Samsun Pty Ltd v Andrew Wily
[2000] NSWSC 281
•7 April 2000
CITATION: Samsun Pty Ltd & Ors v Andrew Wily & Anor [2000] NSWSC 281 revised - 26/04/2000 CURRENT JURISDICTION: Common Law Division FILE NUMBER(S): SC 20090/98 HEARING DATE(S): 31/03/2000 JUDGMENT DATE: 7 April 2000 PARTIES :
Samsun Pty Limited (1 Pl)
Betanza Pty Limited (2 Pl)
Gil McLachlan & Mark Giffin t/as Harvey World Travel Manly (3 Pl)
McCarroll's (International) Travel World Pty Limited (4 Pl)
Hamerline Pty Limited (5 Pl)
S & R Travel Pty Limited (6 Pl)
Derran Pty Limited (7 Pl)
Coronet Court Pty Limited (8 Pl)
Harvey World Travel Franchises Pty Limited (9 Pl)
Andrew Wily (1 Def)
Guy McKanna (2 Def)JUDGMENT OF: Kirby J
COUNSEL : T Blackburn/R Glasson (Pls)
Ms L McCallum/Ms D R Sibtain (Defs)SOLICITORS: White & Associates (Pls)
Henry Davis York (Defs)CATCHWORDS: Defamation - Imputations - Capacity to convey republication LEGISLATION CITED: Defamation Act, 1974 - s7A(2) CASES CITED: Slipper v BBC (1991) 1 QB 283
Fitzsimons v Duncan [1908] 2 IR 483 at 503 (KB)DECISION: Refer paras 41 and 42
1 Mr Andrew Wily (the first defendant) and Mr Guy McKanna (the second defendant) are apparently partners in the insolvency firm, Armstrong Wily & Co. On or about 26 January 1998, they issued a press release in these terms:
THE SUPREME COURT Revised 26/4/2000
OF NEW SOUTH WALES
COMMON LAW DIVISIONKIRBY J
Friday 7 April 2000
20090/98 - SAMSUN PTY LIMITED & ORS v ANDREW WILY & ANOR
JUDGMENT
HIS HONOUR:
The Publications
“ASIAN CRISIS CLOSES TOP TRAVEL COMPANY
The Sydney city franchise of Harvey World Travel was placed in the hands of a voluntary administrator this week.
Mr Andrew Wily, partner at insolvency firm Armstrong Wily & Co, was appointed voluntary administrator of Potter World Travel Pty Ltd, which held the Sydney CBD franchise of Harvey World Travel. The travel operator was a medium-sized operation with a mixture of commercial and retail accounts.
Mr Wily said today: ‘The financial problems of the company have been attributed by its directors to the Asian economic crisis and the associated decline in the foreign exchange value of the Australian dollar.
‘The recent decline in the purchasing power overseas of the $A has led many people to postpone their overseas travel as it is now more expensive. This has led to a sharp drop in revenue for the company. And the Asian economic crisis has meant fewer visitors to and from Asia, again(st) undermining the business.
‘The travel industry operates on extremely tight margins and any fluctuations in their business dramatically effects profit margins.
‘There is little doubt that the travel industry is suffering at the moment and I feel there will be further fallouts.’
Ironically, the company will not have far to go to lodge its voluntary administration papers as it is located in the Australian Securities Commission building at the corner of Pitt and Market Streets, Sydney.
Note : Harvey World Travel are a substantial franchise operation and the administration of this franchise has no effect on the overall operations.
Further media information:
Andrew Wily Guy McKanna
(02) 9362-3235 (b) Capital”2 The plaintiffs assert that, by issuing a press release, the defendants either authorised its republication, or its republication was the natural and probable consequence of the initial publication (para 14).
3 A number of newspapers used the press release as the basis for a story. Each news items has been identified in the Statement of Claim as a publication for which the defendants are responsible.
4 In the Daily Telegraph of 25 January 1998, the following appeared:
“ Travel agents at risk
A leading insolvency expert yesterday warned that the Asian financial crisis may spark a rise in travel industry bankruptcies.
Harvey World Travel’s Sydney CBD franchise has been forced into voluntary administration by the crisis.
Insolvency firm Armstrong Wily & Co’s Andrew Wily says: ‘There is little doubt that the travel industry is suffering at the moment and I feel there will be further fallouts.’
Mr Wily, who has been appointed voluntary administrator, says the CBD closure will not affect the chain’s overall operations.”
5 This was the second matter complained of.
6 The Sydney Morning Herald published an article on 27 January 1998, which was in these terms:
“ Asian crisis hits travel agency franchise
The Asian currency crisis has claimed another victim with the Sydney city franchise of Harvey World Travel placed in the hands of a voluntary administrator this week.
A partner at insolvency firm Armstrong Wily & Co, Andrew Wily, was appointed voluntary administrator of Potter World Travel Pty Ltd, which held the Sydney CBD franchise of Harvey World Travel.
Mr Wily said the directors of the company had blamed its problems on the Asian currency crisis and the fall in the exchange value of the Australian dollar.
‘The recent decline in the purchasing power overseas of the Australian dollar has led many people to postpone their overseas travel as it is now more expensive’ Mr Wily said.
‘This has led to a sharp drop in revenue for the company, and the Asian economic crisis has meant fewer visitors to and from Asia, again undermining the business.’
He said the travel industry was suffering now, and believed there would be further casualties.”
7 This was the third matter complained of.
8 The Chronicle published a very similar article on 27 January 1998. It opened with these words:
“ Travel industry suffers
SYDNEY --- The Asian currency crisis has claimed another victim with the Sydney city franchise of Harvey World Travel placed in the hands of a voluntary administrator.
Partner at insolvency firm Armstrong Wily & Co, Andrew Wily, was appointed voluntary administrator of Potter World Travel Pty Ltd, which held the Sydney CBD franchise of Harvey World Travel. …”
9 This was the fourth matter complained of.
10 Finally, the Australian published an article on 27 January 1998, which opened with these words:11 After additional comment concerning the tourist industry, and the possibility of assistance from Government, the article concluded with these words:
“ Crisis sending travel agents to the wall
By Fiona Kennedy and Matt Robbins
The Asian economic crisis was squeezing travel agents’ margins to the point where some could collapse, the administrator of a prominent Sydney business said last night.
Insolvency expert Andrew Wily, who last week became voluntary administrator of a Sydney CBD franchise for Harvey World Travel, predicted ‘further fallouts’ in an industry already constricted by tight profit margins.
Mr Wily issued his warning as another travel company cautioned customers against ‘mischievous’ claims of surcharges linked to the plunge of the Australian dollar.
Flight Centre marketing manager Keith Stanley said several other agencies were promising exclusive immunity against surcharges when, in fact, ‘any person who has fully paid for future travel automatically has full protection against surcharges.’
Mr Wily said the Sydney franchise, Potter World Travel, started failing about November and collapsed ‘very quickly’.
‘The financial problems of the company have been attributed by its directors to the Asian economic crisis and the associated decline in the foreign exchange value of the Australian dollar’ he said.
‘The travel industry operates on extremely tight margins and any fluctuations in their business dramatically affects profit margins.
‘There is little doubt that the travel industry is suffering at the moment and I feel there will be further fallouts.
‘There will probably be a few (agencies) that will find it quite difficult. Whether they can survive is a matter of how quickly they can reduce other costs.’”
12 This was the fifth matter complained of.
“Mr Wily said the medium-sized operation Potter World Travel, which employed about 10 staff and had a mixed commercial and retail clientele, was hit by falls in both in-bound Asian tourism and Australian overseas travel.
A tourism analyst forecast the Asian downturn would this year cause a one-third decline in Asian in-bound tourist number(s). Gold Coast based Alan Midwood said a 33 per cent drop in visitors would translate into a total decline of about 9 per cent or 380,000 in overseas visitors, with a resultant loss in export earnings of $1.5 billion and 24,000 jobs.
Declines of up to 85 per cent in numbers from the worst-hit sources of Indonesia, South Korea and Thailand could be expected, Mr Midwood said.”
The Statement of Claim
13 The Statement of Claim identifies nine plaintiffs. All are companies. Eight are franchisees of Harvey World Travel. The ninth plaintiff (Harvey World Travel Franchises Pty Limited) is a corporation which administers the franchise arrangements, having entered a franchise agreement with each of the first eight plaintiffs.
14 The Statement of Claim deals with each publication in the same way. It alleges that the matter complained of, on its natural and ordinary meaning, together with certain extrinsic facts, gave rise to the following imputations:
“(a) The First Plaintiff, as a franchisee of Harvey World Travel and a member of the travel industry, had been so affected by the Asian economic crisis that it was at risk of becoming insolvent;
(b) the First Plaintiff, as a franchisee of Harvey World Travel and a member of the travel industry, was unlikely to be able to meet its obligations to travellers.”
15 The imputations said to arise in respect of the first to eighth plaintiffs, are expressed in the same terms, identifying the particular plaintiff. However, no complaint is made on behalf of the ninth plaintiff, the franchise company.
16 The extrinsic facts relied upon in respect of the initial press release (the first matter complained of) are as follows:17 In respect of the republication of material based upon the press release (the second, third, fourth and fifth matters complained), the imputations and extrinsic facts are the same for the various franchisees of Harvey World Travel (the first to eighth plaintiffs). However, complaint is also made on behalf of the Franchisor (the ninth plaintiff). The imputations are as follows:-
“(a) The First Plaintiff carries on business as Harvey World Travel Revesby and Harvey World Travel Mid City Melbourne and is a franchisee of Harvey World Travel;
(b) the Second Plaintiff carries on business as Harvey World Travel Strathfield and is a franchisee of Harvey World Travel;
(c) the Third Plaintiffs carry on business as Harvey World Travel Manly and is a franchisee of Harvey World Travel;
(d) the Fourth Plaintiff carries on business as Harvey World Travel Emu Plains and are a franchisee of Harvey World Travel;
(e) the Fifth Plaintiff carries on business as Harvey World Travel Crows Nest and is a franchisee of Harvey World Travel;
(f) the Sixth Plaintiff carries on business as Harvey World Travel Kogarah and is a franchisee of Harvey World Travel;
(g) the Seventh Plaintiff carries on business as Harvey World Travel Mona Vale and Harvey World Travel Mosman and is a franchisee of Harvey World Travel;
(h) the Eighth Plaintiff carries on business as Harvey World Travel Morley and is a franchisee of Harvey World Travel;”
18 The extrinsic facts relied upon in respect of the ninth plaintiff are as follows:
“(q) The Ninth Plaintiff, as the franchisor of the Harvey World Travel franchisees including the First to Eighth Plaintiffs and a member of the travel industry, had been so affected by the Asian economic crisis that it was at risk of becoming insolvent;
(r) The Ninth Plaintiff, as the franchisor of the Harvey World Travel franchisees including the First to Eighth Plaintiffs and a member of the travel industry, was unlikely to be able to meet its obligations to travellers.”
“(i) the Ninth Plaintiff is the franchisor of the Harvey World Travel franchisees.”
The Defendants’ Contentions
19 The defendants submitted that the imputations were not capable of arising, and should be struck out. They did so upon a number of bases.
20 The first submission related to the capacity of the material to give rise to defamatory imputations against the plaintiffs. The defendants submitted that the press release (the first matter complained of) was simply not capable of defaming the first to eighth plaintiffs.
21 The second submission related to republication. It was said that the defendants’ responsibility must be determined by reference to the press release (the first matter complained of), and not later publications. Having made the press release, the defendants may be taken as having intended its dissemination to the news media. However, if, as they contend, the press release was not defamatory of the plaintiffs, then its republication by others in some different form (which may be defamatory) is not their responsibility. In short, responsibility for republication presupposes, not simply the dissemination of material to persons likely to reproduce that material, but that the material disseminated was defamatory.
22 The third submission went to the issue of identification. Even taking account of the extrinsic facts, nothing in the press release (or for that matter, the newspaper reports which followed) was capable of being reasonably understood as referring to the franchisees (the first to eighth plaintiffs) or the franchisor (the ninth plaintiff). The first to eighth plaintiffs are all franchisees of Harvey World Travel. They are variously located. The first plaintiff carries on business at Revesby, and in the mid city of Melbourne. The second plaintiff operates from Strathfield as a franchisee of Harvey World Travel. The third plaintiff carries on its business from Manly, and the fourth from Emu Plains. The fifth plaintiff is located at Crows Nest, and the sixth at Kogarah. The seventh plaintiff operates from Mona Vale and Mosman, whereas the eighth has his business at Morley. The press release, on the other hand, is quite specific, identifying the Sydney city franchise of Harvey World Travel. There are other references in the press release, and indeed in the newspaper articles which followed, which make it plain that the Sydney city franchise was identified, and no other franchise.
The Plaintiffs’ Contentions
23 The plaintiffs, in response, emphasise the low threshold which they are required to meet on what is, in effect, a strike out application. The issue is whether the publication could be reasonably understood as referring to the plaintiffs, or the imputations are capable of arising.
24 Even were the view taken that the press release was not defamatory, that would not put an end to the defendants’ liability in respect of later publications of part of the text of their press release. In Slipper v BBC (1991) 1 QB 283, Bingham LJ analysed the circumstances in which the original publication of defamatory material may be liable for republication. Referring to Weld-Blundell v Stephens, Bingham LJ quoted from Lord Wrenbury in that case (at p 298). He said this:25 Here, on the plaintiffs’ argument, it is a jury question as to whether the defendants were responsible in all the circumstances for the republication by the various newspapers. The jury would be entitled to wonder why the defendants had issued the press release in the first place. They are an insolvency firm. What business was it of their’s to disseminate information concerning Harvey World Travel to the news media? They must be taken to have intended that the press release would be taken up, as it duly was. Secondly, the plaintiff’s drew attention to the test to be applied. When determining whether something was capable of being regarded as defamatory, the ordinary reasonable reader would not approach the article as would a lawyer. He or she, therefore, would not have the appreciation of a lawyer as to the nature of franchises, and the way in which they operate independently of each other. Rather, the approach may involve a certain amount of loose thinking. The issue should be left to the jury.
“Lord Wrenbury, at p 999, regarded Ward v Weeks as ‘good law’ but accepted that a defendant could be liable not only if he had authorised repetition of a slander by a third party but also ‘if from the surrounding circumstances it is to be inferred that he anticipated and wished that he should repeat it.’”
26 Is the press release issued by the defendants (the first matter complained of) capable of giving rise to the imputations pleaded on behalf of the first to eighth plaintiffs? The press release is quite explicit. It identifies the Sydney city franchise of Harvey World Travel, and no other. The opening words were as follows:
Conclusion
27 In the paragraph which followed, the specific outlet was again identified. The paragraph was in these terms:
“The Sydney city franchise of Harvey World Travel was placed in the hands of a voluntary administrator this week.”
28 The press release concluded with a note. The note makes it plain that nothing was being said about the financial health of other Harvey World Travel franchises:
“Mr Andrew Wily, partner at insolvency firm Armstrong Wily & Co, was appointed voluntary administrator of Potter World Travel Pty Ltd, which held the Sydney CBD franchise of Harvey World Travel.”
“ Note : Harvey World Travel are a substantial franchise operation and the administration of this franchise has no effect on the overall operations.”
29 I do not believe that the press release issued by the defendants (the first matter complained of) is capable of giving rise to the defamatory imputations pleaded on behalf of the first to eighth plaintiffs in para 13 of the Statement of Claim. The press release may have reflected on the travel industry generally, as a group (cf Gillooly The Law of Defamation in Australia & New Zealand p.66ff). However, the document, as framed, was not, in my view, capable of giving rise to the imputations against the first to eighth plaintiffs which have been pleaded.
30 Further, I do not believe that the addition of the extrinsic facts render the material capable of being understood as referring to the first to eighth plaintiffs. The insolvent enterprise is identified as a franchise. Its location is specified. It is the Sydney city, or CBD, franchise of Harvey World Travel. I do not believe that you have to be a lawyer to recognise that the insolvency of that franchise has nothing to do with franchises associated with Harvey World Travel which are located in Melbourne, Emu Plains, or in the other locations specified. The word “franchise” is a commonplace English word. I believe that the ordinary reasonable reader would understand the broad nature of such an enterprise.
31 This brings me to the issue of republication. The original press release (the first matter complained of) was carefully drafted. The draftsman plainly understood the potential for confusion, where only one outlet in a chain of franchises had become insolvent. The outlet was, therefore, identified by location, as I have indicated. A note was added that the insolvency of that outlet said nothing about the chain. The only document which the defendants created was the press release (the first matter complained of). What, in these circumstances, is the defendants’ liability for republication? I have held that the press release was not capable of giving rise to defamatory imputations in respect of the first to eighth plaintiffs. Are the defendants responsible, in these circumstances, for any republication which imperfectly reproduces the original document, where that republication may be defamatory? I believe not, absent some evidence which suggests that the defendants intended the republication of their document in a modified form. Here there is no such suggestion.
32 The text books, which deal with liability for republication, assume that the statement reproduced is defamatory. Gatley (9th ed) page 154, para 6.30, says this:33 Brown, The Law of Defamation in Canada (2nd ed, vol 1), expresses the rule in this way (footnotes omitted): (at p 348)
“ 6.30 General principle. Where a defendant’s defamatory statement is voluntarily republished by the person to whom he published it or by some other person the question arises whether the defendant is liable for the damage caused by that further publication. In such a case the plaintiff may have a choice: he may (a) sue the defendant both for the original publication and for the republication as two separate causes of action, or (b) sue the defendant in respect of the original publication only, but seek to recover as a consequence of that original publication the damage which he has suffered by reason of its repetition, so long as such damage is not too remote.”
34 The author added the following: (at p 349)
“Republication occurs where the person to whom the words were originally published communicates them to someone else. The general rule is that a person is responsible only for his or her own defamatory publications, and not for their repetition by others. There is no liability for a republication by a third person that the defendant neither authorized nor intended to be made.
‘There is no liability upon the original publisher of the libel when the repetition is the voluntary act of a free agent, over whom the original publisher had no control and for whose acts he is not responsible …’
However, there are several exceptions to this rule. The defendant may intend or authorize another to publish a defamatory communication on his or her behalf. Secondly, a defendant may publish it to someone who is under some moral, legal or social duty to repeat the information to another person. Thirdly, a defendant may be liable if the repetition was the natural and probable result of his or her publication.”
35 Fitzsimons v Duncan [1908] 2 IR 483 at 503 (KB) is referred to where Johnson J said this:
“These rules apply only where the information repeated is the same or substantially the same so that the sum and substance of the original charge remains.”
“So long as the sense and substance of the defendant’s communication by writing or conduct is preserved in the published libel, it is not necessary for the plaintiff … to prove that the published libel is verbally and literally the identical communication which originated with the defendant."
36 That passage, and indeed the statement of the rule, presupposes that the statement which was republished was defamatory.
37 Given that, in my view, the document for which the defendants are responsible, the press release, is not defamatory of the plaintiffs, I do not believe that they can be responsible for the republication of that document in a manner which may itself be defamatory (the second to fifth matters complained of). The plaintiff could, of course, in such circumstances, commence an action against the publishers of the news items.
38 In fact, when one examines the subsequent publications, they too confine their comments to the CBD outlet of the Harvey World Travel franchise chain. I am not inclined to think, even if one were to take a broader view of republication, that the second to fifth matters complained of are capable of giving rise to the imputations pleaded.
39 It follows from my comments that the ninth plaintiff, the franchisor, has no action. The ninth plaintiff only complains about the news items which depend upon liability for republication. There is no express reference to the franchisor in any of the articles. They are, as the Statement of Claim implicitly acknowledged, expressly excluded by the note at the foot of the press release.
40 The defendants, therefore, have succeeded in respect of each publication, and each plaintiff. Nothing in the Statement of Claim remains.
41 When the matter was argued, there was no discussion as to the appropriate order were I to find for the defendants, as I now have. It appears to me that, in respect of the imputations pleaded, I should enter a verdict for the defendants in accordance with s7A(2) of the Defamation Act. However, I give leave to the plaintiffs to have the matter listed for argument as to the appropriate order (within twenty-one days), should they wish to argue that some other order is appropriate.
42 The plaintiffs should pay the defendants’ costs.
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