JWH GROUP PTY LTD (Discontinued 30 August 2004) & ANOR v BUCKERIDGE & ANOR
[2007] WASC 194
•31 AUGUST 2007
JWH GROUP PTY LTD (Discontinued 30 August 2004) & ANOR -v- BUCKERIDGE & ANOR [2007] WASC 194
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2007] WASC 194 | |
| Case No: | CIV:2566/2003 | 6 AUGUST 2007 | |
| Coram: | NEWNES J | 31/08/07 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | "Polly Peck" pleas in defence struck out | ||
| B | |||
| PDF Version |
| Parties: | JWH GROUP PTY LTD (Discontinued 30 August 2004) (ACN 098 664 709) JULIAN ALAN WALTER LEONARD WALTER BUCKERIDGE BGC (AUSTRALIA) PTY LTD (Discontinued 30 August 2004) (ACN 005 736 005) |
Catchwords: | Defamation Application to strike out "Polly Peck" defences Whether defendant's imputations capable of being conveyed by words complained of Whether permissible "Polly Peck" plea Whether different factual basis Whether more serious than plaintiff's imputation Turns on own facts |
Legislation: | Nil |
Case References: | Buckeridge v Walter [2007] WASCA 19 Elliott v West Australian Newspapers Ltd [2007] WASC 149 Nationwide News Pty Ltd v Moodie [2003] WASCA 273 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
JULIAN ALAN WALTER
Second Plaintiff
AND
LEONARD WALTER BUCKERIDGE
First Defendant
BGC (AUSTRALIA) PTY LTD (Discontinued 30 August 2004) (ACN 005 736 005)
Second Defendant
Catchwords:
Defamation - Application to strike out "Polly Peck" defences - Whether defendant's imputations capable of being conveyed by words complained of - Whether permissible "Polly Peck" plea - Whether different factual basis - Whether more serious than plaintiff's imputation - Turns on own facts
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Legislation:
Nil
Result:
"Polly Peck" pleas in defence struck out
Category: B
Representation:
Counsel:
First Plaintiff : No appearance
Second Plaintiff : Mr R W Richardson
First Defendant : Mr S M Davies
Second Defendant : No appearance
Solicitors:
First Plaintiff : No appearance
Second Plaintiff : Clayton Utz
First Defendant : Mallesons Stephen Jaques
Second Defendant : No appearance
Case(s) referred to in judgment(s):
Buckeridge v Walter [2007] WASCA 19
Elliott v West Australian Newspapers Ltd [2007] WASC 149
Nationwide News Pty Ltd v Moodie [2003] WASCA 273
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1 NEWNES J: This is an application by the second plaintiff for an order that par 4A and par 10A of the substituted defence be struck out on the ground they disclose no reasonable cause of defence or are embarrassing. The particular pleas in the defence are what are commonly known as "Polly Peck" pleas. It is therefore appropriate to start with the plea in the statement of claim.
The pleadings
2 The statement of claim pleads causes of action in slander and libel. In par 3 of the statement of claim, it is alleged that, on or about 17 December 2003, the following words were spoken in a conversation between Mr Neil Prior, a finance journalist, and the first defendant:
"Prior: 'What's this writ by J-Corp and Kimpura suing Walter for about $700,000 all about?'
The Defendant: 'This claim is based on figures compiled by Pricewaterhouse Coopers, which had been nominated by Walter to carry out calculations for the Deed. I think the reason that he does not want to pay is because he does not have the money to pay'."
3 In par 4 of the statement of claim, it is alleged that the words attributed to the first defendant, in their ordinary and natural meaning, meant and were understood to mean that the second plaintiff had not paid approximately $700,000 to J-Corp Pty Ltd ("J-Corp") and Kimpura Pty Ltd ("Kimpura"), which sum he was legally obliged to pay, because he did not have the money to do so.
4 The same meaning is then pleaded in par 5 of the statement of claim as a true innuendo. The extrinsic facts alleged by the second plaintiff are that at the time of the conversation Mr Prior was aware that a writ had been issued by J-Corp and Kimpura, as first and second plaintiffs respectively, against Oswald Homes (1972) Pty Ltd as first defendant, Rural Building Company Pty Ltd as second defendant, WA Country Builders Pty Ltd as third defendant, JWH Group Pty Ltd as fourth defendant, Julian Walter Holdings Pty Ltd as fifth defendant and the current second plaintiff as sixth defendant, claiming damages arising from the failure of Oswald Homes (1972) Pty Ltd, Rural Building Company Pty Ltd and WA Country Builders Pty Ltd to pay to J-Corp the sum of $698,946 owing pursuant to a "Deed Governing Sale" of 6 June 2003 and a "Deed of Variation - Deed Governing Sale" of 31 July 2003.
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5 It is pleaded in par 6 of the statement of claim that the slander was actionable per se in that it was calculated to disparage the second plaintiff in his personal credit and in respect of his calling or occupation. In support of that plea, particulars are given that the second plaintiff is the promoter, founder and managing director of JWH Group Pty Ltd which is the ultimate holding company of the "JWH Group" of companies which carry on the business of designing, building and marketing residential homes.
6 The cause of action in libel is pleaded in par 8 of the statement of claim. It is alleged that the first defendant published the words in the conversation with Mr Prior intending or authorising that the sense or substance of them be republished by The West Australian newspaper, including upon its internet website, or in circumstances where the first defendant knew or ought reasonably to have known that that was the natural and probable consequence of the publication to Mr Prior.
7 It is pleaded in par 9 that the sense and substance of the slander was republished in The West Australian newspaper on 18 December 2003 and that the first defendant is liable for that publication. The newspaper article is set out in full in the statement of claim. I think it is unnecessary for present purposes to reproduce it.
8 It is alleged in par 10 of the statement of claim that the newspaper article, too, meant in its ordinary and natural meaning that the second plaintiff had not paid approximately $700,000 to J-Corp and Kimpura, which sum he was legally obliged to pay, because he did not have the money to do so.
9 In the substituted defence, the first defendant denies, in respect of each of the publications alleged by the second plaintiff in par 3 and par 5 of the statement of claim, that the words bore or were capable of bearing the meaning pleaded or any defamatory meaning.
10 Relevantly for present purposes, the first defendant further pleads, in par 4A of the defence, that if the words spoken to Mr Prior bore any meaning defamatory of the second plaintiff in their ordinary and natural meaning, or "if [Mr Prior] was aware of the matters alleged in paragraphs 5 and 6 of the Statement of Claim", the words meant and were understood to mean that:
"4A.1 The second plaintiff is an incompetent businessman in that he has not managed companies in the JWH Group of Companies owned and controlled by him in a manner that ensured that those
- companies were in a position to pay to J-Corp and Kimpura such sum as may be required to be paid in accordance with the arrangements that had been made as to the division of the business of J-Corp between the interests of the first defendant and the interests of the second plaintiff;
- 4A.2 Further or alternatively, the second plaintiff is an unreliable businessman in that he has permitted companies in the JWH Group of Companies owned and controlled by him to not pay to J-Corp and Kimpura a payment required by the arrangements that had been made concerning the division of the business of J-Corp as between the interests of first defendant and the second plaintiff."
11 It is pleaded that the words in those meanings were true in substance and in fact, and particulars of the matters relied upon to establish the truth of those meanings are then set out.
12 In par 10A of the defence the first defendant denies that the newspaper article bore or was understood to bear the meaning pleaded by the second plaintiff, but says if it bore any defamatory meaning, it bore the meanings alleged above, which were true in substance and in fact. The same particulars of justification are relied upon.
13 It is immediately apparent, then, that there are two substantive differences between the imputation pleaded by the second plaintiff, on the one hand, and the two imputations pleaded by the first defendant, on the other. They are, first, that whereas the second plaintiff pleads in respect of each publication that the words meant that the second plaintiff owed money which he was unable to pay, the first defendant pleads that the words meant that companies owned and controlled by the second plaintiff owed money which they were unable to, or did not, pay. Secondly, that whereas the imputation pleaded by the second plaintiff ascribes no reason to his inability to pay, the first defendant pleads that it was due to the second plaintiff's incompetence as a businessman that the companies were unable to pay or to his unreliability as a businessman that the companies did not pay.
The second plaintiff's submissions
14 It was submitted on behalf of the second plaintiff, first, that the words spoken to Mr Prior in their ordinary and natural meaning, or in circumstances where Mr Prior had the knowledge pleaded in the statement of claim, were not capable of conveying the imputations of incompetence or unreliability pleaded by the first defendant. There was simply nothing in the words which could cause a reasonable reader to understand them in
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- that sense. Nor were the words of the article in The West Australian newspaper capable of bearing that meaning.
15 In each publication, the effect of the words complained of is simply that the relevant debt has not been paid by the second plaintiff and that this is because the second plaintiff does not have the money to pay it. There was simply no basis for a reasonable reader to conclude that the second plaintiff was an incompetent or unreliable businessman as pleaded.
16 Secondly, it was submitted that, in any event, the imputations in par 4A and par 10A are not permissible alternative variations of the second plaintiff's pleaded imputations and therefore are not permissible "Polly Peck" imputations.
17 The imputations of incompetence and unreliability in the management of the JWH Group of companies were each separate and distinct meanings from the second plaintiff's pleaded meaning and were more injurious. The second plaintiff's plea was simply an imputation of incapacity to pay a debt, without any culpability or blameworthiness being attributed to the second plaintiff. By contrast, the first defendant's imputations attributed to the second plaintiff incompetence and unreliability in the management of a group of companies.
18 It was submitted that the imputations pleaded by the first defendant depended upon a different factual basis and would create a false issue which would add to the trial a wide-ranging enquiry into, among other things, the second plaintiff's competence and reliability in the management of various companies and the consequences of that for the financial capacity of those companies.
19 It was submitted, thirdly, that the particulars of justification were incapable of making out the "Polly Peck" pleas that the second plaintiff was an unreliable or incompetent businessman.
The first defendant's submissions
20 It was submitted on behalf of the first defendant that a "Polly Peck" plea is not necessarily bound up with the extent to which a plaintiff may depart from the plaintiff's pleaded meanings at trial. It is available whenever it appears that a plaintiff has pleaded a case that avoids the substance or true sting of the matter complained of, for example, by running a case that is unduly narrow or selective. Accordingly, attention must be directed to the substance of the matter rather than a narrow or
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- selective meaning that a plaintiff seeks to extract from the words complained of.
21 If it were otherwise, the law would be brought into disrepute because, by framing a narrow or selective case, the plaintiff would be able to achieve a vindication that was not meritorious having regard to the matter complained of as a whole.
22 Counsel acknowledged that the extent to which the Court at first instance could accept such a submission was constrained by the decisions of the Full Court of this Court, particularly the decision in Nationwide News Pty Ltd v Moodie [2003] WASCA 273.
23 It was argued that the reasonable listener or reader would understand the references to "he" in the words complained of to be a reference to the companies in the second plaintiff's group of companies, rather than simply to the second plaintiff himself. They would understand that the second plaintiff was responsible for the operation of the group of companies, so it is at least arguable that they would understand that the inability of the group of companies to pay the money was a reflection on the competence or reliability of the second plaintiff.
24 Counsel argued that it was clear from the decision of the Court of Appeal in Buckeridge v Walter [2007] WASCA 19 at [19] that a statement that companies owned and controlled by a person cannot pay a debt is reasonably capable of supporting an adverse inference as to the financial reputation of that person. In the present case, it was at least arguable that the ordinary and reasonable listener or reader would understand that the inability of the second plaintiff's group of companies to pay the amount claimed was a result of the incompetence or unreliability of the second plaintiff. The second plaintiff had simply pleaded an imputation as to the incapacity to pay without attributing any reason to it. That left open all possible causes as to the incapacity to pay. The first defendant was entitled to plead the causes of that incapacity.
25 It was further submitted that, in any event, the words complained of contain material that goes to unreliability and incompetence. Unreliability is capable of arising from the statement in the newspaper article that, although the sum claimed was based on figures compiled by accountants nominated by the second plaintiff, the companies owned and controlled by the second plaintiff have not paid the amount calculated by those accountants. That suggests unreliability.
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26 Further, there are statements in the words complained of to the effect that it was known that a sum would or might have to be paid and to the fact that the companies owned and controlled by the second plaintiff were not in a position to pay once the final figure had been worked out, which is capable of being understood to suggest unreliability or incompetence on the part of the second plaintiff.
27 Counsel argued that the first defendant's imputations did not extend beyond the bounds of a permissible "Polly Peck" plea. There were common factual issues arising from the first defendant's imputations and the imputation pleaded by the second plaintiff, in the commonality of the underlying debt, the commonality of the matters which gave rise to the debt, and the proximity between the second plaintiff and his companies. Counsel argued that the meanings pleaded by the first defendant were not more injurious. The second plaintiff does not confine the inability to pay to any specific matter and therefore any reason for that incapacity is reasonably open.
28 Counsel argued that the particulars were sufficient to support the plea of justification of the "Polly Peck" imputations.
Should the pleas be struck out?
29 In my view, neither of the imputations pleaded in par 4A and par 10A of the substituted defence are capable of arising from the words complained of and nor is either of them a permissible "Polly Peck" plea.
30 It is important, as counsel for the second plaintiff submitted, to have regard to each of the three separate claims pleaded by the second plaintiff.
31 The first claim is the claim for slander in relation to the conversation pleaded in par 3 of the statement of claim. There is, in my view, simply nothing in the words complained of which is capable of conveying the imputations of incompetence or unreliability pleaded by the first defendant.
32 In the first place, there is nothing in the words which is capable of conveying the meaning that the express references to the second plaintiff were not references to him personally but to companies owned and controlled by him. There is simply no reference to any companies at all, much less to companies in a group of companies owned and managed by the second plaintiff.
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33 In any event, it is plain that financial incapacity can arise for many reasons apart from incompetence or unreliability of the sort pleaded. There is nothing in the words complained of which is capable of causing an ordinary reasonable person to understand them to mean that the inability to pay was due to incompetence or unreliability of the sort pleaded.
34 In relation to the true innuendo, there is nothing in the extrinsic facts which are said to be known to Mr Prior which improves the first defendant's position in respect of these defences. Once again, there is simply nothing in the words complained of, understood in the context of the extrinsic facts, which is capable of conveying the meanings of incompetence or unreliability pleaded by the first defendant.
35 I should add that the first defendant's plea in respect of the true innuendo is confusing, and therefore embarrassing, as it refers to Mr Prior's knowledge of the matters pleaded in par 6 of the statement of claim, in addition to his knowledge of the extrinsic facts pleaded in par 5 of the statement of claim. In the statement of claim the matters pleaded in par 6 are not pleaded as extrinsic facts known to Mr Prior, but the matters relied upon by the second plaintiff to establish that the slander is actionable per se.
36 In respect of the newspaper article, I consider the position is the same as for the slander claims and for the same reasons. Even accepting for present purposes that it is arguable a reader would understand the references to the second plaintiff to be references to his companies (a question on which I express no view), there is nothing in the words complained of which is capable of conveying the imputations pleaded by the first defendant. In my view, it is clear that a reader of the article who arrived at the conclusion that the inability to pay was caused by the second plaintiff's incompetent management of the JWH Group of companies, or that the JWH Group of companies had not paid because the second plaintiff was an unreliable businessman, would not be doing so by reason of anything contained in the words complained of, but as a result of their own prejudices or assumptions quite independently of those words.
37 I also consider that the imputations in par 4A and par 10A are not permissible "Polly Peck" pleas.
38 In Elliott v West Australian Newspapers Ltd [2007] WASC 149, I concluded that a defendant may plead and justify only a meaning that is a
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- nuance or variant of a meaning pleaded by the plaintiff, being a meaning not substantially different from, or more serious than, the plaintiff's pleaded meaning, and on which the plaintiff would be entitled at trial to seek a verdict on the basis of the plaintiff's pleaded meanings. I remain of that view.
39 I consider that the meanings pleaded by the first defendant are in each case not a permissible variant or nuance of, and they are, in addition, more serious than the second plaintiff's pleaded meaning that he was unable to pay the amount claimed.
40 As I have said, the imputation pleaded by the second plaintiff is simply that the second plaintiff was unable to repay a debt owing by him to J-Corp and Kimpura because he did not have the money to do so, obviously relying on the proposition that that of itself is defamatory (without the attribution of any element of fault or misconduct) because it reflects on the second plaintiff's creditworthiness: Gatley on Libel and Slander, 10th ed, par 2.21.
41 That imputation, in my view, is a very long way removed from the first defendant's imputation that the second plaintiff was an incompetent businessman who had not managed certain companies owned and controlled by him in a manner that ensured they were in a position to pay money owing to J-Corp and Kimpura. It is equally a long way removed from the imputation that the second plaintiff was an unreliable businessman who had permitted certain companies owned and controlled by him not to pay money owing to J-Corp and Kimpura. Those imputations focus on a substantially different factual basis and would extend the factual enquiry at trial well beyond the bounds of the second plaintiff's case.
42 I also consider that the first defendant's pleas involve more serious allegations. It is one thing to say that a person is unable to pay a debt. That may come about by some misfortune or for other reasons not attributable to any incompetence or blameworthy conduct on the person's part. It is another, and plainly more serious, thing to say that the person is an incompetent or unreliable businessman.
Conclusion
43 It is well-established that a plea will only be struck out as disclosing no reasonable cause of action or defence where it is clearly untenable. In my view, par 4A and par 10A of the defence are clearly untenable and I
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- would strike them out. I will hear the parties on any other orders that may be appropriate and on costs.
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