Green v Fairfax Media Publications Pty Ltd - [2020] WASC 250

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   GREEN -v- FAIRFAX MEDIA PUBLICATIONS PTY LTD [2020] WASC 250
CORAM:   LE MIERE J
HEARD:   3 JUNE 2020
DELIVERED          :   3 JULY 2020
FILE NO/S:   CIV 1011 of 2019
BETWEEN:   JEMMA MARIE GREEN
Plaintiff
AND
FAIRFAX MEDIA PUBLICATIONS PTY LTD
First Defendant
AARON ODYSSEUS PATRICK
Second Defendant

Catchwords:

Practice and procedure - Pleadings - Strike out application - Application to strike out paragraphs of the defence

Defamation - Defences - Justification - Whether particulars pleaded are capable of proving substantial truth of imputation - Whether particulars are embarrassing - Whether a defendant may amend defence to pleads as particulars of justification facts derived from the plaintiff's discovery

Defamation - Defences - Contextual truth - Contextual imputations - Whether material is capable of carrying contextual imputation

Defamation - Defences - Mitigation of damages - Particulars of mitigation - Whether publications by or on behalf of the plaintiff in response to defamatory matters may mitigate damages

Legislation:

Defamation Act 2005 (WA)

Result:

Application allowed in part

Category: B

Representation:

Counsel:

Plaintiff	:	Mr M L Bennett
First Defendant	:	Mr A T S Dawson SC
Second Defendant	:	Mr A T S Dawson SC

Solicitors:

Plaintiff	:	Bennett + Co
First Defendant	:	Carmel Galati & Banki Haddock Fiora
Second Defendant	:	Carmel Galati & Banki Haddock Fiora

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

Abou‑Lokmeh v Harbour Radio Pty Ltd [2016] NSWCA 228
Allen v John Fairfax and Sons Ltd (Unreported, NSWSC, 2 December 1988)
Berezovsky v Forbes Inc [2001] All ER (D) 452
Bookbinder v Tebbit [1989] 1 WLR 640
Broome v Cassell & Co Ltd [1972] AC 1027
Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44
Cornwell v Channel Seven Sydney Pty Ltd [2016] NSWCA 255
Crosby v Kelly [2013] FCA 1343
Dey v Victorian Railways Commissioners (1949) 78 CLR 62
Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135
Fairfax Media Publications Pty Ltd v Zeccola (2015) 91 NSWLR 341
Favell v Queensland Newspapers Pty Ltd (2005) 79 ALJR 1716
Favell v Queensland Newspapers Pty Ltd [2004] QCA 135
Gallagher v Destiny Publications Pty Ltd [2015] WASC 40
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Habib v Nationwide News Pty Ltd (2010) 76 NSWLR 299
John Fairfax Publications Pty Ltd v Hitchcock (2007) 70 NSWLR 484
Lord Ashcroft KCMG v Foley [2011] EWHC 1710 (QB)
Lord Ashcroft KCMG v Foley [2012] EWCA Civ 423
Maisel v Financial Times Ltd (1915) 84 LJKB 2145
Nationwide News Pty Ltd v Warton [2002] NSWCA 377
Pahuja v TCN Channel 9 Pty Ltd (No 2) [2016] NSWSC 1074
Rush v Nationwide News (2018) 359 ALR 473
Trkulja v Google LLC (2018) 263 CLR 149
Weeks v Nationwide News Pty Ltd [No 2] [2019] WASC 44

LE MIERE J:

Summary

The plaintiff, Jemma Green, is a co‑founder and chairman of Power Ledger Pty Ltd which is a blockchain technology company.
On 28 December 2018 the defendants published an article entitled 'BlockChain firm in gun over spruikers' (the spruikers article). The subject of the spruikers article may be gleaned from its headline:
Blockchain firm in gun over spruikers.
and the lede (first paragraph), tells what the story is about:
A prominent Australian blockchain company that rewarded fake social media profiles for spruiking its virtual currency said it didn't control the accounts and wanted to improve the reputation of the blockchain industry.
The defendants have published an online version of the article in substantially the same terms (the second website article).
On 28 December 2018 the defendants published an article under the headline: 'How to make and lose $2 billion' (the $2 billion article). The article is accompanied by a photograph of the plaintiff and the words:
Blockchain: The pitch from Power Ledger's Jemma Green was almost impossible to understand, but her ambition was unmistakeable. Aaron Patrick analyses whether there's more than just hype to the Australian entrepreneur's power‑trading start‑up.
The defendants have published an online version of that article in substantially the same terms (the first website article).
By their defence of 11 April 2019 the defendants denied that the articles give rise to the imputations pleaded by the plaintiff or that they defame the plaintiff. The defendants pleaded that each of the articles were published on an occasion of qualified privilege, and the spruikers article and the second website article were an expression of opinion relating to a matter of public interest and based on proper material. The defendants also pleaded matters upon which they rely in mitigation of damages.
On 21 March 2020 the defendants amended their defence to plead that the imputations pleaded by the plaintiff to arise from the spruikers article and the second website article, and the alternative imputation pleaded by the plaintiff to arise from the $2 billion article and the first website article, are substantially true and to plead the defence of contextual truth in relation to the spruikers article and the second website article. The defendants also added further particulars of mitigation of damages.
The plaintiff has applied to strike out of the defence:
1.paragraphs 4, 12 ‑ 14, and 28 ‑ 31 of the particulars of justification subjoined to [30A] which pleads justification to the spruikers article and the second website article;
2.paragraph 30B which pleads the defence of contextual truth in relation to the spruikers article and the second website article;
3.paragraph 32A which pleads justification to the $2 billion article and the first website article; and
4.particulars (b) and (c) of the particulars of mitigation.
The defendants oppose the whole of the plaintiff's application.
For the reasons which follow:
(a)paragraph 30B of the defence which pleads the defence of contextual truth in relation to the spruikers article and the second website article should be struck out on the ground that it discloses no reasonable defence;
(b)paragraph 54(a)(vi) and (vii), (h)(ii) and (k), [83] ‑ [85] and [86] ‑ [87] of the particulars to [30B] insofar as they are incorporated as particulars of [32A], which pleads justification to the imputations pleaded at [12.2] and [17.2] (in relation to the $2 billion article and first website article) of the statement of claim, should be struck out on the ground that they are embarrassing;
(c)paragraphs (b) and (c) of the particulars of mitigation should be struck out on the ground that they disclose no reasonable defence; and
(d)the plaintiff's application should otherwise be dismissed.

Power Ledger

I make the following assumptions for the purposes of this application only. The plaintiff is a co‑founder and chairman of Power Ledger. Power Ledger operates a blockchain‑based cryptocurrency and energy trading platform that allows for decentralised selling and buying of renewable energy. The technology and platform was developed from the plaintiff's PhD thesis. The company issued POWR tokens which allow holders to consume and provide energy through the platform. POWR tokens can be exchanged for other currencies and have a market value.
Power Ledger made an initial coin offering (ICO) which is a type of fundraising by selling its POWR tokens. Power Ledger promoted its ICO through its bounty campaign. A bounty is a reward in the form of POWR tokens given to social influencers, called bounty hunters, for promoting Power Ledger and its POWR token on Twitter, Facebook and other social media. Power Ledger posted on its website a Bounty Paper which provided information about its bounty campaign including how POWR tokens could be earned by making social media posts, which had the effect of promoting or increasing awareness of Power Ledger and POWR tokens.
The ICO, described as the ICO proper to distinguish it from the ICO presale, ran from 8 September to 6 October 2017.

The spruikers article

I will set out the whole of the spruikers article because it is relatively short and its contents are important in this application.
Blockchain firm in gun over spruikers
Initial coin offerings
Aaron Patrick
1.A prominent Australian blockchain company that rewarded fake social media profiles for spruiking its virtual currency said it didn't control the accounts and wanted to improve the reputation of the blockchain industry.
2.Electricity‑trading start‑up Power Ledger has been criticised for using 'bounty hunters' to drive interest in its bitcoin‑like currency, which has fallen 90 per cent in value over the past 12 months.
3.Some investors seeking free allocations of the currency may have made misleading or exaggerated claims, including that Power Ledger has attracted the interest of Tesla founder Elon Musk and will revolutionise the retail electricity industry.
4.Driven by a 20‑fold rise in bitcoin, initial coin offerings were some of last year's most attractive investment opportunities. In the subsequent 12 months few have developed into successful companies, and questions are now being asked about the way in which many were promoted to unsophisticated investors.
5.Peter Williams, a partner at Deloitte Consulting specialising in technology, said providing a financial incentive, or bounty, for individuals to promote initial coin offerings could lead to unethical behaviour.
6.These are 'classic market manipulation techniques', he said.
7.The Australian Securities and Investments Commission, which this year set up a unit to monitor cryptocurrency investments, said spruikers should disclose they are being rewarded by the company. ASIC estimates one‑quarter of initial coin offerings may be scams.
8.'Just because you call something an ICO [initial coin offering], doesn't mean you are unregulated,' said ASIC commissioner John Price. 'We are very focused on disclosure in this area.'
9.Power Ledger's virtual currency, or token, is trading about 20 per cent below its issue price. Fewer than 100 buildings use its trading system.
10.'Some of our bounty group were professional bounty hunters chasing tokens because it's what they do,' Power Ledger said in a post a few weeks after the token sale. 'Some were bots reporting an astounding 5000 likes of our social media output in a single 24‑hour period.'
11.The company continues to pay spruikers who promote its currency, which was worth $2.4 billion at the peak of the bitcoin boom.
12.Chairman and co‑founder Jemma Green, who was this year named an EY entrepreneur of the year, said the company wanted to create grassroots support for the currency sale, and disclosed it had set aside 1.5 million tokens for spruikers.
13.'Rewards were offered to community members to share our project with their own networks,' Dr Green said.
14.'The means by which they did so were outside of our control, and we made it clear that our core supporters who believed in the project and the future of renewable energy were the main audience for this program.'
[Paragraph numbers added for convenience of reference]

Spruikers article and second website article ‑ plaintiff's imputations

The plaintiff says those articles defame her and give rise to the imputations that she:
1.causes unethical market manipulation by Power Ledger by using undisclosed paid spruikers to promote it and its POWR token (amended statement of claim (SOC) [7.1] and [23.1]);
alternatively
2.actively encourages unethical market manipulations by Power Ledger using undisclosed paid spruikers to promote it and its POWR token (SOC [7.2] and [23.2])

Spruikers article - relevant defences

For the purposes of this application the relevant defences advanced by the defendants in relation to the spruikers article and second website article are the defences of justification ([30A] of the defence) and contextual truth ([30B] of the defence).
I will first consider the plaintiff's submission that the contextual truth defence discloses no reasonable defence because counsel for the plaintiff, Mr Bennett, said that that is the primary object of the plaintiff's application.

Defendants' plea of contextual truth

The defendants plead the defence of contextual truth under Defamation Act 2005 (WA) s 26 at [30B] of their defence. The defendants plead that the spruikers article and the second website article carried, in addition to the imputations pleaded by the plaintiff, the following other imputation:
The plaintiff, by her creation, promotion and operation of Power Ledger, misleads the public and investors. (Contextual Imputation)
and by reason of the substantial truth of the Contextual Imputation, the imputations pleaded by the plaintiff do not further harm the reputation of the plaintiff.
The defendants give particulars in support of their contextual truth defence (the Contextual Truth particulars). First, the defendants repeat [1] ‑ [4] of their particulars in support of their defence that the imputations pleaded by the plaintiff are true. Those particulars in effect attribute the conduct of Power Ledger to the plaintiff.
In [2] ‑ [92] of the Contextual Truth particulars the defendants give particulars of their plea that the plaintiff has misled the public and investors. The particulars are organised into four sections which allege that the plaintiff has:
a.caused and/or actively encouraged unethical market manipulation as described in paragraph 3 of the particulars;
b.encouraged, and/or failed to take reasonable steps to correct the falsity of, the Elon Musk Rumour as described in paragraphs 4 to 18 of the particulars;
c.made misleading statements about, and/or caused Power Ledger to make misleading statements about the likelihood of Power Ledger succeeding as a business to the public and investors, including by omission, as described in paragraphs 19 to 68 of the particulars; and
d.made misleading statements in relation to, and/or caused Power Ledger to make misleading statements in relation to the POWR Token, including by omission, as to:
i.its nature, including the nature of the rights and/or interests to which holders of POWR Tokens were or would become entitled;
ii.its uses in the token model adopted or to be adopted on the Power Ledger Platform (Token Model); and
iii.the Token Model and how it would function in practice.
as described in paragraphs 69 to 92 of the particulars.
I will consider the plaintiff's submission in relation to the spruikers article that the contextual truth defence should be struck out on the ground that it discloses no reasonable defence. I will refer to the second website article only when it relevantly differs from the spruikers article.

Statutory defence of contextual truth

The defence of contextual truth is a statutory defence provided by Defamation Act s 26 in these terms:
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.

It is a requirement of the defence of contextual truth created by s 26 that the defamatory matter carried the imputation or imputations alleged by the defendant (the contextual imputations) and the contextual imputations are 'in addition to' and 'other' than the plaintiff's imputations.

Striking out contextual truth imputations - principles

Whether the spruikers article carried the Contextual Imputation is a question of fact for the jury. However, it is for the judge to decide whether the spruikers article is capable of bearing the Contextual Imputation.[1]
[1] Fairfax Media Publications Pty Ltd v Zeccola (2015) 91 NSWLR 341 McColl, with whom Macfarlan JA and Sackville AJA agreed, [88] ‑ [89].
Striking out an imputation on the ground that the matter complained of is not capable of carrying the imputation is a step to be taken with great caution.[2] Deciding capacity to carry an imputation is an exercise in generosity not parsimony. The question is not what the matter complained of in fact conveys but what a jury could reasonably think it conveys to the ordinary reasonable person, which is often a matter of first impression.[3]
[2] Favell v Queensland Newspapers Pty Ltd [2004] QCA 135 [2] McPherson JA, approved by Favell v Queensland Newspapers Pty Ltd (2005) 79 ALJR 1716 [6] (Gleeson CJ, McHugh, Gummow & Heydon JJ); Trkulja v Google LLC (2018) 263 CLR 149.
[3] Trkulja v Google LLC (2018) 263 CLR 149 citing Berezovsky v Forbes Inc [2001] All ER (D) 452 [16] (Sedley LJ).

The Contextual Imputation

The Contextual Imputation was correctly described by the defendants in their written outline of submissions as 'a general imputation of misconduct'.[4] The gist of the imputation is that the plaintiff misleads the public and investors. The imputation is confined only by alleging the plaintiff does so by her creation, promotion and operation of Power Ledger. The imputation is not confined to any specific misleading conduct. The plaintiff's imputations on the other hand attribute to the plaintiff specific misconduct ‑ unethical market manipulation by causing or actively encouraging Power Ledger to use undisclosed paid spruikers to promote it and its POWR token.
[4] Defendants' written submissions 15 May 2020 [37].
A defendant may plead a general contextual imputation in defence to a specific imputation pleaded by a plaintiff even if it relates to the same subject matter, as long as it differs in substance.[5] In those circumstances the defendant may prove a general imputation true by matters not referred to in the matter complained of in the same way a defendant may do so if the plaintiff pleaded a general imputation as in Maisel v Financial Times Ltd.[6]
[5] Fairfax Media Publications v Zeccola (2015) 91 NSWLR 341; Abou‑Lokmeh v Harbour Radio Pty Ltd [2016] NSWCA 228; Cornwell v Channel Seven Sydney Pty Ltd [2016] NSWCA 255.
[6] Maisel v Financial Times Ltd (1915) 84 LJKB 2145.
In this case the defendants seek to prove their pleaded general imputation true by matters not referred to in the spruikers article. The defendants seek to prove that the plaintiff made misleading statements about, and/or caused Power Ledger to make misleading statements about, the likelihood of Power Ledger succeeding as a business including by omission, as described in [19] ‑ [68] of their Contextual Truth particulars. The matters advanced in those particulars are not referred to in the spruikers article.
The defendants further seek to prove that the plaintiff made misleading statements in relation to, and/or caused Power Ledger to make misleading statements, in relation to the POWR token including by omission as to a number of matters described in [69] ‑ [92] of the Contextual Truth particulars. The matters set out in those particulars are not referred to in the spruikers article.
The defendants also seek to prove that the plaintiff has misled the public and investors in that she has encouraged, and/or failed to take reasonable steps to correct the falsity of, the Elon Musk rumour as described in [4] ‑ [18] of the Contextual Truth particulars. Those particulars assert that by making certain Twitter posts and Telegram messages and not responding to certain queries, the plaintiff encouraged a rumour among individuals interested in Power Ledger that Elon Musk was interested in Power Ledger and had met with the plaintiff to discuss that interest which is defined as the Elon Musk rumour. The spruikers article says that some investors seeking free allocations of the currency, that is the spruikers referred to in the headline, may have made misleading or exaggerated claims that Power Ledger has attracted the interest of Elon Musk. But that is not the Elon Musk rumour. The spruikers article makes no reference to the plaintiff having encouraged the Elon Musk rumour as asserted in the Contextual Truth particulars.

A defendant may justify a general imputation as a contextual imputation as long as the general contextual imputation is capable of arising from the defamatory publication.
A publication may contain a specific allegation but also a more general charge. Maisel v Financial Times Ltd is an example of such a case. But a publication that contains specific allegations does not necessarily contain a more general charge. Bookbinder v Tebbit[7] is an example of such a case.
[7] Bookbinder v Tebbit [1989] 1 WLR 640.
Whether a publication containing a particular charge of wrongdoing carries a general charge may turn on whether the article makes a number of specific charges against the plaintiff.[8] It may also turn on the gravity of the misconduct attributed to the plaintiff in the defamatory publication.[9]
[8] See for example Cornwell v Channel Seven Sydney Pty Ltd [2016] NSWCA 255.
[9] See for example Nationwide News Pty Ltd v Warton [2002] NSWCA 377.

Spruikers article not capable of carrying Contextual Imputation

The spruikers article is not capable of conveying the general charge that by her creation, promotion and operation of Power Ledger the plaintiff misleads the public and investors. The subject of the article is set out in its headline and lede: Power Ledger rewarded fake social media profiles for spruiking its virtual currency.
The only conduct of the plaintiff referred to in the spruikers article which can be related to the 'creation, promotion or operation' of Power Ledger is Power Ledger's use of the spruikers referred to in the headline and lede to promote the company and its virtual currency. The article describes elements of that conduct to include using spruikers who use fake social media profiles, make misleading or exaggerated claims and make their promotions without disclosing they are being rewarded by Power Ledger. The article does not refer to any other conduct of Power Ledger.
The defendants submit that the spruikers article and the second website article are capable of conveying that the plaintiff misleads the public and investors in the 'promotion' of Power Ledger by referring to eight statements in the article. The first is the headline: 'Blockchain firm in gun over spruikers'. In its terms that is a reference to Power Ledger using spruikers to promote itself. The rest of the article makes plain that that promotion is the use of spruikers to promote the company and its token and some of the spruikers use fake social media profiles, make misleading or exaggerated claims and make their promotions without disclosing they are being rewarded by the company to do so.
The second is the reference in [1]: 'rewarded fake social media profiles spruiking its virtual currency'. That is referring to the promotion of the POWR token by the spruikers.
The third is the reference in [3]: 'has been criticised for using "bounty hunters" to drive interest in its bitcoin-like currency'. Senior counsel for the defendants, Mr Dawson SC, submits this suggests that Power Ledger created a false perception of interest in its bitcoin‑like currency that did not reflect the actual level of interest. That may be so, but the use of bounty hunters can only reasonably be understood to be a reference to the promotion of the POWR token by the spruikers.
The fourth is the reference in [2]: 'has fallen 90% in value over the past 12 months'. Mr Dawson submits this suggests that Power Ledger is worth only a fraction of the hype it incentivised others to generate. That may be so, but the hype the company incentivised others to generate can only be understood by a reasonable reader to be by the use of the spruikers in the bounty campaign.
The fifth is the reference in [3]: 'some investors seeking free allocations of the currency may have made misleading or exaggerated claims, including that Power Ledger has attracted the interest of Tesla founder Elon Musk and will revolutionise the retail electrical industry'. That allegation is about the conduct of Power Ledger in promoting it and its virtual currency by the use of spruikers in the bounty campaign in the course of which, spruikers have made those misleading or exaggerated claims about Elon Musk. It cannot reasonably be understood to be a reference to the company promoting itself in any other way.
The sixth is the reference in [4]: 'questions are now being asked about the way in which many [ICOs] were promoted to unsophisticated investors'. This can only reasonably be understood to be a reference to Power Ledger's promotion by the use of spruikers in the bounty campaign.
The seventh is the reference in [5]: 'providing a financial incentive, or bounty, for individuals to promote initial coin offerings could lead to unethical behaviour'. Mr Dawson says this implies that Power Ledger provided the financial incentive for misleading or exaggerated claims referred to in [3]. This can only reasonably be understood to be a reference to Power Ledger's use of spruikers in the bounty campaign.
The eighth is the reference in [12]: 'the company continues to pay spruikers … who promote its currency'. This once again can only reasonably be understood to be a reference to Power Ledger's use of spruikers in its bounty campaign.
The defendants also refer to two subheadings which appear in the second website article only. The first is 'ICO scams'. The subheading introduces the statement that ASIC had set up a unit to monitor cryptocurrency investments and said that spruikers should disclose they are being rewarded by the company. That can only be a reference to Power Ledger's use of spruikers in its bounty campaign. The second subheading is 'Continuing to pay'. That subheading introduces the statement that '[t]he company continues to pay spruikers … who promote its currency'. That can only be a reference to the company's use of spruikers in its bounty campaign.
The defendants refer to four statements in the spruikers article and second website article which they submit support the contention that the articles are capable of conveying that the plaintiff has misled the public and investors in the 'creation and operation' of Power Ledger.
The first is a reference in [4]: 'Driven by a 20 fold rise in bitcoin, initial coin offerings were some of last year's most attractive investment opportunities. In the subsequent 12 months few have developed into successful companies, and questions are now being asked about the way in which many were promoted to unsophisticated investors'. The defendants submit that the statements suggest that Power Ledger is one of a class of companies that made misleadingly inflated claims about its prospects at the outset and then failed to deliver on those claims. The reference to 'the way in which many were promoted to unsophisticated investors' can only be read by a reasonable reader to be a reference to Power Ledger's use of spruikers in its bounty campaign, which is the subject of the headline and the three paragraphs which precede [4] as well as the paragraphs which follow it. The article contains no reference to any other form of promotion.
The second is a reference in [9]: 'Power Ledger's virtual currency, or token, is trading at about 20% below its issue price'. The defendants submit this statement suggests that Power Ledger issued tokens that were overpriced. The statement cannot be divorced from its context which is criticism of Power Ledger 'for using bounty hunters to drive interest in its bitcoin-like currency, which has fallen 90% in value over the past 12 months' ([2]) and '[t]hese are "classic market manipulation techniques"'([6]). The criticism that the token is trading about 20% below its issue price cannot be understood by a reasonable reader as a criticism of any conduct of Power Ledger other than its use of spruikers in its bounty campaign.
The third is the reference in [9]: 'Fewer than 100 buildings use its trading system'. Once again the statement cannot be divorced from its context which is criticism of Power Ledger's bounty campaign using paid spruikers who exaggerated the worth or benefit of the company and its token.
The fourth is the statement in [12] that Power Ledger's 'currency … was worth $2.4 billion at the peak of the bitcoin boom'. The defendants submit this statement suggests that Power Ledger seriously overvalued its POWR token, and that this value was disproportionate to the commercial potential of Power Ledger as a company. The statement cannot be divorced from its context which is criticism of Power Ledger’s bounty campaign using paid spruikers who exaggerated the worth or benefit of the company's token. Indeed, the words quoted by the defendants are part of a sentence which reads: '[T]he company continued to pay spruikers who promote its currency, which was worth $2 billion at the peak of the bitcoin boom'.
The defendants also point to the subheading 'ICO scams' in the second website article. As I have said earlier in these reasons, the subheading introduces the statement that ASIC had set up a unit to monitor cryptocurrency investments and said that spruikers should disclose they are being rewarded by the company. It can only be understood as a criticism of Power Ledger's promotion of its POWR token during the ICO by its bounty campaign.
My finding that the spruikers article does not carry the general imputation pleaded by the defendants is consistent with the authorities cited by Mr Dawson.
In Fairfax Media Publications Ltd v Zeccola,[10] McColl JA, with whom Macfarlan JA agreed and Sackville AJA relevantly agreed, held that a general contextual imputation of a Maisel nature could be pleaded in defence to a specific plaintiff's imputation even though they related to the same subject matter, as long as they differed in substance. Her Honour referred to the conclusion of Hunt J in Allen v John Fairfax and Sons Ltd,[11] where his Honour held that the 'differ in substance' test was satisfied where a defendant pleaded a contextual imputation in general terms in the sense permitted by Maisel. His Honour stated:
If the matter complained of conveys to the same ordinary reasonable reader two imputations at the same time, one of a general nature 'of a Maisel type' and another of a specific nature which, even though related to the same subject matter of the general imputation, differs in substance from it, the policy behind s 16 requires that the defendant be permitted to plead the former as a contextual imputation to the plaintiff's cause of action based upon the latter [10].
[10] Fairfax Media Publications v Zeccola (2015) 91 NSWLR 341.
[11] Allen v John Fairfax and Sons Ltd (Unreported, NSWSC, 2 December 1988).
In Fairfax Media Publications Ltd v Zeccola the defendants pleaded the contextual imputation that the plaintiff 'permitted Palace Films to default on its payment obligations to producers of Australian films', whereas the plaintiffs pleaded more specific and less serious imputations of withholding returns on successful films. McColl JA found that the publication complained of referred to a 'wider field of financial default than that selected by the [plaintiff]'. Her Honour said that the contextual imputation was capable of being conveyed by two passages from the publication complained of, which her Honour identified. Her Honour then described the contextual imputation as an imputation 'of general financial default'.
The spruikers article and second website article do not refer to a wider field of misleading conduct than that selected by the plaintiff. The whole of each article is concerned with the conduct of Power Ledger to promote the company, and its POWR token, by the use of undisclosed paid spruikers to exaggerate their worth or benefits.
McColl JA referred with approval to the decision of Rares J in Crosby v Kelly,[12] where Rares J declined to strike out two contextual imputations that each of the applicants 'is a hypocrite'. The applicant's imputations were that they:
(a)introduced to Australia the morally disreputable practice of pretending to conduct a genuine and objective opinion poll while actually disseminating, to participants in the supposed poll, material unfairly slanted against those persons or groups to whom the conductors of the supposed poll (or those commissioning it) are opposed, with a view to surreptitiously and dishonestly prejudicing participants against those persons or groups ('push polling'); and
(b)introduced to Australia the morally disreputable practice of push polling [3].
[12] Crosby v Kelly [2013] FCA 1343.
Rares J opined that the ordinary reasonable reader would be capable of understanding the matter complained of to convey that each applicant expressed moral views about matters that were different from what they actually did: ie their actual behaviour, an example of which was their introduction of push polling to Australia. In other words, his Honour said, the meaning that could be conveyed to the ordinary reasonable reader was that each applicant was a hypocrite. Accordingly, the matter complained of was capable of conveying the textual imputations.[13]
[13] Crosby v Kelly [27].
The spruikers article and second website article are not capable of conveying to a reasonable reader that the plaintiff by her creation, promotion and operation of Power Ledger misleads the public and investors, an example of which was its use of undisclosed paid spruikers. The articles are wholly about Power Ledger's use of undisclosed paid spruikers.
In Abou‑Lokmeh v Harbour Radio Pty Ltd[14] the plaintiff pleaded imputations that the plaintiff:
(a)paid to have Ms Issa murdered;
(b)paid money to a lawyer in an attempt to have Ms Issa imprisoned; and
(c)extorted thousands of dollars from Ms Issa to withdraw criminal charges [5].
The defendants pleaded contextual imputations including that the plaintiff:
(i)wanted Ms Issa to be killed; and
(ii)conducted himself in such a way to cause Ms Issa to fear for her life [8].
[14] Abou-Lokmeh v Harbour Radio Pty Ltd [2016] NSWCA 228.
The New South Wales Court of Appeal held that the contextual imputations differed in substance from the plaintiff's imputations. McColl JA explained that imputation (a) pleads an imputation of a specific nature, that the plaintiff paid to have Ms Issa murdered, whereas imputation (i), although related to the same subject matter, contends that he 'wanted her killed' and is of a general nature.[15] Her Honour held that the gravity of imputation (a) is such that the general charge contained in imputation (i) is capable of being conveyed in addition to it.[16]
[15] Abou-Lokmeh v Harbour Radio Pty Ltd [2016] NSWCA 228 [43].
[16] Abou-Lokmeh v Harbour Radio Pty Ltd [2016] NSWCA 228 [46].
In this case the specific allegations made in the spruikers article and second website article about the plaintiff are not of such a grave nature that the publications give rise to the general charge in the contextual imputation.
In Cornwell v Channel Seven Sydney Pty Ltd[17] the appellants pleaded 14 defamatory imputations each of which pleaded a specific instance of misconduct attributed to the plaintiff. The respondents pleaded contextual imputations including the imputation 'the plaintiff is dishonest'. The New South Wales Court of Appeal held that the primary judge did not err in refusing to strike out the contextual imputation. Gleeson JA, with whom McColl and Macfarlan JJA agreed, held that the primary judge had made no error in concluding that it was at least arguable that the broadcast conveyed the general imputation of dishonesty in addition to the imputations of which the plaintiff complained.[18]
[17] Cornwell v Channel Seven Sydney Pty Ltd [2016] NSWCA 255.
[18] Cornwell v Channel Seven Sydney Pty Ltd [2016] NSWCA 255 [46].
In contrast to the publication in Cornwell v Channel Seven Pty Ltd the spruikers article and second website article do not assert a number of specific instances of misleading conduct which are capable of conveying a general imputation of misleading the public.

Contextual defence - conclusion

The spruikers article and the second website article are not capable of carrying the Contextual Imputation. The defence of contextual truth in [30B] of the defence should be struck out.

Justification of spruikers article imputations ‑ defence [30A]

The defendants' defence of justification of the imputations pleaded by the plaintiff to be carried by the spruikers article and the second website article is based upon Power Ledger's bounty campaign.
In broad outline the defendants' justification case is that Power Ledger has given a reward or bounty in the form of free tokens to social influencers or bounty hunters for promoting Power Ledger, its ICO and its POWR token. The bounty hunters have made those promotions without disclosing that they have done so for reward thereby generating 'an artificial level of legitimacy and value of Power Ledger, the ICO and the POWR token resulting in inflation of the market price for the tokens' during and immediately following the ICO' re‑amended defence ([30A] particular [29]). The defendants say that in that way Power Ledger has manipulated the market for POWR tokens and that it is unethical because 'it created the risk that purchasers of POWR tokens would acquire them on false pretences'. The defendants say that the plaintiff has done those things because she is responsible for that conduct of Power Ledger.
The defendants plead that the imputations that the plaintiff causes, or alternatively actively encourages, unethical market manipulation by Power Ledger using undisclosed paid spruikers to promote it and its POWR token are true in substance. The defendants' particulars of justification are set out in 32 paragraphs.

Plaintiff's challenge to justification plea in defence [30A]

The plaintiff submits that taken at their highest, the defendants' particulars of justification are not capable of proving the substantial truth of the plaintiff's imputation that she causes, or alternatively actively encourages, market manipulation by Power Ledger. That is a capacity objection. The plaintiff also submits that certain of the particulars are embarrassing. I will consider those objections first. Before addressing the plaintiff's contentions I will outline the principles to be applied to an application to strike out particulars of justification.

Principles applicable to application to strike out particulars of justification

Particulars of justification must satisfy at least three requirements. First, they must be relevant to proving the defamatory meaning pleaded by the plaintiff. Secondly, they must be pleaded with such particularity that the plaintiff knows not merely the general case she has to meet but also the acts, omissions or things attributed to her which are alleged to justify the imputation so that she knows the case against her. Thirdly, the particulars must be sufficient, that is, capable of proving the truth of the defamatory meaning sought to be justified. The first requirement is one of relevance, the second of specificity or precision, the third requirement goes to the capacity of the particulars to justify the pleaded imputation.[19]
[19] Lord Ashcroft KCMG v Foley [2011] EWHC 1710 (QB); Lord Ashcroft KCMG v Foley [2012] EWCA Civ 423; Rush v Nationwide News (2018) 359 ALR 473; Weeks v Nationwide News Pty Ltd [No 2] [2019] WASC 44 [32].

Objection to paragraph 4

Paragraphs 5 ‑ 31 of the particulars plead matters which the defendants say establish unethical market manipulation by Power Ledger using undisclosed paid spruikers to promote it and its POWR token. Paragraph 32 pleads that the matters stated in [1] ‑ [4] establish that the plaintiff knew about and permitted the matters stated in [5] ‑ [31].
Paragraphs 1 to 3 of the particulars are not controversial. Paragraphs 1 and 2 assert that the plaintiff co‑founded Power Ledger as a technology company with a stated aim of developing blockchain technology applications for use in trading energy and environmental commodities and investing in energy assets. Paragraph 3 asserts that the plaintiff is a director, chairperson and shareholder of Power Ledger.

Paragraph 4 pleads that the plaintiff was intimately involved in Power Ledger's day‑to‑day affairs; was responsible for deciding Power Ledger's direction; and oversaw all aspects of Power Ledger's business.
The plaintiff objects that [4] is vague and conclusionary.
It is not sufficient to simply plead a conclusion from unstated facts; such a pleading is embarrassing. There is a distinction between factual conclusions (the plaintiff was intimately involved in Power Ledger's day‑to‑day affairs) and factual supporting allegations (what the plaintiff did and said). The distinction between a conclusion and supporting allegations is illusive. At some level everything is inference; all factual assertions are conclusions. However, courts distinguish between conclusions and the facts that permit them to be made because they may not agree that the inference drawn by a party is justified. As Gleeson CJ said in relation to questions about the specificity of pleaded imputations, the solution will usually be found in considerations of practical justice.[20] A defendant may plead a particular at a high level of generality providing that it is sufficient to allow the plaintiff a fair opportunity to meet it and it is not likely to cause confusion either at the pleading stage or at the trial in relation to the factual allegation.
[20] Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135, 137.
In my opinion [4], in its context, is sufficient to inform the plaintiff of the case she has to meet and to give her a fair opportunity to meet it.

Paragraphs 5 to 11

The plaintiff does not object to [5] ‑ [11] of the particulars. Paragraph 5 refers to Power Ledger developing a blockchain‑based energy trading platform. Paragraphs 6 and 7 refer to a White Paper produced by Power Ledger which describes its platform and was published on its website. Paragraph 8 refers to Power Ledger creating 1 billion tokens (POWR tokens).
Paragraph 9 refers to Power Ledger putting on its website a Token Paper which provided information in relation to Power Ledger's proposed ICO using POWR tokens. Paragraph 10 says that Power Leger made available on its website a Bounty Paper which provided information about a campaign to be launched by Power Ledger to allocate free POWR tokens to persons who promoted Power Ledger, the ICO and the POWR token on social media during the ICO. Paragraph 11 sets out statements made in the Bounty Paper including that Bounty Campaign participants who created blog posts or articles meeting certain standards would accumulate Bounty Reward Points.

Objection to paragraphs 12 ‑ 14

Paragraph 12 of the particulars is that Power Ledger did not require or suggest, either in its Bounty Paper or otherwise, that Bounty Campaign participants publicly disclose (whether in the relevant post or otherwise) that they produced, posted and/or shared online promotional content with a view to accumulating Bounty Reward Points.
Paragraph 13 of the particulars is that the allocation of Bounty Reward Points and/or POWR tokens to Bounty Campaign participants was not conditioned upon Bounty Campaign participants publicly disclosing (whether in the relevant post or otherwise) that they produced, posted and/or shared online promotional content with a view to accumulating Bounty Reward Points.
Paragraph 14 of the particulars says that at all material times the plaintiff (and Power Ledger) knew that in the absence of a requirement to do so, Bounty Campaign participants would not publicly disclose that they posted promotional content with a view to accumulating Bounty Reward Points; and that in circumstances where a Facebook post incorporating the hashtag #POWR token was liked, it was not apparent to a person viewing the post that a Bounty Campaign participant had liked the post with a view to accumulating Bounty Reward Points.
The plaintiff says that [12] does not disclose 'unethical market manipulation'. That is a relevance objection. Paragraph 12 is relevant to that part of the defendants' case that the plaintiff, through Power Ledger, used undisclosed paid spruikers to promote it and its POWR token. Paragraph 13 says that Power Ledger allocated Bounty Reward Points or POWR tokens to Bounty Campaign participants without requiring them to publicly disclose that they would, or may receive, Bounty Reward Points for making the promotion. Paragraph 14 says that the plaintiff knew that in the absence of such a requirement, Bounty Campaign participants would not disclose that they posted promotional content with a view to accumulating Bounty Reward Points; and a person viewing a post by a bounty hunter would not know they posted it with a view to earning bounty points.
The question is not whether any particular allegation taken alone discloses 'unethical market manipulation,' but whether it does so when taken together with the other particulars. I will consider that capacity objection later in these reasons.
The plaintiff says [14] is irrelevant insofar as it refers to conduct of Power Ledger. I do not accept that submission. The defendants' case is that the plaintiff knew about and permitted Power Ledger's conduct.
The plaintiff objects that each of the particulars in [12] ‑ [14] are conclusionary and submissions, not a material fact. The plaintiff also submits that [14] is vague. Those are objections to a lack of specificity. I find that each particular is sufficiently precise to inform the plaintiff of the case she has to meet and give her a fair opportunity to meet it.
The plaintiff says that insofar as [14] says that it was not apparent to a person viewing a post by a bounty hunter that the bounty hunter had made the post with a view to accumulating Bounty Reward Points, the particular is inadmissible opinion. I do not agree. The allegation is an inference. The inference is open. Whether or not it should be drawn is a matter for trial.

Paragraphs 15 to 27

The plaintiff does not challenge [15] to [27] of the defendants' particulars of justification. Paragraph 15 says that Bounty Campaign participants included bot accounts (software used to automatically generate posts); bounty hunters (persons who participate in bounty campaigns associated with ICOs for the bounty); and professional bounty hunters (bounty hunters who derive substantial income from their participation in bounty campaigns).
Paragraph 16 says that Power Leger allocated about 150 million POWR tokens to its directors, employees and contractors engaged in building the Power Ledger platform, which allocation was subject to escrow for between six and 18 months. Paragraph17 says that Power Ledger allocated about 1.5 million POWR tokens to be distributed to Bounty Campaign participants. Paragraph18 says that by 27 August 2017 Power Ledger had sold 90 million POWR tokens to its strategic partners and to potential early adaptors of the Power Ledger platform.
Paragraph 19 says that Power Ledger launched its ICO on 27 August 2017. Paragraph 20 asserts the purposes for which Power Ledger stated in its Token Paper that the funds raised by the ICO would be used. Paragraph 21 says that the ICO occurred in two phases. During the first phase ‑ ICO presale ‑ members of the public could purchase POWR tokens for US$0.088 less a 5% discount. During the second phase ‑ ICO proper ‑ members of the public could purchase tokens at the prevailing market price or at a discount during the first three weeks. Paragraph 22 says that the ICO presale ran from 27 August to 3 September 2017. Paragraph 23 says that during the ICO presale Power Ledger sold about 100 million tokens and raised about A$17 million. Paragraph 24 says that the ICO proper ran from 8 September to 6 October 2017. Paragraph 25 says that during the ICO proper Power Ledger sold about 150 million tokens and raised about A$17 million. Paragraph 26 says that about five weeks after Power Ledger closed the ICO proper the market price for tokens was US$1.79. Paragraph 27 says that during the ICO Bounty Campaign participants posted promotional content with a view to accumulating Bounty Reward Points and did not publicly disclose that they did so with a view to accumulating Bounty Reward Points.

Paragraphs 28 to 31

The plaintiff seeks to strike out [28] to [31]. Paragraph 28 says that during the ICO, Power Ledger used Bounty Campaign participants to post promotional content that had the effect (in aggregate) of:
a.generating the appearance of a greater than actual level of public interest in Power Ledger, the ICO and the POWR Token;
b.elevating the profile of Power Ledger, the ICO and the POWR Token;
c.attracting interest in Power Ledger, the ICO and the POWR Token from prospective 'investors' and members of the public;
d.Power Ledger, the ICO and the POWR Token achieving a degree of prominence for which they would otherwise have had to use paid advertising to achieve;
e.creating the impression that the POWR Token was a worthwhile acquisition or investment by reason of its apparent popularity; and
f.creating the impression that there was a significant number of persons who were sufficiently impressed by Power Ledger's achievements and future prospects (and/or the future value of POWR Tokens) that they were willing:
i.to 'invest' their own money in Power Ledger by acquiring POWR Tokens; and
ii.to promote Power Ledger, the ICO and the POWR Token without reward.
Paragraph 29 pleads that the online promotional content thus generated an artificial level of legitimacy and value in respect of Power Ledger, the ICO and the POWR tokens, resulting in inflation of the market price of tokens during the ICO proper and during the period immediately following the ICO proper.
Paragraphs 30 and 31 are conclusionary. Paragraph 30 says that by reason of the matters in [27] ‑ [29] the market for tokens was manipulated by the participation of bot accounts and bounty hunters in Power Ledger's bounty campaign in a manner which was unethical because it created the risk that purchasers of tokens would acquire them on false pretences. Paragraph 31 says that in the premises, Power Ledger, in promising in its bounty campaign to reward the production of, posting of and interaction with the online promotional content referred to in [28], caused and/or actively encouraged manipulation of the market for tokens which was unethical as particularised in [30].
Paragraph 32 then brings those matters home to the plaintiff by pleading that by reason of the matter stated in [1] ‑ [4] the plaintiff knew about and permitted the matter stated in the balance of the particulars.

Objections to paragraphs 28 ‑ 31

The plaintiff objects that each of [28] - [31] of the particulars is conclusionary and a submission, not an allegation of material fact.
Paragraphs 28 and 29 are allegations of fact albeit at a relatively high level of generality. Paragraphs 30 and 31 are conclusionary. However, they are conclusions of fact not law. They are facts stated at a high level of generality. The supporting allegations which are said to give rise to those conclusions are stated.
The plaintiff objects that each of the particulars refers to conduct of Power Ledger which is not relevant or attributable to the plaintiff. I do not accept that submission. The defendants' case is that the plaintiff knew about and permitted Power Ledger's conduct.
The plaintiff objects that each of the particulars is inadmissible opinion. I do not agree. Each of the particulars is an allegation of fact albeit conclusionary or at a relatively high level of generality.
The meaning of the allegation in [29] that the promotions 'generated an artificial level of legitimacy and value' is not immediately clear. An artificial level of value of an asset is the value of the asset on some presumed or fictional basis. Business legitimacy like political legitimacy is a nebulous concept. The level of legitimacy refers to the degree to which the relevant section of the public accept the business as real, genuine and deserving of the trust and confidence of those who invest in it or use its products or services. In the present context an artificial level of legitimacy and value in respect of Power Ledger, the ICO and the POWR token means: the notional value of Power Ledger and the POWR token and the amount that would have been raised by the ICO, and the degree to which the relevant section of the public would have accepted Power Ledger, the ICO and the POWR token as real, genuine and deserving of trust and confidence, if the 'online promotional content' referred to in [28] of the particulars had not existed. Understood in that way I find that [29] is relevant and sufficiently informs the plaintiff of the case she has to meet.

Particulars not irrelevant or lacking sufficient specificity

For the reasons I have given I do not accept the plaintiff's objections to the challenged particulars of justification on the grounds of relevance and specificity.

Particulars not incapable of proving imputations

The plaintiff further objects that the particulars of justification are not capable of proving the truth of the defamatory meanings sought to be justified.
Particulars provided in support of a defence of justification must be capable of proving the truth of the defamatory meanings sought to be justified. The power to strike out a defence in a defamation case should be exercised with great care and a plea should not be struck out unless it is clear that it cannot succeed.[21]
[21] John Fairfax Publications Pty Ltd v Hitchcock (2007) 70 NSWLR 484 [112].
In Rush v Nationwide News[22] Wigney J said:
The court must determine whether the particulars that have been provided, taken at their highest, are capable of proving the truth of the defamatory imputations that are sought to be justified. In making that determination, the court must not only bear in mind that the particulars are a bare outline of the facts that the [defendants] will seek to prove, but also exhibit the … caution that must necessarily be exhibited in determining, at an interlocutory stage, factual issues that may be better finally determined on the basis of all of the evidence led at the trial [50].
[22] Rush v Nationwide News (2018) 359 ALR 473.
In assessing the sufficiency of the particulars it is also necessary to have regard to the accumulated effect of the particulars.[23]
[23] Pahuja v TCN Channel 9 Pty Ltd (No 2) [2016] NSWSC 1074 [11]; Gallagher v Destiny Publications Pty Ltd [2015] WASC 40 [11].
The particulars of justification proceed from allegations of primary facts to intermediary conclusions drawn by inference from those primary facts and leading, as a matter of evaluative determination, to the justification of the pleaded imputations. I am not satisfied that taken at their highest, the particulars are not capable of proving the truth of the defamatory imputations pleaded by the plaintiff.

The $2 billion article

Under the headline 'How to make and lose $2 billion', the $2 billion article starts by referring to the plaintiff as a rock star in the wild world of blockchain pioneers and says that she oversaw the biggest initial coin offering in Australian history. The article continues as follows. The plaintiff's company, Power Ledger, promises to revolutionise the global power industry. Power Ledger's blockchain tokens are an unregulated computer‑based form of money. The plaintiff created a virtual currency worth more than $2 billion at its peak, yet 'her trading system has a tiny take‑up, was rejected by the one big electricity retailer that used it, and a government‑funded trial hasn't met the expectations of some involved'. Now, some experienced tech and green industry figures are posing an awkward question: Does Power Ledger epitomise the over‑hyping of blockchain?
The article questions the purpose of Power Ledger's business and the value of blockchain technology outside cryptocurrencies. The article says that Power Ledger's company manifesto sounded like an IPO but was not and instead the tokens gave investors the right to use Power Ledger's technology at some point in the future but they were not entitled to any profits. The article says that Power Ledger turned to bounty hunters to raise capital instead of stockbrokers or bankers, that 1.5 million POWR tokens were set aside for individuals to promote the sale on social media and Twitter was flooded with posts and 'false accounts were rewarded with POWR tokens for their promotional work'. ASIC is reported to disapprove of people spruiking investments without disclosing their interests and a Deloitte's partner is quoted as saying that these are 'classic market manipulation techniques'.
The article refers to Power Ledger raising $34 million with its initial coin offering bringing apparent wealth to the plaintiff. It then says that the system does not operate outside a few pre‑established trials that cover a tiny number of people; there is no way to sign up to Power Ledger's trading system; and few buildings use Power Ledger's system. Then it is said that the government has provided $2.6 million to test the system on about 40 houses in Fremantle. Comments are attributed to an anonymous participant to the effect that the system is not worth using. A cryptocurrency broker is quoted as saying that 'he can't see what would drive the token price up' and the value of the token holders 'is not well aligned to the value of the business'.
The article says that the bitcoin boom seems to have passed and questions if the ICOs were an investment fad that shifted wealth rather than created it. It is said that after spectacularly peaking in January 2018, POWR tokens crashed with the rest of the bitcoin market and today trade about 20% below their issue price. It is said that the company continues to reward bloggers who promote the virtual currency.
The first online article is in substantially the same terms.

$2 billion article and first online article - plaintiff's imputations

The plaintiff says that the $2 billion article and first online article defame her and give rise to the imputations that she:
1.by her creation, promotion and operation of Power Ledger, defrauds the public and investors (SOC [12.1] and [17.1]);
alternatively
2.by her creation, promotion and operation of Power Ledger misleads the public and investors (SOC [12.2] and [17.2]).

$2 billion article - defence of justification

The defendants plead justification to the alternative imputations which the plaintiff pleads are carried by the $2 billion article and the first online article. That is, that the plaintiff by her creation, promotion and operation of Power Ledger, misleads the public and investors.
In support of their plea that those imputations are true, the defendants repeat the Contextual Truth particulars.
As set out earlier in these reasons, those particulars are organised into four sections which allege the plaintiff has misled the public and investors in that she has:

a.caused and/or actively encouraged unethical market manipulation as described in [3] of the particulars;
b.encouraged, and/or failed to take reasonable steps to correct the falsity of, the Elon Musk Rumour as described in [4] to [18] of the particulars;
c.made misleading statements about, and/or caused Power Ledger to make misleading statements about the likelihood of Power Ledger succeeding as a business to the public and investors, including by omission, as described in [19] to [68] of the particulars; and
d.made misleading statements in relation to, and/or caused Power Ledger to make misleading statements in relation to the POWR Token, including by omission, as to:
i.its nature, including the nature of the rights and/or interests to which holders of POWR Tokens were or would become entitled;
ii.its uses in the token model adopted or to be adopted on the Power Ledger Platform (Token Model); and

iii.the token Model and how it would function in practice.
as described in [69] to [92] of the particulars.

Particulars A: unethical market manipulation

The plaintiff's objections to these particulars are the same as her objections to the defendants' particulars of justification in relation to the spruikers article. I do not uphold those objections in relation to the $2 billion article for the same reasons I do not uphold them in relation to the spruikers article.

Particulars B: responsibility for the Elon Musk rumour

The plaintiff makes three submissions in relation to the Elon Musk rumour particulars. First, the plaintiff says that the particulars taken together are not capable of proving that the plaintiff encouraged and/or failed to take reasonable steps to correct the falsity of, the Elon Musk rumour.
The test is whether the particulars, taken as a whole, are capable of proving the plaintiff's responsibility for the Elon Musk rumour. The test has been variously expressed, including 'so obviously untenable that it cannot possibly succeed' and 'manifestly groundless'.[24] I am not satisfied that the particulars taken as a whole are not capable of proving the plaintiff's responsibility for the Elon Musk rumour.
[24] General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, 128 ‑ 129 (Barwick CJ); Dey v Victorian Railways Commissioners (1949) 78 CLR 62, 91 (Dixon J).
The plaintiff's second objection is that the defendants have impermissibly relied on material obtained from the plaintiff's discovery to establish these allegations in support of their justification defence. There are two answers to that objection. First, I am not satisfied as a matter of fact that the defendants' particulars are to any significant extent derived from material obtained from the plaintiff's discovery.
Secondly, there is no rule of law that a defendant may not amend his or her defence to plead as particulars of justification facts derived from the plaintiff's discovery. In Weeks v Nationwide News I wrote:
[A] defendant must give adequate particulars before obtaining discovery and can obtain inspection of the plaintiff's documents only in respect of the specific facts or instances stated in his or her particulars of justification: Zierenberg v Labouchere [1893] 2 QB 183; Yorkshire Provident v Gilbert; Arnold and Butler v Bottomley [1908] 2 KB 151. The suggestion that, upon a generalised plea of justification, a defendant may obtain discovery from the plaintiff to gain information so as to possibly buttress general allegations is as unfounded today as it was in 1893. The rationale for this rule is the policy which discourages persons from making defamatory statements about others when not possessed of facts which would support such statements. In Zierenberg v Labouchere Kay LJ said:
'If the defendant says that he is unable to state any facts without discovery, the answer is simple and conclusive - he ought not to have published the libel, and cannot plead any justification for having done so (189).'
To the extent that that is a special rule in defamation actions, it is well established and continues to be applicable today [31].
In that passage I was addressing the adequacy of particulars of justification and the scope of discovery required to be given by the plaintiff, not any limitation upon the defendant amending his or her defence as a result of material obtained on discovery or subpoena.
Thirdly, the plaintiff objects to [16] of the particulars, that 'the plaintiff did not meet Elon Musk on 30 September 2017 to discuss Power Ledger and, as at the date of preparation of this pleading, the plaintiff has not met Elon Musk to discuss Power Ledger'. The plaintiff submits it is irrelevant whether the plaintiff had met Elon Musk to discuss Power Ledger as at the date of the re‑amended defence. I do not uphold that objection. The gist of the defendants' allegation is that the plaintiff did not meet Elon Musk on 30 September 2017 and has still not met with Elon Musk to discuss Power Ledger. I am not satisfied that, taken with the other Elon Musk rumour particulars, the particular is irrelevant. That does not, of course, mean that all of the particulars, if proved, will establish the plaintiff's responsibility for the Elon Musk rumour. That is a matter for trial.

Particulars C: Power Ledger's commercial viability

Paragraph 19 of the particulars is:
The plaintiff publicly made misleading statements, and/or caused Power Ledger to make misleading statements, by making favourable statements about the likelihood of Power Ledger succeeding as a business and by omitting to disclose in her and/or its public statements:
a.the significance of certain vulnerabilities in Power Ledger's business plan, namely:
i.the fact that without the cooperation of licensed or registered electricity retailers (Authorised retailers) Power Ledger was unlikely to succeed as a business, as described in paragraphs 23 to 26 of the particulars;
ii.the fact that, absent legislative changes, the peer‑to‑peer electricity trading possible on a microgrid or embedded network (Microgrid) could not be replicated on interconnected distribution networks (Grid) by reason of the compulsory charges and liabilities (Compulsory charges) that are imposed on Authorised retailers that use the Grid, as described in paragraphs 27 to 44 of the particulars; and
iii.the fact that, at all material times, Power ledger faced significant difficulties in establishing a substantial user base, as described in paragraphs 45 to 51 of the particulars;
b.unfavourable information regarding Origin Energy's trial of the Power Ledger Platform as described in paragraphs 52 to 63 of the particulars; and
c.accurate information about the funding of a project in Fremantle, Western Australia as described in paragraphs 64 to 68 of the particulars.
The 'Power Ledger's commercial viability' particulars are organised into five sections: C1favourable statements; C2 co‑operation of authorised retailers; C3 peer‑to‑peer electricity trading on the grid; C4 platform user base; C5 Origin Energy trial; and C6 Renew Nexus project. The plaintiff objects to particulars under sections C4 (platform user base), C5 (Origin Energy trial) and C6 (Renew Nexus project).

Particulars C4: platform user base

The plaintiff objects to [50] and [51] of the platform user base particulars on the grounds that they are submissions not material facts, opinion evidence and vague.
I do not uphold any of those objections. The matters asserted are allegations of fact not law, albeit at a relatively higher level of generality. They sufficiently inform the plaintiff of the case she has to meet and give her a fair opportunity to meet it. The facts alleged may or may not require expert opinion evidence to establish them. That is not a question to be determined at this time and does not render the particulars embarrassing or failing to disclose a defence. I do not find the facts alleged to be so vague as to be embarrassing.

Particulars C5: Origin Energy trial

The plaintiff objects to the C5 Origin Energy trial particulars on four bases. First, the plaintiff says that [52] ‑ [63] fall short of the imputation to be met. I do not uphold that objection. I am not satisfied that, taken with the other particulars, those particulars are manifestly incapable of establishing the truth of the pleaded imputation.
Secondly, the plaintiff submits that [54] is irrelevant because it alleges conduct attributed to Power Ledger not the plaintiff. I do not uphold that objection. The defendants' case is that, put succinctly, the plaintiff is responsible for Power Ledger's conduct or Power Ledger's conduct is to be attributed to the plaintiff. However, [54] says that the plaintiff and Power Ledger promoted the Origin Energy trial during the ICO including as set out in the subparagraphs which follow. Subparagraphs 54(a)(vi) and (vii), (h)(ii) and (k) refer to posts made after the ICO closed on 6 October 2017. Those sub‑subparagraphs are not capable of supporting the allegation that the plaintiff and Power Ledger promoted the Origin trial during the ICO. They should be struck out.
Thirdly, the plaintiff says that in [58] the defendants seek to rely on matters post‑publication of the articles. I do not uphold that objection. The particular does not rely on matters after the publication of the articles. It relies upon conduct of Power Ledger up to the time of publication of the articles.
The plaintiff objects to [59] on the ground that the words 'at all material times' are vague. I do not uphold that objection. In their context the words 'all material times' refer to from in or about January 2018 when Origin Energy decided not to proceed with a full implementation of the Power Ledger platform, to the date of publication of the articles. The current particulars confine the defendants to leading evidence of matters occurring during that period.

Particulars C6: Renew Nexus project

The plaintiff objects to [64] to [68] of the particulars on the ground that they attribute conduct to Power Ledger not the plaintiff. I do not uphold that objection. The defendants' case is that the plaintiff is responsible for the relevant conduct of Power Ledger.
Next the plaintiff objects that [64] ‑ [68] are not capable of meeting the pleaded imputation that the plaintiff misled the public and investors by the alleged statements made by Power Ledger set out in [66] and [67] of the particulars. Paragraph 66 and 67 say that Power Ledger made statements to the effect that the Australian Government, through the Smart Cities and Suburbs Programme, awarded Power Ledger $2.57 million in funding for a cutting edge project in Fremantle and that Power Ledger was one of the recipients of a $2.5 million Australian Government grant to establish a Smart Cities trial in Fremantle. Paragraph 68 says that contrary to those statements, Power Ledger was a financial contributor to the Renew Nexus project. The plaintiff says that nothing misleading is disclosed in the statements; the statements make plain that Power Ledger asserted it was a recipient of part of the government grant for the Renew Nexus project, a project utilising the Power Ledger platform. The defendants say that Power Ledger was not a recipient of the government grant but was a financial contributor to the Renew Nexus project. The defendants' case is that it was inaccurate to say that Power Ledger was a recipient of the government grant, whether in whole or in part. I am not satisfied that this part of the defendants' case is unarguable.
The plaintiff objects to [67] on the ground that by it the defendants seek to rely on statements post‑publication of the articles. The court must consider that objection in the context of the imputations sought to be justified. The imputation is that the plaintiff by the creation, promotion and operation of Power Ledger misleads the public and investors. The imputation is a general imputation.
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.[25]
[25] Habib v Nationwide News Pty Ltd (2010) 76 NSWLR 299 [313]; Gatley on Libel and Slander (12th ed) [11.10].
The imputation is a general charge. The imputation conveys that the plaintiff is a person who, in creating, promoting and operating Power Ledger, misleads the public and investors. The imputation imputes to the plaintiff a propensity indicative of her character generally rather than being confined to any specific incident or conduct. In those circumstances, it is open to the defendants to seek to justify the imputation by reference to post‑publication conduct as long as there is a sufficient temporal proximity between the publication and the post‑publication conduct sought to be relied on.
The conduct sought to be relied upon by the defendants to justify the imputation is conduct which occurred about seven months after publication. It is not clear that the matters particularised are too remote in time from the date of publication. When the defendants seek to lead the evidence, much will depend on the precise evidence sought to be led in the context of the defendants' case which will have been fleshed out at trial. The particular will not be struck out.

Particular D: misleading statements in relation to the POWR token

This part of the defendants' particulars is divided into five subsections. The plaintiff objects to particulars in each of the five subsections.

D1: the Power Ledger platform according to Power Ledger

This subsection contains [69] ‑ [75]. The plaintiff objects to [74] on the ground that the defendants cannot rely on matters which are alleged to have occurred after the date of the publications. Paragraph 74 is that from at least December 2019 Power Ledger engaged in the 'burning' of POWR tokens. Burning tokens means they are made irretrievable by sending them to an address on the Ethereum blockchain that has no owner and no private key.
The conduct sought to be relied upon by the defendants to justify the imputation is conduct which occurred about 12 months after publication. It is not clear that the matters particularised are too remote in time from the date of publication. When the defendants seek to lead the evidence, much will depend on the precise evidence sought to be led in the context of the defendants' case which will have been fleshed out at trial. The particulars will not be struck out.

Particulars D2: Power Ledger's public statements

The plaintiff objects to [80] ‑ [82] on the ground that each of those paragraphs refers to an article published by Power Ledger after the date of the publication. The articles were made available by Power Ledger approximately two months, seven months and 13 months after the publication of the articles complained of respectively. They will not be struck out for the same reasons that [74] will not be struck out.
The plaintiff objects to [85] on the grounds of vagueness and that the matters are not set out with sufficient particularity as to how the statements in [83] and [84] are inconsistent with the Disclosure Document and therefore misleading, as [85] alleges.
Paragraphs 83 ‑ 85 form a sort of pleading triptych. Paragraph 83 pleads that in its Disclosure Document, Power Ledger stated that ownership of POWR tokens carries no rights other than the right to use the POWR tokens as a means to enable usage of and interaction with the Power Ledger ecosystem, if successfully completed and deployed and in particular do not represent or confer:
(i)any ownership right, share or security (or any equivalent right) in Power Ledger, any other company or the Power Ledger Ecosystem;
(ii)any future right to receive an interest or revenue share in Power Ledger, any other company or the Power Ledger Ecosystem;
(iii)any future right to receive an interest in any intellectual property rights relating to the Power ledger Ecosystem; or
(iv)any other form of participation in or relating to Power Ledger or the Power Ledger Ecosystem
other than a right to participate in the Power Ledger Ecosystem (if and when it is deployed) for the duration of the time you hold such POWR token.
Paragraph 84 pleads that from about the time of the ICO, Power Ledger made statements to the effect set out in subparagraphs (a) ‑ (d) and states the source of those statements. Subparagraph (d) is that a POWR token represented or conferred on its owner one or more of the rights or interests described in [83(i)] ‑ [83(iv)]. Subparagraphs 84(a) ‑ (c) contain different statements. Paragraph 84 then continues by stating that the statements to the effect set out in subpars (a) ‑ (d) were made in the documents or sources set out in subpars (e) ‑ (i), which also set out statements as well as the source of them.
Paragraph 85 pleads, as I have said, that the statements set out in [83] and [84] were misleading in that the statements set out in [84] were inconsistent with the Disclosure Document, that is the statements set out in [83].
The function of particulars is to fill in the picture of the plaintiff's cause of action or the defendants' defence with information sufficiently detailed to put the opposing party on their guard as to the case they have to meet and to enable them to prepare for trial. The plaintiff will not be able to prepare for trial unless she knows not only the facts which the defendants will deploy at trial but also how they will deploy those facts, that is how they will put their case.
Whether the plaintiff's conduct was misleading is a question of fact to be answered in the context of the evidence as to the alleged conduct and the relevant surrounding facts and circumstances. Misleading means to lead into error or cause someone to have an incorrect impression or belief usually by giving incorrect information or a false impression. Misleading and inconsistency are different concepts. Inconsistent statements are statements which are contradictory or lack agreement or harmony between them. Making inconsistent statements may or may not be misleading, depending upon the context and circumstances in which they are made and how they interact with each other.
Paragraph 85 does not say that the statements set out in [83] are misleading because they are false or for some other reason are likely to lead a person reading them into error. Paragraph 85 does not say that the statements set out in [84] are misleading because they are false or for some other reason are likely to lead a person reading them into error. The plea in [85] is ambiguous. It may be a plea that the two sets of statements are each misleading because they are inconsistent with the other. Alternatively, it may be a plea that it is misleading to make statements which are inconsistent with each other. As to the former, it does not follow as a matter of logic that one statement is misleading because it is inconsistent with another statement. As to the latter, ordinarily, making inconsistent statements will not suffice to establish the conduct is misleading. If the President tells the public that coronavirus is really nothing to worry about and then says it is a pandemic that he is taking very seriously, the statements may be inconsistent and one or the other of them may be misleading, but one would not ordinarily say that making the two statements is misleading.
The plea in [85] does not inform the plaintiff or the court how making the two sets of statements is misleading.
The particulars are embarrassing for another reason. The plaintiff and the court should not be required to search through the paragraphs, subparagraphs and sub‑subparagraphs of the relevant particulars of justification and try to divine which of the statements or combination of statements referred to in [84] are inconsistent with each of the statements in [83]; and which of the statements, or combinations of statements in [84] makes each of the statements in the Disclosure Document, that is the statements in [83], misleading; or which of the statements in the Disclosure Document referred to in [83] makes which of the statements in [84] misleading.
Paragraphs 83 ‑ 85 do not adequately inform the plaintiff of the case she has to meet. Paragraphs 83 to 85 should be struck out.

D4: the use of the POWR token and Power Ledger's token model

The plaintiff objects to subpars 86(d), (e), (f) and (g) on the ground that the defendants cannot rely on matters after the date of the publications. I will not strike out those particulars for the same reason I will not strike out the other matters which refer to publications or conduct after the date of the publication of the matters complained of.

Paragraphs 86 ‑ 88 form another pleading triptych. Paragraph 86 pleads that from about 4 August 2017 Power Ledger made the following statements in relation to the use of the POWR token in the token model. There then follows a list occupying 4‑1/2 A4 pages of multiple statements made in multiple documents.
Paragraph 87 says that as a result of those statements, the following matters were 'unclear'. There then follows a list of 11 matters that were 'unclear'.
Paragraph 88 says that Power Ledger promoted itself, the ICO, the POWR token and the Power Ledger platform without clarifying the matters stated in [87].
The pleading does not sufficiently inform the plaintiff or the court of how the defendants put their case. The pleading is that as a result of the statements in [86], the matters in [87] were unclear. That is, not free from confusion, uncertainty or doubt. The pleading does not explain how a failure to make some matters clear makes the statements misleading. Generally, conduct that merely leads to confusion or causes uncertainty or doubt will not be considered misleading. Generally, misleading conduct is conduct which induces, or is capable of inducing, a person into error. Making statements which leave some matters unclear is not, without more, misleading. The pleading does not explain how the failure to make the unclear matters clear, makes the statements misleading.
These paragraphs are embarrassing for another reason. Particulars must be presented in an intelligible form which informs the opposing party and the court of the case that has been made. The plaintiff and the court should not be required to trawl through pages of statements and alleged 'unclear matters' and try to match up the statements with the allegations of 'unclear matters' to decipher which statements or permutations of statements give rise to which 'unclear matters', and why the failure to make each of the 'unclear matters' clear makes the statements or some permutation of them misleading.
Paragraphs 86 ‑ 88 are embarrassing because they do not adequately inform the plaintiff and the court of the case the defendants wish to make and the case that the plaintiff has to meet. They will be struck out.

D5: the functioning of the token model in practice

The plaintiff objects to [89] ‑ [91] on the ground that they are matters after the date of the publications and [91] contains submissions not facts. I do not uphold those objections on the same grounds I have not upheld those objections in relation to earlier paragraphs of the particulars.

Late amendment

The plaintiff says she suffers significant prejudice by the defendants' late pleas of justification. The plaintiff says she has already filed and served outlines of the evidence she intends to use at trial and the parties have exchanged discovery of documents. Further, the plaintiff says that it is apparent that a number of particulars of justification have been pleaded by reference to either the plaintiff's discovered documents and/or the documents produced by Power Ledger on subpoena.
The defendants' re‑amended defence was filed pursuant to an order of the court made on 5 March 2020 granting the defendants leave to amend their defence. The court has a discretion to strike out a pleading amended pursuant to an order of the court where the court granted general leave to amend not leave to amend in accordance with the terms of a proposed pleading.
It is not appropriate to exercise the discretion to disallow the amendments in this case. The plaintiff has not adduced any evidence that she will suffer any undue prejudice by the late amendments that cannot be cured by appropriate costs orders. The plaintiff has put on her witness statements. However, the trial is not scheduled to start until 26 October 2020, which is about four months away. There is no evidence that the plaintiff is unable to put on evidence responding to the amendments to the defence prior to the commencement of the trial or that to do so will place an undue burden on her.
I am not satisfied that, to any significant extent, the defendants' particulars of justification have been pleaded by reference to either the plaintiff's discovered documents and/or the documents produced by Power Ledger on subpoena. Furthermore, as I have said, there is no rule of law or practice that a defendant cannot amend to plead as particulars of justification facts derived from documents obtained on discovery or subpoena.
I will not strike out any of the defendants' amended defence on the ground that the amendments were made too late.

Mitigation of damages

The defendants set out in three paragraphs matters on which they rely in mitigation of damages.
Paragraph (b) pleads that the defendants rely in mitigation of damages on public statements made by the plaintiff and Power Ledger in response to publication of the matters complained of including the 34 articles or publications then specified. Paragraph (c) pleads that the defendants rely in mitigation of damages on the statement provided on or about 7 January 2019 to Power Ledger's shareholders and staff by the plaintiff and Power Ledger in response to publication of the matters complained of. Those matters are not relevant and should be struck out.
The authors of the 12th edition of Gatley on Libel and Slander say that admissible evidence that can be given in mitigation of damages can be placed in seven categories. None of the categories include publications by or on behalf of the plaintiff in response to publication of the matters complained of or to attempt to rehabilitate its reputation harmed by publication of the matters complained of.
I am not aware of any authority in support of the proposition that publications by or on behalf of a plaintiff in response to the publication of defamatory matters may mitigate damages, and no such authority was cited in the course of argument. In my opinion such a proposition is contrary to principle.
General compensatory damages serve three functions: to act as a consolation to the plaintiff for the distress she suffers from the publication of the defamation, to repair the harm to her reputation and as a vindication of her reputation.[26] The publication of material by or on behalf of the plaintiff does not act as a consolation for the distress she has suffered from the publication of the defamation.
[26] Carson v John Fairfax & Sons Ltd (1993) 178 CLR 44; Broome v Cassell & Co Ltd [1972] AC 1027.
Vindication of the plaintiff's reputation means to clear the plaintiff's name of the suspicion of discreditable conduct or character. This requires that the recipients of the original publication are authoritatively informed that the plaintiff has been unfairly or inaccurately represented. A denial or protest by or on behalf of the plaintiff is not an authoritative declaration.
Section 22 of the Defamation Act requires the court to ensure that there is an appropriate and rational relationship between the harm sustained by the plaintiff and the amount of damages awarded. The law presumes damage but evidence of actual harm to the plaintiff's reputation is relevant.
The mitigation plea does not plead that the plaintiff's publications were read by the same readers as the articles complained of or that they lessened the suspicion of discreditable conduct by, or character of, the plaintiff in the estimation of those who read them. It cannot be inferred that the publications lessened the harm to the plaintiff's reputation as a result of the publications complained of. Readers may have reacted to the plaintiff's rebuttals like Mandy Rice Davies when defence counsel pointed out Lord Astor denied an affair or even having met her, 'well he would, wouldn't he?'

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
GG
Associate to the Honourable Justice Le Miere
3 JULY 2020