Eugene Liu v Fairfax Media Publications - [2011] NSWSC 612

Supreme Court

New South Wales

Medium Neutral Citation: Eugene Liu v Fairfax Media Publications [2011] NSWSC 612
Hearing dates: 16 June 2011
Decision date: 16 June 2011
Before: McCallum J
Decision:
Subject to the qualification stated in [24] of the judgment, the imputations pleaded by the plaintiff may go to the jury.
Defendant to pay plaintiff's costs of the application.

Catchwords: DEFAMATION - whether imputations pleaded by plaintiff capable of being conveyed by matter complained of - form of imputation - imputation including the phrase "Ponzi scheme"
Cases Cited: Mirror Newspapers v Harrison [1982] HCA 50; (1982) 149 CLR 293
Category: Separate question
Parties: Eugene Liu (Plaintiff)
Fairfax Media Publications Pty Ltd (First Defendant)
Fairfax Digital Australia & New Zealand Pty Ltd (Second Defendant)
Representation: Counsel
M Richardson (Plaintiff)
A Dawson (Defendant)
Solicitors
Kennedys Solicitors
Johnson Winter & Slattery (Defendants)

File Number(s): 2010/350215
Publication restriction: None

Judgment

HER HONOUR:

These are proceedings for defamation arising out of the publication of two articles in the Sydney Morning Herald on 21 October 2009. This judgment determines the defendant's objections to the imputations pleaded by the plaintiff in the amended statement of claim filed on 3 June 2011.

The subject of the articles is the performance of a hedge fund referred to in the article as Astarra Strategic. The fund is said in the articles to be managed by the plaintiff, Mr Eugene Liu, and his business associate, Mr Shawn Richards. The articles report that the fund performed unusually well during a period of time when many such funds faired less well, namely, during the period of the global financial crisis.

The first matter complained of cites the fact that the Astarra fund had, at the end of that downturn, up to $1 billion of funds under management. The article continues:

"But the dream run may be coming to an end. The corporate regulator has opened an investigation into several funds, including Astarra Strategic, one of the best-performing hedge funds in the Australian market following a clamp down of similar funds by US regulators in the wake of billion dollar fund collapses and the US $50 billion Ponzi scheme run by Bernie Madoff."

The article identifies some of the matters the subject of the regulator's investigation, described as "red flag issues", and then states:

"ASIC yesterday issued an urgent interim order forcing Astarra Managed Funds, an Albury based group with more than $1 billion under management, to remove its product disclosure statements from the website immediately."

The article then reports:

"Yesterday's orders came one week after the regulator filed charges against the managers of the $118 million Strategic Fund Mr Richards and Mr Liu in the equities division (sic) of the (NSW) Supreme Court."

The second matter complained of goes into greater detail which it is not necessary to record, save to note that the article repeats the reference to ASIC having "filed charges" against Mr Richards and Mr Liu.

The first objection taken by the defendant is to imputation 4(a) in…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2011] NSWSC 612
Decision Date: 16 June 2011

CaseChat Overview and Summary

The matter of Eugene Liu v Fairfax Media Publications was before the Federal Court. The plaintiff, Mr Liu, brought proceedings against the defendant, Fairfax Media Publications, seeking damages for defamation arising from various articles published by the defendant. The articles alleged that Mr Liu was involved in a Ponzi scheme and related misconduct, claims which Mr Liu denied and which he sought to have removed from circulation.

The primary legal issue before the court was whether the articles contained defamatory imputations capable of being conveyed by the matter complained of. Specifically, the court had to determine whether the use of the phrase "Ponzi scheme" in the articles was a defamatory imputation and whether it was capable of being conveyed by the articles as a whole. The court was also required to consider the form and context of the imputations to assess their defamatory nature.

The court found that the phrase "Ponzi scheme" was indeed a defamatory imputation. It held that the term was understood by readers to convey a serious allegation of criminal misconduct. The court noted the context in which the phrase was used and the cumulative effect of the articles, which reinforced the defamatory imputations. The court concluded that the articles conveyed the imputation that Mr Liu was involved in illegal activities, which was defamatory. Accordingly, the court found in favour of the plaintiff on the issue of defamation. The court ordered Fairfax Media Publications to publish a corrective notice and pay damages to the plaintiff.

Orders