Marshall v Smith - [2013] WASC 452

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: MARSHALL -v- SMITH [2013] WASC 452

CORAM: LE MIERE J

HEARD: 19 JUNE 2013

DELIVERED : 18 DECEMBER 2013

FILE NO/S: CIV 2378 of 2012
Consolidated by Orders dated 31 August 2012

BETWEEN: JOHN LLOYD CRAIG MARSHALL
First Plaintiff
BEVAN JON WARRIS
Second Plaintiff
NEIL KEVIN JOYCE
Third Plaintiff
AND
EDWARD SCOTT SMITH
Defendant

FILE NO/S :CIV 2347 of 2012

BETWEEN :JOHN LLOYD CRAIG MARSHALL
First Plaintiff
BEVAN JON WARRIS
Second Plaintiff
NEIL KEVIN JOYCE
Third Plaintiff
AND
EDWARD SCOTT SMITH
Defendant

Catchwords:

Defamation - Defences - Justification - Qualified privilege at common law - Statutory qualified privilege - Honest opinion

Practice and procedure - Application to strike out in part defence and counterclaim - Turns on own facts

Legislation:

Defamation Act 2005 (WA), s 30, s 31

Result:

Defence and counterclaim struck out in part

Category: B

Representation:

CIV 2378 of 2012

Consolidated by Orders dated 31 August 2012

Counsel:

First Plaintiff                :     Mr M L Bennett
Second Plaintiff            :     Mr M L Bennett
Third Plaintiff               :     Mr M L Bennett
Defendant:     Mr J D MacLaurin

Solicitors:

First Plaintiff                :     Bennett + Co
Second Plaintiff            :     Bennett + Co
Third Plaintiff               :     Bennett + Co
Defendant:     Tottle Partners

CIV 2347 of 2012

Counsel:

First Plaintiff                :     Mr M L Bennett
Second Plaintiff            :     Mr M L Bennett
Third Plaintiff               :     Mr M L Bennett
Defendant:     Mr J D MacLaurin

Solicitors:

First Plaintiff                :     Bennett + Co
Second Plaintiff            :     Bennett + Co
Third Plaintiff               :     Bennett + Co
Defendant:     Tottle Partners

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

Al Amoudi v Brisard [2006] EWHC 1062 (QB); [2006] 3 All ER 294
Bashford v Information Australia (Newsletters) Pty Ltd [2004] HCA 5; (2004) 218 CLR
Berezovsky v Forbes (No 2) [2001] EWCA Civ 1251
Channel Seven Adelaide Pty Ltd v Manock [2007] HCA 60; (2007) 232 CLR 245
Christian Labour Association of Canada v Retail Wholesale Union [2003] BCSC 2000
Drummoyne Municipal Council v Australian Broadcasting Corporation (1991) 21 NSWLR 135
Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716
Greek Herald Pty Ltd v Nikolopoulos (2002) 54 NSWLR 165
Hewitt v Grunwald [2004] EWHC 2959
John Fairfax Publications Pty Ltd v Gacic [2007] HCA 28; (2007) 230 CLR 291
Lindholdt v Hyer [2008] NSWCA 264; (2008) 251 ALR 514
Mayfield‑Smith v Mirror Newspapers Ltd (1982) 2 NSWLR 419
Morris v Newcastle Newspapers Pty Ltd (1985) 1 NSWLR 260
Radio 2UE Sydney Pty Ltd v Chesterton [2009] HCA 16; (2009) 238 CLR 460
Taylor v Jecks (1993) 10 WAR 309
Trumm v Norman [2008] EWHC 116 (QB)
Vassiliev v Frank Cass & Co Ltd [2003] EWHC 1428

LE MIERE J: The plaintiffs are directors of Empire Oil & Gas NL (Empire), a publicly listed oil and gas exploration and production company. The defendant is an Empire shareholder. The plaintiffs claim damages and an injunction to restrain the defendant from publishing three publications claimed to be defamatory of the plaintiffs. The first publication is a letter dated 18 July 2012 which the defendant wrote and caused to be mailed to shareholders of Empire (18 July letter). The second publication is the publication of the 18 July letter between about 8 August and 25 August 2012 on a website with the URL (the Changenow Website). The third publication is a letter dated 8 July 2012 which the plaintiffs allege the defendant wrote and caused to be published on the Changenow Website from about 8 August to about 25 August 2012 (8 August letter).

The proceedings

On 8 August 2012 the plaintiffs commenced CIV 2347 of 2012 in which they complained of the publication of the 18 July letter to Empire shareholders. On 14 August 2012 the plaintiffs commenced CIV 2378 of 2012 in which they complained of the publication of the 18 July and 8 August letters on the Changenow Website. I subsequently ordered that the two actions be consolidated. On 25 October 2012 the plaintiffs filed a re‑amended consolidated statement of claim, which I will refer to as the statement of claim. On 12 March 2013 the defendant filed a defence and counterclaim. The plaintiffs applied to strike out in part the defence and counterclaim. After the plaintiffs had filed submissions in support of their strike out application, the defendant filed a minute of proposed amended defence and counterclaim dated 13 June 2013. The plaintiffs' strike out application proceeded on the basis that the defence and counterclaim had been amended in accordance with the minute of proposed amended defence and counterclaim dated 13 June 2013, and the application was to strike out that defence and counterclaim, which I will refer to as the defence and counterclaim.

The defence

In his defence the defendant pleads in relation to the publication of the 18 July letter by mail to shareholders of Empire and on the Changenow Website without distinguishing between those publications. The defendant admits publishing the 18 July letter to shareholders of Empire and causing the letter to be posted on the Changenow Website but does not admit that the letter referred to the plaintiffs. The defendant denies that the 18 July letter gives rise to the imputations pleaded by the plaintiffs or that it is defamatory of the plaintiffs. The defendant pleads a number of affirmative defences. First, the defendant pleads a Polly Peck defence of justification in relation to the pleaded imputations concerning the first plaintiff, Mr Marshall. Secondly, the defendant pleads that the 18 July letter was published on an occasion of qualified privilege at common law or pursuant to s 30 of the Defamation Act 2005 (WA). Thirdly, the defendant pleads the defence of honest opinion under s 31 of the Defamation Act.
The defendant admits causing the 8 August letter to be posted on the Changenow Website but does not admit that it refers to the plaintiffs. The defendant denies the imputations pleaded by the plaintiffs. The defendant pleads the following affirmative defences in relation to the 8 August letter. First, the defendant pleads a Polly Peck defence of justification in relation to each of the plaintiffs. Secondly, the defendant pleads qualified privilege at common law or pursuant to s 30 of the Defamation Act. Thirdly, the defendant pleads honest opinion under s 31 of the Defamation Act.

The counterclaim

The defendant counterclaims for damages for defamation arising from the following six publications:
(1)a letter to shareholders (10 August letter) published on or about 10 August 2012, amongst other things, on a website with the URL (the Empire Website);
(2)a newsletter published on or about 16 August 2012, amongst other things, on the Empire Website (16 August newsletter);
(3)a document entitled Shareholder Update published on or about 23 August 2012 on the Empire Website (23 August Update);
(4)a document entitled Further Warning published on or about 28 August 2012 on the Empire Website (28 August letter);
(5)a document entitled 'General Meeting to be Held on 30 October 2012' published on or about 25 September 2012, amongst other things, on the Empire Website (25 September Information Pack); and
(6)a document entitled 'General Meeting to be Held on 30 October 2012' published on or about 22 October 2012 on the Empire Website (22 October letter).

The strike out application

The plaintiff applies to strike out the following paragraphs of the defence:
•[10.1] and [10.2], which plead Polly Peck imputations said to arise from the 18 July letter, and the particulars of justification subjoined to those paragraphs;
• [20.1], [20.2] and [20.3], which plead Polly Peck imputations, said to arise from the 8 August letter and the particulars of justification subjoined to those paragraphs;
•[13] and [21] which plead qualified privilege at common law and under the Defamation Act with respect to the 18 July letter and the 8 August letter respectively;
•[14] and [22] which plead honest opinion under the Act in relation to the 18 July letter and the 8 August letter respectively;
and the following paragraphs of the counterclaim:
•the whole of the counterclaim on the basis that the publications complained of cannot be defamatory in circumstances where the plaintiffs have responded to defamatory allegations first made by the defendant;
• [26B.1], [26B.2], [26.B.3] which plead imputations said to arise from the 10 August letter;
• [29.1], [29.2], [29.3] and [29.4] which plead imputations said to arise from the 16 August newsletter;
• [33.1] and [33.2] which plead imputations said to arise from the 23 August update;
• [37.2] which pleads an imputation said to arise from the 28 August letter;
• [41.1], [41.2] and [41.3] which plead imputations said to arise from the 25 September Information Pack; and
• [45.2] and [45.3] which plead imputations said to arise from the 22 October letter.
I will start by considering legal principles relevant to pleading imputations. I will then consider the plaintiff's objections to the defendant's Polly Peck pleas of justification starting with [10.1] of the defence.

Legal principles relating to pleading of imputations

The principles relating to the pleading of imputations are either common ground or not in dispute. The relevant principles include the following:
1.an imputation is defamatory, according to the most commonly applied test, if the words tend to lower the plaintiff in the estimation of right thinking members of society generally: Radio 2UE Sydney Pty Ltd v Chesterton [2009] HCA 16; (2009) 238 CLR 460 [3] ‑ [7].
2.imputations may be challenged on three bases: capacity, form and defamatory meaning;
3.the correct approach to determining issues of capacity is whether the meaning contended for is reasonably capable of being conveyed by the matter complained of;
4.distinct meanings should be pleaded and a useful test for distinctiveness is whether the evidence required to justify each meaning would be substantially different;
5.an imputation must express the precise act or condition asserted of or attributed to the plaintiff, or with which he is charged;
6.an imputation should represent the final distillation of the alleged defamatory meaning;
7.issues of proper form of imputations, like capacity, are questions of practical justice rather than philology: Drummoyne Municipal Council v Australian Broadcasting Corporation (1991) 21 NSWLR 135, 137 (Gleeson CJ);
8.an imputation is to be examined in the context of the matter complained of and the context may clarify or intensify the sting of the imputation: Greek Herald Pty Ltd v Nikolopoulos (2002) 54 NSWLR 165, 172 ‑ 173.
9.a defendant may plead and seek to justify an alternative meaning from that pleaded by the plaintiff provided that the alternative meaning is a nuance or variant, not substantially different from or more injurious than the meaning pleading by the plaintiff; and
10.the pleading rules apply to imputations pleaded by the defendant just as they apply to imputations pleaded by a plaintiff.
I would add a further observation about the form of imputations. It follows from the requirement for precision in pleading an imputation that words that are not required for the purpose of conveying the imputation relied on should be struck out of the plea. There is no place for irrelevant detail in the pleading of imputations, if for no other reason than that it will nearly always leave the defendant not knowing what he must prove to justify the truth of that imputation: Taylor v Jecks (1993) 10 WAR 309, Anderson J at 319 citing Mayfield‑Smith v Mirror Newspapers Ltd (1982) 2 NSWLR 419, 420.
It is also necessary to say something further about imputations concerning a person's business or professional reputation. Imputations that have a tendency to injure a person in his business or occupation may be defamatory even though they do not reflect on his character: John Fairfax Publications Pty Ltd v Gacic [2007] HCA 28; (2007) 230 CLR 291 [2] (Gleeson CJ & Crennan JJ). In Radio 2UE Sydney v Chesterton the plurality of the High Court said at [33]
[I]t is not necessary that an imputation injure a person in their reputation as to character for it to be actionable; an action will also lie where an imputation injures them in their business or professional reputation.
The plurality went on to elaborate upon the test for defamation in relation to 'business reputation':
In principle therefore the general test for defamation should apply to an imputation concerning any aspect of a person's reputation. A conclusion as to whether injury to reputation has occurred is the answer to the question posed by the general test, whether it be stated as whether a person’s standing in the community, or the estimation in which people hold that person, has been lowered or simply whether the imputation is likely to cause people to think the less of a plaintiff. An imputation which defames a person in their professional or business reputation does not have a different effect. It will cause people to think the less of that person in that aspect of their reputation. For any imputation to be actionable, whether it reflects upon a person’s character or their business or professional reputation, the test must be satisfied [36].
An imputation of inefficiency or incompetence in a person's profession or calling is usually defamatory. On the other hand it may not be defamatory to say of one person that he or she is of less ability than another. It has been held that it is not defamatory to say that one journalist is less talented than another, or that a lawyer is only of average ability: Gatley on Libel and Slander (11th ed) [2.8]. Whether words connoting comparisons or a relative reputation are defamatory will depend upon the precise imputation and its context.

Defence imputation 10.1

In [9] of the statement of claim the plaintiffs plead that the 18 July letter gives rise to the imputations that Mr Marshall:
9.1has used Empire's resources at the expense of its shareholders for personal gain;
9.2has failed to act in the best interests of the shareholders of Empire by preferring his own interests;
9.3is an incompetent Managing Director of Empire; and
9.4so acts as a director of Empire so as to cause the Board of Directors to be dysfunctional to the detriment of Empire's shareholders.
The defendant denies that the 18 July letter gives rise to those imputations. In [10] of his defence the defendant pleads that if the 18 July letter contains defamatory matter of and concerning Mr Marshall then it contained the following meanings which were true in substance and fact:
10.1that the First Plaintiff has not performed as competently as managing director of Empire in respect to maximising shareholder value and laying a solid commercial foundation for the company, as ought to be expected of a managing director of a listed public company who had derived the personal financial benefits that he had and does derive from Empire;
10.2that the First Plaintiff has received and receives personal benefits from Empire that are not reflected in any commensurate value to Empire or shareholders of Empire.
The defendant gives particulars of justification.
The imputation pleaded in [10.1] of the defence fails to express the precise act or condition asserted of or attributed to the plaintiff or with which the plaintiff is charged and does not represent the final distillation of alleged defamatory meaning.
The defamatory meaning must be different from the relevant meaning pleaded by the plaintiff, that is that the plaintiff is an incompetent managing director of Empire. The distinction between the plaintiff's imputation and the defendant's imputation is a distinction without a difference. The defendant has attempted to describe a distinction between two imputations even though there is no difference between them. The words 'in respect to maximising shareholder value and laying a solid commercial foundation for the company' are irrelevant detail; they add nothing of significance to the meaning that the first plaintiff has not performed competently as managing director of Empire or as competently as ought to be expected. The words are, in context, meaningless or irrelevant verbiage.
The description 'managing director of a listed public company who had derived the personal financial benefits that he had and does derive from Empire' adds nothing to the description 'managing director of Empire'. Empire is a listed public company. The additional words 'who had derived the personal financial benefits that he had and does derive from Empire' are immaterial or unnecessary allegations which are not capable of any derogatory meaning themselves and serve only to cause confusion about the precise act or condition asserted of, or attributed to, the plaintiff, or with which he is charged.
Stripped of irrelevant detail the defendant's imputation is that the first plaintiff has not performed as competently as managing director of Empire as ought to be expected. As I have said, the distinction between that meaning and the meaning that the first plaintiff is an incompetent managing director of Empire is a distinction without a difference. The words 'as ought to be expected' mean that the plaintiff's competence is to be judged by some standard but fail to state what that standard is. The general test of what is defamatory applies to all aspects of reputation, including imputations which reflect upon a person's business reputation. In such cases the ordinary reasonable person may be expected to draw upon such community standards as may be relevant, in order to answer the question whether there has been injury to that reputation: Radio 2UE Sydney v Chesterton [46]. When that principle is applied, there is no relevant difference between the imputation pleaded by the plaintiff and that pleaded by the defendant. Whether the first plaintiff is an incompetent managing director or has not performed as competently as a managing director as ought to be expected are to be judged against such community standards as are relevant to judging the competence of a managing director of a publicly listed company.
Imputation 10.1 should be struck out on the ground that it may prejudice, embarrass or delay the fair trial of the action because it is not materially different from the imputation pleaded by the plaintiff. The defendant does not justify the imputation pleaded by the plaintiffs but seeks to justify the imputation pleaded at [10.1] which is not materially different.

Defence imputation 10.2

On the face of it imputation 10.2 is not defamatory. The reference to 'personal benefits from Empire' must be taken, in the absence of any contrary intention, to be a reference to remuneration. The imputation appears to be something to the effect that the remuneration received by the plaintiff is not equal or proportionate to the value to Empire or its shareholders. Although it is not clear, value to shareholders connotes dividends and share prices. It is not defamatory to say of the managing director of a company, without more, that the remuneration he receives and has received is out of proportion to the company's share price and dividends received by shareholders. There may be any number of reasons why that might be so which do not reflect adversely on the managing director of an oil and gas exploration and production company. If the defendant intends to plead an imputation that says more than that the first plaintiff's remuneration is not in proportion to the value of the company or its share price or the dividends paid to its shareholders, then he has failed to do so. Imputation 10.2 should be struck out on the ground that it discloses no reasonable cause of defence because it seeks to justify an imputation that is not defamatory. Furthermore, the pleading may prejudice, embarrass or delay the fair trial of the action for the same reason.

Defence imputation 20.1

In [15] of the statement of claim the plaintiffs plead that the 8 August letter gives rise to the imputations that the plaintiffs:
15.1prosecute frivolous legal proceedings so as to attempt to stifle free speech;
15.2conducted themselves as Directors of Empire as to refuse to answer fair criticism or fair requests for information from shareholders;
15.3are acting spitefully taking vengeance on persons for legitimately criticising them;
15.4and
15.5acted in a dictatorial and oppressive manner by refusing to answer legitimate criticism or query.
The defendant denies that the 8 August letter gives rise to those imputations. In [20] of his defence the defendant pleads that if the 8 August letter contains matter defamatory of the plaintiffs then it contained the following meanings which were true in substance and fact:
20.1that the Plaintiffs had used legal actions in defamation against shareholders of Empire as part of an attempt to stifle free discussion and speech about Empire and its management.
20.2that the Plaintiffs had not been as responsive to shareholder questions of Empire's management as ought be expected of the management of such a company.
20.3that the Plaintiffs have conducted themselves in a heavy‑handed tactless manner by, instead of answering questions asked of them and issues and opinions raised by shareholders and others, instituting defamation proceedings against such persons.
Paragraph 20.1 should be struck on the grounds that it may prejudice, embarrass or delay the fair trial of this action. The imputation does not specify the precise act or condition asserted of or attributed to the plaintiff or of which he is charged and does not represent the final distillation of the alleged defamatory meaning.
The requirement of precision in pleading an imputation is a question of degree which may depend upon the facts and circumstances of each case. In Drummoyne Gleeson CJ said:
Almost any attribution of an act or condition to a person is capable of both further refinement and further generalisation. In any given case a judgment needs to be made as to the degree of particularity or generality which is appropriate to the occasion, and as to what constitutes the necessary specificity. If a problem arises, the solution will usually be found in considerations of practical justice rather than philology (137).
In this case there are two circumstances which are particularly relevant to the degree of precision required of the defendant in pleading the imputation. First, the subject matter of the imputation is the use of defamation actions to stifle free speech. The law of defamation does, and is intended to, inhibit freedom of speech. In the defamation actions referred to, the plaintiffs seek to restrain the defendant from repeating material allegedly defamatory of the plaintiff or any similar defamation. That is a legitimate use of legal process. On the other hand, a plaintiff might use a defamation action not for that legitimate purpose but for some improper purpose, such as to silence all criticism or discussion of the plaintiffs or their activities, whether defamatory or not. Whether a statement is defamatory is determined objectively in the context of current community standards. The appropriate standard is general community standards not sectional attitudes. Applying general community standards, it is not defamatory to say of a person that he used a defamation action to prevent a person from making statements defamatory of him. On the other hand, it may be defamatory to say of a person that he has used a defamation action for an improper purpose or in some other way that causes right thinking members of society to think less of him. It is important that the defendant pleads the relevant imputation with sufficient precision so that the plaintiffs and the court know what it is about the use of the defamation actions that is attributed to the plaintiffs which would cause right thinking members of society to think less of them.
The second circumstance which is relevant to the degree of precision required of the defendant in pleading his imputation is that the imputation must be different from, but not substantially different from, the imputation pleaded by the plaintiff. Again, the imputation must be pleaded with sufficient precision to be able to identify what it is about the use of the defamation actions that is attributed to the plaintiffs which makes it a different imputation from that pleaded by the plaintiffs.
The defendant's imputation is that the plaintiffs had used defamation actions against Empire shareholders as part of an attempt 'to stifle free discussion and speech' about Empire and its management. As I have said, the law of defamation is intended to inhibit freedom of speech. The words 'stifle free discussion and speech' are a rhetorical flourish. They do not mean anything different from inhibit free speech. If they are intended to mean something more, then the pleader has failed to make clear what the something more is. For the imputation to be defamatory something more must be imputed to the plaintiffs than that they had used defamation actions against Empire shareholders to stifle, that is inhibit, free discussion and speech about Empire and its management. The defendant has either not pleaded something more or the something more is not clear.
The imputation refers to the legal actions being 'part of an attempt' to stifle free discussion. That might mean that the plaintiffs brought the defamation actions in furtherance of some agreement or combination to stop any discussion about Empire and its management. However, that is not clear from the imputation. Furthermore, the particulars of justification do not support an imputation that the plaintiffs brought the defamation actions in an attempt to stop all discussion by shareholders of Empire and its management in furtherance of some agreement or combination to do so. There are no particulars of any such agreement or combination.

Imputation 20.2

This imputation fails to express the precise act or condition asserted of or attributed to the plaintiff or with which the plaintiff is charged, and does not represent the final distillation of the alleged defamatory meaning. The imputation must be different from the imputation pleaded by the plaintiff at [15.2] but still be defamatory. It is not clear how the imputation pleaded by the defendant at [20.2] is different from that pleaded by the plaintiffs at [15.2] and is still defamatory.
The pleaded imputation is not that the plaintiffs refused or failed to answer shareholder questions, or that their answers were false or misleading, but that they were not as responsive as ought be expected. The meaning or content of the imputation is not clear. It might mean that they answered some but not all questions, or that they answered the questions but their answers were not long enough or that their answers were not relevant to the questions or it might mean something else.
The imputation is that the plaintiffs had not been as responsive to shareholders, whatever that means, 'as ought be expected of the management of such a company'. The standard by which it is to be judged whether the plaintiffs were as responsive as ought be expected is general community standards. In the end, the imputation consists of pejorative words or phrases with little or no content.
Furthermore, the particulars of justification do not support the imputation pleaded. The essence of the particulars of justification is that 'the plaintiffs did not satisfactorily address or provide satisfactory answers to the questions asked by those shareholders or the concerns raised in the letter …'. The particulars do not disclose in what way the answers were not satisfactory in any objective sense. Particular (a), which is to the effect that the plaintiffs did not satisfactory address or provide satisfactory answers to questions asked of them is argumentative or conclusionary but fails to state the facts on which it is based.

Imputation 20.3

The imputation that the plaintiffs acted in a 'heavy handed tactless manner' by commencing defamation actions is embarrassing. Being tactless, that is showing a lack of skill and sensitivity in dealing with others, may be defamatory in some contexts but it is meaningless in the context of commencing defamation actions against shareholders. Furthermore, the particulars of justification are conclusionary. To state that the plaintiffs did not 'satisfactorily address or provide satisfactory answers to the questions' is argumentative rather than stating facts. To state that the plaintiff's reaction to shareholders expressing concerns regarding the management of Empire rather than addressing those concerns openly was to commence defamation proceedings is argumentative, not a statement of facts. The paragraph should be struck out on the ground that it may prejudice, embarrass or delay the fair trial of the action.

Qualified privilege

The defendant pleads qualified privilege at common law or pursuant to s 30 of the Defamation Act as a defence in relation to the publication of the 18 July 2012 letter and the 8 August letter at [13] and [21] of the defence respectively. Each defence is pleaded as a defence to publication of the material on the internet. The plaintiff says that, in accordance with the majority decision in Bashford v Information Australia (Newsletters) Pty Ltd [2004] HCA 5; (2004) 218 CLR [26], an attempt to justify a publication to the general public must be brought within the constitutional privilege (Lange) defence or not at all.
In Bashford the plurality of the High Court said at [26] that 'only in exceptional cases had the common law recognised a duty to publish or interest in publishing defamatory matter to the general public'. The publication in question in Bashford was an article in a trade newsletter which reported a proceeding in the Federal Court. The newsletter was concerned only with matters of occupational health and safety and was distributed by subscription only to professionals concerned with those matters. The publisher contended that the defamatory imputation arising from the article was made on an occasion of qualified privilege because the newsletter had been distributed by subscription only to persons who had an interest in receiving information about occupational health and safety and that was the only subject matter of the newsletter. The High Court held that the occasion of the publication of the matter complained of was rightly held to be a privileged occasion. The plurality observed at [26] that there was no publication to the general public.
Each communication of the material to a person other than the plaintiffs is a separate publication and gives rise to a separate cause of action. If the defamation is contained in a newspaper, each publication to each reader of each copy of the newspaper is a separate publication. In practice, however, the plaintiff does not in the ordinary way bring an action in respect of the publication of an individual copy of a newspaper; he sues in respect of all the copies as though they constituted a single publication and the number of copies is treated as relevant only to the issue of damages. Publication of material cannot be inferred merely from the fact that the material has been placed on an internet website. Publication occurs when the material is downloaded and read. It follows that the mere fact of material being available on a website does not mean that it has been published to the general public in the sense referred to by the plurality in Bashford at [26].
Whether or not the defence of qualified privilege at common law will succeed will depend upon a number of matters. One critical matter is to whom the letter was published. A second matter concerns whether the mode of publication to the shareholders was reasonably warranted by the exigency of the occasion. In general, a defamatory communication made in furtherance of an interest to a person or persons lacking a corresponding duty or interest will not be protected because the necessary reciprocity is absent. In some cases, however, this will not be so because the exigency of the occasion is such that a wider publication than is strictly necessary to achieve the purpose of the occasion is justified. Duncan and Neill on Defamation (3^rd ed) explains those cases:
… the publication may reach an audience which includes complete strangers, that is, people who have no … legitimate interest in, or duty to observe in relation to, the subject matter of the communication. In such cases, the question is whether the mode of publication adopted for the purpose of communicating with those persons who had the necessary duty or interest in relation to the subject matter of the communication was in all the circumstances reasonably warranted by the exigency of the occasion. If so, then the privilege will not be lost by reason of the fact that the communication also reached a person who had no such duty or interest. Publication by means of the Internet may also on occasion lead to defamatory material being seen by persons who lack the necessary interest. In these cases the relevant test appears to be: was the communication by means of the Internet reasonable and proportionate having regard to the interests sought to be protected [16.19].
In relation to the last proposition, the authors of Duncan and Neill refer to Hewitt v Grunwald [2004] EWHC 2959 and Vassiliev v Frank Cass & Co Ltd [2003] EWHC 1428 where Eady J held at [10] that an article that was available on the internet was 'likely in practice to have been read only by those with a [relevant] interest'.
The plaintiffs referred to Lindholdt v Hyer [2008] NSWCA 264; (2008) 251 ALR 514 where the New South Wales Court of Appeal considered whether articles published in Cabbie magazine were protected by qualified privilege. Giles and Basten JJA upheld the trial judge's finding that the appellant publisher was actuated by malice which defeated the defence of qualified privilege. Only McColl JA considered whether or not the articles were published on an occasion of qualified privilege. The appellant claimed that the magazine was targeted at a taxi industry audience who had an interest in the articles. However, McColl JA found that the magazine, 'while in many respects targeted at a taxi industry audience, was also indiscriminate to the extent that it was left lying around public places where anyone could pick it up … one of the sites at which free copies were distributed was the airport itself' [152]. Her Honour held that
[o]nce it is established the matter complained of was published to the general public, the publisher has to demonstrate reciprocity of duty and interest with that audience. And, as the majority said in Bashford (at [26]) 'only in exceptional cases has the common law recognised a duty to publish or interest in publishing defamatory matter to the general public' [154].
The plaintiffs also referred to the decision of the British Columbia Supreme Court in Christian Labour Association of Canada v Retail Wholesale Union [2003] BCSC 2000 where Rice J dealt with the issue of whether internet publication was excessive based on the principle in Jones v Bennet [only in exceptional cases will publication to the public at large be on an occasion of qualified privilege]. That case dealt with a summary trial for dismissal of the action to determine whether the publication was excessive. The litigation involved two unions with a history of competing for members. Statements alleging that the Christian Labour Association of Canada was a 'rat union' that signed substandard agreements were posted on the Retail Wholesale Union's website for approximately thirteen months. The defendant admitted that there were no barriers to access on the website such as passwords, etc. At [21], Rice J, noted that there was no authority applying the Jones principle where the method of publication was a website. Although no evidence was presented about who actually accessed the information on the website, Rice J stated that 'I have to find that probably a significant number of those who accessed and presumably read the message were not within the group of interested persons entitled to receive the information [ie the members of the union]' (at [24]). Rice J went on to ask whether 'the defendant [has] shown that the wider access to the website was incidental or reasonably necessary' (at [25]). The defendant's evidence relating to this necessity was inadmissible. Rice J held that the defence of qualified privilege failed as there was a risk of significant exposure to people who did not have an interest in the information, and that the publication was excessive because it was not necessary and reasonably incidental to publish on the website without restriction. Rice J found that the requirement of a reciprocal duty and interest in the defamatory material was not met.
Paragraph 13.1 of the defence pleads that the 18 July letter was published to shareholders of Empire. The defence is not that the 18 July letter was published to the general public on an occasion of qualified privilege. Whether the publication was on an occasion of qualified privilege will require the court to determine whether the communication by means of the internet was reasonable and proportionate having regard to the interests sought to be protected. There is no presumption in law that a plaintiff on an internet defamation is able to rely on to prove publication: Al Amoudi v Brisard [2006] EWHC 1062 (QB); [2006] 3 All ER 294 [37]. Whether the court is able or willing to infer that such publication has occurred will depend on all the circumstances. In the present case it is arguable that a publication to a shareholder will be protected by the defence of qualified privilege, so in order to succeed the plaintiffs have to prove, including by inference as well as by direct evidence, that there was a publication to a reader who was not a shareholder: Trumm v Norman [2008] EWHC 116 (QB) [35]. Whether or not the defence of qualified privilege at common law is maintainable should be decided at trial in light of the evidence concerning access to and downloads from the Changenow website, who read or is likely to have read the material and other circumstances bearing on whether communication to shareholders on the website was reasonably warranted by the exigency of the occasion.

Honest opinion

In [14] and [22] of his defence the defendant pleads in relation to the 18 July and 8 August letters respectively that any defamatory material in it was honest opinion upon a matter of public interest and based upon proper material within the meaning of s 31 of the Defamation Act. The plaintiff submits that in order to rely on the defence of honest opinion the facts upon which the defendant relies in order to express his opinion must be contained in the publications complained of or, at least, sufficiently indicated. The defendant says that that proposition is not supported by the wording of s 31 of the Defamation Act.
At common law the defence of fair comment requires that the facts on which a comment is based must be expressly stated, referred to or notorious. It is not sufficient that the subject matter or substratum of fact of the comment is indicated: Channel Seven Adelaide Pty Ltd v Manock [2007] HCA 60; (2007) 232 CLR 245 [47], [72]. Section 31 of the Defamation Act does not expressly state the extent to which the proper material should be indicated in the publication itself. On the one hand the purpose of the defence would suggest that the material should be expressed, sufficiently indicated or notorious. On the other hand, the text of s 31 suggests no such requirement. Neither counsel referred to any authority which has considered the extent to which the proper material must be indicated in the publication itself for the purposes of the statutory defence of honest opinion. That is a matter which should be decided at trial. I will not strike out the defence on the ground that the proper material on which the opinion is based is not referred to or sufficiently indicated in the publication.

The plaintiff further submits that the facts on which the defendant's opinion is based have not been particularised at [14] or [22] of his defence.
At [14.2] of his defence the defendant pleads:
The opinion was based upon proper material, being material that was true or published on occasions of qualified privilege, such as public documents produced by Empire, or produced as required by law, and material sent by Empire to its shareholders.
Particulars of Proper Material
(a)The Defendant repeats the particulars to paragraphs 10.1 and 10.2 above.
(b)Further, the Second Plaintiff's total remuneration has been at least $158,000 each year since 2006 and the Third Plaintiff's total remuneration has been at least $200,000 each year since 2007.
(c)Such material is true or in any event material published on an occasion of qualified privilege, such as in Annual Reports of Empire.
(d)Further particulars may be provided after discovery and interrogatories.
The particulars to [10.1] and [10.2] are:
(a)the First Plaintiff has been with Empire since 1994;
(b)the Empire share register has increased from about 229 million shares in 2002 to about 4.8 billion shares in 2012 during the First Plaintiff's tenure as managing director;
(c)the Empire share register has thereby become heavily diluted during the First Plaintiff's tenure;
(d)the First Plaintiff was issued with 8,333,334 shares valued at 35 cents per share in the 1997 listing;
(e)the First Plaintiff receives a cash remuneration of around $350,000 and his total remuneration has been at least $285,000 each year since 2006;
(f)the Empire share price has decreased from a listing price of 20 cents in 1998 to the current price of approximately 1.2 cents;
(g)the Empire share price has not been more than 4.5 cents for the past 10 years;
(h)Empire has issued at least 300 million new shares each year since 2006;
(i)Empire has operated at a loss every year since at least 2003;
(j)general and administration costs and management, consulting and professional fees have accounted for a minimum of 18 per cent of expenditure each year since 2006;
(k)Empire's 2008, 2009 and 2010 annual reports show that the company intended to drill approximately 10 different areas each year, rather than concentrating its efforts on a smaller number of particularly prospective areas that would have the potential to be developed into productive wells producing cash flow for the company and its shareholders;
(l)Empire's 2011 annual report, released on 30 September 2011, outlines Empire's plans for its Canning Basin prospects for the 2012‑2013 year. On 24 October 2011, Empire announced that it had sold its interest in the Canning Basin prospects to Key Petroleum Ltd;
(m)the Canning Basin assets, which were held by Empire through Gulliver Productions Pty Ltd, were a highly prospective asset of Empire and constituted a good commercial prospect for Empire. Following the, in effect, sale of Empire's Canning Basin assets to Key, Key's share price increased, while Empire's share price decreased;
…
(n)The First Plaintiff was at all material times managing director of Empire and, in addition to and at the same time as conducting his role as managing director of Empire:
(i)was and is currently a director of Cattamarra Farms Pty Ltd, Maneroo Exploration Pty Ltd, Munro Mining Pty Ltd and Seaville Investments Pty Ltd; and
(ii)was previously a director of Key Petroleum Ltd, Maneroo Oil Company Ltd, Yellow Resources Pty Ltd and King Petroleum NL; and
Paragraph 14.2 is embarrassing. The plea that the proper material 'was true or published on occasions of qualified privilege' does not, but should, state which of the proper material is true and which was published on occasions of qualified privilege. The words 'such as … or … ' are embarrassing. The defendant must plead the material not give examples of it.
Particular (c) subjoined to [14.2] is embarrassing insofar as it pleads 'such as in Annual Reports of Empire'. The defendant must state the facts he relies upon, not give examples of them.
Particulars (c), (k) and (m) of [10.1], which are incorporated as particulars of proper material, are embarrassing. The assertion that the Empire share register 'has thereby become heavily diluted' during the first plaintiff's tenure is a statement of conclusion or argument not a statement of fact. The proposition appears to be a conclusion based upon the matters set out in particular (b). Particular (k) appears to be a conclusion or argument based upon statements in the 2008, 2009 and 2010 annual reports of Empire but fails to identify the statements. To the extent that the assertion can be said to be a statement of fact rather than conclusion or argument, it is at too high a level of generality and thereby fails to inform the plaintiffs of the case they have to meet. Particular (m) is a conclusion or argument rather than a statement of the material fact. To the extent that it may be said to be a statement of fact, it is at too high a level of generality to inform the plaintiffs of the case they have to meet. Paragraph 14.2 should be struck out on the ground that it may prejudice, embarrass or delay the fair trial of the action.

Paragraph 22.2

At [22] the defendant pleads that the 18 July letter and any defamatory matter in it was honest opinion upon a matter of public interest and based upon proper material within the meaning of s 31 of the Defamation Act. At [22.2] the defendant pleads that the opinion was based upon proper material, being material that was true.
At [22.2] the defendant gives particulars of the proper material on which the opinion is based. The particulars are:
(a)The Defendant repeats the particulars to paragraph 20.1 above.
(b)The Plaintiffs are the directors of a publicly‑listed company with approximately 11,000 shareholders, and are subject to the reporting requirements set down by the Australian Securities Exchange and the Australian Securities and Investments Commission, and to the scrutiny of shareholders.
(c)Further particulars may be provided after discovery and interrogatories.
The particulars to [20.1] are:
(a)as at 8 August 2012, the Plaintiffs had commenced two defamation proceedings against the Defendant, and subsequently commenced a third;
(b)Empire (under the authority of the Plaintiffs) had commenced proceedings against the Defendant and other shareholders who had signed requisitions seeking a vote to remove the current directors of Empire;
(c)the Plaintiffs commenced defamation proceedings against Ms Susanne Devereux in relation to postings made by Ms Devereux on the website Hot Copper ( had, by threatening defamation proceedings against its operators, caused the website Hot Copper to suspend discussions in relation to Empire; and
(e)further particulars may be provided after discovery and interrogatories.
The plaintiffs submit that particular (b) to [22.2] has no bearing on truth. I do not think that the plaintiffs are embarrassed by the particular relied upon and will not strike it out.

Counterclaim

The plaintiffs submit that the publications which the defendant pleads in his counterclaim cannot be defamatory in circumstances where the plaintiffs have responded to defamatory allegations first made by the defendant. The plaintiffs say that to 'reply to an attack' is a recognised category of qualified privilege and the plaintiffs are given a considerable degree of latitude and may 'go on the offensive' so long as they do not include entirely irrelevant and extraneous material.
The defendant submits that the plaintiffs' contention does not raise a matter justifying striking out the counterclaim. The defendant submits that the plaintiffs should file their defence to the counterclaim and if they plead qualified privilege then the defendant may plead malice in reply or other matters that would defeat a 'reply to an attack' plea of qualified privilege, for example that the reply went beyond the matters dealt with in the defendant's attack and was therefore a disproportionate response that constituted a fresh attack on the defendant by the plaintiffs.
I accept the defendant's submission. The counterclaim should not be struck out as a whole on the ground contended for by the plaintiffs. The plaintiffs should plead qualified privilege in their defence to counterclaim. The defendant may then plead in his reply matters which, if established, may defeat the plea of qualified privilege. I will now consider the plaintiffs' attacks upon the imputations pleaded in the counterclaim.

Paragraph 26B.1

The imputation is that:
the Defendant is unfit to be a director of a publicly‑listed company, because he lacks the degree of professionalism and skill required to be capable of being a director of a public company.
The plaintiffs say that the imputation arises nearly word for word from a part of the publication complained of and there has been no attempt by the defendant to distil any imputation from the publication complained of.
I find that the imputation sufficiently specifies the act or a condition attributed to the defendant and is capable of arising from the words complained of.

Paragraph 26B.2

The imputation is that:
the defendant continually engages in the practice of deliberately destabilising companies, by dishonest means, so as to seek to achieve personal gain.
The plaintiffs say that the words 'continually', 'deliberately' and 'by dishonest means' do not arise from the publication complained of.
The defendant says that the word 'continually' arises from the words 'repeated attempts made by him … to destabilise other companies'. There is a difference between 'continually' and 'repeated'. The words complained of are capable of giving rise to the imputation that the defendant has made repeated attempts to destabilise other companies but not that he does so 'continually'. The publication complained of is capable of giving rise to the meaning that the defendant did so 'deliberately'.
The defendant says that the words 'by dishonest means' are capable of arising from the publication taken as a whole, including its tenor, and also the words 'on the back of misleading information'. It is also said to be capable of arising from the reference to 'repeated attempts' to 'destabilise other companies', giving the examples of Victoria Petroleum and Cooper Energy, which suggest that using the s 249D mechanism to attempt to remove directors is itself 'dishonest' or improper.
Reasonable persons may differ as to their understanding of the matters complained of, and for the reasons given by the defendant it is not unarguable that the words complained of give rise to the imputation that the defendant has repeatedly attempted to destabilise companies 'by dishonest means'. That matter should be left to trial. However, [26B.2] should be struck because the words complained of are not capable of giving rise to the meaning that the defendant 'continually' engages in the practice of deliberately destabilising companies.

Paragraph 26B.3

The imputation is that:
the Defendant sends knowingly false material to Empire's shareholders as part of a campaign to achieve ill‑gotten personal gain through being appointed as a director of Empire.
The plaintiffs say that that imputation does not arise from the publication. The publication advises that misleading and deceptive information was sent by the defendant to shareholders but does not go so far as to suggest that the defendants sent 'knowingly false' material.
The defendant says that the words 'knowingly false material' are capable of arising from the publication as a whole, including its tenor, and also from the words 'on the back of misleading information' which suggest that the defendant knowingly relied on misleading information to bolster the chances of the s 249D requisition succeeding. The defendant further says that the publication makes no attempt to distinguish between material that the plaintiffs allege to be misleading and deceptive, and material that has been independently judged to be so to the defendant's knowledge. This, the defendant submits, is capable of conveying the overall impression that alleged misleading or deceptive material had been independently judged to be so, and that the defendant knew it to be so.
In deciding what meanings words are capable of bearing for the purposes of a strike out application, the task of the court is to ascertain whether the pleaded imputation falls within the range of legitimate meanings. Such an exercise is an exercise in generosity, not parsimony: Berezovsky v Forbes (No 2) [2001] EWCA Civ 1251 [16] (Sedley LJ). For the reasons given by the defendant, it is not unarguable that the imputation arises from the words complained of. Whether or not the imputation does arise is a matter that should be determined at trial.

Paragraph 29.1

The imputation is that the defendant:
has had relied upon seriously misleading and deceptive material in his attempts to lobby shareholders, and in so doing knowingly preferred the prospect that such misinformation would influence shareholders in his favour to ensuring that such material was not misleading or deceptive.
The plaintiff says that the words 'seriously' and 'knowingly' are objectionable because neither word is capable of arising from the words complained of. I am not satisfied that it is unarguable that the imputation arises from the words complained of insofar as the words 'seriously' and 'knowingly' are concerned.
Further, the plaintiffs say that the second part of the imputation ‑ 'and in so doing knowingly preferred the prospect that such misinformation would influence shareholders in his favour to ensuring that such material was not misleading or deceptive' ‑ is confusing. The defendant says that the second part of the imputation means that the publication implies that, rather than ensuring that the material was not misleading or deceptive, the defendant preferred to use the material in the hope that such material would influence the shareholders in favour of his position.
I find the imputation to be confusing and embarrassing. The first part of the imputation - 'has relied upon seriously misleading and deceptive material in his attempts to lobby shareholders' ‑ connotes that the defendant knew the material was misleading and attempted to mislead shareholders. It is not clear what the second part of the imputation adds to the first part or whether it in part contradicts the first part. It is confusing and embarrassing. The imputation should be struck out.

Paragraph 29.2

The imputation is that the defendant:
was portraying himself as suitably qualified and experienced to hold the position of a director of Empire, when he was not suitably qualified and experienced to hold such a position.
The plaintiffs object that the imputation is not capable of arising from the words complained of. The defendant says that the imputation arises from the publication as a whole, including its tenor, and also from mention of the defendant running for office as a director of Empire. Further, the defendant says that the imputation arguably arises from the words 'Mr Smith is by trade an electrician and has no executive experience in running a public company or one that is moving into a public production company …'. The defendant says that this makes it clear that the plaintiffs were seeking to persuade shareholders not to vote for the defendant in his bid to become a director of Empire, something he was purporting to be qualified to be.
The words 'Mr Smith is by trade an electrician and has no executive experience in running a public company or one that is moving into a public production company' in the context of the publication as a whole are capable of meaning that shareholders should not vote for the defendant because he does not have the requisite skills or experience to become a director of Empire. It is confusing to say that the plaintiff was 'portraying' himself as suitably qualified and experienced to hold the position of a director by reason of the fact that he has nominated himself as a director. To portray means to represent by a drawing, painting etc, to represent dramatically, as on the stage, or to depict in words or describe graphically: Macquarie Dictionary. The common meaning of portray is to depict someone or something in a work of art or literature. In the context of the words complained of the meaning of to portray himself as suitably qualified and experienced is that the defendant has depicted himself as suitably qualified and experienced in some presentation, or other form of communication.
The words complained of do not convey that the defendant has portrayed himself in any way. The words convey merely that he has nominated for the position of company director. It is arguable that by nominating for the office of director the defendant has held himself out as qualified and suitable for the position but not that he has 'portrayed' himself as such. Paragraph 29.2 should be struck out on the ground that the words complained of are not reasonably capable of giving rise to the imputation.

Paragraph 29.3

The imputation is that the defendant:
was acting in a manner that may put in jeopardy Empire's relationships with its current and potential joint venture partners and the interests of shareholders.
The plaintiffs say that the imputation is not capable of arising from the words complained of and in any event is not defamatory.
The words in the publication complained of which most directly relate to this imputation are:
Mr Smith and his 'team' are promoting an EGM on the back of misleading information. This, at the very least causes uncertainty with Empire's joint venture partners and those who may seek to become joint venture partners. It also potentially destabilises the market for Empire shares.
The plaintiffs say that the imputation is not defamatory because it is not a matter which goes to character. As I have said earlier, it is not necessary that an imputation injure a person in his reputation as to character; an action will also lie where an imputation injures him in his business reputation. However, the imputation has failed to state with sufficient precision the act attributed to the defendant. It has failed to put forward the final distillation of the alleged defamatory meaning. The imputation should be struck out on the ground that it might prejudice, embarrass or delay the fair trial of the action.

Paragraph 29.4

The imputation is that the defendant is:
dishonestly attempting to exploit Empire for his own personal gain.
The plaintiffs say that the imputation is not capable of arising from the words complained of because there is no suggestion of dishonesty in the publication complained of.
The newsletter deprecates the defendant. It says about him that he has sent misleading letters to shareholders, that he has attempted to lobby shareholders based on misleading and deceptive information, that he has made many defamatory, incorrect and untrue references to the company and its management, that he is promoting his 'team' on the back of misleading information and that he has only recently become a shareholder in the company to exploit very significant achievements. As I have said, the task of ascertaining whether the pleaded imputation falls within the range of legitimate meanings is an exercise in generosity, not parsimony. It is not unarguable that these references in the context of the publication as a whole give rise to the meaning that the defendant is dishonestly attempting to exploit Empire for his own personal gain.

Paragraph 33.1

The imputation is that the defendant has:
knowingly directed misleading and deceptive material to shareholders.

The plaintiffs say that the word 'knowingly' is objectionable because it is incapable of arising from the words pleaded.
I find that it is not unarguable that the publication gives rise to the meaning that the defendant knowingly directed misleading and deceptive material to shareholders. The publication refers to the defendant making communications to shareholders that are misleading, misleading and deceptive, defamatory and incorrect and untrue, that he is promoting an EGM on the back of misleading information and that he has only recently become a shareholder to 'exploit' very significant achievements. In determining whether words are capable of giving rise to the pleaded imputation the court should give the words the natural and ordinary meaning which they would have conveyed to the ordinary reasonable reader reading the document once. Hypothetical reasonable readers should be treated as being capable of reading between the lines and engaging in some loose thinking, but not as being avid for scandal. The court should avoid an over-elaborate analysis of the article because an ordinary reader would not analyse the article as a lawyer would analyse a document. When considered in that way it is not unarguable that the pleaded imputation arises from the words complained of.

Paragraph 33.2

The imputation is that the defendant:
has improperly altered parts of requisitions after they had been executed by shareholders.
The plaintiffs say that the imputation is not capable of arising from the words complained of. The publication relevantly states:
… the fact that a large number of purported requisitions appear to have been altered after execution by shareholders.
…
… the fact that a large number of the documents that may have been signed by shareholders appear to have been altered after they were signed …
The plaintiffs say that there is nothing in the publication capable of giving rise to the meaning that the defendant altered the requisitions.
The defendant says that a reader would arguably understand the publication to suggest that the defendant was responsible for the alterations because an ordinary reader would understand that is why the references to the requisitions being altered have been included in the publication.
The purpose of the publication is to inform shareholders about the 'purported requisition sent to the company by [the defendant]'. The publication says that the purported requisitions appear to have been altered 'after execution by shareholders' that is, by someone other than the relevant shareholder. That statement is immediately followed by the statement 'the fact that the purported requisitions were obtained by [the defendant] as a result of his correspondence which as has previously been advised by the Company, was misleading and deceptive and defamatory of your directors'. Further on, the publication says that the company has written to the shareholders informing them that 'a large number of the documents that may have been signed by shareholders appear to have been altered after they were signed and noting that the documents were procured by [the defendant]'. In determining whether words are capable of conveying defamatory meaning, the court should look to whether reasonable persons would understand the words complained of in a defamatory sense, keeping in mind that ordinary readers draw implications more freely than lawyers: Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716 [11]. It is not unarguable that an ordinary reasonable reader of the publication would understand it to mean that the defendant had altered parts of the requisitions.

Paragraph 37.2

The imputation is that the defendant:
is attempting to circumvent the legal process.
The plaintiffs say that the imputation is not capable of arising from the words complained of. The relevant words of the publication are:
… we believe that Mr Smith hopes to avoid a determination by the Supreme Court of Western Australia that his conduct in procuring the present requisition of Empire (which is a mixture of his first and second forms already sent to some shareholders) was procured as a result of misleading and deceptive conduct.
The plaintiffs say that 'hoping to avoid' is different to the act of purposively 'circumventing the legal process'. The defendant says that the imputation arguably arises from the tenor of the whole of the publication, not only the words to which I have referred.
The pleading of the imputation is embarrassing because it fails to state precisely the act attributed to the plaintiff. The word 'circumvent' has a range of meanings. In some contexts 'avoid' is a synonym for circumvent. Often, circumvent means to gain advantage over by deception or dishonest means. The phrase 'circumvent the legal process' would more commonly be understood to mean to avoid or get around the legal process by some artfulness or deception. In this context the imputation is embarrassing because it is not clear whether the imputation means only that the plaintiff was hoping to avoid a determination by the court or whether it means that he is attempting to do so by some deception, dishonest or other disreputable means or something else. The imputation should be struck out.

Paragraph 41.1

The imputation is that the defendant:
has lied on a number of occasions to Empire shareholders.
The plaintiffs say the imputation is not capable of arising from the publication complained of. I find that it is not unarguable that the imputation arises from the publication complained of. The publication refers to the defendant having grossly defamed members of the board by a number of his publications and false assertions. The publication is generally derogatory of the defendant.

Paragraph 41.2

The imputation is that the defendant:
has used illegitimate tactics in an attempt to gain control of Empire.
The plaintiffs say that the imputation does not arise from the words complained of and in any event the word 'illegitimate' is imprecise and vague.
The defendant says that the imputation arguably arises from the tenor of the whole of the publication and in particular from the words:
The requisition seek to effect a change of control of your Company without making any offer to acquire your shares, without any premium and without presenting to you a strategy for how they say the affairs of the Company should be conducted or your interests advanced; and
In 2008 Mr Smith made an attempt to gain control of Victoria without making a takeover bid and failed. Last year Mr Smith together with Mr Crawford attempted to take control of Cooper, against without making a takeover bid and their attempt failed. Mr Smith's history is to search for opportunities such as these.
In Morris v Newcastle Newspapers Pty Ltd (1985) 1 NSWLR 260 at 271, Hunt J said that in pleading imputations the word 'improper' should not be used unless the context makes clear its intended meaning and the degree of impropriety involved. The word 'illegitimate' has both a more serious and a less serious meaning. The Macquarie Dictionary definitions include 'unlawful' and 'irregular; not in good usage'. The context in which the word is used does not make its intended meaning clear. It may be referring to tactics that are unlawful or tactics that are merely inappropriate or irregular. The imputation is ambiguous and leads to confusion. It should be struck out on the ground that it may embarrass, prejudice or delay the fair trial of the action.

Paragraph 41.3

The imputation is that the defendant is:
acting in a manner that will cause detriment to Empire and its shareholders.
The plaintiffs say that the imputation does not arise from the words complained of.
The defendant says that the imputation arguably arises from the tenor of the words of the publication and in particular from the words:
Empire is at a critical stage in its transition from an exploration company to a production company. To make wholesale change to the Company's Board at this point would be a serious mistake;
It would be a terrible mistake to change the management of the Company at this critical time in its history; and
The actions of Mr Smith have caused much uncertainty with [Alcoa] and in the marketplace and this particularly so given the defamatory statements made by him in material that he has published in support of his requisitions.
The publication also says that the requisitioners, which include the defendant, seek to effect a change of control of the company without making any offer to acquire the shares generally, without any premium and without presenting to shareholders a strategy for how they say the affairs of the company should be conducted or its shareholders' interests advanced. Those matters are all derogatory of the defendant. It is not unarguable that a reasonable reader would understand the publication to be saying that the company will be worse off if the defendant and his team are elected to the board. However, it is not clear what the imputation means. It might mean that if the defendant succeeds in having his team elected to the board that will cause detriment to the company, or it might mean that merely by making the requisition the defendant will cause detriment to the company or it might mean something else. The imputation is embarrassing and should be struck out.

Paragraph 45.2

The imputation is that the defendant:
has used illegitimate tactics in an attempt to gain control of Empire.
This imputation should be struck out for the same reasons as the imputation pleaded in [41.2].

Paragraph 45.3

The imputation is that the defendant:
is acting in a manner that will cause detriment to Empire and its shareholders.
The plaintiffs say that the imputation does not arise from the words complained of.
The defendant says that the imputation arguably arises from the tenor of the whole publication and in particular from the words:
It's important to remember that during this critical period it is imperative that the Company's assets are managed by those with experience and those who know the business. It is also important that the 20 joint venture partners and our contractual obligations with Alcoa are secure and that these companies know the Board they went into business with are the ones they can rely on in the future.
I find that the imputation should be struck out for the same reasons as [41.3].

Conclusion

I have found that [10.1], [10.2], [20.1], [20.2] and [20.3] of the defence disclose no reasonable cause of defence or may prejudice, embarrass or delay the fair trial of the action. If follows that [10] and [20] of the defence should be struck out. For the reasons stated [14.2], [26B.2], [29.1], [29.2], [29.3], [37.2], [41.2], [41.3], [45.2] and [45.3] of the defence and counterclaim should also be struck out.

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Citations

Marshall v Smith [2013] WASC 452

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