Fenn v Australian Broadcasting Corporation
[2018] VSCA 166
•28 June 2018
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2018 0035
| ASHLEY FENN | First Applicant | ||
| and | |||
| ETHAN AFFORDABLE HOUSING LIMITED (ACN 135 818 245) | Second Applicant | ||
| v | |||
| AUSTRALIAN BROADCASTING CORPORATION | Respondent | ||
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| JUDGES: | McLEISH, NIALL and ASHLEY JJA |
| WHERE HELD: | MELBOURNE |
| DATES OF HEARING: | 31 May 2018 |
| DATE OF JUDGMENT: | 28 June 2018 |
| MEDIUM NEUTRAL CITATION: | [2018] VSCA 166 |
| JUDGMENT APPEALED FROM: | [2018] VSC 60 (John Dixon J) |
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DEFAMATION – Defences – Pleadings – Partial justification – Contextual truth – Application for leave to appeal against refusal to strike out defences – Whether particulars of justification capable of justifying sting of plaintiffs’ imputation – Whether matter for jury to determine meaning of plaintiffs’ imputation – Whether contextual imputations capable of ‘swamping’ plaintiffs’ imputation – Whether contextual imputation ‘in addition to’ plaintiffs’ imputation – Leave to appeal granted – Appeal allowed in part – Defamation Act 2005 ss 25, 26.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicants | Ms G L Schoff QC with Mr T J Mullen | Millens Lawyers |
| For the Respondent | Dr M J Collins QC with Mr H R Hassan | Grindal & Patrick (as town agents for ABC Legal) |
McLEISH JA:
I agree with Ashley JA, for the reasons he gives, that the application for leave to appeal should be granted and that the appeal should be allowed with respect to grounds 1, 1A and 2 but otherwise dismissed.
NIALL JA:
I have had the advantage of reading in draft the reasons for judgment of Ashley JA. I agree that the application for leave to appeal should be granted and that the appeal should be allowed with respect to grounds 1, 1A and 2 but otherwise dismissed for the reasons given by his Honour.
ASHLEY JA:
On 21 February 2018, a judge in the Trial Division ordered that an application before trial by Ashley Fenn (‘Fenn’ or ‘the first plaintiff’) and Ethan Affordable Housing Limited (‘Ethan’ or ‘the second plaintiff’) in a defamation proceeding brought by them (collectively, ‘the plaintiffs’) against Australian Broadcasting Corporation (‘ABC’) be very largely dismissed.
By their application, made in reliance upon r 23.02(a) and/or (c) of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’) and/or s 48 of the Civil Procedure Act 2010, the plaintiffs had sought that a pleading of justification by paragraph 7A of ABC’s defence and a pleading of contextual truth by paragraphs 7B to 7E should be struck out.
The relevant orders made by the judge were as follows:
1.With the exception of particulars 7A.15 – 7A.16 which will be struck out, the plaintiff’s [sic] application to strike out the defence of justification is refused.
2.With the exception of the cross-referencing in the particulars to paragraph 7C.12 (which must be limited in accordance with the reasons for judgment published on 16 February 2016 (sic)) the plaintiff’s application to strike out the defence of contextual truth is refused.
Now the plaintiffs seek leave to appeal against the orders to which I have just referred; and that their appeal be allowed.
Background circumstances
In 2008, the Federal government established the National Rental Affordability Scheme (‘NRAS’). Its object was to provide an alternative to public housing, by encouraging private investors to purchase residential properties suitable for rental to lower income persons in need of housing, and to provide such accommodation at a discount to the market rental. The scheme was to be achieved by paying investors an annual amount (partly funded by the Federal government and partly by a State or Territory government), which would make up the rental shortfall. The amount would either be payable in cash or by way of a tax offset certificate. The scheme was, in effect, marketed through charities and non-government organisations, which encouraged investor participation and managed the scheme so far as investors ‘on their books’ were concerned. Part of the management function was to submit claims for investors to the Commonwealth government; and, having received the so-called incentive payments, to transmit them to the individual investors.
Ethan apparently became an approved participant in the NRAS in about July 2010. It appears that it was registered on the Australian Charities and Not-for-profits Register in early December 2012, with the status of a charity.
A consequence of Ethan being a charitable institution was that an investor would receive the incentive payment in cash, rather than in the form of a refundable tax offset certificate.
Finally, it appears to be uncontroversial that a number of private investors entered the scheme through Ethan, and that Ethan charged them a small percentage of the annual incentive payment which their participation meant they should receive, in return for it providing management services.
The articles
On 12 December 2016, ABC published a report concerning the plaintiffs on its ‘7.30 Report’ television program. Soon afterwards, the program, together with edited transcript and other material, was made available for download on the ABC’s 7.30 Report website under the heading ‘Former Family First candidate accused of delaying payments to investors in housing scheme’. Further, a news article based on the program, headed ‘Ex-Family First candidate Ashley Fenn accused of delaying payments to investors in government housing scheme’, was made available for download on the ABC news website. The television program and the online articles are the publications upon which the plaintiffs sue.
On or about 6 March 2017, the plaintiffs commenced the proceeding against ABC with which the Court is now concerned. The plaintiffs also commenced a proceeding against Mr Neil Henson, operator of a real estate agency. He had been an interviewee on the 7.30 Report, and was alleged by the plaintiffs to have emailed a link to the online publications to various persons. Mr Henson joined ABC as a third party to the proceeding in which he was the defendant. The Court was informed on the hearing of the present application that the plaintiffs and Mr Henson had come to a settlement.
As matters stand, the extant proceeding is listed for trial in October 2018.
The meanings particularised by the plaintiffs
By paragraph 7 of the statement of claim, amended pursuant to the order of Justice Keogh dated 6 September 2017, the plaintiffs plead:
7.In their natural and ordinary meaning, the Publications are defamatory of the Plaintiffs and meant and were understood to mean that:
(a)the plaintiffs had breached their obligations to vulnerable investors in the Federal Government's National Rental Assistance Scheme (‘the NRAS’), by failing to account to them for money paid to them on behalf of those investors by the Government, for lengthy periods and sometimes for more than a year.
(b)the Plaintiffs had ripped off vulnerable investors in the NRAS by deliberately delaying the payment of moneys received from the Government on behalf of those investors so that they could pocket the interest earned on the money.
(c)Fenn is a hypocrite, in that he recently sought election to the Federal Senate for the Family First party, but rather than putting families first, he had instead exploited families who had invested in the NRAS for his own commercial benefit and caused them financial hardship by failing to pass on payments that had already been paid to Ethan that was due and owing to those families under the NRAS, whilst at the same time profiting from the interest earned on that money.
The justification defence
The defendant’s pleading
By paragraph 7A of its defence, amended in accordance with the orders of Justice John Dixon dated 21 February 2018, ABC pleads:
7A. If the Publications are defamatory of the Plaintiffs and carried the meaning alleged in paragraph 7(a) (which is denied), then in that meaning the Publications were substantially true and, accordingly, the Defendant has a defence at common law and pursuant to section 25 of the Defamation Act 2005 (Vic) (the Act), and to the extent necessary the equivalent provisions in the defamation legislation of the other States and Territories of Australia.
Particulars
National Rental Assistance Scheme (‘NRAS’)
7A.1The NRAS is a government initiative that commenced in 2008 with the aim of increasing the supply of new and affordable rental dwellings to families on low or moderate incomes by offering incentives to businesses and community organisations.
7A.2The legislative framework for the NRAS is set out in the National Rental Affordability Scheme Act 2008 (‘the NRAS Act’) and the National Rental Affordability Scheme Regulations 2008 (‘the NRAS Regulations’) (together ‘the Scheme’).
7A.3To become involved in the Scheme, businesses and community organisations apply to the Federal Government for an allotment for each dwelling they wish to include in the NRAS.
7A.4Once a business or community organisation is awarded an allotment, that entity becomes a participant in the NRAS (‘Approved Participant’) and is entitled to receive an annual financial incentive (‘the Incentive’) for each approved rental dwelling (‘NRAS approved dwelling’). Incentives are available for up to ten years if the relevant conditions under the Scheme are met.
7A.5The operational year for the NRAS is from 1 May until 30 April (‘NRAS year’).
7A.6It is a condition of the Scheme that Approved Participants must offer every NRAS approved dwelling to families with low or moderate incomes and at a rental level of at least 20 percent below the applicable market rental rate.
7A. 7Incentives are provided partly by the Federal Government and partly by the State or Territory Government in the State or Territory in which the applicable NRAS approved dwelling is located.
7A.8The Federal Government component of the Incentive is approximately 75% of the total value of the Incentive and may be paid in cash to Approved Participants who are endorsed charitable institutions but is otherwise provided in the form of a refundable tax offset certificate.
7A.9The remaining 25% of the Incentive is provided by the relevant State or Territory Government in the form of a cash payment to the Approved Participant.
7A.10In order to receive Incentives each year, an Approved Participant must provide information in the form of a statement of compliance to the relevant Federal Government department (currently the Department of Social Services, ‘DSS’) for each NRAS approved dwelling. The provision of that information allows the DSS to assess whether the property is compliant with the Scheme.
7A.11Under the Scheme, an Approved Participant must lodge statements of compliance by 30 June after the end of each NRAS year, unless the DSS has provided the Approved Participant with an extension of time.
7A.12The maximum extension of time the DSS provides to Approved Participants to lodge statement of compliance is to 30 September after the end of the relevant NRAS year.
Ethan Affordable Housing Ltd (‘Ethan’)
7A.13Ethan became an Approved Participant in the NRAS on or about July 2010.
7A.14A person who purchased an NRAS approved dwelling with an NRAS allotment allocated to Ethan is described hereafter as ‘an Investor’.
7A.17The First Plaintiff was a director, the secretary, and the managing director of Ethan at all material times, and in those capacities was responsible for the conduct of Ethan referred to in these particulars.
Ethan’s agreements with Investors
7A.18By an agreement between Ethan and each Investor, each Investor paid an annual fee to Ethan that was equivalent to 7.5% of the Incentive provided by the Federal and State/Territory Governments for each NRAS approved dwelling the Investor owned.
7A.19In return, Ethan agreed to do the following for each NRAS approved dwelling held by an Investor:
7A.19.1ensure the dwelling complied with the requirements of the Scheme;
7A.19.2submit statements of compliance for the dwelling to the DSS; and
7A.19.3ensure the Incentive provided by the Federal and State/Territory Governments for the dwelling was passed on to the Investor.
Representations concerning timing and nature of payments by Ethan
7A.20In at least 2012 and 2013, Ethan represented to Investors via its website ( ‘the Ethan Website’) that:
7A.20.lboth the Federal and the State/Territory components of the Incentive were provided to Ethan by way of a cash payment, which would be paid by Ethan to Investors after an audit process was completed in June and September following the end of each NRAS year.
7A.20.2they would receive Incentives in cash, bi-annually;
7A.20.3they would earn at least $109,228 in tax-free income for every NRAS approved dwelling they purchased through Ethan; and
7A.20.4they would enjoy positive cash flow.
The relevant extracts from the Ethan Website may be inspected by appointment. Further particulars may be provided after interrogatories and discovery and prior to trial.
7A.21On or about 29 August 2013, Ethan represented to Investors (by way of a document entitled ‘NRAS Program Update’) that a benefit of its charitable status was that they could elect to receive the Federal Government component of the Incentive in cash.
A copy of the NRAS Program Update may be inspected by appointment.
7A.22From 2014 until at least August 2016, Ethan represented to Investors via the Ethan Website that Incentives would be paid to them after an audit process was completed in August and September each year.
The relevant extracts from the Ethan Website may be inspected by appointment. Further particulars may be provided after interrogatories and discovery and prior to trial.
7A.23Since August 2016, Ethan has represented to Investors via the Ethan Website that Incentives will be paid to Investors as soon as Ethan receives them from the relevant government.
The relevant extracts from the Ethan Website may be inspected by appointment. Further particulars may be provided after interrogatories and discovery and prior to trial.
7A.24In a booklet provided to Investors considering engaging Ethan Residential as a property manager, Ethan represented to Investors that it would take steps to ensure Investors received their Incentives without complication and on time at the end of each NRAS year.
A copy of the booklet may be inspected by appointment.
7A.25In the premises, Investors have at all relevant times had a reasonable expectation that they would receive their Incentives from Ethan within a reasonable time after the end of each NRAS year.
Delays in providing Incentives to Investors
7A.26Ethan did not provide all Investors with the full amount of their Incentives within a reasonable time after the conclusion of the relevant NRAS year. For example:
7A.26.lLiz and Michael Burkitt experienced delays of between 5 to 8 months before receiving the full amount of their Incentives for the 2015 and 2016 NRAS years;
7A.26.2Geoff Gardiner experienced delays of over 6 months before receiving the full amount of his Incentives for the 2014, 2015 and 2016 NRAS years;
7A.26.3Neil Hickey experienced delays of over 12 months before receiving the full amount of his Incentives for the 2013, 2014, 2015 and 2016 NRAS years;
7A.26.4Jason Hine experienced a delay of over 6 months before receiving the full amount of his Incentive for the 2015 NRAS year;
7A.26.6John Johnston consistently experienced delays of over 6 months before receiving the full amount of his Incentives for the 2012, [2013], 2014, 2015 and 2016 NRAS years; and
7A.26.7Lucas Koppen experienced delays of over 6 months before receiving the full amount of his Incentive for 2015 NRAS year.
Further particulars will be provided after discovery, interrogatories and the issue of subpoenas prior to trial.
Vulnerability of investors
7A.27It can be inferred that that [sic] the Investors, or many of them, were vulnerable for the following reasons:
7A.27.lUnder the Scheme, Investors do not have direct access to their Incentives from the Federal and State/Territory Governments. The entitlement to the Incentives lies with Ethan as the relevant Approved Participant.
7A.27.2Investors are responsible for all ongoing costs associated with their NRAS approved dwellings. Those costs can include land tax, property management fees, council fees, insurance, interest and bank charges.
7A.27.3Investors relied upon Ethan to provide their Incentives to them in a timely manner in order to assist with cash flow and to pay those ongoing costs.
7A.27.4Prior to around March 2015, some Investors utilised independent property management companies with no connection to the Plaintiffs to provide tenancy and property management services for their NRAS approved dwellings.
7A.27.5From around March 2015, Ethan purported to require Investors to engage the services of a property management company approved by Ethan (‘Ethan Residential’) to provide tenancy and property management services.
7A.27.6There was nothing under the Scheme (or the DSS’s administrative requirements) that prevented Investors from using Ethan for NRAS compliance purposes only, whilst using an independent property manager to provide tenancy and property management services for their NRAS approved dwellings.
7A.27.7Some Investors who did not wish to engage Ethan Residential felt compelled to do so because they feared losing their Incentives if they failed to comply with Ethan’s demands.
As will immediately be evident, the justification defence addressed only one of the three imputations particularised by the plaintiff, and was pleaded in reliance on the common law and pursuant to s 25 of the Defamation Act 2005 (‘the Act’). It is a partial justification defence, which bears upon assessment of damages.
Submissions at first instance
In order to better understand the judge’s reasons, I should advert to the main points raised in the submissions below.
The plaintiffs submitted in writing that the gist of imputation (a) was unequivocally clear. It was that the articles meant that the plaintiffs had failed to pay investors for lengthy periods moneys which they had received for the investors from government. Imputation (a) did not propound a meaning that the investors had simply not been paid for lengthy periods. But the focus of the particulars of justification was upon what was said to be the investors’ ‘reasonable expectations’ that they be paid within a reasonable time after the end of an NRAS year. So the justification defence, as disclosed by the particulars, did not engage with imputation (a).
In response, the defendant submitted in writing that:
(1) the defence of justification depends on the substantial truth of the defamatory material conveyed by the libel. The same concept appears in s 25 of the Act;
(2) the meanings that are actually conveyed by an allegedly defamatory matter are a matter for the tribunal of fact at trial;
(3) a plea of justification ought not be parsed in a ‘meticulous sense’.[1] It is sufficient to justify the sting of the pleaded imputation.[2] Details which do not alter or aggravate the character of the imputation may be ignored;[3]
[1]Citing Li v The Herald & Weekly Times Pty Ltd [2007] VSC 109 [87] (‘Li’).
[2]Citing Sutherland v Stopes [1925] AC 47, 79 (Lord Shaw) (‘Sutherland’).
[3]Citing Herald & Weekly Times Ltd v Popovic (2003) 9 VR 1, 63 [306] (‘Popovic ’).
(4) ‘Contrary to the plaintiffs’ assertion … the sting of imputation 7(a) is that the plaintiffs breached their obligations by failing to account to investors for lengthy periods of time and sometimes for more than a year. It is the failure to account in a timely fashion that is said by the program to be the critical issue, for it is the delay that caused prejudice to investors’;[4]
(5) ‘Understood in that way, the particulars are capable of justifying the imputation: see especially the defence at [7A.26]’.
[4]My emphasis.
Pausing, I make three observations with respect to the defendant’s submissions.
First, the defendant was plainly contending that the true and only sting of imputation 7(a) — contrary to what the plaintiffs said was its unequivocal meaning — was that there had been delay in paying money to investors for lengthy periods of time. That is, the defendant was contending that the meaning of imputation 7(a) did not contain, as a material circumstance, retention of moneys by the plaintiffs which had been received by them for investors. So much is apparent from the words ‘contrary to the plaintiffs’ assertion at [12] of their outline’. It was paragraph [12] of the plaintiffs’ outline which contended that, of central importance to imputation 7(a), was the meaning that the plaintiffs retained, for lengthy periods, moneys paid to them by government for investors.
Second, by the submission noted at [19](4) above, the defendant then treated what it alleged was the sting of the meaning conveyed by imputation 7(a) as if, in a pleadings dispute, that sting could be confirmed by its assertion of what the program identified as ‘the critical issue’.
Third, the defendant’s submission that ‘understood in that way, the particulars are capable of justifying the imputation’ was a submission founded upon what the defendant claimed to be the ‘sting of imputation 7(a)’, which departed from the meaning asserted by the plaintiffs. It was not, by contrast with one submission advanced for ABC in this Court, that the defendant’s justification defence engaged with the meaning of imputation 7(a) relied upon by the plaintiffs.
The judge’s reasons
The judge commenced his analysis of relevant principles by observing that a court should exercise great caution with its jurisdiction to strike out a defence prior to trial. He then referred in a generic way to the applicable rules, saying that their purpose was to ‘secure compliance with pleading rules’. He noted that ‘[t]he inquiry begins and ends with the pleadings and particulars’.[5]
[5]Fenn v Australian Broadcasting Corporation [2018] VSC 60 [9] (‘Reasons’).
His Honour stated that at common law the defendant must prove that all of the stings of the defamatory matter relied upon by the plaintiff are substantially true or the defence will fail. He observed that s 25 of the Act states that a defendant must prove that the defamatory imputations carried by the matter of which the plaintiff complains are substantially true. It is sufficient, he said, to justify the sting of the pleaded imputation without the need to prove the substantial truth of every detail alleged in the pleaded imputation. Immaterial or trivial details may be ignored. [6]
[6]Ibid [11].
His Honour then observed that the defamatory meaning of a publication is to be determined by the jury at trial.[7] Subject to a trial judge having power to determine that the published matter is not capable of conveying a particularised meaning, so much may be accepted. But, as will be seen, contrary to his Honour’s approach, it did not provide the answer to the strike-out application with respect to paragraph 7A of the defence.
[7]Ibid [12].
Then, after referring to the observation of Eady J in Hunt v Times Newspapers Ltd[8] that particulars of justification should be relevant to and supportive of the defamatory meanings which are sought to be justified,[9] his Honour noted that the parties differed in their construction of the sting conveyed by the plaintiff’s imputation (a).[10]
[8][2012] EWHC 110 [24].
[9]Reasons [12].
[10]Ibid [18].
The plaintiffs identified, the judge stated, two material aspects to the imputation pleaded by paragraph 7(a) of the statement of claim. The first was that the plaintiffs had breached their obligations to investors. The second was that the plaintiffs had done so when they failed to account to the investors for moneys paid to Ethan on their behalf. The imputation’s sting, the plaintiffs had submitted, was the failure to account to the investors in respect of moneys received, not simply delay in payment.[11]
[11]Ibid [19].
The judge then noted, ‘in contrast’, the defendant’s submission that the sting of the imputation was delay. It was the failure to account in a timely fashion that had caused prejudice to investors. The defendant, his Honour said, had pointed to a number of examples within the publications to illustrate its point that the ordinary reasonable reader would understand the sting of the imputation as focusing on the delay in accounting to investors.[12]
[12]Ibid [20].
It is quite clear, I interpolate, that his Honour’s note of the defendant’s submission, so far as it referred to ‘delay in accounting to investors’, should not be understood as meaning that ABC had submitted that Ethan had delayed paying investors moneys which it had received from government. It is apparent, see [19](4) and [21] above, that this was not ABC’s submission.
The judge then said this:
21It is clearly open to a jury to conclude that the sting of the imputation arose from the plaintiffs’ failure by delay in complying with obligations arising from expectations engendered by the plaintiff’s conduct, to make payments to investors. Both parties acknowledge that a delay in accounting for investor’s entitlements assists in defining the sting of the imputation, although reasonable minds may differ as to how it focuses on the plaintiffs’ culpability for that delay or the prejudice to investors that is alleged. It may be a matter of whether the jury considers the defendant’s interpretation of the imputation carried is the proper construction of the publication or a permissible variant of the imputation alleged. Alternatively, causing prejudice might be thought to be culpable in the sense being advanced by the plaintiffs, or the jury may not be much persuaded by the distinction to be put to it as to the imputation carried by the publications. Either way, these are matters for a trial.
22The plaintiffs’ contentions rather depended on their construction of the sting of the imputation. However, whether the defence is capable of succeeding must be assessed on the basis that the jury may accept the defendant’s construction of the imputation as carried or as a permissible variant and look for proof of the substantial truth of that sting, or it may accept the plaintiffs’ construction and look at the facts and circumstances through that prism. Either approach is reasonably open.[13]
[13]Reasons [21]–[22]. Bold is my emphasis.
Then his Honour turned to the particularisation of the justification defence; and, with two minor exceptions, concluded that the particularisation was apt. He summarised the position this way:
45In summary, I am not satisfied that the defence of justification is so clearly unsustainable on the facts and circumstances particularised that it could not possibly succeed. Those particulars will support evidence that will be capable of justifying the sting of the imputation, whether it be interpreted by the jury as the plaintiffs contend or as the defendant contends. Self-evidently the particulars may more comfortably establish substantial justification of the imputation as the defendant would have it construed, which is a sufficient basis to allow the defence to stand. I am not persuaded that it is not arguable that a jury may find that the defamatory imputation as the plaintiffs construed is substantially true.[14]
[14]Ibid [45].
His Honour’s consideration of the particularisation of the justification defence was rooted in his conclusion that the jury might find ‘the sting of the imputation’ to be one or other of two versions. Whether — (1) the conclusion evidenced a correct approach, and (2) the particulars could establish the substantial truth of the plaintiffs’ ‘construction’, a matter relied upon by the defendant in this Court — are questions which I later must consider.
Proposed grounds of appeal
The plaintiffs rely upon these proposed grounds:[15]
[15]For convenience, I refer in these Reasons simply to ‘ground’ and ‘grounds’.
1.The primary judge erred in finding at [21] and [22] that it was a matter for the jury at trial to construe the applicants’ pleaded imputation (a).
1A.The primary judge erred in finding at [45] that the respondent’s particulars of justification were capable of justifying the sting of the applicants’ pleaded imputation (a).
2.The primary judge should have determined that the applicants’ pleaded imputation (a):
‘that they had breached their obligations to vulnerable investors in the Federal Government’s NRAS Scheme by failing to account to them for money paid to them on behalf of those investors by the Government for lengthy periods and sometimes for more than a year’,
put in issue as a material allegation the applicants’ failure to account for money received on behalf of investors and that as the respondent’s pleaded particulars of justification did not seek to justifying [sic] that material part of the imputation paragraph 7A of the defence did not disclose a defence and should be struck out.
Plaintiffs’ submissions in this Court
It was submitted for the plaintiffs, in writing, that —
(1)a plaintiff’s pleaded imputation is simply the plaintiff’s formulation of the defamatory meaning conveyed by the matter of which the plaintiff complains. Subject to the availability of a Hore-Lacy[16] defence, a defendant cannot defend a publication by proving the truth of some other imputation about which the plaintiff does not complain;
(2)both at common law and pursuant to s 25, a defendant must prove that the plaintiff’s imputation is substantially true. This requires that every material part of the imputation must be true — otherwise the defence fails. Particulars must be provided which are sufficient to justify every material part of the imputation. Whilst each of the plaintiffs’ imputations includes the material allegation that the plaintiffs failed to account to investors for money received on their behalf, that being the sting of which they complain, the defendant’s particulars do not allege that the plaintiffs failed to account to investors for money paid to the plaintiffs. The particulars merely allege that Ethan did not provide all investors with the full amount of their incentives within a reasonable time after the conclusion of the relevant NRAS year. The particulars do not allege that such delay was a breach of any obligation or that there was fault on the part of the plaintiffs;
(3)the judge’s findings at Reasons [21] and [22] that it would be open to the jury to conclude at trial that the sting of plaintiffs’ imputation (a) was the one contended for by the plaintiffs, or one contended for by the defendant, disclosed error. Imputation (a) is not ambiguous. If the defendant wished to assert that imputation (a) is ambiguous and could be construed by the jury in two different ways, then the defendant should have applied to strike it out, or the Court should have required an amendment of the statement of claim.[17] ‘Construction of the imputation’ is not a matter that could be left to the jury to determine at the end of trial;
(4)contrary to the judge’s finding at Reasons [45], the judge should have held that the plaintiffs’ imputation could only be justified by proof of the material allegation of failure to account. Because the defendant’s particulars did not address that part of the imputation, the justification defence should be struck out.
[16]David Syme & Co Ltd v Hore-Lacy (2000) 1 VR 667 (‘Hore-Lacy’).
[17]Counsel cited Singleton v Ffrench (1986) 5 NSWLR 425, 426 (Mahoney JA), 433–4 (McHugh JA) (‘Singleton’); Greek Herald Pty Ltd v Nikolopoulos (2001) 54 NSWLR 165, 173 [24], [28] (Mason P, with whom Wood CJ at CL agreed), 177 [51] (Young CJ in Eq) (‘Greek Herald’).
Orally, counsel submitted that —
(1)the judge’s analysis began to falter at Reasons [11]. Although that paragraph set out perfectly uncontentious principles about justification, his Honour began a slide into an exercise which sought to discern the sting of the imputation. The slide developed out of a submission for the defendant citing the speech of Lord Shaw in Sutherland.[18] But there, his Lordship was speaking of the need to justify substantially the defamatory matter, not the imputation;
(2)the defendant had asserted below what it said was the sting of the imputation by reference to what it said was the critical issue dealt with by the publications. The judge had been invited to construe the imputation to find out what was its sting. The material aspect of imputation (a) could not be clearer. It is failing to account to investors for money paid to the plaintiffs by the government;
(3)each of the three imputations relied upon by the plaintiffs has at its heart failure to account for moneys received. Underlining the point, there is no issue between the parties that there was delay in making payments. In the publications, Fenn was quoted as admitting that there had been delay. The ‘real issue is whose fault is that delay, where is the money?’;
(4)what had been allowed to happen was an argument about the construction of the imputation. The cause of action is the publication of the defamatory matter. A plaintiff’s imputation is simply the plaintiff’s attempt to distil the defamatory meaning that the publication conveys;
(5)the statement of Doyle CJ in Advertiser-News Weekend Publishing Co Ltd v Manock,[19] cited with approval in the joint judgment of Warren CJ and Ashley JA in Setka v Abbott,[20] identifies the part played by particularisation in a defamation proceeding. The meaning pleaded by the plaintiff will identify the meaning of which the plaintiff complains, and delimit the boundaries within which the proceeding is to be fought. That is what imputation (a) does;
(6)it is never the function of the jury to determine what an imputation means. The jury’s function is to determine the meaning of the published matter which is complained of;
(7)the proper course is to look at the particulars of justification and ask whether they are capable of justifying the plaintiff’s pleaded meaning. If they tend to justify something substantially different, as the plaintiffs here asserted, if they fail to address a material part of the plaintiffs’ imputation, then they are incapable of justifying the imputation and ought to be struck out. But the judge had been led into the position where he sought to construe the plaintiffs’ imputation, in consequence of which he did not properly contrast the justification particulars with the plaintiffs’ imputation;
(8)the judge’s error was first, in finding that the defendant’s construction of the plaintiffs’ imputation was open to the jury; and second, in finding that the particulars were capable of justifying either of the two constructions;
(9)at the heart of the justification particulars was particular 7A.25, which alleges that investors had a reasonable expectation that they would receive their incentive payments from Ethan within a reasonable time after the end of the NRAS year; which reasonable expectation was breached, according to particular 7A.26. But the matters there raised did not engage with the meaning of imputation (a).
[18][1925] AC 47, 79.
[19](2005) 91 SASR 206, 219 [76] (‘Advertiser’).
[20](2014) 44 VR 352, 367 [47] (‘Setka’).
Finally, I should refer to this question and answer, at the very end of the submissions for the applicants in this Court:
JUDGE:Would you go to the jury, here, on the basis that your meanings, that is, that the gist of the [articles] was that your clients were paid moneys by the government and held them back, is what you win or lose on?
COUNSEL:Yes, absolutely.
Defendant’s submissions in this Court
It was submitted in writing for the defendant that —
(1)great caution must be exercised before striking out defences in defamation proceedings. The fact that reasonable minds might differ about, for example, the sting of a pleaded imputation or whether particulars of justification are capable of meeting the imputation ‘is a strong, perhaps an insuperable, reason for not exercising the discretion to strike out’;[21]
(2)grounds 1 and 1A do not disclose an arguable ground of appeal. The meaning of an imputation is a matter for the tribunal of fact at trial. In this matter, it will be for the jury to determine whether the defendant has proved the truth of either the imputation pleaded by the plaintiffs, or a permissible variant thereof. In doing so, the jury will have to form its own view, including about whether parts of the imputation are material to the sting;
(3)ground 2 is not arguable. Plaintiffs’ imputation (a) does not, contrary to the plaintiffs’ contention, include a ‘material allegation that the [plaintiffs] had failed to account to investors for money received on their behalf’. The imputation is rather that the plaintiffs breached their obligation by failing to account to investors for lengthy periods. There is no ambiguity in the sting. The question is relevantly one of emphasis, quintessentially a jury matter;
(4)the sting of the imputation, unambiguously, asserts a breach of obligations arising from a failure, by reason of delay, in accounting to investors;
(5)ground 2 is not faithful to the manner in which the plaintiffs argued the matter below. Their position was summarised by the judge as being that the ‘injurious nature of the sting is the plaintiffs’ culpability for [their] breach of obligation’. Their complaint below was that the defendant’s particulars did not grapple with proving as true their responsibility for the breach;
(6)further, grounds 1, 1A and 2 are arid. That is so because the judge concluded, at Reasons [45], that the particulars of justification were capable of justifying the sting of imputation (a), whatever meaning it bore;
(7)the defendant did not contend that imputation (a) is either ambiguous or capable of carrying a different sting than that contended for by the plaintiffs. Simply, the imputation must be read as a whole, and when so read, the sting lies in breach of obligations arising from a failure to account to investors in a timely fashion.
[21]Counsel cited Channel Seven Adelaide Pty Ltd v Manock (2007) 232 CLR 245, 261–2 [33] (‘Manock’).
It was submitted orally for the defendant that —
(1)it was a misconception to contend that the defendant was seeking to run an unpleaded Hore-Lacy case. The defendant seeks to justify the plaintiffs’ meaning. The true question is whether the particulars of justification are capable of establishing the substantial truth of the plaintiffs’ imputation. This could be done one of two ways. By proving the literal truth of the imputation, or proving its substantial truth;
(2)in the present case, although the defendant did not need to go so far, if at trial the defendant made good all of the particulars which have been pleaded, and there was no contrary evidence from the plaintiffs, then the defendant would be entitled to invite the jury to infer that Ethan had received money from the government and delayed paying it. That was what the judge had stated, in substance, at Reasons [45];
(3)the repeated representations by Ethan that it would pay incentives speedily, in circumstances where it did not do so, entitled the defendant to invite the jury to infer that payments had been received but their transmission to the investors delayed;
(4)nonetheless, whilst this line of submission justified the judge’s conclusion at Reasons [45], the defendant did not need to go so far. That is because its obligation is to prove the substantial truth of the imputation;
(5)the question whether the defendant has established the substantial truth of an imputation is a matter for the jury. It does not turn on the meaning of the imputation;
(6)in Popovic,[22] Gillard AJA said that the defence of justification ‘is concerned with meeting the sting of the defamation, that is, the defamatory meanings as found by the jury’. That is what the judge was referring to at Reasons [22];
(7)with respect to grounds 1 and 2, what the defendant wishes to submit to the jury at trial is that, whether the cause of breach of obligations was something to do with the government not making the payments in a timely fashion, or something to do with Ethan not passing on payments received in a timely fashion, is a matter immaterial to the sting. That is because of the representations, the obligation solemnly incurred by Ethan, in the context where Ethan was dealing with government funds and vulnerable investors;
(8)the jury, having heard all the evidence, might be satisfied that there was a breach of an obligation, whether social, moral or legal, which would entitle it to infer that there was a grave wrong by Ethan and that the character of the defamatory allegation was not to be determined by whether the cause of the delay was error on the part of government or lack of timeliness on the part of Ethan. The representation by Ethan was effectively that ‘Ethan would make it happen’.
[22](2003) 9 VR 1, 57 [274].
In response to a question from the Bench whether the judge had proceeded on the basis that imputation (a) had two reasonable meanings, counsel responded that ‘[t]he language is, perhaps, in part, a little infelicitous’. But it was ‘tolerably clear that his Honour was addressing himself to the question of what the jury might find to be the sting of the imputation which needed to be proved to be true in order to make good a defence of substantial truth’.
Principles
In my opinion, the following principles are pertinent to the determination of this application so far as it relates to the justification defence.
First, for the reasons explained in the joint judgment of Warren CJ and Ashley JA in Setka,[23] at common law a plaintiff must, in almost every case, particularise any meaning which is complained of in an impugned publication. In that connection, their Honours referred approvingly to what Doyle CJ had said in Advertiser —
Once the plaintiff pleads a meaning on which the plaintiff relies, that pleading will identify the meaning of which the plaintiff complains and delimit the boundaries within which the action is to be fought. Although it is the publication of the defamatory material that is the tort, the function of the pleading is to identify the field of inquiry at trial. [24]
[23](2014) 44 VR 352, 367 [46]–[49].
[24](2005) 91 SASR 206, 219 [76].
Second, as was observed in the joint judgment in Setka, that is not quite the end of it:
Nonetheless, because at common law a plaintiff sued on the publication and because the trier of fact was not constrained to find for a plaintiff only upon meanings which had been particularised, it was held in a number of cases that a plaintiff could succeed on an unpleaded meaning, so long as it was, as it was variously said, ‘a nuance of’, ‘comprehended by’, ‘simply a variant of’, ‘less injurious than’, ‘not more injurious than’, or ‘not altering the substance of’ the meanings pleaded. [25]
[25]Setka (2014) 44 VR 352, 367 [48].
Third, the somewhat imprecise concepts identified in the passage just cited were reduced by Charles JA in David Syme & Co Ltd v Hore-Lacy,[26] into the language ‘not sufficiently different from and not more injurious than’ the pleaded meanings. That formulation has often been applied in later cases, both in Victoria and in other common law jurisdictions.
[26](2000) 1 VR 667.
Fourth, as was observed in the joint judgment in Setka:
In s 25, reference to ‘the defamatory imputations carried by the matter of which the plaintiff complains’ must thus be understood as embracing the imputations pleaded, and also unpleaded variants meeting the description noted at [48] above.[27] Section 25 should not be understood, by a back door, to be inhibiting a plaintiff’s entitlement to succeed at trial on both pleaded meanings and permissible variants as understood by the common law. [28]
Thus, under the Act, as at common law, a plaintiff must[29] particularise each meaning which is relied upon.
[27]The reference to ‘[48] above’ is a reference to the passage cited at [43] above. My footnote.
[28]Setka (2014) 44 VR 352, 380 [106]–[107].
[29]Almost always.
Fifth, if a question arises whether a plaintiff’s particularised defamatory meaning is capable of being conveyed by the impugned publication, and it is clear to a judge on application that there is no such capability, then the meaning must be struck out. But the judge should be very cautious before so concluding, because reasonable minds may differ about the matter.[30] This particular function, to be clear, resides in a judge, not the trier of fact. The latter determines whether a meaning which is capable of being conveyed has in fact been conveyed.
[30]Manock (2007) 232 CLR 245, 261–2 [33] (Gummow, Hayne and Heydon JJ).
Sixth, it is another area where the functions of the judge and the trier of fact differ, if a question arises as to the gist, or ‘sting’, of a plaintiff’s particularised imputation — if it is said, for instance, that there is uncertainty or ambiguity of meaning — that question is to be resolved by a judge.[31] This may be antecedent to, or at, trial. It is not the function of the trier of fact to resolve competing assertions as to the meaning of an imputation. Put another way, it is not the function of the trier of fact — ordinarily a jury — to decide the gist of an imputation.[32] The jury’s task is to find the meaning of the published matter. In that connection, a meaning — imputation — particularised by the plaintiff sets the framework for the jury’s consideration, in the way explained by Doyle CJ in Advertiser, and by Warren CJ and Ashley JA in Setka. Any alleged ambiguity or uncertainty in the plaintiff’s imputation will have been sorted out by a judge before the jury embarks on its task. At trial, the jury might or might not accept that the meaning propounded by the plaintiff[33] was conveyed by the impugned publication. But this does not involve the jury determining the ‘sting of the imputation’. To the extent that the defendant submitted to the contrary to the principle expressed in this paragraph, I reject that submission.
[31]At the extreme, an imputation might be struck out. More usually, a plaintiff might be ‘forced to greater specificity’: Greek Herald (2001) 54 NSWLR 165, 173 [24] (Mason P).
[32]It was not so at common law; was not so under the Defamation Act 1974 (NSW), see Singleton (1986) 5 NSWLR 425, 427–9 (Mahoney JA), 433–5 (McHugh JA); and is not so under the Act.
[33]Or a permissible variant.
Seventh, a justification defence is not free-standing. Before trial, it must be apparent that the defence engages with the plaintiff’s particularised meaning. If it does not do so, it will be struck out. Caution in taking that step does not mean that, if the situation is clear, the step should not be taken.[34] In a common law jurisdiction, that is precisely what happened with a justification defence in Manock, cited by defendant’s counsel.[35] The position was the same under the Defamation Act1974 (NSW). In Greek Herald, Mason P pointed out that ’[d]efences as to truth, contextual truth and comment are also responsive to the pleaded imputations’.[36] The necessary corollary is that a truth defence which did not respond could not survive challenge.
[34]It is the same with other untenable defences: Manock (2007) 232 CLR 245, 262 [33] (Gummow, Hayne and Heydon JJ). Manock involved, by the time that it reached the High Court, a comment defence. In this Court, comment and Hore-Lacy defences have from time to time been struck out as being untenable.
[35]Ibid 259–60 [23]–[25], [28].
[36]Greek Herald (2001) 54 NSWLR 165, 172 [19].
Eighth, in the context of strike-out applications it is commonplace that a judge will need to identify what is the sting conveyed, on the one hand, by a plaintiff’s imputation, and, on the other hand, by a defendant’s imputation. Questions of that kind can arise where the pleading is of — justification;[37] [38] Hore-Lacy justification;[39] comment;[40] and contextual truth.[41]
[37]Where particulars of justification fall for consideration.
[38]See, eg, Manock, above n 35; Gutnick v Dow Jones & Co Inc(No 4) (2004) 9 VR 369.
[39]See, eg, Setka (2014) 44 VR 352; Anderson v Nationwide News Pty Ltd (2001) 3 VR 619, 624 [14]–[17].
[40]See, eg, Hore-Lacy v Cleary (2007) 18 VR 562, 572–4 [36]–[49], 584 [104].
[41]It is at the heart of the ‘differ in substance’ enquiry described by McColl JA in Fairfax Media Publications Pty Ltd v Zeccola (2015) 91 NSWLR 341 (‘Zeccola’). See also Abou-Lokmeh v Harbour RadioPtyLtd [2016] NSWCA 228 [30] (‘Abou-Lokmeh’), where, as in Zeccola, McColl JA approved an observation of Nicholas J in Ange v Fairfax Media Publications Pty Ltd [2011] NSWSC 204 [28]. That observation strongly makes the point; and Newnham v Davis (No 2) [2010] VSC 94 [48]–[51] (‘Newnham’).
I pause to refer to two submissions advanced for the defendant:
(1) senior counsel cited a passage from the reasons for judgment of Gillard J in Li v The Herald & Weekly Times Pty Ltd,[42] in which his Honour referred to the advice of Lord Shaw in Sutherland.[43] I understood counsel’s submission to be that, in the context of a pleadings dispute, a justification defence which is under challenge should not be read word by word, but should be given ample meaning. But that is not what his Lordship was addressing. Nor was it the issue in respect of which Gillard J cited his Lordship’s advice. The point at issue was the way in which a justification defence should be considered and applied at trial. Gillard J referred in that context to his Lordship’s observation that ‘the plea must not be considered in a meticulous sense’. Counsel’s citation of Li did not advance consideration of the present issue;
(2) senior counsel also cited a passage from the reasons for judgment of Gillard AJA, sitting in this Court, in Popovic.[44] He did so in two contexts. First, as a basis for the submission that a defendant makes out the defence of justification by establishing truth in substance, this not requiring proof of minor or irrelevant aspects of the defamatory meaning. Second, to support a submission that the defence must meet the defamatory stings as found by the jury.
[42][2007] VSC 109 [87].
[43][1925] AC 47, 79.
[44](2003) 9 VR 1, 57 [274], [306].
The accuracy of the first submission is not in doubt. Its application is another matter.
Insofar as the second submission implied that it is for the jury at trial to determine the sting of a plaintiff’s imputation, I reject it. Apart from matters to which I have already referred, the pertinent part of the reasons for judgment of Gillard AJA concerned what his Honour called a ‘Polly Peck’[45] defence — Polly Peck being a forerunner of Hore-Lacy.[46] What his Honour stated in that connection was that the defendant was required to plead and then justify at trial its alternative meaning — which must be a meaning not separate and distinct from that relied upon by the plaintiff.[47] Then, those requirements having been met, the trial had proceeded.
[45]Polly Peck (Holdings) Plc v Trelford [1986] QB 1000.
[46]Winneke P, appropriately, referred to the defence in Hore-Lacy terms: see Popovic (2003) 9 VR 1, 14-15 [20]–[21].
[47]Popovic (2003) 9 VR 1, 63–5 [306]–[317], 68–9 [327]–[329].
Ninth, in Setka, Warren CJ and Ashley JA summarised the development of the pleading at common law which has come to be known as the Hore-Lacy justification defence. Their Honours said:
Thus, by an H-L justification defence, a defendant denied that the publication had the meanings relied upon by the plaintiff and did not seek to justify them. A defendant did not seek to do so because it would be anomalous to confess and avoid to a meaning which, according to the defendant the publication was incapable of conveying.
Assuming that the defence succeeded to that point, assuming that the plaintiff would have been entitled to rely, as permissible variants, upon the meanings proposed by the defendant, and assuming that the defendant justified those meanings, the plaintiff would fail.
The pleading of a justification defence in conformity with the reasons of the majority in Hore-Lacy necessarily operated to define, together with the statement of claim, the substance of the issues to be litigated at trial. In our opinion, to treat such a defence as being no more than a matter of form, an example of the pleader’s art (or subterfuge), was to erroneously confine its importance. Rather, the statement of claim and defence set the framework for trial — what could be opened, what would be admissible evidence, how the judge should charge in a jury trial, and what issues the judge must consider in a trial by judge alone.[48]
[48]Setka (2014) 44 VR 352, 370–1 [60]–[61], [64].
Their Honours also concluded that, subsequent to the commencement of the Act, Hore-Lacy remains a necessary part of the landscape in defamation proceedings — whether by preservation of the common law, or else in the application of s 25 of the Act. Their Honours preferred a conclusion that Hore-Lacy remains because, relevantly, the common law remains in place; that it does so as a matter of substance, not merely pleading. Whelan JA preferred a conclusion that Hore-Lacy survives, as a matter of pleading, in the context of s 25 of the Act. For present purposes, the question as to whether one or the other explanation is the correct one is beside the point.
Hore-Lacy demonstrates the importance of completing the framework for consideration by the trier of fact of the issues for resolution where a justification defence is propounded. The trier of fact will then be able to understand what it is that the defendant seeks to justify.
Analysis
In this Court, defendant’s counsel stressed a submission that it was not argued that the meaning of plaintiff’s imputation (a) was ambiguous.[49] Rather, counsel submitted, the imputation has the meaning identified at [19](4) above. That is its necessary meaning, discernible from the content of the impugned publications. Thus, the meaning is not that contended for by the plaintiff as noted at [18] and [35](3) above.
[49]Which would invite a judge’s consideration, and resolution, of the alleged ambiguity.
I reject that submission. For reasons already explained, in the setting of this pleadings dispute it was for the judge to examine the plaintiff’s imputation (a) and settle upon its sting. That was not to be discerned by recourse to the impugned publications. I agree with the plaintiffs’ submission that, unambiguously, the meaning proposed by imputation (a) is that the plaintiffs breached their obligations to vulnerable investors by ‘failing to account to them for money paid to them on behalf of those investors … for lengthy periods …’. The first ‘them’ refers to the investors. The phrase ‘paid to them’ refers to payment to the plaintiffs. The sting of the published matter of which the plaintiffs complain by imputation (a) is not that they breached their obligations by failing to pay incentive moneys to investors for lengthy periods in breach of obligation; but rather, that the breach was failing to pay investors moneys for lengthy periods after Ethan had received them.
So to understand imputation (a) is entirely consistent with the way in which imputations (b) and (c) are framed. The plaintiffs’ submission to that effect should be accepted. Each of the three imputations asserts, in substance, that the plaintiffs delayed payment of moneys to investors which had been received by Ethan from the government for the investors. The similarity of language is striking:
·‘…failing to account to [investors] for money paid to [the plaintiffs] on behalf of those investors by the Government’;
·‘…deliberately delaying the payment of moneys received from the Government on behalf of … investors’;
·‘…failing to pass on payments that had already been paid to Ethan that was due and owing to [investors]’.
The submission for the defendant that reference in imputation (a) to alleged delay in payment of moneys received by Ethan is, in effect, a peripheral matter, or an irrelevance, and that the meaning which must be justified therefore need not address it, cannot be accepted.
Still less can it be accepted that it would be for the jury to decide that the ‘sting’ of imputation (a) does not contain that aspect; for which reason the judge must have concluded, on consideration of the justification particulars, that the justification defence engaged with imputation (a). It was no part of the judge’s function to give consideration to what the jury might conclude was a possible meaning of imputation (a). It was, in any event, no part of the jury’s function to make any such inquiry.
Thus, insofar as the defendant submitted, and the judge accepted, that the entire question of the meaning of imputation (a) was a matter for the jury, and that the jury might find that the meaning was as contended for by the justification particulars, this bearing upon the judge’s consideration of the strike-out application, the submission and the judge’s acceptance of it cannot be accepted.
In this Court, the defendant submitted — it did not sit comfortably with the submission noted at [56] above — that the justification particulars literally engaged with imputation (a). A submission was made which took as its starting point acceptance of the ‘plaintiffs’ meaning’. It ran this way: the particulars did engage with what I have described as the unambiguous meaning of plaintiffs’ imputation (a). Ethan had represented to investors for years that payments would be speedily made, and had continued to do so after there had been repeated delays in payment. A jury could infer that Ethan had withheld moneys which it had received from government for investors.
I will deal briefly with this submission. It appears that it was not advanced below. It was not mentioned in ABC’s written outline, and the judge’s reasons do not suggest that it was made orally. In any event, in my opinion, it lacks merit. First, it is incompatible with the summation of the ‘representations’ particulars at paragraph 7A.25 of the defence. Second, it is not compatible with paragraph 7A.26, which follows on from the ‘representation’ particulars, and which says nothing to suggest retention of moneys paid to Ethan for any of six identified investors. Third, if it was to be alleged that the particulars would enable the jury to draw the inference referred to in the preceding paragraph, then that should have been particularised. Had this been done, the plaintiffs’ would have been able to submit — I am strongly disposed to say correctly — that the so-called inference was no more than an invitation to speculate.
I have assumed, in rejecting the submission noted at [56], that the particulars of justification address the meaning described at [19](4) above. As explained below, they do so. But that carries the defendant nowhere.
Paragraph 7A of the defence begins this way:
If the publications are defamatory of the plaintiff and carried the meaning alleged in paragraph 7(a) (which is denied), then in that meaning the publications were substantially true … .[50]
[50]My emphasis. These words underline the fact that the justification defence must engage with the meaning proposed by the plaintiffs.
Particulars 7A.1 to 7A.12 do no more than set up the framework of NRAS, including — (1) the operational year for that body; (2) the fact that any approved dwelling must be let at a rental level at least 20% below the applicable market rental rate; (3) the fact of contribution to incentive payments to investors by Federal, State and Territory governments; (4) whether incentive payments are to be paid in cash or by way of refundable tax offset certificates; and (5), the need for a body such as Ethan to provide information in the form of a statement of compliance to the relevant Commonwealth department for each approved dwelling so as to enable the department to assess whether the property is compliant with the scheme, such statements of compliance to be lodged by 30 June after the end of each NRAS year, with a maximum extension of time for lodgement being 30 September of that year.
Particulars 7A.13 and 7A.17 detail when Ethan became an approved participant in the scheme, and Fenn’s role as director, secretary and managing director of Ethan at all material times.
Thus far, the particulars are no more than a preface to the heart of the justification defence.
Particulars 7A.18 to 7A.19 identify the contractual arrangements between Ethan and investors, by which, in return for 7.5% of the incentive payment, Ethan was to ensure that the investor’s dwelling complied with the requirements of the scheme, submit statements of compliance and ensure that incentive payments were passed on to the investor.
By particulars 7A.20 to 7A.24, ABC alleges that a number of representations were made by Ethan to investors as to when incentive payments would be made, as well as representations spruiking the benefits of the scheme for investors. The following allegations are made:
· By particular 7A.20.1, that Ethan represented that:
both the Federal and the State/Territory components of the Incentive were provided to Ethan by way of a cash payment, which would be paid by Ethan to Investors after an audit process was completed in June and September following the end of each NRAS year.
· By particular 7A.21, that:
On or about 29 August 2013, Ethan represented to Investors (by way of a document entitled ‘NRAS Program Update’) that a benefit of its charitable status was that they could elect to receive the Federal Government component of the Incentive in cash.
· By particular 7A.22, that:
From 2014 until at least August 2016, Ethan represented to Investors via the Ethan Website that Incentives would be paid to them after an audit process was completed in August and September each year.
· By particular 7A.23, that:
Since August 2016, Ethan has represented to Investors via the Ethan Website that Incentives will be paid to Investors as soon as Ethan receives them from the relevant government.
· By paragraph 7A.24, that:
In a booklet provided to Investors considering engaging Ethan Residential as a property manager, Ethan represented to Investors that it would take steps to ensure Investors received their Incentives without complication and on time at the end of each NRAS year.
The effect of the representations thus particularised is said by particular 7A.25 to be this:
In the premises, Investors have at all relevant times had a reasonable expectation that they would receive their Incentives from Ethan within a reasonable time after the end of each NRAS year.
Particular 7A.26 alleges six specific examples of delay in providing incentive payments to investors. In submitting below that the particulars were capable of justifying the imputation, ABC referred ‘especially’ to particular 7A.26, which begins this way:
Ethan did not provide all investors with the full amount of their incentives within a reasonable time after the conclusion of the relevant NRAS year.
Then follow the six examples. In no instance is it asserted that the alleged delay in making payment of the incentive involved a situation where Ethan had received the money but delayed transmitting it to the investor.
Particular 7A.27 pleads circumstances from which, it is said, it could be inferred that all or many of the investors were vulnerable. It is not necessary to say any more about this paragraph of the particulars, because it does not bear, in my opinion, upon resolution of the application to strike out the justification defence.
Thus, it is clear that the particulars said to support paragraph 7A of the defence neither meet, nor attempt to meet, the centre point of the sting alleged by imputation (a) — that the publications had the meaning not simply that Ethan delayed making payment to investors in breach of obligations, but that it so delayed after having received payments from the government (whether Commonwealth or State) for those investors. On their face, the particulars seek to justify a different sting of the publications — that Ethan delayed in making payments to investors for lengthy periods in a way that was incompatible with representations that had been made to them over the years, to their detriment. Only the last alleged representation — see particular 7A.23 — made just a few months before the publications, makes any reference to receipt of moneys from government. This is not the point of the defence, as is clear from particular 7A.25; and see also particular 7A.26.
It was submitted for the defendant, however, that even if the particulars of justification did not engage with ‘the plaintiffs’ meaning’ of imputation (a) yet it is only required to prove the substantial truth of that imputation, and it is a matter for the jury whether the defendant has established the substantial truth of that imputation. It is correct to say that a defendant need only establish the substantial truth of a plaintiff’s meaning. But otherwise I reject the submission. First, it confuses the role of a jury at trial and the role of a judge on an application to strike out a justification defence. Second, the substantial truth contended for by the defendant in the present case was substantial truth of a meaning which greatly departed from the unambiguous meaning of imputation (a).
In the event, the justification particulars — (1) do not engage with the unambiguous meaning of imputation (a); and (2), are incapable of establishing the substantial truth of that meaning.
I have described and cited pertinent parts of the judge’s reasons at [25]–[32] above. I should return to them, against the background of the principles stated at [42]–[55] and the analysis at [56]–[76] above.
I am respectfully unable to agree with the judge’s analysis at Reasons [19]–[22]. At [19] and [20], his Honour set up what he then treated as two competing versions of the sting of imputation (a). At [21], he stated that it would be ‘clearly open to a jury to conclude that the sting of the imputation arose from the plaintiffs’ failure by delay in complying with obligations arising from expectations engendered by the plaintiff’s conduct’. That was the defendant’s proffered meaning of both the imputation and the published matter. His Honour next identified, at [22], the plaintiffs’ ‘construction of the sting of the imputation’. He then stated that ‘whether the defence is capable of succeeding must be assessed on the basis that the jury may accept the defendant’s construction of the imputation as carried or as a permissible variant and look for proof of the substantial truth of that sting…’
It is apparent — although the defendant contended to the contrary in this Court — that his Honour treated the defendant’s proffered meaning ‘of the imputation’ as being different to the meaning advanced by the plaintiffs. That is, his Honour did not approach the matter on the footing, argued for the defendant, that there was only one meaning of the sting of imputation (a), and it was ‘the defendant’s meaning’. Had his Honour accepted that submission, it would have been wrong. But instead, his Honour considered that it would be part of the jury’s function to pass upon the sting of imputation (a), and that it was relevant to the strike-out application that the jury might find one or other meaning to be that sting. That approach, with respect, was incorrect.
I turn to Reasons [45]. I respectfully disagree with the judge’s conclusion that the justification particulars would be capable of supporting either the ‘sting of the imputation’ as contended for by the defendant or as contended for by the plaintiff — whichever ‘interpretation’ the jury settled upon. For reasons which I have explained, the starting point for the conclusion was incorrect. Perhaps, I should not speculate, the wrong starting point culminated in a conclusion which is otherwise inexplicable. I do not understand how particulars which entirely exclude reference to the centre-point of imputation (a) could possibly stand in justification — allowing ‘substantial justification’ — of the meaning which it advances.
It follows that the defendant’s reliance upon Reasons [45] leads nowhere.
Remedy
I come to the question of remedy. It was submitted for ABC in this Court that what was being done by the plaintiffs was to challenge a discretionary interlocutory decision on a matter of practice and procedure, in which circumstances leave to appeal will only be rarely granted. There was, ABC submitted, a failure by the plaintiffs to identify any substantive error of principle that would warrant interference with the impugned orders, or any substantial injustice in allowing them to stand. But the error complained of by the plaintiffs with respect to the judge’s consideration of the justification defence is that his Honour proceeded from an incorrect application of principle, which then cascaded into a false evaluation of the particulars said to make good the justification defence. That having been established, the Court is not concerned merely with a challenge to a discretionary interlocutory decision on a matter of practice and procedure. Rather, error in principle having been identified and established, leave to appeal should be granted on grounds 1, 1A and 2, and the appeal allowed.
The contextual truth defence
The statutory provision
Section 26 of the Act says this:
Defence of contextual truth
It is a defence to the publication of defamatory matter if the defendant proves that —
(a)the matter carried, in addition to the defamatory imputations of which the plaintiff complains, one or more other imputations (contextual imputations) that are substantially true; and
(b)the defamatory imputations do not further harm the reputation of the plaintiff because of the substantial truth of the contextual imputations.
The defendant’s pleading
By paragraphs 7B to 7E of the defence, the defendant pleads that:
7B. Further or alternatively, if the Publications are defamatory of the Plaintiffs and carried any or all of the meanings alleged in paragraph 7 or any permissible nuances thereof (‘Carried Imputations’), all of which is denied, then the Defendant says that the Publications also carried, in their natural and ordinary meaning, the following additional imputations:
(a)the Plaintiffs so conducted the business of the Second Plaintiff that, in July 2016, the Australian charities’ regulator took the most serious action it could take and revoked the Second Plaintiffs charitable status (‘First Contextual Imputation’);
(b)in failing to provide investors with the annual incentives to which they were entitled under the National Rental Affordability Scheme within a reasonable time after the end of each financial year, the Plaintiffs caused financial hardship, stress and emotional distress, and put some investors at risk of having to sell their properties or default on their mortgages (‘Second Contextual Imputation’).
7C.The First and Second Contextual Imputations are substantially true.
Particulars
Contextual Imputation (a)
7C.1On 3 December 2012, Ethan was registered as a charity on the charity register of the ACNC.
7C.2The ACNC is a Commonwealth statutory body operating as Australia’s independent national regulator of charities pursuant to the Australian Charities and Not-for-profits Commission Act 2012 (‘the ACNC Act’) and the Australian Charities and Not-for-profits Commission Regulation 2013 (‘the ACNC Regulations’).
7C.3The ACNC Act and the ACNC Regulations prescribe governance standards that entities registered with ACNC (‘charities’) are required to meet (‘the ACNC Governance Standards’).
7C.4The object of the ACNC Governance Standards is to provide a minimum level of confidence that charities will (amongst other things):
7C.4.1effectively, efficiently and responsibly use the resources available to them;
7C.4.2meet community expectations about managing their affairs (including the use of public money, volunteer time and donations);
7C.4.3minimise the risk of mismanagement and misappropriation;
7C.4.4operate transparently and for a proper purpose; and
7C.4.5meet their obligations under the ACNC Act and the ACNC Regulations.
7C.5As part of its regulatory role, the ACNC is:
7C.5.lresponsible for the registration and revocation of charities; and
7C.5.2required to maintain, protect and enhance public trust and confidence in the not-for-profit and charities sector by ensuring that charities are accountable and transparent.
7C.6The most serious action the ACNC can take against a charity is to revoke its Commonwealth charitable status. The ACNC will take action and revoke charitable status if it identifies serious mismanagement or misappropriation of funds; a persistent or deliberate breach of the ACNC Act; or that vulnerable people or significant charitable assets are at risk.
7C.7Charities that have their charitable status revoked lose access to Commonwealth charity tax concessions.
7C.8The ACNC launched an investigation into the activities and operations of Ethan and assessed Ethan’s eligibility for registration as a charity and its compliance with the ACNC Governance Standards.
7C.9The ACNC’s investigation revealed that Ethan had failed to comply with its obligations under Part 3-2 of the ACNC Act with respect to record keeping over two consecutive lodgement years.
7C.10Following its investigation into Ethan, on 25 July 2016, the ACNC revoked Ethan’s charitable status and backdated the revocation to 1 July 2013.
7C.11In an email letter to the ABC on or about 12 December 2016 the Plaintiffs confirmed that they had received a notice from the ACNC setting out the reasons for the revocation of Ethan’s charitable status but declined to provide a copy to the ABC.
Further particulars may be provided after discovery, interrogatories and the issue of subpoenas prior to trial.
Second Contextual Imputation
7C.12The Defendant repeats and relies upon the particulars to paragraph 7A above (save for the matters set out in 7A.27.5 -7A27.7).
7C.13Ethan’s delay in payment of Incentives to various Investors meant they could not plan or manage their financial affairs properly or had to make financial sacrifices whilst awaiting payment. The affected Investors include:
7.C.13.1Elizabeth and Michael Burkitt;
7C.13.2Geoff Gardiner;
7C.l3.3Jason Hine; and
7C.13.4John Johnston.
7C.14Some Investors experienced financial hardship, stress and emotional distress by reason of Ethan's delay in paying Incentives in a timely manner. The affected Investors include:
7.C.14.1Elizabeth and Michael Burkitt;
7C.I4.2Geoff Gardiner;
7C.l4.3Nell Hickey;
7C 14.4Jason Hine; and
7C.14.5John Johnston.
7C.15Several Investors became frustrated and stressed by the failure of Ethan to respond adequately and in a timely fashion to their legitimate concerns about delays in payment of Incentives. The affected Investors include:
7C.15.1Elizabeth and Michael Burkitt;
7C.15.2Neil Hickey; and
7C.15.3John Johnston.
7C.16Delays in the payment of Incentives also caused some Investors considerable stress and inconvenience with respect to completing their tax returns in a timely fashion. The affected Investors include:
7C.16.1Jason Hine; and
7C.16.2John Johnston.
Further particulars may be provided after discovery and interrogatories and prior to trial.
7D.The Carried Imputations do not further harm the reputation of the Plaintiffs because of the substantial truth of the First Contextual Imputation and, further or alternatively, the Second Contextual Imputation.
7E.In the premises, the Defendant has a defence of contextual truth pursuant to section 26 of the Act and, to the extent necessary, pursuant to the corresponding provisions in the defamation legislation of each other Australian State and Territory.
The judge’s reasons, first contextual imputation
Having set out s 26 of the Act, the judge made general statements with respect to its operation. He noted that —
particulars of contextual truth must clearly set out the publisher’s case, explicitly stating the meaning to be justified with adequate disclosure of the facts, matters and circumstances which will demonstrate substantial truth. [51]
The correctness of that proposition is not put in doubt.
[51]Reasons [14].
The judge next stated that —
In assessing whether a contextual truth defence is adequately pleaded, the Court should take the defendant’s case at its highest in relation to the imputations alleged by the plaintiff and compare the particulars of contextual truth with the least serious of the plaintiff’s imputations. [52]
Again, see below, that was a correct statement of principle.
[52]Ibid [15] (citations omitted).
His Honour next observed, correctly, that —
A contextual implication must be ‘in addition to’ the plaintiff’s imputation. It must differ in substance from that other imputation. That evaluation can be impressionistic and a jury is not limited to the precise formulation of an imputation that is pleaded and may consider permissible variants.[53]
[53]Ibid [16] (citations omitted).
Pausing, the plaintiffs did not submit that the first contextual imputation is not ‘in addition to’ their imputation (a). But that question does arise with respect to the second contextual imputation.
I should next refer to his Honour’s statement that —
The defence requires that the plaintiff’s imputation does not further harm the plaintiff’s reputation because of the substantial truth of the contextual imputation set up by the defendant. Again, this assessment is a factual question but it is amenable to a legal assessment of whether the evidence that might be called in support of pleaded particulars has the capacity to support a conclusion as to the harm, or further harm that may have occurred.[54]
[54]Ibid [17].
The question whether a defamatory imputation pleaded by a plaintiff did not further harm the plaintiff’s reputation because of the substantial truth of a contextual imputation pleaded by the defendant,[55] and the question whether particulars of the imputation which are pleaded support that imputation are each amenable to consideration by a judge at the threshold. In the first case, a judge asks — is the defendants’ imputation capable of furthering the harm brought on the plaintiff’s reputation by reason of the plaintiff’s imputation. In the second case, the judge considers whether particulars of the imputation pleaded by the defendant are capable of supporting that imputation. If those questions are answered in favour of a defendant, the issues whether the defendant has established the elements of the defence are to be decided by the trier of fact at trial.
[55]But bearing in mind the matter of ‘aggregation’ discussed at [95] and following, below.
Turning specifically to the first contextual imputation, the judge noted competing submissions with respect to just what was being alleged. On the one hand, the plaintiffs submitted that the first contextual imputation characterised Ethan’s failure to comply with its obligations as being ‘with respect to record keeping’. So understood, it could not be said to be sufficiently serious that the plaintiffs’ imputations could not and did not cause them further injury. On the other hand, the defendant contended that the record-keeping failure was coloured by the context — the revocation of Ethan’s charitable status, which is the most serious sanction available to the regulator. This revocation, ABC submitted, implied that the record-keeping failure amounted to a very grave failure to comply with the law.
Then his Honour embarked upon consideration of the particulars in support of the first contextual imputation, observing in some instances that evidence about matters particularised would be admissible at trial and could stand.
In any event, the judge expressed these conclusions:
52I reject the plaintiffs’ characterisation of the first contextual imputation as a mere, or relatively inconsequential, record-keeping failure. In my opinion, it would be open to a jury, after considering the evidence that these particulars would permit, to view the sting of the imputation about the record keeping failure in the context of the ACNC enforcing its most serious sanction after its investigation into Ethan Housing’s activities and operations. The jury could reasonably conclude that the first contextual imputation was a serious imputation of a grave failure to comply with the law.
53To establish the defence, the jury must compare this imputation with the least serious of the plaintiffs’ imputations, which is imputation (a) concerning breach of obligations. A jury could reasonably accept that the first contextual imputation is in addition to each imputation. It is at least arguable that a jury could find the revocation of charitable status differs in substance from that contained in imputation (a) and is sufficiently serious such that the plaintiffs’ imputation did not cause any further injury to the plaintiffs. It would be open to a jury to find that breach of statutory obligations that attracted the regulators [sic] most serious sanction would not further harm the plaintiffs’ reputation beyond any harm from breach of private obligations owed to investors. This is a matter of fact for the jury and I am not persuaded that evidence in support of these particulars will lack the capacity to permit a reasonable jury to so reason.
54The plaintiffs have not established that the contextual truth defence based on the first imputation is so obviously untenable or unarguably bad to warrant being struck out.
Ground of appeal, first contextual imputation
By ground 3, the plaintiffs contend that —
The primary judge erred in finding at [53] that it would be open to a jury to find that the respondent’s first contextual imputation was sufficiently serious such that the applicants’ first imputation did not cause any further harm to the applicants’ reputation.
Principles
According to the agreed position of the parties, in a strike–out application each of the defendant’s contextual imputations is to be compared with the least serious of the plaintiffs’ imputations, in order to see whether it is capable of being ’in addition to’ that imputation. That agreed position is consistent with authority.[56]
[56]See, eg, Abou-Lokmeh [2016] NSWCA 228 [20] (McColl JA).
According to the defendant’s submission, to which the plaintiffs did not mount a contrary argument, the question whether s 26(b) of the Act is sufficiently satisfied for the purposes of such an application is to be considered by aggregating the capability for harm arising from the contextual imputations, assuming proof of their truth, and comparing the extent of that potential harm with the capability for harmful impact of the least serious of the plaintiffs’ imputations. Aggregation of capability for harm, it was submitted, is a consequence of the language of s 26(b).
To approach the matter in that way may well be problematic in some instances. For instance, a judge might be satisfied that neither of two contextual imputations, considered apart, would be capable of ‘swamping’ the plaintiff’s least serious imputation. But, considered together, there might be such capability. Again, a judge might be satisfied that one of two contextual imputations was capable of ‘swamping’ the plaintiff’s least serious imputation, but that the other contextual imputation would be incapable of having such an impact; or, indeed, of having any impact at all. In each of those two situations, the consequence of the approach contended for by the defendant would be that both contextual imputations would survive a strike-out application. In the absence of full argument, I will approach the matter on the basis contended for by the defendant. But I reserve for consideration on another occasion the question whether the approach is correct in principle.
I should add this. The only authority relied upon by the defendant to support the ‘aggregation’ argument was a passage in the judgment of McColl JA in Abou-Lokmeh, where her Honour stated that: ‘The Court should “take the defendant’s case at its highest as to which of the plaintiff’s imputations were conveyed (that is, to compare the particulars of contextual truth with the least serious of the plaintiff’s imputations”’.[57] That did not carry the argument very far.
[57][2016] NSWCA 228 (citations omitted).
My own research, limited in the circumstances, has disclosed that in Fleming v Advertiser-News Weekend Publishing Co Pty Ltd,[58] Peek J of the South Australian Supreme Court held, on a strike-out application where the plaintiff pleaded a single imputation and the defendant pleaded three contextual imputations, it being argued for the plaintiff that the harm flowing from his imputation must necessarily exceed the harm flowing from the defendant’s imputations, that:
That argument might have substantial force if both the plaintiff and defendants each made one imputation of one factual occurrence and that of the plaintiff was inherently more serious than that of the defendants. But here, while the imputation made by the plaintiff is the most serious standing alone, the defendants make a number of imputations the cumulative effect and force of which must be taken into account.[59]
[58][2012] SASC 58.
[59]Ibid [50].
His Honour’s approach drew on the statement of the judge from whose decision the appeal before him was brought that —
the relevant comparison is not simply between individual imputations, but whether the defendants’ contextual imputations, taken in aggregate and including the facts and matters pleaded by the defendants, are such that they are capable of so affecting the plaintiff’s reputation that the defendants’ pleaded imputations, assuming they are established, do not further injure his reputation.
That approach was said to accord with the conclusion of Hunt J in Hepburn v TCN Channel Nine Pty Ltd.[60]
[60][1984] 1 NSWLR 386.
Under the Defamation Act 1974 (NSW), each imputation pleaded by the plaintiff was a separate cause of action. Thus, any contextual imputations had to respond to a single imputation pleaded by the plaintiff. It was in this context that s 16 of the 1974 Act relevantly provided, in part, that it was a defence to any (plaintiff’s) imputation complained of that ‘(c) by reason that those contextual imputations are matters of substantial truth, the imputation complained of does not further injure the reputation of the plaintiff’. This language made it very clear that the aggregate effect of more than one contextual imputation was to be considered in the weighing process, necessarily against a single imputation pleaded by the plaintiff.
It might be argued, because the current position on a strike-out application is that the least serious of the plaintiff’s pleaded imputations is to be compared for impact with any contextual imputations pleaded by the defendant, that the impact of multiple contextual imputations is to be considered in the aggregate. But as I said earlier, I prefer to leave the question whether that is the correct approach to a later occasion, after full argument which would necessarily address the relevant provisions of the Act. For completeness, I note finally that the particular approach was not taken by Kaye J (as his Honour then was) in Newnham.[61]
[61][2010] VSC 94 [52]–[54].
To reiterate, I will now approach the matter on the footing of acceptance of the defendant’s ‘aggregated impact’ submission, which the plaintiffs did not contest.
Before going on, I should say that it was common ground before the judge and in this Court that the least serious of the plaintiffs’ imputations is that contained in paragraph 7(a) of the statement of claim.
It was next common ground that, in determining whether a defendant’s contextual imputation is capable of being ‘in addition to’ the plaintiff’s least serious imputation, a court must focus on the facts, matters and circumstances relied upon to establish the truth of the contextual imputation, rather than upon the terms of the contextual imputation itself. This involves particular focus upon the particulars alleged in support of the contextual imputation.
It has been repeatedly stated in New South Wales and in Victoria that the question whether a contextual imputation is capable of being ‘in addition to’ a plaintiff’s imputation turns upon whether the former differs in substance from the latter.[62] It is important to understand that the key ingredient of difference in substance is that the contextual imputation is not a permissible variant of a meaning pleaded by the plaintiff.
[62]See, n 42. See also Setka (2014) 44 VR 352, 417–18 [297]–[298] where the parties made competing submissions which in each case accepted the correctness of this test; and Newnham [2010] VSC 94 [48].
This does not mean, however, that the same imputation may not be pleaded both as Hore-Lacy justification and contextual truth. That may be done, and it will be for the trier of fact to decide which, if either, plea succeeds, unless a judge concludes before the jury comes to consider the matter that one or both pleas are incapable of being sustained.[63]
[63]In Newnham [2010] VSC 94, the defendant relied upon exactly the same three meanings in support of defences of justification and contextual truth. Kaye J concluded that the justification defence should stand, but that the contextual truth defence should be struck out, the defendant’s meanings not being arguably ‘additional to’ the meanings particularised by the plaintiff.
Parties’ submissions, first contextual imputation
Having already described the principles which apply to consideration of a strike-out application with respect to contextual imputations by reference to submissions made for the parties, in what follows I set out only so much of their submissions as addressed factual considerations.
The gist of the written and oral submissions for the plaintiffs was that all that is alleged against them in the particulars supporting the first contextual imputation is that Ethan failed to comply with its obligations with respect to record keeping. Indeed, it is only alleged that a regulator so determined. The defendant had provided no particularisation to show that the bookkeeping deficiency was grave. The defendant was evidently relying upon discovery to make good the deficiencies in its particularisation. Particularisation which depended upon the defendant’s hopes of uncovering a serious deficiency in bookkeeping was not a basis for a conclusion that the first contextual imputation is capable of ‘swamping’ plaintiffs’ imputation (a).
Moreover, it was submitted, it appeared that the judge’s error in weighing the relative seriousness of plaintiffs’ imputation (a) with the particulars supporting the first contextual imputation was, at least in part, a consequence of his Honour’s error in misconstruing imputation (a). That is, his Honour construed that imputation as arguably only concerning delay and a breach of private obligations owed to investors based on a failure to meet reasonable expectations.
It was submitted for the defendant that the judge had rightly rejected the plaintiffs’ submission that the first contextual imputation was essentially benign. The plaintiffs did not now identify any alleged error in the judge’s analysis, beyond a bare assertion that the reasoning seemed, in some unidentified way, to have been infected by error in misconstruing plaintiffs’ imputation (a). There was nothing to support an inference to that effect.
Moreover, it was submitted, it was quintessentially a jury matter to determine whether, in the entire context revealed by the particulars alleged in support of the first contextual imputation, revocation of Ethan’s status as a charity had such reputational consequences as to ‘swamp’ the effect upon the plaintiffs of their imputation (a).
Analysis, first contextual imputation
The ground of appeal does not challenge the judge’s finding that it would be open to a jury to find that the first contextual imputation was in addition to plaintiffs’ imputation (a). Understandably so. Neither does the ground challenge the judge’s conclusion that the defendant could adduce evidence to prove the truth of the first contextual imputation. Again, understandably so. The particulars in support of the first contextual imputation are long-winded, and mainly a preface to the substance of what is contended, but particulars 7C.6, 7C.8, 7C.9, 7C.10 and 7C.11 identify the main matters that the defendant would seek to prove at trial.
At the heart of the ground of appeal is this passage, I repeat it for convenience, in the judge’s reasons:
It would be open to a jury to find that breach of statutory obligations that attracted the regulators [sic] most serious sanction would not further harm the plaintiffs’ reputation beyond any harm from breach of private obligations owed to investors. This is a matter for the jury and I am not persuaded that evidence in support of these particulars will lack the capacity to permit a reasonable jury to so reason.[64]
[64]Reasons [53].
It will immediately be noticed that the judge dealt separately with the impact of the first contextual imputation with plaintiffs’ imputation (a), rather than aggregating the impact of the first and second contextual imputations and considering whether they were capable of ‘swamping’ plaintiffs’ imputation (a). It was submitted for the defendant that this was an incorrect approach, but that, as soon as the judge found that one of the contextual imputations was capable of ‘swamping’ plaintiffs’ imputation (a), then it followed that the aggregate effect of the two contextual imputations would have that effect. I agree that, logically, it would do so.
The passages cited at [94] above expanded upon his Honour’s rejection of the plaintiffs’ characterisation of the first contextual imputation as a mere or relatively inconsequential record-keeping failure.
If it was correct to say that the comparators were, on the one hand, a breach of a statutory obligation that attracted a regulator’s most serious sanction, and, on the other hand, breach of private obligations owed by Ethan to investors, I would have no doubt that a jury could conclude that plaintiffs’ imputation (a) did not further harm the reputation of the plaintiffs because of the substantial truth of the first contextual imputation. But was that a correct comparison?
The judge’s reference to ‘a breach of private obligations owed by Ethan to investors’ has the flavour of the defendant’s version of the meaning of plaintiffs’ imputation (a), which I have rejected. I think that there was force to the plaintiffs’ submission to that effect. If that was the situation, then it was a false comparator
There is, in the event, a real question whether the judge identified the meaning of the comparator on the plaintiffs’ side correctly. But the matter is opaque. In my view, it cannot be concluded with necessary confidence that the judge did set up an erroneous comparison.
On the other side of the ledger, I agree with the defendant’s submission that alleged failures of bookkeeping must be understood in the context of imposition by the regulator of the most serious sanction available. At least, it would be open to a jury, in the course of deciding if the particulars supported the pleaded contextual imputation, to so conclude.
Assume that the judge correctly stated the comparators. The question then would become one of comparing a contextual imputation of statutory breach, serious, it might be concluded, but largely undefined, with the lengthy withholding of moneys paid to Ethan by government for vulnerable investors. It is, in my opinion, far from clear that imputation (a) would not further harm the reputation of the plaintiffs because of the substantial truth of the defendant’s imputation. But I cannot conclude that a jury might not so conclude.
In the event, despite having some hesitation about the correctness of the judge’s description of one of the relevant comparators with respect to the first contextual imputation, I consider that the plaintiffs’ attack on his Honour’s ‘no further harm’ conclusion fails.
The judge’s reasons, second contextual imputation
With respect to the second contextual imputation, the judge resolved the matter this way:
59The second contextual imputation is ‘in addition to’ imputation (a) — that the plaintiffs failed to comply with their obligations to the investors by delay in payment of the incentives — as it goes one step further because its sting is that as a result of such failure, the plaintiffs caused financial hardship, stress and emotional distress, and put some investors at risk of having to sell their properties or default on their mortgages. The defendant conceded that the particulars relied on for the justification defence were repeated, but submitted that the additional particulars of the contextual truth defence (in paragraphs 7C.13–16) focus on the actual consequences experienced by the investors.
60It is not uncommon to have substantial overlap between imputations pleaded by a plaintiff and contextual imputations set up by a defendant, but the particulars show that the evidence to be adduced to prove the truth of the second contextual imputation would differ to that required to prove the truth of the plaintiff’s alleged imputation. That follows because the second contextual imputation is in addition to and capable of swamping the plaintiff’s imputation by reason of the specific consequences faced by various identified investors. At trial, evidence could be led in support of these particulars that might persuade a jury about the financial hardship and emotional distress experienced by those investors, which is a matter that the defendant must prove to succeed in its defence. The facts and circumstances that may demonstrate the truth of the second contextual imputation range over a greater factual matrix and are much more specific than those that may demonstrate the truth of the plaintiff’s imputation (a).
61The plaintiffs have not persuaded me that it is not arguable that the second contextual imputation is not different in substance to the more general imputations of a failure to comply with obligations by a delay in payment to investors, or that it is not arguable that the sting of the second contextual implication is not sufficiently serious and could not further harm the reputations of the plaintiffs.[65]
Grounds of appeal, second contextual imputation
[65]Ibid [59]–[61] (citations omitted).
By grounds 4 and 5, the plaintiffs contend that —
4.The primary judge erred in finding at [61] that it would be open to a jury to find that the respondents’ second contextual imputation was sufficiently serious such that the applicants’ first imputation did not cause any further harm to the applicants’ reputation.
5.The primary judge erred in finding at [60] that the respondent’s second contextual imputation was carried by the publications in addition to the applicants’ first imputation.
Parties’ submissions, second contextual imputation
It was submitted for the plaintiffs in writing that the defendant sought to justify the second contextual imputation by proof of the same particulars as it relies upon in its justification defence, save that it has particularised specific consequences faced by a number of identified investors. But those additional particulars were not material because the sting of a defamatory matter resides in the defamatory condition or attribute conveyed of the plaintiff. The consequences suffered by investors were irrelevant, save to the extent that they were said to have been caused in a defamatory sense by the conduct of the plaintiffs. But the second contextual imputation does not attribute any blame to the plaintiffs for the alleged delays in payments being made to investors.
With respect to comparative seriousness, the plaintiffs relied upon the circumstances just mentioned; and contended that the judge erred because he had misconstrued plaintiffs’ imputation (a) as involving ‘a more general imputation of a failure to comply with obligations by a delay in payment to investors’.[66]
[66]See Reasons [61].
Orally, the plaintiffs submitted that one could not just add some consequences and say that it was therefore a different and additional imputation.
It was submitted in writing for the defendant that the judge correctly summarised plaintiffs’ imputation (a) as alleging ‘a failure to comply with obligations by a delay in payment to investors’.
Next, it was submitted that the sting of the second contextual imputation resided in the plaintiffs, by their failure to provide incentives to investors in a timely fashion, having caused financial hardship, stress and emotional distress; and having put some investors at risk of having to sell their properties or default on their mortgages. This was a serious imputation, the consequences of the plaintiffs’ conduct as articulated necessarily affecting the seriousness of the second contextual imputation.
Then, upon the question whether the second contextual imputation was ‘in addition to plaintiffs’ imputation (a)’, it was submitted that there was nothing to the point for the reasons identified by the judge at Reasons [59] to [60]. The consequences to the investors, which lay at the heart of the second contextual imputation, had been studiously avoided by the plaintiffs in imputation (a).
Orally, defendant’s counsel emphasised that the sting of the second contextual imputation resided in the seriousness of the consequences consequent upon the failure to make payment. Plaintiffs’ imputation (a), unlike the second contextual imputation, eschewed any reference to those consequences.
Analysis, second contextual imputation
Both parties focussed in their submissions upon the question of the comparative reputational harm of the second contextual imputation and plaintiffs’ imputation (a). That was the way in which the judge approached consideration of s 26(b) of the Act. At risk of repetition, it was not the way that the defendant asserted that s 26(b) should be considered on a strike-out application.
I note next that both parties advanced argument with respect to the requirement that the second contextual imputation be ‘in addition to’ plaintiffs’ imputation (a) as if this was the second matter to be considered. That inverted the sequence set up by s 26(a) and (b) of the Act. But I will deal with the matter in the sequence of the submissions.
The particulars alleged in support of the second contextual imputation have two aspects. The first aspect assigns a meaning to plaintiffs’ imputation (a) which, save in one respect, is the meaning contended for by the justification defence. Essentially, it is that the published matter conveyed simply a meaning that the plaintiffs delayed in making payments to investors in accordance with their reasonable expectations.
The second element is that vulnerable investors suffered identified consequences of that delay. The difference between the particulars supporting the second contextual imputation and the particulars of the justification defence is that, in lieu of particulars alleging unreasonable delay in payment to six investors[67] and an inference that all or many of the investors were vulnerable,[68] there is substituted an allegation that delay in payment to the same six investors caused them, variously, different kinds of distress.
[67]One investor being husband and wife.
[68]Particulars 7A.26–7A.27.
One must consider both aspects of that particularisation, notwithstanding that emphasis was laid by the defendant upon the consequences for investors — that is, the second aspect.
As to quantum of reputational harm, I do not agree with the defendant’s submission that the judge, at Reasons [60], correctly identified the gist of plaintiffs’ imputation (a). For reasons which I have explained, at the heart of that imputation is the meaning that the plaintiffs delayed making payments to vulnerable investors of amounts which Ethan had received from government.
Let me approach the matter, initially, in the way that the judge did, by considering the possible impact of each contextual imputation, compared standing alone, with plaintiffs’ imputation (a). If one considered the reputational impact of a pleading, on the one hand, of plaintiffs’ imputation (a) as correctly understood, and, on the other hand, a meaning that the plaintiffs delayed (whatever be the reason) in making payments to vulnerable investors in consequence of which those investors suffered different kinds of distress, I would conclude that the second contextual imputation, as particularised, is not capable of ‘swamping’ plaintiffs’ imputation (a). On the other hand, I think that the second contextual imputation as thus understood might be capable of causing the plaintiffs some reputational harm.
As the matter was argued, in my opinion the position should be expressed as follows: the first contextual imputation, considered alone, is capable of ‘swamping’ plaintiffs’ imputation (a). The second contextual imputation is capable of causing the plaintiffs some reputational harm, but is not capable, standing alone, of ‘swamping’ plaintiffs’ imputation (a). In aggregate, the two contextual imputations have that capability. The situation is not one in which the second contextual imputation would be incapable of causing the plaintiffs any reputational harm. So the consequences of such a situation, even given ‘aggregation’, need not be considered.
I turn to the requirements of s 26 (a) of the Act. It can certainly be said, in my opinion, that the second contextual imputation, as particularised, is different to plaintiffs’ imputation (a). The former, unlike the latter, focusses upon delay in payment of moneys received. The latter, unlike the former, focusses particularly upon various consequences for six identified investors.
The further and critical question is whether the second contextual imputation is capable of being considered different in substance to plaintiffs’ imputation (a). If the trier of fact could rationally conclude that the second contextual imputation is a permissible variant of plaintiffs’ imputation (a) — that is, a variant meaning upon which the plaintiffs would be entitled to succeed at trial — then it could not be considered to be different in substance. But in my opinion, whilst recognising that the issue does not squarely arise,[69] it is doubtful whether a jury could rationally conclude that the second contextual imputation is a permissible variant of plaintiffs’ imputation (a).
[69]There having been no attempt to plead Hore-Lacy justification.
The matter may be looked at in another way. It yields the same result. The question may be asked: is the second contextual imputation capable of being understood by the trier of fact as differing in substance from the meaning of plaintiffs’ imputation (a)? In my opinion, in all the circumstances which I have described, the answer to that question is ‘yes’.
Conclusions
It follows from what I have said that, in my opinion, grounds 1, 1A and 2 should be upheld, but that grounds 3, 4 and 5 should be rejected. Because there were arguments of substance with respect to all the grounds, I would grant leave to appeal in each instance, but would allow the appeal only on grounds 1, 1A and 2. I would otherwise dismiss the appeal. Finally, because the justification defence is to be struck out, there will need to be an order granting leave to the defendant to amend paragraph 7C.12 of the amended defence.
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