Knell v Harris [No 5]

Case [2018] WADC 177

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   KNELL -v- HARRIS [No 5] [2018] WADC 177

CORAM:   GOETZE DCJ

HEARD:   23-27 JULY 2018

DELIVERED          :   14 DECEMBER 2018

FILE NO/S:   CIV 3385 of 2013

BETWEEN:   SIDNEY CHARLES KNELL

First Plaintiff

QAV PTY LTD

Second Plaintiff

AND

KATHRYN ISABEL HARRIS

First Defendant

WARREN MATHESON LANCE

Second Defendant

NETLINE PTY LTD

Third Defendant


Catchwords:

Defamation by email concerning management of short stay apartments within a strata development - Imputation - Innuendo - Reasonable grounds for believing that the conduct of the person allegedly defamed required investigation by strata company and by relevant authorities - Qualified privilege

Legislation:

Defamation Act 2005 (WA)
Strata Titles Act 1985 (WA)

Result:

Action dismissed

Representation:

Counsel:

First Plaintiff : Dr R O'Hair
Second Plaintiff : Dr R O'Hair
First Defendant : Mr C P K Russell
Second Defendant : Mr C P K Russell
Third Defendant : Mr C P K Russell

Solicitors:

First Plaintiff : Lawton Gillon
Second Plaintiff : Lawton Gillon
First Defendant : Pragma Legal
Second Defendant : Pragma Legal
Third Defendant : Pragma Legal

Case(s) referred to in decision(s):

Adam v Ward [1917] AC 309

Cairns Central Plaza Apartments [2012] QBCCMCr 385

Central Plaza Pty Ltd v Lloyd [2013] QCATA 26

Ho v Powell [2001] NSWCA 168

Jones v Dunkel (1959) 101 CLR 298

Knell v Harris [2018] WADC 85

Lance v QAV Pty Ltd [2013] WASC 13

Mirror Newspapers Ltd v Harrison (1982) 149 CLR 293

Netline Pty Ltd v QAV Pty Ltd [No 2] [2015] WASC 113

Radio 2UE Sydney Pty Ltd v Chesterton [2009] HCA 16

Rayney v The State of Western Australia [No 9] [2017] WASC 367

GOETZE DCJ:

  1. This action concerns alleged defamation by email published on 23 October 2012 to a strata company manager following alleged mis‑management of short-stay apartments within a strata development.  Earlier emails alleged mis‑management without regard to the correct letting procedures and funds being improperly deducted from apartment returns.

  2. It is denied that the subject email or any earlier email was defamatory.  It is further claimed that there was a belief, based on reasonable grounds, of a need to investigate the alleged mis‑management and that the matters complained of were true in substance and in fact.  Alternatively, there is a claim for qualified privilege in that the subject email and all earlier emails were sent to the strata manager, without malice.

The parties and other persons

Fieldland Corporation Pty Limited

  1. In 2002, Fieldland Corporation Pty Limited purchased land at 304 ‑ 318 Great Eastern Highway, Ascot, and later, between 2005 and 2008, it constructed a strata development thereon.

Ascot Village

  1. The strata development is commonly known as Ascot Village.  Stage 1 of that development comprised 37 short‑stay apartments and 16 residential apartments for owner occupation.  Stage 2 comprised another 40 residential apartments.  The strata company is properly described as The Owners of Ascot Village Strata Plan 46542.

Sidney Charles Knell

  1. The first plaintiff, Mr Sidney Knell, was…

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Details
AGLC
Knell v Harris [No 5] [2018] WADC 177
Case
[2018] WADC 177
Decision Date

CaseChat Overview and Summary

The defendants, Mr Lance and Mr Porter, sued the plaintiff, Mr Knell, over emails sent by the defendants to various apartment owners alleging that Mr Knell was involved in fraudulent activities. The court was required to determine whether the defendants' communications constituted defamation and whether they were protected by qualified privilege. The defendants argued that their communications were protected by qualified privilege because they were made in good faith for the protection of a legitimate interest, namely the management of the strata scheme. The court found that the defendants' communications were indeed defamatory, as they implied that Mr Knell had engaged in dishonest conduct. However, the court also found that the defendants' communications were protected by qualified privilege. The court held that the defendants had a legitimate interest in ensuring that the strata scheme was managed properly and that they had reasonable grounds for believing that Mr Knell's conduct required investigation. The court found that the defendants' communications were made in good faith and that they were not motivated by spite or malice.

The court further found that the defendants' communications were not reckless as to whether they were true or not. The court held that the defendants had conducted a reasonable investigation into the matters they were communicating about and had obtained legal advice before sending the emails. The court found that the defendants' communications were necessary for the protection of their legitimate interest and that they were not made with a primary purpose of causing damage to Mr Knell's reputation. The court held that the defendants' communications were protected by qualified privilege and that the action was therefore dismissed. The court did not make any orders for costs.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

On 18 October 2011, Mr Knell responded to Mr Porter's email and wrote to all owners of all serviced apartments advising that:Again, as in previous correspondence, a number of misrepresentations have been made and it is necessary for us to set the record straight. Again, neither Mr Porter nor Mr Lance fully understands the issue at hand, or (as we suspect) the only other conclusion must be that there is a hidden agenda and, that they are purposely misrepresenting the facts to advance their own agenda which, given the subject matter of the email can only be to sack QAV as the Resident Letting Agent.… Mr Lance commenced a small debt claim in the Magistrates Court ($2,400) in relation to monies that he claimed to be owed, being his continual hounding of us regarding booking fees charged to him in his accounts as part of the income break-up between he and QAV. We have never admitted to owing this and, at court, Mr Pye reached a settlement and paid an amount and some of his costs, without any admission of liability. …There was no judgment of any sort entered against QAV or any other entity.Again, it is slanderous and beyond contempt for Mr Porter to use this as an inducement against other owners. Later, on 18 October 2011, Mr Lance then sent his own email to various owners and Ms Logiudice reiterating the fact of a ruling from the Magistrates Court and advising that in light of both the legal opinion he had obtained and the court ruling, QAV was not able to deduct various expenses from owners' accounts. He reiterated his earlier advice that the ARM letting arrangement was:(clearly primae facie fraud as ARM received Split Returns from QAV yet only paid some of the surplus to Owners except John and Leonie Kentish as of December 2008.) [sic]And he further said:Perhaps, the Owners interested in establishing what is the legal situation with Ascot Village arrangements should consider a submission to the Courts in WA for a determination of the requirements. Further, Mr Lance also indicated that his legal advice was that only the original 2008 Quest fixed and split return agreements under the Letting and Services Agreement were valid, and any amendments to them needed to be executed by deed by the strata company. Mr Lance wanted compliance with the 2008 Quest fixed and split return agreements. On 23 January 2012, Mr Lance wrote to Ms Logiudice regarding the Letting and Services Agreement, noting that at the prior AGM held on 17 March 2011, as set out above at [101], it was decided to investigate/explore the details of said LSA and report back to the owners at the upcoming AGM. By his letter to Ms Logiudice dated 23 January 2012, Mr Lance called on QAV to uphold the terms and conditions of the Letting and Services Agreement and to refund monies due to apartment owners. Mr Lance did not receive a response from Ms Logiudice to his letter dated 23 January 2012. On 1 August 2012, solicitors on behalf of Mr Lance wrote to Ms Logiudice regarding the use of letting agreements not conforming with the Letting and Services Agreement.

Ratio Decidendi

Legal Principle Established

In Re Bluechip Development Corporation (Cairns) Pty Ltd [2011] QSC 368, the Supreme Court of Queensland made orders winding up Bluechip Development Corporation (Cairns) Pty Ltd, being a company of which Mr Knell was a director. The reasons for decision were delivered on 9 December 2011. From the Bluechip written reasons at [184], it can be seen that, amongst other things, Bluechip had considerable liabilities to the Australian Taxation Office and others. The trial judge found thatMr Knell's conduct in relation to the sale of the management rights to CCP (Cairns Central Plaza Pty Ltd) is likely to be productive of the mistrust. [225]and that the effect of Mr Knell's conduct was (or would appear to have been) that a valuable asset passed from Bluechip to another but that, notwithstanding its financial difficulties, Bluechip's cash position was not improved [225]. Moreover, income received in respect of management rights was retained in another group of companies controlled by Mr Knell. The trial judge found Mr Knell to be evasive [227] and that some of his evidence did not sit comfortably with his other evidence or an agreement he had entered into [228]. There were matters likely to contribute to a deep sense of suspicion about Mr Knell's conduct [231]. He had general reservations about Mr Knell's evidence [234]. Mr Lance referred to this decision in his correspondence to Ms Logiudice dated 23 January 2012, raising the issue of whether the Ascot Village strata company should consent to Mr Knell being a director of QAV and in control of it. Further, in the email the subject of this action, Mr Lance enclosed a copy of the decision of an adjudicator from the Office of the Commissioner for Body Corporate and Building Management in Cairns Central Plaza Apartments [2012] QBCCMCr 385, concerning the body corporate of a strata development in relation to a caretaking agreement. The adjudicator refused an increase in the remuneration paid to Cairns Central Plaza Pty Ltd, in which Mr Knell had an interest. The reasons for decision of the adjudicator indicate that motions were passed upon a vote from Mr Knell, a director of the same Bluechip as referred to above at [81], being the original owner of the development, by a power of attorney granted by the owners of each of the strata lots. The adjudicator found that Mr Knell was not a representative of any of the lots for which he purported to vote, and in the case of the one unit in respect of which he was able to vote, no vote was cast. The adjudicator was critical of the increase in remuneration which sought to double that which had been previously provided for, noting that relevant legislation only permitted changes in 'terms generally the same' as previously. This decision was handed down on 23 August 2012. The decision of the adjudicator was overturned on 12 February 2013 by the Queensland Civil and Administrative Tribunal in Central Plaza Pty Ltd v Lloyd [2013] QCATA 26. Having said that, it should be observed that the judicial member hearing the appeal agreed with the adjudicator's decision that the resolutions increasing remuneration were invalid and that that decision was not only supported by the evidence, but should be affirmed. However, the appeal was then allowed for other reasons not relevant to this action.