Mahommed v Channel Seven Sydney Pty Ltd - [2009] NSWSC 631

No judgment structure available for this case.

CITATION: Mahommed v Channel Seven Sydney Pty Ltd [2009] NSWSC 631

HEARING DATE(S): 1/06/09 - 5/06/09
9/06/09 - 12/06/09

JUDGMENT DATE :
9 July 2009

JURISDICTION: Common Law
Defamation List

JUDGMENT OF: Kirby J

DECISION: (1) There shall be a verdict for the plaintiff in respect of the first publication (the first promotion) of $50,000.
(2) There shall be a verdict for the plaintiff in respect of the second publication (the second promotion) of $50,000.
(3) There shall be a verdict for the plaintiff in respect of the third publication (the programme) of $140,000.
(4) The defendant should pay the plaintiff’s costs.

CATCHWORDS: DEFAMATION - second stage defamation trial after s 7A trial - twelve imputations conveyed - Today Tonight programme - defences of justification - substantial truth and contextual truth - DAMAGES - general damages - aggravated damages - claim for exemplary damages - plea of mitigation of damages - facts properly before the court in respect of defences which failed - bad reputation - dishonesty of plaintiff - whether evidence related to relevant "sector" of reputation - whether findings of another judge admissible in mitigation - separate publications - assessment of damages - whether separate verdicts.

LEGISLATION CITED: Defamation Act 1974
Corporations Act 2001 (Cth)
Civil Liability Act 2002
Motor Accidents Compensation Act 1999

CATEGORY: Principal judgment

CASES CITED: Mohammed v Channel Seven Sydney P/L [2006] NSWCA 213
Channel Seven Sydney P/L v Mahommed [2008] NSWCA 21; (2008) 70 NSWLR 669
Morris v Newcastle Newspapers Pty Limited (1985) 1 NSWLR 260
Plato Films Ltd v Speidel [1961] AC 1090
Steele-Smith & Ors v Liberty Financial P/L & Anor [2005] NSWSC 398
Liberty Financial v Scott (No 3) [2004] VSC 490; (2004) 11 VR 621
Liberty Financial v Scott [2002] FCA 345
Steele v Mirror Newspapers Ltd [1974] 2 NSWLR 348
Briginshaw v Briginshaw (1938) 60 CLR 336
Greek Herald Pty Ltd v Nikolopoulos [2002] NSWCA 41; (2002) 54 NSWLR 165
Radio 2UE Sydney Pty Ltd v Chesterton [2009] HCA 16; (2009) 82 ALJR 654
Hepburn v TCN Channel Nine Pty Limited (unreported, 8.10.82)
Australian Broadcasting Corp v Hodgkinson [2005] NSWCA 190
John Fairfax Publications Pty Limited v Zunter [2006] NSWCA 227
Carson v John Fairfax & Sons Limited (1993) 178 CLR 44
Triggell v Pheeney (1951) 82 CLR 497
Rigby v Associated Newspapers (No 2) [1969] 1 NSWR 729
John Pfeiffer Pty Limited v Rogerson [2000] HCA 36; (2000) 203 CLR 503
Australian Consolidated Press Ltd v Uren (1967) 117 CLR 221
Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419
Costello Abbott & Ors v Random House Australia Pty Ltd [1999] ACTSC 13; (1999) 149 FLR 367
Rochfort v John Fairfax & Sons Ltd [1972] 1 NSWLR 16
ABC v McBride [2001] NSWCA 322
Turner v News Group Newspapers Ltd (CA) [2006] 1 WLR 3469
Goody v Odhams Press Ltd [1967] 1 QB 333
O’Hagan v Nationwide News Pty Limited [2001] NSWCA 302; (2001) 53 NSWLR 89
Rogers v Nationwide News Pty Limited [2003] HCA 52; (2003) 216 CLR 327
Hayward v Thompson [1982] 1 QB 47
Barber v Pigden [1937] 1 KB 664

TEXTS CITED: Regulatory Guide 146; Licensing: Training of Financial Products Advisers
Mayne and McGregor on Damages, 12th ed. (1961)
Gatley on Libel and Slander, 10th ed (2004)

PARTIES: Peter Mahommed (Pl)
Channel Seven Sydney Pty Limited (Def)

FILE NUMBER(S): SC 2005/20064

COUNSEL: C Evatt/R Rasmussen/M Rollinson (Pl)
K Smark SC/K Rees (Def)

SOLICITORS: Michael Corrigan (Pl)
Mallesons Stephen Jaques (Def)

Peter MAHOMMED

-v-

CHANNEL SEVEN SYDNEY PTY LIMITED

(20064/2005)

I N D E X

Para No.

1. LIABILITY

The action.
1

The defence.
5

The defamatory publications.
11

The defence of truth.
31

Background.
35

Liberty Financial.
41

The Smith-Steeles.
47

The first and second Smith application.
61

Was Doreen Smith incapacitated?
80

The first application of Tony Steele.
103

The second application of Tony Steele
112

Mr Mahommed’s perception of Tony Steele’s capacity.
119

Tony Steele’s capacity.
124

The third Smith application.
147

The third and fourth Steele applications.
160

Other issues relevant to credit.
182

The fourth and fifth Smith loans.
191

Outrageous fees?
205

A dishonest Financial Adviser and Mortgage Broker?
219

The defendant’s contextual imputations.
229

“Polly v Peck” (justifications outside New South Wales)
239

2. DAMAGES

The reputation of Mr Mahommed.
241

Hurt to feelings.
244

Aggravated damages.
270

Exemplary damages.
275

Dishonesty on the part of the plaintiff.
287

The principles in respect of mitigation.
291

Submissions of the parties.
317

The relevant sector.
322

The opinion of Justice Palmer.
332

Quantification of damages.
336

Order.
350

*******

1. LIABILITY

The action.

1 KIRBY J: Mr Peter Mahommed (the plaintiff) by Third Further Amended Statement of Claim has commenced an action in defamation against Channel Seven Sydney Pty Limited (“Channel 7”) (the defendant). The action relates to a television broadcast, “Today Tonight”, screened on 29 June 2004, and two promotional broadcasts screened between 22 June 2004 and 29 June 2004. In each case the material was screened throughout Australia (apart from the Northern Territory).

2 The matter has had a checkered history. After a trial before Nicholas J under s 7A(3) Defamation Act 1974 (“the Act”), a jury found that only one of fifteen imputations was carried and defamatory. The plaintiff appealed and a retrial was ordered (Mohammed v Channel Seven Sydney P/L [2006] NSWCA 213).

3 The retrial took place before Adams J in February 2007. The jury found that the three publications carried a total of twelve imputations which were defamatory, namely: (Exhibit A – renumbering the imputations so that each has a unique number)

Promotion from 22 to 29 June 2004

1. The Plaintiff is a thief.

2. The Plaintiff ripped off $1 million from a dementia patient.

3. The Plaintiff took advantage of a dementia patient and took everything she had.

Promotion 28 June 2004

4. The Plaintiff ripped off $1 million from a dementia patient.

5. The Plaintiff kept stealing money from a dementia patient.

6. Because of his dealings with a dementia patient the Plaintiff deserved to spend a lot of time in gaol.

Programme – 29 June 2004

7. The Plaintiff ripped off $1 million from a dementia patient.

8. The Plaintiff took advantage of a dementia patient and took everything she had.

9. The Plaintiff swindled Doreen Smith.

10. The Plaintiff is a thief.

11. The Plaintiff charged Doreen Smith outrageous fees.

4 The defendant appealed. Although error was found, the appeal was dismissed (except as to costs) (Channel Seven Sydney P/L v Mahommed [2008] NSWCA 21; (2008) 70 NSWLR 669).

The defence.

5 After the s 7A hearing, the defendant filed a Defence to the Third Further Amended Statement of Claim. No defence was pleaded to either promotional broadcast. Nor was a defence pleaded to four of the six imputations arising from the broadcast itself (imputations 7 to 10 inclusive). The defendant asserted, however, that the remaining two imputations were substantially true and related to matters of public interest. Those imputations were: (Exhibit A)

11. The Plaintiff charged Doreen Smith outrageous fees.

6 The plaintiff acknowledged that, were the defendant able to prove either imputation was substantially true, each related to a matter of public interest.

7 The defendant also raised the defence of contextual truth in respect of the imputations conveyed by the programme. That defence is available in New South Wales (s 16 of the Act). In the context of that defence, the defendant pleaded back the imputations which it set out to justify and added three more. The contextual imputations relied upon (in New South Wales) were therefore as follows: (Exhibit A – again giving each a sequential unique number)

13. The Plaintiff charged Doreen Smith outrageous fees.

15. The Plaintiff had, in his business of financial adviser and mortgage broker, knowingly taken advantage of a man he knew to be significantly disabled.

16. The Plaintiff took advantage of Doreen Smith by exploiting her age and infirm state to secure payments for his company.

17. The Plaintiff was unfit to be a financial adviser or mortgage broker.

8 The plaintiff objected to imputation 17 upon the basis that it added nothing, and was rhetorical (Morris v Newcastle Newspapers Pty Limited (1985) 1 NSWLR 260, per Hunt J at 272). I will deal with that issue below (infra para [231]).

9 The defendant, in submissions, acknowledged that the plaintiff must get a verdict, at least in respect of the two promotional broadcasts (DS: para [6]). In respect of the programme, the defence of contextual truth was not available in states other than New South Wales, apart from Tasmania. However, the defendant did not press that defence in respect of the publication in Tasmania (T 528). The defendant therefore acknowledged that, for states other than New South Wales, the plaintiff must get a verdict in respect of imputations 7 to 10. In New South Wales, the defendant asserted that the defence of contextual truth was a complete answer to the action based upon the broadcast.

10 On the question of damages, the defendant foreshadowed that, even were it to fail in establishing the substantial truth of imputations 11 and 12, and fail in New South Wales in its defence of contextual truth, the evidence would establish nonetheless that Mr Mahommed was dishonest. Honesty was, according to the defendant, the relevant sector of Mr Mahommed’s character called into question by the programme (Plato Films Ltd v Speidel [1961] AC 1090, per Lord Denning at 1140). The defendant submitted that the evidence concerning Mr Mahommed’s dishonesty could therefore be taken into account in mitigation of the damages to be awarded in respect of all publications. The defendant invited the Court to award nominal damages (perhaps $1).

The defamatory publications.

11 As mentioned, the programme screened on 29 June 2004 was preceded by two promotional advertisements. The first, screened between 22 June and 29 June 2004, was in these terms: (Exhibit E)

She kept forgetting, so this mortgage broker took everything she had.

12 It is convenient to repeat the imputations arising from that publication (in respect of which there was no defence). They were as follows: (Exhibit A)

1. The Plaintiff is a thief.

2. The Plaintiff ripped off $1 million from a dementia patient.

3. The Plaintiff took advantage of a dementia patient and took everything she had.

13 The second promotional broadcast was screened only 28 June 2004, that is, the day before the broadcast. It was as follows: (Exhibit D)

14 The imputations conveyed by that publication (in respect of which there was no defence) were as follows: (Exhibit A)

4. The Plaintiff ripped off $1 million from a dementia patient.

5. The Plaintiff kept stealing money from a dementia patient.

6. Because of his dealings with a dementia patient the Plaintiff deserved to spend a lot of time in gaol.

15 The programme screened on 29 June 2004 incorporated the opening words of the first promotion, namely: (Exhibit F: lines 1-3)

16 As the words “stolen, stolen, stolen” were spoken, they were shown in large red letters across the screen. Each word “stolen” was superimposed upon the image of a different suburban brick house. There followed an image of Mr Mahommed in his Mercedes car, where the reporter directed the following unanswered question to him: (Exhibit F: line 4)

17 Ms Naomi Robson then introduced the programme with these words: (Exhibit F: lines 6-11)

“Now to the story of a sick woman who may lose her home and could lose a lifetime of assets all because of her dealings with a mortgage broker. Doreen Smith suffers from dementia, an illness her mortgage broker seized upon and he’s been able to swindle a forgetful Doreen out of everything she owns. David Richardson investigates.”

18 There followed a confrontation between the reporter, David Richardson, and Mr Mahommed in a street in the Newcastle area where Mr Mahommed carried on his business as a mortgage broker. The exchange was in these terms: (Exhibit F: lines 12-17)

19 The programme continued as follows: (Exhibit F: lines 18-23)

20 The programme then included a sequence depicting Doreen Smith, a woman in her mid seventies, walking to get a cup of tea, her hand shaking. The dialogue was as follows, conducted in Ms Doreen Smith’s bedroom, as she was assisted by her son, Trevor Steele: (Exhibit F: lines 24-30)

“DOREEN SMITH:
I don’t know what I’m doing. That’s where I live all day, every day of my life other than the doctors I live there.

And this is his victim, 77 year old Doreen Smith, a pensioner suffering depression and dementia, now on the verge of losing the family home.

21 The reporter then explained that Doreen Smith needed cash. She stumbled upon Mr Mahommed’s advertisement in a local newspaper (Exhibit F: lines 31-33). The programme showed her son, Trevor Steele, saying the following: (Exhibit F: lines 34-37)

22 The reporter thereafter referred to a number of mortgages, where the amounts borrowed increased over time (Exhibit F: lines 39-42). Doreen Smith was shown saying that she just signed documents placed in front of her by Mr Mahommed. She did not read them (Exhibit F: lines 43-46). The programme went on to refer to loan applications completed by Mr Mahommed: (Exhibit F: lines 47-50)

23 The image of a closed door was shown on the screen in a nondescript, unimpressive building. The reporter said this: (Exhibit F: lines 51-55)

24 The following exchange then occurred between the reporter and Trevor Steele: (Exhibit F: lines 56-60)

25 The Channel 7 reporter then stated that bank documents showed Doreen had drawn $10,000 for herself, “but other transactions are extremely suspicious” (Exhibit F: lines 63/64). Trevor Steele was shown making the following assertions which the reporter then broadly confirmed: (Exhibit F: lines 65-70)

26 The programme went on to include an image of Doreen and the following exchange: (Exhibit F: lines 71/72)

27 A further aspect was then introduced by the reporter, relating to another son of Doreen Smith, Tony Steele. The following was said: (Exhibit F: lines 73-79)

28 Reference was made to enquiries with the lender, Liberty Financial. The company said that it was satisfied with the checks it had run on Doreen Smith before lending her the money. The reporter added: (Exhibit F: lines 83-86)

29 The programme thereafter provided a commentary from an expert in consumer protection, Mr Chris Field. It was as follows: (Exhibit F: lines 87-94)

Of all the cases that I’ve seen involving mortgage brokers and money lenders, this strikes me as one of the absolute worst.

30 The programme concluded with these words: (Exhibit F: lines 95-108)

What about the withdrawals? The money goes into her account, $20,000 here, $25,000 to you.

The defence of truth.

31 It is convenient to begin with the defendant’s case concerning the substantial truth of imputations 11 (outrageous fees) and 12 (dishonesty as a financial adviser and mortgage broker). The same body of evidence is also relied upon to prove the contextual imputations.

32 Evidence was tendered relating to the financial dealings between Mr Mahommed and Doreen Smith and her son, Tony Steele. There were a number of loan applications in the period 17 June 2002 and 8 April 2004. They were made either by Doreen Smith or Tony Steele (and, in the case of the latter, by a trustee company, Maxwell Developments Pty Limited in some transactions). The lender in each case was Liberty Financial Pty Limited (“Liberty Financial”), apart from a transaction in April 2004, which ultimately did not proceed.

33 I will shortly set out this material. These transactions were previously the subject of litigation in the Equity Division of this Court. An action was brought by Doreen Smith, Tony Steele and Maxwell Developments against Liberty Financial. Mr Mahommed was joined in the action. It proceeded before Palmer J in March 2005. Doreen Smith’s son, Trevor Steele, appeared (with Palmer J’s leave) for his mother and brother. The action sought to set aside the various loans (Steele-Smith & Ors v Liberty Financial P/L & Anor [2005] NSWSC 398). Much of the material relied upon by the defendant to demonstrate Mr Mahommed’s dishonesty derives from that litigation, where Mr Mahommed swore an affidavit (Exhibit 35 in this trial) and gave evidence (Exhibit 19).

34 In describing the dealings between Mr Mahommed and the Smith-Steele family, I will make findings of fact. I will then return to each imputation and consider whether the defendant has established the substantial truth of either.

Background.

35 Mr Peter Mahommed was born in Narrabri in April 1956. He is 53 years old. He was in his late forties at the time of these events. He is one of six children. He was brought up in Maitland, where his mother still lives. He left school at the age of 17 years, having obtained the Higher School Certificate. He was employed by Woolworths as a trainee and was later made Retail Manager at the age of 19 years. He remained with Woolworths for six years, ultimately becoming the Manager for the Hunter Valley Region (T 27).

36 Between 1978 and 1980, Mr Mahommed was employed as Group Supervisor of 18 stores run by the Newcastle Co-operative (T 27). In 1980, he went to work for Legal and General Insurance as a consultant. He undertook training in the restructuring of superannuation (T 28). In that capacity, he got to know many of the accountants and lawyers in the Newcastle area (T 92).

37 In 1989, Mr Mahommed became a mortgage broker. He had no qualifications and none were required (T 91). He said a mortgage broker was someone who introduced a client to a lender to arrange a loan (T 28). He only dealt with business loans and always on the security of a house (T 28). He dealt with a number of lenders, including the ANZ Bank, Westpac, the Bank of Adelaide, ING Bank, Liberty Financial and others (T 28).

38 Mr Mahommed was not a financial adviser (T 33). He said this: (T 33/34)

39 Under the Corporations Act 2001, a person who carries on a “financial services business” must hold an Australian Financial Services Licence (s 911A). It is an offence punishable under the Act to provide such services without a licence (s 911A; s 1311). An application for a licence must be made to ASIC (s 913B). There are two tiers of service regulated by licences issued by ASIC, with corresponding tiers of education required for each licence (cf Regulatory Guide 146; Licensing: Training of Financial Products Advisers). A person who holds a licence is subject to a number of specific obligations (s 912A). ASIC may suspend or cancel a licence (s 915C).

40 The plaintiff’s mother, Mrs Margaret Mahommed, was called to give evidence. She was a dignified and intelligent woman. She had lived in Maitland for 56 years (T 290). She said that her son had an excellent reputation before the programme, specifically as a mortgage broker within the finance industry (T 287). Many had spoken to her before the programme, each speaking well of her son (T 287). Such people included the General Manager of a mortgage firm, the Manager of Legal and General, as well as the Manager of Woolworths (T 288/9). The Manager of Woolworths had said that her son was trustworthy and very honest. He could be left in charge, although only 19 (T 289). He had a reputation as a hard working young man (T 288).

Liberty Financial.

41 Liberty Financial was, as mentioned, one of the lenders used by Mr Mahommed. On 18 February 2002 his company, Vestecorp Financial Services Pty Limited (“Vestecorp”), entered a Standard Introducer Agreement with Liberty Financial. The Agreement identified the market which Liberty Financial hoped to capture. It required Vestecorp to fulfil the following, amongst other obligations: (Exhibit 2: Cl 1.3)

or is reasonably likely to be, declined by a lenders mortgage insurer

42 The Agreement also required Vestecorp not to do the following: (Exhibit 2: Cl 3.2)

“3.2 You must not:

who have been, or are reasonably likely to be, declined by a lenders mortgage insurer

43 In Liberty Financial v Scott (No 3) [2004] VSC 490; (2004) 11 VR 621, Harper J said this: (at 1) (cf DS: para [76])

“Liberty Financial Pty Ltd (‘Liberty’), the first plaintiff in this proceeding, is a money lender. It claims to be the first financier in Australia to serve a specialised market: borrowers who, because they are not sufficiently credit worthy, are not of much interest to conservative lenders such as banks. Lending in this market has its risks; but if you have carefully identified these, and are astute enough, and if your lending policies are sufficiently sophisticated and flexible, there is money to be made. Indeed, Liberty claims to have developed, through skill and hard work, all the attributes necessary to exploit the market to the full.”

44 Weinberg J in Liberty Financial v Scott [2002] FCA 345, made a comment along similar lines. He said: (at [3])

“The first applicant, Liberty Financial Pty Ltd (‘Liberty’), is a specialist lender in the business of providing tailored lending products to customers who are unable to obtain finance from traditional sources (‘non-conforming loans’).”

45 Vestecorp, under the agreement, also agreed “to use its best endeavours to ensure all information provided to Liberty was accurate (clause 3.1(a)); ensure that Vesecorp and the plaintiff acted at all times in good faith and with all due care, skill and diligence (clause 3.1(d)); and not to engage in any misleading or deceptive conduct (clause 3.2(b)); ...” (cf DS: para [68]).

46 Mr Mahommed acknowledged that, before signing the Agreement, he carefully read it (T 101). Nonetheless some aspects of the Agreement had no relevance to him, because of the nature of his business (T 102). He said he discussed this matter with the Area Manager (who’s name he could not remember) (T 109/10). The Agreement contained a schedule which identified a number of “Loan Products”. Some were loans to ordinary consumers, and attracted the Consumer Credit Code, and its protection. He did not transact such business, confining himself to business and investment loans because he believed it was in his financial interests to do so (T 104). From his perspective, the attraction of Liberty Financial was the short turnaround time, usually 24 hours, in contrast to a bank which may take as much as four weeks (T 32; 104). Business and investment loans did not require mortgage insurance (T 102). There was little by way of documentation. Indeed, the loans were referred to as “low doc” loans (T 102). Mr Mahommed explained what this phrase meant in these words: (T 32)

“A. ... What that means is that the documentation that you had to provide was very limited because it was predominantly based upon the security of the asset taken by the lender as opposed to a consumer credit loan which is dealt for normal home loans to consumers which is regulated by the Consumer Credit Act.”

The Smith-Steeles.

47 Doreen Sylvia Smith was born in August 1928 (Exhibit G). When she met Mr Mahommed in 2002 she was therefore 74 years old. She had a colourful past. In March 1952, she was convicted of false pretences. A three year good behaviour bond was imposed. Within a year she was called up for being in breach of that bond and bound over to be of good behaviour for 4 years (Exhibit B).

48 There followed, in 1956, convictions for various offences of dishonesty (goods in custody). A fine was imposed. On 9 December 1957, Ms Smith was convicted of larceny and sentenced to 15 months light labour, to be released after 3 months if her conduct in prison was satisfactory (Exhibit B).

49 In January 1959, Ms Smith was convicted of stealing and fined. In July the same year she was convicted of false pretences (12 counts). She was sentenced to 18 months imprisonment. She lodged an appeal and the sentence was deferred upon her entering a recognizance. She was ordered to report to a Probation Officer for supervision.

50 Ms Smith was again convicted of false pretences on 6 September 1960 (3 counts). She was fined, but called up for having breached the recognizance imposed some years earlier. She was sentenced to 12 months imprisonment. Psychiatric treatment was ordered, if the prison thought it appropriate. In 1964, Ms Smith was convicted of stealing (clothing) and fined. She was again convicted in May 1967 of obtaining money by false pretences. She was, on this occasion, sentenced to 3½ years imprisonment with a 6 month non parole period (Exhibit B).

51 In 1971, a newspaper article was published relating to a police investigation into an allegation of theft of 50,000 tons of low quality off-grade wheat, valued at $5 million. No-one was named. The wheat had been stolen from temporary storage in the west of New South Wales. It had been transported to the coast in large bulk carriers and sold to pig farmers in the outer Sydney metropolitan area.

52 Ms Smith (then married and known as Mrs Steele) sued the publisher, Mirror Newspapers. She gave evidence that she understood the article to refer to her. Since 1969 she had engaged in a large scale business of carting and cleaning wheat near Parkes. Although she obtained a verdict of $45,000, it was set aside on appeal and a new trial ordered (Steele v Mirror Newspapers Ltd [1974] 2 NSWLR 348).

53 The new trial, however, never took place. Ms Smith was charged shortly thereafter with the offences which were the subject of the article. In 1975, she was convicted of false pretences (6 counts) and sentenced to 6 years imprisonment with a non parole period of 3½ years. An appeal against that sentence was dismissed (20 August 1976). During the currency of that sentence, another charge of false pretences was dealt with. A term of 18 months imprisonment was imposed, concurrent with the sentence she was then serving. At the same time, Ms Smith was convicted of forging and uttering. She was sentenced to 6 months imprisonment in respect of each count, again concurrent (Exhibit B).

54 After her release, Ms Smith did not reoffend for some time. However, on 10 May 1989, she was convicted of dishonestly obtaining a valuable thing by deception (2 counts) and obtaining property by a wilfully false promise (Exhibit B). On this occasion she was sentenced to a minimum term of 2 years 6 months and 10 days, with a further term of 1 year 10 months and 5 days. She lodged an appeal which was dismissed (19 May 1990). When the sentence was imposed, the Judge was invited to take into account a number of other offences of dishonesty.

55 As will emerge below, during the years 1997 to 2001, Ms Doreen Smith secured a substantial contract with NorthPower, the energy authority in the Newcastle region. I will return to this aspect.

56 Ms Smith’s son, Trevor Steele, was born in August 1952. In 1976, at the age of 24, he was convicted of assault with intent to rob. He was sentenced to 4 years imprisonment with a non parole period of 12 months (Exhibit B). On 30 May 1979, he was convicted of receiving. At the time of his offence he was on parole. He was sentenced to 2 years imprisonment, cumulative upon the unexpired sentence for his previous offence, which he was then required to serve. During the currency of that sentence, he was also sentenced for stealing and fined.

57 In June 1989, Mr Trevor Steele was convicted of obtaining a financial advantage by false pretences, the offence having been committed in 1985 (11 counts). He was ordered to serve 100 hours community service on each count and enter a 3 year good behaviour bond (Exhibit B). He was also dealt with in respect of 6 counts of obtaining property by wilfully false promises in 1990. He was required to enter a recognizance in respect of each count.

58 In 1993, Mr Trevor Steele was convicted of passing a valueless cheque and was fined. In September 1998, he was convicted of obtaining money by deception, the amount being, in each case, less than $2,000 (3 counts). He was sentenced in the lower court to a term of imprisonment. His appeal was allowed and a recognizance for a term of 2 years substituted.

59 In 1998, Mr Steele was convicted of high range PCA and sentenced to 6 months imprisonment with disqualification from driving for 18 months. On appeal, 9 months periodic detention was substituted for the prison term. In January 2002, he was convicted of low range PCA and disqualified from driving for a further period.

60 Let me then turn to the circumstances in which the Smith-Steeles met Mr Mahommed.

The first and second Smith application.

61 Mr Mahommed periodically inserted advertisements in the Newcastle Morning Herald in the hope of obtaining business. The advertisements were in the following terms: (Exhibit 1)

AVAILABLE FINANCE BY
PRIVATE LENDERS
Minimum Loan $20,000
Real Estate security req.
Financials not essent.
Same day approval TAP
Ph 02 4953 0755 Mon-Fri

62 Mr Mahommed explained what he meant by “Financials not essent.”: (T 99)

63 Mr Mahommed acknowledged that the advertisement did not state that the loan had to be for a business purpose (T 99). He said: (T 105)

“A. Well the proposition in relation to the ad, it is a hook, so, my experience is people who call you in relation to what it says there usually are people who can’t get a loan in relation to the consumer credit code and that was fine because I didn’t work in that area. ... ”

64 He added: (T 105)

“A. To me it was quite simple, business investment loan, (if) it wasn’t in that category, I didn’t proceed, but what I am saying is that I did not get a majority of calls or calls in relation to consumer credit loans, because if they could have got a consumer credit loan they would have just went off to their bank. That was my assumption.”

65 On 17 June 2002, Trevor Steele answered Mr Mahommed’s advertisement. According to Mr Mahommed’s affidavit in the Equity proceedings (24.1.05), their conversation was in these terms: (Exhibit 35: para [5])

“Trevor: ‘I’ve seen your ad in the paper and wanted to enquire whether we can borrow some money.’

I said: ‘What’s the purpose of the loan?’

Trevor: ‘We are starting up a business and need some funding.’

I said: ‘We only operate on real property security. Do you have real estate for security purpose?’

Trevor: ‘My mother does.’

I said: ‘Well, I will need to speak with her.’”

66 Doreen Smith phoned back the same day, stating: “We need a loan of $35,000 urgently for a new business” (Exhibit 35: para [6]). Mr Mahommed thereafter went to her home in Caves Beach, where he met Doreen Smith and her son, Trevor Steele. He had with him a copy of the questions which he would need to complete when submitting the application to Liberty Financial. They had a conversation sitting around the kitchen table (T 44). He asked questions and made notes in his handwriting (Exhibit 5). The conversation included the following discussion concerning the proposed business: (Exhibit 35: para [7])

“I said: ‘What is your present occupation?’

Doreen: ‘My family and myself have set up a new business called Country Power Newspapers, we are in the process of obtain(ing) a contract to supply marketing services to Country Energy.

I said: ‘What is your business address?’

Doreen: ‘Swansea Arcade in Swansea.’

I said: ‘What did you do there?’

Doreen: ‘I will organise the promotional and marketing for the business.’

I said: ‘What is your income?’

Doreen: ‘Well, back then we had a turnover in excess of $5,000,000. That contract terminated late last year and I’m arranging for a new contract in the name of my son Trevor. Trevor and Tony, my other son, will operate the new business and that’s what we need the money for.’

I said: ‘What’s your personal income from the business at the moment?’

Doreen: ‘$35,000.00.’

I said: ‘Do you have an Accountant who looks after your business dealings?’

Doreen: ‘Yes. Alan McKeown.’”

67 None of these conversations were challenged by Trevor Steele, who appeared for Doreen Smith in the Equity proceedings and who cross examined Mr Mahommed (Exhibit 19). Doreen Smith disclosed that she had previously been bankrupt and had been discharged on 20 March 2000 (Exhibit 35: para [8]). She furnished a copy of the Certificate of Title to her Caves Beach property (Exhibit G). The property was unencumbered. She also provided bank statements relating to her contract with NorthPower (also known as Country Energy). Mr Mahommed retained a copy of those bank statements (Exhibit G). They related to the first half of 2001, the latest being 12 months before this meeting. They showed significant sums of money passing through Doreen Smith’s account with Westpac with a credit balance not less than $100,000 and, at times, $350,000 (Exhibit G).

68 Mr Mahommed returned to his office and completed the application on the internet (Exhibit 6). He spoke to the accountant, Mr McKeown. His affidavit related that conversation in these terms: (Exhibit 35: para [19])

“I said: ‘Have you spoken to Doreen Steele about some requirements I need?’

McKeown: ‘Yes. I have. Can you tell me exactly what it is you need?’

I said: ‘We need confirmation that the funds that Liberty are advancing to her are for business or investment purposes. Can you confirm that with her and then send a letter to Liberty care of Vestecorp and I’ll forward it onto them?’

McKeown: ‘Yes. I can do that. What’s your fax number?’

I said: ‘4927 5562.’

McKeown: ‘I’ll get it to you as soon as possible.’”

69 Mr McKeown wrote a letter to Liberty Financial on 1 July 2002, in these terms: (Exhibit G)

“SUBJECT: DOREEN STEELE

I refer to the above and various discussions with our client. I advise our client’s intention to establish a business requiring funds of approximately $50k to be outlaid for the purchase of equipment and other business assets.

I further confirm that the interest on the proposed loan to finance this purchase will be tax deductible as it will be used to produce assessable income.”

70 The typed application was then signed by Ms Smith. It included a declaration that she believed that the amount that she was seeking to borrow was tax deductible (Exhibit 6: p 87).

71 Liberty Financial considered Doreen Smith’s application. There was a discrepancy between the name on the driver’s licence which had been photocopied by Mr Mahommed and transmitted to Liberty Financial, and the name on the Certificate of Title. Liberty Financial therefore required a birth certificate, which Ms Smith provided to Mr Mahommed and which he passed on (Exhibit G). At the same time, Doreen Smith asked that the amount of the loan be increased to $50,000.

72 Liberty Financial thereafter agreed to advance $50,000. The property at Caves Beach was valued at approximately $330,000 (Exhibit 12: p 119).

73 About a month after the money had been provided, Doreen Smith again telephoned Mr Mahommed (4 August 2002). She wanted to borrow more money. Their conversation, according to his affidavit, was in these terms: (Exhibit 35: para [26])

“Doreen: ‘Hello, Peter. We would like to borrow some more money to purchase a motor vehicle for the business. Can you arrange that?’

I said: ‘How much do you need?’

Doreen: ‘We would like another $40,000.’

I said: ‘That would mean that your total borrowing would be $90,000. The way it works is that we have to make application for a new loan of $90,000. Liberty will pay out the previous loan for $50,000.’

Doreen: ‘That’s OK.’”

74 In cross examination, Mr Mahommed said this: (T 145)

75 Mr Mahommed acknowledged that it would have been better and cheaper for Ms Smith had she made only one application. However, he added, plausibly and reasonably, the following: (T 146)

“A. In hindsight it is always a wonderful thing but, at the end of the day, you know, she probably would have thought the same thing, but the fact is she requested it, she was aware of the fees, she signed off on it. It is not for me to dictate how she should run her business or plan her budgeting. I don’t know.”

76 Doreen Smith confirmed that nothing had changed in terms of her particulars (Exhibit 35: para [26]). Mr Mahommed thereafter prepared an application in which the only change was the amount which Doreen Smith had in the bank (which increased to $15,000) (Exhibit 9: p 110). The application included a declaration signed by Doreen Smith that the loan was “wholly or predominantly for business purposes” (Exhibit 9: p 113). Liberty Financial approved the loan and advanced the money. Mr Mahommed was paid his commission, which was $4,000 (Exhibit 12: p 121).

77 An attack was made upon Mr Mahommed in respect of each transaction. Indeed, the same attack was also mounted in respect of later transactions. Broadly, the defendant’s criticism identified three matters. Each was said to be relevant to Mr Mahommed’s honesty and therefore relevant to the defendant’s case on justification and the contextual imputations. The three matters were:

First, a comparison between Mr Mahommed’s handwritten notes, from his interview with Doreen Smith and the application he submitted a short time later, revealed discrepancies. Mr Mahommed, according to the defendant, changed the figures to make the application more attractive and therefore more likely to be approved. He worked on a success fee, so that he shared the borrower’s interest in the loan being approved (T 118).

Secondly, Doreen Smith was a woman in her mid 70’s. She was taking medication. She had been recently widowed. The defendant submitted it would have been obvious to Mr Mahommed that she was infirm (DS: para [133]).

Thirdly, for many of the same reasons, it would also have been obvious, according to the defendant, that there was no prospect whatever of a business being established. The applications and those that followed were crafted as business applications in order to avoid the Consumer Credit Code (DS: para [74]).

78 Mr Mahommed answered the defendant’s attack in a number of ways:

First, he provided various explanations for the discrepancies. He denied that he had deliberately changed the applications to make them more attractive to Liberty Financial, so that they were more likely to succeed.

Secondly, he said that he was greatly impressed by Doreen Smith. He had no reason to doubt her account in respect of which there was corroboration.

Thirdly, he insisted that the criticism was based upon a mistaken assumption as to his role as a mortgage broker. He acknowledged that he was obliged to provide accurate information. Stated another way, he was obliged not to provide information that he knew was false or misleading. He claimed to have observed that requirement. Nonetheless, it was his expectation that Liberty Financial, as the lender and as a matter of due diligence, would check the details. He had no means of checking such matters and it was not his function.

79 Let me consider each of these matters, beginning with Doreen Smith and the impression she made upon Mr Mahommed.

Was Doreen Smith incapacitated?

80 At the same time as Channel 7 was making its programme, the subject of this action, the Office of Fair Trading was conducting an investigation based upon a complaint from Trevor Steele. On 21 June 2004, the Office wrote to Mr Mahommed seeking his response. The letter said this: (Exhibit J)

“Mr Steele has informed Fair Trading that his mother’s physical and mental health has deteriorated significantly since the death of his father 2 years ago and suffers from a chronic anxiety state and advanced dementia. He has provided a letter from the family doctor of 20 years which attests to her condition. ... ”

81 The letter continued:

“Mr Steele has alleged that a loan application for Mrs Smith was filled out by a representative of your company in which it was stated that she worked as a consultant and was earning $50,000 pa, when in fact Mrs Smith is 76 years old and receives the war pension and other Centrelink benefits as her only source of income. Mr Steele asserts that due to her state of mental health, his mother was not able to comprehend what was happening at the time. ...”

82 Mr Mahommed responded on 28 June 2004 (which was the day before the television programme). He drew attention to the contract held by Doreen Smith with NorthPower between 1997 and early 2001, where the turnover was in excess of $5 million (Exhibit 4). He added: (Exhibit 4: p 4)

“During such meetings D Steele/Smith did not make it known to me (or any of the above parties) that she had the medical condition referred to in your correspondence. It didn’t appear to me that D Steele/Smith had a major problem articulating minor details of events that had occurred during he(r) contractual period with Country Energy.”

83 The Office of Fair Trading ultimately took no action on Mr Steele’s complaint (Exhibit P). Mr Mahommed, in cross examination, said that when he met Doreen Steele she was “pretty impressive” (T 129). She had no tremor. She did not appear to be either dull or sedated (T 130). He added: (T 132)

From my perspective, given what she was saying was true and I had no reason to doubt it, here is an elderly old lady and she has turned over this amount of money. I don’t know too many clients who have done that. So they then produce some bank statements showing 600,000 gone into accounts or so over a very short period of time

84 To my imperfect ear, Doreen Smith’s speech did not appear slurred during the television broadcast (Exhibit C). The tremor exhibited by Doreen Smith also seemed somewhat exaggerated. Ms Smith’s daughter, Mrs Denise Robinson, gave evidence. In the course of cross examination, the programme was replayed to refresh her memory. She was then asked the following: (T 448)

85 There was no evidence, apart from the assertion by Trevor Steele, that Doreen Smith was in receipt of a War Veteran’s Pension. Assuming that assertion to be accurate, there was no evidence that it had been disclosed to Mr Mahommed (T 61).

86 The letter from the Office of Fair Trading referred to medical evidence which had been provided by Trevor Steele (Exhibit J). The evidence was not identified. Dr Manners had been the family’s treating doctor for several decades. He regularly saw Doreen Smith in respect of various physical and psychological problems (T 304/5). She did not suffer from dementia (T 306). Following the death of her husband (in February 2002), Endone was prescribed, which is a narcotic medication. She was registered as a narcotic user with the Department of Health (T 299). She also took Benzodiazepine, a Valium-type medication, a sleeping tablet. Dr Manners said that, were she to save up medication and take a larger than usual dose, her judgment may be affected (T 306). He saw her regularly during 2002/2003. According to his recollection, she had appeared confused on one or two occasions. When cross examined, Dr Manners was invited to examine his notes to identify any such entry. He said this: (T 300)

“A. There was a consultation on 17 December 2003 where it was noted that she had had slurred speech and confusion for some 4 hours. However, by the time she saw me that had resolved. They would seem to be just that, on that occasion.”

87 Two other witnesses were called, relevant to Doreen Smith’s capacity in 2002/3. Her daughter, Mrs Denise Robinson, visited her mother occasionally after the death of her father. She lived in Sydney and her mother in Newcastle (T 449). She would not stay long. On three or four occasions in 2002/3 her mother would be asleep during her visit, having passed out because she had taken too many sleeping tablets. Mrs Robinson noticed her behaviour was erratic. On occasions she would phone and her speech would be slurred. Mrs Robinson inferred that she had taken too many pills (T 437). She last saw her mother in December 2004 or January 2005 (T 448).

88 The remaining witness called by the defendant was Ms Edith Maher. She cleaned Doreen Smith’s home between 1999 and 2004. She was an unusual witness. She was very defensive and given to hyperbole. She had since qualified as a nurse (T 414). She said she began working for Doreen Smith one day a week (T 385). By 2002 she was attending her home three or four days a week, working one complete day and on the other days “popping in and out” (T 385). When she began work as a cleaner, Doreen Smith was working fulltime for NorthPower. She appeared to be an efficient and competent business woman who knew exactly what she was doing (T 417). Ms Maher described her as a “determined woman” (T 419). She later decided, however, that she would have nothing further to do with Doreen Smith. One gathers that Ms Maher regarded her as manipulative. She said: “She gets you in” (T 406). She added: “She just makes you feel sorry for her” (T 406).

89 Ms Maher said that after Doreen’s husband died in February 2002, she became deeply depressed (T 387). She had previously injured her arm and was taking medication (T 387). Sometimes she appeared to be heavily medicated (T 390). Her speech would be slurred and she would dose off, sometimes holding a cigarette (T 392). When she woke up she would be cranky and irrational (T 392). She was very demanding (T 398).

90 Ms Maher recalled Mr Mahommed coming to the house. He sat at the table on the back patio with Doreen and Trevor Steele. The door was shut. She did not listen to what they were saying. She regarded it as none of her business (T 402).

91 Ms Maher also said that Trevor Steele was a drug addict on prescription drugs, who took tablets quite often (T 415). That evidence provided some confirmation of a statement made by Mr Mahommed in his letter to the Office of Fair Trading, answering the complaint of Trevor Steele. He made the following comment, in the context of the last loan he was endeavouring to arrange in April 2004: (Exhibit 4: p 2/3)

“D Steele/Smith contacted me and apologised to me for the harassment caused by her son Trevor Steele. She also advised that her son Trevor had a gambling problem and has been in rehab for chronic alcoholism.”

92 What finding should be made in respect of Doreen Smith and her capacity at the time Mr Mahommed was dealing with her? The defendant called Tony Steele, Doreen Smith’s son. I will refer to his evidence shortly. It did not, however, call Doreen Smith or Trevor Steele. According to the plaintiff, their absence was the more surprising since the defendant had arranged a hire car to transport Doreen Smith (and Tony Steele) to Sydney (T 413). I infer that the evidence of Doreen Smith and that of Trevor Steele would not have assisted the defendant.

93 I accept that, after her husband’s death in February 2002, Doreen Smith was depressed and periodically abused her medication. On such occasions it is likely that she slurred her words and slept more than usual. Ms Maher’s evidence was very broad brush and her opportunities to observe were limited, as were those of Doreen Smith’s daughter, Mrs Robinson. The best guide, I believe, to Doreen Smith’s capacity is the evidence of Dr Manners, who saw her regularly. According to his notes, in the period 2002/3, there was one episode of confusion in late 2003 which had resolved by the time he saw her. The meeting with Mr Mahommed on 17 June 2002 took place four months after her husband’s death. I infer that by that time she had recovered her equilibrium, although I do not doubt that she had good days and bad days. On 14 August 2002, she wrote a letter to NorthPower (for whom she had previously worked) in these terms, which I believe accurately reflected her capacity when Mr Mahommed was dealing with her: (Exhibit 16)

“Due to the long term illness and recent death of my husband coupled with the three operations I have had to undertake during the past few years I was unable to address the issue of corroborating receipts and invoices in this matter any earlier.

I am however, feeling much stronger these days and therefore have been able to attend to this matter therefore please find enclosed the following items: ... ”

94 Mr Mahommed’s account of his meeting with Doreen Smith and Trevor Steele was plausible. I accept that he was impressed. Doreen Smith’s life in crime suggests that she was a good talker. Her recent track record with NorthPower was formidable. She had secured a contract with a substantial corporation when she was almost seventy years old (1997). Under the contract, the turnover was considerable. Her cash flow was confirmed by the bank statements which she produced. More than that, she had apparently accumulated significant assets since her bankruptcy or somehow had managed to retain them, notwithstanding her bankruptcy. She appeared to be a woman of substance. Her stated intention to establish a business was confirmed verbally and then in writing by her accountant, Mr McKeown.

95 Within weeks of meeting Mr Mahommed, Doreen Smith approached him in July 2002 for assistance. Her contract with NorthPower had been terminated on 23 August 2001 (Exhibit 15). She claimed that certain invoices had not been paid. She asked Mr Mahommed to undertake the task of reconciling her invoices with the payments revealed by her bank statements (Exhibit 4: p 3).

96 Mr Mahommed agreed to undertake that task. On 9 August 2002 an agreement was drawn up between Doreen Smith and Vestecorp appointing Vestecorp as Doreen Smith’s agent for the purpose of “recouping” the money outstanding (Exhibit 14). It was agreed that Vestecorp would receive 15% of the amount recouped (Exhibit 14). Mr Mahommed assisted Doreen Smith in composing a letter to NorthPower dated 14 August 2002, which attached a schedule which he had prepared. The letter stated that Mr Peter Mahommed had been appointed as her agent. She expressed the hope that the matter would be finalised within 14 days. Mr Mahommed knew, of course, that such a hope was “fairyland” (T 183). NorthPower would plainly need to undertake the process of cross checking (T 183).

97 On 26 August 2002, Deacons solicitors sent a letter to Mr Mahommed. The letter provided mixed messages. It was in these terms: (Exhibit 17)

“Our client is currently reviewing its records and we will contact you in due course.

Until such time, our client strongly denies your client’s claim.”

98 Mr Mahommed responded the next day (27 August 2002). He objected to the suggestion that the solicitors would respond “in due course”. He sought to introduce some urgency, stating the following: (Exhibit 17)

amount covering total payments for invoices’

99 I will come back to the issue of NorthPower in the context of subsequent loan applications. Mr Mahommed’s actions, at least to this point, were consistent with Doreen Smith having made a strong impression upon him. It was reasonable for him to accept at face value her claim that she intended to establish a business, especially since that claim had been corroborated by her accountant. He had no knowledge of her criminal past.

100 What, then, of the discrepancy concerning the statement of personal effects? The handwritten notes in respect of the first loan give the value of personal effects as $55,000 (Exhibit 5: p 67). The typed application, prepared shortly after, provided the figure of $65,000 (Exhibit 6: p 81). That figure was repeated in the second application. There was, as will emerge below, a pattern of such discrepancies in the applications that followed. The assets of the borrower were represented to be slightly more than the instructions would allow. The explanations provided by Mr Mahommed for such differences were many and varied. He told Palmer J, when the first such discrepancy was drawn to his attention, that it was a mistake. He pressed the wrong button (Exhibit 19: T 160). In his evidence before this Court, he allowed for the possibility of mistake, but asserted that the most likely explanation was that he had telephoned the client, when typing the application, and had obtained a revised figure (T 141).

101 It is possible that some of these entries were mistranscriptions from his notes. I do not doubt Mr Mahommed did occasionally check issues with his clients and was sometimes provided with a revised figure. However, given the number of occasions upon which there were such discrepancies, and the pattern that they always appeared to show the applicant in a more favourable light, his explanations were improbable. I believe it likely that Mr Mahommed, for some reason, simply inserted a higher figure. Why he did so is less certain. It was a “low doc” loan, where “financials” were not required. The lender primarily looked to the real estate for its security. The amount borrowed on the first and second loan applications was modest in comparison to the value of the property. The higher figure was unlikely to have made any difference to the outcome, which Mr Mahommed would have realised.

102 I will return to this issue in the context of later loan applications. I accept that Mr Mahommed’s function, as a mortgage broker, was not to verify each assertion made by the applicant for the loan. It was, as mentioned, a “low doc” loan, dependant primarily upon the real estate security. Mr Mahommed expected that the lender would make its own enquiries, which it did. It noted, for instance, the discrepancy between Doreen Smith’s name on her driver’s licence and her name on the Certificate of Title (supra para [71]). However, he had an obligation to the lender not to provide information to the lender which he knew to be false. He understood that obligation. Aside from adjusting the value of personal effects (from $55,000 to $65,000), I believe that he was not in breach of that obligation in the context of the first and second loan applications. As for the personal effects, he had, of course, been to Ms Smith’s home at Caves Beach. He had seen the way in which the home was furnished. He made the comment in the course of his evidence before Palmer J that people really have no idea of the value of their belongings (Exhibit 19: p 161). They can only provide an estimate. Without undue charity, it is possible that he adjusted that estimate by reference to what he had seen. I will return to this aspect below.

The first application of Tony Steele.

103 It will be remembered that the process of arranging a second loan for Ms Doreen Smith began on 4 August 2002. On 28 August 2002, Ms Smith rang Mr Mahommed again. Mr Mahommed, in his affidavit in the Equity proceedings before Palmer J, recounted the conversation in these words: (Exhibit 35: para [47])

his business

I said: ‘I would need to meet with him and obtain details from him.’

Doreen: ‘Alright. You can meet at my house.’”

104 Mr Mahommed, when giving evidence before Palmer J, corrected Doreen Smith’s opening words, substituting “the business” for “his business” (Exhibit 19: p 99).

105 Later the same day, there was a meeting at Doreen Smith’s home at Caves Beach. Mr Mahommed said that he, Doreen Smith and Trevor Steele sat at the kitchen table with Tony Steele, discussing the application (T 44). He had met Tony Steele previously, but only in passing (T 45). He said he addressed questions to Tony, which were generally discussed by those at the table before he would respond (T 46). He would give a quick and direct response after dialogue with his mother and brother (T 199). He denied that Doreen Smith and Trevor Steele provided each answer. He said: “Tony had input” (T 204). Tony wished to borrow money for business purposes (T 41; 203). The business was connected to the prospective contract with NorthPower. Mr Mahommed did not regard such a contract as remote (T 207).

106 Mr Mahommed wrote down Tony Steele’s responses. He recorded his occupation as that of Sales Manager and his annual gross income as $30,000 (T 209). He claimed that he was sitting next to Tony when he wrote these things down and that he believed him capable of such work (T 210).

107 Mr Mahommed then returned to his office and typed the application. He returned to Caves Beach the following day, handing the application to Tony Steele with these words: (Exhibit 35: para [50])

“Here is the application which I’ve completed from the information you gave me yesterday. Check the information to see that it is right and then you need to initial and sign on the bottom of each of the pages where indicated.”

108 Mr Mahommed said that he observed Tony Steele read the application. Indeed, he made two corrections, one being the amount of the loan (which was $80,000 not $70,000) and the other being the address of the property. Tony Steele owned an unencumbered property at 1/151 Bowman Street, Swansea (not 1/51) valued at $185,000 (Exhibit 27). Mr Mahommed made the amendments (Exhibit 35: para [50]). He observed Mr Steele initial each page, signing the application and certain declarations forming part of the application (Exhibit 35: para [50]; cf Exhibit 21).

109 The typewritten application submitted to Liberty Financial does incorporate each of the changes identified by Mr Mahommed (Exhibit 21: pp 157, 159). There was no entry in the handwritten notes concerning the value of “household/personal property” (Exhibit 20: p 153). The typewritten application included the sum of $15,000 for that item. The value of Tony Steele’s motor vehicle was recorded as $4,000 in the notes, but $5,500 in the application (Exhibit 20: p 153; cf Exhibit 21: p 159). The amount in the bank was $2,500 in the notes, compared to $3,500 in the application. Mr Mahommed, at various stages, provided three explanations for these differences. He said before Palmer J that he had made a mistake, “hit the wrong button” (Exhibit 19: T 160). He said, in his evidence in chief in this Court, that he changed the value of the motor vehicle after looking up Glass’ Guide (T 49). When cross examined, he said he made the change after a phone conversation with Tony Steele (T 220). When his attention was drawn to the contradiction, he reverted to his explanation given in chief, saying that his evidence was an honest mistake (T 222). His evidence on this aspect was wholly unconvincing. I believe that, for some reason, he increased the amounts, even though he believed that it hardly mattered (since the real estate was the security).

110 Mr Mahommed’s fee for the transaction was $2,000 (Exhibit 20: p 144). Liberty agreed to provide the loan. Settlement took place on 19 September 2002. Mr Mahommed was paid on settlement the sum of $7,500. The difference was said to be the repayment of a loan he had made to Ms Doreen Smith (T 245).

111 Mr Mahommed said that he made a number of such loans, each documented and signed by Ms Smith and himself. The money was provided by his wife (T 152), although repaid into his account (T 156). The documents were destroyed after the loan had been repaid, apart from one loan on 20 November 2003 (Exhibit 11). The defendant relied upon these loans, and the apparent failure to include the interest in his personal tax returns, as matters damaging Mr Mahommed’s credit. I will return to that issue below. It was also submitted that it would have been obvious to Mr Mahommed on settlement, if it were not obvious beforehand, that Doreen Smith was using Tony Steele’s money for her own purposes (DS: para [185]).

The second application of Tony Steele.

112 Later the same year, a second loan application was made by Mr Tony Steele. On 24 October 2002, shortly before the application, the solicitors for NorthPower wrote to Mr Mahommed, providing a preliminary response to Doreen Smith’s claim for the unpaid invoices. It was a much stronger letter, although it left the door open. It said this: (Exhibit 25)

“From the material that we have seen to date it would be both inappropriate and premature for CE to take any position (other than the current one) in relation to settlement of your client’s account. Our analysis at this time also indicates that recovery action against your client and investigation by external authorities might be warranted and we are presently reviewing this aspect in more detail.

The following table illustrates both duplications and inconsistencies in aspects of the material provided by your client. Please note this is only a small sample of the matters that have been identified so far.”

113 The letter included a table which gave examples of invoices which appeared to duplicate the same work. Somewhat ominously, the solicitors added these words: (Exhibit 25)

“On its face it looks like your client has duplicated charges and the seriousness of these inconsistencies with respect to your client and the possible implications for her should not be underestimated.”

114 Two requests were then made, the first to provide authority allowing all “service providers” to furnish information, and the second, seeking all records in the possession of Doreen Smith. The letter then stated that the review was continuing.

115 On 21 November 2002, Doreen Smith telephoned Mr Mahommed, foreshadowing a further loan application: (Exhibit 35: para [53])

“Doreen: ‘Tony wishes to increase his loan to $129,000. Can you come around and fill out the application form with him.’”

116 Mr Mahommed, according to his affidavit, went to Caves Beach the following day. He said he saw Tony Steele and had the following conversation: (Exhibit 35: para [54])

“Tony: ‘No. My income is $38,500. Is that what it was the first time?’

I said: ‘I’ll check. What’s the purpose of the loan?’

Tony: ‘To help with the business.’”

117 A further loan application was submitted. It was in the same terms as the previous application, except that the annual gross income of Tony Steele was increased from $30,000 to $38,500 and the value of his household items and personal effects was increased from $15,000 to $25,000.

118 It was submitted by the defendant that Mr Mahommed’s account of his conversation with Tony Steele concerning his income was patently false (DS: para [190]) and that there was no basis for increasing the value of his household items. They were, it was suggested, further examples of his dishonesty (DS: para [190]). I will defer that issue for the moment.

Mr Mahommed’s perception of Tony Steele’s capacity.

119 The television programme and the letter from the Office of Fair Trading sent the day before the programme, asserted that Tony Steele was a chronic schizophrenic who could not work. It was said that he was in receipt of an Invalid Pension (Exhibits F, J). Mr Mahommed dealt with that suggestion in his affidavit in the Equity proceedings, in these terms: (24.1.05) (Exhibit 35: para [57])

“In all my dealings with Tony Steele and my meetings with him, I was not advised that he suffered any illness or mental disability nor did I observe him to suffer from any illness or mental or learning disability. Mr Steele seemed to me perfectly capable of understanding the loan arrangements being organised for him and was able to provide me with the information requested from him to complete the application forms without difficulty.”

120 Mr Mahommed gave evidence before Palmer J on 31 March 2005. Before he gave that evidence, he saw Mr Tony Steele give evidence in the same proceedings. He said that he hardly recognised him. His head was shaved. He looked like he had not had a bath for a week. He was dressed in dirty shorts, a shirt and thongs (T 48). His appearance was in marked contrast to the way he looked when he had seen him dressed to go to a local club (T 48). He was incoherent.

121 Mr Mahommed said before Palmer J that he had spent somewhere between ten and twelve hours with Tony Steele (Exhibit 19: T 136). He did not notice anything unusual about the way he spoke (Exhibit 19: T 137). He sat next to him and read the loan document with him (Exhibit 19: T 101). Examining the questions he had to ask to fill out in the loan application, Mr Mahommed recounted their conversation in these terms: (Exhibit 19: T 107)

“A. Yes. On p 558 I asked Tony, ‘Are you currently under any form of bankruptcy or are you aware of anyone currently petitioning for your bankruptcy?’ I explained that in terms and I remember saying to him, ‘Simply what that may mean is have you got any current liabilities, debts that have been through the courts or an estate that you haven’t paid, they’ve got a judgment or a notice that they’re going to bankrupt you?’ He said, ‘No, I haven’t.’ I asked him, ‘Have you been advised to seek bankruptcy or have you been petitioned for your bankruptcy in relation to the first question?’ He acknowledged, ‘No, I haven’t’.

I asked him, ‘Have you ever been a shareholder or an officer of a private company of which an administrator or a liquidator has been appointed?’ I remember asking him or saying to him that, ‘Are you a company director of a company?’, because I was aware that Country Power was not a pty limited company. He said, ‘No, I wasn’t.’”

122 Mr Mahommed insisted before Palmer J that he had a clear recollection of their meeting and could replay it in his mind (Exhibit 19: T 102/3). He repeated that there was nothing unusual about him. Nothing struck him about his physical appearance or his manner of speech (Exhibit 19: T 165).

123 The evidence of Mr Mahommed before this Court was to the same effect. He said the first application, where they all sat around the kitchen table, may have taken a couple of hours (T 218). He never spoke to Tony Steele alone (T 45). Doreen Smith and Trevor were usually present (T 45). He walked with a limp and his speech was slow. However, there were no signs of intellectual impairment (T 45). Mr Mahommed said he simplified some of the issues, as he did with a number of clients, but he did not do so because he believed Tony Steele was simple (T 216/7) (cf DS: para [179]).

Tony Steele’s capacity.

124 Dr Seth Manners said that he had treated Tony Steele since the mid 1980s. He had been diagnosed as schizophrenic at the age of 17 years (T 297). On seven or eight occasions he had been admitted to psychiatric hospitals. His psychotic symptoms had, with treatment, disappeared in about 1990 (T 297). He had been involved in a number of motor vehicle accidents, suffering severe fractures of both femurs. The fractures had healed, but had left him with significant deformity in both legs and a degree of pain (T 300). He now walked with a limp. He had been continuously on medication for schizophrenia for more than two decades. He attended the surgery every three weeks for tablets and an anti-psychotic injection (T 296). He had been generally stable for the last ten years (T 298). At one point methadone had been prescribed because he had developed problems with narcotic medication, prescribed for pain (T 298). He had a short period of agitation lasting days, associated with withdrawal (T 298). Dr Manners described him as suffering from a “very mild chronic mental illness” (Exhibit L). His intellectual capacity had been reduced to a slight degree (T 298). Dr Manners described the way in which he presented in these words: (T 297)

“A. ... his speech is often slow and stilted, he doesn’t necessarily follow a logical course in a conversation, he’ll interrupt a conversation and go off in another direction. I’ll just refer to – he does not have much conversation other than pleasantries because he doesn’t volunteer information, you have to seek information from him.”

125 Dr Manners believed that Tony Steele had never been employed. He could not work (T 298). He was in receipt of a Disability Support Pension. Indeed, in the context of that pension, Dr Manners said this: (T 298)

126 Dr Manners stated that Tony Steele was very much under the influence of his brother Trevor (T 302). If he were asked to sign a document, he probably would do so (T 303). The following was put in cross examination: (T 303) (cf Exhibit M)

127 However, there were limits to his comprehension. On 12 April 2005, in the context of the Equity proceedings, Tony Steele gave a Power of Attorney to a solicitor, Ms Pamela Young (Exhibit N). The following was put to Dr Manners: (T 304)

128 At the same time, Tony Steele signed a document appointing Ms Pamela Young, solicitor, as his “Enduring Guardian” (Exhibit O). Again, Dr Manners thought he would have a great deal of difficulty understanding that concept (T 304). He said that Tony Steele had a limited degree of literacy (T 298).

129 The following question was put in cross examination as to the way he presented: (T 301)

130 Tony Steele’s sister, Mrs Denise Robinson, was asked to describe her brother. She said this: (T 435)

“A. He has always been Tony, I guess. He is not very talkative. You find it very difficult to have a conversation with Tony. On those occasions when I did visit the home he would stay in his room. He would probably say five or six words to me the whole time I was there.”

131 She added: (T 435)

“A. Tony cannot work. Tony cannot hold a proper conversation for any length of time. He could answer telephone, but not hold a conversation. He would always answer a telephone and just get my mother or father. He can use his VCR to change videos, make himself a cup of coffee. That’s pretty much Tony. He doesn’t do much else.”

132 Mrs Robinson also said this: (T 435)

133 Mr Tony Steele was called to give evidence. He walked with a marked limp. He was dressed normally. His head had not been shaved. Indeed, he presented well. As Dr Manners remarked, at first he appeared to be reasonably normal. His answers were limited, but generally responsive. Within a relatively short time, however, the limits of his comprehension and the quirkiness of his reactions were apparent. I accept that he may have been able to correct the address on the loan document from 1/51 to 1/151, because he was no doubt familiar with that address, and had seen it many times. Nonetheless, I believe that the limits of his literacy would soon have been obvious, had time been spent with him, and especially if documents had been placed in front of him. I cannot accept that Mr Mahommed spent one and a half hours interviewing him, without recognising that he suffered from a mild mental illness. I reject as false Mr Mahommed’s evidence that he spent ten to twelve hours with him and regarded him as normal. That evidence, I believe, was false to the knowledge of Mr Mahommed when he gave it.

“31 The imputation in this appeal was described by counsel for the appellant as referring to the sector of ‘activities of violence’, however the gravity of the imputation extended beyond such an artificial construct to his reputation in the sector addressing his conduct as a police officer. Indeed, as noted by Meagher JA, the gravity of the imputation is in part due to the appellant’s position as a police officer.

307 In ABC v McBride (supra), Ipp AJA (as he then was) provided a useful commentary upon the reasoning of the Court of Appeal in O’Hagan. He said this:

“25 Meagher JA remarked on the difficulties in determining the relevant sector and the absence in the authorities of reliable guidelines that could assist in the inquiry. He determined the relevant sector, in effect, by considering the overall defamatory impact of the imputation pleaded. The defamation was directed at the very essence of the office of a police officer, hence, the relevant sector was the appellant’s reputation as a police officer generally.”

308 Ipp AJA added:

sector

O’Hagan v Nationwide News Pty Ltd

309 The action in ABC v McBride arose out of a Four Corners programme in 1988. Dr McBride was, at that time, a medical practitioner. However, he was struck off in 1993 for medical fraud. The plaintiff’s Statement of Claim alleged the following defamatory imputations: (para [6])

“(a) The [plaintiff] deliberately exposed women patients to danger.

(b) [T]he [plaintiff] had so acted as to warrant him being accused of conduct which endangered the lives and health of women patients.”

310 The defendant’s plea in mitigation relied upon particulars of scientific fraud. On the application of Dr McBride, the particulars were struck out. The ABC appealed.

311 It was common ground that evidence of bad reputation had to be confined to the “relevant sector” (para [16]). The issue was whether the scientific fraud was within the relevant sector. Ipp AJA, having referred to O’Hagan and the need for the evidence to be “relevant to that part of the plaintiff’s reputation capable of being harmed by the defamatory material”, said this:

Marsden v Amalgamated Television Services Pty Ltd

O’Hagan v Nationwide News Pty Ltd

30 The essential question in determining the relevant sector remains: what is the scope of the plaintiff’s reputation capable of being harmed by the defamatory material?”

312 Counsel for the ABC drew attention to the judgment of the Medical Tribunal in 1993, which included these words: (para [32])

“There is force in the submission of Senior Counsel for the [Tribunal] that whilst the proven misconduct [in respect of scientific fraud] does not relate to the practise of medicine, the relationship is so close that it might well fall into that category. ... ”

313 In identifying the sector, it is relevant to look at the defamatory material. Ipp AJA said this:

“47 A transcript of the Four Corners program in question is annexed to the statement of claim. The transcript forms part of the context in which the pleaded imputations are to be understood. It is relevant and admissible for the purposes of demonstrating the force and effect of the imputations pleaded and giving colour to and explaining the significance of them ... ”

314 It is also important to look at the terms of the imputations. His Honour said this:

deliberately exposed women patients to danger’

so acted as to warrant him being accused of conduct which endangered the lives and health of women patients

the respondent, in deliberately exposing women patients to danger, acted as to warrant him being accused of conduct which endangered the lives and health of women patients

patients

315 His Honour then stated his conclusion in these terms:

“36 The reputation of a medical practitioner, insofar as it relates to his dealings with his patients, is wide in scope, and it would, ordinarily, provide considerable latitude for a defendant who wished to allege material in mitigation of damage. But, in my opinion, such a reputation is far removed from the reputation of a person, who, for example, conducts laboratory tests on animals for the purposes of determining their reaction to experimental drugs. ... ”

316 His Honour determined that a person who occupied himself as a medical practitioner and occasionally as an experimental scientist was conducting two separate occupations, although they may not be entirely unrelated (para [36]). He did not believe that a reputation for falsifying results of experiments would impinge on a reputation for being a caring and compassionate doctor (para [37]).

Submissions of the parties.

317 The defendant suggested in written submissions that the relevant sector was “dishonesty”. It said this: (DS: para [9(j)])

dishonesty

318 Having referred to Lord Denning’s statement in Plato Films Limited v Speidel (supra), the defendant said this:

Plato v Speidel

319 The following was then put: (DS: paras [56]-[57])

“56 The evidence in this case reveals the plaintiff as undeserving of substantial damages in relation to allegations of dishonesty. On balance the Court would conclude that he behaved dishonestly toward Liberty, Doreen Smith, Tony Steele and also in the course of his evidence before Palmer J and this Court.

Jenman v Ollis

320 In submissions, Mr Smark SC, for the defendant, introduced a qualification concerning the relevant sector. He said this: (T 655)

“ ... the sector generally is dishonesty. I made one qualification of that which was that we don't say that matters peculiarly within the private life of the plaintiff ... ”

321 Counsel for Mr Mahommed suggested that the relevant sector was “dishonesty in mortgage broking” (T 645). It was also said that the Amended Defence confined the matter in mitigation to the programme, not the promotions (T 646). Counsel for the defendant disagreed. However, if there were doubt, he sought leave to amend paragraph [8] of the Amended Defence to put the matter beyond doubt. As I read the Amended Defence, paragraph [8] applies to all publications. However, the defendant was given leave to put the matter beyond doubt by adding to paragraph [14] the words “and of the facts as proved in relation to those imputations”.

The relevant sector.

322 Usually the issue requiring an identification of sectors will arise at the beginning of a case (as in O’Hagan and McBride) and will determine the evidence that can be introduced as evidence of bad reputation or in support of a plea of justification. Here, the issue arises at the end of the trial, the evidence having been introduced in respect of the defences to Imputations 11 and 12 that have failed. The issue is whether that evidence has a broader relevance and can be used in mitigation of Imputations 1 to 10, as well as Imputations 11 and 12. That requires an examination of whether it relates to a relevant sector of reputation. If it does, does it materially mitigate the damage occasioned by each imputation?

323 Are the sectors “dishonesty” or “dishonesty in business” too broad, in the same way that the sector of “medicine” was found to be too broad in McBride? Are there two separate sectors, with different imputations relating to each, and the evidence put forward in mitigation relevant to some but not others? The two possible sectors are:

1. Mr Mahommed’s reputation for financial honesty.

324 There is a significant difference between someone who is prepared to lie, especially to cover up wrongdoing, and someone who steals from another. Both are dishonest. However, dishonesty is a large umbrella. It is a crude classification for conduct which is very different. A person may have a reputation as a liar, but not a thief.

325 Here, some of the imputations involved the suggestion of financial dishonesty without more.

Imputation 1

Imputation 5

Imputation 10

326 Only in the very broadest sense could it be said that the fact that a person is shown to be a liar in certain circumstances is relevant to the fact that he is a thief. To adopt the test of Ipp AJA in McBride, that part of the plaintiff’s reputation which was capable of being harmed by the publication was his reputation for financial integrity or honesty, not his reputation for truthfulness.

327 The remaining imputations in the promotions and the programme are broader in their scope, just as the imputation in O’Hagan was, in context, broader than the suggestion of violence. The other imputations combine financial dishonesty with a generalised description of the means by which the financial objective was accomplished (“ripped off”, “swindled”, “took advantage of”, “dishonest financial adviser and mortgage broker”). The gravity of the imputation (to use Stein JA’s phrase in O‘Hagan) extends beyond financial dishonesty. It includes the means of obtaining that objective and lying thereby becomes relevant.

328 Here the material put forward in mitigation, with one possible exception, related to the plaintiff’s reputation for truthfulness, not financial honesty. The possible exception was the third matter in paragraph [289] supra, where Mr Mahommed put forward an application on behalf of Doreen Smith for reasons which included his own financial self interest. That matter aside, the remaining matters appear to be far removed from a person who is a thief, who steals money from clients.

329 So, if the matter were to be approached upon the basis that there were two different sectors, the evidence put forward in mitigation could not be relied upon in respect of Imputations 1, 5 and 10, apart from the matter to which I have just made reference (the third matter in para [289] supra, where Mr Mahommed pursued his own self interest). On this approach, the matters in mitigation could be relied upon in respect of all other imputations.

330 However, both parties identified the relevant sector rather more broadly, namely “honesty in business” (defendant) and “honesty as a mortgage broker” (plaintiff). On either characterisation, it seems to me that all matters are available in mitigation in respect of all imputations. However, the distinction in terms of relevance between lying and stealing would remain. The circumstances in which the lying occurred would also be relevant. The marginal increase in the value of assets in the Smith/Steele applications was, in relative terms, a very minor form of dishonesty. Putting forward Ms Smith’s application containing a statement of income knowing it to be false, or refraining from enquiry which would reveal its falsity, was more serious. Nonetheless, in comparison to what was said about Mr Mahommed on the programme, it was also a very mild form of dishonesty.

331 One then comes to the false explanations provided by Mr Mahommed in his affidavit on 24 January 2005 (Exhibit 35) and his evidence before Palmer J and this Court. There is no question that Mr Mahommed’s conduct involved serious and repeated dishonesty. Nonetheless, there was a context. The “cover up” followed closely upon the programme. The programme comprehensively and unfairly savaged Mr Mahommed’s reputation, including his reputation for financial honesty. I have no doubt that he was shattered by the experience and especially the injustice of what had been said about him. To lie in such circumstances, in the hope of recovering one’s reputation, was foolish. Ultimately it did not help. It was nonetheless a very human reaction and one which does not necessarily suggest a pervasive dishonesty in Mr Mahommed’s character.

The opinion of Justice Palmer.

332 It will be remembered that the defendant relied upon the findings of Palmer J as evidence of bad reputation, although it accepted that, on the authorities that bound me, such a matter could not be taken into account (supra para [293]).

333 The defendant argued in the alternative that, on the analogy of convictions, statements about a person in open court were part of the public record and available in mitigation.

334 Attention was drawn to the statement of Lord Denning in Goody v Odhams Press Limited (supra), where the following was said in the context of evidence available in mitigation: (at 340/1)

“ ... I think that previous convictions are admissible. They stand in a class by themselves. They are the raw material upon which bad reputation is build up. They have taken place in open court. They are matters of public knowledge. They are accepted by people generally as giving the best guide to his reputation and standing. They must of course be relevant, in this sense, that they must be convictions in the relevant sector of his life and have taken place within a relevant period such as to affect his current reputation. But being relevant, they are admissible. They are very different from previous instances of misconduct, for those have not been tried out or resulted in convictions or come before a court of law. To introduce those might lead to endless disputes. Whereas previous convictions are virtually indisputable.”

335 Palmer J, in the course of his judgment on 28 April 2005, made a number of findings critical of Mr Mahommed (Steele-Smith v Liberty Financial Pty Limited (supra para [33]) at paras [100]-[103]). The defendant asked that I take those findings into account as part of its case in mitigation of damages. No authority extending to findings in a court judgment was identified. The admission of such material would involve an expansion of the categories available in mitigation of damages. As a matter of principle, such findings seem to me very different from a conviction. A conviction is the end of a process, although it embodies the collective opinion of a jury where it follows a verdict. The conviction is a fact. It is quite different from a Judge’s reasoning, which is an opinion. The opinion may be right or wrong, fair or unfair. Unlike a conviction, it is not, to use Lord Denning’s words, “virtually indisputable”. For the purposes of this action, I do not believe Palmer J’s findings are relevant in mitigation.

Quantification of damages.

336 In determining damages, the Court is obliged to ensure that there is an appropriate and rational relationship between the relevant harm and the amount of damages awarded (s 46A(1) Defamation Act 1974). In fixing that sum, the Court should have regard to the general range of damages for non-economic loss in personal injury awards in this State (including those regulated by Statute) (s 46A(2) of the Act). The defendant pointed out that the present award appropriate for “a most extreme case” under the Civil Liability Act 2002, is $427,000 and $366,000 under the Motor Accidents Compensation Act 1999 (DS: para [39]). In Rogers v Nationwide News Pty Limited [2003] HCA 52; (2003) 216 CLR 327, Hayne J (Gleeson CJ and Gummow J agreeing) said that the section identified “a presumptive outer limit to awards for defamation” (at 343).

337 In this case, however, there were multiple imputations (each a cause of action) and three publications. Issues arise as to whether there should be separate verdicts. It was accepted that “whether one or more causes of action are to be included in one verdict or judgment will depend upon the exercise of the trial Judge’s judicial discretion” (Hayward v Thompson [1982] 1 QB 47, per Lord Denning MR at 62 quoting Scott LJ in Barber v Pigden [1937] 1 KB 664 at 684). Here, I believe that it is appropriate to give a separate verdict for each of the three publications. However, in arriving at each verdict, it is important to be mindful of the fact that there was likely to be a substantial overlap in the viewing audience. Indeed, the idea of the promotions was to tease the audience, exciting their interest in the forthcoming programme. In Carson v John Fairfax & Sons Limited (supra para [242]), the majority (Mason CJ, Deane, Dawson and Gaudron JJ said this): (at 54/55)

“While the two publications were different and conveyed different defamatory imputations, there was a clear and close relationship between them. Both were written by the same person (a respondent in the second action, Mr Slee) and published in the same section of different issues of the same newspaper. Each of them was defamatory of the appellant in respect of conduct relating to the same series of litigation. The effect of the defamatory publications was cumulative. The second compounded the harm to the appellant caused by the first: it renewed and expanded the hurt to his feelings; it exacerbated the damage to the reputation which he had hitherto enjoyed in legal, commercial and other circles.”

338 The majority, having referred to the fact that no award could be made of exemplary damages, and that malice was not relevant, said this: (at 55)

“In the context of those legislative provisions, it is permissible and sensible in a case where claims for closely related defamatory publications have been heard together for a jury, in determining what is the appropriate compensation to be awarded to the plaintiff in respect of each publication, to take account of the aggregate ‘harm’ suffered by the plaintiff by reason of both of them. ... ”

339 Each of the imputations was serious. In combination, they were devastating to the plaintiff’s reputation. The material was published very widely. In the first promotion, the words “Stolen, stolen, stolen” appear in large letters across the screen, superimposed upon a brick bungalow in each case (supra para [11]). That was what the plaintiff had stolen (Imputation 1). The figure of “1 million dollars” was mentioned. It was not small-scale theft.

340 But it was worse than that. It was a callous, heartless act against a defenceless old woman who had dementia (Imputation 2). It was also an act that involved greed. The plaintiff took advantage of her and took everything she had (Imputation 3).

341 Mr Mahommed was not named in the first promotion. His image was shown on the screen. The defendant accepted identification. The promotion was brief but dramatic. Everything conveyed was untrue. The hurt to Mr Mahommed’s feelings was significant. For the reasons given, he is entitled to aggravated damages.

342 The second promotion was more of the same. However, it was longer and incorporated images of the enfeebled Doreen Smith, underlining the callousness of Mr Mahommed’s behaviour (supra para [13]). Immediately after the image of Doreen Smith, her son Trevor Steele was shown saying, with controlled rage, the following: (supra para [13])

“He has robbed her blind.”

343 Shortly thereafter he said:

“I’d like to see him spend a lot of time in gaol.”

344 Again, the promotion was relatively short. Mr Mahommed was not named, although his image was shown. Again, what was said was completely untrue. Doreen Smith did not have dementia. Mr Mahommed did not steal $1 million, or anything, from her. He did not callously take advantage of a patient with dementia. Again, aggravated damages are warranted.

345 One then comes to the programme itself. It began by repeating the slogan in the first promotion: “Stolen, stolen, stolen” (supra para [15]). The introduction that followed repeated the same false allegations. Doreen Smith was said to be a woman suffering from dementia. She was forgetful and her mortgage broker had seized upon these qualities to swindle her of everything she owned (supra para [17]). Mr Mahommed was named. He was confronted in the city where he lived, in the Newcastle region (supra para [18]). His crime and his callousness was worse because, according to her son, all she wanted was a trifling amount for Christmas presents (supra para [21]). Instead, she had been induced to borrow between $800,000 and $1.2 million (supra para [24]). No sooner had the money been loaned to her, than it was transferred to Mr Mahommed’s personal account (supra para [25]). The pretext was fees owing. This was, according to an expert in consumer law, “one of the absolute worst” cases (supra para [29]).

346 That was the context within which each of the imputations of “ripping off $1 million” (Imputation 7), “taking advantage of a dementia patient” (Imputation 8), “swindling Doreen Smith” (Imputation 9) and “stealing from her” (Imputation 10), are to be understood.

347 Again, none of these allegations was true. Each was enormously damaging to Mr Mahommed’s reputation and hurtful to his feelings, as he and his mother described. He moved house, grew a beard and wore a baseball cap to disguise his appearance. Although no claim was made for special damages, his reputation was so damaged that he ceased working as a mortgage broker.

348 Imputations 11 and 12 are somewhat different. The matters proved in mitigation are more directly relevant to them, and especially Imputation 12 (“dishonest financial adviser and mortgage broker”), than to the other imputations. Nonetheless, there was, in each case (including Imputations 11 and 12), a substantial gulf between the dishonesty collectively described by each publication and the dishonesty (serious though it was in some cases) that the defendant was able to show in its case in mitigation.

349 The appropriate award in respect of each publication, including aggravated damages, is in my view, as follows:

1. In respect of the promotion (Imputations 1, 2 and 3), the sum of $50,000.

2. In respect of the second promotion (Imputations 4, 5 and 6), the sum of $50,000.

3. In respect of the programme (Imputations 7, 8, 9, 10, 11 and 12), the sum of $140,000.

The total verdict is $240,000.

Order.

350 I therefore make the following orders:

1. There shall be a verdict for the plaintiff in respect of the first publication (the first promotion) of $50,000.

2. There shall be a verdict for the plaintiff in respect of the second publication (the second promotion) of $50,000.

3. There shall be a verdict for the plaintiff in respect of the third publication (the programme) of $140,000.

4. The defendant should pay the plaintiff’s costs.

**********

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Citations

Mahommed v Channel Seven Sydney Pty Ltd [2009] NSWSC 631

Most Recent Citation

Fierravanti-Wells v Channel Seven Sydney Pty Ltd (No. 3) [2011] NSWDC 201

Cases Citing This Decision

5

Channel Seven Sydney Pty Ltd v Mahommed (No 2) [2011] NSWCA 6

Channel Seven Sydney Pty Ltd v Mahommed [2010] NSWCA 335

Secure Funding Pty Ltd v Bettini [2011] NSWSC 557

Cases Cited

25

Statutory Material Cited

4

Mahommed v Channel Seven Sydney Pty Ltd [2006] NSWCA 213

Channel Seven Sydney Pty Ltd v Mohammed [2008] NSWCA 21

Mahommed v Channel Seven Sydney Pty Ltd [2006] NSWCA 213

CITATION:	Mahommed v Channel Seven Sydney Pty Ltd [2009] NSWSC 631
HEARING DATE(S):	1/06/09 - 5/06/09 9/06/09 - 12/06/09
JUDGMENT DATE :	9 July 2009
JURISDICTION:	Common Law Defamation List
JUDGMENT OF:	Kirby J
DECISION:	(1) There shall be a verdict for the plaintiff in respect of the first publication (the first promotion) of $50,000. (2) There shall be a verdict for the plaintiff in respect of the second publication (the second promotion) of $50,000. (3) There shall be a verdict for the plaintiff in respect of the third publication (the programme) of $140,000. (4) The defendant should pay the plaintiff’s costs.
CATCHWORDS:	DEFAMATION - second stage defamation trial after s 7A trial - twelve imputations conveyed - Today Tonight programme - defences of justification - substantial truth and contextual truth - DAMAGES - general damages - aggravated damages - claim for exemplary damages - plea of mitigation of damages - facts properly before the court in respect of defences which failed - bad reputation - dishonesty of plaintiff - whether evidence related to relevant "sector" of reputation - whether findings of another judge admissible in mitigation - separate publications - assessment of damages - whether separate verdicts.
LEGISLATION CITED:	Defamation Act 1974 Corporations Act 2001 (Cth) Civil Liability Act 2002 Motor Accidents Compensation Act 1999
CATEGORY:	Principal judgment
CASES CITED:	Mohammed v Channel Seven Sydney P/L [2006] NSWCA 213 Channel Seven Sydney P/L v Mahommed [2008] NSWCA 21; (2008) 70 NSWLR 669 Morris v Newcastle Newspapers Pty Limited (1985) 1 NSWLR 260 Plato Films Ltd v Speidel [1961] AC 1090 Steele-Smith & Ors v Liberty Financial P/L & Anor [2005] NSWSC 398 Liberty Financial v Scott (No 3) [2004] VSC 490; (2004) 11 VR 621 Liberty Financial v Scott [2002] FCA 345 Steele v Mirror Newspapers Ltd [1974] 2 NSWLR 348 Briginshaw v Briginshaw (1938) 60 CLR 336 Greek Herald Pty Ltd v Nikolopoulos [2002] NSWCA 41; (2002) 54 NSWLR 165 Radio 2UE Sydney Pty Ltd v Chesterton [2009] HCA 16; (2009) 82 ALJR 654 Hepburn v TCN Channel Nine Pty Limited (unreported, 8.10.82) Australian Broadcasting Corp v Hodgkinson [2005] NSWCA 190 John Fairfax Publications Pty Limited v Zunter [2006] NSWCA 227 Carson v John Fairfax & Sons Limited (1993) 178 CLR 44 Triggell v Pheeney (1951) 82 CLR 497 Rigby v Associated Newspapers (No 2) [1969] 1 NSWR 729 John Pfeiffer Pty Limited v Rogerson [2000] HCA 36; (2000) 203 CLR 503 Australian Consolidated Press Ltd v Uren (1967) 117 CLR 221 Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419 Costello Abbott & Ors v Random House Australia Pty Ltd [1999] ACTSC 13; (1999) 149 FLR 367 Rochfort v John Fairfax & Sons Ltd [1972] 1 NSWLR 16 ABC v McBride [2001] NSWCA 322 Turner v News Group Newspapers Ltd (CA) [2006] 1 WLR 3469 Goody v Odhams Press Ltd [1967] 1 QB 333 O’Hagan v Nationwide News Pty Limited [2001] NSWCA 302; (2001) 53 NSWLR 89 Rogers v Nationwide News Pty Limited [2003] HCA 52; (2003) 216 CLR 327 Hayward v Thompson [1982] 1 QB 47 Barber v Pigden [1937] 1 KB 664
TEXTS CITED:	Regulatory Guide 146; Licensing: Training of Financial Products Advisers Mayne and McGregor on Damages, 12th ed. (1961) Gatley on Libel and Slander, 10th ed (2004)
PARTIES:	Peter Mahommed (Pl) Channel Seven Sydney Pty Limited (Def)
FILE NUMBER(S):	SC 2005/20064
COUNSEL:	C Evatt/R Rasmussen/M Rollinson (Pl) K Smark SC/K Rees (Def)
SOLICITORS:	Michael Corrigan (Pl) Mallesons Stephen Jaques (Def)

Para No.
1. LIABILITY
The action.	1
The defence.	5
The defamatory publications.	11
The defence of truth.	31
Background.	35
Liberty Financial.	41
The Smith-Steeles.	47
The first and second Smith application.	61
Was Doreen Smith incapacitated?	80
The first application of Tony Steele.	103
The second application of Tony Steele	112
Mr Mahommed’s perception of Tony Steele’s capacity.	119
Tony Steele’s capacity.	124
The third Smith application.	147
The third and fourth Steele applications.	160
Other issues relevant to credit.	182
The fourth and fifth Smith loans.	191
Outrageous fees?	205
A dishonest Financial Adviser and Mortgage Broker?	219
The defendant’s contextual imputations.	229
“Polly v Peck” (justifications outside New South Wales)	239
2. DAMAGES
The reputation of Mr Mahommed.	241
Hurt to feelings.	244
Aggravated damages.	270
Exemplary damages.	275
Dishonesty on the part of the plaintiff.	287
The principles in respect of mitigation.	291
Submissions of the parties.	317
The relevant sector.	322
The opinion of Justice Palmer.	332
Quantification of damages.	336
Order.	350