JUDGMENT (Particulars of defence of comment & qualified privilege - mitigation of damages - contextual imputations - capacity - form)
1 This action has been the subject of judgments and rulings as follows: Dowd J 27 November 1995; Levine J 30 November 1995; Studdert J 5 June 1996; Levine J 29 August 1997.
2 The Statement of Claim in these proceedings was filed on 29 November 1994 and the plaintiffs sue on four publications.
3 The Defence was filed on 17 September 1997 and raises substantively defences of comment, qualified privilege, justification under s 15 and contextual justification under s 16 of the Defamation Act, 1974.
4 With respect to the first publication (21 October 1994) the plaintiffs contend that it conveys the following imputations:
"4(a) the plaintiffs are extremely incompetent as Manager of the Estate Mortgage Trusts;
(b) the plaintiffs have acted dishonestly in their capacity as Managers of the Estate Mortgage Trust".
5 The defendants rely upon the following contextual imputations:
"13(a)…
(i) The plaintiffs are extremely incompetent as Managers of the Estate Mortgage Trust.
(ii) The plaintiffs are dishonest.
(iii) The plaintiffs' management of the Trusts have been disastrous for unit holders.
(iv) The plaintiffs' management of the units is dishonest because there is no transparent or apparent accountability.
(v) The plaintiffs have improperly condemned and victimised the first defendant.
(vi) The plaintiffs unjustifiably oppose the proposals made by or on behalf of the first defendant as set out in annexure 'A'.
(vii) The plaintiffs have acted unreasonably in opposing the first defendant's proposals as set out in annexure 'A'".
6 The second matter complained of (1 October 1994) is said by the plaintiffs to convey the following imputations:
"6(a) the plaintiffs are extremely incompetent as Manager of the Estate Mortgage Trusts;
(b) the plaintiffs have acted dishonestly in their capacity as Managers of the Estate Mortgage Trusts;
(c) the plaintiffs as Managers of the Estate Mortgage Trusts have deliberately breached their duties as such Managers by selling a large number of trusts properties to Mercantile Mutual at a gross undervalue;
(d) the plaintiffs as the Managers of he Estate Mortgage Trusts have deliberately deceived the unitholders of those trusts into increasing their fees to an exorbitant level;
(e) the plaintiffs as the Manager of the Estate Mortgage Trusts have behaved improperly by reducing management fees and adding this amount onto property expenses".
7 The defendants plead in respect of this publication the following contextual imputations:
"14(a) …
(i) The plaintiffs are extremely incompetent as Managers of the Estate Mortgage Trusts.
(ii) The plaintiffs have acted dishonestly in their capacity as Managers of the Estate Mortgage Trusts.
(iii) The plaintiffs as managers of the Estate Mortgage Trusts have deliberately deceived the unit holders into increasing their fees to an exorbitant level.
(iv) The plaintiffs through and by their manager Grant Smith made an unreasonable observation that the first defendant's letter of 20 June 1994 had depressed the price of Meridian A and B Class units from 80 cents to 55 cents.
(v) the plaintiffs were so negligent in the managing of the Trusts that net assets declined by nearly $1 million within a seven month period.
(vi) The plaintiffs through and by their manager Grant Smith were dishonest.
(vii) The plaintiffs were so incompetent that they forecast a net profit of $61.6 million for the year ended June 1994 when in fact the profit was only $2.41 million.
(viii) The plaintiffs have so conducted their management of the Trusts that an independent inquiry is warranted.
(ix) The plaintiffs are charging excessive fees.
(x) The plaintiffs are so incompetent in their management of the trusts that assets have slumped instead of increasing in value.
(xi) The plaintiffs through and by the Manager Grant Smith were dishonest because they deliberately mislead unit holders into believing their management fees were comparable to those charged previously by the Estate Mortgage Managers but failed to disclose that the Estate Mortgage Managers were managing assets of over $1 billion whereas the Plaintiffs were managing assets of only a fraction of that sum.
(xii) The plaintiff through and by their Manager Grant Smith so conducted themselves they made statements in the prospectus which warranted a rebuke by the NSW Health Minister.
(xiii) The plaintiffs through and by their Manager Grant Smith have engaged in a desperate attempt to ridicule the first defendant.
(xiv) The plaintiffs were so incompetent in their management of the units they sold nearly half their properties at the bottom of the market at distressed prices.
(xiv) The plaintiffs were in dereliction of their duties in respect of the sale of properties.
(xvi) The plaintiffs through and by their Manager Grant Smith were so negligent in and about the sale of properties that they sold one property for $5.15 million nearly $1 million below the last offer.
(xvii) The plaintiffs are dishonest.
(xviii) The plaintiffs unjustifiably oppose the proposals made by or on behalf of the first defendant as set out in annexure 'B'.
(xix) The plaintiffs have acted unreasonably in opposing the first defendant's proposals as set out in annexure 'B'".
8 The third matter complained of (2 October 1994) is said, by the plaintiffs, to convey the following imputations:
"8(a) the plaintiffs have behaved improperly as the Managers of the Estate Mortgage Trusts by charging exorbitant fees;
(b) the plaintiffs have acted incompetently as Managers of the Estate Mortgage Trusts".
9 The contextual imputations upon which the defendants rely are:
"15(a) …
(i) The plaintiffs have behaved improperly as the managers of the Estate Mortgage Trusts by charging exorbitant fees.
(ii) The plaintiffs have acted incompetently as managers of the Estate Mortgage Trusts.
(iii) The plaintiffs through and by their Manager Grant Smith made denigrating comments regarding the first defendant in order to prevent any reduction in the fees charged by the plaintiffs.
(iv) The plaintiffs by themselves and their Manager Mr Grant Smith have improperly sought to silence criticism.
(v) The plaintiffs are poor managers of the Trusts.
(vi) The plaintiffs themselves and through and by their Manager Mr Grant Smith are hypocrites.
(vii) The plaintiffs through and by their Manager Grant Smith are dishonest because they endeavoured to deceive unit holders in an attempt to cover up a trading loss.
(viii) The plaintiffs issued a misleading 1994 annual report because what appears to be a profit of $2.14 million is actually a trading loss of $2.782 million.
(ix) The plaintiffs are dishonest".
10 The fourth publication upon which the plaintiffs sue (22 October 1994) is said to convey the following imputations:
"10(a) the plaintiffs have behaved improperly in their capacity as Managers of the Estate Mortgage Trusts by deliberately fashioning the trusts account in order to deceive the unitholders;
(b) the plaintiffs have behaved improperly in their capacity as Managers of the Estate Mortgage Trusts by deliberately deceiving a court in stating that the trusts would be re-valued to twenty-five million dollars in the twelve months between 1993 and 1994;
(c) the plaintiffs have behaved improperly in their capacity as Managers of the Estate Mortgage Trusts by entering into a joint venture which was otherwise than in the interests of the unitholders".
11 The defendants, in respect of this publication, allege the following contextual imputations:
"16(a) The plaintiffs have behaved improperly in their capacity as the Managers of the Estate Mortgage Trusts by deliberately fashioning the Trusts accounts in order to deceive unit holders.
(ii) The plaintiffs improperly failed to report an operating loss as on June 1994 of $2.782 million.
(iii) The plaintiffs through and by their Manager Grant Smith have incompetently managed the Trusts.
(iv) The plaintiffs are responsible for an accounting which was deliberately fashioned to deceive unit holders.
(v) The plaintiffs are dishonest".
12 By Notice of Motion filed on 4 December 1997 the plaintiffs seek orders that the Defence be struck out or that further and better particulars be provided.
13 The complaints made by the plaintiffs with respect to the particulars of the defences of comment and qualified privilege are the same as in action 16709 of 1991; I do not propose to rehearse them; I propose to make orders that the defendants provide proper particulars in response to requests numbers 3, 4 and 5 in the plaintiffs' solicitor's letter dated 21 October 1997.
14 Further, the defendants will, of course, in relation to any pleas of justification and contextual justification as remain after consideration of the latter, have to provide all proper particulars of facts, matters and circumstances upon which reliance is placed in asserting the substantial truth of either the plaintiffs imputations or the defendants contextual imputations.
15 As to contextual imputation 13(a)(i), it is struck out it being the same imputation as pleaded by the plaintiffs.
16 As to contextual imputation 13(a)(ii), I strike this imputation out as not differing in substance from the plaintiffs' imputation 4(b).
17 As to contextual imputation 13(a)(iii), I strike this out. It appears to attribute in no specific way anything about the plaintiffs' management that leads to what is asserted to be the consequence.
18 As to contextual imputation 13(a)(iv), this should read "the plaintiffs' management of the units is dishonest because there is no transparent accountability". I am prepared to allow this contextual imputation. It goes further than the general charge of dishonesty in plaintiffs' imputation 4(b) and the disallowed contextual imputation 13(a)(ii). In any Amended Defence, of course, the wording will have to be corrected.
19 Contextual imputation 13(a)(v) is struck out by reason of the use of the word "improperly".
20 Contextual imputations 13(a)(vi) and (vii) are struck out for the reasons explained in the other judgment.
21 As to the contextual imputation 14(a)(i), (ii) and (iii) it is noted that these are withdrawn.
22 In respect of contextual imputation 14(a)(iv), it is argued first that it is not capable of being defamatory; I disagree. Next it is argued that it is incapable, even if being proved to be true, of adversely affecting any damages to which the plaintiffs' are entitled by reason of the failure to justify the plaintiffs imputation. This will be a matter for the trial. Contextual imputation 14(a)(iv) will go to the jury. Contextual imputation 14(a)(v) and it will go to the jury.
23 Contextual imputation 14(a)(vi) is struck out by reason of the use of the word "dishonest".
24 Contextual imputation 14(a)(vii) I will allow to go to the jury.
25 Contextual imputation 14(a)(viii) is struck out as not specifying precisely what the "conduct" was.
26 Contextual imputation 14(a)(ix) will go to the jury.
27 As to contextual imputation 14(a)(x) I will allow this imputation to go the jury. It is an expansion of the assertion of incompetence encapsulated in plaintiffs' imputation 4(a).
28 As to contextual imputation 14(a)(xi) I am not persuaded that the use of the words "through and by" amount to a rolled up contextual imputation. This contextual imputation will go to the jury.
29 As to contextual imputation 14(a)(xii) the "through and by" argument fails and I am not persuaded that it is incapable of being defamatory. This contextual imputation will go to the jury.
30 As to contextual imputation 14(a)(xiii) it is contended that this is not capable of being conveyed (the arguments as to form fail); I am not persuaded by this argument and contextual imputation 14(a)(xiii) will go to the jury.
31 As to contextual imputation 14(a)(xiv), I will allow this contextual imputation to go to the jury on the same basis as 14(a)(x).
32 As to contextual imputation 14(a)(xv), I strike this out as being embarrassing in its vagueness.
33 As to contextual imputation 14(a)(xvi), this contextual imputation will go to the jury.
34 As to contextual imputations 14(a)(xvii), (xviii) and (xix) these contextual imputations are struck out for reasons which, I trust, are by now clear.
35 As to contextual imputation 15(a)(i) and (ii) these are withdrawn.
36 As to contextual imputation 15(a)(iii) the "through and by" argument is rejected. The argument that the latter part of the imputation does not sensibly connect with the first part is valid. I simply do not understand what it means. Contextual imputation 15(a)(iii) is struck out.
37 Contextual imputation 15(a)(iv) is struck out: "improperly" causing the usual problems.
38 As to contextual imputation 15(a)(v), this is struck out: it does not differ in substance from the pleaded imputations by the plaintiffs.
39 As to contextual imputation 15(a)(vi), I am not persuaded that it is incapable of being conveyed; the problem arises with the use word "hypocrites". The defect in form is that which brings it about that the description "hypocrite" is applicable is not pleaded as it can be and should be in this contextual imputation. It is therefore struck out.
40 Contextual imputations 15(a)(vii) and (viii) will go to the jury.
41 Contextual imputation 15(a)(ix) is struck out.
42 Contextual imputation 16(a)(i) is struck out (it is the same as the plaintiffs' imputation).
43 Contextual imputation 16(a)(ii) is struck out by reason of the use of the word "improperly".
44 Contextual imputation 16(a)(iii) is struck out; the "through and by" argument is rejected but the lack of precision in the use of the word "incompetently" is its principal vice in form.
45 As to contextual imputation 16(a)(iv), this not does differ in substance from plaintiffs' imputation 10(a) and is struck out.
46 Contextual imputation 16(a)(v) is struck out.
47 Complaint is made about paragraph 8 of the Defence and I strike it out for the same reasons that applied to paragraph 10 in matter number 16709/91.
48 With respect to the matters raised in mitigation of damages for the reasons referred to in the earlier judgments, I strike out particulars (v), (vi) and (vii). The considerations referred to in regard to the same or similar particulars in the earlier judgments are applicable here.
49 The plaintiffs have succeeded in their motion and costs will be awarded accordingly:
50 The formal orders are:
- The defendants are to provide proper further and better particulars of the defence of comment and qualified privilege in response to the plaintiffs' solicitors letter of 21 October 1997, within 28 days.
- Contextual imputations 13(a)(i), (ii), (iii), (v), (vi) and (vii) are struck out.
- Contextual imputation 13(a)(iv) as proposed to be amended will go to the jury.
- Contextual imputations 14(a)(iv), (v), (vi), (ix), (x), (xi), (xii), (xiii), (xiv) and (xvi) will go to the jury.
- Contextual imputations 14(a)(viii), (xv), (xvii), (xviii) and (xix) are struck out.
- Contextual imputations 15(a)(iii), (iv), (v), (vi) and (ix) are struck out.
- Contextual imputations 15(a)(vii) and (viii) will go to the jury.
- Contextual imputations 16(a)(i), (ii), (iii), (iv) and (v) are struck out.
- Paragraph 8 of the Defence is struck out.
- Particulars (v), (vi) and (vii) of the particulars of Mitigation of Damages are struck out.
- The defendants are to provide proper further and better particulars of particulars (viii) of Mitigation of Damages, within 28 days.
- The defendants are to pay the plaintiffs' costs.
- Leave to file an Amended Defence within 28 days.
- At the expiry of 28 days, liberty to restore to the Defamation List on 3 days notice.