Zeccola v Fairfax Media Publications Pty Ltd

Supreme Court of NSW|2013-06-13|Before: McCallum J

Judgment 1HER HONOUR: These are proceedings for defamation arising out of the publication of three articles concerning the fortunes of the Australian film industry. The first two articles were published on 15 July 2009 in The Australian Financial Review in its printed edition and on the Internet. The third was published on 20 July 2009 on a film and television news website known as Screen Hub. 2The plaintiffs are Mr Antonio Zeccola (second plaintiff) and Mr Benjamin Zeccola (third plaintiff), who are associated with the company which trades as "Palace Films". A non-trading shelf company within the same corporate group, Palace Films Pty Ltd, was also a plaintiff. However, I dismissed the proceedings brought by it: see Palace Films Pty Ltd v Fairfax Media Publications Pty Ltd [2012] NSWSC 1136. 3There are six defendants to the proceedings. The first, second and third defendants ("the newspaper defendants") are represented separately from the fourth, fifth and sixth defendants ("the Screen Hub defendants"). Each group of defendants has filed a defence pleading a number of positive defences including the defences of truth and contextual truth under ss 25 and 26 of the Defamation Act 2005. 4The plaintiffs made an oral application in the defamation list to have the contextual imputations struck out, presumably under rule 14.28 of the Uniform Civil Procedure Rules 2005. This judgment determines that application. Although separate defences have been filed on behalf of each group of defendants, the defences are in substantially the same terms and raise common issues on the present application. It is convenient to consider the arguments primarily by reference to the defence filed by the newspaper defendants. 5Four grounds of objection to the defences were argued. Each is considered in turn below.

Alternative contextual imputations 29Mr Evatt's second objection related to the pleading of alternative contextual imputations, as follows (paragraph 19(a)(iv) of the defence): (a) the second plaintiff acted wrongfully in permitting Palace Films to continue to trade when it was insolvent; or, alternatively (b) there are reasonable grounds to suspect that the second plaintiff permitted Palace Films to trade when it was insolvent. 30Mr Evatt submitted that a defence of contextual truth should not plead contextual imputations in the alternative to each other. He submitted that to do so is against the purpose of the defence. 31Mr Dawson noted that no authority had been cited to support that proposition. He indicated, however, that the defendants would be prepared to plead the alternatives as stand-alone imputations to solve the dispute. 32As it turns out, an authority cited by Mr Dawson on a different point later in argument (but not handed up in court) provides an example of alternative contextual imputations passing without comment from Nicholas J in a carefully-reasoned and thorough analysis of the defence of contextual truth: see Ron Woodham v John Fairfax Publications Pty Ltd [2005] NSWSC 1204 also reported in (2005) Aust Torts Reports 81-822 (the contextual imputations are set out at [3] of the judgment). 33Although the point was not argued in that case, the decision in Woodham suggests that there is no reason in principle why a contextual imputation of lesser seriousness cannot be pleaded as an alternative to a more serious contextual imputation. Whilst the pleading of alternative contextual imputations may be undesirable for the complexity they bring to an already complex defence, I do not think there is any principled basis for prohibiting that approach.

Capacity 34Mr Evatt's third objection to the contextual truth defence was that neither of the alternative contextual imputations set out above is capable of being conveyed. 35The first alternative is that the second plaintiff acted wrongfully in permitting Palace Films to continue to trade when it was insolvent. Mr Evatt acknowledged that, prior to the dismissal of the proceedings at the suit of the first plaintiff, I ruled (in favour of Palace Films Pty Ltd) that the imputation "that [Palace] is insolvent" was capable of arising: Palace Films Pty Ltd v Fairfax Media Publications Pty Ltd, Supreme Court of New South Wales, 14 May 2010, unreported (at [60]). 36However, Mr Evatt submitted that the articles do not have "the extra link necessary to sheet home insolvency to the second and third plaintiffs". There is a degree of tension between that submission and the plaintiffs' reliance upon imputations (q) and (r) set out above. Imputation (q) is that the second plaintiff acted wrongfully in permitting Palace Films to withhold returns due to producers of successful films. Imputation (r) is that the second plaintiff permits Palace Films to dishonour distribution commitments by not distributing a film despite having agreed to do so. Each of those imputations assumes that the first matter complained of attributes the governance of Palace Films to the second and third plaintiffs. The matters complained of are replete with references to that effect. 37The defendants further noted that, so far as the second plaintiff is concerned, his case is put on the basis that, although he is not named, the matter complained of was published to persons who knew he was a director of Palace Enterprises Pty Ltd, the entity which trades as Palace Films and Palace Cinemas. It was submitted that, to the extent that that is established, it could hardly be said that the matter complained of is not capable of conveying the imputations that attribute control of that entity to him. 38For those reasons, I am satisfied that the first alternative imputation is capable of being conveyed by the matter complained of in each case. 39The alternative imputation is that there are reasonable grounds to suspect that the second plaintiff permitted Palace Films to trade when it was insolvent. Mr Evatt submitted that there is nothing in the matter complained of to suggest that any person held the suspicion referred to. 40Mr Dawson acknowledged that the articles do not speak in terms of any suspicion held by any individual person or authority. He conceded that the imputation was put on the basis that the primary imputation might be carried only weakly, in effect as something only to be suspected rather than confidently inferred. Mr Dawson indicated that it was for that reason that the two imputations were pleaded as alternatives. He submitted that there is no requirement that a "suspicion" imputation identify the person holding the relevant suspicion. 41That submission, as far as it goes, finds ample support in authority. As noted by Mr Dawson, there is a helpful discussion of the relevant principles in the decision of Kirby J in Purcell v Cruising Yacht Club of Australia [2003] NSWSC 245. His Honour said (at [28] to [29]): A plaintiff, in framing an imputation, or a defendant in framing a contextual imputation, may, according to the defendants, formulate the imputation in one of two ways. Either the suspicion must be attributed to an authority figure, such as the police, or the imputation (as here) must be framed in terms of "reasonable grounds to suspect", or the plaintiff having acted in such a way as to warrant suspicion. To say that the police "suspect" a person of murder is defamatory. It is also defamatory to say that there are reasonable grounds for suspecting that person committed murder. I accept the defendants' argument. That, however, is not the end of the matter. The issue must ultimately be determined by reference to the words published. In the context of those words, is the defendants' contextual imputation conveyed? In that context, is there a need to identify the person who held the suspicion? It is suggested that different issues arise, depending upon the level of detail provided by the publication. If the publication, to use the defendants' example, simply makes a bold allegation that there are reasonable grounds for suspecting a particular person of murder, then the imputation (without identifying the person who had the suspicion) would be carried. If, however, the publication provided an explanation for the suspicion, and it plainly depended upon matters of expertise, then the position, it was suggested, may be different. The message to the ordinary reasonable listener, in those circumstances, would be that there were reasonable grounds in the minds of experts to suspect that a particular person had committed the crime of murder. 42However, what emerges from Purcell is that the issue arose in the context of an article dealing with the official treatment of an identified allegation of misconduct. Kirby J's analysis assumed that the matter complained of reported the existence of a suspicion. His Honour's point was that the imputation did not have to name or identify who held that suspicion, so long as it was evidently held reasonably. That is why this issue has generally arisen in the context of articles dealing with matters such as the fact of a person having been arrested and charged with an offence; the findings of a Royal Commission (cf Sergi v Australian Broadcasting Commission [1983] 2 NSWLR 669); the reference of a complaint to the protest committee of a club (Purcell) or the reference of a matter to ICAC (cf Greig v WIN Television NSW Pty Ltd [2007] NSWSC 1118). 43It does not follow from those authorities that every article that is capable of conveying an imputation of guilt is also capable of conveying an imputation of reasonably-held suspicion. Nor do those authorities hold that it is enough if the matter complained of excites suspicion in the mind of the ordinary reasonable reader. In my view, the defendants' alternative imputation in the present case conflates two concepts. It conflates the sting of the imputation and the force with which it is conveyed. The defamatory sting that a person is reasonably suspected of something must have its foundation in something to that effect stated or conveyed by inference in the matter complained of. 44If an article reports the fact that a complaint or allegation has been referred to an authority, an imputation may be conveyed that the person is reasonably suspected of certain conduct, whether or not the holder of the suspicion is named. But if an article merely hints at a particular meaning, the territory for dispute is whether it in fact conveys that meaning. The weakness with which a particular meaning is conveyed cannot be overcome by watering down the defamatory sting from saying the plaintiff behaved in a certain way to saying only that he was suspected of having behaved in that way. 45I do not think there is anything in the matters complained of in the present case to point to the objective existence of any suspicion, complaint or allegation that the plaintiffs behaved in a certain way. The articles either say that the plaintiffs acted wrongfully in permitting Palace Films to continue to trade when it was insolvent or they do not. I do not think the articles are about the existence of a reasonably held suspicion. 46For those reasons, I have concluded that the alternative contextual imputation is incapable of being conveyed and must be struck out.

Hore-Lacy pleading 47Mr Evatt's final objection related to the pleading under the heading "Hore-Lacy" (a reference to the principles stated in David Syme & Co Ltd v Hore-Lacy [2000] VSCA 24; (2000) 1 VR 667). Mr Evatt noted the emergence of an argument that the so-called Hore-Lacy defence is not a substantive defence at all and should, where pleaded, be struck out (at least in this State). However, Mr Evatt did not seek to press that point in argument before me, evidently taking the view that it is foreclosed by the decisions of the Court of Appeal in Kermode and in John Fairfax Publications Pty Ltd v Hitchcock [2007] NSWCA 364; (2007) 70 NSWLR 484. 48Mr Evatt's objection to the Hore-Lacy pleading in the present case was more specific. The defence states (at paragraph 20): In further and alternative answer to paragraphs 11 and 12 of the statement of claim, if it is found that any of the first contextual imputations do not differ in substance from the plaintiff's first imputations, the first, second and third defendants say as follows: (a) they will rely on that contextual imputation as being the meaning of the first matter complained of and as the meaning by which it was understood: and (b) that meaning was substantially true. 49Mr Evatt submitted that, if the defence does exist, the pleading set out above is not the way to plead it. He advocated, as the proper form of pleading, a defence taken from other proceedings (for which he gave credit to Mr Sibtain of counsel) as follows: The matter complained of was true in substance and in fact in the following meaning [meaning specified], which is not different in substance from [the plaintiff's imputations]. 50Mr Dawson explained that the object of his pleading was, in effect, to cover all bases. One of the requirements of a contextual imputation is that it must differ in substance from the plaintiff's imputations. Mr Dawson wishes to ensure that, in the event that his contextual imputations do not meet that requirement, it will be open to the defendants to rely upon the same imputations as Hore-Lacy meanings rather than contextual imputations (and that there will be no complaint of surprise in that event). 51Mr Dawson submitted that his approach finds support in the decision of Nicholas J in Ron Woodham v John Fairfax Publications Pty Ltd referred to above. Without taking me to the decision during argument, Mr Dawson submitted that it stands as authority for the proposition that, if a contextual imputation differs in substance from the plaintiff's imputations, it can be relied upon as a contextual imputation and that, if it does not differ in substance from the plaintiff's imputations, it can be relied upon as a Hore-Lacy meaning (T42). Mr Evatt responded, with equal confidence, that the decision "doesn't help my friend". 52It is true that the judgment in Woodham does not state, in terms, the principle articulated by Mr Dawson but the result Nicholas J allowed assumed its correctness. That conclusion was reached in circumstances where his Honour had already made a finding that the defendant's imputation did not meet the requirements of a contextual imputation, and that has not occurred in the present case. His Honour said (at [63]): I have found that (D) [a contextual imputation] does not differ in substance from 4(f) [one of the plaintiff's imputations]. Therefore, in my opinion, it is available to the defendant for the purpose of the remaining interstate defences. 53Mr Evatt noted that Mr Dawson had not explained in the present case how the imputation that the second plaintiff acted wrongly in causing a company to trade whilst insolvent is a mere nuance to any of the plaintiffs' imputations. There is some force in that point but it only addresses the most extreme example (the contextual imputation that differs most from the plaintiffs'). Mr Evatt did not submit that the other contextual imputations plainly differ in substance from the plaintiffs' imputations. Indeed, as explained above, he has been successful in submitting that one of the contextual imputations carries no different sting from the plaintiffs' imputations. 54I acknowledge that it seems unlikely that the comprehensive and cautious approach reflected in Mr Dawson's pleading will ultimately be of any great assistance to the defendants, but I cannot be sure. Acknowledging the approach taken by Nicholas J in Woodham, I do not think a basis has been established for striking out that part of the defence. It has always been permissible to plead inconsistent defences in the alternative. 55As hinted by Mr Evatt, however, the alternatives are not to be left to the jury. It will be necessary for a ruling to be given at the trial (or else an election made) as to whether each of the defendants' imputations can properly be left as a contextual imputation and, if not, whether it can be left as a Hore-Lacy meaning. The pleading nonetheless serves as notice to the plaintiffs of the two ways in which the imputations will potentially be relied upon. 56I note that the proceedings are already listed on 7 April 2014 in the Defamation List. I will hear the parties as to costs on that occasion. 57The orders are: (1)that contextual imputations 19(a)(i), (iv)(b) and (v); 27(a)(i), (iv)(b) and (v) and 35(a)(i), (iv)(b) and (v) in the defence filed by the first, second and third defendants be struck out. (2)that contextual imputations 9(a)(i), (iv)(b) and (v) in the defence filed by the fourth, fifth and sixth defendants be struck out.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 March 2014

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