Slater v Ecosol Pty Ltd - [2025] SASCA 78

SUPREME COURT OF SOUTH AUSTRALIA
(Court of Appeal: Civil)
SLATER v ECOSOL PTY LTD
[2025] SASCA 78
Judgment of the Court of Appeal
(The Honourable President Livesey, the Honourable Justice S Doyle and the Honourable Auxiliary Justice Hall)
17 July 2025
DEFAMATION - PRIVILEGE - QUALIFIED PRIVILEGE - STATEMENTS MADE IN RESPECT OF A DUTY OR INTEREST
DEFAMATION - PRIVILEGE - QUALIFIED PRIVILEGE - REBUTTAL OF PRIVILEGE BY MALICE
Appeal from a decision dismissing Mr Slater’s claim for defamation against Ecosol Pty Ltd. The primary judge also dismissed a claim for defamation by Mr Smith, a director of Ecosol, against Mr Slater, which had been brought by way of cross claim.
Ecosol formerly carried on business manufacturing stormwater treatment products. Mr Slater and Mr Smith are shareholders, and Mr Smith the chairman of directors. Ecosol entered into a contract to sell its business by way of a management buyout. The contract was subject to shareholder approval. Mr Slater sent a number of letters to shareholders opposing the proposed sale. Mr Smith, on behalf of Ecosol, sent a number of letters to shareholders supporting the sale.
Mr Slater claimed against Ecosol for defamation in respect of various imputations said to arise in five of the letters sent by Mr Smith, and Mr Smith cross claimed for defamation in respect of imputations said to arise in three of Mr Slater’s letters.
In relation to Mr Slater’s claim, the judge found that several defamatory imputations were conveyed, and rejected defences of justification and triviality. However, the claim was dismissed on the basis that the imputations were conveyed on an occasion of qualified privilege, and the defamatory statements were not actuated by malice.
Mr Slater appealed on grounds distilled as follows:
1.The judge erred in upholding the common law defence of qualified privilege because the defamatory statements were not sufficiently connected to the occasion of privilege.
2.The judge erred in finding that Ecosol, through Mr Smith, was not actuated by malice in making the defamatory statements.
3.The judge failed to appreciate the significance of Mr Smith’s role and obligations as a director and fiduciary in making the defamatory statements relied upon.

4. The judge erred in finding that Mr Smith was an honest witness.
Per the Court, dismissing the appeal:
1.The impugned statements made by Ecosol, through Mr Smith, even though defamatory and in some respects strident and incorrect, were nevertheless relevant and germane to the occasion of the qualified privilege.

2. The judge’s findings did not establish that Mr Smith was actuated by malice.
3.Mr Smith’s role and obligations as a director and fiduciary did not provide any basis for impugning the judge’s reasoning and conclusions in relation to either the connection to the privileged occasion or malice.
4.Mr Slater’s procedural and substantive challenges to the judge’s finding that Mr Smith was an honest witness have not been made out.

Adam v Ward [1917] AC 309; Andreyevich v Kosovich (1947) 47 SR (NSW) 357; Bashford v Information Australia (Newsletters) Pty Ltd (2004) 218 CLR 366; Bass v TCN Channel Nine Pty Ltd (2003) 60 NSWLR 251; Bellino v Australian Broadcasting Corporation (1996) 185 CLR 183; Bennette v Cohen [2009] NSWCA 60; Cush v Dillon (2011) 243 CLR 298; Guise v Kouvelis (1947) 74 CLR 102; Howe v Lees (1910) 11 CLR 361; Marshall v Megna [2013] NSWCA 30; Papaconstuntinos v Holmes A Court (2012) 249 CLR 534; Penton v Calwell (1945) 70 CLR 219; Roberts v Bass (2002) 212 CLR 1; Slater v Ecosol Pty Ltd (No 2) [2024] SASC 29; Slater v Ecosol Pty Ltd [2023] SASC 99; Stone v Moore (2016) 125 SASR 81, considered.

SLATER v ECOSOL PTY LTD
[2025] SASCA 78
Court of Appeal – Civil: Livesey P, S Doyle JA and Hall AJA

THE COURT: This is an appeal from a decision of Blue J dismissing Mr Slater’s claim for defamation against Ecosol Pty Ltd.[1] His Honour also dismissed a claim for defamation by Mr Smith, a director of Ecosol, against Mr Slater which had been brought by way of cross claim.
[1] Slater v Ecosol Pty Ltd [2023] SASC 99 (‘the Reasons’).
Overview
Ecosol formerly carried on business manufacturing stormwater treatment products. Mr Slater and Mr Smith are shareholders of Ecosol. Mr Smith is the chairman of directors of Ecosol.
In 2018, Ecosol entered into a contract with Urban Asset Solutions Pty Ltd (‘UAS’) to sell its stormwater treatment business to UAS. UAS was connected with members of Ecosol’s management, with the sale transaction referred to as a management buyout (‘MBO’). The contract was subject to shareholder approval. Mr Slater sent a number of letters to shareholders of Ecosol opposing the proposed sale. Mr Smith, on behalf of Ecosol, sent a number of letters to shareholders of Ecosol supporting the proposed sale.
Mr Slater claimed against Ecosol for defamation in respect of various imputations said to arise in five of the letters sent by Mr Smith, and Mr Smith cross claimed for defamation in respect of imputations said to arise in three of Mr Slater’s letters.
The trial of the claims was a relatively lengthy one, involving a number of witnesses and a significant volume of documents. The issues at trial included whether the pleaded imputations arose, whether they were defamatory, and whether the defences of justification, qualified privilege and triviality were available. Mr Slater and Mr Smith each alleged malice in answer to the qualified privilege defences.
In relation to Mr Slater’s claim for defamation the judge held that most, but not all, of the alleged imputations arose from Ecosol’s impugned publications, and were defamatory. The detail of these imputations is addressed later in these reasons, but broadly speaking they involved challenges to the honesty and motives of Mr Slater in his opposition to the proposed sale. The judge found that Ecosol failed to establish a defence of justification in relation to the various defamatory imputations conveyed. Ecosol’s defence of triviality also failed. However, his Honour found that Ecosol established a defence of common law qualified privilege in respect of each of the defamatory imputations conveyed. In respect of each imputation, Ecosol established an occasion of qualified privilege, and that the defamatory statements were sufficiently connected to that occasion. Mr Slater failed to establish malice. It was not necessary for the judge to address Ecosol’s defences of statutory qualified privilege. The judge dismissed Mr Slater’s claim for defamation.
In relation to Mr Smith’s cross claim for defamation, the judge made equivalent findings, and dismissed his claim. Mr Smith has not appealed the dismissal of his cross claim.
The appeal
Mr Slater’s original notice of appeal identified 65 grounds of appeal. In his revised notice of appeal, he narrowed his challenge to 13 grounds of appeal, namely that the judge erred:
·in finding that Ecosol’s defence of common law qualified privilege was made out;
·in finding that it was not necessary to determine Ecosol’s defence of statutory qualified privilege;
·in failing to address the significance of the duties owed by Ecosol’s directors;
·in failing to recognise that Mr Smith, as chairman of Ecosol, had no basis for publishing the defamatory imputations;
·in finding that malice had not been established;
·in finding that Mr Smith was a reliable witness;
·in failing to seek submissions in relation to Mr Smith’s credit;
·in failing to properly consider Mr Slater’s case that Mr Smith was a liar;
·in finding that Mr Smith was an honest witness;
·in failing to hold that there was a scheme to prefer the MBO offer, and that by participating in this scheme the directors acted in breach of their fiduciary and statutory duties;
·in failing to appreciate the significance of this scheme and the directors’ breach of their duties;
·in weighting case management principles over the delivery of justice; and
·in finding that, even if Mr Slater’s claim had succeeded, his damages would have been assessed at not more than $20,000.
During the course of oral argument, Mr Slater accepted that it was appropriate for this Court to confine its consideration to four broad categories of complaints. First, that the judge erred in finding that Mr Smith was an honest witness, including because he failed to properly hear from Mr Slater in relation to this issue. Secondly, that in his consideration of issues including the connection to the occasion of qualified privilege and malice, the judge failed to properly appreciate the significance of Mr Smith’s role as a director and fiduciary, and his alleged breaches of duty. Thirdly, that the judge ought to have rejected the defences of common law qualified privilege on the basis that the defamatory statements were not sufficiently connected to the privileged occasion. Fourthly, that the judge ought to have rejected the defences of common law qualified privilege on the basis that Mr Slater established malice on the part of Mr Smith, and hence Ecosol.
Mr Slater accepted that, unless he succeeded in his appeal, it would not be necessary for this Court to consider his complaints in relation to statutory qualified privilege and damages.
Before addressing the matters raised on Mr Slater’s appeal, it is necessary first to set out in some detail the factual background, and the judge’s reasoning. In then addressing the matters raised on appeal, it is convenient to commence by addressing Mr Slater’s challenge to the judge’s reasoning in relation to the connection to the occasion of qualified privilege and malice, before addressing the significance of Mr Smith’s duties as a director and fiduciary, and the judge’s treatment of Mr Smith’s credit.
Factual background
The judge made detailed findings of fact as to the corporate history and operation of Ecosol, culminating in the sale of its stormwater treatment business to UAS.[2] It is not necessary to recite all of that detail, although these reasons should be read as incorporating reference to those findings. The following is a summary of those findings, including the impugned publications and the judge’s findings as to the imputations they conveyed.
[2] Reasons at [5]-[236].
The establishment of Ecosol
Ecosol was incorporated in 1993, under the name Asahi Glass Pty Ltd. In 1994, Ian Charlton, whose background was in accounting, was appointed a director.
By November 1995, Scott Roy had designed and built a prototype of a stormwater filtration system comprising a concrete outer case with stainless steel, aluminium and plastic filters. He and his friend, Richard Versteegh, approached David Bishop, whose background was in the construction and fabrication industry, to manufacture the device. Mr Bishop in turn approached Mr Charlton with a view to investing in a company to manufacture and install the stormwater filtration system.
Asahi Glass was acquired for that purpose, and its name was changed to Ecosol. The directors were Jodie Roy (Mr Roy’s wife), Mr Versteegh, Mr Charlton and Mr Bishop. The shares were held by these directors or their nominees.
Ecosol commenced carrying on business. Mr Roy was employed full time as Technical Research Director. Mr Charlton was also employed full time.
Ecosol maintained a running loan account with Mr Charlton. From time to time, commencing in January 1996, Mr Charlton advanced money to Ecosol, resulting in credits to that loan account. From time to time, Ecosol made repayments of the loan or issued shares to Mr Charlton, resulting in debits to the loan account. The running balance of the loan account was generally in credit.
In April 1997, additional shares were issued to each of Ecosol’s shareholders. At around the same time, some shares were also issued to new shareholders, including Mr Smith (a cousin of Mr Charlton). Mr Smith’s background is as an investigator.
During 1998 and 1999, further shares were issued, and some shareholders sold their shares to existing or new shareholders. In 1998, Mr Bishop resigned as a director, and Richard Gapper was appointed a director. Andrew Macklin was employed as a sales and marketing person. In around 2000, Mr Macklin became the general manager of Ecosol.
In 1998, Mr Smith suggested to Mr Slater that he invest in Ecosol, which was being run by Mr Charlton. Mr Slater’s background is as an accountant, tax agent, real estate agent and property conveyancer. He has a Bachelor of Economics (majoring in Accounting), a Masters in Property, and a Bachelor of Laws.
In October 1998, Mr Slater and some of his friends and family were issued shares in Ecosol. By about 2005, and after a share split, Mr Slater and his family and friends had acquired a total of 34,042 shares in Ecosol, at purchase prices totalling $168,100.
In 2000, Mr Versteegh and Mrs Roy resigned as directors of Ecosol, and Adrian Fair commenced employment with Ecosol.
In 2001, Mr Gapper resigned as a director of Ecosol, and was replaced by Mr Smith. The directors at the time were thus Mr Charlton (chairman) and Mr Smith. Also in 2001, Mr Roy resigned as an employee of Ecosol.
Early consideration of listing Ecosol or a management buyout
In 2004, Ecosol obtained advice in relation to the possibility of listing its shares on the Australian Stock Exchange (‘ASX’). In late 2004, Mr Charlton reported to a board meeting that Ecosol would not qualify for listing until its financials improved significantly, and that the cost was prohibitive.
In 2005, Mr Charlton reported to a board meeting that he had investigated the possibility of listing on the National Stock Exchange (‘NSX’). Ecosol met the criteria for listing, but it would require a change in its articles which in turn would require a special resolution of shareholders (75 per cent). Mr Charlton reported that Mr Roy had indicated he and his wife would support this if it permitted them to sell some of their shares. It was resolved to engage solicitors to amend Escosol’s articles. There was some subsequent confusion about whether the Roys continued to support this proposal. The judge found that, although the Roys were not in fact opposed to it, Mr Smith mistakenly believed they were opposed to it.
In 2006, Mr Charlton advanced $250,000 to Ecosol, and was granted a fixed and floating charge over all of its assets.
In 2007, a deed between Ecosol and Mr Charlton was drafted, acknowledging that the former owed the latter just over $350,000 in salary, superannuation and interest. It does not seem that this deed was ever signed.
At some point, Ecosol acquired an office unit in O’Riordan Street, Alexandria, referred to as ‘the Sydney property’.
In July 2009, Mr Macklin presented a document to the board of directors of Ecosol, and subsequently had discussions with Mr Charlton and Mr Smith, about the possibility of an MBO. Broadly speaking, Mr Macklin’s proposal acknowledged that Mr Charlton was owed about $350,000 on his loan account and $300,000 in unpaid salary; and involved, over a few years, Ecosol repaying the former and converting the latter into shares, and Mr Macklin buying those converted shares and lending further money to Ecosol. After discussing the proposed MBO at a meeting of the directors of Ecosol, Mr Charlton advised Mr Macklin that only a cash offer in the range of $2.30 to $2.50 per share would be acceptable. Mr Macklin said he did not wish to proceed.
In 2011, Mr Charlton resigned as a director of Ecosol. Mr Macklin replaced him as a director. Mr Smith became chairman of directors, and Mr Macklin became the managing director. Mr Fair became the general manager. Mr Charlton also resigned as an employee of Ecosol, although he continued to do some part-time work for the company until 2015. From 2011 onwards, Ecosol made repayments against Mr Charlton’s loan account, with the result that it was fully repaid by late 2013.
Mr Charlton was a director and employee of his family-owned company, Janic Consulting Pty Ltd (‘Janic’). It provided consulting and training services, and at some point commenced providing services to Ecosol through Mr Charlton.
In February 2013 Mr Macklin revisited the possibility of an MBO with Mr Charlton, Mr Bishop and Mr Smith. After some discussions, Mr Macklin advised that he had been unable to secure sufficient third party funding. Mr Smith said that he did not think there was enough security available to offer vendor finance, and that the offer was below market value. Mr Charlton and Mr Smith decided not to proceed with the possibility of an MBO.
At around the same time, Mr Macklin, on behalf of Ecosol, also sought advice about the possibility of listing. Mr Slater was informed that advice was being sought. There remained difficulties with any listing. Whilst Mr Smith gave evidence that Mrs Roy was opposed, the judge again found that Mr Smith was mistaken about this, perhaps confusing discussions in 2013 with what had occurred in 2005. An October 2013 letter to shareholders informed them that the possibilities of listing on the ASX or NSX, or converting to a public unlisted company, had been raised, but were problematic.
Between 2014 and 2016, Ecosol obtained valuations of its business from Perrior Ryan, chartered accountants, which valued the company at $3.36 per share, $3.14 per share and then $2.48 per share.
The possibility of a management buyout re-emerges
In September 2016 there was a meeting of the directors of Ecosol, being Mr Smith and Mr Macklin. Mr Charlton attended by invitation of Mr Smith. Mr Macklin made or foreshadowed an indicative offer to purchase the shares of Ecosol. The possibility of three years of vendor finance was raised. Ecosol engaged Janic to communicate with Mr Macklin about the offer, and to review the proposal. Mr Macklin was not to be involved with Ecosol’s consideration of the offer.
After analysing the offer, Mr Charlton discussed with Mr Smith his view that the offer did not reflect the value of Ecosol. Mr Smith ultimately recommended against taking the offer to shareholders. Mr Charlton expressed frustration with Mr Macklin, and the changing detail of any potential offer. He recommended inviting Mr Macklin to make a stable offer, and not taking it to the shareholders of Ecosol until it was at least market value, had adequate security, and treated all shareholders the same (in terms of the price and the timing of the acquisition of their shares).
In 2017, Mr Macklin, on behalf of Ecosol, engaged Deloitte Financial Advisory Pty Ltd (‘Deloitte’) to value Ecosol. Deloitte advised a range, with a midpoint value of $1.80 per share. Mr Charlton and Mr Smith believed this was low and erroneous given the Perrier Ryan valuations obtained the previous year. Shareholders were informed of the Deloitte valuation.
In August 2017, Mr Macklin and Mr Fair made another indicative offer to acquire the shares in Ecosol. It valued Ecosol at $1.97 per share, but as Mr Macklin and Mr Fair did not have the financial capacity to pay, the transaction included vendor finance and involved several steps (including the separate purchase of the Sydney property). Mr Smith, on behalf of Ecosol, instructed Mr Charlton to undertake a review of this proposal.
Over subsequent weeks, Mr Charlton reported to Mr Smith that there were various errors in the Deloitte valuation, and with Mr Macklin’s proposal. He suggested that the value of Ecosol should be around $2.50 to $2.60 per share. It seems that Mr Macklin indicated a preparedness to increase his offer to $2.60 per share, if he could make a delayed payment without security.
Mr Slater urges consideration of other alternatives

During October 2017, Mr Slater sent several emails to Mr Macklin urging that the directors consider options such as listing Ecosol, or pursuing other funding from sources such as retail investors. He criticised reliance upon valuations which were based upon discounted cash flow modelling. Expressing a lack of confidence that the board would pursue these options, he requested a list of shareholder contact details. He ended up inspecting the share register.
In late October 2017, Mr Smith, as chairman of Ecosol, sent a letter to shareholders. He informed them of the 21 August 2017 indicative offer from Mr Macklin and Mr Fair, foreshadowing further communication if a formal offer was made. He also told shareholders that a shareholder, Mr Slater, wanted shareholders to be aware of an alternative proposal to refinance the company through a stock market listing. He said that Mr Slater would be invited to present his proposal at the upcoming shareholder meeting.
Mr Slater sent further emails to Mr Macklin, both disputing the reasons that had been put as barriers to listing Ecosol, and suggesting that Mr Macklin was in a position of conflict which prevented him from commenting on the matter of listing. On 30 October 2017, Mr Smith wrote to Mr Slater telling him that the board had looked at listing on several occasions over the years, and on each occasion decided it was not a viable action. However, the board was open to ideas and invited Mr Slater to present his proposal to shareholders at the upcoming meeting.
In November 2017, Mr Smith sent Mr Slater an email, stating that Mr Charlton and his family had confirmed they would not support a resolution that would facilitate listing on the NSX. Mr Smith also received a valuation from Gardiner Hall, opining that a reasonable value for Ecosol was $2.60 per share.
Revised management buyout proposals
On 22 January 2018, Mr Macklin and Mr Fair wrote to Mr Smith making an indicative and non-binding offer to buy a majority stake in Ecosol, with the longer-term intention of buying all of its shares. The proposal had a similar structure to the previous indicative offer, but this time equated to an offer of $2.66 per share. Mr Smith again asked Mr Charlton, through Janic, to advise on the offer. Mr Charlton identified some difficulties, including that the offer did not permit all shareholders to exit at the same time. It seems this was a difficulty for Mrs Roy, who held 29 per cent of the shares and so had the power to veto the required special resolution. Mr Smith decided not to take the offer to the shareholders.
On 29 January 2018, Mr Macklin and Mr Fair made a revised indicative and non-binding offer. Mr Charlton noted that the offer still required one shareholder remaining unpaid, without security, for five years. Whilst he indicated he was prepared to consider waiting for payment, the offer remained below market value. Mr Smith again decided not to take the offer to shareholders, but instructed Mr Charlton to negotiate with Mr Macklin.
In early February, Mr Slater emailed Mr Smith asking for an update in relation to the MBO. Mr Smith did not reply.
On 13 February 2018, Mr Macklin provided a revised offer. Mr Charlton, through Janic, reviewed the offer and advised Mr Smith that the difficulties of differential treatment of shareholders, a below market value offer, and lack of security, all remained. Mr Macklin requested that Mr Smith contact shareholders and seek their views. Mr Smith asked Mr Charlton to contact various of the shareholders. He did so, and received a mixed reaction. Some of the bigger shareholders were less than enthusiastic. Mr Smith also contacted some shareholders.
In early March 2018, Mr Smith telephoned Mr Slater and informed him of the offer. Mr Slater told Mr Smith he did not agree to the proposal, and said that Ecosol should look at a trade sale and contact competitors. Mr Smith said he was not inclined to contact competitors.
Around this time, Mr Smith asked Mr Charlton to explore the possibility of selling certain assets and liabilities, rather than selling Ecosol’s shares.
An alternative proposal from Spel Environmental Pty Ltd
In March 2018, one of Ecosol’s competitors, Spel Environmental Pty Ltd (‘Spel’) contacted Mr Macklin, expressing interest in acquiring Ecosol. Mr Macklin informed Mr Smith. Mr Macklin indicated that he was withdrawing his proposed MBO to ensure that management fulfilled its fiduciary obligations in respect of the inquiry by Spel. Mr Smith telephoned Mr Slater and updated him about the interest from Spel, and the withdrawal of the MBO. When asked whether he had been responsible for contacting Spel, Mr Slater refused to answer. Mr Slater telephoned Mr Macklin, and urged the directors to explore all options for selling Ecosol, including listing on the ASX or NSX, taking it to the market, or the proposed MBO. Mr Smith contacted Mr Charlton, through Janic, to provide ongoing advice.
During March 2018 there were a number of further communications about the matters mentioned above. These included emails between Mr Smith and Mr Slater, which in turn included Mr Smith informing Mr Slater that he was not authorised to speak with third parties about the matters under consideration, and requesting confirmation that he not do so. Mr Smith accused Mr Slater of having already caused the MBO proposal to be withdrawn. Mr Slater sent an email seeking a retraction of the suggestion that he was responsible for the MBO being withdrawn, and foreshadowing legal proceedings. Through its solicitor (Mr Leech of Cowell Clarke), Ecosol sent letters by email to Mr Slater and Mr Mielke, dated 16 March 2018, expressing concern about them communicating with Spel, and requesting that they cease communicating with third parties. Mr Slater responded, joining issue with the allegations made against him, and seeking an apology.
In late March 2018, Mr Macklin provided Mr Smith with an update on the options for a sale or listing of Ecosol.
In June 2018, there was a board meeting and Mr Bishop was appointed to the board, joining Mr Smith and Mr Macklin. Mr Macklin declared a conflict of interest and offered to recuse himself from all matters relating to the potential MBO.
On 15 June 2018, Mr Charlton, on behalf of Janic, sent a letter to Mr Smith identifying four non-MBO options that were worth consideration by the board: listing on the ASX, listing on the NSX, a trade sale and retail investment.
In July 2018, Mr Slater issued a minor civil action in the Magistrates Court against Ecosol, Cowell Clarke and Mr Leech for defamation in relation to the 16 March 2018 letter emailed to Mr Mielke. Mr Slater also called for the removal of Mr Smith as director and said he would be contacting his fellow shareholders.
Agreement with UAS to acquire the business and assets of Ecosol
On 18 June 2018, Mr Macklin provided Mr Smith with a term sheet containing a non-binding offer to acquire the business and assets of Ecosol. It involved Mr Macklin and Mr Fair creating a new entity through which to make the acquisition. Over the following two months, Mr Charlton negotiated with Mr Macklin, liaised with Cowell Clarke in relation to documentation, and reported to and received instructions from Mr Smith.
On 23 August 2018, Mr Smith and Mr Bishop, on behalf of Ecosol, and Mr Macklin and Mr Fair, on behalf of their entity, UAS, executed a business sale and purchase agreement. Its terms were broadly similar to those set out in the earlier-provided term sheet, although with some significant alterations. On the same date, the parties executed a vendor finance agreement.
The directors of Ecosol call a general meeting to approve the sale to UAS
On 28 August 2018, Ecosol sent an email to all shareholders providing notice of a general meeting, and an explanatory memorandum. The meeting was to be held on 26 September 2018, and include consideration of a resolution that the directors’ decision to sell the company’s assets and liabilities to UAS be approved. The explanatory memorandum incorporated a two-page letter relating to the UAS transaction, expressed to be by Mr Smith, but signed by both Mr Smith and Mr Bishop. It included the following:
I have called this general meeting because, on 6 July 2018, after due consideration, Board accepted an offer from [UAS] to buy Ecosol’s assets and liabilities. This agreement, signed on 23 August 2018, is subject to your approval at this meeting.
…
The offer values Ecosol at $1.81M, or $2.54 per share, inclusive of a small premium of $0.03 per share. Accountants, Gardiner Hall had previously updated its 2017 valuation and in May 2018 found that the market value was $2.51 per share.
Previously, Andrew and Adrian had made share offers of $1.97, $2.31, and $2.42. As chairman, and on your behalf, I did not believe that these offers were acceptable because they were below market value, they did not treat all shareholders equally, and they did not provide adequate security of payment.
I believe that the current offer addresses my concerns about market value and treatment of shareholders and is financially more attractive to shareholders. It also enables Ecosol to finance the transaction itself over five years and ensure that all shareholders receive full payment for their shares by way of a General Security Agreement (GSA) charge over Urban Asset Solutions’ assets.
To potentially enhance the shareholder return the Sydney property was excluded from the sale. Currently worth $850K, it has already increased by 55% since it was purchased in July 2015. This upward trend is expected to continue, albeit not at the same pace, primarily because of its proximity to the soon to be built Sydney Gateway that will enable transport access to the west connects underground motorway system leading to the M5 away to Melbourne and the M4 to Sydney’s western suburb.
I believe that the interest earned from the loan, the potential capital gain from the sale of the property, along with the rental income from Urban Asset Solutions, which has agreed to lease the property, will enhance the shareholder exit return.
Ecosol will receive rent and loan repayments for five years out of which it pay an annual, and significantly-enhanced, dividend to shareholders. [If] the loan is repaid, and the property sold – I will be monitoring the Sydney property market to ensure that this is done at the most advantageous time – shareholders will receive one final dividend and Ecosol will then be wound up. You should be aware that the dividends include a return of your capital i.e. payment for your shares.
…
The Board, as part of its due diligence, has considered other options. Over the past ten years or so it has been proactive in seeking a viable shareholder exit strategy but always without success, largely because our industry is not particularly attractive to investors, especially in the current economic environment…
You may remember that at the January 2013 AGM we discussed various shareholder exit strategies, none of which were considered suitable so the board committed to annual dividends to at least unlock some shareholder return. This has worked reasonably well but future dividends are not assured – last year the dividend was reduced and there is no certainty that this will not happen in future years.
The Board considered listing on the Australian Stock Exchange (ASX) but advice from several professional advisers confirmed that Ecosol was too small to qualify for the ASX. We also considered listing on the smaller National Stock Exchange but found this to be very expensive and without any guarantee of a satisfactory shareholder exit. Another option considered was engaging professional advisers to find a suitable investor(s) willing to buy Ecosol, effectively a trade sale. Again, there was no certainty that this would be successful and, moreover, any such sale, were it to happen, would be at market value anyway and so the costs involved, likely exceeding $175K.
Objections to the UAS transaction
On 28 August 2018, Mr Slater prepared a five and a half-page document addressed to the shareholders, which contained extracts from the explanatory memorandum and his comments on them. On 31 August 2018, he prepared a two and a half-page document entitled in upper case ‘Commercial in confidence to fellow Ecosol shareholders’. The section of the document headed ‘Executive Summary’ expressed serious concerns with the way the board had managed Ecosol’s exit strategy. On 31 August 2018, Mr Slater posted both of these documents to the shareholders of Ecosol. He also emailed copies to Mr Macklin, Mr Smith and Mr Bishop.
On 10 September 2018, a lawyer retained by Mrs Roy (Gavin Beard, from Brighthill Lawyers) sent letters to Ecosol and to the shareholders contending that Mr Macklin and Mr Fair had a conflict of interest, and expressing concerns about Ecosol’s dealings with these men and UAS. The letter to Ecosol requested various categories of information.
After Mr Smith had taken advice from Janic, through Mr Charlton, Ecosol’s solicitors, Cowell Clarke, wrote to Mr Beard declining to provide the information sought, and setting out the limits of a shareholder’s right to documents.
On 12 September 2018, Mr Roy telephoned Mr Smith asking if he would agree to Mr Roy contacting a Spel executive to ask if Spel might be interested in reactivating its interest in Ecosol. Mr Smith agreed. Indeed, on 18 September 2018, Mr Smith made contact with a representative of Spel, and requested any indicative offer as a matter of urgency. The Spel representative requested information in order to consider whether to make an offer, and Mr Smith engaged Janic to assist in addressing any due diligence requests from Spel, under instructions from Mr Bishop.
On 19 September 2018, Mr Beard wrote to shareholders informing them that Ecosol had refused to provide the information sought, and that they were now considering applying to the Supreme Court. On 21 September 2018, Mrs Roy brought an application in the Supreme Court of Queensland, seeking documents and an adjournment of the general meeting.
On 21 September 2018, Mr Smith wrote to shareholders, referring to the letter they had been sent by Mr Beard, informing them of Spel’s potential interest, and stating that the general meeting would be adjourned for 60 days.
On 22 September 2018, Mr Slater emailed Mr Bishop, requesting that he call a general meeting to remove Mr Macklin and Mr Smith as directors, and appoint Mrs Roy and Mr Slater as directors. The following day, Mr Slater emailed Mr Bishop again wanting an explanation for why he could not approach other Ecosol competitors about the sale of Ecosol’s assets.
On 2 October 2018, the Supreme Court of Queensland ordered that Ecosol provide various documents to Mrs Roy, and Mr Smith engaged Janic to attend to this. A few days later, several folders of documents were made available through Cowell Clarke. The due diligence information sought by Spel was provided, and Spel was requested to make any binding offer to Ecosol by 24 October 2018. Later in October, Spel indicated that it had decided not to make any offer.
Notice of the deferred general meeting
On 2 November 2018, Ecosol sent a second notice of general meeting and explanatory memorandum to its shareholders. The meeting was to be held on 23 November 2018. The explanatory memorandum comprised a one and a half-page letter relating to the UAS transaction, signed by Mr Smith, and a four and a half-page supplementary explanatory memorandum. It summarised the terms of the transaction documents. It also referred to the fact that Spel had expressed interest, and had conducted due diligence, but had advised it would not be making an offer to purchase.
Expressions of interest from Flow Defence and SW 360
On 5 November 2018, Mr Beard sent emails to Ecosol’s solicitors stating that, subject to due diligence, Flow Defence Pty Ltd would make an offer to purchase the business for a price in the vicinity of $3.00 per share under a five year vendor finance agreement. Details of the contemplated 60 days for due diligence were set out. Within a few days, Ecosol, through Mr Smith, wrote to its shareholders, attaching this correspondence, but saying that the directors did not consider the foreshadowed offer was credible, and that the general meeting would proceed on 23 November 2018. Mrs Roy subsequently wrote to Ecosol shareholders, effectively responding to this correspondence from Ecosol.
On 5 November 2018, Mr Slater sent emails to at least one other organisation, known as Stormwater 360 (‘SW 360’), enquiring whether it would like an opportunity to undertake due diligence in respect of Ecosol’s business. The managing director of SW 360 responded expressing interest. Through its solicitors, SW 360 contacted Ecosol’s solicitors, Cowell Clarke. On Mr Smith’s instructions, Mr Charlton provided SW 360’s solicitors with a due diligence pack.
The defamatory publications commence
On 11 November 2018, Mr Slater sent an email to [email protected], attaching an eight-page document addressed to the Ecosol directors and copied to Ecosol shareholders. The email said that the document contained Mr Slater’s key concerns to which the directors should respond immediately in writing so that shareholders could cast a fully informed vote on the tabled resolution. This email was the first of the publications by Mr Slater that Mr Smith contended was defamatory of him.
It is not necessary to set out the full text of this publication by Mr Slater. It is sufficient to note that it made a number of criticisms of the Ecosol directors in relation to their approach to the sale of Ecosol, and that it was written in emphatic language, with several passages being in upper case and underlined. The judge found that it conveyed several defamatory imputations: that Mr Smith, as one of Ecosol’s directors had refused to countenance a higher offer to the MBO in a clear breach of his fiduciary duties; that Mr Smith had acted in an outrageous manner; that Mr Smith was biased towards the MBO; and that Mr Smith had wilfully permitted Ecosol to refuse to abide by orders of the Supreme Court of Queensland.
The first publication
On 12 November 2018, Ecosol sent by email a letter to its shareholders, signed by Mr Smith and entitled ‘Update for general meeting’. The letter referred to the interest expressed by Flow Defence and SW 360. It also referred to recent correspondence the shareholders had received from Mr Slater, being an apparent reference to the letter mentioned above. This is the first of the publications by Ecosol that Mr Slater contended was defamatory of him (‘the first publication’). The penultimate paragraph was as follows:
Letter from shareholder
Some of you will have recently received correspondence from Matthew Slater who is a shareholder of the Company. Much of Mr Slater’s letter contains statements that are defamatory of various Company personnel and statements that are factually incorrect and misleading and deceptive. The company does not consider it of benefit to shareholders that it engage at this stage in responding in detail to Mr Slater’s letter.
The judge held that this would have been understood as referring to Mr Slater’s communication to shareholders dated 11 November 2018, and conveyed the following imputations defamatory of Mr Slater:
1.Mr Slater had made statements which he knew were lies;
2.Mr Slater deliberately engaged in misleading and deceptive conduct;
3.Mr Slater was a liar; and
4.Mr Slater’s conduct was so false and reprehensible that Ecosol and Mr Smith did not consider it warranted a detailed response.
The letter concluded by saying that Ecosol would provide an update to shareholders before the 23 November 2018 general meeting concerning any developments.
On 12 November 2018, Mr Slater responded by email addressed to [email protected]. The communication had a heading in upper case ‘Do the directors or their major influencer Ian Charlton stand to make a financial gain direct or indirect if the MBO succeeds? Yes or no and the answer in writing please’. He said that, unless the shareholders received a clear negative answer in writing to that question, the directors could not sit in judgment of rival offers to the MBO. He said that the deadline for shareholders to lodge or change a proxy would expire before the deadline for other bids. He said that the MBO was paying no goodwill for Ecosol.
The second publication

On 13 November 2018, Ecosol sent by email to its shareholders a letter signed by Mr Smith. He referred to the recent correspondence received by shareholders from Mr Slater. This is the second of the publications by Ecosol that Mr Slater contends was defamatory of him (‘the second publication’). It included the following:
A number of you will have received yet more correspondence from Matthew Slater. Mr Slater appears to have a strong desire to prevent completion of the sale of company assets to Urban Asset Solutions Pty Ltd (UAS). Regrettably, Mr Slater’s involvement is contributing nothing of value to shareholders. Rather, he is forcing the company to incur additional costs in addressing his defamatory and vitriolic comments.
No personal interest
To be clear, Jeff Smith, David Bishop and Ian Charlton will not receive any benefit now or in the future from and have no personal interest in the sale of the company’s assets to UAS, other than in their capacity as shareholders, in common with all other shareholders. Mr Slater’s suggestions to the contrary are without foundation and demonstrate his personal animosity towards these individuals.
Valuation and goodwill
Mr Slater has alleged that UAS will be paying nothing for Ecosol’s goodwill. Since 2012, Ecosol has had periodic company valuations undertaken. In each case, the valuer has used the discounted cash flow (DCF) method to value the company. The DCF valuation method was used in arriving at a value for the company’s assets in the sale to UAS.
The DCF method is one of the most common methods used for valuing companies. In short, a company is valued by reference to the cash flows it generates from the utilisation of all of its assets, including its goodwill. The method does not separately attribute a specific value to any one asset of the company, including goodwill. In arriving at a value for the sale of the company assets to UAS, the value of the company’s goodwill and its other assets is effectively taken into account by the valuer in employing the standard DCF method. Given that the DCF valuation method is so widely known and accepted as a valuation method, we would have thought that as an accountant, Mr Slater would be aware that it does not involve specifying a separate value for goodwill. We can only assume that Mr Slater’s comments about UAS paying nothing for Ecosol’s goodwill are intended to mislead shareholders.
The judge held that the second publication conveyed the following imputations defamatory of Mr Slater:
1.Mr Slater was improperly seeking to interfere with the completion of the sale of company assets to UAS;
2.Mr Slater’s involvement was improperly adding to the costs of the sale to the detriment of shareholders;
3.Mr Slater’s comments in his letters to shareholders were vitriolic and he was motivated by improper purposes and hatred for the officers of Ecosol;
4.Mr Slater was motivated by sheer vindictiveness, malice and animus towards the officers of Ecosol; and
5.Mr Slater was acting in a destructive and reprehensible manner.
Further objections and communications
On 14 November 2018, Mr Slater responded in an email addressed to Ecosol’s shareholders. It attached a three-page document addressed to Mr Smith, and comprised the second publication by Mr Slater that Mr Smith contended was defamatory of him. The letter included:
Dear Mr Chairperson
1Absolutely I have a very strong desire to prevent the MBO succeeding on the basis of the information the board has provided but only on November 2nd more than a month after the first meeting was adjourned and what it was forced to disclose by a Supreme Court order.
2Shareholders are yet to hear an explanation as to why the board with its fiduciary duties are so keen to force the MBO on shareholders by it appears on the facts such as not taking Ecosol to the market, rebuffing Spel’s initial approach, having Andrew Macklin run interference to the Spel Bid, not adjourning the rescheduled meeting so that the fresh bidders have a reasonable time frame to consider their bids, not abiding by Supreme Court orders for discovery in a material way which might have shown more concerning information that shareholders should know, not disclosing the full valuation report etc etc.
3Your very limited in scope attempted rebuttal of the multitude of serious concerns documented in details reveals more about your arrogance and dismissive attitude to shareholders right to know which makes you unfit in this role rather than shedding any light on those issues at hand.
4 I for one have no desire to have you in this matter as my ruler for the next five years.
5Given this is your mindset and YOUR statement that I am delivering nothing of value to shareholders which is false given a few shareholders have responded to my detailed concerns list with the following comments:
‘Many thanks, Matt. Excellent information and something that we have not been privy to for many years. Interesting to see how the director’s handle this.’
‘Thank you so much for confirming.... insightful information’
‘Well done Matt very comprehensive history of events’
6It is important for shareholders to know that the only reason I and Jodie and her legal representative are able to communicate promptly via the same channel you have had the advantage of IS NOT because you complied with the recent Supreme Court order requiring you provide Jodie an up to date contact details of shareholders but because I was given those contact details late last year when I viewed the share registry and this is probably out of date given a couple of email addresses have bounced back.
The judge found that this publication conveyed an imputation defamatory of Mr Smith, namely that he was unfit to be a director of Ecosol because of his arrogantly dismissive attitude to the shareholders’ right to know about important company information.
On 20 November 2018, Mr Beard sent a letter by email to Ecosol’s solicitors, Cowell Clarke, stating that, given the limited time, Flow Defence proposed that the UAS transaction documents be amended to substitute it for UAS and to increase the purchase price. It was said that the effect of this was to substitute an offer which equated to $3.00 per share as opposed to the UAS offer of $2.54 per share. Over the next day, Cowell Clarke responded with some questions about this offer, and Mr Beard responded to those questions.
On 20 November 2018, Mr Slater sent an email addressed to shareholders, setting out 13 questions that he had submitted for the directors of Ecosol to answer at the forthcoming general meeting. This was the third publication by Mr Slater that Mr Smith contended was defamatory of him. The questions were as follows:
1A cash offer for the business from a competitor for Ecosol assets WILL MEAN THAT ECOSOL CAN BE LIQUIDATED IMMEDIATELY otherwise how much will be Ecosol Directors be paid p.a. if the MBO goes ahead and they stay on for five years to monitor the deal?
2What expenses do the Directors expect to be able to claim p.a after the MBO, in broad terms the type of expense and nature if Ecosol does not accept a cash offer?
3If Andrew Macklin is still an Ecosol director will he remain so if a cash offer accepted?
4      What was Andrew Macklin’s new strategic vision for Ecosol
5Will certain shareholders be paid before other shareholders if a cash offer is not accepted?
6      What equity is currently left in the Sydney commercial property?
7      What are the new innovative products mentioned in the Ecosol web page?
8Why did Ecosol not fully comply with the Supreme Court of Queensland court orders?
9Why did Jeffery Smith apparently waste shareholders funds by flying down specifically for the defamation directions hearing when he could have appeared by telephone?
10If not and he was staying down for the shareholder meeting has he charged Ecosol for hotel accommodation he stayed at for the rest of the week?
11Will the current directors excluding Andrew Macklin get any direct or indirect financial benefit in the future through an associated entity if the UAS offers succeeds if a cash offer is not accepted?
12Why did the Directors schedule a meeting at 9am rather than early evening which would be a more convenient time slot for shareholders?
13Why were shareholders required to send in any change in proxy before the deadline for the other bidders was finished?
Whilst the questions contained a number of implicit criticism of the directors, the judge held that it did not give rise to the defamatory imputations alleged by Mr Smith.
On 21 November 2018, a representative of SW 360 sent an email to Cowell Clarke, attaching an offer to purchase Ecosol. Later the same day, Cowell Clark sent an email to Mr Smith, Mr Bishop and Mr Charlton, comparing the SW 360 and UAS offers.
At about this time, Mr Roy told Mr Slater during a telephone call that he had been advised by the Smith camp to stay away from the shareholders meeting as he was not a shareholder. Mr Slater was challenged in cross-examination about this conversation, but Mr Roy gave evidence that he was told this, although he could not recall whether it was by Mr Smith or the lawyers, and that he would have relayed that to Mr Slater.
On 21 November 2018, Mr Slater sent an email addressed to the shareholders. Referring to the Flow Defence proposal, he said that the Roys had made an unconditional bid for Ecosol on identical terms to Mr Macklin’s MBO except the price was $3.00 per share rather than $2.54. He also said that Ecosol’s lawyers had written to Mr Roy telling him to stay away from the meeting.
The board rejects the Flow Defence and SW 306 proposals
On 22 November 2018, Mr Charlton, on Mr Smith’s request, wrote to Mr Smith setting out his opinion concerning the SW 360 and Flow Defence offers. Mr Charlton’s opinions were included within Mr Smith’s letter to shareholders attached to the 22 November 2018 email to shareholders referred to below.
On 22 November 2018, Mr Smith and Mr Beard met as the directors of Ecosol. Although not shown in the minutes, Mr Charlton attended by invitation. The board decided to reject the SW 360 offer, and not to extend any offer of finance to Flow Defence meaning that, in the absence of any other financing, its offer could not be considered any further. The board decided that the shareholder meeting should proceed.
The third publication
Late in the evening of 22 November 2018, Ecosol sent its shareholders an email attaching a three-page letter signed by Mr Smith. In that letter, Mr Smith provided an update on the status of the two recent offers that Ecosol had received. He referred to offers by SW 360 and Flow Defence. He identified difficulties and disadvantages in respect of each offer. He said that the board had rejected the SW 360 offer and decided not to extend any offer of finance to Flow Defence meaning that, in the absence of any other financing, its offer could not be considered any further. He said that the board remained supportive of the UAS offer.
The letter also included the following response to Mr Slater’s communications to shareholders:
Before I update you with the status of the two recent offers we have received I would like to correct a very serious allegation directed to our lawyers, Cowell Clarke, by shareholder Matthew Slater. In his email to shareholders dated 21 November 2018 he says that “… Ecosol lawyers have written to [Mr Roy] telling him to stay away from the meeting …” This is completely untrue as are several other statements Matthew makes in his email.
This letter comprised the third impugned publication by Ecosol (‘the third publication’) that Mr Slater alleged contained imputations defamatory of him. However, the judge did not accept that any of the alleged imputations were conveyed.
During the course of that night, Mr Slater sent three emails to shareholders responding to the Ecosol letter.
The general meeting and settlement of the sale to UAS
On 23 November 2018 at 9.00am, the shareholder meeting proceeded. Minutes of the meeting signed by Mr Smith as chairman recorded that Mr Smith informed the shareholders that the board considered that the offers received from SW 360 and Flow Defence were either not credible or not sufficiently attractive for the reasons set out in the letter sent to shareholders the previous night. He said that the only resolution to be considered at the meeting was to consider, and if thought fit approve, the directors’ decision to sell the company’s assets and liabilities to UAS. He said that the lodgement of proxies had closed on 21 November 2018 at 9.00am and showed that the holders of 377,732 shares (53 per cent) had directed proxies in favour of the resolution and holders of 49,312 shares (6.9 per cent) were against.
The minutes recorded that, in answer to questions and to what was said by Mr Slater (and perhaps Mr Roy), Mr Smith referred to the letter sent to shareholders on the previous night. The resolution was then put. It was declared that the resolution was passed, with 409,710 votes (59.3 per cent) cast in favour of the resolution and 281,042 votes (40.7 per cent) cast against the resolution.
On 30 November 2018, settlement of the sale of Ecosol’s business to UAS occurred. In early December, Ecosol engaged a real estate agent to sell the Sydney property.
The fourth and fifth publications
On 28 June 2019, Mr Slater sent an email to Mr Smith and Mr Bishop which he copied to most shareholders.
On 22 July 2019, Ecosol sent an email to all shareholders, attaching a letter signed by Mr Smith. In that letter, he referred to the recent correspondence received by shareholders from Mr Slater (which the judge held would have been understood as a reference to the 28 June 2019 email mentioned above). It included the following passages (being ‘the fourth publication’ sued upon by Mr Slater):
You may have received another letter recently from shareholder, Matthew Slater. Apart from one point that I will address later in this letter I do not intend to respond to him. Past experience shows that doing so just encourages further questions to which we no longer have adequate resources or time to respond.
…
As Matthew stated in his letter he is suing the Company, and also its legal advisors, Cowell Clarke, for almost $12,000 for defamation in the Small Claims Court. …
In his letter Matthew asks how these costs are being paid. He knows full well that it is the Company, and ultimately, you the shareholder, who will bear these costs. He seems indifferent to the effect it is having on you. I am sure that you understand that we cannot meet Matthew's unwarranted demands as this could lead to further action by him…
…With the recent sale of the Sydney property I had hoped to announce a third dividend of 80 cents per share payable on 31 October 2019. However, we must plan for the possibility that Matthew will take further legal action and that we may not be insured and so will have further unnecessary costs to bear. This means that we have had to reduce the third dividend to 60 cents per share so that we have sufficient cash reserves to fund any potential legal costs.
Moreover, we will now have to revise our dividend payment schedule. A planned fourth dividend of 14 cents per share that was to have been paid on 20 December 2019 in time for Xmas has been postponed indefinitely. I am sincerely sorry that we have to do this but I am sure you understand our position. I am hopeful that Matthew will moderate his position so that we are able to resume regular dividends as we had previously planned.
As mentioned earlier the only issue raised in Matthew's open letter that requires a response relates to the wording about UAS paying $2.54 per share. He is correct and I should have said that the $2.54 per share refers to the total amount you will hopefully receive from both UAS and the sale of the Sydney property. I apologise for any possible confusion.
The judge held that this fourth publication conveyed the following imputations defamatory of Mr Slater:
1.Mr Slater was selfish and not empathetic for the shareholders; and
2.Mr Slater was a serial pest.
On 6 August 2019, Mr Smith sent an email to Mr Slater attaching a concerns notice alleging that he had been defamed by Mr Slater in his letters to shareholders.
On 8 August 2019, Ecosol sent an email to its shareholders attaching a letter signed by Mr Smith (‘the fifth publication’). It included the following:
On a less positive note Matthew Slater is continuing with his defamation case and other behaviour that negatively impacts our ability to get the proceeds of the sale intact to you. Unfortunately, every interaction with Matthew costs us and adds no value whatsoever. You may recall that he has foreshadowed further legal action against myself, David Bishop, Andrew Macklin, and Ian Charlton alleging various breaches of fiduciary duties in our directorial roles. It appears as though he may have moderated his stance on this recently advising us that he no longer intends to take the Federal Court action. However, there is nothing to stop him changing his mind and, as he would not sign a legally-binding document on terms acceptable to us to rule out all of his threats, nor end his defamation action, they remain an issue that will impact dividends.
Whilst finding that this conveyed an imputation that Mr Slater’s behaviour towards Ecosol was without merit, his Honour did not consider that this publication was defamatory.
On 8 October 2019, Mr Slater sent Mr Smith and Mr Bishop a concerns notice alleging that he had been defamed by them and Ecosol in Mr Smith’s letters to shareholders.
The defamation proceedings
In October 2019, Mr Smith issued defamation proceedings against Mr Slater in the District Court of New South Wales. In November 2019, Mr Slater issued defamation proceedings against Ecosol and Mr Smith in the Magistrates Court in South Australia. He later discontinued the action against Mr Smith, and continued only against Ecosol.
In April 2021, in the context of an appeal from some interlocutory orders made by a magistrate in Mr Slater’s defamation proceedings, those proceedings were transferred into the Supreme Court. In July 2021, orders were made transferring Mr Smith’s proceedings to the Supreme Court of South Australia, to be heard by way of a cross claim in Mr Slater’s proceedings against Ecosol.
For completeness, the earlier defamation proceedings brought by Mr Slater in the Magistrates Court were dismissed by a magistrate in December 2019. The defences of qualified privilege and triviality were established. A judge of the District Court dismissed Mr Slater’s review of that decision.
The trial
As mentioned at the outset of these reasons, the trial of Mr Slater’s and Mr Smith’s defamation claims was relatively lengthy, and involved a large volume of documentary exhibits. The trial proceeded over more than 10 sitting days, with the parties relying upon more than 15 lever arch folders of documents. The parties relied upon oral evidence from close to 20 witnesses. The parties also relied upon notices to admit, and the responses to those notices.
Mr Slater gave his evidence in chief mainly through written statements and affidavits. He also called evidence from Mr Mielke. He subpoenaed a number of witnesses, including Mr and Mrs Roy.
Ecosol called evidence from Mr Smith, Mr Charlton, Mr Bishop and Mr Macklin, each of whom gave their evidence in chief mainly through affidavits.
The trial judge’s reasons and findings
After setting out the factual background in some detail, the judge commenced the operative section of his reasons by addressing his assessment of the various witnesses.
Assessment of Mr Slater’s evidence
After noting the challenge by Ecosol and Mr Smith to his honesty, the judge accepted Mr Slater’s honesty as a witness:
[252]My overall impression of Mr Slater was that he was an honest witness. He has fervent beliefs that the sale to UAS was not in the best interests of Ecosol’s shareholders, in propounding and promoting it the Ecosol directors were not acting in the best interests of Ecosol and the Ecosol directors breached their duties to shareholders. He has a fervent belief in his own case. He has an intense personal dislike for Mr Smith, Mr Macklin and Mr Charlton. My overall impression is that he was honest in his evidence about his beliefs and also in his evidence about events (albeit reliability of his evidence about events is a different issue which I address below).

After stating this general conclusion, the judge proceeded to address the ‘extensive submissions’ that had been made in challenging Mr Slater’s honesty as a witness.[3] He began by making some observations about Mr Slater’s demeanour as a witness.[4] He noted Mr Slater’s tendency to give long, discursive and imprecise answers to questions, both during cross-examination and from the judge. However, his Honour considered that this reflected his personality and personal characteristics rather than dishonesty. He described Mr Slater as believing he had an analytical mind, when in reality he tended to express himself not in sharp, concise or structured propositions, but in more rambling, discursive and repetitive terms.
[3] Reasons at [253].
[4] Reasons at [254]-[255].
The judge addressed several mistakes or discrepancies in the things written or said by Mr Slater in his communications and in his evidence.[5] He was not satisfied that Mr Slater knowingly gave any false evidence.
[5] Reasons at [256]-[278].
The judge was also satisfied that Mr Slater was a generally reliable witness:
[279]In relation to reliability, I take into account the fact that Mr Slater has an obvious self-interest as applicant on his claim and respondent on Mr Smith’s claim. I take into account his personality and characteristics to which I have referred above. I take into account that he was giving evidence generally about events that occurred three or four years previously and in some cases much earlier. I accept that he was generally a reliable witness in relation to his own state of mind at material times. In relation to events, as it transpires, the issues in the case do not generally turn on reliability of Mr Slater’s evidence or his recollection. In the scale of witnesses in cases generally, Mr Slater was not an exceptionally reliable witness nor was he an exceptionally unreliable witness. I regard him as a generally reliable witness, albeit it cannot be said that 100 per cent of his evidence was accurate.
Assessment of Mr Smith’s evidence
In finding that Mr Smith was an honest and generally reliable witnesses, the judge expressed himself more succinctly:
[280]Mr Slater contends that Smith was not a credible witness. However, unlike Ecosol, he does not make detailed submissions in support of that contention.
[281]I find that Mr Smith was an honest witness. Although he was on occasions argumentative and evasive, this did not in my assessment reflect on his honesty. Mr Smith was a more concise and straightforward witness than Mr Slater, which reflects personality differences between them.
[282]In relation to reliability, I take into account the fact that Mr Smith has an obvious self-interest as applicant on his cross claim and as director of the respondent Ecosol on Mr Slater’s claim. I take into account that he was giving evidence generally about events that occurred three or four years previously and in some cases much earlier. Like in respect of Mr Slater, I accept that Mr Smith was generally a reliable witness in relation to his own state of mind at material times. In relation to events, as it transpires the issues in the case do not generally turn on reliability of Mr Smith’s evidence or his recollection. In the scale of witnesses in cases generally, Mr [Smith] was a reasonably reliable witness, albeit it cannot be said that 100 per cent of his evidence was accurate.
One of Mr Slater’s complaints on appeal is that the judge did not adequately address Mr Smith’s credit. In addressing this complaint later in these reasons, reference will be made to some of the more detailed findings made by the judge about Mr Smith’s evidence, both in rejecting Mr Slater’s allegation of malice on the part of Mr Smith, and in rejecting Mr Slater’s defence of justification to various of the defamatory imputations he published about Mr Smith. The detail of the findings in these contexts underpin the credit findings expressed in more general terms at this point in the judge’s reasons.
Assessment of the other witnesses
The judge addressed the remaining witnesses in a rolled-up way, finding them all to have been honest and generally reliable witnesses.[6]
[6] Reasons at [283]-[286].
It is appropriate to observe at this point that, whilst the evidence of the various witnesses was relevant in a number of respects, this was not a case that turned to any great extent upon the judge’s assessment of the witnesses. Most of the salient facts, including virtually all of the matters summarised earlier in these reasons, was apparent from the contemporaneous documentation received in evidence.
Although some factual issues at trial, such as those raised by the defences of justification, required consideration of the evidence given by the various witnesses, the issues have narrowed on appeal. That said, the credibility and reliability of Mr Slater and Mr Smith are relevant to the challenges to the defence of qualified privilege, particularly the challenge to the rejection of Mr Slater’s submission of malice on the part of Mr Smith, and so it will be necessary to return to his Honour’s assessment of these witnesses later in these reasons.
Defamatory imputations conveyed
Turning to the legal issues raised on appeal, as there is no cross-appeal by Mr Smith, it is only necessary to address the judge’s rejection of Mr Slater’s claim for defamation.
The judge addressed each of the five publications relied upon by Mr Slater in his claim for defamation.[7] The relevant passages from those publications have been set out earlier in these reasons. As has also been set out earlier in these reasons, the judge found that the first, second and fourth publications conveyed imputations which were defamatory of Mr Slater.
[7] Reasons at [321]-[378].
It is not necessary to repeat the detail of those imputations. It is sufficient at this point to observe that they were generally to the effect that, in his conduct and communications in connection with the proposed management buyout and sale to UAS, Mr Slater had lied to and misled shareholders, had improperly interfered with the proposed transaction, had been improperly motivated by vindictiveness and a hatred for officers of Ecosol, and had acted selfishly and without empathy for the shareholders of Ecosol.
Defence of justification not established
In support of its defence of justification, Ecosol relied at trial upon what it submitted were eight examples of lies, or knowingly false statements made by Mr Slater in his communications to the Ecosol shareholders.
The judge addressed each of these in detail before ultimately concluding that he was not satisfied that Mr Slater had lied or made any knowingly false statements to shareholders.[8] It is not necessary to address the detail of this aspect of the judge’s reasoning. It is sufficient to note that the judge accepted – or at least, was not prepared to reject – Mr Slater’s explanations for the mistakes and ambiguities in his communications with shareholders. In several cases, the statements made, or at least opinions or views expressed, by Mr Slater were accurate or had a proper basis. However, in some cases, statements were found not to be false or misleading because they were expressed in terms of Mr Slater’s opinion or ‘understanding’, or how they ‘appeared’ to him. And in some cases, the judge appears to have accepted, or allowed for the possibility, that statements were false or misleading, but found there was no evidential basis for concluding that Mr Slater positively knew they were false or misleading.
[8] Reasons at [379]-[500].
Similarly, the judge was not ultimately satisfied that Mr Slater was improperly motivated in his conduct and communications with shareholders in connection with the proposed transaction with UAS. The judge accepted that Mr Slater had an intense dislike for Mr Smith and other officers of Ecosol, however the judge was not satisfied that this motivated his conduct or communications.
Whilst there is no occasion to revisit any of these findings, it is appropriate to observe that it is not as though the judge concluded that Mr Slater’s communications to shareholders were all fair and accurate. To the contrary, it appears from the judge’s findings in respect of the defence of justification, and from his findings and reasons more generally, that those communications were not only expressed in strong and emphatic terms, and heavily critical of the conduct of the directors and officers of Ecosol, but they also lacked precision and at the very least had the capacity to confuse or mislead shareholders in a number of respects. It also appears from the judge’s findings and reasons that Mr Slater’s conduct and communications did at times impede, or interfere with, the progress of the transaction with UAS, and the shareholders’ consideration of that transaction, and on some occasions had no objective basis or foundation. These observations are relevant to, and form part of the context when considering, the appropriateness of Ecosol’s responses, through Mr Smith’s impugned publications, for the purposes of qualified privilege and malice.
Defence of qualified privilege established
In addressing Ecosol’s defence of common law privilege, the judge accepted that it required consideration of three matters:[9] whether the publication occurred on an occasion of qualified privilege; whether the defamatory statement was sufficiently connected to that occasion; and whether the publisher acted with malice (that is, for a purpose other than the purpose for which the privilege existed). As the judge correctly explained, Ecosol, as the defendant, carried the onus in relation to the first two matters. Mr Slater carried the onus in relation to malice.
[9] Reasons at [303], [503].
As to the occasion of the privilege, the judge referred to authorities explaining the reciprocity of duty or interest which underpins the occasion for the privilege at common law.[10] This included reference to Bashford v Information Australia (Newsletters) Pty Ltd,[11] where the defendant published a trade newsletter (the ‘Occupational Health and Safety Bulletin’) to 900 subscribers who paid an annual subscription, and had professional responsibility for occupational health and safety matters. A majority of the High Court (Gleeson CJ, Hayne and Heydon JJ, McHugh and Callinan JJ dissenting) held that the defamatory article in that newletter was published on an occasion of qualified privilege. In so holding, Gleeson CJ, Hayne and Heydon JJ said:[12]
What set the respondent’s Bulletin apart from some other paid publications was the narrow focus of both its subject matter and its readership. Because its subscribers were only those responsible for occupational health and safety matters, and because it dealt only with those matters, there was that reciprocity of duty or interest between maker and recipient which attracted qualified privilege. The circumstances of the publication were, therefore, very different from those in which the general news media deal with matters of political or other interest …
[10] Reasons [305]-[311].
[11] Bashford v Information Australia (Newsletters) Pty Ltd (2004) 218 CLR 366.
[12] Bashford v Information Australia (Newsletters) Pty Ltd (2004) 218 CLR 366 at [26] (Gleeson CJ, Hayne and Heydon JJ).
In addressing the occasion of the privilege for Ecosol’s impugned communications, the judge explained that one established category was a communication to a recipient having a legitimate interest in receiving it, by a person having a reciprocal interest in communicating it.[13] His Honour then explained that, in applying this to the three publications which he had held conveyed imputations defamatory of Mr Slater, it was appropriate to divide the publications into two groups: the two published in November 2018, prior to the shareholder meeting; and the one published in mid-2019, after settlement of the sale to UAS.[14]
[13] Reasons at [504].
[14] Reasons at [506].
In relation to the publications in November 2018 prior to the shareholder meeting, the judge described these as a ‘paradigm case’ for an occasion of qualified privilege:
[507]In respect of the first set, each of the first and second impugned publications related to business to be addressed at the forthcoming shareholders meeting, namely whether the directors’ decision to sell the company’s assets and liabilities to UAS should be approved. Such approval was a condition precedent to settlement of the contract of sale. In each impugned publication, the directors provided information to shareholders relevant to their decision whether to vote for or against the approval resolution. In each impugned publication, the directors were in part responding to communications sent to shareholders by Mr Slater relevant to shareholders’ decision on voting and advocating a “no” vote. In each case, the publication was sent only to Ecosol shareholders.
[508]In these circumstances, each recipient had a legitimate interest in receiving the communication comprising the impugned publication. The Ecosol directors had an interest in communicating it and that interest was reciprocal. This is a paradigm case in which the first element of the defence is satisfied.
In relation to the fourth publication, which was published in mid-2019 after settlement of the sale to UAS, his Honour described the occasion of privilege as follows:
[509]In respect of the second set, the fourth impugned publication related to business of the company, including relevantly the payment of dividends to shareholders, Mr Slater’s litigation and interactions between Mr Slater and the company. In the impugned publication, the directors provided information to shareholders relevant to shareholders in relation to these matters. In the publication, the directors were in part responding to communications sent to shareholders by Mr Slater relevant to these matters. Again the impugned publication was sent only to Ecosol shareholders.
[510]In these circumstances, each recipient had a legitimate interest in receiving the communication comprising the impugned publication. The Ecosol directors had an interest in communicating it and that interest was reciprocal. This is a paradigm case in which the first element is satisfied.
After concluding that this first element of common law qualified privilege was established, his Honour turned to the requirement that the defamatory statement be sufficiently connected to the occasion of privilege.
The judge found that in the case of each of the first, second and fourth publications, the impugned statements or words were ‘closely and sufficiently connected to the occasion of qualified privilege’. In the case of the first and second publications, the statements or words ‘related to statements made by Mr Slater to shareholders concerning the UAS transaction and the response by the directors to those statements’.[15] In the case of the fourth publication, the statements or words ‘related to statements made by Mr Slater to shareholders concerning company affairs, Mr Slater’s actions against the company and the payment of dividends to shareholders’.[16] In the case of each of the publications, his Honour rejected Mr Slater’s submission to the effect that the statements or words were foreign to the occasion of qualified privilege.[17]
[15] Reasons at [512]-[513].
[16] Reasons at [514].
[17] Reasons at [515].
On this basis, his Honour held that the second element of qualified privilege was established, and that the defence applied subject only to the issue of malice.
Malice not established
The judge commenced his consideration of malice by setting out some passages from the reasons of Gaudron, McHugh and Gummow JJ in Roberts v Bass.[18] In these passages, their Honours confirmed that qualified privilege would be defeated by proof of malice, that is, proof that the publisher used the occasion for a purpose or motive other than that for which the privilege exists:[19]
An occasion of qualified privilege must not be used for a purpose or motive foreign to the duty or interest that protects the making of the statement. A purpose or motive that is foreign to the occasion and actuates the making of the statement is called express malice. The term "express malice" is used in contrast to presumed or implied malice that at common law arises on proof of a false and defamatory statement. Proof of express malice destroys qualified privilege. Accordingly, for the purpose of that privilege, express malice ("malice") is any improper motive or purpose that induces the defendant to use the occasion of qualified privilege to defame the plaintiff. ...
[18] Roberts v Bass (2002) 212 CLR 1; Reasons at [317].
[19] Roberts v Bass (2002) 212 CLR 1 at [75] (Gaudron, McHugh and Gummow JJ).
Their Honours also distinguished improper motive from other states of mind, such as knowledge of falsity, recklessness, lack of belief in the defamatory statement, ill-will, bias or prejudice. Whilst these states of mind, particularly knowledge of falsity, may be used as a basis for inferring that the publisher was actuated by an improper motive, the distinction remains important. Their Honours explained:[20]
Improper motive in making the defamatory publication must not be confused with the defendant's ill-will, knowledge of falsity, recklessness, lack of belief in the defamatory statement, bias, prejudice or any other motive than duty or interest for making the publication. If one of these matters is proved, it usually provides a premise for inferring that the defendant was actuated by an improper motive in making the publication. Indeed, proof that the defendant knew that a defamatory statement made on an occasion of qualified privilege was untrue is ordinarily conclusive evidence that the publication was actuated by an improper motive. But, leaving aside the special case of knowledge of falsity, mere proof of the defendant's ill-will, prejudice, bias, recklessness, lack of belief in truth or improper motive is not sufficient to establish malice. The evidence or the publication must also show some ground for concluding that the ill‑will, lack of belief in the truth of the publication, recklessness, bias, prejudice or other motive existed on the privileged occasion and actuated the publication. Even knowledge or a belief that the defamatory statement was false will not destroy the privilege, if the defendant was under a legal duty to make the communication...
If the defendant knew the statement was untrue when he or she made it, it is almost invariably conclusive evidence of malice. That is because a defendant who knowingly publishes false and defamatory material almost certainly has some improper motive for doing so, despite the inability of the plaintiff to identify the motive…
[20] Roberts v Bass (2002) 212 CLR 1 at [76]-[77] (Gaudron, McHugh and Gummow JJ).
Their Honours later emphasised the distinction between the courts’ readiness to infer an improper motive and hence malice from knowledge of falsity, and the greater difficulty in inferring an improper motive from a mere lack of honest belief or recklessness:[21]
In our opinion, neither lack of honest belief nor knowledge of falsity ipso facto destroys a defence of qualified privilege. But knowledge of falsity is "almost conclusive evidence" of improper motive, except where the defendant is under a legal duty to publish the defamation.
In exceptional cases, the sheer recklessness of the defendant in making the defamatory statement, may justify a finding of malice. In other cases, recklessness in combination with other factors may persuade the court that the publication was actuated by malice. In the law of qualified privilege, as in other areas of the law, the defendant's recklessness may be so gross as to constitute wilful blindness, which the law will treat as equivalent to knowledge. … In less extreme cases, recklessness, when present with other factors, may be cogent evidence that the defendant used the occasion for some improper motive. This is particularly so when the recklessness is associated with unreasoning prejudice on the part of the defendant.
…
Further, mere lack of belief in the truth of the communication is not to be treated as if it was equivalent to knowledge of the falsity of the communication and therefore as almost conclusive proof of malice. The cases contain many statements to the effect that the privilege will be lost if the defendant did not honestly believe in the truth of a defamatory statement made on a privileged occasion. If those statements mean no more than that qualified privilege is lost when the defendant knows or believes the defamatory statement is false, they are in accord with settled principle and authority. But if they mean that the defendant loses the privilege unless he or she has a positive belief in the truth of the publication, it is not easy to reconcile them with basic principle.
[21] Roberts v Bass (2002) 212 CLR 1 at [83]-[84], [87] (Gaudron, McHugh and Gummow JJ).

Related to this, Mr Slater also submitted that the availability of the defence of qualified privilege required that Ecosol and Mr Smith confine their contributions to responding more directly to the particular matters raised by Mr Slater in his publications. He contended that, for the responses to his publications to be sufficiently connected to the privileged occasion, they had to be confined to correcting or commenting upon the particular statements made by Mr Slater, or otherwise presenting information that would assist shareholders in their consideration of the UAS transaction and its alternatives. Mr Slater asked rhetorically how going beyond this role would have assisted the shareholders’ consideration of the UAS transaction, which was the basis for the privileged occasion. In support of these submissions, Mr Slater emphasised the significance of Mr Smith’s role as a director and fiduciary, as developed later in these reasons. He also pointed to Mr Smith’s tendency in his communications to shareholders to address Mr Slater’s detailed criticisms by sweeping them aside dismissively, rather than engaging with the substance or detail of them. In Mr Slater’s submission, Mr Smith’s communications tended to shut down or stifle any debate about the merits of the UAS transaction, rather than facilitate or further that debate.
In response to these submissions, it may be observed that Mr Slater’s communications were not as detailed and analytical as his submissions tend to suggest. Whilst he made a number of points worthy of consideration, they were encompassed within communications which were, in many respects, quite sweeping and emphatic in their terms. But more importantly, as we have endeavoured to explain, Mr Slater’s submissions tend to assume too narrow a view of the defence of qualified privilege, and of the nature and strength of the connection required between the defamatory statements and the occasion of the privilege. By and large, the defence is concerned with protecting defamatory statements that relate to the topic which underpins the occasion for privileged communications, without attempting to assess the accuracy or quality of those statements, or their capacity to assist or inform discussion or consideration of that topic.
For the reasons given, we are not satisfied that the judge erred in his consideration of whether Ecosol’s defamatory statements were sufficiently connected to the occasion of the privilege. To the contrary, we are satisfied that they were sufficiently connected.
For completeness, we add that we do not consider that Mr Smith’s position as a director, or Mr Slater’s allegations that Mr Smith breached his fiduciary and statutory duties, alters the above analysis. As elaborated upon later in these reasons, whilst Mr Smith’s position and duties formed part of the general context in which the issue of qualified privilege, and the connection of the defamatory statements to the occasion of privilege, fell to be considered, we do not think they affect or undermine the analysis or conclusions set out above.
Malice
As explained earlier in these reasons, the judge gave relatively detailed reasons for rejecting Mr Slater’s case that Ecosol, through Mr Smith, was actuated by malice in making the defamatory statements in the impugned publications.
In particular, the judge rejected Mr Slater’s primary submission to the effect that the directors of Ecosol had a dominant motive of undermining Mr Slater’s credibility in his communications with shareholders in opposition to the transaction with UAS, and furthering a scheme to give preferential treatment to an MBO over all other alternative proposals. His Honour not only rejected these suggested motivations, but also rejected the existence of any such scheme.
The judge also rejected Mr Slater’s allegations of malice based upon anger or annoyance towards Mr Slater, and malice inferred from Mr Smith not having any basis for believing his defamatory statements to be true.
Importantly, the judge accepted that Mr Smith believed that the UAS transaction was in the best interests of the Ecosol shareholders, and indeed that Mr Slater’s opposition was without a reasonable or proper basis, and warranted a response from Ecosol’s directors. The judge made findings to this effect in the context of his reasons for rejecting the allegation of malice on the part of Ecosol, through Mr Smith (for example, at [521]-[522], [553] and [562]).
Some additional findings
However, it is significant that the judge made further, more detailed, findings to this effect in the course of rejecting Mr Slater’s defence of justification to Mr Smith’s cross claim for defamation.[68] The following are some examples of such findings.
[68] Reasons at [700]-[848].
In rejecting Mr Slater’s submission that Mr Smith refused to countenance a higher offer to the MBO in breach of his fiduciary obligations, the judge made findings to the effect:[69] that at times Mr Smith and Ecosol did not pursue or countenance other alternatives to the MBO, and could have taken further steps to obtain advice or otherwise advance those alternatives; but that Mr Smith did so believing that completion of the contract for the sale to UAS was in the best interests of Ecosol, and preferable to the alternatives; and that it had not been established that Mr Smith acted in breach of his fiduciary obligations.
[69] Reasons at [709], [715], [721] and [730].
In rejecting Mr Slater’s submission that Mr Smith was biased towards the MBO (that is, the sale to UAS), the judge addressed in detail Mr Slater’s bases for contending that the proposed sale to UAS was inferior to the alternatives available to Ecosol, and that Mr Smith must have known this, and hence must have been biased towards the sale to UAS. In this context, the judge commenced by referring to a spreadsheet provided by Mr Slater in his closing address. The spreadsheet set out Mr Slater’s own analysis, comparing the sale to UAS with the alternative transactions with SW 360 and Flow Defence.[70] The judge also mentioned that Mr Slater had not obtained any expert evidence to assist in comparing the alternatives:
[739]Mr Slater before trial had referred to the possibility of adducing expert opinion evidence concerning the comparative values of the offers. However, he did not ultimately adduce any such evidence. Nor did he attempt to adduce evidence of his own opinions to prove the objective value of the offers. The absence of evidence renders it impossible to determine the comparative values of the offers.
[70] Reasons at [736].
Despite the difficulty in comparing the alternatives, given the lack of evidence, the judge proceeded to address in detail the analysis contained in Mr Slater’s spreadsheet. His Honour first addressed Mr Slater’s comparison between the transactions with UAS and SW 306.[71] This included consideration of a number of adjustments and corrections that Mr Slater said needed to be made in order to properly compare the two transactions. The judge identified several difficulties with this analysis, including the lack of evidence to support some aspects of it. Ultimately the judge concluded that Mr Slater had failed to prove that the adjusted value attributed to Ecosol under the SW 360 transaction exceeded its value under the UAS transaction. The judge also found that Mr Slater had not proved that Mr Smith falsely represented to shareholders that the SW 360 offer was substantially lower, or markedly less attractive, than the UAS offer.[72]
[71] Reasons at [740]-[765].
[72] Reasons at [777].
The judge then addressed Mr Slater’s submissions to the effect that Mr Smith had knowingly misrepresented the Flow Defence transaction to the Ecosol shareholders, including by making false statements about its merits relative to the UAS transaction.[73] Again, after considering Mr Slater’s spreadsheet analysis, and some other matters of detail, the judge found that Mr Slater had not proved his case. Whilst accepting that the Ecosol directors ought not to have dismissed the Flow Defence proposal merely because they were not prepared to grant vendor finance, the judge accepted that there were other difficulties with the proposal. Mr Slater failed to prove that the Flow Defence proposal would represent a superior return for shareholders. Further, and in any event, the judge accepted that Mr Smith genuinely held the opinion that Flow Defence would at best produce a market value return, and would result in a lower return to shareholders than the sale to UAS. The judge did not accept that any of Mr Smith’s statements about the Flow Defence proposal were knowingly false or even recklessly false. Indeed, the judge did not accept that Mr Smith’s statement that the Flow Defence offer was not credible was knowingly or recklessly false.
[73] Reasons at [778]-[803].
The judge also considered Mr Slater’s comparison between the UAS transaction and Ecosol’s value under a liquidation scenario, again by reference to Mr Slater’s spreadsheet analysis.[74] The judge concluded that there was no evidence on the basis of which he could find that the value of Ecosol under a liquidation scenario exceeded, or even approached, the value of Ecosol under the UAS transaction.
[74] Reasons at [804]-[819].
The judge concluded his consideration of Mr Slater’s attempts to justify his allegation that Mr Smith was biased towards the MBO involving the UAS transaction by reiterating his conclusion that Mr Smith did have an unconscious leaning in favour of the sale to UAS. He also reiterated his concerns about some aspects of Mr Smith’s conduct in relation to the UAS sale and the alternatives to it.[75] He regarded some aspects of Ecosol’s consideration of the SW 360 and Flow Defence alternatives as superficial compared with the approach to the UAS sale.[76] However, referring to matters including Mr Smith’s reliance upon professional advisors, the judge repeated his rejection of any conscious bias in favour of UAS:
[823]However, the imputation that Mr Smith was biased in favour of the MBO meant that he had a deliberate and conscious bias in its favour. This is quite different to an unconscious leaning. Moreover, it is clear that Mr Smith relied strongly upon advice that he sought and obtained from Mr Charlton via Janic and from Cowell Clarke, who each gave negative advice in comparing the SW 360 and Flow Defence offers to the UAS sale contract.
[824]I have taken into account all of Mr Slater’s submissions. I am not satisfied that Mr Smith was biased in favour of the MBO.
[75] Reasons at [820].
[76] Reasons at [821]-[822].
In rejecting Mr Slater’s defence of justification to Mr Smith’s cross claim for defamation, the judge also found that Mr Slater failed to prove that Mr Smith had permitted Ecosol not to abide by court orders (being the orders made by the Supreme Court of Queensland for the production of documents).[77]
[77] Reasons at [826]-[838].
Finally, the judge also held that, by reason of Mr Slater’s failure to prove either that Mr Smith acted with a conscious bias towards the MBO, or that he wilfully refused to abide by any court orders, and his failure to establish any other basis in the evidence, Mr Slater had not established that Mr Smith acted in breach of his fiduciary duties to Ecosol.[78]
[78] Reasons at [839]-[843].
Challenge on appeal
Returning to Mr Slater’s challenge on appeal to the judge’s rejection of his case that Ecosol, through Mr Smith, was actuated by malice, the starting point is that Mr Slater does not dispute the judge’s statement of the relevant legal principles. He accepts that they are as summarised in the passages from Roberts v Bass set out both in his Honour’s reasons, and earlier in these reasons.
At one level, Mr Slater’s challenge to the judge’s conclusion in relation to malice is merely an attempt to re-argue points made and lost at trial. Whilst accepting that this appeal is an appeal by way of rehearing, and requires that this Court undertake its own independent assessment of the evidence adduced at trial, there are nevertheless well-recognised limits to this task. These include having regard to the natural limitations faced by an appellate court, particularly in relation to findings which have been informed by credit findings based, to some extent at least, upon the demeanour of witnesses. An appellate court will ordinarily only interfere with such findings where they are inconsistent with some objective or unchallenged evidence, or are otherwise glaringly improbable.
In challenging the judge’s finding that Ecosol, through Mr Smith, was not actuated by malice, Mr Slater faces a difficult task. Not only was the judge’s conclusion supported by very detailed and careful reasoning, but also it was one informed by his Honour’s observations of Mr Smith, in the context of a relatively long and complicated trial. The judge had the opportunity to observe Mr Smith give evidence, with the benefit of a close understanding of the detail of the evidence that had been adduced at trial. Having had this opportunity, the judge accepted that, whilst fervent in his beliefs, and having an intense dislike for Mr Slater, Mr Smith was nevertheless an honest witness. Further, and more importantly, the judge’s demeanour-based findings extended to findings to the effect that Mr Smith honestly believed that the UAS transaction was in the best interests of the company and its shareholders, that the alternatives were inferior options, that Mr Slater’s opposition was not reasonably based and indeed included falsehoods and was improperly motivated, and that it was appropriate that Mr Smith communicate his response to Mr Slater’s opposition to shareholders.
Faced with findings to this effect, it is difficult to see how Mr Slater could expect to succeed in his challenge to the judge’s refusal to find malice on the facts as found. Far from establishing that Mr Smith was improperly motivated, the judge accepted that Mr Smith was genuinely motivated to inform shareholders of what he considered was in their best interests in making the impugned publications.
In this respect, the judge was right to emphasise the distinction, drawn in Roberts v Bass, between positive knowledge of falsity, and a mere lack of belief or even recklessness. On the judge’s findings, Mr Slater failed to establish that Mr Smith knew any of his defamatory statements were false. Indeed, this was not even a case where Mr Smith lacked belief in the statements he made, or made those statements recklessly without caring whether they were true. Rather, the judge accepted that Mr Smith genuinely believed the defamatory statements he made. Mr Smith’s acknowledgment in evidence that, at the time he made his defamatory statements, he did not know what was in Mr Slater’s mind, or even what information he had, did not stand in the way of the judge making this finding.
Mr Slater argued on appeal that, even accepting the judge’s findings, his Honour failed to consider the cumulative effect of the matters advanced by Mr Slater in support of his allegation of malice on the part of Mr Smith. Even though the judge addressed Mr Slater’s submissions in support of malice under three separate headings, we do not accept that his Honour overlooked any potential significance of the cumulative significance of these matters. In any event, given that his Honour did not accept that any of the alleged improper motives were established, it is difficult to see how, in combination, the evidence could be said to have established a dominant actuating motive which was improper.
Absent a successful challenge to the judge’s more detailed findings, there is no basis to challenge his Honour’s rejection of Mr Slater’s case that Ecosol, through Mr Smith, acted with malice. Put another way, Mr Slater’s attempt to challenge the judge’s findings on the facts as found must fail.
We deal separately below with two further aspects of Mr Slater’s attempts on appeal to challenge the judge’s finding of malice. The first is his reliance upon Mr Smith’s position and duties as a director and fiduciary, and the significance he seeks to ascribe to this in challenging both the judge’s findings that Mr Smith’s defamatory statements were sufficiently connected to the privileged occasion and the judge’s refusal to find malice. The second is his attempt to challenge Mr Smith’s credit, and in particular, the judge’s acceptance of his evidence that he genuinely believed that the UAS transaction was in Ecosol’s best interests. Mr Slater submits that the alternatives to the UAS transactions were so obviously superior to the MBO involving UAS, and were so inadequately considered by Mr Smith and Ecosol, that Mr Smith’s evidence should have been rejected.
Relevance of Mr Smith’s position and obligations as director and fiduciary
Both at trial, and on appeal, Mr Slater relied heavily upon Mr Smith’s position and obligations as a director of Ecosol, and what he argued were breaches of those obligations in supporting the sale to UAS.
Mr Slater sought to rely upon Mr Smith’s position and obligations in at least two different but related ways.
First, he argued that Mr Smith’s position and obligations were relevant in determining whether his defamatory statements were sufficiently connected to the occasion of qualified privilege. In particular, he argued that even if the defence of qualified privilege was not inherently confined to statements that contributed to, or assisted, debate on the topic that attracted the privilege, the context provided by Mr Smith’s position and obligations meant that that was so. In other words, Mr Smith’s legitimate interest in communicating with shareholders was informed and constrained by his position and obligations. As a director and fiduciary, his position and obligations required that he only communicate with shareholders in a way that informed and assisted shareholders, and the scope of the privilege occasion was correspondingly confined.
We do not accept this argument. We are not sure that Mr Smith’s position and obligations as a director and fiduciary imposed a constraint upon the scope of his communications with shareholders in the way Mr Slater contended. But more fundamentally, even if this were the case, we do not accept that this would directly inform the scope of the occasion of qualified privilege in the way contended.
We accept that Mr Smith’s position and obligations were relevant in a general way. They formed part of the context which gave rise to the privileged occasion in respect of communications with shareholders about the proposed transaction with UAS, and the affairs of Ecosol more generally. However, we do not think they directly affected the application of the authorities in relation to the rationale for the defence of qualified privilege, and the consequentially broad view of what is sufficient to establish the necessary connection to the privileged occasion. We do not think that the obligations or responsibilities, or indeed the authority and influence, that came with Mr Smith’s position as a director meant that he was more confined in what he could say on the privileged occasion than Mr Slater, as a ‘mere’ shareholder. In our view, the fact that Mr Smith was a director and fiduciary did not mean that any false or defamatory statements, or statements which attacked the integrity or character of Mr Slater, were not protected. These statements remained sufficiently connected to the privileged occasion, and hence protected, as long as they were relevant and germane to that occasion in the broad sense in which these terms are used in the authorities. Because the statements in this case related to Mr Slater’s communications with shareholders in relation to the UAS transaction, they were sufficiently connected and protected.
Secondly, he argued that Mr Smith’s position and obligations were relevant to the issue of malice. In particular, he argued that Mr Smith breached his fiduciary and statutory obligations by pursuing a scheme which involved inappropriately preferring the MBO over other alternatives. He argued that this supported a finding of malice insofar as Mr Smith’s communications were actuated by this wrongful motive.

We have already summarised the judge’s reasons for rejecting a finding of malice on the basis that Mr Smith was motivated by a desire to undermine the credit of Mr Slater in the context of a scheme to give preferential treatment to an MBO over all other alternative proposals. Essentially the judge found that this scheme did not exist; that Mr Smith was in fact motivated by a genuine belief that the transaction was in the best interests of the shareholders, and that it was necessary for him to respond to Mr Slater’s communications to shareholders.
We do not think the overlay of Mr Smith’s position and obligations as a director and fiduciary alters the analysis in this case. We do not think Mr Slater established that Mr Smith was in breach of his obligations as director or fiduciary. Certainly the judge did not make any finding to this effect. In so concluding, we do not think that the judge overlooked the strict and objective nature of those obligations. But more importantly for present purposes, we agree with the judge’s observation that, ‘the mere fact of the directors breaching their duties (if proved) would not amount to malice in the absence of proof of existence of the scheme’.[79]
[79] Reasons at [554].
Again, the judge’s findings to the effect that Mr Smith believed that the UAS transaction was in the best interests of Ecosol, and that he was not acting in pursuit of a scheme to inappropriately prefer a transaction which he knew was not in the best interests of shareholders, stand in the way of Mr Slater succeeding on appeal. In that context, it is appropriate to conclude by addressing Mr Slater’s attempts to directly challenge those demeanour and credit-based findings made by the judge.
Challenge to credit findings
In challenging the judge’s finding that Mr Smith honestly believed that the UAS transaction was in the best interests of the Ecosol shareholders, Mr Slater made various complaints, including some of a procedural nature.
As to Mr Slater’s procedural complaints, he submitted that he was not given a fair or proper opportunity to challenge Mr Smith’s credit. In support of this he initially suggested that the judge had said, during the course of a directions hearing, that he would not be permitted to challenge Mr Smith’s credit as it was not part of his pleaded case, and was not an issue in the case.[80] However, upon being pressed about this, it became clear that all the judge said to Mr Slater was that any challenge to Mr Smith’s credit would have to be in relation to matters within the four walls of his pleaded case. Mr Slater ultimately accepted that this was all that the judge had said, and indeed that he did proceed to put Mr Smith’s credit in issue at the trial in several respects.
[80] Referring to a hearing on 14 April 2022, at T41, during an extended break in the trial.
In addition to this, Mr Slater argued that he was misled into truncating his submissions in challenge to Mr Smith’s credit by reason of an observation made by the judge during the course of closing addresses. Mr Slater said that he understood the judge to indicate that he had all the information he needed to determine the matters in issue, and understood from this that there was no need for him to develop any further his submissions in relation to Mr Smith’s credit.[81] He also complained that he was denied sufficient time for his closing address.[82]
[81] Referring to T2160-2161.
[82] Referring to T2221.
Again, when pressed, Mr Slater did not ultimately seek to make much of these complaints. The passages of transcript relied upon do not support his complaint. The first involved no more than the judge indicating at the commencement of oral closing addresses that he had received voluminous written submissions; that he would appreciate further assistance in relation to the analysis in Mr Slater’s spreadsheet; and that he otherwise encouraged the parties to focus on what they wished to emphasise. The judge otherwise left it to the parties to address him orally as they saw fit, and gave them ample opportunity to do so. The second passage of transcript involved no more than the judge indicating, about an hour into Mr Slater’s closing address, that he expected Mr Slater to finish within the half a day the judge had allocated him. It does not appear from the transcript that the judge truncated submissions, or otherwise discouraged, let alone prevented, the parties from addressing the issues as they saw fit.
In any event, these procedural challenges do not take the matter very far. As is clear from what has already been set out in these reasons, the judge plainly understood that Mr Slater sought to challenge Mr Smith’s credit, and addressed that challenge. And Mr Slater has not identified any additional submissions of significance to Mr Smith’s credit that he was prevented from making.
Whilst the judge’s ultimate conclusion that Mr Smith was a generally honest and reliable witness was expressed succinctly,[83] it was supported by detailed findings and analysis located elsewhere in his Honour’s reasons, particularly when addressing Mr Slater’s allegations that Mr Smith was actuated by malice and that his defamatory allegations about Mr Smith were true.[84] Other than the further matters of detail in relation to his spreadsheet addressed below, Mr Slater has not identified any additional matters that might have been addressed or put by way of challenge to Mr Smith’s evidence.
[83] Reasons at [280]-[282].
[84] See the references above to the judge’s malice findings (Reasons at [521]-[522], [553] and [562]) and the judge’s justification findings (Reasons at [700]-[848]).
In addition to the above, Mr Slater also complained that he was prevented from obtaining expert evidence to support his challenge to Mr Smith’s evidence to the effect that he believed the UAS transaction was in the best interests of Ecosol shareholders, and superior to the alternatives. However, once again, Mr Slater has failed to make good this procedural complaint. There were a number of directions hearings before the judge prior to the commencement of trial. During this period of time, Mr Slater at times raised the possibility of obtaining expert evidence to support his position that the other alternatives were superior to the UAS transaction. However, he did not ever take this step. On appeal, Mr Slater said that, a few weeks out from trial, he received some additional documents from Ecosol that contained important financial information and led him to raise again the possibility of obtaining expert evidence. He said that he sought an adjournment of the trial to permit him to seek this evidence, but that the judge declined to adjourn the trial, indicating that the trial would proceed as scheduled. However, the judge did not prevent Mr Slater from seeking to obtain expert evidence. As the judge observed in his reasons,[85] it was simply a case that Mr Slater did not obtain the expert evidence he had foreshadowed in relation to comparative values. If he had wanted to rely upon expert evidence, he could have obtained the evidence and then sought leave to rely upon it. Particularly in circumstances where the trial proceeded in an interrupted manner over a number of months, we do not think it can be said that Mr Slater was prevented from obtaining expert evidence. Certainly it has not been demonstrated that the judge did so unfairly or erroneously.
[85] Reasons at [739].
In any event, it is difficult to see how the foreshadowed expert evidence could have relevantly assisted Mr Slater’s case; at least not in relation to the issues relevant on appeal, as opposed to the parties’ justification defences. Even assuming an expert accountant or valuer provided evidence to the effect that, in his or her opinion, the alternatives would have been better for the shareholders than the UAS transaction, it is difficult to see how this could have been used to impugn Mr Smith’s evidence that he believed that the UAS transaction was superior. In circumstances where the assumed expert evidence was not available to Mr Smith at the time he made his defamatory statements, we do not think it could realistically have influenced the judge’s consideration of this issue.
It is significant in this context that Mr Smith was, at the relevant time, assisted by advice from Ecosol’s consultant (Janic, through Mr Charlton), lawyers (Cowell Clarke) and accountants (Gardiner Hall) in relation to the relative merits of the UAS transaction and the alternatives to it. The judge found that Mr Smith ‘relied strongly’ upon this advice, being advice which was ‘negative’ about the alternatives relative to the UAS transaction.[86] Whilst Mr Slater sought to impugn this advice and reliance on the basis that Mr Charlton was himself in a position of conflict, and that Cowell Clarke had also become too close and were compromised in their views, we do not think this provides a sufficient basis for impugning the judge’s reliance upon this advice in considering Mr Smith’s subjective state of mind at the time. In our view, the advice obtained and relied upon by Mr Smith not only supported the judge’s acceptance of Mr Smith’s evidence that he believed the UAS transaction was superior, but also reinforces our conclusion that any subsequent expert evidence in these proceedings is unlikely to have provided a persuasive basis for impugning the judge’s findings in favour of Mr Smith’s credit on this critical issue.
[86] Reasons at [823].
In attempting to impugn the judge’s findings, Mr Slater made submissions to this Court to the effect that the judge failed to properly appreciate the inferiority of the UAS transaction to its alternatives (particularly the proposals from SW 360 and Flow Defence), and the significance of Mr Smith’s failure to properly consider those alternatives. He accepted that he needed to establish, in effect, that the alternatives were so superior, or so poorly considered, that no reasonable person could have believed that the UAS transaction was in the best interests of the Ecosol shareholders. In this way, he sought to establish that the judge’s findings as to Mr Smith’s state of mind were so implausible or improbable that they should be overturned by this Court.
Mr Slater sought to undertake this difficult task by taking this Court through some of the detail in his spreadsheet comparing the UAS transaction with its alternatives. As mentioned, and summarised above, the judge analysed this detail in his reasons. Mr Slater sought to challenge some aspects of the judge’s analysis. We do not consider it necessary to descend to this level of detail. Even if there were some merit in these challenges to the detail of this aspect of the judge’s reasons, we do not think it would provide an adequate basis for impugning the judge’s ultimate conclusion to the effect that Mr Smith believed the UAS transaction was superior to the alternatives, and in the best interests of the Ecosol shareholders. Even if the judge had been persuaded that one or both of the alternatives were superior to the UAS transaction, it would not follow from this that Mr Smith must have come to the same understanding. As Mr Smith could only have relied upon information available to him at the time, Mr Slater’s subsequent analysis by reference to his own spreadsheet was of limited, if any, significance to Mr Smith’s credibility. The detail contained in Mr Slater’s spreadsheet was primarily relevant to Mr Slater’s defence of justification to the defamatory statements he published about Mr Smith, rather than to Mr Smith’s credit. This is consistent with the judge’s decision to address the detail of this analysis in the section of his reasons dealing with that defence.
Finally, Mr Slater challenged the judge’s reference to the lack of any apparent motive for Mr Smith to support the UAS transaction if he did not believe it was in the Ecosol shareholders’ bests interests. In response to this, Mr Slater argued that it was significant that Mr Smith was an acolyte of Mr Charlton, who was also his cousin. He argued that both Mr Smith and Mr Charlton were friendly with Mr Macklin, and were not only positively disposed towards him but they perhaps also felt obliged to him in some way, given his years of service to Ecosol. Whilst it is apparent that these men were all on good terms, which might have contributed to what the judge found was an unconscious bias on the part of Mr Smith and Mr Charlton in favour of the UAS transaction, we do not think this provides a proper basis for this Court to impugn the judge’s reasoning or findings about Mr Smith’s credit and belief. The suggestion that Mr Charlton might have made some promise to appease Mr Macklin was not supported by any evidence, and was no more than an invitation to speculate.
The fact remains that it was somewhat illogical to suggest that Mr Smith and Mr Charlton would act contrary to their own interests as shareholders in pursuing the UAS transaction if they believed there were superior alternatives. Mr Slater’s assertions are also somewhat difficult to reconcile with the historical conduct of the directors in rejecting several earlier attempts by Mr Macklin to attract their support for an MBO. Even if they were waiting for Mr Macklin to offer fair value for Ecosol, the fact is that they rejected those earlier attempts. It is also noteworthy in this context that the directors of Ecosol sought shareholder approval for the UAS transaction even though their advice was to the effect that they did not need to do so.
In the ultimate analysis, we do not consider that Mr Slater has established any proper basis for impugning the judge’s findings in support of Mr Smith’s credibility, and his findings to the effect that Mr Smith genuinely believed that the UAS transaction was in the best interests of the shareholders, and that it was appropriate for him to respond in the way he did to the criticisms of this transaction by Mr Smith. It follows that this aspect of Mr Slater’s submissions do not provide a basis for impugning the judge’s finding that the defence of common law qualified privilege was made out.
Mr Slater’s submissions on appeal also included a challenge to the credit of other witnesses, including Mr Charlton and Mr Macklin. However, in circumstances where those challenges were not fully developed, and it is not apparent how they would provide a basis for impugning the judge’s ultimate conclusions, we do not consider it necessary to address those challenges.
Conclusion
Having failed in his challenge to the judge’s conclusion that Ecosol’s defamatory publications were protected by a defence of common law qualified privilege, there is no need or occasion for this Court to address the issues sought to be raised by Mr Slater in relation to the defence of statutory qualified privilege, or in relation to damages. Nor is there any need or occasion to address the issue of costs.
For the reasons set out, we dismiss Mr Slater’s appeal.