First Defendant : Mr W S Martin QC & Ms J L Johnson

Second Defendant : Mr W S Martin QC & Ms J L Johnson

Berezovsky v Forbes Inc [2001] EWCA Civ 1211

Gumina v Williams (No 1) (1990) 3 WAR 342

Jones v Skelton [1963] 1 WLR 1362

Lewis v Daily Telegraph Ltd [1964] AC 234

Mayfield-Smith v Mirror Newspapers Ltd [1982] 2 NSWLR 419

Mirror Newspapers Ltd v Harrison [1982] HCA 50; (1982) 149 CLR 293

Monte v Mirror Newspapers Ltd [1979] 2 NSWLR 663

Mortimer v Nationwide News Pty Ltd [2000] NSWSC 612

Shave v West Australian Newspapers Ltd (No 2) [2001] WASC 197

Taylor v Jecks (1993) 10 WAR 309

Waterhouse v Perkins, unreported, NSWSC (Levine J); 10 October 1996

West Australian Newspapers Ltd v Shave [2001] WASCA 216

Capital and Counties Bank v Henty (1880) 5 CPD 514

Lewis v Daily Telegraph; Rubber Improvement Ltd v Daily Telegraph [1963] 1 QB 340

Morgan v Odhams Press Ltd [1971] 1 WLR 1239

Nationwide News Pty Ltd v Abboud, unreported; FCt SCt of WA; Library No 960710; 12 September 1996

Reynolds v Nationwide News Pty Ltd [2001] WASC 90

1 MASTER NEWNES: This is an application by the plaintiff for leave to amend the statement of claim by amending the imputation which it is alleged was conveyed by the words complained of. The defendants oppose the plaintiff's application to amend and seek to strike out the existing imputation.

2 In the statement of claim, it is pleaded that the plaintiff was the managing director of JWH Group Pty Ltd. The first defendant was and is a director of the second defendant and its executive chairman, and a director of J-Corp Pty Ltd. The second defendant is the publisher of the "BGC Bulletin" magazine.

3 It is pleaded that, in or about December 2003, the first and second defendants published, in the December 2003 edition of the "BGC Bulletin", by way of an article "authored" by the first defendant and entitled "Christmas Foreword", the following words of and concerning the plaintiff:

"2003 has been the toughest year of my working life but much has happened. During the year we purchased the 50% of J-Corp that we did not own. This was very [sic] unpleasant business where during the accountancy investigation, large amounts of theft by Julian Walter were unearthed."

4 It is pleaded in par 6 of the statement of claim that in its ordinary and natural meaning, the defamatory publication meant, and was understood to mean, that the plaintiff had stolen large amounts of money from J-Corp and had thereby committed a serious criminal offence. [Emphasis is proposed amendment].

5 It was agreed that the hearing of this application should also be treated as an application by the defendants to strike out the existing plea in par 6.

6 The principles to be applied on an application of this sort are well established. Imputations will be struck out at this stage if they are plainly incapable of being conveyed by the words complained of: Gumina v Williams (No 1) (1990) 3 WAR 342 at 346; Taylor v Jecks (1993) 10 WAR 309 at 319. In determining whether words are capable of bearing the imputation alleged, there is, with respect, much to be said for the view that that is "an exercise in generosity, not parsimony": Berezovsky v Forbes Inc [2001] EWCA Civ 1211 at [16].

7 The test to be applied in determining whether the defamatory imputations alleged are capable of being conveyed by the words complained of was discussed is the well-known passage from the judgment of the Privy Council in Jones v Skelton [1963] 1 WLR 1362 at 1370 - 1371:

"In deciding whether words are capable of conveying a defamatory meaning the court will reject those meanings which can only emerge as the product of some strained or forced or utterly unreasonable interpretation. In Capital and Counties Bank v George Henty & Sons [1882] 7 AC 741, 745 Lord Selborne LC said:

'The test, according to the authorities, is, whether under the circumstances in which the writing was published, reasonable men, to whom the publication was made, would be likely to understand it in a libellous sense.'

The ordinary and natural meaning of words may be either the literal meaning or it may be an implied or inferred or an indirect meaning: any meaning that does not require the support of extrinsic facts passing beyond general knowledge but is a meaning which is capable of being detected in the language used can be a part of the ordinary and natural meaning of words. See Lewis v Daily Telegraph Ltd [1963] 2 WLR 1063; [1963] 2 All ER 151 HL(E). The ordinary and natural meaning may therefore include any implication or inference which a reasonable reader guided not by any special but only by general knowledge and not fettered by any strict legal rules of construction would draw from the words. The test of reasonableness guides and directs the court in its function of deciding whether it is open to a jury in any particular case to hold that reasonable persons would understand the words complained of in a defamatory sense."

8 The person to whom it is alleged the words were spoken will be assumed to be a reasonable person, not unusually suspicious or unusually naive, nor avid for scandal. In Lewis v Daily Telegraph Ltd [1964] AC 234 Lord Reid said, at 258:

"There is no doubt that in actions for libel the question is what the words would convey to the ordinary man: it is not one of construction in the legal sense. The ordinary man does not live in an ivory tower and he is not inhibited by knowledge of the rules of construction. So he can and does read between the lines in the light of his general knowledge and experience of world affairs."

9 There is, however, an important distinction to be drawn between a person's understanding of a publication and judgments or conclusions which that person may arrive at as a result of his or her own beliefs and prejudices: Mirror Newspapers Ltd v Harrison [1982] HCA 50; (1982) 149 CLR 293 per Mason J at 301.

10 The imputation pleaded must specify "the precise act or condition asserted of, or attributed to" the plaintiff: Monte v Mirror Newspapers Ltd [1979] 2 NSWLR 663 at 678 and Taylor v Jecks (supra) at 319. Accordingly, detail that is not material to an imputation will generally be struck out, as irrelevant detail in the pleading of an imputation will nearly always leave the defendant not knowing what must be proved to justify the truth of the imputation: Taylor v Jecks (ibid).

11 The defendants took two substantive objections to the imputation. First, it was contended that the meaning that the plaintiff had stolen large amounts of money was not reasonably open on the words complained of, there being no reference to money and nothing which would cause a reasonable reader to understand that the theft was of money rather than of other property. Secondly, it was submitted that the proposed amendment to the imputation, if it merely characterised the existing imputation of theft, was surplusage and embarrassing and, if it did not, it was so vague as to be embarrassing.

12 There were two further objections by the defendants, which were acknowledged by senior counsel for the defendants to be lesser complaints. The first was that a reasonable reader would not understand the words to mean that "large amounts of money" had been stolen when the words complained of referred to "large amounts of theft", and the second was that there was nothing in the words complained of which would cause a reasonable reader to understand that the theft had been from J-Corp.

13 It was submitted on behalf of the plaintiff that the meaning that the theft was of money was clearly open, particularly in circumstances where it was alleged that the theft had been unearthed during an accountancy investigation into the purchase of a company. The plaintiff's counsel also rejected the objection to the addition of the words "and had thereby committed a serious criminal offence". It was submitted that the "serious criminal offence" referred to was plainly the theft of the money and therefore there was no vagueness or uncertainty about what was referred to. The attribution of a serious criminal offence was part of the defamatory sting and therefore was not objectionable.

14 It was submitted on behalf of the defendants that the objection to the imputation that a large amount had been stolen, rather than a large number of thefts had occurred, was a semantic objection and the meaning pleaded was clearly a meaning which was capable of being conveyed to a reasonable reader.

15 With regard to the contention that a reasonable reader would not understand J-Corp to be the victim of the theft, the plaintiff's counsel argued that as the only entity referred to, and the entity into which the accountancy investigation had apparently been carried out, J-Corp was the only entity from which it would reasonably be inferred that the theft had occurred.

16 In my view, the existing imputation is arguably conveyed by the words complained of. It is the case, as submitted by senior counsel for the defendants, that an investigation by accountants is not necessarily restricted to questions of money, but it is, in my view, clearly arguable that a reasonable reader would regard such an investigation as connected with the accounts of the company and with its funds.

17 It is necessary then to turn to the question of whether the proposed amendment to the imputation would render it embarrassing. I might mention in passing that the form of the proposed amended imputation does not appear to be a particularly unusual one, as a brief review of some reported cases tends to illustrate. See, for instance, Shave v West Australian Newspapers Ltd (No 2) [2001] WASC 197; West Australian Newspapers Ltd v Shave [2001] WASCA 216; Waterhouse v Perkins, unreported, NSWSC (Levine J); 10 October 1996; and Mortimer v Nationwide News Pty Ltd [2000] NSWSC 612. But it seems that the present issue has not previously arisen for determination.

18 As the argument for the defendants was based on what Anderson J said in Taylor v Jecks (supra), it is necessary to refer in more detail to what was said in that case in relation to the pleading of irrelevant material in imputations. His Honour said (at 319):

"As to the right of a party to have struck out of a pleading irrelevant and unnecessary allegations, it is part of the general rule that a party may not introduce into a pleading an allegation that may raise a false issue or that might obscure the true issue or that places the other party in the situation of not knowing the true nature and extent of the case he must meet. Bullen and Leake and Jacob's Precedents of Pleadings (12th ed) 146-147. Whilst not every immaterial or unnecessary allegation will deserve to be struck out of every pleading, insofar as innuendo paragraphs are concerned, I respectfully agree with the statement made by Hunt J in Monte v Mirror Newspapers Ltd (supra) at 678. His Honour said: "What the plaintiff must plead as the imputation upon which he relies is, in my opinion, the precise act or condition asserted of, or attributed to, him, or with which he is charged." I think it must follow from this requirement for precision that words that are not required for the purpose of conveying the imputation relied on should be struck out of the plea. There is no place for irrelevant detail in the pleading of innuendoes or imputations, if for no other reason than that it will nearly always leave the defendant not knowing what he must prove to justify the truth of that imputation. Mayfield-Smith v Mirror Newspapers Ltd [1982] 2 NSWLR 419 at 420."

19 In Mayfield-Smith v Mirror Newspapers Ltd [1982] 2 NSWLR 419, an imputation that "the plaintiff had threatened apprentice Dufficy by saying 'I'll punch you' " was struck out because, it was held, the inclusion of the words "by saying 'I'll punch you' " in the imputation resulted in unnecessary detail that added nothing to the imputation but which might lead to a dispute at trial as to whether or not those additional facts were material to what must be proved by the defendants in order to justify the truth of the imputation. It was therefore embarrassing.

20 I do not consider that the imputation, as proposed to be amended, falls into that category. I accept the plaintiff's submission that the reference to "a serious criminal offence" is plainly a reference to the alleged theft referred to in the preceding words of the imputation. What is then pleaded may be, as submitted by senior counsel for the defendants, simply an adjectival characterisation of the preceding words, but it does not give rise to the difficulties, identified in the cases to which I have referred, which have caused irrelevant detail to be struck out. That is, it does not introduce material that may give rise to disputes at trial as to what the defendants must prove in order to justify the imputation. Indeed, if, as submitted on behalf of the defendants, the amendment is simply an adjectival characterisation of the preceding words then the proof of the alleged theft would necessarily be proof of the offence and no difficulty could arise. In any event, I do not consider that the proposed amendment would give rise to any real embarrassment to the defendants.

21 Moreover, there, is in my view, force in the plaintiff's contention that the amendment sought to be made adds to the sting of the libel.

23 The expression "a large amount of theft" is somewhat unusual, but I consider it is arguable that a reasonable reader would understand it to refer to the total amount of the alleged theft, not the number of times incidents of theft had occurred.

24 I do not accept the defendants' submission that there is no basis upon which a reasonable reader would understand the alleged thefts to have been from J-Corp. J-Corp is the only entity referred to in the words complained of and it appears from the words complained of that J-Corp was the subject of the accountant's investigation which allegedly unearthed the thefts. In my view, the imputation is arguable.

25 I would therefore allow the application to amend the statement of claim and dismiss the application to strike it out.