De Ville Australia Pty Ltd v Seven Network Limited No. Scciv-01-824

DE VILLE AUSTRALIA PTY LTD AND ORS v SEVEN NETWORK LIMITED
[2002] SASC 292
Miscellaneous Appeal
WICKS J
Preliminary

This is an appeal against the order of a master made on 8 November 2001 by which he ordered that the plaintiff have leave to file an amended statement of claim as sought except that the following paragraphs of the amended statement of claim be deleted, namely par 9.1, par 9.2, par 10.2, par 10.3, par 10.4. and par 13.2. On this appeal it is not sought to reinstate par 10.2 and par 10.3 in the statement of claim.
Grounds of Appeal
The grounds of appeal are as follows:
1That the learned master erred in law in holding that the complained of publication was not capable of bearing the meanings pleaded in sub-paragraphs 9.1, 9.2 and 10.4 of the amended statement of claim.
2That the learned master erred in law in ruling that sub-paragraph 13.2 of the amended statement of claim was not a proper pleading for aggravated damages.
3That the learned master erred in law in ordering that sub-paragraph 13.2 be removed from the proposed amended statement of claim when notice had been given to the plaintiff prior to the strike out application that the application to strike out 13.2 had been abandoned.
Outline of the action
This is an action for defamation. The proceedings have been brought by the plaintiffs against Channel 7 arising out of a documentary segment broadcast by that channel in Adelaide on 5 March 2001. A transcript of the item broadcast is annexed to the statement of claim. In addition to the transcript there is also a video tape of the segment.
It is alleged in par 1 and par 2 of the statement of claim that the plaintiff is a company which manufactures and distributes engine coolants under the brand name “Tectaloy” and that the second and third-named plaintiffs are the sole directors and shareholders of the first-named plaintiff. It is alleged in par 5 and par 6 of the statement of claim that the defendant is the producer and broadcaster of a regular current affairs programme known as “Today Tonight” which programme is broadcast throughout Australia. It was further alleged that on or about 5 March 2001 the defendant broadcast in South Australia a “Today Tonight” programme which included a report on the topic of car coolants.
The authorities
The question then in relation to the broadcast is whether in their natural and ordinary meaning the words broadcast are capable of bearing the meanings pleaded: Chapman v Australian Broadcasting Corporation (2000) 77 SASR 181 per Lander J at p 188. Further at p 190 of the same report Lander J said:
"In due course, it will be necessary to determine whether the imputations which can arise are defamatory of and concerning the plaintiffs. That is a separate exercise; Capital & Counties Bank Ltd v George Henty & Sons (supra); Monte v Mirror Newspapers Ltd (1979) 2 NSWLR 663."
See also the following passages which are taken from the judgment of Hunt J in Farquhar v Bottom (1980) 2 NSWLR 380 at p 385:
" The only issue before me is whether the matter complained of is capable of conveying those imputations to the ordinary, reasonable reader. That is a question of law: Jones v Skelton [1963] SR (NSW) 644 at 650. Whether those imputations are capable of defaming the plaintiff is another question of law: ibid, but it does not arise in the proceedings before me. The defamatory capacity of the imputations must be determined as a separate question: Capital and Counties Bank Ltd v George Henty & Sons (1882) 7 App Cas 741 at 772; Monte’s case [1979] 2 NSWLR 663 at 668. It will have to be decided, if indeed it could be disputed, by the trial judge.
If both these questions of law are answered in favour of the plaintiff, it then becomes necessary for the jury [the trial Judge in South Australia] to determine (a) whether the ordinary reasonable reader would, in fact, have read the matter complained of as conveying those imputations, and (b) whether that reader would, in fact, have understood such imputations as being such as to cause ordinary decent folk in the community, taken in general, to think the less of the plaintiff: Gardiner v John Fairfax & Sons Pty Ltd (1942) 42 SR (NSW) 171; 59 WN 125 at 172; Consolidated Trust Co Ltd v Browne (1948) 49 SR (NSW) 86 at 88.
In deciding whether the matter complained of is capable of conveying to the ordinary reasonable reader the imputations relied upon by the plaintiff, I must be guided and directed by the test of reasonableness. I must reject any strained, or forced, or utterly unreasonable interpretation: Jones v Skelton (supra). I must proceed upon the basis that the ordinary reasonable reader is a person of fair, average intelligence: Slatyer v Daily Telegraph Newspaper Co Ltd (1908) 6 CLR 1 at 7; who is neither perverse: ibid; nor morbid or suspicious of mind: Keogh v Incorporated Dental Hospital of Ireland (1910) 2 Ir R 577 at 586; nor avid for scandal: Lewis v Daily Telegraph Ltd [1963] 1 QB 340 at 374."
In Lewis v Daily Telegraph Ltd [1964] AC 234, Lord Reid said at p 258 in relation to the natural and ordinary meaning of words:
" What the ordinary man would infer without special knowledge has generally been called the natural and ordinary meaning of the words. But that expression is rather misleading in that it conceals the fact that there are two elements in it. Sometimes it is not necessary to go beyond the words themselves, as where the plaintiff has been called a thief or a murderer. But more often the sting is not so much in the words themselves as in what the ordinary man will infer from them, and that is also regarded as part of their natural and ordinary meaning. Here there would be nothing libellous in saying that an inquiry into the appellants’ affairs was proceeding: the inquiry might be by a statistician or other expert. The sting is in inferences drawn from the fact that it is the fraud squad which is making the inquiry. What those inferences should be is ultimately a question for the jury, but the trial judge has an important duty to perform."
In the same case at p 277, Lord Devlin observed in relation to the same topic as follows:
" [The] natural and ordinary meaning of words ought in theory to be the same for the lawyer as for the layman, because the lawyer’s first rule of construction is that words are to be given their natural and ordinary meaning as popularly understood. The proposition that ordinary words are the same for the lawyer as for the layman is as a matter of pure construction undoubtedly true. But it is very difficult to draw the line between pure construction and implication, and the layman’s capacity for implication is much greater than the lawyer’s. The lawyer’s rule is that the implication must be necessary as well as reasonable. The layman reads in an implication much more freely; and unfortunately, as the law of defamation has to take into account, is especially prone to do so when it is derogatory."
Paragraphs 9.1 and 9.2
The following imputations are contained in the first seven lines of the annexure to the statement of claim in this action:
·[The] story they tried to stop about car additives, the coolants which are supposed to protect your engine,
·the results [of independent tests on the top brands], well they are nothing short of alarming.
In respect of par 9.1 and par 9.2 of the statement of claim, the plaintiffs rely on lines 1 to 7 of the transcript of the broadcast annexed to the statement of claim. This passage reads as follows:
"First tonight the story they tried to stop about car additives, the coolants which are supposed to protect your engine. We had independent tests carried out on the top brands to see just how they measure up, and the results, well they are nothing short of alarming. And in fact one of the manufacturers, Stylace Holdings, battled for two days rather[sic] in Federal Court to prevent us airing this report. Well we won that fight the judge said it was in the public interest. Here’s Jacki Quist."
The purpose of the application from which this appeal arises is not to determine whether words set out in the broadcast in their natural and ordinary meaning have the meaning pleaded but rather to determine whether such words in their natural or ordinary meaning are capable of having the meaning pleaded.
Paragraph 9.1 and par 9.2 of the statement of claim before they were deleted in consequence of the learned master’s order pleaded certain imputations as follows:
"9In its natural and ordinary meaning the broadcast asserts of and concerning the first plaintiff the following:-
9.1 that the first plaintiff has, as a manufacturer of coolant, something to hide from the public.
9.2 that the matter which it has to hide is “nothing short of alarming.”
In their natural and ordinary meaning the words the subject of the dot points above are capable of bearing the meanings pleaded respectively in par 9.1 and par 9.2 of the statement of claim in this action.
In every case it is necessary for the plaintiff to prove that the words were published of and concerning the plaintiff: Morgan v Odhams Press Ltd [1971] 2 All ER 1156 at 1165. In the present case, the first plaintiff can be identified as the manufacturer of the coolant which is marketed under the trade name of “Tectaloy”.
Paragraph 10.4
The following imputation is contained in lines 9 to 11 of the broadcast, a transcript of which contained in an annexure to the statement of claim:
"It’s the iridescent green stuff you pour into your car radiator. It’s called coolant and its designed not only to cool your engine but prevent it from rusting. But beware the wrong brand could potentially wreck your motor."
Paragraph 10.4 of the statement of claim before it was deleted in consequence of the learned master’s order was as follows:
"10The natural and ordinary meaning of the broadcast of and concerning the second and third plaintiffs is:-
...
10.4 they knowingly market to members of the public a product which they know could potentially wreck the motor vehicles of members of the public."
In their natural and ordinary meaning, the words broadcast and contained in lines 9 to 11 of the transcript of the broadcast are capable of bearing the meaning pleaded in par 10.4 of the statement of claim in this action. These imputations relate only to the second and third plaintiffs. It is alleged in the statement of claim that these plaintiffs are the sole directors and shareholders of the first plaintiff. It is difficult to see how shareholders, as distinct from directors, could be liable for short-comings in the products marketed by the first plaintiff. They are privy only to such information as is provided in the Annual Report of the first plaintiff, reports which are made from time to time on an ad hoc basis and at the Annual General Meeting. Essentially shareholders are investors. A company is under the control of its directors. Any control by shareholders as such is indirect. The directors should have a detailed knowledge of a company’s business particularly if they are executives and part of the management team.
Paragraph 10.4 should be re-instated in the statement of claim in relation to the second and third plaintiffs as directors but not as shareholders.
Paragraph 13.2
Paragraph 13.2 of the statement of claim before it was deleted in consequence of the learned master’s order was as follows:
"13The defendant broadcast the complained of program in circumstances warranting an award of aggravated damages.
Particulars
13.2the defendant broadcast the program following the refusal of injunctive relief in favour of another manufacturer of coolant in circumstances where the Judge refusing the relief nevertheless noted that there was a serious question to be tried as to whether or not there was a misrepresentation in the proposed program and in circumstances where the defendant opposed the grant of an injunction on the basis that there was a suitable alternative remedy of an action in defamation."
The allegations contained in par 13 of the statement of claim refer to litigation taking place in Sydney in the Federal Court. The plaintiff in that litigation is Stalyce Holdings (Aust) Pty Ltd and the defendants are Channel Seven Melbourne Pty Ltd and Channel Seven Sydney Pty Limited. The proceedings in South Australia have been brought against Channel Seven Network Limited which, according to the statement of claim is the holding company of a separate company in each State of Australia. According to the statement of claim the defendant is the producer and broadcaster of the “Today Tonight” programme.
The plaintiffs are not involved in the Sydney litigation. The sole plaintiff is Stalyce Holdings (Aust) Pty Ltd. It is suing in its capacity as the manufacturer of “Clean Team Radiator Coolant”. The defendant in South Australia is Seven Network Limited whereas, as can be seen, other Channel Seven companies produce and broadcast the “Today Tonight” current affairs item in Melbourne and Sydney. The simple fact is that in the Melbourne and Sydney litigation both plaintiffs and defendants are different parties. The litigation in question is of no interest or concern to the first plaintiff.
In order to justify an award of aggravated damages the plaintiff must prove that the conduct of the defendant must be found to be improper, unjustifiable or lacking in bona fides. In other words, it must amount to misconduct: Triggell v Pheeney (1951) 82 CLR 497 at p 512 and p 514. Also, the defendant’s conduct must have caused harm to the plaintiff: Broom v Cassell (1972) AC 1027 at pp 1124-1126.
Conduct on the part of the defendant in a libel action up to and at the trial may result in additional hurt suffered by the plaintiff. A refusal to make an apology or the making of an inadequate apology or one followed by uproarious laughter or abuse may attract aggravated damages. The way in which a libel action is conducted in court may have the same consequence. A cross-examiner may conduct his cross-examination in a sarcastic fashion or act towards the plaintiff in a hostile manner. Publicity given to imputations found to be baseless at the trial may cause increased reputational damage and bring about an award or additional award of aggravated damages.
I am concerned with one thing and that is that the injunctive relief was not sought by the plaintiffs at the behest of another manufacturer of a car coolant. They were taken by another manufacturer on its own account. Paragraph 13.2 should not be reinstated in the statement of claim.
Orders made
For these reasons, I make the following orders:
(1)    That the appeal be allowed.
(2)That the appellants have leave within a further 14 days to file and serve a further amended statement of claim which reinstates or confirms the reinstatement of paragraphs 9.1, 9.2 and 10.4 in the form in which those paragraphs appeared in the statement of claim annexed to the Summons in this action.
(3)That if so advised the defendant have leave within a further 14 days of the filing of the amended statement of claim to file and serve an amended defence.
(4)That if so advised the plaintiff have leave within a further 7 days of the filing of the amended defence to file and serve an amended reply.
(5)    That this matter be referred to Judge Kelly for further directions.
(6)    That any party interested may be at liberty to apply.
(7)    That further consideration of these proceedings be adjourned.

[2002] SASC 292

28 August 2002