Mularczyk v John Fairfax Publications Pty Ltd

[2001] NSWCA 467

CITATION:	Mularczyk v John Fairfax Publications Pty Ltd [2001] NSWCA 467
FILE NUMBER(S):	CA 40108/01
HEARING DATE(S):	24 October 2001
JUDGMENT DATE:	12 December 2001
PARTIES :	Claimants/Appellants: Liliana Mularczyk, Tsico Galettis, George Cullen, Deanna Knapman, Edward Noon, Mark Dixon Opponent/Respondent: John Fairfax Publications Pty Ltd
JUDGMENT OF:	Sheller JA at 1; Beazley JA at 2; Heydon JA at 37

LOWER COURT JURISDICTION :	Supreme Court
LOWER COURT FILE NUMBER(S) :	21448/96
LOWER COURT JUDICIAL OFFICER :	Levine J

COUNSEL:	Claimants/Appellants: Ms L McCallum Opponent/Respondent: Mr T Blackburn
SOLICITORS:	Claimants/Appellants: MacMahon Associates Opponent/Respondent: Freehills
CATCHWORDS:	Defamation - Imputation of Dishonesty - Perverse Jury Verdict
LEGISLATION CITED:	Defamation Act 1974 (NSW)
CASES CITED:	Mechanical & General Inventions Co v Austin [1935] AC 346 Hocking v Bell (1942) 42 SR (NSW) 130 Cairns v John Fairfax & Sons LTd [1983] 2 NSWLR 708 Australian Newspaper Co Ltd v Bennett [1894] AC 284 Broome v Agar (1928) 138 LT 698 Cinevest Ltd v Yirandi Productions Ltd [2001] NSWCA 68 Austin v Culpepper (1684) 2 Show 313 Macrae v Sutherlan (1889) 16 R 476 Harrigan v Jones [2000] NSWSC 119
DECISION:	Leave to appeal granted; Appeal allowed

CA 40108/01
SC 21448/96
SHELLER JA
BEAZLEY JA
HEYDON JA


Wednesday, 12 December 2001

MULARCZYK & ORS v JOHN FAIRFAX PUBLICATIONS PTY LIMITED

FACTS

The appellants, teachers at a Sydney high school, claimed they were defamed in two articles which appeared in the Sydney Morning Herald. The jury found that only one of the matters complained of, namely “that the appellant[s] behaved dishonestly in that [each] pretended to be suffering from stress in order to avoid being transferred to a new school” carried a defamatory imputation, but found that the imputation was not defamatory.

On appeal it was claimed that the jury verdict in relation to the found imputation was perverse. It was also argued, although not strongly, that the jury should have found that the other pleaded imputations were made out.

HELD per Beazley JA (Sheller JA and Heydon JA agreeing)
(i) The jury verdict was perverse: the allegation of dishonesty reflected on the personal and professional character of the appellants and admitted of only one answer – namely that it was defamatory.

ORDERS
(i) Leave to appeal granted.

(ii) Appeal allowed.

(iii) Verdict of the jury set aside.

(iv) Order a new trial in respect of the imputation “that the [appellant], a teacher at a New South Wales high school, behaved dishonestly in that she pretended to be suffering from stress in order to avoid being transferred to a new school” .

(v) Remit the matter to the Common Law Division for rehearing.

(vi) Set aside the costs orders made in the court below and remit the question of costs of the jury trial before Levine J to the trial judge on the new trial.

(vii) The respondent is to pay the appellants’ costs of the appeal, but is to have a certificate under the Suitors’ Fund Act 1951 (NSW), if so entitled.


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CA 40108/01
SC 21448/96
SHELLER JA
BEAZLEY JA
HEYDON JA


Wednesday, 12 December 2001

MULARCZYK & ORS v JOHN FAIRFAX PUBLICATIONS PTY LIMITED

JUDGMENT

1 SHELLER JA: I agree with Beazley JA.

This is an application for leave to appeal, and, if granted, an appeal from a jury verdict in which the jury rejected a found imputation as defamatory.

Background

3 The plaintiffs/claimants (whom I shall call the appellants) are teachers employed by the New South Wales Department of Education. All had been teachers at Lurnea High School. For some years up to the end of 1995, there had been disputes between the appellants and the principal at the school. Departmental attempts to negotiate or settle the dispute had failed. The Department therefore transferred all six teachers and the principal to other schools, effective from the commencement of the first term in 1996. The appellants did not attend the new schools to which they had been transferred.

4 On each of 9 and 10 February 1996 an article appeared in the respondent’s Sydney Morning Herald newspaper relating to these matters. The appellants brought proceedings against the respondent, alleging that they had been defamed in each of the articles.

5 The matter was heard by a jury of four on 7 February 2001 in accordance with the procedure specified in Pt 2 of the Defamation Act 1974 (NSW): s 7A. The jury rejected that the article of 9 February was capable of carrying any of the pleaded imputations. No appeal is brought in relation to those findings.

6 The jury found that the 10 February article was capable of carrying the following imputation:

“That the [appellant], a teacher at a New South Wales high school, behaved dishonestly in that she pretended to be suffering from stress in order to avoid being transferred to a new school.”

7 However, they found that the imputation was not defamatory. The appellants claim that that finding was perverse and should be set aside.

8 The 10 February article was contained in the News Review section of the newspaper and was headed:

MUTINY
IN THE STAFFROOM
HOW A SCHOOL TORE ITSELF APART

9 The following comment was then made:

“It began with minor grievances, but now the Lurnea High School dispute has escalated with allegations of sexual misconduct, staff on stress leave, a principal who fears her career is in tatters – and the threat of a Statewide teachers’ strike.”

10 The portion of the article relied upon by the appellants as containing the defamatory imputation stated:

“Boston considered his only option was to transfer [the principal] was well as the rebels in an attempt to heal the growing rift in the school.

…

That should have been the end of it. But on January 29, at the start of the new school year, [the principal] – the only one to be transferred out of the district – was the only one to turn up at her new appointment.

The six teachers all decided to turn up at Lurnea instead of their new appointments. They were given two days to turn up or face the sack. All then applied for stress leave.

Federation president Denis Fitzgerald justified the stress leave applications to the Herald, arguing the six had been under ‘an unprecedented level of public scrutiny’.”

11 The reference to Boston was a reference to Ken Boston, the Departmental Head. The reference to the Federation President was a reference to the President of the Teachers’ Federation – well known as the body which represents the interests of teachers.

12 Counsel for the appellants submitted that the jury’s finding was perverse because an imputation that a person behaved dishonestly in her or his profession must be defamatory as its meaning could only be pejorative. The only circumstance in which such an imputation would not be defamatory was if there was exculpatory material in the context in which the imputation appeared. Initially, counsel for the appellant submitted that the exculpatory material had to appear within the parameters of the imputation and that it was impermissible to seek exculpatory material in other parts of the matter complained of. She conceded however that the question whether the imputation was defamatory had to be considered in context, although she submitted that the context was limited. It was implicit in her submission that there was no exculpatory material within any relevant portion of the article.

When is a Jury Verdict Perverse

13 A jury verdict will only be found to be perverse if it is so unreasonable that it could not be said that the jury performed its judicial function; or “the verdict is one which [a] reasonable [jury] properly instructed might not reasonably find”: Mechanical & General Inventions Co v Austin [1935] AC 346 at 375 per Lord Wright; or is “such as to compel a conclusion that to allow a verdict to stand would be to permit a miscarriage of justice”: Hocking v Bell (1942) 42 SR (NSW) 130 at 140.

14 In Mechanical & General Inventions Co v Austin, Lord Wright at 375 cautioned, however, that:

“An appellate Court must always be on guard against the tendency to set aside a verdict because the Court feels it would have come to a different conclusion.”

15 The question whether a jury verdict rejecting a found imputation as defamatory, was perverse arose in Cairns v John Fairfax & Sons Ltd [1983] 2 NSWLR 708. The found imputation was that “[t]he plaintiff was improperly involved with his assistant, Junie Morosi in a romantic or sexual association contrary to the obligations of his marriage and to that of Miss Morosi”. The plaintiff, Dr Cairns, was the then Treasurer of the Commonwealth of Australia.

16 Samuels JA at 716 - 717 (who was in dissent in the result but not on this point) stated the principle for determining whether a verdict was perverse in these terms:

“Was [the jury verdict] unreasonable? … the test requires a case against the verdict which is ‘clear and beyond argument’: Broome v Agar (1928) 138 LT 698 at 702 per Sankey LJ.”

17 Hutley JA held that the jury verdict was not perverse, stating at 710:

“In my opinion, the simultaneous finding that there was the allegation of improper adultery between the two appellants and the finding that this is not defamatory is unusual, but not perverse in these days. The judgment of a jury as to what is the effect on reputations of misconduct in the field of correct sexual morality is not lightly to be rejected. It has been strengthened by the abandonment of official standards.”

18 Prior to reaching this conclusion his Honour said at 710:

“Not every statement that a person has done something improper is defamatory; for example, spitting in public is improper, but a jury’s decision that a statement that X spits in public was not defamatory, could not be set aside as perverse. The imputation of criminality is not always defamatory (Berry v British Transport Commission [1961] 1 QB 149, at 166), an imputation of mere impropriety must be in the same position.”

19 He further commented:

“The imputation of an ‘improper’ romantic relationship could cover a steep gradation of activities.”

20 Mahoney JA concluded that it was open to the jury to conclude that not every association which was inconsistent with a person’s marriage should be assessed as being discreditable. After noting the submission made by the defendants in that case, that “a jury [had] a wide discretion, in the sense that its verdict may be set aside only ‘in an extreme case’”: see Australian Newspaper Co Ltd v Bennett [1894] AC 284; Broome v Agar; Gatley on Libel and Slander, 8th Ed (1981) paras 1506 – 1509, he observed at 720:

“There is, I think, a distinction between … cases, … where the issue is the meaning of words and cases, such as the present, which depend upon community standards. … In cases such as the present, the defamatory quality of imputation depends upon the general community attitude to conduct of a particular kind. There is, I think, more difficulty in the court holding that a jury could not form a particular view as to general community standards than in deciding whether a word is capable of a non-defamatory meaning. In this sense, it will, in my opinion, be more difficult to persuade the court to set aside a jury’s verdict in a case of the former than of the latter kind.”

21 Counsel for the appellant submitted that this case satisfied the test of a perverse verdict because the question OF whether the imputation was defamatory admitted only of an affirmative answer. She relied upon the reasoning of Samuels JA in Cairns where his Honour considered that it was critical that the imputation involved an allegation of impropriety in the relationship and therefore must be defamatory. Likewise here, it was said, the imputation of dishonesty was critical – and only admitted of one answer. Counsel further submitted that the majority decision in Cairns was explicable and the case therefore distinguishable, on the basis that on the approach taken by the majority, the imputation was directed at the plaintiffs’ personal life and not their professional life. Here the imputation involved an allegation of dishonesty relating to the appellant’s professional conduct as teachers.

22 Whilst that distinction is available, I do not think it advances the argument greatly. The distinction drawn by Mahoney JA in Cairns set out at para 18 is, I believe, more to the point.

23 The question of whether a jury verdict that an imputation was not defamatory could be overturned also arose in Cinevest Ltd v Yirandi Productions Ltd [2001] NSWCA 68, where Spigelman CJ noted at para 41 that:

“The test that must be met for [an appellate court] to interfere with a jury’s verdict is a high one. The jury finding must be rejected as perverse or unreasonable.”

24 In that case the imputation was:

“That [the appellant] was incompetent in that it failed to return money to investors in any of the fifteen films it had produced.”

25 Senior counsel for the respondent had argued that that portion of the imputation commencing “in that it failed” should be read as a ‘definition’ of the word “incompetent” as used in the imputation.

26 Spigelman CJ at para 44 (Meagher and Handley JJA agreeing) rejected such an approach:

“I do not agree that the use of a word like ‘definition’ is appropriate. The additional words in the imputation refer to the manifestation of an ‘act or condition’ of the First Appellant which the jury identified to be that of ‘incompetence’. It is not correct to suggest that the jury’s finding implied that the word ‘incompetence’ was being used in some special sense. Rather, the natural and ordinary meaning of that word was satisfied by reason of particular conduct. The ‘act or condition’ attributed to the plaintiff (see e.g. Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135 at 136-137), was that of incompetence by the conduct specified.”

27 His Honour continued at paras 45 and 46:

“The defamatory sting is in the word ‘incompetent’. It may well be that a failure to return money to the investors over the course of making fifteen films would not necessarily indicate anything adverse about the producer of those films. Film making is a notoriously difficult business particularly in Australia. Many films serve promotional or educational purposes with no objective of return of funds. Even, in the case of a film made for ‘investors’, a failure to return money to investors may not be a manifestation of ‘incompetence’ at all.

It would have been perfectly appropriate for the jury to find that an imputation of ‘incompetence’ was not in fact conveyed, by reason of the fact that the conduct specified in the pleaded imputation did not constitute ‘incompetence’. Furthermore, there will be cases in which conduct of a particular character is found to manifest ‘incompetence’ but incompetence in the specified respect is not defamatory. That may be so because incompetence of that character does not impinge on a person’s reputation in a relevant way, e.g. to say a person is an incompetent golfer will not affect his or her trade reputation.”

28 His Honour concluded at para 47:

“That cannot, in my opinion, be said of the imputation in the present case. The particular of the conduct relied on concerned the business affairs of the corporation in its dealings with ‘investors’. That must, in my opinion, have an effect on the reputation of that corporation in its business affairs. The appeal should be allowed.”
The jury verdict that the imputation was not defamatory was thus set aside.

29 Upon what side of the line does this imputation fall? The allegation is of “dishonesty”. In its normal meaning “dishonesty” means lack of honesty, fraudulent, deceitfulness: The Australian Concise Oxford Dictionary, 2nd Ed. It would be fair to say, I think, that in the normal course it is not a word used in jest or which has any ameliorating features.

30 Gatley on Libel and Slander, London, 9th Ed, (1998) at 2.19 refers to a number of cases where it has been held that it is defamatory to publish of a person that he is dishonest: see Austin v Culpepper (1684) 2 Show 313; cf Macrae v Sutherland (1889) 16 R 476. In Harrigan v Jones [2000] NSWSC 119 the plaintiff complained that an on-air broadcast contained an imputation that he was dishonest as a referee. Dealing with the meaning of dishonesty, Studdert J stated at 7:

“dishonesty … involve[s] a conscious and deliberate course of conduct amounting to cheating.”

31 These references, to the extent they are useful, underscore what I have already said, namely that ‘dishonesty’, on its face, bears a negative connotation. The question which must be asked however, is in what sense was the charge of dishonesty imputed in this case. It is convenient to return to the terms of the imputation, namely:

“That the [appellant], a teacher at a New South Wales high school, behaved dishonestly in that she pretended to be suffering from stress in order to avoid being transferred to a new school.”

32 The imputation of dishonesty found by the jury relates to the appellants’ claiming to be suffering from stress, which can be a debilitating condition, of sufficient degree for them to be away from school. However, the purported suffering of the condition was being used as a pretence, a ruse to avoid being transferred to another school. Transfers are an incident of the professional life of a teacher. So, and I would think it goes without saying, is the requirement for honesty. Honesty is required of teachers in all facets of their professional life – for example in their exam marking, in the disciplining of children, to refer to just two. The need for honesty however, has another important facet, and that is in the manner in which the conduct of teachers in all aspects of their professional lives provides modelling for their students. It would be difficult for a school to deal with truancy of pupils when, for example, their own teachers are behaving dishonestly in the manner alleged here. There is also another aspect. The schools to which the appellants were transferred were expecting them to attend to teach. Their ‘dishonest’ failure to do so involved an abrogation of their professional duty.

33 In Gatley at 2.26 it is said that:

“Any imputation which may tend to injure a person’s reputation in business, employment, trade, profession … is defamatory. To be actionable, words must impute to the plaintiff some quality which would be detrimental, or the absence of some quality which is essential, to the successful carrying on of his office, profession or trade. The mere fact that words tend to injure the plaintiff in the way of his office, profession or trade is insufficient. If they do not involve any reflection upon the personal character, or official, professional or trading reputation of the plaintiff, they are not defamatory.”

34 In my opinion, the jury verdict was perverse. The imputation of dishonesty alleged was the absence of a quality which, I consider, must be taken as being an essential attribute of a teacher in the proper performance and discharge of his or her professional duties. To be said to be dishonest directly reflects on both the personal and professional character and qualities of persons in the position of the appellants. To return to the submission put by counsel for the appellants, the imputation could admit of only one answer, namely that it was defamatory.

35 Though the appellants contended that the perverse answer by the jury in finding that the imputation discussed above was not defamatory vitiated the whole of the proceedings, that argument was not pressed with any vigour and is unsound. The jury’s other answers are not perverse.

36 Accordingly, I would propose the following orders:

(i) Leave to appeal granted.

(ii) Appeal allowed.

(iii) Verdict of the jury set aside.

(iv) Order a new trial in respect of the imputation “that the [appellant], a teacher at a New South Wales high school, behaved dishonestly in that she pretended to be suffering from stress in order to avoid being transferred to a new school” .

(v) Remit the matter to the Common Law Division for rehearing.

(vi) Set aside the costs orders made in the court below and remit the question of costs of the jury trial before Levine J to the trial judge on the new trial.

(vii) The respondent is to pay the appellants’ costs of the appeal, but is to have a certificate under the Suitors’ Fund Act 1951 (NSW), if so entitled.

: I agree with Beazley JA.

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