Aktas v Westpac Banking Corporation Limited & Anor

[2010] HCATrans 43

[2010] HCATrans 043

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney     No S3 of 2010

B e t w e e n -

PAUL UYSAL AKTAS

Appellant

and

WESTPAC BANKING CORPORATION LIMITED (ARBN 007 457 131)

First Respondent

HOMEWISE REALTY PTY LIMITED ACN 001 131 273 TRADING AS CENTURY 21 HOMEWISE REALTY

Second Respondent

FRENCH CJ
GUMMOW J
HAYNE J
HEYDON J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 10 MARCH 2010, AT 10.19 AM

Copyright in the High Court of Australia

MR T.S. HALE, SC:   If the Court please, I appear with my learned friend, MR A.T.S. DAWSON, for the appellant.  (instructed by Penhall & Co Lawyers)

MR J.R. SACKAR, QC:   If the Court please, I appear with MR K.P. SMARK, SC and MR R.J. HARDCASTLE for the first respondent.  (instructed by Mallesons Stephen Jaques)

FRENCH CJ:   I note that there is a submitting appearance from the second respondent.  Yes, Mr Hale.

MR HALE:   Your Honours, the issue raised in this appeal is one of both defamation law and banking law and it is, does a notice of dishonour on a customer’s cheque that is presented for payment have the protection of the common law defence of qualified privilege when the dishonour arose from the Bank’s own mistake and in breach of its contractual obligation to its customer.  This issue turns on the question of whether in all the circumstances the Bank had a duty or an interest to publish.  The facts may be shortly stated and are not in dispute.

In December 1997 the Bank dishonoured 30 trust account cheques drawn on the account of the second respondent, Homewise Realty.  It carried on business as a real estate agency in Auburn under the name of Century 21 Homewise Realty.  The appellant, Mr Aktas, was well known as the alter ego and chief executive of the real estate agency in Homewise.  The payees of each of the cheques were clients of Homewise for whom Homewise managed rental properties and those duties included the collection of rent which was paid into the agent’s trust account.  The trust account cheques which were dishonoured were drawn on Homewise were for the payment to clients of the net rent collected after deduction of commission and other expenses.  The dishonour arose entirely due to the Bank’s mistake, and this is common ground.

There were sufficient funds in the trust account to meet the cheques.  The appellant, Mr Aktas, sued the Bank in defamation.  Each of the 30 cheques had been returned endorsed “refer to drawer” and these were the defamatory publications on which he sued.  If the payee banked with Westpac the cheques were returned to the payee.  If the payee banked with another bank the cheques were returned to the collecting bank. 

The cheques are to be found, although I was not proposing to take your Honours to them, in volume 1 of the appeal book at pages 274 to 480, together with certain associated documents.  As an example of a cheque where the customer was a client of Westpac, one finds an example, cheque 24, at pages 430 to 437, where your Honours see at 431 the statement that was sent out by Century 21.  At 432 we see the cheque which was also signed by Mr Aktas.

At 433 we see the box and the endorsement and at 434 we see the letter which is sent to the customer enclosing the cheque and at 436 to 437 are answers to interrogatories in relation to that particular dishonour. An example of where the notice of dishonour was sent to the collecting bank can be found at 402 which is in relation to cheque No 20 where again we see the statement at 402 which is the accompanying document which identifies how the sum is calculated. We see 403 is the cheque, 404, we see, although perhaps not as clear as it should be, the “refer to drawer” box has been ticked. At 405 is the communication from the collecting bank to the customer attaching the cheque and at 407 to 408 again are answers to interrogatories in relation to that particular cheque. The rest of the cheques, or the evidence in relation to the rest of the cheques is similarly presented.

FRENCH CJ:   At the time these notices went out, they went out from the – I think you indicated the date it was sent to the department – but at one level the Bank was aware that an error had been made in relation to the PCO endorsement on the trust accounts.

MR HALE:   It seems what happened, although it may not be of great significance for the purpose of this appeal – it appears that the PCO was placed on the cheques and then the account ‑ ‑ ‑

FRENCH CJ:   On the accounts.

MR HALE:   On the account, and then removed, but because ‑ ‑ ‑

FRENCH CJ:   It was removed on 2 December, was it not?

MR HALE:   Yes, I think that is what it was.  We refer to it in our written submissions, the detail at paragraph 9, we collect the various references.  But it seems what then occurred is because certain steps had been put in train, even though the PCO had been removed, the communication of the dishonour still went ahead.  As I say, not a great deal may turn on that.  As I say, Mr Aktas sued in defamation and the jury found that the publications were defamatory of the appellant, and the imputation the jury found conveyed are to be found in a number of places, but perhaps most conveniently in the judgment of the Court of Appeal, volume 2 of the appeal book at 744.

GUMMOW J:   Why do you say nothing turns on paragraph 9?

MR HALE:   Perhaps I should say nothing of great significance, in the way we put our case, but it is one of the circumstances to which the Court would have regard in determining whether or not there was the requisite duty or interest, but it is one circumstance, yes.

FRENCH CJ:   At one level the Bank is aware of the true position when it issues the notice.

MR HALE:   That is correct.  There was some debate about this in the Court of Appeal, but, yes, that is correct.  One arm of the Bank certainly was aware of it.  But the argument, at least, there was no reply.  There is no contention of malice.

GUMMOW J:   We are not worried about arms and legs.  We are just worried about the Bank.

MR HALE:   I am sorry?

GUMMOW J:   We are not worried about arms and legs.

MR HALE:   No.

GUMMOW J:   We are worried about the Bank.

MR HALE:   Yes.  That clearly is one of the relevant circumstances in terms of whether or not the occasion of communication or the occasion was one of common law qualified privilege.  The imputations found by the jury are set out in the judgment of Justice McClellan in the Court of Appeal at 744 – imputations (a) through to (d) in paragraph 28.

KIEFEL J:   What was pleaded as the matter complained of?  Which communication – the “refer to drawer” mark or the letters?

MR HALE:   The return of the cheques marked “refer to drawer”.  Your Honours will note at paragraph 29 that there is also reference to Homewise having sued in defamation.  Your Honours will see that Homewise is a second respondent which has filed, I think, a submitting appearance or maybe no appearance at all, but it ultimately succeeded in contract.  The primary judge found or entered a verdict for the Bank on the ground that she held that the communication, that is, the return of the cheques ‑ ‑ ‑

GUMMOW J:   Now, what was the state of the defamation law in New South Wales at the relevant time?

MR HALE:   It was the 1974 Act where the imputations were the cause of the action.  She also concluded that had she not found this defence established, she would have entered a verdict for $50,000 in favour of the appellant.  That is to be found in her judgment at 138 at page 712 of the appeal book at line 40.  Your Honours, one might have thought that these factual circumstances would have been the subject of a good deal of judicial scrutiny over the years but in fact there are only two reported authorities on point in the 20th and 21st centuries.

GUMMOW J:   That is because, perhaps, banks did not rush to have these disputes with their customers litigated.

MR HALE:   Yes, and in fact in our written submissions we refer to the comment in Weerasooria on Banking where it is suggested ever since Justice Hilbery’s judgment in Davidson v Barclays Bank no bank had ever taken a point.  There may be a number of reasons for it but the only two reported authorities on point are, firstly – and I do not propose to take your Honours to them at this stage – is Davidson v Barclays Bank [1940] 1 All ER 316 in which in similar circumstances Justice Hilbery found the defence of qualified privilege did not apply and, secondly, a decision of the Supreme Court of Ireland in Pyke v The Hibernian Bank Limited (1950) IR 195 where a bench of four judges divided on the question and two of the judges were of the view that Davidson was correct but the Chief Justice did not find it necessary to deal with the issue and Justice Black dissented.

As I say, I will come back briefly to those authorities because much – this Court has recently considered the defence of common law qualified privilege in Bashford v Information (Australia) Newsletters Pty Limited (2004) 218 CLR 366.

GUMMOW J:   Are we construing any particular provision of the 1974 Act in New South Wales?

MR HALE:   No.  Common law qualified privilege applies under the Act in addition to the statutory qualified privilege.

GUMMOW J:   Section 11, is it, that preserves the common law defences?

MR HALE:   Yes.  Given this Court has, as I say, recently considered the relevant principles in Bashford I propose to go to Bashford and it would seem that the central principles for determining whether an occasion of qualified privilege is firstly the publication must be made in the discharge of some public or private duty.  Perhaps I should pause here for the moment.

GUMMOW J:   Where are you reading from?

MR HALE:   Paragraph 9 of the Court’s judgment.

FRENCH CJ:   The joint judgment of Chief Justice Gleeson and Justices Hayne and Heydon?

MR HALE:   Yes.  If your Honours go to paragraph 9 there is reference to the principles and there is then reference to Toogood v Spyring from which we extract the principle that the publication, and this comes from Toogood v Spyring must be:

made by a person in the discharge of some public or private duty, whether legal or moral, or in the conduct of his own affairs, in matters where his interest is concerned.

Next, if we drop down to the very end of paragraph 9:

Reciprocity of duty or interest is essential.

The third principle, going back to Toogood v Spyring, is that the duty or interest must be recognised as being “protected for the common convenience and welfare of society”, which obviously gives rise to certain policy considerations.  The joint judgment at paragraph 10 then goes on to observe that the principles are stated at a very high level of “abstraction and generality”. 

FRENCH CJ:   These judgments dealt in part with the interaction between the defence of qualified privilege and that of a fair and accurate report of judicial proceedings.  Did they deal really with the issue that we are faced with?

MR HALE:   They did in this sense.  Perhaps I should just go back one step in terms of the factual circumstances of that case.  There was the publisher there, Information Australia, published a magazine or trade newsletter concerned with matters of occupational health and safety, and generally speaking, as a matter of common law qualified privilege, the publication of a newsletter at large would not attract the privilege. 

However, in this particular case the evidence disclosed that the recipients of the newsletter were in each case individuals within organisations who had subscribed to that newsletter who had particular responsibilities in their organisation for occupational health and safety, and that they subscribed to the publisher in order that they might be kept up to date with and provided with the information concerning occupational health and safety.  So they were generally the factual circumstances. 

Now also, within one of the newsletters, that is to say the newsletter on which Mr Bashford brought the proceedings, there was a report of certain proceedings in the Federal Court.  It was in relation to that aspect that there was the subsidiary or second question which related to fair protected report, but the first question of common law qualified privilege and whether it applied in the relevant circumstances was clearly a separate and distinct issue.  What we see from, going back to paragraph 10 of the joint judgment, is the requirement – this is at the end of paragraph 10 – that the court:

must “make a close scrutiny of the circumstances of the case, of the situation of the parties, of the relations of all concerned and of the events leading up to and surrounding the publication” –

picking up Guise v Kouvelis. When one looks at paragraph 10, we start with the general proposition and there is then the injunction, but we need to concentrate on the specific to see whether such an occasion arises. Justice McHugh in his dissenting judgment at paragraph 63 on page 389 dealt with the question and identified the correct approach. Although he dissented, nonetheless it appears that this has been accepted as a correct statement of principle. It certainly has been regarded so in the latest edition of Gatley on Libel and Slander, the 11th edition, at paragraph 14.9 at footnote 77 which specifically sets out a good part of paragraph 63 and concludes that although it is a dissenting judgment, it is submitted that this does not affect the correctness of his general thesis.  So what his Honour identifies, going to the third line:

in determining the issue of qualified privilege is [that] . . . the court must consider all the circumstances and ask whether this publisher had a duty to publish or an interest in publishing this defamatory communication to this recipient.

It goes on:

It is not to ask whether the communication is for the common convenience and welfare of society.

GUMMOW J:   That was a reference back to what his Honour said at paragraph 55 on page 386 which picked up what Sir Frederick Jordan had said in Andreyevich.

MR HALE:   Yes.  I was going to come back to paragraph 55.  Also in paragraph 64 his Honour sets out ‑ ‑ ‑

GUMMOW J:   The question then becomes, looking at paragraph 55 ‑ ‑ ‑

MR HALE:   Should I go to paragraph 55 because what he says, picking up paragraph 55 at the top of page 387, what Chief Justice Jordan again points out in similar terms to that which Justice McHugh has pointed out at 63 must:

show by evidence –

which in this particular case is significant –

that both the givers and the receivers of the defamatory information had a special and reciprocal interest in its subject matter, of such a kind that it was desirable as a matter of public policy, in the general interests of the whole community of New South Wales, that it should be made with impunity, notwithstanding that it was defamatory of a third party.

GUMMOW J:   I think it might be said against you – I am not sure about this – but that thought in that passage connects with the Cheques Act in some way.

MR HALE:   It does.  I was going to come to that if it convenient.  What I was proposing to do, if this is a convenient course, is go to the general principles as established in Bashford and then go to the particular circumstances of the case here.  That will also require an analysis of the Cheques Act.  If that is a convenient course, that is the way I propose to proceed, but it is significant to show it by evidence.  Going back to paragraph 64, his Honour there referred to the judgment in Baird and what Earl Loreburn said, which is to similar effect, that:

whether the occasion was an occasion of privilege the Court will regard the alleged libel, and will examine by whom it was published, to whom it was published, when, why, and in what circumstances it was published, and will see whether these things establish a relation between the parties which gives a social or moral right or duty; and the consideration of these things may involve the consideration of questions of public policy.

His Honour at footnote 90 points out that this was also referred to in Telegraph v Bedford and also by Justice Dixon in Mowlds v Fergusson.  It is in that context, or having regard to those principles, that it is necessary to examine in some detail or under close scrutiny the precise circumstances and relationship between the Bank and the recipients.  In Gatley in the 11th edition at paragraph 14.9 there are references to ‑ ‑ ‑

GUMMOW J:   Who are the current editors of Gatley?  The latest edition did not fare too well in a recent case, for example.

MR HALE:   It is Patrick Milmo, QC and Rogers, together with the number of contributing editors.  The point I was simply going to make that Gatley at paragraph 14.9 refers to “off the peg” categories of common law qualified privilege where, because of their particular nature, one perhaps does not need to make quite the same element of exercise of scrutiny, but this clearly is not one.  As we say, it is therefore necessary to make a close scrutiny of all the circumstances to see whether any legal, social or moral duties or interests were engaged between the Bank on the one hand and the collecting bank or payees on the other. 

If I could go firstly to the relationship between Homewise and the Bank.  That, of course, was one of banker and customer and, of course, of debtor and creditor, given that there were funds standing to the credit of the customer in the trust account.  The Bank, when the cheques were presented, had a contractual obligation to pay on the cheques and, as the primary judge found, in failing to pay and issuing the notices of dishonour it breached that contract.

Nextly, because there were funds available to meet the cheques the Bank had no reason to communicate with the payees or the collecting bank.  Its only relevant obligation was simply to make the payments.  If I might go to the Cheques Act, and particularly section 67 - at the time the Act was known as the Cheques and Payment Orders Act, but the relevant provisions are identical to the Cheques Act. Section 67 in substance provides to the bank a protection from honouring the cheque in particular circumstances, and that is ‑ ‑ ‑

HEYDON J:   I am sorry to interrupt.  The relevant time was shortly after 24 March 1998, correct?

MR HALE:   The relevant date was December 1997.

HEYDON J:   What legislation was actually in force at that date?  Was that the Cheques and Payment Orders Act 1986?

MR HALE:   That is correct.

HEYDON J:   It is not exactly the same as the current form of the Cheques Act.  It may not matter, but in one case we have drawee bank, in another case we have drawee institution; that is not identical.

MR HALE: Yes, perhaps I was wrong in saying it was identical. It is to the same effect. As my learned junior points out, this has been identified in our written submissions. Relevantly, under section 67 there is a protection, if I might put – a statutory protection provided to the Bank, and that is it may refuse payment, but it may only refuse payment if it dishonours the cheque “as soon as is reasonably practicable”. If it does not, then under subsection (1)(b) ‑ ‑ ‑

GUMMOW J:   I do not understand this, this is all postulate.  This is not addressed to the situation where there are moneys in the account to honour the cheque, is it?

MR HALE:   No.

GUMMOW J: Section 67 has a long history, does it not?

MR HALE:   Yes.  In fact, what clearly has happened, which I will come to ‑ ‑ ‑

GUMMOW J:   It is the phrase “shall either pay or dishonour”, is it not?

MR HALE:   Yes.

GUMMOW J:   That is critical.

MR HALE:   And if it does not dishonour as soon as reasonably ‑ ‑ ‑

GUMMOW J:   It does not mean “shall either pay or dishonour” as it thinks fit.

MR HALE:   Exactly so.  What has occurred in this case is the Bank clearly was under the mistaken belief that it was unable to access the funds or there were insufficient funds and it adopted a particular course.  The relationship that followed between the Bank and the collecting bank was one which was predicated on an erroneous assumption – namely, the funds were not there.

HAYNE J: Section 67(1) is cast in the language of obligation, not in the language of protection at all, is it?

MR HALE:   That is correct.

HAYNE J:   The obligation is pay or dishonour.

MR HALE:   Dishonour; that is correct.  The way ‑ ‑ ‑

HAYNE J:   There are then consequences if the drawee bank fails to do so – that is, if the drawee bank fails either to pay or dishonour as soon as is reasonably practicable.

MR HALE: That is correct; that is so. The way it may dishonour, or the means of dishonouring the cheque, is to be found in section 69. That is what the Bank did when it returned the cheques marked “refer to drawer”, but what can be seen from section 69 is it does not actually require a particular reason to be given as part of the dishonour, simply that the cheque is dishonoured, notice of dishonour is given. So the words “refer to drawer” that were endorsed on the cheque were words that were not necessary in order to effect a dishonour under section 69.

KIEFEL J: But what section 67 requires the Bank to do, if it is to obtain the protection given by the Act, is to notify its decision. Pay or dishonour is the Bank’s decision, is it not? The question then arises whether it is the communication of the decision which is the occasion – the decision is made is the occasion.

MR HALE: What the Bank has to do is, in order to avoid the obligation or the liability to the holder of the cheque – it has to do something and to take advantage of section 67(1) it must serve the notice of the dishonour.

KIEFEL J:   But it has to do something about its decision.  The Act is not concerned with the correctness.  It requires it to act efficiently and quickly.

MR HALE: That may be so, but what it is doing, when it serves the notice of dishonour, firstly, it is taking advantage of section 67(1) so as to avoid the liability to pay the holder and to do that it serves the notice of dishonour. Secondly, what is done by the service of the notice of dishonour is, of course, informing the payee what has occurred, which has a particular consequence, amongst other things, that the Bank, under section 67, is not liable, albeit it may be liable in contract to the customer and, secondly, it has a particular consequence under section 69.

HAYNE J:   To inject these notions of protection is to inject notions that are not found in the statute anywhere in section 67 and the notion of protection that you inject is one which masks a quite – it may be elaborate, it may not be elaborate – set of questions about the remaining liability in case of wrongful dishonour. In case of wrongful dishonour, there may be questions of whether the Bank remains liable to pay the cheque to the holder.

MR HALE:   Yes.

HAYNE J:   Leave that aside. Section 67 gives the Bank a choice; pay or dishonour. Section 69 tells you how a bank dishonours. It dishonours by doing certain things, one of which is communicating the fact of dishonour, but that is all the statute is telling you.

MR HALE:   Well, I accept that the use of the word “protection” probably was inappropriate. The point I was seeking to make is that what the Bank was doing when it served or sent the notices of dishonour under section 69 was to engage the provisions under section 67(1) and that is what the Bank did when it sent out those particular notices. Our central proposition is ‑ ‑ ‑

GUMMOW J:   In this case there were only three parties, were there not?  The drawer, the drawee and the payee?

MR HALE:   Yes.  There was the Bank, the drawer of the cheque, namely, Homewise and the payee.

GUMMOW J:   There was no negotiation for the cheque at any stage?

MR HALE:   No, no. 

HAYNE J:   In some cases the paying bank and the collecting bank were identical.  In other cases the collecting bank was different from the paying bank.

MR HALE:   Exactly.  Now, our central proposition is that although the Bank may have had a commercial interest in making the communication ‑ ‑ ‑

GUMMOW J:   What was the commercial interest?

MR HALE:   That it was able to, if one construes section 67 on the basis – and I recognise for the moment the difficulties raised by Justice Hayne.

GUMMOW J:   Publish the fact that it had broken its contract with its customer?

MR HALE:   What it was doing was endeavouring to avoid liability to the holder under section 67(1). That, we say, is not a legal, social or moral duty or interest of the kind recognised in this area of discourse.

FRENCH CJ:   This is your point at paragraph 34 of your submissions, is it not, that this is just supporting a private commercial interest?  It does not inform the defence of qualified privilege.

MR HALE:   That is correct.

FRENCH CJ:   And that is all that you are really wanting to say.

MR HALE:   That is what I am wishing to say, yes.  And what occurred, as I say ‑ ‑ ‑

GUMMOW J:   What do you say is the private commercial interest?

MR HALE:   I do not think we defined it in the submission, but the private commercial interest is that the Bank was endeavouring to avoid liability under the cheque to the holder of the cheque pursuant to section 67, recognising, as I do, some of the difficulties of the operation of section 67, and the communication perfects or engages that mechanism.

KIEFEL J:   Do the recipients of the notice of dishonour have an interest in receiving the Bank’s decision upon it?

MR HALE:   Again, they certainly have a commercial interest.  Whether that rises to the level of an interest recognised in the law of defamation or qualified privilege is another question.  But even if they did, then the Bank would fail in its defence because it did not have the reciprocal duty or interest to publish.

KIEFEL J:   To what extent does the – I am just trying to understand whether your argument relies entirely upon the approach taken in Davidson’s Case, which seems to be to the effect that preceding an error denies the possibility of the occasion for the qualified privilege arising, or as you seemed to be suggesting before, that the contractual obligations of the Bank might deny the possibility of the occasion arising.

MR HALE:   We go further than Davidson, but at the same time, embrace the two central reasons for Davidson which is, firstly, that the Bank was operating under an error in making the communication and therefore there was not an occasion of common law qualified privilege.

KIEFEL J:   But what does error have to do with defences of qualified privilege, because many defamatory statements are wrong.

MR HALE:   There is no doubt about that, but what is at issue here is whether or not there was the relationship, or the relation to which reference has been made in Bashford.  Was there the relationship between the parties of such a kind that the communication would come within the protection?  Our simple proposition is, is that one does not establish an occasion of common law qualified privilege by mistake.  So if there is an established relationship, if it is a privileged occasion, then of course, absent malice, then the fact that the communication is in error or contains an error is not to the point.

KIEFEL J:   If the Bank itself had not been mistaken about its own actions, but say, for example, it had relied perfectly innocently and without knowledge on information provided by a third party in doing something in relation to a customer, would the defence apply?

MR HALE:   It must and I hope I am not avoiding this question, but as your Honour has seen, the need to concentrate on the particular circumstances immediately before the giving of the communication.  So one really needs to understand the precise factual circumstance to determine whether there is such an occasion, because it has to be an occasion – there has to be a reciprocal duty in the interest, which would be recognised as being necessary for the common convenience and welfare of society.

KIEFEL J:   But what I am trying to determine is is it the fact of mistake itself or the fact that the Bank is mistaken as affecting its contractual obligations that is important?

MR HALE:   Yes.  There are two elements which go to that.  The first is – and I was about to come to that – perhaps I can go back one step.  The Bank clearly dishonoured the cheques because it mistakenly believed it was entitled to do so.

GUMMOW J:   Mistake is irrelevant to a breach of contract, is it not?

MR HALE:   Indeed.

GUMMOW J:   It enters into questions of formation – question of breach.  If you break the contract, you break the contract.  It is no defence to say “I did not mean to.”

MR HALE:   Exactly so.  That is central to one of our propositions.  The Bank was in breach of its contractual arrangements with its customer, namely, the real estate agent.  It is difficult to see how on the one hand the communication, that is, the notice of dishonour, could be in breach of duty, that is, breach of contractual duty, and pursuant to duty, namely, the duty of communication.  The fact that the communication constituted a breach of the contractual arrangements is an essential or highly relevant point in determining whether there was in fact a privilege communication, whether there was a relevant duty.

GUMMOW J:   Are there other cases on qualified privilege outside the banking situation where there is a breach of contract and communication of it?

MR HALE:   I must say, not in precisely those terms.  The role of contract has been relevant and been the subject of consideration in a number of cases.  For example, in Bashford itself the contract was between the publisher and the recipient and in that particular case this Court held that that of itself was a relevant albeit not determinative matter in determining that there was a duty of publication.  In Howe & McColough v Lees there was a contractual arrangement between the various sellers requiring them to notify persons with whom they dealt who had not delivered or paid on time.  Again, the fact that there was a contract was regarded as relevant to the determination.  There again, that contractual arrangement was between all the members of the syndicate or the group, namely, the recipients, the publishers and those who received the communication.

In Macintosh v Dun, which dealt with the credit reference, there was a contract requiring Dun – later Dun and Bradstreet – to provide information.  But in that particular case the Privy Council took the view that the contract was not one which would give rise to a relevant duty because of what the contract required of Dun, of the publisher, because in that particular case it was a contract which required the provision of information, some of which was confidential, some of which was uncertain, and therefore the Privy Council took the view – and this is the way this Court interpreted it in Bashford – that it was not appropriate in those circumstances to encourage such a contractual arrangement.

Now, there are three cases in which the issue of contract has come up but in slightly different circumstances but by analogy or applying similar considerations.  In each of those cases, contract in different terms was relevant to determining whether or not there was the relevant duty or interest.  So it is in this case, but we put it a different way.  The contractual arrangement is between bank and customer and the fact that the contract has been breached or what – the communication was in breach of contract is relevant to the issue of whether or not the Bank had a duty to publish that notice of dishonour in circumstances where it was going to be in breach of its contract with its customer.  We say that is an important aspect of determining duty.

KIEFEL J:   Is that rather approaching the question of duty or interest only in relation to the Bank and customer and not the Bank and other parties who might be interested to know what the Bank’s decision is?

MR HALE:   It is.  It puts it in a slightly different context but if ‑ ‑ ‑

KIEFEL J:   It narrows it, rather, does it not?

MR HALE:   It is slightly different but in each case it must be relevant to the duty because if we go back to the authorities when they talk of duty, particularly the 19th century cases and even earlier, it is a duty where a person should almost of moral obligation or social obligation feel compelled out of duty to inform someone of something, either because it is in response to an inquiry or for a variety of different reasons and what the honourable person would do.  It is a duty which I think Lord Lindley picks up in Stuart v Bell and we refer to in our written submissions.  It is a duty – if I can give your Honours in our written submissions at paragraph 32.

FRENCH CJ:   It is footnote 19.

MR HALE:   It is a duty which would be recognised by people of ordinary intelligence and moral principles.  That is the level of the duty.  Then in paragraph 32(b) of our submissions we pick up Macintosh v Dun, again identifying it is a duty that is recognised for:

the common convenience and welfare of society – not the convenience of individuals or the convenience of a class –

that is a sectional interest, but for:

the general interest of society”.

FRENCH CJ: That is (1908) 6 CLR 303. It would help if you cited the references.

MR HALE:   I am sorry, yes, I should have.  Also, in some of the earlier authorities, and if we go to paragraph 37 of our written submissions at the bottom of page 10 and over the page we pick up the sort of circumstances in which there is such a duty.  Firstly, picking up Bowen v Hall:

it is better for the general good that individuals should occasionally suffer than that freedom of communication between persons in certain relations should be in any way impeded –

Also Wason v Walter, which is a case in slightly different circumstances which I think is more concerned with report of court proceedings but still deals with fundamental principles; the occasional inconvenience to individuals arising from them must yield to the general public good.  So that is the nature of the duty which is generally to give rise to overall public benefit, and that is ‑ ‑ ‑

HAYNE J:   In the Court of Appeal at page 105 in paragraph 70 the duty or interest concerned is identified as arising by reason of matters referred to, line 11 and following, “However, unless communication is made,” et cetera, and that is a matter which I had understood to be taken up by the respondent Bank in paragraph 19 of its submissions.  But focusing for the moment on the Court of Appeal, what do you say about what is there said?

MR HALE: Firstly we say that – and this goes back to the way one views section 67 – firstly it is submitted that what Justice McClellan does, adopts a construction of section 67 of the Act which does not properly accord with its terms. We have put the proposition as to what happens with the service of the notice of dishonour. It is something that is in order to avoid liability to pay rather than simply the giving of notice. What his Honour says, from about line 12, “unless communication is made, the payee will not only not receive the funds to which they are apparently entitled”, that, with respect, does not sit well with section 67 which is to the effect that if the notice of dishonour is not given and not given reasonably as soon as practicable, then the Bank must honour the cheque. So that misconceives the role of dishonour.

Nextly, what his Honour does is he does not, in our respectful submission, focus on all of the circumstances – he has not scrutinised all of the relevant circumstances of this particular case but, rather, adopts a general view as to what is in the good order of society, that is, an efficient banking system.  What he does not do is concentrate on the fact that in this particular case the Bank was – the notice of dishonour was made in breach of contract and has not dealt with all of the circumstances leading up to the notice of dishonour; the important fact that there was no duty or obligation to have any communication with the payees in the particular circumstances, rather, the obligation was simply to pay on the cheque.  So he has not concentrated on the specific.

Nextly, what his Honour does, although he does say it is necessary for the good order of society, there seems to be more a concentration on the efficiency of the banking system as distinct for the good of society as a whole and going back again to Macintosh v Dun ‑ ‑ ‑

HAYNE J:   Well, is it efficiency of the banking system, or is the reference to “efficient” in line 4, the reference to “for a time” in about line 16 or so and “delay” in about line 24 a reference to the position of the customer?

MR HALE:   I think, with respect, that is probably what he is doing but again ‑ ‑ ‑

HAYNE J:   Not the Bank’s customer, sorry, the payee of the cheque.

MR HALE:   The payee. Again, that comes back to the first point of the construction of section 67, but even so, can it be said that the particular relationship in the banking system between bank and customer and the need for efficiency, can that be said that that is something which would be elevated above private commercial interest or sectional interest, to which Macintosh v Dun is referring, or does it rise to the level for the good order of society.  The next aspect is ‑ ‑ ‑

HAYNE J:   Well, just before you leave that and this may be more a question for Mr Sackar, what is not immediately apparent to me is what is the significance to be attached to this question of time that appears in paragraph 70?  Why does it matter whether the communication is made at a particular time in determining whether the occasion is an occasion of qualified privilege?  Now, it may do, it may not, but do you want to address any submission about that matter?

MR HALE:   Only this, that, leaving aside the section 67 issue, there may be commercial reasons why the Bank wishes to communicate earlier rather than later, but those commercial interests would hardly be elevated into “for the common convenience and welfare of society as a whole”. Then, another aspect is that – going back to the authorities to which I earlier referred in Bashford ‑ ‑ ‑

GUMMOW J:   I am just not sure – this may not be your problem, I suppose – I am not sure I follow the sequence of the reasoning in paragraph 70 in the Court of Appeal.  How do you see the steps in the reasoning?

MR HALE:   Well, as I see what his Honour is saying is firstly, a payee has an interest in knowing promptly whether his cheque will be met.

GUMMOW J:   Well, we start with the situation in this case they were bearer cheques, were they not?  It is pay X or bearer, is that correct?

MR HALE:   I think that is correct.  My learned junior will just check that.  Yes, your Honour is correct.

GUMMOW J:   So we are talking about the holder, really.

MR HALE:   Yes.

GUMMOW J:   Who happens to be the bearer.

MR HALE:   Yes.  What his Honour seems to be saying, although he is concentrating on the payee, is that it is in the no doubt commercial interests of the payee to receive those funds promptly, to be notified promptly as to whether the cheque will be met and, therefore, there must be a duty on the part of the Bank to meet that expectation.

HAYNE J:   We begin with the notion of duty at line 1 on page 105:

by affording the defence of qualified privilege to someone, who by reason of their own error is under a duty to communicate the consequences of their error to another –

Does his Honour identify what that duty is?

MR HALE:   That is the point that we make.  There was no duty.  Because there were funds there was no reason at all to communicate with the payee.  It only had one function and that was to pay on the cheque.

HAYNE J:   But even if there were no funds the Bank could have chosen to – could have.

MR HALE:   Could have chosen to pay – could have, yes.  His Honour does not, with respect, identify with any precision at least what that duty was, notwithstanding the authorities to which I have earlier referred make it plain that one needs to ‑ ‑ ‑

GUMMOW J:   It may be implied, but it something out of the Cheques Act.

MR HALE:   He seems to be, but again, the difficulty with that, which I have earlier referred to from about line 13:

unless communication is made, the payee will not only not receive the funds to which they are apparently entitled –

Now, that, with respect, is not correct.

FRENCH CJ:   He is really characterising the approach of Justice Hilbery in Davidson’s Case in 70, is he not, and that is really an approach which is responding to the proposition that you can have a qualified privilege, an occasion of qualified privilege, built out of error, as distinct from an existing occasion in which you make an erroneous communication?

MR HALE:   That is so.  Your Honour the Chief Justice, I am sure that is what his Honour has done.  He has picked up the language.

KIEFEL J:   Has he not said, “I apprehend underpins the approach of Hilbery J”, trying to understand why that approach was taken in Davidson.

MR HALE:   Yes.  Under the Cheques Act, of course, the only obligation, as Justice Hayne has pointed out, is to pay or dishonour.

FRENCH CJ:   In the context of his characterisation of Justice Hilbery’s approach his Honour is, if you like, speaking in a wider context than that created by the Cheques Act.

MR HALE:   Perhaps he is.  Well, he probably is, and he is talking at a level of abstraction or generality which perhaps is unwise insofar as it is not concentrating on the specific.  But another aspect of what his Honour has done is, in coming to the conclusion – assuming for the moment these sectional or commercial interests do rise or are said to rise to the level of being for the good order of society, the question is, what is the evidence of that?  Again, going back to Bashford, and particularly picking up Andreyevich which is referred to in Bashford at paragraph 55, and I think it is also picked up by Justice Gummow, is that there is a requirement to show by evidence that there is a reciprocal duty and interest of such a kind and it was desirable as a matter of public policy and, in a sense, that it is so obvious and would be recognised by people of ordinary, intelligent and moral principle.

Again, going back to the authorities, it is for the greater public good that persons in Mr Aktas’ position should suffer the consequence of the Bank’s error rather than the Bank itself.  Now, applying the principle of people of ordinary, intelligent and moral principle, one might be doubtful as to whether the ordinary person would recognise such a duty and that is really what the issue comes down to when it comes to matters of public policy.

KIEFEL J:   On one view it might be rather somewhat conflating two concepts to speak of the occasion as being the duty to communicate a fact or matter and the assessment which appears at the end of the passage from Toogood v Spyring about the welfare of society.  If you combine them, as you seem to do, to create some great moral imperative before a communication can be made, it might be to skew a little what I think was said in that case.

MR HALE:   Perhaps if we could go back to paragraph 64 of Bashford where Justice McHugh refers to Baird and identifies what he says to be the correct approach, which is, one must look at the alleged libel, examine all of the circumstances in which it was published, to then identify what the relationship between the parties is and for there to be a duty, then it must be ‑ ‑ ‑

KIEFEL J:   Perhaps we just leave the word “duty” out of it for a moment because it carries other connotations with it.  Is it not whether or not the occasion is where a need or obligation to communicate has arisen, that is what you determine?

MR HALE:   There is a relationship between the parties.

KIEFEL J:   And then perhaps one approach, according to Toogood’s Case, you look at that in the context of social welfare and the need for freedom of communication.

MR HALE:   Yes, and perhaps to put it another way, you look at what is said to be the duty or interest – and I am going back to using those words because they seem to be – Adam v Ward and all of the cases refer to it – but one looks at the relationship in which the communication was made to see what is that relationship, to see whether what is said to be a duty pursuant to which the publication is made is a duty which is recognised as such under the law of defamation.  It is only recognised as such if it is for the common convenience of welfare of society or, perhaps to put it another way, where Justice McHugh in Bashford refers to a result.

KIEFEL J:   Are you going to refer to the decision in Guise v Kouvelis at all?

MR HALE:   I had not intended on doing so, but I am quite happy to do so because it is another one which actually refers to the need to look at all the circumstances.

KIEFEL J:   Well, yes, but it might also be an example of what I was discussing, and that is, where you inject too much of the social welfare principle in the determination of the perceived need to communicate at the outset because in Guise v Kouvelis (1947) 74 CLR 102 the majority looked at the – this is the case where an officer of the club, where there was gambling taking place, felt obliged to accuse one of the players of being a crook. The majority thought that the basis of the privilege being social welfare did not warrant him saying that, whereas Justice Dixon in dissent said that he was a member of the club. His Honour approached it, at page 124, on the basis that the circumstances were such that it was incumbent upon the defendant to take some step. The matter was put by his Honour as simply as that, at least as the initial inquiry, whether or not it was incumbent to take some step.

MR HALE:   Yes.  Again, also in Guise v Kouvelis I think Justice Dixon, also at pages 116 through to 117, again emphasising the importance of looking at all the facts particularly, refers apparently approvingly to authorities which refer to individualising a particular case, as is done in negligence. To answer your Honour’s question, what I was seeking to do in picking up those authorities following Toogood v Spyring, is what we have at paragraph 70 of Chief Justice McClellan’s judgment is what he seems to be explaining as the obligation or duty insofar as he seems to be suggesting that a bank should in circumstances, even when activated by an erroneous view of duty, should be protected, or there should be a recognised duty, because the payee needs to have some certainty.  Therefore he says that duty arises because it is in the interests of the banking system and therefore for the good order of society.

The proposition, the way I was testing that, was that one looks at the way his Honour has described it and all the authorities seem to identify that the nature of these duties is one for the good order and convenience of society and ask whether in those particular circumstances that so‑called duty as found by Justice McClellan falls with or is consistent with those authorities.  So, one asks oneself, is the transaction that Justice McClellan identifies one which would be recognised as being for the convenience and welfare of society as a whole.

KIEFEL J:   To what extent is the duty of which you speak, to communicate or otherwise, defined by the interest of the person receiving or needing to know the information?

MR HALE:   It must be considered because there has to be a reciprocity of interest.  The duty and interest of communicator and recipient must correspond in some way.  I have been mainly concentrating on the publisher.

KIEFEL J:   But really what I am asking is, is it possible that the duty can arise simply because there is a need on the part of a third party, such as a the holder of a cheque, to know what the Bank’s decision is?  That might be what Justice McClellan was alluding to.

MR HALE:   I think that is what he was saying but there could not in these circumstances for the reasons I have earlier described because it has to be a duty which would be recognised in all the circumstances.

HEYDON J:   Just a moment, let us look at interest and let us see whether underneath paragraph 70 the Chief Judge at Common Law is not simply saying this, in commerce where money is owed to you it is very important that you be paid in good time but if you cannot be paid in good time it is almost equally important to know that you are not going to be paid in good time so that you can approach some – if you need the money urgently to pay someone else - and commerce often depends on a high degree of velocity in transactions – you can go to some bank or some other financier to get the money or you can make a direct approach to the debtor and demand an explanation for what has happened.  There is a real interest, is there not, which would be recognised by people of sound morality and judgment and so forth, in appreciating that up‑to‑date information is crucially importantly, commercially?

MR HALE:   There are two aspects of that.  The first is, undoubtedly, there is a commercial interest.  The question is whether it is any more than simply a commercial interest or a sectional interest, and does it rise to such a level ‑ ‑ ‑

HEYDON J:   But it is wider than the banking system.

MR HALE:   Is it indeed wider than the banking system?

HEYDON J:   It is wider than the banking system.

MR HALE:   But even so, the question ultimately has to be looked at.  Can it be said, or what is the evidence of that because what ‑ ‑ ‑

HEYDON J:   It is a matter of judicial notice.

MR HALE:   Perhaps it is a bit more than that, with respect, because Mr Tyree in his article, to which we have made reference, identifies – fundamentally, the point comes down to this, if there is an error ‑ ‑ ‑

GUMMOW J:   Well, the point comes down to what Justice Hilbery said in 1940 really, which is set out at paragraph 65 of the judgment of the Court of Appeal:

you cannot by making a mistake –

“mistake” is perhaps a generous word –

create the occasion for making the communication, and what the bank seeks to do here is to create an occasion of qualified privilege by making a mistake which called for a communication on their part.”

So you have conflicting interests, I suppose, in a sense.

MR HALE:   Here, as I was identifying earlier – and there is a large number of authorities which has been adopted in this Court but goes back to Hebditch v MacIlwaine [1894] 2 QB 54 at 59 - what has occurred in this particular case, as I identified earlier, it is clearly that the Bank dishonoured the cheques because it believed it was entitled to do so and believed it was entitled to serve the notices of dishonour. It clearly did not believe there were available funds.

GUMMOW J:   Now, section 67(1) is something of a red herring in a way. Section 67(1) operates to oblige the Bank to pay the holder even if there is a defect in the holder’s title, or the holder has no title. Even if that is so, the Bank is still liable to pay that defective holder because it has not jumped quickly by acting to give notice of dishonour as soon as reasonably practical.

MR HALE:   Again, going back to ‑ ‑ ‑

GUMMOW J:   So the stress of working out questions of defect in title of holders where there has been a negotiation, usually, is pushed into the Bank.

MR HALE:   Yes, and undoubtedly the communication, as I say, was in these circumstances on this occasion ‑ ‑ ‑

GUMMOW J:   So if you are looking at matters of public policy in a loose sense, the statute at any rate contemplates that banks on some occasions will have to pay when they should not have to pay, as it were, in a loose sense, because of the pressures of prompt notice.

MR HALE:   Yes.  That is consistent with – and I was about to go to Mr Tyree’s article, but it is consistent with what Mr Tyree is saying is there is ultimately a balance to be considered whether the person in Mr Aktas’ position should be without remedy and suffer loss, or whether in such circumstances the Bank should suffer such loss in such circumstances.  It is where should the loss fall. 

We have set out partly in our written submissions parts of what Mr Tyree has said, but ultimately, firstly, why would the banking system be adversely affected in any way, and this goes back to the issue of evidence.  Why would it be affected adversely if, in fact, it was the Bank who had to bear that loss rather than the defamed person.  There is nothing to suggest that there is ‑ ‑ ‑

GUMMOW J:   The Bank’s loss being occasioned by it acting so as to give information to the payee.

MR HALE:   Yes.  The question – when it is done on a wholly mistaken basis why should it be that the Bank not bear that loss?  Why should it be borne by the individual who is defamed?

KIEFEL J:   Loss distribution is not a concern of the law of defamation though, is it?  It is concerned with conduct and effects on reputation.

MR HALE:   Yes, ultimately that is what we are concerned with, but again here – well, perhaps just picking that up, because I was talking about the balance in the way Mr Tyree has referred to it – but ultimately, picking up what your Honour said, is the law of defamation is about vindication of reputation, and therefore why should it be – and vindication is the amount of damages that are awarded must be sufficient to vindicate that particular reputation.

KIEFEL J:   Could I take you back to the context of the defence of qualified privilege, which is concerned with an absence of malice, is it not?

MR HALE:   Yes.

KIEFEL J:   The common law holds that no inference of malice which would otherwise be drawn from the making of a defamatory statement, no inference will be drawn if there is some occasion, which is to say the need for the particular communication arose in the circumstances.  Now, what I have difficulty with is what does mistake have to do with the context of an absence of malice?  It would seem to me to bear no logical connection with the matter with which qualified – or the matter to which qualified privilege is addressed.

MR HALE:   Yes, I will address that, and while that is obviously what Toogood v Spyring refers to and it is picked up in a number of cases, Adam v Ward, the way the law operates is if there is a communication or there is a relationship or a duty and interest then absent establishing malice then it is assumed there is no malice.

KIEFEL J:   Yes.

MR HALE:   The circumstance – the way one answers that is with the proposition to draw the distinction between whether there is an occasion; that is to say, there is the reciprocal duty and interest on the one hand.  Secondly, the second step, assuming there is, one then looks at the communication to determine whether it was published within that relationship.  Now, in that second step mistake is not to the point; that is the very purpose of the defence, so that in such a relationship the duty and interest is such that a defamatory false statement is protected.  It is in relation to the first step, that is to say whether in fact there is that relationship, and the authorities plainly establish ‑ ‑ ‑

KIEFEL J:   You cannot just take the notion of whether there is a relationship out of the context in which qualified privilege works, and the purpose for which it works, and the communications it is intending to protect.  It is just to take one aspect of it, is it not?

MR HALE:   In our respectful submission, no, because the first point is to identify, going back to the authorities, in all of the circumstances where there is such a duty and it brings up the public policy considerations.  Once one establishes there is such a duty, the next question is to look at the particular communication on the basis there is that duty.  But so far as identifying whether such a duty arises, the authorities appear to be clearly established.

HAYNE J:   An alternative point of view may be that the conclusion about reciprocity of duty and interest suffers the vice of circularity.  It suffers the vice of circularity because there is a communication, more particularly, there is an occasion for communication only because the Bank refuses to pay.  To conclude from the fact that the Bank’s refusal to pay creates an occasion for communication in which there is reciprocity of interest might be thought to conclude the question of reciprocity by considering only the position of the Bank.  Moreover, to inject notions of promptness into the analysis may be thought to be a red herring when the Bank must communicate its refusal promptly else it remain liable to pay.

MR HALE:   Picking up what your Honour has just said, confining the analysis or the scrutiny as to whether there is an occasion simply to the Bank’s position would be inconsistent with the authorities Andreyevich and others and of making full scrutiny of all of the circumstances leading up to the ‑ ‑ ‑

GUMMOW J:   Well, Sir Frederick Jordan said, is it desirable as a matter of public policy in the general interests, which must include third parties.

MR HALE:   I think I follow your Honour, yes.  This is why in determining whether there is such an occasion not only is the question of breach of contract relevant but it is necessary to look objectively, as the authorities will tell us, as to whether or not there is an occasion because a publisher will not be protected by qualified privilege if it erroneously and honestly misconceives the nature of its duty or interest, which is what we say is the foundational problem here.  To give the example that I mentioned earlier, Hebditch v McIlwaine, if I remember the facts correctly, there was a petition or letter sent by a number of persons about an election to a particular officer believing that that particular officer had the opportunity to do something about those elections, perhaps call new elections or investigate.  The relationship was thought to be by electors to the person who had some control of the election.

In fact, the person to whom the petition was sent did not have any such function, albeit had the person had that function, it would have been no doubt a privileged occasion.  What it was there held was the fact that those publishers – and of course they defamed somebody – because those publishers were in error, even though they honestly believed there was a duty, one looked at it objectively, and there was no duty.  This has been picked up and Hebditch has been picked up by Justice McHugh in Bashford at 171 ‑ ‑ ‑

GUMMOW J:   Just a minute, at what page?

MR HALE:   Paragraph 171.  That is my note, I hope that is correct.

FRENCH CJ:   That is Justice Kirby, I think.

MR HALE:   Was it?  I do apologise.  Yes, it was.  I may have the wrong reference.  I suspect I have the wrong reference.

HEYDON J:   Paragraph 71.

MR HALE:   It is 71.  Thank you.

HEYDON J:   Footnote (110).

MR HALE:   Yes, it is footnote (110), and it is ‑ ‑ ‑

GUMMOW J:   [1894] 2 QB 54.

MR HALE:   It has also been picked up, if I could give these references – Justin v Associated Newspapers Limited (1966) 86 WN (Pt 1) (NSW) 17, Justice Walsh at 33.  My note is also Adam v Ward [1917] AC 309 at 334, Stuart v Bell itself [1891] 2 QB 341 at 349, and Stephens v West Australian Newspapers (1994) 182 CLR 238. I hope I have those references accurately. I suspect, having regard to the first one which was inaccurate, there may be some ‑ ‑ ‑

GUMMOW J:   What is the point of difference between Justice McHugh and Justice Callinan and the other members of the Court in Bashford?

MR HALE:   Justice McHugh took the view that, as I see it, there was no duty because there was a failure to establish with sufficient precision the particular circumstances of each particular recipient.  That is the way I read his Honour’s judgment, whereas the joint judgment and as I understand your Honour’s judgment in Bashford, was that the facts were sufficiently well established to be able to identify that reciprocal duty in the interest, in respect of each recipient, because of the evidence which was that firstly each of the recipients was an occupational, health and safety person and so on.  That is the way that I read the difference, and it is the lack of specific evidence.

HAYNE J:   Well, paragraph 93, “Information Australia was a volunteer”, might perhaps encapsulate a strand, an important strand in his Honour’s reasons.

MR HALE:   Yes.  Also, I was dealing with the issue of mistake.  I apologise, I am repeating myself, but it goes back to the fact that these communications or the notice of dishonour clearly came about because the Bank took the view it was entitled to dishonour, that there were insufficient funds, and therefore it assumed it had that obligation, if I might call it that, of communication and, in fact, it did not.  Also, when one goes to look at the specifics of the case as to whether there is a duty, one must deal with the fact that there was on this particular occasion a mistake, as we have already referred to, and whether there is such a duty or it is necessary there be such a duty to protect a publication when there was no reason at all for there to be any communication at all and perhaps fundamentally, going back to the question of duty, is the fact that it involves a breach of contract.

KIEFEL J:   When you say there was no need for any communication, perhaps not this particular communication, but the presentation of the cheque called for a response, did it not?

MR HALE:   It called for a payment.

KIEFEL J:   That is a response, yea or nay.

MR HALE:   Yes.  Your Honour says yea or nay, but in the circumstances where there was the contractual obligation to pay, there was no reason at all to dishonour.  In those particular circumstances there was no relationship, if I might call it that, which was established between the parties which would give rise to the duty and interest which would protect this particular communication.

KIEFEL J:   I am still having some difficulty coming to grips with the notion of the party being wrong or mistaken affecting the operation of a defence of qualified privilege, and perhaps that is my difficulty, but there are two passages in Bashford – I think you touched upon one – which refer to the relevance or otherwise of error. I think the first is paragraph 32 in 218 CLR 366 in the judgment of the then Chief Justice, Justices Hayne and Heydon and I think the second is in Justice Gummow’s judgment at paragraph 126. They might be taken to suggest that inaccuracy or mistake is not really relevant to the operation – perhaps paragraph 32 more clearly – does not really operate in the context of qualified privilege, it does not prevent the occasion from arising.

MR HALE:   Paragraph 32, that is dealing with an accurate report.  If your Honour is referring to the mistake as to the content of the communication on such an occasion, yes, of course that is protected.

KIEFEL J:   The comment is there made obviously in the context of fair and accurate reporting defence which, as their Honours explain, deals with the quality of what is said, whether it is right or wrong, inaccurate or accurate, and their Honours contrast it with the duties or the types of – their Honours say “all manner of communications” which are the subject of a defence of qualified privilege.  It is the distinction their Honours are drawing there that seems to me to suggest that inaccuracy may not have a great part to play in a qualified privilege defence.

MR HALE:   Perhaps the answer is – and I have not been directing my attention to those passages – but in fair protective report, and when it was dealt with under common law qualified privilege the view was taken that there was such a relationship of duty and interest because of being members of society and therefore having the interest of being told what was happening in court and so that was the relevant duty and interest.  Also, the occasion of qualified privilege in the defence is engaged in circumstances where it must be assumed that the matter published was defamatory and generally untrue, otherwise you would not be dealing with a defence.

So it is foundational really or it is fundamental to the operation of the defence is that it is protecting inaccurate, misleading and false statements.  But the occasion arises because of the necessity, it being thought, on such occasions to protect them.  That is a different question from whether or not there is such an occasion and Hebditch v McIlwaine is one of the examples.  Whether or not there is such an occasion has to be determined objectively where the subjective views of the parties are not relevant and, hence, the example I gave of the facts in Hebditch.  So a mistaken view as to whether one has the duty does not give rise to that duty.  It has to be objectively determined and, hence, one needs to look at all the circumstances.

I am reminded also, one of the errors here is error as to the Bank’s view as to its contractual obligations.  Clearly enough it believed it was contractually entitled to serve the notice of dishonour and it clearly was mistaken in that.  That is why the communication took place and objectively there was no such duty or interest.

GUMMOW J:   Has there been any academic comment on the Court of Appeal’s decision in this case?

MR HALE:   The loose‑leaf service makes reference to it and I think it paraphrases it.  It says the debate “has not stopped there”, or something to that effect.  As my learned friend reminds me, the error here is better understood as an error which led to a breach of contract, which is relevant to the issue of duty.  I had not thought it necessary to take your Honours to Mr Tyree’s article – I am sure your Honours will have the opportunity of reading that – which identifies the debate.

FRENCH CJ:   Thank you, Mr Hale.  Yes, Mr Sackar.

MR SACKAR:   The loose‑leaf service that my learned friend referred to is the law relating to banker and customer in Australia, contributed to partly by Mr Tyree, but that is the only discussion we have found of any of the issues. 

Can I start with trying to be a little precise, something I may live to regret shortly.  It is important, when one is looking at the occasion, to focus upon the date of publication.  Both in the outline, paragraph 9, which has been the subject – and I am now referring to my learned friend’s outline – of earlier comment by some members of the Court and also in the chronology, which is attached to his submissions, there is reference to events which postdate 1 December.  That becomes or may become relevant to a number of issues.

I think what I am about to say may not be controversial – that is, Mr Hale may not controvert what I am about to say but I will say it anyway.  The case was pleaded on the basis that 1 December was the date of publication – not the 2nd nor the 3rd, but the 1st.  The relevant statement of claim, which was the statement of claim extant at the 7A hearing, if I can describe it colloquially that way, appeal book 1, page 149, shows that in each and every case the publication is asserted to be 1 December and in each and every case – and I am looking now at page 150 – the mode of publication or the particulars of publication are said to be words endorsed or stamped on the cheque.

Why do I say that?  I say it for this reason:  it is plain and obvious on the facts of the case that after the 2nd – that is, the morning of 2 December at 10.19 and 10.20 when the PCO status was reversed on the relevant account – thereafter it is accepted not only was the placing of the PCO on the afternoon of the 1st erroneous and wrong, but thereafter her Honour and the Court of Appeal make reference to there being no explanation as to how it could be that automated correspondence generated – and some of that correspondence Mr Hale took you to, and you will note that it is dated 3 December.

The question here for this Court, however, is this - 1 December is the date of publication, so the question of when, if at all, there is an occasion is the date of the publication.  Whilst his Honour Justice Dixon, as he then was, in Guise v Kouvelis, indicates one must look at the circumstances up to and surrounding the publication for the relevant purposes, which I will return to for another reason shortly, when the jury was addressed, for example, at the section 7A hearing on 2 and 3 November 2005 – the statement of claim I have taken you to is dated 3 November – they were addressed specifically on the basis that the publication was the endorsement on the cheque.

Now, I have that transcript and I do not want to burden the Court with that, but the question of the relevance of the second and the third emerged again in the Court of Appeal when in the absence of any articulation of malice, it being abandoned on day four of the trial before Justice Fullerton, my learned friend attempted to raise malice again but by reference to events on the third and that was denied, and I need not take your Honours to that, it is recorded in the Court of Appeal.

The relevance of all of this is that when one was looking at the occasion, the events which follow, which may have had some bearing had the case been conducted in a different way, or if the case had been pleaded in a different way – and if I may say frankly may not lead to any different result at the end – but the case needs to be looked at if one wants to be precise as to the date of publication being 1 December.  We say that that approach accords wholly first with Justice Dixon, although he uses ‑ ‑ ‑

HAYNE J:   Just before you come to that, was that publication a communication of dishonour within the meaning of section 69, that is, the stamping on the back of the cheque?

MR SACKAR:   There is no evidence, quite frankly, about that.  That is one of the problems and one of the mysteries of the way in which this case was run.  It was pleaded and there were admissions made at the 7A hearing that the relevant publication was the first.  That does not answer your Honour’s question, I accept, because the facts seemed to suggest on one view of them that the publication to other persons – if I may use the term now from the Cheques Act “notice of dishonour” – may well have been on days subsequent to the first, but that is not the way the case was pleaded or conducted before the jury.

HAYNE J:   So it would not be I think a departure from practice if the person who presented the cheque on the holder’s behalf, which in some cases would be a collecting bank other than Westpac, had the paper returned to them on that day?  Perhaps I am mistaken, but these are matters which you say were not explored in evidence.

MR SACKAR:   Not explored.  The case, for whatever reason, was confined to 1 December.

HAYNE J:   It was admitted that there had been a publication of what had been stamped on the back of the cheque and that that publication had occurred on the 1st?

MR SACKAR:   Correct, although factually that does not appear to be the case, or may not be the case.

FRENCH CJ:   Her Honour made findings of fact about that at paragraph 25, page 656 in volume 2, I think.  It looks as though that covers all communications with both the Bank’s own customers and collecting banks.

MR SACKAR:   The other thing I should say, while we are in her Honour’s judgment, is that you will notice at page 661, paragraph 35 - again it may not in fact be the fact but she records:

It was common ground between the parties that the publication of the defamatory matter occurred on multiple occasions on or about 1 December 1997 when the words “Refer to Drawer” were stamped . . . either after they were presented for payment –

and so on.  Now, the factual material is unsatisfactory.  However, the point of drawing this to the Court’s attention is not simply to criticise anybody but simply to highlight the relevant date from the point of view of determining whether or not there was an occasion.  I will not take the Court to it but in Howe v Lees 11 CLR 361, particularly the judgment of Justice O’Connor at 373, his Honour says:

It may well be conceded that the defendants, after they discovered their mistake, showed a somewhat mean spirit and an apparently callous disregard of the plaintiff’s position, in endeavouring to escape from its natural consequences.  Those are circumstances which might fairly be considered in awarding damages, if the plaintiff were entitled to recover, but they could not, in my opinion, reasonably justify the inference that, at the time when the appellants reported the respondent’s default, they did not honestly believe that the default had been made.

This does have some significance because the point of the qualified privilege defence is the question in part whether Westpac had or had any belief at all and if so whether it was an honest belief on 1 December which was the pleaded date.  The facts may have been very different if the case were otherwise conducted but they were not conducted on any different basis. 

The admissions, as I say, were driven by 1 December and the jury was addressed on the 2 and 3 November 2005 on the basis that the publication which they were invited to find as a fact was in fact the publication on the relevant cheques stamped and endorsed “refer to drawer” on the reverse.

FRENCH CJ:   They were dealing, of course, with the 7A process of determining imputations, were they not?

MR SACKAR:   Yes.

FRENCH CJ:   So is there anything material about the date so far as their findings are concerned?

MR SACKAR:   Only to this extent, that the case that was put to them and the questions they answered were not precisely driven by 1 December.  In other words, they did not come back with an answer “Yes, on 1 December there was a publication”.  But the pleading which was extant at that time pleaded only 1 December and no other date, not even on a re-publication basis, and secondly, the address to the jury was always on the basis that the embodiment of the publication or the mode of publication was the cheque endorsed and stamped.

KIEFEL J:   Her Honour at paragraph 35 also refers to the Bank’s acknowledgement of “its liability as re-publisher” when the collecting bank disclosed the fact to its customers.  Does that take it beyond 1 December?

MR SACKAR:   No, we would say not.  Not from the point of view of the relevant occasion because the case was not developed on the basis that what has been called a mistake was either perpetuated by a second mistake or was egregious in the sense that there was knowledge on the part of the Bank and therefore some different position ought to be approached in relation to the re‑publication.

Let me deal with the word “mistake”, if I may, by coming briefly to the main points we wish to make.  I use that term only because it has been used.  There are mistakes and there are mistakes.  A mistake that you are honestly reporting to a police officer some event or some crime and the person turns out to be a citizen standing on the pavement will not protect you in a qualified privilege context.  That is a mistake which clearly goes to the relationship.  We do not advance here at all that a mistake of that kind could create an occasion of qualified privilege.  The mistake here, if that is what one calls it, is clearly an error in the interpretation of the garnishee order, if one wants to be precise about it.

Her Honour did not find anything other than that.  She found that Ms Lidgard, on the afternoon of the 1st, had communicated with someone else within the bank and the bank admitted that erroneously she had placed post credits only on the account which was reversed the following day following a conversation with Mr Thompson.  It does not rise any higher than that, but that does not really distinguish this case from any other type of case where in a confession and avoidance context one confesses either a defamation and in some cases, this one no exception, falsity and then goes on to avoid by some other reason.

The question that really arises here is partly to be answered by a question Justice Gummow posed, namely, the precise difference between the majority in Bashford 218 CLR 366 and Justice McHugh. The distinction, as far as we see it, turns upon with what level of abstraction does one approach the question of identifying or not the occasion of qualified privilege? That is made good by a number of statements both in the majority and one statement I will take you to which my learned friend has already taken you to in Justice McHugh. May I just briefly set the context in which we want to make the points otherwise. May I take the Court to the majority at page 373 and point out a number of things, if I may, there.

GUMMOW J:   The joint judgment, you mean.

MR SACKAR:   The joint judgment, thank you.  There are a couple of words I wish to highlight in the joint judgment’s reciting of Baron Parke’s statement in Toogood v Spyring.  I am reading from page 373:

In general, an action lies for the malicious publication of statements which are false in fact, and injurious to the character of another (within the well‑known limits as to verbal slander), and the law considers such publication as malicious, unless it is fairly made by a person in the discharge of some public or private duty, whether legal or moral ‑

I now emphasise the words –

or in the conduct of his own affairs, in matters where his interest is concerned.

Stopping there, what the Court of Appeal did at paragraph 70, happily or unhappily – and I will put that into context when I come to deal with the questions that undoubtedly may arise there – they were grappling with this notion of reciprocity because, at the bottom of that quote, again relying upon Adam v Ward:

Reciprocity of duty or interest is essential.

But the reciprocity can arise, in our respectful submission, by two persons, at least, driven by their own affairs and in relation to matters that they are concerned with – their interest.

That is the start of the issue.  There is an overlay, an important one, in terms of looking at the question of whether it is in the interests, generally, of society that they be permitted, albeit driven by their own affairs to communicate in a way defamatory of the third person.  That is the starting point, so one need not start at the level of a public or even a private duty and, yes, let me confront that point now.

We accept Justice Hayne’s and Justice Gummow’s characterisation of sections 67 and 69. It is pay up or else type of provision I put to the Court of Appeal that should be regarded as a source of legal duty. Upon reflection, that is not accurate because when one looks at it one finds it very difficult to see a curial process that might be called in aid and in aid of what.

It certainly paints a picture and it certainly sets a backdrop, commercially, in a context where one accepts without too much difficulty that cheques are responsible in Australia every day of the week for passing, if I can put it in a very loose way, a very large sum of money around the community.  On the question of relationship, one thing is clear from Toogood v Spyring, the proponents to the relationship or equal sides of the compact, if I can use that description, do not have to come to that relationship with equal interests.  It is not a case of equality, it is a simple case of reciprocity.

The position here is that the 30 payees had a very keen interest, a commercial one but a very keen one, in the status of the cheques drawn in their favour.  That is to be taken into account when one views either the moral obligation as understood by Chief Justice Griffith in Howe, which I shall come to in a moment, or alternatively, Westpac’s commercial interest of pay up or else.

Now, I am not trivialising one moment Westpac’s interest but it does not have to be of equal weight or significance to that of other persons in the equation.  The mere fact that Westpac had a contractual arrangement with Homewise or, for that matter, irrelevantly, collecting banks had an equal contractual relationship with their customers, not relevant for what I am about to say, does not derogate from or detract from a consideration of qualified privilege in this context.

It does not follow night as day that if Westpac is breaching its mandate and breaching its contract it does not follow that there is no interest amongst the community of interests, including the 30 payees, that there be a communication as to the status of those cheques.  When does time begin to run?  We say the drawing of the cheque, not the presentation of the cheque.  Nothing much may turn upon it but that is really the commencement of the commercial discourse, inevitably, which will take place in the ordinary course of business between the various parties who have an interest in the status of the cheques.

So private interest is sufficient.  I do not advance legal duty, pursuant to the Cheques Act, but it cannot be ignored as a relevant backdrop against which one looks at the issues of commerce – and there is nothing wrong with looking at issues of commerce – in terms of considering whether persons ought to have an ability ‑ ‑ ‑

GUMMOW J:   Commerce between whom?

MR SACKAR:   Commerce between all of the stakeholders, if I can use that colloquialism here.  Westpac has a decision to make – pay up or else, so to speak.  Homewise is perfectly entitled to expect that its contract be honoured, no question about that, and it has been rewarded or compensated appropriately for that breach of mandate.  But that does not really deal, determinatively or at all, with whether the wider community, including 30 payees, have any interest in receiving a communication albeit provoked by an erroneous understanding or belief on the part of Westpac.

So coming back to where the judgment of Chief Justice Gleeson, Justices Hayne and Heydon differ from Justice McHugh, level of generality in answering that question.  That becomes readily apparent, we would say, with great respect.  First of all, the comment made at page 373, paragraph 10:

These principles are stated at a very high level of abstraction and generality.

When one goes to Justice McHugh - may I invite the Court now to go to 386, paragraph 55:

It is of the first importance to understand that references to concepts such as “the common convenience and welfare of society” and similar phrases record a result and explain why the communication and the relevant duty or interest gave rise to an occasion of qualified privilege.  Such concepts are not the determinants of whether the occasion is privileged.  They must be distinguished -

et cetera.  Over the page – my learned friend emphasised this passage.  May I do so for a different purpose?  When Justice McHugh seemingly approvingly quotes Chief Justice Jordan:

“show by evidence that both the givers and the receivers of the defamatory information had a special and reciprocal interest in its subject matter” -

read for that here, the solvency or not, because that is…..of the imputations which it has been conceded were relevantly conveyed non-maliciously.

GUMMOW J:   What is the force of this word “reciprocal”?

MR SACKAR:   The force of it is that there ‑ ‑ ‑

GUMMOW J:   Attached to what you say the relevant situation was here.

MR SACKAR:   An interrelationship, and a common - “community of interest” is the phrase used otherwise, but it is ‑ ‑ ‑

GUMMOW J:   I know.  That is another category of indeterminate reference.

MR SACKAR:   It suits me for the moment to use it, but what does it mean?  It means an interrelationship between the two parties.  It may be drawn upon a business relationship.  It may be drawn here, not in any contractual sense, from a commercial association which necessarily must take place between Westpac and the payees, whether they are customers of Westpac or whether they are customers of their own bank and hence a different collecting bank.

It does not have to be contractual.  It certainly does not have to – as I have said monotonously now, perhaps – turn upon matters of degree.  But there has to be an association if one is looking at commercial association, where in the ordinary course of business there will necessitate communication of some sort or other between the collaborators, the participants, the commercial participants.  Here, not only importantly from the point of view of qualifying privilege, there is no communication outside those persons who would be relevantly concerned with the status of those cheques.

GUMMOW J:   Justice McHugh goes on to talk about corresponding duty or interest.  Do you see that a few lines down?

MR SACKAR:   Yes, he does.

GUMMOW J:   What is the correspondence?

MR SACKAR:   The correspondence should be given as the courts in most of the authorities tend to suggest, not, I accept, with precise identification of the word “correspondence”, but this is not to be given anything other than a broad and liberal interpretation.  One sees elsewhere in the authorities the rather generous approach adopted to the notion of moral duty, sometimes leading to an acceptance of a duty of imperfect obligation being sufficient.  So one has to look at the notion of correspondence as needing to rise no higher than, for example, in this case – and that is the case that we are focusing on – a necessary commercial association which will flow inevitably from the moment the pen is poised over the cheque book of Homewise and signed.

HAYNE J:   But is the proposition you are advancing about the content of reciprocity any larger than the communication by the Bank “I will not pay” is significant, important, consequential to the recipient of the communication, the payee?  If you like, commercially significant, commercially important, commercially consequential may colour it a little, but is the proposition larger than that?

MR SACKAR:   No, but what I am saying is it does not have to rise any higher than that to ‑ ‑ ‑

HAYNE J:   Thus any communication which has significance for the recipient is made on an occasion of qualified privilege?

MR SACKAR:   No.

HAYNE J:   No?

MR SACKAR:   No, because what needs to be looked ‑ ‑ ‑

HAYNE J:   What is the intermediate step that must be examined?

MR SACKAR:   There is no intermediate step.  If I may put it this way, there is an ultimate step.  The question is, as Justice Gummow, if I may suggest, in Bashford, articulates it this way at page 412, paragraph 126, the last six or so lines in his paragraph:

This is because the particular relationship between the defendant and the person in receipt of the communication, and the advantages which the law deems are to be had from free communication within such a relationship, enjoy a significance over and above the accuracy of the defamatory imputation in question.

So ultimately there is a policy consideration which will develop case by case.  It is not just a mere “I would really like to talk to X, therefore, I am with impunity able to say what I will about Y.”  No.  We accept ‑ ‑ ‑

GUMMOW J:   That brings us back to Justice Hilbery, it seems to me.

MR SACKAR:   Except to say this about Justice Hilbery, which I will ‑ ‑ ‑

GUMMOW J:   He may have been right or he may have been wrong, but that is the sort of thing he was focused on.

MR SACKAR:   He was wrong in a couple of respects, but, importantly, Justice Hilbery, when I come to it briefly in a moment, characterised the Bank’s defence in that case, seemingly by his clear perception of the way it was conducted before him, as the Bank putting on the table quite clearly that their error should be seen as a creation of the occasion.  That is the way the case was run before Justice Hilbery.  I will come to that passage in his judgment because it is very important.  Ultimately his reasoning was, well, hang on a minute, because the qualified privilege or the occasion was not extant ‑ ‑ ‑

GUMMOW J:   You want to define the occasion at a higher level, do you not?

MR SACKAR:   I want to do two things.  I want to define it at a higher level, unsurprisingly ‑ ‑ ‑

GUMMOW J:   By going back to the pen poised above the chequebook.

MR SACKAR:   Correct, but there is nothing wrong with that for this reason:  that if one takes Guise v Kouvelis, as one should – Justice Dixon – one has to look, who was it, why, when, et cetera.  It does not make sense to artificially draw the line unless you run a case on that basis, as they did before Justice Hilbery.  Do not worry about a pre-existing relationship.  Do not worry about any practice or custom between us as banker and customer.  We are happy, or so it seems the parties were happy – or at least the Bank was happy – to have that case conducted on the basis that the point from which his Lordship was asked to look at the question of when an occasion was in existence was from the moment they made their error, so it seems.

HAYNE J:   But the occasion you fasten on is an occasion qualitatively described as being the occasion of determining the fate of the cheque.  Is that right?

MR SACKAR:   Correct.  Whatever that fate may be and if ‑ ‑ ‑

HAYNE J:   Just so, but the cheque can have two fates:  one involving communication, the other not.

MR SACKAR:   Correct.

HAYNE J:   You say the fate of the cheque is the occasion because one fate involves a communication.  The communication is an occasion?

MR SACKAR:   Yes and no.

HAYNE J:   They are the best judicial questions and they are the best counsel’s answers.

MR SACKAR:   I would like to raise both hands and point to one as opposed to the other.  Would you assume metaphorically I have?  The point of the drawing of the cheque is simply to indicate that the timeline should sensibly be looked at from the moment the commercial discourse is put into action, and at any point along the way there may be communications which give rise to defamation as a cause of action.

It may or may not be a dishonour.  It might be, for example, a conversation between a teller and a payee about the status of the bank cheque – or rather the cheque, I am sorry.  The reason I put it at an earlier point in time is because it seems to us logically and commonsensically that is when the commercial discourse commences because at that point is set in train a series of circumstances which will end happily, or in this case unhappily, but that is what commences the chain of events, here eclipsed by error on the part of the Bank, we accept that.

Now, may I just go back briefly to Andreyevich at 387, Chief Justice Jordan:

reciprocal interest in its subject matter, of such a kind that it was desirable as a matter of public policy –

and so on.  When Justice McHugh then deals, as he does, with Baird v Wallace‑James at paragraph 64, and when one looks at his criticisms of the Chief Justice, Justices Hayne and Heydon, one sees at, for example, 388 – I will not take the Court laboriously to it – but our respectful submission is that when one reads through paragraphs 58 – he having acknowledged confession and avoidance – 59, 60, 61 leading up to 64 where he calls in aid Baird v Wallace‑James his real criticism, it seems to us, is to suggest, no, Baird v Wallace‑James is the way you look at it and it requires a much more specific examination of the persons involved in the defamation, the libel, and particular emphasis is to be placed on the details, an individualising of the issues because when one goes to paragraph 64, the quote from Earl Loreburn:

“In considering the question whether the occasion was an occasion of privilege the Court will regard the alleged libel, and will examine by whom –

and so on.  It is a matter of degree.  It is a matter of impression and it is a real question of at what level of generality does one look at the relationship.  It may well be that some relationships need greater scrutiny if one is going to consider what I accept is the necessary policy consideration enunciated by Justice Gummow in paragraph 126.  It may be easier, historically, at least, to say that the policy considerations or the tension to be resolved between the defamed and the defamer might be easier in some contexts.

It might be easier where a character reference is being sought to resolve that interest in favour of free communication.  It might be easier to resolve it in situations where a police officer is being spoken to or some misuse of public moneys are being reported or something of that sort.  Why?  Well, because one can more readily point to a public duty as opposed to a private commercial interest, but having said that, nonetheless, in this case, not because of an illegal imperative under the Cheques Act in the sense of a legal duty to communicate but one could not deny the backdrop of sections 67 and 69.

One could not deny the vital interest which the payees have in receiving information as to the status of the cheque, and as I now say, again, and the weight that might be placed on the payee’s interest may be sufficient when one juxtaposes it against the Bank’s commercial interest to pay up or else, even though one would not weight it in the say way as one would the interests of the payee, if you like the innocent party, on one view, along with Homewise, but nonetheless it is an important question to be resolved, ultimately I accept, as a matter of policy.

But in this case, we would submit with respect, because it is perhaps driven by commercial interest, it is not to be trivialised.  Why?  Because Baron Parke only too well understood that one’s own affairs in certain contexts, provided one could in those days conform with the common convenience and welfare of society, we would adopt, with respect, the articulation by Justice Gummow in the last few lines of paragraph 126.  That is the ultimate question.  Is it a context in which free communication should be given priority, as it were, over the reputation of the person who would not necessarily be defined in the confession and avoidance context.

GUMMOW J:   Saying that, one had in mind what Sir Frederick Jordan actually said in disposing of Andreyevich (1947) 47 SR at 364 to 365.  He gave several examples and he finished up with the conclusion that the disputation within members of the Yugoslav community in that case did not attract the privilege.  He said at 364 point 8:

there would be no preponderating benefit to the people of the State as a whole which could justify the concession of privilege –

in this sort of calumny that was apparent.

MR SACKAR:   Well, that highlights, helpfully, why this is necessarily a matter of degree because that policy question may be answered very differently with a publication, I think in that case, of a newsletter which was much more widely communicated than the, if I may call it, the commercial dialogue between the confined number of parties here.  So, therefore, the policy consideration will necessarily be dictated by the context or the answer, I should say, to the question your Honour poses in Bashford, respectfully, will be answered differently depending on the context. 

Hence, the categories will not be closed.  But here, the fact that it is of very limited publication is of some considerable significance because only those people who are directly commercially involved in the outcome of the question, the status of the cheque, were party to the communication. 

HAYNE J:   In the terms identified in that last sentence at paragraph 126 of Bashford, what are the advantages which the law should deem “to be had from free communication” in this kind of case?

MR SACKAR:   In this kind of case, the word “delay” which caught your Honour’s attention – and I do not seek to embrace it necessarily – but there is a real issue in a modern society that people involved in commercial transactions ought as promptly as possible know where they stand.  Evidence given in this trial, for example, before the trial judge was to the effect that people wait on direct debits or mortgage payments or something of that sort.  It takes very little imagination to think about considerations from the payee’s point of view which would militate in favour of them knowing where they stand so that they can take, if need be, the next step.  That really comes back to the point I have been emphasising to some extent that ‑ ‑ ‑

HAYNE J:   Knowing where they stand in the sense of whether the drawer of the cheque has funds sufficient to meet the order which the drawer has issued to his bank.

MR SACKAR:   Yes.

GUMMOW J:   That seems to be your problem.

MR SACKAR:   It may be.

HAYNE J:   This dishonour is for insufficiency of funds is the imputation conveyed – it is “refer to drawer”, but ‑ ‑ ‑

MR SACKAR:   It just says “refer to drawer”, the publication ‑ ‑ ‑

HAYNE J:   Yes, I understand that, but conveys the imputation that there are insufficient funds, does it not?

MR SACKAR:   May I just go to the imputations for a moment.  Is that a convenient time?  I am not ‑ ‑ ‑

FRENCH CJ:   A few minutes early, but ‑ ‑ ‑

MR SACKAR:   No, I will not take the Evatt defence, I will ‑ ‑ ‑

HAYNE J:   You are being deluged with assistance.

MR SACKAR:   It is the kind I am not sure I want.  Can I just come back to that after lunch, because it is an issue, but may I just complete on this point though.  Whatever these imputations were or are there is a concession that they are relevant to the occasion.  The question that your Honour poses perhaps may have had greater significance if the issue of sufficiently connected to the occasion was the issue that we were debating.  That issue is not before you in a sense that the point is not taken, so the precise terms of the imputations here – whatever the words may have conveyed, it does not matter because it has been accepted that they were relevant to the occasion. 

The only issue we have to look at here is whether there was an occasion, and one does not go to the issue of relevance, first, second or last to determine whether there was or was not an occasion.  That is going to be my answer.  Perhaps I need not come back to the point after lunch, but it really is answered fully by the fact that that issue is simply not on the table in this case.

FRENCH CJ:   Yes, that might be a convenient time.  We will adjourn until 2.15.

AT 12.44PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.16 PM:

FRENCH CJ:   Yes, Mr Sackar.

MR SACKAR:   There are two matters I wish to briefly go to prior to concluding.  The first is - I will not go back to what I said immediately prior to the break on the imputations but may I take the Court to the imputations for one reason only.  They are in appeal book 2 at 744.  My learned friend took you to them this morning.

Were it to have any relevance - we say no because of what I addressed before lunch, but in any event the first imputation in paragraph 28 of 744 of the Court of Appeal’s judgment is that Mr Aktas caused Homewise to pass a valueless cheque; the second that he failed to ensure that Homewise was able to meet its obligations to clients entitled to payment of moneys; the third that he failed to ensure Homewise did not default in payments to clients and the last that he failed to ensure Homewise paid its debts.  There are none of them there that give rise to any allegation of insufficient funds but in any event the jury found those words.

Unless one was of the view, not relevant in this case because of the irrelevance of the imputations at this point given what the issues are between the parties, the position was the Bank as a matter of fact, as found both by the Court of Appeal and the trial judge, did not honour the cheque because it put a PCO – post credits only – on the account in the circumstances described, namely, a garnishee order.  It was never, ever intended to convey, nor do those imputations, we would say, with respect, convey any suggestion of insufficient funds. 

The last matter I want to go to is Justice Hilbery in [1940] 1 ALL ER 316.  The trial judge, at 318, in addressing or distilling what the Bank’s defence was, put it this way, just above letter A on page 318:

The defence of the bank which has been fought might be summarised in this way:  “We marked this cheque with a statement which was defamatory of our customer in the way of his business, suggesting against him that he was a person who could not meet a cheque for £2 15s 8d although he had drawn it and given it to one of his customers.  He was drawing a cheque upon an account which had not got that amount in it, but the statement was made on a privileged occasion – an occasion which we say was one of qualified privilege – and through our inability on this occasion to keep our books correctly.”

So that, happily or unhappily from the Bank’s point of view, the judge distilled the essence of Barclay’s Case as seemingly that the occasion – and that becomes clearer later in his judgment – seemed to commence from the mistake, as he put it, or from the more descriptive, colourful language he used to describe what they had done, as an “extremely stupid and highly dangerous blunder”, at 320.  But when one gets to a final part of his reasoning – may I invite the Court to go to 323 – in the first full paragraph on that page he was considering what Lord Esher had said in Hunt v Great Northern Railway and he says:

where a railway company had dismissed one of their servants for alleged gross neglect of duty, then published his name, and the reasons for his dismissal, and the fact that he had been dismissed, in a monthly circular addressed to the company’s servants.  That was held to be privileged, because the occasion of the privilege had already arisen when the company had treated the servant in that way . . . That is an example which I give because it shows that the occasion which gives rise to the matter of common interest must be existent.

Now, two things to be said:  the judge did not, although he adverts to Hunt v Great Northern, he never examined, in the way that we suggest is the correct way, the reciprocity issue which is central to any analysis of qualified privilege.  But indeed, he did present the case as presented to him by Barclays as the mistake, as it were, so it seems the case was conducted, being the occasion, or the error being the occasion which in turn in a self‑perpetuating way led to the publication. 

Now, for any number of reasons we distinguish that position from the case that we say is extant here, and for any number of reasons, developed further in our written submissions, we say with great respect, Justice Hilbery’s judgment would not be something would commend itself to this Court.  It is on the facts of its own case and on the facts of the way in which the Barclays Bank ran the matter there.  One thing is clear from all of the authorities, rightly, wrongly or otherwise, all of these cases in the end will turn upon their own facts.  They are our submissions.

FRENCH CJ:   Mr Sackar, just before you sit down, I notice that in the defence there was a plea of qualified privilege at common law and under section 22 of the Defamation Act.  What happened to the section 22?

MR SACKAR:   It was abandoned.

FRENCH CJ:   I see.

MR SACKAR:   It never rose above the trial.  It was abandoned at trial. 

FRENCH CJ:   Thank you.  Yes, Mr Hale.

MR HALE:   Your Honours, the first point deals with the approach of the respondent in the level of abstraction which, in our submission, the level of abstraction which my learned friend urges upon this Court is at such a high level that one ignores the circumstances of the publication and all events leading up to it which is contrary to those passages in Bashford to which I took the Court to earlier, which are at paragraphs 10, 55 and 64; in Baird and also Andreyevich.  One perhaps can see that given the circumstances it is understandable that the Bank is driven to that position.

The next point I wish to deal with is that there has been much focus on the interest of the recipient but on the authorities it does not follow that just because the recipient has an interest in receiving the communication the publisher has a duty or interest in publishing it.    Whether the publisher has a duty is to be determined having regard to all the circumstances and applying the principles to which I referred earlier today.

By way of example, in Macintosh v Dun 6 CLR 303 the recipient, namely, the traders – at page 307, the second last paragraph at about point 8, there is a recognition of the commercial interest of the traders. However, that was insufficient of itself to establish that there was the requisite duty and that was because of application of principle and notwithstanding the contract. We see that from the oft quoted passage at the bottom of page 306, “Then comes the real question”. It is because of the inappropriate manner in which the publisher gathered and assembled the information which it provided to the trader which was the reason why the Court found that there was not the requisite duty, notwithstanding, as I say, there was a contract. When one looks by way of example by contrast the approach in Howe & McColough v Lees ‑ ‑ ‑

KIEFEL J:   I was going to ask you about that decision.  Howe & McColough v Lees regarded Macintosh v Dun as turning only on its own peculiar facts and questions of policy – that is, I think, in Chief Justice Griffith’s judgment – and it might be thought to be an implied criticism of Macintosh v Dun, particularly if you have a look at the closeness of the facts.

MR HALE:   And the history of the ‑ ‑ ‑

KIEFEL J:   And the fact that, yes, I think the Chief Justice was one of the members of the court appealed from.

MR HALE:   Yes.  But even so, if one looks at what the Chief Justice said, and with whom Justice Barton agreed, what was the reason why the duty applied – there was a duty, was fundamentally – because if we go to page 370 – was because, in the middle of the page, the recognition that in this particular case the contract was such and involved such subject matter that:

Any honourable man would regard himself as bound to do so.

So each of the traders in that particular case had a common interest of looking after themselves, but what was critical in that case, so far as interest was concerned, was that there was a contract which honourable men would regard themselves as bound to apply, which really comes back to the next point I was going to come to, and that is, commercial interest of itself is not sufficient to give rise to the duty.  It is a commercial interest that may have some additional factor which makes it in the public interest or in which there is a duty.  Here, as we see, is the duty of discharging or giving effect to a contract having the subject matter that this contract had.

KIEFEL J:   At page 369, the Chief Justice in 11 CLR in Howe & McColough v Lees referred to the expression I think Mr Sackar used earlier today, “community of interest”, as distinct from “common interest”, and referred on the one hand to the person making the communication at the top of page 369 - the occasion on which that person speaks, as being one in:

which a man who desired to do his duty to his neighbour would reasonably believe that he ought to make –

the communication.

MR HALE:   Yes.

KIEFEL J:   On the one hand, and at the bottom of the page, said that the interest that the person receiving the communication would have to be not:

an interest in the particular subject matter . . . but an interest in knowing the fact communicated ‑ ‑ ‑

MR HALE:   In that particular case, which is somewhat different from this case, each of them had an identical interest.  Each of them was part of the co‑operative.  Each of them was trading with purchasers of cattle.  Each of them was concerned about whether or not the people they were trading with would in fact pay in accordance with the terms of trade.  They are all in precisely the same position and that, in our respectful submission, is what the Chief Justice is referring to by using the term “community of interest” at the bottom of the page.

KIEFEL J:   No, he uses that to distinguish a common interest, which is what you are describing.

MR HALE:   I see, yes.  I suppose - yes.

KIEFEL J:   You are describing a coincidence of interest.  That is not what his Honour is talking about at all.  He is saying that you have a person making the statement and receiving it – might be for slightly different reasons, but they ‑ ‑ ‑

MR HALE:   Yes, I understand the point you have made and I think I dealt with this in part earlier, dealing with the role of the Cheques Act.  But ultimately, the propositions that we wish to extract from Howe & McColough v Lees is that the simple fact that there is a particular commercial interest in receiving the information does not lead to the conclusion that there is a corresponding duty to publish it.

Whether or not there is a corresponding duty has to be seen or analysed in the circumstances of the particular case and what was determinative, certainly in the Chief Justice’s judgment, it would seem in the middle of page 370, was the desirability of honouring a lawful contract of this particular nature.  I think also, if we go to Justice O’Connor’s judgment at 376, in the middle of the page, the paragraph there again seems to be directing attention to the desirability of performance in those circumstances, unlike Macintosh v Dun.

In Bashford, also, there was a recognition of an interest in the recipients, namely, the occupation and health officers in each of the companies, but again one of the critical issues was of course the question of duty. Again, not following just because there was an interest that there must be a duty. We see that, for example, in the approach at paragraph 20 of the joint judgment in which their Honours consider Macintosh v Dun and Howe & McColough v Lees and why in the case of Howe & McColough v Lees there was a duty, whereas in Macintosh there was not.  That then is picked up, as we see it, in paragraph 26 of the joint judgment.

In both Bashford and also Howe & McColough v Lees one of the key factors which led – and I made this point earlier – to the Court in each case concluding there was a duty was because of the existence of a contract which was sought to be enforced where the subject matter was of a kind, particularly in the case of Bashford, thought to be conducive to the welfare of the community, in particular in Bashford occupational health and safety.  We make the point that in those cases, what on the face of it are private interests are thought to have an interest well beyond that, a community or social interest because of the very nature of the circumstance which in our submission would not apply in the particular circumstances of this case.

This Court in Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 571 deals with the relationship between duty and interest in

the circumstances of that case.  In that case, in a sense, it is an exception because there in Lange it was the interest in the electorate – the people of this country – receiving the information that did in fact create the duty to publish it.  That is, of course, because of the special circumstances of that case which I need not go into, which by contrast is not the circumstance here for the reasons I have gone into. 

One very final point.  I hope it would not be thought that that we conceded that the imputations were relevant to the occasion, rather, the way the case was conducted was on the basis that there were no privileged occasions.  Those are the matters we wish to put in reply.

FRENCH CJ:   Thank you, Mr Hale.  The Court will reserve its decision.  The Court adjourns until 9.15 tomorrow morning for the pronouncement of orders.

AT 2.47 PM THE MATTER WAS ADJOURNED