Palace Films Pty Ltd v Fairfax Media Publications Pty Ltd

[2010] NSWSC 415

CITATION:	Palace Films Pty Ltd & Ors v Fairfax Media Publications Pty Ltd & Ors [2010] NSWSC 415
HEARING DATE(S):	30 April 2010
JUDGMENT DATE :	14 May 2010
JURISDICTION:	Common Law
JUDGMENT OF:	McCallum J
DECISION:	(1) The whole of the statement of claim is struck out with leave to replead. (2) I will hear the parties further as to costs.
CATCHWORDS:	DEFAMATION - publication and republication - whether properly pleaded - allegation that defendants "wrote and published or caused to be written and published" - imputations - whether bad in form or incapable of arising - BREACH OF CONFIDENCE - whether claim inconsistent with claim in defamation
LEGISLATION CITED:	Defamation Act 1974 Uniform Civil Procedure Rules 2005
CATEGORY:	Procedural and other rulings
CASES CITED:	Chesterton v Radio 2UE Sydney Pty Ltd [2010] NSWSC 47 David Syme & Co Limited v Grey (1992) 38 FCR 303 Dow Jones & Company Inc v Gutnick [2002] HCA 56; 210 CLR 575 Griffith v Australian Broadcasting Corporation [2003] NSWSC 298 Habib v Radio 2UE Sydney Pty Ltd [2009] NSWCA 231 Harvey v John Fairfax Publications Pty Ltd [2005] NSWCA 255 Nationwide News Pty Limited v Warton [2002] NSWCA 377 Sims v Wran (1984) 1 NSWLR 317 Speight v Gosnay (1891) 60 LJQB 231 Toomey v Mirror Newspapers Ltd (1985) 1 NSWLR 173 Webb v Bloch (1928) 41 CLR 331; (1928) 2 ALJR 282
TEXTS CITED:	Gatley on Libel and Slander, 9th ed (1998); 10th ed (2004); 11th ed (2008) Starkey on the Law of Slander and Liable, 1st ed (1830)
PARTIES:	Palace Films Pty Ltd (First Plaintiff) Antonio Zeccola (Second Plaintiff) Benjamin Zeccola (Third Plaintiff) Fairfax Media Publications Pty Ltd (First Defendant) Brian Rosen (Second Defendant) Michaela Boland (Third Defendant) Screenhub Pty Ltd (Fourth Defendant) John Paxinos (Fifth Defendant) Alexander Prior (Sixth Defendant)
FILE NUMBER(S):	SC 09/297851
COUNSEL:	C. Evatt QC / R. Rasmussen (Plaintiffs) A. T. S. Dawson (First & Third Defendants) R. Potter (Second Defendant) M. Richardson (Fourth, Fifth & Sixth Defendants)
SOLICITORS:	Millens Lawyers (Plaintiffs) Banki Haddock Fiora (First & Third Defendants) DLA Phillips Fox (Second Defendant) Kennedys (Fourth, Fifth & Sixth Defendants)

- 20 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

McCALLUM J

14 MAY 2010

09/297851 Palace Films Pty Ltd & Ors v Fairfax Media Publications Pty Ltd & Ors

JUDGMENT

1 HER HONOUR: These are proceedings for defamation and breach of confidence arising out of the publication of four articles, one in a printed newspaper and three that were placed on the internet. The claim is brought by Palace Films Pty Ltd, a film distribution company, and its two directors, Mr Antonio Zeccola and Mr Benjamin Zeccola. The proceedings were commenced by statement of claim filed 15 October 2009. The application presently before the Court concerns the form of that pleading. It is contended on behalf of the defendants that the whole of the pleading, and alternatively parts of it, are liable to be struck out under r 14.28 of the Uniform Civil Procedure Rules 2005.

2 The areas in which the pleading is alleged to be defective are:

(a) the manner in which the issue of publication has been pleaded for the purpose of the causes of action in defamation;

(b) the form and content of the defamatory imputations relied upon by the plaintiffs;

(c) the manner in which the cause of action for breach of confidence has been pleaded, particularly in so far as it appears to be subverted by the cause of action in defamation.

Publication

3 Before considering the form of pleading objected to in the present case, it is useful to bring to mind some of the principles according to which a person may be held liable for the publication of defamatory matter. The starting point is to recall that the wrong sought to be vindicated in a claim in defamation is damage to reputation. The event that causes such damage is the comprehension of defamatory matter by a person other than the plaintiff. It follows that each such communication of defamatory matter may be sued on as a separate cause of action: Dow Jones & Company Inc v Gutnick [2002] HCA 56; 210 CLR 575 at [27] per Gleeson CJ, McHugh, Gummow and Hayne JJ.

4 In Gutnick, the High Court explained, against that analysis, that publication is to be understood as a bilateral act consisting of the publisher’s making the matter available and a third party having it available for his or her comprehension: at [26].

5 On the publisher’s side, the acts that may amount to making the matter available for comprehension by a third party are plainly not confined to the act of the author in composing the offending words. A range of other kinds of participation may be sufficient. The principles for determining who is liable as a publisher were stated by the High Court in Webb v Bloch (1928) 41 CLR 331 particularly at 364 where Isaacs J noted (citing Starkie on the Law of Slander and Libel):

“All who are in any degree accessory to the publication of a libel, and by any means whatever conduced to the publication, are to be considered as principals in the act of publication: thus if one suggests illegal matter in order that another may write or print it, and that a third may publish it, all are equally amenable for the act of publication when it has been so effected.”

6 It is obvious, applying those principles, that in the case of a newspaper article, the journalist, the editor and the proprietor of the newspaper may each be liable as a publisher of the article in the form in which it goes to print (although the liability of the journalist may not coincide exactly with that of the proprietor and the editor if, for example, the journalist has no control over headlines or photographs published as part of the article). In order to avoid confusion in the discussion that follows, it is convenient to describe all those who participate as principals in the act of publication within the principles stated in Webb v Bloch as original publishers.

7 It has long been accepted that, in certain circumstances, liability may separately be brought home to an original publisher for the repetition or republication of the defamatory matter by the voluntary act of another. In Speight v Gosnay (1891) 60 LJQB 231 at 232, CA, Lopes LJ identified four classes of case in which such liability might be imposed:

a) where the original publisher authorised the republication;
b) where the original publisher intended the republication;

c) where the original publisher made the original publication in circumstances where republication was the “natural consequence” of the original publication.
d) where the original publisher made the original publication to a person who was under a duty to repeat it;

8 The recognition of such liability entails a number of complexities. For many years it has been accepted (in this jurisdiction at least) that the republication may alternatively be characterised as giving rise to a separate cause of action against the original publisher or as a separate head of damage caused by the original publication. In Sims v Wran (1984) 1 NSWLR 317 at 320C-E, and again in Toomey v Mirror Newspapers Ltd (1985) 1 NSWLR 173 at 181G to 183F, Hunt J described the issue as one giving rise to an election on the part of the plaintiff. His Honour explained that the plaintiff may sue the original publisher on the republication as a separate cause of action. If he chooses that course, he should plead each republication in the exact words as a separate paragraph in the pleading, so as to enable the defendant to plead to it whatever defences may be appropriate to that particular publication: Sims v Wran at 320D; Toomey at 182C.

9 Alternatively, the plaintiff can choose to sue only on the original publication, but seek to recover as a consequence of that original publication the damage suffered by reason of its repetition or republication. Hunt J stated that, in that event, the plaintiff is not suing on the republication as a separate cause of action, but is relying on it as damage caused by the original publication in accordance with the general principles relating to damages in tort: Sims v Wran at 320E; Toomey at 182B. The Court of Appeal has recently endorsed that analysis: Habib v Radio 2UE Sydney Pty Ltd [2009] NSWCA 231 per McColl JA at [126]; Giles and Campbell JJA agreeing. McColl JA stated that it is appropriate in that circumstance to plead that the original publication “caused” the republication: at [125].

10 The nature of the liability involved when the original publisher is sued in respect of a republication has not always been described consistently. It may be that liability is imposed on the footing that, in the circumstances, the intervening publisher has become the agent of the original publisher: David Syme & Co Limited v Grey (1992) 38 FCR 303 at [68]. On that analysis, the principles stated in Speight v Gosnay identify the circumstances in which such agency will arise, but it may be doubted whether those principles create any separate juridical basis for imposing liability. A further question (or perhaps it is the same question) is whether the original publisher is jointly responsible (with the intervening publisher) for the same wrongful act or only concurrently responsible for the same damage. On any view, the principle that the original publisher may be liable for the republication on the basis of intention alone (as Speight v Gosnay appears to hold) may be open to reconsideration.

11 The better view may be that the original publisher can only be held liable for repetition or republication by an intervening publisher if his conduct amounts (directly or through the agency of the intervening publisher) to that of a publisher within the principles stated in Webb v Bloch and Gutnick: but cf Griffith v Australian Broadcasting Corporation [2003] NSWSC 298 at [19] and [22], where Levine J doubted whether the liability of the original publisher for a republication is that of a “publisher” of the republication (in the context of a consideration of the troublesome provisions of s 7A of the now repealed Defamation Act 1974).

12 A further complexity arises where the plaintiff seeks to hold the original publisher liable for repetition or republication outside the jurisdiction in which the proceedings are brought. I do not think it is open to a plaintiff in that circumstance to rely on the republication “as damage”, for the reasons I gave in Chesterton v Radio 2UE Sydney Pty Ltd [2010] NSWSC 47 at [14] to [18]. My conclusion in that case derived from my understanding of the reasoning of Gummow J in David Syme v Grey at [60] to [79]. I note that in Habib at [126], McColl JA doubted (without deciding) whether his Honour’s analysis otherwise derogates from acceptance of the principle that republications may be sued on “as damages”. That is a question for another day.

13 It is not necessary to resolve those difficulties for the purpose of the present application, but they demonstrate the importance of an unambiguous pleading. It is plain that a critical task for the pleader is to identify each publication intended to be sued upon as a separate cause of action and, in the case of any republication, an unambiguous indication as to which of the courses identified in Sims v Wran has been elected by the plaintiff. Habib is ample illustration of the difficulties that can arise if the plaintiff’s intention in that respect is open to dispute on the pleading.

Pleading of publication in the present case

14 The first matter complained of in the present case (to which I will refer as the primary article) appeared in the printed newspaper version of the Australian Financial Review on 15 July 2009 under the headline “Money has a starring role in locally made movies”. The article was published under the by-line of a journalist, Ms Michaela Boland.

15 The pleading alleges that the first, second and third defendants “wrote and published or caused to be written and published” the primary article. As to the first and third defendants (referred to in argument as the Fairfax defendants), the existence of a proper factual basis for that allegation is uncontroversial. The first defendant is Fairfax Media Publications Pty Ltd. It was acknowledged on behalf of that company that it is the proprietor and publisher of the printed newspaper version of the Australian Financial Review. The third defendant is the journalist under whose by-line the primary article was published, Ms Boland.

16 The Fairfax defendants submit, nonetheless, that the formulation “wrote and published or caused to be written and published” is embarrassing and should be struck out. They submit that the pleading in that form conflates a number of different concepts and may generate unnecessary complexity in the future conduct of the proceedings.

17 In my view, the formulation “wrote and published or caused to be written and published” is problematic. Mr Evatt, who appeared with Mr Rasmussen for the plaintiffs, defended the form of the pleading on the basis that “it comes from Gatley”. He did not, however, point to any particular part of that text.

18 Since at least its ninth edition, the precedent for pleading publication of a newspaper article in Appendix 1 of Gatley on Libel and Slander has recommended the following formulation:

“The defendants and each of them published the following words defamatory of the [plaintiff/claimant]”: see A1.12 (9 ^th ed); A1.13 (10 ^th ed); A1.10 (11 ^th ed).

19 It is true that there are other forms of words recommended in other precedents in Gatley, including “the defendants published and/or caused to be published” (A1.17, 11^th ed). With respect to the learned authors of that text, I think that is an unfortunate formulation, particularly in the use of the conjunction “and/or”. Separately, the chapter in Gatley headed “Particulars of Claim” in the 11th edition notes at [28.10] that it is usual to describe in the particulars of claim the mode of publication. The examples offered are “wrote and caused to be published” and “spoke and published”. For my part, I think the repetition of the words “and published” in the particulars is unnecessary.

20 In Webb v Bloch it was noted that the text, Starkey on the Law of Slander and Liable, 1^st edition (1830) stated (my emphasis):

“The declaration generally avers, that the defendant published and caused to be published; but the latter words seem to be perfectly unnecessary either in a civil or criminal proceeding; in civil proceedings, the principal is to all purposes identified with the agent employed by him to do any specific act” (at 364 per Isaacs J).

21 The vice of the form “spoke and published” (or “wrote and published” as pleaded in the present case) is that it combines a purely factual allegation as to the mode of publication (he spoke the words) and a conclusion (he published the words). A preferable formulation, in my view, is that set out in the precedents in Gatley cited above, that is, simply to allege that the defendant in question published [the following] words defamatory of the plaintiff. For the reasons stated above, that in my view would be a proper pleading of either a publication or a republication. Separately, the pleading should then identify the facts, matters and circumstances relied upon to support that contention, including (where it is not obvious from the premises already pleaded) identification of the mode of publication or the acts by reason of which it is contended that the defendant made the matter available for comprehension by others.

22 In my view, the additional words used in the present case “or caused to be written and published” are confusing. They may be understood as an attempt to plead direct publication in accordance with the practice described in Webb v Bloch at 364, although a similar form of words was there acknowledged to be “perfectly unnecessary”. Alternatively, they may be understood as an attempt to plead republication (as the same words were understood by the Court of Appeal in Habib at [171]).

23 If intended only as an alternative formulation of the allegation of publication, the words add nothing. If intended to allege against any defendant that the primary article was a republication, that should be explicitly pleaded.

24 The confusion in the present case arises most acutely in respect of the claim against the second defendant, Mr Brian Rosen. Mr Rosen is described in the primary article as the former chief executive of the Film Finance Corporation. It emerged in argument that the basis on which Palace seeks to have him held liable as a publisher of the matters complained of is that he provided information to the journalist for the purpose of the primary article. The article includes three direct quotes attributed to Mr Rosen and other material that refers to him, but he is by no means the only source of information cited.

25 It is doubtful whether Mr Rosen’s provision of some of the information used by the journalist in her composition of the primary article is enough to make him liable as a publisher of the article in its final form on the principles stated in Webb v Bloch. A claim might alternatively be brought on the basis that the primary article amounts to a republication of the words originally spoken by Mr Rosen to the journalist but that does not appear to be contended. The present pleading causes confusion as to how the claim is put.

26 Such confusion may be eliminated if a pleading is subjected to the discipline of articulating:

(a) each communication of defamatory matter (that is, each publication) sued on as a separate cause of action;

(b) as to each such cause of action, and as to each defendant to that cause of action, a statement of the facts, matters and circumstances on the basis of which it is contended that he or she published the defamatory matter complained of (where that is not otherwise obvious);

(c) as to any republication sued on as a separate cause of action, a separate paragraph alleging that the original publication was republished and pleading the words of the alleged republication in terms ( Sims v Wran at 320D; Toomey at 182C);

(d) as to each defendant to each separate cause of action for republication, the facts, matters and circumstances on the basis of which it is contended that he or she is liable for the republication (in accordance with the principles stated in Speight v Gosnay or otherwise in accordance with the principles as to who is a publisher);

(e) any republication relied upon only as damage flowing from the original publication, with an appropriate pleading of causation ( Habib at [125]) together with a statement of the facts, matters and circumstances on the basis of which it is contended that the original publication caused the republication, where appropriate.

Pleading of publication of the second matter complained of

27 The second matter complained of is an article in identical terms to the primary article, under the same headline and by-line. It was placed on the internet on 15 July 2009 (the day on which the primary article was published) on a website called afr.com. I will refer to that publication as the internet version of the primary article.

28 The pleading of publication in respect of the internet version of the primary article uses the same formulation, “wrote and published or caused to be written and published”. For the reasons already stated, the pleading should not be permitted to stand in that form. There is an additional complication in respect of the internet version of the primary article in that the first defendant is not the proprietor of the website in question. It does not necessarily follow that it could not be liable as a publisher of the internet version of the article. On the principles stated in Webb vBloch, it would be enough if the first defendant authorised that publication. In any event, the way in which the case is put by the plaintiffs is presently unclear.

Pleading of publication of the third matter complained of

29 The third matter complained of is a short abstract of the primary article posted on a website called businessspectator.com. The pleading alleges that the first, second and third defendants “caused part of [the primary article] to be republished by “Business Spectator” on the internet”. That appears to amount to a claim that the short abstract is a republication of the primary article and is sued on as a separate cause of action. The plaintiffs should, however, be required explicitly to plead their election in that respect.

30 The particulars of publication are unhelpful, stating:

“The second defendant knew that the words he spoke of and concerning the plaintiff to the third defendant would be likely to appear in the media and the said words were published in “the Australian Financial Review” and the first, second and third defendants caused part of the words to be republished on the internet by “Business Spectator” on 15 July 2009 and at other times as aforesaid”.

31 Those particulars merely repeat the allegation that the defendants caused the republication of the primary article without identifying the factual basis for that contention. The facts pleaded in respect of Mr Rosen appear to relate to republication of the words he spoke, not republication of the primary article.

32 Notwithstanding those difficulties, the pleading of the third matter complained of is tolerably clear and would not be liable to be struck out on its own. However, since amendment is necessary in any event, those issues should be clarified in the amended pleading.

Pleading of publication of the fourth matter complained of

33 The fourth matter complained of is an article dated 20 July 2009 placed on the internet on a website called screenhub.com.au under the headline “Palace: of dreams or producers’ nightmare?” That article makes explicit reference to the primary article and purports to provide “the crux of that story with a little more detail for the industry”.

34 The pleading of publication in respect of that article is in the following terms:

“On or about 20 July 2009 the Fourth Defendant by itself, its servants and agents including the Fifth and Sixth Defendants placed and published on the said website and the Second, Third, Fifth and Sixth Defendants caused to be placed and published thereon a certain article of and concerning the Plaintiffs which was defamatory of them which said article is annexed hereto and marked ‘CN’.”

35 The fourth defendant is Screenhub Pty Ltd. The fifth and sixth defendants are Mr John Paxinos and Mr Alexander Prior. The plaintiffs allege that Screenhub Pty Ltd by itself, its servants and agents including Mr Paxinos and Mr Prior, operated, controlled and managed a film and television news service on the identified website.

36 Mr Richardson, who appeared for those parties, did not object to the allegation that his clients “placed and published” the Screenhub article on the website. He submitted, however, that the second part of the allegation (which asserts that Mr Rosen, Ms Boland, Mr Paxinos and Mr Prior “caused [the article] to be placed and published” on the website) generates confusion of the kind already discussed. For the reasons already stated, I accept that submission. I do not think that paragraph should be permitted to stand.

37 It follows that it will be necessary for the plaintiffs to replead publication of all of the matters complained of and any republication relied on as damage caused by any of the matters complained of.

Imputations pleaded by the plaintiffs

38 Notwithstanding that conclusion, the parties indicated that it would be of assistance to them to have rulings in respect of the imputations objected to by the defendants (in effect, every imputation pleaded). It is convenient first to deal with the imputations pleaded in respect of the corporate plaintiff, Palace Films Pty Ltd.

39 Imputation (a) is:

“that [Palace] was blacklisted by the Film Finance Corporation.”

40 Mr Dawson, who appeared for the Fairfax defendants, submitted that imputation (a) suffers from the vice deplored by Hunt AJA in Harvey v John Fairfax Publications Pty Ltd [2005] NSWCA 255 at [118] - [132] of pleading the imputation in the words of the matter complained of itself without distilling the act or condition allegedly attributed to the plaintiff by those words.

41 I think there is force in that complaint. The word “blacklisted” is drawn directly from the article. On its own, that word is devoid of any clear meaning in the absence of some identification of the conduct on the strength of which the blacklisting is said to have occurred. The practice of blacklisting may be applied to a variety of kinds of conduct, ranging from suspicion of misconduct to dishonesty. The article identifies a basis for the blacklisting in the present case. It is the task of the pleader to distil what is charged against the company by that description of events. I do not think an imputation in the present form should go to the jury.

42 Imputation (b) is:

“that [Palace] did not pay up profits to film producers.”

43 Mr Rasmussen, who argued these issues on behalf of the plaintiffs, accepted that, in the absence of any contention that Palace had any obligation to pay such profits, the imputation is problematic and should be repleaded.

44 Imputation (c) is:

“that [Palace] failed to provide distribution guarantees thereby disadvantaging film producers.”

45 Mr Rasmussen accepted that the article does not say that there was in fact any disadvantage to film producers. He sought an opportunity to amend the imputation at least to the extent of substituting the words “thereby potentially disadvantaging”. In any event I accept, as submitted by Mr Dawson on behalf of the defendants, that the imputation in either form is incapable of being defamatory since, stripped of any context, it is not defamatory to say of a person that his conduct disadvantaged (less still, potentially disadvantaged) others.

46 An additional difficulty with imputation (c) is that there is no vice in failing to provide distribution guarantees in the absence of any obligation to provide such guarantees. No such obligation is identified in the imputation. The imputation should not stand in its present form.

47 Imputation (d) is:

“that [Palace] by not providing distribution guarantees injured the film industry because film producers were not able to go into production to make new films.”

48 Mr Rasmussen accepted that the use of the word “providing” was problematic in the absence of any articulation of an obligation to provide. It appeared in argument that the defamatory sting sought to be alleged in the imputation was that Palace failed to honour some obligation, but that is not captured in the present pleading. Mr Dawson submitted that there is an additional difficulty with the imputation because it asserts a result (that film producers were not able to go into production at all) that is in fact contradicted in the matter complained of. Paragraph 35 states that, when Palace Film’s distribution guarantees failed to materialise, “the FFC stepped into the breach”. No doubt that issue will be taken into account when the imputation is repleaded, as Mr Rasmussen accepts it must be.

49 It is convenient to consider the next two imputations together. The objection to those imputations is that neither is capable of arising from the article. Imputation (e) is:

“that [Palace] is dishonest.”

50 Imputation (f) is:

“that [Palace] had defrauded producers.”

51 The article does not expressly identify any fraud or dishonesty on the part of Palace or either of its directors. Mr Rasmussen submitted, however, that the charge of dishonesty or defrauding is open to be inferred from the article as a whole.

52 A difficulty for the pleader in the present case is that there is a measure of vagueness in the article itself in its description of the relationship between Palace and the film producers referred to. There is a suggestion that Palace failed to honour some sort of obligation towards film producers, but the nature of any such obligation is not articulated.

53 The central theme of the article begins to emerge in the following paragraphs (14, 15):

“14 Palace’s executive director, Benjamin Zeccola, says the company remains a great supporter of local films but its schedule of titles in production is barren.
15 The reason, according to more than 10 well-placed industry sources, is that Palace became so slow in returning profits to film producers that federal film funding agency the Film Finance Corporation blacklisted the company.”

54 Mr Rasmussen submitted, in effect, that it is an open question that should be left to the jury whether the circumstances of Palace’s slow payment described there, and expanded elsewhere in the article, convey the sense of deliberate refusal to pay, which the ordinary reasonable reader would take to be dishonest.

55 I doubt whether a general charge of dishonesty is reasonably capable of being conveyed by the article considered as a whole. In my view, the sense of the article is that Palace is slow to pay, suggesting in turn either cash flow difficulties or recalcitrance. The latter may indicate an approach to business dealings that some would characterise as dishonourable, but dishonesty encompasses many other kinds of conduct. Accordingly, it may be doubted whether the specific conduct described in the article is apt to communicate a general charge of dishonesty: cf Nationwide News Pty Limited v Warton [2002] NSWCA 377 especially at [56] to [61].

56 The greater difficulty, however, is that imputation (e) attributes the characteristic of dishonesty, which is essentially a personal attribute, to the corporate plaintiff. Neither party referred me to any authority on that issue, but I do not think an imputation that a company is dishonest can stand. A company may be fixed with the state of mind or knowledge of a particular officer through whom it acts on a specific occasion, but I do not think a company can have an ongoing attribute such as dishonesty.

57 As to imputation (f), I do not think the charge of defrauding film producers, which would amount to a criminal act, is capable of arising. In my view, the highest charge capable of being conveyed is of dishonourable conduct rather than deliberate defrauding.

58 Imputation (g) is:

that [Palace] is insolvent.”

59 Mr Dawson submitted that that imputation is incapable of arising, since the article goes no further than to suggest cash flow difficulties, which do not equate to insolvency. In my view, imputation (g) is capable of being conveyed by the article. The article reports that Palace’s schedule of “titles in production” is barren. The reason, so the article explains, is that Palace has been blacklisted for slow payment. Separately, the article reports one insider as saying “Palace miscalculated with a string of flops” and further stating that the failure of the film “Clubland” put Palace in a “really difficult cash flow position”. The article also describes the film distribution industry as “high risk”.

60 Mr Dawson drew my attention to a part of the article which states: “Should Palace Films recover from what appears to be cash flow difficulties, aggrieved producers would probably work with the company again”. The whole emphasis of the article, however, is an apparent present inability to meet financial obligations. Imputation (g) should be permitted to stand.

61 Imputation (h) is:

“that [Palace] has such cash flow difficulties that film producers will not work with it.”

62 Mr Rasmussen acknowledged that there may be some ambiguity in the article as to who it is that will not work with Palace Films, since the blacklisting is reported to have been done by the Film Finance Corporation rather than film producers. Leaving aside that issue, for the reasons stated in respect of imputation (g) above, I am of the view that the article is capable of conveying imputation (h).

63 Imputation (i) is:

“that [Palace] prevented a film producer from seeking more funds from private investors.”

64 Mr Dawson complained that the word “prevented” is devoid of any meaningful content and fails to identify the act or condition, communication of which would damage Palace’s reputation. Mr Rasmussen accepted that there is difficulty on that account and sought an opportunity to address that issue.

65 I am satisfied that imputations (a) to (f) and (i) in paragraph 6 of the statement of claim should be struck out with leave to replead.

66 A different problem arises in respect of the imputations pleaded by the two directors, Mr Antonio Zeccola and Mr Benjamin Zeccola. The imputations pleaded on their behalf mirror the imputations pleaded by Palace, with the additional contention as to each director that he caused that condition. Thus, imputation (j) is:

“that [Mr Antonio Zeccola] caused [Palace Films] to be blacklisted by the Film Finance Corporation.”

67 Imputation (k) is:

“that [Mr Antonio Zeccola] caused [Palace Films] not to pay up profits to film producers”

and so on.

68 In my view, those imputations are plainly bad in form. The use of the word “caused” in every imputation wholly fails to identify the act or condition allegedly attributed to each director by the article. Imputations (j) to (aa) should not be permitted to stand.

69 Those rulings dispose of the challenges to the imputations pleaded in respect of the first, second and third matters complained of. As to the fourth matter complained of, Mr Rasmussen acknowledged during the course of argument that imputations (a) to (d), and possibly (e), are problematic and should be repleaded.

70 Imputation (f) is:

“that [Palace] reneged on its deal to distribute the film ‘Acolytes’.”

71 The objection to that imputation is that the term “reneged” is drawn from the words of the matter complained of and fails to distil the act or condition complained of. In this instance, I disagree. I do not think that the principles stated by Hunt AJA in Harvey require a plaintiff in every case to translate the language of the matter complained of into different language simply to avoid using the words of the matter complained of itself. The word “reneged” is, in my view, of sufficiently clear meaning to identify the act or condition allegedly attributed to Palace by the article.

Breach of confidence

72 The principal complaint in respect of the cause of action pleaded in breach of confidence is that it sits uncomfortably, and perhaps irreconcilably, with the cause of action in defamation.

73 A plaintiff who sues for defamation does not have to establish the falsity of the defamatory imputations relied upon. In the present case, however, the second and third plaintiffs have alleged that the hurt and upset suffered by them was increased by their knowledge that the imputations were false. The effect of that averment is to put a positive case that the imputations are false.

74 The difficulty arises from the particulars given in support of the claim in breach of confidence. Those particulars disclose that there is substantial overlap between the defamatory imputations pleaded by the plaintiffs and the allegedly confidential information. If the imputations are false to the knowledge of the plaintiffs, the information allegedly disclosed in breach of confidence must also be false (to the extent of the overlap). As submitted by Mr Potter on behalf of the second defendant, there can be no equity in protecting a falsehood.

75 Before argument in respect of the pleading of that cause of action proceeded, Mr Rasmussen acknowledged that a threshold task was to identify those parts of the confidential information alleged to be true, as requested by the defendants. An amendment to the present pleading in light of that indication appears inevitable.

76 Separately, Mr Richardson on behalf of the Screenhub defendants observed that, on any analysis, there can be no cause of action in breach of confidence against his clients, since the only act of publication alleged against them occurred five days after publication of the primary article. It follows inexorably that the information in question was no longer confidential at the time of their alleged act of publication or disclosure. Although the matter was not fully argued, it appears to me that there is force in that complaint. That issue should be addressed in any amended pleading.

Conclusion

77 In light of the need to replead publication in respect of each of the four matters complained of and almost all of the imputations, I am satisfied, as submitted on behalf of the defendants, that it is appropriate to strike out the whole of the statement of claim with leave to replead.

Costs

78 On behalf of the Fairfax defendants, Mr Dawson sought indemnity costs. Mr Potter, on behalf of Mr Rosen, sought an order that costs be assessed forthwith. As I indicated at the conclusion of the hearing, Mr Rasmussen should have an opportunity to address those issues. Accordingly, I propose to hear the parties further as to costs upon publication of this judgment.

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