SRSC & Anor v Beaumont & Ors - [2004] NSWSC 164 - NSWSC 2004 case summary — Zoe

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SRSC & Anor v Beaumont & Ors

[2004] NSWSC 164

Supreme Court of NSW|2004-03-18|Before: Studdert J

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Court

Supreme Court of NSW

Decision date

2004-03-18

Before

Studdert J

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Original judgment source is linked above.

Judgment (259 paragraphs)

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CITATION : SRSC & Anor v Beaumont & Ors [2004] NSWSC 164 HEARING DATE(S) : September 15, 16, 17, 22, 23, 24, 25, 26, 29, 30, October 1, 7, November 3, 4, 5, 10, 11, 12, 13, 14, 17, 19, 20, 21, 24, 25, 26, 27, 28, December 1, 2003. JUDGMENT DATE : 18 March 2004

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JURISDICTION: Common Law Division Defamation List JUDGMENT OF : Studdert J DECISION : (1) In the proceedings by the second plaintiff arising from the publication in April 1998, verdict for the second plaintiff against the first defendant in the sum of $10,000, together with interest in a sum to be determined. (2) In the proceedings by the second plaintiff arising from the publication on 4 May 1998, verdict for the second plaintiff against the first and the second defendants in the sum of $70,000, together with interest in a sum to be determined. (3) In the proceedings by the second plaintiff arising from the publication on 5 May 1998, verdict for the second plaintiff against the first and the third defendants in the sum of $120,000, together with interest in a sum to be determined. (4) In the proceedings by the first plaintiff arising from the publication in April 1998, verdict for the first plaintiff against the first defendant in the sum of $4000, together with interest in a sum to be determined. (5) In the proceedings by the first plaintiff arising from the publication on 4 May 1998: (a) verdict for the first plaintiff against the first and second defendants concerning imputations (b), (d), (e), (f) and (g) in the sum of $62,500, together with interest in a sum to be determined; (b) verdict for the first plaintiff against the second defendant concerning imputation (h) in the sum of $12,500, together with interest in a sum to be determined. (6) In the proceedings by the first plaintiff arising from the publication on 5 May 1998: verdict for the first plaintiff against the first and the third defendants concerning imputations (b), (d), (e), (f) and (g) in the sum of $638,020, together with interest in a sum to be determined; (b) verdict for the first plaintiff against the third defendant concerning imputation (h) in the sum of $127,604, together with interest in a sum to be determined. (7) In respect of the claim by the first plaintiff against the first and second defendants, and in respect of the claim by the first plaintiff against the first and the third defendants, I reserve leave to the first plaintiff to apply for additional damages referable to capital gains tax considerations should the first plaintiff be found liable to pay such tax. (8) Costs are reserved. (9) The matter is to be relisted by arrangement with my associate for argument as to interest and costs.

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CATCHWORDS : DEFAMATION - Claims arising from interview and two subsequent television programmes - one in Victoria and one in New South Wales - Imputations found by jury - defences of truth and of comment raised to all three publications. Claims for damages by specialist opthalmologist - claims on imputations arising from interview and two later television programmes - assessment of damages - whether assessment should include aggravated damages - whether in case of Victorian programme exemplary damages should be awarded. Claims for damages by body corporate - claims on imputations arising from interview and two later television programmes. Assessment of damages - whether assessment should include aggravated damages - whether in case of Victorian programme exemplary damages should be awarded - whether assessment should make provision for capital gains tax - leave to apply for such provision reserved. Defamation Act, ss 7A, 15, 16, 30, 31, 32, 34, 46, 46A, 47, 48 LEGISLATION CITED : Income Tax Assessment Act 1997, ss 4-5, 6-5, 102-5, 118-37 Income Tax Assessment Act 1936, s 160ZB Bickel v John Fairfax & Sons Limited (1981) 2 NSWLR 474 Breen v Williams ((1995-96) 186 CLR 71 Briginshaw v Briginshaw (1938) 60 CLR 336 British Transport Commission v Gourley (1956) AC 185 Bulfin v Bebarfald's Limited (1938) 38 SR 423 Carson v John Fairfax Limited (1992-1993) 178CLR 44 Catt v Marac Australia Limited (1987) 9 NSWLR 639 Coyne v Citizen Finance Limited (1990-91) 172 CLR 211 Cullen v Trappell (1980-81) 164 CLR 1 Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41 Hunt v Star Newspapers (1908) 2 KB 309 Jackson v TCN Channel 9 [2002] NSWSC 1229 Jones v TCN Channel 9 (1992) 26 NSWLR 732 Joynt v Cycle Trade Co. (1904) 2 KB 292 CASES CITED : Lamb v Cotogno (1987) 164 CLR 1 McGregor on Damages, 17th ed. @ 503-504 Merivale v Carson (1888) 20 QBD 275 O'Brien v McKean (1968-69) 118 CLR 540 Perkins v NSW Land Council (1998) 45 NSWLR 340 Pfeiffer v Rogerson (2000) 203 CLR 503 Rabelias Pty Limited v Cameron 95 ATC 4552 Refjek v McElroy (1965) 112 CLR 517 Rogers v Nationwide News Pty Limited (2003) 201 ALR 784 Rogers v Whitaker (1991) 23 NSWLR 600; (1992) 175 CLR 479 Rubber Improement Limited & Anor v Daily Telegraph Limited (1964) AC 234 Steele v Mirror Newspapers (1974) 2 NSWLR 348 Steiner-Wilson & Webster Pty Limited v Amalgamated Television Services Pty Limited (unreported, Crispin J, ACT SC, 18 November 1999) Tinkler v Commissioner of Taxation (1979-80) 29 ALR 663 Triggett v Pheeney (1951) 82 CLR 497 UDC v Brian (1985) 157 CLR 1 Sydney Refractive Eye Surgery Centre Pty Limited (1st Plaintiff) Dr Michael Lawless (2nd Plaintiff) PARTIES : Dr Paul Beaumont (1st Defendant) HSV Channel Seven Pty Limited (2nd Defendant) Amalgamated Television Services Pty Limited (3rd Defendant) FILE NUMBER(S) : SC 20298/98 COUNSEL : B.R. McClintock SC/M.F. Richardson (Plaintiffs) T.E.F. Hughes QC/K.P. Smark (Defendants) SOLICITORS : Gilbert & Tobin (Plaintiffs) Mallesons Stephen Jaques (Defendants)

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SRSC (a) Through its surgical staff, SRSC, which is an eye-surgery clinic, behaves unethically in that for its financial gain they mislead their patients about the risks of eye surgery; (b) SRSC is an eye-surgery clinic which, through its surgical staff, is a party to a deceitful scheme to trick patients into signing a form purporting to give consent to surgery on their eyes by showing them a video tape which is misleading as to risks inherent in the surgery; (c) SRSC, which is an eye-surgery clinic, employs on its staff a surgeon who is a disgrace to the medical profession in that he recommends eye surgery when it is not in his patients' best interest; (d) Surgical staff of SRSC, which is an eye surgery clinic, are irresponsible eye surgeons in that they perform eye surgery without adequately warning their patients of the serious risk of permanent eye damage inherent in laser eye surgery; (e) SRSC is an eye surgery clinic which engages in deliberately misleading marketing practices in supplying potential patients with a video which falsely states that no patient has gone blind from laser eye surgery; (f) SRSC is an eye surgery clinic which engages in deliberately misleading marketing practices in supplying potential patients with a video which falsely states that if patients have laser surgery on their eyes they will be able to throw away their spectacles; (g) SRSC is an eye surgery clinic which participates in an arrangement to cause its patients to pay absurdly inflated costs for post-operative care; (h) SRSC is an eye surgery clinic which publishes advertisements which are false in that they deliberately mislead prospective patients about the risks inherent in laser eye surgery. Dr Lawless (b) Dr Lawless is a party to a deceitful scheme to trick patients into signing a form purporting to give consent to surgery on their eyes by showing them a video tape which is misleading as to risks inherent in the surgery; (c) Dr Lawless is a disgrace to the medical profession in that he recommends eye surgery which is not in his patients' best interest; (d) Dr Lawless is an irresponsible eye surgeon in that he performs eye surgery without adequately warning his patients of the serious risk of permanent eye damage inherent in laser eye surgery; (e) Dr Lawless engages in deliberately misleading marketing practices in using for potential patients a video which falsely states that no patient has gone blind from laser eye surgery; (f) Dr Lawless engages in deliberately misleading marketing practices in using for potential patients a video which falsely states that if patients have laser surgery on their eyes they will be able to throw away their spectacles;" 4 At this subsequent trial, the defendants did not rely upon all of the defences that were pleaded, and it is convenient that I now record in short form those defences that have been pursued. Those defences are the following:

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The third defendant relies solely upon comment of a stranger. 5 Each of the defendants allege against both plaintiffs as to imputations (b), (e), (f) and (h) that the plaintiffs behaved in a fraudulent manner. 6 In reply the plaintiffs pleaded malice. As to the defence of comment under s 32 of the Defamation Act, the issue as to whether any comment represented the opinion of the first defendant was raised. As to the defence of comment by a stranger under s 34 of the Defamation Act, the issues as to whether the comment was that of the first defendant, and, if so, any such comment was in good faith for public information arose. 7 The hearing of this cause occupied thirty sitting days and the tendering of nearly 150 exhibits. It would be neither practicable nor useful to conduct a comprehensive review of the evidence of each witness from whom evidence was taken. There are, however, certain matters that either have not been in dispute at this lengthy hearing or which have been clearly established, and I shall address these matters first. Then, because of the issues of malice raised against Dr Beaumont and of fraudulent conduct raised against the plaintiffs, I will conduct some analysis of the evidence of Dr Rogers, Dr Lawless and Dr Beaumont. Thereafter I shall consider the issues that arise because of the defences that have been pursued. 8 Dr Rogers and Dr Lawless are both specialist ophthalmologists. In 1991 they acquired together a laser for the performance of eye surgery. In 1996 the first plaintiff was incorporated and thereafter Dr Rogers and Dr Lawless conducted their practices through the first plaintiff. They were joined in that practice by Dr Sutton. The first laser eye surgery conducted in 1991 was PRK (photorefractive keratectomy). Then, in December 1995, the plaintiffs began to carry out a new procedure known as Lasik (Laser assisted in situ keratomileusis). In the year ended 30 June 1997, the plaintiffs performed 912 Lasik primary procedures compared with 369 primary PRK procedures. Then in the year ended 30 June 1998, 2362 primary Lasik procedures were carried out compared with 28 primary PRK procedures. 9 Briefly, the older procedure, PRK, which was introduced into Australia in 1991, begins with a portion of the outer layer of the cornea, the epithelium, being scraped away. Then an excimer laser is applied to the exposed surface, which is sculpted to correct the eye's refractive error. Lasik is a different procedure altogether. The first stage with this procedure is to cut the outer layer of the cornea to leave a flap that is peeled back but not removed. After the flap is rolled back, the laser is applied to the area within the cornea; then when the laser treatment is finished the flap is put back into position and, ordinarily, it heals quickly. 10 Whilst both PRK and Lasik were used to treat short-sightedness, Lasik is generally regarded as an improved procedure, and one of its advantages was that it was less painful than PRK and enabled more rapid recovery. 11 In 1992 or 1993 Dr Rogers and Dr Lawless began to employ orthoptists, and, after it was incorporated, SRSC did likewise. By 1997 or 1998 the first plaintiff had four or five employed orthoptists. 12 In 1997 a decision was made by the plaintiffs to introduce an information video intended for prospective patients. There had been an earlier video (Exhibit 17), but the evidence disclosed that in 1997 EFEX produced a new video for the first plaintiff. This new video was called "Wake Up and See". This new video was first distributed in September 1997. It was this video which became the focal point of the interview (see Exhibit B), and of the TV broadcast (see Exhibits F and G). The video was also the focal point of the imputations upon which the plaintiffs' claims are based. 13 Dr Rogers and Dr Lawless are both eminent ophthalmologists. So, too, is Dr Beaumont. It is a sorry feature of this litigation that the Court is required to make an assessment of the credibility of these three specialists and to make findings as to their conduct. However unattractive the prospects of doing so may be, it is nevertheless necessary for the Court to undertake this task, because it is alleged against Dr Rogers and Dr Lawless that they behaved in a fraudulent manner, and it is alleged against Dr Beaumont that he has behaved maliciously and that he has expressed opinions that he has not held. 14 I do not intend to dwell upon the details of the career of Dr Rogers. There is no issue as to the accuracy of his curriculum vitae, Exhibit M. He has had an interest in laser surgery since 1985 and has had extensive experience in the field of laser surgery. He was the corneal specialist at Royal North Shore Hospital until the late 1980s when Dr Lawless replaced him. 15 Professor McGhee, whose professional eminence is not here challenged, expressed in his evidence the highest regard for the reputations of both Dr Rogers and Dr Lawless in 1997 and 1998. Indeed, Professor McGhee arranged to send two Fellows to them for training in corneal cataract and refractive surgery. Professor McGhee was asked these questions and gave these answers (T 1447): "Q. They were known as experienced refractive surgeons in 1997/98? A. Yes.

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Q. Totally neutral? A. Yes. In the sense that it tried to talk someone into and out of it I think it was, yes…" 22 Dr Rogers made the point that only three percent of those who inquired about the possibility of surgery proceeded to have surgery. 23 I found the reluctance of Dr Rogers to acknowledge the promotional objective of the video to be an unsatisfactory feature of his evidence. 24 In Exhibit A (at lines 21-22), Helen O'Connor, on whose experience the video was based, stated: "But the surgeons are very experienced and already they've completed over 5000 operations." 25 Exhibit 3, which quantified the PRK and Lasik procedures undertaken month by month from 1 September 1991 onwards, showed procedures up to the end of July 1997 totalling 3288. I find on the evidence that that aggregate figure was the aggregate of primary procedures undertaken. I accept that it did not include revision procedures. If these were taken into account, Exhibit WWW reveals that by the end of July 1997 the number of procedures carried out was some 4300. However, on either approach to the numbers, what Helen O'Connor said in Exhibit A was wrong. 26 This error assumes significance when considering the defences raised to imputation (b) and imputation (h). Fraudulent behaviour is attributed to the plaintiffs over this misstatement of the number of procedures. 27 Mr Hughes submitted that a surgeon who advertised with a view to gaining professional business was under a fiduciary duty concerning the content of the advertising material. He cited Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41, and in particular the judgment of Mason J at 97, and UDC v Brian (1985) 157 CLR 1 per Gibbs CJ at 5-6; Catt v Marac Australia Limited (1987) 9 NSWLR 639 at 651; and Bulfin v Bebarfald's Limited (1938) 38 SR 423. Mr Hughes properly acknowledged however that there was no authority directly in point and Breen v Williams (1995-96) 186 CLR 71 acknowledged certain restrictions upon the duty owed by a doctor to a patient. Whilst Breen v Williams is not directly in point, I am not persuaded that the distribution of a promotional video was attended by fiduciary duty such as that for which Mr Hughes here contends. Nevertheless, care should have been exercised in seeing to the accuracy of the information contained in the video, including the information about the number of procedures. 28 How did the misstatement occur? 29 Dr Rogers acknowledged in his evidence that Helen O'Connor overstated the number of procedures (T 159). His evidence was to the effect that he first realised the number of operations had been overstated two days before the hearing began on 15 September 2003 (T 251). Dr Rogers said he thought the number had been provided by Carla Riches, a former office manager of the first plaintiff (T 160, T 302). 30 Carla Riches, however, was called by the defendants. Ms Riches was the office manager for the first plaintiff from January 1996 until November 1997 and was involved in the making of "Wake Up and See", dealing with EFEX in its production. Ms Riches was provided by EFEX with a proposal for the video (Exhibit 27) and she said she provided it to Dr Rogers and to Dr Lawless. Ms Riches said she also gave to the doctors for their approval the second draft script provided by EFEX (Exhibit 16). Likewise, the final script (Exhibit 30) in which it was asserted the first plaintiff had, since 1991, "performed over 4000 operations". According to Ms Riches, the information as to the numbers came from Dr Rogers and Dr Lawless (T 1033). In a brochure (Exhibit 9) that came into use after the first plaintiff moved premises to Chatswood on 4 July 1997, it was stated that "over 4000" laser procedures had been performed by the first plaintiff, and Ms Riches said that Dr Rogers gave her the information for this document (T 1029), and that the figure of "4000" was arrived at in consultation with Dr Rogers (T 1045). The video director, Ian Stevenson, and the video producer, Angela Barbour, were called by the defendants to complete the evidence as to how "Wake Up and See" came into existence. Ms Barbour did not know where the reference to "over 4000 operations" in Exhibit 30, or the reference to "over 5000 operations" in the working script (Exhibit 47), came from, but I am satisfied that these numbers came from the first plaintiff, and I accept the evidence of Ms Riches that it was Dr Rogers and Dr Lawless who provided the numbers. 31 It is not altogether clear how the numbers were arrived at. I accept that there were no comprehensive computer records available such as would have recorded at the time precise numbers as to procedures. I accept that to obtain accurate numbers it would have been necessary to work through the many volumes of logbooks in which details of procedures that had been performed were kept. 32 Dr Rogers did accept responsibility for the misinformation in the video about the operation numbers (T 252); he acknowledged that the misstatement of numbers was "a bad mistake" (T 254), a "seriously incorrect figure" (T 255), and "a serious error" (T 260). The error was compounded because it was elsewhere repeated or built upon in other publications distributed by the first plaintiff, such as the brochure, Exhibit P, where the number had mistakenly escalated to "more than 8000", and the third edition of "Wake Up and See" (Exhibit 5) where the number of procedures was wrongly stated as "over 12,000 operations". 33 Dr Rogers was cross examined about that last number of "over 12,000 operations" at T 292-293: "Q. Did you realise it as your responsibility to check that figure before it was embodied in a promotional videotape to be released to the public? A. I was responsible for the figure.

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Q. You have answered my question. A. Okay." 34 Not only were incorrect numbers stated in the first plaintiff's videos and literature but in newspaper advertisements as well: see Good Weekend, 1 August 1998 (Exhibit 4) (T 258-259). 35 Satisfied as I am as to the responsibility of Dr Rogers for the incorrect information as to numbers, I consider his conduct to have been very careless in the provision of the figures, or at the very least in allowing incorrect numbers to be published. 36 Like Dr Rogers, Dr Lawless was reluctant to acknowledge the promotional role of Exhibit A. He did not agree that the statement by Helen O'Connor as to the experience of the surgeon at SRSC was in any sense promotional (T 717). He thought that the video described Ms O'Connor's experience (T 718). Contrary to what Dr Lawless had to say, I consider the conclusion that the video was in part promotional is inescapable. 37 I am satisfied as to the responsibility of Dr Lawless for the incorrect statement in Exhibit A as to the number of operations. It seems to me there existed ample opportunity for both doctors to have checked the procedure numbers, and they should have done so. 38 In evidence Dr Lawless acknowledged that the assertion in Exhibit A as to the number of operations was incorrect (T 586, T 671-673). He could hardly have done otherwise. Dr Lawless contributed to the writing of Exhibit 29, a co-management document that came into existence after Exhibit A, and in which it was asserted in the introduction that "SRSC has performed more than 6000 successful procedures." Dr Lawless was unable to explain how the figure of 6000 was arrived at, but he agreed it was an error and that he did nothing to check it (T 752). Dr Lawless was the co-author of co-management guidelines, Exhibit T, which came into existence before the end of April 1998. In this it was asserted that SRSC had treated some 8000 eyes and that figure too was wrong. 39 Like Dr Rogers, Dr Lawless incorrectly attributed primary responsibility for the wrong number appearing in Exhibit A to Carla Riches (T 587). 40 Dr Lawless put forward this explanation: "If you put a number of lasers performed, it's going to be accurate for a week because the week before and the week after you did less and then you did more. I don't think it was - I didn't consider myself central to choosing the number 5,000, but if I was and making a video, you'd want the video to last for a couple of years, as you want a brochure to last for two or three years, and it has to be a number that reflects somehow where you were, where you're going to be six months later and probably two years later.

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So it can't be - it is hard - it must be tough for someone to come up with a number that is going to be appropriate through that period." 41 The above explanation is totally unacceptable and could not excuse an overstatement of procedures performed. 42 There is another unsatisfactory feature of the evidence of Dr Lawless concerning this video. Dr Lawless said he did not see a draft script for the video, but that evidence was plainly incorrect, as the doctor went on to acknowledge in his cross examination and as the evidence of Carla Riches, Ian Stevenson and Angela Barbour in any event established. Indeed, when shown a draft script, Exhibit 15, with handwriting upon it, Dr Lawless acknowledged that the handwriting was his, even though he could not remember putting it there. 43 I accept that Dr Lawless had genuinely forgotten that he had been presented with a draft script for consideration before "Wake Up and See" came into being, but, as earlier remarked, I regard him as being equally blameworthy with Dr Rogers for the false statement of procedure numbers in the first edition of "Wake Up and See", and for the failure to correct such error in it, and in the failure to prevent the compounding of that error in later versions of the video and in literature put out by the first plaintiff. Both doctors, in my opinion, behaved very carelessly. 44 Mr Hughes submitted that their fault exceeded mere carelessness, and that they deliberately falsified the operation numbers or, at least, that their behaviour amounted to recklessness. I do not find this submission to have been made good. 45 In the opinion of Dr Lawless 1000 operations conveys a sense of experience (T 750); Dr Stasiuk thought 500 to 1000 Lasik cases were more than sufficient to engender a patient's confidence (T 849); Professor McGhee considered a refractive surgeon to be an expert in the area after performing "probably a few hundred" procedure (T 1448), although the number 5000 would have been "reassuring" (T 1422). 46 It seems to me that a reasonable viewer of this video, Exhibit A, would be no more influenced to undertake laser eye surgery in response to information that asserted the surgeons had performed "over 5000 operations" than to information that the surgeons had performed "over 3000 operations", or "over 1000 operations", or "thousands of operations". 47 It seems to me to be unlikely that had they contemplated dishonest or fraudulent behaviour to boost patient numbers, either Dr Rogers or Dr Lawless would have perceived it to be a useful exercise to deliberately or recklessly overstate the number of procedures that had been carried out by the first plaintiff. 48 Whilst I consider the behaviour of both Dr Rogers and Dr Lawless to have warranted criticism in the respects above identified, I was in other respects impressed by each of these doctors. Each doctor was in the witness box for a long period and each doctor was subjected to very testing cross examination. Each of these witnesses impressed me generally as being an honest and reliable witness, and I reject the submission levelled against each of them that there was any element of fraud in relation to the overstatement in Exhibit A or elsewhere of the number of operations undertaken by the first plaintiff. I reject the submission that the operation numbers were deliberately falsified, and I reject the alternative submission that either doctor behaved recklessly concerning such overstatement. 49 This brings me to Dr Beaumont. Dr Beaumont is an ophthalmologist who has specialised in medical retina and neuro-ophthalmology. Dr Beaumont has practised as an ophthalmologist for thirty years and Exhibit 40 evidences his distinguished career. 50 Dr Beaumont commenced laser eye surgery in February 1972, and that has been his particular speciality, primarily for the treatment of retinal conditions; Dr Beaumont said (T 1047): "Q. Has laser eye surgery been your particular speciality? A. Yes. Q. For what conditions? A. Primarily for the treatment of retinal conditions but also because I had the laser that would enable me to do other conditions, like closing blood vessels in the cornea or making a hole in the iris, or actually making a hole in the - a posterior capsule-ectomy, because I had the equipment, I became very experienced in those areas as well." 51 Unlike Dr Rogers and Dr Lawless, Dr Beaumont has never practised excimer laser refractive surgery, but his evidence was that he had kept himself informed by the literature relating to laser eye surgery and in about 1990 he became involved in the establishment of the Macquarie Street Excimer Laser Centre. A number of ophthalmologists responded to an offer to become involved in a group purchase of an excimer laser. The members of the group agreed to be bound by an independent ethics committee, and Dr Beaumont was the chairman of that committee. The Macquarie Street Excimer Laser Centre operated until about the middle of 2003. 52 The concept behind the ethics committee was that of Dr Beaumont. He explained it in his evidence in this way (T 1051-1052): "A. It was primarily my idea that the Excimer laser would create a financial pressure on any single doctor who was buying it that would make it very difficult for him to not want to laser every case that came along, that there would be a conflict of interest between the financial pressure on him and his professional duty, so to minimise that conflict of interest I suggested to my colleagues that they should form a large group where the pressure would not be as great and that, furthermore, they could establish an independent ethnics committee outside of the ownership of the group that could, in the early stages of the development of this new technology, help to guide the ethics of the whole group and a number of colleagues agreed that this was a good idea and the centre was set up." 53 Dr Beaumont had a financial interest in the Macquarie Street centre throughout the period within which laser eye surgery was being conducted there (T 1056). 54 Dr Beaumont was contacted by Mr Little from the third defendant prior to the two television broadcasts on 4 and 5 May 1998. Mr Little requested that he go on a programme on excimer laser surgery and that he agree to address ethical issues on that programme. Following that initial approach Dr Beaumont had a meeting with John Little at Dr Beaumont's office and subsequently he met with Mark O'Brien from the third defendant. When he met with Mark O'Brien, Dr Beaumont was shown Exhibit A from start to finish and then it was played back again and the video was stopped during this replay, as the transcript, Exhibit B, records. I will address the imputations and the issues raised by the defences and the reply presently, but it is my intention to express my assessment of Dr Beaumont as a witness, necessary as this has become by reason of the issues raised in this cause. 55 Like Dr Rogers and Dr Lawless, Dr Beaumont gave evidence over an extended period and he was subjected to searching cross examination. I had ample opportunity to observe him in the witness box and I regret to say that there were many features of his evidence that bear upon the question as to whether I ought to regard his evidence generally as being reliable. I propose to deal with those matters now:

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(1) The evidence establishes that, unhappily, Dr Beaumont was not well disposed towards Dr Lawless: (a) Dr Rogers gave evidence that he had known Dr Beaumont from 1972 and that for a time they studied together. Later Dr Beaumont was supportive of Dr Rogers in a difficult period resulting from the celebrated case of Rogers v Whitaker (1991) 23 NSWLR 600 and (1992) 175 CLR 479, and in June 1991 Dr Beaumont invited Dr Rogers to join in the enterprise of the Macquarie Street Laser Centre (T 98-99). Dr Beaumont, having extended this invitation, then said to Dr Rogers: "By the way, Michael Lawless can't come in." Dr Rogers said he replied: "Why not?" Dr Beaumont then named two ophthalmologists who he said would not join if Michael Lawless was in and added: "I feel the same way." Dr Beaumont expressed no reason for what he had said about Dr Lawless. Dr Rogers was not cross examined about the above conversation, but when Dr Beaumont gave evidence, he denied what Dr Rogers claims had occurred (T 1102). Then, in 1996, Dr Rogers said that there was a deal of publicity concerning the launch of the first plaintiff's new laser, and Dr Beaumont protested to him about the "publicity barrage". Dr Beaumont said: "I'm appalled. I'm really surprised that you would do it", but then added: "I'm not surprised by Lawless. It's just the sort of thing he'd get up to. He should be drummed out of the College." (T 105) Once again, Dr Rogers was not cross examined to test his account of this conversation, but Dr Beaumont denied the remarks Dr Rogers attributed to him about Dr Lawless. In the absence of cross examination, I prefer the evidence which Dr Rogers gave concerning the conversations he claimed to have had with Dr Beaumont in 1991 and in 1996 rather than Dr Beaumont's denials. (b) In September 1997 Dr Lawless saw a patient, Mrs Mullane, for a second opinion regarding a cataract and implant surgery. Mrs Mullane had been a patient of Dr Beaumont, but he decided that the patient needed to have her cataracts addressed and referred her to Dr Chatfield. Dr Chatfield was retiring and Mrs Mullane asked Dr Lovett, who was her son-in-law and a medical practitioner, to recommend an ophthalmologist. Dr Lovett recommended Dr Lawless. When Dr Beaumont found out about this, he telephoned Mrs Mullane and advised her to seek treatment elsewhere, because the speciality of Dr Lawless was predominantly that of refractive surgery. All the correspondence concerning this incident is collected in Exhibit EE. Dr Lawless complained to the president of the Royal Australian College of Ophthalmologists about Dr Beaumont's behaviour and eventually the matter was resolved. The College took no action. What is significant, however, is part of the content of the letter which Dr Beaumont wrote to the president of the College on 23 September 1997 addressing the complaint. Paragraphs 7 and 8 of that letter read: "7. I deny that I have a bias or prejudice in regards to Dr Lawless. My judgment of his professional standing is based on facts such as this event, his statements to the press, his display on television, his publications of his clinical experience in treating high myopes and getting a high incidence of complications and the reports from my colleagues. 8. I have read the letter of Dr Ian Lovett. Dr Lovett knew I was looking after his mother-in-law and had done so for thirteen years. He should have contacted me prior to referring her off to another eye specialist. If Dr Lovett had followed the usual professional ethics of contacting me prior to referring his mother-in-law or if he had done the usual practice of making the referral through his local practitioner, Dr Sheen, then the confusion which occurred would have been avoided. There are many points in Dr Lovett's letter which are factually incorrect but as Dr Lovett is not making a formal complaint, I will ignore these. I do make the observation, however, that I think it is rather unethical that Dr Lawless should involve his personal friends in his vendetta." To my mind the paragraph numbered 7 manifests ill-will to Dr Lawless. The assertion of "a high incidence of complications" and the assertion of "reports from my colleagues" (inferentially unfavourable) evidence ill-will towards Dr Lawless. Then, in paragraph 8, there is the assertion, unfounded in the evidence, that Dr Lawless involved Dr Lovett in a vendetta. (c) On 5 March 1998 Dr Beaumont wrote to the New South Wales Medical Board enclosing a letter written by Dr Rogers, Dr Lawless and Dr Sutton on the question of co-management. This subject, indeed, was a subject which was considered by the Royal Australian College of Ophthalmologists. However, Dr Beaumont sought legal advice as to its terms and reported to the Medical Board that the legal opinion (copy of which he enclosed) suggested that the co-management fee was a secret commission "and therefore a criminal act". Dr Beaumont concluded by asking the Medical Board to deal with the situation "as it may not only be unethical and contravene the Medical Act, but it may also be deserving of a criminal prosecution" (see Exhibit W). Dr Beaumont asked the Medical Board in Exhibit W to consider referring the matter to the Attorney General. When cross examined about his letter to the Medical Board, Dr Beaumont denied that he wanted Dr Rogers, Dr Lawless and Dr Sutton to be prosecuted (T 1114) and, indeed, he went so far as to say that he would rather they were not prosecuted (T 1115). I simply do not accept that evidence, particularly having regard to the content of Exhibit W. It is to be observed that the complaint to the Medical Board raised in Exhibit W shortly before Dr Beaumont was interviewed by Mr O'Brien remained undetermined when the interview for the broadcast took place.

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(2) Dr Beaumont acknowledged in his evidence (T 1191) that one of the ethical rules of the Royal Australian College of Ophthalmologists, to which he belonged, prohibited public attacks on other members of the profession but he denied that his behaviour was unethical in proceeding with the interview with Mr O'Brien for the purposes of the telecast. He agreed that he made "strong criticisms" of the behaviour of Dr Lawless in the interview (T 1191) and, indeed, he agreed (T 1527) that he knew when interviewed by Mr O'Brien that Mr O'Brien was going to use the material provided in the interview to publicly defame the plaintiffs and, further, he appreciated that what he was saying in that interview amounted to "very serious defamatory things" about the plaintiffs (T 1527). Later, however, when taken to Exhibit OOO, being the by-laws of the College of Ophthalmologists, Dr Beaumont did agree (T 1563) that when he gave the interview to Mr O'Brien, he breached an ethical by-law, and in particular the following provision: "(a) Only the President, Honorary Secretary, Chairman of the Public Relations Committee or a Fellow specifically deputed by one of them is authorised to act as media spokesperson for the College. However, in respect of a State or local issue, the relevant Branch Chairman or his/her nominee may speak to the media on behalf of the Branch. (b) Members shall not advertise or make a statement to the public about professional services unless the chief purpose of the advertising or statement is to present information reasonably needed by any patient or colleague to make an informed decision about the appropriateness and availability of medical services. (c) Advertising and statements to the public must be demonstrably true, must not contain any endorsement of clinical skills, and must not be likely to bring the profession or one's colleagues into disrepute …" (Emphasis added) Dr Beaumont recognised he could have complained to the College about the plaintiffs' video, Exhibit A, (T 1563), and I am unable to accept that it was Dr Beaumont's perception that his participation in the interview with Mr O'Brien involved no breach of the ethical standards prescribed by the College.

[51]

(5) It emerged in cross examination of Dr Beaumont that he cooperated with OPSM in suggesting the form of advertisements that OPSM might employ (see Exhibit BBB). On 23 April 1997 Dr Beaumont wrote to Mr Lack of OPSM in the terms following: "A short note to follow up our phone conversation. I would like to thank you for giving me the opportunity of looking at the advertisements that OPSM proposes. The principle with regards to this is not to suggest that the procedure is uncomplicated or that it is universally successful. This is not the true story. It is important to deliver the true message to the patient. It is still able to be put forward as a fantastic medical advance and a wonderful procedure with regards to giving a large number of the Australian public the opportunity to be free of glasses and improve their lifestyle . Specifically, the word 'simple' in the first advertisement suggests uncomplicated and the statement 'Now you can' is too definite. In the second advertisement the word 'uncomplicated' describing in your sub-heading 'A quick and uncomplicated procedure' would have to be removed. Other than that, I do not see anything wrong with the advertisements." (Emphasis added) On a sheet accompanying the above letter Dr Beaumont proposed as an example of an ethical advertisement the following: "Radio - 30 seconds If you have been looking into laser surgery to reduce your dependence on glasses look into OPSM Laser Clinics. Our independent ophthalmologists can advise on a range of options, including LASIK. The surgery is quick, complications uncommon and there is minimal discomfort . To get further advice phone OPSM Laser Clinics on 1800 626 300 now. That's 1800 626 300." (Emphasis added) Dr Beaumont suggested at the foot of that sheet: "Other OK phrases you may want to use: 1) Dramatically reducing your need for spectacles 2) Improves your vision without spectacles" Dr Beaumont considered the thirty second ad to be "honest and accurate" (T 1999) and the assertions that "the surgery is quick, complications uncommon and there is minimal discomfort" also to be true (T 1200). He agreed that the suggestion in the letter as to the opportunity to be free of glasses conveyed the notion of being able to throw away glasses (T 1203). However, whilst it was his view that a large number could achieve this through Lasik, a view held by him in April 1997 and in May 1998, this was not the same as saying that all could do this, and he said that was the impression Exhibit A created. Whether that is so or not, is a matter to be considered when addressing the imputations and the defences to them. Dr Beaumont was cross examined on the subject of advertising carried out by the Macquarie Street Laser Centre (see in particular the cross examination at T 1175-1190). I did not find the evidence given in cross examination on the matters here identified in (5) to sit comfortably with Dr Beaumont's criticisms of Exhibit A and the advertising undertaken by the first plaintiff.

[64]

Q. Dr Beaumont, would you answer my question. It is an absolutely extraordinary mistake to make to say erroneously that the patient was a physician in America when you say you were referring to a patient in Japan, isn't it? A. In it is not an absolutely extraordinary mistake." (The reference in the above passage to a patient in Japan was a reference to an eighteen year old person in Japan who, after Lasik surgery, developed infection in both eyes and who suffered temporary loss of vision in them. His case was the subject of an article by Watanabe and others published in the Archives of Ophthalmology in December 1997 - Exhibit 26.) Later (T 1644), Dr Beaumont was asked this question and gave this answer: "Q. How did you come to make the mistake of saying to Mr O'Brien that it was a physician in America when it was a patient in Japan? A. At that time in ordinary conversation in an interview, the point I was wanting to make was that a bilateral infection had occurred when a bilateral simultaneous Lasik procedure was done, and that was upmost in the thoughts in my mind, and I made a mistake as to the geography and the physician, which to me is not relevant to the point I was making. I'm quite aware that I've made a mistake there, and in conversation, when you are talking about cases, you know that a bilateral infection has occurred, and that is just fundamentally the, and a most important, issue in your mind. The extra data, such as the age of the patient, the date when it was published, and the fact that it was in America or Japan, they aren't as readily recalled, and at that time I did make a mistake." There was further cross examination about the Watanabe article (see in particular T 1729-1742). In the course of that cross examination Dr Beaumont was asked this question and gave this answer (T 1733-1734): "HIS HONOUR: Q. How could you possible confuse an America physician with a Japanese patient - I don't follow. A. It is easy. When I read the literature, your Honour - when I read the literature I read the principles, and I don't store the patient's, unless it is relevant, age or race or - and I quite often don't store the name of the person who has written the article. What is important to me is the fact that someone has had a bilateral infection, and that goes into my mind, that bilateral infection occurred, and that is the most important fact when I read it. I would read sometimes hundreds of articles a week, and I only store the relevant data that is important to me making decisions in managing patients. I never - and I have great difficulty recalling names and which hospital it was done at, because it doesn't matter. The only thing that matters is the important part of the information that affects your patient management, and I do this all the time. It is not unusual. In law I think it is different because you always have to refer to cases by names, but in medicine what we are concerned about is the fact that a bilateral infection occurred, and the name and the race just didn't go in as an important piece of information relevant to patient management." The evidence in this case does not describe the case of any American doctor who temporarily lost sight in both eyes after Lasik surgery and I regard the evidence that Dr Beaumont gave he had confused the patient he described to Mr O'Brien with an eighteen year old Japanese person described in the Archives of Ophthalmology as being most unsatisfactory. Indeed, I do not accept it. 56 It will, of course, be necessary to refer further to the evidence of Dr Beaumont when considering the various imputations and I have not above attempted to record an exhaustive analysis of what I perceive to be worrying features of his lengthy testimony. However, I have decided that where the evidence of Dr Beaumont is not in accord with the evidence of either Dr Rogers or Dr Lawless, I prefer the evidence of the latter two doctors, each of whom I found generally to be a more satisfactory and reliable witness than the first defendant. I have so concluded notwithstanding the extent of the carelessness of Dr Rogers and of Dr Lawless in respect of the misinformation on the number of surgical procedures they have carried out. In making my assessment, I have brought into account, where appropriate, the particular skill of Dr Rogers and of Dr Lawless concerning the Lasik procedure to which Exhibit A relates, and Dr Beaumont's lack of expertise in that particular area, Dr Beaumont having acknowledged that he has never practised excimer laser refractive surgery. 57 I will now consider the defences to the various imputations.

[82]

(f) Professor McGhee said (T 1516): "I think I stated yesterday that the consent form, and the process, was a reasonable form." 70 Dr Stasiuk opined that it was impossible in an information video to cover every risk and that "the most important time to mention the risks is during the doctor/patient consultation" (T 843). 71 Dr Rogers recognised the video as an important element in the consent process (T 242, T 370), but considered there were more important things that happened (T 242). 72 Dr Lawless instructed the orthoptists as to what they should say to patients, taking them through the "Essential Points" document. Unlike Dr Rogers, Dr Lawless considered the video, Exhibit A, to be only a "small part" of the consent process (T 581). 73 The evidence of Professor McGhee, Dr Stasiuk, Dr Rogers and Dr Lawless leads me to the conclusion that the face to face interview between the patient and the surgeon was of central importance. I cannot and do not accept the evidence of Dr Beaumont reviewed at para 67 above. Dr Rogers gave evidence as to the procedure he adopted with his patients, including discussion of the Essential Points and consent forms (see T 120 and following). I accept as being reliable the evidence that Dr Rogers gave as to the consent process. Dr Lawless gave evidence as to the procedure he adopted at the face to face interview with his patients (see T 450 and following). He also gave evidence as to the instruction he gave to the orthoptists engaged by the first plaintiff as to what they should say to patients when considering the Essential Points document with them (T 444 and following). Again I accept as reliable the evidence that Dr Lawless gave as to these matters. I also accept the evidence that Dr Lawless gave (T 482) that in 1997/98 only about 45% of patients who presented for a consultation with an orthoptist and then with a surgeon ultimately proceeded to have refractive surgery. Having considered the evidence as to the consent process, the language of the forms employed and the evidence of Dr Rogers and of Dr Lawless in point, I do not consider that the truth of imputation (a) has been established. 74 Let me deal specifically with the four matters which Mr Hughes identified:

[84]

(b), (c) and (d) It was submitted that patients were not given due warning about the risks of infection and of loss of vision, including blindness. It was also submitted that the patients were not duly warned about the risks of having both eyes operated upon on the same day. This last matter is the focus of imputation (c) and I will deal with it there, but I now state, for reasons which I will later express when addressing imputation (c), that I do not find that patients were misled about the risks of bilateral same day surgery. Much attention was directed to what appears in Exhibit A at lines 77-87 read in conjunction with the remarks attributed to Georgia at lines 51-55. It was submitted that what was there said understated the risks. In the rough cut of Wake Up and See (Exhibit 6), Georgia said at lines 501-502: "There have been two or three cases of reported infections in the world" and this was cut from Exhibit A. When asked about Georgia's statement and the source of her knowledge, Dr Lawless was unaware of the source but said that Georgia was wrong (T 766). In response to the following question at T 767, Dr Lawless gave the following answer: "Q. It was unlikely, wasn't it, that she would make such an error unless somebody had initiated the error by giving her information? A. To my knowledge there was no - the Watanabe case, the Japanese case, was, as I understand it, the first infection after lasik. It did not lead to severe, permanent visual loss, and that was the letter to the Archives in July 1997, which we wouldn't have read until later that year. Had Georgia have known of other cases? I don't think she could have because I don't think they existed, or at least they didn't exist in a way that they were reported and people knew about them." I accept that the above answer reflected the knowledge of Dr Lawless and I accept his evidence at T 697 that what he told Ms O'Connor accorded with his belief at that time. I accept it to have been his belief that the first reported case of infection after Lasik was the Watanabe case (see earlier at p 30) and that "cases of infection started to filter into the literature through 1998" (T 765). The Watanabe article appears in the Archives of Ophthalmology in December 1997 and concerned a case of corneal infection as a complication of Lasik. The patient was not treated at the Watanabe clinic but appeared there for treatment for the infection. His sight was severely impaired on presentation and the impairment amounted to legal blindness. However, that was not a permanent state of affairs. In assessing this matter, Dr Lawless had regard to the fact that the circumstances in which the Lasik surgery had taken place were not disclosed and also that in Japan, at that time at least, surgery was carried out by other than ophthalmologists. Dr Lawless was cross examined about an article by Salah which was published in the American Journal of Ophthalmology in 1996 (see Exhibit 33). This article did address excimer laser but did not report a permanent case of significant loss of BCVA (see the evidence of Dr Lawless at T 803-804). One patient referred to there lost two lines at the end of the study but sight may have returned after that time (T 830). Dr Lawless was also cross examined on an article in the Journal of Refractive Surgery published in September/October 1998. That article was written by Dr Fraenkel, Dr Lawless, Dr Cohen, Dr Sutton and Dr Rogers. Description was given of three cases of opacification identified within one week of Lasik surgery, but in each case resolution of the condition occurred within four weeks of appropriate treatment. Professor McGhee gave evidence concerning an article by Dr Seiler, published in the August 1991 edition of the Journal of Ophthalmology (Exhibit 43). This was a PRK study and one of the patients was a sixty-two year old person with a pre-existing collagen disease, which, by 1997, was a known contraindication to Lasik (T 1444). She was not a typical patient and a Lasik procedure for her would have been strongly contraindicated in 1997/98 (T 1445). None of the patients reviewed by Seiler ended up gaining or losing more than one line (T 1445). Professor McGhee was also questioned about a letter by Sampath (Exhibit 44). Again this concerned a patient who underwent a PRK procedure. He was aged seventy-one and Professor McGhee agreed he was not a representative case for present purposes (T 1444). Finally, there was an article by Friedman in the Archives of Ophthalmology in July 1997 (Exhibit 45). This reported on three patients who underwent ALK, resulting in severe visual loss many months after surgery. Dr Lawless was not cross examined about this article and neither was Dr Rogers. Whilst ALK involved the use of a microkeratome as in the first stage of Lasik, the procedure then in ALK was to make a further deeper cut to reshape the eye (T 1106). Dr Beaumont thought that the procedure was abandoned in 1996 or 1997 (T 1107). I do not find this article by Friedman to be of assistance in the present context. 75 On my assessment of the evidence in this case, what Dr Lawless said to Ms O'Connor at lines 77-82 has not been proved to have involved any assertion that was intended to deceive. The risk of infection and scarring was adverted to and so too was the risk of loss of sight and blindness. Imputation (e) deals specifically with the question of blindness and I will consider the statement "no-one has gone blind" when looking at that imputation. 76 Dr Lawless agreed that what he said in Exhibit A about vision not being quite as crisp was inadequate (T 721): "Q. To say, 'the quality of your vision might not be quite as crisp as it is now with your best glasses or your best contact lenses', is an inadequate warning, would you not agree, of the risk of permanent loss of best corrected visual acuity? A. Which is why in the consultation process that is gone into at length. This was part of the edited documentary. This was not the consent." 77 Clearly, it would not be possible in an information video to fully inform every person who may view it as to all the risks of the procedure. No two patients would be the same intellectually or physically and this makes the one on one consultation the more important. It seems to me that the procedure as described by Dr Rogers and Dr Lawless, which I found the plaintiffs had in place, recognised and addressed this. 78 I see nothing unethical or misleading in having a procedure whereby what was stated in the video was expanded in consultation. What was required at the end of the consent process was that the patient should be sufficiently informed so as to be able to give a meaningful consent. It has not been proved that the plaintiffs failed to provide the necessary information, and the substance of this imputation has not been proved. 79 Of course, it is not to be overlooked that changes were made to the video in June 1998, and I do not overlook the submission made by Mr Hughes that the plaintiffs changed the video because they appreciated the references that were taken out were misleading. The relevant changes were the deletion of lines 78-80 of the words "Now that has never happened. Alright. Meaning that has never happened in the world. No-one's ever gone blind from having it done. Right. But it could happen",

[93]

Imputation (b): SRSC is an eye-surgery clinic which, through its surgical staff, is a party to a deceitful scheme to trick patients into signing a form purporting to give consent to surgery on their eyes by showing them a video tape which is misleading as to risks inherent in the surgery. Dr Lawless is a party to a deceitful scheme to trick patients into signing a form purporting to give consent to surgery on their eyes by showing them a video tape which is misleading as to risks inherent in the surgery 82 The jury found this imputation to have been proved for the benefit of both plaintiffs against both defendants. 83 The defendants here assert fraud against the plaintiffs, acknowledging that an allegation of fraud is a very serious allegation requiring clarity of proof: see Briginshaw v Briginshaw (1938) 60 CLR 336 and Refjek v McElroy (1965) 112 CLR 517. 84 It is submitted that the plaintiffs provided patients with a video that was misleading as to the risks of surgery, knowing it contained untruths or at the very least with reckless indifference to its truth or falsity. 85 I described and assessed the informed consent process of which Exhibit A formed part when considering imputation (a) and I assessed the behaviour of Dr Rogers and of Dr Lawless concerning the overstatement of the operations when earlier addressing their credibility (at paras 13-48). For the reasons earlier stated, I reject the submission that there was any element of fraud involved in the overstatement in Exhibit A of the number of operations performed by the first plaintiff's surgeons. 86 This imputation involves not just the alleged element of the supply of a misleading video, but its supply as part of a deceitful scheme to trick patients into signing a consent form for the purposes of surgery. If there was such a scheme, Dr Rogers and Dr Lawless would have to have been parties to it. Dr Rogers said he was involved in the decision to make the video (T 133), and he reviewed it to check its truthfulness (T 134). He was happy with it, although it was later changed after the television programmes. He said he considered Helen O'Connor's experience to be representative (T 135). He said he was very proud of the video (T 392): "A. It is a video that I was proud of. I don't think that any other video that I saw - and there was lots of videos that we could have used and we chose to make our own video, because in my view other videos that were about were based on a couple of vague statements about things with lifestyle things with people water-skiing and going about life with wonderful vision, and I thought they were inappropriate so we made the effort to spend - we could have just taken one of those videos, but we made the effort to spend the money to help someone see personal experience. I was proud of it. I was trying to get the best possible consent process and I think our video actually helps people understand the process they are going through. I don't think they actually got through with any misconceptions. You just say it is impossible, because no-one knows all the thought processes of a patient, but you are obviously trying your best to make sure that the patient's expectations and your expectations are the same. That is one of the keys to being successful in refractive surgery." 87 The review about which Dr Rogers spoke was inadequately conducted because he did not detect the error as to operation numbers, but I accept the honesty of his responses referred to above. 88 For his part, Dr Lawless said he accepted responsibility for Exhibit A (T 553). He watched it with Dr Rogers following its production, he thinks twice, before they decided to use it (T 472). He thought it was good (T 553), and perceived it to contain a person's description of her experience. Once again, although the failure of Dr Lawless to detect the error as to numbers was very careless, I considered him to express in the responses reviewed an honest perception of Exhibit A. 89 I do not find that either Dr Rogers or Dr Lawless had become aware of the inaccuracy of the operation numbers until recently, and I do not find that either doctor perceived that the video, Exhibit A, was inaccurate or misleading in any respect at any time prior to the events giving rise to these claims. I expressed earlier (at para 48) my favourable assessment of each of these witnesses, and of course that assessment bears upon each of the imputations concerning which fraud is alleged against the plaintiffs. 90 I will not repeat what I have written when considering imputation (a), but much of what I there wrote concerns matters of relevance to this imputation. However, I now add to that earlier material. 91 In answer to interrogatories (Exhibit 12), the first plaintiff acknowledged awareness of the following: " PRK could cause : Pain Delayed visual recovery Sromal haze Temporary post-operative hyperopia Under correction Overcorrection Induction of astigmatism Regression Glare Topographical abnormality to the cornea including central islands Scarring Abnormal epithelial healing Infectious keratitis Loss of best corrected visual acuity LASIK could cause : Incomplete or irregular flap creation Free caps Perforated flaps Intraocular penetration Subluxated flap Diffuse lamellar keratitis Central islands Decentration of ablation Overcorrection Under correction Regression Production and use of the second video tape Induced astigmatism Post-operative flap wrinkles Corneal flap melt Bacterial keratitis Epithelial ingrowth Interface debris Keratitis sicca Loss of best corrected visual acuity Corneal ectasia" 92 Then, in Exhibit 20, the second plaintiff made a similar acknowledgement. 93 The above risks are not adverted to in the video but this omission does not establish the truth of the imputation. It seems to me that it would be impractical and unhelpful to spell out in an information video or, indeed, in documents such as those comprising Exhibit Q all the possible side effects or complications of Lasik. 94 At this point I should refer to certain of the paragraphs contained in the documents to be found in Exhibit Q. 95 In the "Essential Points" document (see para 65(iii) above), paragraphs 4, 5, 6 and 7 are as follows: "4. It is possible that LASIK could affect your best corrected vision. If so, your best vision, with glasses, may not be as good after surgery as it was before. 5. There is always a slight chance of getting an infection. The chance of this is probably no higher than with long term contact lens wear. An infection may lead to severe scarring and in extreme cases the need for a corneal transplant and possibly blindness. 6. The long term effects of LASIK are unknown but studies to date show no untoward side effects. 7. Corneal flap problems occur in about 1% of LASIK procedures. This may require a second procedure the day following surgery or some weeks later." 96 Patients were required to complete consent forms, one of which, again forming part of Exhibit Q, contained these provisions: "3. Retinal problems due to LASIK although rare, are possible. These can lead to permanent loss of vision. 4. Corneal flap complications are possible among which are: (A) Incomplete flap requiring postponement of the procedure. (B) Delayed visual recovery. (C) Epithelial ingrowth. Epithelial cells may grow underneath the flap. If severe the flap will need to be lifted and the cells cleared. 5. Presbyopia is an age dependent condition which reduces the ability to focus for near work. Consequently patients who have had successful laser vision correction will require reading glasses in later life. 6. Since it is impossible to state every complication that may occur as a result of surgery, I understand that the list of complications stated in this form is not complete. 7. I understand that complications may occur with any procedure and I accept the possible risks associated with this procedure. Also it is understood that the long term effects associated with this procedure are unknown. 8. As with any laser refractive surgical procedure results cannot [be] guaranteed." 97 Reviewing the informed consent process overall, and the documents patients were required to address, I do not consider the plaintiffs' approach to alerting patients to the risks of laser surgery was unreasonable and certainly I do not consider it evidences a deceitful scheme to trick patients into signing a consent. 98 In this connection, I refer to the following evidence given by Dr Lawless in cross examination (T 636): "Q. Would you agree that nowhere in the SRSC consent documentation, or in the SRSC video, exhibit A, or any SRSC brochure on issue in or prior to July 1997, was there any mention of the risk of intraocular penetration? A. Yes. And I think that would apply to any consent form for any surgery performed anywhere, which is why every consent form has - I bet we have got it here somewhere, 'Since it is impossible to state every complication' blah, blah, blah. Number 5. You just can't do it. [I take the reference to "Number 5" to be a reference to paragraph 6 in the document set out in para 96 above.]

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MR HUGHES: Q. Would you like the question again? A. No, thank you, Mr Hughes. It's okay. I think we have effectively covered it the other way. If you - which I guess is what I was trying to say. You could make a list here, which is, 'Lasik could cause' and there is the 15 or 17 things on the document, exhibit number 20, but you would have to keep adding to the list every month or - and then you would sometimes take one off, but they lead - those things, because knowledge changes, they lead to, if bad, a smaller number of events which, as I said, there was basically three, and they lead to severe loss of sight or blindness. So I think it's - personally I think it is more confusing to a patient if you put 30 things here, whereas what they really want to know - I might be being patronising, but I think what they want to know is not what diffuse lamellar keratitis is in its pathogenesis; what they want to know is what can it do to my vision? How is it doing that? and what it might lead to. And that's why, in the consent form - and I think that is covered, hopefully, in the consultation process, but in the written document it is covered by the end point. Q. What's the end point? A. Well, I have to look at it, but things like severe loss of sight, blindness, those sorts of things. It's covered - we tried to cover it at the other end, because that's what patients - people - can understand." 99 It seems to me that it was a reasonable approach, and not a misleading one, to alert patients not to the technical names of complications but to the practical effect of them, and I accept the evidence of Dr Lawless to the effect that this is what was endeavoured to be achieved in the plaintiffs' consent process. 100 In the video, Dr Lawless indicated he was going to proceed immediately to do the second eye. Was this misleading as to the risks of surgery? I think not, but I will deal with same day bilateral surgery when addressing imputation (c). 101 In the video, Georgia said, at lines 59-63: "Now the long term effects of the procedure are not known. We do know up to ten years time, which is all the history we have with the use of excimer lasers, that there is no adverse side effects to their use." 102 It was submitted that this was a misleading statement because it conveyed to the ordinary viewer the notion that there were no adverse side effects in the long term or the short term. I do not think that is what Georgia was saying; rather, it seems to me, that in context Georgia was addressing long term effects only. Dr Lawless, indeed, went on to address possible adverse effects at lines 73-87 and, in any event, the video has to be viewed as part of the overall consent process, and the documents to be found in Exhibit Q alerted the reader to complications that could occur, so that before the reader took away the consent document, there would have been the opportunity to read the "Essential Points" material and that document would have been explained. By the time a reasonable reader signed the consent document, he could be expected to have had an awareness of the existence of possible short term side effects and their consequences. 103 Imputations (d), (e), (f) and (h) address matters of relevance to imputation (b). I shall address those imputations discretely, but for reasons I shall later express the truth of none of those further imputations has been established. Likewise, the defendants have failed to prove the truth of either imputation (b). I do not find either plaintiff to have been party to a deceitful scheme such as is asserted in the imputation.

[101]

Q. Was that your view? A. Yes." 108 Dr Lawless gave evidence as to what he would tell his patients about having both eyes done at once (T 453): "I would then talk about the fact that most people wanted to have both eyes done at the one time, and I would say, 'You don't have to do that, but the majority of people do it in that way.' I said, 'But from my point of view, if you choose to do both eyes together, this is what I will do. I will do the first eye and if it is technically perfect I would tell you and, then I would move on and do your second eye.' Then I would say, 'If it wasn't technically perfect, the first eye, I would tell you why and what the issue was, and I would not go on and do your second eye.' I would say, 'That would be a nuisance, but it is better to approach it that way.'" 109 Dr Lawless said he told Helen O'Connor, even though she wanted both eyes done together, he would not do the second eye "if the first eye was not technically perfect". 110 The instruction given by Dr Lawless as set out above did not alert the patient to added risk associated with same day surgery. Unlike Professor McGhee, Dr Rogers did not consider there was such an element (T 124), and neither did Dr Lawless. The perception of Dr Lawless as to the risk was reflected in what he considered patients should be told. In cross examination (T 709) Dr Lawless said "They should be informed that bilateral surgery is their choice and that a severe complication can occur - a severe, vision-threatening complication can occur from lasik, the understanding being that it could occur in one eye and it could occur in the second eye. It would be an extremely rare event, of the order of - I don't know. I picked 1 in 100 million, but the implication is - that's what I think they should be warned about." 111 In other words, there were risks associated with surgery on one eye and patients should be warned as to this. There were the same risks associated with surgery in the other eye, and patients should be alerted to appreciate this. 112 The evidence satisfies me that the practice of same day Lasik surgery on both eyes was widespread by April-May 1998. Professor McGhee acknowledged he was conservative in his thinking about this, and it was not, in 1998, recommended in the United Kingdom (T 1429), but Professor McGhee said he knew a number of surgeons were performing same day surgery by that time, and that this was not uncommon in America. 113 Dr Martin considered same day bilateral eye surgery was an acceptable practice by 1997-1998 (T 921). 114 Dr Stasiuk did not start to perform same day bilateral surgery until 1999, but he recognised it was "reasonably popular" by 1998 and was being performed by thirty or forty percent of ophthalmologists in Australia (T 839). 115 Nowadays, I accept, as Dr Rogers and Dr Lawless asserted (T 129, T 469), that the overwhelming majority of refractive surgeons do same day surgery on both eyes. Dr Rogers had this to say as to the position in 1998 (T 129): "Q. Just for clarity, what was the position amongst refractive surgeons in 1998 concerning bilateral sequential surgery? A. The majority, but not quite as much as an overwhelming majority, were practising bilateral sequential surgery. The United States was almost totally bilateral sequential surgery. Australia was only a moderate majority, but certainly a majority of cases, but there were a few doctors who felt that there wasn't enough evidence yet and they were happy to still do one at a time. Some of them used to do one and then wait an hour. I couldn't quite see the merit in that, but some of them used to then actually do it the next day. I couldn't see much merit in that. But some of them would actually wait a week. There were a small minority of surgeons who did that but they were surgeons I respected, they had their opinion.

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Q. So there was never any such concern? A. No." 116 Dr Rogers was aware of the guidelines of the Royal College of Ophthalmologists against the practice, but disagreed with those guidelines. 117 For his part, Dr Lawless said he, too, disagreed with the 1997 guidelines of the United Kingdom College (T 469). He considered them to have no basis in fact. According to Dr Lawless, by 1997 the predominant view favoured same day surgery, and the majority of bilateral surgery was carried out on the same day (T 468). 118 Dr Beaumont expressed a positive view that same day surgery was "inexcusable and should not be carried out, that there was a very important duty to properly inform the patient as to the risks" (T 1097). 119 The evidence has not all been one way, but I am well satisfied from my assessment of the evidence that by 1997-1998 same day laser surgery on both eyes was carried out in a large percentage of cases in Australia and America, and I am also well satisfied that Dr Lawless followed this practice provided all went well with the operation on the first eye. Whilst the view that same day surgery on both eyes was appropriate was not universally held in 1997-1998, the evidence falls far short of establishing that those surgeons who practised same day surgery were behaving irresponsibly. Indeed, I accept that both Dr Rogers and Dr Lawless were highly skilled surgeons, and their evidence persuades me that it was responsible behaviour for surgeons to do same day surgery on both eyes, in the absence of any complication occurring with the operation on the first eye. 120 I am not satisfied that Dr Lawless failed to give adequate warning of the risks associated with same day surgery. It seems to me that the defendants have fallen far short of proving the truth of the imputations in the terms expressed in the case of either plaintiff. It has not been proved that Dr Lawless acted disgracefully in recommending surgery contrary to his patients' best interests, either in the case of Helen O'Connor or generally.

[113]

(d) Professor McGhee voiced criticism of the expression of Dr Lawless of loss of crispness of vision at lines 86-87, and would have couched the warning more strongly. At T 1427, the professor said: "MR HUGHES: Q. Do you have a view as to whether that is an adequate warning or not? A. I would couch it more strongly than that, but then it depends on what is in the consent afterwards. But I wouldn't call it a consent - I think principally that one I've used is like having a thumb print on your spectacles that you cannot get rid of that, the quality is smeared, and you might see it three-quarters of the way down the chart but the quality is not there. And I think that is a warning. I would be more forceful but I don't think that is necessarily a bad warning." 126 Once again, in considering these imputations I must bear in mind that the video is not an exhaustive source of information to the plaintiffs' patients but, rather, a part of the informed consent process. In determining whether the truth of each of these imputations has been proved, it is necessary to heed not only the video but the other steps in the process of informed consent earlier identified. 127 The video itself does refer to the risk of infection and the risk of blindness and it does refer to loss of quality of vision, albeit in terms of which Professor McGhee was critical. 128 However, Professor McGhee, whilst expressing the view that he did not consider the video balanced (T 1435), because, as I understand it, it did not address the need to include patients who had only average results, did not conclude that the video would necessarily have a disproportionate effect. He thought that you could still obtain informed consent notwithstanding this video, and said in response to a question at T 1431: "Q. In your experience, can you say whether or not a video such as this may have a disproportionate influence overshadowing documents signed by the patient later? A. I don't think I could answer that question. I think it would depend very much on the quality of the informed consent afterwards. As long as the informed consent addressed these issues, I think it would be more difficult to get the informed consent. But I think you could still get informed consent." 129 Professor McGhee acknowledged that it was impossible to produce on a video information that dealt with everything that could happen to every patient and that it was for the doctor ultimately to address the individual patient and his circumstances (T 1523). 130 I must have regard to what Dr Rogers and Dr Lawless said was done to complete the process of informing patients. Accepting as I do the evidence that each doctor gave as to this process and participation in it, I am not satisfied that warning given was inadequate. 131 The imputation is concerned with permanent eye damage, and this was not something that was addressed in the Watanabe article, to which I made earlier reference. It is unnecessary for me to repeat the references to the items by Salah, Fraenkel and others, Seiler, Sampath and Friedman, but I do heed them in considering whether the truth of imputation (d) has been established. 132 Exhibit A alerted the viewer to the risk of blindness and this risk was addressed in the "Essential Points" document (para 5). The patient was warned in the documents of the risk of sight being worse after surgery and of the risk of infection leading to severe scarring. In one of the consent documents the patient was warned of possible corneal flap complications including temporary or permanent blurred vision and retinal problems that could lead to severe loss of vision. Each of the doctors addressed these problems with his patients. Referring to the chart, Dr Rogers, as part of the information process, said he warned patients that by inflammation or scarring the patient could suffer severe loss of vision and be unable to do better than see the top line of the chart. 133 Dr Lawless would tell his patients that they could lose their sight, although this would be a rare event. He would tell them that they could suffer degradation in the quality of their vision and he would go through the "Essential Points" with them. 134 Having evaluated the evidence as to the consent process in this case, and having assessed the evidence which Dr Rogers and Dr Lawless gave, I do not find that either surgeon behaved irresponsibly by performing eye surgery without giving patients adequate warning about the risk of permanent eye damage. The truth of imputation (d) as relied upon by the first plaintiff and the truth of imputation (d) as relied upon by the second plaintiff has not been made out. 135 When I was considering imputation (a), I referred to the evidence of Dr Rogers and of Dr Lawless dealing with the change in the video after the television programme: see paras 79 and 80. Accepting that it was considered appropriate to change the video when it was changed, it does not follow that there was any element of irresponsibility in the earlier use of the video, Exhibit A.

[114]

Imputation (e) SRSC is an eye surgery clinic which engages in deliberately misleading marketing practices in supplying potential patients with a video which falsely states that no patient has gone blind from laser eye surgery. Dr Lawless engages in deliberately misleading marketing practices in using for potential patients a video which falsely states that no patient has gone blind from laser eye surgery. 136 This imputation is available to each of the plaintiffs against each of the defendants. 137 It is alleged that each of the defendants acted fraudulently and was party to a deliberately misleading practice in supplying a video falsely stating that no patient had gone blind from laser eye surgery. 138 The defendants relied essentially upon the Watanabe case (see earlier, in particular at para 74, and see also Exhibit 26) as being a case of blindness occurring in consequence of eye surgery. It was submitted that Dr Lawless knew of this case and that in consequence what he told Helen O'Connor in Exhibit A to the effect that no-one had gone blind from laser eye surgery was wrong. 139 Dr Lawless admitted that he knew about the Watanabe case, he thinks by about March 1998 (T 711). 140 What did Exhibit 26 tell the reader? The patient presented to Dr Watanabe's practice with infection following surgery undertaken elsewhere in Japan. There was no information in the article as to who carried out the operation, or where, or in what circumstances. The patient on first presentation was legally blind due to the infection, but the infection was treated and by six weeks the patient was 6/12 and improving. 141 Dr Lawless was cross examined about this case (T 699-712). Whilst Dr Lawless agreed that the patient was legally blind on first presentation (T 703), Dr Lawless said when the cornea was remodelled and smooth, "my educated assessment is that his vision would return to, at worst 20/30, but it could have returned to 20/20 best corrected" (T 703). 142 Then (at T 704): "Q. At all events, this was a report in a reputable journal of severe loss of vision resulting from bilateral simultaneous lasik surgery, wasn't it? A. This is a report in a letter to the editor - and I make that distinction, because that is a clear distinction in the scientific literature - but it is in a peer review publication. This would not have been peer reviewed, because it was a letter to the editor, and those things are not looked at as closely, they are not always cited in literature searches, but what it shows is that there was a temporary reduction in vision in this unfortunate man, no doubt, and that it improved, and my best estimate is that it would have improved to normal, given long enough follow-up." 143 Dr Lawless said he did not regard this as a case of blindness because the patient got better. At T 713: "THE WITNESS: Thank you, your Honour. If I perform lasik and the epithelium is disturbed, things can happen. It has to grow back over a week or 10 days, and sometimes for a few weeks the vision can be very poor in that eye, down to the level of 6/60 or below, but it gets better. Is that severe visual loss reported in the literature? No, it is not. It is a thing that can happen and, if managed properly, gets better. This was a little late being treated, this particular case in Japan, but once treated it was managed properly, and I think this person will have a complete visual recovery, so I just don't rate that as a blinding or severe visual loss complication from lasik because it got better." 144 Exhibit A was changed in May/June 1998, after the TV programmes. I referred earlier to the reasons Dr Lawless gave for those changes (see para 80 above), in the course of which he stated his belief that nobody had gone blind by that time or since. 145 Mr McClintock drew attention to evidence given by Professor McGhee which indicated that that witness did not categorise the Watanabe case as being a case of blindness. At T 1442 (dealing with the Watanabe article), Professor McGhee gave the following evidence: "Q. Equally, this article has nothing to say about blindness, does it? A. No.

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(iv) earlier, Georgia had told her that the surgery would not eliminate the need for reading glasses. At lines 52-55 Georgia addressed presbyopia: "Now presbyopia is a condition where in your late forties-early fifties you start to lose the ability to focus on near objects and you start to require a pair of reading glasses. That's going to happen to you whether you have the surgery done or not." 161 Dr Lawless said it was his experience as at 1998 that following Lasik surgery over ninety-five percent of patients were able to do without glasses, absent presbyopia (T 947). Dr Rogers said that in 1997/1998 the figures available to him indicated of the first plaintiff's patients "about ninety-seven, ninety-eight, ninety-seven and a bit percent" were well within legal limits for driving without glasses (T 137). I accept this evidence given by Dr Lawless and Dr Rogers. 162 Professor McGhee did not consider what Helen O'Connor was told about her ninety-five to ninety-six percent chance was wrong (T 1500), and at T 1504 this was said: "MR McCLINTOCK: Q. What I want to suggest to you is that what Dr Lawless said in lines 71 and 72 that there is a 95 to 96 per cent chance, that if it applies generally, it was essentially accurate; do you agree with me or disagree? A. If it pertains to a vision of 6/12, yes." 163 Exhibit KKK was an article published in the Ophthalmology Journal in February 2001. It recorded a study carried out between August 1998 and June 1999 (T 1501). Results there published, in what Professor McGhee acknowledged to be one of the bigger studies as to the actual outcomes of Lasik, revealed 94.6% of patients never wore distance correction at six months after Lasik. Professor McGhee said he expected that article to be accurate (T 1501), and I therefore accept it as being so. That study in Exhibit KKK was, of course, taken after the events of April-May 1998, but sufficiently close to them to afford some support for what Dr Rogers and Dr Lawless said. The McDonald study in the journal was altogether consistent with the evidence given by Dr Rogers and by Dr Lawless. 164 Following reflection on all the evidence in point, and on the competing submissions of counsel, I do not find either plaintiff engaged in deliberately misleading marketing practises, in the use of the video Exhibit A, or otherwise, and I do not find the truth of imputation (f) to have been established.

[143]

Imputation (h) SRSC is an eye surgery clinic which publishes advertisements which are false in that they deliberately mislead prospective patients about the risks inherent in laser eye surgery. 165 This imputation is available to the first plaintiff in its action against the second and the third defendants. This involves an allegation of fraud. 166 Mr Hughes submitted that there was a substantial overlap between imputation (b) and imputation (h), but one point of difference. The "deceitful scheme" in imputation (b) began with the process of preparing the video tape whereas imputation (h) deals with the finished product, the video itself. 167 The text of Exhibit G, the Sydney television production, refers in many places to advertisements: at lines 25-28, 55-57, 159, 191-193 and 213-215. However, I do not understand there to have been any attempt made for the purposes of this hearing to prove that there was any deliberate misleading in any promotional material other than the video, Exhibit A. 168 Mr McClintock submitted that the video itself was not an advertisement and, if this was so, that, of course, would defeat the defence presently being considered. However, I am satisfied that one of the functions of the video was promotional and I consider it to be legitimate to regard the video as an advertisement for the purposes of imputation (h). As I understand it, Mr Hughes relied upon the assertion that this video was false in asserting the truth of imputation (h). 169 What the defendants must prove is that Exhibit A was false because it deliberately misled prospective patients about the risks inherent in eye surgery, but, of course, the concept of fraud must be sheeted home to the first plaintiff. 170 Earlier I considered, but rejected, the submission that the overstatement of the operation numbers was fraudulent (paras 28-48). I also rejected the submission that the overstatement misled about the risks of laser eye surgery (para 74 above). 171 What are those risks? Essentially they are:

[144]

(d) risks of the above associated with infection. 172 As to the risk of blindness, Ms O'Connor was warned of that risk in the video and I refer to what I wrote earlier at paras 74-75, and subsequently concerning imputation (e) at paras 136-152. I also addressed the risks of infection leading to scarring and loss of sight (at paras 74-75). 173 I referred (at para 76) to the acknowledgment by Dr Lawless that what he said about BCVA in Exhibit A was inadequate. Mr Hughes submitted that this acknowledgement was relevant to the proof of both imputation (b) and imputation (h). So, too, it was submitted, was the evidence of Dr Rogers as to the necessity to make it clear to a prospective Lasik patient that surgery could result in a loss of BCVA which could not be corrected with glasses (T 367), and his further evidence that to describe the possible loss as some loss of crispness of vision was inadequate (T 369-370). 174 However, it does not follow that in approving the video, Exhibit A, Dr Lawless and Dr Rogers, and through them the first plaintiff, were setting out to deliberately mislead prospective patients about the inherent risks of laser surgery. No patient could come to surgery without proceeding through the complete consent process considered earlier, as each of these doctors must have appreciated. Accepting, as I do, that it was not practicable within the video itself to fully inform everyone who might come to view Exhibit A as to all the risks of surgery that that viewer might encounter, it seems to me to be entirely reasonable that the first plaintiff relied upon its other procedures to fully inform prospective patients. 175 I do not find that there was fraud in the distribution or use of Exhibit A, and I do not find the truth of imputation (h) to have been established. 176 In the result, the defendants have failed to prove the truth of any one of the imputations in relation to which the defence based upon truth has been raised. It follows that it becomes unnecessary to consider the defence based upon s 16 of the Defamation Act in relation to the New South Wales publication or the Polly Peck defence in relation to the Victorian broadcast. 177 This brings me to the defences as to comment.

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Comment 178 It is convenient to deal firstly with the position in New South Wales. The causes of action arising in New South Wales enliven consideration of Pt 3 Div 7 of the Defamation Act. 179 The first defendant relies upon s 32 of the Act: "(1) Subject to sections 30 and 31, it is a defence as to comment that the comment is the comment of the defendant. (2) A defence under subsection (1) as to any comment is defeated if, but only if, it is shown that, at the time when the comment was made, the comment did not represent the opinion of the defendant." 180 The third defendant relies upon s 34 of that Act: "(1) Subject to sections 30 and 31, it is a defence as to comment that the comment is not, and in its context and in the circumstances of the publication complained of did not purport to be, the comment of the defendant or of any servant or agent of the defendant. (2) A defence under subsection (1) is defeated if, but only if, it is shown that the publication complained of was not in good faith for public information or the advancement of education." 181 Both these statutory defences are subject to the provisions of ss 30 and 31: "30. (1) For the purposes of this section, but subject to subsection (2), proper material for comment means material which, if this Division had not been enacted, would, by reason that it consists of statements of fact, or by reason that it is a protected report within the meaning of section 24, 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. (2) A statement of fact which is a matter of substantial truth is proper material for comment for the purposes of this section, whether or not the statement relates to a matter of public interest. (3) The defences under this Division are available as to any comment if, but only if: (a) the comment is based on proper material for comment, or (b) the material on which the comment is based is to some extent proper material for comment and the comment represents an opinion which might reasonably be based on that material to the extent to which it is proper material for comment. (4) There is no special rule governing the nature of the material which may be the basis of comment imputing a dishonourable motive or governing the degree of foundation or justification which comment imputing a dishonourable motive must have in the material on which the comment is based. 31. The defences under this Division are not available to any comment unless the comment relates to a matter of public interest." 182 It has not been contended by Mr McClintock, if these imputations (or any of them) are found to be matters of comment, that they do not relate to a matter of public interest. I am satisfied that the content of Exhibit A and the topics addressed in Exhibits B, F and G concern matters of public interest for the purposes of s 31. There is, however, a real issue as to whether the defences raised satisfy the requirements of s 30(3) of the Act. 183 The statutory defence of comment presents a preliminary question of law, namely "whether the statement in question is capable of being construed as a comment, in that it is an opinion which could possibly be held on the material indicated as its basis": see Bickel v John Fairfax & Sons Limited (1981) 2 NSWLR 474 at 490. 184 In Bickel Hunt J identified other issues arising on the statutory defence of comment (at pp 490-491): "If that legal issue [that is the issue as to capacity] is determined in favour of the defendant, then the factual issues which arise are as follows: (1) Is the statement in question to be construed in fact as an expression of opinion? This issue is determined by asking: (a) whether the ordinary reasonable reader would have understood the statement as having been intended by its author to be an expression of opinion upon sufficiently indicated material; and (b) whether the opinion is one which an honest man might have held on that material. The first of these questions is determined by reference only to the form in which the matter complained of has been expressed and perhaps also to the circumstances surrounding the publication. The second question (like the preliminary legal issue) is determined by considering the relationship between the opinion expressed and the material upon which it is based. Both these are objective questions and the author's actual intention or other state of mind is irrelevant to their resolution. (2) Is the comment based upon proper material for comment? (I leave out of account the statutory variant afforded by s 30(3)(b).) Where that material is a book, the book need only be produced. Where the book is factually described in the matter complained of and the comment is based at least in part upon that description, it must be established that the book has been accurately described. This question is determined by a comparison between the description of the book in the matter complained of and the book itself. Again it is an objective question and the author's state of mind is irrelevant to its resolution." 185 Other issues that arise concerning the first defendant are: (3) Was the comment (if it was comment) the comment of the first defendant? (4) If so, did the comment represent the opinion of the first defendant, the onus being upon the plaintiffs to prove that it did not? 186 Other issues arising in the case against the third defendant are: (3) Was the comment (assuming it to be such) that of the first defendant or was it the comment of the third defendant or its servant or agent? (4) If the comment was that of the first defendant, was its publication in good faith for public information, the onus being upon the plaintiffs to prove that it was not. 187 In the passage from Bickel set out above, Hunt J referred to "the statement in question". That "statement" is the imputation (or any imputation) giving rise to the cause of action: see Perkins v New South Wales Land Council (1998) 45 NSWLR 340, and in particular the judgment of Priestley JA at 345. Mr Hughes sought to reserve his decision by submitting that Perkins was wrongly decided, but, plainly, I am bound by that decision. 188 I must approach my consideration of the statutory defences of comment with the above statements of principle in mind.

[163]

Imputation (a) Through its surgical staff, SRSC, which is an eye-surgery clinic, behaves unethically in that for its financial gain they mislead their patients about the risks of eye surgery. 199 Mr Hughes submitted that this imputation is comment with the conclusion expressed first, followed by the reason for the conclusion. It was submitted that the ordinary reasonable viewer would regard the content of this imputation as wholly a matter of opinion. 200 To the contrary, Mr McClintock submitted that whilst the statement that the staff behaves unethically might be viewed as opinion and thus comment, what followed was a statement of fact and a statement which is a not a matter of substantial truth. 201 In determining whether an imputation constitutes comment, it is, of course, proper to heed the manner of its expression. That said, the task is not a simple one and it is not made any easier by reason of the relevant jury findings having been made at an earlier trial pursuant to Pt 7A of the Defamation Act. Dr Beaumont used the word "unethical" on a number of occasions in the course of the interview, one of which followed what he had said at lines 225-234, and immediately after being asked at 236 "What do you think of the doctors and clinics that make those claims out there?" 202 It seems to me, addressing the questions posed by Hunt J in Bickel (supra), that the imputation should be construed in fact as an expression of opinion. However, whilst Dr Beaumont accepts that he expressed the comment and that this reflected his opinion at the time he saw the video (T 1066), I do not consider that the opinion was based upon proper material for comment, and in view of the shortcomings in Dr Beaumont's knowledge upon the plaintiffs' procedure of informing patients as to the risks of surgery, I do not accept that Dr Beaumont could honestly have held, or that he did hold, the opinion expressed in the imputation. In my opinion, this imputation, and all the remaining imputations other than imputation (g), attract consideration of more than the video, Exhibit A. No opinion as to whether or not a patient could give informed consent to proposed Lasik surgery could properly be reached without knowledge of the entire process of information given to patients up to the time of surgery. The difficulty is that Dr Beaumont had no knowledge of the detail of this process, which I reviewed when considering the defence of truth in relation to imputation (a). 203 Dr Beaumont said in Exhibit B that the video was "all so positive that I don't think you can adequately get informed consent." The doctor gave evidence to the like effect at T 1668: "Q. You didn't know, did you, prior to the moment of the operation, at the point there referred to, what, if anything, Dr Lawless had said to Helen O'Connor about bilateral surgery or increased risks? A. No, I did not.

[176]

Imputation (c) : SRSC, which is an eye-surgery clinic, employs on its staff a surgeon who is a disgrace to the medical profession in that he recommends eye surgery when it is not in his patients' best interest. Dr Lawless is a disgrace to the medical profession in that he recommends eye surgery which is not in his patients' best interest. 209 Mr Hughes again submitted that imputation (c) is comment coming out of the interview, Exhibit B. Mr McClintock submitted that even if the assertion that a surgeon was employed who was a disgrace could be regarded as an expression of opinion, the rest of the imputation is a statement of fact and, hence, the imputation as a whole cannot be regarded as comment. 210 Again I must consider the circumstances and the context from which this imputation has been found to arise. I note that the word "disgrace" was not used in Exhibit B, but the word "disgraceful" appears in a completely different context at line 358, in the setting of considering the reasonableness of fees for optometrists. 211 When considering the defence of truth in connection with imputation (a), it was submitted that the failure of Dr Lawless to refer to risks associated with same day bilateral surgery justified this imputation. 212 I am not satisfied, applying Bickel (supra), that imputation (c) is properly to be regarded as no more than an expression of opinion, and it follows that the defence of comment to this imputation must fail. 213 I should add that whilst I accept that Dr Beaumont himself has a firm belief (not on the evidence shared by his peers), that it is a "crazy thing" to undergo bilateral same day surgery (T 1651), the doctor recognised that it was not the role of the surgeon to stop a patient from making a decision to undertake such surgery, provided adequate instruction was given by the surgeon. I refer to the evidence of Dr Beaumont (T 1657): "Q. Dr Beaumont, also, if you genuinely thought it was a crazy thing to do, you would have regarded your responsibilities as an ethical doctor, wouldn't you, to leave the centre when it was adopted in 1999? A. No. It was adopted under the ethical guidelines, that even though it was a crazy thing to do, provided that there were stringent standards set with regards to informed consent, it was not the role of the Ethics Committee to deny the patients from taking the risk. As is stated in paragraph 3: It was generally agreed that it was not the role of the Ethics Committee to prevent patients from taking risks, but it was their role to recommend that the informed consent procedures be very stringent, particularly in view of the fact that the surgery was of an elective nature and involved a normal eye in the first instance. Now, I may still think that the patient was crazy to take the risk, but the ethical position is that we were not there to prevent the patient from taking the risk." 214 Dr Beaumont in the above evidence defined what he perceived to be the ethical position of the surgeon. That he believed the "crazy" decision as to bilateral same day surgery was the decision of the patient - and not that of the surgeon - is entirely consistent with what Dr Beaumont said in Exhibit B at lines 67-69: "…there's a physician in America who lost vision in both eyes because he got an infection in both eyes when he had both eyes done at the same time. What a crazy thing to do, what a terrible risk to take for the sake of a few days inconvenience." 215 Had it become necessary to determine this, I would have been disposed to find that the imputation, if a matter of comment, did not represent the opinion of Dr Beaumont.

[178]

Imputation (e) SRSC is an eye surgery clinic which engages in deliberately misleading marketing practices in supplying potential patients with a video which falsely states that no patient has gone blind from laser eye surgery. Dr Lawless engages in deliberately misleading marketing practices in using for potential patients a video which falsely states that no patient has gone blind from laser eye surgery. 220 Mr Hughes submitted that the interview addressed deliberately misleading marketing practices and that the marketing practices were deliberately misleading because the risk of blindness and the risk of severe loss of vision were risks downplayed from the point of the assertion that nobody had gone blind from laser eye surgery. Mr McClintock submitted, that this imputation comprises only an assertion of fact. 221 When one has regard to what appears at lines 64-76, it seems to me that the ordinary reasonable viewer would have understood this imputation to be an expression of opinion. However, the statements as to fact to be found in those passages of Exhibit B to which I have referred have not been proved to be substantially true, and do not, in my opinion, represent proper material for comment. 222 Dr Beaumont acknowledged that he was wrong in asserting (at lines 67-68 of Exhibit B) that there was a physician in America who lost vision in both eyes (T 1638) (and see para 55(8) above). As to the patient in America to whom reference was made (at line 73 of Exhibit B), the correspondence comprised in Exhibit DDD records the change in relevant assertions. On 11 September 2003 the first defendant's solicitors wrote that the patient in America was a reference to a female patient in Australia, but on the following day a further communication from the first defendant's solicitors asserted that the reference to the Australian patient was incorrect and that the person intended to be referred to was an American patient whose eye was damaged by the penetration of the microkeratome. It was not contended that that occurred in a Lasik procedure. 223 In my opinion, what was stated at lines 64-76 has been shown not to have been proper material upon which the ordinary reasonable viewer could have evaluated the opinion expressed. This being so, this comment defence fails. 224 There is another difficulty with this defence concerning imputation (e). The imputation involves an element of fraud. The plaintiffs were expressed to be engaged in deliberately misleading marketing practices. Before one could form a reasonable and rational opinion as to whether there was the fraudulent behaviour reflected in imputation (e), there was clearly a need to be aware as to the full extent of the consent procedure, including the content of any advice given by the orthoptist and by the surgeon. The first defendant did not have this knowledge: see T 1614 and T 1633. It seems to me therefore that the defence must fail for the same reasons that led me to reject the defence in relation to imputation (a).

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Imputation (f) SRSC is an eye surgery clinic which engages in deliberately misleading marketing practices in supplying potential patients with a video which falsely states that if patients have laser surgery on their eyes they will be able to throw away their spectacles. Dr Lawless engages in deliberately misleading marketing practices in using for potential patients a video which falsely states that if patients have laser surgery on their eyes they will be able to throw away their spectacles. 225 Mr Hughes submitted that this was clearly comment on the video, and Mr McClintock submitted that it was clearly an assertion of fact. 226 It seems to me that the ordinary reasonable viewer would have understood the statement as having been intended by the author as an expression of opinion. 227 Whilst Dr Beaumont accepted that he intended to convey the various imputations, I should point out in fairness to him that he also said that he specifically wanted to convey what he said but was not thinking whether what he said conveyed this or that imputation(T 1544-1545). 228 This imputation involves an element of fraud. Plainly, in determining whether the plaintiffs were engaged in a fraudulent marketing practice concerning the use of the video, it was incumbent upon anyone forming an opinion to have regard to the whole process whereby information was provided to potential patients. No opinion consistent with the terms of imputation (f) could be reached without heeding that process in its entirety. Dr Beaumont knew there was a consent process employed by the plaintiffs (T 1614, T 1633) and thought it would involve a one-on-one surgeon-patient meeting, but Dr Beaumont acknowledged he was not aware of the plaintiffs' consent procedures at the time he was interviewed. 229 With these considerations in mind, I cannot, and do not, accept that the comment comprising imputation (f) represented the opinion of the defendant. 230 The defence of comment as to imputation (f) accordingly fails.

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Imputation (g): SRSC is an eye surgery clinic which participates in an arrangement to cause its patients to pay absurdly inflated costs for post-operative care. 231 This alone of the imputations is an imputation where the defence of comment is the only defence raised. 232 Once again, Mr Hughes submitted that this is comment and Mr McClintock submitted that it is fact. 233 The source of the imputation is readily identifiable at lines 336-345 of Exhibit B, and I consider that the ordinary reasonable viewer would have understood the statement as an expression of opinion. 234 Before the interview between Dr Beaumont and Mr O'Brien was conducted, I find that Mr Little had been informed by Dr Rogers that the first plaintiff was reducing the co-management fee for two eyes from $600 to $400 and for one eye from $300 to $200 (Dr Rogers: T 143). There is no evidence Dr Beaumont knew this at the time he was interviewed. However, Exhibit B still does not present the full picture, because whilst the viewer is told that the optometrist would normally received "something like $25" for a consultation, the viewer is not informed the optometrist would also receive $25-50 for writing a report (see Exhibit UU). That a report writing fee would normally be paid was Dr Beaumont's instruction to his solicitors, Messrs Tillyard and Callanan, when he sought their advice as to whether "the co-management fee" was lawful. Dr Beaumont did give evidence (T 1064) that the writing of a report should be included in the $25, but I consider that evidence inconsistent with what he wrote in Exhibit UU, and I find it to be unacceptable. I found the responses of the witness later given in cross examination at T 1119 and following, when he was cross examined about the inconsistency between Exhibit UU and his evidence at T 1064, to be unconvincing. Any person wanting to evaluate the comment in imputation (g) needed to be aware that a report fee would normally be charged in addition to a consultation fee. Moreover, the viewer would have understood the comment to be made in response to an inquiry as to how the fees being paid "compare with what is being offered on the regular rebate schedule". The evidence satisfies me that there was no rebate scheduled for Lasik surgery attendances and the viewer also needed to be told this to evaluate the comment made by the doctor. 235 Having regard to these shortcomings, I do not consider the first defendant's comment was based on proper material for comment as required by s 30 of the Defamation Act, and the defence of comment to imputation (g) therefore fails. 236 It becomes unnecessary therefore to consider s 32(2) in respect of imputation (g), but because this matter was addressed in evidence and I have not had occasion to review imputation (g) earlier, I consider I should refer to what Dr Beaumont said when interrogated as to his belief as to the truth of this imputation. Exhibit JJ records the relevant interrogatory administered and the doctor's answer: "6A At time of publication of the First Matter Complained Of, did the First Defendant have any, and if so, what belief as to the truth and falsity of the following imputations: …… (g) The First Plaintiff is an eye surgery clinic which participates in an arrangement to cause its patients to pay absurdly inflated costs for post-operative care. 6B The First Defendant understands this question to be directed to beliefs held at the time at which the relevant words in respect of each imputation were spoken and on that basis the First Defendant answers in respect of each imputation: (g) No." 237 The first defendant gave an explanation for that answer in evidence in chief (T 1101): "Q. Would you tell his Honour why you gave the answer 'No' to that interrogatory? A. I gave the answer 'No' to that interrogatory because I considered the word 'absurdly' to have the connotation of irrational or totally unreasonable, and I thought at the time --

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The broadcast in Victoria on 4 May 1998 240 This brings me to consider the defence of comment concerning the imputations arising against the second defendant and the first defendant from the television programme that went to air in Victoria on 4 May 1998. The jury found in this connection imputations (b), (d), (e), (f), (g) and (h) to have been proved in the case of the first plaintiff and imputations (b), (d), (e) and (f) in the case of the second plaintiff. 241 I propose to consider the defence of comment as relied upon by the second defendant, that being the comment of the first defendant. 242 Mr McClintock submitted that the comment defence pleaded by the second defendant must fail because of a fundamental difficulty, namely errors in the description of the matters upon which the claimed comment was based. It is, of course, fundamental that fair comment can only be based on facts that are truly stated: see Hunt v Star Newspapers (1908) 2 KB 309, and in particular the judgment of Fletcher Moulton LJ at 320. Mr McClintock referred to Merivale v Carson (1888) 20 QBD 275 as illustrative of the proposition. In that case Bowen LJ said at 284: "Still there is another class of cases in which, as it seems to me, the writer would be travelling out of the region of fair criticism - I mean if he imputes to the author that he has written something which in fact he has not written. That would be a misdescription of the work. There is all the difference in the world between saying that you disapprove of the character of a work, and that you think it has an evil tendency, and saying that a work treats adultery cavalierly, when in fact there is no adultery at all in the story. A jury would have a right to consider the latter beyond the limits of fair criticism." 243 Comment cannot be fair if based upon facts not truly stated: see Joynt v Cycle Trade Co. (1904) 2 KB 292 per Kennedy J at 294; see generally Gatley on Libel and Slander, 9th ed., at 12.14 and following. 244 What are the criticisms made as to the factual basis for the matters claimed to be comments?

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(xii) The next criticism made by Mr McClintock concerns that passage of the programme concerning co-management commencing at line 354 of Exhibit F. What the viewer was not informed of but about which I accept Dr Rogers had told Mr Little was that a decision had been taken to reduce the fees to $200 for one eye and $400 for two eyes. Then, immediately before the passage commencing at line 361, what has been omitted is the question Dr Beaumont was asked which prompted the response, most of which is recorded between line 361 and line 367 of Exhibit F. The question asked (at lines 336-337 of Exhibit B) was "How do the fees being paid compare with what is being offered on the regular rebate schedule?", and there was no regular rebate schedule fee for Lasik consultations, as I find the first defendant well knew. Moreover, the viewer is not informed of the fee of $25-50 normally paid for reports. I will not repeat what I wrote concerning imputation (g) when considering Exhibit B. However, Mr McClintock submits that what was recorded was misleading and the fee charged was not absurd, as Dr Beaumont acknowledged in an answer to interrogatories earlier considered: Exhibit JJ. 245 Mr McClintock submitted that the impact of the matters he identified and which I have above recorded was such as to rid any comments expressed of a proper factual basis (assuming the various imputations to be comments). Further, since the second defendant was relying upon comment by a stranger, it was submitted that the contamination of what Dr Beaumont said in the various passages of contamination identified, prevented what was attributed to him from being his comment at all. 246 I have given Mr McClintock's submissions close consideration and have decided other than where I have indicated to the contrary that they are well founded. There was no adequate or accurate description of the video "Wake Up and See" presented for the viewer's assessment and the viewer was given no opportunity to evaluate the plaintiffs' informed consent process or the substance of Dr Beaumont's remarks about the impact of the video, in particular at lines 253-258. 247 In my opinion, the cumulative effect of the factual failings in what was presented for the viewer in the programme was to deprive the ordinary reasonably viewer of the opportunity for proper assessment of each of the comments to be found in the various imputations. In my view, the foundation for the comment defence here relied upon by the second defendant has not been established, and the defence fails in respect of all the imputations found by the jury against the second defendant. 248 The issue of contamination by splicing of what is claimed to be the first defendant's comments is not raised against the first defendant in respect of the imputations found by the jury against the first defendant arising from either television broadcast. I refer here to what was recorded at T 2294. 249 However, I am not satisfied that the first defendant has established the defence of comment to any one of the imputations found to have arisen from either of the television broadcasts. I will not repeat what I wrote when considering the various imputations in the context of Exhibit B. The first defendant is in no better position concerning those comment defences in relation to either Exhibit F or Exhibit G where, putting to one side the impact of splicing and contamination, the other failings in the television broadcasts identified deprive the first defendant of a proper factual basis for the asserted comments.

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The claim of Dr Lawless 253 Any award of damages to the second plaintiff must afford compensation for the damage to his reputation and the hurt to his feelings, and it must also afford appropriate vindication for the impact upon his reputation of the publication being considered. Inevitably, there is overlap when regard is had to these various components. 254 I quote from the joint judgment of Mason CJ, Deane, Dawson and Gaudron JJ in Carson v John Fairfax Limited (1992-1993) 178 CLR 44 at 60-61: "… Specific economic loss and exemplary or punitive damages aside, there are three purposes to be served by damages awarded for defamation. The three purposes no doubt overlap considerably in reality and ensure that 'the amount of a verdict is the product of a mixture of inextricable considerations' (Uren v John Fairfax & Sons Pty Ltd (1966), 117 CLR, at p 150, per Windeyer J). The three purposes are consolation for the personal distress and hurt caused to the appellant by the publication, reparation for the harm done to the appellant's personal and (if relevant) business reputation and vindication of the appellant's reputation (Carson (1991), 24 NSWLR, at pp 296-299). The first two purposes are frequently considered together and constitute consolation for the wrong done to the appellant (Uren v John Fairfax & Sons Pty Ltd (1966), 117 CLR, at p 150; Coyne (1991), 172 CLR, at p 216; John Fairfax & Sons v Kelly (1987), 8 NSWLR 131, at p 142; McCarey v Associated Newspapers Ltd [No 2], [1965] 2 QB, at p 107). Vindication looks to the attitude of others to the appellant: the sum awarded must be at least the minimum necessary to signal to the public the vindication of the appellant's reputation 'The gravity of the libel, the social standing of the parties and the availability of alternative remedies' are all relevant to assessing the quantum of damages necessary to vindicate the appellant (Fleming, Law of Torts, 8th ed (1992), p 595)." 255 In New South Wales, ss 46, 46A, 47 and 48 bear upon the assessment of damages: "46 General (1) In this Part relevant harm means, in relation to damages for defamation: (a) harm suffered by the person defamed, or (b) where the person defamed dies before damages are assessed, harm suffered by the person defamed by way of injury to property or financial loss. (2) Damages for defamation shall be the damages recoverable in accordance with the common law, but limited to damages for relevant harm. (3) In particular, damages for defamation: (a) shall not include exemplary damages, and (b) shall not be affected by the malice or other state of mind of the publisher at the time of the publication complained of or at any other time, except so far as that malice or other state of mind affects the relevant harm. 46A Factors relevant in damages assessment (1) In determining the amount of damages to be awarded in any proceedings for defamation, the court is to ensure that there is an appropriate and rational relationship between the relevant harm and the amount of damages awarded. (2) In determining the amount of damages for non-economic loss to be awarded in any proceedings for defamation, the court is to take into consideration the general range of damages for non-economic loss in personal injury awards in the State (including awards made under, or in accordance with, any statute regulating the award of any such damages). 47 Truth or falsity of imputation On the question of the amount of damages where it is relevant to that question that the imputation complained of was or was not true or a matter of substantial truth: (a) there is no presumption as to whether the imputation was or was not true or a matter of substantial truth, and (b) evidence as to whether the imputation was or was not true or a matter of substantial truth may be adduced by any party (whether or not evidence on the subject is adduced by any other party). 48 Other recoveries In proceedings for damages for defamation in respect of the publication of any matter, evidence is admissible on behalf of the defendant, in mitigation of damages, that the plaintiff: (a) has already recovered damages, (b) has brought proceedings for damages, or (c) has received or agreed to receive compensation, for defamation in respect of any other publication of matter to the same purport or effect as the matter complained of in the proceedings." 256 There are obvious difficulties in taking into consideration the general range of damages for non economic loss in personal injuries cases for a number of reasons. There is no element of vindication to be considered in determining what is fair compensation in a claim for damages for personal injuries. Moreover, there are now a number of different regimes by reference to which damages for non economic loss may be awarded in personal injuries claims depending upon the circumstances in which the particular plaintiff was injured. The caps created by these various regimes do not apply when damages are to be awarded for defamation. As Heydon J said in Rogers v Nationwide News Pty Limited (2003) 201 ALR 784 at para 190: "It must be remembered that the statutory capping of damages is not an ethically-driven or value-infused exercise." 257 Notwithstanding the difficulties, and heeding what was said in point in Rogers v Nationwide, it is nevertheless necessary for me to bring into account the content of s 46A(2). 258 In an appropriate case it is legitimate to bring into account features of aggravation (but not, of course, in this State, at least, malice: see s 46). Here it is submitted there are features of aggravation, being the failure of the defendants to apologise and the maintenance of the defences of truth. However the vigorous persistence of a defence does not necessarily warrant aggravated damages absent unjustifiable conduct: see Steele v Mirror Newspapers (1974) 2 NSWLR 348; Triggett v Pheeney (1951) 82 CLR 497; and Coyne v Citizen Finance Limited (1990-91) 172 CLR 211. I am not satisfied here that the conduct of any defendant warrants the award of aggravated damages. 259 There is no claim for special damages in the case of the second plaintiff. It is relevant to heed the circumstance that the first plaintiff makes a claim which encompasses the alleged economic loss of the first plaintiff by reason of the impact of these publications. The second plaintiff was at all relevant times pursuing his professional activities through the first plaintiff and as a shareholder will directly benefit from any award of damages to the first plaintiff and will thus be compensated in the first plaintiff's claim for any loss of income occasioned by the television broadcasts. 260 With the above matters in mind, I consider the second plaintiff's claim. 261 Dr Lawless was born on 13 November 1956, so that he is presently forty-seven years of age. He is a married man living with his wife and three children, the eldest of whom is thirteen years of age. 262 The second plaintiff graduated from the University of Sydney in 1980. He became a Fellow of the Royal Australian College of Ophthalmologists and a Fellow of the Royal Australian College of Surgeons in 1986 and since then he has held, and continues to hold, a number of appointments set out in his curriculum vitae, Exhibit Y. I do not propose to record them here. 263 I am satisfied by the evidence that he has had a distinguished medical career and up to the time of these television broadcasts he was held in high regard by his peers. As to this:

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(d) Professor McGhee said that in 1997-1998 he considered the second plaintiff and Dr Rogers "had reputations of the highest" (T 1447) and were "probably known as the most experienced refractive surgeons in Australia" (T 1447) 264 I accept that those various specialists entertained the views expressed concerning the reputation of Dr Lawless before the television broadcasts. 265 Dr Lawless gave a deal of evidence about the impact of the television broadcasts upon him. I accept the evidence that he gave bearing upon matters relevant to his claim for damages as a truthful account as to that impact. 266 Dr Lawless became aware that the television broadcasts were pending and, indeed, was present for at least part of the interview which Dr Rogers had with Mr Little before the broadcasts. Indeed, he told Mr Little he would be happy to be interviewed live (T 488) but Mr Little did not raise with him the content of the video, Exhibit A, or the issue of bilateral surgery or the issue of the arrangement with OPSM. He first became aware that he was on the television programme when Dr Sutton told him the day after the programme went to air in Victoria. He obtained a copy of Exhibit F that day and played it. He said he felt terrible seeing it, so much of it was untrue and so personal. He said he felt awful (T 492). His own perception was that prior to this programme he was well regarded as a leader in refractive surgery (T 492). He had a perception that Dr Beaumont did not like him before this television programme (T 492) because Dr Rogers had told him Dr Beaumont did not want him in the Macquarie Street practice. 267 Dr Lawless went home to watch the programme, Exhibit G, with his wife and he said he was devastated by it (T 522). Subsequently, the referrals from OPSM, which had started in 1988, stopped, and there was a marked decline in patients seeking refractive surgery from the first plaintiff. 268 Dr Lawless gave evidence as to his distress as to what he perceived to be the falsity of the assertions in the programme. He was aware of the imputations found by the jury and regarded each of them as being false and he expressed his feelings concerning each of the imputations at T 516 and following: he was "angry and hurt", he felt "completely flattened", and he felt that he "had been badly treated". 269 Dr Lawless instructed his solicitors to seek an apology from the defendants (T 547), but received none and was disappointed about this. He found the litigation to be draining and unpleasant, and I accept what Dr Lawless said as to this. 270 After a lengthy period under cross examination, Dr Lawless said of his experience with the case (T 891) "…this has been a horrible week. Yesterday and the day before I went and had my lunch in Hyde Park and I cried. I never cry. I couldn't understand. I would be going home at the end of the day just a shell. And it is horrible for my family, my wife and three kids. The reason I didn't worry this morning is that I worked it out at 2 o'clock this morning..."

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And then (T 892-893): "I have never been cross-examined before and I thought it was going to be gruelling and a process of attrition. I thought that was how - but I thought it would be a process to get to truth, and what I realised it was was just this matrix, this thing was, this cross-examination was just a matrix created on which to hang what I thought was the lie of the show. That came to me at 2 o'clock this morning. That is why I've been so upset by this process. I thought it was question and answer, getting at the truth. But in the end I don't think it was. It was just a process to allow the lie to hang there." 271 The second plaintiff's wife, who is a radiologist by profession, gave evidence of viewing Exhibit G with her husband and described her perception of the effect of the programme upon him: that he looked "crushed, stunned and in disbelief" (T 901). Dr Lawless said that her husband lay awake all night, saying: "How could he - anybody do that" (T 902). Dr Lawless said that she was concerned about her husband in the days that followed. She said she felt she completely lost him and that there was no emotional connection, but by the Friday of that week he said he would be okay. 272 Dr Lawless described her husband's condition during the course of the hearing and said that he had been exhausted. Dr Lawless was asked no question in cross examination, and I accept without any reservation all the evidence that Dr Lawless gave concerning the effect of the programme on Channel 7 on her husband, and also the effect of the hearing upon her husband. 273 The second plaintiff gave evidence that immediately after he saw the programme he had a few people who called him to speak about the programme, and there were also many patients who spoke to him about it. One patient in particular was angry when he decided not to carry out some re-treatment on her eye. He referred her to another ophthalmologist. 274 Each of the imputations which the jury found arose was very serious. With the exception of imputation (c), the other four imputations were found to arise from each of the broadcasts; imputation (c) arose only from the interview, Exhibit B. Of those four broadcast imputations, three of them involve allegations of fraud against him; the fourth asserts irresponsibility. 275 So far as Exhibit B is concerned, imputation (c) is a most serious imputation, but the extent of the publication was limited because what Dr Beaumont said he said only to Mark O'Brien in the presence of an undefined, but presumably small, number of camera crew. I must be careful not to award damages which overcompensate the second plaintiff by doubling up awards addressing the same heads of damage. 276 The television broadcasts each went out to a large audience. There were 476,300 viewers of the television programme in Victoria (see Exhibit KK) and there were 356,700 viewers of the Sydney programme (see Exhibit LL). 277 Fortunately, it does not appear that the second plaintiff suffered long term effects to his reputation by reason of any of these imputations. Certainly, there is no evidence of any ongoing effects and Dr Martin gave evidence, which I accept (T 913-914): "He has gone on to become recognised for his work in corneal and refractive surgery, not only nationally but also internationally. I think about a year ago the International Council of Ophthalmology set up - they had an advisory committee but they revamped that advisory committee picking subspecialists from each area of ophthalmology, and Michael Lawless was collected to represent refractive surgery on that advisory committee.

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(vii) Channel 7 was alerted to the assertion of Dr Beaumont's malice before Exhibit G went to air. 281 As far as items (iii) and (iv) of the matters advanced by Mr McClintock are concerned, I am not persuaded that the use of the PRK procedures in the television programmes was indicative of malice, or that the position of the segment showing Dr Lawless carrying out a procedure evidenced malice. As to the destruction of the camera tapes, whilst the second and third defendants have offered no explanation as to what happened to these, the fact that these tapes are missing does not persuade me of a malicious motive, nor does the content of the television programme as such. Finally, I reject the submission that because the letter, Exhibit H, was sent to Channel 7 before the Sydney programme went to air, the subsequent showing of that programme evidenced malice. It does not seem to me to follow that simply because it was pointed out that the plaintiffs maintained Dr Beaumont was biased the subsequent broadcast by the third defendant evidenced malice. It may equally have evidenced a confidence by those who had spoken to Dr Beaumont that his motivation was otherwise. 282 Accepting as I do Dr Rogers' description as to his meeting with Mr Little, it seems to me that fairness required that Mr Little afford to Dr Rogers and to Dr Lawless the opportunity of meeting those matters about which Dr Beaumont addressed criticism and about which the pending television programme was going to deal. Whilst I do not consider that the failure to afford the doctors the opportunity to deal with those matters reflects well on Mr Little, this does not lead inevitably to the conclusion that the second and third defendants acted maliciously in putting the programme to air, and I am not persuaded by the evidence that malice has been established, and still less am I persuaded that malice towards the plaintiffs, or either of them, motivated these programmes evidenced by Exhibits F and G. 283 So far as Dr Beaumont is concerned, I am satisfied that he was not well disposed towards Dr Lawless. I will not repeat what I have written about this earlier (see para 55(i) above). However, I am not satisfied that malice was the dominant motive behind what Dr Beaumont said in Exhibit B. 284 I recognise that the intent behind conduct which is necessary to justify an award of exemplary damages may be found in contumelious behaviour that falls short of being malicious: see Lamb v Cotogno (1987) 164 CLR 1, but I have concluded that the behaviour of the defendants concerning the publication in Victoria does not call for the awarding of exemplary damages. It seems to me that the damages which I intend to award to each plaintiff by way of compensation themselves suffice as punishment and by way of deterrence for the conduct of the defendants. This is an added reason why the claim for exemplary damages is refused. 285 There are three discrete publications and there are five imputations to be considered in awarding damages to the second plaintiff. 286 Mr McClintock referred in the course of submissions to Rogers v Nationwide News (supra) in which an award of $250,000 was found to be excessive by the Court of Appeal but was restored in the High Court. Mr McClintock referred also to Jackson (supra) in which a number of plaintiffs were awarded damages in differing amounts up to $200,000. Mr McClintock referred also to the matter of Steiner-Wilson & Webster Pty Limited v Amalgamated Television Services Pty Limited (unreported, Crispin J, Supreme Court of the ACT, 18 November 1999) in which compensatory damages were assessed against the first defendant in excess of $60,000 and against the second defendant in excess of $80,000 and in which awards of exemplary damages were made in the sum of $50,000 against the first defendant and in the sum of $10,000 against the second defendant. Mr McClintock further submitted that Dr Lawless was more seriously defamed by the defendants than was Dr Rogers in the proceedings he took against Nationwide. 287 It seems to me that caution must be exercised in having regard to awards of damages in other cases. So much depends upon the particular circumstances of the particular case: see Rogers v Nationwide (supra), and in particular the judgment of Hayne J at paras 69-70, and 73. 288 I am satisfied that the second plaintiff is entitled in aggregate to substantial damages to bring into account all relevant matters that I have above endeavoured to identify. 289 Whilst the broadcast in Victoria preceded that in New South Wales, and whilst the imputations that arose were the same in the Victorian broadcast as in the New South Wales broadcast, it seems to me that the greater hurt, and the greater need for vindication, arises in New South Wales where the second plaintiff resides and, more importantly, where he has carried on the practise of his profession. Nevertheless, Dr Lawless was well known in Victoria and his reputation with his peers there was very important. The tort there committed was a serious one. 290 In relation to the proceedings concerning the imputations arising from the interview (Exhibit B), I award to the second plaintiff against the first defendant the sum of $10,000. In arriving at this sum I have regard to the limited nature of the publication. 291 I am satisfied that the first defendant is liable for the republication in the television programmes of imputations (b), (d), (e) and (f). I so find having regard in particular to:

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Claim by the first plaintiff 294 The first plaintiff, of course, has no claim for harm to feelings available to it, but it is entitled to maintain a claim for harm to its trading reputation. The way the case has been presented by the first plaintiff has been to make a claim for loss of business, and it has sought to quantify that claim and also to quantify a claim for loss of good will. 295 The issue in this case, subject to proof of the first plaintiff's entitlement to damages at all, has been the quantification of loss. 296 Exhibit 3 records the laser procedures performed by the first plaintiff from 1 September 1991 until the date it stopped trading and the same exhibit shows procedure numbers thereafter for The Eye Institute until 30 April 2002. Prior to December 1995, the procedures were solely PRK but from that time onwards the first plaintiff began to perform Lasik procedures. Thereafter PRK procedure numbers steadily declined and the number of Lasik procedures greatly increased. Whilst for the financial year ended 30 June 1996 there were 688 PRK procedures and only 47 Lasik procedures, for the financial year ended 30 June 1997 there were 369 PRK procedures and 912 Lasik procedures. Then, for the year ended 30 June 1998 there were 28 PRK procedures and 2362 Lasik procedures. 297 Exhibit 3 also shows a drop in the total number of procedures from 2390 for the year ended 30 June 1998 to 1617 procedures for the year ended 30 June 1999. 298 The first plaintiff claims that this drop occurred because of the impact of the television broadcasts. 299 Dr Rogers gave evidence that after the two broadcasts, there was "a precipitant decline in both Lasik consultations and Lasik procedures" (T 201) and monthly records were then kept of procedures. Then in July 1999 the first plaintiff ceased to carry on its practice. Dr Rogers gave evidence about this (T 209): "Q. What change occurred in relation to Sydney Refractive and the company which was mentioned yesterday, Direct Focus Pty Limited? A. In about July 1999 we, Sydney Refractive Surgery Centre, stopped - we kept the company, but it wasn't doing anything, and we had this company Direct Focus which wasn't doing anything, and we changed the name of Direct Focus to The Eye Institute and transferred all the assets from Sydney Refractive Surgery Centre into that company and we kept the company, Sydney Refractive Surgery Centre, even though there was no activity happening in it."

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Q. Perhaps you could explain, in your perception at the time, why the program caused you, or caused Sydney Refractive, to stop advertising? A. Well, we thought the program had cast a smear over me, my practice and refractive surgery, and that if we advertised it would just ignite that in people's minds and they would associate us with the show." 304 Dr Lawless could not remember for how long advertising of refractive surgery was stopped. 305 Accepting as I do the evidence above reviewed from Dr Rogers and from Dr Lawless, what follows from it? 306 A number of expert witnesses were called concerning the first plaintiff's claim. The first plaintiff called Dr Callaghan and Mr Gower and the defendants called Dr Beaton, Mr Lom and Mr Bryant. 307 Dr Callaghan, whose report became Exhibit SS, is a doctor of philosophy. He is a graduate in engineering from Melbourne University and he has a Master of Science degree from Birmingham University. He has expertise in marketing and expertise in mathematics and statistics. As I understand it, the opinions expressed in his report and in his oral evidence were essentially based on mathematics and statistics. Dr Callaghan concluded his report: "31. There are a wide range of reasons why sales forecasts may or may not be met in any particular situation. Forecasts based on an analysis of the historical data may be overestimates or underestimates depending on the impact of these factors. These factors include economic factors affecting demand from the marketplace, resource constraints or increases in capacity in providing services, positive or negative publicity, competitive factors and strategic decisions by management to expand or restrict the supply of services. In the services sector word of mouth referrals may also play a large part in generating sales if it is positive or reducing it if it is negative. In the case of SRSC forecasts that I have made I have not attempted to estimate the impact of these complex and varied factors which may lead to more optimistic or pessimistic forecasts depending on their direction." 308 Then, in cross examination Dr Callaghan agreed (T 1080) that he had not sought to deal with the impact of the factors identified in para 31 of his report. Those factors, however, cannot be ignored, and I shall consider them presently when assessing the evidence of Dr Beaton. 309 Dr Callaghan's approach in endeavouring to determine the forecasts for the first plaintiff from May 1998 onwards by reference to prior sales history from September 1991 was to use two non-linear models: he used the combined results of cubic and logistic models to achieve a best estimate of forecast sales (see para 16 of his report). Dr Callaghan arrived at lost sales, or rather lost procedures, for the following years in the following numbers: Year ended 30 June 1999 2186 procedures lost Year ended 30 June 2000 4027 procedures lost Year ended 30 June 2001 6980 procedures lost

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310 This conclusion was reached upon the basis that strong sales growth would have occurred over the above three financial years. 311 The defendants have submitted that Dr Callaghan's approach is open to criticism for a number of reasons, not the least of which is that the model he postulated was essentially based on statistics and mathematics. His projection, and other projections undertaken, are shown graphically in Figure 9 of Dr Beaton's report, Exhibit 51, and what that graph illustrates is that Dr Callaghan's projections are far more optimistic than other exercises undertaken. 312 Dr Callaghan conceded in cross examination (T 1075) that one way of testing the conclusions is by extrapolation, but he did not consider that his model could be used to predict beyond three years, or at most beyond three years and six months (T 1076). He considered this to be so because of the limited history upon which his model was based, but I must state that I considered Dr Callaghan's responses on the issue of extrapolation to be unconvincing. A significant difficulty with Dr Callaghan's approach was that it postulated compound growth year by year of the order of sixty percent. 313 Mr Lom, in his report, Exhibit 52, had this to say about Dr Callaghan's approach: "2.2 In my experience businesses that start from 'scratch' can achieve very significant growth rates in the early years but these rates are not sustainable as the business matures. In the approximately 28 years that I have spent in public accounting I am yet to come across a business that has been operating for six years that can sustain over the next four year period a compound annual growth rate of 64.8%. 2.3 I note in Table 4 of Callaghan's report that the logistic curve predicts a virtually constant growth rate that varies between 59.9% and 60.0% per annum. Whilst the table stops at 30 June 2001, as can be seen from the table below, extending this table to 30 June 2010 results in a prediction that SRSC would perform 546,826 procedures in that year (and 60 million procedures in 2020). Whilst the logistic curve may be statistically valid, its use without regard to the underlying business factors can produce a nonsensical result. Year ended Growth Rate No. of Procedures

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314 I find what Mr Lom wrote, as set out above, to be very persuasive. 315 Another difficulty with Dr Callaghan's approach is that it provides for increasing losses of business with the passage of time so that on his approach, whilst the lost sales were only 2186 in number in the first full financial year after the broadcasts, the losses had increased to 6980 procedures further on in years. There is no reason why these broadcasts at about the same time would have had a gradually increasing effect. The opposite was to be expected, and Dr Callaghan acknowledged this in cross examination (T 1082). 316 Dr Lawless said that references to the programmes continued to be made by patients "for a couple of years" (T 529). I do not consider it likely that a potential patient, after 1 July 2000, would by that time have been deterred from undertaking surgery because of any continuing impact of the television broadcasts. 317 Dr Callaghan's evidence does not persuade me that I should approach the assessment of damages in this case upon the basis of as many lost procedures as Dr Callaghan has allowed for, even for the year ended 30 June 1999. 318 It is convenient that I now address the question as to whether, on whatever approach should be adopted to the assessment of damages, the first plaintiff is entitled to maintain a claim beyond 30 June 1999 when it ceased to carry on practice. Mr McClintock submitted that the evidence of Dr Rogers and of Dr Lawless established that the decision to cease trading was a consequence of the television broadcasts, and that the claim put forward beyond 30 June 1999 gave credit for actual procedure numbers undertaken by The Eye Institute by deducting those actual procedure numbers from the first plaintiff's lost procedure numbers as claimed. 319 Notwithstanding Mr McClintock's submissions concerning this issue, it seems to me that the first plaintiff's claim beyond 30 June 1999 is fundamentally flawed. I consider this to be so for the reasons which the defendants have advanced. 320 What happened as from 1 July 1999 is that Dr Rogers, Dr Lawless and Dr Sutton ceased to provide their services for the first plaintiff and from that date on the first plaintiff simply ceased to carry on any business. It does not appear there was any assignment of the assets of the first plaintiff to The Eye Institute. The first plaintiff was not wound up and it has not been asserted that the first plaintiff was unable to trade profitably. It is fundamental in a tortious claim for economic loss that a claimant mitigate or seek to mitigate its loss. That has not happened here. 321 The defendants have submitted that if the first plaintiff considered it was disadvantaged by carrying on its practice under its corporate name, it could have effected a change of that name, and I consider there is merit in that submission. 322 The first plaintiff has simply done nothing since 1 July 1999, and in my opinion is not entitled to maintain a claim for economic loss beyond that date. 323 Even if a claim was maintainable, it does not seem to me that it would be legitimate to advance such a claim by endeavouring to determine lost procedure numbers after crediting Lasik procedures undertaken by The Eye Institute. Dr Rogers, in giving evidence as to the decision of the first plaintiff to cease trading, indicated that because of the dramatic downturn in refractive surgery, it was decided to expand the sort of work to be done. Once The Eye Institute began to operate, Dr Rogers said it carried out "virtually all work except for retinal surgery." What the consequence of this was in its effect upon The Eye Institute's capacity to carry out Lasik procedures was not explored in the evidence. 324 Mr Gower is a chartered accountant whose report became Exhibit QQ. He was asked to undertake a number of exercises defined in para 2 of his letter to the plaintiffs' solicitors dated 29 September 2003, and forming part of Exhibit QQ. The exercises defined in paras 2(c) and 2(d) of his letter do not assume relevance because they relate to the first plaintiff's claim beyond 30 June 1999, a claim I have determined is not maintainable. 325 Mr Gower concluded that had the first plaintiff achieved the growth and performed the number of procedures determined by Dr Callaghan, its nett profits would have been greater than they were and that, assuming the lost procedures determined by Dr Callaghan, the first plaintiff's loss of profits amounted to $3,641,000. 326 Mr Gower was asked to consider an alternative approach to the assessment of the first plaintiff's loss up to 30 June 1999, namely that assuming the TV programmes had not been broadcast the first plaintiff had continued to achieve the average number of procedures that had been performed in the ten months up to 30 June 1998. Taking this approach, Mr Gower calculated the loss of profits from 6 May 1998 to 30 June 1999 at $2,064,000. That figure includes provision for income tax and interest (see p 11 of Exhibit QQ). 327 It was submitted by the defendants that Mr Gower's approach was unacceptable because it made no allowance for market factors, and it advanced no rationale for selecting a period of ten months for a basis of predicting future procedure numbers. Mr Gower used ten months in the report because the plaintiffs' solicitors asked him to do so. In cross examination Mr Gower acknowledged the benefit of adopting a longer period (T 1004-1005): "Q. Would you agree - and this is no criticism of your approach, because you had to work with what you were given - that because of declines which one would assume from looking at MFI40, it would be prudent, if you had the information, to rely on figures over a wider period of time than 10 months for the purpose of assessing loss of profit or revenue? A. Obviously, the longer the period of time that you rely on, the greater the probability is going to be that you are able to get some sort of accurate trend and --

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Q. Is that a fair proposition? A. Yes." 328 I shall return to address these criticisms presently. 329 Mr Gower was also asked to determine "the reduction in value" of the first plaintiff as at 30 June 1999 in consequence of the drop in procedure numbers that occurred during that financial year, assuming that but for the broadcasts the numbers would have been maintained at the average levels in the ten months preceding that broadcast. Mr Gower was also asked to undertake the "reduction in value" exercise on the assumption that but for the broadcasts the numbers would have increased in accordance with Dr Callaghan's projections. 330 Mr Gower arrived at an estimated loss of value in the range $2.9 million to $4.36 million on the first basis requested, and on Dr Callaghan's projections he arrived at a loss of value of $5.815 million to $8.723 million. 331 I do not consider the claim for reduction in value of the practice can be allowed, and I so conclude substantially accepting the submissions of the defendants directed to this claim. 332 In the first place, there have been no two valuations reached such as invite a comparison. Absolute values have not been determined and what Mr Gower has sought to do is to express a view as to a relative loss of value. 333 It transpired that Mr Gower had written an earlier report dated 28 November 2001. He was cross examined about that report (T 1010). He wrote then that whilst the first plaintiff had been involved in negotiations for the sale of its business, no sale had been achieved and that therefore he had not sought to determine the extent of any reduction in capital value which may be attributable to the programme. He was asked this question and gave this answer: "Q. That was your considered view, that it was appropriate, in the absence of any indication of a concluded sale, to exclude a loss of capital value from any question of damages assessment? A. That's correct." 334 Mr Gower had no concluded sale upon which to base his opinion expressed in Exhibit QQ. 335 The defendants next submitted that it was irrational to treat the impact of a single negative event of adverse publicity as continuing indefinitely. This undermined any approach to the assessment of damages. At what point of time is the loss to be determined and why? 336 Finally, there is the problem with this approach to the assessment of damages that the first plaintiff simply ceased to practise and the doctors through whom it had earned its income provided their services to another corporate entity. The evidence does not indicate that the first plaintiff had any contractual right to retain the services of Dr Lawless or Dr Rogers or Dr Sutton. This was not something that Mr Gower took into account in making his assessment of the loss in value (T 1012). 337 In Exhibit 52 Mr Lom considered what Mr Gower wrote concerning the loss of value of the practice. Mr Lom dealt with this matter at pp 9-11 of his report (paras 3.3.1 to 3.3.16). I consider what Mr Lom there wrote to be persuasive. 338 The first plaintiff's claim for damages upon the basis of a loss of value of the practice is rejected. 339 Dr Beaton provided a report, Exhibit 51. Dr Beaton is a Bachelor of Medicine, he is a Doctor of Philosophy in Basic and Applied Physiology, and he has a Masters degree in Business Administration. His expertise to address the matters considered in his report has not been challenged. 340 Dr Beaton carried out projections in addressing the claim by the first plaintiff for lost procedures. He used two lines:

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(See figures 6 and 7 at pp 25 and 26 of Exhibit 51.) 341 Figure 8 then compared the forecast range to the actual procedures rates (see p 27 of the report). 342 Dr Beaton wrote, at para 26 of his report: "On the basis of the statistical projections I have carried out and the presence of other negative factors, and based on my experience and expertise in marketing and healthcare, I conclude that it is not possible to isolate confidently any negative impact on SRSC's sales caused by elements of the broadcast which may be found to have been defamatory. That is to say, in my opinion, SRSC's sales pattern is accounted for by other unrelated factors. That said, if the court finds there was an impact for which a quantification is to be made, then in my opinion such impact should not be quantified outside the range of zero to 897 procedures, which upper limit is based on the factors and calculations I present in the body of this statement. In other words, having concluded that the evidence fails to disclose a relevant loss, I am indicating that the next most logical boundary to draw is an upper limit as described above." 343 However, Dr Beaton identified four factors capable of explaining the decline in procedure numbers from May 1998 onwards. I refer to pp 11 and 12 of Dr Beaton's report: "… In my opinion there are at least four factors which provide reasonable explanations for any gap between statistically confident forecasts for growth in SRSC procedure rates from May 1998 onwards, had the elements of the broadcast which may be found to have been defamatory not occurred, and the observed procedure rates for SRSC during this period. These factors are: (a) A slowdown in growth of the overall Sydney market, likely to have been caused by a range of factors, including a significant amount of negative publicity - independent of and in some instances prior to the broadcast - concerning this procedure and the marketing practices employed in the industry generally. (b) Increasing competition in the Sydney market, including an increase in the number of laser eye surgery centres, surgeons, laser machines, and associated promotional activities. (c) SRSC's own conduct, including a 15% reduction in its advertising expenditure in FY1999, apparent customer service problems, a change of business name, change of corporate structure and the introduction of new personnel, post April 1998. (d) Non-defamatory aspects of the broadcast which drew viewers' attention to risks of the surgical procedure in general and to questionable marketing practices in the industry. In my opinion it is not possible to say with absolute certainty what proportion of people were so influenced by defamatory as opposed to non-defamatory imputations contained in the broadcast, only that any impact on SRSC's sales resulting from the broadcast must be discounted to allow for the non-defamatory elements." 344 Concluding his report, Dr Beaton wrote (para 64): "On the basis of the whole of the analysis and opinions set out above, and based on my experience and expertise in marketing and healthcare, I conclude that it is not possible to isolate confidently a negative impact on SRSC's procedure rates caused by the alleged defamatory elements contained within the broadcast. In my opinion, SRSC's sales pattern is more than accounted for by other unrelated factors. That said, if the Court finds there was an impact for which a quantification is to be made, then in my opinion such impact should not be quantified outside the range of zero to 328 procedures (if the period in question is the date of the broadcast to 30 June 1999) or zero to 897 procedures (if the period in question is the date of the broadcast to 30 June 2001), which upper limits are based on the numbers shaded in yellow in Figures 18 and 17, respectively, above." 345 Just as the defendants have been critical of Dr Callaghan, so too has the first plaintiff been critical of Dr Beaton. A number of criticisms have been advanced:

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(vi) some of the material was in medical journals, which Dr Beaton agreed were not generally read by the public (T 1390). 350 I do not assess the publications to which Dr Beaton has made reference as being at all likely to have accounted for the decline in the first plaintiff's procedure numbers following the television broadcasts. 351 The next matter adverted to as a possible explanation for the drop in procedures was increased competition. The evidence does not permit of any realistic analysis as to whether competitors are likely to have taken the first plaintiff's patients away, and there was no cross examination of Dr Rogers or Dr Lawless that would assist on this issue. In my opinion the evidence does not warrant an inference that the decline in numbers was due to an increase in competition. 352 Dr Beaton next referred to the drop in advertising by the first plaintiff. In the year ended 30 June 1999 there was a significant reduction in advertising. Dr Lawless gave evidence (T 530) as to why a decision was taken to stop advertising. It was thought that because of the television broadcasts advertising would be counterproductive. Dr Lawless said: "We thought the program had cast a smear over me, my practice in refractive surgery, and if we advertised it would just ignite that in people's minds and they would associate us with the show." 353 Dr Beaton did not consider it an unreasonable reaction to the television broadcasts to stop advertising. He gave the following answer to the following question (T 1393): "Q. What I'm suggesting to you is it was a reasonable thing for someone in the position of my client to do to cut back on advertising to avoid reinforcing the negative impact of the program? A. I would answer this way: it was a reasonable option they had, but there were a number of equally reasonable options, in my view. One, for example, might have been to adopt a different style of promotion which sought to distance themselves from the imputations. So, there were other things they could have done to maintain their promotional presence." 354 I consider that it was a reasonable response to these television programmes for the first plaintiff to have cut back on advertising and if, in consequence, the reduction in advertising led to a reduction in procedures, I would nevertheless regard any reductions caused in this way to remain causatively linked to the defamatory broadcasts. 355 The final matter raised by Dr Beaton by way of possible explanation for the drop in business was that the broadcasts contained non-defamatory aspects that drew viewers' attention to risks of the surgical procedure in general and to questionable marketing practices in the industry. Whilst the defamatory imputations affecting the first plaintiff as found by the jury were serious, I consider it is likely that viewers would have been influenced by adverse, but not defamatory, features of the same programme, and I accept what Dr Beaton wrote as to this (see para 343 (d) above). It is not possible to be precise about this, but I have concluded this adverse influence would be likely to have accounted for a drop of ten percent in patient numbers between the time of the programmes and 30 June 1999, and I propose to reflect this in my assessment. 356 My assessment of the other three matters raised by Dr Beaton as providing a reasonable explanation for a decline in procedures is that they are each unlikely to have done so. 357 The evidence establishes that OPSM ceased to refer patients after the broadcasts (Dr Lawless, T 524). I find this is likely to have been because of the broadcasts, but there is no evidence as to what proportion of the first plaintiff's business came from OPSM. However, I have concluded that the most likely explanation for the decline in patient numbers following the broadcasts is to be found in the broadcasts themselves. 358 However, I am not satisfied that the lost procedures were as many as Dr Callaghan's evidence would suggest having regard to the valid criticisms to his approach, which I have shortly endeavoured to record. On the other hand, I do not accept Dr Beaton's approach either, having regard to what I perceive to be valid criticisms of his approach, to which I have earlier referred. 359 The period in respect of which damages are to be awarded for loss of procedures is a period of a little over twelve months. Having reflected on all the evidence that is available, I have decided that the best guide to the lost procedures for this period is to take the average number of procedures per month for the twelve months prior to the publications and to use that average figure during the post publications period up to 30 June 1999. I will reduce the procedure numbers by ten percent to take account of the adverse impact of the programmes beyond the impact of the defamatory imputations contained in them. 360 The approach that Mr Gower was asked to take in using the average of ten months prior to the publication left out of account the months of May and June 1997. In May 1997 there were 203 procedures compared with 106 procedures in May 1998 but in June 1997 there were only 147 procedures. If one takes only ten months prior to the publications upon which to place an estimate as to lost procedures, this affords an average number of procedures per month of 208 and ignores the relatively poor numbers for June 1997. 361 Dr Beaton suggested that numbers were declining before the broadcasts, but I am not satisfied that this is so. There was some drop in May 1998 after the broadcasts and a significant drop in June after the broadcasts, but when one compares the full financial year ended 30 June 1997 with the full financial year ended 30 June 1998, what one sees is, prior to 5 May 1998, a very significant increase in procedure numbers. 362 It is possible that had the broadcasts not taken place there would have been some decline in procedure numbers. It is also possible had the broadcasts not taken place that the first plaintiff would have continued to increase procedure numbers as it had done in the past. However, what I am satisfied is probable on my assessment of the evidence is that the procedure numbers would not have fallen below the average monthly figures achieved in the period of twelve months up to 30 April 1998, but for the television broadcasts. 363 The total number of procedures carried out in the period from 1 May 1997 to 30 April 1998 was 2411. The average number of procedures carried out per month then was 201, rounding the calculation off. I therefore find on the balance of probabilities that, but for the adverse effects of the television broadcasts, the first plaintiff would have performed, between the date of the broadcasts and 30 June 1998, 2814 procedures. In the same period the first plaintiff performed 1928 procedures. I therefore find that the procedures lost were 886 in number. I attribute ninety percent of those lost procedures to the impact of the defamatory imputations. Accordingly, I find the compensable loss in procedure numbers to be 797 procedures, rounding the calculation off. 364 What was the monetary loss suffered in consequence? 365 Mr Gower determined that the average revenue per procedure in the financial year ended 30 June 1998 was $2113.70, and in the financial year ended 30 June 1999 this had dropped to $1991.18 per procedure (see Exhibit QQ, p 5). 366 Accepting Mr Gower's figures just mentioned, I calculate the loss of revenue as follows:

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(b) Labour cost savings at $143.43 on 797 procedures = $114,313.71 370 Hence I arrive at total costs savings of $277,292.24. 371 It follows that the lost nett profit before tax is $1,319,724.86. 372 In his report of 29 September 2003 (Exhibit QQ), Mr Gower, in quantifying the first plaintiff's loss, determined its lost nett profit before tax, and then made a deduction of thirty-six percent for income tax. Then, after calculating interest, he added "A gross up for income tax which will be payable by SRSC on the receipt of an award of damages." 373 Whether the first plaintiff's award will attract a taxation liability has been a matter of strenuous contention. 374 It is well settled that in an action for tort where a person is claiming damages in respect of impairment of earning capacity following injury, any allowance in respect of such a claim is made by reference to nett loss. The court does not include in the assessment the income tax that person would have had to pay on lost earnings because he does not have to pay income tax on that assessment: see, generally, Cullen v Trappell (1980-81) 146 CLR 1 in which, by majority, the High Court followed the decision of the House of Lords in British Transport Commission v Gourley (1956) AC 185. The damages are awarded for loss of earning capacity, even though they may be measured for the past by reference to comparable earnings of others and even though there may be agreement between the parties as to wage loss for the past. In O'Brien v McKean (1968-69) 118 CLR 540 Windeyer J said at 557: "…. the true ground of damages for what is called economic loss is the destruction or impairment of earning capacity…" 375 Then, in Tinkler v Commissioner of Taxation (1979-80) 29 ALR 663, Brennan J said at 667: "Moreover, an award of damages is assessed to compensate not for loss of earnings but for loss or impairment of earning capacity: see Paff v Speed (1961) 105 CLR 549 at pp 559, 566; Bresatz v Przibilla (1962) 108 CLR 541 at 545; Arthur Robinson (Grafton) Pty Ltd v Carter (1968) 122 CLR 649 at 658). Although an injured plaintiff recovers 'not merely because his earning capacity is or may be productive of financial loss' ( Graham v Baker (1961) 106 CLR 340 at 347), the award is assessed as a lump sum to include fair compensation for the affection of earning capacity over the entire post-accident period." 376 In Rubber Improvement Limited & Anor v Daily Telegraph Limited (1964) AC 234, it was determined that the principle in Gourley applied to a company that established its profits had been diminished by defamation. Lord Reid said at 262: "There can be no difference in principle between loss of income caused by negligence and loss of income caused by a libel. Let me take first the case of the plaintiff company. A company cannot be injured in its feelings, it can only be injured in its pocket. Its reputation can be injured by a libel but that injury must sound in money. The injury need not necessarily be confined to loss of income. Its goodwill may be injured. But in so far as the company establishes that the libel has, or has probably, diminished its profits, I think that Gourley's case is relevant. But damages for libel have to be assessed by a jury, and juries are not expected to make mathematical calculations, so they can only deal with this matter on broad lines. I think that a jury ought to be directed to the effect that if they think that the plaintiff company has proved that it has suffered or will suffer loss of profits as a result of the libel they must bear in mind that the company would have had to pay income tax at the standard rate out of that profit if it had been earned and would only have been entitled to keep the balance. So in assessing damages they ought not to take into account the whole of that profit, but should make allowance for the obligation to pay income tax out of it." 377 In McGregor on Damages, 17th ed., the following commentary appears by reference to the above decision (at 503-504): "Yet it is not at all clear that damages specifically awarded for loss of business profits, particularly to a company, would not be taxable in the defamed claimant's hands, unless, which is unlikely, the business has been brought down by the defamation. Defamation does not appear to have produced any cases since Lewis in which Gourley has been applied. The law has moved on since Gourley's day and it is not difficult to find cases in which damages have been held subject to tax where they represent business profits lost through negligence, whether involving property or of a professional nature." 378 It has been submitted by the defendants that any award of damages to SRSC is not truly to be regarded as relating to income. When determining whether or not compensation is income the relevant issue is the nature of the receipt in the hands of the recipient. Mr Smark referred to the joint judgment of Deane and Fisher JJ in Tinkler (supra) where their Honours said at 672: "There is a clear distinction between the character of a payment and the manner of its calculation or quantification… The method of calculation or quantification may provide a quite misleading guide to the character of the payment." 379 Here it is submitted that whilst the approach to the assessment of damages has been to determine what losses were incurred, nevertheless the damages are awarded for the purposes identified by Lord Reid in the passage from Rubber Improvement Limited to which I made reference above. 380 Counsel have not referred to any authority in this country which is directly in point on the question as to whether in awarding damages to SRSC I should include an allowance for income tax. Mr Smark submitted that the damages awarded to SRSC ought not to be treated as "ordinary income" for the purpose of s 6-5 of the Income Tax Assessment Act, 1997. With that submission I agree. 381 Mr Smark has submitted further that there is no statutory provision which would have the effect of making the award "statutory income" for the purposes of s 6-10 of that statute. 382 In response, it has been submitted on behalf of the plaintiff company that the payment of damages is to be treated not as ordinary income but as falling within the category of "capital gains" and that as a result any award of damages to SRSC will attract a liability to pay income tax. Reference is made to s 102-5 of the 1997 Act. 383 Under s 118-37 of the 1997 Act a capital gain is disregarded if relating directly to: "(a) compensation or damages you receive for any wrong or injury you suffer in your occupation; (b) compensation or damages you receive for any wrong, injury or illness you or your relative suffers personally." 384 It has been pointed out that in a taxation ruling, TR 95/35, the Commissioner has stated that the exemption from capital gains tax for personal injuries is intended to be read as widely as possible and, in relation to the predecessor to s 118-37, that the exemption should apply to compensation for defamation. However, the same ruling excluded corporations from the exemption. Paragraph 216 of taxation ruling 95/35 which related to s 160ZB of the Income Tax Assessment Act 1936 states that: "Compensation for any wrong or injury suffered by a company does not fall within the scope of the exemption." 385 Section 160ZB(1) of the Income Tax Assessment Act 1936 provides: "A capital gain shall not be taken to have accrued to a tax payer by reason of the tax payer having obtained a sum by way of compensation or damages for any wrong or injury suffered by the tax payer to his or her person or in his or her professional vocation and no such wrong or injury or proceeding instituted or other act done or transaction entered into by the tax payer in respect of such a wrong or injury shall be taken to have resulted in the tax payer having incurred a capital loss." 386 Apparently the reason for the ruling of the Commissioner referable to the above subsection is that the subsection refers to "his or her" person and "his or her profession or vocation", and hence the provision has been interpreted as a provision intended only for natural persons. 387 Addressing the contention that an award of damages will attract capital gains tax, Mr Smark drew attention to s 4-5 of the 1997 Act: "If a provision of this Act uses the expression you , it applies to entities generally, unless its application is expressly limited."

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Mr Smark submitted that absent any express limitation in s 118-37, s 4-5 ought prevail and the exemption in s 118-37 is thus available to the first plaintiff. 388 It seems to me that there is considerable merit in that submission, and that for this and other reasons developed by Mr Smark the first plaintiff would have substantial arguments to put to the Commissioner of Taxation as to why the first plaintiff should not be required to pay capital gains tax in relation to damages awarded. Should those arguments prevail, for the Court now to make any provision for taxation would result in an injustice to the defendant and, whilst I am unable presently to calculate the precise amount that would be involved, it would not be inconsiderable. On the other hand, to proceed on the basis that any award will not attract capital gains tax would result in an injustice to the plaintiff if ultimately it is required to pay such tax. It is not possible for this Court now to resolve the tax issues that arise, including the quantification of any liability, and I presently make no provision for income tax in assessing damages. If, however, ultimately the first plaintiff is found to be liable to pay capital gains tax on the damages to be awarded, I would consider this to be a recoverable head of damages as against the defendants. 389 In the circumstances, whilst recognising that it is generally desirable that there be no fragmentation of the process of assessing damages, it seems to me here that justice can best be done if I reserve leave to the first plaintiff to apply for additional damages referable to capital gains tax should the first plaintiff be found liable to pay such tax. I note that the defendants consent to this course, and, indeed, invite me to adopt it in the event that I entertain concern that capital gains tax may be attracted. I also note that the course I am about to take in reserving leave to apply is a course taken by Hodgson J in Rabelias Pty Limited v Cameron 95 ATC 4552 at 4553. 390 For the present I make no provision for capital gains tax. I reduce the lost nett profit which I earlier arrived at by thirty-six percent to take account of the tax that would have been payable on that profit. Accordingly, the sum to be awarded to the first plaintiff, omitting cents and rounding the calculation off, is $844,624. 391 Mr McClintock submitted that I should award exemplary damages in respect of the claim of the first plaintiff concerning the Victorian programme. He relied substantially upon the same matters as were advanced in support of the claim for exemplary damages for the second plaintiff. I am not persuaded that exemplary damages should be awarded to the first plaintiff, and I refer to what I have already written in paras 280-284. 392 The first plaintiff did not conduct business in Victoria but only in New South Wales where, presumably, most of its patients resided. There is evidence in the case which establishes that both Dr Rogers and Dr Lawless were well known in Victoria and Dr Stasiuk gave evidence as to the discussion in the medical community in Victoria concerning the Victorian programme. However, whilst I am satisfied that the first plaintiff suffered harm as a consequence of the Victorian programme, I consider it likely that the greater portion of the harm suffered by the first plaintiff was in consequence of the later New South Wales programme. 393 The first plaintiff was defamed by the first defendant in the April 1998 interview. The publication was, of course, a limited one, and I propose to award only very modest damages in respect of the claim based on the interview. Those damages I assess in the sum of $4000. 394 The evidence permits of no precision in apportionment in respect of the two television programmes. Strictly speaking, it is not a question of apportionment at all, but of determining what damages are appropriate in respect of each publication having regard to the harm caused by the publication in question. I must, of course, be mindful of the number of procedures lost because of the television programmes. I find the later programme in New South Wales to be likely to have occasioned the first plaintiff far greater harm than the Victorian programme. Doing the best I can, I propose to award damages in respect of the Victorian publication in the sum of $75,000 and in respect of the New South Wales publication in the sum of $765,624.