Charlwood Industries Pty Ltd v Brent

[2002] NSWCA 201

CITATION:	Charlwood Industries Pty Ltd v Brent [2002] NSWCA 201
FILE NUMBER(S):	CA 40848/01
HEARING DATE(S):	26/06/02
JUDGMENT DATE:	18 July 2002
PARTIES :	Charlwood Industries Pty Ltd v Nick Brent
JUDGMENT OF:	Sheller JA at 1; Hodgson JA at 2; Ipp AJA at 3

LOWER COURT JURISDICTION :	Supreme Court - Common Law Division
LOWER COURT FILE NUMBER(S) :	SC 13192/00
LOWER COURT JUDICIAL OFFICER :	Newman AJ

COUNSEL:	T K Tobin QC/S Phillips (Appellant) T D Blackburn/C Taylor (Respondent)
SOLICITORS:	Schrader & Associates (Appellant) S Hodges (Respondent)
CATCHWORDS:	DEFAMATION - where a jury found an imputation of lying was conveyed but was not defamatory - whether jury's finding perverse - principles - circumstances where a jury verdict may have been a compromise - whether Court should order both issues to be retried - principles - Defamation Act 1974 s 7A - DEFAMATION - practice and procedure - power of Court of Appeal to direct a verdict - circumstances where the Court of Appeal would exercise discretion under s 108(3) Supreme Court Act 1970 - principles. D
LEGISLATION CITED:	Defamation Act 1974 Supreme Court Act 1970 Supreme Court Procedure Act 1900
CASES CITED:	Sarma v The Federal Capital Press of Australia Pty Limited [2002] NSWCA 93 Cairns v John Fairfax & Sons Ltd [1983] 2 NSWLR 708 Browne v Agar (1928) 138 LT 698 Mechanical & General Inventions Co v Austin [1935] AC 346 Hocking v Bell (1942) 42 SR (NSW) 130 Cinevest Ltd v Yirandi Productions Ltd (2001) ATR 81-610 Greek Herald Pty Limited v Nikolopoulos [2002] NSWCA 41 Broome v Agar (1928) 138 LT 698 Mularczyk v John Fairfax Publications Pty Limited [2001] NSWCA 467 Harrigan v Jones [2000] NSWSC 119 Australian Broadcasting Corporation v McBride (2001) NSWCA 322 Singleton v Ffrench (1986) 5 NSWLR 425 Reader's Digest Services Pty Limited v Lamb (1982) 150 CLR 500 Pavy v John Fairfax Publications Proprietary Limited 2002) NSWCA 46 Rivkin v John Fairfax Publications Pty Limited [2002] NSWCA 87 Pateman v Higgin (1957) 97 CLR 521 Monti-Haitsma Enterprises Pty Limited v Lord (1988) Aust Torts Reports 80-200 Radio 2UE Sydney Proprietary Limited v Parker (1992) 29 NSWLR 448 Coroneo v Kurri Kurri and South Maitland Amusement Company Limited (1934) 51 CLR 328 Holford v Melbourne Tramway and Omnibus Company Limited 1909) VLR 497 Morgan v John Fairfax and Sons Limited [No 2] (1991) 23 NSWLR 374 Buck v Jones [2002] NSWCA 8 Hocking v Bell (1945) 71 CLR 430 Shepherd v Felt & Textiles of Australia Limited (1931) 45 CLR 359 Edmund Weil Inc v Russell (1936) 56 CLR 34
DECISION:	(1) The appeal is upheld in part (2) The verdict of the jury, that the matter complained of conveyed the imputation that the appellant lies to its customers, is set aside (3) The verdict of the jury, that such an imputation was not defamatory of the appellant is set aside (4) A new trial with a jury is ordered with respect to both questions (5) The respondent to pay the appellant 65% of the costs of the appeal (6) The respondent should have a certificate under the Suitor's Fund Act, if otherwise entitled.

CA 40848/01
SC 13192/00

SHELLER JA
HODGSON JA
IPP AJA

Thursday 18 July 2002

CHARLWOOD INDUSTRIES PTY LTD v NICK BRENT

FACTS

The appellant is associated in business with a company called Charlwood Home Improvements. Both the appellant and Charlwood Home Improvements brought proceedings against the respondent for damages for defamation. They alleged that the respondent (who had had a bad experience dealing with the companies) published defamatory material of and concerning both of them on an Internet website. It was further alleged that the material in question conveyed five imputations and that each imputation was defamatory of both Charlwood Home Improvements and the appellant. At trial, the jury found Charlwood Home Improvements had not established that any matters complained of conveyed the alleged imputations. Accordingly they failed in their claim. As regards the appellant, the jury found that the imputation that the appellant “lies to its customers” was conveyed, but found that such an imputation was not defamatory of it.

On appeal, the appellant submitted that the jury decision that the imputation was not defamatory was perverse. As such, the Court should exercise its powers under s 108(3) of the Supreme Court Act 1970 and direct a verdict on the question of whether the imputation was defamatory and give judgement accordingly. The respondent submitted that the defamatory quality of an imputation could be considered in the context of the matter complained of. Specifically, that the imputation “the appellant lies to its customers” means only “that its advertising puff does not live up to reality”. Alternatively, the respondent submitted that should the appeal be allowed, the Court should remit to the jury both the questions of whether the imputation is defamatory and whether the imputation arises from the mater complained of. The respondent also submitted that s 108 (3) does not empower the Court to direct a verdict in cases involving s 7A of the Defamation Act 1974.

Held:
Per Ipp AJA, Sheller and Hodgson JJA agreeing.

(1) Ordinarily, the imputation that a person has lied or is guilty of dishonest behaviour will be regarded as defamatory. This inference will be even more readily drawn if the imputation is that the person lied or was dishonest in the course of their business: Greek Herald Pty Ltd v Nikolopoulos [2002] NSWCA 41, Mularczyk v John Fairfax Publications Pty Ltd [2001] NSWCA 467, Cinevest Limited v Yirandi Productions Limited (2000) ATR 81-610.

(2) The finding of the imputation that the appellant lies to its customers should have inevitably led to a finding that the imputation was defamatory. The jury’s finding to the contrary was perverse: Sarma v The Federal Capital Press of Australia Pty Limited [2002] NSWCA 93.

(3) The jury cannot use the context of the matter complained of to put a meaning on the imputation different to that already found by them to exist: Singleton v Ffrench (1986) 5 NSWLR 425, Reader’s Digest Services Pty Ltd v Lamb (1982) 150 CLR 500. In the present case, the context makes it plain that the imputation involved the appellant telling lies to its customers in the course of its business. Underlying the submission that the lies told by the appellant involved “advertising puff” is the proposition that the lies involved statements that were devoid of meaning and without content. Meaningless statements could not constitute lies told to the appellant’s customers. Therefore this submission does not correspond to the imputation found, namely that the appellant tells lies.

(4) The jury verdict that a plainly defamatory imputation is not defamatory cannot be readily explained. An inference can be drawn that the jury may have given a compromise verdict. It was not self-evident that the imputation that the appellant “lies to its customers,” existed. On the other hand, the finding that the imputation was not defamatory was not reasonably open to the jury. The perception of a jury compromise underlies s 7A cases where the Court has ordered both issues relating to an imputation are to be retried. In the present case, a jury should retry both issues relating to the imputation that the appellant “lies to its customers”: Radio 2UE Sydney Proprietary Limited v Parker (1992) NSWLR 448, Morgan v John Fairfax and Sons Limited [No 2] (1991) 23 NSWLR 374, Mularczyk v John Fairfax Publications Pty Ltd [2001] NSWCA 467, Cinevest Limited v Yirandi Productions Limited (2001) ATR 81-610.

(5) Section s 108(3) of the Supreme Court Act 1970 empowers the Court of Appeal to direct a verdict. If an imputation is plainly defamatory, and on the relevant material any other decision would be perverse, it would follow, as a matter of law, that the Court of Appeal may direct a verdict on the issue whether a defamatory meaning arises and give judgement accordingly: Hocking v Bell (1947) 75 CLR 125, Edmund Weil Inc v Russell (1936) 56 CLR 34.

(6) As it is arguable that the imputation that the appellant lies to its customers does not arise from the relevant material, the policy under s 7A should be followed and the questions be retried by a jury. It is therefore unnecessary for the Court to exercise its power under s 108 (3).

Orders

(a) The appeal is upheld in part.

(b) The verdict of the jury, that the matter complained of conveyed the imputation that the appellant lies to its customers, is set aside.

(c) The verdict of the jury, that such an imputation was not defamatory of the appellant, is set aside.

(d) A new trial with a jury is ordered with respect to both questions.

(e) The respondent to pay the appellant 65% of the costs of the appeal.

(f) The respondent should have a certificate under the Suitor’s Fund Act, if otherwise entitled.

CA 40848/01
SC 13192/00

SHELLER JA
HODGSON JA
IPP AJA

Thursday 18 July 2002

CHARLWOOD INDUSTRIES PTY LTD v NICK BRENT

Judgment

1 SHELLER JA: I agree with Ipp AJA.

2 HODGSON JA: I agree with Ipp AJA.

3 IPP AJA: This appeal concerns a finding by a jury, under s 7A of the Defamation Act 1974, that an imputation, held by the jury to have been conveyed by the material complained of, was not defamatory of the appellant. The appellant contends that the jury’s finding that the imputation was not defamatory was perverse.

4 The name of the appellant is Charlwood Industries Pty Ltd. The appellant is associated in business with a company called Charlwood Home Improvements Pty Limited. I shall refer to the latter company as “Charlwood Home Improvements”. Charlwood Home Improvements, as first plaintiff, and the appellant, as second plaintiff, brought proceedings against the respondent for damages for defamation. They alleged that the respondent published defamatory material of and concerning both of them on a website on the internet.

5 The statement of claim alleged that the material in question conveyed five imputations and that each such imputation was defamatory of both Charlwood Home Improvements and the appellant.

6 The five imputations were said to arise from the whole of the matter complained of. They were as follows:

“(a) [Each of the plaintiffs] carries out home extensions in such an unprofessional way that it totally lacks credibility.
(b) [Each of the plaintiffs] operates it[s] business of home renovations in a dishonest way.
(c) [Each of the plaintiffs] falsely advertises that it can provide competent home renovation services.
(d) [Each of the plaintiffs] lies to its customers.
(e) [Each of the plaintiffs] offers to its customers guarantees which are worthless”.

7 The matter complained of comprised several documents. The heading to the first document stated:

“ The Charlwood Homes
Extension that Failed ”.

Underneath the heading appeared the following:

“When you decide to hire a building company to carry out an extension to your home, how do you guarantee yourself that the job will be done in a professional manner and in accordance with all the promises that the construction company make at the time of the sale??
We tried and failed miserably. Our dream extension turned out to be a nightmare. We found that the written testimonies and promises given on this companies [sic] paperwork as well as orally by this companies sic] employees, were not worth a squirt of cat’s pee as far we were concerned.
We invite you to have a look at some of these promises as well as the circumstances that led us to this conclusion.
If you are in the market for a home extension …. don’t miss it because it shows how you can get struck with a builder who cannot deliver services or products that back up their advertising and glossy brochure promises.
The company, Charlwood Homes as far as we are concerned, does not have a scrap of credibility left”.

A number of “links” followed, one of these was:

“The lying letters from Charlwood Homes”.


The letters themselves were not before the Court.

Another link stated:

“The Charlwood Homes Guarantee certificate …. in our case…. worthless !!!!”

8 The next document contained the heading:

“The Failed Charlwood Homes job”

Underneath that heading was an extract from a brochure. The heading to the extract stated:

“ DECIDING HOW TO EXTEND OR IMPROVE ”

The material underneath the heading included the following:

“We at Charlwood Industries pride ourselves in knowing that we provide a complete worry-free home improvement and building service …
Since 1977 Charlwood Industries has been making homes greater places to live in …
…
Our trained personnel will only be too glad to advise and assist you with your proposed project …
…
So make your home improvement, large or small, one of the best investments of your lifetime by allowing Charlwood Industries Pty Limited to complete your project with a minimum of fuss and, of course, all work comes fully warranted”.

The brochure contained photographs of a factory and showroom apparently completed by “Charlwood Homes” and of “stock holdings for quick installation”.

9 The website continued:

“Now look at how they left the roof of our new extension … (below)”

The next page contained a description of defects in the respondent’s home, particularly in the roof. A photograph of the roof, depicting the defects, was shown.

10 The website went on to state:

“We have complained for 18 months about this and it has been shrinking for over 3 years. Whilst we are still under warranty … Charlwood refused to do anything about it. We were told that the roof had a 25 year guarantee with it when we purchased. It lasted for just 5 years before it started to shrink !!!!!
Charlwood’s own guarantee states a 7 year guarantee period (see clause 3 of THEIR guarantee period). We were well within that period when we start to complain”

11 The “Charlwood Homes Guarantee Contract” was then set out. This “guarantee contract” contained a reference to a guarantee by Charlwood Industries Pty Limited, the appellant. Underneath the guarantee contract a further document appeared. It contained the following remarks:

“It’s not even 7 years since we purchased and the damage has been present for nearly 3 already!!!
This is not a small company, but once they have your money … forget it. You are on your own … as we have found out”.

12 At the trial the jury were asked whether Charlwood Home Improvements had “established that the matter complained of conveyed to the ordinary reasonable reader any of the following imputations …” Then followed the five imputations set out in para 4 above. This question (which comprised, in fact, five sub-questions) was referred to as “question 1”.

13 Question 2 was the following:

“In respect of any imputations to which you have answered ‘Yes’, in question 1 has [Charlwood Homes] established that any such imputation was defamatory of it”.

The same five imputations were then set out.

14 Question 3 was comprised of the same sub-questions as question 1 save that the sub-questions concerned the appellant, and not Charlwood Home Improvements. Question 4 was in the same terms as question 2 save that, again, the question (and the sub-questions) concerned the appellant and not Charlwood Home Improvements.

15 As regards Charlwood Home Improvements, the jury gave negative answers to all the sub-questions asked under question 1 and question 2. Accordingly, Charlwood Home Improvements failed in its claim.

16 As regards the appellant, the jury gave negative answers to all the sub-questions in question 3 save that which asked whether the matter complained of conveyed the imputation that the appellant “lies to its customers”. The jury gave negative answers to all the sub-questions in Question 4.

17 As regards the appellant, therefore, the jury found that the matter complained of conveyed to the ordinary reasonable reader the imputation that the appellant “lies to its customers” but found that that imputation was not defamatory of it. The appellant contends that the jury’s decision that the imputation was not defamatory was perverse.

18 Several recent cases have set out the principles that apply to appeals based on the contention that a decision by a jury, made under s 7A, is perverse. I think it only necessary to refer to the statement by Stein JA in Sarma v The Federal Capital Press ofAustralia Pty Limited [2002] NSWCA 93 where his Honour said:

“7. To succeed the appellant has to show that, upon the most favourable meaning of the imputation, the finding of the jury was perverse, Cairns v John Fairfax & Sons Ltd [1983] 2 NSWLR 708 at 710. The case against a verdict must be ‘clear and beyond argument’, see Samuels JA in Cairns (at 716-717), quoting from Sankey LJ in Browne v Agar (1928) 138 LT 698. It has been acknowledged that the jury has a wide discretion in the sense that its verdict may only be set aside ‘in an extreme case’, Mahoney JA in Cairns at 720. So it is clear that the jury must be allowed great latitude in its decision making.
8. Further, in Cairns (at 720) Mahoney JA noted that in cases where the defamatory quality of the imputation depends on general community attitudes to conduct, there is more difficulty in a court finding that a jury could not form a particular view as to community standards.
9. To be a perverse verdict, it must be so unreasonable that it could not be said that the jury performed its judicial function ( Mechanical & General Inventions Co v Austin [1935] AC 346) or, that to allow the verdict to stand would be to permit a miscarriage of justice ( Hocking v Bell (1942) 42 SR (NSW) 130).
10. It has repeatedly been said that an appellate court must guard against the tendency to set aside a jury verdict because it would have come to a different decision.
11. In Cinevest Ltd v Yirandi Productions Ltd (2001) ATR 81-610 at 67,031 Spigelman CJ noted that the test to be met to interfere with a jury’s verdict was a high one and a finding could only be rejected if perverse or unreasonable. However, the court found that the particular conduct relied on concerned the business affairs of a company in its dealings with investors and must have [had] an affect on the reputation of the company in its business affairs.”

19 Ordinarily, the imputation that a person has lied or is guilty of dishonest behaviour will be regarded as defamatory. This inference will be even more readily drawn if the imputation is that the person lied or was dishonest in the course of his or her business. Even an imputation of incompetency (that is, a quality less pejorative than dishonesty) in the course of business is likely to be held to be defamatory. There are several cases that illustrate these propositions.

20 In Greek Herald Pty Limited v Nikolopoulos [2002] NSWCA 41 the jury held that the following imputation was defamatory:

“The plaintiffs lied to members of the Canterbury-Marrickville Olympic Soccer Football Club.”

Mason P pointed out that:

“Counsel for the defendants argued that merely to be accused of lying was not defamatory, without specification of what the lie was about, why it was told, or its effect. Reference was made to an adult telling a child about Father Christmas and a fire officer telling people in a crowded theatre with an inferno behind the scenes that there was no cause for alarm.”

His Honour proceeded:

“In the present case it would have been better if the content of the lie imputed to the plaintiffs were spelled out. For one thing, this would have placed in proper focus the defendants’ argument to the jury that some types of lying may be morally justifiable, with the possible consequence that the instant accusation was not defamatory. There are lies and lies, just as every accusation of theft is not defamatory (cf Broome v Agar (1928) 138 LT 698 at 702). Nevertheless, it remains generally true that accusations of lying or theft are defamatory.”

21 The significance of an accusation of dishonesty was discussed in Mularczyk v John Fairfax Publications Pty Limited [2001] NSWCA 467. In this case the jury had found the following imputation not to be defamatory:

“That the [appellant], a teacher at a New South Wales High School, behaved dishonestly in that she pretended to be suffering from stress in order to avoid being transferred to a new school”.

The appellant contended that the jury’s decision was perverse. In upholding the appeal, Beazley JA pointed out that the normal meaning of “dishonesty” was “lack of honesty, fraudulent, deceitfulness” and said:

“It would be fair to say, I think, that in the normal course it is not a word used in jest or which has any ameliorating features”.

Her Honour referred to Harrigan v Jones [2000] NSWSC 119 where Studdert J stated at para 7:

“Dishonesty … involve[s] a conscious and deliberate course of conduct amounting to cheating”.

And proceeded:

“These references, to the extent they are useful, underscore what I have already said, namely that ‘dishonest’, on its face, bears a negative connotation. The question which must be asked however is in what sense was the charge of dishonesty imputed in this case.”

Her Honour stated further:

“In my opinion, the jury verdict was perverse. The imputation of dishonesty alleged was the absence of a quality which, I consider, must be taken as being an essential attribute of a teacher in the proper performance and discharge of his or her professional duties. To be said to be dishonest directly reflects on both the personal and professional character and qualities of persons in the position of the appellants. To return to the submission put by Counsel for the appellants, the imputation could admit of only one answer, namely that it was defamatory.”

22 In Cinevest Limited v Yirandi Productions Limited (2001) ATR 81-610 the jury had held that there was an imputation that Cinevest, a film company, was incompetent in matters relating to its business affairs involving dealings with “investors”. Spigelman CJ expressed the view that such an imputation “must” have an effect on the reputation of Cinevest in its business (see also Sarma v The FederalCapital Press of Australia Pty Limited).

23 Mr Blackburn who, together with Mr Taylor, appeared for the respondent, pointed out that the defamatory quality of an imputation may be considered in the context of the matter complained of: Greek Herald Pty Limited v Nikolopoulos. Moreover, on appeal, the question of perversity must be considered assuming the most favourable meaning of the imputation to the respondent: Cairns v John Fairfax & Sons Limited (1983) 2 NSWLR 708. He submitted that, when seen against the background of the relevant context, the imputation that the appellant “lies to its customers” was not defamatory.

24 Mr Blackburn developed his argument by first drawing attention to the fact that the jury found that the matter complained of did not give rise to any imputations against Charlwood Home Improvements. He submitted that the reason for this decision must have been that Charlwood Home Improvements was not identified in the matter complained of and, on that ground, the imputation concerning the telling of lies did not apply to it. He submitted that, adopting a like approach to the case against the appellant, the jury might have concluded that only a very limited part of the matter complained of applied to the appellant. On this basis, Mr Blackburn said the following in his written submissions:

“The notion of the appellant ‘lying’ to its customers arises only by implication; more particularly, by contrasting the advertising puff contained on pages 3 and 4 with the criticisms of the respondent. It was accordingly open to the jury to take the view that the ‘lying’ imputed to the appellant consisted in its failure to make good the advertising puff that appears on pages 3 and 4 of Exhibit A. If the jury took that view, they were entitled to take the view that it was not defamatory of a company like the appellant to say that it lied to its customers (in that sense). In the context of the matter complained of, putting upon it the construction most favourable to the respondent, it could not be said that the jury’s answer was clearly, and beyond argument, perverse.”

25 In his oral submissions Mr Blackburn submitted that the jury could have regarded the imputation that the appellant “lies to its customers” as meaning only “that its advertising puff does not live up to reality”.

26 For the following reasons, I am not persuaded by these submissions.

27 Although imputations may be considered in the context of the matter complained of, that context is only relevant and admissible for the purposes of demonstrating the force and effect of the imputations pleaded and giving colour and explaining the significance of them: Australian Broadcasting Corporation v McBride (2001) NSWCA 322 (at para 47). The jury cannot use the context to put a meaning on the imputation different to that already found by them to exist: see Singleton v Ffrench (1986) 5 NSWLR 425 and Reader’s Digest Services Pty Limited v Lamb (1982) 150 CLR 500 (at 505).

28 The imputation did not involve the telling of a single lie or a particular lie. Its essential thrust was that the appellant was guilty of dishonesty by telling lies to its customers. Moreover, the relevant context makes it plain that the imputation involved the appellant telling lies to its customers in the course of its business. The context does not detract from these matters, which are of compelling force.

29 Mr Blackburn did not identify precisely what statements in the matter complained of, according to him, constituted “advertising puff”. He did, however, identify the portion which, he accepted, concerned the reputation of the appellant. On an examination of that portion, at least the following particular statements could be said to apply to the appellant: “we at Charlwood Industries pride ourselves in knowing that we provide a complete worry-free home improvement and building service realistically priced to suit your requirements”, “since 1997 Charlwood Industries has been making homes greater places to live in”, “[the appellant will] complete your project with the minimum of fuss”, and “of course, all work comes fully warranted”.

30 In my opinion, even if the imputation that the appellant lies to its customers rested solely on an assumption that one or more of the particular statements quoted above was a lie, the imputation would inevitably be defamatory. Such an imputation would reflect, seriously, on the business ethics and morality of the appellant. This conclusion cannot be avoided by describing the material as “advertising puff”.

31 In any event, underlying the submission that the lies told by the appellant involved “advertising puff” is the proposition that the lies involved statements that were devoid of meaning and without content. The problem with this submission, however, is that it cannot stand against the imputation found, namely, that the appellant told lies. The making of meaningless statements could not constitute lies told to the appellant’s customers, yet the jury found that the matter complained of conveyed the imputation that the appellant told such lies.

32 In my opinion, the finding of the imputation that the appellant lies to its customers should have led inevitably to a finding that the imputation was defamatory. I conclude that the jury’s finding to the contrary was perverse.

33 The next question is: what orders should in consequence be made?

34 It was submitted on the respondent’s behalf that should the appeal be allowed the Court should remit to the jury not only the question whether the imputation is defamatory but, in addition, the question whether the imputation arises from the matter complained of.

35 During the course of argument it was pointed out to the respondent that - the jury having found that the imputation in question was conveyed - it would be appropriate for the respondent to file a cross-appeal against this finding, conditional upon the appellant establishing that the jury’s finding was perverse. The respondent has now filed a draft notice of cross-appeal and has made written submissions in support of it. The appellant in turn has made written submissions in reply. On reflection I think it unnecessary that a notice of cross-appeal be filed. This is not a procedure that, in the past, has been required. If, however, in jury trials where more than one verdict has been brought down, a respondent wishes to contend that, in the event of one verdict being overturned, others should also be set aside, the respondent’s written submissions should make this very clear and, if possible, the appellant should, in turn, file written submissions in reply.

36 In dealing with the relief that should be granted, it is first necessary to examine those cases involving s 7A of the Defamation Act where orders of the kind now sought by the respondent have been made.

37 In Cinevest Limited v Yirandi Productions Limited the jury found that two imputations were conveyed. These were described as “imputations (c) and (d)”, each of which being in terms that Cinevest was “incompetent”. The jury held that only imputation (c) was defamatory. This Court held that the jury’s answer that imputation (d) was not defamatory was perverse. The question arose whether the Court should remit both questions with respect to imputation (c) and both questions with respect to imputation (d). Spigelman CJ said in this regard:

“The Court is not in a position to determine precisely what mental process the jury went through in order to answer the two questions with respect to imputation (d) in the way it did. Nevertheless, the two answers about imputation (c) are perfectly logical and supportable. I do not see any reason why the error with respect to (d) should cast doubt on the answers with respect to (c).
The position is otherwise with respect to the first question relating to imputation (d), namely whether that imputation was conveyed. It may very well be that the jury’s thought processes hinged on whether or not the particular behaviour said to be incompetent was in truth a matter of competence in a film maker. The two questions are inextricably intertwined. More careful deliberation may well lead to a different answer with respect to whether or not the behaviour of failing to return money to investors constituted incompetence in the natural and ordinary meaning of that word.
Accordingly, in my opinion, …. the order should be that the matter be remitted for a new trial on imputation (d).”

38 In Mularczyk v John Fairfax Publications Pty Limited this Court, having held that the jury had been perverse in finding that the imputation involving dishonesty was not defamatory, ordered that the questions whether the imputation arose and, if so, whether it was defamatory, be remitted to the jury. That is to say, the Court ordered that both should be the subject of a new trial. The Court did not say why it came to this decision.

39 In Pavy v John Fairfax Publications Proprietary Limited (2002) NSWCA 46 the jury found that an imputation existed to the effect that a father had acted violently towards his infant son but held that that imputation was not defamatory of him. The Court held that the latter finding was perverse and ordered that there be a new trial of both the issue whether the material conveyed the imputation and the issue whether that imputation was defamatory. Again, there was no discussion of the considerations that influenced the Court in making the order.

40 In Rivkin v John Fairfax Publications Pty Limited [2002] NSWCA 87 the appellant appealed against the jury’s findings that none of several imputations sued upon by him were conveyed. The appellant argued that, considered individually, each of the negative answers given by the jury was perverse and, submitted, further, that, considered in the aggregate, the negative answers given by the jury demonstrated that the jury acted perversely. Grove J (with whom Meagher JA and Foster AJA agreed) held that the jury’s findings were perverse in regard to some of the imputations but not others. His Honour formed the view that the negative answers to every question indicated that the jury had misapplied themselves to their task. The Court therefore took the view that there should be a new trial as to all the imputations before the jury, not just as to those imputations in respect of which the jury’s findings were held to be perverse.

41 We were not referred to, and I have not been able to find, any other decision of this Court where appeals from decisions made under s 7A have been successful on the ground that the jury perversely held an imputation not to be defamatory. In the cases I have mentioned, the Court ordered a new trial on both questions, namely, whether the imputation arose and, if so, whether it was defamatory. We were not referred to, and I have not been able to find, any case where the Court ordered a new trial only on the question whether an imputation as found was defamatory.

42 It has long been accepted that, after a jury trial where the jury has erred, an appellate court has a general discretion either to order a trial on all issues or only on the particular issue where there has been error on the part of the jury: Pateman v Higgin (1957) 97 CLR 521, Monti-HaitsmaEnterprises Pty Limited v Lord (1988) Aust Torts Reports 80-200, Radio 2UE Sydney Proprietary Limited v Parker (1992) 29 NSWLR 448 (at 472).

43 The general approach was stated in Coroneo v Kurri Kurri and South Maitland Amusement Company Limited (1934) 51 CLR 328 by Rich, Evatt and McTiernan JJ at 346 to be as follows:

“Whether a jury’s unreasonable finding on one issue or question should be regarded as destructive of any or all of its finding on another, must therefore depend on all the circumstances of the case, particularly the charge of the trial Judge and the whole conduct of the trial.”

44 Pateman v Higgin involved an action for damages arising out of negligence. The court below had ordered a new trial of an action limited to damages. The appellant sought a new trial generally including the issue of liability. The High Court was concerned with an error by a jury that led to the jury’s verdict as to damages being set aside on the ground that it was inadequate. Kitto J said (at 527):

“… it remains, I think, a sound general proposition from which to start in the consideration of each particular case according to its own circumstances that if there is to be a new trial it ought to be of the case as a whole unless the court thinks that ‘they shall do more injustice by setting the matter at large again’”.

The passage in parenthesis is from the judgment of Cussen J in Holford v Melbourne Tramway and Omnibus Company Limited (1909) VLR 497 (at 529). Kitto J went on to say (at 528):

“It is often true, in a defamation action for example, that the case on liability and the case on damages are not in distinct compartments and therefore ought not to be decided by different tribunals; but the case before us, like the majority of cases of its class, falls naturally and clearly into the two divisions. The evidence on the one issue is quite separate from the evidence on the other, and the two issues form quite separate subjects for consideration.”

Taylor J was of a different opinion as to the “sound general proposition” that governed the question. He said (at 532):

“But, whilst agreeing that cases may occur in which the assessment of damages is of such a character as to give rise to grave doubts concerning the validity of a jury’s findings on other issues, I can see no reason why the mere fact that a finding on one issue is erroneous should necessarily vitiate a finding or findings on distinct and separate issues.”

And (at 533):

“The question then, as I see it, is whether there is anything in the character of the verdict under review, or in the circumstances of the case, to warrant the conclusion that justice between the parties requires that a general new trial should be ordered.”

McTiernan J did not express a view as to the general approach, but said (at 525):

“The presumption raised by the verdict that the jury truly decided the issues of liability which they had to try cannot be rebutted by conjecture. The contention of the defendant that the verdict must have resulted from a compromise among the jury rests merely on conjecture. That is not sufficient to sustain the argument that there should be a new trial generally.”

45 In Morgan v John Fairfax and Sons Limited [No 2] (1991) 23 NSWLR 374, reference was made to Pateman v Higgin and Coroneo. Morgan concerned defamation proceedings where an issue of statutory qualified privilege, raised as a defence, was erroneously dealt with by the trial judge after a general verdict was obtained from the jury. The Court held that it was inappropriate to order a new trial confined to the issue of qualified privilege when it was not clear how the jury had determined the various issues left to them. Hunt AJA (with whom Samuels JA agreed) pointed out (at 381) that the older cases dealing with the nature of any new trial to be ordered were usually concerned with whether there should be a new trial in which liability generally would be in issue or whether there should be a new trial limited to damages only. His Honour observed (at 381):

“The appellate courts …. had no sure means of knowing how the various issues had been determined by the jury at the trial. The only course usually open in such cases was to order a new trial generally where an error had been demonstrated in relation to one of those issues concerning liability.”

This seems to adopt the approach of Kitto J in Pateman v Higgin .

46 Hunt AJA went on to say that the older cases emphasise that “where the case on one issue and the case on another issue are not in distinct compartments, those issues should not be decided by different tribunals”.

47 In Morgan the Court had no sure means of knowing how the jury had determined the various issues. The Court considered that in the circumstances of the case the issue of statutory qualified privilege was not in a distinct compartment from the other issues relating to liability. Hence, it was decided that the new trial could not be limited to the defence of statutory qualified privilege. See also Rivkin v John Fairfax PublicationsPty Limited.

48 In Radio 2UE Sydney Proprietary Limited v Parker Clarke JA (with whom Handley and Cripps JJA agreed) observed (at 472):

“[The Court] undoubtedly has a discretion to order a new trial generally or one that is limited to, for instance, the question of damages.”

In that case his Honour remarked (at 472) that, while there were some factors in support of a limited new trial, “because errors pervade both the areas of imputation and comment I am of opinion that there should be a general new trial”.

49 I accept that in strict logic it might be said that the question whether material conveys a particular imputation is distinct from whether that imputation is defamatory. But the law is not always a matter of strict logic. There are features of the present case that indicate that the perversity of the finding that the imputation was not defamatory was the result of a compromise within the jury, linked to the finding that the material complained of did in fact convey the imputation that the appellant lies to its customers.

50 This situation is different to that in Pateman v Higgin. There were a number of grounds on which the jury in that case could have delivered a verdict involving an inadequate sum of damages. Error of principle or fact could well have been the reason for that verdict. Hence the conclusion of McTiernan J that it was speculative to say that compromise was the cause of the inadequacy.

51 A verdict that a plainly defamatory imputation is not defamatory cannot be as readily explained. Mere mistake on the jury’s part does not easily offer itself as a probable explanation for such a decision. Accordingly, behind every jury verdict that perversely holds that an imputation is not defamatory lurks the spectre of compromise. This perception, I think, underlies those s7A cases where this Court has ordered both issues to be retried.

52 In the present case, the inference that a compromise verdict may have been given is reinforced by the fact that it would have been reasonably open to the jury to bring down a verdict that the matter complained of did not give rise to the imputation that the appellant lies to its customers. It was not self-evident that the imputation existed. The question whether the imputation was conveyed must have caused serious debate during the deliberations of the jury. On the other hand, the finding that the imputation was not defamatory was not reasonably open to the jury.

53 The conjunction of the potential contentiousness of the first question with the perversity of the answer to the second question strongly suggests a compromise verdict. Additionally, regard must be had to the fact that the matter complained forcefully implies that the respondent was hard done by when dealing with the appellant and was capable of evoking substantial sympathy for the respondent. It is not difficult to imagine that some members of the jury might have been disinclined, overall, to hold for the appellant.

54 When these matters are seen against the fact the defamatory nature of the imputation is obvious and compelling, and no other reason for the verdict presents itself, the possibility of a compromise verdict has to be regarded as real.

55 Accordingly, in my opinion, both issues relating to the imputation that the appellant lies to its customers should be retried.

56 Mr Tobin QC, who together with Mr S Phillips appeared for the appellant, submitted that this Court should exercise its powers under s 108(3) of the Supreme Court Act and direct a verdict on the question of whether the imputation was defamatory and give judgment accordingly.

57 Section 108(3) provides:

“Where it appears to the Court of Appeal that upon the evidence the plaintiff or the defendant is, as a matter of law, entitled to a verdict in the proceedings or on any cause of action, issue or claim for relief in the proceedings, the Court of Appeal may direct a verdict and give judgment accordingly”.

58 Mr Blackburn submitted that s 108(3) did not empower this Court to direct a verdict in cases involving s 7A of the Defamation Act.

59 Before dealing in detail with the issue so raised I should mention that in Rivkin Grove J referred to the terms of s 7A (3) and said [at 153]:

“It follows that the statute inhibits any substitution by this Court of answers in lieu of those given by the jury to the series of questions left to them. Reference was made to the general powers of the Court but in my view the requirements of the provisions which I have recited are plain and although in my opinion it was perverse for the jury to answer the questions which I have indicated in the negative, the questions must in due course be answered by a jury and not by a judge or judges”.

Grove J made no reference in his reasons to s 108(3) of the Supreme Court Act . It seems to me, with respect, that in referring to “the general powers of the Court” his Honour was referring to the inherent powers of the Court. In the absence of any specific reference to s 108(3), I do not regard Rivkin as determinative of the issue whether, under s 108(3), the Court of Appeal has power to direct a verdict and give judgment where upon the evidence, the plaintiff or the defendant is, as a matter of law, entitled to a verdict on any issue in the proceedings.

60 In Buck v Jones [2002] NSWCA 8 this Court held that a jury’s finding that defamatory material did not convey a particular imputation was perverse. The parties accepted that the Court of Appeal could not substitute a finding in the plaintiff’s favour pursuant to the power of s 108(3) of the Supreme Court Act “because a favourable finding would not lead to a verdict in the proceedings”. Apparently, the plaintiff did not submit that s 108(3) conveyed the necessary power on the basis that the jury’s decision was a verdict on an issue in the proceedings. Therefore the Court did not decide the question.

61 Section 108(3) expressly empowers this Court to direct a verdict where, upon the evidence, either the plaintiff or the defendant is, as a matter of law, entitled to a verdict on any issue. Thus, the section makes no distinction between the rights of a plaintiff or a defendant and regards a decision by a jury in regard to a particular issue as a “verdict”.

62 Regard should also be had to s 102 of the Supreme Court Act. Section 102 provides:

“Where, in any proceedings in the Court, there is a trial of the proceedings or of any issue in the proceedings with a jury, an application for -
(a) the setting aside of a verdict or judgment;
(b) a new trial
(c) the alteration of a verdict by increasing or reducing any amount of debt, damages or other money
shall be by appeal to the Court of Appeal.”

Thus, like 108(3), s 102 contemplates a jury giving a verdict on “any issue in the proceedings”. Indeed, if an answer given by a jury to a question posed under s 7A were not to be regarded as a verdict, there could be no appeal from the jury’s decision.

63 Section 7A (5) of the Defamation Act contemplates the application of the relevant provisions of the Supreme Court Act to s 7A. Section 7A(5) provides:

“Section 86 of the Supreme Court Act 1970 applies subject to the provisions of this section.”

Section 86(1) of the Supreme Court Act provides:

“Proceedings on a common law claim in which there are issues of fact on a claim in respect of defamation are to be tried with a jury”.

Section 7A (5) of the Defamation Act therefore limits the broad reach of s 86(1). It follows that the legislature, in enacting s 7A, recognised that the Defamation Act would be subject to the provisions of the Supreme Court Act .

64 The conclusion that s 108(3) empowers the Court of Appeal to direct a verdict is supported by Hocking v Bell (1945) 71 CLR 430. In this case the High Court gave consideration to s 7 of the Supreme Court Procedure Act 1900. Section 7 (which was the predecessor to s 108(3) of the Supreme Court Act) provided:

“In any action, if the Court in Banco is of opinion that the plaintiff should have been nonsuited, or that upon the evidence the plaintiff or the defendant is as a matter of law entitled to a verdict in the action or upon any issue therein, the Court may order a non-suit or such verdict to be entered”.

Latham CJ said (at 441 to 442):

“Setting aside a verdict is one thing. Entering a contrary verdict is quite a different thing. The giving of a verdict is the function of jurors, not of judges. Special provision, by statute or rules, is necessary in order to enable the court to go beyond setting aside the verdict of a jury and ordering a new trial and to enable it to direct a contrary verdict to be entered and to give judgment accordingly: see Shepherd v Felt & Textiles of Australia Limited (1931) 45 CLR 359 at 379, per Dixon J.
…
After a trial by jury the Full Court upon appeal has no power to draw inferences of fact; and though it may order a new trial where the verdict is against evidence and the weight of evidence, it cannot order a verdict to be set aside and judgment to be entered for the party against whom a verdict was given unless the conditions prescribed by the Supreme Court Procedure Act 1900, s 7, are satisfied.”
…
Thus, in the present case the Full Court could properly order a verdict to be entered for the defendant only if the defendant is ‘as a matter of law entitled to a verdict’. If there is evidence upon which a jury could reasonably find for the plaintiff, unless that evidence is so negligible in character as to amount only to a scintilla, the judge should not direct the jury to find a verdict for the defendant, nor should the Full Court direct the entry of such a verdict. The principle upon which the section is based is that it is for the jury to decide all questions of fact, and therefore to determine which witnesses should be believed in case of a conflict of testimony. But there must be a real issue of fact to be decided, and if the evidence is all one way, so that only one conclusion can be said to be reasonable, there is no function left for the jury to perform, so that the court may properly take the matter into its own hands as being a matter of law, and direct a verdict to be entered in accordance with the only evidence which is really presented in the case: see Shepherd v Felt & Textiles of Australia Limited at 73 per Starke J: - ‘where on the uncontroverted facts the action or an issue must be determined in favour of one party, then, as a matter of law, that party is entitled to the verdict in the action or upon the issue. And it is necessarily wrong to leave any conclusion or inference in such circumstances as a question of fact to the jury”.

65 These remarks were approved by the Privy Council on appeal, see Hocking v Bell (1947) 75 CLR 125 at 130 where (at 131) the following was said:

“If, at the end of the hearing of witnesses, the evidence is all one way, so that no jury can reasonably found for the plaintiff, and a verdict and judgment in favour of the plaintiff are nevertheless given, it is within the competence of the Supreme Court to direct that verdict and judgment should be entered for the defendant.”

66 The views so stated in Hocking v Bell echoed those expressed by Dixon and Evatt JJ in Edmund Weil Inc v Russell (1936) 56 CLR 34 at 47 where their Honours said at 47:

“The jurisdiction of the Full Court extends to entering any verdict to which a party is upon the evidence entitled as a matter of law (s 7 of the Supreme Court Procedure Act 1900).”

67 Applying the principles thus stated, if the imputation is plainly defamatory and, on the relevant material, any other decision would be perverse, it would follow, as a matter of law, that the Court of Appeal may direct a verdict on the issue whether a defamatory meaning arises and give judgment accordingly.

68 Any other result would be quite incongruous. For example, in a case where the Court of Appeal holds that a verdict was perverse by failing to hold that an imputation was defamatory, it would be incongruous to hold a new trial in accordance with law, with all the expense and solemn paraphernalia, when all those involved would know that, should the jury again bring in a verdict that the imputation was not defamatory, that verdict would once more be overturned on the same ground. In such circumstances the practicalities of the situation and common sense cry out for the Court to proceed under s 108(3).

69 Mr Blackburn also submitted that, if this Court was entitled to substitute a verdict on the question whether the imputation was defamatory, “it must follow that the appellant was entitled to seek a direction to that effect from the trial judge”. He submitted that, because at trial the appellant had not sought such a direction, this Court should not allow it to do so on appeal. This argument, however, misconceives s 108(3). That section does not entitle a trial judge to direct a verdict and give judgment. It only empowers the Court of Appeal to do so. There was therefore no point in seeking a direction to that effect from the trial judge.

70 It remains, however, to consider whether, in the present case, the Court should exercise the discretion conferred upon it under s 108(3).

71 I have decided that both questions (whether the imputation exists and, if so, whether it is defamatory) should be retried. I have observed that it is arguable that the imputation that the appellant lies to its customers does not arise from the relevant material. In my opinion, that being so, the appropriate course would be for the policy under s 7A to be followed and for those questions to be retried by a jury.

72 In all the circumstances I propose the following orders:

(a) The appeal is upheld in part.

(b) The verdict of the jury, that the matter complained of conveyed the imputation that the appellant lies to its customers, is set aside.

(c) The verdict of the jury, that such an imputation was not defamatory of the appellant, is set aside.

(d) A new trial with a jury is ordered with respect to both questions.

73 The appellant was successful on the issue raised by it but the respondent was successful on the issue that both questions should be remitted to the jury. On balance I think justice would be served if the respondent paid the appellant 65% of the costs of the appeal and I propose that such an order be made. The respondent should have a certificate under the Suitor’s Fund Act, if otherwise entitled.

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