Brender v John Fairfax Publications Limited

[2000] NSWSC 743

CITATION:

Brender v John Fairfax Publications Limited [2000] NSWSC 743

CURRENT JURISDICTION:

Common Law

FILE NUMBER(S):

SC 20101 of 2000

HEARING DATE(S):

26 July 2000

JUDGMENT DATE:

4 August 2000

PARTIES :

JOSEPH BRENDER
(Plaintiff)

v

JOHN FAIRFAX PUBLICATIONS LIMITED
(Defendant)

JUDGMENT OF:

Levine J

COUNSEL :	T E F Hughes Q.C. N Abadee (Plaintiff) W H Nicholas Q.C. (Defendant)
SOLICITORS:	Landerer & Co. (Plaintiff) Freehill Hollingdale & Page (Defendant)
CATCHWORDS:	Imputations - capacity - tests to be applied - newspaper article - fanciful and extreme construction
CASES CITED:	Amalgamated Television Services Pty Limited v Marsden (1998) 43 NSWLR 158 Lewis v The Daily Telegraph (1963) 1 QB 340 Mirror Newspapers Limited v Harrison (1982) 149 CLR 293
DECISION:	See paragraph 37

DLJ: 1
CAV
[2000] NSWSC 743

THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
DEFAMATION LIST

No. 20101 of 2000

JUSTICE DAVID LEVINE

FRIDAY 4 AUGUST 2000

JOSEPH BRENDER
(Plaintiff)

v

John Fairfax Publications Limited
(Defendant)

JUDGMENT (Imputations - capacity - tests to be applied - newspaper article - fanciful and extreme construction)

1    The plaintiff sues for damages for defamation in respect of the publication in “The Sydney Morning Herald” of 22 February 2000 (page 5) of an article bearing the headline:

“TAXPAYERS PICK UP THE PIECES AGAIN
Comment - Ian Verrender”

2    The text of the matter complained of is appended to these reasons. 3    Pursuant to SCR Pt 31 r 2 and by consent, there has been conducted the separate trial of the issue of law as to the capacity of the matter complained of to carry the pleaded imputations. 4    The imputations said to be carried by the matter complained of, in its natural and ordinary meaning, are:

“4
(a) That the plaintiff in concert with Phillip Bart acted unconscionably to the detriment of unsecured creditors of National Textiles Limited by being a party to the acquisition of assets of that company for less than their true worth.
(b) That the plaintiff in concert with Phillip Bart acted in a predatory way to the detriment of unsecured creditors of National Textiles Limited by being a party to the acquisition of assets of that company for less than their truth worth”.

5    Mr Nicholas Q.C., for the defendant, submitted that the imputations, in their use of the words “unconscionably” and “predatory” respectively, connote “unscrupulousness” in the former and “robbery/theft” in the latter. The Macquarie Dictionary was called in aid. The expression “in concert” connotes the plaintiff and Mr Bart as having had acted with a common intent; they did so in an unscrupulous and predatory way to acquire the company’s assets for less than their true worth. In “combination” they caused - in the sense of intending and bearing responsibility for - the detriment sustained by unsecured creditors (not, it is to be noted, of shareholders). 6    There is nothing in the article, contrary to what is reflected in the imputations, that can point to any obligation in the plaintiff, to have acted in a particular way. The vice of each imputation, when considered against the publication, is the respective use of concepts of impropriety and intent, and thus responsibility, involved in “unconscionably” and “predatory”. 7    Although not initially adverted to in the body of submissions for the defendant, lines 1 to 3 provide purely historical background. Lines 4 to 6 do no more than recite again matters of history, namely that an unidentified major secured creditor agreed to support a controversial deed of arrangement; then Mr Brender and Mr Bart “signed off” on the deal in the sum of $15 million. 8    There is no suggestion in the matter complained of that Mr Brender and Mr Bart were in any way involved in procuring the deed of arrangement first, and secondly, that that “controversial” deed of arrangement was in some way entered into to advance their common interests or, in any way, to conflict with any duties they might have had. 9    The matter then goes on to speak of consequences of the deed of arrangement as it affected unsecured creditors (lines 7 to 9). Lines 10 to 13 speaks of consequences only. 10    The rhetorical question asked in line 16 “why else would Brender and Bart be so willing to snap up the company’s own assets?” is answered by the article itself namely, “… Australia clearly has a future in textile production”. Nothing in the balance of the article (lines 19 to 29) could constitute any suggestion that the plaintiff or Mr Bart or indeed any one busied himself “running down the company to get it into a situation where it could be picked off” unconscionably, in a predatory way, or at all. 11    The fair reading of the matter complained of points to any detriment to the unsecured creditors being the result of the demise of the company, or the consequence of the entering into of the controversial deed of arrangement, with neither of which is there any suggestion of a connection on the part of the plaintiff or of Mr Bart. 12    In Mirror Newspapers Limited v Harrison (1982) 149 CLR 293 at 301 Mason J said:

“A distinction needs to be drawn between the reader's understanding of what the newspaper is saying and judgments or conclusions which he may reach as a result of his own beliefs and prejudices. It is one thing to say that a statement is capable of bearing an imputation defamatory of the plaintiff because the ordinary reasonable reader would understand it in that sense, drawing on his own knowledge and experience of human affairs in order to reach that result. It is quite another thing to say that a statement is capable of bearing such an imputation merely because it excites in some readers a belief or prejudice from which they proceed to arrive at a conclusion unfavourable to the plaintiff. The defamatory quality of the published material is to be determined by the first, not by the second, proposition Its importance for present purposes is that it focuses attention on what is conveyed by the published material in the mind of the ordinary reasonable reader”.

13    The submission for the defendant is that to arrive at an understanding that the matter complained of is capable of carrying the pleaded imputations would involve the application of the “second proposition” to which his Honour refers. 14    This proposition was repeated by Hunt CJ at CL in Amalgamated Television Services Pty Limited v Marsden (1998) 43 NSWLR 158 at 166F:

“What must be emphasised is that it is the test of reasonableness which guides any court in its function of determining whether the matter complained of is capable of conveying any of the imputations pleaded by the plaintiff. In determining what is reasonable in any case, a distinction must be drawn between what the ordinary reasonable reader, listener or viewer (drawing on his or her own knowledge and experience of human affairs) could understand from what the defendant has said in the matter complained of and the conclusion which the reader, listener or viewer could reach by taking into account his or her own belief which has been excited by what was said. It is the former approach, not the latter, which must be taken”.

15    In short, the fair reading of this article discloses it to be a historical narrative with some comment by the columnist but devoid of anything which on a reasonable basis points to the plaintiff’s and Mr Bart’s connection with the affairs of the company being otherwise than at arm’s length. There is no suggestion of any involvement at all, let alone to the level captured in each of the imputations, in any of the activities asserted to give rise to the state in which the company, the unsecured creditors and employees are said to find themselves. By reason of events to which the plaintiff and Mr Bart were not parties in the sense referred to in the imputations, the plaintiff (and Mr Bart) were able to attain a commercial advantage by acquiring the assets of the company for $15 million (as compared the earlier merger proposed figure of $61 million). 16    The article offers no suggestion of a link between Mr Brender and Mr Bart and the consequence in relation to the business, the unsecured creditors and the employees. These consequences flow from matters with which Mr Brender and Mr Bart were not connected in the sense referred to in the imputations, and are explained in the matter complained of itself. A reason for the commercial success enjoyed by the plaintiff and Mr Bart is also explained in that each was able to take advantage of acquiring, at the stated price, the company’s assets, that company being in an industry, textile production, which clearly has a future in this country. 17    On this analysis, it is submitted, the defendant must succeed. 18    For the plaintiff, Mr Hughes Q.C. did not submit that the general principles referred to particularly by Hunt CJ at CL are inapplicable. The Court however was reminded of two pertinent passages from the decisions in Lewis v The Daily Telegraph in the Court of Appeal and the House of Lords. 19 From the judgment of Holroyd Pearce LJ in the Court of Appeal ((1963) 1 QB 340) this passage was cited at 374:

“When persons publish words that are imprecise, ambiguous, loose, fanciful or unusual, there is room for a wide variation of reasonable opinion on what the words mean or connote. The publisher can hardly complain in such a case if he is reasonably understood as having said something that he did not mean. But when words with a precise and well-known meaning are used without the addition of any expressions which could impart some other flavour to them, it is not fair to twist them from their normal sense”.

20 From Lord Devlin’s speech in the House of Lords ((1964) AC 234 at 285) the following well-known passage was cited:

“A man who wants to talk at large about smoke may have to pick his words very carefully if he wants to exclude the suggestion that there is also a fire; but it can be done. One always gets back to the fundamental question: what is the meaning that the words convey to the ordinary man: you cannot make a rule about that. They can convey a meaning of suspicion short of guilt; but loose talk about suspicion can very easily convey the impression that it is a suspicion that is well founded”.

21    Further as Hunt CJ at CL said in Marsden at 164G citing Prosser & Keeton: Handbook of the Law of Torts:

“The most common statement is that if reasonable persons may differ as to the conclusion to be drawn, the issue must be left to the jury; otherwise it is for the Court”.

22    This, it is said for the plaintiff, is such a case. 23    The principles by which the Court should be guided in determining the issue of capacity were referred to by Hunt CJ at CL in Marsden at 165-6 and may be summarised as follows:

· the ordinary reasonable meaning of the matter complained of may be either the literal meaning of the published matter, or what is implied by that matter or what is inferred from it;

· any strained, forced or utterly unreasonable interpretation must be rejected;

· the ordinary reasonable reader is a person of fair average intelligence, who is neither perverse, nor morbid or suspicious, nor avid for scandal;

· that person does not live in an ivory tower, but can and does read between the lines in the light of his or her general knowledge and experience of worldly affairs;

· the mode or manner of publication is material, so that the more sensational the article, the less likely it is that the ordinary reasonable reader will have read it with the degree of analytical care which may otherwise have been given to it;

· the ordinary reasonable reader of such an article is prone to engage in a certain amount of loose thinking;

· where the words published are imprecise, ambiguous, loose, fanciful or unusual, there is a wide degree of latitude given to the capacity of the matter complained of to convey particular imputations;

· the publisher is responsible for an inference drawn by a reader from a statement which the publisher is reasonably understood to have intended to imply. 24    The plaintiff particularly relies upon the following in the application of these considerations: the “arresting” headline as it was described; the prominent position of the matter complained of on page 5 of The Sydney Morning Herald (Exhibit 1 on the application) and what is said to be the “sensational” and “extravagant” language used. Reference is made, for example, to the “former business associate”. Reference is made to lines 5 -6 and line 8 where the author juxtaposes the use of the phrase “walk away” - “Brender and Bart walk away with the business for $15 million … the unsecured creditors ‘walk away’ without even the price of a bus ticket home”. It is argued that “walking away” is an example of the risk of a defamation inherent in the use of what is said to be ambiguous, fanciful, imprecise or loose expressions (see Lewis v The Daily Telegraph at 374) and also could point to “smoke” and thus “fire”. 25    By reference to “Roget,” the phrase “walk away” would be understood almost in the sense of a thief at night “walking off with” that which Messrs Brender and Bart had “snapped up”. Reliance was also placed upon the emphasis in the headline and in the article (lines 27-29) of the taxpayers “yet again have been asked to pick up the pieces”. 26    The idea, it is submitted, that the plaintiff and his “former business associate” have acted “predatorily” (“thief”) is emphasised by the strong contrast between their position namely, acquiring the assets at twenty five percent of their true worth, and that of the unsecured creditors. This, as I understand from oral submissions, is reinforced by the matter of “history” referred to in the opening lines, namely that three months previously Mr Bart and Mr Brender were pursuing a merger proposal that would have required the latter to outlay $61 million for National Textiles. 27    The notion of “unconscionable” or “predatory” is reasonably available, it is submitted, from the idea that the taxpayer is left to “pick up the tab” or “the pieces”. 28    I cannot come to the conclusion that this matter complained of is capable of carrying the imputations in the light of the plaintiff’s approach. It is not a question of “minds may differ” as to this article. The view I have formed is that they cannot. 29    It is a question of whether the reasonable reader could understand this article as conveying the pleaded imputations. The imputations whilst not “florid”, are extraordinarily “strong” in ascribing the disparagement or “stings” said by to be conveyed by the article. I am persuaded by the submissions for the defendant that the reasonable reader could not conclude that the matter complained of conveys meanings expressed in the terms of these imputations. A fair reading of the article discloses nothing as to the conduct of the plaintiff or indeed Mr Bart, particularly in “concert,” that points to responsibility for what is said to be the consequences of the demise of the business and/or the entry into of the “controversial” deed of arrangement (with the entering into of which there is no suggestion that the plaintiff or Mr Bart were connected). 30    It is not for me (presently), to decide as a matter of law that the matter complained of is anodyne in the sense of being incapable of conveying any imputation defamatory of the plaintiff. The only matter I have now to decide is whether it is capable of conveying those imputations pleaded according to the well-known principles that I have sought to set out in these reasons. 31    The conclusion to which I have come is that the meanings constituted by the pleaded imputations could only arise in a “fanciful” way, by the unreasonable application of suspicions or a morbid approach having been adopted by the reader. The language of the article cannot be characterised as so ambiguous, imprecise, loose and certainly not so sensational and extravagant (not at all in my view) as to permit or warrant what I consider to be the loose and fanciful analysis and thus construction the plaintiff’s approach involves. 32    In contrast to the meanings encapsulated in the imputations, it is clear that the matter complained of does no more than recite history, is comment on that history, asks questions which are answered and points to no more than the plaintiff and Mr Bart, at arms length (in the absence of anything pointing to the requisite intention in terms of responsibility) obtaining a commercial advantage in the acquisition of a company’s assets, that company being involved in an industry which has a future in this country. 33    The explanation of the phrase “walk away” in terms of the notion of theft or robbery in my view, is at the very least fanciful if not extreme, notwithstanding the clever juxtaposition by the columnist to which I have referred. “Snap up” is no more than a phrase that reasonably could be understood, not as a deliberate and in concert unconscionable predatory expropriation of the assets to the detriment of unsecured creditors, but rather the availing by the two gentleman of a favourable commercial situation in their interests (akin to walking away with a ‘bargain” that had been “snapped up”). 34    The nub of the matter, in my view, is that there is nothing in the matter complained of, as was submitted for the defendant and which I accept, that points to involvement or “responsibility” by any action at all on the part of the plaintiff (or Mr Bart), for those matters said to be consequential upon the controversial deed of arrangement, the demise of the business or simply the assets acquisition for $15 million. 35    Accordingly, I hold as a matter of law that the matter complained of is incapable of carrying the two imputations pleaded. 36    It was also contended that in the event that I held otherwise, the imputations do not differ in substance and thus contravene SCR Pt 67 r 11(3). This I do not have to decide. I will only remark that I do not find attractive the arguments for the plaintiff that “unconscionable” could be regard as a “genus” of which “predatory” is a species. That is, this is not a case in which the plaintiff has pleaded imputations in gradations of descending order of seriousness. To my mind the expressions are not mutually exclusive. It is nonetheless unnecessary for me presently to resolve that issue. 37    Accordingly, the formal orders are:

1. The determination, pursuant to SCR Pt 31 r 2 of the separate question of law is that I hold the matter complained of is incapable of carrying the imputations pleaded in 4(a) and (b) of the Statement of Claim filed 17 March 2000.

2. The plaintiff is to pay the defendant’s costs of the application.

3. The plaintiff has leave to file by 5pm on Friday 18 August 2000 an Amended Statement of Claim.

4. Upon the filing of any Amended Statement of Claim, by 5pm on Friday 25 August 2000 the defendant is to notify the plaintiff in writing of any objection it takes to that amended pleading and to provide an outline of submissions in support of such objection. By 4pm Thursday 31 August 2000 the plaintiff is to notify the defendant, with an outline of submissions, of its response to any objections taken by the defendant.

5. The matter is listed in the Defamation List on Friday 1 September 2000.

Appendix
TAXPAYERS PICK UP THE PIECES AGAIN
COMMENT - IAN VERRENDER

1. Less than three months ago. Philip Bart, a National Textiles director and the company’s
2. biggest shareholder, was pursuing a merger proposal that would have seen his former
3. business associate, Joseph Brender, outlay $61 million for National Textiles.
4. Yesterday afternoon, after the company’s major secured creditor agreed to support the
5. controversial deed of arrangement, Brender and Bart signed off on a deal that will see
6. them walk away with the business for about $15 million.
7. In the meantime, about 400 unsecured creditors with debts of more than $14 million are
8. likely to walk away from this morning’s creditor’s meeting at Newcastle Workers’ Club
9. without even the price of a bus ticket home.
10. Brender, who with partner Sam Moss who controls Bruck Textiles, will take the plant,
11. machinery and stock from National Textiles’s Hunter Valley plant and National Bartex’s
12. Rosebery plant, and transport most of it to Bruck’s Wangarratta factory. Bart will end
13. up owning the Tasmanian-based Australian Weaving Mills.
14. The sorry tale of the demise of National Textiles has been explained away as a simple
15. matter of an industry in decline.
16. But Australia clearly has a future in textile production. Why else would Brender and Bart
17. be so willing to snap up the company’s assets? And why is it that taxpayers once again
18. have had to pick up the tab?
19. Brender has received more than $40 million in Federal handouts over the past decade and
20. Bart has received several million dollars in Federal grants for his textile operations.
21. National Textiles’s last audited accounts, signed on September 30, reveal an operation
22. with net assets of $22 million. Somehow, in the space of just three months, that figure
23. reversed to the point where there now appears to be a deficiency of $51 million despite
24. what appears to have been strong trading conditions in December and in the previous six months.
25. The stark difference can be partly explained by the different values assigned to an
26. ongoing business as opposed to a fire-sale liquidation. But the reality is that 342 Hunter
27. Valley workers have lost their jobs, hundreds of small businesses will suffer potentially
28. crippling bad debts, and taxpayers yet again have been asked to pick up the pieces.

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Last Modified: 09/26/2000