Heugh v Askin
[2014] WASC 30
•5 FEBRUARY 2014
HEUGH -v- ASKIN [2014] WASC 30
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 30 | |
| 05/02/2014 | |||
| Case No: | CIV:2936/2012 | 18 DECEMBER 2013 | |
| Coram: | KENNETH MARTIN J | 18/12/13 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Application granted in part | ||
| B | |||
| PDF Version |
| Parties: | JOHN PHILLIP HEUGH HENRY ASKIN RICHARD FAULL WILLIAM DUNMORE CENTRAL PETROLEUM LTD |
Catchwords: | Civil law and procedure Defamation Pleadings Application to strike out imputations and particulars of special damages Threshold of arguability Turns on own facts |
Legislation: | Nil |
Case References: | Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135 Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Lewis v Daily Telegraph Ltd [1964] AC 234 Mirror Newspapers Ltd v Harrison (1982) 149 CLR 293 Monte v Mirror Newspapers Ltd [1979] 2 NSWLR 663 Oracle International Pty Ltd v West Australian Newspapers Ltd (Unreported, WASC, Library No 970696, 11 December 1997) Smith v Littlemore (1996) 15 WAR 289 Taylor v Jecks (1993) 10 WAR 309 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
HENRY ASKIN
First Defendant
RICHARD FAULL
Second Defendant
WILLIAM DUNMORE
Third Defendant
CENTRAL PETROLEUM LTD
Fourth Defendant
Catchwords:
Civil law and procedure - Defamation - Pleadings - Application to strike out imputations and particulars of special damages - Threshold of arguability - Turns on own facts
Legislation:
Nil
Result:
Application granted in part
Category: B
Representation:
Counsel:
Plaintiff : Mr M Bennett
First Defendant : Mr J Maclaurin
Second Defendant : Mr J Maclaurin
Third Defendant : Mr J Maclaurin
Fourth Defendant : Mr J Maclaurin
Solicitors:
Plaintiff : Bennett + Co
First Defendant : Jarman McKenna
Second Defendant : Jarman McKenna
Third Defendant : Jarman McKenna
Fourth Defendant : Jarman McKenna
Case(s) referred to in judgment(s):
Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135
Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Lewis v Daily Telegraph Ltd [1964] AC 234
Mirror Newspapers Ltd v Harrison (1982) 149 CLR 293
Monte v Mirror Newspapers Ltd [1979] 2 NSWLR 663
Oracle International Pty Ltd v West Australian Newspapers Ltd (Unreported, WASC, Library No 970696, 11 December 1997)
Smith v Littlemore (1996) 15 WAR 289
Taylor v Jecks (1993) 10 WAR 309
- KENNETH MARTIN J: (This judgment was delivered extemporaneously on 18 December 2013 and has been edited from the transcript.)
1 The re-amended statement of claim (RESOC) filed on behalf of the plaintiff on 29 November 2013 has been the subject of attack. There has obviously been conferral between the parties. As the attack has essentially distilled, the paragraphs now under challenge are pars 10, 15, 16, 18 and 19. In the course of the exchange of written submissions, it was indicated by the plaintiff that concessions would be made in respect of pars 15 and 16 as regards the current pleas. Hence, I do not need to trouble with those paragraphs.
2 Essentially, I am concerned with the publication of 5 June 2012, called the 'Second Publication' in par 9 of the RESOC. The complaint is that the first defendant, Henry Askin, wrote, and the second and third defendants, Richard Faull and William Dunmore, approved, and the fourth defendant, Central Petroleum Ltd, caused to be published to shareholders of Central Petroleum a false and defamatory communication under the heading 'Chairman's Letter to Shareholders', on Central Petroleum's letterhead, and which publication was made of and concerning the plaintiff, John Phillip Heugh.
3 The text of the Second Publication is set out in par 9. The context was looming resolutions before Central Petroleum shareholders concerning the proposed removal of Mr Heugh under resolution 6, and rival counterproposals to replace all members of the board, save for Mr Heugh, with three nominees of Petroleum Nominees Pty Ltd (PNPL). PNPL is said to be associated with Mr Clive Palmer, and to own about 4% of Central Petroleum. There was therefore a looming vote by shareholders, and the Second Publication was made in that context.
4 The imputations contended for by the plaintiff under pars 10.1, 10.2 and 10.3 of RESOC concern the asserted natural and ordinary meaning of the Second Publication.
5 Paragraph 10.1 contends that the Second Publication, meant and was understood to mean that Mr Heugh had incompetently valued Central Petroleum's assets in respect to Clive Palmer's farm-in agreement. Alternatively, it is put at par 10.2 that Mr Heugh, for his own personal gain had substantially undervalued Central Petroleum's assets for the purposes of Mr Palmer's proposed farm-in agreement. Alternatively, par 10.3 contends for the imputation that Mr Heugh was unfit to be a director of Central Petroleum.
6 Principles to be applied to striking out allegedly defamatory imputations are well-known. Essentially, the defendant confronts a high threshold in terms of showing the court that the imputations as contended for by the plaintiff are either unarguable or, as it is sometimes put, 'manifestly groundless' or 'untenable', by reference to a line of case authority going back to Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 and the well-known decision by Hunt J in Monte v Mirror Newspapers Ltd [1979] 2 NSWLR 663, and the many cases cited by his Honour there.
Law
7 For present purposes, I have been referred to a number of case authorities. One of them is the decision of Steytler J (as he then was) in Oracle International Pty Ltd v West Australian Newspapers Ltd (Unreported, WASC, Library No 970696, 11 December 1997). In typically helpful observations between pages 9 and 13 of those reasons, his Honour refers to the cases Taylor v Jecks (1993) 10 WAR 309, Monte v Mirror Newspapers and Smith v Littlemore (1996) 15 WAR 289. In particular, he observes:
The usual starting point in considering whether or not words complained of are reasonably capable of bearing the defamatory meaning contended for:
'Is whether under the circumstances in which the writing was published, reasonable men, to whom the publication was made, would be likely to understand it in a libellous sense: Jones v Shelton [1963] 1 WLR 1362, 1370 - 1371.'
Those who read a newspaper article are assumed to be reasonable people of ordinary intelligence and education who are also fair minded and entertain a sense of justice. It is also assumed that they will read the article as a whole and in the context of its publication (See Bick v Mirror Newspapers (1979) NSWLR 679(n) at 683). The reader does not live in an ivory tower and is not inhibited by strict rules of construction. Nor is that person unusually suspicious, unusually naive or avid for scandal (See Lewis v The Daily Telegraph in the House of Lords (1964) AC 234 at 258 - 259).
9 His Honour further cites Mason J in the well-known defamation decision, Mirror Newspapers Ltd v Harrison (1982) 149 CLR 293, 301 in terms of the understanding of what is published to a reader, and judgments or conclusions based on prejudices as opposed to beliefs. One is legitimate, the other illegitimate. Mason J said there:
It is one thing to say that a statement is capable of bearing an imputation defamatory of the plaintiff because the ordinary reasonable reader would understand it in that sense, drawing on his own knowledge and experience of human affairs in order to reach that result. It is quite another thing to say that a statement is capable of bearing such an imputation merely because it excites in some readers a belief or prejudice from which they proceed to arrive at a conclusion unfavourable to the plaintiff. The defamatory quality of the published material is to be determined by the first, not by the second, proposition.
10 Striking a proper balance in terms of putting aside a reader's prejudices (although one deals with the objective criterion of the reasonable reader with all the reasonable reader's foibles and non-legalistic qualities), can be contrasted with the more recent decision of the High Court in Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716. In that case Gleeson CJ and McHugh, Gummow and Heydon JJ, cautioned against taking too legalistic an approach. The High Court noted the capacity of ordinary, reasonable readers to draw implications where there is a basis by reference to observations of Lord Devlin in Lewis v Daily TelegraphLtd [1964] AC 234. The plurality said at [11]:
Lord Devlin pointed out in Lewis v Daily Telegraph Ltd that whereas, for a lawyer, an implication in a text must be necessary as well as reasonable, ordinary readers draw implications much more freely, especially when they are derogatory. That is an important reminder for judges.
11 The plurality in Favell cite another well-known extract from Lewis at page 285, where Lord Devlin said:
A man who wants to talk at large about smoke may have to pick his words very carefully if he wants to exclude the suggestion that there is also a fire; but it can be done. One always gets back to the fundamental question: what is the meaning that the words convey to the ordinary man: you cannot make a rule about that. They can convey a meaning of suspicion short of guilt; but loose talk about suspicion can very easily convey the impression that it is a suspicion that is well founded.
12 Also of note is what their Honours said regarding a jury's conclusions, namely, that it is a question of 'what a jury could properly make of it' in terms of what is the 'most damaging meaning' that people between the 'two extremes' of 'unusually suspicious' and 'unusually naive' would attach to the words in question [17].
13 At the end of [15] in Favell their Honours say:
When all these matters are taken into account a jury could reasonably conclude that 'it would put an incredible strain on human experience' if the appellants' proposal to redevelop their property was not facilitated by the fortuitous occurrence of a fire.
Evaluation
14 For the present case, although the whole of the Second Publication must be evaluated as part of the context, the crux of the issue in terms of the plaintiff's imputations, as contended for, can be gathered from sentences appearing at page 17 of the RESOC. The publication reads:
We have been provided with little relevant information about the qualifications of Mr Palmer's proposed nominees or their plans for your Company. We do know however that Mr Palmer, through PNPL, sought to conduct a farm-in in Central Petroleum's assets at a price that in the collective judgement of senior staff and directors (other than John Heugh), substantially undervalued the Company's assets. We do not believe that any of the directors nominated by Mr Palmer could be considered independent directors. We believe that it is in the best interests of the majority of shareholders that the board include independent directors.
We urge shareholders to follow the recommendations of the Board, other than Mr John Heugh, in voting at the upcoming General Meetings.
15 I come then to imputations 10.1 and 10.2 in terms of the plaintiff's base assertion that Mr Heugh arguably, from what is written, had incompetently valued Central Petroleum's assets in respect of Mr Palmer's farm-in agreement and, secondly, that Mr Heugh, for his own personal gain, substantially undervalued the company's assets for the purpose of Mr Palmer's proposed farm-in agreement.
16 On my assessment, even applying the capacity of the ordinary and reasonable reader to draw adverse inferences rather loosely and eschewing any tendency towards overly legalistic construction, those two imputations go way too far. This is so even on the relatively low threshold of whether or not they are manifestly groundless and untenable: clearly, that criterion is met. The sentence about the collective judgment of senior staff and directors was plainly directed only at an assertion of substantial undervalue in terms of the Palmer farm-in proposal.
17 By my assessment, even viewed casually, the juxtaposition of Mr Heugh, in terms of his not sharing that collective judgment and, in fact, being the only director who was not of that view, does not reach a level of arguability in terms of imputing that Mr Heugh incompetently valued the fourth defendant's assets. Applying an objective test to the words used, there was simply a difference of views over value. There was a forceful rebuff of the Palmer farm-in proposal. There was a strong dissenting view by Mr Heugh. But alleged incompetence in an exercise of valuation is going several steps too far, in terms of what is in that article.
18 For similar reasons, the pejorative assertion of acting for his own personal gain, sought to be attributed to Mr Heugh in terms of a substantial undervalue of the assets and in terms of his acting effectively as an accomplice of the proposed farm-in, again goes too far in terms of the trait of Mr Heugh arguably acting for personal gain.
19 Reading between the lines there is obviously an assorted alignment by way of inference, as between Mr Heugh and the Palmer farm-in proposal as propounded. Part of this was effectively to seek the appointment of three new directors associated with Mr Palmer. But to contend that Mr Heugh acted for the purpose of his personal gain, rather than in the interests of Central Petroleum, simply by reference to a view contrary to other board members seems to me to take things much too far. This is so even at the relatively loose interlocutory threshold of arguability.
20 In my view, imputations 10.1 and 10.2 simply cannot survive. They must be struck out as failing to disclose an arguable cause of action.
21 Imputation 10.3 is of a different character. It is that Mr Heugh was unfit to be a director of Central Petroleum. I think there is just enough, and I confess I have wavered over this, within the text of the Second Publication to support the asserted arguability of this imputation - assessed at the presently applicable threshold of arguability.
22 As to par 10.3, by no means am I suggesting a jury would come to that view at trial, or that a judge evaluating the imputation at trial would find as the plaintiff alleges, on a civil trial standard of balance of probabilities. But the test now is one of what is manifestly groundless or untenable - and in particular what an ordinary, reasonable reader would be prepared to draw by way of inferences. It may be said at trial that the ordinary and reasonable reader might, reading between the lines, infer that the stance taken by Mr Heugh as a director, in terms of his support for the Palmer proposal and corresponding disagreement with other directors could indicate Mr Heugh displayed such bad judgement about a fundamentally important proposal affecting this company that he could be, in that sense, unfit to be a director.
23 Mr Maclaurin made a respectable argument to the contrary on the basis the word 'unfit' ought to be read more restrictively than simply displaying a lack of judgment. However, the meaning of unfit needs to be evaluated in overall context. Unfitness for a judge might be different to unfitness for a surgeon, and moreover for a director. Hence, I reject the submission that, in the context of a director, one cannot deploy the word unfit to carry an arguably pejorative defamatory imputation.
24 A secondary challenge to par 10.3 was that, assuming par 10.3 was arguable as a cause of action, nonetheless, as formulated it is embarrassing because it does not capture the essence of Mr Heugh's unfitness or why he was unfit. In other words, the imputation needed to go further to say why he was unfit, either due to lack of judgment or by some other criterion. As Gleeson CJ said when Chief Justice of New South Wales in Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135 (a decision, which is well-known to all defamation lawyers) where one draws a line in terms of capturing the essence of an imputation it is often not a matter that necessarily lends itself to a bright line distinction in every case: sometimes there are shades of grey.
25 Here, I am not prepared to strike out par 10.3 on the basis that it is embarrassing. It is a matter for the jury, by reference to the Second Publication, to decide whether they are satisfied it carries that imputation. That is really all that I am concerned with at this point. Contextually, bearing in mind board spill votes which are the subject matter of the Second Publication, what is contextual as the par 10.3 natural and ordinary meaning survives the embarrassment threshold, just as it survives the arguable cause of action threshold. So par 10.3 may remain.
26 The other aspect of the application sees argument arising over the special damage, by reference to pars 18 and 19. Those two paragraphs are inextricably linked. Paragraph 19 proceeds on the basis that as a result of the matters pleaded in par 18 the plaintiff has suffered special damage. There has obviously been some degree of surgery, adjustment and augmentation to this pleading, apparent simply from the different colours that present. But par 18 effectively contends resolution 6 (for the removal of Mr Heugh as director) was carried by reason of the Second Publication and an earlier, allegedly defamatory publication in a notice of general meeting, under a heading 'Schedule 2 - Reasons for voting for Resolution 6 - Removal of John Heugh as a director'. That raises a question of causation, and that raises a question of fact to be established at a trial. More importantly, the question is what flows out of all the publications if they are accepted as defamatory. Paragraph 19 continues on:
As a result of the matters pleaded in paragraph 18 above, the plaintiff has suffered special damage.
27 And par 19.1 reads by way of particulars of particulars of special damage 'loss of his financial benefits as a Director of the Fourth Defendant'.
28 In my view, that is arguable in terms of a director's lost financial benefit. It is obviously a question of fact; whether it is established or not is a matter for the trial. I see that it might arguably be contended that if a sufficiently serious defamatory statement had circulated prior to the elections for a director, the director could be removed or not elected as a result. Arguably then, a claim for lost director's benefits as special damage could be pursued. Whether it succeeds or not is another thing. But I am now viewing things only at the interlocutory threshold of arguability.
29 There is no 19.2; that has been excised obviously by the conferral process.
30 Paragraph 19.3 reads that Mr Heugh suffered a loss of earning capacity. That is untenable; little more needs to be said about it because the plaintiff, I think, properly accepted it was simply too broad. There presents no arguable linkage to the passing of resolution 6 in terms of Mr Heugh's removal of a director as to his loss of earning capacity generally in circumstances where earning capacity is not confined to the lost capacity as a director or, indeed, in any capacity at all. This is way too wide.
31 Paragraph 19.4 contends for a loss of a chance for future employment as a managing director of Central Petroleum. That also cannot stand. Resolution 6, as carried, was for Mr Heugh's removal as a director, not as managing director. He had already been removed at an earlier time as Central Petroleum's managing director. If the argument was in terms of a loss of a chance, clearly various things must have fallen into place for Mr Heugh to be reappointed as a managing director, and the foundation stones to get one to that point are missing. Their absence exposes a conceptual deficiency in its own right. Hence, 19.4 should also be struck out.
32 Paragraph 19.5 seeks loss of expected salary as a director and managing director of a comparable public company as the fourth defendant. Again, the intermediate steps to arguably reach that conclusion are simply not there. If it is meant that there is loss of salary for a non-executive director in other public companies then there is some material missing in terms of why there would be that loss, and the deficiency is even more obvious as regards the managing director scenario. That seems to me to be a totally different category to that of resolution 6 as regards the removal of a bare director of Central Petroleum. Hence, 19.5 cannot survive either.
33 That leaves then only 19.1 standing.
34 The balance of par 19 must be struck out.
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