Khan v Fairfax Media Publications Pty Limited
[2014] WASC 451
•3 DECEMBER 2014
KHAN -v- FAIRFAX MEDIA PUBLICATIONS PTY LIMITED [2014] WASC 451
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 451 | |
| Case No: | CIV:1389/2014 | 4 NOVEMBER 2014 | |
| Coram: | LE MIERE J | 3/12/14 | |
| 22 | Judgment Part: | 1 of 1 | |
| Result: | Application granted in part | ||
| B | |||
| PDF Version |
| Parties: | FAROOQ KHAN FAIRFAX MEDIA PUBLICATIONS PTY LIMITED JONATHAN BARRETT |
Catchwords: | Practice and procedure Application to strike out the statement of claim in part Imputations fail to disclose a reasonable cause of action Imputations will prejudice, embarrass or delay the fair trial of the action |
Legislation: | Nil |
Case References: | Berezovsky v Forbes (No 2) [2001] EWCA Civ 1251 Corby v Allen & Unwin Pty Ltd [2014] NSWCA 227 Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135 Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716 Greek Herald Pty Ltd v Nikolopolous [2002] NSWCA 41; (2001) 54 NSWLR 165 Jeynes v News Magazines Ltd [2008] EWCA Civ 130 John v Guardian News & Media Ltd [2008] EWHC 3066 Lewis v Daily Telegraph [1964] AC 234 McAlpine of West Green v Bercow [2013] EWHC 1342 (QB) Nationwide News Pty Ltd v Warton [2002] NSWCA 377 Singleton v Ffrench (1986) 5 NSWLR 425 Taylor v Jecks (1993) 10 WAR 309 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
FAIRFAX MEDIA PUBLICATIONS PTY LIMITED
First Defendant
JONATHAN BARRETT
Second Defendant
Catchwords:
Practice and procedure - Application to strike out the statement of claim in part - Imputations fail to disclose a reasonable cause of action - Imputations will prejudice, embarrass or delay the fair trial of the action
Legislation:
Nil
Result:
Application granted in part
Category: B
Representation:
Counsel:
Plaintiff : Mr M L Bennett
First Defendant : Mr A T S Dawson
Second Defendant : Mr A T S Dawson
Solicitors:
Plaintiff : Bennett + Co
First Defendant : Carmel Galati
Second Defendant : Carmel Galati
Case(s) referred to in judgment(s):
Berezovsky v Forbes (No 2) [2001] EWCA Civ 1251
Corby v Allen & Unwin Pty Ltd [2014] NSWCA 227
Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135
Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716
Greek Herald Pty Ltd v Nikolopolous [2002] NSWCA 41; (2001) 54 NSWLR 165
Jeynes v News Magazines Ltd [2008] EWCA Civ 130
John v Guardian News & Media Ltd [2008] EWHC 3066
Lewis v Daily Telegraph [1964] AC 234
McAlpine of West Green v Bercow [2013] EWHC 1342 (QB)
Nationwide News Pty Ltd v Warton [2002] NSWCA 377
Singleton v Ffrench (1986) 5 NSWLR 425
Taylor v Jecks (1993) 10 WAR 309
- LE MIERE J:
Overview
1 The plaintiff, Farooq Khan, is a lawyer and managing director of three listed public companies - Orion Equities Ltd, Queste Communications Ltd and Bentley Capital Ltd. The defendant is the publisher of the Australian Financial Review and maintains six websites which I will refer to as the Websites. The defendant published in the Australian Financial Review an article about the plaintiff under the headline 'King of the Underperformers'. On the front page of the edition which featured the article was a photograph of the plaintiff with the caption 'Khan's Killing: The man behind the ASX's worst company'. I will refer to that article as the First Article. The defendant published on the Websites an article under the headline 'Farooq Khan: The man behind the ASX's worst-performing listed investment company' which was in substantially the same terms as the First Article. I will refer to that article as the First Website Article. The defendant published a further article in the Australian Financial Review about the defendant under the headline 'Khan and the mystery case of a beach house'. I will refer to that article as the Second Article. The defendant published on each of the Websites an article under the headline 'Farooq Khan and the case of the beachside property' which was in substantially the same terms as the Second Article. I will refer to that article as the Second Website Article. The plaintiff claims that each of the articles is defamatory of him and claims an injunction restraining their further publication and damages including aggravated damages.
2 The defendant has applied to strike out the imputations pleaded by the plaintiff on the ground that the paragraphs of the statement of claim which plead the imputations said to arise from the articles fail to disclose a reasonable cause of action against the defendant or will prejudice, embarrass or delay the fair trial of the action.
The issues
3 The issues on this application are whether the imputations pleaded by the plaintiff are capable of arising from the articles and whether they are likely to prejudice, embarrass or delay the fair trial of the action because the imputations are ambiguous or their meaning is uncertain. These issues require the court to apply the principles for determining the meaning of publications and when an imputation should be struck out on the ground that it is incapable of arising and when an imputation should be struck out on the ground that it is ambiguous or of uncertain meaning.
Meaning of words
4 In deciding what meaning the words complained of are capable of bearing the court should have in mind the guidance summarised by Sir Anthony Clarke MR in Jeynes v News Magazines Ltd [2008] EWCA Civ 130:
(1) The governing principle is reasonableness.
(2) The hypothetical reasonable reader is not naïve but he is not unduly suspicious. He can read between the lines. He can read in an implication more readily than a lawyer and may indulge in a certain amount of loose thinking but he must be treated as being a man who is not avid for scandal and someone who does not, and should not, select one bad meaning where other non-defamatory meanings are available.
(3) Over-elaborate analysis is best avoided.
(4) The intention of the publisher is irrelevant.
(5) The article must be read as a whole, and any 'bane and antidote' taken together.
(6) The hypothetical reader is taken to be representative of those who would read the publication in question.
(7) In delimiting the range of permissible defamatory meanings, the court should rule out any meaning which, 'can only emerge as the produce of some strained, or forced, or utterly unreasonable interpretation …' (see Eady J in Gillick v Brook Advisory Centres approved by this court [2001] EWCA Civ 1263 at paragraph 7 and Gatley on Libel and Slander (10th edition), paragraph 30.6).
(8) It follows that 'it is not enough to say that by some person or another the words might be understood in a defamatory sense.' Neville v Fine Arts Company [1897] AC 68 per Lord Halsbury LC at 73.
5 The second Jeynes principle does not mean that the court must always choose the least defamatory meaning available. In McAlpine of West Green v Bercow [2013] EWHC 1342 (QB) [66] Tugendhat J explained that if there are two possible meanings, one less derogatory than the other, whether it is the more or the less derogatory meaning that the court should adopt is to be determined by reference to what the hypothetical reasonable reader would understand in all the circumstances. Just as it would be unreasonable for a reader always to adopt a bad meaning when a non-defamatory meaning was available, so it would be unreasonable and naïve always to adopt the less derogatory meaning.
6 The sixth Jeynes principle draws attention to the nature of the hypothetical reasonable reader. In John v Guardian News & Media Ltd [2008] EWHC 3066 Tugendhat J referred to the 'educated readership' of the Guardian Weekend section. In this case I may have regard that the readership of the Australian Financial Review tends to be better informed and knowledgeable about financial and business affairs than the population at large. However, that is not significant in determining this application. The articles in question are written in a popular, journalistic style not an academic or technical style. The meaning conveyed to a reader does not depend upon understanding business or financial concepts. So far as the Websites are concerned, I am unable to conclude that the characteristics of the readers of those sites are significantly different from the population at large.
7 In Corby v Allen & Unwin Pty Ltd [2014] NSWCA 227 McColl JA, with whom Gleeson JA and Bathurst CJ relevantly agreed, set out the function of the judge in determining whether a publication is capable of conveying the pleaded imputations:
The judge's function at the capacity stage is to determine 'the outside boundaries of the possible range of meanings and [set] the "ground rules" for the trial': P Milmo and WVH Rogers, Gatley on Libel and Slander (11th ed 2008, Sweet & Maxwell) ('Gatley'), at [3.13] (see also [32.5]) citing Mapp v News Group Newspapers Ltd [1998] QB 520.
That standard by which the issue of law raised by the separate trial was to be determined was addressed in Favell v Queensland Newspapers Pty Ltd [2005] HCA 52 ; (2005) 79 ALJR 1716 ('Favell') where the plurality (Gleeson CJ, McHugh, Gummow and Heydon JJ, Kirby J generally agreeing) approved the following statement by McPherson JA in the Court of Appeal:
'Whether or not [the pleading] ought to and will be struck out [as disclosing no cause of action] is ultimately a matter for the discretion of the judge who hears the application. Such a step is not to be undertaken lightly but only, it has been said, with great caution. In the end, however, it depends on the degree of assurance with which the requisite conclusion is or can be arrived at. The fact that reasonable minds may possibly differ about whether or not the material is capable of a defamatory meaning is a strong, perhaps an insuperable, reason for not exercising the discretion to strike out. But once the conclusion is firmly reached, there is no justification for delaying or avoiding that step [at] whatever stage it falls to be taken.' (Emphasis added)
Accordingly, the capacity determination is 'an exercise in generosity not parsimony'; while it involves a 'matter of impression … the impression is not of what the words mean but of what a jury could sensibly think they meant': Berezovsky (at [16]) per Sedley LJ delivering the judgment of the court. Implicit in Sedley LJ's observation, is that the question of course is 'what a jury could sensibly think [the words] meant' to the ordinary reasonable reader.
One reason 'great caution' is mandated at the capacity stage, is because the conclusion which necessarily underpins a determination that the matter complained of is not capable of conveying the pleaded imputations is that 'no reader could reasonably understand the words to bear any meaning outside the range delimited … by the judge; and that it would be "perverse" for any jury to do so': Jameel v Wall Street Journal Europe SPRL [2003] EWCA Civ 1694 ; [2004] EMLR 89 ('Jameel') (at [9]) per Simon Brown LJ (Mummery and Mance LJJ agreeing).
Thus, the focus should be on the fact that the decision deprives the plaintiff of the opportunity to present his or her case to the jury, the importance of whose constitutional role in this area as representatives of the community is frequently emphasised: see John Fairfax Publications Pty Ltd v Rivkin [2003] HCA 50 ; (2003) 77 ALJR 1657 ('Rivkin') (at [2]) per Gleeson CJ (who also agreed with Callinan J); (at [184]) per Callinan J. The significance of the jury's role warrants the application of a 'high threshold of exclusion': Jameel (at [14]) per Simon Brown LJ.
In Favell (at [14]–[15]), the plurality appeared to apply a capacity test which asked whether challenged imputations 'could reasonably be found by a jury'. This is the test adopted in this court: see Marsden (at 164) per Hunt CJ at CL (Mason P and Handley JA agreeing); Griffith v John Fairfax Publications Pty Ltd [2004] NSWCA 300 (at [19](a)); Malcolm v Nationwide News Pty Ltd [2007] NSWCA 254; (2007) Aust Torts Reports 81–915 (at [14]) per Beazley JA (Basten JA and McClellan CJ at CL agreeing) [133] - [138].
The First Article and First Website Article
8 As I have said on the front page of the Australian Financial Review which featured the First Article was a photograph of the plaintiff with the caption 'Khan's Killing: The man behind the ASX's worst company'. The article appears under the headline 'King of the Underperformers' and below it appears the sub-headline 'Investigation Failing Company's Queste Orion and Bentley pay chairman Farooq Khan $527,500 pa'. The article is accompanied by a photograph of the plaintiff with the caption 'Cashing In' and a table entitled 'The Performance of Three Companies Chaired by Perth Businessman Farooq Khan'. The table shows the poor performance of the companies by reference to figures including total shareholder return, market capitalisation, August premium/discount to NTA (%) and Farooq Khan's base salary.
9 The First Website Article is the same as the First Article with the following differences. First, it appears under the headline: 'Farooq Khan: The man behind the ASX's worst-performing listed investment company'. Secondly, it does not have the sub-headline: 'Investigation Failing Company's Queste, Orion and Bentley pay Chairman Farooq Khan $527,500 pa'. Thirdly, it has sub-headlines which appear in bold type: 'Common thread is Farooq Khan', 'Traveling in Turkey, unavailable for comment', 'Who benefits from company assets', 'Signs of cracks at Queste' and 'Capital-rich and income-poor'.
10 The themes of the First Article and the First Website Article are as follows. The three companies, Orion, Bentley and Queste, have performed very badly by the measures of total shareholder return and share price. On one measure Orion is the worst performing listed investment company on the ASX. The three companies have a common thread. All are chaired by the plaintiff, a corporate raider. The plaintiff has made a lot of money out of the companies. He should receive $487,500 this financial year from his executive chairman fees from the companies. In 2005 Orion bought a residential property in Mandurah for $3.8 million. It was recently valued at $1.49 million. The plaintiff now resides at the residence which he rents from Orion under an agreement entered into on 1 June. A spokesman for Orion has not disclosed who rented the property before 1 June and says it is irrelevant. The plaintiff has declined an opportunity to clarify the matter. The Financial Review does not suggest whatever previous arrangements were in place breached any conditions - it has never been made clear what they were. It raises the perplexing question of who is really benefiting from the assets that the company invests in.
The First Article and First Website Article imputations
11 In his statement of claim (SOC) [6] the plaintiff pleads that the First Article gives rise to the following imputations:
6.1 the Plaintiff as director and Chairman of Orion, is dishonest in his dealings with shareholders of Orion;
6.2 the Plaintiff as director and Chairman of each of Queste, Orion and Bentley, preferred his own financial interests to the interests of shareholders of these Companies;
6.3 the Plaintiff as director and Chairman of each of Queste, Orion and Bentley is greedy; and
6.4 the Plaintiff as director and Chairman of each of Queste, Orion and Bentley is the most incompetent executive director and Chairman of any company whose securities are or were listed for quotation on the ASX.
- At SOC [11] the plaintiff pleads that the First Website Article gives rise to the same imputations.
Imputations 6.1 and 11.1
12 The imputation pleaded by the plaintiff at [6.1] in relation to the First Article and [11.1] in relation to the First Website Article is that:
The plaintiff as director and Chairman of Orion, is dishonest in his dealings with shareholders of Orion.
13 The imputation is of general dishonesty in the plaintiff's dealings with shareholders of Orion. The plaintiff submits that whilst the publications must be read as a whole, the imputation arises from the part of each article that refers to the beachside residence and in particular the following:
The recent rental disclosure makes shareholders aware their executive chairman lives at their investment property. Orion is required to disclose such rental agreements when they are made with its own executive staff.
But did Khan stay there before June 1?
'It is completely not relevant,' Ho says.
So, who previously rented the property?
'It's not appropriate to disclose,' he says.
The sensitivity behind Ho's response perhaps arises from the possibility that, if Khan had stayed there previously, it was unknown to shareholders.
Ho and Khan declined an opportunity to clarify the matter. The Financial Review does not suggest whatever previous arrangements were in place breached any conditions - it [has] never been made clear what they were.
Who benefits from company assets
And it raises the perplexing question of who is really benefiting from the assets that the listed company invests in?
14 The defendant challenges the imputation on the grounds that it is bad in form and incapable of arising from the articles. I will first consider whether the imputation is bad in form. It is common ground that the imputation derives, if at all, from that part of each article which suggests that if the plaintiff had stayed at the beach house before 1 June he had not disclosed it to Orion's shareholders. The defendant says that if that is said to give rise to an impression of some form of dishonesty, or suspected dishonesty, the imputation should specify it. The defendant says that the imputation is of general dishonesty, is of guilt rather than suspicion and is in the present tense.
15 The plaintiff submits that the articles convey that the plaintiff acted dishonestly by failing to disclose to the shareholders that he stayed at the beach house prior to 1 June. The plaintiff says that to fail to be open and candid is to be dishonest.
16 The plaintiff must plead the precise act or condition asserted of, or attributed to, him, or with which he is charged: Taylor v Jecks (1993) 10 WAR 309, 319. The requirement of precision raises questions of degree. In Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135, 137 - 138 Gleeson CJ made the following points:
• Almost any attribution of an act or condition to a person is capable of both further refinement and further generalisation. In any given case a judgment needs to be made as to the degree of particularity or generality which is appropriate to the occasion, and as to what constitutes the necessary specificity.
• Whilst the principles relevant to the plaintiff's obligation remain constant their practical application may depend upon the facts and circumstances of the given case, and the relevant circumstances may include the manner in which the defendant has expressed the defamatory matter.
• The requirement upon a plaintiff cannot go beyond doing the best that can reasonably be done in the circumstances.
• The question is ordinarily one to be resolved by considerations of practical justice in the circumstances of a particular case, rather than considerations of the possibility of linguistic refinement.
• The issue which has to be decided in the particular case is whether there is likely to be confusion either at the pleading stage or at the trial in relation to the meaning for which the plaintiff contends.
Furthermore, an imputation must be read in the context of the publication complained of and the context may clarify the sting of the imputation: Greek Herald Pty Ltd v Nikolopolous [2002] NSWCA 41; (2001) 54 NSWLR 165 [18] - [22].
17 Language is an imprecise thing. Many words may carry a range of reasonable meanings. The narrow meaning of dishonesty is disposed to lie, cheat, defraud or steal. The broad meaning may extend to failing to be open and candid. The articles emphasise that the plaintiff has made plenty of money from the companies and that the return to shareholders has been very poor. It is not clear that the imputation of dishonesty refers to a failure to be open and candid with shareholders about the beach house rather than lying, cheating, defrauding or stealing from the shareholders or some other shade of dishonesty. The defendant does not know what it will have to prove to justify the imputation. Paragraph 6.1 and 11.1 should be struck out on the ground that they may prejudice, embarrass or delay the fair trial of the action.
18 I also uphold the defendant's second challenge to the imputation - that it is not capable of arising from the articles. First, the articles do not impute dishonesty to the plaintiff. The plaintiff says that the Macquarie Dictionary definition of to be 'honest' includes to be 'open' and 'candid'. Accordingly, the plaintiff says that to be 'dishonest' is a failure to be open and candid. The Macquarie Dictionary on-line definition of 'dishonest' is 'not honest, disposed to lie, cheat, or steal, a dishonest person'. The Oxford English Dictionary on-line definition of dishonest is 'wanting in honesty, probity, or integrity; disposed to cheat or defraud; thievish'. As I have said, dishonesty has a range of meanings. It is for the judge to determine the meaning of the pleaded imputation: Singleton v Ffrench (1986) 5 NSWLR 425, 428 Mahoney JA. The meaning of dishonest in imputation 6.1 [and 11.1] is the usual meaning of disposed to lie, cheat, defraud or steal. The articles are not capable of meaning that the plaintiff is dishonest in that sense.
19 Secondly, the articles are not capable of giving rise to the meaning that the plaintiff is dishonest 'in dealings with shareholders'. The article does not refer to any dealings between the plaintiff and the shareholders in relation to the Mandurah house. A failure to disclose to the shareholders who rented the beach house before 1 June cannot properly be described as dealings with the shareholders.
20 Thirdly, the articles are not capable of giving rise to the meaning that the plaintiff is guilty of the impugned behaviour, that is being dishonest in dealings with shareholders. The articles are capable of giving rise to no more than that there are grounds to suspect that the plaintiff is guilty of the impugned behaviour or there are grounds for investigating whether he is guilty of that behaviour, not that he is guilty of that behaviour. The articles say that no suggestion is made that 'whatever previous arrangements were in place breached any conditions' because 'it [has] never been made clear what [those arrangements] were'. The article suggests nothing more than the possibility that the plaintiff stayed at the beach house. This precludes an imputation of guilt which depends on the articles conveying that the plaintiff did stay there and that he deliberately concealed that from shareholders.
21 Fourthly, the articles are not capable of giving rise to an imputation of general dishonesty, as distinct from being dishonest in his dealings with shareholders in the sense of failing to disclose matters to them in relation to his use of the beach house. Whether a particular allegation of wrongdoing carries a general charge depends on the facts of each case. In Nationwide News Pty Ltd v Warton [2002] NSWCA 377 Heydon JA explained that, although it has been recognised as a general proposition that a publication dealing with a specific incident is incapable of supporting a general imputation, that proposition does admit of exceptions in particular circumstances. The task is to pay close and careful attention to the specific circumstances with a view to determining whether the specific conduct alleged in a particular case, unlike specific incidents alleged in other cases, can support a general imputation. In Nationwide News Pty Ltd v Warton Heydon JA said:
The article does not suggest that the plaintiff's act is other than an isolated act of dishonesty, but it does suggest that it is a most serious act of dishonesty. … While a person can do a dishonest thing without being thought a dishonest person, some things are so dishonest that one can infer that only a dishonest person would do them. The activities attributed to the plaintiff in the article are so extensive, serious and risky that it is open to ordinary reasonable readers to infer that only a dishonest person would have done them [61].
22 The charge against the plaintiff is that he has failed to disclose to the shareholders whether he resided at the Mandurah house before 1 June, who resided there and what were the arrangements with Orion. At most, the articles suggest the plaintiff may be guilty of an isolated act of dishonesty but they do not suggest that it is 'a most serious act of dishonesty' sufficient to give rise to the inference that only a dishonest person would do it. The rest of the article refers to the plaintiff receiving high salaries as a director and chairman of companies that have performed badly but do not suggest that the plaintiff has been dishonest. The imputation of general dishonesty in the plaintiff's dealings with Orion shareholders is not capable of arising from the publication. Paragraphs 6.1 and 11.1 should be struck out on the ground that they disclose no reasonable cause of action.
Imputations 6.2 and 11.2
23 Imputation 6.2 [and 11.2] is:
The plaintiff as director and Chairman of each of Queste, Orion and Bentley, preferred his own financial interests to the interests of shareholders of these Companies.
- The defendant says that the imputation is not capable of arising. The defendant says that there is no suggestion in the articles that the plaintiff has preferred his financial interests to the interests of shareholders of each of the companies named. The defendants say that the mere fact that an executive chairman is paid well while the company does not perform very well over a period cannot, without more, suggest some form of misconduct on the part of the executive chairman.
24 The plaintiff says that whilst the publication must be read as a whole the imputation arises from at least the following words:
The three companies have a common thread. All are chaired by Perth corporate raider Farooq Khan.
And despite the companies' overt failings, Khan has made plenty of money from them.
In fact, he earns more than half a million dollars a year from his three executive roles.
…
Fallout from that poor Mandurah investment is not reflected in Khan's pay at Orion, where he continues to receive a base salary of $272,500.
…
In the meantime, Khan should receive $487,500 this financial year, solely from the executive chairman wages received from Queste, Orion and Bentley.
25 On a strike out application the court is to decide no more than whether the plaintiff's pleaded imputation is arguable or unarguable. The exercise is one of impression, that is the impression of what a trier of fact could sensibly think the words mean. Such an exercise is an exercise in generosity, not in parsimony: Berezovsky v Forbes Inc [16].
26 The First Article is accompanied by the caption 'Khan's Killing, the Man Behind the ASX's Worst Company' and the headline 'King of the Underperformers'. The caption suggests that the plaintiff has made a quick and large profit out of the companies whilst they have performed very badly. The tone of the article is derogatory of the plaintiff.
27 In my opinion imputations 6.2 and 11.2 are not so unarguable that they should be struck out. Executive remuneration has become a widespread topic of conversation in Australia. Since the global financial crisis there has been increasing scrutiny of executive remuneration. In everyday conversations and in public utterances disquiet, even outrage, at high executive remuneration is expressed from time to time. It is true that the mere fact that an executive chairman is paid well while the company does not perform well over a period cannot, without more, suggest some form of misconduct on the part of the executive chairman. However, the something more may be the structure and tone of the article. Many articles are devised on the 'no smoke without fire' premise, so that many allegations take a form which might be construed as alleging improper behaviour though on detailed analysis the allegation is not directly made. In Lewis v Daily Telegraph [1964] AC 234, 285 Lord Devlin said:
It is not, therefore, correct to say as a matter of law that a statement of suspicion imputes guilt. It can be said as a matter of practice that it very often does so, because although suspicion of guilt is something different from proof of guilt, it is the broad impression conveyed by the libel that has to be considered and not the meaning of each word under analysis. A man who wants to talk at large about smoke may have to pick his words very carefully if he wants to exclude the suggestion that there is also a fire; but it can be done. One always gets back to the fundamental question: what is the meaning that the words convey to the ordinary man: you cannot make a rule about that. They can convey a meaning of suspicion short of guilt; but loose talk about suspicion can very easily convey the impression that it is a suspicion that is well founded.
28 The articles are written in the context of a widespread perception that executive remuneration should reflect corporate performance. The articles themselves link the plaintiff, the companies' poor performance and the plaintiff's high salaries by juxtaposing the companies' poor performance with the plaintiff's high salaries. The article is generally derogatory of the plaintiff. It is not unarguable that the articles give rise to the meaning that the plaintiff preferred his own interests to those of the shareholders.
Imputations 6.3 and 11.3
29 The imputation is that:
The plaintiff as director and chairman of each of Queste, Orion and Bentley is greedy.
30 The defendant submits that the imputation is bad in form and that any attempt to make it more specific will reveal that it does not differ in substance from imputation 6.2. It therefore follows, the defendant submits, that for the same reasons given in relation to imputation 6.2 [11.2] the imputation is not capable of arising.
31 The plaintiff says that whilst a director could arguably be greedy as a result of preferring his own financial interests over the interests of shareholders, it is conceivable that a director could prefer his own financial interests over the interests of shareholders without such conduct being greedy.
32 I have referred earlier in these reasons to the principles relating to the pleading of imputations set out in Taylor v Jecks, Drummoyne Municipal Council v Australian Broadcasting Corporation and Greek Herald Pty Ltd v Nikolopoulos. Applying those principles to imputation 6.3 [11.3] in the context of the First Article and the First Website Article, I find that the imputation is not sufficiently specific.
33 The articles say that the plaintiff has made a lot of money out of the companies. The articles say that the plaintiff resides at the beachside residence and rents it from Orion. The articles go on to question who is really benefiting from the assets that the company invests in and arguably suggests that it is the plaintiff. When viewed in context the imputation does not identify how or why the plaintiff is greedy. This is not a case where the plaintiff cannot be more specific. The articles do not state expressly that the plaintiff is greedy. The articles do not use the word 'greedy'. The meaning that the plaintiff is greedy arises, if it arises at all, as an inference drawn from the articles. The plaintiff can, and should, specify in what way the plaintiff is said to be greedy. The plaintiff submitted that a director might arguably be greedy as a result of preferring his own interests to the interests of shareholders. Counsel for the plaintiff did not elaborate in what other ways it might be inferred that the plaintiff is greedy. At trial it is open to the plaintiff to say that the articles mean that he is greedy in that in receiving high salaries when shareholders receive poor returns he prefers his interests to the interests of the shareholders. It is also open to the plaintiff to say that the articles mean that he is greedy in that he receives high salaries when shareholders are receiving poor returns or that he receives high salaries in excess of the true value of his services or that the articles mean that he is greedy in some other, as yet unspecified, way.
34 There is likely to be confusion at the pleading stage or at the trial in relation to the meaning for which the plaintiff contends if the imputation is not pleaded with greater specificity. If the imputation is that the plaintiff is greedy in that he prefers his own interests over those of the shareholders then the imputation is merely repetitive of imputation 6.2 [11.2] and should be struck out. If the imputation is that the plaintiff is greedy in some other way then the defendant needs to know in what other way before it can consider pleading truth. Further, if the defendant pleads truth, the court needs to know in what way it is said the plaintiff is greedy in order to determine the admissibility of evidence at trial.
35 Imputations 6.3 and 11.3 should be struck out on the ground that they are not pleaded with sufficient specificity and may therefore prejudice, embarrass or delay the fair trial of the action.
Imputations 6.4 and 11.4
36 The imputation is:
The plaintiff as director and Chairman of each of Quest, Orion and Bentley is the most incompetent executive director and Chairman of any company whose securities are or were listed for quotation on the ASX.
- The plaintiff has proposed to amend the imputation to refer to 'any licensed investment company' rather than 'any company'.
37 The defendant says that the imputation is not capable of arising for the following reasons. The articles do not suggest that the plaintiff is or has been incompetent. The imputation is pleaded on the false premise that poor performance of itself - even the worst performance by some particular measure - equates to incompetence on the part of management. If the article sets out a history of negligent decisions on the part of the plaintiff or a lack of ability to fulfil his role, that would be different. However, the article suggests that, to the extent that bad decisions were made, it is only with the benefit of hindsight that one can say that. And there are external causes for the poor state of the company such as declining markets and other setbacks which are entirely independent of the plaintiff's skill as an executive.
38 The plaintiff says that the article attributes the poor performance of the companies to the plaintiff. The plaintiff says that this connection arises from at least the following matters:
• the reference to the plaintiff as the 'King' of the underperformers in the title of the First Article;
• the caption 'Khan's Killing: The man behind the ASX worst company' on the front page of the First Article;
• the headline of the First Website Article: 'Farooq Khan: The man behind the ASX worst-performing listed investment company';
• the prominent photograph of the plaintiff;
• the sub-headline 'The performance of 3 companies chaired by Perth businessman Farooq Khan' followed by a graph displaying mostly decreasing annualised shareholder returns over a five year period;
• the sub-headline in the 'First Website Article' which reads 'Common thread is Farooq Khan'.
39 In deciding what meanings words are capable of bearing for the purposes of a strike out application, the task of the court is to ascertain whether the pleaded imputation falls within the range of legitimate meanings. The exercise is one of impression. The impression is not of what the words mean but of what the trier of fact could sensibly think they meant. Such an exercise is an exercise in generosity, not in parsimony: Berezovsky v Forbes (No 2) [2001] EWCA Civ 1251 [16] (Sedley LJ).
40 Poor corporate performance does not necessarily mean that the chairman or directors are poor directors or incompetent. There may be industry specific or other external factors or macro-economic reasons for the company's poor performance. However, one of the most obvious features of the article is the connection it makes between the three badly performing companies and the plaintiff. Arguably, the article may be taken to imply that the companies' poor performance has been caused by or reflects the plaintiff's incompetence. An ordinary reasonable reader might consider that the article would not feature the plaintiff's connection with the companies and the companies' poor performance if it was not implying that the poor performance was caused by the plaintiff's incompetence: see Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716 [8] (Gleeson CJ, McHugh, Gummow & Heydon JJ).
41 Over-elaborate analysis of the articles is best avoided when considering whether the articles are capable of giving rise to the pleaded imputation. The articles are about the plaintiff. They feature prominently the poor performance of the three companies. The articles say that the common thread of the three companies is the plaintiff. The articles, including their headlines and captions, are derogatory of the plaintiff. The range of permissible or legitimate meanings of the articles include that the plaintiff is incompetent as director and chairman of the companies. The words 'the most incompetent executive director and chairman … ' may seem to be extravagant. However, the Financial Review article has the headline 'King of the underperformers' and the caption 'The man behind the ASX worst company' (emphasis added). The First Website Article has the headline: 'Farooq Khan: The man behind the ASX worst performing listed investment company' (emphasis added). Having regard to those headlines and captions it is not unarguable that an ordinary reasonable reader may have formed the impression that the plaintiff is the most incompetent executive director and chairman of any listed investment company whose securities were listed for quotation on the ASX at the time of the articles.
42 However the imputation in its present form is incapable of arising or is embarrassing. The imputation is expressed both in the present tense - 'are' - and in the past tense - 'were'. The element of the imputation expressed in the present tense must refer to the time of the publication. It appears that the words 'are or were listed for quotation on the ASX' refer to companies listed on the ASX when the articles were published and at any time in the past. There is no reference in the articles to the companies being the worst performing of any company whose securities have ever been listed for quotation on the ASX. The articles say that Orion 'is the worst-performing listed investment company on the Australian Securities Exchange according to the ASX's most recent update' (emphasis added). Bentley is described as 'one of the worst-performers of more than 60 LICs on the ASX' (emphasis added). Alternatively, if the words 'are' or 'were' do not mean at the time the articles were published and at any time in the past then it is not clear to what time or period they refer. For that reason the imputation should be struck out.
Second Article and Second Website Article
43 The Second Article appeared under the headline 'Khan and the mystery case of a beach house' and the sub-headline 'Shareholders are left to wonder just who enjoyed one of Orion Equities' investments, if the chairman didn't'. The article is accompanied by a photograph of the plaintiff riding his bike with the caption 'Orion Equities executive chairman Farooq Khan Rides his cycle near the company's renovated beach house' and a photograph of a car with the caption 'and parks his Porsche … in the drive'.
44 The theme of the article appears in the first paragraph:
It is the intriguing question for long-suffering shareholders of listed investment company Orion Equities. How long and how often has their executive chairman, Farooq Khan, stayed at a nicely renovated, beachside property purchased on their behalf?
- The article then continues as follows. The plaintiff appears to have used the property as a weekender without shareholder's knowledge. The plaintiff was part of the three person investment committee that decided to buy the property for $3.8 million. The property has been renovated and revalued at $1.5 million. It has never been disclosed to whom it was rented. The plaintiff and his spokesman, Ho, have repeatedly declined to say if the plaintiff stayed there during that period. The Financial Review has 50 photos in addition to the accompanying photographs of either the plaintiff or his family's belongings at the house. The Financial Review does not suggest there has been a breach of related party disclosure regulations but the plaintiff and Ho will not clarify to shareholders what arrangements were in place that appear to have allowed the plaintiff to stay at the house without requiring it to be disclosed. Orion shareholders have suffered losses on their shares which have been weighed down by poor performing investments such as the Mandurah property.
45 The Second Website Article appears under the headline 'Farooq Khan and the case of the beachside property'. It features a photograph of the plaintiff on a bicycle with the caption 'Orion Equities executive chairman Farooq Khan cycles near the company's renovated beach house'. The text of the Second Website Article is the same as the Second Article.
The Second Article and Second Website Article imputations
46 At SOC [15] the plaintiff pleads that the Second Article gives rise to the following imputations:
15.1 the Plaintiff as director and Chairman of Orion, is dishonest in his dealings with shareholders of Orion;
15.2 the Plaintiff as a director and Chairman of Queste, Orion and Bentley, prefers his own financial interests over the interests of the shareholders of these Companies; and
15.3 the Plaintiff as a Director and Chairman of Orion has refused to be accountable to shareholders of Orion in relation to his conduct.
- At SOC [20] the plaintiff pleads that the Second Website Article gives rise to the same imputations.
Imputations 15.1 and 20.1
47 The imputation is:
The plaintiff as director and chairman of Orion, is dishonest in his dealings with shareholders of Orion.
48 The defendants say that the imputation is bad in form. If the way in which the material concerning the plaintiff's use of the beach house is said to give rise to an impression of some form of dishonesty, or suspected dishonesty, the imputation should specify it. Also, the information in the articles about the beach house arrangements is not sufficient to convey an imputation of dishonesty expressed as an imputation of guilt in general terms and in the present tense. Further, the imputation refers to 'dealings with shareholders', yet there is no reference to the plaintiff having had any such dealings.
49 The plaintiff says that the imputation conveyed by the articles is two-fold:
• the plaintiff stayed in the Mandurah residence owned by Orion shareholders prior to 1 June; and
• he failed to disclose this matter to Orion shareholders.
The plaintiff says that the following words are particularly significant:
Now, the Financial Reviewcan reveal that Khan appears to have used a beachside property, owned by Orion shareholders, a weekender without their knowledge. (emphasis added)
The plaintiff says that the imputation may be susceptible to further linguistic refinement but there can be no confusion as to the meaning for which the plaintiff contends and therefore no basis for the imputation to be struck out.
50 The articles do convey to readers that the plaintiff stayed in the Mandurah beach house prior to 1 June and he failed to disclose that to Orion's shareholders. The articles are capable of being defamatory of the plaintiff. However, whether the pleaded imputation is sufficiently precise and is capable of arising are different questions.
51 In my opinion, the imputation is bad in form for the same reasons as imputations 6.1 and 11.1. The imputation may cause confusion as to the meaning for which the plaintiff contends. The plaintiff does not appear to contend that the articles mean that the plaintiff is dishonest in his dealings with shareholders in the sense of being disposed to lie, cheat, defraud or steal. However, the imputation does not make clear the sense in which the plaintiff is said to be dishonest.
52 Furthermore, the imputation is not capable of arising from the articles for similar reasons that imputations 6.1 and 11.1 are not capable of arising from the First Article and First Website Article. The articles do not impute to the plaintiff dishonesty in the sense of lying, cheating, defrauding or stealing. The articles do not refer to any 'dealings with shareholders' in relation to the beach house. The article conveys that the plaintiff has not disclosed to shareholders that he used the beach house before 1 June. However, that does not amount to 'dealings' with shareholders. The articles are not capable of giving rise to an imputation of general dishonesty as distinct from being dishonest in relation to a particular matter, that is failing to disclose his use of the beach house to shareholders.
Imputations 15.2 and 20.2
53 The imputation is:
The plaintiff as a director and chairman of Queste, Orion and Bentley, prefers his own financial interests over the interests of the shareholders of these companies.
- The defendant says that the imputation is incapable of arising for similar reasons as those argued in relation to imputations 6.2 and 11.2. The defendant says that nothing in the articles suggests that the plaintiff received any financial advantage in relation to renting or having stayed at the Mandurah beach house or that any such arrangements were to the detriment of Orion's shareholders.
54 The plaintiff says that the imputation arises as follows:
• as a result of the connection drawn by the article between the plaintiff's management of the companies and his drawing of large salaries despite the poor performance of the companies; and
• the assertion that the plaintiff stayed in the Mandurah property at various times prior to 1 June, without a lease and rent free.
It is arguable that the articles convey the meaning that the plaintiff used the beach house before 1 June and has failed to disclose to the shareholders who rented the property and how the plaintiff was able to and did use the property.
55 The imputation is the same as imputations 6.2 and 11.2. In my opinion, for the same reasons that it is not unarguable that imputations 6.2 and 11.2 are capable of arising from the First Article and First Website Article, it is not unarguable that imputations 15.2 and 20.2 are capable of arising from the Second Article and Second Website Article.
Imputations 15.3 and 20.3
56 The imputation is that:
The plaintiff as a Director and Chairman of Orion has refused to be accountable to shareholders of Orion in relation to his conduct.
57 The defendant says that the imputation is bad in form. If, it is submitted, it relates to the references in the articles to the plaintiff and Mr Ho declining to provide information about the plaintiff staying at the beach house, it can easily be cured by the imputation being made more specific by the addition of an appropriate clause. Without that specificity, the imputation is otherwise incapable of arising. The mere fact that there is good reason to think that the plaintiff may have stayed at the Mandurah property well prior to his lease of the premises on 1 June, but that he had not clarified any such arrangements with shareholders is not capable of supporting an imputation in such general terms; at most it could only imply that he had failed to be accountable to them in respect of the question as to whether or not he had stayed at the property prior to entering the lease. It does not go further so as to support a general imputation of the kind relied upon by the plaintiff.
58 The plaintiff contends that the imputation is clear and is twofold:
1. the plaintiff stayed in the Mandurah residence, which is owned by Orion shareholders, prior to 1 June; and
2. he failed to disclose this matter to Orion's shareholders.
59 The imputation is ambiguous and embarrassing. The imputation does not specify the conduct of the plaintiff for which he has refused to be accountable to shareholders. The imputation must be understood and construed in the context of the article. However, the article does not make it clear what is the conduct of the plaintiff for which he is refusing to be accountable to the shareholders. The conduct may be using the residence before 1 June or it may be something more. The plaintiff should specify the meaning of the articles with greater specificity.
60 I do not uphold the argument that the imputation is incapable of arising. The imputation may be capable of arising if the conduct of the plaintiff for which he has refused to be accountable to shareholders is specified.
Conclusion
61 Paragraphs 6.1, 6.3, 6.4, 11.1, 11.3, 11.4, 15.1, 15.3, 20.1, and 20.3 should be struck out. The plaintiff should have leave to re-plead.
2
11
1