Resolute Ltd v Warnes
[2000] WASCA 359
•21 NOVEMBER 2000
RESOLUTE LTD & ANOR -v- WARNES [2000] WASCA 359
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2000] WASCA 359 | |
| THE FULL COURT (WA) | |||
| Case No: | CIV:1369/2000 | 2 NOVEMBER 2000 | |
| Coram: | KENNEDY J IPP J MILLER J | 21/11/00 | |
| 20 | Judgment Part: | 1 of 1 | |
| Result: | Application allowed | ||
| PDF Version |
| Parties: | RESOLUTE LTD (ACN 009 069 014) MICHAEL JOSEPH CARRICK MARK BRADLEY WARNES |
Catchwords: | Contempt Interference with course of justice and administration of law Publication offensively critical of party defending proceedings Pending defamation proceedings Practical reality of publication Right to ventilate matters of public interest |
Legislation: | Nil |
Case References: | Attorney General v Hislop [1991] 1 QB 514 Attorney General v Times Newspapers Ltd [1974] AC 273 Davis v Baillie [1946] VLR 486 Fry v Bray [1959] 1 FLR 366 Harkianakis v Skalkos (1997) 42 NSWLR 22 Hinch v Attorney General (Vic) [No 2] (1987) 164 CLR 15 John Fairfax & Sons Pty Ltd v McRae (1955) 93 CLR 351 R v Thompson [1989] WAR 219 R v West Australian Newspapers Ltd; Ex parte Director of Public Prosecutions (WA) (1996) 16 WAR 518 Smith v Lakeman (1856) 26 LJ (NSCH) 305 Willshire-Smith v Votino Bros Pty Ltd (1993) 41 FCR 496 Attorney General (NSW) v John Fairfax & Sons Ltd (1980) 1 NSWLR 362 Attorney General v Butterworth [1963] 1 QB 696 R v Pearce (1991) 7 WAR 395 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : RESOLUTE LTD & ANOR -v- WARNES [2000] WASCA 359 CORAM : KENNEDY J
- IPP J
MILLER J
- First Applicant
MICHAEL JOSEPH CARRICK
Second Applicant
AND
MARK BRADLEY WARNES
Respondent/Contemnor
Catchwords:
Contempt - Interference with course of justice and administration of law - Publication offensively critical of party defending proceedings - Pending defamation proceedings - Practical reality of publication - Right to ventilate matters of public interest
Legislation:
Nil
(Page 2)
Result:
Application allowed
Representation:
Counsel:
First Applicant : Mr M L Bennett
Second Applicant : Mr M L Bennett
Respondent/Contemnor : In person
Solicitors:
First Applicant : Bennett & Co
Second Applicant : Bennett & Co
Respondent/Contemnor : In person
Case(s) referred to in judgment(s):
Attorney General v Hislop [1991] 1 QB 514
Attorney General v Times Newspapers Ltd [1974] AC 273
Davis v Baillie [1946] VLR 486
Fry v Bray [1959] 1 FLR 366
Harkianakis v Skalkos (1997) 42 NSWLR 22
Hinch v Attorney General (Vic) [No 2] (1987) 164 CLR 15
John Fairfax & Sons Pty Ltd v McRae (1955) 93 CLR 351
R v Thompson [1989] WAR 219
R v West Australian Newspapers Ltd; Ex parte Director of Public Prosecutions (WA) (1996) 16 WAR 518
Smith v Lakeman (1856) 26 LJ (NSCH) 305
Willshire-Smith v Votino Bros Pty Ltd (1993) 41 FCR 496
Case(s) also cited:
Attorney General (NSW) v John Fairfax & Sons Ltd (1980) 1 NSWLR 362
Attorney General v Butterworth [1963] 1 QB 696
R v Pearce (1991) 7 WAR 395
(Page 3)
1 KENNEDY J: I have had the advantage of reading in draft the reasons to be published by Ipp J, with which I am in agreement.
IPP J:
Events leading to the publication of the allegedly contemptuous material
2 This is an application for an order that the respondent, Mr Warnes, be judged guilty of contempt of court for publishing material said to have had a real tendency to interfere with the administration of justice.
3 The first applicant ("Resolute") is a company whose shares, at all material times, have been listed upon the Australian Stock Exchange. The second applicant ("Mr Carrick") was the managing director and chief executive officer of Resolute. Mr Warnes is a former stockbroker who has since October 1999 sought to draw public attention to what he perceives to have been illegal and improper conduct by Resolute and its board in a number of respects, and particularly in regard to a particular transaction, described as the "Bulong" transaction. Mr Warnes has publicised his beliefs in trenchant terms and has thereby sought to apply pressure on the relevant government authorities to investigate these matters.
4 By the Bulong transaction, Resolute sold a certain asset to Preston Resources Ltd. Mr Warnes formed the view that this transaction was tainted by fraud. He thereupon proceeded to publish a great deal of material on the Internet in which he made allegations that were prima facie highly defamatory of Resolute and its board. The publications included statements that "the Bulong deal was a sham", "[Preston's] shareholders … have already been raped by their own directors with the dirty Bulong acquisition", "the Bulong deal between [Resolute] and [Preston] was a mates' deal that shafted [Preston's] shareholders bigtime", "PSR shareholders, … have been slaughtered by their own grubby directors". He asserted, in effect, that there had been a conspiracy between Mr Carrick and Mr Colin Ikin, on behalf of Preston, to defraud the shareholders of Preston. He said that "Ikin and Carrick cut the deal together" and the transaction constituted "theft". He said that certain aspects of the transaction were hidden from Preston's shareholders and from the market.
5 Resolute and Mr Carrick instituted two actions against Mr Warnes claiming damages for defamation and also relied on various other causes of action based on the material published by Mr Warnes. On 22 February
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- 2000 Scott J granted an interim injunction restraining Mr Warnes from publishing various matters, including words to the effect that Resolute and Mr Carrick were parties to improper arrangements between themselves and Preston, that Resolute and Mr Carrick acted to the prejudice of the shareholders of Resolute or Preston, that Resolute failed to make proper disclosure in its books of accounts and that Resolute was insolvent. The orders so made by Scott J have been extended from time to time and are still operative.
6 Mr Warnes infringed the orders made by Scott J and on 28 August 2000 Miller J ordered that Mr Warnes be committed to prison for 1 month for contempt of court, suspended for a period of 12 months from the date of the order.
7 These events are merely background to Mr Warnes' publication of other material in January and March 2000 that, in these proceedings, Resolute and Mr Carrick say is contemptuous. Resolute and Mr Carrick do not submit that the publication of that material constitutes further infringements of the order made by Scott J.
The material alleged to be in contempt of court
8 On 29 January 2000, Mr Warnes sent to Bennett & Co, the solicitors of Resolute and Mr Carrick, a facsimile criticising the conduct of both Resolute and Bennett & Co. Relevantly, the facsimile stated:
"Now while I have your attention, I would appreciate it if you people at Bennett & Co would kindly do your best to run up as large a legal bill as you possibly can on the matter of Resolute & Carrick v M Warnes. Your bill must be at least $100,000 so far and with a bit of luck, should exceed $500,000 by the conclusion of this matter (if I have calculated your enormous charge out rate correctly). Now that should make Resolute shareholders really howl, when they find out.
Now on the other hand my legal bill so far is zero (I must be winning then, don't you think?). …
As I see it, if I win this case …, I will of course counter-sue Resolute and their CEO for plenty ie for damage to my career and reputation etc etc. …
If if I do win and assuming your client's legal bill is north of $500,000 by that stage, the poor hapless Resolute shareholders
(Page 5)
- will pick up the bill. My legal cost will of course still be zero. Correct?
Now if I lose and I must admit, this may happen, despite being in the right I must be realistic about what sort of legal talent I will have to confront in court, the total costs will unfortunately again be borne by the hapless Resolute shareholders. Unfortunately for your clients, my personal asset position is a tad light on at the present and give or take a few cents is a challenging but adequate 5 cents or so, … so you may have trouble collecting the legal costs or damages should I be be [sic] most unfortunate and lose.
So you see, I don't seem to lose even if Resolute wins and the tremendous bonus to me is that I get to lay out the god awful intricacies of the dodgy Bulong deal, the Ghana Gold deal and a host of other fascinating material I will be presenting to support my case, for the Judge to consider and to pass comment on. Now if I was a Resolute shareholder, and thank [G]od I'm not, I would be starting to question why my company was pissing so much money up against the wall for no possible return (Messrs Carrick and Ikin, note adequate IRR again). But then again, I suppose that's what both Resolute and Preston have been doing with their shareholder funds for some considerable time now. But anyway, everyone to his or her own standard of directors I guess.
…
I look forward to Resolute's justification on this expenditure at their next AGM. Hopefully I will be able to attend if I can afford to buy one share and ask the question myself."
- A significant aspect of this facsimile are the words that appear on the first page:
"CC: Money Wasters at Resolute, Dealers at Poyntons (who have an interest in how Resolute spends its funds) and anybody else who is interested in how [Resolute] spends shareholders funds."
(Page 6)
- "CC: Moneys Wasters at Resolute, Dealers at Poyntons (for a good laugh) and anybody who is interested in how [Resolute] spends shareholders money."
10 On 27 February 2000, Mr Warnes addressed a facsimile to "Legal Council [sic] for the gross money wasters at Resolute". The facsimile was sent to Bennett & Co and commenced with the words, "CC: Dealers at Poyntons, Analysts at various broking firms, gross money wasters at Resolute, Preston shareholders" on the front of the facsimile. Relevantly, the facsimile stated:
"Congratulations on running up Resolutes [sic] legal costs past what I estimate must now be $250,000 or more. If our estimates going forward are correct, a final legal bill of $500,000 should easily be achieved and up to $1m in costs for the account of the poor abused shareholders at Resolute, quite likely. Unfortunately it is no longer a laughing matter is it, given last weeks retrenchment of many long serving and loyal employees at Resolute? I understand that many loyal, long serving employees received pathetic retrenchment packages despite the wholesale wastage of critically short funds elsewhere. Wastage such as legal action against my [sic] myself and my brother, the continual funding of senior management's '5 star' lifestyles (i.e. we note the latest junket to Cape Town with entourage) and the massive bonuses the good old boys at the top receive.
…
"Disposal of Property and the Bankruptcy Act. In the lift, you indicated you wanted to send me a copy of the criminal code relating to criminal defamation (it seems you feel I will have a need for it … hmm … I wonder whom will actually need the criminal code at the end of this) but instead you send me a copy of a few pages from the bankruptcy act relating to disposal of property along with a search revealing evidence of disposal. Again you waste Resolute shareholder's critically short funds which unlike the inference made by your client, in the local newspaper is not a comfortable $20M but in fact a day to day survival position. Marty, that's why all the mums and dads who read the paper are now buying, what they perceive to be a cheap buy, while at the same time, the 'purple circle' insto [sic] boys lead by Poynton's Corporate desk, flogged out over 20M over
(Page 7)
- the past 45 days. Does it not suggest to you that one group of shareholders knows the real situation and one group is getting bullshit? Which group do you think is receiving the bullshit Marty?
…
"PS: Oops, I nearly forgot. Could you ask your client to assist me on a certain matter? If Resolute had not sold Bulong to Preston and transferred the $70M currency hedge book deficiency to Preston, which month hence, would Resolute have financially collapsed? Given the company is currently on the day to day bread line (your client confirmed this to one of my contacts in Cape Town only 2 weeks ago by the way), how could it possibly survived [sic] if it still owned the hedge book? …"
11 On 6 March 2000 Mr Warnes sent a further facsimile to Mr Bennett. The front page recorded:
"CC: ASIC
ASX
Resolute Directors
Preston Directors
Arthur Andersen
Preston Shareholders
Barclays Capital Plc
Hartley Poynton Ltd Dealers
Various Analysts
Scoreboard: Resolute's Legal Fees to date: $250,000 est (and about to climb rapidly)
MBW Legal Fees: $0
DJW Legal Fees: $0
Major Losers: Resolute Shareholders and retrenched employees due to wastage of company resources on such legal actions
Estimated Final Legal Costs to Resolute: $750,000 - $1,000,000
Estimated likely recovery of legal costs if [Resolute] win - $0"
(Page 8)
- The facsimile read further as follows:
"Apologies if I've neglected to send this to anyone that should have a copy. We continue to investigate the Bulong transaction between Resolute and Preston and as we expected from the outset, we continue to uncover more and more non-disclosures to say the least.
I now draw your attention back to July 1998 when the sale was announced. Included in an item described as Bulong Mineral Interests … was a $7.5 Million item representing the sale of a limestone resources [sic] for $300,000 and a Patent (granted 30 July 1998) for part of the Bulong process for $7.2M.
…
It appears, to have also been carried at nil value on Resolute's balance sheet prior to the sale …
…
[T]his raises further serious questions about the conduct of Resolute and Preston directors.
Now, unless I'm mistaken, I can't recall any disclosures to the market or to shareholders, from Resolute and Preston, in regards to this matter. Despite this matter being known to both of those companies, and known prior to settlement occurring on the sale of Bulong in November, no disclosure has been made and also no provision appears to have been made between the two companies should the objection be upheld. What is also quite disturbing, is that the Bond document makes no mention of the matter, despite the invitation to prospective bondholders to find the $7.5M asset purchase. We note that Barclays is the Bankers to Resolute, Preston and Billiton and that Arthur Anderson are the auditors for both Preston and Resolute. "
"Thank you for racking up more legal fees against Resolute by sending me more of your squalid little threatening letters.
(Page 9)
- Unfortunately you have mistaken me for someone that gives a rats about what you or your incredibly talented CEO client thinks, except of course if he wants to enlighten me on how the hell Resolute is going to survive the WMC legal action pertaining to the Bulong acid contract and also how Resolute will come up with the $10M that Preston has to pay Macquarie (and guaranteed) by Resolute on May 1st. I'd like to see that!
Oh yes, by the way, I am intending to lodge a formal complaint with the Major Fraud squad this coming week in relation to the Bulong sale transaction between Resolute and Preston.
In regards to our little defamation action and I think I can speak for my brother as well. We will never ever negotiate this action with you twerps, it will be taken right to the end and if we lose, we will appeal it to the highest court possible. The legal costs should be truly astounding by the end."
- On the front of the facsimile, the words "CC: Censored" appeared.
The legal principles generally applicable
13 The principles to be applied, generally, to a contempt of the nature alleged were examined by Mason P in Harkianakis v Skalkos (1997) 42 NSWLR 22 (at 27 - 30). This case turns on certain of those principles and I shall set out in summary form those that are presently relevant. In substance, save where otherwise indicated) these have been extracted from his Honour's exposition.
(a) The charge must be established beyond reasonable doubt.
(b) The claimant must prove, according to the criminal standard, that the published material has, as a matter of practical reality, a real (or clear) and definite tendency to interfere with the course of justice in a particular case (John Fairfax & Sons Pty Ltd v McRae (1955) 93 CLR 351 at 372; R v West Australian Newspapers Ltd; Ex parte Director of Public Prosecutions (WA) (1996) 16 WAR 518 at 533).
(c) Because of its exceptional nature, this summary jurisdiction has always been regarded as one, which is to be exercised with great caution.
(d) Intention to interfere with the due administration of justice is not necessary to constitute a contempt. Where, however, intent to
(Page 10)
- interfere has been proved, this has usually been sufficient to sustain a prosecution.
- (e) The gravamen of the category of criminal contempt in which improper pressure is placed on a party to court proceedings through public dissemination of material is the tendency to deter the litigant, improperly, from obtaining curial vindication of its rights. Successful interference with a party's conduct of proceedings is not necessary for proof of liability for contempt by improper pressure.
(f) It is an open question as to whether the tendency is to be measured against the capacity of the particular litigant involved to withstand pressure, or whether the court should have in contemplation some hypothetical litigant of "ordinary" fortitude.
(g) In punishing certain types of interference with litigants, the law distinguishes between proper and improper pressure.
Intent
14 Counsel for the applicants submitted that the facsimiles revealed an intent on the part of Mr Warnes to bring pressure to bear on Resolute and Mr Carrick to dissuade them from persisting in the defamatory action brought against him. Mr Warnes denied this. Mr Warnes asserted that he wanted the case to proceed so that he could ventilate in open court the allegations that he made in the facsimiles. He said that his subjective purpose in sending copies of the facsimiles to the various recipients recorded under the appellation "CC" was to ensure that his allegations would become widely known and cause an official inquiry to be made into the conduct of Resolute's board. He said that he had behaved aggressively at times as Bennett & Co had behave aggressively towards him and he wanted to ensure that they knew that he was not cowed by their tactics.
15 There is much in the facsimiles that supports Mr Warnes' submissions in this respect. He has pursued the board of Resolute with what seems to be a compulsive obsession, and he seems to be dedicated to bringing the alleged misconduct of the board to light. Of course, nothing I say in this regard should be construed as any comment on my part as to the behaviour of Resolute's board. That was not an issue before this Court and I do not intend to say anything about it. But the point is that Mr Warnes appears to be far more concerned with publicising his grievances than with dampening the litigation.
(Page 11)
16 In the circumstances, I am not satisfied, beyond reasonable doubt, that Mr Warnes sent the facsimiles with the subjective intent of interfering in the course of the administration of justice.
Did the facsimiles have a tendency to deter Resolute from proceeding with its actions?
17 Resolute has plainly not been deterred by the conduct of Mr Warnes. It has persisted with its actions against him. This fact, however, as I have pointed out, does not prevent a finding being made that Mr Warnes is guilty of contempt by improper pressure.
18 There is no evidence as to the ability of Resolute to withstand pressure, and I shall approach the matter as if it were a litigant of "ordinary" fortitude.
19 In the circumstances, a primary question is whether the published material has, as a matter of practical reality, a real (or clear) and definite tendency to interfere with the course of justice. This question depends on an objective assessment of the relevant material. The court must "ascertain whether the publication is such as may affect the minds of reasonable men": Fry v Bray [1959] 1 FLR 366 at 376.
20 In my view, for the reasons that I hereafter express, the facsimiles contained four categories of warnings or threats to Resolute. The first was that, by proceeding with the litigation, Resolute would incur vast legal costs that it would not be able to recover from Mr Warnes because he was impecunious. The second was that Mr Warnes would publish to others the fact that Resolute was foolishly incurring those vast costs without any prospect of recovering them. The third was that, while the litigation continued, Mr Warnes would publish other harmful details about Resolute and its board. The fourth was that Mr Warnes would publish those other harmful details in the litigation itself.
21 In the facsimile of 29 January 2000, Mr Warnes asserted that Resolute, in suing him, was likely to incur legal costs of $500,000, whereas his costs would be nil. Additionally, he said, should Resolute succeed, it would not be likely to recover anything by way of costs from him. According to the general tenor of Mr Warnes' submissions, these statements were made to demonstrate the foolhardiness of the board of Resolute. But, in my view, the clear inference that a reasonable reader would also draw from these statements is that Mr Warnes was issuing a warning to Bennett & Co that it would not be in Resolute's interests to
(Page 12)
- continue with the litigation. That is to say, the inference arises, objectively determined, that Mr Warnes' purpose was to persuade Resolute to cease the litigation. Construed in this sense, the warning about costs falls within the first category referred to above. But the inference to be drawn colours the other assertions made in the facsimile.
22 The facsimile stated that Mr Warnes intended to place before the court details of "the dodgy Bulong deal, the Ghana Gold deal and a host of other fascinating material". It is not at all clear on what basis this material would be relevant to the actions brought by Resolute and Mr Carrick. The statement in question in effect was a warning to Resolute that, if it continued with the litigation, it would be met with these allegations. Thus, this warning falls into the fourth category to which I refer above. It also reinforces the inference that the purpose of facsimile was to persuade Resolute to cease the litigation.
23 During argument on the appeal, Mr Warnes was asked why he had placed the letters "CC" on the facsimile and the words that followed them. He replied, in effect, that he had no particular purpose in mind, but that Bennett & Co had acted aggressively towards him and he wished to behave aggressively towards them. I accept that this might well have been his subjective intent, but, in my view, objectively speaking, a different inference could readily be drawn by a reasonable reader of the facsimile. This different inference arises particularly from the express indication that copies of the facsimile were being sent to Poyntons (who were Resolute's stockbrokers) and "anybody else who is interested in how [Resolute] spends shareholders funds". That inference is that Mr Warnes was publicising his allegations to all and sundry with the implicit warning that if Resolute continued suing him, further allegations of the same kind would be published in the same way. Put in another way, Mr Warnes was bringing additional pressure to bear on Resolute by telling it that he was informing others of the way in which Resolute "spends shareholders funds" and by disclosing, and threatening in the future to disclose, details of "the dodgy Bulong deal, the Ghana Gold deal and a host of other fascinating material". Accordingly, these allegations fall into the second and third categories of threats referred to above.
24 With regard to the facsimile of 1 February 2000 (which referred to the increasing cost of the litigation), the sting, as it were, lay in the words:
"CC: Moneys Wasters at Resolute, Dealers at Poyntons (for a good laugh) and anybody who is interested in how [Resolute] spends shareholders money."
(Page 13)
- In my view, similar inferences - objectively determined - arise from these words. That is to say, while I accept that Mr Warnes' subjective intention may only have been to behave aggressively towards Bennett & Co, in my view, a reasonable reader of the facsimile could readily have inferred that, by sending the facsimile to Poyntons and "anybody who is interested in how [Resolute] spends shareholders money", Mr Warnes was implementing his threat to make public the allegations relating to the waste of money in legal costs. Thus, this facsimile contains threats that fall into the first and second categories.
25 The facsimile of 27 February 2000 asserted that Resolute had incurred legal costs of more than $250,000 and that a final bill "of $500,000 should easily be achieved" and "up to $1m in costs … quite likely" would be incurred. This allegation has to be seen against the fact that Mr Warnes previously informed Resolute and its solicitors that he had virtually no personal assets and Resolute might "have trouble collecting the legal costs". It is to be noted that Mr Warnes conceded in submissions before this Court that, in fact, he did not know what legal fees had been charged by Bennett & Co.
26 The allegation as to the legal costs incurred and likely to be incurred has also to be seen against Mr Warnes' allegations that Resolute had retrenched many long serving loyal employees (with "pathetic retrenchment packages") despite "wholesale wastage" by the board of "critically short funds" resulting from the legal action against Mr Warnes, a "junket" by senior management to Cape Town, and payment of massive bonuses to senior management. Further it was said that Resolute is in "a day to day survival position" and on a "day to day bread line". Additionally, while one group of shareholders knew the "real situation," another group was being fed false information.
27 Thus, the facsimile of 27 February 2000 contained serious imputations of wasteful litigation, improper treatment of employees, wasteful and unnecessary expenditure and other misconduct by the board, as well as insolvency. It is true that the language of the facsimile is not that of a reasoned observer, and may be thought by some to be the angry and exaggerated comments of an unbalanced person. Nevertheless, the statements to which I have referred were highly damaging, potentially, to Resolute's reputation, and were capable of affecting, adversely, its share price and its business.
28 In this context, when the facsimile is objectively construed, the statement to the effect that copies of the facsimile had been sent to dealers at Poyntons, analysts at various broking firms, and others, is once more
(Page 14)
- readily capable of being understood as a realisation of the threats previously made and an implicit threat that unless the litigation terminated, publication of similar material would continue. What other purpose, the reasonable reader might ask, was the point in telling Bennett & Co that the facsimile was being sent to a group of persons described as "analysts at various broking firms", but without specifically identifying the recipients? The threats in this facsimile fall into the first three categories.
29 The "CC" reference at the inception of the facsimile of 6 March 2000 is the same as similar references in the earlier facsimiles, save that in this instance the list of recipients is larger. Arthur Andersen is the name of Resolute's auditors and Barclays Capital Plc is Resolute's banker. They (and Preston) subsequently informed Resolute that they had received copies of the facsimile. The inference that arises from the "CC" reference is the same as that is to be drawn from the earlier facsimiles, and is emphasised by the opening statement expressing "[a]pologies if I've neglected to send this to anyone that should have a copy".
30 The reference in the "[s]coreboard" to Resolute's legal fees to date is repetitive of like allegations in the past (save that the likely final costs have been increased to "$750,000 - $1,000,000"). It is again said that Resolute is likely to recover nothing from Mr Warnes should it succeed in its case against him and that the "major losers" in the litigation are Resolute's shareholders and its retrenched employees. I repeat that statements of this kind were readily capable of giving rise to the inference that if Resolute continued with the litigation it would incur substantial losses.
31 The references to the continued investigation of the Bulong transaction and the "expected" uncovering of more and more "non-disclosures" are also readily capable of being construed as being in implementation of the threat implicit in the facsimile of 29 January 2000 and subsequent facsimiles to publish further damaging allegations should the litigation continue. The allegations that there were "serious questions" about the conduct of Resolute directors and non-disclosure by them "to the market or to shareholders" are capable of being construed in the same light. Accordingly, the comments I have previously made in regard to like allegations made in the past apply. Again, the threats in this facsimile fall into the first three categories.
32 The facsimile of 17 March 2000 contained imputations to the effect that Resolute was not likely to survive "the WMC legal action pertaining
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- to the Bulong acid contract" and its obligation in regard to "the $10M that Preston has to pay Macquarie (and guaranteed) by Resolute on May 1st". Additionally, this facsimile stated that Mr Warnes intended "to lodge a formal complaint with the Major Fraud squad this coming week in relation to the Bulong sale transaction between Resolute and Preston". In regard to the pending litigation, it asserted, "[t]he legal costs should be truly astounding by the end". The facsimile contained the words "CC: censored". In other words, Mr Warnes was thereby warning Resolute that he had sent the facsimile to others, but was not prepared to disclose the identity of the recipients.
33 In my view, this facsimile, when read with the others, is capable of being regarded as having been sent in implementation of threats previously made to reveal harmful information about Resolute should it continue with the litigation. It is also capable of being construed as repeating those threats. It clearly alleged that by proceeding with the litigation Resolute would inevitably incur very high legal costs that it would be unable to recover. Once it was made apparent to Resolute that this facsimile was being disseminated to others, the inference arises that the allegations therein were being made, as it were, in terrorem, that is, to deter Resolute and Mr Carrick from proceeding with Resolute's claims. These are threats that fall in to the first three categories to which I have referred above.
34 I conclude, generally, that the applicants have established beyond reasonable doubt that the facsimiles were reasonably capable of being understood as containing warnings or threats by Mr Warnes that fall within the four categories that I have described. In my opinion, as a matter of practical reality, it is beyond reasonable doubt that, objectively speaking, the facsimiles had a very real tendency to deter Resolute and Mr Carrick from persisting in Resolute's actions against Mr Warnes.
Was "improper" pressure placed on the applicants?
35 I accept that, in addition to having the tendency that I have found, the facsimiles raised issues that were likely to be of interest to the shareholders and employees of Resolute and the investing public. These include the competency and probity of the board of Resolute, the implications and commercial soundness of the Bulong and other transactions, and the solvency of the company. Additionally, it may be said that warnings expressed by one litigant to another about the extent of costs that are being incurred and the likelihood of their recovery have always been legitimate weaponry in litigation negotiations. These matters
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- all have a bearing on the propriety of the pressure brought to bear on Resolute and Mr Carrick that gave rise to the tendency in question.
36 In Hinch v Attorney General (Vic) [No 2] (1987) 164 CLR 15 (at 46) Deane J said:
"The publication of material in circumstances where the clear tendency of the publication is to preclude or prejudice the fair and effective administration of justice in particular pending legal proceedings constitute contempt of court unless, as a matter of weighing competing public interests, the detriment of the possibility of prejudice to the administration of justice is outweighed by other identified factors such as the public interest served by freedom of discussion of matters of public importance and by the exposure of public dangers and abuses."
- His Honour said further (at 57):
"The restrictions imposed by the law of contempt of court upon freedom of speech can only be justified if their operation is confined to circumstances where there can be discerned a clear tendency to interfere adversely with the due administration of justice and where the detriment of that tendency is not outweighed by the combination of the abstract public interest in freedom of discussion and any specific public benefits of such discussion in the circumstances of the particular case."
See also Mason CJ (at 27 - 280, and 30), Wilson J (at 41 - 44), Toohey J (at 68) and Gaudron J (at 85) et seq. It is to be noted that Mason CJ (at 30) said that the judgment of Fullagar J in Davis v Baillie [1946] VLR 486 at 496 was "instructive", where, in the words of the learned Chief Justice, "his Honour concluded that two of the articles in question went beyond what is 'proper or legitimate'".
37 While the Court is required to balance the interest of freedom of expression, which is a matter of public interest, and the due administration of justice which is likewise a matter of public interest (R v Thompson [1989] WAR 219 at 223), a material factor in the equation is whether, in purporting to exercise freedom of expression in the public interest, the respondent acted in a proper manner. When propriety is to be considered, factors such as the truthfulness and accuracy of the report come into play (Davis v Baillie). Where criticism of a person's conduct is in issue, the fairness and temperate nature of the criticism may be determinative (Attorney General v Times Newspapers Ltd [1974] AC 273). Improper
(Page 17)
- pressure will be held to constitute contempt: Attorney General v Hislop [1991] 1 QB 514 at 531 per Nicholls LJ.
38 Thus, in Attorney General v Times Newspapers Ltd Lord Reid said (at 297 - 298):
"[W]here the only matter to be considered is pressure put on a litigant, fair and temperate criticism is legitimate, but anything which goes beyond that may well involve contempt of court."
- And Lord Morris gave as an example of improper conduct (at 302):
"[C]onduct … calculated so to abuse or pillory a party to litigation or to subject him to such obloquy as to shame or dissuade him from obtaining the adjudication of a court to which he was entitled."
40 In Attorney General v Hislop McCowan LJ said (at 535):
"[T]here seems to me all the difference in the world between a private discussion between lawyers aimed at bringing to Mrs Sutcliffe's attention that she might be cross-examined about certain matters and holding her up to public obloquy in terms neither fair nor temperate but of abuse."
41 The difference between private pressure and publication to a section of the public was illustrated in Willshire-Smith v Votino Bros Pty Ltd (1993) 41 FCR 496, a case that has similar features to the present. The applicant in that case had sued his landlord, the managing agent and certain of their respective directors, for relief concerning his tenancy of
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- business premises. The applicant wrote a letter to another tenant, one Karran, containing virulent references to the managing agent. The applicant said that the nature and character of the letter and its intended purpose was, first, to perpetuate the adverse publicity attendant upon the publication of the advertisement, secondly, to disparage the company in its role as the managing agent of commercial premises in general and the particular shopping centre in particular, and finally, to engender suspicion as to the competency, honesty and integrity of the company in its business activities. O'Loughlin J pointed out that the letter was directed to an identifiable section of the public, namely all those people who had had any dealings with the managing agent. The terms of the letter were extreme and abusive. It included the statement that, "[t]hey have acted in an unconscionable manner with tenants, and unless we can get together to stop these bastards, everyone will suffer".
42 O'Loughlin J (at 505) referred to Attorney General v Times Newspapers Ltd and Attorney General v Hislop and remarked that what was said in those cases :
"[C]an be adapted and applied to the conduct of any individual who engages in, or who exhibits a willingness to engage in, correspondence with a limited section of the public."
- His Honour then observed (at 505):
"The correct test is to determine whether the conduct complained of amounted to improper pressure to induce a litigant to withdraw from proceedings or to settle them on terms that he regarded as inadequate. If the conduct amounted to such improper pressure it would not matter that it failed to achieve its objective."
The learned Judge proceeded (at 506):
"I do not think that the subject of contempt of court occurred to Mr Willshire-Smith when he wrote that letter; his objective was to denigrate the company in the eyes of the reader of the letter. His insular thinking would not have extended to the likely adverse consequences that could flow from the letter. It was not his intention to prevent [the managing agent] from defending these proceedings: rather he was intent on finding more ammunition with which to carry on his fight against the company. On the other hand, however, the contents of the letter, particularly the display of viciousness towards authority,
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- would have constituted a real risk that a litigant might have been dissuaded from properly prosecuting his defence to the proceedings that Mr Willshire-Smith had instituted.
Mr Willshire-Smith may not have applied his mind to the issue of interference with the due administration of justice but his conduct in writing his letter of 6 October 1992 to Mr Karran had a tendency to that effect. In particular, it tended to inhibit the company from availing itself of its constitutional right to have its defence determined by the Federal Court. It also tended to attract public comment from a limited section of the community and that comment was likely to bring pressure to bear on the company. That pressure could have prevented it from defending the action either at all or in a way in which it would otherwise do or it might have forced it to submit to an unsatisfactory compromise."
- In my opinion, a similar conclusion is inevitable in the present case.
43 I come now to the first category of warnings or threats made by Mr Warnes, namely, the statements he made to Resolute and Bennett & Co about the vast legal costs incurred and likely to be incurred in the litigation involving the parties, and the fact that those costs would never be recovered. These warnings or threats gave rise to private pressure and I am not satisfied beyond reasonable doubt that they were made improperly. In other words, I am not persuaded to the requisite standard that Mr Warnes committed contempt of court in making those threats.
44 As regards the threats that fall into the second category, these are to be viewed in a different light. These threats concern the indications Mr Warnes gave to Resolute and Bennett & Co that he would publish and was publishing his comments as to the legal costs to persons, not involved in the litigation, but who could have a marked influence on Resolute's share price and general reputation. The comments in question were unfair, scurrilous and abusive. Moreover, they were made on the basis that those costs were known to Mr Warnes, whereas in truth he was entirely ignorant as to the amount thereof. In my opinion, the making of those comments to the persons concerned was improper and constituted contempt of court.
45 As regards the threats or warnings that fall in to the third category, no right of freedom of expression justifies the publication of material reasonably capable of being understood as containing threats to publish seriously defamatory material about Resolute and its board (including
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- Mr Carrick) if it continued with its actions against him: cf Smith v Lakeman (1856) 26 LJ (NS) Ch 305 referred to with approval by Mason P in Harkianakis v Skalkos (at 29). Moreover, I do not regard the extreme comments made by Mr Warnes as to the misconduct of the board of Resolute (in regard to such matters as the conduct of the litigation, the substantial waste of moneys in other respects, the conferring of improper benefits on the board, the retrenchment of and dealing with employees and the various non-disclosures) and the insolvency of the company as being temperate. Accordingly, I consider that the publication of those threats and comments to persons other than Resolute and Mr Carrick were improper.
46 I do not regard the threats or warnings falling into the fourth category alone as being improper (as I am not satisfied beyond reasonable doubt that the harmful material that Mr Warnes threatened to publish was not relevant to the issues raised in the litigation and, further, because the threats were not published to anyone else).
Conclusion
47 I would hold that, to the extent I have indicated, Mr Warnes was guilty of contempt of court in publishing the facsimiles. I would hear counsel and the respondent as to the appropriate penalty.
48 MILLER J: I have read the reasons published by Ipp J. I am in agreement with those reasons and have nothing further to add.
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