Defamation - Pleadings - Imputations - Imputation of commission of criminal offence - Turns on own facts

Aqua Vital Australia Ltd & Anor v Swan Television and Radio Broadcasters Pty Ltd & Anor, unreported; FCt SCt of WA; Library No 950417; 9 August 1995

Emerson v Walker & Ors [1999] WASC 265

Farquar v Bottom [1980] 2 NSWLR 380

Morosi v Radio Station 2GB [1980] 2 NSWLR 418

Savigne v News Ltd [1932] SASR 240

Smith v Littlemore (1996) 15 WAR 289

1 JUDGMENT OF THE COURT: This is an application for leave to appeal from the decision of a Judge dismissing the applicant's application to strike out the statement of claim or a paragraph of the statement of claim in a defamation action. It also constitutes the substantive hearing of the appeal.

2 The respondent was a member of the State Parliament and a Minister of the Crown having responsibility for the administration of the government department that oversees the regulation of the finance broking industry. The applicant is the publisher of a daily newspaper. One Jim McGinty was an opposition member of State Parliament. On 17 February 2000 McGinty wrote a letter, addressed and delivered to the Commissioner of Police, which is in these terms:

"I wish to complain about the conduct of Doug Shave MLA.

On 15th February 1999 Mr Shave delivered to the West Australian Newspaper a letter in which Mr Shave named Dominic Casella as a person who had made a complaint to the Finance Brokers Supervisory Board.

Mr Shave is the Minister of Fair Trading.

Mr Shave has breached Section 88 of the Finance Brokers Control Act. I believe the only way in which Mr Shave could have known of Mr Casella's identity was by breaching that provision. In any event, by writing the letter, Mr Shave was an accessory after the fact to a serious breach of the legislation he has a duty to uphold."

3 On 18 February 2000 the applicant published an article which was as follows:

"Shave 'broke' secrecy rule.

Police may probe naming of broker complainant.

THE State Opposition has asked Police Commissioner Barry Matthews to order an investigation into a possible breach of the Finance Brokers' Control Act involving Fair Trading Minister Doug Shave.

Labor fair trading spokesman Jim McGinty has complained that despite secrecy provisions in the Act, Mr Shave obtained the name of a man who lodged a complaint with the Finance Brokers' Supervisory Board then revealed the man's identity in a letter to the editor published in The West Australian last week.

Mr Shave's letter referred to an earlier report which revealed the Finance Brokers' Supervisory Board had failed to investigate a complaint made in January last year which indicated that finance broker Blackburne and Dixon got a secret commission valued at $1 million for arranging a $4 million loan in 1993.

The board announced an investigation on February 3, three days after the report was published. Under the secrecy provision of the Finance Brokers Control Act, it is an offence for a registrar, member or officer of the board to divulge information about a person provided to the board.

In a letter to Mr Matthews, Mr McGinty said he believed the only way Mr Shave could have known the identity of the complainant was by breaching the secrecy provision.

'In any event, by writing the letter Mr Shave was an accessory after the fact to a serious breach of the legislation he has a duty to uphold,' the letter said.

A spokeswoman for Mr Matthews said the Commissioner was considering what action to take.

The man named by Mr Shave as the complainant developer Dominic Casella, said he was outraged by the Minister's action.

'Instead of concentrating on why his department did not investigate this complaint when I made it in January last year, he has tried to discredit me,' Mr Casella said.

He said he phoned Mr Shave several times since the letter was published to demand an apology but the Minister had not responded to his calls.

'Mr Shave has been defending the brokers and saying there's nothing wrong, then he's ready to publicly attack someone who tries to blow the whistle,' Mr Casella said.

Mr Shave said he learnt that Mr Casella was the complainant when he was provided with a copy of the complaint by the Ministry of Fair Trading.

He said he was aware of the secrecy provision in the Act and that the information had been provided by the ministry, not a member or officer of the board. The registrar and officers of the board are employed by the ministry.

Mr Shave said the identity of a complainant had no bearing on whether a complaint would be investigated by the board and the ministry."

4 We will refer to the letter of 17 February 2000 as "the Letter" and to the newspaper publication of 18 February 2000 as "the Article". The respondent says that each of the Letter and the Article is defamatory. He issued a writ naming the applicant and McGinty as defendants. In par 4 of the statement of claim the respondent pleaded that in their natural and ordinary meaning, the words of the Letter would be understood by the ordinary reasonable reader to mean that he had committed a criminal offence by breaching the provisions of the Finance Brokers Control Act. In par 7 the respondent pleaded that the words of the Article would be understood to mean that he had committed a criminal offence by breaching the provisions of the Act.

5 The applicant applied to have par 7 of the statement of claim struck out and McGinty made a similar application in relation to par 4. The grounds of attack were that the pleading failed to disclose a reasonable cause of action or that it would prejudice, delay or embarrass the fair trial of the action. The applications came before the trial Judge on 23 June 2000. In Shave v West Australian Newspapers Ltd and Anor [2000] WASC 172 (which we will call "Shave (No 1)") the trial Judge delivered reasons in which he rejected the contentions of the applicant and McGinty that pars 7 and 4 respectively did not disclose a reasonable cause of action or would be embarrassing. However, formal orders were not made at the time because the respondent had foreshadowed some amendments to those paragraphs in any event.

6 On 7 July 2000 the respondent filed a minute of proposed amended statement of claim. The amendment to par 4 was to create two subparagraphs. The existing par 4 was replaced by par 4.1 and reformulated as follows:

"[The respondent] was an accessory after the fact to a breach of the provisions of [the Act] and had thereby committed a criminal offence"

7 Paragraph 4.2 contains an alternative plea that the words of the letter would be understood to mean that the respondent had so conducted himself as to give rise to a suspicion on reasonable grounds that he was an accessory after the fact to a breach of the provisions of the Act and had thereby committed a criminal offence.

8 In par 7.1 the respondent pleads that the words of the Article would be understood to mean that he had committed a criminal offence by breaching the provisions of the Act. In other words, there is no change to the substance of the plea so far as it concerns the applicant. However, a subparagraph has been added, as an alternative plea, as follow;

"7.2 [The respondent] had so conducted himself as to give rise to a suspicion on reasonable grounds that he had committed a criminal offence by breaching the provisions of the Act."

9 The application to strike out and the application to amend came before the same trial Judge on 21 July 2000. In Shave v West Australian Newspapers Ltd and Anor (No 2) [2000] WASC 197 his Honour delivered reasons in which he again rejected the contentions that the statement of claim should be struck out and gave leave to the respondent to amend in accordance with the minute. In Shave (No 2) the trial Judge said, at [2]:

"The circumstances giving rise to the claims and the principles bearing upon a striking-out application in defamation are described fully in my previous judgment in this matter [in Shave (No 1)]. I will not repeat what I said on that occasion other than in summary form. It follows that the reasoning reflected in the earlier judgment should be regarded as forming part of the present reasons for decision. Further submissions have now been made by counsel for the respective parties, but I have not been persuaded to change or modify any of the views I expressed on the previous occasion. I did not make final orders at that time in anticipation that the matter would be brought on for hearing again in due course. Accordingly, the orders to be made upon the handing down of this judgment will constitute the entire range of orders made in response to the various applications before me."

10 In Shave (No 2) the trial Judge expressed his conclusions in this way, at [54]-[55]:

"It follows from my earlier rulings that, in my view, the claims reflected in the plaintiff's minute of amended statement of claim are sufficiently pleaded. It is generally inappropriate to allow leave to amend in terms that are at risk of being struck out later. In this case, however, as it turns out, a dilemma of that kind does not arise. Accordingly, I will allow to the plaintiff leave to amend in terms of the minute of amended statement of claim.

In summary, then, I will make orders dismissing the applications to strike out par 4, par 7, par 12, par 13 and par 14 of the amended statement of claim. I will hear further submissions from the parties as to what programming orders should now be made so that the action can proceed."

11 Paragraphs 12, 13 and 14 relate to the respondent's claim for aggravated and exemplary damages and are not relevant to this application.

12 The order that has been extracted is limited to the dismissal of the application to strike out and it refers to orders made on 4 August 2000, that is, the orders made after the handing down of the reasons in Shave (No 2). There is a procedural difficulty. The application for leave to appeal is phrased as follows:

"[The applicant] have leave to appeal against the decision of [the trial Judge] delivered on 29 June 2000 whereby he dismissed [the applicant's] application to strike out the statement of claim or to strike out paragraph 7 of the statement of claim".

13 The order that was extracted following the appearance before the trial Judge on 23 June 2000 somewhat curiously provides that the applicant's "application to strike out pars 13 and 14 of the statement of claim ... be adjourned until ... [21 July 2000]". It is silent as to the fate of the application concerning par 7. It also provides that "[the respondent] have leave to amend pars 3, 4, 13 and 14 of the statement of claim and make any consequential amendments to be filed and served within 14 days". It, too, is silent as to the proposed amendments to par 7.

14 The procedural difficulty is that, neither on the face of the reasons for decision or the order extracted as at 23 June 2000, is there clearly a "decision" which could properly be the subject of an appeal. The question is whether the "appeal" is against the terms of par 7 in the form in which it appeared before it was amended or whether it encompasses par 7.2 as well. On its face it is the former. At the hearing of the application counsel for the respondent said that until the opening remarks of counsel for the applicant he had not been aware of a challenge to the decision allowing par 7.2 to stand. He said the draft notice of appeal simply could not accommodate such an argument. He was not in a position to argue par 7.2 and would need time to prepare. We ordered that the application be confined to the draft notice of appeal as filed. The ramifications of that order will become apparent at the end of these reasons.

15 McGinty did not seek to challenge the orders dismissing his application to strike out par 4 or the statement of claim generally. We will therefore address our attention solely to par 7 and its implications for the respondent's case against the applicant.

The Trial Judge's Decision and the Grounds of Appeal

16 In Shave (No 1) at [13]-[14] the trial Judge set out the approach to be taken to a strike-out application in these circumstances in a way that is not now under challenge and which we accept as an accurate and useful summary. His Honour also set out [6]-[12], some general comments about the nature of defamatory imputations, the manner in which (as a matter of law and also as a question of fact for trial) the natural and ordinary meaning of words is to be ascertained. Again (and with one possible query) there is no serious challenge to what his Honour there said. The query relates to [8] in which his Honour said: "In deciding whether the words are capable of conveying a defamatory meaning as a matter of law, the court will reject those meanings which can only emerge as the product of some strained or forced or utterly unreasonable interpretation". The question which was raised in argument was whether the addition of the phrase "some strained or forced or utterly unreasonable interpretation " was in accordance with authority. It seems that it is. In Jones v Skelton [1963] 1 WLR 1362 Lord Morris said, at 1370:

"It is well settled that the question whether words which are complained of are capable of conveying a defamatory meaning is a question of law and is therefore one calling for decision by the court. If the words are so capable then it is a question for the jury to decide as to whether the words do in fact convey a defamatory meaning. In deciding whether the words are capable of conveying a defamatory meaning the court will reject those meanings which can only emerge as the product of some strained or forced or utterly unreasonable interpretation."

17 His Honour recognised the need to look at the words complained of in the context of the Article as a whole to see if qualifications or surrounding statements outweighed or nullified what were apparently plain statements of fact. The trial Judge placed emphasis on the sentence: "In any event, by writing the letter, Mr Shave was an accessory after the fact to a serious breach of the legislation he has a duty to uphold", a statement that he said was at the heart of the report in the Article. His Honour went on to say, at [31]-[34]:

"The ordinary reasonable reader may have noted that the opening assertion that Mr Shave "broke" the secrecy rule was subject to some degree of ambiguity, this being denoted by the quotation marks enclosing "broke". Such a reader may also have given due weight to the second heading and to the notion in the opening paragraph that what was being spoken of was a "possible" breach. Such a reader may have gone on to take account of some elements of complexity in the situation, namely, that the secrecy provisions are directed principally at staff and members of the Board, that Mr Shave is the Minister and seems to be putting up an explanation in answer to the outrage expressed by Mr Casella and that the events may become the subject of an investigation ordered by the Police Commissioner. The reader may also take account of the fact that the presence of two senior politicians on opposite sides of the controversy suggests that a degree of political point scoring is involved. However, in my view, bearing in mind the statement lying at the heart of the report, it would certainly be open to the ordinary reasonable reader to conclude as a matter of broad impression that, notwithstanding the complexities, one thing is clear. Mr Shave is an accessory after the fact to a serious breach of the legislation and to that extent at least it can be said that he has committed a criminal offence.

This reading of the words complained of requires that some emphasis be given to the words "In any event ... " which precede the assertion I have just singled out as lying at the heart of the report. In my opinion, such a reading does not give the prefatory words an undue emphasis. Such a reading is consistent with the tenor of the article that, notwithstanding certain complexities, and some uncertainty as to what the Police Commissioner will do next, it seems that Mr Shave is an accessory after the fact to the commission of an offence. In other words, although the structure of the article may arguably have the effect of introducing a note of caution as to whether Mr Shave, or some other person, should be regarded as the perpetrator of a breach of the secrecy provisions, there is a basis for concluding that the word "broke" and the words "In any event ... " would leave the ordinary reasonable reader with an impression that, according to the newspaper report, Mr Shave is in breach of the law concerning secrecy as an accessory after the fact.

As counsel for the plaintiff put it during the course of his argument, the article conveys the meaning that "if nothing else, Mr Shave is an accessory after the fact." When the matter is viewed in that light, the inverted commas around the work "broke" are capable of being understood not as a reference to what I called the complexities of the situation, but to the notion that what is being spoken of is an indirect breach of the Act by Mr Shave as an accessory after the fact. It is this condition of guilt, if nothing else, that is being attributed to him.

The term "accessory after the fact" is well-known and would be understood by the reader as a reference to collateral conduct amounting to a criminal offence. It follows that, in my view, the imputation contended for in par 7 of the statement of claim cannot be characterised as clearly untenable or manifestly groundless and should not be struck out. It is inherent in the words actually used and is capable of conveying a meaning defamatory of the plaintiff."

18 In the grounds of appeal the applicant makes a number of assertions. First, the trial Judge placed too great an emphasis on the sentence: "In any event, by writing the letter, Mr Shave was an accessory after the fact to a serious breach of the legislation he has a duty to uphold". Secondly, that his Honour wrongly concluded that the ordinary reasonable reader would not understand that "the offence" could only be committed by members and staff of the Finance Brokers Supervisory Board and not by the applicant. Thirdly, that the trial Judge failed properly to apply the decision in Mirror Newspapers Ltd v Harrison [1982] HCA 50; (1982) 149 CLR 293. We will describe this aspect of the challenge in more detail shortly.

The Meaning of the Article - Was a Criminal Offence Committed?

19 The point fundamentally in issue in this application is a neat one. Counsel for the applicant argued that when the fourth, twelfth and thirteenth paragraphs of the Article are read together it is simply not possible to say that a defamatory meaning, namely, that the respondent had committed a criminal offence, could arise. For ease of reference, we will set those paragraphs out again.

"... Under the secrecy provision of the Finance Brokers Control Act, it is an offence for a registrar, member or officer of the board to divulge information about a person provided to the board. [fourth paragraph]

Mr Shave said he learnt that Mr Casella was the complainant when he was provided with a copy of the complaint by the Ministry of Fair Trading. [twelfth paragraph]

He said he was aware of the secrecy provision in the Act and that the information had been provided by the ministry, not a member or officer of the board. The registrar and officers of the board are employed by the ministry." [thirteenth paragraph]

20 Counsel for the applicant submitted that the fourth paragraph informs the reader in direct, clear and unequivocal terms as to the ambit of the offence provision, namely, that it is only an offence if a registrar, member or officer of the board divulges information. In the twelfth and thirteenth paragraphs the respondent informs the reader as to how he came to obtain the information, namely, from the Ministry and not from a member or officer of the Board. Counsel submitted that there was no contrary proposition anywhere in the Article. It is not, counsel said, a bane and antidote situation. Rather, it is a situation in which the definition of the offence given to the reader, when read with the respondent's statement of what actually happened, could do anything other than lead the reasonable reader to conclude that no offence had occurred, but that McGinty had said something different in a letter to the Commissioner of Police.

21 There is much to be said in favour of this argument. However, it must be borne in mind that the trial Judge was asked to exercise the power summarily to dismiss the action. Leaving to one side for the moment the effect of par 7.2 of the amended statement of claim, without the imputation that the respondent was guilty of a criminal offence there is no pleaded case against the applicant. The question is whether the words complained of in their natural and ordinary meaning and in the context of the Article as a whole are capable of conveying a defamatory meaning that the respondent had committed a criminal offence. It is not enough for a Judge asked to exercise the power summarily to conclude that such a result might ensue. A Judge must be persuaded that the imputations as pleaded are so obviously untenable that the case cannot possibly succeed or that it is manifestly groundless. There is a significant difference between the task of the Judge exercising this summary power and the task of the Judge at trial in deciding whether the words complained of are capable of defaming the plaintiff and the task of the trier of fact deciding whether they do, as a matter of fact, defame the plaintiff. In this respect, the discussion in Monte v Mirror Newspapers Ltd [1979] 2 NSWLR 663 at 672 - 675 is helpful.

22 It may seem a little strange that distinctions of this type are drawn when the issue is one that is likely to be decided at trial on the same basic material as is before the court at the interlocutory stage. The issue is, of course, whether the words complained of are capable of bearing a defamatory imputation and, generally speaking, that falls to be decided from the publication itself. However, the critical question at the interlocutory stage is the same: are the imputations contended for by the plaintiff manifestly untenable? When that question is asked against the entire factual matrix which is aired at trial it might evoke a different response.

23 We also accept the submission of counsel for the applicant that in assessing whether words are capable of conveying a defamatory meaning the test is whether the ordinary reasonable reader would be likely to understand them in that way. It is not enough to say that the words might be understood in a defamatory way by some person or another: Lewis v Daily Telegraph Ltd [1964] AC 234 at 259.

24 We think that (certainly in relation to this aspect of the challenge) regard must also be had to the sixth paragraph where the Article reports McGinty's comment that "in any event by writing the letter [the respondent] was an accessory after the fact to a serious breach of the legislation". The applicant contends that the trial Judge placed too much emphasis on this aspect of the Article. We do not agree. It is true that the fourth paragraph defines the relevant "offence" and that the respondent's explanation in the twelfth and thirteenth paragraphs might be taken as indicating that no offence had been committed. But even if that is so, we think that the presence of the sixth paragraph and the importation of the concept of an accessory after the fact is of some significance to the overall argument as to what the ordinary reasonable reader would understand the words to mean. Again there is an argument as to what the ordinary reasonable reader would understand by the reference to an "accessory after the fact". The trial Judge concluded that the phrase was "well---known and would be understood by the reader as a reference to collateral conduct amounting to a criminal offence". In our view the proposition is arguable. Counsel for the applicant submitted that if the reader could be taken to know what "accessory after the fact" meant he or she would also know that without a principal offence there could not be a secondary liability. That, too, is arguable but in our view it is not sufficient to justify a conclusion that the contrary proposition is manifestly untenable.

The Meaning of the Article - Was the Respondent under Investigation?

25 That effectively deals with the first two grounds of appeal. But this is not sufficient to dispose of the matter because the question still arises whether, when the Article is considered as a whole, the meaning could only be that there was an investigation into a possible breach of the law rather than that the respondent had committed an offence. This is encapsulated in the third ground of appeal.

26 Counsel for the applicant referred to several phrases in, or parts of, the Article in this respect. The heading has the word "broke" in inverted commas. The first paragraph refers to the State Opposition asking the Commissioner of Police "to order an investigation into a possible breach" of the Act. The fifth paragraph refers to a "belief" said to be held by McGinty. The seventh paragraph says that the Commissioner "was considering what action to take". Counsel submitted that the Article taken as a whole, especially in the light of those parts or phrases, could not convey a meaning that the respondent had committed a criminal offence.

27 Defamation actions arising from the publication of material that suggests, or is capable of suggesting, that a person has committed a criminal offence or is under investigation in that regard are far from unknown. They almost always raise peculiar difficulties. Mirror Newspapers Ltd v Harrison is a typical example. The newspaper reported that the plaintiff had been arrested and charged with assault arising from the bashing of a member of Parliament. The report said that the arrest followed a month of intensive investigation by a special squad of detectives. The High Court ruled that the newspaper report was not capable of bearing an imputation that the plaintiff was involved in the bashing or that he was guilty of a criminal offence in connection with the bashing.

28 The trial Judge has set out the relevant passages from the judgment of Mason J at 300 and we will not repeat them. The gravamen is that the ordinary reasonable reader can be taken to be aware of the presumption of innocence and of the fact that some people who are charged are acquitted at trial. This general approach is also reflected in the comments of Lord Reid in Lewis at 259 - 260. We think it is fair to summarise the position by saying that, generally speaking, merely to state that a person is under investigation or has been charged does not convey an imputation that the person is guilty of the offence which is the subject of the investigation or the charge: see also Armitage v Double Bay Newspapers Pty Ltd, unreported, SCt of NSW (Hunt J); No 13056 of 1991; 26 September 1991.

29 However, as the trial Judge's discussion of Nationwide News Pty Ltd v Abboud, unreported; SCt of WA (FCt); Library No 960710; 12 September 1996, Singleton v Hudson (1998) 20 WAR 191 and Foord v John Fairfax & Sons Ltd, unreported, SCt of NSW (Hunt J); CLD 20450 of 1986; 27 February 1987 demonstrates, each case must be viewed carefully according to its own peculiar fact situation. In particular, we refer to the comment of Hunt J if Foord at 52 (which was cited with apparent approval in Abboud, at 13 and in Singleton at 197):

"Where there is a statement which says directly that the plaintiff had committed the particular act, an imputation would usually have to go to the jury whatever is added to that statement concerning further inquiries or charges in relation to the act said directly to have taken place."

30 The second paragraph of the Article contains the statement that the respondent "obtained the name of the man who lodged the complaint ... then revealed the man's identity in a letter to the editor". The sixth paragraph contains the statement that by writing the letter to the editor the respondent was an accessory after the fact to a serious breach of the legislation. In our view these are statements of the character referred to in the dicta from Foord. The next question is whether there is a distinguishing feature here, namely that not only has the respondent not been charged, he is not even under investigation. The Article makes it clear in the first paragraph that the Commissioner has been asked to investigate. In the seventh paragraph it is said that the commissioner was "considering what action to take".

31 We accept that this constitutes a further step which would have to be taken by a trier of fact in concluding that the words actually bore the defamatory meaning that the respondent had committed a criminal offence. Not only would the ordinary reasonable reader be aware of the presumption of innocence that applies to a person who has been charged but not yet tried, he or she would also be aware that where a decision to charge (or even whether the allegations warranted investigation) had not been made, the presumption would have to apply. On balance we feel that this is more a question of degree than of principle and, accordingly, is best left for trial.

32 Not without hesitation, we have come to the view that the contention that an imputation could arise in the terms pleaded in par 7 (now par 7.1) is not so manifestly untenable that it should be struck out.

33 It follows that the appeal, so far as it is said to be mounted against the decision delivered on 29 June 2000, would not succeed. We would therefore grant leave to appeal but dismiss the appeal.

34 That leaves the question of par 7.2 of the amended statement of claim. In argument, counsel for the applicant raised the interesting question whether, in light of Rakhimov v Australian Broadcasting Corporation & Anor [2001] NSWSC 10, the previously accepted wisdom as to pleading imputations of suspicion might fall to be reconsidered. It may be that in the light of what has been said in these reasons the applicant might choose not to pursue the challenge to that paragraph. However, if there are other issues to be raised we think it is in the interests of justice that a broad view be taken of the appeal papers and that the parties be given an opportunity to advance whatever additional submissions they think are appropriate. If that were to be the case the applicant would need to reformulate the draft notice of appeal to indicate precisely the issues which relate to par 7.2 of the amended statement of claim.

35 We will therefore stand the matter over for 48 hours and hear the parties as to the finalisation of the application and appeal.