JWH Group Pty Ltd v Buckeridge [No 3] - [2009] WASC 271

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: JWH GROUP PTY LTD -v- BUCKERIDGE [No 3] [2009] WASC 271

CORAM: LE MIERE J

HEARD: 15 MAY 2009

DELIVERED : 17 SEPTEMBER 2009

FILE NO/S: CIV 2566 of 2003

BETWEEN: JWH GROUP PTY LTD (ACN 098 664 709)
First Plaintiff
JULIAN ALAN WALTER
Second Plaintiff
AND
LEONARD WALTER BUCKERIDGE
First Defendant
BGC (AUSTRALIA) PTY LTD (ACN 005 736 005)
Second Defendant

Catchwords:

Practice and procedure - Defamation - Application to strike out paragraphs of amended defence - Whether meanings pleaded by the defendant are capable of arising from the publications - Whether meanings pleaded by the defendant fail to state the precise act or condition asserted of, or attributed to, the plaintiff - Whether the meanings pleaded by the defendant are substantially different from the plaintiff's imputation - Turns on own facts

Legislation:

Nil

Result:

Application granted

Category: B

Representation:

Counsel:

First Plaintiff                :     No appearance
Second Plaintiff            :     Mr J D MacLaurin
First Defendant             :     Mr T K Tobin QC & 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):

Advertiser‑News Weekend Publishing Co Ltd v Manock [2005] SASC 82; (2005) 91 SASR 206
Anderson v Nationwide News [2001] VSC 335; (2001) 3 VR 619
Anderson v Nationwide News Pty Ltd [No 2] [2002] VSC 18; (2002) 3 VR 639
Buckeridge v Walter [2007] WASCA 19
Chakravarti v Advertiser Newspapers Ltd [1998] HCA 37; (1998) 193 CLR 519
Channel Seven Adelaide Pty Ltd v Manock [2007] HCA 60; (2007) 232 CLR 245
David Syme & Co Ltd v Hore‑Lacy [2000] VSCA 24; (2000) 1 VR 667
Drummond‑Jackson v British Medical Association [1970] 1 All ER 1094
Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135
FAI General Insurance Co Ltd v RAIA Insurance Brokers Ltd (1992) 108 ALR 479
Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716
Fletcher v POS Solutions Australia Pty Ltd [2004] VSC 507
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Herald & Weekly Times v Popovic [2003] VSCA 161; (2003) 9 VR 1
John Fairfax Publications Pty Ltd v Gacic [2007] HCA 28; (2007) 230 CLR 291
Lucas‑Box v News Group Newspapers Ltd [1986] 1 WLR 147
Monte v Mirror Newspapers Ltd [1979] 2 NSWLR 663
Morgan v Mallard (1997) 68 SASR 184
Nationwide News Pty Ltd v Moodie [2003] WASCA 273; (2003) 28 WAR 314
Nixon v Slater & Gordon [2000] FCA 531; (2000) 175 ALR 15
Polly Peck (Holdings) plc v Trelford [1986] QB 1000
Radio 2UE Sydney Pty Ltd v Chesterton [2008] NSWCA 66
Radio 2UE Sydney Pty Ltd v Chesterton [2009] HCA 16; (2009) 83 ALJR 654
Reader's Digest Services Pty Ltd v Lamb (1982) 150 CLR 500
Slim v Daily Telegraph Ltd [1968] 2 QB 157
Soultanov v The Age Co Ltd [2009] VSC 145
Stern v Piper [1997] QB 123
Stubbs Ltd v Russell [1913] AC 386
Switzerland Australia Health Fund Pty Ltd v Shaw (1988) 81 ALR 111
Taylor v Jecks (1993) 10 WAR 309
West Australian Newspapers Ltd v Elliott [2008] WASCA 172; (2008) 250 ALR 363
Whelan v John Fairfax & Sons Ltd (1988) 12 NSWLR 148

LE MIERE J:

Introduction

Julian Alan Walter (plaintiff) is presently the only plaintiff in this action and Leonard Walter Buckeridge (defendant) the only defendant. At an earlier time in the proceedings JWH Group Pty Ltd (JWH) was a plaintiff and BGC (Australia) Pty Ltd (BGC) was a defendant. However, on 30 August 2004 the action was discontinued by and against those companies.
The current statement of claim is the substituted statement of claim dated 5 April 2005 which I will refer to as the statement of claim. The statement of claim pleads a slander and a libel.
The defendant's defence has been amended on a number of occasions pursuant to general leave to do so granted on 22 March 2007. On 31 October 2008 the plaintiff applied by chamber summons to strike out [4A], [4B] and [10A] of the re‑amended substituted defence dated 6 June 2008. Before the hearing of the plaintiff's chamber summons the defence was further amended on 21 April 2009. The defendants further amended the defence on 13 May 2009. On the final hearing of this application the parties and the court treated the application as an application to strike out [4A], [4B] and [10A] of the defendant's further re‑amended substituted defence dated 13 May 2009, which I will refer to as the amended defence.

The statement of claim

The plaintiff pleads that he is, and at all material times was, managing director of JWH. The defendant is and at all material times was a director of J‑Corp Pty Ltd (J‑Corp).
The plaintiff pleads that on 17 December 2003 during a telephone conversation with Mr Neil Prior, a finance journalist employed by West Australian Newspapers, the defendant spoke the following words to Mr Prior of and concerning the plaintiff:
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 Price Waterhouse 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].
The plaintiff pleads that the words in their natural and ordinary meaning, and by way of innuendo meaning, meant that the plaintiff had not paid approximately $700,000 to 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.
The plaintiff pleads extrinsic facts that were known to Mr Prior that give rise to the innuendo meaning. Those extrinsic facts are that J‑Corp and Kimpura had issued a writ against Oswald Homes (1972) Pty Ltd (Oswald Homes), Rural Building Company Pty Ltd (Rural Building), WA Country Builders Pty Ltd (WA Country Builders), JWH, Julian Walter Holdings Pty Ltd (JW Holdings) and the plaintiff which claimed damages arising from the failure of Oswald Homes, Rural Building and WA Country Builders to pay to J‑Corp monies totalling $698,946 owing pursuant to deeds executed on 6 June and 31 July 2003 entitled 'Deed Governing Sale' and 'Deed of Variation - Deed Governing Sale'.
The plaintiff further pleads that the sense and substance of the words complained of was republished in The West Australian newspaper on 18 December 2003 in an article entitled 'Buckeridge, Walter, Sling Brickbats' and upon the newspaper's website (the article) and the defendant is liable for the publication of the article. The plaintiff pleads that the article, in its natural and ordinary meaning, had the same meaning as the spoken words complained of, that is that the 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.

Amended defence

In [3] of the amended defence the defendant says that the words complained of by the plaintiff formed part of a larger conversation and pleads the additional words spoken by the defendant which the defendant says provides the context and true meaning of the words complained of. The defendant pleads that he spoke the following words:
The claim is made under a formula that was included in the Deed governing the carve up of the J‑Corp assets.
The claim is based on figures compiled by Price Waterhouse Coopers, which had been nominated by Walter to carry out the calculations for the Deed.
I think he doesn't want to pay because he hasn't got the money. BGC has had difficulties getting paid by JWH for building materials supplied by BGC to JWH since the carve up of J‑Corp. BGC will only supply Walter's new group on a cash‑on‑delivery basis from next month.
I will refer to the words complained of by the plaintiff together with the additional words as the Spoken Words.
The defendant denies that the Spoken Words were of and concerning the plaintiff. The defendant further denies that the Spoken Words in their natural and ordinary meaning, and in their proper context, bear the meaning pleaded by the plaintiff or any defamatory meaning of the plaintiff.
The defendant admits the extrinsic facts relied upon by the plaintiff to give rise to the innuendo meaning pleaded by the plaintiff but denies that the Spoken Words bear the meaning pleaded by the plaintiff or any meaning defamatory of the plaintiff by reason of those extrinsic facts.
In [4A] of the amended defence the defendant pleads that if, which is denied, the Spoken Words in their proper context bore any meaning defamatory of the plaintiff those words in their natural and ordinary meaning meant that:
the second plaintiff had consciously and without oversight not paid approximately $700,000 to J‑Corp and Kimpura which sum he was legally obliged to pay,
and those words were true.
The defendant says that the Spoken Words do not convey the imputation pleaded by the plaintiff but seeks to justify a different meaning that is capable of arising from the publication. In Australia this type of defence has been identified as a Polly Peck defence.
In [4B] the defendant pleads alternatively that if the Spoken Words in their proper context bore any meaning defamatory of the plaintiff those words by reason of the extrinsic facts bear the following meanings:
4B.1the second plaintiff had consciously and without oversight not paid approximately $700,000 to J‑Corp and Kimpura which sum he was legally obliged to pay;
4B.2further or alternatively, there were reasonable grounds to believe that the second plaintiff, as owner and controller of the JWH Group of Companies, had caused not to be paid a lawful debt of approximately $700,000 then due to J‑Corp and Kimpura, failing to support his corporate businesses at a time when funds needed to satisfy the debt were not available to the JWH Group of Companies;
4B.3further or alternatively, the second plaintiff, as owner and controller of the JWH Group of Companies, had caused not to be paid a lawful debt of approximately $700,000 then due to J‑Corp and Kimpura, failing to support his corporate businesses at a time when funds needed to satisfy the debt were not available to the JWH Group of Companies;
and the said words were true.
The defendant admits that the article appeared in The West Australian newspaper but denies that the publication was a republication of the sense and substance of the Spoken Words and denies that the defendant is liable for the publication of the article. The defendant denies that the words published in the article bear the meaning alleged by the plaintiff or any meaning defamatory of the plaintiff.
In [10A] of the amended defence the defendant pleads alternatively that if, which is denied, the article bore any meaning defamatory of the plaintiff those words in their natural and ordinary meaning meant the meanings pleaded in [4B.1], [4B.2] and [4B.3] of the amended defence.

The plaintiff's objections

The plaintiff seeks to strike out the Polly Peck defences, that is [4A], [4B] and [10A] of the amended defence, on the grounds that they disclose no reasonable defence and that they may prejudice, embarrass or delay the fair trial of the action. The plaintiff submits that there are three broad bases for his strike out application. The first is that the meanings pleaded by the defendant are not capable of arising from the publications. The second is that the meanings pleaded by the defendant fail to state the precise act or condition asserted of, or attributed to, the plaintiff or with which he is charged. The third is that the defendant's meanings are not permissible because they are substantially different from the plaintiff's imputation.

Principles on a strike out application

The jurisdiction to strike out a pleading should only be exercised where the court concludes that the pleading is so clearly untenable that it cannot possibly succeed: Taylor v Jecks (1993) 10 WAR 309, 313 (Anderson J). This test has been expressed in various ways, including that the pleading must be 'manifestly groundless': General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, 129 (Barwick CJ).
Whether the Polly Peck imputations alleged by the defendant are capable of being conveyed by the words complained of is to be determined having regard to the General Steel test. In exercising the discretion to strike out imputations on the ground that the publication was not capable of giving rise to the defamatory imputations alleged, the court must approach the task with great caution: Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716 [6] (Gleeson CJ, McHugh, Gummow and Heydon JJ).

Is the first Polly Peck imputation capable of arising?

In each of [4A], [4B.1] and [10A.1] the defendant pleads the imputation:
The second plaintiff had consciously and without oversight not paid approximately $700,000 to J‑Corp and Kimpura which sum he was legally obliged to pay.
The plaintiff submits that that imputation (the first Polly Peck imputation) is not reasonably capable of arising as the natural and ordinary meaning of the Spoken Words, or an innuendo meaning of the Spoken Words or as the natural and ordinary meaning of the article.
The defendant submits that there are three elements to the first Polly Peck imputation:
1.there is a sum of $700,000 due to J‑Corp and Kimpura that the plaintiff is legally obliged to pay;
2.the plaintiff had not paid that sum; and
3.the plaintiff had consciously and without oversight not paid.
The first and second elements of the first Polly Peck imputation are reasonably capable of arising from the Spoken Words. The plaintiff does not contend otherwise. The defendant says that the third element of the first Polly Peck imputation, that the plaintiff had consciously and without oversight not paid, arises from the following parts of the Spoken Words:
The claim is based on figures compiled by PricewaterhouseCoopers, which has been nominated by Walter to carry out calculations for the Deed.
I think he doesn't want to pay because he hasn't got the money. BGC has had difficulties getting paid by JWH for building materials supplied by BGC to JWH since the carve up of J‑Corp. BGC will only supply Walter's new group on a cash‑on‑delivery basis from next month.
and from the following parts of the article:
Mr Buckeridge told WestBusiness that the claim was based on figures compiled by PricewaterhouseCoopers, which had been nominated by Mr Walter to carry out calculations for the deed.
I think he doesn't want to pay because he hasn't got the money.
Mr Buckeridge said BGC had difficulty being paid by JWH for building materials supplied since the carve‑up and would only supply Mr Walter's new group as a cash‑on‑delivery basis from next month.
But Mr Walter rejected the claims by Mr Buckeridge that JWH had not paid BGC for building materials saying his group had withheld some money recently because BGC was slow in paying rebates for bulk discounts.
Mr Walter said the Supreme Court action would be defended because the final accounts were based on valuations acceptable to BGC and involved changes to the underlying accounting policies at J‑Corp.
The plaintiff says that the Spoken Words say that the plaintiff had not paid $700,000, that he was legally obliged to pay that sum and he has not paid it because he did not have the money to do so. The plaintiff says that the defendants' first Polly Peck imputation, in effect, consists of the first two parts of the plaintiff's imputation but attributes no reason for the plaintiff not having paid the $700,000. The words spoken by the defendant include 'I think the reason that he does not want to pay is because he does not have the money to pay'. The plaintiff says that the defendant's imputation requires the reader to ignore those words.
It is necessary to consider separately the Spoken Words in their natural and ordinary meaning, in their meaning taken with the extrinsic facts and the natural and ordinary meaning of the article.
The Spoken Words, start with Mr Prior referring to the writ by J‑Corp and Kimpura suing the plaintiff for about $700,000 and asking what it was all about. The defendant then explained how the claim arose, that is, under a formula included in the deed governing the carve‑up of the J‑Corp assets, and said that the claim was based on figures compiled by PricewaterhouseCoopers who had been nominated by the plaintiff to carry out the calculations. The defendant then said that he thought the plaintiff 'doesn't want to pay because he hasn't got the money'. The defendant went on to say that BGC has had difficulties getting paid by JWH for building materials since the carve‑up of J‑Corp. The subject of the Spoken Words is that the plaintiff has not paid the sum due under the deed and the reasons why the plaintiff has not paid. The defendant stated, albeit qualified by the expression 'I think', the reason why the plaintiff had not paid. That reason is related to the plaintiff's financial soundness. The phrase 'he hasn't got the money' may be open to different interpretations but it is concerned in some way with the state of the plaintiff's finances.
For the purposes of the law of defamation, particular words have only a single or uniform meaning: Slim v Daily Telegraph Ltd [1968] 2 QB 157, 171 ‑ 172; Reader's Digest Services Pty Ltd v Lamb (1982) 150 CLR 500, 506 (Brennan J). This does not mean that a publication may only convey one meaning. It could convey several literal, inferential and legal innuendo meanings, but a publication cannot be found to convey inconsistent or contradictory meanings.
It is an element of the imputations put forward by each of the plaintiff and the defendant that the plaintiff had not paid a sum which he was legally obliged to pay. A person may have not paid a sum which he was legally obliged to pay for a number of different reasons and in different circumstances. The defendant's imputation does not include the circumstance that the plaintiff had not paid because he was unaware of the obligation to pay or had forgotten it. There remain a number of reasons why, or circumstances in which, the plaintiff may have not paid. One reason might be that the plaintiff did not have the cash or realisable assets to pay and was not able to raise the funds to pay. Another reason might be that the plaintiff was a person given to refusing or delaying to pay his debts in the ordinary and proper course or that he refused or delayed paying on this occasion so as to have the use of the money due to J‑Corp and Kimpura. The latter circumstance is comprehended within the defendant's imputation.
An imputation that the plaintiff has the funds to pay but elected not to do so so that he might avoid or delay paying his legal obligations is comprehended within the defendant's imputation but is not reasonably capable of arising from the Spoken Words. The imputation that the plaintiff has refused or delayed paying the debt due to J‑Corp and Kimpura so as to have the use of the money due to them is not reasonably capable of arising from the Spoken Words because the Spoken Words attribute to the plaintiff a reason for not having paid and that reason is that 'he does not have the money to pay'. The first Polly Peck imputation is not reasonably capable of arising from the Spoken Words because it includes with it an imputation which is not reasonably capable of arising.
The Spoken Words attribute to the plaintiff a reason for not paying the sum due. The way in which the defendant formulated that reason in the Spoken Words might give rise to different interpretations but they must all relate in some way to the plaintiff's financial soundness or the state of his finances. An ordinary reasonable listener would not understand the words complained of to mean that the plaintiff did not pay a sum legally due and owing for some unstated reason when the focus of the words complained of was the reason for the plaintiff not having paid. The defendant has put a blue pencil through the published words 'I think he doesn't want to pay because he hasn't got the money' to change the meaning of the words complained of and then seeks to justify the words in their expurgated form.

I turn now to consider whether or not the Spoken Words are capable of giving rise to the first Polly Peck imputation by way of innuendo meaning.
The essence of the extrinsic facts is that Mr Prior knew that the writ had been issued against a number of corporations as well as the plaintiff, that those corporations were owned and controlled by the plaintiff and that the plaintiff conducted his building businesses through the use of corporations. Those extrinsic facts might lead an ordinary reasonable listener to understand the words complained of to relate to the plaintiff or corporations associated with him not having paid the sum legally due for reasons connected with the financial position of the plaintiff or the corporations. But those extrinsic facts could not lead a reasonable listener to understand the words complained of to mean that the plaintiff had not paid the sum legally due for some reason unrelated to the state of the plaintiff's finances. The contention that the Spoken Words are reasonably capable of giving rise to the first Polly Peck imputation by way of innuendo meaning is untenable.
I turn now to consider whether the article in its natural and ordinary meaning is reasonably capable of giving rise to the first Polly Peck meaning. The article is much longer than the Spoken Words. The article commences by saying that the simmering row between a construction mogul (the defendant) and his former business partner (the plaintiff) has erupted into a tit‑for‑tat litigation over the carve‑up of their former building joint venture J‑Corp. The article then refers to J‑Corp and another company suing the plaintiff for about $700,000 and explains how that claim arises. The article refers to the defendant having vowed to cut off credit provided by his building materials companies to the plaintiff's company, JWH Group, and the plaintiff suing the defendant for defamation. That is a reference to a different defamation action than the present one. The article then sets out words that in substance are the same as those contained in the Spoken Words including the words 'I think he doesn't want to pay because he hasn't got the money'. The article then says that the plaintiff rejected claims that JWH had not paid BGC for building materials and said that his group had withheld some money because BGC was slow in paying rebates for bulk discounts. The article concludes by saying that the plaintiff said that the Supreme Court action would be defended because the final accounts were based on valuations acceptable to BGC and involved changes to the underlying accounting policies at J‑Corp.
The defendant has not made a bane and antidote argument. The defendant does not rely upon the final paragraph of the article, that is that the plaintiff said the action would be defended because the final accounts were based on valuations acceptable to BGC and involved changes to the underlying accounting policies at J‑Corp, as removing the defamatory meaning conveyed by the parts of the article that convey that the plaintiff has not paid a sum that he is legally obliged to pay and that 'he doesn't want to pay because he hasn't got the money'. To the contrary, the defendant's imputation accepts that the article gives rise to the meaning that the plaintiff had not paid the sum to J‑Corp and Kimpura which sum he was legally obliged to pay. The defendant's imputation is not reasonably capable of arising from the article for the same reasons that it is not reasonably capable of arising from the Spoken Words.

Is the first Polly Peck defence sufficiently precise?

The plaintiff submits that the first Polly Peck imputation is embarrassing because it does not plead the precise act or condition attributed to the plaintiff. In Monte v Mirror Newspapers Ltd [1979] 2 NSWLR 663, Hunt J said:
What the plaintiff must plead as the imputation upon which he relies is, in my opinion, the precise act or condition asserted of, or attributed to, him, or with which he is charged (678).
In Whelan v John Fairfax & Sons Ltd (1988) 12 NSWLR 148, Hunt J said that an imputation may be struck out when it is ambiguous and said that the issue that had to be decided in the particular case was whether there was likely to be confusion either at the pleading stage or at the trial in relation to the meaning for which the plaintiff contended (155). In Taylor v Jecks Anderson J, with whom the other members of the Full Court agreed, approved the statement by Hunt J that what the plaintiff must plead as the imputation upon which he relies is the precise act or condition asserted of, or attributed to, him, or with which he is charged.
The requirement to plead the precise act or condition asserted of, or attributed to, the plaintiff or with which he is charged gives rise to issues concerning the degree of specificity required in a pleading. In Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135, Gleeson J said that the pleading rules requiring specificity raised questions of degree, and said that if a 'problem arises the solution will usually be found in considerations of practical justice rather than philology' (137). The degree of specificity should be decided in light of the published material, with reference to the appropriate test: whether confusion is likely about the plaintiff's alleged meaning. Ambiguity may flow from the published material. The plaintiff must specify the meanings to be argued for, which may include quite general meanings, depending on just what was published.
Having regard to considerations of practical justice, the first Polly Peck imputation should be struck out. The imputation fails to state the precise act or condition asserted of, or attributed to, the plaintiff, or with which he is charged. The defamatory sting of the allegations or charges against the plaintiff in the Spoken Words and the article lies in the reasons why, or circumstances in which, the plaintiff had not paid the sum he was obliged to pay. The defendant's plea fails to state that reason or circumstances. That is likely to lead to confusion at the trial and unfairness to the plaintiff. The ambiguity or uncertainty does not arise from the Spoken Words. The Spoken Words attribute to the plaintiff a reason for not paying. That reason is connected with the plaintiff's financial position.

Principles with respect to Polly Peck pleas

The third basis on which the plaintiff challenges the first Polly Peck imputation is that it is not a permissible variant of the imputation pleaded by the plaintiff.
Parties may disagree about the meaning conveyed by a publication. In the first type of disagreement, a defendant might argue that the publication does not convey the imputation pleaded by the plaintiff, but seek to justify a different meaning that is capable of arising from the publication. This can be described as a Lucas‑Box defence after the English Court of Appeal decision in Lucas‑Box v News Group Newspapers Ltd [1986] 1 WLR 147, but in Australia is often referred to as a Polly Peck defence: see Kenyon A T, 'Perfecting Polly Peck: Defences of Truth and Opinion in Australian Defamation Law and Practice' (2007) 29 Sydney Law Review 651, 658.
A defendant might also argue that the multiple imputations conveyed by a publication are not distinct, but have a common sting, and that proving the truth of one aspect of the common sting will justify the entire publication. This can be described as a Polly Peck common sting defence. The defendant does not rely upon a 'common sting' defence in this case. A defendant might also argue that the publication carried, in addition to the defamatory imputations of which the plaintiff complains, one or more other imputations that are substantially true and the defamatory imputations do not further harm the reputation of the plaintiff because of the substantial truth of the contextual imputations. This is described under the uniform defamation acts as the defence of contextual truth. The defendant does not rely on a contextual defence in this case.
In Western Australia a defendant is allowed to plead and justify some meanings that differ from the plaintiff's pleaded imputations: Nationwide News Pty Ltd v Moodie [2003] WASCA 273; (2003) 28 WAR 314; Buckeridge v Walter [2007] WASCA 19; West Australian Newspapers Ltd v Elliott [2008] WASCA 172; (2008) 250 ALR 363.
This application turns, in part, on the degree to which the defendant's pleaded imputations may differ from the imputations pleaded by the plaintiff. The degree to which defence meanings may differ from the plaintiff's pleaded meanings relate to the degree to which plaintiffs are held to their pleaded imputations. If plaintiffs were held precisely to their pleaded imputations then the pleading of a Polly Peck defence would merely raise a false issue. If the precise meaning pleaded by the plaintiff is not found by the jury, the plaintiff fails. On the other hand, if the precise meaning pleaded by the plaintiff is found by the jury, it is no defence that a different meaning is true. However, a defendant is allowed to prove and justify a meaning different from that pleaded by the plaintiff because plaintiffs are not held to precisely the imputations pleaded.
In England, whether a Polly Peck (or Lucas‑Box) defence is permitted depends on the answer to three questions. First, is the defence meaning capable of arising from the publication? Second, does the defence meaning arise from a separate and distinct allegation in the publication, about which the plaintiff does not complain? Third, has the defendant provided proper particulars of fact that are capable of supporting the defence? In Western Australia, the defendant must pass a fourth test: Is the defence meaning not substantially different from and not more injurious than the plaintiff's imputation: Nationwide News Pty Ltd v Moodie; West Australian Newspapers Ltd v Elliott.
The 'not substantially different and not more injurious' test has been criticised as unduly restrictive, for example, by Andrew T Kenyon op cit. However, as a single judge I am obliged to apply that test.
Before considering the test applied in Moodie and Elliott it is helpful to refer to the decision of the High Court in Chakravarti v Advertiser Newspapers Ltd [1998] HCA 37; (1998) 193 CLR 519 and the decision of the Court of Appeal of Victoria in David Syme & Co Ltd v Hore‑Lacy [2000] VSCA 24; (2000) 1 VR 667.
In Chakravarti v Advertiser Newspapers Ltd the High Court considered the extent to which a court might depart from the meaning pleaded by the plaintiff in finding a publication to be defamatory of the plaintiff. The plaintiff had sued the defendant on two articles. The plaintiff pleaded two imputations in respect of the first article. The trial judge found that the article was defamatory of the plaintiff without ascribing a meaning to it. The Full Court of the Supreme Court of South Australia reversed that decision and held that the article did not bear either of the meanings pleaded by the plaintiff. On appeal the High Court held that the article did not bear the two meanings pleaded by the plaintiff but bore a meaning similar to the second imputation relied on by the plaintiff. The court held that the plaintiff was entitled to rely upon the alternative meaning because it did not involve any unfair disadvantage or prejudice to the defendant.
Gaudron and Gummow JJ said (546):
As a general rule, there will be no disadvantage in allowing a plaintiff to rely on meanings which are comprehended in, or are less injurious than the meaning pleaded in his or her statement of claim. So, too, there will generally be no disadvantage in permitting reliance on a meaning which is simply a variant of the meaning pleaded. On the other hand, there may be disadvantage if a plaintiff is allowed to rely on a substantially different meaning or, even, a meaning which focuses on some different factual basis. Particularly is that so if the defendant has pleaded justification or, as in this case, justification of an alternative meaning. However, the question whether disadvantage will or may result is one to be answered having regard to all the circumstances of the case, including the material which is said to be defamatory and the issues in the trial, and not simply by reference to the pleadings.
The approach adopted by Brennan CJ and McHugh J was more restrictive. Their Honours considered that the practice of a defendant pleading and justifying meanings which the plaintiff had not pleaded was contrary to the basic rules of common law pleadings and that, in general, a plea of justification in respect of an imputation not pleaded by the plaintiff does not constitute a good defence but raises a false issue which could only embarrass the fair trial of the action. Their Honours said that the imputation pleaded by the plaintiff confines the meanings relied on. The plaintiff may not seek a verdict on a different meaning 'which so alters the substance of the meaning pleaded that the defendant would have been entitled to plead a different issue, to adduce different evidence or to conduct the case on a different basis' [19]. Their Honours said:
If the meaning pleaded goes to the jury and is not found by the jury, the plaintiff fails. If there be no unfair disadvantage to the defendant by allowing another defamatory meaning to be relied on and to go to and be considered by the jury ‑ as where the plaintiff seeks to rely on a different nuance of meaning or, oftentimes, merely a less serious defamation ‑ the different defamatory meaning may be found by the jury [24].
Thus, their Honours held that a different nuance of meaning or oftentimes a less serious defamation may be left to the jury provided it is not unfair to the defendant.
Kirby J was also concerned that a plaintiff be confined to imputations to the extent required by considerations of fairness. His Honour said:
In an attempt to reconcile the desirable encouragement of particularisation of claims, the avoidance of 'trial by ambush' … and the consideration of the entirety of the publication in question … courts will uphold the discretion of the trial judge, including a discretion to confine parties to the imputations pleaded where that is required by considerations of fairness … However, a more serious allegation will generally be taken to include a less serious one unless the latter is of a substantially different kind … If the publisher claims surprise, prejudice or other disadvantage, the trial judge may protect it. No complaint can arise where additional imputations found represent nothing more than nuances or shades of meaning of those pleaded [139].
One of the most influential decisions concerning the Polly Peck defence has been David Syme & Co Ltd v Hore‑Lacy. The President of the Fitzroy Football Club sued the publisher of the Age newspaper over an article that concerned media interviews he gave about a possible merger or takeover of the club. The court discussed the range of meanings on which a plaintiff can succeed at trial and which a defendant can plead and justify. Ormiston JA held that a defendant could not plead or rely on a meaning other than one which is not more serious and otherwise is not substantially different than the plaintiff's meaning [22]. Charles JA held that a defendant should not be permitted to raise a meaning substantially different from, or more injurious than, the meanings alleged by the plaintiff [52]. Charles JA said that:
Whether the meaning was substantially different would presumably be tested by asking whether the defendant would have been entitled to plead a different issue, adduce different evidence or conduct the case on a different basis … or possibly whether the justification would be substantially different … [52] (references to authority omitted).
Thus, the approach of the Victorian Court of Appeal in Hore‑Lacy is that meanings cannot be substantially different or more injurious than plaintiffs' meanings. That raises the question of what meanings come within the concept of 'not substantially different'?
In Hore‑Lacy the plaintiff had pleaded meanings including:
(a)the plaintiff had told lies concerning the Fitzroy Football Club's financial situation during the radio and television interviews referred to;
(b)the plaintiff had treated members of the Fitzroy Football Club who attended at their annual general meeting as credulous dupes or fools;
(c)the plaintiff had lied to the members of the Fitzroy Football Club who attended at the annual general meeting;
(d)the plaintiff had been guilty of sharp practice in obtaining proxies from shareholders of the Fitzroy Football Club [27].
The defendants had eventually pleaded two imputations:
(a)the plaintiff had told lies in statements made by the plaintiff broadcast on radio and television in the previous week when he denied a report in The Age that the financial jig was up with the Fitzroy Football Club; and
(b)the plaintiff had misled members of the Fitzroy Football Club who attended the annual general meeting.
The court found the defendant's meanings were not substantially different, nor more injurious, than the plaintiff's meanings and the Polly Peck plea was allowed to stand [24], [62]. The defence plea appears arguably narrower and suggests that fewer discreditable matters arose from the publication but the pleas are similar. The sting of the first imputation pleaded by the defendant is that the plaintiff told lies in connection with the financial situation of the club. That is also the sting of the plaintiff's first imputation. The defendant's second imputation is that the plaintiff had misled members of the club at its annual general meeting. The plaintiff's second and third imputations attributed to the plaintiff's misconduct in the way he treated members of the club at the annual general meeting, first by treating them as fools and second by lying to them. The defendant's imputation is similar.
The subsequent Victorian case of Anderson v Nationwide News [2001] VSC 335; (2001) 3 VR 619 applied the Hore‑Lacy approach to the defence of fair comment. The Chief Executive Officer of BHP had sued the defendant for publishing a newspaper article headed 'When bullies talk, it's time to walk'. The plaintiff pleaded that the article meant that he had promoted, supported and contrived the merger of BHP and Billiton and breached his duty to BHP and its shareholders for the ulterior purpose of enabling him and his wife to return to live in the United States earlier than what otherwise would have been the case. The defendant sought to justify these meanings:
(a)the plaintiff was promoting and supporting a merger of Billiton and BHP on terms which did not favour BHP or its shareholders; and
(b)the plaintiff was promoting and supporting a merger of Billiton and BHP on terms which were not as favourable as they should have been to BHP and its shareholders.
Ashley J held that the defendant's imputations were outside the permissible limits of a Polly Peck defence as outlined in Hore‑Lacy. His Honour said that a 'permissible Polly Peck defence must plead a meaning not more serious and not substantially different from the meaning pleaded by the plaintiff' [14]. According to the plaintiff's case the article meant that he had supported and contrived the merger and had breached his duties to BHP and its shareholders by supporting that merger for ulterior purposes ‑ that is, of enabling him and his wife to accelerate their return to the United States and to appease his wife. The meanings pleaded by the defendant alleged simply that the plaintiff promoted and supported a merger which did not favour BHP and its shareholders; a merger whose terms were less favourable than they should have been to BHP and its shareholders. The essence of the meanings pleaded by the plaintiff is that the plaintiff acted for ulterior motives. The essence of the meanings alleged by the defendant, were entirely devoted to the plaintiff's alleged promotion of and support for a merger which was unsatisfactory from the standpoint of BHP and its shareholders. Ashley J held that the defendant's meanings were 'greatly different' from the meanings pleaded by the plaintiff [18]. His Honour said that the sting of the meanings alleged by the plaintiff and the defendant were quite different. Moreover, his Honour held that the plaintiff would not be entitled to a verdict on the meanings pleaded by the defendant [18].

Ashley J declined to strike out the defendant's plea of fair comment because the plaintiff had not sought particulars of the substance of the comment. Subsequently, the defendant provided particulars in which it said that the substance of the comments was that the plaintiff was promoting and supporting a merger of BHP and Billiton on terms:
(a)which did not favour BHP or its shareholders; and
(b)which were not as favourable as they should have been to BHP and its shareholders.
The plaintiff applied to strike out the defence of fair comment. In Anderson v Nationwide News Pty Ltd [No 2] [2002] VSC 18; (2002) 3 VR 639 Bongiorno J struck out the fair comment defence. His Honour said that the sting of the libel alleged by the plaintiff is the allegation that he had an ulterior motive but the pleaded defence of fair comment goes only to a lack of business judgment and did not meet the libel. His Honour said that if the article means no more than the defendant contends, then the defendant will succeed in the action, not because of any fair comment defence but because the plaintiff will not have established the libel of which he complained [14].
The Victorian Court of Appeal again considered the Polly Peck defence in Herald & Weekly Times v Popovic [2003] VSCA 161; (2003) 9 VR 1. The plaintiff, the Deputy Chief Magistrate of Victoria, sued over an article published by the defendant in its Herald Sun Newspaper. The article suggested that the plaintiff had presided over a criminal prosecution of persons for arson arising out of the burning of an Indonesian national flag at a political protest at the Indonesian Consulate. In fact, the proceeding was a consent adjournment application which the Magistrate had treated as a contested mention. The plaintiff relied on three imputations:
(a)she had subverted the law by pre‑judging a hearing;
(b)she had behaved outrageously by bullying a prosecutor; and
(c)she had so misconducted herself that her removal from office was warranted.
The defendants denied the plaintiff's pleaded meanings and sought to justify three imputations of their own:
(a)the plaintiff had pre‑judged the case then before her;
(b)she had bullied the prosecutor; and
(c)she had conducted herself inappropriately.
At trial the trial judge directed the jury that they should consider whether the article was defamatory of the plaintiff by reference only to the plaintiff's pleaded meanings. The jury found that the article was defamatory of the plaintiff and that it was not true. The judge rejected the Lange defence and entered judgment for the plaintiff.
On appeal the appellants contended, amongst other things, that the trial judge misdirected the jury by telling them that they should answer the question whether the article was defamatory of the plaintiff by reference only to the plaintiff's pleaded imputations. The court found that the trial judge misdirected the jury because it is for the jury to determine the publication's meaning, not merely whether the plaintiff's pleaded imputations are conveyed. However, the court found that the defence of justification relied upon by the defendants would have failed in any event because the defendants' imputations were not capable of arising and there was no evidence to go to the jury that any of them were true. Only Winneke ACJ directly addressed the question of whether the defence meanings were substantially different from, or more injurious than, the meanings pleaded by the plaintiff. Winneke ACJ held that they were not:
In this case the defamatory sting which was given to each of the three meanings pleaded by the plaintiff depended upon her proving to the jury's satisfaction that the article conveyed the meaning that she was engaged in presiding over a criminal prosecution for arson. It was that fact which gave meaning to the imputations of bias, and inappropriate conduct. That was why defence counsel was at pains to point out that the plaintiff's meanings could not be proved. The meanings pleaded by the defendants deliberately steered clear of this aspect of the meanings pleaded by the plaintiff. That fact, in itself, renders the defendants' meanings substantially different from those pleaded by the plaintiff [21].
In Fletcher v POS Solutions Australia Pty Ltd [2004] VSC 507 Ashley J again considered the degree to which a defendant in pleading a Polly Peck defence may depart from the meanings pleaded by the plaintiff. The corporate plaintiff (Tower) and corporate defendant (POS) were competitors in the computer industry. Tower and its managing director, Fletcher, sued POS and others over a newsletter allegedly published by the defendants. Tower pleaded the following imputations:
(a)Tower falsely claimed that its computer software system (product) was reliable. It did so knowing that its product was defective, and in an endeavour to conceal its deficiencies from the business public.
(b)The defect in Tower's product caused users to be disturbed in their sleep to the point that it had impacted upon the commercial viability of their business.
(c)Almost all persons who had gone over to use the POS product had stated the same reasons for doing so – in essence, that the POS product was superior to Tower's defective product.
Fletcher pleaded the following imputations:
(a)he was lying when he said that the Tower product was reliable;
(b)he was complicit in Tower lying about the reliability of its product;
(c)he was engaging in false denigration of the POS product, and concealment of the defects of the Tower product, in the former case so as to direct attention away from the defects of the Tower product;
(d)he had intentionally misled the business public concerning the defects of the Tower product by lying about the quality of the POS product, back‑up and reputation;
(e)his lies showed that what he said could not be trusted.
The defendants sought to plead a Polly Peck defence which, in [9B] of the proposed defence, sought to justify the following imputations concerning Fletcher:
(a)he had been circulating libellous and misleading information within the newsagency industry about the systems and services of POS;
(b)he has said things about the service and software of POS that are untrue;
(c)he has repeatedly published material which attacks the service and software of POS.
The defendants sought to plead and justify, in [9C] of the proposed defence, the following imputations concerning Tower:
(a)it had been circulating libellous and misleading information within the newsagency industry about the systems and services of POS;
(b)it supplies software that continually needs to be re‑indexed;
(c)it supplies software that freezes regularly if not continually re‑indexed;
(d)it supplies software that causes inconvenience to the owners of businesses in which that software is engaged;
(e)it has said things about the service of software of POS that are untrue;
(f)it has repeatedly published material which attacks the service and software of POS.
Ashley J said that to be permissible a Polly Peck defence 'must plead a meaning not more serious and not substantially different from the meaning pleaded by the plaintiff' [18]. Ashley J found that the meanings pleaded by the defendants in [9B] and [9C] of the proposed defence were not permissible. His Honour said:
By para 9B of their proposed defence, the defendants seek to justify meanings which are, I consider, quite different to those pleaded by the statement of claim. Such meanings do not respond, at all, to Mr Fletcher's plea that the article meant that ‑
•He lied about the reliability of the Tower product.
•He denigrated the POS product, back‑up and business reputation to distract the relevant business community from defects in the Tower product, lying in what he said about the POS product.
•His lies showed that he was a man who could not be trusted.
Further, so far as the meanings alleged by para 9B address denigration of the POS product they do not meet the sting of the meanings alleged by Mr Fletcher. There is a distinct difference between factual inaccuracy and lying inaccuracy in things written and said.
Not only do the meanings alleged by paragraph 9B address only some of the meanings alleged by Mr Fletcher, and miss the sting of those meanings so far as they are addressed, in one respect, or perhaps two, they are more serious. So, subpara (a) refers to the circulation of libellous material; and publication of material 'repeatedly' ‑ see subpara (c) ‑ may go further than the meanings alleged by Mr Fletcher [20] ‑ [22].
Ashley J also found that the meanings pleaded in [9C(b)], [9C(c)] and [9C(d)] were not permissible:
Those meanings focus upon the Tower product. Their thrust is that the newsletter meant that Tower supplied a product which was defective and inconvenienced owners of businesses who used it. In my opinion those meanings do not at all meet the sting of the meanings alleged by Tower. The latter focus upon lies allegedly told by Tower about its product; and, so far as paragraph 8(c) and (d) of the statement of claim are concerned, upon reasons given by almost all newsagents who had moved over to use the POS product why they had done so.
Even if it was true that the plaintiffs' product was unreliable, which is what the meanings alleged by paragraph 9C(b) and (c) propose, there is a great difference between those meanings and the core meaning proposed by Tower – that is, that it had lied in claiming that its product was reliable. Paragraph 9C(b) and (c) of the proposed defence do not come to grips with a meaning that Tower lied about its own product as distinct from what it said being simply untrue. This is so notwithstanding para 10(a) ‑ (d) of the statement of claim which, allege that the Tower meanings were false because, inter alia, the Tower product was in fact reliable.
Concerning para 9C(d), the meaning assigned by the defendants is that the plaintiffs' product in fact caused inconvenience to business users. That does not at all meet the meaning assigned by Tower ‑ that is, that almost all newsagents who had moved over to use the POS product had given the 'very same reasons' for doing so ‑ reasons to do with the comparative merits of the competing products [26] ‑ [28].
The degree to which a Polly Peck defence may depart from the plaintiff's meanings was recently addressed by Kaye J in Soultanov v The Age Co Ltd [2009] VSC 145. The plaintiff was a director and shareholder of the biotechnology company Solagran Ltd. The plaintiff sued over an article published in The Age newspaper entitled 'Solagran directors bought up stock'. The article alleged that directors of Solagran had been buying up stock for more than one year before they released crucial details of a successful clinical trial of a drug caused Ropren. The plaintiff pleaded that the article bore one imputation:
[As] a director of Solagran [the plaintiff] had breached the continuous disclosure rules of the Australian Stock Exchange in that he had failed to immediately disclose crucial information which had come into his possession that would have a potentially significant impact on the price of those shares [5].
The defendants pleaded a number of defences including a defence of honest opinion, or fair comment, under s 31 of the Uniform Defamation Act 2005. In answer to a request for particulars of the substance of the comment pleaded, the defendants particularised that comment as follows:
The plaintiff had unethically traded in Solagran shares when privy to the details of trial results which had not been released to the market [9].
The plaintiff submitted that the defendants' plea of honest opinion should be struck out because it did not purport to address the imputation pleaded by the plaintiff or an imputation which is either a variant of, or not substantially different from, the imputation pleaded by the plaintiff [19]. The plaintiff relied on the decision of the High Court in Channel Seven Adelaide Pty Ltd v Manock [2007] HCA 60; (2007) 232 CLR 245 as authority for the proposition that 'a defendant is only permitted to raise a defence of fair comment (or its statutory equivalent, honest opinion) in respect of the plaintiff's imputation, or in respect of a meaning which is either a variant of, or not substantially different from, the meaning pleaded by the plaintiff' [19].
Kaye J reviewed a number of authorities and concluded that two principal considerations have underscored the decisions of courts in recent cases, and in particular the High Court, in circumscribing the extent to which a jury, or a plaintiff or defendant, may depart from the defamatory imputations relied on by the plaintiff:
First, the courts have been concerned to ensure that, insofar as a judge or jury might find a publication, complained of, to be defamatory in a sense which differs from the meaning pleaded by the plaintiff, such departure does not operate unfairly to the disadvantage of the defendant. Secondly, the courts have been concerned to ensure that a defendant, by seeking to defend an imputation which differs from the imputation relied on by the plaintiff, does not thereby hijack the trial of the case, by pleading and relying on 'false issues', which do not meet the sting of the imputations relied on by the plaintiff [24].
Kaye J considered that it was for those reasons that the courts have required that a defendant is 'bound by the meanings put forward by the plaintiff, or meanings which are either a "variant" of the plaintiff's meanings, a "nuance" of the plaintiff's meanings, or, at most, are not substantially different from those meanings' [25]. Kaye J then applied those tests to the case before him, bearing in mind the underlying reasons for the tests. His Honour concluded that the defendants' imputations were not substantially different from the plaintiff's imputation and should not be struck out. His Honour considered that the principal thrust of the article was the allegation that the directors of Solagran purchased shares in the company for a significant period before they released details of the successful clinical trial of Ropren to the market. There were 'two intertwined threads joined in the article. The first thread was the purchase of the shares, and, tied with that thread, was the purchase of the shares by the defendants before price sensitive information had been released to the market' [44]. Kaye J considered that the plaintiff had 'chosen to extract one of the two threads ‑ the non‑disclosure of the information ‑ and restrict his innuendo to one aspect of that allegation' [44]. On the other hand, the defendants had pleaded their innuendo to the two intertwined threads. His Honour considered that in that way there is a necessary and close connection between the subject matter of the defendants' imputation and the subject matter of the plaintiff's imputation. His Honour considered that it would be unfair if the defendants were shut out from pleading a defence directed to an imputation focussing on non‑disclosure and purchase of shares. His Honour said:
If a jury does accept the imputation put forward by the plaintiff, the jury might well conclude that the real sting of that imputation lay, not just in the breach of rules concerning disclosure of information to the market, but, rather, in the trading of shares by the directors during the period of non‑disclosure [45].
I turn now to consider the three decisions of the Western Australian Full Court or Court of Appeal that have addressed the issue. In Nationwide News v Moodie, Anderson J at [11] ‑ [13] and Steytler J at [57] ‑ [60] adopted the general approach of Hore‑Lacy, that is, a plaintiff's case cannot go to the jury on meanings that are substantially different or more injurious than the plaintiff's pleaded meanings and defence pleadings are limited to the same degree. McLure J found that it was unnecessary on the facts of the case to make a determination on the correct test to apply [94]. Her Honour said that it was arguable that Ormiston JA's formulation of the correct test in Hore‑Lacy was unduly narrow having regard to the reasons of the majority in Chakravarti [88]. Her Honour also observed that, on her reading of the reasons in Chakravarti, 'disadvantage to the defendant is an additional limiting factor on the extent to which a plaintiff can depart from his pleaded imputations, not a factor that is intended to widen the plaintiff's (and in turn the defendant's) opportunities to depart from them' [94].
In Nationwide News Pty Ltd v Moodie the plaintiff had pleaded that the matters complained of bore the following meanings:
•that the plaintiff acted as a mafioso in performing his duties as chief of Greater Murray Health Service;
•that the plaintiff acts as a mafioso in performing his duties as chief executive of the King Edward Memorial and Princess Margaret Hospitals (the Hospitals) using mafia tactics to enforce his policy;
•that the plaintiff acted as a mafioso in performing his duties as chief executive of the Hospitals; and
•that the plaintiff is a dishonest, ruthless mafioso style executive [16] ‑ [17].
The defendant sought to advance a Polly Peck plea that the words complained of did not have the meanings contended for by the plaintiff but had a different meaning and in that meaning they were true. The defendant's meanings were:
•the plaintiff in performing his duties as chief executive officer of the Greater Murray Health Service and the Hospitals was dictatorial and secretive in his management style; and
•the plaintiff in performing his duties as chief executive officer of the Hospitals was dictatorial and secretive in his management style [18].
The Full Court found that the Polly Peck imputations pleaded by the defendant were a permissible variant of the imputations pleaded by the plaintiff. Steytler J said that the imputations pleaded by the plaintiff were very broad, being to the effect that the plaintiff had acted 'as a mafioso' in performing his duties, that he had used 'mafia tactics' to enforce his policy and that he was a 'dishonest, ruthless mafioso style executive' [62]. His Honour said that it was plain from the words complained of that the references to 'mafioso' and 'mafia tactics' refer exclusively to the respondent's management style [63]. His Honour held that the meanings pleaded by the defendant were comprehended within, and less injurious than, those pleaded by the plaintiff and the meanings pleaded by the defendant could not be said to be substantially different from those pleaded by the plaintiff or to focus on some different factual basis [64]. His Honour added that the situation might well have been different had the plaintiff chosen to plead its imputations with more precision, at least if the pleaded imputations had been to the effect that the plaintiff was acting in breach of the law or, at least, conforms to the practices of a group that stands outside or ignores the law. Anderson and McLure JJ held that the defendant's meanings were not substantially different or more injurious than those pleaded by the plaintiff for the reasons given by Steytler J.
Buckeridge v Walter [2007] WASCA 19 arose out of an earlier interlocutory application in this action. The defendant had applied for leave to amend its defence to include a Polly Peck plea to plead and justify the following meaning:
Companies in the JWH Group of Companies owned and controlled by the [plaintiff] and named as defendants in the Supreme Court writ as liable to pay to J‑Corp and Kimpura the sum of approximately $700,000 had not paid the sum because they did not have the money to do so.
The Master refused the application on the ground that the imputation was incapable of adversely reflecting on the plaintiff's personal financial reputation. The defendant sought leave to appeal. The Court of Appeal refused leave. McLure JA, with whom Buss JA agreed, found that the Master erred in ruling that the inability of the companies to pay their debt was incapable of supporting an imputation adversely reflecting on the plaintiff's personal financial situation. However, her Honour found that the defendant's imputation failed to state the precise act or condition asserted of or attributable to the plaintiff. Her Honour concluded that the court could not, and should not, make a determination as to whether the defendant's imputation was a permissible Polly Peck plea because there was significant uncertainty as to precisely what it was that the appellant wished to impute and justify [23].

In West Australian Newspapers Ltd v Elliott Steytler P wrote:
If one thing is settled in this jurisdiction it is that a defendant cannot plead a Polly Peck imputation that is outside the extent to which a plaintiff would be permitted to depart from his or her pleaded imputations: Buckeridge v Walter [2007] WASCA 19 at [20] per McLure JA, Buss JA concurring; Moodie at [13] per Anderson J, [59] per Steytler J and [85] per McLure J [20].
His Honour then reviewed the leading authorities and concluded:
This review of the cases suggests that there is general, although not universal, support for the proposition that a plaintiff who has pleaded specific meanings by way of false innuendo may only succeed at trial on some other meaning if it is not substantially different from and not more injurious than the meanings pleaded. If that is correct then, as Charles JA pointed out in Hore‑Lacy (at [52]), the issue of whether the meaning was substantially different might be tested by asking whether the defendant would have been entitled to plead a different issue, adduce different evidence or conduct the case on a different basis or, possibly, whether the justification would be substantially different. If the Polly Peck imputation pleaded by the defendant is one that would have satisfied the test enunciated, had it been pleaded by the plaintiff, it will be allowed. If it would not have satisfied that test, it will not be allowed: Buckeridge at [20]. At least in the absence of further authority, that is the approach that should, in my opinion, be followed by the present two‑judge court [31].
McLure JA said that the 'balance of Australian authority favours a negative test of the scope of the defence which is in terms that a defendant cannot plead and justify a meaning substantially different from, or more injurious than, the meanings alleged by the plaintiff' [73]. Her Honour went on to observe that a 'Polly Peck defence of its nature must permit a defendant to plead and justify an imputation which is different from the imputations pleaded by the plaintiff in the sense that different evidence would be required to justify it' [75]. Her Honour observed that the 'extent to which a plaintiff is permitted to depart from his pleaded imputations is subject to, albeit not solely determined by, considerations of fairness' [76]. Her Honour said that the 'Polly Peck defence may be regarded as an important factor in achieving an appropriate balance between the competing public interests of protection of the reputation of individuals and the protection of freedom of speech' and that there are 'sound policy reasons for denying a plaintiff unilateral control over all the imputations in contest at trial' [79].
The effect of the judgments of Steytler P and McLure JA in West Australian Newspapers Ltd v Elliott is that the scope of the Polly Peck defence is that a defendant cannot plead and justify a meaning substantially different from, or more injurious than, the meanings alleged by the plaintiff. As a single judge I should follow that test. However, the cases demonstrate that it is often easier to state the test than to apply it. Indeed, in West Australian Newspapers Ltd v Elliott McLure JA went so far as to say that the cases 'demonstrate that the test is inconsistently applied with inconsistent outcomes' [73].
In West Australian Newspapers Ltd v Elliott the plaintiff alleged that the publication complained of conveyed, amongst others, the meaning that he dishonestly and illegally profited from information about the true position of the Fortescue Metals Group's dealings with Chinese investors. The defendant pleaded a Polly Peck defence to the effect that there were reasonable grounds to suspect that the plaintiff had illegally profited by using information about the true position of the group's dealings with Chinese investors. Steytler P, with whom McLure JA agreed, said:
An imputation of guilt will always be more serious than one of suspicion on reasonable grounds. Also, ordinarily, a plea of justification of an imputation that there are reasonable grounds for suspicion that a plaintiff engaged in criminal or reprehensible conduct will require proof of the same published facts as are said by the plaintiff to give rise, in the context of the publication, to an imputation that he or she has engaged in that conduct. It is only the conclusion to be drawn from those facts (in the context of the publication) that is different and, even then, the difference will be one of degree, depending upon the strength of the imputation of suspicion to which the publication is said to give rise [49].
His Honour held that the defendant was entitled to plead an imputation of reasonable suspicion of guilt.
The Hore‑Lacy approach has also been followed in South Australia. In Advertiser‑News Weekend Publishing Co Ltd v Manock [2005] SASC 82; (2005) 91 SASR 206 the plaintiff, Dr Manock, sued the defendant newspaper for damages for libel. Dr Manock was a forensic pathologist at the State Forensic Science Centre. The claim was based on three articles published by the defendant in its newspaper which criticised the forensic evidence given by Dr Manock in various murder cases. The plaintiff's pleadings claimed that the articles had cast imputations on his forensic evidence and findings in relation to murder trials. The defendant pleaded that the meanings related to Dr Manock's work as a forensic pathologist, were not limited to murder trials and were true in substance and in fact in relation to the alternative meaning. Doyle CJ, with whom Vanstone and White JJ agreed, held that the defendant may only plead and seek to justify such alternative meanings as may be relied on by the plaintiff to obtain a judgment even though he has not pleaded them. Doyle CJ held that an alternative meaning that can be pleaded and justified by the defendant can be no more than a shade or nuance of the meaning pleaded by the plaintiff, and so in substance the alternative meaning 'must be close to or the same as the meaning pleaded by the plaintiff' [72]. Doyle CJ held that the alternative meaning pleaded by the defendant was a meaning on which Dr Manock would not be entitled to rely at trial and so could not be pleaded and justified by the defendant as an alternative meaning. His Honour said:
74.The 'common sting' on which the defendant relies is created by removing or ignoring an aspect of the meaning alleged by Dr Manock, or by raising the meaning alleged by Dr Manock to a higher level of generality so as to change the alleged meaning from a meaning with an area of overlap with the defendant's meaning to a meaning that is the same. While Polly Peck might contemplate that approach, Australian authority is to the contrary.
…
76.Once the plaintiff pleads a meaning on which the plaintiff relies, that pleading will identify the meaning of which the plaintiff complains, and delimit the boundaries within which the action is to be fought. Although it is the publication of the defamatory material that is the tort, the function of the pleading is to identify the field of inquiry at the trial.
77.It appears to be generally accepted that once the plaintiff has pleaded the meaning on which the plaintiff relies, the plaintiff will not be entitled to seek a verdict on a different imputation. On that all members of the High Court agreed in Chakravarti. That is subject to the qualification that another defamatory meaning might be relied on by the plaintiff, when it is a mere shade or nuance of meaning, provided that the defendant suffers no prejudice, embarrassment or unfair disadvantage as a result: Brennan CJ and McHugh J at [24] ‑ [25], Gaudron and Gummow JJ at [60] and Kirby J at [139] subparas 3 and 4.
78.Accordingly, there can be no unfairness to the defendant in not allowing the defendant to justify a meaning that, because it differs from the meaning pleaded by the plaintiff, the plaintiff would not be permitted to advance at trial. That is what the Judge has decided here.
79.While on the question of the ability of the plaintiff to depart from a pleaded imputation, I record my agreement with the following observation made by McLure J in Nationwide News at [94]:
'On my reading of the reasons in Chakravarti, disadvantage to the defendant is an additional limiting factor on the extent to which a plaintiff can depart from his pleaded imputations not a factor that is intended to widen the plaintiff's (and in turn the defendant's) opportunities to depart from them.'
…
81.The latitude that the principle stated in Polly Peck allows will lead to defendants re‑stating defamatory imputations at higher levels of generality, then seeking to justify the more general imputation by evidence that does not bear directly on the matter of which the plaintiff complains. On that point it is pertinent to recall the observation by Gleeson CJ in Drummoyne Municipal Council v ABC (1990) 21 NSWLR 135 at 137:
'Almost any attribution of an act or condition to a person is capable of both further refinement and further generalisation.'
Doyle CJ said that for the reasons he had stated, the law as stated by O'Connor LJ in Polly Peck (Holdings) plc v Trelford [1986] QB 1000 should not be applied and the preferable approach was that adopted by Charles JA in Hore‑Lacy.

Is the first Polly Peck imputation permissible?

The imputation pleaded by the plaintiff is that the plaintiff had not made the payment he was legally obliged to pay because he did not have the money to do so. Senior counsel for the defendant submitted that this is not a plea that the plaintiff was insolvent. The term insolvency is not always used in the same sense. It is sometimes used to denote an insufficiency of the entire property and assets of a person to pay his debts. But it is also used in a more restricted sense to express the inability of a person to pay his debts as they become due in the ordinary course of business. The plaintiff has framed his imputation in the rather general terms that he did not have the money to pay a sum which he was legally obliged to pay.
The defendant's imputation is that the plaintiff has consciously and without oversight not paid a sum he was legally obliged to pay. In Stubbs Ltd v Russell [1913] AC 386 the appellants had published a trade journal in which the respondent's name appeared in the weekly list of persons against whom decrees in absence had been obtained in the small debts courts. A decree in absence is in essence a default judgment for a debt. The House of Lords held that the entry, when read in connection with an explanatory note, was incapable of bearing the defamatory meaning that the respondent was unable to pay his debts. Lord Shaw said that a decree might pass for a large variety of reasons, none of which would injuriously affect the reputation of the debtor. One interpretation of the entry would be that the debtor had forgotten to pay the sum sued for. Another reason might be that he was ‑ having certain opinions as to the injustice of the claim or the full amount of it ‑ determined not to pay except under force of law. A third reason for such a decree might be that he was absent and knew nothing about the summons. And a fourth that he was a person given to refusing or delaying to pay his debts in ordinary and proper course. His Lordship said that the last reason might be injurious to, and defamatory of, the plaintiff (397).
The defendant's imputation is that the plaintiff consciously and without oversight did not pay the sum he was legally obliged to pay. The words consciously and without oversight remove the possibilities adverted to by Lord Shaw that the payment was not made because the plaintiff had forgotten it or did not know of it. Senior counsel for the defendant says that the imputation is to the effect that the plaintiff decided not to pay the sum he was legally obliged to pay for some unstated reason.
The defendant's imputation is substantially different from the plaintiff's imputation. The plaintiff would not be permitted to put to the jury the defendant's imputation. The defendant's imputation is of a different character than the plaintiff's imputation. The sting of the plaintiff's imputation is that the plaintiff did not pay the debt because of his inability to do so or at least for reasons related to the funds available to him. The defendant's imputation does not meet that sting.
The matter should not be approached by looking at the different elements of the plaintiff's imputation and of the defendant's imputation. The plaintiff's imputation does not contain three distinct charges ‑ that the plaintiff is legally obliged to pay $700,000 to J‑Corp and Kimpura, that he had not paid that sum and that he did not have the money to do so. The three elements or aspects of that allegation are so connected together as to form one charge or allegation. The sting of the imputation is that the plaintiff did not have the money to pay the debt.
The defendant's imputation may be said to be wider or at a higher level of generality. The defendant's imputation includes within it the plaintiff's meaning and meanings inconsistent with the plaintiff's meaning. The defendant's imputation includes within it the meaning that the plaintiff had engaged in discreditable conduct by not paying so as to avoid or delay paying a debt in circumstances where he was not prevented or impeded from doing so by his financial circumstances. That is a meaning which reflects upon the plaintiff's honesty. The plaintiff's imputation reflects upon his creditworthiness but not his honesty.
The defamatory sting of the plaintiff's imputation is that he did not have the money to pay. It is that circumstance that gives meaning to the imputation that the plaintiff had not paid the sum due. The defendant's meaning steers clear of that aspect of the meaning pleaded by the plaintiff. It does not meet the sting of the imputation relied upon by the plaintiff.
The defendant's imputation is created by removing or ignoring the critical aspect of the meaning alleged by the plaintiff, or by raising the meaning alleged by the plaintiff to a higher level of generality so as to change the meaning to a meaning that includes meanings that are inconsistent with the plaintiff's meaning.

The second Polly Peck imputation

In [4B.2] the defendant pleads that if the Spoken Words in their proper context bore any meaning defamatory of the plaintiff then those words by reason of the extrinsic facts mean:
[T]here were reasonable grounds to believe that the second plaintiff, as owner and controller of the JWH Group of Companies, had caused not to be paid a lawful debt of approximately $700,000 then due to J‑Corp and Kimpura, failing to support his corporate businesses at a time when funds needed to satisfy the debt were not available to the JWH Group of Companies (the second Polly Peck imputation)
and the said words were true. In [10A.2] the defendant pleads that the words in the article in their natural ordinary meaning carried the same meaning and are true.
The plaintiff seeks to strike out the Polly Peck defences in [4B.2] and [10A.2] of the amended defence on the same grounds on which he applies to strike out the first Polly Peck imputation. The plaintiff submits that the meaning pleaded by the defendant is not capable of arising from the publications, that the meaning pleaded by the defendant fails to state the precise act or condition asserted of or attributed to the plaintiff and the imputation is not a permissible variant of the plaintiff's imputation.

Is the second Polly Peck imputation capable of arising?

The plaintiff submits that the Spoken Words and the article both use the term 'he' and refer to the plaintiff's financial incapacity to pay as being the reason payment has not been made. The plaintiff submits that the imputation does not refer to the plaintiff not having the money to pay and does not attribute any fault to the plaintiff not paying. The plaintiff says that the concepts of 'causing not to be paid' as 'owner or controller of the JWH Group of Companies' cannot arise from the publications.
I will first consider the plea in [4B.2], that is the plea relating to the publication of the Spoken Words to Mr Prior. The defendant relies on the extrinsic facts to show that the Spoken Words bear the meaning pleaded in [4B.2]. Hence, it is necessary to consider the meaning of the Spoken Words to a person who knew the extrinsic facts.
The ordinary natural meaning of words is the meaning that an ordinary, reasonable recipient would understand. It is not the meaning actually understood by the listener. However, the characteristics of the listener may be relevant to meaning. In Drummond‑Jackson v British Medical Association [1970] 1 All ER 1094 the England and Wales Court of Appeal considered whether an article published in the British Medical Journal was capable of bearing a meaning defamatory of the plaintiff dentist. The article made an attack upon the plaintiff's technique for anaesthesia. Lord Denning said that the question that arose was:
[A]re these words reasonably capable of being understood as being defamatory of the plaintiff? Understood, that is, by the sort of people likely to read them. These are, I take it, the medical men who read the British Medical Journal (1099).
Sir Gordon Willmer referred to the importance of considering the person, or class of persons, whose reaction to the publication should be the test of the wrongful character of the words used. His Honour considered that, because the article was of a highly technical nature, dentists were the class of persons whose reaction to the publication was to be considered (1106).
In Radio 2UE Sydney Pty Ltd v Chesterton [2008] NSWCA 66 McColl JA noted that the approach of Willmer J in Drummond‑Jackson has been applied in some Australian cases: Switzerland Australia Health Fund Pty Ltd v Shaw (1988) 81 ALR 111; FAI General Insurance Co Ltd v RAIA Insurance Brokers Ltd (1992) 108 ALR 479; Nixon v Slater & Gordon [2000] FCA 531; (2000) 175 ALR 15 and Morgan v Mallard (1997) 68 SASR 184 [125] ‑ [127]. Spigelman CJ said at [10] that such an approach receives significant support in the judgment of Callinan and Heydon JJ in John Fairfax Publications Pty Ltd v Gacic [2007] HCA 28; (2007) 230 CLR 291. That approach was referred to by French CJ, Gummow, Kiefel and Bell JJ without apparent disapproval in Radio 2UE Sydney Pty Ltd v Chesterton [2009] HCA 16; (2009) 83 ALJR 654 [31].
In this case, where the Spoken Words were published to only one person, it may be relevant to consider that the recipient of the publication was a finance journalist. That was not argued in this case and I will not consider it further except to observe that it is a matter that may be relevant to determining the meaning of the words complained of.
Mr Prior knew that J‑Corp and Kimpura had issued a writ against the plaintiff and a number of billed companies for sums totalling approximately $700,000 pursuant to certain deeds. Mr Prior asked the defendant, 'What's this writ by J‑Corp and Kimpura suing Walter for about $700,000 all about?' The defendant's response included 'I think he doesn't want to pay because he hasn't got the money'. The response included the statement that BGC will only supply Walter's new group on a cash and delivery basis. A reasonable person in the position of Prior would have understood 'Walter's new group' to include, if not confined to, a group of related companies. It is arguable that a reasonable person in the position of Mr Prior would have understood the statement 'he doesn't want to pay because he hasn't got the money' to refer to money owing by a company, or companies, that was, or were, controlled by the plaintiff or in which the plaintiff had a substantial holding and influence. At least, the contention is not manifestly untenable.

The meaning that the plaintiff, as owner and controller of the JWH group of companies, had caused not to be paid a lawful debt of approximately $700,000 then due to J‑Corp and Kimpura is reasonably capable of arising from the Spoken Words combined with the extrinsic facts. In the context of the Spoken Words and the extrinsic facts, the imputation means that the plaintiff, as owner and controller of a group of companies, had caused those companies, or some of them, not to pay the lawful debt, that is the plaintiff was the cause of the debt not being paid and had brought about the debt not being paid. At least, the contention is not manifestly untenable.
In the course of the hearing senior counsel for the defendant drew attention to the words 'The reason that he does not want to pay is because he does not have the money to pay' being qualified by the words 'I think'. Reports of hearsay are treated in the law of defamation as direct assertions. This is the repetition rule which is 'designed to prevent a jury from deciding that … a publication which conveys rumour, hearsay, allegation, repetition … is true or alternatively bears a lesser defamatory meaning than would attach to the original allegation itself': Stern v Piper [1997] QB 123, 135 ‑ 136. The same approach is taken where a defendant, rather than purporting to report what someone else has said, simply asserts what he believes – again, he must prove the truth of the belief, not just that he believed it: Gatley on Libel and Slander (11th ed) [11.4]. The authors of the eleventh edition of Gatley go on to say that this does not mean that wherever a defendant makes a statement implicating a person with wrongdoing, it must be proved that the person was guilty of the wrongdoing. On its proper interpretation the statement may convey merely that there are reasonable grounds to suspect the person or grounds for investigation of his conduct.
The Spoken Words are reasonably capable of giving rise to the meaning that there are reasonable grounds to believe that the plaintiff had caused the debt not to be paid rather than the meaning that the plaintiff had, as a matter of fact, caused the debt not to be paid. At least, the contention that the Spoken Words are reasonably capable of giving rise to the 'reasonable grounds to believe' imputation is not manifestly untenable and should not be struck out at this interlocutory stage.
The article does not contain some of the extrinsic facts known to Mr Prior. The article does not say that the writ was issued by J‑Corp and Kimpura against a number of companies as well as the plaintiff. The article says that two of Mr Buckeridge's companies have sued the plaintiff for about $700,000. That arguably makes it less likely that an ordinary reasonable reader would have understood the words 'I think he doesn't want to pay because he hasn't got the money' to refer to the plaintiff causing companies he owned and controlled not to pay. However, the article goes on to refer to BGC having difficulty being paid by JWH and only being willing to supply the plaintiffs' new group as a cash on delivery basis. The article goes on to refer to the plaintiff saying that his group had withheld some money recently because BGC was slow in paying rebates for bulk discounts on building materials. It is not manifestly untenable that the article is reasonably capable of giving rise to the meaning that the plaintiff, as owner and controller of a group of companies, had caused not to be paid the debt of approximately $700,000 then due to J‑Corp and Kimpura.
It is not manifestly untenable that the article reasonably gives rise to the meaning that there were reasonable grounds to believe that the plaintiff had caused the debt not to be paid. That is, it is not manifestly untenable that the article reasonably gives rise to a meaning of 'reasonable grounds to believe' that the plaintiff had caused the debt not to be paid rather than the meaning that, as a matter of fact, the plaintiff had caused the debt not to be paid.

Is the second Polly Peck imputation sufficiently precise?

The second Polly Peck imputation can be considered to mean that there were reasonable grounds to believe the following elements:
1.The plaintiff was the owner and controller of the JWH group of companies;
2.The plaintiff had caused the group of companies not to pay a lawful debt of approximately $700,000 owing by the group to J‑Corp and Kimpura;
3.The plaintiff had failed to support the group when funds needed to satisfy the debt were not available to the group.
In Buckeridge v Walter the Court of Appeal considered an imputation that:
Companies in the JWH group of companies owned and controlled by the plaintiff and named as defendants in the Supreme Court writ as liable to pay to J‑Corp and Kimpura the sum of approximately $700,000 had not paid the sum because they did not have the money to do so.
McLure JA, with whom Buss JA agreed, said:
I will assume in the appellant's favour that the imputation alleges that companies owned and controlled by [the plaintiff] did not have the money to pay a presently due and owing debt of around $700,000. The focus of the imputation is on the condition of the companies, being their inability to pay the specified debt. The reader is left to speculate as to the precise act or condition asserted of or attributable to [the plaintiff]. It is unclear whether it is intended to relate to, inter alia, his competence as a director, a possible breach of his duty as a director or his personal financial position. The Master inferred that it was intended, in general terms, to be an adverse reflection on [the plaintiff's] personal financial reputation. Although there is some support for that view in oral submissions made on behalf of the appellant at the hearing, it is not supported by the particulars of justification (which are confined to proving the companies' inability to pay the debt) or the written submissions in the appeal (which enigmatically suggest that the respondent had 'responsibility' for the actions of the corporate group, which I take to be a reference to the failure to pay the specified debt) [17].
I find that the second Polly Peck imputation fails to express the precise act or condition asserted of, or attributed to, the plaintiff. There are two threads to the imputation. The first is the condition of the companies and their inability to pay the debt. The second thread is the conduct of the plaintiff in causing the companies not to pay the debt and failing to support them. The allegation that the plaintiff had caused the companies not to pay the debt at a time when funds were not available to the companies to pay the debt does not adversely reflect on the propriety of the plaintiffs' conduct. An ordinary reasonable listener would not think that a person had acted improperly in not causing a company that he owned and controlled to pay a debt in circumstances where the company did not have the funds available to pay the debt.
The heart of the allegation in the imputation is that the plaintiff failed to support his corporate businesses, that is he failed to support the companies by advancing to them his personal funds or using his personal assets or credit to obtain funds for the companies by way of loan or otherwise. However, the imputation fails to express the precise act or condition asserted of, or attributed to, the plaintiff. It is not clear whether the sting of the imputation is intended to relate to the plaintiffs' personal financial position and his inability to 'support his corporate businesses' or some lack of business morality in failing to 'support his corporate businesses' when he was able to do so.
The sting of the imputation is made no clearer by the particulars of justification. Most of the particulars relate to the financial situation of the companies. The particulars then follow the imputation in that they say:
(9)The plaintiff did not pay or caused to be paid the sum demanded to J‑Corp and Kimpura;
(10)… the second plaintiff, as the person ultimately responsible for the operation of Oswald Homes, and the sole director of RBC and WA Country, had caused not to be paid the lawful debt … then due to J‑Corp and Kimpura, failing to support his corporate businesses at a time when funds needed to satisfy the debt were not available to those companies.

Is the second Polly Peck imputation a permissible variation?

The second Polly Peck imputation is substantially different from the plaintiffs' imputation. The plaintiff would not be permitted to put to the jury the second Polly Peck imputation. The defendants' imputation is of a different character than the plaintiffs' imputation. That is so for substantially the same reasons that the first Polly Peck imputation is substantially different from the plaintiffs' imputation.

The third Polly Peck imputation

In [4B.3] and [10A.3] the defendant pleads the following imputation:
[T]he second plaintiff, as owner and controller of the JWH group of companies, had caused not to be paid a lawful debt of approximately $700,000 then due to J‑Corp and Kimpura, failing to support his corporate businesses at a time when funds needed to satisfy the debt were not available to the JWH group of companies.
I find that this imputation is reasonably capable of arising from the Spoken Words and the article. I find that the imputation fails to express the precise act or condition asserted of, or attributed to, the plaintiff. I find that the imputation is substantially different from, and an impermissible variant of, the plaintiffs' imputation. I make those findings for the same reasons as in relation to the second Polly Peck imputation.

Conclusion

For the reasons stated, [4A], [4B] and [10A] of the amended defence should be struck out.