Marshall v Smith
[2013] WASC 451
•18 DECEMBER 2013
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: MARSHALL -v- SMITH [2013] WASC 451
CORAM: LE MIERE J
HEARD: 19 JUNE 2013
DELIVERED : 18 DECEMBER 2013
FILE NO/S: CIV 2534 of 2012
BETWEEN: JOHN LLOYD CRAIG MARSHALL
First Plaintiff
BEVAN JON WARRIS
Second PlaintiffNEIL KEVIN JOYCE
Third PlaintiffAND
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 the defence - Turns on own facts
Legislation:
Corporations Act 2001 (Cth), s 249D
Defamation Act 2005 (WA), s 30, s 31, s 32
Result:
Defence struck out in part
Category: B
Representation:
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 366
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
Cleary v Jeans [2006] NSWCA 9
Empire Oil & Gas NL v Smith [2012] WASC 396
Lindholdt v Hyer [2008] NSWCA 264; (2008) 251 ALR 514
Radio 2UE Sydney Pty Ltd v Chesterton [2009] HCA 16; (2009) 238 CLR 460
Rana v Google Australia Pty Ltd [2013] FCA 60
Tamiz v Google [2013] EWCA Civ 68
Trkulja v Google (No 5) [2012] VSC 533
Viney v TCN Channel Nine Pty Ltd [2006] NSWSC 1273
Wishart v Murray [2013] 3 NZLR 246; [2013] NZHC 540
LE MIERE J: The plaintiffs are directors of Empire Oil & Gas NL, a public 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 further publishing 12 publications claimed to be defamatory of the plaintiffs. The first four are letters, described by the plaintiffs as 3 September 2012 letter, Request an Apology letter, 4 September 2012 letter and 7 September 2012 letter, published on the website (the Changenow website) in September 2012. The fifth is a newspaper article (Newspaper Article) published on the Changenow website in September 2012. The sixth to twelfth publications, described by the plaintiffs as the First to Seventh Posts, are messages published on a message board on the Changenow website in September 2012.
The defence
The current statement of claim, which I will refer to as the statement of claim, is the amended statement of claim dated and filed 15 November 2012. The defendant filed a defence on 5 February 2013. The plaintiffs then applied to strike out, in part, the defendant's defence. On 11 June 2013 the defendant filed a document entitled 'Minute of Proposed Amended Defence' which stated that it was amended pursuant to O 21 r 3. The parties treated the minute which I will refer to as the amended defence, as the defendant's defence amended pursuant to O 21 r 3 and the plaintiffs' application as an application to strike out in part the amended defence.
The plaintiffs' application to strike out in part the amended defence came on for hearing on 19 June 2013 together with the plaintiffs' application to strike out in part the amended defence and counterclaim in the related consolidated proceedings between the same parties, CIV 2347 of 2012 and CIV 2378 of 2012. Counsel for the parties made submissions in relation to the application in the consolidated action and relied upon their written submissions in this application, together with supplementary written submissions which I gave leave to file.
The amended defence
The defendant admits that he published or caused to be published the letters and the Newspaper Article on the Changenow website but denies that he is liable or responsible for the publication of the message board posts. In relation to each of the letters and the Newspaper Article published on the Changenow website, the defendant denies that the letter or article gives rise to the imputations pleaded by the plaintiffs or is defamatory of the plaintiffs and pleads affirmative defences of Polly Peck justification, qualified privilege at common law or pursuant to s 30 of the Defamation Act 2005 (WA) and honest opinion under s 31 of the Defamation Act. In relation to each of the message board posts the defendant pleads that if he is a publisher of the posts then he is an innocent disseminator of the matters posted within the meaning of s 32 of the Defamation Act. In relation to the Fifth Post the defendant pleads a Polly Peck justification.
This application
The plaintiffs apply to strike out a number of paragraphs of the amended defence on the grounds that they disclose no reasonable cause of defence, may prejudice, embarrass or delay the fair trial of the action or are otherwise an abuse of the process of the court. I will start by considering [9.1] of the defence.
Defence imputation 9.1
The defendant denies that the 3 September 2012 letter gives rise to the imputations pleaded by the plaintiffs or is defamatory of the plaintiffs. In [9] of his defence the defendant pleads, in the alternative, that if the 3 September 2012 letter contains matter defamatory of the plaintiffs then it contains the meanings pleaded at [9.1], [9.2] and [9.3] of the defence which are true in substance and fact. The imputation pleaded at [9.1] is that the plaintiffs:
failed to ensure that the transaction involving the Waugh‑1 well in EP 437 was an open and transparent farm‑out process in accordance with best industry practice and the openness and transparency expected of companies such as Empire.
The defendant gives particulars of justification.
The plaintiffs submit that that imputation is not reasonably capable of being conveyed by the 3 September 2012 letter. The plaintiffs further object that the imputation is a rolled up plea.
The defendant says that the imputation arises from the publication as a whole, or its tenor, and in particular from the italicised words:
Farm‑Out of Waugh‑1 well in EP 437 to Caracal Exploration Pty Ltd (See EGO ASX announcement of 30 August 2012), a thinly capitalised company with a former director of Key Petroleum Ltd as sole director. Does this transaction have any connection to the previous acquisition by Key of the Company's Canning Basin assets? There does not appear to have been a formal farm out process undertaken by the Company to ensure that the Company gets the best farm out terms? Surely it is in the best interests of shareholders to get the best deal?
The imputation pleaded at [9.1] should be struck out for two reasons. First the phrase 'the openness and transparency expected of companies such as Empire' is vague and imprecise. Is the openness and transparency expected of companies such as Empire more or less than the openness and transparency 'in accordance with best industry practice', and if so, in what way? If the openness and transparency expected of companies such as Empire is the openness and transparency in accordance with best industry practice then the words 'and the openness and transparency expected of companies such as Empire' are redundant and embarrassing. If they are different, then it is not apparent what their content is and they are embarrassing for that reason.
Secondly, if 'the openness and transparency expected of companies such as Empire' is different from 'an open and transparent farm‑out process in accordance with best industry practice' then the imputation is an impermissible rolled up imputation. One approach to determining whether an imputation is an impermissible rolled up or composite imputation is to identify whether what is contained in the imputation attributes to the plaintiff more than one condition or quality that are independent of one another; or whether, even where multiple adjectives or descriptors are used, they, in combination, express a single, even if composite, condition or quality: Viney v TCN Channel Nine Pty Ltd [2006] NSWSC 1273 [15] (Simpson J). If 'the openness and transparency expected of companies such as Empire' is a different standard or has a different content than 'an open and transparent farm‑out process in accordance with best industry practice' then the imputation attributes to the plaintiffs more than one quality that are independent of one another and the imputation is an impermissible rolled up plea.
Paragraph 9.1 of the defence should be struck out on the grounds that it may prejudice, embarrass or delay the fair trial of the action.
Defence imputation 9.2
The imputation is that:
9.2there were reasonable grounds to doubt the Plaintiffs' commitment to Empire, arising from their dealings with their Empire shares and options;
The 3 September 2012 letter is reasonably capable of conveying the defendant's imputation. In relation to each of the plaintiffs, the letter says that the plaintiff, or a private company associated with him, exercised options and then almost immediately sold the underlying shares for a profit of over $1.2 million, $606,000 and $97,500 respectively. In each case that statement is followed by the question:
Does this show a commitment to the company?
The corresponding imputation pleaded by the plaintiffs is that the plaintiffs 'have no commitment to Empire of which they are directors of'. This is not a case in which the imputation made by the letter is so plain as to justify withdrawing from the trier of fact the possibility of finding at least that the letter could reasonably have been understood to convey some lesser defamatory meaning than that the defendants have no commitment even if the trier of fact ultimately regards that meaning as the meaning of the words complained of.
Imputation 9.3
Imputation 9.3 is that:
[t]here are reasonable grounds to suspect the Plaintiffs are not prepared to be as open and accountable to Empire's shareholders as ought be expected of directors of a company such as Empire.
This imputation should be struck out on the ground that it may prejudice, embarrass or delay the fair trial of the action. The words 'as ought to be expected' mean that the plaintiffs' competence is to be judged by some standard but fail to state what that standard is. The general test of defamatory matter is whether the matter is likely to lead an ordinary reasonable person to think the less of the plaintiff. The hypothetical audience, that is to say the referees of the issue of whether a person has been defamed, are ordinary reasonable people of ordinary intelligence, experience and education. The standards to be applied by the hypothetical referees to an assessment of the effect of imputations are those of the general community: see Radio 2UE Sydney Pty Ltd v Chesterton [2009] HCA 16; (2009) 238 CLR 460.
In assessing whether it is defamatory to impute to the plaintiffs that they are not prepared to be as open and accountable to the shareholders as ought be expected of directors of a company such as Empire, the court must apply general community standards. The court would apply the same community standards in determining whether it is defamatory to impute that the plaintiffs are not prepared to be open and accountable. There is no material difference between the imputation with the words 'as ought be expected of directors of a company such as Empire' included and the imputation without those words. Both imputations would require the same justification. The addition of the words 'as ought be expected of directors of a company such as Empire' are apt to cause confusion and are embarrassing.
Paragraph 20.1
The defendant denies that the Request an Apology Letter is defamatory of the plaintiffs but pleads, in the alternative, that if it contained matter defamatory of the plaintiffs then it contained the meaning pleaded by the defendant which is true in substance and in fact. The meaning pleaded at [20.1] is:
the legal proceedings the Plaintiffs had caused Empire to commence against shareholders, reasonably suspected to be funded by Empire, were not solely for Empire's benefit, but also involved a benefit to the Plaintiffs.
The defendant has given the following particulars of justification:
(a)Supreme Court of Western Australia proceedings COR 135 of 2012, commenced by Empire against the Defendant and others;
(b)Empire was the plaintiff in COR 135 of 2012;
(c)a purpose for, and the relief sought by, Empire's proceedings was to prevent the holding of a general meeting of shareholders at which the shareholders would vote upon whether the Plaintiffs should be removed or replaced as directors of Empire;
(d)the Defendant had received substantial support from shareholders in relation to his call for a general meeting of Empire in accordance with section 249D of the Corporations Act 2001 in that, in addition to the 377 requisition forms delivered to Empire, the Defendant received approximately 300 additional forms, making a total of approximately 26% of shareholders who had completed requisition forms;
(e)even after some shareholders had withdrawn their requisitions after communications from Empire and its solicitors, there remained requisitions from at least 5% of shareholders, being a sufficient number to require Empire to convene a general meeting pursuant to the Corporations Act;
(f)the Defendant repeats paragraphs 9.3(d) and 9.3(e) above;
(g)the proceedings COR 135 of 2012 were costly; and
(h)further particulars may be provided after discovery and interrogatories.
Paragraphs 9.3(d) and 9.3(e) are:
(d)on 28 August 2012 the First Plaintiff in his position as director of Empire Oil and Gas NL informed shareholders that a second requestion notice was pending;
(e)on 6 September 2012 Empire's solicitors received a further (second) bundle of requestions and which provided a reasonable basis for the Plaintiffs, in the interests of Empire and its shareholders, to have resolved to discontinue the COR 135 of 2012 proceedings, and allow a general meeting to be held, but the Plaintiffs did not so cause COR 135 of 2012 to be discontinued. The Defendant relies upon inferences to be drawn from this conduct; and
The plaintiffs say that the particulars of justification will never justify whether legal proceedings taken by Empire 'were not solely for Empire's benefit'. The plaintiffs say that even if Empire's action 'also involved a benefit to the plaintiffs', such benefit would be incidental and that is not defamatory. I agree. Particular (d) states a purpose for, and relief sought by, Empire's proceedings which would, or might, involve a benefit to the plaintiffs in that the shareholders would not vote upon whether the plaintiffs should be removed or replaced as directors. However, the imputation does not say that the potential benefit to the plaintiffs was the reason the plaintiffs caused Empire to commence the proceedings or that they would not have done so but for that potential benefit. The particulars, if proved, establish nothing more than that a benefit to the plaintiffs was incidental to the purpose of, and relief sought by, Empire in the proceedings. That is not defamatory of the plaintiffs. If that is all the defendant's imputation means then it is not defamatory. If the defendant's imputation means something more, then the particulars do not support it. Either way, [20.1] should be struck out on the grounds that it discloses no reasonable cause of defence or may prejudice, embarrass or delay the fair trial of the action.
Defence [33.1]
The plaintiffs plead that the 4 September 2012 letter gives rise to the imputation that the plaintiffs, and each of them, are responsible for persons harassing shareholders so as to cause fear.
The defendant denies that the 4 September letter gives rise to that imputation or is defamatory of them. In the alternative the defendant pleads that if the 4 September letter contained matter defamatory of the first plaintiff then it contained the following meaning which is true in substance and fact:
Empire's management had exercised excessive pressure upon various of Empire's shareholders.
The imputation is defective in form. The exercise of excessive pressure is attributed to 'Empire's management' not the plaintiffs. The imputation fails to state the act or condition asserted of or attributed to the plaintiffs. If the imputation was amended to refer to the plaintiffs then it is not unarguable that the imputation is reasonably conveyed by the 4 September letter.
Defence [44.1]
The plaintiffs say that the 7 September letter gives rise to the imputation that the plaintiffs institute and prosecute proceedings in the name of the company against the interests of shareholders of the company. The defendant denies that the letter gives rise to that imputation or any imputation defamatory of the plaintiffs. In the alternative the defendant says that if the letter contains matter defamatory of the plaintiffs then it gives rise to the following meaning which is true in substance and fact:
The court proceedings the Plaintiffs caused Empire to take, and the conduct of such proceedings in respect to the section 249D requisitions, were, by reason of their cost and purpose, not wholly in the interests of shareholders.
The imputation should be struck out on the grounds that it may prejudice, embarrass or delay the fair trial of the action. It fails to express the precise act or condition asserted of or attributed to the plaintiffs or with which they are charged. The imputation does not assert that the proceedings were not in the interest of shareholders but that they were not 'wholly' in the interests of shareholders. That might mean that they were partly in the interests of shareholders and partly in the interests of someone else, who is not identified, or it might mean that the proceedings were for the benefit of the shareholders but not wholly in the interests of shareholders because the cost outweighed the benefit or it might mean something else. The content of the imputation is uncertain. That means that the plaintiffs do not know the case they have to meet. Furthermore, the court is unable to assess whether the imputation is defamatory. If it means nothing more than that balancing the likely cost of the proceedings against their purpose it is not in the interests of shareholders, then it may not be defamatory. Furthermore, the imputation refers to the purpose of the proceedings without identifying it. That may be a Trojan horse if it involves an allegation of some purpose other than seeking to advance the interests of the company. The meaning is not made clear by reference to the 7 September letter.
Defence [54.1]
The plaintiffs plead that the Newspaper Article gives rise to the imputation that the plaintiffs:
40.engaged in legal proceedings as a tactic to bully shareholders of Empire from exercising rights as a shareholder;
40.2used their authority as directors to bully shareholders; and
40.3are misusing company funds to prosecute their personal defamation actions.
The defendant denies that the Newspaper Article gives rise to those imputations or is defamatory of the plaintiffs. In the alternative, the defendant pleads that if the Newspaper Article contains matter defamatory of the plaintiffs then it contained the following meaning which is true in substance and in fact:
[t]hat the plaintiffs had used legal actions in defamation against shareholders of Empire in part as an attempt to stifle free discussion and speech about Empire and its management.
The plaintiffs say that the imputation is unsustainable in circumstances where the separate actions commenced against Ms Devereux and Mr Watson (referred to in the particulars) constitute a legitimate exercise of the plaintiffs' civil rights. Furthermore, the plaintiffs say that the imputation will require the defendant to prove that the plaintiffs are utilising the court's process for an ulterior motive outside the ambit of the defamation claim which is akin to an allegation of fraud and the particulars of justification are not sufficiently particularised.
The defendant says that the imputation does not allege that the plaintiffs commenced legal actions for an illegitimate purpose, that is, an abuse of process. Rather, the defendant's imputation asserts that legal actions were used by the plaintiffs as part of a course of conduct that was an attempt to stifle free discussion and speech about Empire.
The imputation is not that the plaintiffs had used the defamation actions 'as part of' an attempt to stifle free discussion, but that their use of the actions was 'in part' an attempt to stifle free discussion. That is, the imputation is not that the plaintiffs had used the defamation actions as part of a wider attempt to stifle free discussion. The imputation is that one of the uses of the defamation actions is to stifle free speech. The law of defamation is intended to inhibit freedom of speech by restraining the publication of defamatory matter. That is a legitimate use of legal process. It is not defamatory to say of a person only that he has used defamation actions to inhibit freedom of speech. The words 'stifle free discussion and speech' do not mean anything different from 'inhibit free speech'. The imputation attributes to the plaintiffs actions that are not defamatory. For the imputation to be defamatory of the plaintiffs it must attribute to them doing something more than using legal actions in part to inhibit free speech. But the defendant's imputation does not attribute anything more to the plaintiffs. It is not defamatory and should be struck out.
Qualified privilege
The defendant pleads qualified privilege at common law, in addition to statutory qualified privilege, with respect to each publication complained of by the plaintiffs.
The plaintiffs attacked the plea of qualified privilege at common law on two grounds. First, the plaintiffs say that, in accordance with the majority decision in Bashford v Information Australia (Newsletters) Pty Ltd [2004] HCA 5; (2004) 218 CLR 366 [26], an attempt to justify a publication to the general public must be brought within the constitutional privilege (Lange) defence or not at all. Secondly, the defendant asserts that the Request an Apology Letter and the 4 September 2012 letter constitute 'replies to attacks', but the plaintiffs say that the 'reply to an attack' privilege does not apply. However, the plaintiffs did not press this objection on the hearing of the application.
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. However, the plurality observed that there was no publication to the general public in that case. Each communication of material to a person other than the plaintiffs is a separate publication and gives rise to a separate cause of action. In the case of the internet, publication occurs when the material is downloaded and read. 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. Whether or not the defence of qualified privilege at common law will succeed will depend on the 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 (3rd ed) [16.19].
The defendant pleads that each of the letters on the internet was published to Empire's shareholders. The plaintiffs say that because the letters were available on the internet to the world at large, they were published to the general public and the defence of qualified privilege is not available. The plaintiffs referred to Lindholdt v Hyer [2008] NSWCA 264; (2008) 251 ALR 514 where the New South Wales Court of Appeal considered defamatory articles published by the appellant in Cabbie magazine. The trial judge found that the articles were published on occasions of qualified privilege but the defence of common law qualified privilege was defeated by the finding that the appellant was actuated by malice. On appeal the appellant challenged the finding of malice. The respondent, by notice of contention, argued that the publication was not on an occasion of qualified privilege. The court dismissed the appeal on the ground that the trial judge's finding of malice was correct. Only McColl JA considered whether the articles were published on an occasion of qualified privilege. The trial judge had found that the distribution of Cabbie was targeted at a taxi industry audience which had an interest in the subject matter of the articles and that the distribution went no further than was necessary to do so. McColl JA found that the evidence did not support that finding. Her Honour found that whilst the distribution of the magazine was in many respects targeted at a taxi industry audience, it was also indiscriminate to the extent that it was left lying around public places where anyone could pick it up. So far as the magazine was distributed on the Gold Coast, one of the sites at which free copies were distributed was the airport, which is a place to which the general public has recourse. McColl JA said that it was not to the point that the primary judge doubted whether passengers and the general public would do no more than glance at the magazine. Her Honour found that the matter complained of was published to the general public, that the publisher had therefore to demonstrate reciprocity of duty and interest with that audience and as the majority said in Bashford 'only in exceptional cases has the common law recognised a duty to publish or interest in publishing defamatory matter to the general public' [26]. In considering the principles to be applied in determining whether a publication is on an occasion of qualified privilege McColl JA said at [70]:
Because the principles to be applied in determining whether a defamatory statement was published on an occasion of qualified privilege are stated at a higher level of abstraction and generality, their application depends on 'a close scrutiny of the circumstances of the case, of the situation of the parties, of the relations of all concerned and of the events leading up to and surrounding the publication'. Bashford (at [10]) per Gleeson CJ, Hayne and Heydon JJ (at [54] per McHugh J).
The plaintiff also referred to Christian Labour Association of Canada v Retail Wholesale Union [2003] BCSC 2000 [22] ‑ [25], [30] ‑ [31]. The parties were unions with a history of competition for members. The words complained of were published on the defendant's website. The defendant applied for the plaintiff's libel action to be dismissed on the ground that the words complained of were published on an occasion of qualified privilege. For the purposes of the application the defendant admitted that the words complained of were defamatory and that the general public would not have an interest in the message, but argued that the statement was aimed only at its members who would have an interest in receiving the union news. The defendant's total membership was about 2,300. The visits to the site were about 530. The identity of the visitors could not be proved precisely. There were no barriers or restrictions to access to members such as user ID numbers or passwords. Rice J held that the defendants claim for qualified privilege failed. Having posed the question: 'Has the plaintiff shown that the message was communicated excessively?' Rice J said:
For this publication none of the website visitors have been identified as being members of the union or otherwise. Given that fact alone, it would not be proper for me to speculate. Without more information, I could infer no more than that the persons accessing were members of the public who were not necessarily interested [22].
Rice J considered other evidence concerning who was likely to access the website and concluded:
In my opinion the defendants claim for qualified privilege on the materials before me must fail. I find that the likelihood of a significant exposure to persons not interested is there, and that it is excessive because it is not incidental and reasonably necessary to publish the messages on the defendants' website without restriction.
It is not that the internet and use of a website is to be discouraged, but if statements are to be made which are admittedly defamatory, and there is a risk of significant numbers of uninterested persons seeing it, that can be excessive, and will be if restrictions are available but disregarded [30] ‑ [31].
In my view this is not a suitable matter for a strike out application. There is no presumption in law that a plaintiff in an internet defamation case 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 a publication has occurred will depend on all the circumstances. It is arguable that publication to Empire shareholders 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 publication to readers who were not shareholders. If there was publication to readers who are not shareholders, then the court will have to determine whether communication by means of the internet was reasonable and proportionate having regard to the interests sought to be protected. Whether or not the defence of qualified privilege will be made out will require a close scrutiny of all of the facts of the case bearing on who accessed the website, the likelihood that it was accessed by persons other than Empire shareholders and the reasonableness of using the website as a means of communicating to Empire shareholders and not others.
Honest opinion
The defendant pleads in relation to each of the letters and the Newspaper Article published on the Changenow website that any defamatory material 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 plaintiffs submit 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 that there is 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 plaintiffs attack the pleading on the further ground that the particulars of proper material are inadequate. I will now consider the adequacy of the particulars of proper material given by the defendant.
Paragraph 11
In [11] the defendant pleads that any defamatory matter in the 3 September 2012 letter was honest opinion upon a matter of public interest and based upon proper material within the meaning of s 31 of the Defamation Act. In [11.2] the defendant gives particulars of the proper material on which the honest opinion is based. Particular (b) is:
The proper material also includes matters contained or referred to in the 3 September 2012 letter itself, which are true and further, include Empire's publications to and recorded by the ASX referred to therein which are true, alternatively published on the occasion of qualified privilege.
In my view those particulars are inadequate and embarrassing. It is embarrassing to say that the proper material 'includes' matters contained or referred to in the letter. The particulars should specify the matters relied upon not merely state some of them. Secondly, it is embarrassing to say that the proper material is contained in the letter without identifying the material. The plaintiffs should not be required to trawl through the letter and guess which matters contained in it are relied upon by the defendant. Thirdly, the proper material is said to 'include' Empire's publications to and recorded by the ASX referred to in the letter. Again, the publications should be identified. Fourthly, it is embarrassing to say that the matters are true or alternatively published on an occasion of qualified privilege without identifying the matters. It is embarrassing to state that Empire's publications are true. Presumably, the defendant means that some or all of the matters stated in the publications are true. However, the defendant has failed to identify what those matters are. The particulars fail to state the proper material on which the opinion is based.
Paragraph 11 should be struck out on the grounds that the defendant has failed to properly particularise the proper material on which the honest opinion is based.
Paragraph 23
In [23] the defendant pleads that any defamatory matter in the Request an Apology Letter was honest opinion under s 31 of the Defamation Act. In [23.2] the defendant pleads that the opinion was based on proper material and gives particulars. The particulars repeat the particulars of justification subjoined to [20]. Those particulars include that Empire commenced proceedings COR 135 of 2012 in this court against the defendant and others and make other references to COR 135 of 2012. The plaintiffs object to the references to COR 135 of 2012 in the defendant's particulars.
In COR 135 of 2012 Empire sought, amongst other orders, a declaration that the letter to the directors of Empire attaching 377 shareholder requisition forms be declared invalid. The defendant was one of the defendants to that action. He did not oppose the making of the declaration. I held that the Corporations Act 2001 (Cth) s 249D requisition considered in that case was invalid and the shareholder requisition forms were not a valid request for the purposes of s 249D of the Corporations Act: Empire Oil & Gas NL v Smith [2012] WASC 396. In those circumstances it would be an abuse of process for the defendant to plead or argue in this action that the requisition forms were valid: see Cleary v Jeans [2006] NSWCA 9 [44] ‑ [47].
The particulars to [20], which are incorporated by [23.2] as particulars of the proper material on which the opinion was based, include references to COR 135 of 2012. Particulars (d) and (e) refer to the requisition forms in terms which suggest that they were valid requests for the purposes of s 249D of the Corporations Act and that the plaintiffs, as directors of Empire, were obliged to call and arrange a general meeting. Particular (e) states that 'there remained requisitions from at least 5% of shareholders, being a sufficient number to require Empire to convene a general meeting pursuant to the Corporations Act'. The declaration made by the court in COR 135 of 2012, which was not opposed by the defendant, is to the effect that the shareholder requisition forms were not a valid request for the purposes of s 249D of the Corporations Act. Particulars (d) and (e) should be struck out. They are a collateral attack on the decision of the court in COR 135 of 2012 which is binding on the defendant.
Particular (g) is that 'the proceedings COR 135 of 2012 were costly'. That is too vague and uncertain. On one view all legal proceedings are costly.
Paragraph 23.2, and therefore [23], should be struck out on the grounds that particulars (d) and (e) are an abuse of process and particular (g) may prejudice, embarrass or delay the fair trial of the action.
Message board posts
In [42] of the statement of claim the plaintiffs plead:
On or about 4 September 2012 the Defendant created or caused to be created an internet message board on the Website which operated by users of the Website either posting a comment or replying to a comment posted by others. In the latter case, a 'thread' is created.
In [58] of his defence the defendant denies [42] of the statement of claim and pleads two matters in respect of the plaintiffs' pleas as to the message board posts. First, at [58.1] of the defence the defendant denies that he is liable or responsible for the publication of the message board posts. Secondly, at [58.2] the defendant says that if he is a publisher of the message board posts then he is an innocent disseminator of such matter within the meaning of s 32 of the Defamation Act.
The plaintiffs say that [58.1] of the defence should be struck out because it is indisputable that the defendant was a publisher of the message board posts given [4.1] of the defence where the defendant pleads that he:
4.1admits he is a person who maintains the Website, in the sense, and only in so far as and limited to the fact, that:
(a)at his request he caused the domain name for the Website to be registered;
(b)at his request he caused the Website to be set up;
(c)from time to time he requested and caused publications to be posted on the Website; and
(d)he permitted the Website to remain operating so that he could, from time to time, request and cause his publications to be posted on the Website.
The defendant says that the question of whether he is liable as a publisher of the message board posts is a matter for trial, not a strike out application. He submits that the plaintiffs, in effect, impermissibly seek to strike out a denial. It is necessary to set out the rest of the defendant's plea in [4] of his defence where the defendant:
4.2says that he was not the sole person who had access to and the ability to make changes or additions to the Website;
4.3says that he did not have at any material time the technical know‑how or ability to set up, configure, or make additions to the facilities upon the Website and did not in fact perform any of those functions, which were performed by other persons;
4.4refers to and repeats the matters pleaded in paragraph 58 below; and
otherwise does not admit paragraph 4 of the Statement of Claim.
Also, at [58.1] of his defence the defendant gives the following particulars of his denial that he is liable or responsible for the publication of the message board posts:
(a)The Defendant only caused to be set up, and at all material times only considered and knew, the Website to be a straight‑forward website that the Defendant could himself cause letters to be posted upon.
(b)The Defendant was not aware, at any material time prior to the time described in particular (d) below, as to the publication of the defamatory matter sued upon, nor that the Website had a message board facility that allowed third parties to post, in an unrestricted fashion and without notice to the Defendant, messages upon the Website.
(c)The Defendant did not have the technical ability to, and did not in fact, set up the Website so as to contain a message board facility that allowed third parties to post messages upon it, in an unrestricted fashion and without notice to the Defendant.
(d)The Defendant did not, at any material time in relation to the publication of any defamatory material on the message board of the Website, know or was aware that third parties were posting defamatory matter upon the Website, until he was informed that the Plaintiffs' solicitors had complained about certain content on the message boards, at which time the Defendant instructed and caused the message board facility to be disengaged and the messages posted upon it removed.
(e)In all the circumstances the Defendant was, in respect to any material that was defamatory that was posted on the message board, at most a passive facilitator of the publication of such material, with no knowledge or intention to cause such defamatory publications.
(f)The Defendant otherwise repeats paragraph 4 above.
The plaintiffs' strike out application raises two questions. The first is, what is the correct legal test for determining whether the host of an internet message board on a website is the publisher of statements posted on it by other users. The second is whether, on the facts as pleaded, the defendant has a tenable case that he is not the publisher of statements posted by others. The liability of a website host for statements posted by others is a developing area of law. The plaintiffs referred to the judgment of Beach J in the Supreme Court of Victoria in Trkulja v Google (No 5) [2012] VSC 533 delivered on 12 November 2012. Relevant authorities have since been reviewed by Mansfield J in the Federal Court in Rana v Google Australia Pty Ltd [2013] FCA 60 delivered on 7 February 2013, by the Court of Appeal of England and Wales in Tamiz v Google [2013] EWCA Civ 68 delivered on 14 February 2013 and Courtney J in the High Court of New Zealand in Wishart v Murray [2013] 3 NZLR 246; [2013] NZHC 540 delivered on 19 March 2013.
In Tamiz v Google the England and Wales Court of Appeal held that an internet service provider which supplied a platform for blogs and various tools to assist the blogger, and which was able to remove or block access to blogs when alerted to the fact that they breached its own terms and conditions, could be potentially liable for defamatory comments posted on a blog once it had received notification and had had sufficient time to act. Richards LJ, with whom Sullivan LJ and Lord Dyson MR agreed, said that by providing that service the defendant facilitated publication of the blogs, including the comments posted on them but its involvement did not make it a primary publisher of the blogs. The defendant was not a secondary publisher prior to notification. However, if the defendant allowed defamatory material to remain on a blog after it had been notified of its presence, it might be inferred to have associated itself with, or to have made itself responsible for, the continued presence of that material on the blog and thereby to have become a publisher of the material.
In Wishart v Murray Courtney J held that Facebook page hosts were publishers of postings made by anonymous users in certain circumstances. Courtney J said:
Those who host Facebook pages or similar are not passive instruments or mere conduits of content posted on their Facebook page. They will be regarded as publishers of postings made by anonymous users in two circumstances. The first is if they know of the defamatory statement and fail to remove it within a reasonable time in circumstances that give rise to an inference that they are taking responsibility for it. A request by the person affected is not necessary. The second is where they do not know of the defamatory posting but ought, in the circumstances, to know that postings are being made that are likely to be defamatory [117].
The defendant pleads that he did not know that third parties were posting defamatory matters upon the website until he was informed that the plaintiffs' solicitors had complained about certain content on the message boards, at which time he caused the message board facility to be disengaged and the messages posted upon it removed. The present pleadings do not address whether the defendant ought to have known that postings were being made that were likely to be defamatory. In any event, that would be a matter for trial. The defendant's denial that he published, or is responsible for publication, of the message board posts is not so clearly untenable that the plaintiffs are bound to succeed in establishing that the defendant published, or was liable for publishing, the message board posts. Paragraph 58.1 of the defence will not be struck out.
The plaintiffs say that the defence of innocent dissemination is unarguable. The plaintiffs say that as soon as the plaintiffs became aware of the message board posts and a request was made to remove them, the defendant could no longer rely on the defence of innocent dissemination.
Section 32 of the Defamation Act gives statutory form to the defence of innocent dissemination. The defence applies if:
(a)the defendant published the matter merely in the capacity, or as an employee or agent, of a subordinate distributor;
(b)the defendant neither knew, nor ought reasonably to have known, that the matter was defamatory; and
(c)the defendant's lack of knowledge was not due to any negligence on the part of the defendant.
The plaintiffs say that the defendant cannot rely on innocent dissemination in circumstances where the defendant had from 13 August 2012 received numerous notices in relation to the content of the matters being published on the website. The plaintiffs say that sufficient evidence has been led. The evidence consists of the affidavit of Mr Marshall sworn 15 August 2012 in CIV 2378 of 2012 and the affidavit of Nicola Emma Batterlin affirmed 10 September 2012.
The defendant says that the question of when he became aware of the message board posts and when he arranged for them to be removed are questions of fact and a matter for trial. The defendant does not admit that the message board posts remained on the website for more than a reasonable time after he knew or ought reasonably to have known that they were defamatory and that they were posted on his website.
When the defendant became aware of the message board posts and that they contained, or were alleged to contain, matters defamatory of the plaintiffs are issues on the pleadings. They are matters for trial, not a strike out application.
Conclusion
For the reasons stated [9.1], [9.3], [20], [33], [44], [54], [11], [23] of the defence should be struck out.
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