Bowin Designs Pty Ltd v Joyce, John Vincent

[1996] FCA 1070

CATCHWORDS

DEFAMATION - Privilege - qualified privilege - whether available to consumer organisation in respect of article in consumer magazine published by it dealing with potentially dangerous product - whether defence of qualified privilege established - whether reply of malice established.

TRADE PRACTICES - Interpretation - exclusion of liability by s 65A of Trade practices Act 1974 - application of section to consumer magazine published by consumer protection organisation.

Trade Practices Act 1974 s 65A

Sun Earth Homes Pty Ltd v Australian Broadcasting Corporation (1993) 45 FCR 265
Camporese v Parton (1983) 150 DLR (3d) 208
Stephens v West Australian Newspapers Ltd (1994) 182 CLR 211
Adam v Ward [1917] AC 309
Horrocks v Lowe [1975] AC 135

BOWIN DESIGNS PTY LIMITED v JOHN VINCENT JOYCE & ANOR

No NG 758 of 1992

Lindgren J
Sydney
6 December 1996

IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )        No NG 758 of 1992
GENERAL DIVISION                 )

BETWEEN:

BOWIN DESIGNS PTY LIMITED
  First Applicant

JOHN VINCENT JOYCE
                   Second Applicant

AND:

AUSTRALIAN CONSUMERS ASSOCIATION
  Respondent

CORAM:Lindgren J

PLACE:Sydney

DATE:6 December 1996

MINUTE OF ORDERS

THE COURT ORDERS THAT:

1. The application be dismissed.

1. The applicants pay the respondent's costs.

NOTE:     Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )        No NG 758 of 1992
GENERAL DIVISION                 )

BETWEEN:

BOWIN DESIGNS PTY LIMITED
  First Applicant

JOHN VINCENT JOYCE
                   Second Applicant

AND:

AUSTRALIAN CONSUMERS ASSOCIATION
  Respondent

CORAM:Lindgren J

PLACE:Sydney

DATE:6 December 1996

REASONS FOR JUDGMENT
  TABLE OF CONTENTS

GENERAL INTRODUCTION........ ........ ........ ........ ...... 2

INTRODUCTION TO FACTS........ ........ ........ ........ ..... 3

THE PLEADINGS........ ........ ........ ........ ........ .... 11

THE EVIDENCE........ ........ ........ ........ ........ ..... 18

The period down to 15 August 1989........ ........ ... 18

The period from 15 August 1989 to 17 December 1991.. 29

The period from 17 December 1991 to the publication

of the article at the end of June 1992........ ...... 42

Publication of the article as a result of the mailing

of the July 1992 issue of "Choice" magazine on 26

June 1992........ ........ ........ ........ ........ ... 80

The period after publication of the article........ . 80

REASONING........ ........ ........ ........ ........ ........ 93

The imputations said to have been conveyed by the

matter complained of........ ........ ........ ........ 93

General legal nature of the various qualified

privilege/qualified protection defences........ .... 110

General nature of the various "comment" defences... 115

ACA's defence of qualified privilege at common law. 118

ACA's defence of qualified privilege under

sub-s 22 (1) of the NSW Act........ ........ ........ 138

ACA's "code" defences of qualified protection

in Queensland and Tasmania........ ........ ........ . 152

ACA's various comment defences........ ........ ..... 152

Claims under the TP Act and the FT Act........ ..... 153

Fraud and negligence........ ........ ........ ....... 155

CONCLUSION........ ........ ........ ........ ........ ...... 155

GENERAL INTRODUCTION:
The first and second applicants ("Bowin" and "Mr Joyce" respectively) seek to recover damages from the respondent ("ACA") arising out of the publication of an article in the July 1992 issue of "Choice" magazine published by ACA (the article will also be referred to sometimes as "the matter complained of").  The article was entitled "From Gas Heater to Flamethrower".  It related to a portable gas heater known as the "Mod-n-aire MS12" ("the MS12" and "the MS12 heater") manufactured by Bowin.  Mr Joyce is the managing director of Bowin.  A photocopy of the article with line numbers added for reference purposes is annexed to these Reasons for Judgment.

Bowin and Mr Joyce claim that ACA's publication of the article gives rise to causes of action in defamation, fraud and negligence, and statutory causes of action based on contravention of various provisions of the Trade Practices Act 1974 ("the TP Act") and of the Fair Trading Act 1987 (NSW) and equivalent legislation in the other States and Territories of Australia ("the FT Act" - references to sections of the FT Act will import references to the relevant provisions of the New South Wales Act as well as to those of the Acts of the other jurisdictions).

INTRODUCTION TO FACTS
Mr Joyce is a senior and experienced mechanical engineer of standing in his profession.  He and his wife are the directors of Bowin.  Bowin has been designing and manufacturing gas heaters since 1977.  Through Mr Joyce, Bowin designed the MS12 in 1983.  Manufacture of it commenced in January 1984.

The heater is linked to a "bayonet" gas outlet by means of a 1.5 metre flexible hose of _ inch diameter.  Beginning in March/April 1987, the hose for the MS12 was manufactured and supplied to Bowin by Thomas Gooden & Son (Industries) Pty Ltd ("Gooden").  In oral evidence, Mr Joyce said that although other manufacturers had previously supplied Bowin with hoses for the MS12, Gooden was the only manufacturer that could (apparently as from March/April 1987) provide hoses of the colour and with the flexibility that Bowin required.

In mid-1989, a problem with the hoses came to light: there were instances of the hose becoming detached from the heater.  The evidence does not suggest that there was any defect of design or of quality control in respect of the heater itself: rather, the defect was in the hose supplied by Gooden.
At both the heater and the bayonet ends of the hose, there were crimped brass fittings.  The problem was that the hose became detached from the crimped brass fitting which remained screwed into the back of the heater.  If gas was flowing at the time, it was enabled to escape.  If the heater was burning at the time, there was risk of ignition of the escaping gas, and consequently of fire.  I need not discuss the process by which this could occur.  The evidence did not explore this question and there was no occasion for it to do so.  Obviously, the risk of ignition was of short duration since the heater had lost its supply of gas.  This is not, however, to minimise the seriousness of the risk: there were instances of fire, fortunately without serious consequences, but, as is common knowledge, any fire can have disastrous results for the person and property.

The first incident of which Bowin and Mr Joyce became aware occurred on 3 May 1989 when a Mrs Clark telephoned Bowin complaining that a child had "tripped over [the] unit and ripped [the] hose out" (Bowin's service call report no. 003046).  Bowin maintained a computerised system of "service call reports".  When someone contacted Bowin about a need for service, details would be immediately typed into the computer and a print-out would be handed to the appropriate serviceman.  The serviceman would record on the print-out details of the service call which he made, including his name, the date of the service call, the serial number of the heater (if the consumer had not already supplied this to Bowin), the work done and the cost of labour and materials.  As well, the form provided for a "fault code" to be inserted.  Bowin's fault code M/11 signified "HOSE FAULT" and featured on many of the service call reports in the case.

In the case of Mrs Clark, the serviceman called on 8 May 1989, the serial number of the heater which he inspected was 3935, the work done was "fit new hose", the labour in question was that of a "service call" costing $40.00 and the materials supplied were a "20103 hose" costing $25.52.  All hoses supplied by Gooden for the MS12 bore the product number 20103.  The serviceman recorded Bowin's "fault code" as "M13".  The fault code "M13" signified Bowin's general category which covered any fault not specified in any other category and was said by Mr Joyce to indicate "full service".  No doubt this first incident was seen by the serviceman as due, not to a product fault, but to human intervention.  The evidence showed that heater number 3935 had been manufactured by Bowin (and issued with its hose) some two years earlier on 4 May 1987 for Grace Bros, Belconnen.  

Over the period from May to August 1989, there were further instances of detachment of hoses from the MS12.  For example, on 3 July 1989 a complaint by Mrs A James was recorded as being "heater burst into flames".  The serviceman recorded:

"Heater beyond repair.  Order and supply new one.  Hose has ripped from heater and burnt heater and carpet."

The serial number of Mrs James' heater was 4418.  It had been manufactured on 23 February 1988 for "AGL Sydney Ltd, Mortlake" and Mrs James had bought it in July 1988, that is to say, a year earlier.  There was a one-year warranty on the MS12 and the particular heater was replaced by Bowin without charge to Mrs James. 

It will be necessary to consider later the effect of the evidence relating to the extent of the incidence of the hose problem.

John Musster ("Mr Musster") became the Purchasing Manager of Bowin on 1 July 1989, two days before Mrs James' complaint was received.  On 15 August 1989 a meeting took place between representatives of Bowin and of Gooden.  Present were Mr Musster, Christopher Sheehan who was Bowin's Financial Controller, and Mr Joyce, representing Bowin, and Gerald Gooden ("Mr Gooden") and a Mr Lawrence, who was apparently an engineer, representing Gooden.  Gooden hoses then held by Bowin were returned to Gooden for checking.  So far as the evidence reveals, in relation to hoses supplied by Gooden to Bowin after the meeting in August 1989, there was no further instance of a hose becoming detached from its crimped brass fitting.

However, unfortunately further incidents were to occur involving heaters which Bowin had manufactured and sold
previously.  For a long while it appeared that the last incident to occur was one in September 1990, involving the heater of a Mrs Gard of Matraville.  But, as will be seen, a further incident was to occur some 21 months later, in mid-1992, virtually contemporaneously with publication of the article, although it became known only after publication.

On 12 December 1990, about three months after the failure of the hose attached to Mrs Gard's heater, Mr Musster wrote a memo to Mr Joyce about the hose problem.  As will be seen, Mr Joyce's evidence is that the memo was inaccurate in certain respects. 

Mr Joyce did not find the services of Mr Musster to be satisfactory.  Mr Musster ceased to be employed by Bowin on 17 December 1991, some 12 months after writing his memorandum to Mr Joyce.

In early 1992, Mr Musster telephoned Clare Bonham of ACA making allegations against Bowin, not only in respect of the MS12, but also in relation to other Bowin products.  He wrote to Ms Bonham on 24 February 1992 enclosing a copy of a memo dated 12 December 1990 from him to Mr Joyce.   According to Mr Joyce, this version of the memo of that date differed from that which Mr Musster had in fact given to him on 12 December 1990.  Indeed, Mr Joyce's evidence is that he saw the second version for the first time when it was produced by ACA in 1992.  However, nothing turns on the difference between the two versions.

From the time when Mr Musster first contacted ACA down to the publication of the article at the end of June 1992, ACA conducted an investigation into the MS12 hose problem.  ACA made inquiries of Mr Joyce, Mr Gooden, the Australian Gas Association ("AGA"), the Federal Bureau of Consumer Affairs ("the Bureau"), the New South Wales Fire Brigade, the Australian Gas Light Company ("AGL"), Mr Musster, and some of the owners of MS12s who had complained to Bowin (particulars of them had been supplied to ACA by Mr Musster).  AGA is an association of gas appliance manufacturers and gas suppliers which lays down standards for the manufacture of appliances and receives some recognition from government.  AGL is, relevantly, a major retailer of gas appliances. 

The person at ACA who had general responsibility for the MS12 project was Des Shales ("Mr Shales"), Project Manager.  The particular journalist at ACA who wrote the article was Peter Cerexhe ("Mr Cerexhe").  It will be necessary later to analyse in some detail the steps taken by them and others on behalf of ACA leading up to publication because, as will be seen, ACA's conduct is relevant to its defence.

The July 1992 issue of "Choice" which contained the article was mailed by ACA on 26 June 1992 to 140,403 subscribers.  As well, copies were supplied free of charge to approximately 150 persons and institutions, including various consumer organisations in Australia and overseas, a number of Federal and State Government Departments, hospitals and health related organisations, libraries, technical and other expert advisers, representatives of the media and universities.  Libraries stocked the magazine and representatives of the media took it with a view to its contents' becoming available to the public.

Following publication, various public media became interested in the subject matter of the article.  During July 1992 the MS12's problem was featured three times in the press, thirteen times over the radio and four times on television.  A Mr G Sirmai of ACA was interviewed on television and radio in relation to ACA's investigation of the heater.

It may be questioned why the article would be written and its subject matter further canvassed in these ways, in light of the fact that the last known incident had occurred as long ago as September 1990.  The answer is ACA's suggestion, voiced in the article, that it was not unlikely that there remained in consumers' homes MS12 heaters with hoses manufactured by Gooden prior to August 1989 with the latent propensity to disconnect.

Bowin and Mr Joyce led evidence of the detrimental effect which the publication of the article had.  There was evidence directed to showing that the MS12 had become unmarketable and that there was some "overflow effect" on other Bowin products.  There was also evidence showing steps taken to "contain" the damage sustained and otherwise to mitigate Bowin's loss.  There was evidence of the personal effect of the publication on Mr Joyce.

At the time of publication, so far as Mr Joyce and ACA knew, the last incident which was to occur was that concerning Mrs Gard's heater in September 1990.  However, on 8 July 1992, Mr Joyce received a letter dated 26 June 1992 from Mrs W Bentley in Western Australia about her MS12 serial number 4862 which she had bought some four years earlier.  Her letter complained that when the heater was connected to the gas outlet but not burning, "it suddenly blew the hose fitting off where it was attached to the heater".  She said that a lot of gas escaped and asserted that if no-one had been home or if her children had been left alone or someone had been smoking, "there could have been a disaster".  According to Bowin's records, heater no 4862 had been manufactured on 6 April 1988 for "Vemax".

On 8 July 1992 Mr Joyce wrote to Mrs Bentley pointing out that the hose was not manufactured by Bowin but was bought by it from another company and that although the period of four years far exceeded the warranty period, he would seek a credit from the manufacturer of the hose and hoped to pass on to her within seven days the amount which she had outlaid for repair.

As well, Mr Joyce telephoned Mr Gooden and followed this up with a letter recommending that a "safety notice" be published throughout Australia.  As a result, Gooden published a "Product Safety Notice" in a form approved by the Bureau.

THE PLEADINGS
By their application, Bowin and Mr Joyce seek a declaration that ACA has, in trade or commerce in Australia, engaged in conduct in contravention of ss 52, 52A, 55 and 55A of the TP Act and ss 42, 43, 49 and 50 of the FT Act. They seek injunctive relief, an order for corrective advertising and such other orders as the Court might deem fit pursuant to s 87 of the TP Act and s 72 of the FT Act, damages pursuant to s 82 of the TP Act and s 58 of the FT Act, and damages under the general law for defamation, for fraud and for negligence, together with interest and costs. Of these various remedies, only that of damages was addressed in submissions.

By their second further amended statement of claim, the applicants plead a holding out by ACA of itself as possessing special skill and competence in relation to certain matters.  These are the investigation of the activities of manufacturers, wholesalers, retailers and providers of goods and services, the giving of advice to consumers, the giving of advice on consumer protection generally, and the preparation and production of a fair, balanced, unbiased, reliable, truthful and correct magazine publication (4,5 - bold numerals are references to the numbers of paragraphs in the pleading).  It is pleaded that the article in the July 1992 issue of "Choice" magazine which ACA caused to be distributed for public reception by consumers throughout Australia (6), conveyed five imputations which defamed Bowin and Mr Joyce, and six representations or aspects of advice, knowing and intending that consumers would rely upon them in determining whether or not to deal with Bowin and Mr Joyce in Bowin's business.  The five imputations are repeated as "particulars of representations and/or advice".  They are at the heart of the case and are as follows:

1. that the Applicants and each of them were reckless in and about the manufacture and sale of dangerous appliances, namely gas heaters;

(ii)that the Applicants and each of them were irresponsible and reckless in that they knowingly distributed dangerous appliances, namely gas heaters;

(iii)that the Applicants and each of them were careless and reckless in failing to take the appropriate steps to recall or remove dangerous appliances, namely gas heaters, from consumers;

(iv)that the Second Applicant was dishonest in his claim that any danger in and about the gas heaters was limited and had been rectified;

1. that the Second Applicant, although a board member of the Australian Gas Association, knowingly supressed [sic] the truth concerning gas heaters manufactured by his company, from the Association and consumers." (7)

It is pleaded that these five imputations were defamatory of the applicants and of each of them (8).

The additional representation, which is not also pleaded as an imputation, is as follows:

"that the Applicants and each of them had not informed the Australian Gas Association that gas hoses on the heaters lead [sic - led] to fire; ..." (9)

It is pleaded that the imputations, representations, and/or advice:

"(a)are and were unfair, unbalanced, biased, unreliable and untrue;

(b)are and were made by the Respondent knowing them to be untrue or with reckless indifference as to their truth or falsity; and

(c)alternatively to paragraph (b), are and were made by the Respondent negligently and in breach of its duty of care to the Applicants and each of them." (10)

It will be noted that para (b) pleads fraud and para (c) pleads negligence. It is further pleaded that by publishing the matter complained of and the imputations, representations and/or advice referred to, ACA, in trade and commerce, engaged in conduct that was misleading or deceptive in contravention of s 52 of the TP Act and s 42 of FT Act, and, as well, contravened ss 52A, 55 and 55A of the TP Act and ss 43, 49 and 50 of the FT Act. (11)

Further, it is pleaded that "a certain person or persons previously connected with the applicants" made available and/or provided, in trade and commerce, certain information to ACA giving rise to one or more of the imputations, representations and/or advice referred to, and thereby engaged

in conduct in contravention of ss 52, 52A, 55 and 55A of the TP Act and ss 42, 43, 49 and 50 of the FT Act, and that ACA:

"(a)aided, abetted, counselled, procured and induced;

(b)was directly and/or indirectly knowingly concerned in and conspired with, the said person or persons to effect each of those contraventions." (12)

(The only "person or persons previously connected with the applicants" referred to in the evidence is Mr Musster.)

Finally, it is pleaded that as a result of the publication of the matter complained of and the imputations, representations and/or advice, the applicants were greatly injured in their character, credit, reputation and business, have been held up to public ridicule and contempt throughout Australia, and have suffered and will continue to suffer loss and damage. (13)

It is also pleaded that Bowin incurred expenditure in an endeavour to mitigate the effect of the matter complained of by the remedial action which it took, and has suffered loss.  Particulars of this loss are given as follows:

1. Discarded stationary - $5,0000.00 [sic - $5,000.00];

(ii)Advertising of discounted heaters - $2,280.00;

(iii)Major advertising - $10,000.00;

(iv)Advertising subsidy - $23,772.90;

1. Videos - $30,261.00." (14)

Paragraph 15 is as follows:

"15.Further, the matter complained of and the imputations pleaded in paragraph 7 hereof were calculated to cause and did cause actual damage to the Applicants and each of them.

Particulars of Aggravated and Exemplary damages:

The second Applicant asserts that damages are affected by reason of the following facts and matters:

(a)The Respondent's conduct in causing and/ or participating in each of the publications hereunder of and concerning the Applicants and for the purpose of promotion of the matter complained of:

(i)14 July, 1992 - interview with Mr G. Sirmai of the Respondent at 7.30 am 2WS News;

(ii)14 July, 1992 - interview with Mr G. Sirmai of the Respondent at 11.00 am on ‘Eleven AM’ ATN 7;

(iii)14 July, 1992 - interview with Mr G. Sirmai of the Respondent at 5.30 pm ‘Sydney Extra’ TCN 9;

(iv)14 July, 1992 - interview with Mr G. Sirmai of the Respondent at 6.00 pm ‘Seven Nightly News’ ATN 7;

(v)15 July, 1992 - interview with Mr G. Sirmai of the Respondent on ‘Tony Delroy Show Late Night’ ABC radio;

(vi)21 July, 1992 - interview with Mr G. Sirmai of the Respondent at 5.30 pm ‘Sydney Extra’ TCN 9;

(vii)21 July, 1992 - interview with Mr G. Sirmai of the Respondent at 2.55 pm ‘Consumer Watch’ 2GB
Radio;

(viii)21 July, 1992 - article in ‘The New England’ entitled ‘Warning on gas room heater hose’;

(ix)7 August, 1992 - Talkback interview with ‘Ted’ on ‘Sattler File’ 6 PR radio; and

(vii) [sic]

September, 1992 - article in ‘Choice’, entitled ‘Mod-N-Aire Gas Heater: More News’

(b)The Applicants and each of them were particularly injured in the First Applicant's business and the Second Applicant was particularly distressed and embarrassed by:

(i)the nature and falsity of the imputations and representations; and

(ii)the failure of the Respondent to make any or any adequate inquiries prior to the publication of the matter complained of;

(c)The contumelious disregard of the Applicants rights and reputations."

I need not give an account of all aspects of ACA's defence. ACA admits that it published the article in each State and Territory of Australia. It puts in issue whether the pleaded imputations are capable of being or are in fact borne by the article, or are capable of being or are in fact defamatory of the applicants. In answer to the claims based on the TP Act and the FT Act, ACA pleads s 65A of the TP Act and s 60 of the FT Act. These two sections are to the effect that none of the provisions in the respective Acts on which the applicants rely apply to a publication by a person who carries on a business of providing information, in the course of carrying on such a business.

There remain the special defences to the case in defamation. In respect of publication in New South Wales, qualified privilege at common law and the statutory defence of qualified privilege under s 22 of the Defamation Act 1974 (NSW) ("the NSW Act") are relied on. So is the statutory defence of comment on a matter of public interest under ss 29-33 of the NSW Act.

In respect of the "code" States of Queensland and Tasmania, ACA relies on the code defences of qualified protection.

In respect of publication in all other jurisdictions (the Australian Capital Territory, the Northern Territory and the States of Victoria, South Australia and Western Australia), ACA relies on the defence of qualified privilege at common law.

In relation to "fair comment" in respect of jurisdictions other than New South Wales, ACA relies on the defence of fair comment on a matter of public interest as defined or modified by local statutory provision.

By their amended reply to the defence of statutory and common law qualified privilege in New South Wales, qualified protection in Queensland and Tasmania, qualified privilege at common law in all other jurisdictions, comment in New South Wales, and fair comment in Queensland, Western Australia, Tasmania, and the Northern Territory, the applicants plead that ACA was actuated by express malice in publishing the matter complained of and/or published it with an absence of good faith. In reply to ACA's statutory defence of comment on a matter of public interest in New South Wales, the applicants plead that when the comment was made, ACA's alleged servant or agent did not have the opinion represented by the comment (cf sub-s 33 (2) of the NSW Act).

THE EVIDENCE
The period down to 15 August 1989
Mr Joyce and Bowin
It is necessary, particularly in view of the claim in defamation, to know something of the standing and reputation of Mr Joyce and of the business of Bowin.  Mr Joyce's affidavit evidence of these matters was not challenged and I accept it. 

Mr Joyce is a mechanical engineer by trade, having been apprenticed originally to the Southern Electrical Authority in Queensland.  He holds a diploma in electrical engineering.  In the period from 1962 to 1967 he worked in the United Kingdom  where he specialised in aerodynamics and became Chief Development Engineer for the Lotus Car Company.  On his return to Australia in 1968 he formed Bowin.  His wife, Pamela Hilary Joyce is the only other director.  Bowin is their "family company". 

From the time of its incorporation, Bowin carried on the business of designing and manufacturing products.  Bowin's early customers included Ford Australia Limited, British Leyland and the State Rail Authority of New South Wales.  From the late 1970s/early 1980s, Bowin designed and manufactured products for the gas industry.

Mr Joyce was responsible for the design of the suspension of Ford Falcon racing cars which competed in the motor car race which used to be called "The Bathurst 500".  He re-designed the suspension for the Leyland Marina motor car in or about 1976.  He was responsible for the aerodynamic design of the first gas turbine powered car that raced in "The Indianapolis 500" in 1968.  In the early 1970s, he designed the lighting for use in double decker railway carriages used in New South Wales.

Through Mr Joyce, Bowin commenced designing and manufacturing gas heaters in 1977.  Mr Joyce was responsible for the introduction of gas log fires into Australia.  Bowin won a contract with the State Government of New South Wales for the design, manufacture and supply of gas heaters for use in public schools and other public buildings in the State.  To the date of Mr Joyce's affidavit (19 August 1993), Bowin had supplied at least 40,000 heaters to State schools under the contract.
As noted earlier, in 1983 Mr Joyce designed the MS12, and the first MS12 was manufactured by Bowin in January 1984.  In 1984, Bowin received the "Australian Design Award", which, Mr Joyce says, was "in respect of the MS12".

In 1985, Mr Joyce designed the "SST" heater, which was the first electronically controlled gas heater in Australia.  In the same year, he studied Japanese manufacturing techniques with the Japanese Manufacturing Association in Tokyo.  Bowin was one of the first companies in Australia to introduce the "Just in Time" system of manufacturing practised in Japan.  This method of organising production apparently involves manufacturing only sufficient quantities of a product to meet orders, and purchasing components and materials only in sufficient quantities to enable production in those quantities and according to that time scale.  Mr Joyce asserts that it is a feature of the method that it enables the manufacturer to achieve "total quality control".  He says that in 1986, in recognition of Bowin's introduction of the method, it received the "TEAM Award" ("Towards Excellent Australian Manufacturing") from the State Government of New South Wales.

From approximately 1987 and 1988 respectively, Bowin was involved in research, technology and development for low emission burners for gas appliances, at the request of the Education Department of New South Wales and of the South California Gas Company.  Bowin holds patents in relation to "low-nox" burners in Australia and in the United Kingdom and has "patents pending in other countries throughout the world".

It has been a feature of the case that Mr Joyce was, at relevant times, a member of various governmental and industry bodies having roles in relation to gas heaters.  In 1987 he was appointed by the Commonwealth Government as a member of "the Foley Committee" which inquired into the standards and quality control observed in manufacturing in Australia.  He has, from time to time, been a guest lecturer at the University of New South Wales and at Macquarie University on design, manufacture and quality control.  He was a member of the Board of the Technology Transfer Council which was established by the Commonwealth Government to "introduce new manufacturing philosophies into Australian industry", until that Council ceased to exist as an independent entity.  He is a member of the federal council of the Gas Appliance Manufacturers' Association of Australia ("GAMAA") and of the AGA's Air Quality Committee and Appliance Quality Review Committee.

There was other evidence of the good reputation enjoyed by Bowin and Mr Joyce, the detail of which I do not find it necessary to recount.

Bowin experienced growth of approximately twenty per cent per year over the ten years down to the date of Mr Joyce's affidavit, 19 August 1993.  Bowin has employed, at any one time over that period, forty to fifty people.  Mr Joyce says that Bowin's fortunes were continuing to improve until the publication of the article in the July 1992 issue of "Choice".

I accept that Mr Joyce personally, and through him, Bowin, have built up an enviable reputation in mechanical engineering in Australia.  In particular, I accept that this reputation has included, as an element of it, a known interest in promoting quality control and safety.  In this respect, the reputations of Mr Joyce and Bowin were particularly vulnerable to an assault of the kind which they allege against ACA.

Revelation of the Hose Problem - 3 May 1989 to 23 June 1989
Mr Joyce became aware that there was a problem with the hoses supplied by Gooden for the MS12 in May and June 1989.  According to Bowin's service call records, the first four incidents were as follows:

Date of Complaint	Report of Problem	Nature of Complaint as Recorded	Date of Serviceman's Call and work done
3 May 1989	Mrs Clark	"Child tripped over unit and ripped hose out"	Heater serial number 3935-on 8 May 1989 serviceman fitted new hose 20103
8 June 1989	Mr T Hancox	"Metal connection at heater end is out. Caused a fire." Heater installed March 1988.	Heater serial number 5111.  On 13 June 1989 serviceman fitted new hose.
22 June 1989	Mrs Yousef [sometimes referred to as "Mrs Joseph"]	"Hose has broken".	Heater serial number 2782. On 28 June 1989 serviceman fitted a new hose as a "warranty call".

23 June 1989 Mrs Jeppesen "Hose has broken at heater end." Heater serial number 4533.  On 24 June 1989 serviceman replaced hose.

Mr Joyce's evidence was that he became aware of the first, second and fourth of these incidents within a day of their being reported to Bowin, and that after the second of them he instructed Bowin's service coordinator, Mrs Champion, to inform him of any further complaints of similar hose problems.
The immediate response of Mr Joyce to the Hose Problem - 23 June 1989 to 15 August 1989
Mr Joyce telephoned Mr Gooden and reported two failures "in the last two weeks" from a product manufactured about twelve months previously.  Apparently he treated the complaint of Mrs Clark on 3 May 1989 as being of a different kind, no doubt because the disconnection had been due to a child's having tripped over the hose.  It appears that he was referring to the Hancox and Jeppesen incidents.  Why he did not refer to the Yousef incident is not clear, but it seems  that the reason was that his telephone conversation preceded the serviceman's call on 28 June relating to her heater.  Of all the incidents noted, Mrs Clark's on 3 May 1989 seems to be the only one where the immediate cause of the separation of the hose was a sudden extraneous cause.  Mr Joyce asked Mr Gooden to check all hoses prior to delivery to Bowin to ensure that they were properly crimped, and told him that he (Mr Joyce) intended to inspect the hoses in stock and would advise Mr
Gooden of the outcome.  Mr Gooden undertook to inspect Gooden's production process.

Next, Mr Joyce inspected and tested a large number of hoses which had been supplied by Gooden.  He held the brass fitting that attaches to the heater in a vice and pulled at the hose.  With some pressure and a working of the hose backwards and forwards, he was able to pull some of the hoses from their brass fittings, but in many cases he could not do so.  He checked approximately 100 hoses in this way and concluded that "unless a deal of force and persistence was applied to the hoses, they would not become detached from the fitting in the field under normal operating conditions".  He said that notwithstanding this opinion, he instructed employees of Bowin to gather about 100 of the hoses in stock and return them to Gooden for inspection and testing.  In fact, Bowin returned 102 hoses to Gooden on 23 June.

At about the same time (23 June) Mr Joyce caused Bowin's sales and service personnel to inspect all MS12s held in store or on display for sale at each of the AGL showrooms in Sydney and at AGL's bulk store, for the purpose of determining whether or not the hose could become detached from the heater.  The service personnel informed him that the hoses inspected were satisfactory.

A further step taken by Mr Joyce was that he caused employees on Bowin's production line to inspect and test hoses supplied by Gooden before connecting them to the MS12s as they were manufactured.

As noted earlier, on 1 July 1989 Mr Musster became employed by Bowin as its Purchasing Manager.  Bowin's purchase of hoses from Gooden became part of his responsibility. 

On 3 July 1989, there was a further complaint which is recorded on the service call report form as follows:

Date of record of Complaint	Reporter of Problem	Nature of Complaint as Recorded	Date of Serviceman's Call and work done
3 July 1989	Mrs A James	"Heater bought from AGL ‘burst into flames’".	On 4 July 1989, "Heater [serial number 4418] beyond repair. Order and supply new one.  Hose has ripped from heater and burnt heater and carpet." The heater was replaced with a new MS12.

Mr Joyce says that this was the first time he had become aware of any damage being caused by fire.  He gave an instruction that Gooden hoses were not to be used further in the production of the heaters and caused all such hoses on hand to be returned to Gooden for inspection and testing.  Copies of Bowin's "Quality Defect Return" forms in evidence show that fifteen 20102 model hoses supplied by Gooden (this model was not used on the MS12) were returned on 1 August, that 365 model 20103 hoses (used on the MS12) were returned on the same
day (1 August), and that two 20103 model hoses which had already been re-worked by Gooden were again returned to Gooden on 7 August.  Mr Joyce gave evidence that the 365 were all the 20103 hoses remaining in stock as at 1 August.  With the 102 20103 model hoses which had been returned earlier on 23 June and the two which had been returned on 21 July 1989, the 365 made a total of 469 that had been returned, not taking into account more than once the two which were returned a second time on 7 August.  In some cases, the return forms referred to potential danger to the end-user.  

Mr Joyce carried out a test on a number of heaters in Bowin's factory.  While the heater was burning, he detached the hose.  He found that the heater ceased burning and that he could not "simulate a fire".

There were these four further incidents at the end of July 1989:

Date of record of Complaint	Reporter of Problem	Nature of Complaint as Recorded	Date of Serviceman's Call and work done
26 July 1989	Mrs G Palina	"Hose has come out of heater" hose having been installed in October 1988.	Heater serial number 4673-on 31 July 1989 serviceman fitted new hose. No charge to customer. Heater being still under one year warranty.

28 July 1989	Mr Conner, an employee of Bowin [Mr Joyce explained that he had given instructions that all units being manufactured were to be checked and that any about which there was a suspicion were to be attended to.]	"Hose faulty".	On 28 July 1989, "hose removed and production stopped." [In oral evidence, Mr Joyce explained that this meant that all production of heaters at Bowin's factory ceased.]
29 July 1989	Ratten Bury c/o AGL, Cootamundra	"Hose has come out of heater".	New hose supplied to AGL Cootamundra for affixing to heater.
29 July 1989	WM Holthan c/o AGL Cootamundra	"Hose has come out of heater".	New hose supplied to AGL Cootamundra for affixing to heater.

During the period when these incidents occurred, Mr Joyce spoke to Mr Gooden asserting that "a major safety issue" was involved and had to be "addressed with all urgency".  Mr Joyce asked to meet with Mr Gooden and his engineers.

The meeting on 15 August 1989
A meeting took place on 15 August 1989 attended by Mr Gooden and a Mr Lawrence, representing Gooden, and Mr Joyce, Christopher Sheehan, the Financial Controller of Bowin, and Mr Musster, representing Bowin.  Mr Joyce said that he was greatly concerned and questioned whether the hoses were being manufactured in accordance with the relevant Standard.  Mr Gooden assured him that they were and that the hose had been "thoroughly inspected by the AGA laboratories".  Mr Joyce said that he needed to be assured that he did not have "hundreds of hoses that will fail".  Mr Gooden said that a thorough check had been carried out of the process in Gooden's factory and
that apparently there had been a "small number which [had] crept through [Gooden's] quality control".  He said that all of the hoses which Bowin had returned had been thoroughly tested and re-crimped to give Bowin further confidence in the hose.  According to Mr Joyce, he (Mr Joyce) said:

"My greatest concern is for the safety of our customers and secondly, the good name of our company.  We are spending a great deal of time and money to ensure that we produce a high quality product that is safe.  I intend to report the matter to the Australian Gas Association and the Australian Standards Association.  If their advice is such that the product should be recalled, I will request you to recall the products and meet the expenses required to recall the products."

Mr Joyce said that Bowin would "monitor the situation in the coming 12 months" and that if the evidence suggested that there was "a serious quality control problem" extending beyond a few isolated failures, Bowin would move to recall the product and would expect Gooden to meet the full cost.  Mr Gooden agreed, or at least acquiesced, saying that he expected that no more incidents would be reported.

Mr Joyce was to concede in cross-examination that "in hindsight" he had not been "totally reassured" by Gooden that there were not hundreds of hoses that would fail (T 406.36-.37).  It is convenient to note at this stage the distinction, which was to be drawn in the article, between the "prompt action" which Bowin and Mr Joyce took in respect of identification of the fault, the ordering of new hoses and the
fixing of the problem for future MS12s on the one hand, and the failure to take any steps to inform existing owners of MS12s on the other hand.

The period from 15 August 1989 to 17 December 1991
Period from the meeting on 15 August 1989 to the failure of Mrs Gard's MS12 on 17 September 1990
According to Mr Joyce, on 18 August 1989 he telephoned Mr Robin Williams ("Mr Williams") of AGA in Melbourne.  Mr Williams had no recollection of the conversation and conceded that the conversation as deposed to by Mr Joyce may have occurred.  What follows is Mr Joyce's account of the conversation.  Mr Joyce, reported that Bowin had been experiencing failures with the flexible gas hoses fitted to the MS12, that so far the failures had not resulted in serious accidents, but that there had been "a fire which, fortunately, was contained within the heater".  (In fact, by 18 August there had been two cases of fire recorded in Bowin's service call reports, that of Mr T Hancox on 8 June and that of Mrs James on 3 July, but it is not clear that by 18 August Mr Joyce himself had become aware that there had been a fire in the Hancox case.)  Mr Joyce explained that the problem was that the hose pulled out of the crimped brass fitting which screwed into the back of the heater.  He and Mr Williams agreed that it was not obvious how a heater could catch fire, since burning would cease upon disconnection of the hose.  In answer to a question from Mr Williams as to whether the hose was "approved", Mr Joyce said that Mr Gooden had assured him (Mr Joyce) that it was, that he had met with Mr Gooden and had returned all stock to Gooden for inspection, but that he was "not happy with the hose at all".  Mr Joyce continued:

"My concern, Robin, is that if the design of the product was different, these failures could not have occurred.  I believe that the standard for gas hoses is inadequate and the whole matter requires investigation.  Gerald Gooden tells me that the tests for these hoses requires placing a weight on the end of the hose, but I cannot get the hose to fail on a straight pull.  I can get it to fail by working it from side to side.  I believe some design changes are required."

The conversation continued as follows:

"RW:`John, the standard for hoses has been around for a long time.  I have been involved with the Standards Committee.  In fact, I am the Chairman of the Standards Association Committee for gas hoses.  I believe that the code is more than adequate to meet your needs and involves far more than a pull test.  I am not sure that you are familiar with the code.'

JJ:`Well, Robin, I want this matter taken up with the Committee.'

RW:`Well, if you have concerns with the design of the hose, would you please put it in writing to me and I will take the matter up with the Committee.'

JJ:`Thank you.  I will write to you.'"

Mr Joyce then wrote to Mr Williams a letter dated 20 August 1989, the first paragraph of which was as follows:

"I am writing to you with regard to the SAA Code for Flexible Gas Hoses.  I am led to believe, that you are the Chairman of this Committee."

The letter advised that over the preceding two months, Bowin had had "about 10 instances of the hose coming out of the crimped fitting".  In his affidavit, Mr Joyce said that in fact up to that time there were only the nine instances described earlier.   The letter advised that the date of manufacture of the faulty hoses was "1987 and 1988".  He advised that he had stopped production and had returned the hoses in stock to Gooden for testing.  He said that in due course the hoses had been returned by Gooden to Bowin "stamped tested" and that Bowin had recommenced production but was "still unhappy with the product and [had] brought in the manufacturer for further discussions".

According to Mr Joyce's letter, Gooden had advised Bowin that it was modifying its crimping dies to overcome the problem.  Mr Joyce advised that Mr Gooden had told him that the test carried out to ensure that the hose would not come out was a "pull test" which Gooden's hose passed.  Mr Joyce advised Mr Williams that he had discovered that it was possible for the hose to be inserted less than the full measure before crimping.  The last three paragraphs in Mr Joyce's letter to Mr Williams were as follows:

"Needless to say I am less than satisfied with the present code which appears to only cover the direct pull on the hose.  On examination of the crimped fittings used by the manufacturer, I observed that the inner stem protruded past the outer by about 1mm, a quick sketch will soon show that the geometry of forces around the end of this stem, will obviously lever the hose from the crimping due to the direction of forces and the order of mechanical advantage.  Furthermore, either a sight hole or an identifying mark are necessary to allow inspection of the correct insertion depth of the hose in the fitting.

I would appreciate your raising of this matter as an item of urgency with your committee, to attempt to minimise the potential for accident.  The manufacturer is aware of my concerns and is looking into the matters raised, but with the potential dangers inherent with this type of failure and new laws on product recall, I believe the issue should be addressed rather quickly.

Looking forward to hearing further from you in the future, ...." (emphasis supplied)

In oral evidence, Mr Williams agreed that he understood the "potential dangers" to which the letter referred to include the possibility of fire.

It will be noted that Mr Joyce wrote to Mr Williams in the latter's capacity as chairman of a committee of the Australian Standards Association. 

On 24 August 1989, Mr Williams replied on the letterhead of AGA.  He referred to the relevant standard as "Australian Standard AS 1869 - Hose and Hose Assemblies for Liquefied Petroleum Gases (LPG), Natural gas and Town gas".  He acknowledged that he was the Chairman of "Committee RU/1 - Industrial Hoses" which, he said, was charged with the responsibility for that Standard.  He expressed the view that the Standard's requirements adequately covered the question of the strength of connections and advised that they had been in place for many years, both in British Standard BS 3212 and in various issues of AS 1869 going back to 1976.  He described the relevant tensile strength test and flexing resistance test, and said this:

"While we have had problems with crimped fittings on hoses before, after they have satisfied our approval requirements, the problems have generally been found due to assembly faults or changes of ferrule design e.g. by the number of barbs being reduced from the original and hence the clip or crimping not securing the hose to the fitting."

He said that he was prepared to raise the matter at Committee RU/1's next meeting scheduled for early December, 1989, and in the meanwhile would pass the matter on to his "Approvals Officer" with a view to having the Committee's "Inspector" obtain samples for check-testing.

Mr Joyce says that when an inspector from AGA attended Bowin's factory to carry out "routine inspections" of the production line during the following weeks, he asked the inspector what was being done by the AGA about the Gooden hoses and was told, "we are checking out the crimping ... and retesting the hoses".

In 1990 there were further instances of failure of the hose.  According to Bowin's service call reports, they were as follows:

Date of Complaint	Reporter of Problem	Nature of Complaint as Recorded	Date of Serviceman's Call and work done
22 January  1990	Mrs Donnely	"2 heaters with hoses coming off", the heaters having been installed on 20 August 1989 and being under warranty.	On 25 January 1990 Bowin's serviceman fitted new hoses to heaters serial numbers 4526 and 4554.
2 April 1990	Department of Housing	"Hose blown off back".	On 3 April 1990, the Bowin's serviceman fitted a new hose stop.  The heater was serial number 4172 which evidence at the hearing showed had been manufactured on 25 June 1987, nearly 3 years earlier.
15 June 1990	Mrs G Bruce	"Hose came out of heater back, pls fix". The heater having been installed on 7 July 1988.	On 20 June 1990 the Bowin's serviceman recorded "fitted new hose. Other one faulty".
21 June 1990	Mr T Hancox	"Hose has come away from back of heater".	On 27 June 1990 the Bowin's serviceman reported "fit new hose.  No charge".
2 July 1990 [sic]	Vince Goode	"Hose came off and burnt carpet and slight burns to his son", the heater being serial number 4481 installed in 1988 and under warranty.	On 30 June 1990 [sic] the serviceman recorded "hose pulled out of fitting. Replaced hose, heater and carpet OK. Customer very happy with heater."
3 July 1990 [sic]	Mrs Pethybridge	"Hose came off, they were unable to disconnect bayonet easily and it burnt carpet and destroyed the appliance.  Ian picked it up.  They will accept a replacement heater."  The heater was serial number 5059, had been installed in 1988 and was under warranty."	The serviceman called on 10 June 1990 [sic] and recorded that the new heater had been "returned".

25 July 1990	Mrs K Clark	"Connection hoses badly crimped. Please replace hose." The heater had been purchased by Mrs Clark from AGL that same day, 25 July."	On 27 July 1990 a serviceman called and replaced the hose.
26 July 1990	Miss A Johanson	"Connection hose has comed [sic] away from back of heater. Jumped out of metal connection possibly faulty hose." The heater was installed in July 1989 and was under warranty.	On 27 July 1990 the serviceman called and fitted a new hose under a "warranty call".
13 August 1990	Mr D Males	"T Pollock Pty Ltd. Go to office and ask for Mr Males. Hose came off heater. Pls refit new one."	On 14 August 1990 the serviceman fitted a new hose as a "warranty call".
16 August 1990	Mr Long	"Kink in hose where attached to a htr pls replace." The heater had been installed on 16 August 1990 and was under warranty.	On or about 24 August 1990 a serviceman attended and replaced the hose.
20 August 1990	Mr A Bradburne	"Hose has come off heater. No charge. Take new hose to fix."	On 23 August 1990 a serviceman fitted a new hose to the heater serial number 4398 as a "warranty call".
17 September 1990	Mrs Gard	"Hose disconnected from heater", the heater having been installed in February 1989.	On 19 September 1990, a Bowin serviceman replaced the hose without charge.

Mr Musster's memorandum to Mr Joyce dated 12 December 1990
On or about 12 December 1990, Mr Joyce received a typed report from Mr Musster on the subject "Faulty hose - service call code M11".  The report asserted that Gooden had taken over supply of hoses to Bowin on 23 March 1988 (the correct date was March/April 1987), that the first recorded complaint was that of Mrs Clark on 3 May 1989, and that the most recent was that of Mrs Gard on 17 September 1990. 

Mr Joyce says that the memo was inaccurate in numerous respects.  For example, the opening paragraph referred to the hose's tendency to become separated from its bayonet connector and/or from its heater connector, but, according to Mr Joyce, there had been experience only of a problem of the latter kind.  The memo referred to a small number of failures of hoses connected to Bowin heaters other than the MS12, but, according to Mr Joyce, only those connected to the MS12 had been problematical.  The memo referred to the number of recorded faults of the MS12 as twenty-eight, but, again according to Mr Joyce, only those referred to above in these Reasons had been recorded.  The memo referred to problems with the ½ inch hose (Gooden model 20102) as well as the _ inch hose (Gooden model 20103), but, yet again according to Mr Joyce, only the latter, being the kind connected to the MS12, had caused a problem. 

More generally, the memo referred to three cases which "could possibly represent the tip of an iceberg": that of Mrs James on 23 July 1989 whose heater had "burst into flames"; that of Mr Goode on 30 June 1990 whose hose had come off and caused burning of the carpet and a slight burn to his son; and that of Mrs Pethybridge on 3 July 1990 where there had been burning of the carpet and destruction of the appliance.  Mr Musster's memo asserted that from 23 March 1988 to 6 July 1989, Bowin had produced "close to 2,400 units" and that the relatively small proportion which had revealed problems might be only, again, the "tip of an iceberg".  His memo said that in the same period, Bowin had purchased from Gooden 1583 _ inch hoses and 350 ½ inch hoses.  The memo included the following:

"It is these [sic - those] hoses that were supplied prior to August 15, 1989 that concerns [sic] me.  As it is possible to conclude that in the very near future they will display their inherent fault."

and

"On average it appears that it can take up to two seasons of domestic use for the hose to separate it-self from its `connectors'."

It will be recalled that the hose problem became evident in the winter of 1989.  The further winter of 1990 had passed by 12 December 1990, the date of Mr Musster's memo.  In the last passage quoted, Mr Musster seems to be emphasising that the hose problem can be expected to reveal itself, at least in some cases, even after two winters' use.  If one disregards the winter of 1989, this amounts to an assertion that in the case of some heaters, the defect could be expected to become evident not earlier than after the winter of 1991 - a time which was yet to arrive.  Moreover, the memo does not necessarily suggest that if a problem has not emerged immediately following a second winter's use, one will never emerge.

Mr Musster's memo concluded by claiming that it was fortunate that no legal action in respect of property damage or human life had been brought against Bowin, and that if any such
proceeding were to be commenced, Bowin must be in a position to:

"(A)Prove that there is a third party who is ultimately responsible.

(B)We had no knowledge that there was an inherent fault and therefore innocent [sic] of such charges.

(C)We knew about the faults.  Have documented all reported faults and investigated cause of damage/fault.  Taken all relevant steps to advise third party of such faults.  And finally put in to motion the necessary procedure to ensure that the possible danger is totally eliminated."

As previously noted, this "first version" of Mr Musster's dated 12 December 1990 is not that of which he was to give a copy to ACA, although nothing turns on the differences between the two versions (the second version repeated the allegedly erroneous statements in the first).  In any event, Mr Joyce says that after he saw the second version in 1992, he checked his file and found a copy of it (Mr Musster must have created this before he ceased to be employed by Bowin in December 1991).

Following receipt of the memo, Mr Joyce spoke to Mr Musster at length.  He suggested that if Mr Musster checked, he would find that the faulty hoses had come from a very small batch.  (This was a claim that Mr Joyce was to make several times but which he finally conceded to be unsustainable on the evidence.)  He told Mr Musster that he did not wish him to
address legal issues or to prove that Bowin was not at fault or that someone else was at fault.  He said:

"All I am asking you to do is document the details of the customers, dates, faults and returns so that we can then supply it to Goodens.  John, I am not trying to make a profit in the claim against Goodens."

Mr Joyce says that Mr Musster did not provide him with a report amended in accordance with the discussion. 

Following the conversation, Mr Musster, on the letterhead of Bowin, wrote to Mr Gooden on 25 January 1991.  The heading was erroneous:

"Meeting of August 15th, 1990 [the year should have been 1989]".

Notwithstanding that Mr Joyce had told Mr Musster that the only problem experienced was with the _ inch hose, the letter persisted in complaining of faulty ½ inch hoses as well.  Similarly, notwithstanding what he had been told by Mr Joyce, Mr Musster continued to allege a problem of separation from "the affix bayonet connector and/or from the little cc female connector".  The letter claimed that various undertakings had been given by Gooden at the meeting on 15 August 1989.  The letter enclosed an invoice covering costs incurred by Bowin and requested payment.  Gooden's reply dated 19 February 1991 protested about inaccuracies in the letter.  Mr Joyce, who had
been unaware of Mr Musster's sending of the letter, rebuked him about its inaccuracies.  He said:

"Why are you writing things like `keeping a low profile'.  We have got to do whatever is necessary to fix this issue.  That was the purpose of monitoring the hoses for the 12 month period."

He told Mr Musster to contact Mr Gooden and resolve the matter.  This led to further correspondence between Mr Musster and Mr Gooden and payment by Gooden to Bowin (on 23 August 1991) of $2,646.97, in satisfaction of Bowin's claim for reimbursement of expenses.

On 16 May 1991, Bowin returned one hose to Gooden as defective because of a problem described in the "Quality Defect Return" form as "loose fitting".

Over the period from 1989 to 1991, Mr Joyce attended meetings of the Executive Council of GAMAA.  At two of the meetings he raised the hose problem for discussion.  The meetings were held in Melbourne, the first in late 1989 or early 1990, the second on 27 August 1991.  At the first meeting, Mr Joyce told those present that Bowin had "experienced some hose failures" and said that he wanted to draw the attention of other manufacturers to the situation.  He asked those present to have a check made with their service divisions as to whether they had encountered a similar problem.  He told them that he had "had a fire", that he had informed Robin Williams of AGA
about the hose failures, and that he wanted the relevant "Standards Australia code" investigated to ensure that it was adequate.  Some of those present undertook to make inquiries within their own companies and to report to Mr Joyce.  He also sought the advice of members as to whether a "recall" was warranted.  He said words to the following effect:

"How would you react if you had a couple of hoses come off?  How would you treat that?  Would you treat that in a manner that you would look at it as a recall or would you treat it as a small incident at this stage?"

In response, one of those present said words to the following effect:

"John, you would want to be careful moving to something like a recall on just a small number because we don't want to cause panic for the whole industry because everybody uses hoses."

There were other replies apparently to a similar effect.

At the second meeting (on 27 August 1991), two of the other members of the Executive Council of GAMAA reported that their companies used hoses, in one case 40,000 a year, but that no failures had come to light.  Mr Joyce requested that the matter be referred to a "technical committee" of GAMAA for investigation of the manufacturing standard for flexible hoses.

In his discussion with the members of the Executive Council of GAMAA, as in the approach which he had made to Mr Williams of AGA noted earlier, Mr Joyce's primary concern seems to have been with the adequacy of the industry's manufacturing standard.  This was relevant to heaters to be manufactured in the future, but not, at least directly, to those previously manufactured and sold to customers.  However, it is true that Mr Joyce sought the advice of his colleague fellow manufacturers as to the desirability of a "product recall".  No doubt their negative response can be attributed by the cynic to unawareness of all the facts, the informality of the inquiry and response, or even self interest; and by a person more sympathetic to Mr Joyce, to disinterested expertise and experience.  The evidence does not show that Mr Joyce expressly sought his colleagues' views on the desirability of the issue of a product safety notice of the kind that was ultimately to issue in July 1992, but no doubt an inquiry as to the desirability of a product recall would have afforded the opportunity for those present to advise that such a notice should be published.

The period from 17 December 1991 to publication of the article at the end of June 1992
Mr Musster contacts ACA - ACA's immediate response
As noted earlier, on 17 December 1991, Mr Musster ceased to be employed by Bowin.  As was later discovered, he apparently took some records of Bowin, or copies of them, with him. 

In about February 1992, he telephoned ACA and spoke to a "researcher" there name Clare Bonham.  According to her, he said that he had serious concerns about the safety of a number of Bowin's products and that he believed that Bowin's response to the problems was "inadequate, if not irresponsible".  He said,

"There are problems with some of the heaters and I believe this constitutes a possible serious threat to human safety.  I feel some responsibility for putting the heaters into people's homes and I now spend my life waiting to hear that a heater which I have sold has caused serious injury to a child."

Ms Bonham suggested that Mr Musster write to her and provide any written or photographic evidence which he might have to support his claims.  Ms Bonham mentioned Mr Musster's  allegations to Mr Shales, a project manager with AGA.  Mr Shales, in turn, mentioned it to Robin Williams at AGA and asked him whether AGA knew of the problem.  Mr Williams said that he had no knowledge of it and Mr Shales undertook to put his inquiry in writing to AGA. 

Mr Musster wrote to Ms Bonham on 24 February 1992.  The letter comprised four pages.  Annexed to it was a copy of the second version of Mr Musster's memo to Mr Joyce dated 12 December 1990; copies of what purported to be extracts of Bowin's service call data relating to fault code M11 ("FAULTY HOSE") for the period 3 May 1989 to 17 September 1990; and some photographs of MS12s.

The letter related to more than the hose problem experienced with the MS12.  It was headed,

"GAS SPACE HEATER - UNFLUED (UNVENTED) & FLUED.

MANUFACTURE [sic]: BOWIN DESIGNS PTY LTD

BRAND/TRADING NAMES: MOD-N-AIRE, MOD-N-FLAMES & BOWIN"

In the opening paragraph, Mr Musster claimed to be writing because of his "personal concern regarding the quality and standard of the above-mentioned range of domestic gas space heaters".  He claimed to have been a "senior management employee" of Bowin from July 1989 until his resignation on 17 December 1991.  He said,

"I resigned from the position of `Sales & Marketing Manager', because I believed that I was compromising my personal values for the purpose of `selling goods that morally should not have been sold'."

In successive sections of his letter he dealt with the subjects of "FAULTY HOSES",  "LNS WALLMOUNTED & FREE STANDING GAS SPACE HEATER", "THE SIMILARITIES BETWEEN THE FAULTY HOSES AND THE LNS GAS HEATER", "THE SST ELECTRONIC", "THE FEDERATION FIRE" and a "SAFETY TILT SWITCH" under those headings.

It is unnecessary to set out the letter in full.  Officers of ACA who gave evidence acknowledged that such a letter from an obviously disaffected former employee demanded close scrutiny and verification before ACA could adopt any of its allegations.  In relation to the faulty hoses, the letter began by quoting from Mr Musster's memo dated 12 December 1990.  The letter included this:

"On average it appears that it could take a number of seasons of domestic use for the hose to work itself free. e.g.

`Heater burst into flames' - Heater age; 17 months.

`It burnt the carpet and destroyed the appliance' - 15 months.

`Burnt carpet with slight burns to his son' - 15 months."

Mr Musster alleged in his letter that separation arose because of the portability of the MS12: according to the letter, its movement and the winding of the hose around it between seasons had been the cause of the hose's working free from its brass fitting.  The section of the letter dealing with the MS12 concluded with the following:

"(A)You will have a gas leak until such time it is detected.

(B)If the appliance has a flame (pilot or Burner box) you will have an uncontrolled fire.

1 - the gas leak will create a `flashback'.  This uncontrolled fire will cause the heater to catch light.

2 - the fire will spread to the `Flexible Hose' giving it a blow-torch effect.

3 - from here on it is any ones [sic] guess as to what will happen next.

There are thousands of these units out there, waiting like a `time bomb for the right moment to ignite'." (emphasis supplied)

After dealing with other subjects, the letter turned to Mr Joyce.  It asserted that Mr Joyce was the managing director of Bowin, that all decisions referred to in the letter were made by him, and that he had a veto on all decisions which affected the profitability of Bowin.  Mr Musster offered to answer questions and to "qualify" to the best of his ability all statements which he had made.

On 9 March, having read Mr Musster's letter, Mr Shales faxed Mr Williams of AGA's Melbourne office referring to a discussion which they had had at ACA's office in Sydney the preceding month and asking whether AGA knew of a hose-related fault with the MS12.  The letter said:

"Since [the meeting between Messrs Shales and Williams at ACA's office in Sydney in February] we have had other inquiries and now feel that we should now look into these matters urgently.  The problems seem to relate mainly to MS12 heater which it is claimed has a hose related fault. 

If there really are problems with this heater it is in everyone's interest to clarify the situation as quickly as possible."

The reference to "other inquiries" seems to have been a reference to Mr Musster's letter.  On 16 March, Mr Williams wrote to Mr Shales, advising that AGA had no knowledge of the problem but would appreciate receiving further details, and that on receipt of them he could pursue the matter through ACA's inspector in Sydney "and of course the manufacturer".

Also in March 1992, ACA established a "project team", consisting of Mr Shales as project manager, Mr Cerexhe as journalist and a Mr Robert Drake as policy officer, to investigate the issues raised by Mr Musster's letter.  A memo from Mr Shales of 18 March to certain ACA staff informed them of the formation of the project team which was to meet that day, and said:

"The information we have been given is detailed and specific and appears credible.  The conclusion that there is a problem is inescapable; the degree of the problem is not so clear ... If the information supplied to us is correct we should be very concerned and I believe we need to act quickly in a carefully considered way.  The first step must be to identify the significance of the information we have been given."

An "agenda" for the first meeting of the project team recorded this item for discussion:

"DISCUSS AND CLARIFY CONTEXT/SCOPE OF PROBLEM".

There were typed minutes of the meeting which recorded, inter alia, that it was claimed that there were 28 cases of MS12 hose failure known to Bowin as at 12 December 1990 and 7 cases of failure of the same hose on other models; that there had been a hose problem and that Bowin had known about it and rectified it in respect of stock on hand, but had done nothing about, and was not concerned about, products which had already been sold.

In one form or another, the impossibility of knowing how many more defective heaters remained in consumers' homes was to become an issue between ACA and Mr Joyce.  As will be seen, at the end of the day Mr Joyce conceded that he did not know how many there were or what the upper limit of the number was.  But similarly, ACA acknowledged that there might be none.

On 18 March 1992 Mr Shales followed up his fax of 9 March by telephoning Mr Williams.  Mr Williams pointed out that he had replied two days earlier on 16 March.  Mr Williams said that Mr Shales' inquiry was of too vague a nature to be taken further.   But Mr Shales replied that the question was reasonable and that he would have expected Mr Williams to raise the matter with Mr Joyce, who, after all, was, he asserted, a member of the AGA's Appliance Quality Review Board.  Mr Williams said that he felt unable to do so at that stage.

Inquiries made by ACA from first meeting of ACA project team on 18 March 1992 to publication of the article
Following the first meeting of the ACA project team, Mr Drake wrote to the New South Wales Fire Brigade on 20 March, inquiring whether it had any information about possible problems with the MS12 or "incidents of leaking or separated hoses on gas heaters causing gas leaks or fires."  The letter said that "due to the possible public risk", ACA was proceeding as quickly as it could.  It invited a response by facsimile or telephone.   There was no response and no follow up by ACA prior to publication of the article.

On 20 March, Mr Drake wrote to Mr Garry Johnson of the Bureau in relation to the "portable gas space heater" manufactured by Bowin which, according to his letter, might go under the brand names "Mod-n-Aire", "Mod-n-Flames" and/or "Bowin".  He identified the model as the MS12 and described the problem as being the working loose of the flexible hose from the bayonet connector (in fact the problem appears to have been almost entirely associated with the heater end).  He asked whether the Bureau had information about possible problems with the MS12 or incidents of leaking or separating hoses on gas heaters causing gas leaks or fires. 

The letter elicited a reply dated 23 March from Mr J J Wunsch, the Director of Product Safety of the Bureau.  Mr Wunsch advised that the Bureau had no information about the MS12 but asked Mr Drake to keep the Bureau informed if he should receive further complaints or information about the alleged hazard.

On 31 March a meeting was held at the premises of ACA between Messrs Shales and Cerexhe of ACA and Mr Musster.  Mr Musster had brought with him an MS12.  He indicated where (at the heater end) the hose levered its way out of its brass fitting.  He told Messrs Shales and Cerexhe that the problem had been overcome for all stock after August 1989 but that the problem affected earlier MS12 and other model heaters "going back at least to January 1986".  He said that 3,400 MS12s were produced during the period from January 1986 to August 1989 and that the problem affected the MS12 in particular, because of its portability; that with the MS12, the hose separated mainly at the appliance end rather than at the bayonet end;  that a child "burnt its hand in one case"; that there was "a danger if the PVC hose burns back too"; that Bowin had sought compensation which eventually Gooden had paid; and that Bowin had not informed its own insurer about the fires, although Gooden's insurance assessor had come to Bowin's premises and spoken to him (Mr Musster) "about the fires".  In answer to a question, he said that as far as he knew no fire had been serious enough for the fire brigade to be called.  Finally, he said:

"There could be an explosion if the gas leak from the hose led to a build up of gas in the room.  Eventually this could be ignited - a flashback.  An explosion is possible."

Over a period of several days following this meeting with Mr Musster on 31 March, Mr Cerexhe and another employee of ACA attempted to identify and contact the customers named in the extracts from Bowin records supplied to ACA by Mr Musster.  This investigation was relevant to the reasonableness of ACA's conduct in publishing the article.  In paras 7-13 of his affidavit sworn 12 November 1993, Mr Cerexhe gave an account of his telephone conversations with the following persons on the following dates in which the customers said, inter alia,
the things attributed to them below:

Date	Customer	Conversation
2 April 1992	Mrs James	MS12 heater purchased in 1989, some time later burst into flames near the connection of the hose where the hose fits into the body of the heater.  She and her daughter managed to get the heater outside and nothing else was damaged.  Bowin replaced the heater.  On 3 April 1992, Mrs James telephoned Mr Cerexhe to say that she had found a note of the service call which showed that she had reported the problem on 31 July 1989 and that the service call had been on 2 August 1989. (Bowin's records showed these dates as 3 July and 4 July 1989 respectively.)  The serial number of the old heater was 4418 and the serial number of the replacement heater was 5651, which was fitted with a new hose.
2 April 1992	Mrs Gard	The hose came away at the heater end when she moved the heater which was not burning at the time.
8 April 1992	Mrs Zuber	In September 1989 a flame occurred around where the hose went into the heater but the hose did not become detached from the heater.  She telephoned Bowin which replaced the hose at her expense.  Bowin said that it was the fault of the gas company not of the product, but the gas company denied responsibility also.  Mrs Zuber's heater was not an MS12 but an SS16.  Mr Cerexhe said that he made the inquiry on the assumption that any problem encountered with the MS12 may extend to other models and may have a common cause.
8 April 1992	Mrs Males	The hose at the back of the heater came off and flames were coming out of the hose "it was like a flame thrower or a ball of flame".  At her suggestion, Mr Cerexhe telephoned her husband who said "there was just a big flame shooting out of the hose.  The heater was in the kitchen and the flame went onto the tiles".  He said that the heater itself was undamaged, that Bowin came out and fitted a new hose and that the serviceman took away the old hose.  He said that the flame was 15 to 24 inches long and was like "a flame thrower".

14 April 1992	Mr Hancox	The problem was experienced twice, in June 1989 and June 1990, with the same heater.  In both cases the hose worked its way loose at the heater end and came completely away.  The first time the heater was burning and he was moving the heater.  That time the gas ignited at the hose and "it was like a flame thrower" and Mr Hancox "held the hose against the skirting board to snuff out the flame".  A Bowin serviceman changed the hose and did not charge Mr Hancox.  The second time, the heater was not burning and when the hose became loose, he contacted Bowin which replaced the hose with a hose that looked different.  The first time, "the flame was about 300 mm in length and it was on a bare timber floor".
16 April 1992	Mr Bradburne	His wife moved the heater around to reposition it when the hose came off the back of the heater.  The heater was burning and "a flame which was a good foot in length came out of the hose".  He turned the gas off.  He reported the matter to AGL which caused a Bowin serviceman to attach a new hose which had a different connector.  Nothing was damaged by the fire.  The heater was on ceramic tiles and the whole of the floor was black but there were no curtains around.  The flame was "just like somebody with a flame thrower".

On 1 April, Mr Shales wrote three letters: one to Bowin for the attention of Mr Joyce; one to Mr P Greenhalgh, the General Manager of AGA in Canberra; and one to Mr Williams of AGA in Melbourne.  The letter to Mr Joyce was ACA's first contact with him.  In the letter Mr Shales advised that ACA had been given information which caused it concern that some gas heating products manufactured by Bowin may have been sold to consumers with faults making them potentially dangerous.  Mr Shales asked that Bowin "clarify this matter" for ACA.  As well, the letter advised that ACA was discussing the matter with AGA.  It advised that the assertion had been made that 3,400 MS12s had been sold before August 1989 fitted with a gas connecting hose which might become detached from its end
fittings and so constitute a fire hazard.  Mr Shales' letter referred to the allegation that fires had in fact been caused in this way and that Bowin was aware of them.  After referring to the allegation that Bowin was aware of failures of the hoses in the field, the letter went on,

"Although our information is that some stock held by Bowin Designs may have been modified our concern is that units may have been sold which are still in the field fitted with faulty hoses.

I feel you would agree that we are right to be concerned about these claims and feel it is important that they are clarified as a matter of urgency."  (emphasis supplied)

Mr Shales forwarded a copy of that letter to Mr Greenhalgh in case AGA wished "to initiate some course of action".  He asked Mr Greenhalgh for information as to the current approval status of other gas heaters manufactured by Bowin, namely the "SST Electronic" and the "Federation Fire".

Although Mr Shales' letter to Mr Williams does not say so, apparently it enclosed copies of the other two letters of 1 April.  It advised Mr Williams that ACA had approached AGA in Canberra.

On Friday 3 April, Mr Drake of ACA replied to the letter dated 23 March from Mr Wunsch of the Bureau, enclosing copies of ACA's letters dated 1 April to Bowin and to AGA.

On the same day (3 April) Mr Joyce received ACA's letter dated
1 April.  He immediately telephoned ACA and spoke to Mr Cerexhe (Mr Shales was on leave).  There is no substantial difference between the two men as to most of the content of the conversation.  Mr Joyce suggested that the source of the allegations made to ACA was Mr Musster.  Mr Cerexhe said that ACA was not at liberty to disclose its source.  Mr Joyce suggested that ACA should treat information coming from Mr Musster with suspicion, that Mr Musster was currently taking legal action against Bowin, and that "he may have malicious intent to harm the company".   Mr Joyce agreed that Bowin had experienced a problem of faults in hoses supplied by Gooden but not of the dimension which had apparently been suggested by Mr Musster to ACA.  Mr Joyce told Mr Cerexhe that the suggestion that 3,400 hoses were defective was ludicrous.  Mr Joyce said that he was happy for representatives of ACA to attend Bowin's premises and to inspect its records and see the way in which Bowin's factory operated.  Neither Mr Cerexhe nor any other representative of ACA was ever to take up this invitation.  I digress to note that this fact featured in the applicants' submissions and that in reply ACA submitted, first, that the evidence shows that Mr Shales and Mr Cerexhe did not believe that on such a visit, Mr Joyce would disclose to them any evidence which might be in Bowin's possession of the extent of the problem, and secondly, that the cross- examination of Mr Joyce elicited a concession that in fact Bowin had no records establishing that the problem was a small or limited one.  Mr Cerexhe told Mr Joyce that he would appreciate having a reply to ACA's letter and that Mr Shales might have further questions to put to Mr Joyce after he returned from leave.

On Monday 6 April, Mr Cerexhe telephoned the Natural Gas Company (a division or subsidiary of AGL) and asked a Mr Pye there whether the company had a record of any problems with the MS12.  Mr Pye informed him that there had not been any "recall" of the heaters.  Later in the day, Mr Pye telephoned Mr Cerexhe and told him that the company's records did not disclose "returns of MS12 heaters" but that the records related to Sydney only.  He said that the company had not received "any noticeable level of complaints" about the MS12.

(c)the fact that Messrs Cerexhe and Shales formed the view, apparently without any rational basis, that Mr Joyce's word should not be accepted;

(d)the untrue statement that ACA had called upon the Bureau to investigate the matter;

(e)the statement concerning the Australian Design Award contained in the postscript to the article;

(f)Mr Sirmai's participation in, and publication of, injurious matters about the applicants in the programmes and articles referred to in sub-para 15 (a) of the second further amended statement of claim mentioned earlier;

(g)the early entrenched bias against the applicants and concomitant readiness to publish false and damaging matter concerning them.

The applicants point to various matters in evidence which they submit demonstrate the "early entrenched bias" last referred to.  They point, for example, to the successive drafts of the article and observe, for example, that on the last page of the third draft, there had occurred the following paragraph:

"One interpretation is this course of inaction [by Bowin] was chosen because the company placed a higher value on its reputation and profits than on the safety of its customers."

No doubt, the views held by officers of ACA during the "development" of the article may be relevant to their, and ACA's, motive in publishing it in its final form.  However, the abandonment of a passage such as that quoted does not compel a finding that the view expressed in it continued to be held or had ever been held initially.  Perhaps it was abandoned because, upon reflection, those concerned considered that it had not expressed their state of mind at the time when it was written.  Perhaps it was abandoned because evidence subsequently to hand convinced those concerned that their view expressed in the passage could no longer be sustained.  At
least, the deletion of the passage demonstrates some taking of care to ensure that a particularly damaging paragraph did not remain in the article; - a course of conduct which tells against a finding of recklessness or of an intention to injure on the part of those involved in the writing of the article. 

The matters particularised by the applicants in sub-paras A (i), (ii), (iii), (iv) and (vi) above go to the extent of publication and the manner of presentation and the content of the article.  The fact that the article was addressing a potential fire danger in consumers' homes signified that it was bound to be somewhat alarming.  In fact, however, the article contains several acknowledgments of lack of knowledge on the part of the writer.  Even if it were possible to write an article warning of the danger without its conveying the third imputation, that fact would not have signified that the writing of it in the form which it in fact took was motivated by express malice.  The authorities have warned against inferring malice from no more than the manner and extent of publication, including the language used: cf Adam v Ward [1917] AC 309 at 330, 339; Calwell v Ipec Australia Limited (1975) 135 CLR 321 at 332-3.

It is important to consider what any article consistent with the occasion of qualified privilege would have said.  Any article sounding the necessary warning would have had to identify Bowin's MS12 as a potential fire hazard.  It would have had to address the question of the number and identity of the particular heaters which were "suspect".  It would have had to refer to the period of manufacture of them and to acknowledge that it was impossible to know how many or which ones of those manufactured during that period were unsafe.  It would have been unfair if no account had been given of Bowin's and Mr Joyce's conduct and response.  But once these matters are accepted, it is clear that the third imputation, or one very much like it, would be conveyed.

For the foregoing reasons I do not infer express malice from the matters particularised in paras A (i), (ii), (iii), (iv) or (vi).  Lest it should be thought that I have overlooked them, I record that I do not infer it from the matters referred to in paras (a) to (g) above, to the extent that those matters may not be encompassed in the particulars.

Nor do I infer malice from ACA's failure to apologise (see sub-para A (v) of the Amended Reply).  In Horrocks v Lowe [1975] AC 135, Lord Diplock said:

"A refusal to apologise is at best but tenuous evidence of malice, for it is consistent with a continuing belief in the truth of what one has said." (at 152)

I find that Messrs Shales and Cerexhe did believe the content of the third imputation.  Moreover, in the present case, as in Toyne v Everingham (1993) 114 FLR 299, there is no evidence that the applicants ever sought an apology.

In relation to sub-para A (vii), I do not infer that the pleading of paras 14, 15, 16 and 17 of the defence was a pleading in bad faith.  Sub-paragraph A (viii) was not elaborated upon in submissions.  In my view, the evidence does not establish any deliberate, selective and/or reckless misquoting and/or distortion by ACA of information obtained by it from the applicants.  In relation to sub-para A (ix), a failure by ACA to take reasonable care to ensure that the matter complained of did not contain a false imputation about the applicants does not itself and without more constitute evidence of malice.  Finally, in relation to sub-para A (x), the matters pleaded and particularised in paras 14 and 15 of the second further amended statement of claim, namely the incurring of expenditure by Bowin and distress and embarrassment, are incapable of amounting to malice or improper motive on ACA's part.

In relation to para B of the particulars of malice, I do not accept that ACA published the third imputation without having an honest belief in its truth and/or with reckless indifference as to its truth.  On the contrary, I accept that Messrs Shales and Cerexhe, the only relevant officers of ACA for the present purpose, believed in its truth.  Mr Joyce chose not to reply to Mr Shales' letter dated 21 April 1992 notwithstanding Mr Shales' follow-up telephone inquiry on 15 May 1992.  He was not prevented from doing so by the reason which he gave to Mr Shales, namely, because of "matters that [were] before the police."  It was not suggested on the hearing that Mr Joyce could not have replied for that reason.  Nor do I accept that ACA gave the applicants no, or no reasonable, opportunity to explain or refute the third imputation.  Nor do I accept that ACA made no or no reasonable inquiries as to the truth of the third imputation.

It follows from what I have said above and what I say below that the applicants have failed to establish malice and that the defence of qualified privilege at common law succeeds.

ACA's defence of qualified privilege under sub-s 22 (1) of the NSW Act
The NSW Act does not exclude the common law defence of qualified privilege. Accordingly, I am not required to decide whether the defence provided by s 22 of the NSW Act is established. However, I choose to do so because the only substantial issue under s 22 which I have not resolved is the reasonableness of ACA's conduct in publishing, and, as noted earlier, the applicants rely on what they submit is the unreasonableness of ACA's conduct in this respect as evidence in support of their reply of malice to the common law defence.

The terms of sub-s 22 (1) of the NSW Act were noted earlier. The persons to whom the matter complained of was published clearly had "an interest or apparent interest in having information on some subject" within the meaning of para 22 (1) (a) of the NSW Act. The subject was, relevantly, the potential fire danger posed by an unknown number of MS12 heaters which had been manufactured by Bowin before August 1989 and were in consumers' homes. It has not been in dispute that for the purposes of para 22 (1) (b), the matter complained of was published by ACA to the recipients "in the course of giving to [them] information on that subject". The remaining issue as to the availability to ACA of the defence of qualified privilege under s 22 of the NSW Act is whether ACA's conduct in publishing the matter complained of was "reasonable in the circumstances" (cf para 22 (1) (c)). This issue was the subject of lengthy submissions.

In Austin v Mirror Newspapers Ltd (1985) 3 NSWLR 354 ("Austin (PC)") Lord Griffiths, delivering the judgment of the Privy Council, said this:

"In considering whether the conduct of the publisher is reasonable the court must consider all the circumstances leading up to and surrounding the publication.  These circumstances will vary infinitely from case to case and it would be impossible and most unwise to attempt any comprehensive definition of what they may be." (at 360B)

Nonetheless, guidance can be found in observations made in particular cases.  Some which I have found to bear upon the present case are as follows:

1. "The conduct must have been reasonable in the circumstances to publish each imputation found to have been in fact conveyed by the matter complained of.  The more serious the imputation conveyed, the greater the obligation upon the defendant to ensure that his conduct in relation to it was reasonable." (Morgan v John Fairfax & Sons Ltd [No 2] (1991) 23
   NSWLR 374 (CA) ("Morgan") at 387E (Hunt AJA, with whom Samuels JA agreed).

Similarly,

"The harder hitting the comment the greater should be the care to establish the truth of the facts upon which it is based." (Austin (PC) at 364C)

1. It is relevant that the information which the recipient had an interest or apparent interest in having, could easily have been conveyed without the defamatory imputation which in fact arose: Chappell v TCN Channel 9 Pty Ltd (1988) 14 NSWLR 153 (Hunt J) at 171 C,D.

1. If the publisher intended to convey an imputation which was in fact conveyed, generally he must have believed in its truth, and if he did not have that intention in relation to an imputation which was in fact conveyed, he must establish:

(a)at least generally, that he believed in the truth of any other imputation which he did intend to convey; and

(b)that his conduct was nevertheless reasonable in the circumstances in relation to each imputation which he did not intend to convey but which was in fact conveyed: Morgan at 387F,G.

1. "The connection between the subject and the defamatory imputation remains relevant.  It may be tenuous, or it may be real and substantial.  If what was said includes comment, it is relevant to consider whether it was fair and whether it followed logically from facts known or stated.  Questions of the exercise of care before the defamatory utterance are also relevant, and questions as to whether the maker of the statement knew whether he was likely to convey a misleading impression.  These are but examples of what I conceive to be involved in the inquiry to be made by the judge in order to determine whether the defendant has satisfied him that it was reasonable of him to defame the plaintiff in the way he did." (Wright v Australian Broadcasting Commission [1977] 1 NSWLR 697 (CA) ("Wright") at 712B,C (Reynolds JA with whom Glass JA agreed)

1. The effect of a failure or refusal by the person defamed to answer a journalist's questions will depend upon all the circumstances.  If the questions are an attempt to penetrate matters which are secret and are entitled to be kept secret, yet the journalist, upon a refusal or failure to reply, chooses to guess or infer what the answers are and to publish accordingly, if the guess produces a result which is defamatory, the journalist will publish at his risk and will be likely to find that he cannot establish the reasonableness to which para 22 (1) (c) refers: Wright at 707B,C (Moffitt P).

1. " ... the relevant matters for consideration include the manner and extent of publication, the extent of inquiry made, the degree of care exercised and any knowledge that a misleading impression was likely to be conveyed."

and

"1.The reasonableness of the publisher's conduct is to be judged in relation to his publication
of 'that matter' which means the defamatory matter.

2.It is not reasonable to publish the defamatory matter merely because it was reasonable to give information on the subject which inspires interest.

3.The occasion does not protect a defamatory imputation irrelevantly made in the course of giving information." (both passages in Austin v Mirror Newspapers Ltd [1984] 2 NSWLR 383 (CA) ("Austin (NSW/CA)") at 390E,F per Glass JA with whom Samuels and Mahoney JJA agreed)

1. "The defendant must also establish:

(a)that, before publishing the matter complained of, he exercised reasonable care to ensure that he got his conclusions right, (where appropriate) by making proper inquiries and checking on the accuracy of his sources;

(b)that his conclusions (whether statements of fact or expressions of opinion) followed logically, fairly and reasonably from the information which he had obtained;

(c)that the manner and extent of the publication did not exceed what was reasonably required in the circumstances; and

(d)that each imputation intended to be conveyed was relevant to the subject about which he is giving information to his readers.

The extent to which the inquiries referred to in par ... (a) should have been made will depend upon the circumstances of the case, in particular the nature and the source of the information which the defendant has obtained, and whether the position, standing, character and opportunities of knowledge of the informant (as perceived by the defendant himself) are such as to make his belief in the truth of that information a reasonable one: ..." (Morgan at 388B-D per Hunt AJA, with whom Samuels JA agreed)

1. The fact that the defamatory matter is published in the course of giving information which falls within para 22 (1) (a) "may involve some evaluation of the importance of giving such information and the nexus with the defamatory matter", but "[i]n the end, ..., it is the reasonableness of the conduct in publishing the defamatory matter which determines the question under s 22 (1) (c)" (Wright (NSW/CA) at 704G-705A per Moffitt P).

I remind myself of the third imputation:

"That the Applicants and each of them were careless and reckless in failing to take the appropriate steps to recall or remove dangerous appliances, namely gas heaters, from consumers."

As I have previously noted, Messrs Shales and Cerexhe gave evidence that they believed the third imputation to be true, and I accept that evidence.

Clearly, the width of publication and the seriousness of the third imputation demanded that ACA's staff take care in the writing of the article.

I find it convenient to address the question of the reasonableness of ACA's conduct in publishing the third imputation by reference to the particular submissions and factual issues noted below.

(1)The applicants submit that Mr Cerexhe's purpose in
writing the article was to alert consumers to check their heaters rather than to attack the applicants, and to bring pressure to bear on the Bureau to investigate whether the circumstances warranted a product recall or product safety notice.  In ACA's letter to the Bureau which was ultimately dated 10 July 1992, Mr Cerexhe expressed the view that a "public safety issue" existed and that the Bureau should "investigate the matter so as to confirm the scale of the problem (that is, how many heaters with faulty hose connections are still in consumers' homes?)".  The applicants submit that ACA could have achieved its purposes without publishing, relevantly, the third imputation.  In this respect, the applicants cite Morgan at 389E, and Austin (PC) at 364. 

It was Mr Cerexhe's conviction that there might well yet occur serious accidents, injury or death from fire if no notification were to be given to the owners of faulty heaters.  Ultimately, Mr Joyce was forced to concede that the risk existed.  Public notification was an appropriate course to take at the time when the article was published, and was, as events transpired, the very course which Mr Joyce shortly afterwards demanded that Gooden take.

For the reasons which I gave earlier, it would have been difficult to write an article warning heater owners, without implicitly blaming Bowin and Mr Joyce for not having already published, or caused to be published, a similar warning.

(2)The applicants submit that ACA, through Messrs Shales and Cerexhe, "chose not to pursue the search" for information from Mr Joyce, and by publishing when it did, deprived itself of the opportunity to explore with Mr Joyce the reasons why he had not initiated a public notification or product recall.

In his evidence, Mr Shales said more than once that he continued to hope that Mr Joyce would provide the information which he had sought and that Mr Joyce's failure to answer ACA's written questions was "frustrating" for him.  It should not, however, be underestimated how much ACA did know by the time of publication.  Mr Cerexhe had spoken to Mr Joyce on 3 April 1992 and Mr Shales had done so on 21 April 1992, 5 May 1992 and 15 May 1992.  Moreover, Mr Joyce had written to ACA the letter dated 7 April 1992 noted earlier.

ACA understood the following facts to be true:

1. Some MS12 heaters had a faulty hose connection.

1. There had been a substantial number of instances of hoses separating from the fitting on the back of the MS12 heater (Mr Joyce conceded that by the time of publication he knew of at least 18 instances - the 28 specified in Mr Musster's memo minus 10 which Mr Joyce eliminated (T 393)).

1. Most instances had occurred in consumers' homes.

1. Some had occurred when the heater was connected to the gas supply and gas had escaped.

1. In several cases, the gas had ignited causing fire (Mr Joyce admitted to being aware by September 1990 of four fires (Hancox, James, Goode and Pethybridge) and by the time of publication there had been at least a further four fires of which Mr Joyce said that he was unaware (Bruce, Males, Bradburne and Hope).

1. In at least one case, fire caused burns to a person.

1. Thousands of MS12 heaters had been manufactured and sold by Bowin (Bowin's production run records for the five year period 1984-1989 appear to disclose a total of 4,686 MS12s from serial number 0990 to serial number 5675).

(viii)The heaters involved in the 18 hose separation incidents down to September 1990, of which Mr Joyce knew by the time of publication of the article, had been manufactured between 1986 and 1989 (it was not true to say that they were limited to heaters manufactured in 1987 and 1988 or to "one batch").

1. No hose separation incidents or fires had been reported in respect of heaters manufactured before 1986 or after August 1989.

1. The total number of MS12 heaters manufactured between 1987 and 1989 was approximately 3,400. (That figure is stated in the version of the Musster memorandum supplied by Musster to ACA. Bowin's production records appear to show that from the beginning of 1987 to 8 August 1989, it manufactured 2,920 MS12 heaters from serial number 2756 to serial number 5675, but the evidence does not disclose whether any, and if so how many, more were produced in 1989 after 8 August).

1. The number of MS12 heaters manufactured in 1986 was not disclosed in Bowin's records (in fact Ex R3 appears to disclose that the number manufactured in 1986 was 942 (from serial number 1813 to serial number 2754) with the result that the number manufactured from 1986 to 8 August 1989 was 3,862 (2,920 plus 942).  This figure of 3,862 may be compared with the article's reference to "up to 4,000" between 1986 and 1989. 

1. All of the foregoing facts were known to Bowin since they appeared in, or were able to be extracted from, Bowin's business records.

(xiii)In 1989 the applicants became aware of the hose separation problem and wrote to AGA about it.

1. Mr Joyce had not informed AGA that there had been incidents in consumers' homes or that there had been any fires (in fact, he had certainly not done so in writing, and had, at best, mentioned only one instance of fire in passing over the telephone to Mr Williams).

1. The applicants made no attempt to bring the problem to the notice of persons who had bought MS12 heaters.

1. In 1989 Bowin returned some stock of the hoses to their manufacturer, Gooden.

(xvii)Gooden had re-worked that stock and returned it to Bowin.

(xviii)Subsequently, Gooden altered the design of the fitting and subsequent supplies were of fittings with the altered design.

1. Importantly, the number of MS12 heaters which had been manufactured and sold with the faulty hoses was not known.  (Although Mr Joyce testified several times that only a "small number" or "single batch" was involved, ultimately he conceded that the number was unknown.  I accept the following written submission of ACA in this respect:

"(i)At T.371 he [Mr Joyce] estimated that even today the total number of potentially suspect hoses was ‘less than 100’;

(ii)On 24 July 1992 (Ex. R13 and T.478) at a meeting with AGL he had expressed the view that 225 heaters were suspect;

(iii)Ultimately he admitted:

-that he did not know how many hoses were defective: T.407;

-that he did not know how many hoses might have been in consumers' homes with this fault: T.370;

-that he had never been reassured that there were not potentially hundreds of hoses in the field that would fail: T.406-7;

-that it was impossible for him to tell, from his records, where the suspect hoses had gone in the market and that, if the safety risk was considered serious enough, the only
way to inform the end consumer would be by public statement: T.434, 436;

-that there was a question mark over all 1,935 hoses supplied by Goodens: T.438;

-that he could not really say how many heaters might be implicated: T.102.")

1. Where a heater had a faulty fitting with the propensity for the hose to come adrift there was a serious risk of ignition of gas, fire, and serious, even fatal, injury (Mr Joyce accepted this proposition and the evidence of Mr Williams supported it.

(3)The applicants point out that there were particular lines of inquiry which ACA had not pursued to conclusion.  It referred to the fact that ACA did not pursue to conclusion its inquiries of Gooden, notwithstanding Gooden's undertaking to provide information once the relevant employee returned from leave; the New South Wales Fire Brigade; or, of course, Bowin.  But I do not think that it was unreasonable for ACA to publish without waiting for yet further information from these sources.

(4)ACA clearly regarded it as important that the "story" should be published by the beginning of the winter of 1992.  The applicants stress the fact that ACA was subjecting itself to a need to finalise the article at a time when Mr Joyce, unaware of any need for haste, was taking the position that he would not give a written reply to ACA's letter, and that it was sufficient for him to maintain his invitation to Mr Cerexhe to attend at Bowin's factory.

(5)The applicants submit that if Mr Cerexhe had visited Bowin's factory, he may well have learned things which would have influenced him in his view of Mr Joyce.  This is true.  He may well have been favourably impressed by Mr Joyce as a person and by safety precautions taken in Bowin's manufacturing process.  He may well have been convinced that, in general terms, Mr Joyce was a responsible engineer who was concerned over safety issues.  But, importantly, he would not have learned (a) that there did not remain a substantial number of potentially dangerous heaters in consumers' homes; or (b) that any action had been taken to warn the owners of suspect heaters or to recall such heaters.

(6)The applicants point out that on 18 May 1992 AGL wrote to Mr Cerexhe advising that in AGL's opinion "it would be inappropriate to undertake a recall or other action which would be an over reaction to the issue" and that the article does not refer to the view that it may not always be appropriate that there be a product recall or public warning, where there is a possibility that a defective product is being used. 

It is true that the article does not address the question of the dividing line between the class of case in which a product recall or public warning is not called for and the class of case in which it is.  However, I do not think that this demonstrates unreasonableness of ACA in publishing the article.

By reference to all the considerations mentioned above, I think that ACA has established that it was reasonable in all the circumstances for it to have published the article in so far as it conveyed the third imputation.

ACA's "code" defences of qualified protection in Queensland and Tasmania
The terms of the relevant provisions of s 377 of the Criminal Code Act 1899 (Qld) and of s 16 of the Defamation Act 1957 (Tas) were noted earlier. What I have already said in relation to the defence of qualified privilege at common law and the defence of statutory qualified privilege under sub-s 22 (1) of the NSW Act leads me to conclude that ACA has established the defence of qualified protection under those provisions.

In the result, Bowin and Mr Joyce have not established that ACA is liable for actionable defamation.

ACA's various comment defences
In view of the conclusion which I have arrived at above, based upon the various qualified privilege/qualified protection defences, it is not necessary for me to consider ACA's various comment defences.

Claims under the TP Act and the FT Act
ACA submits that the representations pleaded were not made by the article.  Of the five imputations which are also relied on as representations, I have already found that only imputation 3 is conveyed.  In view of the conclusion which I reach below, it is not necessary for me to find whether the sixth representation arises from the article. 

ACA further submits that the representations pleaded other than the first and second mentioned earlier, if made, were not misleading and deceptive. Finally, ACA submits that it has a complete defence to the claims under the TP Act, founded on s 65A of that Act (and to the claims under the FT Act founded on s 60 of that Act). Relevantly, s 65A provides as follows:

"65A(1)Nothing in section 52, 53, 53A, 55, 55A or 59 applies to a prescribed publication of matter by a prescribed information provider, other than - [the exceptions are irrelevant] ... .

(2)For the purposes of this section, a publication by a prescribed information provider is a prescribed publication if -

(a)in any case - the publication was made by the prescribed information provider in the course of carrying on a business of providing information; or

(b)... .

(3)In this section -

‘prescribed information provider’ means a person who carries on a business of providing information and, without limiting the generality of the foregoing, includes - ... ."

Section 60 of the FT Act is in identical terms, except for the numbers of the sections referred to in sub-s (1), which are respectively 42, 44, 45, 49, 50 and 54 in sub-s 60 (1) of the FT Act.

The evidence shows that ACA "carries on a business of providing information" in relation to goods and services provided to consumers and that its "Choice" magazine is published by it in the course of carrying on that business. It follows that s 65A of the TP Act has the effect that the pleaded causes of action based on ss 52, 55 and 55A of the TP Act cannot succeed, and s 60 of the FT Act has the same effect in relation to the pleaded causes of action based on ss 42, 49 and 50 of the FT Act. The applicants accepted that the decision of Wilcox J in Sun Earth Homes Pty Ltd v Australian Broadcasting Corporation (1993) 45 FCR 265 precluded their succeeding at first instance level under the sections to which I have referred.

ACA did not seek to sustain the causes of action based on s 52A of the TP Act and its State counterpart, s 43 of the FT Act, which provided that a corporation or person, respectively, must not, in trade or commerce, in connection with the supply or possible supply of goods or services to a person, engage in conduct that was, in all the circumstances, unconscionable. (Section 52A was amended by the addition of sub-s (7) and re-numbered 51AB as from 21 January 1993 by the Trade Practices Legislation Amendment Act 1992 (Act No 222 of 1992)).

Fraud and negligence
The applicants addressed no submissions to these causes of action. I did not understand them to be pressed. It could not have been suggested that there was the slightest evidence of fraud. My findings in favour of ACA on the issue of reasonableness in the context of the defence of qualified privilege under s 22 of the NSW Act would have sufficed to support a rejection of the claim in negligence.

CONCLUSION
It follows that the application must be dismissed with costs.

I certify that this and the preceding 154 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren.

Associate:

Dated:6 December 1996

Heard:          24, 26, 27, 28 April; 1, 2, 3 May; 23, 24, 25, 26, 27 October; 11 December 1995; 12, 22, 23 February 1996

Place:          Sydney

Decision:       6 December 1996

Appearances:     Mr W H Nicholas QC with Mr T A Alexis of counsel instructed by Anderson and Sjoquist appeared for the applicant.

Mr T K Tobin QC with Mr P W Gray of counsel instructed by Deacons Graham and James appeared for the respondent.