Chetwynd v Armidale Dumaresq Council

[2010] NSWSC 690

CITATION:	Chetwynd v Armidale Dumaresq Council [2010] NSWSC 690
HEARING DATE(S):	12-27 April, 4-7 May 2010
JUDGMENT DATE :	2 July 2010
JUDGMENT OF:	James J
DECISION:	Verdict for the defendant
CATCHWORDS:	DEFAMATION — Defamation Act ss 25, 27, 28, 30 — defence of justification — defence of absolute privilege — defence of publication in a public document — defence of statutory qualified privilege — defence of common law qualified privilege — defence of common law fair comment
LEGISLATION CITED:	Defamation Act 2005 Local Government (General) Regulation Local Government Act New South Wales Defamation Act 1974 Protected Disclosures Act 1994
CASES CITED:	Adam v Ward [1917] AC 309 Andreyevich v Kosovich and Publicity Press (1938) Pty Ltd (1947) 47 SR (NSW) 357 Austin v Mirror Newspapers Ltd (1984) 2 NSWLR 383 Bashford v Information Australia (Newsletters) Pty Ltd (2004) 218 CLR 366 Bennette v Cohen [2009] NSWCA 60 Channel Seven Adelaide v Manock (2007) 232 CLR 245 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 Morgan v John Fairfax & Sons Limited (1991) 23 NSWLR 374 Roberts v Bass (2002) 212 CLR 1 Webb v Bloch (1928) 41 CLR 331
TEXTS CITED:	Australian Defamation Law and Practice Gatley on Libel and Slander (11th ed)
PARTIES:	Brian Chetwynd - Plaintiff Armidale Dumaresq Council - Defendant
FILE NUMBER(S):	SC 2008/289628
COUNSEL:	CA Evatt / L Evans - Plaintiff PW Gray SC - Defendant
SOLICITORS:	Brydens Law Office - Plaintiff Moray & Agnew Solicitors - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

JAMES J

FRIDAY 2 JULY 2010

2008/289628 BRIAN CHETWYND v ARMIDALE DUMARESQ COUNCIL

JUDGMENT

1 HIS HONOUR: In these proceedings the plaintiff Brian Chetwynd sued the defendant the Armidale Dumaresq Council (“the Council” or “the defendant”) for publishing allegedly defamatory matter in November 2007.

2 The plaintiff was a member of the Council between 2000 and 2008 and was Mayor between 2000 and 2005. In 2005 he was a member of an advisory committee set up by the Council (“the Advisory Committee”) in relation to the New England Regional Art Museum (NERAM).

3 On 11 July 2005 the plaintiff attended meetings of the Advisory Committee and then of the Council. Complaints were subsequently made about the plaintiff’s conduct at the meeting of the Advisory Committee and in early 2007 a committee (“the Code of Conduct Committee”) was set up to investigate these complaints.

4 The Code of Conduct Committee prepared a report which contained a number of adverse findings about the plaintiff’s conduct at the meeting of the Advisory Committee on 11 July 2005. This report was included in the agenda contained in a notice of a meeting of the Council to be held on 26 November 2007. The notice of meeting including the agenda was sent by the Council to all members of the Council, to a number of members of the Council’s staff, to some members of the public and to a number of representatives of the media. It was this distribution of the agenda which was alleged by the plaintiff to have been the publication by the Council of defamatory matter about him.

5 Subject to minor qualifications, the defendant did not dispute that the imputations alleged by the plaintiff had been conveyed and that the imputations conveyed were defamatory of the plaintiff. However, the defendant raised defences of justification (s 25 of the Defamation Act 2005 – “the Act”), absolute privilege (s 27 of the Act), publication in a public document (s 28 of the Act), common law qualified privilege, statutory qualified privilege (s 30 of the Act) and common law fair comment. A defence of honest opinion (s 31 of the Act) was raised at the hearing but later withdrawn.

6 In his amended reply the plaintiff in reply to the defence under s 28 of the Act alleged that the defamatory matter had not been published honestly for the information of the public and in reply to the defences of common law qualified privilege, statutory qualified privilege and common law fair comment alleged that the Council had been actuated by express malice in the publication of the matter complained of.

7 The evidence in the proceedings was extensive. Witnesses who gave oral evidence for the plaintiff were the plaintiff himself, the plaintiff’s wife, Mrs Beverly Roobol who was a member of the Council from 2001 to 2008 and Mrs Margaret Wolfer who gave brief evidence on an aspect of damages.

8 Witnesses who gave oral evidence for the Council were members of the Council at relevant times Mr Ducat, Mr Whan, Mr Waters and Mr Maher; employees of the Council, Mr Harvey, Mr Hadfield, Ms George and Mrs Stachiw; a solicitor who was a partner in Phillips Fox Ms Judith Healy; a solicitor who was a member of the Code of Conduct Committee Mr Singh; and an employee of an information technology firm Mr McLachlan.

9 Apart from the oral evidence a large number of documents were admitted into evidence.

10 There are some disputed questions of fact which I will endeavour to resolve later in this judgment. However, many facts were not disputed or were clearly established by the evidence. A number of facts were established by the file notes, letters and oral evidence of Ms Healy of Phillips Fox. No suggestion was made at the hearing that any of the evidentiary material from Ms Healy was otherwise than completely reliable. I will now set out some of the undisputed or clearly established facts. When I refer to a document I am recording that a document in those terms came into existence and not that facts asserted in the document are necessarily true.

Undisputed or clearly established facts

11 In 2000 the Armidale and Dumaresq Councils were amalgamated to form one Council, the Armidale Dumaresq Council.

12 In May 2000 the plaintiff was elected as a Councillor to the new amalgamated Council and in September 2000 he became the Mayor.

13 In 2004 Dr Janice Lally was appointed the Director of NERAM for a term of five years. In May 2005 the Council became the corporate trustee of NERAM and the Advisory Committee for NERAM was appointed of which the plaintiff was a member.

14 Complaints were made about Dr Lally’s performance as the Director of NERAM. These complaints were discussed in a long telephone conversation on 5 July 2005 between the plaintiff and Ms Healy acting as the Council’s solicitor. Extensive notes of the conversation were taken by Ms Healy, which included the following:-

“Opinion of general manager concurs with Brian’s (that is the plaintiff’s) in that if we do not terminate this agreement there will be no staff. Brian understands that Council may have to pay out for the balance of the term.”

15 On 5 July 2005 Ms Healy prepared notes to be used by the plaintiff at a meeting of the Advisory Committee to be held that night. The notes were based on instructions which Ms Healy had received from the plaintiff and were in the following terms:-

“NOTES FOR MEETING - CONFIDENTIAL

Some very serious concerns have been raised today with respect to the performance of the Director, Dr Janice Lally, of the New England Regional Art Museum.

These concerns include the serious following facts:

· The claim that the Director treats staff (including volunteers) and the public very poorly and in such an inappropriate and bullying way that the staff have informed me that they intend to resign if the Director's employment is not terminated. For example, the staff asked for a meeting with me only and the Director found out about this and told the staff that they were not to meet with me, unless the Director was present.

· The Director denied to me (contrary to what a staff member had informed me) over the telephone today, that the Director had prevented the staff from meeting with me, without the Director being present:

· The Director declines to assist the Consultant, Mr Garry Slocombe (who has been appointed on a short term basis) to consider the financial position of the Museum and its structure, as a matter of urgency.

· The Director is frequently not present in the museum during business hours.

Given the above, I intend to consider whether the Director has committed wilful breaches of the employment contract and also whether the Director has committed misconduct.
Resolution
Propose to consider, as a matter of urgency, whether the Director has committed wilful breaches of the employment contract/and also whether the Director has committed misconduct and whether therefore the employment contract should be terminated immediately.”

16 I infer that a meeting of the Advisory Committee was held on 5 July 2005 and that the plaintiff spoke at the meeting in accordance with the notes which had been prepared by Ms Healy.

17 On 7 July 2005 Ms Healy sent a letter of advice to the plaintiff. A later letter sent on 11 July 2005 was in identical terms, apart from some additions to the later letter. As the letter of 11 July 2005 was the focus of submissions at the hearing and as I will be setting out the letter of 11 July 2005 in full, I will not set out the terms of the letter of 7 July 2005.

18 On 8 July 2005 Ms Healy had a telephone conversation with the Council’s general manager Mr Burns, who informed her that an emergency meeting of the Council would be called for Monday 11 July 2005. On the same day Ms Healy had a telephone conversation with Del Bennett, a volunteer at NERAM, concerning the behaviour of Dr Lally.

19 At 11:46 am on 11 July 2005 Ms Healy emailed to the plaintiff two documents, being a letter of advice and Ms Healy’s notes of her conversation with Del Bennett. The letter of advice was in the following terms:-

“Termination of Employment Agreement between you and New England Regional Art Museum Reserve No. 96366 (NERAM) and Janice Lally, dated 29 June 2004
We have been asked to advise on the termination of the Employment Agreement of Dr Lally (Agreement).
Terms of the Agreement

The Agreement is between NERAM and Dr Lally, the Director of NERAM.

We understand that the Council has appointed, on about 20 May 2005, its own Advisory Committee to oversee the corporate trust management role for NERAM. Whilst some changes have occurred as a consequence of this appointment (for example the appointment of Garry Slocombe as a consultant and business manager on a short term basis) the appointment of the Council's Advisory Committee does not change that the Agreement continues to apply to Dr Lally's employment.

Clause 2.1 of the Agreement states that:
‘The term of this Contract shall be five (5) years commencing Monday, 30 August 2004.’

Thus the Agreement appears to be a fixed term contract and has just over four years to 'run' being the balance of the term.

Clause 11.1 of the Agreement provides that:
‘The Director may terminate the Employment Agreement on three (3) months written notice given to NERAM.’


Unfortunately (and rather unusually) there is no similar term in the Agreement providing for NERAM to give notice to the director Therefore assuming NERAM gave notice of the termination of the contract, it would have to give notice of the balance of the term or, to avoid damages being awarded by a Court (equivalent to the balance of the term of the contract) it would have to pay Dr Lally pay in lieu of more than four years (about $300,000 assuming a remuneration package of about $73,760 pa). This however may be reduced if Dr Lally was to mitigate her damages by earning income from alternative work.

Clause 11.2(c) provides that:
‘If the Director at any time is convicted of a felony or is guilty of any wilful breach or continued neglect of the provisions of this Employment Agreement or of misconduct bringing the Director or NERAM into disrepute, NERAM may by written notice given to the Director terminate the Employment Agreement:
…
(e) for any reason specified in paragraph (c) of this subclause, without any period of notice and without payment and allowances (other than remuneration benefits accrued to the date of termination).’

The effect of clause 11.2(c) is that, if Dr Lally had committed such serious breaches of the Agreement, NERAM may terminate the Agreement without any notice.

Courts are conscious that summary dismissal (ie termination without any notice or pay in lieu of notice) can have a detrimental effect on the employee's reputation.
Obviously each case has to be considered in light of its particular circumstances but the effect of summary dismissal places a heavy burden on an employer to justify dismissal without notice. Whilst the circumstances do not have to be exceptional, they nevertheless have to establish that the breach was of a serious nature.
Background
Dr Lally has expressed concerns about Garry Slocombe's appointment. On 9 June 2005, the Mayor, on behalf of NERAM, Advisory Committee, wrote to Dr Lally saying, amongst other things, that:

‘The Committee recognises the importance of your role in NERAM and is appreciative of the efforts and actions you have taken. It acknowledged that you were appointed to the position at a difficult time for the gallery and that you have in essence, inherited an onerous task. It is also acknowledged that under these circumstances you have carried out your obligations with enthusiasm and dedication. The Committee has already conveyed to you, their confidence in your identified skills and attributes and it is desirous that you continue to play an important role in NERAM.’


On 5 July 2005, various concerns were raised by the Mayor at a meeting of the Advisory Committee for NERAM being as follows:

1 Dr Lally treats staff (including volunteers) and the public very poorly and in such an inappropriate and bullying way that some members of the staff have informed the Mayor that they intend to resign if Dr Lally's employment is not terminated. For example, the staff asked for a meeting with the Mayor only and Dr Lally found out about this and told the staff that they were not to meet with the Mayor, unless Dr Lally was present;
2. Dr Lally denied to the Mayor (contrary to what a staff member had informed the Mayor) that Dr Lally had prevented the staff from meeting with the Mayor, without Dr Lally being present;
3. Dr Lally declines to assist the Consultant, Mr Garry Slocombe (who has been appointed on a short term basis) to consider the financial position of the Museum and its structure;
4. Dr Lally is frequently not present in the museum during business hours (although Dr Lally has apparently been present more frequently since Garry Slocombe's appointment)..
Evidence

We are concerned that Council may not have sufficient evidence (providing specific examples ( etc) with respect to the above concerns (see paragraphs 1 to 4). Further, the concerns above may not be sufficiently serious to warrant NERAM terminating the Agreement by relying upon clause 11.2(c) and therefore not giving Dr Lally notice of termination.

We also understand that there may be issues concerning:

· Dr Lally refusing to reply a response with respect to the founding submissions; and

· probity issues concerning Dr Lally taking leave (eg. trip to Germany in about February 2005) but not applying for and taking leave as annual leave.

However we are yet to receive any documents concerning the above.

Letter to Dr Lally
At the very least, a letter should be prepared to Dr Lally setting out the concerns and asking that Dr Lally promptly responds to the concerns. Dr Lally should be informed, in the letter, that NERAM is considering terminating the Agreement on the basis of clause 11.2(c). (A draft of the letter to Dr Lally is attached.

Strictly speaking if circumstances are so serious as to justify summary dismissal, the contract should be terminated immediately and there is no need to put the issue to Dr Lally by letter and seek his (sic) response.

However, given the fact that the evidence is arguably not strong enough to justify summary dismissal, we think it prudent to put the concerns to Dr Lally in writing and to give her a short period in which to respond.

We are instructed that staff are somewhat reluctant to discuss 'openly' the issues concerning Dr Lally for her reprisal.

Judith Healy has had two telephone discussions with staff being:

· Corrine (who works in Finance) and who has asked that her comments, for the moment, be kept confidential; and

· Del Bennett (a volunteer) who is prepared for us to share with you the comments which she has made (a copy of the file note of Del's comments is attached).

Potential claims

Assuming NERAM terminates the Agreement, Dr Lally may institute proceedings in the District Court against NERAM for breach of contract and claiming damages representing the balance of the term of the five year fixed term, interest and costs.

Alternatively to Dr Lally commencing a claim for breach of contract, Dr Lally may commence proceedings under Section 106 of the Industrial Relations Act of New South Wales (unfair contracts claim).

Dr Lally may claim that:
1. the Agreement and arrangements surrounding it (including the involvement of the Council, its Advisory Committee , and the Mayor) was unfair;
2. the communication to Dr Lally, in early June 2005, that the Committee was confident of Dr Lally's skills etc and that she would continue to play an important role in NERAM was misleading and deceptive;
3. Dr Lally was not properly consulted concerning the appointment of Garry Slocombe, who in effect took over her duties and responsibilities and accordingly her position was in fact made redundant.


Dr Lally may institute an unfair contracts claim against not just NERAM but also, the Council, the Mayor and possibly, Garry Slocombe.

Unfair contracts claims are expensive (costs above are likely to exceed $120,000) and there are considerable delays (the case may not be heard for about two years from its commencement date). However, unfair contracts claims commonly settle at conciliation (which usually occurs within about six to twelve months of the claim being lodged) and at which time costs may only be about $20,000.

There is no question that, assuming NERAM terminates the Agreement, the best result would be that:

· NERAM agrees to pay Dr Lally a sum of money (obviously considerably less than $300,000 representing remuneration which Dr Lally would have earlier during the balance of the term);

· there is no litigation arising from the Agreement and its termination; and

· Dr Lally signs a Deed of Release in which she agrees to make no claims against NERAM, the Council, members of the Advisory Committee, the Mayor and Garry Slocombe.

To try to achieve the above, a 'without prejudice' discussion would need to occur with Dr Lally and this should occur at about the same time (or shortly thereafter) as the letter to Dr Lally is provided to her which sets out the concerns. It may be of importance to Dr Lally from a reputational point of view to try to resolve her claims, rather than to argue the claims ‘publicly’.
We look forward to discussing this advice with you.”

20 This letter of 11 July 2005 was in the same terms as the letter of 7 July 2005, except for the addition of the second and third paragraphs under the heading “Evidence” and all of the material under the heading “Letter to Dr Lally, after the first two sentences.

21 In a covering email sent at 11:46 am on 11 July 2005 Ms Healy said that she would shortly be sending the draft letter to Dr Lally.

22 At 5:00 pm on 11 July 2005 Ms Healy emailed to the plaintiff a draft letter to Dr Lally, which was in the following terms:-

“Dear Dr Lally

I refer to your employment agreement, dated 29 June 2004, between New England Regional Art Museum (NERAM) and yourself. (Agreement).

In particular I refer to clause 11.2 of the Agreement which provides, amongst other things, that the Agreement may be terminated if you are guilty of any wilful breach or continued neglect of the provisions of the Agreement or of misconduct bringing NERAM into disrepute.

During the last few weeks the following breaches and acts of neglect by you have been raised:

1. You treat staff (including volunteers) very poorly and in an inappropriate and bullying way;

2. Certain staff contacted the Mayor and asked for a meeting to discuss concerns about your treatment of the staff. You refused to allow the staff to meet with the Mayor without you being present;

3. You denied to the Mayor (contrary to what the staff say) that you had prevented the staff from meeting with the Mayor without you being present;

4. You decline to assist Mr Garry Slocombe (who has been appointed as a consultant on a short term basis to consider, amongst other things, the structure of NERAM); and

5. You have refused to supply and keep informed relevant persons with respect to providing funding submissions;

As you will appreciate these breaches and acts of neglect are very serious.

Consideration is being given to terminating the Agreement and your employment as Director of NERAM, pursuant to Clause 11.2 (c) and 11.2 (e). Further or alternatively, consideration is being given to termination on the basis that you have repudiated your obligations pursuant to the Agreement.

NERAM would like to give you an opportunity, on an urgent basis, to respond in writing to the breaches and acts referred to in paragraphs 1 to 5.

If you do not respond, by July 2005, or your response is unsatisfactory, NERAM intends to terminate the Agreement and your employment.

Yours sincerely”

23 At 5:03 pm a further copy of the letter of advice of 11 July 2005 was sent to the plaintiff.

24 Between about 5:00 pm and 5:19 pm on 11 July 2005 Ms Healy and the plaintiff had a telephone conversation. Ms Healy’s notes of the telephone conversation and the oral evidence of Ms Healy and the plaintiff establish that one of them said “we really have not anywhere to go” and the plaintiff said “not really a case for summary dismissal”. In the context of the plaintiff expressing a desire to summarily dismiss Dr Lally, Ms Healy said “can take gutsy move & terminate on summary dismissal grounds. Worst position is that you have to pay out for the balance of the term”.

25 On the evening of 11 July 2005 a meeting of the Advisory Committee was held between about 5:45 pm and 7:20 pm. There are two sets of Minutes of this meeting. At the hearing there was no explanation why there are two sets of Minutes. One set of Minutes was in the following terms:-

“MINUTES OF THE ADVISORY COMMITTEE OF NEW ENGLAND REGIONAL ART MUSEUM, HELD MONDAY 11 JULY 2005 IN THE COUNCIL CHAMBERS, AT 5.45PM

PRESENT: Chair Chetwynd, Clrs Maher, Roobol and Waters
IN ATTENDANCE: CIrs Ducat, Kelly, Walford, and Whan and General Manager, Mr Shane Burns.
APOLOGY: Clrs Beyersdorf and Patricks

The Committee discussed a number of issues of concern.

MOVED CR WATERS SECONDED CR ROOBOL

That the Trust terminate the Contract of Ms Janice Lally and undertake the processes

The Motion on being put to the vote was CARRIED.

MOVED CR WATERS SECONDED CR ROOBOL

That the Chair and General Manager of Armidale Dumaresq Council be authorized to undertake any other action beneficial to the Trust.

The Motion on being put to the vote was CARRIED.

CLOSE OF MEETING

There being no further business, the meeting closed at 7.20pm.”

26 The other Minutes were in the same terms, except that, in lieu of “the Committee discussed a number of issues of concern” the following appears:-

“The Chair gave an update on developments and legal advice. The following options were presented:

1. Not happy with performance of Director

2. Unfair contract

3. Incompetence

4. Pay out Contract

5. Paid leave

6. Power of Chair”

27 Neither set of minutes records in any detail what was said at the meeting of the Advisory Committee. What happened and what was said at the meeting was strongly contested at the hearing and was the subject of much disputed evidence. I will make findings about what happened and what was said at the meeting later in this judgment.

28 At the meeting of the Council held at 7:20 pm, that is immediately following the conclusion of the Advisory Committee meeting, at which the plaintiff and Councillors Ducat, Kelly, Maher, Roobol, Walford, Waters and Whan were present, it was resolved that the Council endorse the recommendations of the Advisory Committee.

29 On the morning of 12 July 2005 the plaintiff had a telephone conversation with Ms Healy. The plaintiff informed Ms Healy of the passing of the resolution to terminate the contract with Dr Lally. Ms Healy said that “Council recognises that its full liability (to Dr Lally) may be for the complete balance of the term”.

30 On 12 July 2005 Ms Healy sent a letter to the plaintiff in the following terms:-

“We refer to your telephone conversation with Judith Healy this morning.

We note that a resolution has been passed to terminate the agreement between NERAM and Dr Lally, the Director of NERAM without notice and that the termination should occur today.

As discussed with you, Dr Lally may, amongst other things, make a claim under Section 106 of the Industrial Relations Act NSW (Unfair Contracts Claim).

In Lang v Commonwealth Bank of Australia (2000) NSWIRComm 274, Justice Schmidt found the contract of employment to be unfair within the meaning of Section 106 because of serious deficiencies in the investigation into the conduct of the Applicant, despite finding that the Applicant had engaged in misconduct warranting his summary dismissal.

Her Honour commented:
“The consequences for any employee of dismissal for misconduct may, of course, be serious. In the case of a Senior Executive such as Mr Lang, it can readily be appreciated that the effective result may be the end of a career, otherwise successful prior to the termination. In those circumstances, that fairness would require that an employer would conduct a thorough investigation of allegations of misconduct, giving an opportunity to the employee to understand the allegations and what they are based on, to respond and to then have the response taken into account in any decision, can also readily be appreciated”.


For that reason, I drafted the letter (which I sent to you yesterday) to Dr Lally giving her an opportunity to respond to the alleged breaches and act of neglect and informing her that, if the response was unsatisfactory, her employment may be terminated.

We note that we are instructed to proceed on the basis of not providing Dr Lally with an opportunity to understand the allegations and to respond to them.

Attached is a draft letter to Dr Lally terminating the employment on the basis set out in the preceding paragraph.

Assuming you wish to proceed on this basis still, two persons should be present when you provide the letter to Dr Lally and you should make notes, immediately after your meeting with Dr Lally, as to what is said.

If you have any queries, please contact Judith Healy.”

31 The draft letter to Dr Lally was in the following terms:-

“Dear Dr Lally

I refer to your employment agreement, dated 29 June 2004, between New England Regional Art Museum (NERAM) and yourself (Agreement).

In particular I refer to clause 11.2 of the Agreement which provides, amongst other things, that the Agreement may be terminated if you are guilty of any wilful breach or continued neglect of the provisions of the Agreement or of misconduct bringing NERAM into disrepute.
You have committed the following breaches and acts of neglect, amongst others:

1. You treat staff (including volunteers) very poorly and in an inappropriate and bullying way,

2. Certain staff recently contacted the Mayor and asked for a meeting to discuss concerns about your treatment of the staff. You refused to allow the staff to meet with the Mayor without you being present,

3. You denied to the Mayor (contrary to what the staff say) that you had prevented the staff from meeting with the Mayor without you being present,

4. You decline to assist Mr Garry Slocombe (who has been appointed as a consultant on a short term basis to consider, amongst other things, the structure of NERAM), and

5. You have refused to supply and keep informed relevant persons with respect to providing funding submissions,

As you will appreciate these breaches and acts of neglect are very serious.

Accordingly, I confirm that your Agreement and your employment as Director of NERAM, is terminated with immediate effect, pursuant to Clause 11.2 (c) and 11.2 (e). Further or alternatively, to relying on clause 11.2 (c) and 11.2 (e), termination with immediate effect is occurring on the basis that you have repudiated your obligations pursuant to the Agreement.”

32 On 12 July 2005 a letter in the terms drafted by Ms Healy, which was signed by the plaintiff, was personally delivered to Dr Lally by the plaintiff.

33 After the dismissal of Dr Lally three letters expressing concern about her dismissal were written.

34 One letter dated 24 July 2005 was from Associate Professor Kerry Dunne to the Minister for Local Government. Professor Dunne expressed her concern about the possible deleterious effects of the dismissal on the Museum. The only reference to the plaintiff was that “while the Mayor might not be at liberty to comment on the situation publicly, it is imperative that there be transparency in the case, because otherwise NERAM’s reputation will be damaged…”

35 Another letter dated 12 August 2005 was from Mr Bob Baxter, a member of NERAM. In his letter Mr Baxter pointed to the situation of conflict for Dr Lally which had been created by the appointment of a business manager. In his letter Mr Baxter said that “in my almost 40 years of experience in public and private sector employment practices I have never seen a termination notice based on such flimsy and vague reasons and with no prior advice or notice”.

36 In a letter to the manager of the Investigation and Review Branch of the Department of Local Government, which was undated but which was received on 16 September 2005, Jane Hall said:-

“I wish to express my deep concern at the recent summary dismissal of the Director of the New England Regional Art Museum, Dr Janice Lally, by the Armidale Dumaresq Council.
The Council’s actions have been far from transparent: both in the press and at a NERAM committee meeting which was attended by well over a hundred concerned members and friends of the Gallery, Mayor Chetwynd has consistently refused to answer any questions about the reasons for Dr Lally’s dismissal.
I am concerned that due process has not been followed and I ask the Investigation and Review Branch of the Department of Local Government to look into this matter during its upcoming investigation of the Armidale Dumaresq Council.”

37 In August 2005 Dr Lally brought proceedings in the District Court against the Council for breach of contract.

38 In September 2005 the plaintiff did not seek re-election as Mayor but remained as a Councillor.

39 The plaintiff declined to provide a statement for use by the Council in defending Dr Lally’s proceedings. Phillips Fox gave advice that in their opinion the Council had little chance of successfully defending the proceedings and that it was imperative that the proceedings be settled. In May 2006 the proceedings were settled, on terms that the Council pay Dr Lally $80,000 and her costs, later agreed at $40,000.

40 In March 2006, while the court proceedings by Dr Lally were still pending, a report by the Department of Local Government into the Council was issued. In the report it was noted:-

“The former Mayor was Council’s representative on the trustee committee. The termination of the former director of New England Regional Art Museum is the subject of a current legal challenge, involving Council. Council should seek advice on whether it can refer concerns about the former Mayor’s actions in his capacity as Council representative on the NERAM trust to the conduct committee while legal action is under way or if it should wait until any legal action is finalised (Recommendation 40).”

41 On 20 June 2006 the general manager of the Council Mr Burns wrote a letter to the Mayor Councillor Ducat referring to Recommendation 40 in the report and noting that the proceedings by Dr Lally had been finalised and saying that:-

“This now allows Council through its Code of Conduct Committee to consider Cr Chetwynd’s role relating to the following matters:

1. The recruitment process of the employment/ engagement of the business manager.

2. The dismissal of the former Director Ms J Lally.”

42 On 11 July 2006 Mr Ducat sent an email to an officer of the Department of Local Government inquiring about “our way forward with the issue of a Code of Conduct complaint against the former Mayor Councillor Brian Chetwynd”.

43 On 31 July 2006 Mr Burns made a record that he and Mr Ducat had contacted the Department of Local Government about a report of a Code of Conduct Committee into a complaint against Councillor Walford, asking whether the report could be dealt with in private or whether the complaint could be withdrawn. Mr Burns recorded that “(the Departmental officer)…advised that it is too late to go back. Once a review has commenced there is an obligation to place the matter before Council upon a breach being determined. Also the matter needs to go in open Council”.

44 On 20 December 2006, after a delay of some months, the Director General of the Department of Local Government wrote a letter to Mr Burns, in which he noted that the court proceedings (by Dr Lally) had been finalised and added:-

“The Minister for Local Government and the department received three complaints about the conduct of the Mayor in this matter. As contemplated in the recommendation, the conduct of Clr Chetwynd as outlined in these complaints should be examined by you and, if appropriate, referred to council's conduct committee. To that effect, I am attaching the three complaints received.”

45 Mr Burns considered it inappropriate that he should investigate the conduct of the plaintiff and did not carry out any investigation.

46 Some steps were taken to form a Code of Conduct Committee to inquire into complaints against the plaintiff.

47 On 5 February 2007 the Council received a letter from Councillor Waters dated 2 February 2007. Parts of this letter were as follows:-

“TO: The Armidale Dumaresq Council Code of Conduct Committee

Re: Complaint against Councillor Brian Chetwynd

Dear members of the Code of Conduct Committee,

I contend that Cr. Chetwynd breached Council's Code of Conduct and Council's Code of Meeting practice by providing misleading information to the NERAM Advisory Committee meeting of 11 July 2005 held at 530 pm and the extraordinary meeting of Council held at 6.20 pm that same day.

At the meeting Councillor Chetwynd led me to believe that it was necessary that Dr. Janice Lally's contract of employment as Director of NERAM should be terminated

Over a number of weeks the following are some of the points of contention which Cr. Chetwynd brought to meetings, used as reasons that Dr. Lally's performance was unsatisfactory.

· Open hostility between the Director and Business Manager,

· A large number of signed but unpresented cheques were found in a drawer, and the suggestion from the Mayor was that this was to conceal the true financial position of NERAM.

· Portrayal that the place was a total mess and that we should act or "there would be nothing left".

· Verbal report by Mayor that staff were willing to sign declarations regarding their inability to work with the director and staff resignations were likely

· Dr Lally's extended periods of absence,

· Applications for grants, which would have resulted in a financial loss to NERAM, were lodged by the Director without consultation and approval of the business manager

In addition he reaffirmed the grounds for dismissal, stating that the advice from Lawyers Phillips Fox was that if Dr. Lally lodged a claim against Council, then our case was "eminently winnable", he used the word "watertight", and said that any one of the matters above would be sufficient grounds for dismissal, placing particular emphasis on the matter of the alleged cheques in the drawer.

I clearly recall asking

(i) what was Council's legal exposure in the event of a claim by Dr Lally?
(ii) what was Council's legal advice regarding our position in defending a claim.

Cr Chetwynd claimed that Council would win any case and that it was highly unlikely that Dr Lally would lodge a claim.

I recall Councillor Maher asking if, in the opinion of Council's Lawyers, 'Natural justice and procedural fairness" had been followed. Councillor Chetwynd answered "Yes". It is clear from the letter of 12th July 2005 from Phillips Fox, that "natural justice and procedural fairness" had not been followed.

Attached are letters from Phillips Fox emailed to Cr. Chetwynd and Council on 11th July 2005 and 12th July 2005, and a copy of telephone call times by Cr Chetwynd and Phillips Fox from 5th July to 21st July 2005.

I do not recall seeing the letter from Phillips Fox dated 11th July prior to the commencement of the meeting. The letter clearly stated that "we are concerned that Council may not have sufficient evidence".

Sometimes Cr. Chetwynd handed out information at the commencement of a meeting. If this was the case in this instance, then no time was provided to read it I would never have agreed to go to court contrary to legal advice. I do not believe the balance of the Councillors were provided with a copy of the letter prior to the meeting of Council.

I contend that the evidence is clear that Cr. Chetwynd had every opportunity to know of the advice from Phillips Fox regarding Council's exposure to risk, either by the emailed letter of 11th July 2005 or the telephone conversations between Cr. Chetwynd and Phillips Fox that same day, and should have conveyed that to the meeting of July 11th 2005.”

48 The first meeting of the Code of Conduct Committee was held on 8 February 2007. This meeting was attended by Mr Ducat, Mr Whan, Mr Mitchell (the Council’s solicitor) and Mrs Stachiw as administrative support. It was noted that the general manager Mr Burns had “declined to be involved in this investigation due to his position as general manager and the potential conflict in this matter”. Mr Whan was nominated to take the place of Mr Burns. The Committee determined that all communications for the purposes of the inquiry would be in writing and that no verbal investigations would be conducted. It was determined that the Committee would write to the plaintiff referring to the letter from the Department of Local Government of 20 December 2006 and to the complaints relating to the plaintiff and informing the plaintiff of the composition of the Committee and of the evidentiary material which would be included in the investigation.

49 On 12 February 2007 Mr Ducat as chairman of the Committee wrote a letter to the plaintiff stating:-

“CODE OF CONDUCT INVESTIGATION - PROMOTING BETTER PRACTICE REVIEW
RECOMMENDATION 40
FORMER MAYOR'S ACTIONS IN RELATION TO THE EMPLOYMENT OF NERAM STAFF

I am writing to advise you of the Code of Conduct Investigation to be held following receipt of a letter from the Department of Local Government arising from the Local Government Promoting Better Practice Review, Recommendation 40, which was referred to Armidale Dumaresq Council's Code of Conduct Committee process.

The Investigation committee will consist of myself, Deputy Mayor Bruce Whan, an independent representative yet to be determined, and Mrs Rhonda Stachiw as Administrative Support.

Please note that as of today, Mr John Mitchell has notified Council of his decision to disqualify himself as the independent representative due to his involvement as Council's Solicitor in 2005. Efforts are being made to find a suitable replacement for Mr Mitchell and we will advise you immediately a Committee is established.

I apologise for the delay in establishing this investigation and advise that, due to the Christmas vacation, the letter from the Department of Local Government, addressed to the General Manager, did not reach me until 16 January 2007.

Please find attached a copy of the letter from the Department and attached letters of complaint.

I wish to advise that it is anticipated that all communications relating to this investigation will be in writing.”

50 On 1 March 2007 Mr Ducat as chairman of the Committee wrote a letter to the plaintiff for the purpose of keeping the plaintiff informed of progress in the investigation. In the letter Mr Ducat said:-

“Council has secured the services of Mr Kip Werren, a solicitor of Moin & Associates, to act as the Independent Representative on this complaint investigation. The initial meeting of the Committee will be held on Thursday 8 March 2007.

I also wish to advise that I have received a complaint from Councillor Ken Waters, registered on 5 February 2007, relating to the NERAM staffing matter. It is intended that the complaints referred by the Department of Local Government and the complaint from Cr Waters will be dealt with simultaneously by this Committee.”

51 On 5 March 2007 the plaintiff wrote a letter to Mr Ducat. In his letter the plaintiff said that he strongly objected to the manner in which Mr Ducat was proceeding and asserted that Mr Ducat had not complied with the Code of Conduct and in particular clause 10.12 of the Code.

52 Clause 10.12 of the Code of Conduct, which I will set out in full later in this judgment required that inquiries made by the general manager, an independent person or a Conduct Committee should follow the rules of procedural fairness.

53 In his letter the plaintiff provided details of his objections as follows:-

1) The first paragraph of your letter of 12th February 2007 states"...Recommendation 40, which was referred to Armidale Dumaresq Council's Code of Conduct Committee process." In fact, the letter from the Director General of Local Government dated 20th December 2006 is to the General Manager. The fourth paragraph states,"...these complaints should be examined by you and, if appropriate, referred to Council's Conduct Committee." Clearly, the DLG requests the General Manager to examine the complaints. Why was this not done? Further, on what, or whose authority, has the Committee been convened, in the absence of such determination?

2) The General Manager is required to make enquiries under Sect 10.12 of the Code and amongst other things, to inform the person against whose interest a decision may be made. I am not aware of any enquiries and I have not been informed in accordance with the Code. Why was this process not undertaken? The mere fact of enclosing what is purported to be "complaints," is insufficient and does not comply with the Code.

3) In the Review Procedures, I note that a complaint, "must be in writing", and "must specify with precision the alleged breach(es) of the Code of Conduct." I have not seen a complaint against me in writing, nor have I been advised of any alleged breaches of the Code of Conduct. Why has this process not been undertaken and why have I not been advised? The fact that I have not been informed of the complaint, severely compromises my position, in respect of procedural fairness.

4) I note that Sect 10.12 refers to the enquiries to be conducted without undue delay. I am concerned that this has not been the case, despite your apology. This delay has led to speculation that has compromised my position. This is particularly the case, as the matter was mentioned by the General Manager in a Committee Meeting at which Councillors and others were present, prior to making any enquiry or informing me of any complaint or alleged breach. This inappropriate action has compromised my position.

5.) I refer to your letter of 1st March 2007, in which you state that a complaint has been received from Cr Waters, presumably against me. Again I note that the Code has not been followed and procedural fairness not considered. Why was Sect. 10.9 of the Code not adhered to? I refer to my points 1), 2) and 3) above and repeat my questions in that regard, about this alleged complaint.

6) I note that you state in your letter of the 1st March 2007 that the complaints "will be dealt with simultaneously" On what authority or section of the Code do you rely upon to deal with this alleged complaint, when you have not complied with Sect. 10.12 of the Code?

7) I note that you advise me that Mr Kip Werren of Moin & Associates is to be on the Conduct Committee. I advise that I wish to strongly object, to this person hearing any possible or alleged complaint against me, on the following grounds:
(a) That M oin & Associates are engaged by Council to act for them from time to time.
(b) That the above firm have and presumably are acting for Council in the NERAM matter.

Under such circumstances, I do not believe that I would receive a fair and unbiased hearing. Furthermore, Sect 10.12 of the Code specifically refers to persons involved in enquiries, in which they have a direct interest. In addition, I note with interest the reason that Mr. John Mitchell excluded himself, as stated in your letter of 12th February 2007.

8) I further note that you intend for the Conduct Committee to meet on the 8th March 2007. Considering the above, I would contend that any such meeting, would be a blatant attempt to further compromise my position.”

54 A meeting of the Code of Conduct Committee at which Mr Ducat, Mr Whan and Mr Werren and Mrs Stachiw as administrative support were present was held on 8 March 2007. The Minutes of the Meeting recorded that Mr Werren was welcomed as an independent representative on the Committee. It was decided that a letter should be sent to the general manager asking why he has proceeded as he had. A detailed paragraph by paragraph response to the plaintiff’s letter of 5 March 2007 was discussed, as follows:-

“Response to Cr Chetwynd:
Para 1: The complaint from the Department of Local Government was received by the General Manager and referred to the Code of Conduct Committee via the Mayor. It is clear that the Department of Local Government requested the matter to be dealt with by the Code of Conduct Committee and that the Department be advised of the outcomes of the investigation.
Para 2: Procedures have been followed according to the Code of Conduct Handbook. Clause 10.12 states: "enquiries made by the general manager, an independent person or the conduct committee".
Para 3: The Committee had its first meeting on 8 March 2007 and will be commencing an investigation into the four written complaints. The committee will examine the documentation, conduct an investigation and ensure that Cr Chetwynd is kept informed of progress. Procedural fairness will be applied according to Clause 10.12 of the Handbook.
Para 4: As previously explained, the delay in dealing with this complaint can be attributed in part to the Department of Local Government's letter not being received by Council until 22 December 2006. A further delay has been experienced due to appointment of an Independent Representative on the Committee. Now that Mr Kip Werren has accepted the appointment, the Committee will be taking action to investigate this matter without further delays.
Para 5: The complaint from Cr Waters was referred to the Code of Conduct Committee by the General Manager. Cr Chetwynd was advised of the intention to include Cr Waters' complaint with the other complaints received from the Department and due process will be followed in dealing with all complaints under the Code of Conduct Handbook. The Committee determined that following this meeting, a copy of Cr Waters' complaint will be provided to Cr Chetwynd.
Para 6: The Committee will reconvene on 16 March 2007 to consider the specific written complaints in this matter. The Committee will follow the procedures under Clauses 10.7,10.11 and 10.12 of the Handbook.
Para 7: At all times, Council was the client of Moin and Associates and there was no conflict of interest for the purposes of the Solicitor's Professional Rules of Conduct. Furthermore, Mr Kip Werren does not have an interest in the matter.”

55 On 12 March 2007 Mr Ducat wrote a letter to the plaintiff as a progress report on the Code of Conduct investigation. In this letter Mr Ducat said:-

“The Code of Conduct Investigation Committee met at 8am on Thursday 8 March 2007. The Committee was in receipt of your letter dated 5 March 2007 and considered the contents before progressing with other discussions.

Due to the nature of the concerns expressed in the letter, the Committee was unanimous in its determination that it is necessary to appoint an independent representative from outside of Armidale as a fourth member of the investigation committee. Mr Alexander Singh from Everingham Solomons Solicitors in Tamworth has agreed to act as the fourth member of the Committee.

Mr Kip Werren, the other independent representative, has assured the Committee that there is no actual or perceived conflict in this matter. Moreover, while noting the concerns expressed in your letter, the Committee will continue with its inquiries and the newly constituted Committee will meet as soon as Mr Singh has familiarised himself with the documentation.”

56 On 28 March 2007 Mr Ducat wrote a further letter to the plaintiff. In the letter Mr Ducat informed the plaintiff that the Committee now consisted of Mr Ducat, Mr Whan and two independent representatives Mr Werren and Mr Singh. The first meeting of the newly constituted Committee had been held on 22 March 2007. Action would be taken to obtain further and better details of the complaints.

57 Over a period of some months letters were written on behalf of the Committee to various persons requesting them to provide statements about inter alia the dismissal of Dr Lally. These letters were written to members of the Council, employees of the Council and persons associated with NERAM. Replies were received from many of these people.

58 A reply dated 13 April 2007 was received from the general manager Mr Burns. In his reply Mr Burns said that the plaintiff had told him that there were problems with Dr Lally, which were stated by the plaintiff to be:-

1. The staff were ready to walk out and they were dissatisfied with Dr Lally’s performance

2. The volunteer base was decreasing and if Dr Lally did not leave the place would not have any volunteers left.

59 Mr Burns said that the plaintiff had made a comment “something like ‘she has to go or there will be no NERAM operation left’”.

60 Mr Burns said in his letter “when the matter was considered at Council the former Mayor and Trust Chair Councillor Chetwynd did most of the talking to convince the other councillors to support the dismissal”.

61 On 23 April 2007 the plaintiff wrote a letter to Mr Ducat. In this letter the plaintiff said “I have never met Mr Werren and my objection is based solely on his connection with Moin and Associates and his conflict in my view is both actual and perceived”. In this letter the plaintiff complained about what he said was the delay in investigating the complaints, he criticised the Committee for not acting in accordance with the Code of Conduct, he accused Mr Ducat of “making up your own rules” and of writing responses to the plaintiff’s letters which contained “meaningless and verbose rhetoric” and he expressed the view that the Committee was not properly formed.

62 The plaintiff concluded the letter by saying:-

“More than enough time has elapsed for you to carry out these simple processes and I have been very patient over this time, albeit that I have alleged complaints against me. Regretfully, I must take the view that your Committee is not properly formed under the Code and is not following procedural fairness and therefore the veracity of any decision could hardly be taken seriously. Further, in light of your inaction, I now formally object to your membership of the Committee on the basis that, in my view, you have breached Section 10.12 (amongst others) of the Code of Conduct.

Please be advised that I now request from you, a detailed reply to my correspondence, the proper and formal notification of the alleged complaints and an undertaking in respect of proper process and procedural fairness. Further, I request that your reply adequately address all of my concerns and that you provide such reply by 5pm 24th April 2007. Should I not receive this reply, I may follow such course of action as I may be advised.”

63 On 23 April 2007 Mr Ducat sent an email to the plaintiff asserting that time was required “due to the need of the Committee members to familiarise themselves with the details of the complaint and the logistics of bringing four people together”. Mr Ducat asserted that the Committee was properly formed.

64 On 30 April 2007 the plaintiff sent an email to Mr Ducat reiterating his complaints about the delays in the investigation.

65 On 15 May 2007 Mr Ducat wrote a letter to the plaintiff, which included the following:-

“The Committee notes your continued objection to the presence of Mr Werren on the Committee solely due to his connection with Moin & Associates. Mr Werren will remain on the Committee.

The Committee notes your criticism that it should have acted sooner. In this regard, we note that the committee is now formed and has followed the procedures required by the Code of Conduct Committee Handbook and will continue to do so until this matter is concluded and a report prepared.

As to the need for communications to be in writing, please refer to Clauses 11 and 12 of the Code of Conduct Committee Handbook Procedures, pp6-7.

We note that you do not accept that procedural fairness is being afforded to you. You will have every opportunity to respond to those allegations (if any) that the committee believes have sufficient substance. The Committee is thoroughly investigating the matter to ensure that the obligations of procedural fairness are met.

The Committee notes your desire to receive forthright responses from the Mayor. The Mayor can only deal with this matter in his capacity as Chairman of this committee.

The Committee is properly constituted and will continue to do its duties prescribed by the Code of Conduct Committee Handbook.

Your objection to the Mayor's membership of the committee is noted. However, the Code does require the Mayor's membership unless the Committee is formed to deal with a complaint by or about the Mayor.

The Committee met on 10 May 2007 and advises that its investigation is continuing. We confirm that clarification has been sought from certain complainants and this clarification is required before proceeding further.

We will contact you again regarding progress following the next meetings scheduled for 18 and 31 May 2007.”

66 On 6 June 2007 Mr Ducat wrote a letter to the plaintiff. In this letter Mr Ducat identified three issues stating the relevant sections of the Code of Conduct and stating “allegations/questions to be answered”. Issue 1 was “the dismissal of Dr J Lally”. Issue 3 was “the proceedings of the meetings of the NERAM Advisory Committee and Council on 11 July 2005”. It is unnecessary to refer in detail to issue 2, which was “the appointment of Mr G Slocombe as business manager”.

67 The parts of the letter dealing with issues 1 and 3 were as follows:-

Issues	Relevant Code of Conduct Section	Allegations/Questions to be answered
1. The dismissal of Dr Lally 3. The proceedings of the meetings of the NERAM Advisory Committee and Council on 11 July 2005	4.4, 4.6, 4.7, 5.1, 5.4, 5.5, 5.6, 5.9 4.1-8, 5.1-6, 8.1-3, 8.6-7	The Committee is investigating the Mayor’s actions in the dismissal of Dr Lally. Please outline the procedure that you adopted in the dismissal of Dr Lally. Specifically, did you take action within the jurisdiction of the Mayor under the Local Government Act 1993 in dealing with staff issues? The Committee is investigating the Mayor's actions in the dismissal ofDr Lally. Please outline the procedure that you adopted in the dismissal of Dr Lally. Specifically, did you take action within the jurisdiction of the Mayor under the Local Government Act 1993 in dealing with staff issues? (a) There is evidence before the Committee to suggest that you had telephone conversations with Phillips Fox on 11 July 2007, prior to the meetings with NERAM and Council on 11 July 2005. Was that advice received by you in the telephone conversations relayed to the Councillors at the meeting? (b) Did you accurately represent to the meeting the substance of the written and verbal legal advice received by you prior to the NERAM and Council meetings relating to the potential liabilities which could be incurred by Council as a result of the dismissal of Dr Lally? (c) It is alleged that Councillor Maher was heard to ask you during one of the meetings whether it was the opinion of Council's solicitors that "natural justice and procedural fairness" had been followed and that you answered "Yes". Could you please advise the Committee of your recollection of this issue? (d) It is alleged that during one of the meetings, Councillor Waters asked you a question as to what was Council's legal exposure in the event of a claim by Dr Lally. It is further alleged that at the same meeting, Councillor Waters also asked you what was Council's legal advice regarding defending a claim by Dr Lally. In response to these questions it is alleged that you said words to the effect that Council would win any case and it is highly unlikely that Dr Lally would lodge a claim. Could you please advise the committee of your recollection of this issue?

68 The letter concluded:-

“The Committee is now providing you with an opportunity to submit your written response to the questions raised in the three areas identified in the table above.

The next scheduled meeting will be on 14 June 2007, and if time permits, your response would be appreciated by 5pm 12 June 2007 to allow the Committee a day to consider your response prior to the meeting. For your information, please find attached the latest version of Council's adopted Code of Conduct, June 2006.”

69 On 12 June 2007 the plaintiff wrote a letter to Mr Ducat. In the letter he complained that a full copy of Councillor Waters’ complaint and the attachments to the complaint had not been attached to Mr Ducat’s letter of 6 June 2007, as asserted in that letter; he complained that in the circumstances insufficient time had been allowed in which to provide responses; he asserted that since Mr Ducat’s letter of 12 February 2007 the plaintiff had been requesting full details of the allegations against him.

70 With respect to issues 1 and 3 identified in Mr Ducat’s letter of 6 June 2007 the plaintiff said:-

“a) In respect of Issue 1 - dismissal of Dr J Lally. Is this an allegation in respect of any action that may have been, or is alleged to have been taken by me? If so, please provide full details in accordance with my request in 3) above. If not, then please provide any information that you rely upon in respect of those Sections of the Code of Conduct stated therein.

…..

c) In respect of Issue 3 - proceedings of the meetings of the NERAM Advisory Committee and the Council meeting on the 11th July 2005. Are these allegations in respect of any actions that may have been, or are alleged to have been taken by me? If so, please provide full details in accordance with my request in 3) above. If not, then please provide any information that you rely upon in respect of those Sections of the Code of Conduct stated therein. Further, and in respect to each particular point of Issue 3, I advise and/or request:

299 At [76] 31 their Honours said:-

“But, leaving aside the special case of knowledge of falsity, mere proof of the defendant's ill-will, prejudice, bias, recklessness, lack of belief in truth or improper motive is not sufficient to establish malice. The evidence or the publication must also show some ground for concluding that the ill-will, lack of belief in the truth of the publication, recklessness, bias, prejudice or other motive existed on the privileged occasion and actuated the publication.”

300 I do not propose to traverse all of the numerous and somewhat repetitive particulars of alleged malice. I will refer to some only of them, which appear to me to include the particulars which were actually pressed.

(a) It has not been established that the agenda was otherwise than the usual or normal type of agenda.

(c) I accept that the report contained a large number of defamatory imputations.

(d) I do not accept that the imputations were false or known to be false.

(f) It has not been established that the agenda was published as part of a vendetta against the plaintiff.

(h) I do not accept that the plaintiff was not accorded procedural fairness. He was supplied with detailed information about the allegations against him and given numerous opportunities to respond.

(k) I do not accept that the report was produced, published and distributed by a “Kabal” consisting of Messrs Burns, Ducat, Whan, Waters, Werren and Singh.

(m) I accept that no apology was made to the plaintiff. I note, however, that the only actual finding in favour of the plaintiff which was made by the second Code of Conduct Committee was that the letter of 11 July 2005 had been provided to the councillors.

(n) I have held that the defence of truth should succeed.

(o) Councillor Waters in his evidence provided an explanation, which I accept, for the apparent delay in the making of his complaint.

(p) The respects in which the Code of Conduct Committee failed to comply with the Code of Conduct were, in my opinion, minor. In his correspondence with Councillor Ducat the plaintiff was assiduous in taking points that the Committee was not complying with the Code.

(t) The agenda was distributed only to the persons to whom Council agendas were usually distributed.

(u) As the documents in exhibit 2 demonstrate, it was quite a common practice for reports of Code of Conduct Committees containing adverse findings against a councillor to be included in an agenda which was made public.

(y) The position taken by the plaintiff about whether the report had been placed on the Internet fluctuated during the hearing.

(z) (aa) (bb) I accept that there was some ill-will between the plaintiff and some of the other councillors. However, ill-will is not sufficient by itself to constitute malice. It has not been established that Mr Burns was hostile to the plaintiff.

(ff) I accept that neither Councillor Ducat nor Councillor Whan should have been members of the Code of Conduct Committee, having themselves been present at the meetings on 11 July 2005. However, each gave evidence, which I accept, that he believed that he was obliged to be a member of the Committee. Other members of the Committee were Mr Werren and Mr Singh, who were lawyers and who were quite independent of any factions in the Council.

Generally, I consider that the communications between the Code of Conduct Committee and the plaintiff and other persons over a period of several months in 2007, some of which I have summarised or referred to earlier in this judgment, show that the Committee approached its task of investigating the complaints in a patient, conscientious, diligent and fair manner. The Committee was at pains to determine whether the allegations about the plaintiff were true.

301 I am not satisfied that the plaintiff has succeeded in establishing that the publication by the Council of the agenda was actuated by malice. Because I am not satisfied that any individual was actuated by malice, I have not found it necessary to rule on a submission made by counsel for the plaintiff, that “the malice of one infects the others”, a submission said to be based on Webb v Bloch (1928) 41 CLR 331 and a submission which I would be inclined to reject.

Damages

302 I have upheld in whole or in part a number of the defendant’s defences. Accordingly, there will be a verdict for the defendant and the plaintiff has no entitlement to damages. Although I have decided that the plaintiff should not succeed, it would be in accordance with usual practice for me to assess what damages I consider the plaintiff should have recovered, had he been successful, in case I am subsequently held to have been wrong in holding that the plaintiff should not succeed.

303 However, in the present case it appears to me that there would be serious practical difficulties in my attempting to make an assessment of damages. These difficulties stem from the number of imputations, the number of defences, the impossibility of predicting on what imputations the plaintiff might succeed and the fact that many of the findings I have made are on matters which are relevant to both the determination of a defence or defences and the assessment of damages. In the circumstances, I propose to collect what appears to me to be the most important evidence relating to damages and to make findings about that evidence.

304 An important matter in any assessment of damages would be the extent of the publication of the defamatory matter, that is the agenda.

305 Earlier in this judgment I referred to an answer by the defendant to an interrogatory which showed that the agenda was distributed to six individuals and bodies described as “members of the public”, eight individuals representing ABC Television or local newspapers, the members of the Council and ten members of the Council staff (including the Works Coordination Centre). Almost all of the hard copies distributed to councillors and about a dozen of the hard copies distributed to other recipients were returned and shredded in 7 December 2007.

306 In cross-examination the plaintiff conceded that, so far as he was aware, there had not been any publication in any newspaper or any broadcast on television or radio of the report of the Code of Conduct Committee. If there had been any such publication or broadcast, it is likely that the plaintiff would have become aware of it.

307 The plaintiff said in his evidence in chief that the report had been published on the Internet at the Council’s website, so that it could be read “anywhere in the world”. The plaintiff said that the report had been on the Internet for about ten days after the initial publication. Mrs Roobol said in her evidence that more than one person had told her that they had seen the report on the Internet.

308 However, Mr McLachlan, an employee of an information technology firm, gave evidence that he had searched the database of documents that had been made available for public view on the website of the Council. Mr McLachlan gave evidence that his search disclosed that there had been two documents entitled “Agenda Ordinary Council Meeting 26/11/07” on the website, namely:-

1. A document first uploaded on 21 November 2007 and removed on 29 November 2007. At the time it was removed this document included in the index a reference to the Code of Conduct complaint against the plaintiff but did not include any part of the Code of Conduct Committee’s report. Mr McLachlan was unable to say whether the document had ever been in any different form between 21 November 2007 and 29 November 2007.

2. A document first uploaded on 29 November 2007 and still remaining on the website, which did not contain any reference to the complaint against the plaintiff in the index and did not include any part of the Code of Conduct Committee report.

309 The plaintiff’s written submissions contained inconsistent submissions about whether the report had been published on the Internet. In one part of the submissions it was complained that the report had been published on the Internet. In another part of the submissions it was submitted, on what I consider to be a quite inadequate evidentiary basis, that an employee of the Council had been directed not to publish the report on the Internet and this showed that a similar direction could have been given not to publish the report in the copies of the agenda which were distributed.

310 I accept, as was submitted by counsel for the plaintiff, that, in addition to the distribution of the report to the persons named in the answer to the interrogatory, there would have been a “grapevine” effect, especially in a small regional town like Armidale.

311 Oral evidence about damages was given in the plaintiff’s case by the plaintiff himself, his wife, Mrs Roobol and a witness Mrs Wolfer, who gave her evidence by telephone.

312 Evidence that the plaintiff had suffered a loss of reputation was given by the plaintiff himself, his wife, Mrs Roobol and Mrs Wolfer. The plaintiff said in evidence:-

“… I was well known in the area. A lot of people knew me either to speak to personally or who know from - in my activities in the council or simply know me from media reports and whereas those people would in the normal course of events said "Hello", or perhaps stop to have a conversation and it was extremely noticeable that as the ensuing time went on people would even cross the road to avoid to say 'hello', they would walk in a different direction in the supermarket alley or simply ignore me, and I recall a circumstance only very recently with a group of people that I know very well, were associated with NERAM, were out sitting at a next table in a restaurant to myself, my wife and two other people, and they completely ignored me, walked past me, with - I looked at them and they had disdainful looks on their face.”

313 The plaintiff gave further evidence that when he had gone shopping people would avoid him or walk in a different direction, that neighbours did not speak to him unless they had to, that he no longer received invitations, including invitations to Council’s functions and that he had previously often been mentioned (favourably) in the media on many occasions as Mayor or as a participant in community activities. The plaintiff said that he had received telephone calls asking whether what had been written about him was true and that he had also received anonymous telephone calls, making threats or saying that he had got his just deserts or that he was a “troublemaker”.

314 The plaintiff attributed his defeat in the Council elections held in 2008 to the publication of the agenda.

315 The plaintiff’s wife gave evidence that persons had said to her “what’s all this in Council? Your husband’s a trouble maker”.

316 Mrs Roobol gave evidence about the plaintiff’s previous reputation, as follows:-

“His reputation was extremely good. He was known as a community member. He actually saved Armidale's iconic collection, the Hinton collection. He spoke, gave submissions for that and spoke there. He was known as an open-door mayor where community people could go to him and he would listen to whatever they had to say. He was very popular. He had high ratings.”

317 Mrs Roobol gave evidence about the plaintiff’s reputation since November 2007 as follows:-

“He lost a lot of credibility in the community because that was a devastating report that found him guilty. Many people commented on it. Many people made phone calls, a lot of gossip, because we are only a small regional city and they believed that if there was a formal report there and he was found guilty, that he would be guilty.”

318 Mrs Wolfer gave evidence that “the general consensus around town was that he was doing a great job as Mayor” but from the end of 2007 “the general feeling of the community is just a demise of him and his character”.

319 I accept that the plaintiff formerly had a high reputation and that he suffered a serious loss of reputation, that the serious loss of reputation was largely connected with the dismissal of Dr Lally and that the publication of the report with its many adverse findings contributed to the plaintiff’s loss of reputation.

320 However, I do not consider that all of the plaintiff’s loss of reputation should be attributed to the publication of the agenda. I am satisfied that the plaintiff had already suffered some loss of reputation before the publication of the report. The summary dismissal of Dr Lally had aroused deep concern among members of the Armidale community (see the letters of complaint from Bob Baxter and Jane Hall). The plaintiff was perceived as having in large measure been responsible for the dismissal of Dr Lally (see for example recommendation 40 of the Department of Local Government Report). It is likely that the facts that Dr Lally had brought court proceedings against the Council for breach of contract, that the plaintiff had declined to make a statement for the purpose of the Council defending the proceedings and that the proceedings had been settled on terms favourable to Dr Lally became well known in the Armidale community.

321 Evidence about injury to the plaintiff’s feelings was given by the plaintiff and the plaintiff’s wife.

322 The plaintiff gave the following evidence about his reaction when he first read the Code of Conduct Committee report on or about 23 November 2007:-

“I was absolutely devastated. I was very upset. All I could think about was all of the work I'd done over many years and that someone or some people could go to the extent of putting such lies forward and I just was shaking, and I thought about the effort and the time that I'd put into Local Government, 5 years as mayor, the business I had in the community which I'd been there for 25 years. I had a good reputation and in one swoop it was killed, it was gone.”

323 The plaintiff confirmed early in his cross-examination that the publication of the report in November 2007 had been quite unexpected by him.

324 The plaintiff gave further evidence that the Committee’s findings in the report were “absolutely false”, “just lies”. He had asked the Committee to treat him fairly but “they ignored everything, they went ahead and they produced this document in the public arena”. His denials had not been published and he had not been given any opportunity to provide a defence.

325 The plaintiff gave evidence that he had suffered further upset because of the way in which the defendant had conducted itself since the publication of the agenda, in pleading and maintaining that the imputations were true and in declining to tender an apology after the termination of the equity proceedings and after the report of the second Code of Conduct Committee.

326 The plaintiff’s wife gave evidence that when the plaintiff read the report:-

“He was absolutely horrified. He's really never been the same since. He couldn't believe that he'd been - that someone could write those things, and since then he just is a different person.”

327 The plaintiff’s wife added:-

“Physically he couldn't care less what he looked like. He's got broken teeth. He's got long hair. He couldn't care less.”

328 I accept that the plaintiff has suffered severe injury to his feelings. However, as in the case of the claim for loss of reputation, I do not consider that all of the injury to the plaintiff’s feelings should be attributed to the publication of the agenda.

329 It is untrue that the findings by the Committee in its report were quite unexpected by the plaintiff. As referred to earlier in this judgment, I am satisfied that the plaintiff had, notwithstanding his denials, received a copy of a draft report in an advanced state of preparation containing the principal findings which were made against him in the final report, as an attachment to the letter of 9 October 2007 and the email of 10 October 2007. In these circumstances, I do not accept that the publication of the report on or about 23 November 2007 had such a dramatic impact on the plaintiff as he claimed.

330 I would reject, unconditionally, some of the matters said by the plaintiff to have increased the injury to his feelings. It is not true that the Committee “ignored everything” or that the plaintiff was not given an opportunity to provide a defence.

331 Some of the other matters said by the plaintiff to have increased the injury to his feelings depend on the imputations against him being false.

Conclusions

332 I have held that all of the imputations pleaded were conveyed and were defamatory. I have upheld the defence of justification. I have upheld the defence of common law qualified privilege in relation only to the publication to councillors and members of the Council staff. I have upheld the defence of statutory qualified privilege. I have upheld the defence of fair comment in relation to the matters I have identified as being comment. I have rejected the defences under ss 27 and 28 of the Defamation Act. I have not as yet made any order for costs.

Schedule attached.
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