Exibit Exhibitions & Publishing Pty Ltd v Webb - [2006] WASC 61

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: EXIBIT EXHIBITIONS & PUBLISHING PTY LTD -v- WEBB [2006] WASC 61

CORAM: MASTER NEWNES

HEARD: 28 FEBRUARY 2006

DELIVERED : 5 APRIL 2006

FILE NO/S: CIV 1145 of 2005

BETWEEN: EXIBIT EXHIBITIONS & PUBLISHING PTY LTD (ACN 089 992 110)
Plaintiff
AND
JOHN RAYMOND WEBB
Defendant

Catchwords:

Defamation - Application to amend statement of claim - Whether imputations capable of being conveyed by words complained of - Whether defamatory of plaintiff - Adequacy of claim for aggravated and exemplary damages - Turns on own facts

Legislation:

Corporations Act 2001 (Cth)

Result:

Application allowed in part

Category: B

Representation:

Counsel:

Plaintiff: Dr P R MacMillan
Defendant: Mr J C Giles

Solicitors:

Plaintiff: Brickhills
Defendant: Solomon Brothers

Case(s) referred to in judgment(s):

Buckeridge v Walter [2006] WASCA 22
Exibit Exhibitions & Publishing Pty Ltd v Webb [2005] WASC 129
Favell v Queensland Newspapers Pty Ltd (2005) 79 ALJR 1716
Gascoine v McGinty (1995) 14 WAR 542
Lewis v Daily Telegraph Ltd [1964] AC 234
Mirror Newspapers Ltd v Fitzpatrick (1984) 1 NSWLR 643
Ronci v Nationwide News Pty Ltd & Anor, unreported; SCt of WA (Steytler J); Library No 960340; 21 June 1996

Case(s) also cited:

Askew v Morris [2005] WASCA 59
Chapman v Australian Broadcasting Corporation (2000) 77 SASR 181
Day v William Hill (Park Lane) Ltd [1949] 1 KB 632
Dow Jones & Company Inc v Gutnick (2002) 210 CLR 575
Drummoyne Municipal Council v Australian Braodcasting Corporation (1990) 21 NSWLR 135
Gardiner v Ray [1999] WASC 140
Monte v Mirror Newspapers Ltd [1979] 2 NSWLR 663
Vitale v Bednall & Anor [2000] WASC 207

MASTER NEWNES: This is an application by the plaintiff for leave to file a substituted statement of claim. The application is opposed by the defendant on the ground that there has been undue delay by the plaintiff in seeking leave to file and serve the substituted statement of claim and because, if leave were granted, the substituted statement of claim would be liable to be struck out as disclosing no reasonable cause of action or as embarrassing.

Preliminary matters

The application for leave to file an amended statement of claim was made on 22 November 2005. It followed the striking out, in June 2005, of an earlier statement of claim: Exibit Exhibitions & Publishing Pty Ltd v Webb [2005] WASC 129. The plaintiff's solicitor has said in an affidavit filed in support of this application that the plaintiff engaged counsel to prepare an amended statement of claim. The minute of amended statement of claim was not filed and served until 16 September 2005. The delay was due to counsel's unavailability and then an oversight by the plaintiff's solicitors which resulted in the document being misplaced and not filed until 16 September 2005. Since that time the plaintiff's counsel has made further amendments, which has resulted in the proposed substituted statement of claim which was the subject of this application.
A number of objections to the form of the proposed substituted statement of claim were taken by the defendant. One of the objections related to the plea, in par 3, of the extrinsic facts which the plaintiff alleges caused creditors of Consolidated Business Media Pty Ltd (In Liq) ("CBM") to understand the words complained of to refer to the plaintiff. During the course of argument counsel for the plaintiff sought further to amend par 3 in a manner which, on the basis of earlier submissions by the defendant's counsel, I understood would overcome the objection. The amendment involved the insertion of the words "by those who received it" in the first line of par 3, immediately following the words "reasonably understood". I do not therefore propose to deal further with that objection.

The proposed pleading

The substantive objections by the defendant go to the imputations which it is alleged were conveyed by the words complained of and to the claim for aggravated and exemplary damages. I will turn first to the issues concerning the imputations pleaded by the plaintiff.
It is alleged in par 4 of the minute that, on or about 4 February2005, the defendant published or caused to be published to creditors of CBM the following words:
" 'CONSOLIDATED BUSINESS MEDIA PTY LTD (IN LIQ) (REC & MGR APPTD'
…
Mr Anderson suggests in the circular that there was something improper about the sale of CBM's business to media [sic] & Events Australia Pty Ltd. I am employed by Media & Events. Otherwise, I have no connection with, or interest in, Media & Events. Three other facts are also important. First, the consideration paid by Media & Events for CBM's business exceeded $550,000. CBM's business has been valued by three different experts at less than $100,000. No‑one else offered to buy the business. CBM's major competition which now wishes a public examination to be conducted, claimed CBM's business had no value at all. Second, Mr Anderson did not recover the balance of the purchase price as he claims. I ensured that the purchase price was paid to him.
Finally, prior to his appointment as provisional liquidator, I discussed the sale of CBM's business with Mr Anderson. Mr Anderson approved the sale. Mr Anderson told a representative of Media & Events that he had no objection to Media & Events purchasing CBM's business for the agreed price.
…
I am now bankrupt and the company is in liquidation. Both events I sincerely believe were caused by CBM's major competitor's continual harassment of CBM. It is the major competitor's harassment which has financially destroyed me and caused you loss.
It is that competitor who Mr Anderson, in his report, refers to as the two major creditors of CBM who have expressed an interest in funding a public examination. That competitor is a contingent creditor of CBM. That competitor made numerous claims over many years against CBM. The litigation which resulted led to such costs, in terms of legal fees, that CBM and I were financial [sic] ruined.
Mr Anderson rightly points out at the end of his report that the prospects of a return to CBM's unsecured creditors is remote. The only purpose of a public examination is for Media & Events' major competitor, the same major competitor who destroyed CBM and has caused you loss, is to continue to harass me. You should not be conned into funding that attack.' "
It is alleged in par 5 of the minute that in their ordinary and natural meaning the words complained of meant and were understood to mean that:
"(a)the plaintiff ~~has used~~ made use of the legal system both to attack and destroy CBM;
(b)the plaintiff ~~has used~~ made use of the legal system both to attack and financially ruin the defendant;
(c)the Plaintiff improperly supported a public examination of the Defendant by the liquidator of CBM in that it did so for the sole purpose of attacking the Defendant personally;
(d)the Plaintiff dishonestly supported as being in the interests of CBM's secured creditors a public examination of the Defendant by the liquidator of CBM."
The marking up reflects amendments proposed by counsel for the plaintiff during the course of the hearing.

The defendant's submissions

It was submitted on behalf of the defendant that none of the imputations pleaded in par 5 was capable of being conveyed by the words complained of. The defendant put in evidence the entire letter (the "Letter") from which the pleaded words are taken, on the basis that the Letter must be read as a whole. The text of the Letter contains the following two paragraphs immediately preceding the words pleaded:
"I refer to Mr Anderson's circular to creditors which you will have recently received.
I am disappointed and hurt by the numerous inaccuracies contained in Mr Anderson's letter. Consequently, I have written to you to briefly correct some, but not all, of the many errors made by Mr Anderson."
The words pleaded also omit two paragraphs of the Letter referring to other matters contained in Mr Anderson's letter. It is not necessary to set out those parts of the Letter.
In the first place, it was submitted that, as appears particularly from the first two paragraphs of the Letter, the defendant's letter was directed to the conduct of the liquidator, Mr Anderson, and not to the plaintiff at all. It would not have been understood by a reasonable reader to refer to the conduct of the plaintiff.
It was further submitted that, in any event, the imputations in par 5(a) and par 5(b) did not convey any meaning defamatory of the plaintiff and, moreover, they were not capable of being conveyed by the words complained of. Counsel for the defendant argued that it was not suggested in the Letter that the plaintiff's claims against CBM were not bona fide. It was submitted that it is not defamatory to say that by pursuing bona fide claims the plaintiff had made use of the legal system to attack and destroy CBM and the defendant.
If the imputations were understood to mean that the plaintiff had used the legal system simply for the purpose of attacking and destroying CBM and the defendant, the words complained of were not capable of giving rise to such a meaning. The Letter said only that the plaintiff had made numerous claims over the years against CBM which had resulted in costs of such a magnitude that CBM and the defendant were financially ruined. It did not suggest that the claims were not bona fide. There was nothing in the Letter capable of conveying a meaning that the plaintiff had used legal proceedings simply for the purpose of ruining CBM financially, much less the defendant.
Counsel for the defendant submitted in relation to par 5(c) that the criticism in the Letter regarding the proposed public examination was directed at the liquidator, to whose circular the Letter was a response. Accordingly, it was not capable of being understood by a reasonable reader to be defamatory of the plaintiff. Moreover, the use of the word "improperly" rendered the imputation embarrassingly vague. The word "improper" was capable of covering a very wide range of conduct and therefore did not specify the precise act or condition allegedly attributed to the plaintiff by the words complained of. Counsel referred to Gascoine v McGinty (1995) 14 WAR 542 at 546 ‑ 547.
Counsel argued that even the further amendment proposed by counsel for the plaintiff, which involved the insertion of the words underlined above, did not assist the plaintiff. While it overcame the vagueness of the word "improperly", the imputation was not capable of being conveyed by the words complained of. The purpose was one which would not be understood by the ordinary reasonable reader in a defamatory sense. Such a reader has no knowledge of the purposes of a public examination under the Corporations Act 2001 (Cth) and therefore would not understand the alleged purpose to be an improper one.
In relation to par 5(d), counsel for the defendant argued that once again there was nothing in the words complained of which was capable of conveying an imputation that the plaintiff "dishonestly" supported a public examination of the defendant. There was nothing in the Letter to suggest dishonesty by anyone, let alone the plaintiff. The word "conned" is directed to the liquidator, not the plaintiff, and, in any event, does not impute dishonesty.

The plaintiff's submissions

Counsel for the plaintiff submitted that the words complained of, when read as a whole, were plainly capable of conveying the imputations pleaded in par 5(a) and par 5(b). In particular, in the Letter the defendant says that his bankruptcy and the company's liquidation were caused by the plaintiff's "continual harassment of CBM. It is [that] harassment which has financially destroyed me and caused you loss". The Letter goes on to say that the plaintiff "made numerous claims over many years against CBM. The litigation which resulted led to such costs, in terms of legal fees, that CBM and [the defendant] were financially ruined." A direct link was therefore made between the alleged "harassment" and the litigation which had caused the financial ruin of CBM and the plaintiff. A reasonable reader would therefore arguably understand the Letter to mean that the plaintiff had used the legal system for the purpose of attacking CBM and the plaintiff and causing their financial ruin.
Counsel proposed to amend the imputations in the manner set out above in order to make it clear that the imputation was that the plaintiff had used the legal system for the purpose of attacking and destroying CBM and the defendant. I should say that I do not know that the amendments were necessary or that they significantly changed the meaning of the existing imputations. Be that as it may, the application was argued on the basis that the amended imputations bore the intended meaning.
Counsel for the plaintiff submitted in relation to par 5(c) that it was clear from the Letter that the defendant asserted the plaintiff supported a public examination by the liquidator of the defendant, not for any proper purpose, but simply to continue to harass the defendant. In the first paragraph of the words complained of it was said that the plaintiff wished a public examination to be conducted and in the fourth paragraph it was said that the plaintiff had expressed an interest in funding a public examination of the plaintiff. It was asserted in the last paragraph that the only purpose of such a public examination was to enable the plaintiff to continue to harass the defendant.
It was submitted that the imputation in par 5(d) arose in a similar way and the element of dishonesty was conveyed by the reference to creditors being "conned" into funding the public examination. The word "conned" plainly meant dishonesty.

Is the pleading defective?

The relevant principles to be applied on an application of this sort are well established and it is not necessary to repeat them. They are set out in my earlier decision in this action and have more recently been referred to by the High Court in Favell v Queensland Newspapers Pty Ltd (2005) 79 ALJR 1716 at 1719 ‑ 1720 per Gleeson CJ, McHugh, Gummow and Heydon JJ. In that case their Honours also specifically referred to the statement of Lord Devlin in Lewis v Daily Telegraph Ltd [1964] AC 234 at 277, that ordinary readers draw implications from a text much more freely than lawyers, especially when the implications are derogatory, and observed that that was "an important reminder for judges".
In Buckeridge v Walter [2006] WASCA 22, the Court of Appeal of this Court discussed the basis upon which an imputation will be struck out. The Court of Appeal said:
"It is also settled that an imputation will be struck out only if it is plainly incapable of being conveyed by the words complained of or, to use the words of Hunt J in Monte v Mirror Newspapers Ltd [1979] 2 NSWLR 663 at 675, if the imputation is 'so clearly untenable that it cannot possibly succeed': Taylor v Jecks (1993) 10 WAR 309 at 313. In Favell, Gleeson CJ, McHugh, Gummow and Heydon JJ, at 1719 [6], approved the following extract from the judgment of McPherson JA in the Queensland Court of Appeal:
'Whether or not [the pleading] ought to and will be struck out [as disclosing no cause of action] is ultimately a matter for the discretion of the judge who hears the application. Such a step is not to be undertaken lightly but only, it has been said, with great caution. In the end, however, it depends on the degree of assurance with which the requisite conclusion is or can be arrived at. The fact that reasonable minds may possibly differ about whether or not the material is capable of a defamatory meaning is a strong, perhaps an insuperable, reason for not exercising the discretion to strike out. But once the conclusion is firmly reached, there is no justification for delaying or avoiding that step [at] whatever stage it falls to be taken.' "
In that case, Steytler P went on to say (at [4]):
"I should add … my respectful endorsement of the comments made by Kirby J in Favell at 1722 to the effect that courts should discourage, or minimise, the impediment to a fair trial presented by the process of 'trial by interlocutory ordeal', which is especially prevalent in defamation proceedings."
To the same effect, see also Pullin JA at [22].
I consider that the proposed amended imputations are arguably capable of being conveyed by the words complained of. I do not accept the general submission made by counsel for the defendant that, when read as a whole, the Letter would be understood to be directed only to the conduct of the liquidator, to whose circular the Letter is said to be a response. While the Letter is expressed to be a response to the liquidator's circular, in my view it is clear that it is arguably capable of being understood to refer to conduct of the plaintiff.
In relation to the imputations pleaded in par 5(a) and par 5(b), I consider it is arguable a reasonable reader would understand the Letter to mean that the "harassment" of CBM consisted of the litigation brought by the plaintiff in respect of "numerous claims" against CBM, and that it was not genuine and bona fide litigation brought for the purpose of enforcing the plaintiff's rights but rather a campaign of harassment of both CBM and the defendant by the plaintiff. In that context it is relevant that the plaintiff is referred to in the Letter (a reasonable reader might conclude, with some emphasis) as "the major competitor of CBM".
It is true that there is nothing in the words complained of which asserts that the litigation was brought without foundation but, in my view, it is arguable that a reader who arrived at the conclusion that the litigation was simply part of a process of harassment brought to ruin CBM and the defendant would simply be reading the Letter in the manner of the ordinary reasonable reader referred to in Favell v Queensland Newspapers Pty Ltd (supra).
I also accept that, in relation to par 5(c), it is arguable a reasonable reader would understand the words complained of to mean that the plaintiff's desire for, and interest in funding, a public examination of the defendant was for the sole purpose of continuing to harass him. I do not accept the defendant's argument that a reasonable reader, not versed in the Corporations Act or insolvency law, would not know the purpose for which public examinations were conducted and therefore would not understand the words in a defamatory sense.
It is, I think, obvious that a public examination of a debtor is not for the purpose of harassing the debtor or to attack them personally, but simply in order to secure possible benefits for the creditors. I therefore consider it is plainly arguable that a reasonable reader would understand that an examination conducted for the purpose of harassing or attacking a debtor personally was not being used for a proper purpose.
In light of the proposed amendment to add the words "in that it did so" I consider that the defendant's complaint about the embarrassment caused by the use of the word "improperly" is overcome. The nature of the alleged impropriety is now sufficiently clear.
Similarly, in relation to par 5(d), I consider it is arguable that a reasonable reader would understand the final paragraph of the words complained of, read in the context of the words as a whole, to mean that creditors were being "conned" by the plaintiff by its support of a public examination into believing that such an examination was in the interests of creditors, when in fact it was simply to enable the plaintiff to continue to attack the defendant personally. In my view, "conned" in this context is capable of being understood to involve dishonesty. In the Macquarie Dictionary "conned" is defined to mean "a confidence trick; swindle … to swindle; defraud … to deceive with intent to gain some advantage".

I do not accept that the issue of whether or not a public examination should be conducted is a matter which a reasonable reader would understand is directed only to the liquidator. It is the case (whether or not the ordinary reader would know it to be the case) that such an examination would be instigated and conducted on behalf of the liquidator, but in the words complained of it is said that the plaintiff wishes a public examination to be conducted and that it has expressed an interest in funding it. In that context it is arguable that a reasonable reader would understand the words complained of to bear the imputation pleaded by the plaintiff.

The claim for aggravated and exemplary damages

It is necessary then to turn to the complaints about the claim for aggravated and exemplary damages. The relevant plea in the minute is as follows:
"7.The Letter was published or caused to be published by the Defendant in circumstances where:
(a)the Plaintiff repeats paragraphs 3(a), 3(b) and 3(e);
(b)the Liquidator in the Circular recommended to creditors of CBM that they support an application for a public examination of the Defendant by the Liquidator;
(c)the Defendant in the premises published the words complained of in the Letter in the knowledge or with the means of knowledge that the imputation or imputations arising from them as to the Plaintiff were false or with reckless disregard as to whether or not they were false;
(d)the Defendant in publishing or causing to be published the words complained of took the risk of the identification of the Plaintiff and the consequent risk to the Plaintiff's reputation;
(e)by reason that Media and Events Australia Pty Ltd which employs the Defendant is now the major competitor of the Plaintiff and by reason that the Defendant wished to avoid being subjected to a public examination by the Liquidator the prospect of advantage to the Defendant by the publication by damaging the reputation of the plaintiff and by influencing creditors not to support a public examination of the defendant outweighed the prospect of liability or loss following from such publication;
(f)the Defendant has failed to apologise or to offer an apology in circumstances in which such was called for.
8.The Plaintiff repeats paragraph 7 and says the Defendant's conduct in publishing the words complained of in the Letter and thereafter as to which the plaintiff repeats paragraph 7(f) has been in contumelious disregard of the Plaintiff's rights.
9.By reason of the facts referred to in paragraph 7 the Plaintiff claims aggravated damages against the Defendant.
10.By reason of the facts referred to in paragraph 8 the Plaintiff claims exemplary damages against the Defendant."
It was submitted on behalf of the defendant that the plea in par 7(c) was objectionable because, first, it was unclear to what "the premises" referred, but if they referred to par 7(a) and par 7(b) those matters were not capable of founding the plea in par 7(c); and secondly, the plea was inadequately particularised. It was submitted that particulars of the knowledge and the "means of knowledge" alleged should be provided in the statement of claim. At this stage of the proceedings it was not sufficient that that was left for a request for further and better particulars. It was also submitted that it was hardly open to the plaintiff to complain that the defendant published the words with knowledge, or means of knowledge, of the imputations they conveyed when this was the fourth occasion on which the plaintiff had attempted to frame those imputations.
It was submitted that there was nothing in par 7(d) which would support a claim for aggravated or exemplary damages. Such conduct was no different to, and certainly no worse than, naming the defendant in the allegedly defamatory material.
Counsel argued that the plea in par 7(e) was confusing and, in relation to par 7(f), that there was no plea that an apology had been called for and it was well established on the authorities that simply a failure to apologise was incapable of supporting a claim for aggravated or exemplary damages.
Counsel for the plaintiff argued that the plea in par 7 sufficiently pleaded the claim for aggravated or exemplary damages. The matters in par 7(e) established a lack of bona fides on the part of the defendant. The plea in par 7(f) had to be read cumulatively with the other matters pleaded in par 7. It was not contended that the failure to apologise of itself was sufficient to give rise to a claim for aggravated and exemplary damages, but it was one element in conjunction with the other matters relied upon by the plaintiff.
I accept the defendant's complaint that the plea in par 7(c) is not adequately particularised, but, despite the passage of time, it is a matter which I consider can properly be remedied by the provision of further and better particulars and is not a reason which of itself should cause leave to amend the statement of claim to be refused. I consider, however, that the phrase "in the premises" is uncertain and embarrassing. I would therefore refuse leave to amend in terms of par 7(c). I would also refuse leave to amend in terms of par 7(d). In the present context I do not consider it is capable of giving rise to a claim for aggravated and exemplary damages.
While par 7(e) is not felicitously expressed and would benefit from some punctuation, I consider that the meaning is sufficiently clear and I would allow it.
I do not consider that the plea in par 7(f) is adequate. A failure to apologise will be a ground for a claim for aggravated and exemplary damages only if the failure to apologise amounted to conduct which was in some way unjustifiable, improper or lacking in bona fides: Mirror Newspapers Ltd v Fitzpatrick (1984) 1 NSWLR 643 at 660; Ronci v Nationwide News Pty Ltd & Anor, unreported; SCt of WA (Steytler J); Library No 960340; 21 June 1996. I do not consider it is sufficient simply to plead that "in [the] circumstances" such an apology was called for. The plaintiff must set out the circumstances in which it is alleged the failure to apologise amounted to conduct which was in some way unjustifiable, improper or lacking in bona fides.

Conclusion

I consider that the delay in making the application to amend the statement of claim has been sufficiently explained and does not constitute a reason why the application should be refused. It is not suggested that the defendant has been prejudiced by the delay.
I would grant the plaintiff leave to amend the statement of claim in terms of the minute (subject to the further amendments proposed in the course of the hearing), save for par 7(c), par 7(d) and par 7(f) in respect of which I would give the plaintiff leave to replead.
I will hear the parties on the precise terms of the appropriate orders and on costs.