Gray v John Fairfax Publications Pty Ltd
[2007] WASC 274
•27 NOVEMBER 2007
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: GRAY -v- JOHN FAIRFAX PUBLICATIONS PTY LTD [2007] WASC 274
CORAM: NEWNES J
HEARD: 21 SEPTEMBER 2007
DELIVERED : 27 NOVEMBER 2007
FILE NO/S: CIV 2275 of 2006
BETWEEN: BRUCE NATHANIEL GRAY
Plaintiff
AND
JOHN FAIRFAX PUBLICATIONS PTY LTD (ACN 003 357 720)
First DefendantKATRINA JANE NICHOLAS
Second Defendant
Catchwords:
Defamation - Application to strike out imputations pleaded by plaintiff - Whether imputations capable of being conveyed or are embarrassing - Relevant principles - Whether statement that civil claim made against the plaintiff capable of conveying an imputation that the plaintiff had so conducted himself so as to warrant that claim being made - Turns on own facts
Legislation:
Nil
Result:
Application successful in part
Category: B
Representation:
Counsel:
Plaintiff: Mr S M Davies
First Defendant : Mr K J Martin QC
Second Defendant : Mr K J Martin QC
Solicitors:
Plaintiff: Lavan Legal
First Defendant : Edwards Wallace
Second Defendant : Edwards Wallace
Case(s) referred to in judgment(s):
Buckeridge v Walter [2006] WASCA 22
Chakravarti v Advertiser Newspapers Ltd (1998) 193 CLR 519
Corse v Robinson (Unreported, WASCA, Library No 970669, 8 December 1997)
Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135
Favell v Queensland Newspapers Pty Ltd [2005] HCA 52
Gumina v Williams (No 1) (1990) 3 WAR 342
John Fairfax Publications Pty Ltd v Rivkin [2003] HCA 50
Jones v Skelton [1963] 1 WLR 1362
Lewis v Daily Telegraph Ltd [1964] AC 234
Monte v Mirror Newspapers Ltd [1979] 2 NSWLR 663
Purcell v Cruising Yacht Club of Australia Pty Ltd [2003] NSWSC 245
Rakhimov v Australian Broadcasting Corporation [2001] NSWSC 10
Random House Australia Pty Ltd v Abbott (1999) 167 ALR 224
Ronci v Nationwide News Pty Ltd [2001] WASC 239
Taylor v Jecks (1993) 10 WAR 309
Whelan v John Fairfax & Sons Ltd (1988) 12 NSWLR 148
NEWNES J: This is an application by the defendants to strike out three of the defamatory imputations pleaded by the plaintiff in the statement of claim, on the ground that the imputations are not capable of being conveyed by the words complained of or are embarrassing.
The statement of claim
In the statement of claim, the plaintiff pleads that he was defamed in an article, headed 'Gray Eminence Loses His Grip', published in The Weekend Australian Financial Review newspaper of 4 ‑ 5 November 2006. The article is lengthy and the text of the article is attached as an annexure to these reasons.
The plaintiff filed an amended statement of claim on 6 June 2007 and the defendants brought an application to strike out three of the imputations pleaded by the plaintiff. The plaintiff has since filed a minute of proposed re‑amended statement of claim (the Minute) and it was the Minute which was the subject of argument on this application. The Minute, by par 5.2A, adds a further imputation and makes some amendments to the existing imputations.
In the Minute, the plaintiff pleads that in their natural and ordinary meaning the words complained of meant, and were understood to mean, that the plaintiff:
5.1misled investors of Sirtex for personal gain;
5.2so conducted himself as to warrant an allegation, by his former employer the University of WA, that he had obtained intellectual property from the University of WA without authority;
5.2Aso conducted himself as to warrant an allegation, by his former employer the University of WA, that he had sold intellectual property belonging to the University of WA without authority;
5.3is a vexatious litigant;
5.4dishonestly misled investors in Sirtex;
5.5dishonestly breached his duties as a director of Sirtex.
The defendants contend that the imputations pleaded in pars 5.2, 5.2A, 5.3 and 5.5 of the Minute are not capable of being conveyed by the words complained of or are embarrassing.
The defendants' submissions
It was submitted on behalf of the defendants that there was nothing in the words complained of which was capable of conveying to a reasonable reader that the plaintiff had conducted himself in a manner that warranted the allegation by the University of Western Australia (UWA) that he had obtained intellectual property from it without authority, as pleaded in par 5.2 of the Minute.
Senior counsel for the defendants argued that the phrase 'so conducted himself' involves something akin to reasonable grounds for suspicion, referring to Purcell v Cruising Yacht Club of Australia Pty Ltd [2003] NSWSC 245 [28] ‑ [29]. It was submitted that the article, however, says no more, in effect, than that UWA claims that the intellectual property belongs to it and that Federal Court proceedings to determine that question are still pending. There is, therefore, nothing in the article which suggests that there is a reasonable basis for the allegation by UWA and the article says nothing at all about any conduct of the plaintiff that could be understood to warrant the allegation by UWA that the plaintiff had obtained intellectual property belonging to it without authority.
The same arguments were addressed to par 5.2A of the Minute.
It was submitted that the imputation in par 5.3 of the Minute was embarrassing in that it did not capture the final distillation or the sting of the alleged libel. It was also submitted that the expression 'vexatious litigant' was a legal term that would not be known to the general community, so the ordinary reader would not know what a vexatious litigant was.
It was further submitted in relation to par 5.3 that there was nothing in the article capable of conveying an imputation that the plaintiff was a vexatious litigant, whether that expression was understood in its technical legal sense or in a more colloquial sense. In particular, there was nothing in the article to suggest that the legal proceedings commenced by the plaintiff were without merit, and that is an essential ingredient of any understanding that the plaintiff is a vexatious litigant, in either sense in which that expression may be understood.
It was submitted in respect of par 5.5 of the Minute that there was nothing in the words complained of that was capable of conveying an imputation that the plaintiff had dishonestly breached his duties as a director and, in addition, the imputation was so vague as to be embarrassing. It was submitted that the pleaded imputation did not identify anything alleged to constitute a breach of the plaintiff's duties as a director and, accordingly, the defendants did not know the case they had to meet. In any event, there was nothing in the article which was capable of conveying an imputation that the plaintiff had in any respect behaved dishonestly.
The plaintiff's submissions
It was submitted on behalf of the plaintiff that the imputation pleaded in par 5.2 of the Minute arises from the words complained of read as a whole. The publication is generally disparaging of the plaintiff and is capable of creating in the mind of a reasonable reader the impression that UWA is justified in bringing the proceedings in respect of the intellectual property. The words are capable, for instance, of conveying an impression that the plaintiff's co‑directors and others named in the article accept or believe the allegations made by UWA.
It was submitted that the imputation in par 5.3 is not embarrassing, as the term 'vexatious litigant' is not a term of art but would readily be understood by the average reader. Counsel referred to dictionary definitions of 'vexatious' where reference was made to vexatious legal actions being, in substance, actions instituted without sufficient grounds and only for the purpose of causing trouble or annoyance to the defendants. Counsel submitted that it was at least arguable that the article would create in the mind of the reasonable reader an impression that the plaintiff was an aggressive and irrational litigant who has commenced legal actions out of spite to get his own way and to obtain leverage over opponents.
In that connection, counsel for the plaintiff referred to the statement in the article that when the plaintiff had been asked to step aside as chairman, he had 'let rip'. The article then went on, among other things, to refer to the plaintiff having subsequently commenced defamation proceedings against all members of the litigation committee and Freehills, and to statements that the plaintiff was 'not reluctant to up the ante to get what he wants' and that while he may 'continue to throw lawsuits at directors … this looks to be the one battle he cannot win'.
It was submitted that when read as a whole the words complained of were capable of conveying to a reasonable reader that the plaintiff had commenced the defamation proceedings without sufficient grounds and simply to annoy and unsettle his opponents on the board.
In relation to par 5.5 of the Minute, it was submitted that the imputation captured the final distillation of the defamatory meaning and was not vague. It was not necessary to identify the specific duties that the words conveyed the plaintiff had breached. The tenor of the article was that the plaintiff had not acted honestly in obtaining the intellectual property and had not acted in the interests of Sirtex.
The relevant principles
The relevant principles were not seriously in issue on the application. In my view, they are, so far as relevant to the present application, as follows.
An imputation will be struck out at this stage if it is plainly incapable of being conveyed by the words complained of: Gumina v Williams (No 1) (1990) 3 WAR 342, 346; Taylor v Jecks (1993) 10 WAR 309, 319; or if, as framed, it would be likely to prejudice, embarrass or delay the fair trial of the action.
The principles to be applied in determining whether the defamatory imputations alleged are capable of being conveyed by the words complained of were discussed in the well‑known passage from the judgment of the Privy Council in Jones v Skelton [1963] 1 WLR 1362:
In deciding whether words are capable of conveying a defamatory meaning the court will reject those meanings which can only emerge as the product of some strained or forced or utterly unreasonable interpretation. In Capital and Counties Bank v George Henty & Sons [1882] 7 AC 741, 745 Lord Selborne LC said:
'The test, according to the authorities, is, whether under the circumstances in which the writing was published, reasonable men, to whom the publication was made, would be likely to understand it in a libellous sense.'
The ordinary and natural meaning of words may be either the literal meaning or it may be an implied or inferred or an indirect meaning: any meaning that does not require the support of extrinsic facts passing beyond general knowledge but is a meaning which is capable of being detected in the language used can be a part of the ordinary and natural meaning of words. See Lewis v Daily Telegraph Ltd [1963] 2 WLR 1063; [1963] 2 All ER 151 HL(E). The ordinary and natural meaning may therefore include any implication or inference which a reasonable reader guided not by any special but only by general knowledge and not fettered by any strict legal rules of construction would draw from the words. The test of reasonableness guides and directs the court in its function of deciding whether it is open to a jury in any particular case to hold that reasonable persons would understand the words complained of in a defamatory sense. (1370 ‑ 1371)
The person to whom it is alleged the words were spoken will be assumed to be a reasonable person, not unusually suspicious or unusually naive, nor avid for scandal. In Lewis v Daily Telegraph Ltd [1964] AC 234, Lord Reid said:
The ordinary man does not live in an ivory tower and he is not inhibited by knowledge of the rules of construction. So he can and does read between the lines in the light of his general knowledge and experience of world affairs. (258)
In the same case, Lord Devlin said:
When an imputation is made in a general way, the ordinary man is not likely to distinguish between hints and allegations, suspicion and guilt. It is the broad effect that counts and it is no use submitting to a judge that he ought to dissect the statement before he submits it to the jury … it is the broad impression conveyed by the libel that has to be considered and not the meaning of each word under analysis. A man who wants to talk at large about smoke may have to pick his words very carefully if he wants to exclude the suggestion that there is also a fire.
In Favell v Queensland Newspapers Pty Ltd [2005] HCA 52 [6], Gleeson CJ, McHugh, Gummow and Heydon JJ referred with approval to Jones v Skelton and the judgments of Lord Reid and Lord Devlin in Lewis v Daily Telegraph Ltd.
The meaning that the ordinary person will attribute to words will often be a first impression. As such, when attempting to discern the meaning conveyed by words courts should avoid subjecting the words to an 'over meticulous scrutiny': Random House Australia Pty Ltd v Abbott (1999) 167 ALR 224, 257. In Lewis v Daily Telegraph Ltd, Lord Reid observed that the meaning attributed to words 'must be a matter of impression' (260) and Lord Morris commented that it should not rest 'upon any technical process of analysis or construction, nor upon a process of analysis or construction, nor upon a process of critical reading' (266).
The meaning a reader gives to a newspaper article may be affected by matters such as the order in which things are dealt with, the language employed, the emphasis which is given to different aspects of it and the headlines which are used: John Fairfax Publications Pty Ltd v Rivkin [2003] HCA 50, [26] (McHugh J), [187] (Callinan J (with whom Gleeson CJ agreed)). It is therefore necessary to approach the exercise of determining whether the imputations are arguably capable of being conveyed with appropriate circumspection.
In terms of form, what must be clear from the pleading is the meaning the plaintiff contends was conveyed to a reasonable reader by the words complained of. That is, an imputation must specify what the plaintiff claims was 'the precise act or condition asserted of, or attributed to' the plaintiff: Monte v Mirror Newspapers Ltd [1979] 2 NSWLR 663 and Taylor v Jecks, 319.
But as Gleeson CJ pointed out in Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135, 137, the requirement that a plaintiff must 'specify' the act or condition which he claims was attributed to him is one which, in its practical application, raises questions of degree. Whilst the principles relevant to the plaintiff's obligation to 'specify' the act or condition which he claims was attributed to him remain constant, their practical application may depend upon the facts and circumstances of the given case, and the relevant circumstances may include the manner in which the defendant, or the author of the defamatory matter, has expressed the defamatory matter. The issue to be decided is whether there is likely to be confusion either at the pleading stage or at the trial in relation to the meaning for which the plaintiff contends.
It is self‑evident that the proper pleading of imputations in a defamation action is a matter of importance in ensuring a fair trial of the action. As Brennan CJ and McHugh J observed in Chakravarti v Advertiser Newspapers Ltd (1998) 193 CLR 519, 531 ‑ 532, where the plaintiff pleads a false innuendo the plaintiff gives a shape and focus to the cause of action.
But that is not a licence for defendants to pursue the refinement of the pleaded imputations with excessive zeal. In Buckeridge v Walter [2006] WASCA 22, the Court of Appeal ([4] (Steytler P), [23] (Pullin JA)) endorsed the comments of Kirby J in Favell v Queensland Newspapers Pty Ltd, to the effect that excessive refinement of pleading issues is to be discouraged and courts should discourage, or minimise, the impediment to a fair trial presented by the process of 'trial by interlocutory ordeal', which is especially prevalent in defamation proceedings.
Is the proposed statement of claim defective?
In my view, par 5.2 is not capable of being conveyed by the words complained of. I accept the defendants' submission that there is nothing in the words complained of which is capable of being understood by a reasonable reader to mean that the plaintiff had conducted himself in a way that warranted the alleged claim by UWA. There are statements in the article that a claim has been made by UWA that the intellectual property in question belonged to it, rather than to the plaintiff, and that that claim is the subject of contested litigation, but that is not sufficient to convey to a reasonable reader that the plaintiff had conducted himself in a way that warranted the allegation by UWA. And the proceedings brought by the company against the plaintiff are clearly described as proceedings taken as a matter of prudence in case the claim by UWA against the company should succeed.
There is, in my view, no reference in the article to conduct of the plaintiff that could cause a reasonable reader to understand the article to mean that the plaintiff had so conducted himself as to warrant the allegation by UWA.
In the course of argument it was suggested by counsel for the plaintiff that the fact that proceedings had been commenced by UWA would itself arguably lead a reasonable reader to understand the article in that way, on the basis that given the nature and standing of UWA it would not bring such proceedings without having some proper foundation. As I understood the submission, it drew on an analogy with cases where a statement that a person was suspected by the police of an offence had been found to be capable of conveying an imputation that the person had so conducted himself or herself as to warrant that suspicion.
At least in a claim of the present nature, involving the title to intellectual property as between an employer and a former employee, I do not consider that that analogy holds good, if it holds good at all in relation to civil proceedings involving private organisations or individuals seeking to enforce private rights. It is one thing to say that a statement that a public authority, charged with the responsibility of enforcing the law (and having the obligations which fall on such an authority in connection with the discharge of that responsibility), suspects a person of an offence would arguably be understood by a reasonable reader to mean that the person has so conducted himself or herself as to warrant that suspicion. It is quite another thing to say that a statement that a private body or individual alleges it has a civil claim against another person would arguably be understood by a reasonable reader to mean that the person has so conducted themselves as to warrant the allegation.
I might add, too, that even the first proposition in respect of public authorities is by no means universally accepted as a general rule: see, for example, Rakhimov v Australian Broadcasting Corporation [2001] NSWSC 10 [27] where such an argument was rejected, and Corse v Robinson (Unreported, WASCA, Library No 970669, 8 December 1997) and Ronci v Nationwide News Pty Ltd [2001] WASC 239 where it was held to depend upon the context; cf Whelan v John Fairfax & Sons Ltd (1988) 12 NSWLR 148, 160.
It is, however, sufficient in the present case to say that I do not accept that a statement that an allegation of the nature referred to had been made against the plaintiff by UWA would arguably convey to a reasonable reader the meaning that the plaintiff has so conducted himself as to warrant that allegation.
For the same reasons, I would not allow the statement of claim to be amended in terms of par 5.2A of the Minute.
I do not accept that the imputation pleaded in par 5.3 is embarrassing. In my view, it is pleaded with sufficient precision and is an adequate distillation of the defamatory meaning.
I also consider it is arguable that a reasonable reader would understand the article to bear the meaning pleaded in par 5.3. Thus, for instance, the article says, in part:
Having lost the support of the two organisations - Sirtex and CRI - that had flanked him, Gray began turning up the heat.
Via lawyer Martin Bennett, well known in Perth for having acted for high‑profile clients, Gray launched defamation proceedings against all members of the litigation committee and Freehills.
He threatened to call EGMs every seven weeks until he got his way. As those who have worked with Gray know, he's a determined fighter and not reluctant to up the ante to get what he wants.
The article concludes by saying that 'Gray may rail against his own board, continue to throw lawsuits at directors and badmouth Hill, but, for the first time in almost a decade, this looks to be the one battle he cannot win'. The reference to 'the one battle' is plainly a reference to the corporate battle between the plaintiff and his fellow directors.
In my view, those passages in particular, read in the context of the article as a whole, are arguably capable of being understood by a reasonable reader to mean that the defamation actions are without merit but have been commenced by the plaintiff simply for tactical purposes; that is to say, vexatiously.
I consider that the imputation pleaded in par 5.5 is embarrassing in that it does not identify in what respect or respects it is alleged the plaintiff has breached his duties as a director. There is nothing in the words complained of which refers to a breach of directors' duties by the plaintiff and the respect or respects in which it is contended that a reasonable reader would understand those duties to have been breached is not clear. While I do not think it is necessarily the case that the plaintiff must plead the specific legal duties alleged to have been breached, the imputation must at least identify the nature of the breaches which it is alleged the words conveyed so the defendants know the case they have to meet. I accept the defendants' submission that, as the pleading stands, it is not clear what case they have to meet.
The question of whether the imputation is capable of being conveyed is a matter that can only be determined when the nature of the alleged breaches have been identified.
I would therefore strike out pars 5.2 and 5.5 of the statement of claim and would refuse leave to amend the statement of claim in terms of par 5.2A of the Minute. I would give leave to the plaintiff to file a further amended statement of claim if so advised.
Annexure
Instead of saving lives, biotech company Sirtex has been shedding gallons of corporate blood of its own, including that of its founder, writes Katrina Nicholas.
Tuesday, September 9, 2003 was an enriching day for Bruce Gray. Sirtex, the company he founded and in which he had a 36 per cent stake, had just spurned a $270 million takeover from US medical giant Cephalon which valued the biotech at $4.85 a share.
Sirtex's stock was trading at $5.05 and institutions were hungry for a piece of the action. Colonial First State wanted to raise its stake but the other big institutional shareholder, Hunter Hall, wasn't keen to sell.
But Gray was happy to oblige. He sold 5 per cent of his holding - 3 million shares at $5.10 each and pocketed $15.3 million cash. Life must have looked good.
Since founding Sirtex in 1997, Gray then 61, hadn't had much opportunity to cash in.
He'd spent his life working towards the betterment of cancer sufferers, graduating in medicine from the University of Western Australia in 1965 and later returning to run its department of surgery. He also helped set up the Cancer Research Institute, a charitable organisation dedicated to exploring a cure for liver cancer, the world's biggest cancer‑related killer of adults.
And Sirtex's ground‑breaking technology, SIR‑Spheres, had received accolades worldwide. Used to treat patients in Australia, New Zealand and the US, where Sirtex had managed to gain notoriously difficult Food and Drug Administration approval, the technology offered hope of extending the life of liver cancer patients for up to two years.
With his new fortune, Gray indulged himself. Jaguars, a stately home on Sydney's North Shore and a top of the line Beneteau 64, a sailboat worth about $2 million bought in the US. A cocktail party at Sydney's Cruising Yacht Club of Australia followed to mark the boat's berthing. It's name? INON ... short for 'It's now or never'. Yet just 12 months later, Gray's world would begin to crumble.
On November 4, 2004, Sirtex's board gathered at the Centrecourt Business Park in North Ryde to meet before the annual general meeting. It was supposedly a routine affair. Gray, then Sirtex's chief executive and chairman, met fellow directors including founding director Michael Panaccio, long‑time friend and one‑time personal accountant Grant Boyce, Charles Rowland, in charge of Sirtex's US operations, and newcomer Richard Hill, a lawyer and former senior executive of HSBC in Hong Kong and New York, appointed several months earlier.
Then Gray dropped a bombshell. The University of WA was alleging the company's SIR‑Spheres technology was not his intellectual property, but the university's. It claimed it had been taken from the university by Gray during his many years there and vended into Sirtex, now a successful publicly listed company with a market capitalisation most other biotechs would covet.
The room fell silent. It was the first anyone had heard of this.
'It came totally out of left field,' remembers Panaccio, now an investment principal at Starfish Ventures, a venture capital firm he co‑founded. 'I was pretty surprised by the whole thing.'
Fortunately for Panaccio - whose involvement with Sirtex dated to his days at Jafco Investment Asia Pacific, one of Sirtex's early‑stage backers - he'd previously decided not to stand for re‑election and this meeting was to be his last.
But for Hill, so recently committed to the company, the news was devastating.
Gray chose not to mention the university's claim to shareholders at the meeting. Seven weeks later, on December 22, Sirtex posted an announcement headed 'Legal Proceedings' to the stock exchange. The nightmare had started.
Over the course of 2005, no announcements were made about the legal action, despite numerous court skirmishes and all parties - the University of WA also launched a case against Perth's Cancer Research Institute (CRI) - conducting discovery. Updates were given, but in the notes to the accounts, and most taken verbatim from the December 22 statement.
The lawyer in Hill believed that Sirtex, as a matter of course, had to make a cross‑claim against Gray. When the technology was vended into Sirtex (then a private company called Paragon Medical) Gray had given written assurances that it was free and available. If the university's claims were upheld, then Gray had misled Sirtex.
If Hill didn't cross‑claim, he was leaving Sirtex, and himself, open to legal action from shareholders.
Sirtex's litigation committee, consisting of chairman Hill, Boyce and John Eady, was unanimous.
But Gray wouldn't hear of it, insisting the most important thing was that Sirtex, he, and now CRI, maintain a united defence. He also inserted himself into the litigation committee's discussions, frustrating the attempts of the three non‑executives to keep the legal dispute separate from Sirtex's commercial business.
'For two years, he's been telling us how to run the case,' one committee member said. 'Bruce has made this deeply personal. As a board, we tolerate him ... but at meetings, he's always ready with the odd cutting insult.'
For about 18 months Sirtex bumbled along, responding to legal requests when necessary, building sales in the US and Europe and expanding its product range.
While Sirtex's stock languished around $2.60, down from its $5.64 high in late 2002 but still above the $1 investors paid before the float, business was going reasonably well. Sales last financial year were up 90 per cent to $22.6 million and Sirtex turned its first profit.
Gray fulfilled the promise he made to shareholders at the 2004 AGM not to continue as both chairman and chief executive, handing over the management reins to Gilman Wong on May 26, 2005.
In fact, for most of the year Gray was conspicuously absent, informing the board he was ill and would need to take time off for treatment. He never disclosed his illness, and to this day still won't.
Nevertheless, he was well enough to skipper INON in her first big event, the 2005 Sydney to Hobart yacht race. But by August this year, the litigation committee felt it could hold out no longer.
On advice from counsel retained by Phillips Fox, the trio notified Gray at Sirtex's regular monthly board meeting they would start a cross‑claim against him, alleging that - in the event a court found in favour of the University of WA - Sirtex had been misled by him and he had breached warranties provided when he purported to assign the relevant technology to Sirtex in 1997.
Hill also asked Gray to step aside as chairman and suggested he fill the role. The board, bar Gray, backed him.
And then Gray let rip.
Boyce was in a taxi heading home after the board meeting when his mobile phone rang. It was Gray, informing his friend not to expect his support for re‑election at Sirtex's upcoming AGM.
Days later, Gray fired off a five‑page letter to shareholders slamming Hill and damning the litigation committee's handling of the legal action.
He argued it had not been diligent enough and should not have retained Freehills as its law firm for as long as it did, considering Freehills was the firm that helped him vend the technology into Sirtex in the first place. (Sirtex subsequently dumped Freehills and appointed Phillips Fox.)
Gray also used his large holding to requisition an extraordinary general meeting, calling for Hill's immediate removal.
The notice of meeting was signed by Gray, his sister Bethwyn Daebritz, his wife Julie‑Ann representing Pine Ridge Holdings, and her parents, the Warks, representing Westwood Properties although it was later discovered that Westwood had actually sold most of its Sirtex stock.
Faced with the prospect of hundreds of retail shareholders receiving a letter from Gray, a pre‑eminent professor of medicine, claiming their company was grave danger and that Hill should be unseated, Sirtex took action.
The litigation committee wrote to shareholders explaining its reasons for the cross‑claim and warning that if Hill was removed, both Boyce and Eady would resign in sympathy.
Several of Sirtex's bigger shareholders were concerned too, including Hunter Hall, which wrote to other investors urging them not to vote with Gray.
Ten Network director and small Sirtex shareholder Laurence Freedman also spoke out.
Meanwhile, CRI struck a deal with the University of WA. It agreed to put the 8.73 per cent of Sirtex it owned, worth $14 million, in trust for the university's future use. In return, the university would drop the legal action. (The university declined to discuss Gray or the pending court case.)
Having lost the support of the two organisations - Sirtex and CRI - that had flanked him, Gray began turning up the heat.
Via lawyer Martin Bennett, well known in Perth for having acted for high‑profile clients, Gray launched defamation proceedings against all members of the litigation committee and Freehills.
He threatened to call EGMs every seven weeks until he got his way. As those who have worked with Gray know, he's a determined fighter and not reluctant to up the ante to get what he wants.
Back in 2003, he was tough enough to organise a takeover bid for Sirtex. It was Gray himself who solicited Cephalon's $270 million offer and, even before it officially lobbed, had signed an agreement to give it an option to acquire 19.9 per cent of his stock.
The board, taken back, had little choice but to recommend it to shareholders, and in the following weeks about 85 per cent accepted.
On May 27, 2003, Cephalon sent a letter to shareholders explaining it needed to get to 90 per cent by 7pm Perth time that evening.
At 6.55pm, then Sirtex CEO Colin Sutton got a phone call. It was Gray. CRI would not accept Cephalon's bid, meaning it would automatically fail.
'I think he got seller's remorse at the last minute', one former Sirtex director says. 'It was inexplicable. We'd worked for a year on that and then for the controlling shareholder to do an about‑face ... Cephalon couldn't believe what had happened and it severely damaged the reputation of Australian biotechs.'
Freedman calls the Cephalon bid a 'major cock-up'.
Shortly after, Sutton's resignation from Sirtex triggered an exodus of talent including Panaccio, Rowland and then chief financial officer Peter Manley.
Cochlear CEO Chris Roberts chairman of Sirtex at the time of its float in mid‑2000, also came and went on Gray's watch.
Gray, who several months later was to make a small killing selling a parcel of stock to Colonial First State, has always blamed CRI for the bid's failure, but many say that if Gray had wanted CRI to accept he could have made it happen. For Gray's control over CRI surfaced last month, when judge Robert French, in one of the many hearings leading up to the trial proper, scheduled for March 2007, froze CRI's Sirtex shareholding and placed it in the hands of receiver RSM Bird Cameron.
French made the ruling after Gray in September convened a meeting of CRI members and declared all existing CRI directors invalidly appointed and then appointed himself, his sister Bethwyn and a legal partner of his lawyer Bennett as CRI's new directors.
Exactly what prompted Gray to make the dash to Perth and re‑create CRI's board is not clear but combining his 31 per cent shareholding with CRI's nearly 9 per cent would have given him a much stronger chance of rolling Hill at the EGM he'd just called.
Those who have worked closely with Gray say he is an archetypal fault‑finder. 'It took him three years to move to Sydney from Perth and now he's here, all he says is how much he hates Perth,' one person says.
Critics say Gray's desire to control everything extends to his pursuits outside work. 'He didn't know a great deal about sailing but he still had his own ideas about things and wouldn't listen to experience in the field,' says Alan Fenwick, who has sailed 14 Sydney to Hobart races and helped Gray with the fit‑out of INON.
'He'd ask what you thought … and then he'd do it his way.'
In keeping with his nautical bent, Gray, who refuses to discuss many things including the university's 'distracting' case against him, insists he just wants to 'set Sirtex back on an even keel'. He says: 'Mr Hill does not talk for the company, on many issues he talks for himself. He has to resign.'
These days, Gray's desire to keep Sirtex in his grip looks unrealistic.
Just before Sirtex's 2006 AGM, Gray himself asked the company to withdraw his resolution to remove Hill - citing shareholder confusion - and, at the meeting last Tuesday, proxies clearly showed he simply doesn't have the numbers anymore.
The votes, outside of his own, that he boasted of several weeks ago seem to have evaporated and although resolution No 4 was never put to shareholders, Sirtex received more than 500 proxies and 90 per cent of votes were cast … an astonishingly high number for a small biotech.
Hunter Hall and Colonial First State, who combined control 36 per cent, are steadfastly against him, and CRI's 8.73 per cent, crucial to Gray if he wants to succeed, remains frozen.
'I think the outcome was the correct one,' Cochlear's Roberts says. 'It's not easy for someone to be the chief bottle washer and cook. The skills you need to build a big international business are quite different.'
Gray may rail against his own board, continue to throw lawsuits at directors and badmouth Hill, but, for the first time in almost a decade, this looks to be the one battle he cannot win.
The final chapter - Sirtex's legal battle with the University of WA - is yet to be written but like it or not Gray may just be about to exit stage left.
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