Waterhouse v Perkins

TK Tobin QC / RA Campbell (Plaintiff) PJ Beazley (Solicitor) (1st Def) COUNSEL : BAM Connell (2nd Def) DA Caspersonn (4th Def - No. 13146/91) MG Stubbs (5th Def - No. 21381/96)

Waterhouse Solicitors (Plaintiff) Philip J Beazley (1st Def) (No. 13146/91) Bush Burke & Company (2nd Def) SOLICITORS : Gye Associates (3rd Def) Minter Ellison (4th Def) (No. 21381/96) Bush Burke & Company (2nd Def) Gye Associates (3rd & 4th Defs) Stephen Blanks & Associates (5th Def) CATCHWORDS : INTERLOCUTORY JUDGMENTS - when issues can be re-litigated. DEFAMATION - imputations. Brimaud v Honeysett (McLelland J - 19 September 1998); Collier v Howard (McLelland J - 23 April 1996); Amalgamated Television Services Ltd v Marsden [1999] NSWCA 313; CASES CITED : Monte v Mirror Newspapers (1979) 2 NSWLR 663; Hepburn v TCN Channel 9 (1984) 1 NSWLR 386; Morris v Newcastle Newspapers Limited (1985) 1 NSWLR 260; Kermode v John Fairfax Limited [2000] NSWSC 124; Amalgamated Television Services Pty Ltd v Marsden (1998) 43 NSWLR 158. DECISION : See paras 43 - 47.

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION DEFAMATION LIST DUNFORD J Friday, 16 June 2000 13146/91 Martin Otto WATERHOUSE v Kevin PERKINS & ors 21381/96 Martin Otto WATERHOUSE v Kevin PERKINS & ors JUDGMENT 1 HIS HONOUR: The 2nd defendant in proceedings 13146/91 and the 2nd and 5th defendants in proceedings 21381/96 object to various of the imputations set out in the Statements of Claim, both as to form and capacity. A preliminary issue arises in relation to these objections in that Levine J heard argument from the 1st defendant in person in relation to the imputations pleaded in the 1991 proceedings on 4 October 1996 and delivered judgment thereon on 10 October 1996. The 2nd and 4th defendants in the 1991 proceedings were both represented in court during that hearing by solicitors and, although expressly invited to do so, made no submissions in relation thereto. 2 The imputations in the 1996 proceedings are in identical form, but neither the 2nd defendant nor the 5th defendant in those proceeding were represented at that hearing, and the 1996 proceedings were not before his Honour on that occasion. Incidentally the 2nd defendant in the 1996 proceedings is now represented by the same counsel and solicitor as the 2nd defendant in the 1991 proceedings although the parties themselves are not related. 3 It appears that the hearing before Levine J in October 1996 was dealt with as an application to strike out the relevant imputations and not as the trial of a separate issue pursuant to SCR Pt 31, and accordingly his Honour's rulings do not give rise to any form of judgment which would occasion a res judicata finding on all the parties to the proceedings, but merely amounted to interlocutory rulings which, although generally final and binding, can in certain circumstances be revisited. But where there has been a substantial hearing on the merits of an interlocutory issue the ordinary rule of practice is that further applications for the same relief will not be entertained unless based on a material change of circumstances since the original application was heard or the discovery of new material which could not reasonably have been put before the Court on the hearing of the original application: Brimaud v Honeysett (McLelland J - 19 September 1998); Richie: Supreme Court Practice Decisions 8593 at 8594; Collier v Howard (McLelland J - 23 April 1996). 4 These considerations apply to defamation proceedings: Amalgamated Television Services Ltd v Marsden [1999] NSWCA 313 at para [38], including rulings on imputations: Kermode v John Fairfax Limited [2000] NSWSC 124. 5 In the present case the 2nd and 4th defendants were both represented by solicitors who, as I say, announced their appearances, and were asked at p 9 of the transcript whether they wished to make submissions on the issues, and declined to do so. They may have been taken unaware as to what was going to happen at the hearing but neither of them objected to the application proceeding nor sought an adjournment. 6 Accordingly there has been no change in circumstances and no new material discovered which could not reasonably have been put before the Court on the earlier occasion, and I am satisfied that I should not allow the parties in the 1991 case to re-litigate issues dealt with by Levine J on 10 October 1996 but, notwithstanding that the imputations are identical, that cannot shut out the remaining defendants in the 1996 proceedings disputing the capacity of the material to give rise to the imputations pleaded, although in determining the issues raised by them I shall have regard to the judgment of Levine J, firstly in the interests of judicial comity, secondly for consistency as there is I understand an application to be dealt with later in which all parties seek to have both actions consolidated or heard together, and thirdly because of Levine J's known expertise as the Defamation List Judge in relation to such matters. 7 Moreover the terms of Levine J's judgment and also the letter from the first defendant to the plaintiff dated 15th September 1996 (part of Ex. 1) make it clear that his Honour was on that occasion only dealing with the capacity of the imputations, but not with their form; and although reluctant to do anything to encourage the parties to make separate applications as to capacity and form (they should clearly be all dealt with at the same time) nevertheless in this case, where there have been extensive delays on both sides, no prior rulings as to form and they are cases where all issues are to be tried by the jury, I consider I should allow all defendants to object to the form of the imputations, but should not permit those involved in the earlier hearing, that is the 1st, 2nd and 4th defendants in the 1991 proceedings, to re-litigate capacity issues; although in actual fact, although independently seeking to strike out the imputations both as to capacity and as to form, all the other defendants now present in both sets of proceedings relied on the submissions of counsel appearing on behalf of the 2nd defendant in the 1991 proceedings. 8 I turn now to deal with each of the imputations objected to. Imputation (a) is as follows: "The plaintiff in his youth was a seriously violent criminal having been convicted of going on a rampage of destruction by bombings which included his hospitalising a teacher and blowing up a telephone box."

9 Levine J ruled that the matter complained of clearly had the capacity to convey the imputation pleaded. In respect of those defendants who were not parties to the earlier arguments, I adopt his Honour's reasons and reject the incapacity argument. As to form, Mr Connell objects to the use of the terms "violent", "seriously violent", "seriously violent criminal", "rampage of destruction" and "hospitalising". In my view the arguments about "violent", "seriously violent criminal", and "rampage of destruction" are really arguments as to capacity, not as to form; and it will be a matter for the jury to determine whether the material actually conveys those imputations. If the plaintiff seeks to prove the imputation that he was "seriously violent", as opposed to merely "violent", that it seems to me is a matter for the plaintiff, bearing in mind that he thereby undertakes a higher burden to establish the imputation or one not differing in substance from it. I am not satisfied that violence is necessarily limited to acts causing personal injury and includes acts causing damage to property. 10 One matter which has caused me particular concern is whether imputation (a) contains more than one imputation "rolled up" into one, a course which is not permissible, Monte v Mirror Newspapers (1979) 2 NSWLR 663 at 667-9, Hepburn v TCN Channel 9 (1984) 1 NSWLR 386 at 403-4 but on reflection I have concluded that the words "having been convicted of going on a rampage of destruction by bombings which included ... " are merely particulars of the circumstances relied on to establish that in his youth the plaintiff was a seriously violent criminal, just as in Morris v Newcastle Newspapers Limited (1985) 1 NSWLR 260 at 271-2, that part of imputation (b) which asserted that the plaintiff had improperly (inappropriately) attempted to interfere in the affairs of the Newcastle City Council were the circumstances relied on to establish that the plaintiff had abused his position as a member of the Federal Parliament. The challenge to imputation (a) fails. 11 Imputation (b) is as follows:- "The plaintiff is a person who has been convicted of criminal offences of blowing up a telephone box with gelignite." 12 An argument as to capacity was dealt with by Levine J in October 1996 and rejected, and I respectfully adopt what his Honour said in that regard. As to form, Mr Connell objects on the ground that there is no criminal offence in terms of "blowing up a telephone box with gelignite". 13 It is true there is no offence described in those terms but that does not make the imputation objectionable nor embarrassing to the defendant. The imputation asserts that the plaintiff was convicted of a criminal offence involving the blowing up, or arising out of the blowing up, of a telephone box with gelignite. He submitted that the plaintiff could "do much better" than the form in which the imputation is pleaded, but that of itself is not a ground for objection. While the defendant is entitled to know the case he, she or it must meet and precision is required in pleading imputations: Amalgamated Television Services Pty Ltd v Marsden (1998) 43 NSWLR 158 at 162, it is no ground for objection that the plaintiff could do better, or that the defendant would have pleaded the imputation differently. The challenge to imputation (b) fails. 14 Imputation (c) is as follows: "The plaintiff was guilty of gross ingratitude to his uncle Bill by reason that whilst his uncle frequently drove hundreds of kilometres to visit the plaintiff in boarding schools through concern for his well being, the plaintiff responded with arguments and recriminations in the course of those visits." 15 The capacity of this imputation was not argued before Levine J. It is therefore necessary to consider it in some detail, at least in regard to those defendants who were not involved in the hearing in October 1996. To establish this imputation the plaintiff relies in particular on parts of the material to the effect that when his previous school would not take the plaintiff back, his uncle enrolled him in a school in the country two hundred kilometres from Sydney and he drove to see him, but the visits always ended in argument and he felt the plaintiff showed no gratitude for what he had done, blaming him for "sentencing him to confinement in the bush". 16 In my view the material is clearly capable of conveying the imputation of ingratitude by reason of the matter specified. There is also an objection to form arising out of the use of the word "gross" as an adjective specifying the degree of ingratitude, but in my view similar considerations apply to this as applied to the use of "seriously" to describe the "violent criminal" in imputation (a). The challenge to imputation (c) fails. 17 Imputation (d) is as follows: "The plaintiff is unfit to practice his profession as a solicitor having been medically diagnosed and adjudged to be schizophrenic and undergone psychiatric treatment without success." 18 The capacity of this imputation was considered in detail by Levine J, and I respectfully adopt his Honour's ruling and reasons therefor. As to form, it was submitted that the imputation is embarrassing in that it seems to contain a number of conditions as to unfitness namely "diagnosed", "adjudged", "by having undergone psychiatric treatment" and that treatment having been "without success", that the multiplicity of meanings is embarrassing, and that the imputation does not specify the actual condition complained of, that is whether it is a diagnosis or condition. It was also said to be embarrassing by the use of the words "unfit to practice" without specifying whether those words were intended to mean that the plaintiff was professionally unqualified, liable to be struck off or that he had a personality which caused him to fail in the profession. 19 In my view these objections are without substance and they reflect a vivid imagination, and a very large degree of nitpicking on the part of counsel, and any embarrassment is imaginary rather than real. Nowhere does the imputation suggest that the plaintiff is not legally qualified as a solicitor nor that he is liable to be struck off the Roll of Solicitors. What is alleged is unfitness in a general sense, and that such unfitness arises from a combination of specified matters, namely being diagnosed and adjudged to have a particular mental condition, and having undergone psychiatric treatment for that condition without success. 20 I note in particular the use of the word "and" after "diagnosed" and again before "undergone", the inference being that he therefore still has the condition specified. The challenge to imputation (d) fails. 21 Imputation (e) is:- "That the plaintiff was so quarrelsome and temperamental as a barrister, he repelled a large number of clients his uncle Bill Waterhouse had referred to him". 22 The capacity of this imputation was not dealt with by Levine J in October 1996, and to support it the plaintiff relies in particular on the first two paragraphs of the extract of the book taken from pages 371 to 374. 23 It was submitted that there is no reference in terms to "repelling clients" and there is nothing in the material to suggest that the plaintiff ever had a large number of clients, but rather to the contrary. However, having regard to the reference in the material to the plaintiff's inability to succeed as a barrister, most of his clients coming from his uncle Bill Waterhouse, who lobbied his friends to provide work for the plaintiff and the reference to the plaintiff's erratic temperament and frequent arguments with people, I am satisfied that the imputation is capable of arising in the mind of the ordinary reasonable reader when looked at in the context of the material as a whole; whether it does will of course be a matter for the jury. 24 As to form, it was submitted that the reference to repelling clients that his uncle had referred to him constitutes "an unnecessary irrelevant and distracting surplusage". I do not agree. The material suggests that he was not able to get on with even those clients which he got through the good officers of his uncle. The challenge to imputation (d) fails. 25 Imputation (f) is as follows: - "The plaintiff behaved disgracefully as a barrister in seeking to chat up the female barrister opposed to him and treating dismissively his instructing solicitor who sought to divert the plaintiff's actions back to the interest of the client." In support of this imputation the plaintiff relies on the following passage:- "He annoyed his briefing solicitor in a case one day by trying to be friendly with an attractive female barrister representing the other side, asking her out to dinner. Challenged over the extraordinary behaviour by his client's solicitor, he said 'she is very attractive - I am not going to let an opportunity like that go by!"

26 Before Levine J the only objection on capacity was to the use of the words "chat up" which objection failed. Now it is submitted that the imputation lacks capacity because there is nothing disgraceful in a barrister inviting a female opponent out for dinner, and there is no suggestion in the material that the plaintiff's attention had been diverted away from the interest of the client. At least those defendants not present on the earlier occasion are entitled to have this objection considered on its merits. 27 The material was not published in a book intended to be read only by barristers or by those familiar with the ethics, practices or colleagiality of the Bar, but by the general public and it may be that ordinary members of the public would regard "chatting up" a female opponent as disgraceful, particularly when the next paragraph suggests that his instructing solicitor objected. I reject the submission that such disgraceful conduct could only be understood by a reader with an overly morbid or suspicious mind influenced by his own unreasonable beliefs and prejudices. It may be that ordinary reasonable readers unaffected by such prejudices not being familiar with the practices of barristers may regard such conduct as "disgraceful". 28 The imputations pleaded also imply that the plaintiff had been neglecting, or at least not paying attention to the interests of the client, but the ordinary reasonable reader is taken to read the material as a whole and it is the reaction of the ordinary reasonable reader that is the test. 29 Although I have some reservations it would seem to me to be open to the jury to infer that the solicitor would not have challenged the plaintiff over his behaviour unless his attention has been diverted away from the interests of their client. With some hesitation, I feel that imputation (f) should be allowed to go to the jury. I do not understand there to be any challenge as to the form of that imputation or at least a challenge of substance as to the form. The challenge to imputation (f) fails. 30 Imputation (g) is:- "The plaintiff whilst a solicitor was guilty of gross disloyalty to his colleague and employer by making a false accusation against him to the Law Society." 31 The capacity of this imputation has not been previously challenged, and Mr Connell submits that the matter says nothing about "gross disloyalty" and there is no suggestion in the material that there was not a proper basis for the complaint, or that the plaintiff was making a complaint which he knew to be false. He further submits that it cannot be defamatory to say of a solicitor that he informed on an employer over an alleged misdemeanour, irrespective of whether the complaint is found or whether the solicitor is cleared, and that the ordinary reasonable reader would consider it entirely proper that apparent irregularities be brought to the attention of the Law Society as would any lawyer. 32 Mr Tobin, QC on the other hand submits that the words "informed on his employer" take their colour from the surrounding circumstances and that "inform" like "informant" carries with it a concept of breaching confidence and that these matters are to be read in association with the general reference to extraordinary behaviour and chequered background. 33 I do not consider that the words used in the material necessarily have the sinister connotations referred to by Mr Tobin, but whilst any reasonable member of the community may accept that an employed solicitor has an obligation to notify the Law Society if he or she has grounds to believe that significant offences or defalcations are being committed by the employer, the material here does not specify the nature, gravity or extent of the "misdemeanour". 34 The community has a natural abhorrence of "dobbers", and therefore I consider that reporting an employer to the Law Society over an alleged misdemeanour in respect of which he was subsequently cleared could convey the imputation that the employee doing the reporting was disloyal, particularly as there is no information as to that. As to "gross" I repeat what I said earlier in relation to "seriously violent" in relation to imputation (a), and "gross ingratitude" in relation to imputation (c). The challenge to imputation (g) fails. 35 As to imputation (h), the material was held to be incapable of bearing this imputation by Levine J. The imputation is not pressed, and no application is made to amend it. 36 Imputation (i) is as follows:- "The plaintiff was guilty of professional misconduct as a solicitor in that he did litigation for a client on the basis that he would get a share of the result and thereby guilty of Champerty."

37 This imputation is said to arise from that part of the material which asserts that Bill Waterhouse allowed the plaintiff to work out of his premises at North Sydney as a solicitor, giving him an office of his own with free rent, secretarial and other services, and that he was paid for any legal work he did for the family businesses ... and he received a percentage of any bad debts he collected. 38 Mr Connell submits that the ordinary reasonable reader would not have the faintest idea what champerty was, in any event it is not unlawful, having been abolished in New South Wales, and that the exercise of debt collection does not necessarily entail conducting litigation. 39 There was a challenge to the capacity of this imputation argued before Levine J and it is interesting to observe that the argument related expressly to the use of the word "champerty". The argument was rejected, and for the same reasons I would reject it again. 40 In any event the offences of maintenance and champerty were only abolished in this State by the Maintenance and Champerty Abolition Act 1993 no. 88 which was assented to on 29th November 1993, long after the publication of the matter complained of, and indeed after the commencement of the 1991 proceedings, and I might add that the effect of that Act in relation to matters other than criminal offences is not entirely clear, particularly in relation to the proper professional practices of solicitors. The challenge to imputation (i) fails. 41 Accordingly it follows that none of the challenges to the imputations succeed and I rule accordingly, except for imputation (h). 42 TOBIN: Your Honour, as I said, we did not press (h) which means it is a cat and mouse game which means that we would be bound as by way of a pleading amendment not to pursue (h) and I made that clear just after lunch yesterday so that if (h) is not pressed and the plaintiff announces that he does not rely for his cause of action upon it, I do not think your Honour needs to make any other order. HIS HONOUR: No as s 7A does not apply. TOBIN: No your Honour. HIS HONOUR: There has not been a separate trial of the issues. CONNELL: I thought that we were having a separate trial. I am not sure why there is an objection to the judgment being entered, that is all. HIS HONOUR: I do not think it matters. CONNELL: I just wanted to close it off. HIS HONOUR: I will order that it be struck out. CONNELL: If your Honour pleases. 43 HIS HONOUR: I order that imputation (h) be struck out of each Statement of Claim and otherwise the rulings in relation to imputations are in accordance with reasons I have given. (Short discussion ensued as to the further hearing of the matter) 44 HIS HONOUR: I order that before Tuesday 27 June the plaintiff furnish to each defendant full particulars of aggravated damages so far as they relate to acts, matters and all things occurring up to the date of such particulars. 45 I direct the 5th defendant in the 1996 proceedings to deliver to the plaintiff by Friday 23 June a draft of any amended defence in which leave will be sought. I issue a similar direction as to each defendant in each proceedings. 46 By consent I order that the 5th defendant answer on oath the plaintiff's interrogatories on or before 14th June. 47 I will make a note to have regard to the 5th defendant's written submissions on consolidation. This hearing is stood over to Wednesday 28th June at 10 am. The 5th defendant is excused from attending on 28th June. I order the plaintiff to notify the absent defendants of the fresh hearing date in writing. oOo

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