Citation : ELLIOTT -v- WEST AUSTRALIAN NEWSPAPERS LTD [2007] WASC 149

Defamation - Polly Peck plea - Principles applicable to Polly Peck defence - Imputation of reasonable suspicion of guilt - Whether permissible Polly Peck plea when imputation relied upon by plaintiff is one of guilt - Test to be applied

Defamation - Practice and procedure - Whether plaintiff can expressly disclaim meaning that could be relied upon as a Polly Peck defence - Impact of failed Polly Peck plea upon mitigation of damages - Question of fairness

1 STEYTLER P: The appellant seeks leave to appeal against an interlocutory order, made by the primary judge, striking out a paragraph from its amended defence in defamation proceedings brought against it by the respondent. It needs an extension of time of one day for that purpose. The application was heard upon the basis that, if an extension of time was granted and leave was given, the hearing of the application would be treated as if it were the appeal.

2 The defamation proceedings arose out of the publication by the appellant of an article in 'the West Australian' newspaper on 4 March 2006. The article concerned the respondent. He was then the Deputy Chairman of Fortescue Metals Group (Fortescue), a mining company. The article reported that the respondent had sold more than $500,000 worth of shares in Fortescue 'just days before the share price plummeted after doubt was cast over contracts Fortescue signed with Chinese companies'. It went on to say:

Mr Elliott sold the stock in May 2005, days before the iron ore hopeful revealed the exact nature of contracts it had signed with its Chinese partners.

Fortescue was hit this week with legal action by Australia's corporate watchdog, which claims the company misled and deceived the sharemarket by stating that the contracts were 'binding' on the Chinese.

The Australian Securities and Investments Commission is seeking to have Fortescue and its chief executive, mining entrepreneur Andrew 'Twiggy' Forrest, fined up to $3.6 million over the matter.

...

Fortescue shares soared from 59¢ in August 2004 to a high of $5.55 in March 2005 on the back of the announcements as investors scrambled for a slice of what many believed would be the State's next iron ore giant.

But they slumped to $3.15 after Fortescue revealed the details of the contracts and fell further to $2.38 in the following months as the company was immersed in ongoing controversy over the affair.

ASIC has vowed to continue investigating Fortescue's conduct and share sales by directors.

Mr Elliott, a gold medallist in the 1500m at the Rome Olympics in 1960 and the youngest runner to break the four-minute mile in 1958, insisted yesterday he had no knowledge of the Chinese contracts. 'Nobody knew anything about it,' he said.

'(I had) absolutely none. Nobody in the world did. Apart from the Chinese bloke who made the statement.'

...

Documents lodged with the Australian Stock Exchange show that Mr Elliott sold 100,000 of the 900,000 Fortescue shares he held for a total of $519,700 on March 18, 2005. Two months earlier he bought 750,000 shares for $562,500 when he exercised some director's options at 75¢.

He recently sold more Fortescue shares, pocketing $1.4 million last month. He still holds 550,000 shares in the company.

...

3 On 20 March 2006 the respondent sued the appellant for defamation arising out of the publication of the article. In paragraph 4 of his statement of claim dated 3 April 2006, the respondent pleaded that the article, in its natural and ordinary meaning, contained defamatory imputations that he:

4.1 dishonestly profited from using information concerning contracts between Fortescue and Chinese investors which would have an adverse effect upon the price of Fortescue shares when made available to the market, by selling Fortescue shares just prior to the release of that information;

4.2 illegally profited from using information concerning contracts between Fortescue and Chinese investors which would have an adverse effect upon the price of Fortescue shares when made available to the market, by selling Fortescue shares just prior to the release of that information;

4.3 abused his position as a director and deputy chairman of Fortescue for personal gain, by using information gained by virtue of holding those positions concerning contracts between Fortescue and Chinese investors which would have an adverse effect upon the price of Fortescue shares when made available to the market, to sell Fortescue shares just prior to the release of that information;

4.4 told a deliberate untruth by stating that he had no knowledge, at the time of selling his Fortescue shares, of the existence of the contracts between Fortescue and the Chinese investors.

4 In its amended defence dated 12 December 2006, the appellant denied that, in its natural and ordinary meaning, the article bore or was capable of bearing any of the meanings pleaded. However, it went on to plead a so-called 'Polly Peck' defence (Polly Peck (Holdings) Plc v Trelford [1986] QB 1000), in which it set out other imputations which, it said, arose from the article (only one of which is relevant to the appeal) and then pleaded a defence of justification in respect of them. So far as it is relevant to this appeal, this defence reads as follows:

1. Further and in the alternative, if, which is denied, the Article in its natural and ordinary meaning bore any imputation defamatory of the plaintiff, the defendant says that that Article carried only the meaning(s) that:

...

6.3 there were reasonable grounds to suspect that the plaintiff as a director of [Fortescue] had illegally profited from using information concerning contracts between [Fortescue] and Chinese investors which would have an adverse effect upon the price of [Fortescue] shares when made available to the market, by selling [Fortescue] shares, just prior to the release of that information;

which meanings are true in substance and in fact.

Particulars of the reasonable grounds were provided.

5 On 20 February 2007, the respondent brought an application before the primary judge to strike out par 6 of the defence (which then pleaded three imputations) upon the grounds that it failed to disclose a reasonable defence (O 20 r 19(1)(a) of the Rules of the Supreme Court 1935 (WA) (Rules)) and that it would prejudice, embarrass or delay the fair trial of the action (O 20 r 19(1)(c) of the Rules).

6 The primary judge decided that the imputations pleaded in par 6 of the defence were not arguably open 'by way of a "Polly Peck" defence' and struck them out: Elliott v West Australian Newspapers Ltd [2007] WASC 149.

7 When giving his reasons, the primary judge reviewed cases concerning Polly Peck pleadings, including Chakravarti v Advertiser Newspapers Ltd [1998] HCA 37; (1998) 193 CLR 519. He referred to what had been said in that case by Brennan CJ and McHugh J (minority), who rejected the proposition that a defendant could plead and justify a meaning not pleaded by the plaintiff. They said, in that respect [8] that a Polly Peck defence or practice contravenes the fundamental principles of common law pleading and that no injustice is done by holding a defendant to those principles by requiring a defence to respond to the statement of claim. They also considered the extent to which a plaintiff was confined by imputations pleaded in the statement of claim. They said, in this respect [24]:

[I]f the defendant is, or might reasonably be thought to be, prejudiced, embarrassed or unfairly disadvantaged by the departure [from the plaintiff's pleading] - whether in pleading or preparing for trial, or adducing evidence or in conducting the case before verdict - the plaintiff will be held to the meaning pleaded. If the meaning pleaded goes to the jury and is not found by the jury, the plaintiff fails. If there be no unfair disadvantage to the defendant by allowing another defamatory meaning to be relied on and to go to and be considered by the jury - as where the plaintiff seeks to rely on a different nuance of meaning or, oftentimes, merely a less serious defamation - the different defamatory meaning may be found by the jury.

8 The primary judge also considered what had been said, in Chakravarti, by Gaudron and Gummow JJ. He observed that they did not deal specifically with the entitlement of a defendant to plead an alternative meaning. However, they too addressed the question of the extent to which a plaintiff might depart from pleaded imputations. They said that [60]:

As a general rule, there will be no disadvantage in allowing a plaintiff to rely on meanings which are comprehended in, or are less injurious than the meaning pleaded in his or her statement of claim. So, too, there will generally be no disadvantage in permitting reliance on a meaning which is simply a variant of the meaning pleaded. On the other hand, there may be disadvantage if a plaintiff is allowed to rely on a substantially different meaning or, even, a meaning which focuses on some different factual basis. Particularly is that so if the defendant has pleaded justification or, as in this case, justification of an alternative meaning. However, the question whether disadvantage will or may result is one to be answered having regard to all the circumstances of the case, including the material which is said to be defamatory and the issues in the trial, and not simply by reference to the pleadings.

9 Finally, so far as Chakravarti is concerned, the primary judge mentioned that Kirby J, too, did not discuss the entitlement of a defendant to plead an alternative meaning. However, on the issue of the extent to which a plaintiff may depart from pleaded imputations, he said [139.4]:

In an attempt to reconcile the desirable encouragement of particularisation of claims, the avoidance of 'trial by ambush' (National Mutual Life Association of Australasia Ltd v GTV Corporation Pty Ltd [1989] VicRp 66; [1989] VR 747, 768) and the consideration of the entirety of the publication in question (Fleming, The Law of Torts (9th ed, 1998) 588), courts will uphold the discretion of a trial judge, including a discretion to confine parties to the imputations pleaded where that is required by considerations of fairness (Prichard v Krantz (1984) 47 SASR 379, 386; Taylor v Jecks (1993) 10 WAR 309, 316; Pizza Pizza Ltd v Toronto Star Newspapers (1996) 2 CPC (4th) 394, 400). However, a more serious allegation will generally be taken to include a less serious one unless the latter is of a substantially different kind (Prichard v Krantz ... ). It is true that dicta appear in decisions of this court (Sungravure Pty Ltd v Middle East Airlines Airliban SAL [1975] HCA 6; (1975) 134 CLR 1, 14 (Stephen J)), other Australian courts (Hadzel v De Waldorf (1970) 16 FLR 174, 182 (Fox J)) and courts overseas (Slim v Daily Telegraph Ltd [1968] 2 QB 157, 185 (Salmon LJ)) which favour a strict approach: binding a plaintiff at the trial to the precise imputations pleaded. However, I do not consider that these dicta represent the law. The better view is that the rules of pleading must, in those jurisdictions governed by the common law, adapt to the fair evaluation by the tribunal of fact of the matter complained of. If the publisher claims surprise, prejudice or other disadvantage, the trial judge may protect it. No complaint can arise where additional imputations found represent nothing more than nuances or shades of meaning of those pleaded. The position will be otherwise in jurisdictions which, by statute, provide that each imputation is a cause of action upon which the plaintiff may sue.

10 Then, having reviewed other cases, the primary judge concluded [41] that the weight of authority in Australia concerning this issue was reflected in what was said by Ormiston JA and Charles JA in David Syme & Co Ltd v Hore-Lacy [2000] VSCA 24; (2000) 1 VR 667. In that case, Ormiston JA said [21] - [22]:

It would ... seem desirable, if it was not already required by authority, both that defendants should plead the meanings by way of false innuendo or imputation which they place upon the publication relied upon and that they should plead justification in terms which makes clear the version or versions of meaning of the publication to which that justification is directed. Whatever criticisms the minority [in Chakravarti] levelled at the practice, it seems fortunately restricted to defamation actions and Chakravarti would at least restrict the extent to which imputations and false innuendoes which depart from those pleaded may be relied upon at trial. It would seem, moreover, that even the majority would permit a very limited departure from the case pleaded by the plaintiff; in other words, the jury will have to be told that they cannot find for the plaintiff unless they agree with the meaning or one of the meanings put forward on behalf of the plaintiff, or unless the meaning they would give the publication was only a nuance or variant, not substantially different or more serious from that proposed by the plaintiff.

If that be correct, then a defendant should not need to, nor be permitted to, plead or rely on a meaning other than one which is not more serious and otherwise is not substantially different.

11 In the same case, Charles JA said [53] - [54]:

The principal criticisms of the practice sanctioned in Polly Peck, of permitting a defendant to plead and justify a meaning different from that contended for by the plaintiff are that such an approach allows the defendant to raise false issues which can only embarrass the fair trial of the action and will on occasions unfairly prevent a plaintiff from pursuing a claim in defamation, in the manner explained by Brennan CJ and McHugh J in Chakravarti (at [8] - [12]). The setting up of false issues by the defendant in this way may well make admissible a substantial body of evidence that would otherwise be irrelevant and thus greatly lengthen proceedings. But it seems to me that the same criticisms would not hold good if the defendant were limited to justifying a meaning which was one upon which the plaintiff might himself obtain a verdict on the pleadings as they stand.

Nor should a defendant be unfairly prejudiced if the defendant were limited to pleading a meaning which was sufficiently close (in the manner already suggested) to the plaintiff's meanings, so that the plaintiff himself could succeed upon that meaning on the pleadings as they stand. If the defendant is limited to pleading a meaning on which the plaintiff would be permitted to go to the jury, a false issue is not thereby raised. The issues are instead identified and confined, to the benefit of the court and the parties. Of course, if the plaintiff cannot make good a meaning amongst those identified, his action must fail, and the defendant has no need to plead any other meaning.

12 The primary judge went on to adopt what had been said by Charles JA in the passages extracted (Charles JA had also said [52] that a plaintiff could, at trial, succeed on a meaning 'not substantially different from and ... not more injurious than the meanings pleaded, [provided] that the defendant was not unfairly prejudiced'). The primary judge similarly adopted what had been said by Doyle CJ in Advertiser-News Weekend Publishing Co Ltd v Manock [2005] SASC 82; (2005) 91 SASR 206, in the following (and other) passages ([72], [76] - [77]):

I doubt whether the propositions formulated by Charles JA [in Hore-Lacy] are inconsistent with the observations of Brennan CJ and McHugh J in Chakravarti about pleading a Polly Peck defence, because to the extent that a plaintiff may be permitted to depart from the meaning pleaded, fairness requires that the defendant be permitted to anticipate and deal with the alternative meaning. In that context the expression 'alternative meaning' is something of a misnomer. An alternative meaning that can be pleaded and justified by the defendant can be no more than a shade or nuance of the meaning pleaded by the plaintiff, and so in substance (as it seems to me) the alternative meaning must be close to or the same as the meaning pleaded by the plaintiff.

...

Once the plaintiff pleads a meaning on which the plaintiff relies, that pleading will identify the meaning of which the plaintiff complains, and delimit the boundaries within which the action is to be fought. Although it is the publication of the defamatory material that is the tort, the function of the pleading is to identify the field of inquiry at the trial.

It appears to be generally accepted that once the plaintiff has pleaded the meaning on which the plaintiff relies, the plaintiff will not be entitled to seek a verdict on a different imputation. On that all members of the High Court agreed in Chakravarti. That is subject to the qualification that another defamatory meaning might be relied on by the plaintiff, when it is a mere shade or nuance of meaning, provided that the defendant suffers no prejudice, embarrassment or unfair disadvantage as a result: Brennan CJ and McHugh J at [24] - [25], Gaudron and Gummow JJ at [60] and Kirby J at [139] sub-paras 3 and 4.

13 In reliance upon these cases, the primary judge went on to say that the bounds of a permissible Polly Peck plea are set by the meanings pleaded by the plaintiff and any other meanings upon which the plaintiff may obtain a verdict at trial on his pleading as it stands [43]. He said that the defendant could not expand the area of controversy by pleading and seeking to justify meanings which go beyond those confines. He went on to say ([44] - [45]):

The plaintiff is entitled to obtain a verdict at trial upon any of his pleaded meanings or any meaning which is a nuance or variant of a pleaded meaning, being a meaning not substantially different from or more serious than a pleaded meaning. There is, in addition, a further overriding limitation that the plaintiff will not be permitted to rely upon an unpleaded meaning where to do so would be unfair to the defendant.

The defendant may therefore plead and justify only a meaning that is a nuance or variant of a meaning pleaded by the plaintiff, being a meaning not substantially different from or more serious than the plaintiff's pleaded meaning, and on which the plaintiff would be entitled at trial to seek a verdict on the basis of the plaintiff's pleaded meanings.

14 The primary judge did not consider that any of the meanings pleaded by the appellant arguably fell within that description [46]. Then, after referring to Gutnick v Dow Jones & Co Inc (No 4) [2004] VSC 138; (2004) 9 VR 369, he agreed with what had been said by Bongiorno J in that case to the effect that an imputation of reasonable suspicion of guilt is not a permissible variant or nuance of an imputation that the conduct in question had been engaged in, and raised a different case. The primary judge went on to hold [50] that, in the present case, the imputation of suspicion pleaded by the appellant was not a nuance or variant of any of the meanings of guilt pleaded by the respondent. He said that it was a substantially different imputation, raising a quite different case.

15 The primary judge had earlier referred to Nationwide News Pty Ltd v Moodie [2003] WASCA 273; (2003) 28 WAR 314. This was because particular reliance had been placed by senior counsel for the appellant on the judgment of McLure J in that case. She had expressed the opinion that Ormiston JA's formulation in Hore-Lacy was unduly narrow, having regard for the reasons of the majority of the High Court in Chakravarti. Her understanding of the law was that a plaintiff may contend at trial that, even if the words in question do not bear the defamatory meaning alleged in the statement of claim to be the ordinary and natural meaning of those words, they nevertheless bear some other meaning less injurious to the plaintiff's reputation but still defamatory of him. She considered that the majority in Chakravarti, and the Western Australian Full Court in Gumina v Williams (No 2) (1990) 3 WAR 351, had accepted the correctness of the statement of law, to this effect, by Lord Diplock in Slim v Daily Telegraph Ltd [1968] 2 QB 157, 175. She referred also to the judgment of Gaudron and Gummow JJ in Chakravarti for the proposition that there would be no disadvantage in allowing a plaintiff to rely on meanings which were comprehended in or less injurious than the meaning pleaded in the statement of claim and that there would generally be no disadvantage in pleading reliance on a meaning which is simply a variant of the meaning pleaded. She took the view that the question whether disadvantage would or may result is to be answered having regard to the circumstances of the case, including the material which is said to be defamatory and the issues in the trial, and not simply by reference to the pleadings. On her understanding of the reasons in Chakravarti, disadvantage to the defendant was an additional limiting factor on the extent to which a plaintiff could depart from his pleaded imputations, not a factor intended to widen the plaintiff's (and in turn the defendant's) opportunities to depart from them [94].

16 In the present case, the primary judge considered that the imputation pleaded in par 6.3 did not fall within what he described as either of the two, broader, tests applicable to a Polly Peck plea referred to by McLure J in Moodie. He went on to say, of the imputation, that [50]:

It is not an imputation of the same kind as an imputation of guilt. Nor does it depend upon the same evidentiary basis. It is not an imputation for which the plaintiff might arguably seek a verdict at trial on the imputations currently pleaded in the statement of claim.

17 Finally, the primary judge rejected a submission advanced on behalf of the appellant that relied upon the judgment of Hasluck J in Mickelberg v Hay [2006] WASC 285. That case concerned pleaded imputations that the plaintiffs had committed a number of offences. The second defendant pleaded, in answer, (and sought to justify) an imputation that there were reasonable grounds to believe that the plaintiffs had committed those offences. The plaintiffs applied to strike out that pleading upon the basis that it was outside the scope of the imputation pleaded by them. Hasluck J concluded that an imputation of reasonable grounds to believe that the plaintiffs had committed the offences in question was less injurious, but not substantially different to, the imputation of guilt contended for by the plaintiffs. He refused to strike out the plea. The primary judge in the present case said, in this respect [53]:

[I]t is, I think, unnecessary to express any view as to the test which his Honour applied to determine whether a 'Polly Peck' plea is permissible. There seems to me to be a significant difference between, as in Mickelberg v Hay, an imputation of reasonable grounds to believe that the plaintiff is guilty, and in this case, (at its highest) an imputation of reasonable grounds to suspect that the plaintiff is guilty. Even if the former is not substantially different to an imputation of guilt, in my view the latter clearly is. In any event, to the extent there may be similarities between the imputations pleaded by the defendant in that case and those in issue in this case, I would, with respect, take a different view to that reached by Hasluck J. I consider that the various imputations of suspicion pleaded by the defendant in this action are substantially different from the imputations of guilt pleaded by the plaintiff.

18 As I have said, the appellant seeks leave to appeal against the striking out of par 6.3 of its defence. There are four grounds of appeal. They read as follows:

1. The learned Master erred in law, having regard to the terms of the Article in question, in striking out paragraph 6.3 of the defendant's defence as unarguable, on the erroneous basis that an imputation of guilt (raised by a plaintiff) was separate, distinct and substantially different from an imputation of suspicion (on reasonable grounds).
2. The learned Master erred in law, having regard to the terms of the Article in question, by failing to follow Gumina v Williams (No 2) (1990) 3 WAR 351 (Full Court) and Mickelberg v Hay [2006] WASC 285 (Hasluck J) and to conclude upon those local case authorities, that an imputation of suspicion (on reasonable grounds) whilst a less serious assertion, was not an imputation substantially different to the pleaded imputation of guilt as, in effect, was put by the plaintiff.
3. The learned Master erred in law, at his reasons paragraph [53] (see also paragraphs [51], [52], [9] and [10]), having regard to the terms of the Article in question, in relying upon an irrelevant distinction which he drew, as between an imputation of reasonable grounds to 'believe' something (that the plaintiff was guilty of the conduct referred to), contrasted to an imputation of reasonable grounds to 'suspect' something (that the plaintiff was guilty of the conduct referred to), when in law, there was no effective distinction, and so, no 'significant difference between' the two.
4. Alternatively to ground 3, the learned Master erred in law at his reasons paragraph [53], having regard to the terms of the Article in question, by, in effect, concluding that a plea by the defendant in terms of existing paragraph 6.3 of its Defence, (reasons paragraph [4]) were it to be amended to allege that there were 'reasonable grounds to believe that the plaintiff ... ', was equally unarguable as significantly different to an imputation of guilt.

(1) How far may a Polly Peck plea depart from the imputations relied upon by a plaintiff before being struck out as irrelevant?

(2) Does the appellant's plea in par 6.3 of the defence fail the test enunciated in answer to question (1)?

(3) Is the answer to question (2) influenced by the fact (raised by the respondent in answer to grounds 1 and 2) that the respondent expressly disclaims (and will, at the trial, expressly disclaim) any reliance upon the imputation pleaded in par 6.3 of the defence?

20 If one thing is settled in this jurisdiction it is that a defendant cannot plead a Polly Peck imputation that is outside the extent to which a plaintiff would be permitted to depart from his or her pleaded imputations: Buckeridge v Walter [2007] WASCA 19 [20] (McLure JA, Buss JA concurring); Moodie [13] (Anderson J), [59] (Steytler J) and [85] (McLure J). However, there is controversy concerning the extent to which a plaintiff may depart from his or her pleaded imputations.

21 In England, different approaches were taken by Salmon LJ, on the one hand, and Diplock LJ, on the other, in Slim. Salmon LJ said (185):

Supposing, however, that it is not necessary for the indirect meanings or inferences to be alleged in the statement of claim but that nevertheless the plaintiff ... has chosen to allege them, is he to be confined to those meanings or may he rely upon some entirely different meaning at the trial? Without committing myself to any concluded view, I am inclined to think that the plaintiff is bound by his pleading - otherwise it may prove to be nothing but a snare for the defendant. I do not mean, of course that the plaintiff is strictly confined to the very shade or nuance of meaning which he has pleaded - but what he sets up at the trial must come broadly within the meaning he has pleaded. Nor do I think that, without any amendment of his statement of claim, it would be permissible for him to set up any entirely different meaning, even if it were less injurious to the plaintiff than the meaning pleaded.

The plaintiffs, as they were entitled to do, chose to set out in their statement of claim the particular defamatory meaning which they contended was the natural and ordinary meaning of the words. Where this manner of pleading is adopted, the defamatory meaning so averred is treated at the trial as the most injurious meaning which the words are capable of bearing, and the plaintiff is, in effect, estopped from contending that the words do bear a more injurious meaning and claiming damages on that basis. But the averment does not of itself prevent the plaintiff from contending at the trial that even if the words do not bear the defamatory meaning alleged in the statement of claim to be the natural and ordinary meaning of the words, they nevertheless bear some other meaning less injurious to the plaintiff's reputation but still defamatory of him, nor does it relieve the adjudicator of the duty of determining what is the right natural and ordinary meaning of the words, though nice questions may arise as to whether one meaning is more or less injurious than another.

23 In Sungravure Pty Ltd v Middle East Airlines Airliban SAL [1975] HCA 6; (1975) 134 CLR 1, 14, Stephen J attempted to draw these conflicting dicta together. He said:

Having pleaded this innuendo the plaintiff was bound by it, and by such others as he also relied upon, and was not free thereafter to rely upon some quite different meaning which he might seek to read into the words complained of - Slim v Daily Telegraph Ltd ... per Salmon LJ - at least not one more injurious to the plaintiff - per Diplock LJ ...

24 These, and other, cases were reviewed by King CJ (with whom Millhouse and Prior JJ agreed) in Prichard v Krantz (1984) 37 SASR 379. King CJ went on to say, in a passage that has many times since been quoted (386):

A plaintiff would not, of course, be confined to a precise nuance and shade of meaning pleaded or particularised. Modern judges, in any class of case, have a considerable discretion as to the rigour with which they will confined a case presented by the party to the precise language of the pleadings. In many cases, moreover, the more serious allegation can be regarded as including the less serious. In that sense, the court is free to attribute to the words a less injurious meaning than that attributed to them in the pleading. An allegation that the words used mean that the plaintiff is a rapist no doubt includes a meaning that he has been guilty of a less serious type of sexual assault. An allegation that the words mean that a person is a robber no doubt includes a meaning that he has taken property by criminally dishonest means falling short of robbery. It seems to me, however, that it would be contrary to the purpose of pleadings and particulars if a plaintiff could obtain a judgment upon the basis of a meaning of the words used which was not merely a less serious form of the imputation pleaded, but amounted to an imputation of a substantially a different kind.

25 These cases were considered by the High Court in Chakravarti. I have already set out the approaches adopted, respectively, by the majority and the minority in that case, and will not do so again. I have also referred to what was said by each of Ormiston and Charles JJA in Hore-Lacy concerning Chakravarti.

26 In Moodie [9], Anderson J derived from the judgments in Chakravarti the proposition that 'a defamation case will not be permitted to go to the jury, or to judgment, on an alternative meaning which is substantially different from or more serious than the false innuendos pleaded in the statement of claim'. That, essentially, was the position adopted by Ormiston JA in Hore-Lacy. In Moodie, neither McLure JA nor I found it necessary to determine whether this accurately reflected the applicable test as, even if the test adopted by Ormiston JA was that which should be applied, the imputations pleaded in Moodie satisfied that test. However, as I have mentioned, in Moodie McLure JA [88] reiterated the opinion, previously expressed by her in Vitale v Bednall [2001] WASC 278, that it was arguable that Ormiston JA's formulation was unduly narrow having regard to the reasons of the majority in Chakravarti and the decision of the Full Court in Gumina (No 2).

27 In The Herald & Weekly Times Ltd v Popovic [2003] VSCA 161; (2003) 9 VR 1 [20], Winneke ACJ applied what had been said by Charles JA in Hore-Lacy [63] (which he took to have been agreed with by Ormiston JA [23]) as follows:

The position then remains that at trial, neither the plaintiff nor the defendants should be permitted to raise (nor should the defendants be permitted to justify) a meaning substantially different from, or more injurious than, the meanings alleged by the plaintiff.

Gillard AJA expressed the position more generally, saying [329]:

In considering and determining whether the defence has been established, the defendants must be confined to proving the meanings as pleaded or a variation which does not alter the substance of the defamatory sting.

Warren AJA (as she then was) agreed, relevantly, with Gillard AJA.

28 In Manock, Doyle CJ [70] (with whom Vanstone and White JJ agreed), after reviewing Hore-Lacy, Robinson v Laws [2001] QCA 122; [2003] 1 Qd R 81 (in which the Court of Appeal of the Supreme Court of Queensland held that the Polly Peck defence could not be pleaded in that state) and Moodie, formed the opinion (mentioned earlier in these reasons) that those decisions indicated 'substantial' (although not complete) support for the propositions formulated by Charles JA in Hore-Lacy at [53] - [54] (quoted earlier in these reasons). He said also [71] that the propositions formulated by Charles JA, to the extent that they dealt with the ability of a plaintiff to rely on a meaning other than that pleaded, appeared to him to be consistent with what was said by all members of the High Court on that point in Chakravarti. He referred, in that respect, in particular, to [52] of Charles JA's reasons, which read as follows:

[I]t would seem that all members of the court in Chakravarti would take the view that a plaintiff could, after pleading specific meanings by way of false innuendo, succeed at trial on a meaning other than the meanings pleaded, provided that the meaning was not substantially different from and was not more injurious than the meanings pleaded, and that the defendant was not in all the circumstances unfairly prejudiced by allowing that meaning to go to the jury. Whether the meaning was substantially different would presumably be tested by asking whether the defendant would have been entitled to plead a different issue, adduce different evidence or conduct the case on a different basis (Brennan CJ and McHugh J in Chakravarti at [19]) or possibly whether the justification would be substantially different (Gaudron and Gummow JJ at [53]). If, on the other hand, the plaintiff sought at trial to establish a substantially different or more injurious meaning, his action would fail unless the judge permitted him to reformulate his case with the usual consequences as to adjournment and costs.

However, Doyle CJ went on ([72], [76] - [77]) to make the comments set out earlier in these reasons (which I will not repeat).

29 In Channel Seven Adelaide Pty Ltd v Manock [2007] HCA 60; (2007) 82 ALJR 303 the High Court, although dealing with a defence of fair comment, touched upon the permitted extent of departure from imputations pleaded by the plaintiff, albeit in general terms. Gummow, Hayne & Heydon JJ said [83]:

The plaintiff pleaded in par 5 of the statement of claim only one meaning - that the plaintiff had deliberately concealed evidence. The defendant denied that the [words complained of] bore that meaning. If the plaintiff were to fail to establish that the [words] bore that meaning or a meaning not substantially different, the trial judge would not have to go further and the proceedings would be dismissed.

30 Finally, in this respect, in Hore-Lacy v Cleary [2007] VSCA 314, Ashley JA (with whom Neave & Redlich JJA agreed) said [27] that, in Victoria, although a plaintiff sues on the publication, the plaintiff is in general bound by the meanings attributed to it, subject to the right of the tribunal of fact to find a defamatory meaning which is a permissible variation of the pleaded meanings. He went on to say:

A permissible variation is correlative with the limits on the operation of a Polly Peck ... justification defence. It may be regarded as the other side of the coin. According to the majority judgments in David Syme & Co Ltd v Hore-Lacy ... for a Polly Peck defence to be available it must plead a meaning not more serious and not substantially different from the meaning pleaded by the plaintiffs.

31 This review of the cases suggests that there is general, although not universal, support for the proposition that a plaintiff who has pleaded specific meanings by way of false innuendo may only succeed at trial on some other meaning if it is not substantially different from and not more injurious than the meanings pleaded. If that is correct then, as Charles JA pointed out in Hore-Lacy [52], the issue of whether the meaning was substantially different might be tested by asking whether the defendant would have been entitled to plead a different issue, adduce different evidence or conduct the case on a different basis or, possibly, whether the justification would be substantially different. If the Polly Peck imputation pleaded by the defendant is one that would have satisfied the test enunciated, had it been pleaded by the plaintiff, it will be allowed. If it would not have satisfied that test, it will not be allowed: Buckeridge [20]. At least in the absence of further authority, that is the approach that should, in my opinion, be followed by the present two-judge court.

Question (2) - Does the appellant's plea in par 6.3 of the defence satisfy this test?

32 Gumina (No 2) provides a convenient starting point in answering question (2). In that case, the plaintiff pleaded a number of false innuendos which, he said, arose out of an article published about him. These included imputations to the effect that he had a senior role in illegal trafficking in heroin in Perth. The defendants denied that the article carried the imputations contended for. They pleaded, in the alternative, that the only defamatory imputations which arose from the article were that:

(i) the plaintiff is suspected by senior detectives of the CIB of Western Australia of long-term complicity in organised heroin trafficking in Western Australia;

...

(iv) the plaintiff is suspected by senior detectives of the CIB of Western Australia to be a 'lieutenant' to one of Melbourne's leading heroin dealers within an organised crime structure operating in Western Australia ...

which imputations are true.

Seaman J, who wrote the lead judgment, was prepared to accept that the pleaded meanings were capable of arising from the article and, implicitly, that, if they disclosed an arguable defence, they could be relied upon by the defendant. However, because he regarded a statement of suspicion, without more, as disclosing no reasonable defence (371), he was satisfied that the defendant's imputations should be struck out. Malcolm CJ agreed with Seaman J's analysis (354), as did Pidgeon J (356).

33 The reasoning of the High Court in Chakravarti is also important in this respect. In that case, the plaintiff had sued on two separate articles published in The Advertiser newspaper. He pleaded, in his statement of claim, that the first article gave rise to two meanings. The first was that he was involved in criminal and civil misconduct, while an executive of Beneficial Finance Corporation Ltd, in respect of loans from Beneficial Finance to himself. The defendant pleaded that, if the first article was defamatory of the plaintiff, it meant only that he was suspected of being involved in criminal or civil misconduct in respect of the loans. The plaintiff filed a reply. In it, he denied that the article gave rise to the imputation pleaded by the defendant and said, in the alternative, that, if it did, it 'carried the further imputation that the suspicion was well-founded'. The trial judge identified a number of imputations which, he found, arose from the first article. The first of these imputations was, in part, that the plaintiff's conduct 'raised a matter of such gravity as to raise a question of criminal or civil misconduct'.

34 In the ensuing appeal to the Full Court of the South Australian Supreme Court, Doyle CJ, in dissent, held (542) that the first imputation found was within the scope of the meaning pleaded by the plaintiff, notwithstanding that it raised 'a lesser imputation than that which the plaintiff pleaded'. He categorised the first imputation found as one which imputed a question or suspicion of criminal or civil misconduct. He said that, consistently with Prichard v Krantz, such an imputation might be treated as embraced by the plaintiff's pleading. He saw no distinction between the imputations pleaded by the plaintiff in his statement of claim and in his reply.

35 The majority in the Full Court (Perry & Williams JJ) found that the first article did not bear the meaning pleaded by the plaintiff in his amended statement of claim. Perry J went on to find that the first imputation found could also not be relied upon by the plaintiff. He said, in this last respect (556):

While it is true that there are cases where a meaning not pleaded but which is of the same kind but less injurious than the pleaded meaning may properly be found in favour of a plaintiff, that course should not be followed where to do so would be unfair to the defendant. In my opinion, an allegation that the respondent was actually involved in criminal or civil misconduct is so different from an allegation of mere suspicion that it would be unfair to the appellant to find for the respondent on such a basis.

It is true that the appellant pleaded in its defence that the words meant and were understood to mean only a suspicion of criminal or civil misconduct, but the respondent was not entitled to rely on an allegation in the defence as an alternative basis on which to assert a basis of liability not asserted in his own pleading. Indeed, the respondent in his reply joined issue with the assertion that the meaning was restricted to suspicion only of criminal and civil misconduct, and asserted that the article 'carried the further imputation that the suspicion was well founded'. The respondent cannot be permitted to eschew the meaning suggested by the appellant but then be permitted to recover on the basis of that meaning, when the only meaning which he asserts in his own pleading is not made out. On the other hand, if the respondent had accepted the more limited meaning suggested by the appellant, and made it part of his case against the appellant, the course of the trial may well have been radically different.

36 Williams J also concluded that it was not open to the plaintiff to rely upon an imputation of suspicion. He said (559):

In the absence of any alternative primary allegation by the plaintiff asserting an imputation of suspicion, I do not think that the defendant was required to consider how it might extend its pleading or its evidence to deal with such a situation. In some circumstances an allegation of suspicion of guilt could be treated as a 'lesser' allegation within Prichard v Krantz (1989) 37 SASR 379. However, having regard to the way in which issue was joined in this case, I would not be prepared to accommodate the plaintiff in this respect.

37 In respect of the second article discussed in Chakravarti, the plaintiff had pleaded a number of imputations which, he said, arose on the natural and ordinary meaning of the words used. The first of these was that he 'had engaged in criminal conduct in connection with the loan or loans made to him'. Once again, the defendant pleaded a lesser imputation that the plaintiff was suspected of having engaged in criminal conduct in connection with a loan or loans made to him and sought to justify it. Doyle CJ found that the pleaded imputation did not arise and that the article did no more than impute a suspicion of criminal conduct in connection with loans (549). He found that 'this lesser imputation is within the scope of the plaintiff's pleading'. However, he found that the article was a fair and accurate report in relation to that imputation (550).

38 Williams J was content to agree, for the reasons given by Doyle CJ, that the plaintiff's claim based on the first imputation failed (presumably, although he did not say so, only because the article amounted to a fair and accurate report). Williams J considered (561) that the newspaper article asserted 'only suspicion whereas the ambit of [the imputation pleaded by the plaintiff] is confined to guilt'. He said that the plaintiff was consequently not entitled to rely upon the lesser imputation. He found, in any event, that the article provided a fair and accurate report in that respect (561).

39 When the matter came before the High Court, Gaudron & Gummow JJ rejected the conclusion, arrived at by Perry & Williams JJ, that the first article imputed suspicion of misconduct and not actual misconduct [48]. However, as I have mentioned, they nevertheless considered the effect of pleading specific meanings of an allegedly defamatory article. In the course of doing so, they said [59]:

... although the majority in the Full Court held that Mr Chakravarti could not rely on the lesser meaning which the Advertiser asserted, namely, that he was suspected of being involved in criminal or civil misconduct, which lesser meaning it sought to justify and defend, there could have been no disadvantage to the Advertiser in allowing him to do so.

I have earlier mentioned that they went on to say [60]:

As a general rule, there will be no disadvantage in allowing a plaintiff to rely on meanings which are comprehended in, or are less injurious than the meaning pleaded in his or her statement of claim. So, too, there will generally be no disadvantage in permitting reliance on a meaning which is simply a variant of the meaning pleaded. On the other hand, there may be disadvantage if a plaintiff is allowed to rely on a substantially different meaning or, even, a meaning which focuses on some different factual basis. Particularly is that so if the defendant has pleaded justification or, as in this case, justification of an alternative meaning. However, the question whether disadvantage will or may result is one to be answered having regard to all the circumstances of the case, including the material which is said to be defamatory and the issues in the trial, and not simply by reference to the pleadings.

40 Although their conclusion in this respect is obiter (see [61]), the two paragraphs that I have quoted nevertheless make it plain that Gaudron & Gummow JJ regarded the lesser meaning to which they referred as being one that was comprehended in, or less injurious than, the meaning pleaded in the statement of claim.

41 So far as the second article was concerned, Gaudron & Gummow JJ said that, because the first of the meanings pleaded by the plaintiff was not conveyed by the article, he could not succeed on that issue [72]. The respondent had not disputed, for the purposes of the appeal, that both articles carried an imputation that the appellant was the subject of a suspicion of guilt of criminal or civil misconduct [129].

42 Kirby J considered that, contrary to the decision of the majority of the Full Court, the imputation pleaded by the plaintiff in respect of the first article, and that found to exist by the primary judge, was available [140]. So far as the second article was concerned, Kirby J referred to the fact that Doyle CJ had found that the first of the pleaded imputations was not conveyed by the article but that the article had imputed a suspicion of criminal conduct and that the lesser imputation was within the scope of the pleading. He said, in that respect, that Doyle CJ was right to find that the first imputation had not been conveyed [143]. Importantly, for present purposes, he went on to say that 'the imputations found were all within the scope of the imputations pleaded' and that each of the pleaded imputations was established [145].

43 The minority (Brennan CJ & McHugh J) did not directly address the issue. They found [25] only that the defendant had suffered no prejudice, embarrassment or unfair disadvantage and that the plaintiff was entitled to a favourable finding on the meanings attributed to the first and second articles by Gaudron & Gummow JJ. However, as McLure JA pointed out in Moodie [91], it seems plain from what they said that, in the absence of a relevant Polly Peck imputation, a plaintiff who pleaded an imputation of guilt could not rely on a lesser imputation of a reasonable suspicion of guilt. However, if the defendant had pleaded a Polly Peck imputation of a reasonable suspicion of guilt, there could be no suggestion of disadvantage.

44 The difference between an imputation of suspicion, on the one hand, and guilt, on the other, has been discussed in a number of other cases.

45 In Corse v Robinson (Unreported, WASCA, Library No 970669, 8 December 1997), the court (Malcolm CJ, Owen & Steytler JJ) said (11), applying Chakravarti in the South Australian Full Court, that an imputation of guilt (in the sense that a person was actually involved in criminal conduct) is 'so different from an allegation of mere suspicion that the latter is not included in the former'.

46 In Gutnick, the plaintiff pleaded four imputations to the effect that the defendant had engaged in identified reprehensible conduct. The defendant asserted that the words complained of gave rise to three lesser imputations to the effect either that the plaintiff was reasonably suspected of having engaged in the conduct in question or that there was reason to investigate whether he had engaged in that conduct. Bongiorno J said, in this respect [8] - [9]:

The defendant's imputations are, in each case, imputations of reasonable suspicion. But the issue raised by the plaintiff's imputations is not whether he was merely suspected of particular arguably reprehensible conduct but rather whether he engaged in that conduct. In Lewis v Daily Telegraph Ltd ([1964] AC 234) Lord Reid expressed himself as being firmly of the view that there is a great difference between saying that someone has behaved in a suspicious manner and saying that he is guilty of an offence (260). Lord Hodson, in the same case, acknowledged that whilst it might be defamatory to say that someone is suspected of an offence, such a statement does not carry with it an allegation that he has committed the offence (275). Simon Brown LJ (with whom Sir Ralph Gibson agreed) in Stern v Piper ([1997] QB 123, 138) accepted that Lewis' case decided that an allegation that someone is suspected of guilt is different to and less serious than an allegation that he is actually guilty. See also Corse v Robertson [sic] ... and Singleton v Hudson ((1998) 20 WAR 191 at 199).

In Shah v Standard Chartered Bank ((1999) QB 241) May LJ summarised the position in a passage directly in point (at 266):

'A publication that a person is guilty of something differs from a publication that there are reasonable grounds to suspect that he is guilty. Each is normally capable of being defamatory. The second will usually be less serious than the first. To justify the first publication, you have to establish that the person is guilty. To justify the second publication, you have to establish that there are objectively reasonable grounds for suspicion'.

He went on to say [12] that the cases to which he had referred made it clear that the imputations pleaded by the defendant were not variants of those pleaded by the plaintiff in the sense in which that term was used in Hore-Lacy and that the two sets of imputations raised quite different cases.

47 In the course of dealing with the reasons of the primary judge, I have mentioned that, in Mickelberg, Hasluck J concluded that an imputation of reasonable grounds to believe that the plaintiffs had committed particular offences was less injurious than, and not substantially different from, an imputation of guilt. He said [58], after referring to a number of the cases:

These cases underline the distinction between a statement imputing guilt with respect to criminal conduct and a statement of mere suspicion. A plea which sets up an imputation of mere suspicion without more is not capable of carrying a defamatory meaning. However, if the statement complained of extended beyond mere suspicion and contained the assertion that the suspicion was held on reasonable grounds which themselves objectively lead to a conclusion that the person charged is probably guilty of the crime charged, then it could be regarded as defamatory: Jackson v John Fairfax & Sons Ltd [1981] 1 NSWLR 36, 43.

He went on to refer to Hyams v Peterson [1991] 3 NZLR 648, in which Cooke P observed (655) that cases such as Lewis v Daily Telegraph Ltd [1964] AC 234 and Mirror Newspapers Ltd v Harrison [1982] HCA 50; (1982) 149 CLR 293 'recognised that for practical purposes there can be an imputation of suspicion so strong as to be indistinguishable from guilt; it must always be a question of fact how far the defamatory meaning goes' [61]. Hasluck J considered that it was open to a defendant to plead that 'there are reasonable grounds to believe that a person did an act' and said that a formulation of that kind was 'more than an assertion of suspicion and ... capable of injuring the reputation of the person affected' and that it was 'a question of a fact as to how far the defamatory meanings goes' [70]. He said that the imputation pleaded by the defendant was less injurious than, and not substantially different from, that contended for by the plaintiffs [73].

48 In Cleary, the plaintiff pleaded that a book written by the defendant gave rise to imputations that the plaintiff had engaged in discreditable conduct. The defendant raised a defence of fair comment. He pleaded that the book had, relevantly, made only comments to the effect that there was a serious question to be investigated as to whether the plaintiff had engaged in the discreditable conduct referred to and that these comments were fair and accurate. Ashley J considered [42] that there were 'marked differences' between the pleaded imputations and the substance of the alleged comments. He went on to say [49]:

First, whilst it is true, and favours the respondents' position, that a comment that there is a serious question to be investigated whether A acted in a particular way is less serious than an imputation that A did act in that way, I consider - assuming in the respondents' favour that the conduct the subject of the imputation and of the comment is one and the same - that there is nonetheless a great difference in the meanings pleaded by the appellant and the substance of the alleged comment at its closest point to such meanings.

Ashley JA also relied upon Gutnick (No 4), saying [54] that it demonstrated 'the gulf between an imputation that a man acted in a criminal or like manner, and a comment (put at its highest) that there is a serious question for investigation whether he acted in such a way'. I have mentioned that Neave & Redlich JJA agreed with Ashley JA.

49 There can be no doubt that an imputation that a person has engaged in criminal or reprehensible conduct is different from one that there are reasonable grounds for suspecting that the plaintiff has engaged in such conduct. The distinction between suspicion and guilt is obvious and important. However, an imputation of guilt will always be more serious than one of suspicion on reasonable grounds. Also, ordinarily, a plea of justification of an imputation that there are reasonable grounds for suspicion that a plaintiff engaged in criminal or reprehensible conduct will require proof of the same published facts as are said by the plaintiff to give rise, in the context of the publication, to an imputation that he or she has engaged in that conduct. It is only the conclusion to be drawn from those facts (in the context of the publication) that is different and, even then, the difference will be one of degree, depending upon the strength of the imputation of suspicion to which the publication is said to give rise. In that circumstance, and given my understanding of what was said by the majority in Chakravarti (High Court) and by the court in Gumina (No 2), it seems to me that this court should continue to follow what was said in those cases until further guidance is provided by the High Court. I should add that Robinson, which dealt with a plea of 'mere suspicion', and which applied the judgment of the majority of the South Australian Full Court in Chakravarti, was decided before that judgment had been overturned by the High Court.

50 It follows that, unless question (3) is answered in favour of the respondent, the decision of the primary judge to strike out par 6.3 of the appellant's defence cannot stand.

51 Counsel for the appellant contends, in reliance upon a line of authority encompassing Barclay v Cox [1968] VicRp 87; [1968] VR 664, that it is not open to a plaintiff to disclaim an imputation that might properly be found to arise from an allegedly defamatory article. He submits that it is always open to the finder of fact, at least in a jury trial, to decide whether or not a particular publication is defamatory and that it cannot be constrained in its task by a disclaimer of the kind made by the respondent (who, as I have said, disclaims any reliance upon the imputation pleaded in par 6.3 of the defence).

52 In Barclay, the trial judge had submitted a series of questions to the jury concerning an allegedly defamatory publication. The first was whether they were satisfied that the words complained of had the meanings imputed to them by the plaintiff. The second was whether, if the answer to question (1) was yes, any of the meanings found was defamatory of the plaintiff. The court (Winneke CJ, Pape & Adam JJ) held that the second question should not have been asked and that, in a case in which the plaintiff had pleaded the meanings which he alleged ordinary persons would infer from the words used, the jury should have been asked only whether the words, in their natural and ordinary meaning, were defamatory of the plaintiff. In the course of referring to the second question, they said (666):

To ask such a question tends to concentrate the jury's attention unduly on the several meanings pleaded in the abstract and to distract them from their main task of reading the alleged libel as a whole and saying whether an ordinary fair-minded reader would understand it as being defamatory of the plaintiff.

53 In National Mutual Life Association of Australasia Ltd v GTV Corporation Pty Ltd [1989] VicRp 66; [1989] VR 747, the Victorian Full Court (Fullagar, Hampel & McDonald JJ) said that the practice of pleading 'false innuendos' in a libel action 'did not, and ... could not, alter the position at law that the meaning of the words was ultimately a question for the jury, and that the jury must be at large in finding the true meaning amongst such possible meanings as were left to them by the judge, and that the judge was not bound to confine the jury to the false innuendos asserted by the plaintiff' (768). They also said (770), in the course of referring to what had been said by the primary judge:

His Honour added, immediately and correctly, that 'of course it will be for the jury to decide eventually what is the "natural and ordinary" meaning of the words ... used by the ... defendants'. He was certainly not bound or obliged to adopt the meanings alleged by either party, any more than the trial judge will be.

54 The passage that I have quoted from the judgment of the Victorian Full Court in Barclay was quoted with approval by Seaman J in Gumina (No 2) (364). In that case, Seaman J described the primary submission of counsel for the plaintiff as follows (356 - 357):

The primary submission ... was that the plaintiff by his pleading can select the meanings upon which the action will be fought. He will then succeed or fail upon them. Therefore, a plea of justification by the defendants which goes to meanings other than those selected by the plaintiff is irrelevant and should be struck out as disclosing no defence.

He submitted that ... the defendants were trying to shift the focus of the trial away from the real sting of libel, which concerns the plaintiff's conduct, to a wholly different inquiry about the suspicions of senior CIB detectives.

This submission was expressly rejected by Seaman J (with whom Pidgeon J agreed). He said (364), after an analysis of the cases, that he did not accept that a plaintiff 'may confine the issues in the action by his selection of the meanings which he pleads so as to prevent the defendant pleading other meanings and justifying them'.

55 In Chakravarti (High Court), Kirby J agreed [139.3] with what had been said in National Mutual in the extract which I have quoted from the judgment in that case. Similarly, in Hore-Lacy, Ormiston J, citing National Mutual, accepted [2] that neither judge nor jury are confined to the meanings asserted by the parties. He went on to say [8]:

As to the extent to which the jury (or the judge) is at large as to the possible meanings to be placed upon the publication relied upon by the plaintiff, it would seem that Kirby J would take the widest view (at 578 - 581 [139]), which was thought in this state to be the conventional view, at least since Barclay v Cox ... namely that stated by the Full Court in National Mutual ... to the effect that 'the meaning of the words [is] ultimately a question for the jury, and that the jury must be at large in finding the true meaning amongst such possible meanings as [are] left to them by the judge, and that the judge [is] not bound to confine the jury to the false innuendoes asserted by the plaintiff': cited with approval by Kirby J in his proposition 3 (at [139]).

However, he added the following comment (also [8]):

Likewise, as I would understand it, this does not mean that his Honour does not think that fair notice of the meanings proposed to be asserted by the plaintiff ought to be given, for elsewhere he clearly does, but on this preliminary issue he is clearly against 'strictly confining a plaintiff to the pleaded imputations' for that would 'run the risk that the alleged wrong was forgotten or overlooked'.

56 Comments such as these (see also Popovic [308], [314] (Gillard AJA)) must, of course, be understood in their context. Historically, it has always been the defamatory nature of the publication that gave rise to the cause of action: Barclay (666); Hore-Lacy [16]. The practice of pleading false innuendos arose only around the time of Lewis, when it was said to be permissible (and desirable in cases in which the defamatory meaning was not obvious) to do so: Hore-Lacy [38] (Charles JA). The practice that subsequently continued (and developed) was based upon principles of fairness. In National Mutual, the court said (768) that the profession and the bench grew to approve of the practice as 'useful in informing the judge - and perhaps the defendant - of the real complaint of the plaintiff, especially in a case in which no precise defamatory meaning was immediately apparent'. The court added (768) that defendants were to be saved from 'trial by ambush'. In Chakravarti (High Court), Gaudron & Gummow JJ said [56] that, in the authorities touching upon this topic (including National Mutual), 'there has been a tendency to translate into rules what are best seen as considerations going to fair and efficient practice'. No doubt, it was for that reason that they considered that 'disadvantage' is a limiting factor concerning reliance by a plaintiff on meanings that are not pleaded (see [60] of their reasons). They went on to make the comments that I have quoted in [60] of their reasons. I have earlier set out what was said by Kirby J in Chakravarti in this respect at [139.4].

57 It is consequently plain that a plaintiff is still permitted to depart from the meanings pleaded. However, only a limited departure is permitted. Just as fairness has led the courts to continue to allow departure from the meaning pleaded by the plaintiff so, too, has fairness led the courts to hold a plaintiff substantially to the imputations pleaded: Chakravarti [24] (Brennan CJ & McHugh J), [60] (Gaudron & Gummow JJ). There is no doubt that, if two entirely separate and distinct defamatory imputations arise from a publication, and the plaintiff chose to plead only one of them, the plaintiff would not be permitted to rely on, and the defendant would not be entitled to justify, the other. That is plain from the cases to which I have referred, including Chakravarti in the High Court. That raises the question why the position should be different in a case in which the plaintiff would have been able to rely upon an imputation that differs from that pleaded but which is open to the finder of fact, but chooses to disclaim any reliance upon that imputation.

58 Counsel for the appellant suggested that there were two reasons why the position should be different in such a case. The first was that a jury could not be trusted to exclude the disclaimed imputation from their consideration. The second was that the defence would be weakened if the defendant was able to do no more than deny that the imputations pleaded by the plaintiff arose from the publication.

59 I am unable to accept that there is substance to the first 'disadvantage'. There is no reason to assume that a jury will not follow the trial judge's directions. That has long been accepted in the criminal jurisdiction. The position should not be any different in a defamation case. However, the second 'disadvantage' raises greater difficulty.

60 There is no doubt that evidence properly before the court on an unsuccessful, but bona fide, plea of justification may be taken into account in mitigation of damages: Pamplin v Express Newspapers Ltd (No 2) (1988) 1 WLR 116, 120; Chakravarti (Full Court) 552; Popovic [306 (iii)], [346] (Gillard AJA). The position is a good deal less clear whether evidence that might have gone some way towards establishing justification would be admissible absent a bona fide plea of justification. For example, where the evidence establishes that there are reasonable grounds for suspecting that the plaintiff had engaged in specific acts of misconduct and the plaintiff has pleaded only an imputation that he has been guilty of that misconduct, the evidence would, traditionally, not have been admissible if led only as evidence of bad general reputation in the relevant area or sector of the plaintiff's reputation. Evidence of general reputation may not relate to specific acts of misconduct: Scott v Sampson (1882) 8 QBD 491, 503; Plato Films Ltd v Speidel [1961] AC 1090, 1138 - 1140; Chappell v Mirror Newspapers (1984) A Tort Rep 68,942, 68,952 - 68,953; Pamplin 119. However, the law shifted direction in that respect with the decision of the Court of Appeal in Burstein v Times Newspapers Ltd [2000] EWCA Civ 338; (2001) 1 WLR 579.

61 In that case May LJ (with whom Sir Christopher Slade and Aldous LJ agreed) said [47] that it is open to a defendant to accept that there is no proper plea of justification but to seek to rely in reduction of damages on particulars which Scott v Sampson and Speidel v Plato Films Ltd do not exclude. He said that, if this were not so, there is a danger that the jury would be required to assess damages in ignorance of background context that was directly relevant to the damage which the plaintiff claimed had been caused by the defamatory publication. He went on to say [47]:

Thus, in my view, a defendant is not prevented from taking the sensible course of accepting that the publication means what it says and that it is not on the facts justified, and yet putting in evidence directly relevant facts which in other circumstances might have been ingredients of a defence of justification. It would, I think, be illogical and unfair if this were not so. Evidence in support of a plea of justification which fails is admissible in reduction of damages. But the very same evidence would not be admissible to a sensible defendant who acknowledges that it will not support a plea of justification. What is not permissible is to plead a defence of partial justification which in truth is no defence at all.

62 This passage has been applied in New South Wales in Australian Broadcasting Corporation v McBride [2001] NSWCA 322; (2001) 53 NSWLR 430 [14] (Ipp AJA, with whom Beazley JA agreed; and see also Fitzgerald AJA [86]). Since then, in Turner v News Group Newspapers Ltd [2006] EWCA Civ 540; (2006) 1 WLR 3469, Keene LJ (with whom Pill LJ agreed) said [50]:

My analysis of ... authority leads me to conclude that the principle in Scott v Sampson ... has never been absolute; [but] one of the major exceptions to it, before and since that case, has been in respect of evidence of particular acts of misconduct by the claimant put before the jury in support of a plea of justification or fair comment which has then failed; and that insofar as a rational basis can be found for that major exception, it would seem to lie in the direct relevance such evidence is likely to have to the subject matter of the defamatory words. The problem which arose in Burstein's case was that such evidence never got before the jury, because the trial judge struck out the pleaded defence of fair comment before evidence had been called, unlike the situation in Pamplin's case ... This court was understandably not enamoured of the situation where the question of what evidence could be taken into account in mitigation of damages depended upon a matter of procedure. I share that view. It does not make sense for the jury to consider damages in an evidential vacuum in cases where a defence has been struck out before the calling of evidence, when directly relevant background evidence is regularly allowed to be taken into account on damages in cases where it relates to a defence subsequently struck out by the judge or rejected by the jury. Certainly one would wish to identify some underlying principle which would apply in cases where such evidence was not otherwise before the jury, and that, it appears to me, is what this court did in Burstein's case.

63 The scope of the decision in Burstein is to some extent uncertain and its application may be difficult in particular cases: see, for example, Birchwood Homes v Robertson (2003) EWHC 293 (QB) and see, generally in this respect, Milmo P and Rogers WVH (eds), Gatley on Libel and Slander (10th ed, 2004) [27.25, notes 2 and 3] and [33.43], and Kenyon A, Defamation: Comparative Law and Practice (2006) 350. However, in Turner, Keane LJ said, in this respect [56]:

I accept the point made in argument that it is somewhat repetitive to use the words 'background' and 'context' in the phrase 'directly relevant background context', but that in itself does not produce obscurity. It is in any event inevitable that cases will occur where it is not easy to determine whether the test in Burstein's case is met or not. That does not mean that the test is an inappropriate one, any more than is that propounded in Scott v Sampson; as Viscount Simmonds recognised in Speidel's case, the line between evidence of general bad reputation and evidence of specific conduct giving rise to such a reputation is not easy to draw. What constitutes the directly relevant background will vary from case to case, but I would myself accept the need for the courts to proceed ... with some caution in applying Burstein's case, given that it represents a modification of the long-standing rule in Scott v Sampson. As Eady J put it in Polanski v Condé Nast Publications Ltd (Unreported, 21 October 2003), one should guard against extending too creatively the concept of 'directly relevant background'. The Court of Appeal in Burstein's case was concerned to avoid jurors having to assess damages while wearing blinkers. If evidence is to qualify under the principles spelt out in Burstein's case, it has to be evidence which is so clearly relevant to the subject matter of the libel or to the claimant's reputation or sensitivity in that part of his life that there would be a real risk of the jury assessing damages on a false basis if they were kept in ignorance of the facts to which the evidence relates.

64 It is consequently arguable, in the present case, that, if the defence pleaded in par 6.3 should be struck out, the defendant would anyway be permitted to lead the evidence it would otherwise have advanced in support of that plea as evidence of 'directly relevant background context'. However, if the defendant is unable to do so (and the point cannot be determined at this stage as it has not been fully addressed in the submissions of the parties), it seems to me that there is much to be said for the proposition that it would be wrong, as a matter of principle, to allow the plaintiff, by disclaiming an imputation that might otherwise be fairly thought to arise from the offending publication and to fall within the ambit of a permissible Polly Peck defence, to deny to the defendant the very real advantage of having proof of the lesser imputation mitigate the damages awarded (if the greater imputation is made out).

65 In all of the circumstances, it seems to me that it would not be appropriate for a two-judge court, on an interlocutory appeal, to depart from the judgment of the Full Court in Gumina No 2. Moreover, it seems to me that that decision cannot be said to be plainly wrong, on the existing state of authority: Craig v Troy (1997) 16 WAR 96, 162 (Malcolm CJ, Wallwork J concurring); Traegar v Pires de Albuquerque (1997) 18 WAR 432, 447; Re Calder; Ex parte Cable Sands (WA) Pty Ltd (1998) 20 WAR 343, 354.

66 I should add, before leaving this issue, that neither counsel was able to refer us to any case directly on point. Although there was a disclaimer in Cleary, Ashley JA, while noting it, did not rely upon it (fn 36 of [48]). It was unnecessary for him to do so.

67 It follows, in my respectful opinion that grounds 1 and 2 have been made out.

68 Grounds 3 and 4 raise the question whether there is any relevant distinction between an imputation that there are reasonable grounds to 'believe' that a plaintiff is guilty of particular conduct, on the one hand, and one that there are reasonable grounds to 'suspect' that a plaintiff is guilty of that conduct, on the other, and whether the primary judge erred in his approach to that question.

69 I have mentioned that the primary judge said, in this respect [53], that there seemed to him to be a significant difference between an imputation of reasonable grounds to believe that a plaintiff is guilty and one of reasonable grounds to suspect that a plaintiff is guilty. He said that, even if the former is not substantially different to an imputation of guilt, the latter clearly is. He went on to say in any event that, to the extent that there might be similarities between the imputations pleaded by the defendant in the present case and those in Mickelberg, he would take a different view from that reached by Hasluck J.

70 As Cooke P observed in Hyams (655), cases such as Lewis and Mirror Newspapers recognise that for practical purposes there can be an imputation of suspicion so strong as to be indistinguishable from guilt and that it must always be a question of fact how far the defamatory meaning

goes. So, in Chakravarti (South Australian Full Court), Doyle CJ could see no difference (rightly, in my respectful opinion) between an imputation of guilt, on the one hand, and one of well-founded suspicion, on the other (541). It seems to me that there is a difference between 'reasonable grounds to believe', on the one hand, and reasonable grounds for suspicion, on the other, with the former being even closer to an imputation of guilt than the latter. However, nothing turns on that difference in this case. There is no pleaded imputation that there were reasonable grounds to believe anything. The only plea is one of reasonable grounds for suspicion and, for the reasons I have given, that plea is competent.

71 I would accordingly grant an extension of time, give leave to appeal and allow the appeal. I am satisfied that, if leave was not to be given, the appellant would suffer substantial injustice arising out of the fact that there is at least some prospect that it would, as a consequence, be denied the opportunity of adducing evidence in satisfaction of damages: The State of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40; Wilson v Metaxas [1989] WAR 285. I would set aside the orders made by the primary judge and re-instate par 6.3 of the defence. I would hear further from the parties on the issue of costs.

72 McLURE JA: I agree with the orders proposed by the President for the reasons he gives. However, I propose to make some additional comments.

73 I agree that the imputation pleaded by the appellant/defendant (defendant) is within the scope of a permissible Polly Peck defence (Polly Peck (Holdings) Plc v Trelford [1986] QB 1000). It appears from the cases cited in the President's judgment that the balance of Australian authority favours a negative test of the scope of the defence which is in terms that a defendant cannot plead and justify a meaning substantially different from, or more injurious than, the meanings alleged by the plaintiff. However, the cases also demonstrate that the test is inconsistently applied with inconsistent outcomes. It is for that reason I propose to explain why I have concluded that the defendant's imputation is not substantially different from the plaintiff's (respondent) imputations in par 4.1 to 4.3 of his statement of claim. The substance of the plaintiff's imputations is that he was guilty of the offence of insider trading. The defendant's Polly Peck imputation is that there were reasonable grounds to suspect that the plaintiff was guilty of insider trading.

74 I start with unchallenged propositions. First, a Polly Peck defence is available in this jurisdiction. Second, the scope of the defence is delineated by the extent to which a plaintiff can depart from his or her pleaded imputations. Third, a Polly Peck defence has never extended to separate and distinct statements in the words complained of. This limitation has no relevance in this case.

75 A Polly Peck defence would be otiose if it only applied to imputations which, if justified, would establish the truth of the substance or sting of the plaintiff's pleaded imputations. In such a case a defendant would simply justify the plaintiff's imputations. This is consistent with the technical rules for pleading imputations which require that separate imputations be pleaded if different evidence is required to justify the meaning: Chakravarti v Advertiser Newspapers Ltd (1998) 193 CLR 519, 543; Lewis v Daily Telegraph Ltd [1964] AC 234, 282. It necessarily follows that a Polly Peck defence of its nature must permit a defendant to plead and justify an imputation which is different from the imputations pleaded by the plaintiff in the sense that different evidence would be required to justify it.

76 The extent to which a plaintiff is permitted to depart from his pleaded imputations is subject to, albeit not solely determined by, considerations of fairness. The availability of a Polly Peck defence is a relevant factor when considering fairness. This is reflected in all the judgments of the High Court in Chakravarti. Brennan CJ and McHugh J who were in the minority concluded that a Polly Peck defence was not available to a defendant in defamation proceedings. This has the effect of significantly narrowing, on fairness grounds, the potential for a plaintiff to depart from the pleaded imputations. The minority said [19]:

A plaintiff who pleads a false innuendo thereby confines the meanings relied on. The plaintiff cannot then seek a verdict on a different meaning which so alters the substance of the meaning pleaded that the defendant would have been entitled to plead a different issue, to adduce different evidence or to conduct the case on a different basis.

77 In a case such as the present, the minority would not permit the plaintiff to rely on an imputation that there were reasonable grounds to suspect that he was guilty of insider trading because the defendant would have pleaded justification to that imputation.

78 However, the majority in Chakravarti and the Full Court in Gumina v Williams (No 2) (1990) 3 WAR 351 accepted that a Polly Peck defence is a good defence in defamation proceedings. Further, for the reasons I give in Vitale v Bednall [2001] WASC 278, and Nationwide News Pty Ltd v Moodie [2003] WASCA 273; (2003) 28 WAR 314, the plaintiff in that case would be permitted to rely on an imputation of reasonable grounds for suspicion and the defendant's imputation would be within the permissible scope of a Polly Peck defence. That is because (as explained below) the defendant's imputation is both comprehended within and less serious than the plaintiff's pleaded imputations and there is no fairness objection. I would on that basis characterise the defendant's imputation as not having a meaning that is substantially different from or more injurious than the meanings alleged by the plaintiff. Moreover, the cases to which the President refers in dealing with question 3 are consistent with the majority in Chakravarti and the Full Court in Gumina (No 2).

79 Further, I agree with the President that it is not open to a plaintiff to disclaim an imputation that might properly be the subject of a Polly Peck defence. The Polly Peck defence may be regarded as an important factor in achieving an appropriate balance between the competing public interests of protection of the reputation of individuals and the protection of freedom of speech. The facts of this case provide an example. The plaintiff relies on the statements in the article complained of as giving rise to an imputation that he was guilty of insider trading. Having regard to the defendant's particulars in support of its Polly Peck defence, the defendant relies in large measure on the statements in the article to justify the imputation that there were reasonable grounds to suspect that the plaintiff was guilty of insider trading. The plaintiff's case is that the ordinary reasonable reader would draw an inference of guilt from the statements in the article. Yet even if the defendant, upon whom the onus of proving justification lies, proves the truth of the statements in the article, it does not follow that an inference (imputation) that may (not must) be drawn from the words complained of will be the inference of fact drawn from the evidence to prove justification. That is because ordinarily a plaintiff will have to give evidence seeking to rebut the inference otherwise open on the proven facts. The evidence on which the defendant relies for the Polly Peck imputation is not substantially different from that which might be led to justify the plaintiff's imputations. However, because a defendant is not often privy to all relevant information in the possession of a plaintiff and because an unsuccessful defence of justification to the plaintiff's imputation can aggravate the damages, a defendant will, if it is open on the words complained of, plead and justify the less serious imputation. It is acknowledged by the parties that a plaintiff is advantaged and a defendant disadvantaged if the latter is prevented from doing so. The risk of defamation proceedings against a defendant is materially increased if a plaintiff is given unfettered control of the imputations to be determined at trial. Moreover, an unsuccessful Polly Peck defence may be taken into account in mitigation of damage. These provide sound policy reasons for denying a plaintiff unilateral control over all the imputations in contest at trial.