South Australian Water Corporation v Sullivan No. Scciv-01-189

SOUTH AUSTRALIAN WATER CORPORATION v SULLIVAN
[2003] SASC 206
Appeal from a Master

DUGGAN J. The appellant is the defendant in an action brought by the respondent as plaintiff. As this is a dispute as to pleadings it is more convenient to refer to the parties as the plaintiff and the defendant.
The plaintiff has commenced an action against the defendant for damages for breach of contract and defamation. The present appeal is concerned with the pleadings in relation to the alleged defamation.
The further amended statement of claim (the statement of claim) complains of a publication by way of a media release issued by the defendant which contained the following statements:
“SA Water replaces Chief Executive
Mr James Porter, Chairman of the South Australian Water Corporation, has announced that the Board has terminated the employment contract of its Chief Executive, Mr Sean Sullivan. The decision follows a recent review of Mr Sullivan’s performance.
Mr Peter Norman, currently Head of Water Services for the Corporation, has been appointed as Acting Chief Executive.”
It is alleged in para 11 of the statement of claim that:
“11.1In their natural and ordinary meaning the words in the media release meant and were understood to mean that:
11.1.1In carrying out his duties as the chief executive officer of the defendant, the plaintiff had performed in a poor, inadequate and/or unsatisfactory fashion;
11.1.2That the plaintiff’s performance as chief executive officer of the defendant had been poor, inadequate and/or unsatisfactory and that this led to, or had been the reason for, the termination of his employment contract;
11.1.3That the plaintiff’s performance as chief executive officer of the defendant had been sufficiently poor, inadequate and/or unsatisfactory that the termination of his employment contract by the defendant was justified;
11.1.4That the plaintiff had been sacked or dismissed by the defendant by reason of his poor, inadequate and/or unsatisfactory performance as chief executive officer.”
The defendant admits in the second further amended defence (the defence) the allegation as to publication made in para 10.1 of the statement of claim. The defence goes on to state that the defendant denies that the words in the media release bore or were understood to bear or were capable of bearing the meanings set out in para 11 of the statement of claim. Paragraph 12 of the defence pleads that the words in the media release in their natural and ordinary meaning were understood to mean that, following a review of the plaintiff’s performance, the Board considered his position should be terminated. Paragraph 13 of the defence states that the words so understood were true in substance and in fact.
It is claimed in para 14 of the defence that, if the words in the media release bore or were understood to bear or were capable of bearing the meanings or imputations alleged in para 11 of the statement of claim, the words were true in substance and in fact. Paragraph 14 continues:
“Particulars
14.1A review of the plaintiff’s performance was conducted on 29th September 2000 and 14th and 15th October 2000 (‘the performance review’).
14.2Following the review, the Board of the defendant considered the plaintiff’s performance in carrying out his duties as chief executive officer of the defendant was unsatisfactory.”
The defence then goes on to detail in 50 paragraphs the alleged unsatisfactory performance of the plaintiff.
The plaintiff has filed a reply to the defence and objection has been taken by the defendant to paras 7.1 and 7.2 of the reply. The defendant contends that these paras should be struck out. The principal objection to the reply is that it seeks to introduce an extraneous issue which would significantly broaden the scope of discovery. These paras state:
“7The plaintiff says that the Board did not form a view as pleaded in paragraph 13.2 of the Defence that the plaintiff’s employment contract should be terminated as alleged in paragraph 13.2 of the Defence but proceeded without properly considering such question.
7.1During the period of the employment of the plaintiff as CEO of the defendant, the defendant had recorded the best performance figures in its history and his performance was satisfactory.
7.2In relation to paragraph 14.2 of the Defence and in particular to the allegation that the Board considered that the plaintiff’s performance of his duties as CEO of the defendant was unsatisfactory, the plaintiff says as follows:
7.2.1The Board did not proceed in a manner which amounted to consideration;
7.2.2The Board did not consider the performance of the plaintiff in carrying out his duties as chief executive officer properly or at all;
7.2.3Insofar as the Board formed an opinion that it wished to terminate the services of the plaintiff, the plaintiff says that such opinion was not based upon any review of his performance.”
The defendant applied to strike out the plaintiff’s reply. A master dismissed the application and the present appeal is from that dismissal. However the appeal is restricted to the complaint that the master erred in not striking out paras 7.1 and 7.2 of the reply.
The defendant contends that difficulties in the pleadings arise from the use of the words “poor, inadequate and/or unsatisfactory fashion” used in para 11.1 of the statement of claim. Mr Heywood-Smith QC, for the defendant, argued that these words can be read disjunctively. The perceived difficulty is summarised in the defendant’s outline of argument as follows:
“The reader of the complained of publication might think that the author is implying that the Plaintiff had done something wrong so as to justify termination of his contract. What that something might be is unstated. It might be performance reflecting upon the performance of SA Water itself (Meaning A). It might be performance by the Plaintiff which is unsatisfactory to the Board albeit that it does not impact upon the performance of SA Water (Meaning B).”
According to the argument, the defendant contends that the plaintiff wishes to contest the case on the basis of Meaning A. The defendant points out that the plaintiff believes that SA Water was performing well and that he seeks discovery of all documentation going to that issue.
In refusing to strike out paras 7.1 and 7.2 of the reply, the master stated that para 14 of the defence pleads truth in respect of all of the various imputations pleaded in para 11 of the statement of claim. Those imputations are wide enough to include criticism of the plaintiff’s performance as chief executive officer which may have had an effect on the performance of the company.
There is an application before the master to amend the defence so as to clarify the boundaries of the plea of truth. The plaintiff has foreshadowed an argument that the proposed amendment does not address the concern of the master which led him to refuse to strike out paras 7.1 and 7.2 of the reply.
However that may be, it is my view that in the present state of the pleadings and, in particular, having regard to the breadth of para 14 of the defence, the master was correct in allowing the plaintiff to plead in reply that the company was performing satisfactorily.
The question remains whether paras 7.1 and 7.2 of the reply should be allowed to remain even if the defence were narrowed so as to overcome the obstacle which the master held stood in the way of the defendant’s application to strike out these paragraphs.
Mr Swan, for the plaintiff, argued that the performance of the company cannot be divorced from the appropriateness or otherwise of the Board decision to dismiss the plaintiff.
The broad imputation pleaded in the statement of claim is that the plaintiff was dismissed because of his performance and that the dismissal was justified. In my view, it cannot be known at this stage which, if any, of the aspects of personal behaviour relied upon by the defendant can be substantiated. It may become difficult to determine whether the dismissal was justified if the alleged behaviour of the plaintiff cannot be considered against the background of the professional performance of his duties as chief executive officer and the impact which such performance had on the company.
In my view these considerations provide a further justification for allowing paras 7.1 and 7.2 to remain as part of the reply.
The appeal will be dismissed.

[2003] SASC 206

4 July 2003