Knell v Harris [No 5] - [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:

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.
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

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

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

The first plaintiff, Mr Sidney Knell, was actively involved in Ascot Village from 2004 when a company in which he had a financial interest, namely Nationwide Development Corporation Australasia Pty Ltd, purchased a one half interest in Fieldland. Mr Knell became a director of Fieldland on 1 July 2004. The then two other corporate investors in Fieldland were headed by Mr Hans Grotegoed and Mr Christopher Pye.
Acting as a real estate agent on behalf of Prime Property Investments Pty Ltd, being another company of which Mr Knell was a director and shareholder, he had, by early 2005, sold most of the short stay apartments in Ascot Village off the plans and prior to construction.

Quest Ascot Village Pty Ltd/QAV Pty Ltd

At some unknown time, a franchise or agency agreement was sought and obtained from Quest Apartments (WA) Pty Ltd for the business of letting and managing the short stay apartments of Ascot Village. This then, on 3 March 2004, led to the incorporation of Quest Ascot Village Pty Ltd, which was to manage the letting of those short stay apartments. Its sole director was Mr Grotegoed, and a company with which he was associated was its sole shareholder.
On 12 May 2010, Quest Ascot Village Pty Ltd changed its name to QAV Pty Ltd. This and other changes are more fully detailed below at [50].
QAV is the second plaintiff in this action.

Warren Matheson Lance, Kathryn Harris and Netline Pty Ltd

The second defendant, Mr Warren Lance, is a certified practising accountant with a commerce degree. He is also a registered real estate and business sales representative. He has experience working in property development, real estate sales, financial management, business management and the operation of short stay accommodation. He was involved in the purchase of the site on which Ascot Village was later constructed, including obtaining finance for its purchase. He was the project manager of the construction and development of Ascot Village.
Mr Lance is the husband of the first defendant, Ms Kathryn Harris, and a director of the third defendant, Netline Pty Ltd. Together, Ms Harris and Netline own a short stay apartment in Ascot Village as tenants in common in equal shares.

Ascot Residential Management Pty Ltd

Ascot Residential Management Pty Ltd was incorporated on 8 February 2008. At all times, Mr Knell was its sole director. Initially, Fieldland held its only shares, but on a later unknown date, these shares were transferred to Endeavour A.C.T. Pty Ltd, being another company associated with Mr Knell.

Allan William Porter

Mr Porter was previously a home finance manager with a major bank, and subsequently he was a mortgage broker. He has also undertaken internal budgeting, sales and financial tasks for a property investment company where he worked with Mr Knell. In 2004, when there were only plans for Ascot Village, Mr Porter's family trust purchased a short stay apartment at Ascot Village after a discussion between Mr Knell and Mr Porter.

Logiudice Property Group Pty Ltd and Eleanor Logiudice

Logiudice Property Group Pty Ltd acts as a strata manager. Ms Eleanor Logiudice is a director of that company providing management services to The Owners of Ascot Village Strata Plan 46542. Ms Logiudice has been a real estate agent for many years.

The alleged defamation

Mr Knell and QAV allege that on 23 October 2012, Mr Lance defamed each of them in an email he sent to Ms Logiudice. This email is set out in full below at [117].
It was submitted by Mr C P K Russell, as counsel for the defendants, that by reason of s 9(1) and (2)(b) of the Defamation Act 2005, QAV does not have a cause of action given that at the time of publication, it was not an excluded corporation. It did not employ fewer than 10 persons, was not related to another corporation and was not a public body. This was not challenged by Dr R O'Hair, as counsel for the plaintiffs. The remainder of these reasons will only deal with the claim by Mr Knell.

The witnesses at trial

The only witnesses at trial were Ms Logiudice, Mr Porter and Mr Lance. Most of what follows to below at [116] inclusive comes from Mr Lance's witness statement and his documentary evidence. There were, however, many matters of potential interest in this action not dealt with in evidence.

The purchase of the land and construction of the strata development

The relevant history commences in 2002 with the land on which Ascot Village now stands then being vacant property. The registered proprietor of that land was under financial stress. The mortgagee of the property sought advice from Mr Lance as to what could be done with it. It was put up for sale but, at first, it did not sell.
In December 2002, Fieldland purchased the land. Fieldland then comprised a syndicate of three corporate members, the head of one of which, Mr Grotegoed, referred to above at [5] and [7], was known to Mr Lance from previous business dealings. From November 2002 to July 2004, Mr Lance was a director of Fieldland.
In 2004 when Nationwide, referred to above at [5], purchased its one half interest in Fieldland, Mr Knell was advised by Mr Grotegoed that such interest did not extend to the franchise/agency arrangement held by Quest Ascot Village Pty Ltd.
In about 2004, the local government authority provided building approval for the strata development.
Construction of Ascot Village began in 2005. By March 2007, construction of the short stay apartments was complete. Then, by January 2008, construction of the balance of stage 1, being the residential apartments, was also complete.

The business model created to manage the short stay apartments

Once construction of the short stay apartments was complete, the business of letting 36 of those apartments was able to commence under the franchise/agency arrangement through Quest Ascot Village Pty Ltd, trading under the business name of Quest Ascot Village. However, it was not then possible to provide the individual purchasers of short stay apartments with certificates of title for those apartments and so, for the interim, Fieldland remained the registered proprietor of all short stay apartments.
On 1 February 2008, the Owners of Ascot Village Strata Plan 46542 and Quest Ascot Village Pty Ltd entered into a deed entitled 'Letting and Services Agreement', by which the Owners agreed with Quest Ascot Village Pty Ltd that the latter should act as the letting agent for the owners of the short stay apartments, subject to the regulation of that service in terms set out in the deed.
The Letting and Services Agreement was modelled on a precedent agreement from another Quest project at Mandurah. A draft had been prepared at the outset in planning for the management of Ascot Village upon completion of construction. Such planning was no doubt necessary to obtain finance for the purchase of the land, the construction costs and to assist in the sale to investors of apartments off the plans.
The Letting and Services Agreement was executed for the Owners by Mr Grotegoed and Mr Pye, being two of the three directors of Fieldland, which was then still the registered proprietor of all short stay apartments. Mr Knell was then the only other director of Fieldland.
By the Letting and Services Agreement:
1.The initial term of that agreement was for a period of five years and, subject to certain conditions, was to be automatically renewed for three periods of five years each, again subject to certain conditions.
2.Whenever any registered proprietor of a short stay apartment required the services of Quest Ascot Village Pty Ltd as letting agent, the only manner by which that could be undertaken was in accordance with one of two forms of agreement provided in schedules to the deed, being either for a fixed return agreement ('2008 Quest fixed return agreement') with the return being 8% of the purchase price of a short stay apartment, or a split return agreement ('2008 Quest split return agreement') with the return being calculated on a 50/50 split of actual income received on letting an apartment.
3.The term of a 2008 Quest fixed return agreement was to be no more than two years after the date of purchase of an apartment. Thereafter, Quest Ascot Village Pty Ltd could only offer a 2008 Quest split return agreement. The term of a 2008 Quest split return agreement was not fixed at all.
4.There was reserved to short stay apartment owners the right to use agents, other than Quest Ascot Village Pty Ltd, to let out their short stay apartments.
5.Both the 2008 Quest fixed return agreement and the 2008 Quest split return agreement were to be terminated if the Letting and Services Agreement came to an end.
6.Quest Ascot Village Pty Ltd was only able to terminate the Letting and Services Agreement in circumstances not relevant in this action.
7.Quest Ascot Village Pty Ltd was only able to terminate the 2008 Quest fixed and split return agreements in circumstances not relevant to this action.
8.The Letting and Services Agreement could only be varied by deed executed by the parties thereto.
9.The strata company was not to grant any person other than Quest Ascot Village Pty Ltd the right to conduct any similar letting business from within Ascot Village.
10.Quest Ascot Village Pty Ltd was only able to assign the deed or any interest therein with the prior written consent of the strata company, and that consent was not to be unreasonably withheld.
11.There was to be a deemed assignment upon the alteration of the board of directors of Quest Ascot Village Pty Ltd.
12.In seeking consent to an assignment, Quest Ascot Village Pty Ltd was required to prove to the reasonable satisfaction of the strata company that the proposed assignee was a reasonable, responsible and financially sound person capable of adequately performing and observing the duties and provisions of the deed. As part of the consent process, an interview was required between the strata company and the proposed assignee.
13.Any consent to an assignment was not to be effective until Quest Ascot Village Pty Ltd had entered into a deed indemnifying the strata company against all claims made upon it, and the proposed assignee had also entered into a deed agreeing to observe and perform the provisions of the Letting and Services Agreement and other matters.
14.The conditions precedent to the consent provisions did not apply to a person within, or a franchisee of, the Quest group of companies.
15.Quest Ascot Village Pty Ltd was to use its best endeavours to treat all owners fairly, maintain a trust account, provide monthly accounts to owners and act reasonably in the performance of its duties and obligations under the deed.
There has not been any request to vary, or any variation of, the Letting and Services Agreement.
Later, in Netline Pty Ltd v QAV Pty Ltd [No 2] [2015] WASC 113 [58], Beech J found that there was no implied term permitting QAV to terminate a 2008 Quest split return agreement on reasonable notice. Although not determined by Beech J, there is also no such implied term permitting Quest Ascot Village Pty Ltd to terminate a 2008 Quest fixed return agreement.
In early 2008, individual certificates of strata title were issued in respect of the short stay strata apartments. Thirty six apartments had been sold to investors and the thirty-seventh apartment was used by Quest Ascot Village Pty Ltd as its office.

The 2008 ARM letting arrangement

The written materials provided by Mr Lance reveal that Mr Knell and his interests sought to purchase Quest Ascot Village Pty Ltd, however, Mr Grotegoed refused to sell. Mr Lance suggested that this refusal was by reason of a dispute between the Quest group of companies and Mr Knell over a development at Caloundra, Queensland, such that Quest would not accept Mr Knell as an owner or part owner of a Quest franchise. Mr Knell has disputed this.
Notwithstanding the Letting and Services Agreement and, inferentially by reason of Mr Grotegoed's refusal to sell any part of Quest Ascot Village Pty Ltd to Mr Knell or his interests, Mr John Gates from Prime Group Australasia, being a group associated with Mr Knell, wrote to all Ascot Village short stay apartment owners on 5 February 2008, just four days after execution of the Letting and Services Agreement.
By this letter, short stay apartment owners were offered the management of letting their apartments by Australian Residential Management Pty Ltd. ARM is another company with which Mr Knell was associated. The ARM offer was to be by way of a two year fixed return agreement ('2008 ARM fixed return agreement') with the option of a split return agreement ('2008 ARM split return agreement') on 90 days notice. It was however, recommended that such an option not be exercised until six months after entry into the 2008 ARM fixed return agreement. This letter, which required a quick decision and the return of an executed 2008 ARM fixed return agreement, contains the following:
To all Ascot Serviced Apartment Buyers
Dear Ascot Buyer,
SERVICED APARTMENT MANAGEMENT – QUEST ASCOT VILLAGE
I apologise that this letter comes so soon before settlements, and that it is not individually addressed, but time is short.
As you may know there have been some disagreements within the board of Fieldland Corporation regarding the method of managing the rental and letting of the properties. These stem, partly from reluctance by the Quest directors to divulge financial and trading information, and the method of administration of the Split Return system. Whilst this is somewhat understandable, it is not our way of doing business. Happily we are nearing resolution of the problem and a new agreement is about to be struck for ongoing management of the property and your expectations.
We are now at a point where we have agreed on the way ahead, but we wanted to ensure that you, as owners of lots in the Serviced Apartment scheme have some certainty.
We are therefore proposing, and recommending that we interpose a company between Quest Ascot Village Pty Ltd, to be known as Ascot Residential Management Pty Ltd ('ARM'), which will offer the Fixed Return Agreement for a short period while the business is finally established and while we are given time to analyse and properly advise you as to the returns.
ARM is offering to take up a two year agreement at a return of 8% of purchase price.
However, we intend to do a full review within the first 6 months, and to be in a position to advise you as to the best way ahead, at that time.
Thus, while we are offering a lease for two years, we will include an option for you, at your election, to opt out with 90 days notice, and go to a Split Return system. Obviously we would recommend that you wait until we have conducted our review.
The advantage of this is that you will have certainty at the date of settlement, and will be in a position after the review to decide what is providing the best returns, as we will also have those figures.
While we believe that the Split Return system will most likely return slightly better than 8%, we do not believe that there will be much difference in your returns over that initial six months period.
We would appreciate your making a quick decision and returning the agreement to us, signed and ready for our signature at or shortly after the date of your settlement. Whatever your election we will be paying you monthly in the first week of the following month, so there is ample time for your election to be made and returned.
If you do not wish to take up the Fixed Return, would you kindly let us know by email ([email protected]) or fax 1800 793 292? In that event we will accept that you have opted for the Split Return.
…
Update Seminars
We intend to present further information on this at our update seminars in Canberra (this Thursday pm), Sydney (Sunday) and Melbourne (next Tuesday).
If you have not booked in, please contact Wayne Hudson in our Canberra office on (02) 6161‑0000.
By letter dated 11 February 2008, on a shared letterhead between Prime Group Australasia and ARM, Mr Gates again wrote to short stay apartment owners, including the following:
Our current proposal is that a company called Ascot Residential Management Pty Ltd ('ARM' ) enters into a Fixed lease (Fixed Return Agreement) with each of you and, in turn, a Split Return arrangement is entered into with QAV Pty Ltd. ARM has been set up, and will be run as a Non‑Profit organisation. Thus any return that it gets in excess of the fixed return will be distributed to you, the investors, in full at the end of the first three month period.
It is proposed that the initial director of ARM will be Sid Knell who is best placed to negotiate your Split Return system and work with QAV in working out the finer details of implementation of the Split Return system. Once Sid is satisfied that the system in place and working effectively the directors will be drawn from the client investor group.

One couple who purchased a short stay apartment and who entered into a 2008 ARM fixed return agreement were Mr and Mrs Alan Ryan from Victoria. They subsequently provided Mr Lance with a copy of that agreement dated 8 February 2008. Mr Ryan also provided correspondence and an email from ARM to himself and his wife as follows:
1.by letter dated 13 June 2008, advising that from 8 March 2008, the fixed return was 8% per annum of an owner's purchase price, payable monthly, with quarterly distributions exceeding this fixed return; and
2.by email on 15 July 2008, advising that overall the return had been 12.3%. Therefore, each owner with a 2008 ARM fixed return agreement should have received a surplus of around $3,000. However, Quest Ascot Village Pty Ltd had not paid this money to ARM. It was anticipated to be paid by the end of August.
Prior to receipt of these documents from Mr and Mrs Ryan, Mr Lance had not been aware of the involvement of ARM in the management of the letting of apartments in Ascot Village.
The only 2008 ARM fixed return agreement tendered into evidence was that dated 8 February 2008 with Mr and Mrs Ryan for a term of two years. This agreement provided for ARM as 'Agent' to be the
sole agent for the Owner to let the Premises and provide the letting services …
However, the 2008 ARM fixed term agreement also provided for Quest Ascot Village Pty Ltd to be the 'Authorised Letting Agent'. This agreement then enabled ARM to
(a)offer the Premises for rent as short stay rental accommodation through the agency of the Authorised Letting Agent; and
(b)let and manage the Premises competently and diligently.
Mr Lance believed that approximately 18 of the short stay apartment owners entered into the 2008 ARM fixed return agreement.
A 2008 ARM split return agreement was not tendered into evidence.

The purchase of an apartment by Mr Lance's wife and Netline

On 29 February 2008, Mr Lance's wife, Ms Harris and Netline became the registered proprietors of their short stay apartment in Ascot Village. Further, on the same date, Ms Harris and Netline entered into a 2008 Quest split return agreement in accordance with Schedule 2 to the Letting and Services Agreement. The reason for entering into this agreement was that Mr Grotegoed had informed Mr Lance that he could not allow entry into a fixed return agreement as the split return provided considerably higher returns than the fixed return.
The returns on the apartment purchased by Mr Lance's wife and Netline over the first four years were 11.2%, 12.6%, 13.1% and 16.5% per annum respectively, and this is without regard to any capital growth.
In mid‑2008, the Council of Owners in respect of Ascot Village was formed. Mr Lance was an original member of that council and remained so until the Annual General Meeting of the strata company held on 17 March 2011.

Mr Knell's dispute with Mr Grotegoed and its resolution

Mr Grotegoed's refusal to sell any interest in Quest Ascot Village Pty Ltd to Mr Knell and his interests may have been the cause of
some disagreements within the board of Fieldland Corporation regarding the method of managing the rental and letting of the properties
as referred to by Mr Gates in letter detailed at [32] and [33] above. The disagreements were not explained at trial but, in 2007, they led to proceedings in the Federal Court of Australia by which Nationwide sought to wind up Fieldland.
After Mr Grotegoed formalised the future conduct of Ascot Village with Quest Ascot Village Pty Ltd by way of the Letting and Services Agreement, he and Mr Knell settled their disagreements and the Federal Court action was resolved in May 2008.
Mr Grotegoed later sold his interest in Fieldland to the entity headed by Mr Pye. On 6 May 2008, Mr Grotegoed resigned as a director of Fieldland.
On 11 November 2008, Mr Gates again wrote to short stay apartment owners referring to a dispute between the directors of Fieldland and QAV as follows:
At the time of settlement – as the Directors of Fieldland and QAV were in a dispute – the intent of the ARM agreement was to provide certainty of returns to Prime Clients at a time when we did not know how the split return system would pane out [sic].
By letter dated 10 March 2009, ARM wrote to another apartment owner, Mr John Kentish, regarding difficulties in payment of 'extra returns' on his apartment. Presumably, a copy of this letter was sent to all ARM letting agreement owners. This letter noted that
when the Management Rights (of the serviced apartments) are sold at the end of the first two year period, all of these (extra payments on top of fixed returns and the provision of information from Quest Ascot Village Pty Ltd) should be sorted out.
On 29 January 2009, Mr Pye became a director of Quest Ascot Village Pty Ltd. Mr Grotegoed resigned as a director of Quest Ascot Village Pty Ltd on 2 April 2010.
It can be inferred that Mr Grotegoed's delay in resignation as a director of Quest Ascot Village Pty Ltd was because Mr Knell was not able to be part of the management of Quest Ascot Village whilst the Quest franchise/agency was still operative, and the management rights were not to be sold until the end of the first two year period.

Termination with Quest

On 12 May 2010, Mr Knell became a director of Quest Ascot Village Pty Ltd. Then, also on 12 May 2010, Quest Ascot Village Pty Ltd changed its name to QAV Pty Ltd. On 30 June 2010, QAV ceased its association with the Quest group and, from 1 July 2010, became an agent of the Best Western group of companies.
By a letter dated 21 May 2010, Quest Serviced Apartments Pty Limited wrote to Mr Lance's company, Netline. This letter includes reference to Mr Knell's sale of apartments in Ascot Village and his management of those apartments, together with the cessation of the relationship between Quest and Mr Knell as follows:
It is with disappointment that I confirm that the Quest Ascot Village business ('the Business') will be leaving the Quest Group on the 30^th June 2010.
The departure of the Business from the Quest Group comes at the request of the current franchisee/business owner, Quest Ascot Village Pty Ltd ('Business Owner').
A number of owners have contacted our office questioning whether an involvement with the Quest Group can be maintained. Whilst it would be our preference for the Business to remain in the Quest Group, it is clear that the Business Owner sees the future of the Business with it being associated with another brand.
I understand that the re‑branding of the Business will not affect the Management Rights structure and Occupation Agreements that were established and entered into between the developer of the property Fieldland Pty Ltd ('the Developer') and the individual owners.
Owners have also queried the nature of the involvement of Sid Knell with both Quest Ascot Village and the Quest Group. In this regard the original development between Quest Ascot Village was conceived by interests associated with Chris Pye and Hans Grotegoed. Prior to construction commencing, Sid Knell acquired a 50% interest in the Developer.
Sid Knell was also involved in the sale of some of the thirty six (36) serviced apartments that make up the Quest Ascot Village business (via his apartment sales business, Prime Property Investments Pty Ltd). It is understood that as part of the sale process in relation to some of the apartments sold by Prime Property Investments Pty Ltd 'management' agreements were entered into with the purchasers and an entity associated with the Developer (ARM). This entity in turn provided these apartments to the Business. This arrangement had the effect of giving Sid Knell an indirect involvement in the operation of the Business.
While Sid Knell previously had a working relationship with the Quest Group, this relationship ceased in 2007 when Sid Knell established an accommodation group known as Central Apartment Group.
As a result of the above, the Quest Group has had limited control over the arrangements put in place by either the developer and/or via Sid Knell and his associated interests.
Again, whilst I am disappointed that the Business will be leaving the Quest Group, I would like to take this opportunity to thank each of the stakeholders for their support in establishing the Business.
Mr Knell was not at any material time a person within, or a franchisee of, the Quest group. There was therefore, a deemed assignment of the Letting and Services Agreement, which triggered the assignment provisions as set out above at [27.10-12]. There was neither prior written consent [27.10], nor the required proof of character and interview [27.12], and nor were there deeds as required, [27.13].

Problems with payments to apartment owners27

In 2010, Mr Alan Porter, referred to above at [13], provided Mr Lance with an email chain between himself and Mr Knell in which Mr Porter asserted that his family trust was owed money on the rental of the short stay apartment it owned.
Also in 2010, Mr and Mrs Ryan, referred to above at [35], claimed to be owed approximately $12,500 over and above the fixed return they had received for the calendar years 2008 and 2009.
Further, during 2010 Mr Lance learnt that a number of other owners of short stay apartments were concerned about deductions from their returns.
Mr Lance himself was also concerned that QAV was deducting the cost of booking fees and other expenses without authority, and was not paying his wife and Netline their proper return. This was contrary to their 2008 Quest split return agreement which, by cl 9, provided as follows:
9.1The Agent
(a)…
(b)…
(c)must pay the costs and expenses lawfully incurred in relation to the Premises including the following:
(1)gas and electricity charges;
(2)booking fees to travel agents, airlines, tourist organisations, etc;
…
These were matters of concern to Mr Lance, both personally and by reason that, in his capacity as a real estate representative, he had sold a number of apartments in Ascot Village to purchasers who lived on the east coast of Australia, as to which, Mr Gates' letter above at [33] referred to seminars on the east coast. Such owners were not present in Perth to deal with these matters. Mr Lance was also a person behind the concept of Ascot Village and a member of the Council of Owners. He believed he had a responsibility to all owners of short stay apartments in Ascot Village to ensure that they received their proper returns.

The new 2010 QAV fixed or split return agreement

On 24 February 2010, Mr Knell wrote to Mr and Mrs Ryan advising of a 'new system at the end of August' offering a long term rental guarantee or a modified split management agreement. It was proposed to increase the rental guarantee to 8.25% to the end of August 2010. A plan was being developed to improve management, the details of which were not to be provided until confirmed. This letter also included the following:
Outstanding Dividends
The last issue that we wish to discuss is the payment of the outstanding dividend from 2008. We have promised to pay the balance of the dividend after the sale of the last units. We are now in a position to pay this dividend …
By letter dated 10 August 2010, Mr Knell advised short stay apartment owners of the successful change from Quest to Best Western, saying that he and Mr Pye were then the owners of QAV, which it was proposed would enter into a new form of fixed return agreement ('2010 QAV fixed return agreement') with owners, providing for a fixed return at 8.5% per annum. Alternatively, QAV was offering a 45/55 split return agreement ('2010 QAV split return agreement') after deduction for travel agents' fees, credit card charges and other expenses. Other proposed changes are detailed below at [105]. The new arrangements were proposed to apply from 1 October 2010 to 30 September 2011. Owners were required to elect their choice of either a QAV fixed or split return agreement by 31 August 2010.
It would seem that, for Mr Knell, ARM was no longer required by August 2010 and served no further purpose with respect to Ascot Village.
Consistent with this proposal referred to above at [59], Mr Knell also sought to terminate existing 2008 Quest fixed and split return agreements held by those owners who had entered into such agreements under the Letting and Services Agreement. Not all such owners agreed to do this. In consequence, Mr Knell wrote to those owners by letter 13 October 2010, including the following:
If you believe that you do not have to return your letter because you have an agreement with QAV or Fieldland that is strictly incorrect.
If you wish to withdraw your unit from our management it is your right to do so and you can either elect to manage it yourself or you can elect another real estate agency to manage it for you. It is our right to terminate the agreement we have with you, however we do not want to do this. Could you please some urgency into getting this form returned to us.
…
If I don't hear back from you I will be terminating our agreement (with 90 days notice) as Director of QAV. You will then be welcome to re‑negotiate a new agreement which may mean higher fees and lower rental for you as a short term tenant [sic].
On 15 December 2010, Mr Knell sent an email to Mr Lance on the basis that Ms Harris and Netline had not elected to proceed with a 2010 QAV new letting agreement. Mr Lance responded as follows:
Don't know what you are talking about.
We already have a legal Agreement with QAV – have had since original purchase Feb 2008.
Subsequently, on the same date, Mr Lance received a further email from Mr Knell as follows:
Please find attached your copy of the new split return and furniture rental agreement.
Both these agreements take effect on the 1 January for all owners managed under QAV Pty Ltd and are applicable to both new and old owners.
Please sign and return as soon as possible [sic].
Mr Lance responded by email of the same date as follows:
I already have legally binding Agreement with QAV.
What the?
Mr Knell then replied by email on the same date as follows:
Stop playing games – The new agreements are to be signed by all investors by 1 January 2011 – if you want us to continue managing your property.
Warren – please liaise with John or Jonathon if you have any queries or issues with the new agreements. The agreements tidy up a number of ambiguities with the old.
The only change is the increase in rental for furniture and the clarification of credit card and loyalty card fees. You are no longer under the hammer for electrify and utility charges.
Anyway have a good xmas and do me a favour – read the correspondence and get back to John and Jonathon. Always happy to hear from you by phone – best late in the day.
Happy to assist explaining the management system to any of your new buyers – but if I have any more of the sort of nonsense that has transpired today – then it will be better for us to part our ways and you can find a new manager.
I would appreciate an apology to Chris – he incidentally thinks highly of you and always sticks up for you.
I am also happy to work with you and I would like to think that our friendship is important to you [sic].

The proposed sale of Mr and Mrs Ryan's apartment

In late 2010, Mr and Mrs Ryan sought to sell their apartment. An offer was made to purchase that apartment. However, given the Letting and Services Agreement, the offer was conditional upon obtaining a legal opinion concerning the 2008 ARM fixed return agreement.
The resulting legal opinion was to the effect that a short stay apartment owner could not be required to enter into a letting agreement which differed from the letting agreements set out in the schedules to the Letting and Services Agreement and which, at the election of an owner, could be a 2008 Quest split return agreement as provided by that deed. However, QAV refused to enter into such a 2008 Quest split return agreement with the proposed purchaser and hence, the contract for the sale of Mr and Mrs Ryan's apartment came to an end.

Mr Lance's requests for help from Mr Pye and Mr Grotegoed

Mr Lance's concern over Mr Knell's letting agreements then became the subject of an email dated 3 February 2011 from him to Mr Grotegoed, who had headed one of the initial corporate investors in Fieldland. This email does not form any part of the background information for Mr Knell's further and alternative claim that the subject email was defamatory by way of innuendo.
In his email, Mr Lance complained to Mr Grotegoed that he had earlier attempted to resolve matters with Mr Pye, who headed another initial corporate investor in Fieldland. Mr Pye had acknowledged to Mr Lance that he had some issues with the clause regarding booking fees and other expenses in the 2008 Quest split return agreement, and said he intended to seek legal advice about it. However, this had not achieved resolution. Mr Lance sought to discuss his concerns with Mr Grotegoed to see if the seriousness of the situation could be mitigated.
Mr Lance advised Mr Grotegoed that:
1.Mr Knell had caused ARM to become involved in managing the letting of short stay apartments, with the 2008 ARM agreements not complying with the Letting and Services Agreement.
2.Mr Knell had altered the terms of the sales contracts from Fieldland to prospective owners of apartments, so as to provide for ARM to be involved in letting arrangements without regard to the Letting and Services Agreement.
3.QAV was deducting costs (booking fees and other expenses) from owners' returns when it was not entitled to do so.
4.QAV was seeking to maintain fixed return agreements beyond two years, contrary to the Letting and Services Agreement.
5.ARM was not supposed to profit from its letting arrangements, but it had apparently kept a significant surplus.
Mr Grotegoed could not help Mr Lance. He no longer had any interest in Fieldland or QAV as set out above at [45] and [48]. Mr Grotegoed's advice was that it was up to Mr Knell and QAV management to deal with the business as they deemed to be appropriate.

Mr Lance's legal opinion on the Letting and Services Agreement

On 23 May 2011, Mr Lance obtained his own legal opinion to the effect that owners of short stay apartments could not be required to enter into a fixed or split return agreement which differed from those in the schedules to the Letting and Services Agreement. Further, such agreements did not permit QAV to deduct booking fees and other expenses.
Mr Lance circulated copies of this opinion to owners of apartments, QAV and Ms Logiudice.

The claim in the Magistrates Court

Mr Knell responded to Mr Lance's complaint about the deduction of these expenses by reporting to owners in anticipation of the AGM on 17 March 2011 as follows:
QAV will not continue for ever to provide him with their services on Mr Lance's very unfair and incorrect (in their minds) interpretation of the Letting Agreements. If Mr Lance's interpretation of the agreements is upheld in a Court then QAV will seek to terminate his agreements and replace them with fair ones like most owners have already agreed to sign.
Mr Lance was unable to recover from QAV the booking fees and other expenses referred to above at [56] and so in March 2011 his wife, Ms Harris, and Netline commenced proceedings in the minor claims division of the Perth Magistrates Court in claim PE Minor 5115 of 2011 seeking reimbursement for the period from March 2008 to February 2011.
On 30 August 2011, his Honour Magistrate R H Bromfield concluded that under the Letting and Services Agreement, QAV was not entitled to deduct booking fees and other expenses from the monthly returns of owners of short stay apartments. His Honour said:
I have reached the conclusion that the (split return agreement made under Schedule 2 of the Leasing Services Agreement) obligates (QAV) to pay the costs and expenses, gas and electricity, any booking fees, travel agent, debt collection costs …

Having made this ruling, Magistrate Bromfield, of his own volition, then suggested to Mr Pye, representing QAV, that the sum of $2,492.03, including costs, should be paid within three days and if so, then the claim could be dismissed by consent. However, there was to be an order that if not paid within three days, then it would be open to apply to the court to set aside the dismissal and apply for judgment for the unpaid sum and costs. As the learned magistrate said:
… it has the attraction to the defendant but you don't have a judgment then that's an appropriate disposition given your continued association [sic].
QAV then paid the sum of $2,492.03 to Ms Harris and Netline for the claimed period.
QAV did not refund booking fees or any other expenses to any other apartment owners.
In Netline v QAV [116], Beech J reached the same conclusion as Magistrate Bromfield.

The Queensland litigation

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 that
Mr 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.
In passing, the judicial member also noted that the winding up of Bluechip followed
substantial litigation involving evidence of somewhat devious corporate manipulation.
In 2011, Mr Knell commenced proceedings against Mr Lance for defamation based on the emails and information memorandum set out below between [91] and [110]. That action was stayed twice and remains stayed; the last occasion being 22 July 2013. Mr Knell then issued his writ in this action on 18 October 2013, relying on the subject email dated 23 October 2012 as being defamatory, and bringing in the further and alternative claim that he was defamed by reason of innuendo from the same emails set out below between [91] and [110], which as at October 2013, could not be acted upon as their own cause of action by reason of being statute barred.

Complaints to Ms Logiudice

Mr Lance communicated his various concerns from the matters detailed above to the strata company manager, Ms Logiudice.
On 15 March 2011, Mr Lance sent an email to various apartment owners, and Ms Logiudice, which included the following:
Subject: Re: ASCOT VILLAGE – Proposal to sack the letting agent
…
… Prime Property Investment, aka Sidney Charles KNELL, charged significant sums of money as
Commissions …
(suspect that the Australian Tax Office may wish to investigate whether Prime Property Investment actually declared this as income – the funds were used by Knell to 'lever' a position into Fieldland Corporation!)
…
Have instigated my own legal action against QAV P/L AT MY OWN EXPENSE to recover deductions made from rental on our Ascot apartment not in accordance with executed agreement.
Looking Forward to the AGM and to my day in Court. [sic]
Later on that same day, Mr Lance sent an email to a director of QAV, Mr Pye, various apartment owners and Ms Logiudice as follows:
Subject: Re: ASCOT VILLAGE – proposal to sack the letting agent
…
ARM (primae facie a FRAUD), bullying over 'new agreements', change of brand without reference, delays with correction of building defects, blatant lies, deductions not authorised by legal agreements (your lawyer's words if I recall correctly) etc spring to mind.
As stated, I welcome a discussion on facts and proper interpretations of agreements and appropriate meetings of Owners or in a Court.
As stated in many of my communications, Ascot Village has and is producing great returns (PLEASE CONFIRM TO ALL THAT I FOUND THE SITE & BROUGHT IT TO THE TABLE!) so that means Owners according to you, Knell and Jason – should pay QAV/ARM/Fieldland/Prime Investment many, many thousands of dollars over and above LEGAL Agreements because they want too!
At least now, there is a chance that most of the actual issues are out in the open for all Owners to question/access and make up their own minds.
… [sic]
There then followed a further email to Mr Pye, owners and Ms Logiudice from Mr Lance on 16 March 2011, including the following:
Subject: Re: ASCOT VILLAGE – proposal to sack the letting agent
… What is QAV's Strategic Plan going forward for Ascot Village?
What work do Knell, yourself & Jayson do to assist the operation of Ascot Village? (I mean positive ones – not overcharges for furniture rental, booking fees/commissions or threatening Owners with invalid agreements that reduce their entitlements – and I nearly forgot to include the ARM scenario Primae Facie a FRAUD involving hundreds of thousands of dollars that belong to Owners etc facilitated by you via Hospitality bank account & not denied by Knell in his 20 page tirade over the IM).
Would have thought that the Directors would want to circulate such a plan to All Owners rather than attack my motives for bringing issues – rather important issues, that actually affect every Owner (let's be serious) – to Owner's attention.
If you recall correctly, I requested a discussion solely with you in December 2010 PROVIDED YOU DID NOT INVOLVE SID KNELL – you chose to disregard that last request and involved Knell who then threatened me and any chance of a discussion then evaporated.
I even tried many times to advise you of possible consequences of your involvement with Knell – ARM, unauthorised agreements, deductions from owner's rents without authority – etc, etc – yet you continue to hold a view that All Owners both current and prospective – even those with detailed lagal opinions must be wrong – Pye & Knell are right and Owners just have to accept what QAV wants to dish out.
Your response below clearly states that you are not able to effect reasonable change – fine – the correct frum is the AGM [sic].
Ms Logiudice requested that Mr Lance prepare an information memorandum for the strata company annual general meeting to be held on 17 March 2011.
In his information memorandum dated 15 March 2011, Mr Lance sought to terminate the services of QAV at Ascot Village and he raised various matters, including:
1.Mr Knell and Mr Pye may not be fit and proper persons to direct the operations of QAV.
2.ARM only paid a fixed return to owners and a surplus had not been paid to owners. In correspondence dated 15 July 2008, ARM said it had not been paid the surplus from QAV. ARM identified that approximately $3,000 was owed to individual owners. This was suggested by Mr Lance to be a case of
Primae Facie Fraud [sic].
The amount owed as at March 2011 was unknown.
3.QAV claimed it could deduct booking fees etc, from the gross rental in contravention of the Letting and Services Agreement.
4.Mr Lance asked owners to
Please consider carefully the above information. Then I urge you to either attend the AGM in person or forward a proxy to the strata manager supporting the resolution to terminate – information memorandum 15 March 2011.
In response to this information memorandum, Mr Knell wrote to short stay apartment owners including as follows:
… ARM was established to ensure that rental guarantees were honoured. The company trades on the basis of earning total returns and paying a guaranteed return to owners. Therefore, should the returns, based on actual income, not have been sufficient to pay rental guarantees, ARM was interposed to ensure that the guaranteed returns were paid, and any surplus earned was remitted to QAV.
…
Whatever the truth of the above, it is clear that QAV can make any deal it wants with any owner at any time that is in itself lawful.
There were two standard arrangements offered originally and many of the owners decided to make a different deal with ARM PL.
That was their decision to make and if they have some dispute with ARM PL over rent or other payments then they should direct themselves to ARM PL. They presently chose to deal with ARM PL themselves rather than QAV and as QAV was never a party to those arrangements it is not a QAV or Strata Company problem.
More to the point Mr Lance was never in a deal with ARM so he has no status to raise any issues with it. If individual owners do have issues with ARM they should raise them with ARM not prejudice the efficient operation of the business in this manner.
At the AGM on 19 March 2011, Ms Logiudice called on the motion to terminate the services of QAV. Mr Lance had five proxies from other short term apartment owners. Mr Knell had numerous proxies from both short term and residential apartment owners.
In calling on the motion, Ms Logiudice allowed interests associated with Mr Knell and their proxies to vote. Mr Lance claims that this vote should only have been determined by the owners of the short stay apartments, as the Letting and Services Agreement affected only those owners. Mr Lance was also of the view that Mr Knell and some of those persons associated with him and QAV were conflicted because they had an interest in QAV and, as the resolution was to terminate the services of QAV, they should not have been entitled to vote: Strata Titles Act 1985 (WA): s 50A. However, Ms Logiudice allowed those owners to vote, as well as residential owners. It is not known whether the proxies held by Mr Knell required him to vote in any particular manner: s 50A(3), and so nothing can turn on this proxy issue.
Minutes of the Annual General Meeting on 17 March 2011 reveal that the motion to terminate QAV's services was defeated.
The minutes also record that a motion to form a sub‑committee to investigate matters of apartment owners not being paid in full, the change in directors of QAV without strata company approval, and the change in letting agreements resulted in there being 'no resolution'.
Mr Lance said that after he and Mr Porter had spoken at the meeting, Ms Logiudice indicated she would open an investigation into the letting arrangements over the next six months and let Mr Lance know what she found. Mr Porter's evidence followed what Mr Lance said. Ms Logiudice rejected this in her evidence and said another owner suggested a subcommittee, but she agreed that she never looked into the listing arrangements.
There was no relief for Mr Lance in respect of any of his concerns as outlined above. Further, Mr Lance was not re‑elected onto the Council of Owners at this meeting.
On 19 March 2011, Mr Porter wrote to Ms Logiudice by email, following the AGM, concerning investor owners living on the east coast of Australia, and enclosing a spreadsheet of monies owed for a limited period, indicating that money was still owed to various owners.
Early on 30 September 2011, Mr Lance sent an email to Ms Logiudice suggesting that she investigate Mr Knell's involvement in the Bluechip group of companies and saying:
Suspect that this could raise questions about [his] suitability as a director of QAV.
Mr Lance also confirmed the Magistrates Court finding that QAV was not entitled to deduct booking fees from rent and he enclosed notes for the Council of Owners meeting scheduled for later that evening, referring to various matters as follows:
6.Knell, as Managing Director of QAV, wrote to all 'front' Owners late last year and advised that the QAV Agreements that they had were not Legal or Valid & they had to sign new agreements. (I understand that 33 of 36 signed these new agreements or variations thereof). Conditions in these 'new agreements' that are to the advantage of QAV and hence detriment of 'front Owners' include:
a)term is only 5 years (current terms are linked to Caretaking Agreement ie, remain as long as Caretaker in place which has specific terms).
b)Furniture Rental deleted from Letting (allows $33 per week indexed by CPI annually) and creates new Furniture Rental starting at $66 per week. Effect: $1,570 pa per Owner.
c)limits Owner stays in own apartment to 14 nights in calendar year – currently no restriction.
d)QAV can incur expenditure in behalf of Owner up to $500 without consultation – currently $200.
e)QAV can deduct booking fees, credit card fees and debt collection fees from Owner share of rent – currently liability of QAV (refer Court decision). Estimated effect: $3,500 $4,000 pa per Owner.
f)QAV can terminate agreement with 90 days notice – currently only Owner can terminate.
Also during the afternoon of 30 September 2011, Mr Lance sent another email to Ms Logiudice as follows:
…
As you indicate that you take instructions from COO – recommend that you provide all members of the COO with copies of my email from last night with the attached Notes.
Then the COO will be formally on Notice that they owe Ascot village Owners – including Owners of Lots 1 – 37 – a Duty of Care.
Issues have been brought to their attention and should Owners decide on legal Action as a result of Losses suffered – either in deductions to rent not in accordance with Agreements or suffer reductions in capital value of their apartments as a result of invalid letting agreements – then the COO have only their own actions or lack thereof to consider [sic].
On 17 October 2011, Mr Porter sent an email to a number of people, including Mr Lance, Mr Knell and Ms Logiudice, regarding unauthorised deductions from the returns of apartment owners in respect of which Mr Porter said of the average apartment returns
$3,000 has been deducted illegally for fees. …
I know that the returns are good, I know that you don't want to 'rock the boat' but the fact is, you are being lied to, you are being treated with arrogance, you are being ripped off and [Mr Knell] and [Mr Pye] are laughing all the way to the bank.
He referred to the finding of Magistrate Bromfield, pointing out that QAV had refunded money to his family trust and to another short stay apartment owner, Ms Betty Smith, but not to any other apartment owners, and he indicated a need to 'set things right'.
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.
Mr Lance did not attend the AGM on 29 February 2012 and these issues were not discussed at that meeting.

Requests to QAV

On 29 March 2012, Mr Lance provided authorities from 12 owners of short stay apartments, including his wife and Netline, requesting QAV to provide details of revenue generated by their apartments. QAV did not respond to these requests. Mr Lance then engaged solicitors to make the same request, and he obtained copies of owners' statements from which Mr Lance has estimated the owners had been underpaid in excess of $1.3 million for the period from March 2008 to February 2013.

The subject email

The subject email was sent to Ms Logiudice in anticipation of a meeting of the Council of Owners scheduled for 25 October 2012. It reads as follows:
From:   Warren Lance [mailto:[email protected]]
Sent:     Tuesday, 23 October, 2012 9:10 AM
To:      Eleanor Logiudice
Subject: Ascot Village – COO Meeting 25 Oct '12
Hi Eleanor
Thought that I would provide you with an update of matters relating to Ascot Village prior to the COO meeting.
Attached is a recent decision against Knell from the Adjudicator in Qld (Knell used authorities from purchasers @ Cairns to vote himself higher fees and the Adjudicator has declared them void).
I am progressing with my Summons seeking injunctions from the Supreme Court to enforce the prescribed form of Letting Agreements on QAV – Summons is 'settled' and Affidavit in support will be finalised shortly and then a date set by the Supreme Court.
Also, my complaint to the Fraud Squad is with the Assistant Commissioner of Police for review and Hon. Stephen Smith (Minister for Defence and Member for Perth) has written to the Attorney General re lack of action by ASIC (over countless complaints against Knell …) and to the Treasurer for lack of action against Knell re taxation evasion complaint.
Needless to repeat, but you will no doubt remember that the front owners did not authorise the Body Corporate to vary the letting agreements with QAV at all – any non‑compliance with this instruction will instigate legal action.
Regards,
Warren Lance
On behalf of Netline P/L and KI Harris Owners of Lot 19

Complaint to ATO

On 14 September 2011, Mr Lance wrote to the Tax Evasion Referral Centre of the Australian Taxation Office regarding Mr Knell.

Complaint to ASIC

On 30 September 2011, Mr Lance received a copy of the complaint made to ASIC by another unit owner. Further, he was told by Mr and Mrs Ryan that they had also lodged complaints with ASIC in respect of Mr Knell.
On 22 December 2011, Mr Lance lodged his own complaint with ASIC regarding Mr Knell.
On 3 January 2012, ASIC requested copies of documents from Mr Lance, who then provided those copies.

Complaint to Mr Lance's Member of Parliament

On 11 September 2012, Mr Lance attended the office of his local member of parliament by reason that ASIC and the ATO had not responded to him. The parliamentarian then caused his staff to contact the Attorney General and the Treasurer respectively.
On 10 July 2013, ASIC confirmed to Mr Lance that it had received a number of complaints concerning Mr Knell.
The outcomes of the complaints to the ATO and ASIC are not known save that, on 22 February 2013, in an affidavit sworn in the Queensland defamation proceedings, Mr Knell said that:
1.… the ASIC office in Perth has been investigating our families Cairns operation; and
2.… my operations are subject to some usual tax audits during the course of Mr Lance's complaints despite the fact that there have not been any matters arising out of these audits.

Complaint to Fraud Squad

On 14 May 2012, Mr Lance sent a voluminous complaint to the Major Fraud Squad of the Western Australia Police.
On 26 June 2012, the Fraud Squad advised Mr Lance that the material provided did not indicate a criminal offence of stealing or fraud. It advised that his complaint was a matter to be remedied through civil proceedings. The police response includes the following:
…
In summary you allege that since March 2008 the nominated persons intentionally defrauded owners of Lots located within Ascot Village, 308 Great Eastern Highway, Ascot, of monies due to them as rental under Letting Agreements between those owners and QAV Pty Ltd.
…
Having read all of the material provided I do not find that a criminal offence of stealing or fraud has been disclosed.
I can see that a number of owners were persuaded to enter a Letting Arrangement other than that prescribed. At that time, each owner would have been able to avail themselves of advice from a number of sources but it is not clear whether they chose to do that or not.
In any event, the nominated persons appear to have entered into open communication with the Lot owners and been persuasive enough to change the Letting Arrangement. If the grounds promoted by Knell or Pye are deficient and as you allege, are a breach, then those owners can remedy the situation through civil legal proceedings.
It appears that you have already done this successfully in relation to an aspect of this issue.
In summary, I advise that police will not be conducting an investigation into this matter as there is no evidence of a criminal offence and any breach of a Letting Agreement can only be addressed through civil litigation.
On 12 September 2012, Mr Lance subsequently requested that the Fraud Squad decision be reviewed. On 6 December 2012, the Fraud Squad advised Mr Lance that there was no evidence of any criminal offence by Mr Knell.
However, the Fraud Squad appears to have only considered the complaint from the point of view that Mr Knell introduced ARM as a matter of choice for apartment owners between the 2008 Quest fixed and split return agreements, as provided in the schedules to the Letting and Services Agreement, and the 2008 ARM/2010 QAV fixed and split return agreements.
It seems that the Fraud Squad concentrated on Mr Knell's persuasion of owners to change the letting arrangements. The Fraud Squad then conflated any deficiency for such persuasion with the proceedings in the Magistrates Court, which the Fraud Squad noted was successful. However, the Magistrates Court proceedings only related to improper deductions from monthly returns under the original 2008 Quest split term letting agreement; not from the entry into 2008 ARM/2010 QAV letting arrangements.
There was nothing in the review advice from the Assistant Commissioner of Police dated 6 December 2012 to change the earlier assessment to reject Mr Lance's complaint. Further, the Fraud Squad did not consider the impropriety of the letter dated 13 October 2010 set out above at [61].
The details of the complaints and information provided to the ATO, ASIC, Mr Lance's member of parliament and the Fraud Squad do not form any part of the materials relied upon by Mr Knell to support the claim for defamatory imputation arising by innuendo.

The evidence of Ms Logiudice

Ms Logiudice in her witness statement, which stood as her evidence‑in‑chief, included the following:
9.Mr Lance rang me some relatively short time after he sent the above‑mentioned email and discussed some of its contents. While I remember that he rang and mentioned his email, I can no longer remember the contents of the discussion.
10.Mr Lance sent me the following emails on the following dates:
a.on or about 15 March 2011 at or about 8.15 pm;
b.on or about 15 March 2011, at or about 11.07 pm;
c.on or about 16 March 2011 at or about 3.53 pm; with
d.the enclosure to the immediately preceding email described as an 'Information Memorandum';
e.on or about 30 September 2011 on or about 12.08 am; and
f.on or about 18 October 2011 on or about 8.04 pm
…
12.I have re‑read all the emails annexed hereto, which has triggered my independent recollection of each email. I note the first email is expressed to be an 'update' on its face.
13.In the light of the above emails referred to in paragraph 10, I understood at the time and understand now that the complaint to the Fraud Squad referred to in Annexure A was a complaint about Mr Knell and QAV Pty Ltd and that it was what was being sent to the Assistant Commissioner of Police for Western Australia for review and that the Hon Stephen Smith was writing to the Attorney General for the Commonwealth concerning the ASIC complaints referred to in Annexure A that I understood to be about Mr Knell ... and I also understood that Mr Lance had made a tax evasion complaint against Mr Knell which Mr Lance was requesting the Treasurer, through the Hon Stephen Smith to progress.
14.It is crystal clear in my mind and was at the time, that Mr Lance in the first email – Annexure A – was making complaints about Mr Knell and QAV Pty Ltd to the Fraud Squad, ASIC, the ATO and a member of Parliament.
15.… in reference to the conversation after the receipt of the first email 'A' exhibited hereto, that Mr Lance … recounted in detail, but I have no present recollection of those details.
16.At no time during that conversation did he suggest that he merely wanted an impartial enquiry into his complaints and would abide by what the government decided. …
…
19.Over the years, I have come to take Mr Lance's complaints with a 'grain of salt' because I have heard nothing from ASIC, the ATO or the Fraud Squad, or the Parliamentarian. But because I represent other people and must take into account their interests these unresolved allegations against Mr Knell and QAV Pty Ltd leave a question mark in my mind over the conduct, reputation and behaviour of each of them and although the extent of that question mark has diminished since the allegations were first made, without these allegations no question mark would exist.
In cross‑examination, Ms Logiudice conceded that her statement had been prepared with the assistance of one of Mr Knell's employees, Mr John Gates, who wrote the letters referred to above at [33], [34] and [46]. She did 'a dot point' of what she thought should be included and then worked with Mr Gates, doing it 'together'.
Ms Logiudice said her role was simply to act as strata manager and to not be involved in the matters raised by Mr Lance. She was not concerned about comments from the Queensland litigation. She simply sent it to the Council of Owners, although she said:
You know, mud sticks, so to speak.
When you do read some of these emails over the years that they've been coming in, you do start to worry that maybe there is something there about Mr – well, that Mr Lance has brought up.
But – so what I'm saying is there appears to be some sort of defamation against Mr Knell. For what reason? I don't know because even – I know this is from a Supreme Court judge. But it's – I'm not a lawyer. I can't work that out, so ‑ ‑ ‑

The evidence of Mr Porter

From Mr Porter's witness statement, he was told in 2004 by Mr Knell that his family trust would receive a rental guarantee of 8% per annum on the purchase price of its apartment, with 'top up returns' in the first two years if the returns were greater. Mr Porter received a copy of the correspondence dated 5 and 11 February 2008 as set out above at [33] and [34]. His family trust then entered into a 2008 ARM fixed return agreement.
Mr Porter gave evidence confirming his belief that ARM was 'ripping owners off'. He wanted to make other owners aware of his views as he thought owners were not aware that they were not receiving their correct return.
Mr Porter acknowledged that with the assistance of two of Mr Knell's associates, he managed to obtain a refund for a short stay apartment owner, Ms Betty Smith.
In cross‑examination, Mr Porter maintained that monies were still accruing on the apartment owned by his family trust however, he had not been able to calculate the amount and it was for this reason that he had not commenced recovery action.

The evidence of Mr Lance

In his witness statement, Mr Lance said that, as a director of a corporate letting owner, he had the right to attend the Council of Owners meeting scheduled for 25 October 2012 and that, at the time of sending his email being the subject of this action, he was planning to attend that meeting at which he understood that the Council would discuss whether Mr Knell was a fit and proper person to be a director of QAV, and for that reason he had provided the copy of the recent decision from the adjudicator in the Cairns Central Plaza apartments litigation.
The meeting of the Council of Owners scheduled for 25 October 2012 did not proceed because Mr Knell was not in Perth.
In cross‑examination, Mr Lance said that:
1.when he proposed to terminate the services of QAV at the AGM on 17 March 2011, he did not have any alternative proposal for management of the short stay apartments.
2.Whilst Ms Logiudice did not have a vote on the matters detailed in the subject email, he considered she needed to know about such matters in case it was appropriate for there to be a vote on such matters.
3.He commenced proceedings in the Supreme Court as to improper deductions from rental payments and a determination of which agreements QAV could enter into with owners for the benefit of all other short stay apartment owners. This was the proceeding dismissed by McKechnie J referred to below at [142].
4.In December 2013, QAV issued Mr Lance's wife, Ms Harris and Netline with a notice purporting to terminate their 2008 Quest split return agreement. For this reason, Ms Harris and Netline commenced the proceedings for specific performance of their 2008 Quest split return agreement. This action was ultimately determined by Beech J and is referred to below at [143].
5.The fraud to which Mr Lance was referring in his emails above between [91] and [110] was that concerning the imposition of a letting arrangement by ARM between the short stay apartment owners and QAV.

The Supreme Court litigation

In January 2013, McKechnie J dealt with an originating summons brought by Mr Lance in his own name seeking mandatory injunctions in relation to alleged illegal breaches of the Letting and Services Agreement. This action was dismissed because Mr Lance was neither a party to that deed, nor did he have any standing to sue on behalf of other apartment owners: Lance v QAV Pty Ltd [2013] WASC 13.
In April 2015, Beech J in Netline v QAV made reference to Mr Lance's conduct in his reasons at [85] – [98]. However, some of the materials before Beech J post‑date the email being the subject of this action, such that they are not part of the evidence in this trial. Further, given the different issues concerning specific performance, it is not known what documents in this action were, or were not, in evidence before Beech J. Mr Lance's wife and Netline were not awarded specific performance of the Letting and Services Agreement by reason of the breakdown in the relationships of the persons involved. However, they were entitled to damages in lieu thereof. The reasons of Beech J do not assist in determining the issues in this action.

The pleadings

In summary, Mr Knell's pleading alleges that reference in the subject email to complaints to the Fraud Squad, ASIC and the ATO, in their natural and ordinary meaning, impute that Mr Knell had:
1.behaved unlawfully and fraudulently, dishonestly and was a crook;
2.behaved unlawfully and on countless occasions in breach of laws administered by ASIC; and
3.engaged in tax evasion
and that these behaviours were both in general and in relation to Ascot Village.
Further, and in the alternative, Mr Knell's pleading alleges that the complaints to the Fraud Squad, ASIC and the ATO bore the above meanings by innuendo, particularised as being the self‑reporting of what Mr Lance represented to be well founded complaints which, by implication, ought to be taken as true and correct, whatever the actual contents of those complaints, which were not provided to the reader, but which were based on Mr Lance's emails and information memorandum set out above between [91] and [110] inclusive, by which it was alleged that the facts underlying the complaints were true, together with telephone discussions around the dates of each email.
The defence is that the subject email does not give rise to the defamatory imputations as claimed. Alternatively, if the words complained of carry the alleged meanings, then those words bore or were capable of bearing the meaning that Mr Knell's conduct gave rise to a belief on Mr Lance's part that there were grounds to investigate whether Mr Knell had behaved unlawfully in relation to Ascot Village, and that the meanings were true in substance and in fact by reason that Mr Knell, in his capacity as a director of QAV, interposed ARM into the letting structure of Ascot Village, deducted and retained monies lawfully due to owners, continued to deduct booking fees from certain owners after Magistrate Bromfield's ruling, and incorrectly represented to owners that they had to enter new letting arrangements with ARM. These contextual imputations do not further harm Mr Knell's reputation by reason that they are substantially true.
The defence also pleads that the subject email attracted qualified privilege because it was sent to Ms Logiudice in her capacity as the manager of the strata company. She had an interest in receiving that information. She therefore needed to be updated on the status of the various complaints by Mr Lance, who intended to attend the meeting with authorities from 12 owners calling for an audit of monies owed to them. Mr Lance believed that the purpose of the meeting included discussion of Mr Knell's fitness for office. In these circumstances, Mr Lance's conduct was reasonable.
The defence further pleads that:
1.Mr Knell is not named as being the subject of complaint to the Fraud Squad; and
2.the email does not suggest that Mr Lance had complained either to ASIC or the ATO.
The defence is further that Mr Knell's credit and reputation has not been lowered in the eyes of Ms Logiudice, given earlier findings of fact made against Mr Knell in the Queensland litigation referred to above at [81] – [88] inclusive.
A more detailed explanation of pleadings was provided by Staude DCJ in Knell v Harris [2018] WADC 85 at [11] - [28].

The issues

It is first necessary to determine the facts. The issues from the pleadings can be summarised as follows:
1. (a)What is the meaning of the words complained of in the subject email? Are they capable of bearing the suggested imputations?
(b)If so, do the words in fact bear those imputations?
(c)Are the words defamatory?
2. (a)Are the words complained of, together with the referenced background materials, capable of bearing the suggested imputations by way of innuendo?
(b)If so, do the words in fact bear those imputations?
(c)Are the words defamatory?
3.Do the words bear the alternative contextual imputations suggested by Mr Lance that there were grounds to investigate his behaviour?
4.If so, are those words substantially true?
5.Is the defence of qualified privilege without malice open?

The law

The law recognises that people have an interest in their reputation which may be damaged by the publication to others of defamatory matters about them: Radio 2UE Sydney Pty Ltd v Chesterton [2009] HCA 16 [1].
A person's reputation is said to be injured when the esteem in which that person is held by the community is diminished in some respect. Generally, the test is whether the published matter leads to a person's standing in the community, or the estimation in which people hold that person, being lowered, or where the imputation is likely to lead ordinary reasonable people to think less of that person: Radio 2UE Sydney at [5], [26], [40] and [53].
To have defamed Mr Knell, the subject email should have diminished the respect and confidence in which he is held, including with respect to his character and reputation in business.

The complaint to ASIC and the provision of information to the ATO had not been dealt with by 23 October 2012. Mr Lance had not received any substantive feedback, and hence his attendance upon the office of his local member of parliament resulting in the letters from that member to the Commonwealth Attorney General and Treasurer respectively. The ordinary and natural meaning of these words can only be that a complaint had been made and information provided with a reminder calling for a response.
The reference to 'lack of action' by ASIC and the ATO can only mean that the complaint and information respectively had not then been dealt with.
Absent any detail of the complaints to the Fraud Squad and ASIC and the provision of information to the ATO, which had not been provided to the reader of the subject email, as pleaded and as noted above at [145], there cannot be any defamation of Mr Knell based on the subject email alone.
The mere fact of reporting that a complaint had been made, or that information had been provided, does not impute guilt. Here, the subject email did not include any account of suspicious circumstances to arouse an interest that pointed to the complaint being well founded or anything from which wrongdoing could be imputed. The subject email did not convey guilt to the mind of the ordinary reasonable reader.
It follows that the words complained of in the subject email itself are not capable of bearing the suggested imputations set out above at [144] and that, in fact, they do not do so.

Findings on imputations by way of innuendo based on subject email

Given the emails above between [91] and [110] inclusive, Mr Knell has made the further and alternative claim that the subject email carried the meanings complained of by innuendo.
Mr Knell's first complaint is that Mr Lance defamed him by alleging he behaved unlawfully, was fraudulent, dishonest and a crook.
This complaint follows from the emails referred to above that:
ARM was primae facie a fraud [sic]: [92], [93], [95.2] and [109] above.
First, it is not correct to plead that Mr Lance alleged Mr Knell to have behaved unlawfully in that his conduct was fraudulent. Mr Lance alleged a prima facie fraud. Black's Law Dictionary (10^th ed) defines 'prima facie' as:
Sufficient to establish a fact or raise a presumption unless disproved or rebutted; based on what seems to be true on first examination, even though it make later be proved to be untrue [sic].
At the first sight; on first appearance but subject to further evidence or information.
By alleging a prima facie fraud, Mr Lance was effectively putting a proposition and seeking an explanation from Mr Knell.
Secondly, Mr Lance's emails referred to a prima facie fraud and then stated in those emails wording as follows:
1.Looking Forward to the AGM and to my day in Court [sic] 15 March 2011 [91 above.
2.As stated, I welcome a discussion on facts and proper interpretation of agreements, and appropriate meetings of Owners or in a Court;
At least now, there is a chance that most of the actual issues are out in the open for all Owners to question/access and make up their own minds … 15 March 2011; [92] above;
3.Your response below clearly states that you are not able to effect reasonable change – fine – the correct frum is the AGM [sic] 16 March 2011: [93] above;
4.Please consider carefully the above information. Then I urge you to either attend the AGM in person or forward a proxy to the strata manager supporting the resolution to terminate – information memorandum 15 March 2011: [95.4] above;
5.Issues have been brought to [the] attention [of the Council of Owners] and should Owners decide … 30 September 2011: [106] above.
6.Perhaps, the Owners interested in actually 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 – 18 October 2011: [109] above.
On each occasion when Mr Lance raised the issue of prima facie fraud, or other issues, he sought to have apartment owners make up their own minds. Mr Lance could reasonably have expected Mr Knell to explain the reasons for the imposition of the 2008 ARM agreements on top of the existing 2008 Quest fixed and split return agreements, and the reasons for the change in terms in the 2010 QAV agreements which impacted on apartment owners and favoured QAV. Subject to further information, there was no apparent reason for the involvement of ARM in 2008, or for the change in terms in 2010, apart from QAV's claim for extra costs as set out above at [105].
A lay person such as Mr Lance, who might properly be described as a stickler for propriety in circumstances where money is involved, could see the 2008 ARM fixed return agreement as having been improperly provided to owners in that it did not comply with the agreements in the schedules to the Letting and Services Agreement. ARM did not have the prior written consent of the owners to be involved at all, as set out above at [27.9]. Further, the 2010 QAV fixed and split return agreements, which again did not comply with that deed, were forced upon owners and they provided for the doubling of furniture costs and, in the case of the split agreement, the deduction of certain expenses from gross rent before splitting income 50/50.
In the absence of any acceptable explanation from Mr Knell for the imposition of the 2008 ARM fixed return letting agreement, and his 2010 demands that apartment owners abandon their existing 2008 Quest fixed and split return agreements and enter new modified 2010 QAV fixed and split return agreements, it can be inferred that Mr Knell intended that the imposition of ARM, the 2010 QAV increased furniture charges, and splitting only after deduction of certain booking fees and other expenses from gross rent, together with the continuation of fixed return agreements beyond two years, was solely to overcome the provisions of the Letting and Services Agreement and thereby to provide for the financial benefit of ARM and QAV, and hence interests associated with Mr Knell: Jones v Dunkel (1959) 101 CLR 298, 308, 312 and 320 – 321.
Mr Knell's intent can be inferred from at least the following:
1.His general involvement in Ascot Village, including from 1 July 2004 as a director of Fieldland, from 8 February 2008 as a director of ARM and from 12 May 2010, as a director of Quest Ascot Village Pty Ltd and then changing its name to QAV Pty Ltd on the same date.
2.Mr Knell's knowledge of the fact of the existence of the Letting and Services Agreement. This can be inferred from his general involvement in Ascot Village and as set out below.
3.The fact that the Letting and Services Agreement only permitted QAV and owners to enter into letting agreements in accordance with the two schedules thereto.
4.The letters from Mr Gates at [33] and [34] above referring to disagreements within the board of Fieldland and hence the proposal for the imposition of ARM as an interim measure with Mr Knell as the initial director. However, it was Quest Ascot Village Pty Ltd which was to manage the letting of short stay apartments, not Fieldland and so, in 2008, Mr Knell, who was neither a director nor a shareholder of Quest Ascot Village Pty Ltd, sought to bring in ARM to manage the apartments and he did so without the prior written consent of the owners to do so.
5.The use of the 2008 Quest fixed return agreement as a precedent for the preparation of the 2008 ARM fixed term agreement, with modifications.
6.His letter of 10 August 2010 set out above at [59] proposing new agreements, and then the use of the 2008 Quest split return agreement as a precedent for the 2010 QAV split return agreement, with modifications.
7.Mr Knell's reference to the 2008 Quest fixed and split return agreements as being agreements with 'QAV or Fieldland' in his letter to owners dated 13 October 2010 set out above at [61] and his acknowledgement therein that those agreements were continuing as at that date and hence, his demand that owners abandon them and enter into a new 2010 QAV fixed or split return agreement, effective from 1 January 2011, failing which he, as a director of QAV, would issue a notice to terminate those existing agreements.
8.Mr Knell's misleading and deceptive conduct by his letter set forth above at [61] as already observed above at [181] and [209] – [212] inclusive.
9.Mr Knell's misleading and deceptive advice to Mr Lance in his email dated 10 December 2010 as set out above at [65] that the 2010 QAV split return agreement 'tidied up' a few ambiguities' and that Mr Lance had been 'let off the hook' for electricity and other charges as already observed above at [222] and [224].
10.Mr Knell's report to apartment owners set out above at [74] that QAV would seek to terminate the 2008 Quest split return agreement held by Ms Harris and Netline if Mr Lance's interpretation thereof as to deduction of booking fees and other expenses were to be upheld by a court. In other words, he would seek to strip owners of their benefits under the Leasing and Services Agreement. This would then lead to a corresponding benefit to QAV.
11.Mr Knell's attitude as determined above at [171] – [182] inclusive.
12.The fact that from 2008, without any agreement permitting him to do so, and without being a director of Quest Ascot Village Pty Ltd, Mr Knell arranged for booking fees and other expenses to be deducted from the returns of owners with a 2008 Quest split return agreement, despite protestations from Mr Lance. Further, this practice continued unabated after the Magistrates Court ruling and without any reimbursement to owners other than Ms Harris and Netline, Mr Porter and Ms Smith.
13.The deduction of booking fees and other expenses from surpluses of owners with 2008 ARM fixed return agreements when that agreement required ARM to meet such costs.
14.The known history from 2007 of higher returns flowing to owners of apartments with a split return agreement.
This inference of Mr Knell's intent is the only reasonable inference consistent with the proven facts. There is no other reasonable inference open on the proven facts.
There was no reason given for Mr Knell to not give evidence. It can be inferred that he could not have given evidence to contradict the drawing of the above inference and show some legitimate reason for the introduction of ARM, his requirement of owners to enter into the 2008 ARM fixed return agreement and then, in 2010, requiring owners to quit their 2008 Quest fixed or split return agreements and demanding they enter in the 2010 QAV fixed or split return agreements on modified terms and further, in keeping fixed return owners on fixed return agreements for more than two years, rather than offering them a split return agreement after that two year period. This inferential reasoning can apply against Mr Knell notwithstanding that he did not bear the onus of proof: Ho v Powell [2001] NSWCA 168 [15] and [16].
It matters not that the Fraud Squad determined the issue of Mr Knell's persuasion regarding new agreements to be a civil matter. The Fraud Squad did not adequately deal with Mr Lance's complaint, or other matters of concern, as set out above at [228] – [231] inclusive.
Mr Knell sought to financially benefit himself and his interests when he knew that his actions were contradicted by the Letting and Services Agreement.

The breach of laws administered by ASIC allegation

In his email dated 16 March 2011, Mr Lance wrote
ARM unauthorised agreements: [93] above
and from his information memorandum, Mr Lance referred to Mr Knell, who
may not be fit and proper … to direct the operations of the … letting agent: [95.1] above.
This was similarly repeated on 30 September 2011 following the Bluechip judgment:
suspect that this email raises questions about [his] suitability as a director of QAV: [104] above.
There can be no conclusion other than that Mr Knell showed complete disregard for the Letting and Services Agreement for at least the following reasons:
1.Mr Knell introduced ARM into the management of the letting services without the prior written consent of the owners of the strata plan.
2.Mr Knell ignored the 2008 Quest fixed and split return agreements contracted to be provided to owners of short stay apartments. He sought to impose his own 2008 ARM fixed term agreement. The justification for doing so is set out above at [33], [34] and [96], but the various deficiencies as set out above at [198] highlight his failure to achieve that justification.
3.Mr Knell's appointment in 2010 as a director of Quest Ascot Village Pty Ltd triggered the assignment provisions of the Letting and Services Agreement, which he ignored.
4.In 2010, he wrongly sought to have owners abandon their 2008 Quest fixed and split return agreements and to impose on them the modified 2010 QAV agreements.
5.Mr Knell engaged in misleading and deceptive conduct as set out above at [209] and [222].
6.Mr Knell also wrongly deducted booking fees and other expenses from the returns of Mr Lance's wife and Netline from March 2008 and continued to do so until the ruling in the Magistrates Court. Even then, he continued to do so after that ruling with respect to other owners.
The email dated 30 September 2011 did not provide any more than the reasons for decision of Lyon J in the Supreme Court of Queensland. There is nothing defamatory in this email in relation to Mr Knell, ARM/QAV and Ascot Village.
The reasons set out above and the proven matters from Bluechip and Cairns Central Plaza as set out above at [81] - [88] inclusive raised questions of Mr Knell's suitability to be a director of QAV, or any company.

The tax evasion allegation

The only email relied upon in respect of the innuendo concerning the evasion of tax is that set out above at [91]. This refers to a suspicion that the ATO may wish to investigate the declaration of Prime Property's income which was to 'lever' a position into Fieldland. Sales commissions were due to Prime Property for sales made as set out above at [6]. This is accepted, as can be seen from Mr Lance's report to the AGM as described above at [253]. The email above at [91] is not defamatory. It does not provide any account of suspicious circumstances and it does not suggest anything from which guilt can be imputed.

Conclusion on innuendo

At common law, there can be only one innuendo: Chaney J in Rayney [99].
There is no need to determine whether or not an actual fraud has been established, or whether or not there is some breach of law administered by ASIC, or some tax evasion: Mirror Newspapers Ltd v Harrison.
Mr Lance sought discussion of these matters as set out above at [250]. He was not making a judgment call. He did not impute anything. He wanted the apartment owners to be aware of the matters raised, to hear from Mr Knell, and to make up their own minds.
For the above reasons and given the context in which the subject email was sent, the reporting of the fact of complaints to the Fraud Squad and ASIC and the provision of information to the ATO respectively, was not defamatory of Mr Knell by the ordinary and natural meanings of the words used in the subject email or by way of innuendo by reference to the other materials set out above, either separately or together, and whether generally, or in relation to Ascot Village.
Mr Lance believed the matters complained of to be true as a matter of fact. There were valid grounds for investigation on each of these matters. The reports were well founded. The matters complained of are true in substance and in fact. Being true, the matters complained of do not harm Mr Knell's reputation.
The 'sting' of each of the accusations complained of by Mr Knell has been met as outlined above.
The source of much of the information for the above matters was from what Mr Knell himself wrote or said; not hearsay.
If, however, this is not correct, it is necessary to consider qualified privilege.

Qualified privilege

Ms Logiudice was the human face of the corporate body managing the strata company.
It was Ms Logiudice who needed to place items on the agenda regarding the compliance with the Letting and Services Agreement by QAV. She had an actual, or at least an apparent, interest in receiving information from Mr Lance to ensure that the strata company complied with its statutory and contractual obligations. Mr Lance published the various emails set out above at [91] ‑ [110] and [117] to Ms Logiudice in the course of providing her with relevant information. It was reasonable of him to do so: Defamation Act: s 30(1) and (2).
Mr Lance's motivation in providing the information was that he felt duty bound to protect other short-stay apartment owners, some of whom had purchased their apartments when he acted as agent for the vendor. Some of these purchasers were elderly and lived in the eastern states, and to that extent were not in Perth so as to be properly able to protect their own interests, and he felt loyalty to them to ensure that they received a proper return upon their investment.
Mr Lance was also, for most of the time, a member of the Council of Owners with a duty to protect owners. Mr Lance cannot be criticised for to continuing to act in accordance with such duty even when he was no longer a member of the Council of Owners.
It cannot be said that Mr Lance was motivated by malice. He sought to obtain a refund for other owners as Ms Harris and Netline had obtained such a refund following the determination of the complaint to the Magistrates Court. He also sought to maintain the rights of other owners as to letting agreements under the Letting and Services Agreement.
Counsel for Mr Knell was keen to draw attention to the conduct of Mr Lance as commented upon by Beech J in Netline v QAV at [85] ‑ [87]. However, much of this conduct post‑dated the subject email, as did the events being the subject of criticism from McKechnie J in Lance v QAV. That said, there was certainly intimidating conduct on the part of Mr Knell which explains the attitude of Mr Lance. Mr Lance determined to stand up for the rights of apartment owners, including obtaining legal advice and then sticking to that advice, in accordance with the Letting and Services Agreement. Further, Mr Lance did try to resolve matters with the assistance of Mr Pye at first, and then Mr Grotegoed, but to no avail.
In terms of s 30(3) of the Defamation Act, the following should be noted:
(a)the matter published in the subject email was of interest to Ms Logiudice as the manager of the strata company. The members of the COO are owners of apartments in Ascot Village and all apartment owners had an interest in the matters published;
(b)the matter published in the subject email related to the performance of the public functions or activities of Mr Knell in exercising his duties as a director of Fieldland and QAV;
(c)any imputation of fraud, dishonesty or of being a crook is, of course, serious;
(d)however, the subject email referred only to Mr Lance's complaints, either being under review or not having been acted upon. The subject email did not seek to assert a proven fact. It related only to the fact of a complaint which required investigation by the appropriate authority. To the extent that other emails, by innuendo, support Mr Knell's claim, it has to be said that there was validity in the context of those other emails calling for an investigation of his conduct as detailed above;
(e)it was in the interests of Ms Logiudice, the strata company, the Council of Owners, and the owners, for Mr Lance to provide this update and the earlier emails;
(f)the emails were all published in an environment relating to Mr Knell's dealings with Ascot Village and the owners of the units;
(g)Mr Lance knew from his own knowledge that monies had been improperly deducted from the unit in which he had an interest as determined by Magistrate Bromfield. The benefit of that decision did not flow through to all other apartment owners. The Letting and Services Agreement did not permit the imposition of ARM and its requirements for the appointment of Mr Knell as a director of QAV were not complied with. Further, Mr Knell rejected the required use of that deed's fixed and split agreements in favour of ARM's 2008 fixed return agreement and the 2010 QAV fixed and split agreements, which only benefited ARM/QAV. Those matters all required the attention of ASIC as did the findings made in litigation in Queensland. The taxation reference followed Mr Knell's problems with the payment of tax in Queensland and the proper accounting of commissions due to Prime Property from Fieldland. However, somehow the accounts were dealt with in such a way that Endeavour A.C.T. Pty Ltd received title to an apartment; and
(h)the subject email did not contain any response from Mr Knell, but it was not expected that it should do so as it was simply an update. In the past, Mr Knell had provided his own responses to an information memorandum and emails provided by Mr Lance and Mr Porter. It was because Mr Knell's responses were less than satisfactory that Mr Lance pursued his complaints. For the reasons set out above at [57], Mr Lance was not activated by malice in sending all or any of the emails. He sought resolution of his issues with Mr Pye, without success. Then he sought resolution with Mr Grotegoed, but again, without success. His only hope was then to go to the AGM and the COO. Even then, he was shut down on 17 March 2011, as set out at [99] above. The AGM on 29 February 2012 did not proceed - see above at [115]. Even the Magistrates Court decision did not resolve matters. Mr Lance was entitled to push for compliance with the Letting and Services Agreement.

Conclusion

The subject email was limited to the reports of complaints having been made. It did not provide any account of suspicious circumstances and it did not suggest anything from which guilt could be imputed. The earlier emails do not support the claim for defamation by innuendo.
This action should be dismissed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
JB
ASSOCIATE TO JUDGE GOETZE
14 DECEMBER 2018