Anthony William Heath v Fairfax Media Publications Pty Ltd

[2011] NSWSC 742

Supreme Court

New South Wales

Medium Neutral Citation:	Anthony William Heath v Fairfax Media Publications Pty Ltd & Anor [2011] NSWSC 742
Hearing dates:	12 July 2011
Decision date:	19 July 2011
Jurisdiction:	Civil
Before:	Nicholas J
Decision:	Par 55
Catchwords:	DEFAMATION - pleadings - imputations - questions of capacity and form PROCEDURE - whether defendant can force plaintiff to plead imputation as alternative or fallback to another imputation where no basis for order under UCPR Pt 14.28 demonstrated
Legislation Cited:	Uniform Civil Procedure Rules 2005
Cases Cited:	ABC v Obeid [2006] NSWCA 231; (2006) 66 NSWLR 605 Beran v John Fairfax Publications Pty Ltd [2004] NSWCA 107 Harvey v John Fairfax Publications Pty Ltd [2005] NSWCA 255 Robbie Waterhouse v The Age Company Ltd & Ors [2011] NSWSC 159 Mayfield-Smith v Mirror Newspapers Ltd (1982) 2 NSWLR 419 Phelps v Nationwide News Pty Ltd & Anor [2001] NSWSC 130 Singleton v John Fairfax & Sons Ltd [Unreported, NSWSC, 20 February 1980) The Age Corporation Ltd v Beran [2005] NSWCA 289
Category:	Interlocutory applications
Parties:	Anthony William Heath - plaintiff Fairfax Media Publications Pty Ltd - first defendant Fairfax Digital Australia & New Zealand Pty Ltd - second defendant
Representation:	Counsel: J R Young - plaintiff M A Polden - defendants Solicitors: McLaughlin & Riordan - plaintiff Johnson Winter & Slattery - defendants
File Number(s):	11/145960

Judgment

1. His Honour: The defendants opposed the plaintiff's application to amend the statement of claim filed 4 May 2011 in terms of the proposed amended statement of claim, Ex A (the pleading). Opposition was principally on the ground that some of the imputations pleaded were incapable of arising from the matters complained of. Other objections, including as to form, were also taken.

1. The plaintiff sues the first defendant as the publisher of the newspaper "The Sydney Morning Herald" for the publication on 6 May 2010 of an article under the heading "The tender that blew up in the army's face" (the first matter complained of). He sues the second defendant as the publisher on the same day of an article on the internet in substantially similar terms as the newspaper article (the first internet publication). It is alleged that each publication, in its natural and ordinary meaning, conveyed the imputations pleaded in par 7, namely:

"7(a) As the leader of a project within the Defence Materiel Organisation designed to provide much needed equipment to Australian combat troops, the Plaintiff so breached proper process in relation to a tender that the tender process was cancelled.

(b) As the leader of a project designed to provide needed equipment to combat troops fighting the Taliban, the Plaintiff had wrecked a tender process for the provision of such equipment thereby placing combat troops at risk.

(c) As project director of the Defence Materiel Organization, the Plaintiff had given favoured treatment during a tender process to BAE, one of the world's wealthiest armaments manufacturers.

(d) The Plaintiff made a telephone call to an eliminated tenderer during a tender process thereby demonstrating perceived bias.

(e)(as amended): The Plaintiff had been guilty of bias during the process for a tender to replace the unsafe kit for soldiers thereby causing that process to be cancelled."

During submissions, plaintiff's counsel stated that imputation (d) was not pressed.

1. The plaintiff also sues the first defendant as the publisher of the newspaper for the publication on 6 May 2010 of an article under the heading "Dud's army: dodgy kit puts troops at risk" (the second matter complained of). He sues the second defendant as the publisher on the same day of an article on the internet containing so much of the first matter complained of as consists of its headline and first 19 paragraphs which commence with the words "Australia's troops are exposed to unnecessary risk ..." and end with the words "... was awarded a similar contract without tender, worth at least $2.7 million" (the second internet publication). It is alleged that each publication, in its natural and ordinary meaning, conveyed the imputations pleaded in par 7A, namely:

"7A(a)(as amended): As the project manager of the Defence Materiel Organisation charged with sourcing equipment for Australian front-line combat troops, the Plaintiff had so mishandled the tender process for a $23 million project for equipment for combat troops, that the project was halted."

(b)(as amended): That the Plaintiff had so mishandled the $23 million project for equipment for combat troops as to put those troops at unacceptable risk by them having to continue to use obsolete equipment known to fail.

(c)(i) The Plaintiff engaged in questionable tender practices as project manager of the $23 million project for backpacks, webbing and pouches for combat troops.

(ii)(as amended): The Plaintiff demonstrated incompetence as project manager of the $23 million project for equipment for combat troops.

(e) As project director of the Defence Materiel Organisation the Plaintiff had given favoured treatment during a tender process to BAE, one of the world's wealthiest armaments manufacturers.

(f) The Plaintiff had made a telephone call to an eliminated tenderer while the tender process was still on foot which demonstrated perceived bias.

During submissions plaintiff's counsel stated that imputation (c)(i), and (f) were not pressed. He also stated that in imputation (e) the phrase "one of the world's wealthiest armaments manufacturers" was not pressed.

1. The principles applicable to the correct approach of the court to an application such as this are too well-known to justify repetition, and were recently summarised in Robbie Waterhouse v The Age Company Ltd & Ors [2011] NSWSC 159, par 13. Importantly, the question of meaning turns on what the publication, taken as a whole, conveys to the reasonable reader, and this must always be a matter of impression. Ultimately, the question is what a jury could properly make of it. In circumstances where reasonable persons may differ as to their understanding of the article, the matter is one which must, in accordance with authority, be left to the jury.

1. It is unnecessary to recite the competing submissions in detail. The oral submissions have been recorded in the transcript, and the written submissions will remain in the court file.

The first matter complained of

1. The first matter complained of is presented to the reader as the report of the first defendant's investigation into the circumstances in which the tender process for the supply of equipment to the Australian Defence Force was cancelled. The plaintiff's role in the tender process as project director for the Defence Materiel Organisation is described in detail.

1. The headline: "The tender that blew up in the army's face" and the opening paragraph:

"Lieutenant Colonel Anthony Health picked up the telephone and dialled a number in Hallam, 45 minutes southeast of Melbourne. The call was over within minutes, but it would spark a chain reaction, exposing Defence's suspect handling of a multimillion dollar tender, and derailing a decade long effort to modernise Australia's infantry equipment."

are capable of planting in the reader's mind the suggestion that the plaintiff's conduct triggered a process which was disastrous for the army.

1. The focus of the article is on a telephone call made by the plaintiff as a lieutenant colonel in charge of the tender process, whilst the process was still on foot, to the chief executive of an eliminated tenderer, enquiring as to interest in sub-contracting to what was described as "... Defence's preferred tenderer for the project, or even to Defence". The overall suggestion is that, in making the telephone call, the plaintiff indicated that one of the two front runners on the tender shortlist, the London based BAE Systems, was preferred, although at the time no decision had been made. The article reports on the investigations which followed after the revelation of the telephone call to the plaintiff's superior, Brigadier Horrocks, who then called in Defence's internal investigators, the Inspector General. It continues with reference to the conclusions of an independent probity auditor to the effect that irreversible damage to the tender process was attributable to significant administrative breaches by Defence and, also, to the plaintiff's telephone call. It was reported that subsequently the tender process was cancelled "... To protect the integrity of the Commonwealth".

1. I deal with each contested imputation in turn.

1. Imputation 7(a) is:

"7(a) As the leader of a project within the Defence Materiel Organisation designed to provide much needed equipment to Australian combat troops, the Plaintiff so breached proper process in relation to a tender that the tender process was cancelled."

1. The defendants submitted this imputation was incapable of arising in that it was an allegation that it was the plaintiff's conduct alone in breach of the proper process which caused the cancellation of the tender process. It was accepted that the matter complained of was capable of conveying an imputation to the effect that the plaintiff contributed to halting the tender process by failing to follow proper procedures, as the article also referred to other separate matters such as significant administrative breaches which damaged the process. In short, it was put that, although the article could convey to the ordinary reasonable reader the suggestion that some blame was attributable to the plaintiff, an imputation to the effect that he alone was culpable was unreasonable.

1. In my opinion the objection must fail. The article, taken as a whole, is capable of providing ample support for the imputation. The defendants were correct in conceding that the plaintiff is branded, at least, as guilty with others of conduct which caused cancellation of the tender process. However, in my opinion, it was the role of the plaintiff as the project director which was the core of the matter complained of, and its story. I find that the emphasis given to the plaintiff's phone call and its significance as indicative of favourable treatment for BAE Systems, and to the subsequent investigations, leave it open to the reader to understand the article in terms of imputation 7(a) as pleaded. It is well open to conclude that the headline, the opening paragraph, and the content referable to the plaintiff which followed was intended to direct the reader to this understanding. Furthermore, in so concluding, it would be open to the reader of the whole to attach great weight to par 31 which states:

"Without a tape of the phone call, and with conflicting recollections of what was said, the Inspector General and Phillips Fox could not make a finding of actual bias. But officials say their reports did find the call alone demonstrated "perceived bias" and urged the government to cancel the entire project."

1. Accordingly, imputation 7(a) should be left to the jury.

1. Imputation 7(b) is:

"(b) As the leader of a project designed to provide needed equipment to combat troops fighting the Taliban, the Plaintiff had wrecked a tender process for the provision of such equipment thereby placing combat troops at risk."

1. On the issue of capacity, submissions similar to those with respect to imputation (a) were put i.e. that an imputation of sole culpability was pitched too high, and thus incapable of arising. It was also put that the first matter complained of was incapable of meaning that combat troops were placed at risk as a result of anything the plaintiff did. It was put that (for example, with reference to pars 3-9) any risk to which troops were exposed by reason of delays in having appropriate equipment would be understood by the reasonable reader to be attributable to failures of officials in the Defence Materiel Organisation.

1. In my opinion, the objection must fail. In respect of the component of the imputation referable to the plaintiff's conduct in wrecking a tender process, I repeat the reasons in respect of imputation (a).

1. With respect to the component "... thereby placing combat troops at risk", in my opinion, the pleader has arguable support from the whole, particularly the headline and pars 1-9 of the matter complained of. In my opinion, it would be reasonably open for the reader to conclude that the consequence of the process being wrecked by the plaintiff delayed the modernisation of Australia's infantry equipment, thereby leaving troops without the equipment necessary and appropriate for their safety. Imputation (b) properly captures that meaning, and should be left to the jury.

1. Imputation 7(c) is:

"(c) As project director of the Defence Materiel Organization, the Plaintiff had given favoured treatment during a tender process to BAE, one of the world's wealthiest armaments manufacturers."

1. The first objection was on capacity. It was put that the first matter complained of was incapable of conveying the meaning that the plaintiff had given favourable treatment to BAE Systems. I confess to some difficulty in following the defendants' submissions on this issue but, in short, it was put (T p 19, l 36 - l 44):

"To say the plaintiff had concluded after an extensive trial, possibly prematurely or not possibly prematurely. Let's say, prematurely in breach of protocol that he thought was the better of the two, isn't to say, in my respectful submission, that he gave favoured treatment.

Something finding favour in someone's eyes, somebody seeing something as the better of two alternatives isn't the same as them doing something to help one of the two tenderers. That's my submission, your Honour. That's the highest I can put it."

1. In my opinion there is ample support for the imputation, or one not substantially different to it, and the objection on this ground must fail.

1. Relevant statements in the first matter complained of include the following. The plaintiff is described as running the project. The article reveals (par 3) that "... BAE Systems was perceived to have been given favourable treatment on the $23 million tender by officials". It is asserted that (par 12) the plaintiff sought a sub-contractor for "Defence's preferred tenderer". Paragraphs 15-19 identify BAE Systems as the preferred tenderer, which (par 17) "... had already found favour in Heath's eyes because the Australian firms had not needed any help, nor asked Defence for any". The call was made (par 19) "... three months before he recommended BAE win the contract in his formal report". Under the photograph of the soldiers under the heading "BOLD AS BRASS" the joint venturers competing with BAE are referred to. Under the heading "Platatac" it is stated that the plaintiff phoned Mr Doyle-Cox asking "... if Platatac wanted to subcontract to Defence's preferred tenderer for the project, or even to Defence - even though the tender process was underway. CrossFire and Xtek had not needed subcontractors". Paragraph 28 states "But something very wrong did occur during the tender", and refers to the appointment of a probity auditor whose findings are later reported. Taken as a whole, it is manifestly arguable that the ordinary reasonable reader would understand the plaintiff to have given BAE favoured treatment during the tender process by making the phone call, the purpose of which was to seek a sub-contractor to advantage it over its competitors.

1. Further objection was taken in respect of the phrase "... one of the world's wealthiest armaments manufacturers" on the ground that it was otiose, embarrassing, in that it added nothing to the act or condition asserted of, or attributed to, the plaintiff ( Mayfield-Smith v Mirror Newspapers Ltd (1982) 2 NSWLR 419, p 420F-421A). In my opinion, the objection should be upheld, and the words deleted. As pleaded, the words are merely descriptive of BAE, add nothing to the sting of the allegation and amount only to a distraction. If it was intended to allege an imputation, for example, that the plaintiff gave BAE favoured treatment during the tender process, not with regard to the merits, but because of BAE's size and status, it would be necessary to plead such an allegation with the requisite specificity.

1. Accordingly imputation 7(c), subject to the deletion of the phrase objected to, should be left to the jury.

1. Imputation (e) now is:

"(e)(as amended): The Plaintiff had been guilty of bias during the process for a tender to replace the unsafe kit for soldiers thereby causing that process to be cancelled."

1. On the issue of capacity, submissions similar to those with regard to imputation (a) were put. For similar reasons, objection on this ground fails.

1. Objection was also taken on the ground that this imputation does not differ in substance from imputation (a). In my view the objection fails as it is self-evident from their terms that the allegations are different, in that imputation (a) is a general allegation that as the leader of a project the plaintiff breached proper process whilst imputation (e) is a specific allegation of guilt of bias during the tender process. By way of illustration, it is relevant to consider what may be proved by way of justification to each imputation. In Singleton v John Fairfax & Sons Ltd [Unreported, NSWSC 20 February 1980) Hunt J said:

"... Where the imputation consists of a general allegation, it is open to the defendant to establish the truth of that allegation by proof of matters entirely unrelated to the specific instance identified in the matter complained of. The leading case is of Maisel v Financial Times Ltd (1915) 112 LT 953. The matter complained of reported the arrest of the plaintiff, the director of a company, on a charge of fraud. In his Statement of Claim, the plaintiff relied upon an imputation that he was an unfit person to be the director of any company. The defendant was held by the House of Lords to be entitled to justify that imputation by relying upon a number of other dishonest acts, quite independent of that for which he was said in the matter complained of to have been arrested. For an even more startling example, see McGrath v Black (1926) 135 LT 594."

1. Accordingly, imputation 7(e) should be left to the jury.

1. The defendants also submitted that if imputation (e) is upheld, it should be ordered that imputation (c) be allowed only as a fall back to imputation (e). It was put that the conduct alleged in imputation (e) embraces that alleged in imputation (c). Reliance was placed without elaboration on the passage in Harvey v John Fairfax Publications Pty Ltd [2005] NSWCA 255 per Hunt AJA par 75 which includes:

"Each imputation must stand alone, and it includes within it only those meanings which do not differ in substance from that pleaded: Monte v Mirror Newspapers Ltd (1979) 2 NSWLR 663 at 676. This means that a plaintiff must choose the imputations which he pleads with some care. If the jury does not accept the imputation pleaded, the plaintiff does not succeed unless he has also pleaded, in the alternative, a less serious meaning which the jury might accept. These alternative imputations have become known as "fall-back" imputations, and they are correctly regarded as differing in substance from the more serious imputation."

1. In my opinion the submission is misconceived. Imputations (c) and (e) differ in substance, and are unobjectionable in form. In pleading them as he has, the plaintiff has not attracted the application of UCPR Pt 14, r 14.30(3) which precludes reliance on two or more imputations unless they differ in substance. Accordingly, he is entitled to rely on them.

1. In Phelps v Nationwide News Pty Ltd & Anor [2001] NSWSC 130 (pars 22-30) Simpson J upheld the right of a plaintiff to frame his action as he chooses subject to unfairness amounting to abuse of process, or unreasonabless, or the inability of the publication to sustain the form of pleading chosen. Phelps was approved in Beran v John Fairfax Publications Pty Ltd [2004] NSWCA 107 (pars 54-56); The Age Corporation Ltd v Beran [2005] NSWCA 289 (pars 40-41); ABC v Obeid [2006] NSWCA 231; (2006) 66 NSWLR 605.

1. Furthermore, in my opinion, the observations of Hunt AJA in Harvey relied upon by the defendants may be understood as words of caution to a plaintiff contemplating the questions to be put at trial to the jury with regard to each imputation he claims, which includes within it meanings which do not differ in substance from that pleaded. Necessarily, it is for a plaintiff to choose which of his imputations are intended for the jury. Of course, any dispute as to questions to be left to the jury with regard to imputations (or anything else) will be a matter for the trial judge to determine.

1. As a matter of principle, a defendant by means of a strike out application cannot force a plaintiff to replead unless it is demonstrated that the pleading provides the basis for an order under Pt 14, r 14.28. This the defendants have not done. Accordingly, in my opinion, the defendants in this case cannot force the plaintiff to plead imputation (c) as an alternative or fall back to imputation (e). The application for an order to that effect is refused.

The first internet publication

1. The contents of this publication were substantially similar to the first matter complained of and it was alleged it conveyed the same imputations. Accordingly, the rulings in respect of the imputations alleged to have been conveyed by the first matter complained of apply to the imputations alleged to have been conveyed by the first internet publication.

The second matter complained of

1. The second matter complained of is presented to the reader as a report of the first defendant's investigation into Defence's equipment procurement practices, and the risk to which troops were exposed by reason of the defective equipment issued to them. The heart of the problem is said to be the incompetence of the Defence Materiel Organisation which is charged with sourcing the equipment. With particular reference to the plaintiff, the second matter complained of includes the following (pars 15-18):

"Defence officials acknowledged that the clothing division has suffered from problems, but said it had improved considerably over the past four years. They say an element of dissatisfaction about equipment will always exist among troops, regardless of its quality.

In the latest blunder, a $23 million project for backpacks webbing and pouches was halted partly because the newly appointed project manager, Lieutenant-Colonel Anthony Heath, mishandled the tender.

Lieutenant-Colonel Heath contacted a company that had been eliminated from the tender, and was alleged to have sought its assistance on behalf of BAE Systems, which was still competing for the contract.

He denied the allegation, but the tender was abandoned late last year after three internal investigations. Two of these found 'perceived bias' had damaged the tender process."

1. Also included are a photograph of the plaintiff and a pointer which says: "Dodging the bullet - the man at the centre of a $23 million equipment bungle".

1. As earlier indicated, the second internet publication does not include the last mentioned matter.

1. Imputation 7A(a) is:

"7A(a) As the project manager of the Defence Materiel Organisation charged with sourcing equipment for Australian front line combat troops, the Plaintiff had so mishandled the tender process for a $23 million project for equipment for combat troops that the project was halted."

1. The defendants' objection was on capacity. It was put that the statement in par 16 that the project was halted "... partly because (the plaintiff) mishandled the tender" rendered unarguable an imputation which asserted the plaintiff alone was culpable for halting the project.

1. In my opinion, the objection must fail. The publication emphasises the plaintiff's role as the project manager who mishandled the tender. No other person is identified. The pointer brands him as the man at the centre of the bungle. The passages quoted above are sufficient to establish the capacity of the publication to convey this imputation. Whether the phrase "partly because the newly appointed project manager ...", in a context which includes references to officials in the organisation, qualifies this meaning is quintessentially a jury matter.

1. Imputation 7A(a) is left to the jury.

1. Imputation 7A(b) is:

"7A(b) The plaintiff had so mishandled the $23 million project for equipment for combat troops as to put those troops at unacceptable risk by the troops having to continue to use obsolete equipment know to fail."

1. The defendants' objection on capacity was similar to that in respect of imputation (a). It fails for the same reason.

1. Further objection was made, as I understood it, that the assertion that the plaintiff's mishandling of the project put combat troops to unacceptable risk was incapable of being conveyed. In my opinion the objection must fail. There is ample material upon which the ordinary reasonable reader could reach a conclusion in terms of this imputation.

1. The imputation in its present form was introduced during submissions, and apparently in response to the defendants' objection as to the defective form of that originally proposed. The present imputation is sufficient as to form. For removal of doubt, I also find that it differs in substance from imputation (a), and that the plaintiff should not be required to plead them in the alternative.

1. Accordingly, imputation 7A(b) is left to the jury.

1. Imputation 7A(c) is:

"7A(c) The Plaintiff demonstrated incompetence as project manager of a $23 million project for equipment for combat troops."

1. I did not understand there to be an objection to this imputation after the plaintiff made it clear that imputation (c)(i) was not pressed. However, for the removal of doubt, I find the imputation is sufficient in form, and capable of arising. It is left to the jury.

1. Imputation 7A(e) is:

"7A(e) As project director of the Defence Materiel Organisation the Plaintiff had given favoured treatment during a tender process to BAE."

1. The objection was as to capacity. It was put that the most the ordinary reasonable reader would take from the publication was that there was a finding against the plaintiff of perceived, not actual, bias, and there was no additional support for the meaning that he had given favoured treatment to BAE as alleged.

1. The objection must fail. The extracts quoted above provide the basis upon which a reasonable reader could understand an allegation against the plaintiff in terms of the imputation. It is unnecessary to descend into detail to further explain the point.

1. Imputation 7A(e) is left to the jury.

The second internet publication

1. As earlier indicated, the contents of this publication consisted of the headline and first nineteen paragraphs of the first matter complained of. Relevantly, it did not include the words in the pointer, and the photograph of the plaintiff. The imputations alleged to have been conveyed by the second internet publication are the same as those alleged to have been conveyed by the second matter complained of, ruled upon above.

1. In my opinion the rulings in respect of the imputations based on the second matter complained of should apply to the imputations claimed to arise under the second internet publication for the same reasons. The content of the second internet publication is sufficient to support the ruling, which I make, that it is capable of conveying these imputations to the ordinary reasonable reader.

Conclusion

1. I have ruled in respect of the proposed amended statement of claim (Ex A) that imputation 7(a), 7(b), 7(c), and 7(e), 7A(a), 7A(b), 7A(c) and 7A(e) are capable of being conveyed by the relevant matter complained of, and may be left to the jury.

1. I make the following orders:

(1)   The plaintiff to file and serve an amended statement of claim consistent with these reasons by 4pm 29 July 2011.

(2)   The defendants to file and serve their defence by 4pm 12 August 2011.

(3)   These proceedings be stood over for directions to the defamation list 9.30am 15 August 2011.

(4)   The defendants pay the plaintiff's costs of this application.

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Decision last updated: 19 July 2011