Khan v Fairfax Media Publications Pty Limited [No 2]
[2015] WASC 221
•17 JUNE 2015
KHAN -v- FAIRFAX MEDIA PUBLICATIONS PTY LIMITED [No 2] [2015] WASC 221
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WASC 221 | |
| Case No: | CIV:1389/2014 | 9 JUNE 2015 | |
| Coram: | LE MIERE J | 17/06/15 | |
| 13 | Judgment Part: | 1 of 1 | |
| Result: | Defendants' applications are partially successful | ||
| B | |||
| PDF Version |
| Parties: | FAROOQ KHAN FAIRFAX MEDIA PUBLICATIONS PTY LIMITED JONATHAN BARRETT |
Catchwords: | Time limits on applications to strike out pleadings Sufficient precision of pleaded defamatory imputations Capacity of publication to give rise to imputation Whether imputation capable of being defamatory |
Legislation: | Nil |
Case References: | Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 Khan v Fairfax Media Publications Pty Limited [2014] WASC 451 Voelte v Australian Broadcasting Corporation [2015] NSWSC 210 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
FAIRFAX MEDIA PUBLICATIONS PTY LIMITED
First Defendant
JONATHAN BARRETT
Second Defendant
Catchwords:
Time limits on applications to strike out pleadings - Sufficient precision of pleaded defamatory imputations - Capacity of publication to give rise to imputation
Whether imputation capable of being defamatory
Legislation:
Nil
Result:
Defendants' applications are partially successful
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):
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Khan v Fairfax Media Publications Pty Limited [2014] WASC 451
Voelte v Australian Broadcasting Corporation [2015] NSWSC 210
1 LE MIERE J: The defendants have applied to strike out certain paragraphs of the re-amended statement of claim dated 30 March 2015 (RASOC), for leave to file the application and for the time to file the application to be extended to 19 May 2015. The defendants seek to strike out [6.2], [6.3], [6.5], [6.7], [11.2], [11.3], [11.5] and [11.7] of the RASOC. Those paragraphs plead imputations which the plaintiff says arise from the publications complained of which he says are defamatory of him.
Objections to affidavit
2 The application for leave to file the strike out application and for the time to file the application to be extended were supported by an affidavit of Timothy Senior sworn 28 May 2015. The plaintiff submitted that the affidavit of Mr Senior should be struck out or ruled inadmissible because it has not been witnessed according to law and is invalid, leave is required to file it which has not been granted and much of the evidence it purports to give is inadmissible. The defendants did not concede that the affidavit of Mr Senior was invalid or inadmissible but on 8 June 2015 filed and served an affidavit of Carmelina Galati sworn 8 June 2015. Counsel for the defendants stated that they did so to overcome the objections of the plaintiff to the affidavit of Mr Senior and to avoid a contest over its validity and admissibility. It is not necessary to determine the validity or admissibility of Mr Senior's affidavit and the use of court resources to do so is disproportionate to its utility.
3 The plaintiff objects to the affidavit of Ms Galati on the ground that it was filed out of time without leave and contains reference to conferral without leave of the court. The plaintiff makes other objections to the affidavit. I will permit the affidavit to be relied upon. In her affidavit Ms Galati deposes to the history of the court proceeding and communications between the solicitors for the plaintiff and the solicitors for the defendant in relation to the RASOC and the defendants' application to strike out paragraphs of it. Apart from the filing of documents at the court and the making of orders by the court the only matters in Ms Galati's affidavit to which I intend to refer are [33] to [44] which deal with the filing and service of the RASOC and communications between the solicitors for the plaintiff and the solicitors for the defendant in relation to the defendants' objections to the RASOC. The matters to which I will have regard are known to both parties and uncontroversial. There is no prejudice to the plaintiff in the court having regard to those matters.
Application is out of time
4 It is common ground that the defendants' application to strike out parts of the RASOC is out of time but there is a dispute about when the time for making the application expired. On 3 December 2014 I delivered reasons for striking out parts of the plaintiff's statement of claim: Khan v Fairfax Media Publications Pty Limited [2014] WASC 451 (Khan No 1).
5 I ordered that certain paragraphs of the statement of claim be struck out and the plaintiff file and serve an amended statement of claim by 16 January 2015. The plaintiff filed and served an amended statement of claim on 9 January 2015. On 9 February 2015 I ordered the parties to confer in relation to objections by the defendants to the amended statement of claim. On 4 March 2015 I ordered by consent that the plaintiff file a re-amended statement of claim by 13 March 2015. On 23 March 2015 I made orders by consent for the plaintiff to file a re-amended statement of claim by 30 March 2015. The RASOC was filed and served on 30 March 2015.
6 The plaintiff says that pursuant to O 21 r 3(4) an application to strike out any amendment in the statement of claim was required to be made within seven working days after service of the RASOC on the defendants. That is not correct. Order 21 r 3(4) applies where a party has served an amended pleading under subrule (1) or (2). Relevantly, subrule (1) applies where a party amends its pleading without the leave of the court. The RASOC was filed with the leave of the court given on 23 March 2015.
7 The defendants say that the matter is governed by O 4A r 6. Subrule (1) provides that the rule applies if the court directs the parties to comply with a timetable for procedural steps. Subrule (2) provides that the judge making the direction must set the timetable. Subrule (3) provides that the judge may do all or any of the things specified which relevantly includes amending the timetable. That rule applies to the defendants' strike out application because on 5 May 2015 I made orders by consent that any application by the defendants to strike out parts of the RASOC be filed by 14 May 2015. I may, pursuant to O 4A r 6(3)(a), amend the timetable on the defendants' application by extending the time for filing the application to strike out parts of the RASOC.
8 Order 20 r 19(3) requires an application to strike out anything in a pleading to be made within 21 days of the service of the pleading. The purpose of that provision is to ensure that the strike out application is brought promptly so that it may be disposed of promptly and the action continued without further interruption. The same consideration is relevant to an application under O 4A r 6(3)(a) to extend the time for filing the defendants' application to strike out parts of the RASOC as are relevant to an application to extend the time prescribed by O 20 r 19(3). An extension of time will be given in accordance with the principles of case flow management if it advances the expeditious and fair and just determination of the proceedings. The principles enunciated in O 1 r 4A and r 4B require weight to be given to the elimination of delay, the reduction of cost and the efficient disposal of the business of the court, subject to the overriding requirement that there be a fair and just determination of the issues and contentions between the parties. The various considerations identified by the High Court in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 will bear upon applications for an extension of time. The exercise of the court's discretion to extend time will require an explanation to be given for the delay.
9 The plaintiff says that the delay which must be explained is not the delay between 14 May and 19 May but the delay between the time when the application should first have been filed and 19 May. Order 20 r 19(3) provides that an application to strike out part of an amended pleading must be made within 21 days of the service of the amended pleading. In this case the application should have been made by 21 April. The time for filing the application was extended to 14 May by order made on 5 May. However, that order not having been complied with, the extension of time was exhausted. Accordingly, the application was required to be filed by 21 April and when filed on 19 May was approximately four weeks out of time. The defendants' explanation for that delay is as follows. The defendants reviewed the RASOC and on 24 April wrote to the plaintiff's solicitors setting out objections to the RASOC. They received a response from the plaintiff's solicitors on 5 May. At that time the conferral was continuing. The defendants delayed in further progressing the matter whilst they obtained counsel's advice.
10 In my opinion the time for the defendants to apply to strike out parts of the RASOC should be extended to 19 May 2015 for the following reasons. First, at least part of the delay was a result of the parties conferring in relation to the defendants' objections to the RASOC. Parties are required by the rules to confer before making chambers' applications. A reasonable delay in a strike out application being filed is consistent with positive case flow management if the delay is a result of the parties properly conferring before filing a strike out application. Secondly, the court ordered by consent that the time for filing the strike out application be extended to 14 May. The delay following that extension of time was minor. Thirdly, the strike out application impugns imputations pleaded by the plaintiff. The plaintiff's pleaded imputations are of central importance in a defamation action. Imputations which are ambiguous or uncertain have potential to cause confusion, delay and injustice at trial. Imputations which are not capable of arising have the potential to give rise to false issues with consequential delay, inconvenience and expense at trial. In this case I am satisfied that the defendants' objections to the pleaded imputations are made conscientiously and have, or may have, substance. In this case an extension of time for making the application is justified in the interests of the efficient use of the resources of the parties and of the court. The defendants' objections have, or may have, substance and if they are correct leaving the RASOC in its present form would unnecessarily protract time and preparation for the trial and the conduct of the trial itself by including imputations which are not capable of arising or insufficiently precise imputations which may cause confusion, delay and expense at trial. The time for the defendants to bring their application will be extended to 19 May and leave will be granted to apply to strike out parts of the RASOC.
The strike out application
11 The defendants object to the imputations pleaded in [6.2], [6.3], [6.5] and [6.7] of the RASOC on grounds of form and capacity. I will consider each of the challenged imputations in turn. It is common ground that the objections to [11.2], [11.3], [11.5] and [11.7] mirror the objections to [6.2], [6.3], [6.5] and [6.7] and it is sufficient to consider the objections to the imputations in [6]. The outcome of those objections will determine the objections to the imputations in [11].
RASOC [6.2]
12 The imputation pleaded in [6.2] is:
The plaintiff as the chairman of each of Queste, Orion and Bentley is greedy in that he receives high salaries from each of the companies despite being responsible for them failing.
- The defendants say that the imputation is bad in form in two ways. First, the words which define in what way the plaintiff is greedy, that is, 'in that he receives high salaries from each of the companies despite being responsible for them failing' do not support the notion of greed. Secondly, the phrase 'responsible for' is impermissibly imprecise.
13 In Khan No 1 I struck out the imputation that 'the plaintiff as director and chairman of each of Queste, Orion and Bentley is greedy'. I held that the imputation was not sufficiently specific because in the context of the articles the imputation does not identify how or why the plaintiff is greedy. I noted that the plaintiff had submitted that a director might arguably be greedy as a result of preferring his own interests to the interests of shareholders. If the imputation is that the plaintiff is greedy in that sense then the imputation is merely repetitive of what is now imputation 6.1. If the imputation is that the plaintiff is greedy in some other way then the defendant and the court needs to know in what other way so that the defendant knows the case it has to meet and the court can determine the admissibility of evidence at trial.
14 The plaintiff has sought to overcome the lack of precision in the imputation by introducing a definitional clause to state in what way the plaintiff is said to be greedy. However, the definitional clause contains the phrase 'being responsible for [the companies] failing'. The plaintiff being responsible for the companies failing is an essential part of the definitional phrase. The words 'responsible for' are words which have a range of meanings and give rise to uncertainty unless the context makes clear the sense in which they are used. In this case, neither the pleaded imputation nor the article itself makes clear the sense in which the words are used. The phrase 'in that he receives high salaries from each of the companies despite being responsible for them failing' does not identify with sufficient precision the act or condition asserted of, or attributed to, the plaintiff or with which he is charged.
15 It is not appropriate to consider the defendants' contention that the imputation is, in any event, incapable of arising. That is because unless and until the plaintiff says with sufficient specificity in what way the plaintiff is said to be greedy it is not possible to determine whether the imputation differs in substance from imputation 6.1 or is capable of arising from the publications complained of.
Imputation 6.3
16 Imputation 6.3 is that:
The plaintiff as the Chairman of each of Orion and Bentley is the most incompetent executive Chairman of any company whose securities were listed for quotation on the ASX at the time of the article.
- In the course of the hearing Mr Bennett, counsel for the plaintiff, orally moved to amend the imputation to insert 'Queste' before Orion so that the imputation is that the plaintiff as the Chairman of each of the three companies is the most incompetent executive Chairman of any company whose securities were listed for quotation on the ASX at the time of the article.
17 The defendants raise two objections to the existing imputation and further object to its amendment to add 'Queste'. The defendants' first objection is that the imputation refers to 'any company' as opposed to 'any listed investment company'. Imputation 6.4 in the original statement of claim was that 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 the hearing of the application to strike out that imputation the plaintiff proposed to amend the imputation to refer to 'any listed investment company' rather than 'any company'. The argument proceeded on that basis. Counsel for the defendants, Mr Dawson, submitted that the plaintiff should be held to the position he took and on which the court determined the first strike out application.
18 In the course of hearing this application counsel referred to the withdrawal of a concession and applying by analogy the principles relevant to the withdrawal of an admission in a pleading. In my view, it is in the interests of efficient case management to determine whether the imputation which the plaintiff wishes to advance is bad in form or incapable of arising on its merits. It is also in the interests of efficient case management to consider the further amendment proposed by Mr Bennett, that is the addition of 'Queste', to the imputation. Mr Dawson did not claim to be prejudiced by the late motion to so further amend the imputation.
19 The defendants say that the publications complained of are not capable of conveying that the plaintiff was the most incompetent executive chairman of 'any company' in circumstances where the label of 'worst performing company' is attributed by the publication to Orion only. The defendants say that the sentence which gives rise to any imputation about the plaintiff being the most incompetent chairman of any listed investment or other company is the sentence: 'On one vital measure - the discount Orion trades at to its net tangible assets - it is the worst performing listed investment company on the Australian Securities Exchange, according to the ASX's most recent update'. Mr Dawson draws attention to the following. First, only Orion is said to be 'the worst performing listed company'. Secondly, it is said to be 'the worst performing listed investment company' on the ASX not the worst performing company listed on the ASX. Thirdly, the measure on which it is said that Orion is the worst performing listed investment company is the discount at which it trades to its net tangible assets. The table states the discount to net tangible assets for Orion and Bentley but records 'n/a in relation to Queste'. That is the measure of the discount at which the company trades to its net tangible assets is not applied to Queste in the article.
20 The plaintiff says that the First Defamatory Article must be read as a whole. The First Defamatory Article appears under the headline 'King of the Underperformers'. There then appears a sub-headline: 'Investigation Failing Companies Queste, Orion and Bentley pay Chairman Farooq Khan $527,500 pa'. The point is the sub-headline refers to the three failing companies - Queste, Orion and Bentley. Under the banner 'Cashing In' appears a table introduced by the words 'The performance of three companies chaired by Perth businessman Farooq Khan'. The point is that the heading to the table refers to the performance of three companies chaired by the plaintiff. The article says that the three companies have a common thread and refers to the companies' overt failings. The article says:
but before there were Orion-owned olives and a beachside property, and before there was a booming and then busting investment in Strike, there was a company called Queste Communications.
- and later:
Despite the website's claims, Queste is simply a holding company with [the plaintiff] as its second largest shareholder. He holds 21% of the issued capital. His brother-in-law Azhar Chaudri has a further 18%, according to the annual report. In fact several members of [the plaintiff's] extended family turn up on company shareholder registers he has links to although it shouldn't be assumed according to law, that the family members are necessarily related parties.
22 It might be that after hearing detailed argument and carefully considering the publications complained of the court may find that the pleaded imputation does not arise from the publications. The court may arrive at that conclusion after a careful analysis of the publications. However, the question for the court on this application is whether it is unarguable that the pleaded imputation arises from the publications complained of and the court should not exercise the power to strike out the imputation except in a plain and obvious case. The subject of the first defamatory article is the plaintiff and the three companies which are described as failing companies. The theme of the article is the poor performance of the three companies and their common thread is that they are chaired by the plaintiff. The table accompanying the article refers to the performance of the three companies. The article refers to the worst performing listed investment company on the ASX. In that context and having regard to the impression given to a reader by the article as a whole, it is not unarguable that a reasonable reader would understand the article to be saying that the plaintiff is the most incompetent executive chairman of the three companies whose securities were listed for quotation on the ASX.
Imputation 6.5
23 Imputation 6.5 is that:
The plaintiff uses his position at Queste, so as to secure personal benefits in being appointed the remunerated chairman of other companies.
- The defendants submit that the imputation is objectionable for three reasons. First, it is bad in form in that it is unclear what is meant by the phrase, 'personal benefits'. Secondly, it is not defamatory in that the ordinary reasonable reader would not think less of the plaintiff simply for using his position at Queste to secure personal benefits with other companies. Thirdly, it fails to specify the defamatory act or condition attributed to the plaintiff and in particular fails to specify what the plaintiff is alleged to have done wrong by using his position to secure personal benefits with other companies.
24 The phrase 'personal benefit' was referred to by McCallum J in Voelte v Australian Broadcasting Corporation [2015] NSWSC 210. In that case one of the imputations pleaded by the plaintiff was that the plaintiff deliberately betrayed the interests of shareholders of Nexus Energy of which he was Chairman to obtain a personal benefit in taking out the position of CEO of Seven Group Holdings. McCallum J said:
The notion of personal benefit troubled me at first, but I think it is clear from terms of the imputation that it refers specifically to his being given the position of CEO of Seven Holdings and nothing else. On that basis, I reject the submission that the imputation is imprecise on that account [31].
- In this case it is clear from the terms of the imputation that the words 'personal benefits' refer to being appointed Chairman of other companies and the remuneration paid to him as chairman of those companies. The words 'personal benefits' do not render the imputation imprecise.
25 The imputation should not be struck out on the ground that it is incapable of being defamatory. On a strike out application the court decides no more than that the imputation is arguable or unarguable. An imputation should be struck out on the ground that it is not capable of being defamatory only when that conclusion is plain and obvious. In general it is not appropriate to strike out an imputation on that ground when it requires detailed argument and careful consideration. Whether a particular imputation is defamatory depends not only on the state of public opinion but may also depend on the circumstances and context of the publication, matters more fully appreciated at trial.
26 The defendants submit that the imputation does not allege any breach of duty and the matters complained of are not capable of giving rise to such a notion. It is true that the article does not allege any breach of duty by the plaintiff but where a plaintiff has been accused of behaving in business in a way which might be considered discreditable by reasonable members of the public it is no answer to say that the publication did not allege any breach of directors' duties or other breach of the law.
27 It is not defamatory to say of a person that he earns fees from being the chairman of a company. It is not defamatory to say of a person that he seeks appointment as chairman of a company or that he seeks to be remunerated as chairman of a company. However, the pleaded imputation goes beyond those matters. The imputation is that the plaintiff uses his position at Queste to get appointments as chairman of other companies.
28 The imputation must be viewed in the context of the publications which are derogatory of the plaintiff and prominently juxtapose the plaintiff and the companies' poor performances. I am not persuaded that that imputation is so clearly not defamatory that it should be struck out at the pleading stage. In so finding I do not, of course, find that the imputation is in fact defamatory. That is a matter to be determined at trial.
29 The defendants' third objection is that the imputation fails to specify the defamatory act or condition attributed to the plaintiff and in particular fails to specify what the plaintiff is alleged to have done wrong by using his position to secure benefits with other companies.
30 The plaintiff says that the condition attributed to the plaintiff is the manner in which he used his position. In Voelte v Australian Broadcasting Corporation McCallum J said:
Mr Leopold further objected that the meaning of the imputation is unclear by reason of the inclusion of the phrase 'by acting in a way which'. I accept that that phrase does not pinpoint the precise act attributed to Mr Voelte, but, in my view, that is a result of the way in which the matter complained of is presented, pointing to a number of unhappy circumstances and pointing to Mr Voelte as in some way being involved in them without clearly specifying precisely what it is he is alleged to have done.
The matter complained of clearly hints at wrongdoing on his part and, in my view, the publisher must wear the terms in which it conveyed that hint … [26] - [27].
- Mr Bennett says that the same considerations apply in this case. The publications link the plaintiff's position within the companies to the personal benefits gained by the plaintiff in a manner which is capable of being defamatory and if there is any imprecision in the pleading it arises from the content of the article. In my view imputation 6.5 is sufficiently precise.
Imputation 6.7
31 Imputation 6.7 is that:
The plaintiff as the chairman of Queste placed Queste in financial peril so as to secure and maintain his own personal benefit as the remunerated chairman of Orion and Bentley.
- The defendants say the imputation is objectionable for four reasons. The first is that it is bad in form in that it is unclear what is meant by the phrase 'personal benefits'. For the reasons I have given when considering imputation 6.5 the phrase 'personal benefits' is sufficiently precise.
32 The second reason given by the defendants is that the imputation fails to specify the defamatory act or condition attributable to the plaintiff in particular it fails to specify what the plaintiff is alleged to have done to have placed Queste in financial peril and how by so doing he secured and maintained personal benefits. I do not accept that objection. The act attributed to the plaintiff by the imputation is that he placed Queste in financial peril for the purpose of securing personal benefits as chairman of Orion and Bentley.
33 The defendants' third objection is that there is nothing in the matters complained of to suggest that the plaintiff deliberately placed Queste in financial peril for the purpose attributed to him in the imputation. I uphold that objection. In the course of argument Mr Bennett said that the imputation is intended to be to the effect that the plaintiff's actions and inactions as chairman of Queste have been for the purpose of gaining and maintaining personal benefits as the remunerated chairman of Orion and Bentley and have had the consequence of placing Queste in financial peril. I make no comment on whether or not an imputation in those terms is good in form, is defamatory or arises from the publications complained of. In my view that is not the natural and ordinary meaning of the imputation pleaded. The natural and ordinary meaning of the pleaded imputation is that the plaintiff deliberately placed Queste in financial peril for the purpose of securing and maintaining his own personal benefit as the remunerated chairman of Orion and Bentley. In my opinion there is nothing in the publications complained of which are capable of giving rise to that meaning. The imputation should be struck out.
Conclusion
34 The time for the defendants to apply to strike out paragraphs of the RASOC will be extended to 19 May 2015 and the defendants will have leave to apply to strike out [6.2], [6.3], [6.5], [6.7], [11.2], [11.3], [11.5] and [11.7] of the RASOC. Paragraphs 6.2, 11.2, 6.7 and 11.7 should be struck out.
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