Thomson -v- Broadley & Ors [2000] QSC 100 (3 May 2000)

Supreme Court of Queensland|2000-05-03|Before: Jones J

1. Before me are two applications, one by the plaintiff to have determined as a separate issue that the first and fourth defendants' counter-claim is bad in law or, alternatively, to have the counter-claim struck out. The other application is by the defendants to have struck out paragraphs 11-17 of the plaintiff's statement of claim.

2 By his statement of claim, the plaintiff claims damages for defamation and damages for unlawful termination of employment. It is in respect of the latter claim that the defendants' strike out application is made.

3 The plaintiff on 22 June, 1994 was employed by the fourth defendant as its business manager. He commenced duties on 1 July, 1994 and worked continuously in that position until termination of his employment on 11 July, 1997. His remuneration package included salary, incentive bonuses and provision of a fully maintained car.

4 The fourth defendant (previously using the corporation name, Broadley Auto Group Pty Ltd) was the owner and operator of a number of automotive businesses in Cairns. It held the franchise for the sales and service of such vehicle marques as Ford, LandRover, Honda, Hyundai, Kia and Suzuki.

5 The first defendant was the managing director and controlling mind of the fourth defendant. Hereinafter it will be convenient to refer to the first and fourth defendants collectively as "the defendants".

6 In May, 1997 the plaintiff complained to the Department of Consumer Affairs about alleged illegal activities within the defendants' business. The allegations related to odometer tampering, falsifying valuations and roadworthy certificates and providing misleading information for finance applications.

7 The issue became public on 28 October, 1997 when a member of the Legislative Assembly, Mr. Peter Purcell, relying on information from the plaintiff, raised the matter in the Queensland Parliament. The defendants responded alleging that the plaintiff was dishonest in providing this information and acted in a spiteful and malicious way because his employment had been terminated.

8 Thereafter allegations and counter-allegations which are the substance of the statement of claim and the defence and counter-claim were aired in the public news media.

9 Soon after these events in 1997, the defendants commenced proceedings against the present plaintiff, seeking damages for defamation (action No.158/97). The statement of claim was delivered in that action on 20 February 1998 and an amended defence was delivered which, by paragraph 6, demurred to the statement of claim on grounds now relied upon by the plaintiff to strike out the defendants' counter-claim. The amended defence also raised issues of qualified privilege.

10 After the present action was commenced on 22 June, 1999, discussions between the solicitors representing the respective parties resulted in a notice of discontinuance being filed in respect of Action No. 158/97 so that all issues could be litigated in this present action. The counter-claim now under attack is in identical terms to the statement of claim delivered in the discontinued action. To date, the plaintiff has not filed an answer to the counter-claim choosing rather to test its validity in this application.

11 In substance the defendants' counter-claim alleges that the words used by the plaintiff were defamatory of the defendants. The words complained of are clearly capable of having a defamatory meaning. The point at issue on this application is what is the publication that is relied upon.

12 The plaintiff asserts that the defendants were relying upon the publication by Mr. Purcell in parliament and upon various media publications of the parliamentary proceedings and that such publications are protected.

13 The defendants assert that they are relying upon only the publication by the plaintiff to Mr. Purcell and that the reference to the further publications in parliament and in the media are relevant only to the question of damages.

14 The relevant terms of the counter-claim are as follows:-

"4. On a date unknown to the defendants, but prior to October 28 1997, the plaintiff published the words set forth in annexure "A" hereto (hereinafter referred to as the "complained of words").

The complained of words were published in Queensland to:-

15 The pleading then goes on to refer to the publication of the complained of words by Mr. Purcell in the parliament and the media publications of Mr. Purcell's words and in so doing refers to these as "republications" of the plaintiff's words. (See paras 9.1, 16, 17 and 18 of the counter-claim).

16 As to the republication by Mr. Purcell the defendants allege -

"10.1 The natural and probable result of the publication by the plaintiff of the complained of words;

Further, or alternatively, intended or authorised by the plaintiff.

In the premises the plaintiff is liable for the publication of Purcell's words."

17 As to the three identified republications by Cairns Post, the defendants allege they:-

"19.1 Were the natural and probable result of the publication by the plaintiff of the complained of words;

Further, or alternatively, intended or authorised by the plaintiff.

In the premises the plaintiff is liable (for the respective publications of Purcell's words)."

18 It is clear enough that the publications by Mr. Purcell, in the course of a speech made in parliament, attracts absolute protection from liability. (See s.10(1) of Defamation Act 1989). Similarly, the newspaper reports of Mr. Purcell's remarks are protected by s.13 of the Defamation Act.

19 In his submissions, counsel for the plaintiff contended (at paras. 14 and 25) that the protection of absolute privilege extended to the plaintiff relying particularly on Article 9 of the Bill of Rights 1688.

20 The question of the level of protection afforded to an informant to a member of parliament who uses that information in parliamentary proceedings has been considered in a number of cases. See particularly Pepper v Hart, Prebble v Television New Zealand, Rost v Edwards, Hamilton v Al Fayed, R v Grassley and Rowley v O'Chee. [1] In my view such a communication does not attract absolute privilege since the conveying of information in the manner alleged here cannot be characterised as a "proceeding in parliament". The position which arises from these cases is authoritatively summed up in Erskine May's Privileges, Proceedings and Useage of Parliament (21 ed) @ p.133 as follows:-

"Although both houses extended their protection to witnesses and others who solicit business in parliament, no such protection is afforded to informants, including constituents of members of the House of Commons who voluntarily and in their personal capacity provide information to members. The question whether such information is subsequently used in proceedings in parliament being immaterial. But while it appears unlikely that any question of an actual or constructive breach of parliamentary privilege could rise in these cases, the special position of a person providing information to a member for the exercise or his parliamentary duties, has been regarded by the Courts as enjoying qualified privilege of law."

21 Consequently, it is my view that the communication between the plaintiff and Mr. Purcell is capable of being an occasion of qualified privilege only. Whether such a defence is made out is dependant upon facts which are not the subject of scrutiny in this application.

22 But if, as the defendants assert, the purpose of identifying the republications was limited to the scope of damages then there is clear authority for these matters to be pleaded.

23 In Timms v Clift [2] the Court of Appeal said at p.106:-

"It was held in Cutler v McPhail [1962] 2 QB 292, that in circumstances of this sort the defendant who gives information to the press must pay damages for publication in the press if it is a natural and probable consequence of what the defendant has done. If the republished material adheres to the sense and substance of the original, the defendant who has supplied the information in the first place is liable for the republication: Halsbury's Laws of England 4th ed Vol 28 para 70."

24 The Court of Appeal is simply repeating what has long been regarded as the effect of republication. In Gately on Libel and Slander 9th ed. at p.155, the learned author speaks of the general principle applying to republished material in the following terms:-

Where the defendants' defamatory statement is voluntarily republished by the person to whom he published it or by some other person the question arises whether the defendant is liable for the damage caused by that further publication. In such a case the plaintiff may have a choice: he may (a) sue the defendant both for the original publication and for the republication as two separate causes of action, or (b) sue the defendant in respect of the original publication only, but seek to recover as a consequence of that original publication the damage which he has suffered by reason of its repetition so long as such damage is not too remote."

In this case the defendants have indicated that they rely on the second of these alternatives. In relation to this situation the learned authors identified the circumstances of liability in terms of the principle enunciated in Speight v Gosnay [3] as follows:-

"In any event, the starting point is that the defendant is prima facie not liable because the voluntary act of a third person breaks the chain of causation. However, the defendant is liable for the republication or for the damage caused by it:

Where the person to whom the original publication was made was under a duty to repeat the statement;

Where the publication was, in the circumstance of the case, the natural and probable result of the original publication."

25 The correctness of this principle was considered in Slipper v British Broadcasting Commission [4] where at p.296 Stocker LJ said:-

"In a defamation case where there has been republication the question whether or not there has been a breach in the chain of causation inevitably arises but such cases are not in a special category related to defamation actions but are examples of the problem and will fall to be decided on general principles and in the light of their own facts as established. They are not specific or special rules peculiar to defamation actions. All the cases cited, including Ward v Weeks, are examples, on their own facts, of cases concerned with novus actus - breaches of the chain of causation. In this case, therefore, the questions raised on this appeal are, in my opinion: (i) Did the reviews reproduce the sting of the libel? This is a question of fact for the jury. (ii) Did the defendants invite such reviews? The answer to this question depends upon the facts concerning all the circumstances in which the preview was given to the press and, again, is a matter of fact for the jury. (iii) Did the defendants anticipate that such reviews would repeat the sting of the libel? It is at this point that the issue of natural and probable consequence or foreseeability arises." [5]

It follows that the identification of the words used in the republications should be particularised in the pleadings in order to establish that "the sense and substance" of the original has been maintained and also to identify the basis upon which the defendants here allege that the plaintiff is liable for the damage caused by the further publications of the original statement.

26 This, it seems to me, is the clear purpose of paragraphs 9-21 of the counter-claim. In that event the plaintiffs' submission based on the assertion that the Defamation Act is effectively a code and that therefore there is no cause of action arising from the respective republications does not need to be considered.

27 In the circumstances, the counter-claim is a proper pleading and the application to strike it out is dismissed.

Application to strike out part of Statement of Claim

28 The defendants application to strike out paragraphs 11-17 of the Statement of Claim is on the basis that they disclose no cause of action. The pleading claims damages for the unlawful termination of the plaintiff's contract of employment. The claim is based firstly on the implication of a term into the contract that the plaintiff would be given reasonable notice of any termination and suggesting that the minimum period of notice would be 6 months. The claim is also based on two further grounds - the implication of a term that termination would not be harsh, unjust or unreasonable and the implication of a term that the defendants would not carry on a dishonest and corrupt business or in a manner likely to destroy the relationship of confidence and trust between employer and employee.

29 After the filing of this application the plaintiff delivered further and better particulars of his allegations of dishonest and corrupt activities by the defendants. Subject to what is said in paragraph 38 hereof this, it seems to me, overcomes one of the grounds of objection raised by the defendants even though that is not conceded by them. It becomes a question of fact to be resolved at the trial whether the particularised events are sufficient to satisfy the description of corrupt business for the purpose of the application of the principle in Malik v Bank of Credit & Commerce International S.A. [6]. It is not appropriate in these proceedings to determine questions of fact going to the sufficiency of proof of these allegations nor indeed on the issue whether it was reasonably foreseeable that in consequence of the alleged corruption the plaintiff's future employment prospects were reduced.

30 As to the implication into the contract of employment of a term that termination would not be harsh, unjust or unreasonable, the plaintiff argued that this flows from the statutory provision s.73 of the Industrial Relations Act 1999. This section provides:-

The section goes on to identify certain "invalid reasons".

31 The defendant contends that the presence of such a statutory provision cannot, in the absence of something more, be imported into the contract and relies on the decision of the High Court in Byrne v Australian Airlines Limited; Frew v Australian Airlines Limited [7].

32 Byrne's case was concerned with the summary dismissal of two baggage handlers for pilfering. They allege the dismissal was in breach of an award provision made under the Industrial Relations Act 1998 (Cth). The relevant award provision, clause 11(a), provided that "termination shall not be harsh, unjust or unreasonable". Arguments ran that such a term was imported into the contract of employment by the force of the award or was an implied term or alternatively gave rise to a statutory duty.

33 The High Court rejected each of these arguments. Relevantly to the suggestion of an imported term the majority judgment (Brennan CJ, Dawson and Toohey JJ) reads:-

"In a system of industrial regulation where some, but not all, of the incidents of an employment relationship are determined by award, it is plainly unnecessary that the contract of employment should provide for those matters already covered by the award. The contract may provide additional benefits, but cannot derogate from the terms and conditions imposed by the award and, as we have said, the award operates with statutory force to secure those terms and conditions. Neither from the point of view of the employer nor the employee is there any need to convert those statutory rights and obligations to contractual rights and obligations." [8]

Relevantly to the suggestion that the term could be implied the judgment reads:-

"... [T]he answer must be that it is not necessary to imply a term in the form of clause 11(a) for the reasonable or effective operation of the contract of employment in all the circumstances. In the absence of any provision in the award and of any express provision in the contract of employment the law would regard it as a legal incident of the contract that it should be terminable upon reasonable notice or summarily for serious breach. Clause 11(a) may alter that position, but there is no reason to presume that any alteration was intended by the parties to form a term of their contract, nor any reason to impute such an intention to them."[9]

At pp.424-5 the majority also found that the provision did not give rise to a statutory duty so as to provide a ground of civil liability for its breach. The other members of the High Court (McHugh and Gummow JJ) in a separate joint judgment came to the same view as the majority.

34 The plaintiff's contract of employment apparently did not contain any provision relating to termination, the grounds upon which his employment was terminated are set out in a letter from the defendant's solicitors, received 24 July, 1997 which was not exhibited before me. However, it arises from the nature of the argument that the dismissal was of a summary nature and I assume on the basis of an allegation of a serious breach of the terms of the contract of employment.

35 Be that as it may, Byrne's case is clear authority for the defendant's argument that the claim for damages for wrongful dismissal to the extent that it is based on s.73 of the Industrial Relations Act 1999 should be struck out.

36 The Industrial Relations Act 1999 does not apply to all employees. In particular, by s.72(1)(e), the Act does not apply to a person "whose annual wages immediately before the dismissal are more than $68,000...". The level of loss claimed in the statement of claim suggests that the Act's provisions relating to dismissal did not apply to the plaintiff, although there is no direct evidence of the plaintiff's income. If it be the case that there is no express provision nor statutory provision applicable to the termination of the plaintiff's employment, then the requirement that it would be terminable only "upon reasonable notice, or summarily for serious breach", remains a legal incident of the contract. This seems to be the basis upon which the claim is made in paragraph 7 of the statement of claim.

37 In the end result, paragraphs 11, 12, 12A and 13 of the statement of claim should be struck out as showing no cause of action.

38 Paragraphs 14-17 are based on an assertion that there was implied in the contract of employment a term that the defendants would not carry on a dishonest or corrupt business. The assertion appears to be made on a misunderstanding of the principle in Malik's case. That case was not concerned with recovery of damages resulting from dismissal. The judgment simply identified circumstances in which it was adjudged there was a breach of the contract of employment and how it might be reasonably foreseeable that damages for financial loss would flow as a consequence. In Johnson v Unisys Ltd [10] Lord Woolf MR made the point at p. 860 in the following terms:-

"Lord Steyn [in Malik's case at p.52G] made it clear that Addis's case did not prevent damages being recovered for loss of reputation in the circumstances which existed in Malik's case. As he added:

`Provided that a relevant breach of contract can be established, and the requirements of causation, remoteness and mitigation can be satisfied, there is no good reason why in the field of employment law recovery of financial loss in respect of damage to reputation caused by breach of contract is necessarily excluded.' (My emphasis.)

I would respectfully agree with this approach. I find no difficulty with it. It does not however mean that damages for loss of reputation can be recovered in a case where the damage to the reputation is caused by a dismissal which is summary, unfair or without proper notice.

Lord Steyn was also careful to limit the scope of the implied mutual obligation of trust and confidence. He said ([1997] 3 All ER 1 at 22[1997] UKHL 23; , [1998] AC 20 at 53) it -

`applies only where there is "no reasonable and proper cause" for the employer's conduct, and then only if the conduct is calculated to destroy or seriously damage the relationship of trust and confidence. That circumscribes the potential reach and scope of the implied obligation. Moreover, even if the employee can establish a breach of this obligation, it does not follow that he will be able to recover damages for injury to his employment prospects. The Law Commission has pointed out that loss of reputation is inherently difficult to prove... It is, therefore, improbable that many employees would be able to prove "stigma compensation". The limiting principles of causation, remoteness and mitigation present formidable practical obstacles to such claims succeeding." (Lord Steyn's emphasis.)"

39 Notwithstanding the obvious difficulty in making out a case for damages based on this breach of employers obligation, it seems to me to be a matter which will turn on the facts as they are ultimately found to be. The fact that the pleading asserts the existence of an implied term as opposed to what I believe should be described as an employers obligation is a matter for amendment rather than striking out.

1. The plaintiff's application to strike out the counter-claim is dismissed.

2. The defendant's application to strike out paragraphs 11-17 of the statement of claim is allowed in part.

3. I order that paragraphs 11 to 13 (inclusive) be struck out.

4. The costs in respect of both applications will be reserved to the trial judge.

[1] Pepper [1992] UKHL 3; [1993] AC 593; Prebble [1993] 1 AC 321; Rost [ 1990] 2 QB 460; Hamilton Court of Appeal (UK) unrep. 98/149; Grassley (1991) 55 ACR 419; Rowley [2000] 1 QdR 207.

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