Soultanov v The Age Co Ltd
[2009] VSC 145
•17 April 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
No. 8361 of 2008
BETWEEN
| DR VAGIF SOULTANOV | Plaintiff |
| and | |
| THE AGE COMPANY LIMTED (ACN 004 262 702) | First Defendant |
| and | |
| VANESSA BURROW | Second Defendant |
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JUDGE: | KAYE J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 6 April 2009 | |
DATE OF JUDGMENT: | 17 April 2009 | |
CASE MAY BE CITED AS: | Soultanov v The Age Ltd & Anor | |
MEDIUM NEUTRAL CITATION: | [2009] VSC 145 | |
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DEFAMATION – Practice and procedure – Whether words capable of defamatory meaning pleaded by plaintiff – Defence of honest opinion – Whether defence addresses a permitted variant of plaintiff’s meanings – Defence of contextual truth – Whether contextual imputation capable of being more injurious than plaintiff’s pleaded imputation – Whether particulars sufficient.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms G L Schoff | Wisewoulds |
| For the Defendants | Mr M Wheelahan SC with Mr A Strahan | Minter Ellison |
HIS HONOUR:
In these proceedings, the plaintiff claims damages for defamation arising out of an article published in The Age newspaper of 15 February 2008 entitled “Solagran directors bought up stock”. The plaintiff has joined the first defendant as the publisher of the article and the second defendant as its author. The defendants have made an application by summons to strike out paragraph 5 of the plaintiff’s statement of claim, which pleads the one innuendo attributed to the article by the plaintiff. The plaintiff has also issued a summons seeking an order striking out paragraph 6 of the defence, which pleads a defence of contextual truth under s 26 of the Defamation Act 2005 (the Act), and paragraph 7 of the defence, which pleads a defence of fair comment under s 31 of the Act.
The article
The plaintiff is a director and shareholder of the biotechnology company Solagran Limited. The article alleged that directors of Solagran had been buying up stock for more than one year, before they released crucial details of a successful clinical trial of a drug called Ropren. That drug is said to be effective in the treatment of chronic liver disease, dementia and the degenerative aspects of chronic alcoholism and drug addiction. The article reported that successful clinical trials of the drug had taken place during 2006 and 2007. The board of Solagran had stated that it had embargoed the release of written information concerning those trials, until the company had secured intellectual property rights in respect of it. The article then alleged that since the start of the previous year (2007) the plaintiff, its principal founder, had repeatedly increased his shareholding, taking it from fewer than 500,000 shares to 10.8 million shares. It also reported that the executive director and co-founder of the company, Mr Kilroy, had increased his shareholding substantially.
On the second page, the article further reported that RMIT School of Accounting and Law Associate Professor, Kevin Adams, stated that the situation created two ethical questions. The first question was how to balance the market’s right to information with the need to protect intellectual property. The other dilemma was whether there should be trading in shares by directors, when they are privy to information, which obviously would have a potentially significant impact on the price of the shares. The article quoted Professor Adams as stating:
“Obviously that’s an ethical question there, that really they shouldn’t be trading when they’re privy to information that the market’s not aware of.”
The article proceeded to quote a comment by the plaintiff’s co-director, Mr Kilroy, in which he rejected any suggestion of impropriety, stating that the board had not been prepared to release any information until the intellectual property rights had been secured. He acknowledged that the directors had been buying shares, but stated: “… but we always know that the market is as fully informed as it can be”. The article then concluded by stating the following:
“An ASX spokeswoman said she could not comment on the specific case, but said the exchange was required to look into any potential breaches of continuous disclosure rules.
ASX listing rules require companies to immediately disclose information that is likely to have a material effect on the price or value of its securities. Exceptions are allowed in some cases.
An Australian Security and Investments Commission spokeswoman said she could not comment on operational issues.”
The plaintiff’s innuendo
In paragraph 5 of the statement of claim, the plaintiff has pleaded that the article bore one imputation, namely:
“In its ordinary and natural meaning, the Article was defamatory of the plaintiff in his business and professional reputation and meant and was understood to mean that as a director of Solagran he had breached the continuous disclosure rules of the Australian Stock Exchange in that he failed to immediately disclose crucial information which had come into his possession that would have a potentially significant impact on the price of those shares.”
The defendant, by its summons, seeks an order striking out that imputation, on the grounds that the article is not reasonably capable of bearing the meaning pleaded by the plaintiff.
Defence
In their defence, the defendants deny that the article, in its ordinary and natural meaning, bore the imputation alleged by the plaintiff. The defence then pleads three defences, two of which are pertinent to the summons brought by the plaintiff. In paragraph 6, the defendants plead a defence of contextual truth, pursuant to s 26 of the Act, in the following terms:
“6. Further or alternatively, if, which is denied, the article bore the plaintiff’s imputation –
(a)in its natural and ordinary meaning the article also meant and was understood to mean that as a director of Solagran and so knowing the results of a successful clinical trial involving Solagran’s drug Ropren, the plaintiff had unethically bought up Solagran shares before the release of the details of the trial results to the market (”the contextual imputation”);
(b)the contextual imputation was substantially true;
(c)the plaintiff’s imputation does not further harm the reputation of the plaintiff because of the substantial truth of the contextual imputation –
by reason of which the defendants have a defence pursuant to s 26 of the Defamation Act 2005.”
Ms G Schoff, who appeared on behalf of the plaintiff, submitted that paragraph 6 should be struck out for two reasons. First, she submitted that a jury could not conclude that the contextual imputation pleaded by the defendant is more serious than the imputation pleaded by the plaintiff. Accordingly, she contended, a jury could not reasonably conclude that the plaintiff’s imputation does not further harm the reputation of the plaintiff because of the substantial truth of the contextual imputation pleaded by the defendants. Secondly, Ms Schoff submitted that the particulars provided by the defence under paragraph 6 are insufficient to support the contextual imputation pleaded by the defendant.
The plaintiff also seeks to strike out the plea by the defendants, in paragraph 7 of the defence, that the matter contained in the article was an expression of opinion relating to a matter of public interest and based on proper material, pursuant to s 31 of the Act. The plaintiff sought further particulars of the substance of the comment pleaded in paragraph 7 of the defence. In response, the defendants particularised that comment as follows: “The plaintiff had unethically traded in Solagran shares when privy to the details of trial results which had not been released to the market”. The plaintiff seeks to strike out the defence, on the ground that the meaning relied on by the defendant is substantially different to, and distinct from, the imputation on which the plaintiff relies. Ms Schoff submitted that the effect of recent authorities, including the decision of the High Court in Channel Seven Adelaide Pty Ltd v Manock[1] is that a defence of honest opinion (under s 31 of the Act) or fair comment (at common law) is only permissible if it meets the basic “sting” pleaded by the plaintiff.
[1](2007) 232 CLR 245; see also Hore-Lacy v Cleary (2007) 18 VR 562.
Although it is necessary for me to deal, separately, with the submissions made on the defendants’ summons, and the submissions made in respect of each of the two defences which the plaintiff seeks to impugn, the submissions by both sides had one common point of convergence, namely, the question as to the imputations which may reasonably be derived from the article in question. It is convenient to deal first with the defendants’ summons, and then with the plaintiff’s summons. However, there is a degree of overlap in respect of the considerations relevant to each of the applications which are before me.
The defendants’ summons
The issue which I must determine on the defendants’ summons is a question of law, namely, whether the article was reasonably capable of conveying the imputation, pleaded by the plaintiff, to the ordinary reasonable reader.[2] The hypothetical “ordinary reasonable” reader has been described as an ordinary person who does not live in an ivory tower, and who reads between the lines in the light of his or her general knowledge and experience of worldly affairs.[3] Such a reader is described by the law as someone who is not “avid for scandal” and who is neither “unusually suspicious nor unusually naïve”.[4] He (or she) does engage in a degree of loose thinking, and is understood to read between the lines.[5] In particular, it is important to take into account that the ordinary reasonable reader is a lay person, and not a lawyer, and that his or her capacity for implication is much greater than that of a lawyer.[6] On the other hand, as observed by Mason J in Mirror Newspapers Limited v Harrison[7], it is necessary to draw a distinction between the reader’s understanding of what the article is actually saying, and a judgment or conclusion which the reader may reach as a result of his or her own beliefs and prejudices after reading the particular matter in question.
[2]Jones v Skelton [1964] NSWR 485, 491.
[3]Lewis v Daily Telegraph Limited [1964] AC 234, 258 (Lord Reid).
[4]Lewis v Daily Telegraph Limited (above) 259 to 260 (Lord Reid), 277 (Lord Devlin).
[5]Footnote above, 258 (Lord Reid).
[6]Morgan v Odhams Press Limited [1971] 1 WLR 1239, 1245; Lang v Australian Consolidated Press Limited [1970] 2 NSWR 408, 412.
[7](1982) 149 CLR 293, 301.
Mr M Wheelahan SC, who appeared with Mr A Strahan for the defendants, submitted that the central focus of the article was on the purchase by the plaintiff of shares in Solagran, while that company had not disclosed important clinical test results to the market. He submitted that the reference in the article to the ASX listing rules was benign. In support of that proposition, he referred to the decision of the High Court in Mirror Newspapers Limited v Harrison[8]. In that case, the High Court held that a newspaper report, which does no more than state that a person has been arrested and charged with a criminal offence, is not capable of bearing the imputation that that person is guilty, or probably guilty, of that offence. At most, such a statement is capable of bearing the imputation that the police had reasonable cause for suspecting that the person had committed the offence.[9] Mr Wheelahan pointed out that, in the concluding paragraphs of the article, the ASX spokeswoman (referred to in the article) stated that she could not comment on the “specific” case, but said that the stock exchange “was required to look into any potential breaches of continuous disclosure rules”. Mr Wheelahan submitted that, in the context of the article, that statement was “many steps” from the type of allegation, considered by the High Court in Mirror Newspapers Limited v Harrison, that a person has been arrested and charged with a breach of the law. Mr Wheelahan submitted that the last two paragraphs of the article reinforce the conclusion that the spokeswoman was speaking in general terms, without reference to the specific case in question.
[8]Footnote above.
[9]Above, 300 to 302 (Mason J).
In response, Ms Schoff submitted that the allegation contained in the article, as to the ASX listing rules, was not as precise as the allegation in the article which was the subject of the decision in Mirror Newspapers Limited v Harrison. Rather, she described the article in this case as a “smoke and mirror” type of article. She submitted that, read as a whole, the article alleged that the plaintiff had, for some time, been privy to information which had a potentially significant impact on the share price. The article further stated that the company, through its directors, had only disclosed that information to the market in February 2008. The article concluded by reporting that ASX listing rules required companies to “immediately” disclose information of that type, namely, information which is likely to have a material effect on the price or value of its securities. Thus, she submitted, the article inferred that the plaintiff had breached ASX’s listing rules, by failing to immediately disclose information, which had been in his possession for some time, and which had a potentially significant impact on the share price of Solagran.
In my view, there is force in the submission by Mr Wheelahan, that the central thrust of the article concerns the trading, by the directors of Solagran, in the company’s shares before the directors had disclosed to the market the results of the successful clinical trials of the drug Ropren. The article contains two fundamental threads, namely, the non-disclosure by Solagran of the results of the trials of Ropren, and the trading by the directors in the company’s shares during that period of non-disclosure. The article, in structure and substance, closely interweaves those two threads in the manner contended by Mr Wheelahan. Thus, the heading to the article focuses on the purchase by the Solagran directors of stock in the company. That point is the subject of the first paragraph of the article. The second and third paragraphs refer to the fact that Solagran had obtained excellent results from clinical trials conducted in 2006 and 2007, but had not released those results until the previous day. In the next four paragraphs, the article reports how the plaintiff, and his co-director Mr Kilroy, had increased their shareholdings, during the period of non-disclosure of those results. It reports that, during the same period, the price of the shares had risen substantially. In the next paragraph, the article reports Mr Kilroy as stating that the announcement was significant in clinical terms in treating a range of diseases, and commenting “that’s a pretty big market worldwide”. Immediately following that paragraph, the article contains a statement of Mr Kilroy that it was necessary for Solagran to withhold disclosure of the information in order to protect its intellectual property in it.
Thus, the first half of the article closely interweaves the two allegations concerning the non-disclosure of the information to the market, and the purchase of shares in the company by the plaintiff and his co-director during the period of non-disclosure. The second half of the article addresses the question whether there was anything “wrong” with the conduct of the directors, in not disclosing the information to the market, and in purchasing shares in the company during that period. In doing so, the writer again interconnects the two strands, relating to the non-disclosure of information and the purchase of shares. Hence, the views attributed to Professor Adams, which I quoted above[10], closely relate the two issues. The second “ethical question”, stated by Mr Adams, focuses on the trading of shares during the period of non-disclosure. It is that allegation which is responded to by Mr Kilroy in the next section of the article. Immediately following Mr Kilroy’s response, are the last three paragraphs of the article, which I have already quoted[11], relating to the effect of the ASX listing rules.
[10]Para [3] above.
[11]Para [4] above.
Viewed in that light, it can be seen that the article focuses on the trading in shares by the directors of Solagran during the period in which relevant information had not been disclosed to the market as to the results of the clinical trials conducted on the drug Ropren. The references in the article to the ASX spokeswoman, and to the ASX listing rules, do not follow as a discrete part of the article but, rather, they occur sequentially in the context of the article, which thus far has dealt with those two themes. By contrast, Ms Schoff, in her submissions, extracted three parts of the article, which, in combination, she submitted are capable of giving rise to the imputation pleaded by the plaintiff. First, the article refers to the delay by Solagran in disclosing crucial details of its successful trials to the market. Secondly, the remarks attributed to Professor Adams describe that information as having a “potentially significant impact on the share price” of Solagran. Thirdly, in the second last paragraph, the article states that ASX listing rules require companies to immediately disclose information “that is likely to have a material effect on the price or value of its securities”. Joining those three parts of the article together, Ms Schoff submitted that the ordinary reasonable reader might reasonably understand the article to be inferring that the plaintiff, in breach of ASX listing rules, caused Solagran to withhold, from the market, information which potentially had a material effect on the price of the company.
As I have demonstrated, in many respects the construction of the article contended for by Ms Schoff not only involves unpicking the two threads of the article which are interwoven, but, in addition, extracting three separate parts from one of the threads, putting them together, and concluding with the imputation contended for by the plaintiff. The question which arises is whether, nevertheless, a reasonable jury could conclude that the article does bear the imputation so relied on by the plaintiff. In determining that question, it is accepted that the court will reject meanings “which can only emerge as the product of some strained, or forced, or utterly unreasonable interpretation”.[12]
[12]Jones v Skelton [1964] NSWR 485, 491.
On the other hand, it is important to bear in mind that the applicable test, on this application, is whether the words of the article are reasonably capable of being understood, in the sense pleaded by the plaintiff, by the ordinary reasonable reader, who is invested with the attributes to which I have referred. While, as I have stated, the construction of the article contended for by Ms Schoff is somewhat strained, I do not consider that it is so “utterly unreasonable” that a jury could not reasonably conclude that the words bore the meaning, relied on by the plaintiff, in the eyes of the ordinary reasonable reader. As Ms Schoff points out, like many newspaper publications, the article does leave room for inference, particularly in its reference to the ASX listing rules. Further, like many newspaper publications, the article does not proceed sequentially, but, as I have already demonstrated, tends to weave in and out of points made by it. While the process of construction contended for by Ms Schoff is somewhat artificial, nonetheless I consider that a jury might reasonably reach the contrary conclusion, particularly given the attributes which the law ascribes to the ordinary reasonable reader of the article. There is sufficient reference in the article: to the non-disclosure of crucial information; to the fact that that information had the capacity to impact on the price of Solagran’s shares; and to the requirement by the ASX listing rules that such information be disclosed to the market without delay, to entitle a jury to reasonably conclude that the ordinary reasonable reader of the article might have understood it in the sense contended for by the plaintiff. Accordingly, notwithstanding my reservations, I consider that the article is reasonably capable of giving rise to the imputation pleaded by the plaintiff. For that reason, the application by the defendants to strike out paragraph 5 of the statement of claim should be refused.
Defence of honest opinion
Ms Schoff submitted that the defendants’ plea of honest opinion, in paragraph 7 of its defence, should be struck out, because it does not purport to address the imputation pleaded by the plaintiff, or an imputation which is either a variant of, or not substantially different from, the imputation relied on by the plaintiff. She relied on the decision of the High Court in Channel Seven Adelaide Pty Ltd v Manock[13] as authority for the proposition that, in an action for defamation, a defendant is only permitted to raise a defence of fair comment (or its statutory equivalent, honest opinion) in respect of the plaintiff’s imputation, or in respect of a meaning which is either a variant of, or not substantially different from, the meaning pleaded by the plaintiff.[14] Ms Schoff further submitted that that proposition is supported by the decision of the Court of Appeal in David Syme & Co Ltd v Hore-Lacy[15], in which the Court held that, at trial, the jury may only find for the plaintiff, on the issue of whether the publication complained of is defamatory, if it is satisfied that the publication bore the meaning put forward on behalf of the plaintiff, or a meaning which was not substantially different or more serious than that proposed by the plaintiff.
[13](2007) 232 CLR 245.
[14]See also Anderson v Nationwide News Pty (No 2) (2002) 3 VR 639, 642 (Bongiorno J); Hore-Lacy v Cleary (2007) 18 VR 562.
[15](2000) 1 VR 667.
Ms Schoff submitted that the meaning, to which the defendants have directed their defence of honest opinion, is substantially different from the imputation pleaded by the plaintiff. She described the two competing meanings as “ships that pass in the night”. She submitted that the imputation pleaded by the plaintiff is the allegation that the plaintiff had breached the ASX listing rules relating to disclosure of price sensitive information to the market. On the other hand, the meaning to which the defendants have directed their plea of honest opinion is the allegation that the plaintiff had unethically traded in Solagran shares, when they were privy to the details of trial results which had not been released to the market. The plaintiff’s pleading thus went to a specific breach of the rules of the ASX. It focussed solely on the failure of the directors to disclose information as required by those rules. By contrast, the defendants’ imputation alleged unethical conduct, in trading in the shares before release of the information to the market.
In response, Mr Wheelahan made a detailed submission, in which he carefully and thoroughly traversed a number of authorities concerning the question of whether a jury is entitled to find a defamatory meaning other than those pleaded by the plaintiff, and the related question of what alternative meanings might be relied on by a defendant in pleading defences of either justification or fair comment (honest opinion). Fundamentally, Mr Wheelahan submitted that, in a trial by a jury in Victoria under the Defamation Act, the correct principle is that a defendant is entitled to direct a defence of honest opinion to a meaning which is “in the same dimension” as the imputation relied on by the plaintiff. Put another way, Mr Wheelahan submitted that the defendant is entitled to plead honest opinion to a meaning which is not “separate and distinct” from a meaning relied on by the plaintiff. In support of that submission, he referred me to a number of authorities, including Barclay v Cox[16]; Lloyd v David Syme & Co Ltd[17]; Polly Peck (Holdings) Plc & Ors v Trelford[18]; Cruise & Anor v Express Newspapers Plc & Anor[19]’ Chakravarti v Advertiser Newspapers Limited[20]; David Syme & Co Ltd v Hore-Lacy[21]; Anderson v Nationwide News Pty Ltd (No 2)[22]’ Channel Seven Adelaide Pty Ltd v Manock[23] and Lane & Hurley v Channel Seven Adelaide Pty Ltd[24]. In addition, he referred to a number of provisions of the Act.
[16][1968] VR 664
[17][1986] 1 AC 350.
[18][1986] 1 QB 1000.
[19][1999] QB 931.
[20](1998) 193 CLR 519.
[21](2000) 1 VR 667.
[22](2002) 3 VR 639.
[23](2007) 232 CLR 245.
[24](2008) 101 SASR 141.
The starting point of Mr Wheelahan’s submission was the decision of the Full Court of the Supreme Court in Barclay v Cox[25], in which the Court[26] held that where the issue before the jury was whether the words of the alleged libel, in their ordinary and natural meaning, were defamatory of the plaintiff, the sole question for the jury to determine is whether the words in their ordinary and natural meaning are defamatory of the plaintiff. The court held that ordinarily it is inappropriate for a judge, in such a case, to leave to the jury the question whether the words, in the ordinary and natural meaning, bore the imputations contended for by the plaintiff, and whether those imputations are defamatory of the plaintiff. Mr Wheelahan submitted that that principle is still good law in Victoria. He submitted that, properly understood, the decision of the High Court in Chakravarti does not alter that position. Further, he submitted that the subsequent decision of the High Court in Manock does not set aside the principles stated by the Full Court in Barclay v Cox. Further, insofar as that decision might disturb the authority of Barclay v Cox for the purpose of the common law, he submitted that the provisions of the Act have “resurrected” those principles. In particular, he referred to s 8 of the Act, which states the common law position that the cause of action in defamation resides in the defamatory material, and not in the court’s acceptance of one or more of the imputations relied on by the plaintiff. Mr Wheelahan submitted that that position is reinforced by s 22(2) of the Act, which provides that where defamation proceedings are tried by a jury, the jury is to determine “whether the defendant has published defamatory matter about the plaintiff”, and, if so, whether any defence raised by the defendant has been established. Mr Wheelahan submitted that it is significant that s 22(2) requires a jury to determine whether the “matter” published by the plaintiff is defamatory, and not (as was previously the case in New South Wales under the 1974 Defamation Act) whether the imputations pleaded by the plaintiff are made out, and if so, whether they are defamatory of the plaintiff.
[25]Footnote above.
[26]Pages 665 to 666.
Mr Wheelahan further submitted that the imputation, to which the defendant has directed their plea of honest opinion, is of the “same dimension” as the imputation relied on by the plaintiff. In particular, he submitted that the defendants’ imputation is not “separate and distinct” from the plaintiff’s imputation. He submitted that the two meanings are “interlocked” throughout the article. Thus, he submitted that the defendants should be entitled to direct their plea of honest opinion to the meaning specified in the particulars to paragraph 7 of the defence.
The issue raised by the plaintiff’s application, in respect of the defence of honest opinion pleaded in this case, involves the question of the extent to which a defendant, by pleading justification or honest opinion (or fair comment), may seek to defend an imputation, which is not identical to the imputation relied upon by the plaintiff. In turn, that question is necessarily interrelated with the issue as to the extent, if any, to which a jury may find a publication to be defamatory of a plaintiff in a sense which is different to the imputation pleaded and relied upon by the plaintiff. For, fairness dictates that, insofar as a jury (or judge sitting alone) at trial may depart from the meanings relied on by the plaintiff in finding a publication to be defamatory, the defendant must be given the opportunity to rely on such defences as it sees fit to the “alternative” meaning so found by the jury (or judge). It is clear that the principles stated by the authorities in relation to both those questions, since the decision of the Full Court in Barclay v Cox in 1968, have evolved and changed. However, a review of the authorities reveals that two principal considerations have underscored the decisions of courts in recent cases, and in particular the High Court, in circumscribing the extent to which a jury, or a plaintiff or defendant, may depart from the defamatory imputations relied on by the plaintiff. First, the courts have been concerned to ensure that, insofar as a judge or jury might find a publication, complained of, to be defamatory in a sense which differs from the meaning pleaded by the plaintiff, such departure does not operate unfairly to the disadvantage of the defendant. Secondly, the courts have been concerned to ensure that a defendant, by seeking to defend an imputation which differs from the imputation relied on by the plaintiff, does not thereby hijack the trial of the case, by pleading and relying on “false issues”, which do not meet the sting of the imputations relied on by the plaintiff.
It is for those reasons that the courts have, in a number of cases, evolved a solution which, it will be seen, requires that a defendant (and jury) are bound by the meanings put forward by the plaintiff, or meanings which are either a “variant” of the plaintiff’s meanings, a “nuance” of the plaintiff’s meanings, or, at most, are not substantially different from those meanings. Those tests have been developed to address issues of fairness to the parties, and to ensure that the defendant does not raise false issues which distract the jury from the real questions in the case. It is important that the formulations of the principle by the authorities be applied in a manner which serves its underlying purposes. In particular, those purposes assist in determining whether the imputation, pleaded by the defendant, is a “variant of”, or “not substantially different from”, the imputation pleaded by the plaintiff.
The starting point is the decision of the Full Court in Barclay v Cox[27], to which I have referred. In that case, the trial judge submitted three questions to the jury. The first question was whether the plaintiff had satisfied the jury that the words had any of the meanings assigned to them by the plaintiff. The second question was whether any of those meanings were defamatory of the plaintiff. The third question was whether the words were defamatory of the plaintiff in their ordinary and natural meaning. The Full Court (consisting of Winneke CJ, Pape and Adam JJ) held that the trial judge erred in submitting the second question to the jury. The court also expressed the view that it was not, generally, necessary to leave to the jury the first question (namely, whether the jury were satisfied as to the meanings pleaded by the plaintiff). Their Honours stated:
“But where the sole issue is whether the words in their natural and ordinary meaning are defamatory of the plaintiff and the pleading sets out meanings which the plaintiff alleges ordinary men would infer from the words used we think that the better and more desirable course is that the jury should not be asked whether the words were understood to have those meanings. To ask such a question tends to concentrate the jury's attention unduly on the several meanings pleaded in the abstract and to distract them from their main task of reading the alleged libel as a whole and saying whether an ordinary fair-minded reader would understand it as being defamatory of the plaintiff..”[28]
[27][1968] VR 664.
[28]Page 666.
The proposition that the jury might find a publication to be defamatory in a sense different to that pleaded by the plaintiff gave rise to the practice whereby defendants pleaded an alternative meaning, which they contended the defamatory publication bore, and pleaded justification to that meaning.[29] That practice was considered by the Court of Appeal in Polly Peck (Holdings) Plc & Ors v Trelford & Ors[30]. In that case, the Court of Appeal upheld the refusal of the Master to strike out a defence, in which the defendants sought to justify imputations not complained of by the plaintiff. However, in reaching that conclusion O’Connor LJ only gave qualified acceptance to the practice, by stating that where a publication contains two “distinct” libels, and the plaintiff complains of one of them, the defendant cannot justify that libel by pleading and proving the truth of the other.[31] As noted by Mr Wheelahan, the subsequent decision of the Court of Appeal in Cruise & Anor v Express Newspapers Plc & Anor[32] is an example of a case where an imputation, relied on by a defendant, was disallowed on the ground that it was separate and distinct from the plaintiff’s imputation.
[29]See for example Lucas-Box v News Group Newspapers Limited [1986] 1 WLR 147; Khashoggi v IPC Magazines Ltd [1986] 1 WLR 1412.
[30][1986] 1 QB 1000.
[31]Page 1020.
[32][1999] QB 931, 948 to 949 (Brooke LJ).
The decision of the High Court in Chakravarti v Advertiser Newspapers Ltd[33] concerned the question as to the extent to which a court might depart from the meaning pleaded by a plaintiff, in finding a publication to be defamatory of the plaintiff. In that case, the plaintiff sued the defendant on two articles. He pleaded two imputations in respect of the first article. The trial judge found that that article was defamatory of the plaintiff, without ascribing a meaning to it. The Full Court of South Australia reversed that decision, holding that the article did not bear either of the meanings pleaded by the plaintiff. On appeal, the High Court also held that the article did not bear the two meanings pleaded by the plaintiff. However, it found that the article bore a meaning similar to the second imputation relied on by the plaintiff.[34] The court held that the plaintiff, on appeal, was entitled to rely upon that alternative meaning, because it did not involve any unfair disadvantage or prejudice to the defendant.
[33](1998) 193 CLR 519.
[34]Pages 541 to 542 (Gaudron and Gummow JJ).
The three separate judgments delivered by members of the High Court in Chakravarti are different in their emphasis, but, in my view, each of them had a common concern that any departure by the court from the plaintiff’s imputation should not involve unfairness to the defendant. In their joint judgment, Gaudron and Gummow JJ noted that in a number of authorities there had been a “tendency to translate into rules what are best seen as considerations going to fair and efficient practice”. [35] Their Honours noted that modern pleadings fulfil the traditional function of identifying the issues, so that the pleading of imputations was designed to ensure that a plaintiff clearly identified the case which it intended to make at trial. Their Honours then noted:
“Words do not mean what the parties choose them to mean and, at least ordinarily, the defamatory material will, itself, sufficiently identify and, thus, confine the meanings on which they may rely … “[36]
[35]544 [56].
[36]545 [58].
Their Honours concluded that there would be no disadvantage to the defendant in permitting the plaintiff to rely (even at the stage of appeal) on the innuendo upheld by the High Court. They stated:
“As a general rule, there will be no disadvantage in allowing a plaintiff to rely on meanings which are comprehended in, or are less injurious than the meaning pleaded in his or her statement of claim. So, too, there will generally be no disadvantage in permitting reliance on a meaning which is simply a variant of the meaning pleaded. On the other hand, there may be disadvantage if a plaintiff is allowed to rely on a substantially different meaning or, even, a meaning which focuses on some different factual basis. Particularly is that so if the defendant has pleaded justification or, as in this case, justification of an alternative meaning. However, the question whether disadvantage will or may result is one to be answered having regard to all the circumstances of the case, including the material which is said to be defamatory and the issues in the trial, and not simply by reference to the pleadings.”[37]
[37]546 [60].
The approach adopted by Brennan CJ and McHugh J, in their joint judgment in Chakravarti, was more restrictive in its emphasis. Their Honours considered that the practice of a defendant pleading and justifying meanings, which the plaintiff had not pleaded, as sanctioned by the Court of Appeal in Polly Peck (Holdings) Plc v Trelford[38], was “contrary to the basic rules of common law pleadings … “.[39] Their Honours held that, in general, a plea of justification, fair comment or qualified privilege in respect of an imputation not pleaded by the plaintiff does not constitute a good defence, but in general raises a “false issue” which could only embarrass the fair trial of an action. Later in their judgment, their Honours observed that a plaintiff who pleads a “false”[40] innuendo thereby confines the meanings relied on. The plaintiff may not then seek a verdict on a different meaning “… which so alters the substance of the meaning pleaded, that the defendant would have been entitled to plead a different issue, to adduce different evidence or to conduct the case on a different basis”.[41] Thus, their Honours held that that a different “nuance” of meaning, than that pleaded by the plaintiff, may be left to the jury “provided it is not unfair to the defendant to allow the plaintiff to so depart from the meaning pleaded”.[42] Their Honours stated:
“The critical consideration is whether it is prejudicial, embarrassing or unfair to the defendant to allow a plaintiff to amend the statement of claim or otherwise raise as an issue or to seek a verdict on the basis that the matter complained of bears a meaning different from the meaning previously pleaded or relied on by the plaintiff.”[43]
[38]Footnote above.
[39]527 [8].
[40]528 [8].
[41]Page 532 [19].
[42]533 [21].
[43]Page 533 [22], 534 [24].
A similar, but broader, approach was adopted by Kirby J in Chakravarti. However, as with the other members of the court, his Honour was concerned that a plaintiff be confined to imputations to the extent required by considerations of fairness. Thus, he considered that a more serious allegation will generally be taken to include a less serious one, unless the latter “is of a substantially different kind”.[44]
[44]Page 580 [139].
The decision of the High Court in Chakravarti was considered by the Court of Appeal in David Syme & Co Ltd v Hore-Lacy[45]. In that case, the plaintiff pleaded six imputations in respect of an article published by the defendant newspaper. The defendant pleaded that the article was true in substance and in fact. It provided a number of particulars to that plea. A judge struck out the particulars, and the plea of justification. The defendant served an amended defence pleading two alternative imputations to those relied on by the plaintiff. The judge ordered that the defendant provide particulars of that defence. The defendant sought leave to appeal from the two judgments of the primary judge. The issue raised by both applications was whether the defendant in a defamation proceeding, who denies that the words complained of bear the meanings alleged by the plaintiff, but asserts that the words are true, should be required to plead the meanings on which it will rely at trial in support of the plea of justification.[46] In determining that issue, the court considered the extent to which a defendant is entitled to plead, and seek to justify, a meaning which is different to the imputation or imputations sought to be relied upon by a plaintiff. The majority, Ormiston JA and Charles JA, in separate judgments, each held that both a plaintiff and a defendant, in a defamation action, are restricted to the imputation pleaded by the plaintiff, or a different meaning which is either a variant of, or not substantially different from, the pleaded meaning, and which is no more injurious or serious than the pleaded meaning.
[45](2000) 1 VR 667.
[46]Pages 678 and 679 [33] (Charles JA).
In reaching those conclusions, Ormiston JA commenced by considering the question, considered by the High Court in Chakravarti, as to the extent to which the plaintiff is confined to the imputations pleaded in the statement of claim. His Honour examined the different judgments in Chakravarti, and observed that the principle to be derived from Chakravarti was that the requirement that the plaintiff adhere to the pleaded imputations, or a variant of those imputations, was a product of the requirement that the defendant not be disadvantaged unfairly by a plaintiff departing from the meaning pleaded.[47] His Honour noted that that principle left, unresolved, the issue as to how a jury should be instructed on how far it may go beyond the pleaded imputations or imputations which are expressly relied upon at trial. His Honour held that the majority views of the High Court in Chakravarti provided the following answer to that question, namely:
“… the jury may properly be instructed that they can go beyond the meanings alleged, but only so long as the meaning they fix upon is comprehended by or is simply a variant of one of the meanings pleaded or otherwise relied upon.”[48]
[47]672 [12].
[48]673 [17], 675 [21].
Ormiston JA then concluded that, in light of that proposition, a defendant should not be permitted to plead, or rely on, a meaning “… other than one which is not more serious and otherwise is not substantially different” from the meanings pleaded by the plaintiff.[49]
[49]675 [22].
Charles JA came to a similar conclusion. Having examined the judgments in Chakravarti, his Honour stated:
“From these passages it would seem that all members of the court in Chakravarti would take the view that a plaintiff could, after pleading specific meanings by way of false innuendo, succeed at trial on a meaning other than the meanings pleaded, provided that the meaning was not substantially different from and was not more injurious than the meanings pleaded, and that the defendant was not in all the circumstances unfairly prejudiced by allowing that meaning to go to the jury.”[50]
[50]686 [52].
His Honour then noted that the principal criticisms of the practice sanctioned in Polly Peck was that it involved “the setting up of false issues by the defendant” which makes admissible a substantial body of evidence which might otherwise be irrelevant.[51] Thus, as with the plaintiff, a defendant seeking to plead justification is required to plead a meaning “which was sufficiently close (in the manner already suggested) to the plaintiff’s meaning, so that the plaintiff himself could succeed upon that meaning on the pleadings as they stand”.[52] Charles JA observed thus the defendant would be prevented from going to the jury on a “false issue”.
[51]686 [53].
[52]686 to 687 [54].
Pausing there, it is important to note that the central consideration in the separate judgments in Chakravarti was the question whether the defendant would be placed at an unfair disadvantage if, on appeal, the plaintiff were permitted to rely and succeed upon an imputation which was different to the imputation pleaded by him, and put on his behalf to the trial judge. In Hore-Lacy v David Syme, the members of the majority, and in particular Ormiston JA, identified that feature as the basic reason for the formula stated by the High Court in Chakravarti, namely, that the plaintiff was entitled to rely on an imputation which is not substantially different from the pleaded imputation, and which is no more injurious or serious than the pleaded imputation. In Hore-Lacy, the Court of Appeal was concerned with the question of the ambit of the imputation to be relied upon by a defendant who is seeking to justify a meaning different to that put forward by the plaintiff. In determining that the test should apply to any imputation, relied on by the defendant, as is applied to an imputation put forward by the plaintiff, the Court of Appeal was principally concerned to ensure that the defendant should not raise a false issue, by pleading, and seeking to justify imputations which are “substantially different” to those pleaded by the plaintiff.[53]
[53]Page 636 to 637 [53]-[54] (Charles JA).
It is in that background that it is necessary to consider the decision of the High Court in Channel Seven Adelaide Pty Ltd v Manock[54]. The plaintiff relied on that decision as authority for the proposition that the defendant is only entitled to plead fair comment to a meaning pleaded by the plaintiff, or a variant of it. While, in essence, that proposition may reflect the ratio of the court in respect of the particular issues which were before it, it is important to understand the context in which the High Court adopted that formulation of the principle. Manock’s case concerned a “promotion” on television for a program known as “Today Tonight”. The publication complained of comprised twenty-eight words[55]. The plaintiff, a pathologist, pleaded that the promotion in its ordinary and natural meaning bore one imputation, namely “that the plaintiff had deliberately concealed evidence from the trials of Mr Keogh when he was tried for murder”. In its defence, the defendant pleaded fair comment, and provided some thirty-nine particulars of that defence. On an application on behalf of the plaintiff, the Master struck out some, but not all, of those particulars. The matter then proceeded by way of a series of appeals, to the High Court. The court unanimously held that all of the particulars to the plea of fair comment should be struck out. That decision was based on a number of different grounds. One issue agitated before the High Court was whether the meaning pleaded by the plaintiff was relevant to the defence of fair comment pleaded by the defendant.
[54](2007) 232 CLR 245.
[55]257 [16].
In considering that question, Gummow, Hayne and Heydon JJ (with whom Gleeson CJ agreed) noted that the totality of the thirty-nine particulars pleaded by the defendant did not address the imputation relied on by the plaintiff, namely, that he had deliberately suppressed evidence in a murder trial. At best, the defendant’s particulars asserted inaccuracies, inconsistencies and unreliabilities in the plaintiff’s evidence. Gummow, Hayne and Heydon JJ noted that the plaintiff had only pleaded one meaning, and that if he failed to establish that the promotion bore that meaning, or a meaning not substantially different, the trial judge would not have to go further, and the proceedings would be dismissed. On the other hand, if the plaintiff’s allegation were to succeed, the plea of fair comment would have to be considered. That plea would, a fortiori, be directed to the defamatory meaning found by the court. Their Honours then stated:
“The matter sued on – twenty-eight words spoken while a picture of the plaintiff was displayed on the screen – would have been found to have had the meaning alleged, and the only question would be whether those twenty-eight words, bearing that meaning, constituted fair comment. Hence the defendant’s contentions that in this case the meaning pleaded by the plaintiff is irrelevant to the defence of fair comment at common law is wrong. It is wrong because by the time the trial judge comes to consider the fair comment defence the question of meaning will have been decided adversely to the defendant. The meaning found is the comment to be scrutinised for its fairness.”[56]
[56]288 [83] (emphasis added).
It is important to note, in respect of the High Court’s decision in Manock, that the language used by the court was directed to the particular issue under consideration in that case, arising from a brief promotion on television. The defendant sought to sidestep the imputation pleaded by the plaintiff, by directing the plea of fair comment, not to the meaning of the words, but to the “raw material” constituted by the word spoken. It was that proposition which was rejected by the court. Accordingly, Gummow, Hayne and Heydon JJ noted that if the defendant’s submissions were accepted, it would lead to an injustice, because it would permit the defendant to escape liability, by pleading fair comment to an imputation that the plaintiff was incompetent and mistaken. As their Honours stated “There is a great gulf between displaying incompetence and deliberately concealing evidence”.[57] In other words, the vice in the plea by the defendant consisted of its capacity to raise a false issue for the trial.[58]
[57]289 [86].
[58]See also Hore-Lacy v Cleary (2007) 18 VR 562, 569-571 [28-35], 574 [49] (Ashley JA); Western Australian Newspapers Ltd v Elliott[2008] WASCA 172, [49] (Steytler P), [76] (McLure JA).
The foregoing review of the cases is instructive, because it reveals the two underlying purposes served by the tests developed by the courts, in cases such as Chakravarti, Hore-Lacy and Manock, as to the requisite relationship between the imputations pleaded by the plaintiff and the issues to be agitated in the case, whether by the plaintiff (or the jury) travelling beyond the strict formulation of the imputations in the statement of claim, or by the defendant pleading and relying on a defence which does not address the imputations as they have been formulated by the plaintiff. The principal purpose served by tying the plaintiff to imputations, not substantially different from those pleaded, is to ensure fairness to the defendant. The same test has been held to apply to the defendant, principally in order to ensure that the defence does not create a “false issue”, by raising matters which do not meet the case to be put by the plaintiff to the jury, or to be considered by the jury. The various formulae developed by the courts – that the meaning relied on must be a nuance of, a variant of, or not substantially different from, the pleaded imputation – have been developed to serve those two fundamental purposes. In applying those tests to the present case, it is important to bear in mind the underlying reasons for them.
With those principles in mind, I return to the issue raised by the plaintiff’s summons in respect to paragraph 7 of the defence. If the plaintiff’s imputation were to be contrasted with the defendant’s imputation, in isolation from the article from which they are derived, there may be some force in Ms Schoff’s submission that the defendants’ imputation is more than a variant of the imputation relied on by the plaintiff. In other words, it may be one matter to say that a company director has breached the continuous disclosure rules of the Australian Stock Exchange by failing to immediately disclose crucial information which had come into his possession that might have a significant impact on the price of the shares; and it may be a different matter to contend that the director had unethically bought up shares in the company before the release of the details of the information to the market.
However, in my view, such an approach would be artificial, and as such, erroneous, in the context of the article complained of by the plaintiff. As I have already stated, the principal thrust of the article is the allegation that the directors of Solagran purchased shares in the company for a significant period before they released details of the successful clinical trial of Ropren to the market. In other words, there were two intertwined threads, joined together in the article. The first thread was the purchase of the shares, and, tied with that thread, was the purchase of the shares by the defendant before price sensitive information had been released to the market. The plaintiff has chosen to extract one of the two threads – the non-disclosure of the information – and restrict his innuendo to one aspect of that allegation. On the other hand, the defendants have pleaded their innuendo to the two intertwined threads. In that way, in my view, there is a necessary and close connection between the subject matter of the defendants’ imputation and the subject matter of the plaintiff’s imputation. By focussing exclusively on the issue of disclosure, the plaintiff has pleaded the imputation relating to the breach of ASX’s listing rules. On the other hand, the defendants, by focussing on the twin strands of non-disclosure and purchase of shares, have pleaded an imputation of unethical conduct. In my view, examined in that light, the imputation sought to be defended on the basis of honest opinion does not set up a “false issue” at trial.
On the other hand, if the defendants were shut out from pleading a defence directed to that imputation, they would be placed at an unfair disadvantage. If a jury does accept the imputation put forward by the plaintiff, the jury might well conclude that the real sting of that imputation lay, not just in the breach of rules concerning disclosure of information to the market, but, rather, in the trading of shares by the directors during the period of non-disclosure. In that way, in my view, the two imputations are not “substantially different”, when they are considered in the context of the article from which they are derived.
The same conclusion might be reached by considering the effect of an instruction by the trial judge to the jury, concerning the plaintiff’s imputation, of the kind defined by Ormiston JA in David Syme & Co Ltd v Hore-Lacy[59]. If the jury were instructed that they could not find for the plaintiff unless they agreed with the meaning put forward by the plaintiff or a meaning “not substantially different from or more serious than” that proposed by the plaintiff, there is, in my view, a real potential for the jury to find that the words of the article, in their ordinary and natural meaning, bore the imputation pleaded by the defendant, and not by the plaintiff. In that way, as correctly submitted by Mr Wheelahan, the defendants would suffer a real injustice if they were now shut out from pleading a defence of honest opinion to such an imputation. On the other hand, in my view, such a plea would not divert the trial of the case from the particular issues which have been identified by the plaintiff’s imputation. Rather, as I have stated, it is closely interconnected with those issues in the article.
[59](2000) 1 VR 667, 675 [21].
Accordingly, I do not consider that the plaintiff has made out a basis upon which I should strike out the plea in paragraph 7 of the defendants’ defence.
For the purpose of completeness, I should refer briefly to the point made by Mr Wheelahan about the terms of the Defamation Act. Certainly, the effect of s 8 of the Act is, I consider, by and large to adopt the common law position, namely, that the cause of action of a plaintiff lies in the publication of defamatory matter, and not in the imputation or imputations derived from it. However, I do not consider that s 22(2) substantially alters the position stated by the High Court in Manock, or by the Court of Appeal in David Syme & Co Ltd v Hore-Lacy. Rather, as submitted by Ms Schoff, s 22(2) is descriptive of the role of the jury, rather than prescriptive of the precise issue which is to be put to the jury by the judge at trial.
Contextual truth
Ms Schoff submitted that the defence of contextual truth, pleaded in paragraph 6 of the defence, should be struck out on two grounds. First, she submitted that the contextual imputation pleaded by the defendant is no more serious than the imputation pleaded by the plaintiff. Thus, she submitted that the imputation pleaded by the defendant did not (and could not) further injure the plaintiff’s reputation.
Ms Schoff submitted that, in approaching the question whether the defamatory imputations do not further harm the reputation of the plaintiff because of the substantial truth of the contextual imputations, the court should weigh the imputation pleaded by the plaintiff against the imputation pleaded by the defendant. In support of that approach, she referred to the decisions of Hunt J in Jackson v John Fairfax & Sons Ltd[60] and of the New South Wales Court of Appeal in Australian Broadcasting Corporation v Hodgkinson[61]. She acknowledged that there is some conflict in the authorities on this issue. In John Fairfax Publications Pty Ltd v Blake[62] Spigelman CJ disagreed that the court should weigh the plaintiff’s imputation against the defendant’s imputation. Rather, his Honour considered that, in determining whether the defence of contextual truth is capable of being made out, the court should focus on the facts, matters and circumstances said to establish the truth of the contextual imputation, rather than on the terms of that imputation. Ms Schoff submitted that, by reference to either approach, a jury could not reasonably conclude that the contextual imputation pleaded by the defendant is as serious as, or more serious than, the imputation pleaded by the plaintiff. On the one hand, she submitted, the plaintiff’s imputation referred to conduct of the plaintiff which, in “black and white” terms, was a breach of ASX rules. On the other hand, the contextual imputation only relates to the question whether the conduct of the plaintiff was “morally right or wrong”.
[60][1981] 1 NSWLR 36, 39 to 40.
[61][2005] NSWCA 190, [33]-[34] per Hodgson JA.
[62][2001] NSWCA 434, [5], Spigelman CJ (with whom Rolfe AJA agreed).
In response, Mr Wheelahan submitted that the issue is quintessentially a question for the jury. In essence he submitted that it is a matter for the judgment of the jury, bringing into court their worldly experience and knowledge of human affairs, to determine whether the defamatory imputation pleaded by the plaintiff did not further harm the reputation of the plaintiff, because of the substantial truth of the contextual imputation pleaded by the defendant.
I agree with Mr Wheelahan’s submission. Certainly, there may be some cases in which the potentially defamatory effect of the defendants’ imputation could not, on any rational view, be such as to further the harm brought on a plaintiff’s reputation, by reason of the imputation relied on by the plaintiff. However, this is not such a case. It is a matter of judgment for the jury whether the defamatory imputation pleaded by the plaintiff (as to the breach by the plaintiff of the ASX listing rules) did not further harm the reputation of the plaintiff because of the substantial truth of the contextual imputation pleaded by the defendant (namely, that the plaintiff had unethically bought up Solagran shares before release of the details of the trial results to the market). I do not consider that a decision by the jury, either way in respect to such a question, would be unreasonable. My conclusion would be the same whether I was to adopt the approach of Hunt J in Jackson’s case, and the New South Wales Court of Appeal in Hodgkinson’s case, or whether I was to adopt the approach favoured by Spigelman CJ in Blake’s case. Accordingly, I consider that a jury might reasonably conclude that the defamatory imputation pleaded by the plaintiff did not further harm the plaintiff’s reputation, because of the substantial truth of the contextual imputation pleaded by the defendants. Thus, the first ground, argued by Ms Schoff in support of the application to strike out paragraph 6 of the defence, should fail.
The second basis, argued by Ms Schoff in support of the application to strike out paragraph 6 of the defence, was that the particulars subjoined to that paragraph do not rationally support the imputation that the plaintiff had unethically bought up Solagran shares before release of the details of the trial results to the market. Ms Schoff submitted that there is nothing in the particulars which indicates how the defendant will purport to justify the allegation of unethical conduct by the plaintiff. In particular, there is no allegation that the plaintiff purchased shares, before disclosure of the trials to the market, well knowing that that information would, or might, have an effect on the value of the shares. Ms Schoff contended that the particulars provided by the defendants are no more than a chronology of various events, including the purchase of shares by the plaintiff, the conduct of the trial of Ropren referred to as the “Russian Ropren Trial”, and a number of announcements and statements by the plaintiff in various forums as to the progress of the tests. She submitted that none of those particulars are capable of establishing the imputation, pleaded by the defendants, that the conduct of the plaintiff had been “unethical” in purchasing shares in Solagran.
In response, Mr Wheelahan submitted that the particulars provided under paragraph 6 are sufficient to justify an imputation of unethical purchase of the shares by the plaintiff. Mr Wheelahan focussed on four of the twelve particulars provided under paragraph 6. He referred: first, to the lengthy particulars as to the various dates upon which the plaintiff, directly or indirectly, acquired interests in shares in Solagran; secondly, to the particulars alleging the receipt by the directors of Solagran, including the plaintiff, of a preliminary report of the results of the Russian Ropren Trial by October 2006; thirdly, to the particular alleging the receipt by Solagran (and thus the plaintiff) of the final report of the Russian Ropren Trial by 27 November 2006; and, fourthly, to the particular as to the announcement, on 14 February 2008, by the directors of Solagran, of the results of the Russian Ropren trial. Mr Wheelahan submitted that, in order to establish unethical conduct by the plaintiff, it was not necessary for the defendants to prove, nor did they seek to prove, that in deciding to purchase shares in Solagran, the plaintiff had relied on information which was sensitive to the price of the shares, and which had not been released to the market. In other words, Mr Wheelahan submitted that the gravamen of the imputation, pleaded by the defendants, is not that the plaintiff had unethically taken advantage of information, available to him, but not the market, in purchasing the shares at a favourable price. Rather, he submitted that the imputation alleged by the defendants, and supported by the particulars, of unethical conduct, concerned the purchase of shares by a director of a public company, before that company had released details of the trial results of its product to the market. Mr Wheelahan likened the conduct, attributed by the contextual imputation to the plaintiff, to conduct of a judicial officer which is alleged to constitute ostensible, but not actual, bias. He submitted that the gist of the imputation pleaded by the defendants was that the plaintiff’s conduct was unethical because of his act of purchasing shares during the period of non-disclosure.
In weighing those submissions, it is important to bear in mind that Ms Schoff did not submit that the article was incapable of giving rise to the contextual imputation pleaded by the defendant. She accepted that she could not make such a submission, in light of the words attributed to Associate Professor Adams in the latter part of the article. In my view, that concession is correct. The second “ethical question” stated by Professor Adams contains the allegation that the directors of Solagran should not “be trading when they’re privy to information that the market’s not aware of”. Rather, the burden of the complaint, made by Ms Schoff about the particulars, is that they do not support, nor are they capable of supporting, an allegation that the plaintiff improperly took advantage of the information, which had not been released to the market, in deciding to purchase the shares. She submitted that, in the absence of particulars supporting such a proposition, the particulars are “neutral”, and incapable of supporting an allegation of unethical conduct by the plaintiff.
I have some reservations as to the proposition stated by Mr Wheelahan, namely, that the conduct of the plaintiff was unethical, simply because he traded in Solagran shares before the release of information to the market, in the absence of any allegation that the plaintiff had taken advantage of, or based his decision to purchase the shares on, the information which had not been so released. However, I am not persuaded that a jury could not reasonably reach the contrary conclusion, namely, that such conduct of the plaintiff, without more, was unethical. In other words, while I have doubts whether the conduct of the plaintiff described in the particulars to paragraph 6 might fairly be described as “unethical”, I consider that it is reasonably open to a jury to take the view that such conduct was unethical, regardless of whether the plaintiff, in purchasing the shares, had taken advantage of, or relied on, price sensitive information which had not been released to the market. Ultimately, it is for the jury at trial, and not for me on an interlocutory application, to decide whether that conduct constitutes unethical conduct of the director, as alleged in the article. If the jury is satisfied that such conduct was unethical, then the contextual imputation may be made out; if the jury is not so satisfied, then the contextual imputation will fail, and the defence of contextual truth will be rejected.
Accordingly, I am not persuaded that the particulars provided under paragraph 6 of the defence are not capable of supporting the contextual imputation pleaded by the defendants. It follows that the application by the plaintiff to strike out paragraph 6 of the defence should fail.
Conclusions
For the reasons which I have set out above, I conclude:
(1)That the summons by the plaintiff dated 6 March 2009, seeking orders striking out paragraphs 6 and 7 of the defence, should be dismissed.
(2)That the summons of the defendants dated 24 March 2009, seeking an order striking out paragraph 5 of the statement of claim, should be dismissed.
I shall hear counsel on the question of costs.
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