privilege (at common law), comment, and that the publications were made in circumstances such that the plaintiffs were unlikely to suffer harm. 5 The first issues for present determination are whether the defendant has been able to establish the necessary elements of any one or more of the three defences he has pleaded; if he has, whether any of them is defeated by any matter available to the plaintiffs by way of defeasance; and, if the defendant has failed to establish any defence, or if any defence to which he is prima facie entitled is defeated, the quantum of damages to be awarded to any successful plaintiff. By reason of the jury verdict, and the Court of Appeal decision, the issue of the defendant's responsibility for the publications is now foreclosed. Notwithstanding that, the defendant maintains his denial of responsibility for publishing any of the emails other than the seventh, which was the last in time.

[2004] HCA 5

(1910) 11 CLR 361

[1992] HCA 34

[2005] NSWCA 164

Cited By (3)

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