HER HONOUR: These are proceedings for defamation arising out of the broadcast of a segment of the programme entitled "The Business" on ABC News. The relevant form of the pleading is an Amended Statement of Claim filed in Court this morning.
Before the Court is the defendant's application in accordance with the procedures for the first listing hearing specified in the Defamation List Practice Note (SC CL 4). The defendant seeks to have all of the plaintiff's imputations struck out. The objections go both to the form of the imputations and their capacity to arise from the matter complained of. As to the objections on the grounds of capacity, it was common ground that the Court should determine those matters by way of separate question in the proceedings, as commonly occurs in this List.
Broadly speaking, the news item related to the fortunes of a company described as an oil and gas explorer, Nexus Energy and its takeover by Seven Group Holdings. A focus of the segment broadcast was the involvement in that event of the plaintiff, who was formerly the Chairman of Nexus and who is reported to have moved to become the CEO of Seven Group Holdings. The article attributes that move as having occurred during the process of the takeover at an unspecified point in those events.
By way of general observation, Mr McClintock SC, who appears for Mr Voelte, observed that the broadcast should be treated as being in the category of a transitory publication. It is not a printed publication. It is one which the viewer would have seen in all probability but once. It is well established that that is relevant to the determination of the objections as to capacity. I also approach the application on the basis of the authorities, of which I did not need to be reminded, which commend a cautious approach to striking out an imputation on the grounds of capacity.
The first imputation relied upon by the plaintiff is:
"that he, when Chairman of Nexus Energy, deserted Nexus Energy to take up a new post with Seven Group Holdings in order to preside over a takeover by Seven Group Holdings of Nexus Energy that would leave Nexus shareholders with nothing".
Voelte v Australian Broadcasting Corporation [2015] NSWSC 210 | Case summary | Zoe
Mr Leopold SC, who appears with Ms Barnett for the ABC, submitted that the imputation is not reasonably capable of being conveyed either expressly or by inference. Mindful of the preliminary matters to which I have already referred, I have reached the conclusion that, subject to the form objection, to which I will come, the imputation is reasonably capable of being conveyed.
Particular objections to discrete parts of the imputation are set out in the ABC's letter dated 11 December 2014 to the solicitors for the plaintiff. I have considered the contents of those particular complaints. In my view, however, the matter complained of plainly focuses on the involvement of Mr Voelte in the affairs of the two companies or corporate groups referred to.
The matter opens with the proposition that the takeover may be delayed by a decision of the corporate regulator whether to approve it in the face of a challenge by "a group of disgruntled Nexus shareholders." I accept, as submitted by Mr McClintock, that the introduction opens the notion of a hostile takeover and one to which the attention of the regulator has been drawn for the purpose of undertaking a review. The notion of the hostility of the takeover is continued in later aspects of the publication. Importantly, it is reported during those events that Seven Group has had three "goes" at Nexus, one with an offer at 5.3 cents a share and one with a later offer of 2 cents a share. The report of Mr Voelte's move in terms of the order of events in the matter complained of occurs after the reference to the 2 cent offer, suggesting that he may have moved from one group to the other after that event, although that is not made clear.
The matter complained of describes that event in the following terms:
"Complicating matters, Nexus Chairman Don Voelte, switched camps to Seven where he is now CEO of Seven Group Holdings."
In my view, that part of the matter complained of opens the notion that Mr Voelte may have done something contrary to the interests of Nexus, in doing so thus "complicating" those events. There is, in my view, at least a suggestion of things going wrong. It is in that context that Mr Voelte is first quoted saying:
"There's a lot of misinformation out there and I think that it's all out there. People need to read the lodgings."
The journalist then takes up the reference to the lodgings, asserting that the first takeover offer for 5.3 cents a share "was never revealed to shareholders or the Australian Securities Exchange".
As submitted by Mr McClintock, I accept that that is a serious allegation of wrongdoing. The article immediately cuts back to Mr Voelte denying involvement in those events. That is a device of the kind commonly used in well-constructed pieces of journalism where a suggestion of wrongdoing on the part of a particular person is made by reporting an allegation of misconduct and then immediately reporting the denial of that person of any involvement in that misconduct. It is a perfectly acceptable device of journalism, but media publishers must accept that it carries with it the risk of an implication that the denial is disingenuous or not to be believed.
In my view, having regard to the authorities to which I have referred, and particularly the decision of the High Court in Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716 and the recent decision of the Court of Appeal in Corby v Allen & Unwin Pty Ltd [2014] NSWCA 227, I must approach this matter on the basis that this is an article of the kind where there is an allegation of smoke and an insinuation of fire. It seems to me to be plainly suggested that Mr Voelte, in making the move he is reported to have made, deserted Nexus Energy contrary to the interests of the shareholders of that company.
A discrete objection related to whether the article conveys that Mr Voelte intended to leave Nexus shareholders with nothing. It was common ground that that was the plain meaning of the imputation and I do think there is a difficulty in that respect. I do not think the article is reasonably capable of suggesting that harm to shareholders or leaving them with nothing was Mr Voelte's purpose in taking the step he took. Rather, the meaning conveyed is that that was a consequence of his decision of which he was aware at the time he made it. Mr McClintock indicated that he would not have any difficulty in amending the imputation so as to read in the last phrase "in order to preside over a takeover by Seven Group Holdings of Nexus Energy he knew would leave Nexus shareholders with nothing". On the basis of an amendment of that nature, I consider the imputation is capable of arising. The plaintiff should have leave to make that amendment.
Separately, there was an objection as to form on the grounds that the imputation is imprecise by its inclusion of the phrase "to preside over". The defendant relied upon my decision in King v Fairfax Media Publications Pty Ltd (No 2) [2014] NSWSC 1244 at paragraphs [12]-[24] in support of that objection. King was quite a different case. The matter over which Mr King was, according to the imputation, alleged to have presided was "a serious breakdown of corporate probity, governance and ethics within Leighton Holdings' international empire which he failed to prevent". It was expressly stated during argument in King that the use of the word "presided" was not intended to connote any knowledge on his part and, in that circumstance, I considered the use of that phrase to be imprecise, since it did not identify with sufficient precision precisely what shortcoming was sheeted home to Mr King.
In the present case, I think the meaning of the expression "to preside over a takeover" is tolerably clear and I do not think the imputation is objectionable on that basis. Accordingly, the objection as to form is rejected and my ruling on capacity is that the imputation will go to the jury.
Imputation (b) is:
"that the plaintiff, as Chairman of Nexus Energy, breached his legal duties to that company by electing to abandon the company and instead take up a new position as CEO of Seven Group Holdings with the intention of presiding over the takeover by Seven Group Holdings of Nexus Energy and to leave shareholders of Nexus with nothing".
Again, there was an objection both as to capacity and as to form.
Mr Leopold submitted that there is nothing in the matter complained of reasonably to convey the imputation that Mr Voelte breached any duty he owed to Nexus. In my view, on the strength of the material I have recited, there is enough insinuation in the matter complained of to convey that suggestion. Particularly, in addition to the matters I have recorded, the article emphasises the shareholders' challenge to the takeover. I have already referred to the reference to the 5.3 cent offer not being revealed to shareholders or the Australian Securities Exchange. The only person pointed to as being involved in that event is Mr Voelte. The consequence of that event is roundly criticised by Mr Wilson (described later in the matter complained of as "convenor of the Nexus battle"), who describes events as entailing "something quintessentially wrong".
Mr Leopold submitted that the ordinary reasonable viewer knows nothing of the existence of any legal duties which may be owed by a chairman to a company. I do not accept that submission. In my view, the ordinary reasonable reader may be taken to know something of the fact that officers of a company owe legal duties to the company. The imputation was said to be bad in form on the same basis, that is, that the meaning of the term "legal duties" was unclear. I do not accept that submission. It seems to me to be an ordinary phrase as to which the ordinary reasonable reader has an acceptable degree of understanding.
Finally, there was an objection of imprecision based on the inclusion of the phrase "presiding over the takeover", which I have already dealt with. My ruling as to imputation (b) is that the form objection is rejected and the imputation will go to the jury.
Imputation (c) is:
"That the plaintiff as chairman of Nexus Energy breached his fiduciary duty to that company by acting in a way which would instead suit the interests of Seven Group Holdings".
The objection as to capacity to that imputation again focused on the proposition that the matter complained of does not suggest Mr Voelte has breached any fiduciary duty owed to Nexus.
In my view, there is a difficulty with the use of the term "fiduciary duties", which I think is a term of art the meaning of which is known to lawyers and probably a large number of other people in business and commerce but not to the ordinary reasonable reader. Subject to that qualification, for substantially the reasons I have already expressed, I consider that the imputation is reasonably capable of being conveyed.
Mr McClintock indicated that he would be content to delete the word "fiduciary" and that would leave the imputation containing a charge of breaching a duty to the company by acting in a way which would instead suit the interests of Seven Group Holdings. In my view, an amendment of that kind would address the concern. The plaintiff should have leave either to take that course or to plead the imputation as a true innuendo or both, but the present form of the imputation cannot stand.
Mr Leopold further objected that the meaning of the imputation is unclear by reason of the inclusion of the phrase "by acting in a way which". I accept that that phrase does not pinpoint the precise act attributed to Mr Voelte, but, in my view, that is a result of the way in which the matter complained of is presented, pointing to a number of unhappy circumstances and pointing to Mr Voelte as in some way being involved in them without clearly specifying precisely what it is he is alleged to have done.
The matter complained of clearly hints at wrongdoing on his part and, in my view, the publisher must wear the terms in which it conveyed that hint. My ruling as to imputation (c) is that it should be struck out in its present form, but the plaintiff should have leave to amend in accordance with these reasons.
Finally, imputation (d) is:
"that the plaintiff deliberately betrayed the interests of shareholders of Nexus Energy of which he was Chairman to obtain a personal benefit in taking up the position of CEO of Seven Group Holdings."
Mr Leopold submitted that the matter complained of does not reasonably convey the imputation that Mr Voelte betrayed the interests of shareholders or did so deliberately to obtain a personal benefit.
For substantially the reasons I have already articulated in respect of the other three imputations, I do not accept that submission. It is clearly suggested by the accusation that Mr Voelte switched camps that he abandoned one group to the benefit of the other. Mr McClintock made a compelling submission in that respect. Without repeating his references to various literary sources, I accept that the term "switched camps" is a military analogy which is apt to convey the notion of a person betraying those to whom his obligation is owed or those who trust him.
The notion of personal benefit troubled me at first, but I think it is clear from terms of the imputation that it refers specifically to his being given the position of CEO of Seven Holdings and nothing else. On that basis, I reject the submission that the imputation is imprecise on that account.
Mr Leopold further submitted that the term "betray the interests of shareholders" is imprecise. For the reasons already given, I do not think the imputation is liable to be struck out on that basis. Any degree of imprecision as to what Mr Voelte did derives from the content of the matter complained of itself.
My ruling as to imputation (d) is that the objections as to form are rejected and the imputation will go to the jury. I grant leave to the plaintiff to file a further amended statement of claim in accordance with these reasons.
[2]
ADDENDUM
Mr Leopold has drawn to my attention the fact that I overlooked an argument in respect of imputation (b) in the same terms as imputation (a), that is, it was argued that the matter complained of was incapable of imputing to Mr Voelte the intention of deliberately harming shareholders, rather that is a consequence attributed to his conduct as being conduct he undertook with that knowledge.
For the reasons articulated in respect of imputation (a), imputation (b) should stand only if the plaintiff sees fit to amend the last phrase so as to read "with the intention of presiding over the takeover by Seven Group Holdings of Nexus Energy he knew would leave shareholders of Nexus with nothing". On that basis, the order in respect of imputations (a) and (b) is that, if amended in the terms indicated in this judgment, those imputations will go to the jury.
[3]
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Decision last updated: 12 March 2015