Fenn v Australian Broadcasting Corporation
[2018] VSC 449
•15 August 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
S CI 2017 00782
| ASHLEY FENN | First Plaintiff |
| ETHAN AFFORDABLE HOUSING LIMITED (ACN 135 818 245) | Second Plaintiff |
| v | |
| AUSTRALIAN BROADCASTING CORPORATION | Defendant |
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JUDGE: | McDONALD J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 6 August 2018 |
DATE OF RULING: | 15 August 2018 |
CASE MAY BE CITED AS: | Fenn & Anor v Australian Broadcasting Corporation |
MEDIUM NEUTRAL CITATION: | [2018] VSC 449 |
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DEFAMATION – Pleadings – Defences – Justification – Hore-Lacy form – Imputations – Vagueness and generality – Pleading of post-publication conduct – Application for leave to amend refused – Defendant granted leave to replead.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Ms G L Schoff QC with Mr T J Mullen | Millens Lawyers |
| For the Defendant | Mr D P Gilbertson QC with Mr H R Hassan | ABC Legal |
HIS HONOUR:
Introduction
The background to the current proceeding is summarised in a judgment of the Court of Appeal delivered on 28 June 2018:
Background circumstances
7In 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.
8Ethan 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.
9A 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.
10Finally, 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
11On 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.
12On 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.
13As matters stand, the extant proceeding is listed for trial in October 2018.[1]
[1]Fenn v Australian Broadcasting Corporation [2018] VSCA 166 [7]–[13].
The Court of Appeal upheld an appeal from a judgment of John Dixon J in which his Honour had refused to strike out a defence of justification. The consequence of the Court of Appeal’s judgment was that the justification defence was struck out. The defendant was, however, granted leave to amend paragraph 7C.12 of its amended defence (which pleaded a defence of contextual truth) which incorporated by reference the particulars of the justification defence.
On 29 June 2018, the day after the Court of Appeal delivered judgment, the proceeding was listed for directions before me. Orders were made, inter alia, that the defendant file and serve an amended defence in accordance with the reasons of the Court of Appeal, by 4.00 pm on 16 July 2018. A previous trial date of 10 October 2018 was vacated and a new trial date fixed for 22 October 2018. The timetable of interlocutory orders necessitated strict compliance with the proposed timelines, in order to avoid the risk of a further vacating of the trial date fixed.
As events unfolded, the defendant did not file an amended defence in compliance with the Court’s order of 29 June 2018. The amended defence filed on 16 July 2018 was not in accordance with the reasons and orders of the Court of Appeal. A defence complying with the Court’s orders of 29 June 2018 would have done no more than delete the defence of justification and amend the particulars to the defence of contextual truth.
The defendant sought the plaintiffs’ consent to the amendments proposed in the amended defence filed with the Court on 16 July 2018. As a result of correspondence between the parties’ solicitors, the defendant then sought the plaintiffs’ consent to the amendments in a second further amended defence dated 26 July 2018. When this consent was not forthcoming the defendant filed a summons seeking leave to file and serve the amended defence. The application was heard on 6 August 2018.
The amendments to the defence sought by the defendant travel well beyond the reason and orders of the Court of Appeal. A new defence of justification (Hore-Lacy imputation) (‘H-L defence’) is pleaded at paragraph 7A(a) and (b) as follows:
7AIf the Publications are defamatory of the Plaintiffs and carried the meaning alleged in paragraph 7(a) (which is denied), then:
(a)in their natural and ordinary meaning the Publications meant and were understood to mean that they 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 incentives provided to them on behalf of those investors by the Government, for lengthy periods and sometimes for more than a year; and
(b)in that meaning, the Publications were true in substance and in fact and accordingly the defendant has a defence at common law.
The H-L defence particulars refer to investors not previously referred to and allege conduct engaged in by the plaintiffs which post-dates 12 December 2016, being the date of the alleged defamatory publications. Further, the defence of contextual truth has been amended to include particulars relating to new investors and particulars of conduct which post-dates 12 December 2016.
The Hore-Lacy amendment
For the reasons which follow I refuse the defendant’s application to plead a H-L defence. The pleading in its current form is defective. I will, however, afford the defendant an opportunity, within a tightly constrained timetable, to replead the H-L defence.
Mr Gilbertson QC, who appeared with Mr Hassan for the defendant, submitted that paragraph 7A(a) pleads a permissible variation of the imputation pleaded in paragraph 7(a) of the amended statement of claim. He points to the fact that the only difference between the two is the substitution of the words ‘incentives provided’ for the words ‘money paid’. He submitted that it is not substantially different from and not more injurious than the plaintiffs’ imputation.[2]
[2]Ibid [44]; Setka v Abbott (2014) 44 VR 352, 367 [49], 371 [68]; David Syme & Co Ltd v Hore-Lacy (2000) 1 VR 667, 686 [52].
As set out in the introduction of this judgment, the Court of Appeal judgment records a finding that by reason of the second plaintiff being a charitable institution, investors would receive an incentive payment in cash, rather than in the form of a refundable tax offset certificate. Although this finding appears in a section of the judgment headed ‘[b]ackground circumstances’, it reflects the agreed basis upon which the appeal was conducted. Further, Ashley JA, with whom the other members of the Court agreed, concluded:
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.[3]
[3]Fenn v Australian Broadcasting Corporation [2018] VSCA 166 [57].
Putting to one side the defendant’s proposed H-L defence, to date, the proceeding has been conducted on the basis that the failure of the plaintiff to pay incentives to investors was a failure to pay money. Unless the reference to ‘incentives’ in the phrase ‘failing to account to them for incentives provided to them’ in paragraph 7A(a) is a reference to something other than a monetary incentive, it is not a variation of the plaintiffs’ imputation.
During the course of the hearing on 6 August 2018, I raised with Mr Gilbertson the plaintiffs’ criticism of paragraph 7A(a), that the reference to ‘incentives provided’ was vague because it failed to articulate whether the incentive was in the form of a cash payment or some other form of incentive, and if so, what. In response, Mr Gilbertson submitted that the particulars of the NRAS at paragraphs 7A.8 to 7A.9 make clear that the reference to ‘incentives provided’ is a reference to incentives comprised of State/Territory Government cash payments and/or Federal Government tax offset certificates.[4]
[4]Transcript of Proceedings (6 August 2018) 6.10–6.26.
The particulars of the NRAS at paragraphs 7A.8 to 7A.9 are as follows:
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.
I agree with the conclusion of Ashley JA that particulars 7A.1 to 7A.12 ‘do no more than set up the framework of NRAS’.[5] Particulars 7A.8 and 7A.9 do not particularise an allegation that the plaintiffs failed to account to investors for cash and/or non-cash incentives in the form of State/Territory Government cash payments and/or Federal Government (non-cash) tax offset certificates. This conclusion is reinforced by particulars 7A.20 to 7A.25 which appear under the subheading ‘[r]epresentations concerning timing and nature of provision of Incentives to Investors by Ethan’. The particulars which follow are replete with references to ‘cash payment’, ‘[i]ncentives in cash’, ‘cash flow’, ‘[i]ncentives will be paid’. The particulars do not even faintly suggest that incentives would be in the form of non-cash incentives.
[5]Fenn v Australian Broadcasting Corporation [2018] VSCA 166 [66].
Particulars 7A.26.1 to 7A.26.11 appear under the subheading ‘Ethan’s failure to account to Investors for Incentives received by it in a timely manner’. Thereafter, particulars are set out of the alleged failure by the plaintiffs to pass on to investors ‘the Federal Component of the Incentives’. The particulars do not specify the Federal Component of the Incentives as being comprised of cash and/or non-cash incentives in the form of a tax offset certificate.
In Setka v Abbott, Warren CJ and Ashley JA stated:
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.[6]
[6](2014) 44 VR 352, 371 [64].
In its current form, paragraph 7A and the particulars thereof obscure rather than define the substance of the issues to be litigated at trial. If the defendant wishes to pursue a H-L defence it is incumbent upon it to plead an imputation which is a permissible variation of the plaintiffs’ imputation and provide particulars thereof. In its current form paragraph 7A does not do this.
An imputation, including the pleading of alternative imputations by a defendant, must be pleaded with as much specificity as the publication permits.[7] In its current form the imputation pleaded in paragraph 7A(a) is too vague. Further, assuming in the defendant’s favour that the phrase ‘incentives provided’ is properly read as a reference to cash and/or non-cash incentives, the particulars do not particularise this allegation.
[7]Trkulja v Google Inc LLC & Anor [2010] VSC 226 [23].
During the hearing on 6 August 2018, I raised with Ms Schoff QC, who appeared with Mr Mullen for the plaintiffs, whether the plaintiffs eschewed any reliance upon the defendant’s imputation pleaded in paragraph 7A(a). In doing so, I was influenced by the consideration that the plaintiffs may be able to persuade the Court that a H-L defence should not be left to the jury if the plaintiffs specifically eschew any reliance upon the defendant’s Hore-Lacy imputation as a permissible variant.[8] However, it is premature to give consideration to this issue. As paragraph 7A(a) does not properly plead a Hore-Lacy imputation there is nothing for the plaintiffs to eschew reliance upon.
[8]Cf Setka v Abbott & Anor (No. 2) [2013] VSC 726 [37]; Setka v Abbott (2014) 44 VR 352, 421 [320]–[321].
The criticism of the particulars in respect of paragraph 7A applies equally to the particulars in paragraph 7C in respect of the second contextual imputation pleaded in paragraph 7B(b). The second contextual imputation is as follows:
(b)in failing to provide Investors with the Incentives to which they were entitled under the NRAS within a reasonable time after the end of each financial year, the Plaintiffs caused the affected Investors:
(i)financial hardship; or
(ii)stress; or
(iii)emotional distress; or
(iv)put some Investors at risk of having to sell their properties or default on their mortgages.[9]
[9]During the hearing on 6 August 2018 Mr Gilbertson submitted that the phrase “further or alternatively” in paragraph 7B(b) should be read as “or”.
The particulars of the second contextual imputation in paragraph 7C.12A contain numerous references to ‘[i]ncentives’. However, the particulars fail to disclose whether the ‘[i]ncentive’ consists of a cash and/or non-cash incentive.
Post-publication conduct
The particulars of the H-L defence in paragraph 7A.26 and the second contextual imputation in paragraphs 7C.12A and 7C.15, refer to post-publication conduct of the plaintiffs.
In Habib v Nationwide News Pty Ltd, the New South Wales Court of Appeal stated:
The general rule is that an imputation must be justified by reference to the facts in existence at the time of publication. However the general rule may be departed from in circumstances where an imputation amounts to a general charge against the character of the plaintiff.[10]
…
The question whether an imputation amounts to a general charge against the character of a plaintiff is one to be approached with care. Many, if not all, defamatory imputations will cast some adverse light on a plaintiff's character. If too ready a conclusion was drawn that an imputation fell into the Maisel category, then the court might unduly open up avenues for defences of justification and contextual truth which would otherwise be barred to a defendant — and prolong the hearing of defamation cases.[11]
[10](2010) 76 NSWLR 299, 371 [313] (citations omitted).
[11]Ibid 373–374 [322].
The New South Wales Court of Appeal’s warning as to the risk of opening up avenues of defence which might prolong a defamation hearing is pertinent in the present proceedings. All of the post-publication conduct pleaded in paragraphs 7A and 7C could have been pleaded in October 2017 when the defendant initially filed a defence. No satisfactory explanation has been provided as to why the defendant now seeks to expand the evidence in support of its defence.
Insofar as the particulars to paragraphs 7A and 7C refer to post-publication conduct of the plaintiffs, the particulars should be struck out. The imputations pleaded in paragraphs 7A and 7C do not constitute a general charge against the character of the plaintiffs. The imputations are confined to specific conduct: the failure of the plaintiffs to account to investors for incentives received by the plaintiffs on behalf of the investors. The imputations may be said to cast some adverse light on the plaintiffs’ character. However, the imputations do not amount to a general charge of bad character. The defendant will not be permitted to rely upon post-publication conduct.
Should the defendant be granted leave to replead?
I have given careful consideration to whether the defendant should be given leave to replead. The overarching purpose prescribed by s 7 of the Civil Procedure Act 2010 is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute. There is a prospect that granting the defendant leave to replead paragraph 7A will result in the trial date being vacated. The Court’s orders of 29 June 2018 were premised upon the defendant filing an amended defence by 4.00 pm on 16 July 2018. Some four weeks have lapsed since that date. This passage of time, coupled with further delays (even of short duration) to allow for the filing of a further defence, raises the prospect of the trial date being vacated. There is also the prospect of a further challenge by the plaintiffs to any attempt by the defendant to replead a H-L defence.
I accept that the catalyst for the defendant seeking to plead a H-L defence is the Court of Appeal judgment which struck out the defence of justification. I also accept that the defendant’s desire to plead a H-L defence is not an attempt to introduce a patently hopeless issue for determination.[12] I have concluded that paragraph 7A and the particulars in support thereof are deficient. However, I am not prepared to conclude, on the material presently before the Court, that the defendant has no prospect of properly pleading a H-L defence. I consider that in order to facilitate the just resolution of the real issues in dispute, the defendant should be given one final opportunity to plead and particularise a H-L defence.
[12]Matthews v SPI Electricity Pty Ltd; SPI Electricity Pty Ltd v Utility Services Corporation Ltd (Ruling No 6) [2012] VSC 70 [33].
I shall provide the parties with an opportunity to make submissions regarding the revised timetable for interlocutory steps, as well as the costs of the defendant’s summons filed on 2 August 2018.
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