Knell v QAV Pty Ltd - [2020] WASCA 23

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT :   THE COURT OF APPEAL (WA)
CITATION:   KNELL -v- QAV PTY LTD [2020] WASCA 23
CORAM:   QUINLAN CJ
PRITCHARD JA
VAUGHAN JA

HEARD:   9 DECEMBER 2019
DELIVERED          :   27 FEBRUARY 2020
FILE NO/S:   CACV 11 of 2019
BETWEEN:   SIDNEY CHARLES KNELL
Appellant
AND
QAV PTY LTD
First Respondent
KATHRYN ISABEL HARRIS
Second Respondent
WARREN MATHESON LANCE
Third Respondent
NETLINE PTY LTD
Fourth Respondent

FILE NO/S: CACV 25 of 2019
BETWEEN: QAV PTY LTD
Appellant
AND
SIDNEY CHARLES KNELL
First Respondent
KATHRYN ISABEL HARRIS
Second Respondent
WARREN MATHESON LANCE
Third Respondent
NETLINE PTY LTD
Fourth Respondent

ON APPEAL FROM:
Jurisdiction              :   DISTRICT COURT OF WESTERN AUSTRALIA
Coram:   GOETZE DCJ
File Number            :   CIV 3385 of 2013

Catchwords:

Appeal from District Court - Whether primary judge departed from the pleaded issues - Observations made by primary judge after judgment delivery - Observations not part of reasons for judgment - Turns on own facts

Appeal from District Court - Jones v Dunkel - Whether primary judge erred in drawing a Jones v Dunkel inference adverse to appellant - Appellant failed to give evidence - No satisfactory explanation provided for failure to give evidence - Turns on own facts

Legislation:

Defamation Act 2005 (WA), s 30

Result:

Appeal dismissed

Category: B

Representation:

CACV 11 of 2019

Counsel:

Appellant	:	In person
First Respondent	:	A Olsen
Second Respondent	:	C P K Russell
Third Respondent	:	C P K Russell
Fourth Respondent	:	C P K Russell

Solicitors:

Appellant	:	In person
First Respondent	:	A Olsen
Second Respondent	:	Pragma Legal
Third Respondent	:	Pragma Legal
Fourth Respondent	:	Pragma Legal

CACV 25 of 2019

Counsel:

Appellant	:	A Olsen
First Respondent	:	In person
Second Respondent	:	C P K Russell
Third Respondent	:	C P K Russell
Fourth Respondent	:	C P K Russell

Solicitors:

Appellant	:	A Olsen
First Respondent	:	In person
Second Respondent	:	Pragma Legal
Third Respondent	:	Pragma Legal
Fourth Respondent	:	Pragma Legal

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

Australian Securities and Investments Commission v Hellicar [2012] HCA 17; (2012) 247 CLR 345
Cairns Central Plaza Apartments [2012] QBCCMCmr 385
Chong v CC Containers Pty Ltd [2015] VSCA 137; (2015) 49 VR 402
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Knell v Harris [No 5] [2018] WADC 177
Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361
Lance v QAV Pty Ltd [2013] WASC 13
Morley v Australian Securities and Investments Commission [2010] NSWCA 331; (2010) 247 FLR 140
Netline Pty Ltd v QAV Pty Ltd [No 2] [2015] WASC 113
R v Glennon (No 2) [2001] VSCA 17; (2001) 7 VR 631
Re Bluechip Development Corporation (Cairns) Pty Ltd [2011] QSC 368
West v Government Insurance Office of New South Wales [1981] HCA 38; (1981) 148 CLR 62

QUINLAN CJ:

I have had the considerable benefit of reading in draft the reasons of Pritchard and Vaughan JJA.
Subject to one minor matter referred to below, I entirely agree with their Honours' reasons for concluding that the appeals brought by Mr Knell and QAV Pty Ltd (QAV) should be dismissed.
I only wish to add two brief observations of my own.
First, I wish to particularly associate myself with the remarks of Pritchard and Vaughan JJA concerning the manner in which these appeals were prepared and presented, and in particular, the practice of counsel ghost-writing submissions that are then certified as having been prepared by a litigant or some other practitioner.
Counsel who was identified as having prepared the appellant's case in each of these appeals, Dr O'Hair, did not appear before this Court on the appeals. Accordingly, he did not have an opportunity to address the submissions made in relation to his involvement in the preparation of the respective appellant's cases. In those circumstances, I make no personal criticism of him. Nevertheless, as a general observation, as Pritchard and Vaughan JJA have said, it should be clearly understood that a practitioner who is primarily responsible for the preparation of submissions filed in this Court should accept his or her professional responsibility by attaching his or her name to the document. Only when that is done can the Court reliably place confidence on counsel's discharge of his or her duty of independence and candour.
The second observation I would make relates to ground 3 of Mr Knell's appeal, which concerns the rule in Jones v Dunkel.[1]
[1] Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298.
As Pritchard and Vaughan JJA have explained, the learned trial judge relied upon the rule in Jones v Dunkel to more confidently draw the inference that Mr Knell intended, in conducting his business affairs, 'to overcome the provisions of the Letting and Services Agreement and thereby to provide for the financial benefit of … interests associated with Mr Knell'.[2]
[2] Knell v Harris [No 5] [2018] WADC 177 (Primary reasons) [253].
In that regard, it was open to the learned trial judge to apply the rule in Jones v Dunkel in the limited manner in which his Honour did. In particular, as Pritchard and Vaughan JJA have said, Mr Knell, as a plaintiff claiming to have been defamed, would ordinarily be expected to give evidence on his own behalf. Even more so was that expectation likely to arise in the present case, given the defendants' pleas of contextual truth and qualified privilege in answer to the allegedly defamatory publication about Mr Knell.
The explanation given by Mr Knell's counsel at trial for his failure to give evidence ('not wanting to prolong these proceedings')[3] was plainly insufficient and did not provide a proper explanation for his absence.
[3] Trial ts 403 (26/07/18).
At the hearing of the appeal, Mr Knell, representing himself, provided a further, and perhaps more understandable, explanation. In that regard, Mr Knell referred to previous litigation in which he and Mr Lance, the principal defendant in the defamation claim, had been involved. In particular, Mr Knell referred to proceedings brought by Netline Pty Ltd and Ms Harris (the second and fourth respondents to the current appeals) against QAV: see Netline Pty Ltd v QAV Pty Ltd [No 2].[4] In that case, Netline Pty Ltd and Ms Harris sought an order for specific performance, by QAV, of their split return agreement (the Split Return Agreement).
[4] Netline Pty Ltd v QAV Pty Ltd [No 2] [2015] WASC 113 (Netline Pty Ltd v QAV Pty Ltd [No 2]).
In Netline Pty Ltd v QAV Pty Ltd [No 2] Beech J (as his Honour then was) refused the order for specific performance. In doing so, his Honour had cause to consider Mr Lance's conduct in making allegations that were, in substance, the same as those which formed the basis for Mr Knell's defamation action. In that regard, Beech J made the following findings:[5]
Mr Lance has made serious allegations against Mr Knell without any reasonable foundation. He regards those allegations as still being an issue.
In those circumstances, and given Mr Lance's demonstrated propensity to make numerous complaints and unfounded serious allegations, Mr Lance should not be armed with the potent threat of contempt proceedings as a means of enforcing his position in relation to contestable issues about whether the Split Return Agreement has been performed.
[5] Netline Pty Ltd v QAV Pty Ltd [No 2] [104(6) & (7)] (Beech J).
It was by reference, inter alia, to these findings ('armed with Beech J's judgment' as he put it)[6] that Mr Knell said that he concluded that he did not need to give evidence in his own defamation trial. He considered it an 'open and shut case'.[7] Now, with the benefit of the learned trial judge's judgment to the contrary, Mr Knell submits that 'I would have definitely given evidence'.[8]
[6] Appeal ts 35.
[7] Appeal ts 34.
[8] Appeal ts 36.
It is here that I would, ever so slightly, depart from Pritchard and Vaughan JJA's analysis. Unlike their Honours,[9] I do not find Mr Knell's submission in this regard difficult to understand. It reflects, in my view, a predictable expression of regret at having embarked on litigation that has, in essence, backfired. Nevertheless, that regret, understandable as it may be, provides no basis for disturbing the learned trial judge's reliance on the rule in Jones v Dunkel. Even less does it provide a basis for allowing either Mr Knell or QAV's appeal.
[9] See [100] below.
What it does provide is a salutary reminder that, when a plaintiff sues for damage to their reputation, he or she runs the real risk that their reputation will be put in issue and may, in the end, suffer further injury. Indeed, as Mr Knell frankly accepted in oral submissions, by bringing the defamation proceedings against Mr Lance, he armed Mr Lance with the very opportunity that Beech J, by declining specific performance in Netline Pty Ltd v QAV Pty Ltd [No 2], had sought to avoid.[10]
[10] Appeal ts 39.
All of which serves to underscore the importance, reflected in the first of my observations, of frank and independent advice as to the merits and risks of litigation.
The appeals must be dismissed.

PRITCHARD & VAUGHAN JJA:

Overview

The appellants appeal in relation to orders dismissing defamation proceedings brought as to a 23 October 2012 email.
The appellant in appeal CACV 11 of 2019, Sidney Knell, seeks orders setting aside the dismissal of his action and consequential costs orders. Originally Mr Knell sought an order awarding him the costs of the action. By oral application made at the hearing of the appeals Mr Knell instead sought a rehearing of his proceedings. The appellant in appeal CACV 25 of 2019, QAV Pty Ltd,[11] seeks only to set aside the costs order made against it and in lieu thereof an order that there be no order as to costs.
[11] Referred to as 'QAV'.
Mr Knell is a director of QAV and appeared for himself on the hearing of the appeals.
For the reasons that follow both appeals should be dismissed.

Background facts

The appellants allege various errors of law on the part of the primary judge. However, there is only one alleged error that potentially infects any of the primary judge's factual findings. That exception is Ground 3 in appeal CACV 11 of 2019. There Mr Knell alleges error in the primary judge drawing a Jones v Dunkel[12] inference against him. However, Ground 3 did not identify, beyond generalities, which factual findings were said to be impacted by the primary judge having allegedly erroneously applied Jones v Dunkel.
[12] Referring to Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298.
In his written submissions Mr Knell referred to the primary judge as having relied on Jones v Dunkel to make the findings at [253] and [256][13] - findings that were said to be the 'keystone of the arch' of the primary judge's findings which 'essentially poisoned' the whole judgment.[14] In oral submissions Mr Knell also suggested that the primary judge relied on an adverse Jones v Dunkel inference in arriving at the findings at [199] and [254].[15] Accordingly, the findings at [199], [253], [254] and [256] ought to be considered to be in dispute and dependent on the outcome of Ground 3 (although, as will be seen, it is plainly not the case that the primary judge relied on a Jones v Dunkel inference in arriving at some of the 'disputed' findings). With those exceptions the primary judge's factual findings are unchallenged on the appeals.
[13] Appellant's submissions in CACV/11/2019 fn 25 WAB 16.
[14] Appellant's submissions in CACV/11/2019 par 27 WAB 16.
[15] ts 60 - 62 (appeal hearing).
In those circumstances it is only necessary to repeat sufficient of the background facts so as to place in context the issues raised on the appeals. The primary judge's reasons otherwise provide a comprehensive account of the circumstances that gave rise to the allegedly defamatory email and the litigation.
Ascot Village is a strata development on Great Eastern Highway in Ascot. Construction commenced in 2005. Stage 1 comprised 37 short-stay apartments and 16 residential apartments. Stage 2 comprised another 40 residential apartments. Mr Knell became involved in the development in 2004. Among other things a company in which Mr Knell had a financial interest purchased a half interest in the original land owning entity. Also, acting as a real estate agent on behalf of another company of which he was a shareholder and director, by early 2005 Mr Knell had sold many of the short-stay apartments off the plan.
QAV was incorporated in March 2004 to manage the letting of the short-stay apartments. For that purpose a franchise or agency agreement was sought and obtained from Quest Apartments (WA) Pty Ltd. This permitted the short-stay apartments to be managed and let under the 'Quest' banner (the Quest group providing apartment and hotel accommodation). At the time of its incorporation the sole director of QAV was a Mr Grotegoed. A company with which Mr Grotegoed was associated was then the sole shareholder of QAV.
The second, third and fourth respondents in the two appeals were the defendants to the action. It is convenient to continue to refer to them in these reasons as the 'defendants'. They comprise Warren Lance, the second defendant, who is the husband of the first defendant (Kathryn Harris) and a director of the third defendant (Netline Pty Ltd[16]). Ms Harris and Netline together own a short-stay apartment in Ascot Village having become registered proprietors of the property on 29 February 2008. Separately, Mr Lance was the project manager of the construction and development of Ascot Village. Mr Lance was also involved in Ascot Village in other ways. As a real estate representative Mr Lance had sold a number of Ascot Village apartments to Eastern States purchasers. Mr Lance was also an original member of the council of owners in respect of Ascot Village and remained a member of the council until 17 March 2011.
[16] Referred to below as 'Netline'.
While Ms Harris and Netline owned the Ascot Village short-stay apartment, the events of significance to the litigation primarily concerned Mr Lance. For example, although the allegedly defamatory email was said to be sent on behalf of Ms Harris and Netline, it was authored and sent by Mr Lance. Mr Lance was also responsible for most of the other materials on which Mr Knell relied.
We will set out the terms of the 23 October 2012 email at the appropriate place in the chronology. For now, however, it should be mentioned that the email was sent to an Eleanor Logiudice. Ms Logiudice was the director of a company providing strata management services to the relevant strata company - The Owners of Ascot Village Stata Plan 46542 - of which the owners of the apartments were the proprietors. Ms Logiudice gave evidence at the trial having been called as a witness by the appellants.
Construction of Stage 1 of Ascot Village was completed by January 2008. There was, however, some delay in being able to provide the purchasers of the short-stay apartments with individual certificates of title. In those circumstances, on 1 February 2008, the strata company and QAV entered into a deed entitled 'Letting and Services Agreement' (LSA) pursuant to which the strata company agreed that QAV should act as the letting agent for the owners of the short-stay apartments.
The primary judge detailed the terms of the LSA at [27]. Among other things any registered proprietor of a short-stay apartment could require the services of QAV as letting agent (cl 4). That was to be undertaken in accordance with either a fixed return agreement providing for the owner to receive 8 per cent of the purchase price (cl 4.9(a)) or a split return agreement (cl 4.9(b)). The fixed return agreement was only on offer for the initial two years after purchase (cl 4.6). The split return agreement provided for a return to the owner calculated on a 50/50 spilt of the actual income received from the letting of the apartment (item 1 in the schedule to sch 2).
There was a deemed assignment of the LSA on an alteration to QAV's board (cl 8.4(a)). Such assignment was not to occur without prior written consent of the strata company (cl 8.1, cl 8.2). In seeking consent QAV 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 (cl 8.2(c)). As part of the consent process, an interview was required between the strata company and the proposed assignee (cl 8.2(b)).
Between 2007 and mid-2008 there was some disagreement between Mr Knell and Mr Grotegoed. The primary judge recorded, among other things, that Mr Grotegoed refused to sell any interest in QAV to Mr Knell or Mr Knell's interests. Eventually Mr Grotegoed exited the project. This occurred after entry into the LSA. However, Mr Grotegoed remained a director of QAV until shortly before Mr Knell became a director of QAV in May 2010.
Four days after execution of the LSA another company associated with Mr Knell wrote to the short-stay apartment owners.
By this 5 February 2008 letter the owners were offered the management of letting their apartments by Australian Residential Management Pty Ltd.[17] ARM was also a company associated with Mr Knell. ARM offered a two year fixed return agreement with an option of a split return agreement. The letter referred to ARM being interposed between QAV. A number of the short-stay apartment owners entered into a fixed return agreement with ARM. However, Ms Harris and Netline did not. Rather, they entered into 50/50 split return agreement with QAV that adopted the terms of the agreement in the schedule to the LSA.
[17] Referred to below as 'ARM'.
On 30 June 2010 QAV ceased its association with the Quest group. From 1 July 2010 QAV became an agent of the Best Western group. Thereafter the Ascot Village complex became a 'Best Western' badged accommodation provider rather than a 'Quest' apartment hotel. The departure of Ascot Village from the Quest group was at the request of QAV. The timing of the change roughly coincided with a change of name by QAV and Mr Knell becoming a director of QAV (both of which occurred on 12 May 2010).
The primary judge found that:
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 [LSA], which triggered the assignment provisions … There was neither prior written consent, nor the required proof of character and interview, and nor were there deeds as required.[18] (references omitted)
[18] Knell v Harris [No 5] [2018] WADC 177 [52] (Primary reasons). See also [260.3].
In a finding that is unchallenged on appeal the primary judge held that Mr Knell was required to satisfy the strata company that he was reasonable, responsible, financially sound and capable of adequately performing and observing the duties and provisions of the LSA. Moreover, although the LSA required Mr Knell to be interviewed by the strata company - at which time apartment owners could question him - the interview never occurred. The strata company was never formally satisfied as required.
In 2010 Mr Lance became concerned that QAV was deducting booking fees and other expenses without authority. Mr Lance also became aware that other owners had similar concerns and believed that they were owed money by QAV.
With effect from 1 October 2010 QAV sought to renegotiate the fixed return agreements and the split return agreements. QAV was offering a 45/55 split after various deductions (ie a lesser amount than under the pro forma agreement in the LSA). Mr Knell also sought to terminate the existing fixed and split return agreements. This resulted in ongoing correspondence between Mr Knell and Mr Lance in which, among other things, Mr Lance pointed out that Ms Harris and Netline already had an agreement with QAV.

On 23 May 2011 Mr Lance obtained a legal opinion to the effect that the owners of the 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 LSA. The opinion also provided that QAV was not permitted to deduct booking fees and other expenses. Mr Lance circulated the opinion to other apartment owners, QAV and Ms Logiudice.
The legal advice was hardly surprising. Clause 9.1(c) of the split return agreement in the schedule to the LSA provided that QAV (as the 'Agent'):
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;
(3)debt collection costs and charges;
(4)any other deductions that may be agreed upon; and
(5)costs and expenses for Agent Ancillary Services performed during any period that the Premises are not used or occupied by the Owner.[19]
[19] GAB 76.
Nevertheless, Mr Knell sent correspondence to the other owners disputing Mr Lance's interpretation. Ms Harris and Netline had previously commenced proceedings to recover the booking fees and other expenses. On 30 August 2011 Magistrate Bromfield concluded that under the LSA QAV was not entitled to deduct booking fees and other expenses. His Honour stated:
I have reached the conclusion that the [split return agreement] obligates [QAV] to pay the costs and expenses, gas and electricity, any booking fees, travel agent, debt collection costs …
To avoid judgment being entered against QAV, the magistrate, of his own volition, suggested that QAV pay the amount claimed within three days whereupon the claim could be dismissed by consent. That is what happened. However, QAV did not refund booking fees and other expenses to any other apartment owner.
In 2011 and 2012 Mr Knell was involved in litigation in Queensland of which Mr Lance became aware. That litigation concerned:
1.Re Bluechip Development Corporation (Cairns) Pty Ltd[20] - a 9 December 2011 decision where a winding up order was made in relation to a company of which Mr Knell was a director. Among other things the trial judge had general reservations about Mr Knell's evidence.
2.Cairns Central Plaza Apartments[21] - a 23 August 2012 decision where an adjudicator refused an increase in the remuneration to be paid to a company in which Mr Knell had an interest.
[20] Re Bluechip Development Corporation (Cairns) Pty Ltd [2011] QSC 368.
[21] Cairns Central Plaza Apartments [2012] QBCCMCmr 385.
Commencing from mid-March 2011 Mr Lance began communicating his concerns about QAV and Mr Knell to Ms Logiudice. Later Mr Lance's concerns resulted in information being provided and complaints being made to the Australian Taxation Office (ATO), the Australian Securities and Investments Commission (ASIC) and the Major Fraud Squad of the Western Australian Police Squad (Fraud Squad). The primary judge recounts this (and some of Mr Knell's communications to owners) at length at [90] to [115] and [118] to [131] of his Honour's reasons for decision.
As to Ms Logiudice:
1.On 15 and 16 March 2011 Mr Lance sent Ms Logiudice, among others, emails with the subject header '[p]roposal to sack the letting agent' referring to proceedings being commenced against QAV to recover deductions, overcharging and unauthorised deductions by QAV, ARM being prima facie a fraud, threatening owners with invalid and unauthorised agreements and that the ATO may wish to investigate whether a company associated with Mr Knell declared certain commission items as income.
2.By a 15 March 2011 information memorandum, prepared at Ms Logiudice's request for the strata company's annual general meeting as scheduled for 17 March 2011, Mr Lance sought to terminate QAV's services at Ascot Village. Among other things Mr Lance raised whether Mr Knell was a fit and proper person to direct QAV's operations. Reference was also made to ARM and QAV's deduction of booking fees. (At the AGM the motion to terminate QAV's services was defeated and Mr Lance was not re-elected to the council of owners.)
3.On 30 September 2011 Mr Lance sent emails to Ms Logiudice suggesting that she investigate Mr Knell's involvement in the 'Bluechip group' of companies stating that he, Mr Lance, suspected this could raise questions about Mr Knell's suitability as a director of QAV. Mr Lance also confirmed the Magistrates Court's finding and asserted that the new QAV letting services agreements were to the advantage of QAV and the detriment of the owners. Mr Lance suggested that Ms Logiudice provide the materials to the members of the council of owners.
4.On 18 October 2011 Mr Lance sent Ms Logiudice and various owners another email referring to the Magistrates Court's ruling - stating that QAV was not entitled to deduct various expenses. Mr Lance again referred to the ARM letting arrangements as being a prima facie fraud. Mr Lance sought compliance with the terms of the fixed and split return agreements contained in the schedules to the LSA.
5.By letter dated 23 January 2012 to Ms Logiudice, Mr Lance called on QAV to uphold the terms of the LSA and refund money due to owners. Mr Lance also informed Ms Logiudice that information had been provided to the ATO and complaints had been lodged with the ASIC.
6.On 1 August 2012 solicitors acting for Mr Lance wrote to Ms Logiudice regarding the use of letting agreements that were not in conformance with the LSA.
In terms of the information provided and complaints made by Mr Lance:
1.On 14 September 2011 Mr Lance wrote to the ATO - its 'Tax Evasion Referral Centre' - regarding Mr Knell.
2.On 22 December 2011 Mr Lance lodged a complaint with the ASIC regarding Mr Knell. (Mr Lance had previously been made aware of other owners lodging complaints with the ASIC.)
3.On 14 May 2012 Mr Lance sent a complaint to the Fraud Squad.
The complaint to the ASIC resulted in a request for documents. Other than that the referrals to the ATO and the ASIC went unanswered. On 11 September 2012 Mr Lance approached his federal parliamentary member raising the lack of a response. The parliamentarian then caused his staff to contact the Treasurer and the Attorney-General. The complaint to the Fraud Squad was answered. On 26 June 2012 the Fraud Squad informed Mr Lance that, in the view of the responding officer, the material provided did not indicate a criminal offence of stealing or fraud. It was suggested that the complaint concerned a matter to be remedied through civil proceedings. Nevertheless, on 12 September 2012 Mr Lance requested a review of the Fraud Squad decision not to conduct an investigation into the matter.
The email which was alleged to be defamatory of the appellants was sent by Mr Lance to Ms Logiudice on 23 October 2012 referring to 'Ascot Village - COO Meeting 25 Oct '12' as its subject. The email read:
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 (emphasis added)
The email attached a copy of the decision of the adjudicator in Cairns Central Plaza Apartments.
The email was sent to Ms Logiudice in anticipation of a scheduled 25 October 2012 meeting of the council of owners. The meeting did not proceed because Mr Knell was not in Perth. Mr Lance's evidence was that he (Mr Lance) planned to attend the meeting. Mr Lance understood that the council would be discussing whether Mr Knell was a fit and proper person to be a director of QAV.
Ms Logiudice gave evidence that Mr Lance telephoned her a short time after the 23 October 2012 email was received. However, Ms Logiudice was unable to recall what was discussed. Otherwise, based on the emails and information memorandum referred to in [46] above (but not the 23 January 2012 letter) Ms Logiudice understood the 23 October 2012 email to be referring to a complaint to the Fraud Squad about Mr Knell and QAV that had been sent for review, that there had also been ASIC complaints about Mr Knell, and that Mr Lance had made a tax evasion complaint about Mr Knell.
Ms Logiudice on-sent Mr Lance's 23 October 2012 email to the members of the council of owners.
The appellants alleged that the email was defamatory as, in their natural and ordinary meaning, the reference to the complaints to the Fraud Squad, the ASIC and the ATO imputed that Mr Knell had:[22]
1.behaved unlawfully and fraudulently, dishonestly and was a crook (presumably relying on the email's reference to 'my complaint to the Fraud Squad');
2.behaved unlawfully and on countless occasions in breach of laws administered by ASIC (presumably relying on the email's reference to 'countless complaints' involving the ASIC); and
3.engaged in tax evasion (presumably relying on the email's reference to 'tax evasion complaint').
[22] Appellants' second further amended statement of claim dated 27 September 2017 pars 8A, 9A, 10A BAB 111, 114, 117.
In the alternative, Mr Knell and QAV alleged that the email bore such meanings by innuendo. As particularised the allegation was that the defendants had self-reported what were alleged to be well-founded complaints which by implication ought to be taken to be true and correct whatever the actual content of the complaints. The innuendo plea relied on various earlier emails and discussions between Mr Lance and Ms Logiudice (the effect of which is recounted at [46] and [49] to [52] above).[23]
[23] Appellants' second further amended statement of claim dated 27 September 2017 pars 8B, 9B, 10B BAB 112, 114 - 115, 117 - 118.
Separate defamatory imputations were alleged in relation to QAV.[24]
[24] Appellants' second further amended statement of claim dated 27 September 2017 pars 10AA - 10AD BAB 119 - 121.
The defendants denied that the email gave rise to the defamatory imputations as claimed.[25] In the alternative, the defendants pleaded that, in their natural and ordinary meaning, the statements bore or were capable of bearing the meaning that Mr Knell's conduct gave rise to a belief by Mr Lance that there were grounds for investigating whether Mr Knell had behaved unlawfully, and that meaning was true in substance and in fact.[26] The defendants also relied on the defence of qualified privilege.[27]
[25] Amended defence dated 6 September 2017 pars 11, 14, 17, 20 BAB 99, 101, 103, 104 - 105.
[26] Amended defence dated 6 September 2017 pars 12, 15, 18, 21 BAB 99 - 100, 101 - 102, 103 - 104, 105.
[27] Amended defence dated 6 September 2017 pars 13, 16, 19, 22 BAB 100 - 101, 102 - 103, 104, 105.
In alleging that the alternative contextual imputations were substantially true the defendants contended that the meanings were true in substance and in fact by reason that:[28]
1.Mr Knell caused ARM to be interposed such that ARM was able to, and in fact did, retain money that was lawfully due to the owners.
2.Mr Knell caused QAV to deduct booking fees from the returns due to owners. Moreover, despite the Magistrates Court's determination that it was not lawful to deduct those booking fees, Mr Knell caused QAV to continue to do so and to fail to repay earlier unlawfully deducted booking fees.
3.Mr Knell caused QAV to incorrectly represent that the owners had to enter into new letting arrangements which were more favourable to QAV and less favourable to the owners.
4.As to the tax evasion matter, various transactions as particularised gave rise to a belief that there were grounds for investigation as to whether Mr Knell had behaved unlawfully by way of evading the payment of tax.[29]
[28] Amended defence dated 6 September 2017 pars 12(b) - (d), 15(a) BAB 100, 102.
[29] Amended defence dated 6 September 2017 par 18 BAB 103 - 104.

The primary judge's reasoning

The primary judge found that QAV was not an 'excluded corporation' at the time of publication of the 23 October 2012 email and thus, by reason of s 9(1) of the Defamation Act 2005 (WA), did not have a cause of action.[30] At trial QAV did not challenge its status as a non-excluded corporation. On appeal there was no challenge to the primary judge's finding as formed the basis for the dismissal of QAV's action against the defendants.
[30] Primary reasons [16].
Accordingly, the bulk of the primary judge's reasons for decision concerned Mr Knell's claim against the defendants.
The primary judge made significant findings, all unchallenged on appeal, as to Mr Knell's conduct in relation to Ascot Village and QAV. The material unchallenged findings included the following:
1.Mr Knell falsely claimed in a communication to short-stay apartment owners that ARM was established to ensure that rental guarantees were honoured.[31] The primary judge described this reasoning of Mr Knell as a 'work of fiction'.[32] The primary judge instead held that ARM was established to further the financial interests of Mr Knell and others associated with him.[33]
2.This was in circumstances where: (a) ARM did not have the prior written consent of the strata company to be involved in the management of the letting of the short stay apartments; (b) ARM was not part of the agreement with Quest Apartments (WA) Pty Ltd; and (c) ARM should not have operated from the Ascot Village.[34]
3.Mr Knell and QAV simply ignored cl 9 of the split return letting agreement (which was written in plain language and was capable of only one interpretation) and continued to wrongly deduct booking fees and other expenses.[35] Mr Knell was wrong to deduct the booking fees and other expenses from gross returns.[36] As at 15 December 2010 Mr Knell knew that such deductions were not authorised or - at best - had some doubt about whether the deductions were allowed.[37]
4.After the Magistrates Court's ruling Mr Knell manipulated the truth by falsely stating to the owners in an 18 October 2011 email that a settlement was reached.[38] The statement was misleading and deceptive.[39] Moreover, the ruling should have been acted upon immediately to provide for the retrospective and future entitlements of all owners with a split return letting agreement under the LSA.[40] It was, at best, sharp practice not to refund booking fees and other expenses to all apartment owners with such agreements.[41]
5.Contrary to a claim made by Mr Knell to owners - to the effect that QAV could make any deal it wanted with any owner at any time that was itself lawful - QAV was contractually bound to provide owners with a fixed or split return agreement in terms of the LSA.[42] Similarly, contrary to a 13 October 2011 threat by Mr Knell that he, as a director of QAV would terminate the agreements, there was no right to terminate existing fixed or split return letting agreements conformable with the LSA.[43] The threat to terminate was written in strong language and was misleading or deceptive.[44]
6.In a letter dated 13 October 2010 Mr Knell bullied owners and threatened them with termination of their existing fixed or split return letting agreement.[45] This bullying behaviour, and other correspondence to owners, demonstrated an attitude by which Mr Knell showed a complete disregard for the LSA.[46] Mr Knell also adopted intimidatory and bullying tactics in an email to Mr Lance dated 15 December 2010.[47] The communications constituted an attempt to force owners out of existing and ongoing letting agreements under the LSA and into new fixed or split return agreements on terms less favourable to the owners.[48]
[31] Primary reasons [96], [171] - [172], [260.2].
[32] Primary reasons [194]. See also at [198], [201] - [202].
[33] Primary reasons [172], [203].
[34] Primary reasons [191.3]. See also [260.1] - [260.2].
[35] Primary reasons [173].
[36] Primary reasons [223]. See also at [260.6].
[37] Primary reasons [219].
[38] Primary reasons [108], [174].
[39] Primary reasons [222]. See also at [260.5].
[40] Primary reasons [220].
[41] Primary reasons [221]. See also at [260.6].
[42] Primary reasons [96], [175] - [180], [188].
[43] Primary reasons [61], [210], [212].
[44] Primary reasons [209] - [210]. See also at [229], [260.5].
[45] Primary reasons [61], [181]. See also at [209] - [210], [215].
[46] Primary reasons [182].
[47] Primary reasons [65], [215].
[48] Primary reasons [215]. See also [260.4].
In short, as the primary judge later summarised, Mr Knell sought to financially benefit himself and his interests when he (Mr Knell) knew that his actions were contradicted by the LSA.[49]
[49] Primary reasons [258].
The primary judge also held as follows (in a passage that Mr Knell sought to challenge as part of Ground 3):
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 [LSA] 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.[50] (emphasis added)
[50] Primary reasons [253].
The primary judge then went on to state that Mr Knell's intent could be inferred from 14 enumerated factors as set out in [254] of his Honour's reasons. The findings set out in [254] are also things that Mr Knell belatedly sought to attack under the rubric of Ground 3 (see [22] above). However, none of the 14 matters mentioned in [254] concerned an unexplained failure by Mr Knell to give evidence. Rather, the primary judge relied on Mr Knell's general involvement in Ascot Village, Mr Knell's knowledge of the LSA and its terms, the introduction of ARM to manage the apartments without the prior written consent of the owners, Mr Knell's own communications with owners and Mr Lance, Mr Knell's attitude, Mr Knell having arranged for booking fees and other expenses to be deducted and the known history that owners with a split return agreement in terms of the LSA had higher returns from 2007. In other words, Mr Knell's intent to overcome the provisions of the LSA and thereby provide for the financial benefit of ARM and QAV (interests associated with Mr Knell) as found at [254] of the primary judge's reasons was not arrived at by means of drawing an adverse inference by applying the rule in Jones v Dunkel.

That conclusion is fortified by what the primary judge recorded at [255] of the primary reasons. His Honour held that the inference of Mr Knell's intent was the only inference consistent with the proven facts. Accordingly, the primary judge initially reached the inference on the proven facts rather than by relying on any unexplained failure to give evidence on the part of Mr Knell.
Nor, in our view, was the primary judge's finding at [199] based on a Jones v Dunkel inference. There the primary judge inferred that, in order to circumvent a difficulty Mr Knell had with the Quest group, Mr Knell sought to utilise ARM in the management of Ascot Village. In his oral submissions Mr Knell sought to bring the finding at [199] within Ground 3 (see [22] above). That too is misconceived; the primary judge based his finding at [199] on inference from other proven facts rather than Mr Knell's failure to give evidence. Both the finding at [199] and the finding as to Mr Knell's intent at [254] stand outside Ground 3 and ought properly be seen as uncontroversial on the appeal. Indeed, that was the position in Mr Knell's written submissions. It was not until late in Mr Knell's oral submissions that he sought to add [199] and [254] to the factual findings challenged by Ground 3.
Based on his findings as to Mr Knell's conduct, the primary judge held that the context gave rise to well‑founded complaints on the part of Mr Lance, all being true in substance and in fact, and all requiring investigation by the specific authority.[51] The primary judge made findings unchallenged on appeal that:
1.Financial transactions as detailed by the primary judge gave rise to objectively reasonable grounds to suspect that they required investigation by the ATO.[52]
2.It was reasonable for Mr Lance to request that the ASIC investigate Mr Knell's actions insofar as Mr Knell's disregard for the terms of the LSA and the Magistrates Court's ruling, and associated conduct, reflected on Mr Knell's fitness for office as a director of QAV.[53]
3.There were aspects of Mr Lance's complaint that the Fraud Squad had not investigated.[54] One of these was the continuing deduction of booking fees and other expenses, and the failure to refund past such deductions, after the Magistrates Court's ruling. This was a 'delinquency' worthy of report to the Fraud Squad for investigation.[55]
[51] Primary reasons [236].
[52] Primary reasons [232] - [235].
[53] Primary reasons [226]. See also at [225], [227].
[54] Primary reasons [228] - [231].
[55] Primary reasons [230].
The primary judge held that the words complained of in the email, in their ordinary and natural meanings, were not capable of bearing the suggested defamatory imputations and did not in fact do so.[56] There is no challenge to that finding on appeal.
[56] Primary reasons [244]. See also at [267].
In assessing Mr Knell's alternative claim that the email carried the meanings complained of by innuendo, the primary judge considered the contextual matters relied on.[57] Findings - not challenged on appeal - were made that:
1.By alleging a prima facie fraud Mr Lance was effectively putting a proposition and seeking an explanation from Mr Knell.[58] In this respect the Fraud Squad did not adequately deal with Mr Lance's complaint or other matters of concern.[59]
2.Mr Knell showed complete disregard for the LSA.[60]
3.The facts as proven, and the findings in Re Bluechip Development Corporation (Cairns) Pty Ltd and Cairns Central Plaza Apartments, raised questions of Mr Knell's suitability to be a director of QAV or any company.[61]
4.The sole email relied on in respect of the innuendo as to tax evasion was not defamatory; it did not provide any account of suspicious circumstances and did not suggest anything from which guilt could be imputed.[62]
[57] Primary reasons [245] - [269].
[58] Primary reasons [246] - [251].
[59] Primary reasons [257].
[60] Primary reasons [260].
[61] Primary reasons [262].
[62] Primary reasons [263].
Otherwise the primary judge made no express findings on the imputations conveyed by innuendo.[63] Inferentially, however, the primary judge accepted the meanings contended for by the defendants by way of contextual imputation. The primary judge recorded that at common law there can be only one innuendo.[64] His Honour again referred to Mr Lance seeking discussion rather than making a judgment call or imputing anything.[65] The primary judge then found that the email was not defamatory by way of innuendo.[66] This was because:
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.[67]
[63] cf Primary reasons [279].
[64] Primary reasons [264].
[65] Primary reasons [266].
[66] Primary reasons [267].
[67] Primary reasons [268] - [269].
In holding those matters to be true in substance and in fact the primary judge ought necessarily to be taken to have accepted the meaning contended for by the defendants by way of contextual imputation, namely, that Mr Knell's conduct gave rise to a belief by Mr Lance that there were grounds for investigating whether Mr Knell had behaved unlawfully. There is no challenge on appeal to the primary judge's factual findings in this respect. Insofar as the primary judge accepted that the contextual imputations were substantially true his Honour did not find it necessary to consider whether, absent truth, the meaning conveyed by innuendo was defamatory. There is no ground suggesting that the primary judge was in error in failing to consider and determine this issue. Nor, on appeal, was it suggested by either appellant that this court should so find.
The primary judge would also have upheld the qualified privilege defence.[68] His Honour made findings that:
1.Ms Logiudice 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. It was Ms Logiudice who placed items on the agenda regarding QAV's compliance with the LSAs.[69]
2.Mr Lance published the email in the course of providing Ms Logiudice with relevant information[70] - inferentially as to whether the strata company was complying with its statutory and contractual obligations.
3.The conduct of Mr Lance in publishing the email was reasonable in the circumstances.[71]
4.Mr Lance was not motivated by malice.[72] (This finding is not challenged on appeal.)
[68] Primary reasons [272] - [278].
[69] Primary reasons [273].
[70] Primary reasons [273].
[71] Primary reasons [273], [278].
[72] Primary reasons [274] - [276].
The defendants' defence did not identify whether the defendants relied on qualified privilege under s 30 of the Defamation Act 2005 (WA) or the general law. However, the defendants' written closing submissions only raised s 30.[73] Reading the primary judge's reasons as a whole[74] it is apparent that his Honour considered the defence by reference to the statutory provision rather than the general law. On appeal the defendants did not seek to uphold the primary judge's finding as to qualified privilege based on the general law defence.
[73] Second to fourth respondents' closing submissions dated 27 July 2018 par 63 BAB 172 - 173.
[74] See eg Primary reasons [158] - [159] and [271] - [278].
For these reasons the primary judge found that the appellants' actions should be dismissed.
The primary judge heard argument as to the costs of the action on 25 January 2019.[75] The primary judge gave brief reasons for awarding the defendants costs on a party and party basis up to and including 16 April 2015, such costs to be paid by Mr Knell and QAV jointly and severally. Thereafter the costs were payable on an indemnity basis. The basis for the indemnity costs order was the rejection of an offer on the part of the defendants as contained in a letter dated 13 April 2015[76] (the offer was rejected on 16 April 2015).[77]
[75] ts 531 - 553 (25/01/19).
[76] GAB 609 - 612.
[77] GAB 613 - 614.

The appellants' grounds of appeal

Mr Knell relied on five grounds of appeal all of which were alleged to constitute an error of law:
1.By Grounds 1 and 2 the primary judge was alleged to have departed from the issues joined on the pleadings to determine the case. Both grounds relied on statements made by the primary judge after handing down his reasons for decision. Relevantly:
(a)Ground 1 complained that - in the course of the primary judge giving a summary of the reasons for decision - his Honour said that Mr Knell had 'manipulated all these different agreements for his personal use'; and
(b)Ground 2 complained that - later in the same discourse - his Honour said that Mr Knell and QAV 'are probably going to have to pay back a lot of money to unit holders'.
2.Ground 3 alleged that there was no factual foundation for the application of the rule in Jones v Dunkel insofar as the primary judge erred in holding that no reason was offered for Mr Knell not giving evidence.
3.Ground 4 complained that the primary judge erred in upholding the defence of qualified privilege because:
(a)as to s 30 of the Defamation Act 2005 (WA) - it was contended that Ms Logiudice did not have an interest or apparent interest to receive the email; and
(b)as to the general law - it was contended that there was not the necessary reciprocal interest between Ms Logiudice and the defendants.
4.Ground 5 again complained about the primary judge upholding the defence of qualified privilege under s 30 of the Defamation Act 2005 (WA). Mr Knell contended that the conduct of the defendants in publishing the email was not reasonable in the circumstances (relying in particular on Ground 4) and that the primary judge's consideration of the factors enumerated in s 30(3) of the Act was flawed.
The second part of Ground 4 requires no further consideration. The primary judge did not uphold the qualified privilege defence under the general law. The finding was only in terms of s 30. Accordingly, Ground 4 need only be assessed by whether, in terms of s 30(1)(a) and (b) of the Defamation Act 2005 (WA), Ms Logiudice had an interest or apparent interest in having information on some subject and the email was published to Ms Logiudice in the course of giving her information on that subject.
Mr Knell did not allege that success on one or all of these Grounds would sustain a finding in his favour for damages to be assessed. Nor could he. Mr Knell's primary case, as to the alleged defamatory imputations conveyed by the email according to its ordinary and natural meaning, had been rejected and was unchallenged on appeal. So too, as to alleged imputations conveyed by innuendo, Mr Knell's case had not succeeded before the primary judge and there was no relevant challenge which might see reversal and an order for damages to be assessed. The most that was challenged was aspects of the factual findings that sustained the defence of contextual truth as were alleged to be dependent on the primary judge having erroneously employed a Jones v Dunkel adverse inference. But here there was no finding that the contextual imputations were defamatory; and none was sought on appeal.
Rather, at least as originally formulated in Mr Knell's written submissions, this appeal was an attempt to overcome the adverse costs consequences of the appellants' failure at trial. In his appellant's case Mr Knell stated:
… the relief sought on appeal in respect of this appeal ground and each of the others is restricted to vacating and setting aside the judgment below, although normally a new trial could be sought … if the Appellant is successful, he does not propose to pursue a new trial, but is content with the judgment below being vacated and appropriate costs orders …[78]
[78] Appellant's submissions in CACV/11/2019 par 14 WAB 14.
Mr Knell's 'orders wanted' were consistent with that position. Mr Knell sought orders that the primary judge's orders be vacated and set aside and that the costs of the trial be awarded to him.[79] It is difficult to understand why that would be the appropriate order were Mr Knell to succeed in establishing error that vitiated the primary judge's dismissal of the claim. Prima facie the appropriate order would be remission to the primary judge to determine the outstanding issues according to law with the costs of the trial to be reserved and ultimately determined in light of the disposition on remittal.
[79] Appellant's orders wanted in CACV/11/2019 WAB 23.
By the hearing of the appeal, however, Mr Knell's position had changed. In a letter to the court dated 5 December 2019 Mr Knell stated:
… as I am now representing myself at the argument of the appeal I withdraw the concession that I do not seek a re-hearing … I now seek a rehearing or in [sic] alternative if the orders are all vacated then I seek that the parties bear their costs of and incidental to the matter including the appeal …
Accordingly, at the outset of the hearing of the appeals Mr Knell made an oral application to withdraw the concession (as noted at [79] above) and to amend his orders wanted to provide for orders, if successful on appeal, for the matter to be remitted to the District Court for rehearing.[80] That application was opposed by the defendants on the basis that the grounds of appeal left intact all material factual findings such that on a rehearing the only outcome that was open was a dismissal of the action.[81] The court decided that Mr Knell's oral application should be considered in the light of its determination of the remainder of Mr Knell's appeal. For that reason the application is dealt with at [126] below.
[80] ts 5 - 8, 11 - 12 (appeal hearing).
[81] ts 12 (appeal hearing).
QAV's appeal was derivative on Mr Knell's appeal. QAV's single ground of appeal alleged that the primary judge's exercise of discretion concerning costs miscarried in the event that Mr Knell is successful in appeal CACV 11 of 2019 because then: (1) the defendants were not successful in their defence; and (2) the 13 April 2015 offer made by the defendants was not a basis for making a costs order against QAV (whether on an indemnity basis or at all).
QAV accepted that its Ground failed in the event that Mr Knell's appeal in appeal CACV 11 of 2019 was unsuccessful.[82] If the Ground was upheld QAV contended that the proper order in substitution of the primary judge's order as to costs was that there be no order as to costs so far as QAV was concerned, or alternatively, that QAV pay costs on a party and party basis only to the extent that its claim caused the costs in the proceedings to be increased.[83]
[82] Appellant's submissions in CACV/25/2019 par C WAB 9; ts 68 - 69 (appeal hearing).
[83] Appellant's submissions in CACV/25/2019 par D WAB 9.

Disposition: Alleged departure from pleaded issues (Mr Knell's Grounds 1 and 2)

The primary judge handed down his written reasons for decision on 14 December 2018. There was no advance copy. The primary judge announced that he would dismiss the action and order judgment for the defendants. After the reasons were published counsel for the defendants informed the court that the parties had agreed, subject to the view of the primary judge, to put off the question of costs to the New Year.[84]
[84] ts 532 (14/12/2018).
In the course of discussing the costs orders that would be sought there was discourse between bar and bench in which, among other things, the primary judge summarised the nature of the findings he had made. What was said by the primary judge in those interchanges is the basis for Grounds 1 and 2. When viewed in context it is apparent that the primary judge's statements were by way of broadly summarising the effect and consequences of the primary judge's findings in his reasons for decision in circumstances where counsel had not had an opportunity to consider the reasons and there was ongoing discussion before the court as to the type of costs orders that might be sought.
The exchange that informs Ground 1 was as follows:
[Defendants' counsel]: So we would be seeking an order for indemnity costs as a result of the non-acceptance of that offer.
[Primary judge]: Well, I've found Mr Knell to be thoroughly disreputable.
[Defendants' counsel]: All right. Well …
[Primary judge]: Now, that's in summary form.
[Defendants' counsel]: Yes.
[Primary judge]: That he's manipulated all these different agreements for his own personal use.[85] (emphasis added)
[85] ts 533 (14/12/2018).
The exchange that informs Ground 2 was as follows:
[Primary judge]: Yes. So you want indemnity costs following …
[Defendants' counsel]: Yes.
[Primary judge]: … those two offers?
[Defendants' counsel]: Yes. And I …
[Primary judge]: Well, you've hands-down beaten them.
[Defendants' counsel]: Yes.
[Primary judge]: And Mr Knell and QAV are probably going to have to pay back a lot of money …
[Defendants' counsel]: Yes.
[Primary judge]: … to unit holders.
[Defendants' counsel]: Yes.
[Primary judge]: They should all be in the same position as Magistrate Bromfield put …
[Defendants' counsel]: Yes.
[Primary judge]: … your clients …
[Defendants' counsel]: Yes, that's right.
[Primary judge]: … for one thing.
[Defendants' counsel]: Mm hmm.
[Primary judge]: So is there any point in delaying it?[86] (emphasis added)
[86] ts 535 (14/12/2018).
The primary judge made orders dismissing the action. Ultimately, however, his Honour adjourned the question of costs to 25 January 2019.
As to Ground 1, Mr Knell contended that the primary judge's observation that he had found Mr Knell to be 'thoroughly disreputable' and to have had 'manipulated … agreements for his own personal use' was a summary of the primary judge's judgment. Mr Knell contended that the 'findings' as so articulated did not comport with the pleadings.[87] Similarly, as to Ground 2, Mr Knell argued that the primary judge's observation that Mr Knell and QAV were probably going to have to pay back a lot of money to the short-stay apartment owners went beyond the pleadings - thereby exceeding his Honour's jurisdiction - and denied Mr Knell natural justice.[88] Mr Knell contended that any liability to third parties had not been the subject of the proceedings before the primary judge and the defendants' defence could not found any basis for relief to third parties.[89] Mr Knell submitted that the case on the pleadings was that QAV 'had not paid the amounts alleged to be due'.[90]
[87] Appellant's submissions in CACV/11/2019 par 9 WAB 13.
[88] Appellant's submissions in CACV/11/2019 par 17 WAB 14.
[89] Appellant's submissions in CACV/11/2019 par 15 WAB 14.
[90] Appellant's submissions in CACV/11/2019 par 17 WAB 15.
In oral submissions Mr Knell argued that, in his Honour's observations after judgment delivery, the primary judge revealed his real state of mind - and this went beyond the findings as set out in his Honour's reasons for decision (and, inferentially, the pleaded case).[91]
[91] ts 22, 30 (appeal hearing).
There is no substance in Ground 1 or Ground 2. The primary judge's reasons for dismissing the appellants' actions were - as his Honour stated in informing the parties that he would dismiss the action and order judgment for the defendants - the written reasons for decision as published.[92] The subsequent observations made in addressing whether costs should be dealt with immediately, as now pointed to in support of Grounds 1 and 2, were no more than an abridged synopsis of a particular aspect of the reasons and a possible consequence of the findings made by the primary judge. Indeed, the primary judge expressly referred to what he had found (ie in the reasons as published) and was at pains to explain that this was no more than a summary.[93] In a further interchange between counsel then appearing for Mr Knell, who informed the primary judge that his instructions were to deal with costs having had time to reflect on the judgment, the primary judge suggested that his findings as to Mr Knell would be evident on a reading of the written reasons for decision.[94] At no time in the judgment delivery hearing, or in pronouncing orders dismissing the action, did his Honour suggest that he was making any additional findings.
[92] ts 532 (14/12/18).
[93] ts 533 (14/12/18).
[94] ts 536, 537 (14/12/18).

Mr Knell's suggestion before this court that the primary judge's observations in the course of discussion with counsel supplant his Honour's written reasons for decision - revealing what was truly 'top of his mind' - cannot be accepted. It is contrary to what was stated by the primary judge and the context in which the observations were made. The primary judge did not dismiss the appellants' action because of the observations made after delivery of the reasons for decision. The action was dismissed for the reasons provided in the written reasons for decision.
There is no doubt that, in arriving at the various conclusions in the written reasons for decision which led to the dismissal of the action, the primary judge was careful to confine his findings to the pleaded case. No suggestion to the contrary was made by Mr Knell or QAV. The primary judge was at pains to summarise the pleaded case[95] and summarised the issues that arose on the pleadings.[96] The adverse findings made as to Mr Knell's conduct (see [61] to [62] and [64] to [71] above) were conformable with the defendants' pleaded case as to contextual truth (see [57] to [58] above).
[95] Primary reasons [144] - [150].
[96] Primary reasons [151].
Mr Knell's insistence on appeal that the primary judge departed from the pleaded case in dismissing the action relied on comments taken out of context which did not constitute his Honour's reasons for decision. It is wrong to endow those observations - self‑evidently offered as an abstract of the primary judge's conclusions and a natural corollary of one of those conclusions - with the status of findings. All the more so it is misconceived to suggest that those observations supersede his Honour's written reasons for decision insofar as those written reasons contained extensive and comprehensive factual findings based on a careful analysis of the parties' respective pleaded case. Grounds 1 and 2 should be dismissed.

Disposition: Application of the rule in Jones v Dunkel (Mr Knell's Ground 3)

The content of the rule in Jones v Dunkel is uncontroversial. Two consequences may flow from the unexplained failure of a party to call a witness who that party may be expected to call. First, the court may infer that the evidence of the absent witness would not assist the case of the party. Second, the court may draw an inference unfavourable to the party with greater confidence.[97] In the latter case the inference must already be available on the evidence.[98] Also, the uncalled witness must be one who appears to be in a position to cast light on the facts relied on as the ground for the inference.[99] However, the rule in Jones v Dunkel does not permit an adverse inference that the uncalled evidence would have been positively damaging to the party.[100] The absence of the witness cannot be used to make up any deficiency of evidence.[101]
[97] Jones v Dunkel (308), (312), (320 - 321); Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361 [63] - [64]; Australian Securities and Investments Commission v Hellicar [2012] HCA 17; (2012) 247 CLR 345 [232]; Chong v CC Containers Pty Ltd [2015] VSCA 137; (2015) 49 VR 402 [207] - [208].
[98] Morley v Australian Securities and Investments Commission [2010] NSWCA 331; (2010) 247 FLR 140 [634]; Chong v CC Containers Pty Ltd [208].
[99] Kuhl v Zurich Financial Services Australia Ltd [63]; Chong v CC Containers Pty Ltd [208].
[100] Kuhl v Zurich Financial Services Australia Ltd [64]; Australian Securities and Investments Commission v Hellicar [232].
[101] Jones v Dunkel (312). See also Chong v CC Containers Pty Ltd [208].
Accordingly, the rule in Jones v Dunkel is accepted to be an application of the maxim that evidence is to be weighed according to the proof which it was within the power of one side to have produced and in the power of the other to have contradicted.[102]
[102] Chong v CC Containers Pty Ltd [207].
The gravamen of Ground 3 was an allegation that the primary judge applied the rule in Jones v Dunkel despite Mr Knell's failure to give evidence being explained. The explanation was said to consist of the following statement by counsel for the appellants in the course of the trial:
Your Honour, notwithstanding the ordinary rule, I don't have a problem with that [a submission on behalf of the defendants that a document tendered by the appellants should not be received as proof of its contents], because Mr Knell, not wanting to prolong these proceedings, hasn't given evidence and so I'm content with that.[103] (emphasis added)
[103] ts 403 (26/07/18).
The contention was that Mr Knell's failure to give evidence was explained by counsel's statement that he (Mr Knell) had not wanted to prolong the proceedings.
Mr Knell made two other general submissions in support of Ground 3. First, that as this was a defamation case, his onus of proof was discharged once publication and identification was proved. Thus, it was said, a court should be reluctant to draw any adverse inference from his failure to give evidence - especially as the conduct of a trial by a defendant claiming truth is a recognised ground of aggravation in terms of damage.[104] Second, Mr Knell pointed to previous litigation involving some of the parties that had resulted in indemnity costs against Mr Lance[105] and a refusal to order specific performance against QAV on discretionary grounds[106] - the latter said to be particularly significant as it was a case in which both Mr Knell and Mr Lance gave evidence.[107] It is difficult to understand this latter submission and it cannot be accepted. The circumstance that the defendants failed in other litigation involving Ascot Village does not provide an explanation for Mr Knell's failure to give evidence. The other litigation involved different issues. The outcome of that other litigation could not be determinative of the issues for adjudication before the primary judge.
[104] Appellant's submissions in CACV/11/2019 par 30 WAB 17.
[105] Lance v QAV Pty Ltd [2013] WASC 13.
[106] Netline Pty Ltd v QAV Pty Ltd [No 2] [2015] WASC 113.
[107] Appellant's submissions in CACV/11/2019 pars 24 - 26, 31 - 35 WAB 16 - 18.
The defendants sought to answer Ground 3 by submitting that the primary judge was entitled to draw a Jones v Dunkel inference due to Mr Knell's failure to give evidence. It was said, however, that when close attention was given to the primary judge's reasons, his Honour did not rely on the rule in Jones v Dunkel. Rather, according to the defendants, the primary judge was prepared to draw the relevant inferences from the proven facts.[108]
[108] Second to fourth respondents' submissions in CACV/11/2019 par 12 WAB 27 - 28.
For the reasons given at [63] to [66] above the defendants' latter submission must be upheld insofar as Mr Knell belatedly sought to rely on Ground 3 to challenge the primary judge's findings at [199] and [254] of his Honour's reasons for decision. This leaves for consideration the primary judge's findings at [253] and [256].
As to [253], mention has already been made that the primary judge referred to Jones v Dunkel in connection with whether Mr Knell had a particular intention (see [63] above). The language used by his Honour on that occasion was not, however, suggestive that the primary judge was then applying Jones v Dunkel. Rather, his Honour stated that 'in the absence of any acceptable explanation … it can be inferred'.[109] Given that the primary judge then turned (at [254] to [255]) to whether the relevant intent should be inferred on the proven facts the reference in [253] to it 'can' be inferred ought to be understood as a reference to it 'may' be inferred. The primary judge did not, at [253] of the reasons for decision, make any relevant factual finding based on the rule in Jones v Dunkel.
[109] Primary reasons [253].
At [254] and [255] the primary judge then came to a finding as to Mr Knell's intent by inferring Mr Knell's state of mind from the proven facts. The primary judge inferred that Mr Knell's actions in relation to ARM and the 2010 attempt to recalibrate the letting arrangement was solely to overcome the provisions of the LSA and thereby benefit ARM and QAV (interests associated with Mr Knell). The primary judge had come to similar findings elsewhere[110] - findings that are unchallenged on appeal.
[110] Primary reasons [172], [182], [203], [215], [219], [258], [260].
However, the primary judge then returned to the language of Jones v Dunkel at [256]. There his Honour stated:
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]. (emphasis added)
Mr Knell emphasised the first sentence in [256]. At the heart of Ground 3 was that an explanation had been provided. Mr Knell argued that he had stated, through counsel, that he did not give evidence because he did not want to prolong the trial. That must be returned to. What is also important about [256] is that the primary judge applies the rule in Jones v Dunkel to confirm the inference that his Honour previously drew from the proven facts. The burden of [256] is that, Mr Knell having failed to give evidence, the primary judge considered it could be inferred that Mr Knell was unable to provide evidence that would have rebutted the intent as contended for by the defendants and found by the primary judge. The failure to give evidence confirmed the conclusion reached by inference based on the proven facts.
In so doing it is apparent that the primary judge was applying the rule in Jones v Dunkel. Mr Knell having not given evidence, his Honour drew the inference unfavourable to Mr Knell (as open on the evidence given the findings at [254] and [255]) with greater confidence. The primary judge reasoned in accordance with the process as explained by Kitto J in Jones v Dunkel:
any inference favourable to [a party] for which there was ground in the evidence might be more confidently drawn when a person presumably able to put the true complexion on the facts relied on as the ground for the inference has not been called as a witness by [the other party] and the evidence provides no sufficient explanation of his absence … it would be proper for [the jury] to conclude that if [one of the defendants] had gone into the witness-box his evidence would not have assisted the defendants by throwing doubt on the correctness of the inference which, as I have explained, I consider was open on the plaintiff's evidence.[111]
[111] Jones v Dunkel (308).
As that passage demonstrates, Jones v Dunkel was itself a case concerning whether an inference may be drawn more confidently against a party who did not bear the onus of proof. Accordingly, Mr Knell's submission that his onus of proof was discharged is irrelevant to the application of the rule in Jones v Dunkel. Nonetheless, in concluding that Mr Knell could not have given evidence to contradict the intent as found - and thereby show a legitimate reason for his conduct - it is evident that the primary judge did reason in accordance with the rule in Jones v Dunkel. The defendants' submission on appeal that the primary judge did not rely on Jones v Dunkel cannot be accepted.
The circumstance that the primary judge did, at [256], rely on the rule in Jones v Dunkel is not dispositive of Ground 3 in favour of Mr Knell. To the contrary there are two reasons why Ground 3 cannot succeed. First, there was no evidence providing an explanation for Mr Knell's failure to give evidence. Second, the explanation as proffered by counsel on Mr Knell's behalf was patently insufficient. It was open to the primary judge to apply the rule in Jones v Dunkel in the manner in which his Honour did. There was an unexplained failure on the part of Mr Knell to call a witness who he might be expected to call, namely, himself. Mr Knell - as a plaintiff claiming to have been defamed - was a person who would ordinarily have been expected to give evidence on his own behalf. In particular, as to the question of Mr Knell's intent in introducing ARM and the proposed 2010 letting arrangements, Mr Knell was in a position to give evidence as to the reasons for his actions. It was obvious from the pleaded defence that these actions were an important component of the defendants' contextual truth defence insofar as the defendants pleaded that there were grounds for investigating whether Mr Knell had behaved unlawfully in relation to Ascot Village.
There is ample authority that to avoid the potential application of the rule in Jones v Dunkel (it otherwise being open to draw an inference in accordance with the rule) the explanation for the failure to call the relevant witness must be established by evidence before the court.[112] Kitto J's passage from Jones v Dunkel as quoted in [107] above confirms the general understanding: the adverse inference may be drawn where the evidence provides no sufficient explanation for the absence of the witness. Accordingly, if the explanation is the unavailability of witnesses or absence of recollection, that will not merely be presumed by the passage of time.[113]
[112] Jones v Dunkel (308) (approved by the plurality in Australian Securities and Investments Commission v Hellicar [167]); West v Government Insurance Office of New South Wales [1981] HCA 38; (1981) 148 CLR 62, 70; R v Glennon (No 2) [2001] VSCA 17; (2001) 7 VR 631 [58] ('The explanation given by, or on behalf of, a party is a matter of fact and not hearsay'); Chong v CC Containers Pty Ltd [208].
[113] West v Government Insurance Office of New South Wales (70).
Mr Knell's suggested explanation was not the subject of evidence; it was a statement made by counsel. Counsel's statement as to Mr Knell's reason for not giving evidence has no evidentiary weight and provides no basis for excluding the operation of the rule in Jones v Dunkel.
Moreover, there must be a sufficient explanation for Mr Knell's absence.[114] Three factors militate against acceptance of Mr Knell's counsel's statement as providing a sufficient explanation. First, the statement itself was a glib off-the-cuff comment by counsel offered in a context of explaining why there was no objection to a letter being tendered on the basis that it was not proof of its contents. There was no suggestion that the statement constituted a considered explanation for Mr Knell's failure to give evidence so as to exclude the operation of the rule in Jones v Dunkel. Second, the reason given was facile when regard is had to the importance of the evidence that Mr Knell was in a position to provide. Third, it is of importance that it was Mr Knell, a party, who was the uncalled witness.[115] An 'explanation' of the type offered may be sufficient in some instances. For example, depending on the circumstances, to explain the non-calling of a junior clerical assistant who was present, but did not participate, in a meeting. His or her corroborative evidence might be considered disproportionate where the substantive participants in the meeting are called. But muted placations of wishing to avoid the unnecessary prolongation of a trial hold no water when the uncalled witness is a party whose own conduct is put in issue on the pleadings.
[114] Jones v Dunkel (308).
[115] Kuhl v Zurich Financial Services Australia Ltd [63].
Ground 3 should be dismissed.

Unnecessary to determine Mr Knell's challenge to defence of qualified privilege under s 30 (Mr Knell's Grounds 4 and 5)

It is unnecessary to consider Grounds 4 and 5 once Grounds 1, 2 and 3 have been dismissed.
The qualified privilege defence provided a further reason for dismissing Mr Knell's action. To be successful on appeal it is not enough for Mr Knell to show error on the part of the primary judge in finding that the defence applied. Mr Knell having been unsuccessful in establishing error in Grounds 1, 2 or 3, he cannot succeed on appeal irrespective of whether the primary judge's finding on the qualified privilege defence stands or falls. Even if successful on one, or both, of Grounds 4 and 5, Mr Knell will ultimately fail in his appeal.
To test that, let it be assumed that Mr Knell is successful on both Grounds 4 and 5. The position will still be that:
1.The finding below that the words complained of in the email, in their ordinary and natural meanings, were not capable of bearing the defamatory imputations as pleaded, and did not do so, is unchallenged on appeal and must stand.
2.There was no finding by the primary judge that the email carried the defamatory imputations complained of by innuendo. Moreover, on appeal, Mr Knell makes no allegation of error on the part of the primary judge in failing to consider and make such a finding. Accordingly, there is no putative error raised which enables this court to make a finding on that matter. Nor were any submissions directed to the point. Success for Mr Knell on his appeal might, at most, result in a rehearing - and even that would depend on whether the oral application mentioned at [82] above is successful.
3.Even if Mr Knell's alternative claim of defamation by innuendo could be agitated at a rehearing, the claim is answered completely by the defence of contextual truth as accepted by the primary judge and in substance undisturbed on appeal given the rejection of Grounds 1, 2 and 3.
We have considered whether, although unnecessary to do so, it nonetheless would be appropriate to deal with Grounds 4 and 5. We have decided that it is not. Grounds 4 and 5 cannot be dispositive of the appeal. In our view it is preferable that intermediate appellate consideration of the metes and bounds of s 30 of the Defamation Act 2005 (WA) occur on an occasion where the issue is decisive. That is all the more so where, in the course of his oral submissions before this court, Mr Knell freely stated that he did not profess to be an expert on the question of qualified privilege;[116] and that he was 'not saying I totally understand s 30'[117] and that it was 'fairly technical' for him.[118] The oral submissions directed to s 30 were relatively brief and did not grapple with the statutory language of s 30. Mr Knell himself said that his submission on the point would be 'fairly light on'.[119] The limitations on Mr Knell's capacity to make detailed submissions as to the proper construction and application of the integers in s 30 is understandable given that he is a self-represented litigant. It does, however, impact on whether this court should address Grounds 4 and 5 in circumstances where the issues raised are not decisive of the appeal.
[116] ts 13 (appeal hearing).
[117] ts 54 (appeal hearing). See also ts 53 ('[t]he fifth ground is not something I profess totally to understand').
[118] ts 55 (appeal hearing).
[119] ts 44 (appeal hearing).
In the circumstances we decline to address the merits of Grounds 4 and 5.

Disposition: QAV's appeal against the costs order

Given the way in which it was formulated, QAV's appeal must be dismissed insofar as Mr Knell's appeal has been unsuccessful. However, even had Mr Knell's appeal been successful, it is difficult to see any basis for QAV's appeal. QAV's action was dismissed. There is no appeal against the dismissal of QAV's action. Even if Mr Knell's appeal was successful it would remain the position that QAV's action has been dismissed. No sensible reason was offered by counsel for QAV as to why, in those circumstances, costs ought not to have followed the event.[120] QAV's appeal should be dismissed.
[120] ts 64 - 66 (appeal hearing).

Additional observations

As mentioned at the outset, Mr Knell is a director of QAV and appeared for himself on the hearing of the appeals. One of QAV's shareholders, Central Apartment Group Pty Ltd, is associated with Mr Knell.[121] QAV's solicitor on the record in its appeal, Anthony Olsen, is the in-house counsel (and thus an employee) of Central Apartment Group Pty Ltd. Mr Olsen appeared as counsel for QAV at the hearing of the appeals. Mr Knell described himself as Mr Olsen's 'boss'.[122] Accordingly, in a practical sense, Mr Knell controlled the preparation and presentation of QAV's appeal as well as QAV's participation in the appeals.
[121] Central Apartment Group Pty Ltd owns two of the four issued shares in QAV: GAB 90. In correspondence sent to the court Mr Knell describes himself as chief executive officer of Central Apartment Group Pty Ltd.
[122] ts 82 (appeal hearing).
While Mr Knell signed his appellant's case it was apparent from his oral submissions that Mr Knell had the advantage of legal assistance in preparing his appellant's case.[123] This included the assistance of counsel who had appeared for the appellants at trial, Dr R O'Hair. Mr Olsen also informed the court that Dr O'Hair had prepared QAV's appellant's case.[124]
[123] ts 4, 13 (appeal hearing).
[124] ts 66 (appeal hearing).
The practice of counsel ghost-writing an appellant's case is unusual and may lead to abuse. Counsel's signature on a pleading or a set of submissions designates that he or she takes professional responsibility for the contents of the document. It should not be thought that, by the device of preparing such a document in the name of and signed by another, such professional responsibility is avoided.
Other difficulties arise with what has occurred. Mr Olsen signed QAV's submissions and also signed a certificate by which he certified that he had, in preparing the documents, fully prepared the appellant's case and that in all respects other that preparation of the appeal books QAV was ready for the hearing of the appeal. There were two difficulties with that certification. First, Mr Olsen had not prepared the appellant's case; it was prepared by Dr O'Hair. Second, Mr Olsen stated at the hearing of the appeal that he was not expecting to be heard in relation to QAV's appeal until the conclusion of Mr Knell's appeal,[125] said that he was unable to take the appeal much further when called on to make submissions,[126] and eventually said, in substance, that he could not take matters further without having some time to 'put together some more fuller submissions'.[127]
[125] ts 67 (appeal hearing).
[126] ts 68 (appeal hearing).
[127] ts 69 (appeal hearing). See also at ts 72 (appeal hearing).
In short, Mr Olsen was not adequately prepared for the hearing of QAV's appeal.
No reason was given for the practice adopted by Mr Knell and QAV in relation to preparation of their respective appellant's cases. It is a practice that should not be repeated. If a legal practitioner is primarily responsible for the preparation of legal documentation in this court then he or she should accept professional responsibility by attaching his or her name to the document. All the more so a legal practitioner should not certify that he or she has prepared a document when it is the work of another. Nor should a legal practitioner certify that an appellant's case has been fully prepared, and that the party is ready for a hearing, when that is not the case.

Conclusion and orders

Mr Knell's appeal should be dismissed. In those circumstances Mr Knell's oral application made at the hearing of the appeal (see [82] above) has no utility. It too should be dismissed. As Mr Knell's appeal should be dismissed, it follows that QAV's appeal should be dismissed.
Subject to hearing from the parties as to the precise terms, the appropriate orders to give effect to these reasons are as follows:
1.On Mr Knell's appeal in CACV/11/2019:
(a)The appellant's oral application as made at the hearing of the appeal is dismissed.
(b)The appeal is dismissed.
2.On QAV's appeal in CACV/25/2019:
(a)The appeal is dismissed.
The parties should be heard on the question of the costs of the appeals.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DT
Associate to the Honourable Justice Vaughan
27 FEBRUARY 2020