Olesen v Nationwide News Pty Limited

[2020] NSWDC 241

District Court

New South Wales

Medium Neutral Citation:	Olesen v Nationwide News Pty Limited [2020] NSWDC 241
Hearing dates:	14 May 2020
Date of orders:	14 May 2020
Decision date:	26 May 2020
Jurisdiction:	Civil
Before:	Gibson DCJ
Decision:	(1) The defendant’s challenges to the capacity of the imputations (UCPR r 28.2) and their form dismissed; imputations (a) – (f) are reasonably capable of being conveyed. (2) The plaintiff has leave to file an Amended Statement of Claim incorporating particulars of special damage by 25 June 2020. (3) Defence filed and served by 30 July 2020. (4) Reply filed and served by 6 August 2020. (5) Matter stood over to the Defamation List on Thursday 13 August 2020. (6) Defendant is to pay the plaintiff’s costs of the argument today, save for the costs thrown away by reason of the amendments set out in the draft served on the defendant on 30 January 2020.
Catchwords:	TORT – defamation – imputations – form and capacity
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW), rr 13.4, 14.28 and 28.2
Cases Cited:	Amalgamated Television Services Pty Ltd v Marsden (1998) 43 NSWLR 158 Berezovsky v Forbes [2001] EWCA Civ 1251 Chase v News Group Newspapers Ltd [2002] EWCA Civ 1772; [2003] EMLR 11 Corby v Allen & Unwin Pty Ltd [2014] NSWCA 227 Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135 Favell v Queensland Newspapers Pty Ltd (2005) 79 ALJR 1716 Hepburn v TCN Channel Nine Pty Limited [1983] 2 NSWLR 682 Hockey v Fairfax Media Publications Pty Limited [2015] FCA 652 Holmes v TCN Channel Nine Ltd (2007) 4 DCLR (NSW) 394 McCormick v John Fairfax & Sons Ltd (1989) 16 NSWLR 485 Moran v Schwartz Publishing Pty Ltd [2014] WASC 334 Morgan v Odhams Press Ltd [1971] 1 WLR 1239 Sergi v Australian Broadcasting Commission [1983] 2 NSWLR 669 Singleton v John Fairfax & Sons Ltd (Supreme Court of New South Wales, Hunt J, 20 February 1980) Stocker v Stocker [2019] UKSC 17 Toben v Milne [2014] NSWCA 200 Trkulja v Google LLC (2018) 263 CLR 149; (2018) 92 ALJR 619; (2018) 356 ALR 178; [2018] HCA 25
Texts Cited:	R Parkes QC; Professor A Mullis; G Busuttil; A Speker; A Scott; C Strong, Gatley On Libel and Slander (12th ed, 2013, Sweet & Maxwell)
Category:	Procedural and other rulings
Parties:	Plaintiff: Michael Olesen Defendant: Nationwide News Pty Limited
Representation:	Counsel: Plaintiff: Mr T Molomby SC Defendant: Mr M Lewis   Solicitors: Plaintiff: O’Brien Solicitors Defendant: Macpherson Kelley
File Number(s):	2019/330958
Publication restriction:	None

Judgment

The plaintiff’s claim for defamation

1. The plaintiff brings proceedings for damages for defamation for the print and online editions of an article published in The Australian on 27 February 2019 entitled “NDIS provider did time for fraud”. The only difference between the print and online version is that the online version’s heading additionally states “Chief of NDIS provider did time for fraud”.

2. The matters complained of describe complaints about an NDIS provider named Integrated Disability Support Services Pty Ltd (“the company”), which is a registered provider of services for the NDIS/NDIA (the National Disability Insurance Agency). It starts by noting that the company’s “chief”, identified as “Michelle Fay McPhee, 47”, was convicted of fraud after she stole more than $80,000 from a government insurer, for which she served six months of a three-year prison sentence. It then notes she is now one of two directors of a company against which the mother of a disabled applicant “raised concerns about incorrect claiming”.

3. The crucial paragraph in relation to the issues the subject of this application is paragraph 4, which states:

“The company, which Ms McPhee runs alongside her daughter and co-director Kahli Olesen, 24 and Kahli’s husband, Michael Olesen, 27, was found to be charging full cancellation fees for appointments even if they were told before 3 pm the day before, contrary to rules set out by the National Disability Insurance Agency.”

4. Paragraph 5 states that the complaint made by the mother of a disabled applicant “raised eyebrows” within the NDIA, where officers at the regional level were aware of Ms McPhee’s fraud conviction but “unable to prevent [the company] offering taxpayer-funded services”. The “email trail” between the mother of the disabled person, the authority and Ms McPhee is then set out.

5. Ms McPhee is described as having “responded” to the Authority by saying that she was “investigating how much money was owed”. There is an extract from the Authority’s email in which it sent her a directive so that “your account team” could make the necessary changes. She is then quoted as saying that, after “we” reviewed the terms of the agreement, “changes had been made”.

6. This is followed by a report of statements from an unidentified woman described as a spokesman for “the provider” (i.e. the company) that “we regularly conduct internal audits and act swiftly where a concern is identified”, adding that the matter had been resolved “to the satisfaction of all stakeholders involved”.

7. The publication ends with a note that the company was “still listed” as a registered NDIS provider and that “a spokesman for the NDIA said it did not comment on specific investigations.”

The application for determination

8. The defendant brings an application objecting to the filing of an amended statement of claim on the basis that all imputations are both incapable of arising and deficient in form. Written submissions were supplemented by oral argument on 14 May 2020. On that day, I made the rulings set out at the end of this judgment, for which Mr Lewis, for the defendant, has requested written reasons.

9. These are my reasons for holding, pursuant to Uniform Civil Procedure Rules2005 (NSW) (“UCPR”) r 28.2 as to capacity and pursuant to UCPR r 13.4 and 14.28 as to form, that each of the imputations pleaded is reasonably capable of being conveyed and is not deficient in form.

10. This application raises issues of law which at first blush appear complex. In fact, they are arguments which are routinely raised in interlocutory challenges of this kind. While there is much to be said for obtaining rulings as to capacity under UCPR r 28.2 as this ensures certainty at the trial (thereby avoiding unfortunate trial results of the kind which occurred in Hockey v Fairfax Media Publications Pty Limited [2015] FCA 652, objections to the form of imputations, other than where there is a significant failure to plead imputations clearly, may introduce an unnecessary level of technicality to the pre-trial process.

The imputations pleaded

11. The imputations pleaded are as follows:

1. Michael Olesen ran a registered National Disability Insurance Scheme provider company with two others, that engaged in fraudulent conduct.

2. In the alternative, there are reasonable grounds to suspect that Michael Olesen ran a registered National Disability Insurance Scheme provider company with two others, that engaged in fraudulent conduct.

3. Michael Olesen ran a registered National Disability Insurance Scheme provider company with two others, that defrauded a disabled client by deliberately charging that client for cancelled appointments, contrary to the rules set out by the National Disability Insurance Agency.

4. There are reasonable grounds to suspect that Michael Olesen ran a registered National Disability Insurance Scheme provider company with two others, that defrauded a disabled client by deliberately charging that client for cancelled appointments, contrary to the rules set out by the National Disability Insurance Agency.

5. Michael Olesen ran a registered National Disability Insurance Scheme provider company with two others, that was engaged in improper behaviour in that it deliberately acted contrary to the rules set out by the National Disability Insurance Agency.

6. There are reasonable grounds to suspect that Michael Olesen ran a registered National Disability Insurance Scheme provider company with two others, that was engaged in improper behaviour in that it deliberately acted contrary to the rules set out by the National Disability Insurance Agency.

The test to apply to challenges to capacity

12. The test for capacity is explained in Favell v Queensland Newspapers Pty Ltd (2005) 79 ALJR 1716 (“Favell”) at [6], Amalgamated Television Services Pty Ltd v Marsden (1998) 43 NSWLR 158 and, in relation to the uniform legislation, in Corby v Allen & Unwin Pty Ltd [2014] NSWCA 227 (“Corby”) at [135]-[136].

13. In Favell, the High Court repeated the well-known analogy that the ordinary reasonable reader does not live in an ivory tower, but in the real world:

“The ordinary man does not live in an ivory tower and he is not inhibited by a knowledge of the rules of construction. So he can and does read between the lines in the light of his general knowledge and experience of worldly affairs”

14. In Corby at [135] – [136], the Court of Appeal held that the determination of capacity is a test of “generosity, and not of parsimony”, as well as being a “matter of impression”, in that “the impression is not of what the words mean but of what a jury could sensibly think they meant” (citing Berezovsky v Forbes [2001] EWCA Civ 1251 at [16]). The High Court of Australia similarly cited Berezovsky v Forbes in Trkulja v Google LLC (2018) 263 CLR 149; (2018) 92 ALJR 619; (2018) 356 ALR 178; [2018] HCA 25 at [30]-[32], urging caution as to the striking out of imputations of this kind.

15. These warnings are particularly apposite here, as the defendant’s principal submission on capacity is that no meanings of a defamatory nature can arise of and concerning the plaintiff at all, in that the only wrongdoers pointed to are Ms McPhee and the company (and, possibly, her director daughter), in circumstances where these persons have not brought any claim for defamation.

Imputations conveyed about one or more members of a group

16. Whether one or all of a group of persons is asserted to be identified, or to be not capable of being identified (in the present case, the group being the three named persons who “ran” the company and the company itself), the principles applicable to group libel apply: McCormick v John Fairfax & Sons Ltd (1989) 16 NSWLR 485. The issue in that case was whether the plaintiff could sue as a member of a class in relation to allegations of the “one of you” kind, namely that only one person of that class was responsible for the specific conduct in question, in circumstances in which there was no clear indicator in the matter complained of which pointed to any specific group member (at 488D).

17. This is not the case here; what Mr Lewis argues is that two other wrongdoers (Ms McPhee and the company) out of the persons named in the article are identified as the wrongdoers, but not the plaintiff.

18. Whether a person is identified depends upon the on statements (and inferences to be drawn from those statements) set out in the matter complained of. Hunt J noted the relevant test in McCormick v John Fairfax & Sons Ltd at 491E:

“Duncan & Neill Defamation, 2nd ed (1983) par 6.13 at 28, agree that the test is the “intensity” of the suspicion cast upon each member of the class, and they suggest that each such member of the class would be seen as, for example, associates of criminals or persons who had not made sufficient inquiry as to the character of their business associates. I feel that to limit the possible imputations to those suggested there may be too restrictive, but in my view they are good illustrations of the nature of the imputations which might apply in such a case. The slur (Fleming) or the reflection (Gatley) upon the reputation of each member of the class cannot be based upon an assumption by the reader that he was guilty of that conduct himself; it may only be based upon the relationship of that member of the class with the person who was guilty of that conduct.”

19. It is irrelevant whether the other members of the class have sued or not. If the class of identifiable persons is sufficiently clear (which is not challenged here), the question is determined by reference to the content of the matter complained of, and not by reference to who has (or has not) sued.

Imputations of guilt and suspicion of guilt as alternatives

20. As the pleading makes clear, three of the six imputations are pleaded with imputations put in the alternative. The reason for this is that the tribunal of fact may determine that the imputation is one of reasonable suspicion, as opposed to one of guilt.

21. The correct approach to capacity issues where the capacity of imputations of guilt is challenged, as explained in Corby at [135]-[136], requires cautious examination of any assertion that any asserted antidote could outweigh the bane, as this is generally a jury issue and not appropriate for determination as a preliminary issue.

22. Imputations of guilt and suspicion of guilt are generally called “Chase level 1” and “Chase level 2” imputations (Chase v News Group Newspapers Ltd [2002] EWCA Civ 1772; [2003] EMLR 11 (“Chase”) at [45]). Where Chase level 1 imputations of outright guilt are pleaded (see R Parkes QC; Professor A Mullis; G Busuttil; A Speker; A Scott; C Strong, Gatley On Libel and Slander (12th ed, 2013, Sweet & Maxwell) at [11.13]), the question is whether they, or alternatively Chase level 2 imputations of reasonable grounds for suspicion, arise: see the discussion of challenges to such imputations at the capacity stage set out in Moran v Schwartz Publishing Pty Ltd [2014] WASC 334 at [32].

Issues arising from the imputations pleaded

23. The following specific principles of law should be noted in relation to the imputations pleaded in the present case:

1. Imputations of guilt of a crime and reasonable suspicion are pleaded as alternatives in each of the three sets pleaded (imputations (a) – (f)). The use of “fall-back” imputations of this nature is not in dispute.

2. Imputations (a) and (b) plead what Hunt J (in Singleton v John Fairfax & Sons Ltd (Supreme Court of New South Wales, Hunt J, 20 February 1980) has referred to as “the general allegation”, while imputations (c) and (d) plead what his Honour described as “a particular instance” (i.e. a specific instance). The entitlement of a party to plead an imputation of “condition” as well as an imputation of the actual conduct is long recognised: see the discussion of this principle when applied to capacity arguments in Toben v Milne [2014] NSWCA 200 at [12]-[14]. Objections of this kind (namely that the imputations in question do not differ in substance) are generally a form, rather than a capacity, challenge.

3. In addition, in the event that the sting of the defamation is that of being in breach of the NDIA rules, imputations of guilt or reasonable suspicion of conduct of this alternative kind are pleaded (imputations (e) and (f)).

4. Determining whether or not the conduct amounts to accusation of a crime requires the court to take into account a degree of loose thinking: Morgan v Odhams Press Ltd [1971] 1 WLR 1239 at 1245; Stocker v Stocker [2019] UKSC 17. The term “fraud” should not be construed in the strict criminal law sense, for the reasons explained by the Supreme Court in Stocker v Stocker.

5. Finally, the entitlement to plead a general condition (for example, that the plaintiff is a thief) may be arguably not conveyed if the plaintiff only stole one article. However, where a course of conduct is able to be inferred (as Mr Molomby SC submits is the case here), such an argument will fail.

The relevant principles to apply in relation to challenges as to form

24. The correctness of Hutley JA’s statement that “there are no forms of imputations” (Sergi v Australian Broadcasting Commission [1983] 2 NSWLR 669 at 671A) has been affirmed in many decisions, most notably in Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135. These “form” objections are all the harder to maintain under the uniform legislation, where the imputation is no longer the cause of action.

25. I note that some of the highly technical objections previously raised in other applications of this kind, such as the need to specify who holds the suspicion, use of alleged weasel words such as “improper” and the asserted objectionability of the passive voice, have not been raised in this application, so I have not considered these. There may be tactical reasons for a party not raising objections of a certain kind at an interlocutory level, such as an intention to rely upon a defence of contextual justification.

The challenges as to form

26. The challenges to the form of the imputations may be summarised as follows:

1. Imputations (a) and (b) are insufficiently precise as the specific act or condition amounting to “engaged in fraudulent conduct” is not specified. In particular, the act of the plaintiff, as opposed to the company, must be identified.

2. Imputations (c) and (d) suffer from the same defects and, in addition, do not differ in substance from imputations (a) and (b) above.

3. Imputations (e) and (f) suffer from the same defects and do not differ in substance from the above two sets of imputations.

The capacity of the matter complained of

27. As noted above, where more than one person is identified as a potential wrongdoer, the test is what Hunt J described as the “intensity” of the suspicion cast upon each member of the group or class identified.

28. Applying the tests set out by Hunt AJA in Amalgamated Television Services Pty Ltd v Marsden, the ordinary reasonable reader with some basic knowledge of company structure would know that companies are legal entities which can only do what the people who run them cause the company to do. The ordinary reasonable reader would note that this is a company run by a mother, her daughter and the daughter’s husband; in other words, a family-based company (or, to use Mr Molomby SC’s term, a “mum and dad” company).

29. The key paragraphs are the third and fourth paragraphs, which reveal that Ms McPhee, who “did time” for the fraud referred to in the headline and first two paragraphs (where she is referred to as “Michelle Fay McPhee, 47”), “is now one of two directors of [the company] which repaid hundreds of dollars” after the mother of a disabled person “raised concerns about incorrect claiming”. As is noted above, it is in that context that the second paragraph states:

“The company, which Ms McPhee runs alongside her daughter and co-director Kahli Olesen, 24, and Kahli’s husband, Michael Olesen, 27, was found to be charging full cancellation fees for appointments…contrary to the rules set out by the National Disability Insurance Agency.”

30. The following factors, in terms of choice of language, layout and presentation, are relevant:

1. The wrongdoing is not described as a one-off action capable of having been performed by only one person; the use of the plural “we” and references to the “accounts team” infer an ongoing activity by company personnel, discovered only after a complaint is made.

2. The way in which the names of Mr and Mrs Oleson are set out, namely their names and ages, mirrors the way Ms McPhee’s name and age are set out which, in the context of the reporting of Ms McPhee’s conviction, give the conduct the subject of the complaint the flavour of an investigation.

3. The tone is suggestive of the likelihood that there is more going on here than just the particular breach of the rules identified following the specific complaint; the ordinary reasonable reader is invited to raise his or her eyebrows in much the same way as is stated to have occurred at the NDIS, where the officials knew about Ms McPhee’s fraud conviction but had been unable to stop her company being permitted to be registered.

31. Mr Lewis argues that the reference to Ms McPhee as the “chief” and as the person convicted of the fraud must mean that only she is identifiable. Mr Molomby SC replies that the use of the plural and the naming of the plaintiff and his wife (not to mention their ages and relationship to Ms McPhee) convey that these persons are named for a good reason, and that it is significant that they constitute a small and close family group who run the company together.

31. I also note the references to the “email trail” between Ms McPhee and Mr Butler, in which she says that she is “investigating” how much money was owed and states that changes “had been made” as a result. There is also the reference to the “accounts team” and the unnamed company spokeswoman (unlikely also to be Ms McPhee) who refers three times to “we”. To the ordinary reasonable reader, relevantly to the imputations conveyed, these features demonstrate that the conduct described sounds as though they are all in this together.

32. I have considered the challenge to specificity as a form issue, but I formally note that I am satisfied that each of the imputations identifies a defamatory sting sufficiently clearly for the imputation to be identifiable for the purposes of capacity. Ms Goodchild, Mr Molomby’s junior counsel, sets out, in paragraph 12 of her written submissions, the relevant extract from Drummoyne Municipal Council v Australian Broadcasting Commission at 137 and I agree that the matters complained of here provide no basis for a greater degree of specificity than is set out in the imputations.

33. Applying the principles set out in Corby, I am satisfied that the structure and content of each of the matters complained of identifies a group of wrongdoers (the three named persons, operating through their company), as opposed to only one wrongdoer (Ms McPhee and/or the company). Accordingly, I am satisfied that each of the imputations conveyed is conveyed as to the plaintiff as one of this group.

34. The next issue is whether that which is conveyed is a fraudulent act or condition, as well as being alternatively merely reasonable suspicion of one, and/or of wrongdoing of a different nature such as breaching NDIA rules (as captured in imputations (e) and (f)).

35. I have noted the principles as set out above as well as the specific aspects of the publications drawn to my attention by both parties and considered each of the “guilt” imputations separately.

36. As to imputation (a), I am satisfied that there is sufficient to convey an imputation that the plaintiff approved of fraudulent conduct engaged in by the company. The two elements, namely that he knew and that the conduct was fraudulent, both find their basis in the language and general tone of the matters complained of as set out above.

37. The same may be said in relation to (b), namely that he approved this particular conduct.

38. If the conduct of the company is asserted to be contrary to the rules set out by the NDIA in addition, that is an additional sting, and the same is the case in relation to (c).

39. For the reasons discussed in the course of oral submissions, where there is an argument that imputations of guilt are reasonably capable of being conveyed, it is difficult for a defendant to argue that alternative imputations of reasonable suspicion are also conveyed. Having regard to the tone and content of the matters complained of as a whole, this is quintessentially an issue for the tribunal of fact, and I note the warnings of the Court of Appeal in Corby to this effect.

Challenges to the form of the imputations

41. Each of the imputations is asserted by Mr Lewis, in his written submissions, to be “deficient in form and ambiguous” by reason of lack of specificity and as not differing in substance.

42. I do not accept this (commonly raised) complaint. The language of the matter complained of bristles with hints of wrongdoing, and this is reflected in the language (“raised eyebrows” being but one example) as well as in the very generalised hints of misconduct by those “running” the company. In such circumstances, it is not necessary for there to be greater specificity where the language is so general. For the reasons set out by Gleeson CJ in Drummoyne Municipal Council v Australian Broadcasting Corporation, I am satisfied that there is no greater need for specificity.

43. As to the claim that the imputations are “ambiguous” and lack certainty or clarity, this claim (very popular under the repealed legislation) of ambiguity in normal words and phrases in the English language is one for which there is no academic support: Holmes v TCN Channel Nine Ltd (2007) 4 DCLR (NSW) 394 at [16]. Even if there were, such challenges have had no support in the Court of Appeal since the observations made by Hutley JA in Hepburn v TCN Channel Nine Pty Limited [1983] 2 NSWLR 682 at 687D to 688C and by Glass JA in Sergi v Australian Broadcasting Commission (where his Honour noted that there were “no forms” for imputations), the correctness of which was confirmed by Gleeson CJ (in Drummoyne Municipal Council v Australian Broadcasting Corporation at 137), namely that practical justice, not philology, should apply.

44. The next objection is that the imputations do not differ in substance. For the reasons explained by Hunt J in Singleton v John Fairfax & Sons Ltd, the three sets of imputations clearly differ in substance (in relation to the entitlement to plead (c) and (d), as well as (e) and (f), and not just (a) and (b)) because the first two imputations in each group of two are general and the second two imputations are of a particular act.

45. The third set of imputations imputes conduct of a different kind, namely breaching NDIS rules. I accept Mr Molomby SC’s submission that a tribunal of fact may find both criminal conduct and regulatory breaches and am satisfied that the plaintiff should be entitled to plead both kinds of wrongdoing.

46. The challenges to form accordingly also fail.

Costs and other orders

47. These are well-drafted imputations, which is hardly surprising given Mr Molomby SC’s many years of experience. The objections to capacity and form have been entirely unsuccessful and costs should follow the event.

Orders

1. The defendant’s challenges to the capacity of the imputations (UCPR r 28.2) and their form dismissed; imputations (a) – (f) are reasonably capable of being conveyed.

2. The plaintiff has leave to file an Amended Statement of Claim incorporating particulars of special damage by 25 June 2020.

3. Defence filed and served by 30 July 2020.

4. Reply filed and served by 6 August 2020.

5. Matter stood over to the Defamation List on Thursday 13 August 2020.

6. Defendant is to pay the plaintiff’s costs of the argument today, save for the costs thrown away by reason of the amendments set out in the draft served on the defendant on 30 January 2020.

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Decision last updated: 26 May 2020