Hanks v Johnston (No 2)
[2016] VSC 149
•11 APRIL 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
S CI 2015 03372
| PAUL HANKS | Plaintiff |
| v | |
| STUART NEILE JOHNSTON | Defendant |
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JUDGE: | JOHN DIXON J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 11 MARCH 2016 |
DATE OF JUDGMENT: | 11 APRIL 2016 |
CASE MAY BE CITED AS: | HANKS v JOHNSTON (No 2) |
MEDIUM NEUTRAL CITATION: | [2016] VSC 149 |
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PRACTICE AND PROCEDURE – Pleadings – Defendant’s application for leave to amend defence following earlier strike out of certain paragraphs – Paragraphs plead honest opinion defence – Whether particulars capable of establishing that an honest opinion was based on proper material – Section 31 Defamation Act2005 – Rule 23.02 Supreme Court (General Civil Procedure) Rules 2005.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr DP Gilbertson | HWL Ebsworth |
| For the Defendant | Mr A Anderson | DLA Piper Australia |
HIS HONOUR:
In this proceeding, the plaintiff claims that he was defamed by imputations conveyed in a letter published by the defendant on The Peninsula School (the School) website, in an email to the parents of the School (as an attachment) and in a Weekly Bulletin emailed to parents of the School and others (as a link). The defendant, the Principal of the School, is the author of the letter. The plaintiff is the President of the Peninsula School Parents’ Association (the PSPA).
The letter related to the actions of the PSPA Executive. In summary, it stated that the Board of Directors had lost confidence in the current PSPA Executive and its President to act in the best interests of the School, its students and broader community. The letter alleged that the PSPA Executive had ignored governance and management processes and broken the working relationship with the school leadership team, that the PSPA’s President was intending to operate the PSPA with no financial governance by the School (as demonstrated by the PSPA Executive transferring parent funds of approximately $200,000 to an offsite account) and that the PSPA Executive was operating in a manner that was harming the reputation of the School and its students in the wider community. The letter nominated the Deputy Principal as the School Liaison Officer and the PSPA’s point of contact.
The plaintiff claims that the publication conveys four defamatory imputations against him:
(a)The plaintiff is not a fit and proper person to be President of the PSPA;
(b)In causing $200,000 of parents’ money to be transferred to an account outside the School’s control, the plaintiff acted dishonestly;
(c)In order to avoid accountability for the PSPA’s finances, the plaintiff caused $200,000 of parents’ money to be transferred to an account outside the School’s control; and
(d)The plaintiff has engaged in conduct as President of the PSPA that is so reprehensible that he caused the responsibility of the PSPA Executive to act as a liaison between parents and the School to be taken over by the Deputy Principal.
The defendant denied the defamatory imputations and pleaded qualified privilege defences in relation to all of the imputations and honest opinion and justification defences in respect of imputations (a) and (d). I am presently concerned with the honest opinion defence.
On 9 December 2015, I struck out paragraphs 7C, 7D and 7F of the defence and permitted the defendant to serve a proposed amended defence. The defendant’s application for leave to file this pleading proceeded on the basis of the proposed amended defence dated 10 March 2016. The plaintiff opposed leave being granted to file the proposed amended defence. Paragraphs 7C and 7F plead the defence of honest opinion, being the statutory defence under s 31 of the Defamation Act2005. Section 31 relevantly requires the defendant to prove that the honest opinion is based on proper material. The plaintiff objected that the particulars to paragraphs 7C and 7F of the proposed pleading could not support the material allegations and, if leave were granted, the amendment would inevitably be struck out under r 23.02 of the Supreme Court (General Civil Procedure) Rules 2005.
For the reasons that follow the defendant has not satisfied me that the particulars relied upon are capable of demonstrating that the relevant opinions are based on proper material supporting the opinions. The defendant is refused leave to amend his defence in a form that includes paragraphs 7C and 7F of the proposed Amended Defence.
Paragraphs 7C and 7F of the proposed amended defence state:
7CIf (which is denied) the letter was defamatory of the Plaintiff and carried or was understood to carry the imputation alleged in 7(a) or a permissible nuance thereof, then he says that:
(a) the letter was in that meaning an expression of opinion of the Defendant, and an expression of opinion of the Board of the School, rather than a statement of fact;
(b) the opinion related to a matter of public interest;
(c) the opinion was based on proper material, namely material that is substantially true and stated or referred to in the letter; and
(d)he is therefore entitled to the defences of honest opinion in section 31(1), and further or alternatively section 31(3), of the Act.
PARTICULARS
(i)The substance of the opinion was that, in the view of the Defendant and of the Board of the School, the Plaintiff is not a fit and proper person to be President of the PSPA.
(ii) The opinion related to a matter of public interest, namely whether the Plaintiff was a fit and proper person to be President of the PSPA.
(iii) The opinion was based on the following facts, each of which is substantially true and stated or referred to in the letter:
(A)The PSPA had raised concerns about the operations of the School with the media but refused to meet with representatives of the School to resolve the issues raised.
(B)The Plaintiff intended to operate the PSPA with no financial governance by the School.
(C)The Plaintiff intended to remove School Executive involvement from the operation of the PSPA.
(D)The PSPA had transferred parent funds in the amount of approximately $200,000 to an offsite account.
(E)The PSPA, by criticising the School, had harmed the reputation of the School and that of its students.
(F)The Plaintiff, as president of the PSPA, presided over the PSPA at the time when the PSPA engaged in the conduct outlined in paragraphs (A), (D) and (E) above.
(F)(G) By reason of the above matters, the Board of the School had lost confidence in the PSPA and its President, the Plaintiff, to act in the best interests of the School, its students and the broader community, and had appointed the Deputy Principal, Peter Ford, to be the School Liaison Officer and the PSPA’s point of contact.
7FIf (which is denied) the letter was defamatory of the Plaintiff, then he says that:
(a) in its natural and ordinary meaning, the letter carried and was understood to carry the imputation that the Plaintiff has engaged in conduct as President of the PSPA that is so reprehensible that, in order to attempt to prevent further harm to the reputation of the School, the Board had appointed the Deputy Principal, Peter Ford, to be the School Liaison Officer and the PSPA’s point of contact;
(b)that imputation is a permissible nuance of the imputation in paragraph 7(d) of the Statement of Claim;
(c) the letter was in that imputation an expression of opinion of the Defendant, and an expression of opinion of the Board of the School, rather than a statement of fact;
(d) the opinion related to a matter of public interest;
(e) the opinion was based on proper material, namely material that is substantially true and stated or referred to in the letter; and
(f) he is therefore entitled to the defences of honest opinion in section 31(1), and further or alternatively section 31(3), of the Act.
PARTICULARS
(A)The PSPA had raised concerns about the operations of the School with the media but refused to meet with representatives of the School to resolve the issues raised.
(B)The Plaintiff intended to operate the PSPA with no financial governance by the School.
(C)The Plaintiff intended to remove School Executive involvement from the operation of the PSPA.
(D)The PSPA had transferred parent funds in the amount of approximately $200,000 to an offsite account.
(E)The PSPA, by criticising the School, had harmed the reputation of the School and that of its students.
(F)The Plaintiff, as president of the PSPA, presided over the PSPA at the time when the PSPA engaged in the conduct outlined in paragraphs (A), (D) and (E) above.
(F)(G) By reason of the above matters, the Board of the School had lost confidence in the PSPA and its President, the Plaintiff, to act in the best interests of the School, its students and the broader community, and had appointed the Deputy Principal, Peter Ford, to be the School Liaison Officer and the PSPA’s point of contact.
The issue is related to, but different from, the issue that I earlier considered when I struck out paragraphs 7C, 7D and 7F of the defence.[1] The plaintiff contended that the requirement that the opinion be ‘based on’ facts postulated a rational connection between the facts and the opinion formed, citing the Attorney-General’s Department’s Report, Revised Outline of a Possible National Defamation Law[2] in support of this submission. The report stated that ‘[a]n opinion which bears no rational relationship to the facts will fall outside the defence’. I accept that an opinion that bears no rational relationship to the facts particularised cannot be said to be based on that material.
[1]See Hanks v Johnston [2015] VSC 570.
[2]July 2004, Honest Opinion, 17.
The plaintiff contended that the particulars in paragraph 7C of the proposed amended defence fail to identify the conduct of the plaintiff that is the proper material on which the opinion is based. The particulars identified conduct attributed to the PSPA or to the PSPA Executive, not the plaintiff. Particulars (A), (B), (C) and (E) relate to conduct of the PSPA and (D) relates to the PSPA Executive. The plaintiff submitted there was no basis identified that is capable of supporting the opinion that the plaintiff is not a fit and proper person to be President of the PSPA. Particular (F) is pleaded to arise ‘[b]y reason of the above matters’ (i.e. (A) to (E)) and relates to a loss of confidence by the School in the PSPA Executive and its President to act in the best interests of the School, its students and broader community.
Initially, the particulars in sub-paragraphs (B) and (C), referred to the PSPA. The plaintiff argued in its written outline that there is no rational connection between the facts particularised, which relate to the conduct of a managing committee of an organisation, and an opinion that an individual member of that committee is not a fit and proper person to be its president. The plaintiff submitted that the defendant’s contention, that the plaintiff’s conduct is indistinguishable from that of the PSPA, was ill-founded. The plaintiff contended that the form of pleading was unusual, because it made no reference to the capacity, capability or other characteristics of the plaintiff or of the office of president when the issue was the fitness of the former to occupy the latter.
The defendant sought to meet this contention by tweaking his pleading, for example by changing the allegation in sub-paragraphs (B) and (C) to refer to the conduct of the plaintiff rather than the PSPA. The defendant did not, by affidavit or otherwise, identify the basis for this, or other, changes in the allegations that were made in response to the plaintiff’s written submissions.
Further, the plaintiff contended that the particulars in sub-paragraphs (A) to (F) of the particulars to paragraph 7F are identical to 7C(d)(iii)(A) to (F), and are not capable of rationally supporting a different opinion - that the plaintiff has engaged in conduct that is so reprehensible that, in order to prevent further harm to the reputation of the School, the Board appointed the Deputy Principal as the PSPA’s point of contact. The plaintiff relies on the same reasoning.
The defendant argued that the plaintiff’s objection was met by the substitution of the plaintiff in lieu of the PSPA in particulars (B) and (C), the addition of particular (F) and the insertion of the word ‘plaintiff’ following the reference to ’its President’ in particular (G). The defendant further contended that, absent these explicit amendments, it was implicit as a matter of common sense that the plaintiff as President of the PSPA presided over the PSPA at the time when the PSPA engaged in the conduct outlined in the particulars.
The defendant developed this submission by reference to observations in Herald and Weekly Times v Popovic.[3] Gillard J stated that the relevant test for this requirement of a rational connection is that ‘the comment is one which could have been made by an honest person however prejudiced he might be, and however exaggerated or obstinate his views’. However, the issue of whether subjective factors are relevant to the characteristics of the publisher of the opinion or the material basis for the opinion expressed is not the issue presently in dispute. It was not suggested that issues of prejudice, exaggeration, or obstinacy affected the proper material on which, or the way in which, the opinion was based.
[3] (2003) 9 VR 1, 55.
The defendant further submitted that the basis for an opinion that the plaintiff was not a fit and proper person ought to be considered in the light cast by Australian Broadcasting Tribunal v Bond.[4] Toohey and Gaudron JJ stated, in the context of statutory interpretation:
The expression “fit and proper person”, standing alone, carries no precise meaning. It takes its meaning from its context, from the activities in which the person is or will be engage and the ends to be served by those activities. The concept of “fit and proper” cannot be entirely divorced from the conduct of the person who is or will be engaging in those activities. However, depending on the nature of the activities, the question may be whether improper conduct has occurred, whether it is likely to occur, whether it can be assumed that it will not occur, or whether the general community will have confidence that it will not occur. The list is not exhaustive but it does indicate that, in certain contexts, character (because it provides indication of likely future conduct) or reputation (because it provides indication of public perception as to likely future conduct) may be sufficient to ground a finding that a person is not fit and proper to undertake the activities in question.
[4] [1990] 170 CLR 321, 380.
The defendant argued that the actions and decisions of the PSPA of which the plaintiff was President provided the necessary connection, in that, a president’s role to preside over and supervise the affairs of an organisation, while conceding that the decision making power rests in the executive committee. The defendant contended that a jury would be entitled to form the view that because the plaintiff was president of an organisation which conducted itself as alleged that he was not a fit and proper person to be president. Expressed differently, a person who was a fit and proper person to be President of the PSPA, ought to have prevented particular conduct by the executive committee and that the plaintiff has a sufficient degree of responsibility for the conduct of that organisation for the inference about his fitness or propriety for the office to be drawn.
The defendant argued that facts particularised as the consequences of the actions of the PSPA Executive - the intention to divorce the involvement of the PSPA from the School, the funds transfer to an account outside the School and the appointment of the Deputy Principal in the place of the PSPA Executive to act as a liaison between parents and the School - are matters that a jury may consider when forming an opinion that the plaintiff was not a fit and proper person to be President of the PSPA. The defendant contended that failing to hold and retain the confidence of the School board was properly part of a basis to opine whether the plaintiff was a fit and proper person to be President of the PSPA.
The fact in issue at trial that relevantly emerges from the defence is whether the opinion was based on proper material, which is the material allegation framed in the light of the legal principles governing the defence found in s 31 of the Act. The function of the particulars is not to expand the issues defined by the defence, but ‘to fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial’.[5] Evidence is relevant at trial if it could rationally affect, directly or indirectly, the assessment of the probability of the existence of a fact in issue in the proceeding. Investigation of collateral matters is impermissible and a pleading that directs inquiry into collateral matters is liable to prejudice, embarrass or delay the fair trial of the proceeding. The overarching purpose in relation to civil proceedings would not be achieved.
[5]Bruce v Odhams Press Ltd [1936] 1 KB 697, 712-713 per Scott LJ, cited by Gleeson CJ in Goldsmith v Sandilands [2002] HCA 31; 76 ALJR 1024; 190 ALR 370, [2].
I do not consider that the particularised facts properly define the issue for trial on the material allegation of whether the opinion that the plaintiff was not a fit and proper person to be President of the PSPA or the opinion that the plaintiff’s conduct was reprehensible in the manner alleged was based on proper material. The proposed paragraphs invite an inquiry into a collateral issue of whether the actions of the PSPA were proper, having regard to the interests of the School board and the ‘school community’. The particulars do not engage with the issue of plaintiff’s character or conduct.
The defendant’s proposed particulars of the basis for the opinion that the plaintiff was not a fit and proper person allege the same seven matters (set out in 7C(d)(iii)(A) to (G)) as those set out in the particulars (7F(f)(A) to (G)) for the opinion that the plaintiff has engaged in conduct as President of the PSPA that is so reprehensible that he caused the responsibility of the PSPA Executive to act as a liaison between parents and the School to be taken over by the Deputy Principal. Yet, the opinions are about different matters. The first opinion concerned the character of the plaintiff and the second opinion concerned the quality of the plaintiff’s conduct.
Matters (A), (D) and (E) pertain solely to the conduct of the PSPA Executive. It was conceded by the defendant that matter (F) was unnecessary, in that it merely confirmed that the plaintiff was President of the PSPA at the time when the PSPA engaged in the conduct outlined in facts (A), (D) and (E). The defendant submitted that the inclusion of (F) made explicit that which ought to be implicit – that as President he presided over the organisation which involved itself in impugned conduct. But that submission makes the point that the matters alleged as a proper basis for opinions about the character, or quality of the conduct, of the plaintiff are not matters about the plaintiff himself or his particular conduct. They are allegations against the PSPA Executive.
As a matter of law, the conduct of the PSPA Executive is not the conduct of the plaintiff. Simply by reference to his position as President, the plaintiff is not rendered responsible for decision of a collective, nor can the inference be drawn from his position as President that the plaintiff engaged in conduct identical to that of the Executive. The proper basis for opinions about the plaintiff or his alleged conduct must be identified with some precision to avoid irrelevant collateral issues. The relevant matters for the factual inquiry at trial should be particularised with a rational connection to the plaintiff not the PSPA.
Any determination as to whether a person is a fit and proper person will be assessed in light of the relevant context. What the High Court said in Bond was directed to a different context - whether the respondent was a fit and proper person to hold a licence pursuant to the provisions of the Broadcasting Act 1942 (Cth). That said, in my view, the passage cited by the defendant supports the plaintiff’s contention that an inquiry into the proper basis for an opinion about the character of the plaintiff should evaluate the conduct and character of the person i.e. in that case Bond rather than the conduct of a corporate entity.
In respect of matters (B) and (C), the particulars make reference to the plaintiff’s intention rather than his conduct. The defendant identifies no more than his beliefs that this was the plaintiff’s intention. It cannot be said that this was, as a matter of fact, the plaintiff’s intention and that it was relevant as a basis for the defendant’s opinion without identifying the basis for the defendant’s beliefs. The defendant submitted the correctness or otherwise of that assertion would be a matter for trial. That may be so if the defendant identifies the factual inquiry for the trial, which must be more than the fact that the defendant held a belief. The defendant is obliged to particularise with certainty and accuracy the scope of the issues that it pleads.
In respect of matter (G), the defendant’s use of the referencing statement ‘by reason of the above matters’ attempts to identify matters (A) to (F) as the basis for matter (G). I am not persuaded by the defendant’s argument that because the Board lost confidence in the PSPA and its President, the plaintiff, to act in the best interests of the School, its students and the broader community the defendant can support those opinions as based on proper material by reference to the existence of those opinions. This is an impermissible path of reasoning in this context.
The pleading fails to identify the plaintiff’s specific character traits and/or conduct that would form the basis for an opinion that the plaintiff is not a fit and proper person to be President of the PSPA or engaged in reprehensible conduct. The fact that the Board lost confidence in the PSPA Executive and the plaintiff, relying on the previous particulars outlined, insufficiently identifies how the plaintiff is not a fit and proper person or behaved reprehensively.
Finally, there is no merit in the defendant’s submission that a pleadings dispute over these matters runs counter to achieving the just, efficient and cost effective resolution of the real issues in dispute in this litigation. The just, efficient and cost effective trial of this proceeding is achieved by precise and material particulars that avoid collateral and irrelevant issues and expose the basis for the contest at trial about a rational connection between particularised matters and the opinion. It is not, as the defendant contended, a matter of excluding a defence of honest opinion. It is rather a question of whether the defence has been adequately particularised to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial. If that cannot be done, it may then be proper to consider whether the defence should be permitted, but that is not presently the question. I reject the defendant’s contention that this is a matter for the jury to determine at trial.
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