Whitlam v Dempsey (No.3)

[2002] NSWDC 25

District Court

New South Wales

Medium Neutral Citation:

Whitlam v Dempsey (No.3) [2002] NSWDC 25

Hearing dates:

10 May 2002

Date of orders:

7 June 2002

Decision date:

07 June 2002

Jurisdiction:

Civil

Before:

Gibson DCJ

Decision:

See orders at the end of the judgment

Catchwords:

TORT – DEFAMATION – contextual imputations – whether possible to rely upon a contextual imputation based on true innuendo

Cases Cited:

Chappell v Mirror Newspapers Ltd (1984) Aust Torts Rep 80-691

General Steels Industries Inc v Commissioner for Railways (NSW) & Ors (1964) 112 CLR 125

Greek Herald v Nikolopoulos [2002] NSWCA 41

Herscu v Unsworth (Supreme Court of NSW, 6 July 1988, unreported)

John Fairfax v Blake [2001] NSWCA 434

Morris v Newcastle Newspapers Pty Ltd (1985) 1 NSWLR 260

Nikolopoulos v Greek Herald [2001] NSWCA 41

O'Hagan v Nationwide News Pty Ltd [2001] NSWCA 302

Pioneer International Ltd & Ors v Knox (1992) 22 NSWLR 266

Sergi v ABC [1983] 2 NSWLR 669

Sims. v Wran [1984] 1 NSWLR 317

Vajda v Bardy (Supreme Court of NSW, Levine J, 21 October 1994

Waterhouse & Anor v Hickie (1995) Aust Torts Reports 81-347

Category:

Procedural rulings

Parties:

Plaintiff:
Nicholas Richard Whitlam
Defendant:
Robert Dempsey

File Number(s):

5250 of 2001

Publication restriction:

Nil

Judgment

1. Background

1. This is an application by the plaintiff to strike out contextual imputations proposed as inclusions in the Defence by the defendant. The application is made on the following four grounds:

1. It is impossible to plead a contextual imputation that relies upon a true innuendo;

2. The contextual imputations are incapable of arising;

3. The contextual imputations are incapable of "swamping" the imputations found by a jury to be conveyed of and concerning the plaintiff, and

4. The defendant should be required to particularise his defence fully before being given leave to proceed further with any defence of contextual truth.

2. Items 2 - 4 on the list are straightforward matters but item 1 poses an interesting question on which there is no authority apart from some passing comment by Hunt J in Herscu v Unsworth (Supreme Court of NSW, 6 July 1988, unreported).

3. The defence of contextual truth, which arises from Section 16 Defamation Act 1974, is explained by the Court of Appeal in Waterhouse & Anor v Hickie (1995) Aust Torts Reports 81-347 at [62,943] – [62,945].

1.2 The causes of action in the Statement of Claim and the current status of these proceedings

4. The plaintiff commenced proceedings for damages for defamation for the following publications made by the defendant:

1. statements made to a journalist employed by the Sydney Morning Herald on or about 2 March 2001 ("the Herald interview") which were published by the Herald on 3 March 2001 (the proceedings over this publication were lost at the Section 7A trial as a result of the jury's negative findings);

2. statements made to a journalist employed by the Australian on or about 2 march 2001 ("the Australian interview”) which were published by the Australian on 3 March 2001;

3. statements made to a journalist employed by the Financial Review on or about 2 March 2001 ("the Financial Review interview”) which were published by the Financial Review on 3 March 2001.

5. On 24 January 2002 a section 7A trial was heard in the District Court before Puckeridge J and a jury of four and judgments and orders entered in accordance with the jury's questions. The two causes of action remaining (namely the second and third publications) are set out in full below together with the imputations the jury found to be conveyed and to be defamatory.

6. It is of particular importance to note that all the plaintiff's imputations were conveyed by true innuendo, and the facts and matters giving rise to the true innuendo, which were the subject of admissions for the Section 7A trial, must also be referred to. These difficulties arise because the plaintiff elected not to sue the newspapers that published the defendant's statements but to isolate the defendant's statements from the articles in which they appeared as well as from the ongoing debate about the NRMA. Thus it was necessary for the plaintiff to plead true innuendos for the imputations to be conveyed.

7. The facts in this case highlight two problems in defamation law. The first of these is that one of the defects (in my view) of Section 7A is that if there is a defence of contextual truth pleaded by the defendant which includes the pleading of an imputation not pleaded by the plaintiff, the jury cannot be asked to determine whether it is conveyed. The Section 7A jury can only consider the plaintiff's imputations. The second problem arises from the relationship between the matter complained of and the context in which it is published amongst statements by others. When a media broadcaster is sued, the whole of the publication is generally included and this is not a problem, but when an individual whose comments form part of a larger publication is the only person sued and the imputation does not comfortably arise solely from what this person says but from statements by third parties, this can lead to difficulties because the plaintiff is generally obliged to rely on extrinsic facts to establish the imputations (Herscu v Unsworth( Supreme court of NSW, Hunt J, 6 July 1988). What happens where a defendant seeking to plead contextual imputations wants to plead extrinsic facts not relied upon by the plaintiff? Are recent Court of Appeal decisions giving greater importance to context (John Fairfax v Blake [2001] NSWCA 434; Nikolopoulos v Greek Herald [2001] NSWCA 41; O'Hagan v Nationwide News Pty Ltd [2001] NSWCA 302) of assistance?

8. The first point to determine is whether it is permissible for the defendant to raise this defence at all in that it imports new material into the matters complained of by raising extrinsic facts which by definition are not contained in the matter complained of, nor so notorious as to be universally known. This requires a consideration of the contextual imputations pleaded by the defendant do indeed rely upon different extrinsic facts from the extrinsic facts pleaded by the plaintiff, or are so similar as to amount to a more precisely particularised statement of facts.

2. OBJECTION 1 - Impossible for a defendant to plead a contextual imputation that relies upon an innuendo

9. The plaintiff submits that the imputations found by the jury to have been conveyed are published only to those recipients with knowledge of the extrinsic facts particularised by the plaintiff. For the defendant's contextual imputations to succeed, they must be made by the same publication and not by some third party: Pioneer International Ltd & Ors v Knox (1992) 22 NSWLR 266. The extrinsic facts relied upon by the plaintiff are not matters of notoriety and it is effectively statistically impossible for the defendant to assert that those readers who knew the extrinsic facts pleaded by the plaintiff would also know the extrinsic facts pleaded by the defendant. If even one such person did not know the defendant's extrinsic facts, that would be enough to defeat the argument. Therefore, the plaintiff argues, the defence is hopeless because the defendant has to achieve 100% success rate.

10. This is a commonsense argument. However, there are three provisos that should be considered.

11. Firstly, it is by no means a universal rule that a contextual imputation arising by true innuendo can never be pleaded, according to Hunt J in Herscu v Unsworth at [4].

12. Secondly, where the defendant relies upon the same particulars of extrinsic facts (or particulars that are so substantially similar as make no difference) to plead his/her own contextual imputation, such an objection would fail. This can be shown by using the common example given for the existence of true innuendo ("the plaintiff was seen entering 2 Chapel Street" where what is not stated in the text but is known to certain readers is that 2 Chapel Street is the address of a notorious brothel run by criminals). Such a publication might result in an imputation from the plaintiff that the plaintiff was visiting a brothel. Could not the defendant, relying upon the balance of the extrinsic facts pleaded by the plaintiff, seek to plead an imputation that the plaintiff was consorting with criminals?

13. Thirdly, the question of context must be considered. There is no doubt that a defendant may not use adjacent text for the pleading of a contextual imputation: Pioneer at [269E]. However, is a defendant barred from relying on the adjacent text to give rise to true innuendo contextual imputations? Is the defendant barred, for example, from asserting some particular that is implicit in, but not spelled out by, the plaintiff's particulars of true innuendo? Have recent Court of Appeal decisions changed the role of context in defamation actions? It is this question of context that causes the difficulty in this case.

14. At first blush, Hunt J in Pioneer at [269] would appear to rule out the use of other material not published by the defendant. However, three recent decisions in the Court of Appeal show a farsighted expansion of rigid rules of this kind. The first of these is O’Hagan v Nationwide News Pty Ltd [2001] NSWCA 302, and it has the most relevance because the analogy between proof of bad reputation and Section 16 contextual truth was noted by the Court of Appeal in the case cited by Hunt J in Pioneer at [269G], namely Chappell v Mirror Newspapers Ltd (1984) Aust Torts Rep 80-691 at [68,950].

15. In Chappell Moffitt P used Section 16 as an analogy as to why it is impermissible to lead material as proof of prior bad reputation. However, as O’Hagan v Nationwide News Pty Ltd [2001] NSWCA 302 now demonstrates, this limited view of the admissibility of evidence of bad reputation has now broadened considerably. If Chappell no longer represents the law on admissibility of evidence to show prior bad reputation, could this mean that the restrictions in Pioneer could similarly be enlarged?

16. Counsel for both parties drew my attention to a decision of similar import, John Fairfax v Blake where Hodgson J notes at [59] – [61] that when weighing up the plaintiff's and defendant's imputations the Court must focus on the facts matters and circumstances said to establish the truth of the imputation rather than be restricted by the imputation itself. Similarly, in Greek Herald v Nikolopoulos [2002] NSWCA 41 the Court of Appeal noted that when defamatory meaning of an imputation is considered, it must be considered in the context of the matter complained of.

17. What all these cases demonstrate is a perceptible distancing of the court from the technicalities of the imputation to concentrate on the merits of the case. However, I am still bound by authorities such as Pioneer and cannot permit the defendant to go outside the matter complained of (and the plaintiff's true innuendos which are parasitically attached to them by reason of the jury finding) to insert new material into the matter complained of to create a new imputation, particularly after a Section 7A jury trial where the parameters of the publication have been determined. Although the defendant cannot put its imputations before the Section 7A jury, the Section 7A jury must make findings as to publication and if the import of the true innuendo is to add information to the matter complained of (in the form of factual material that was relevant to the imputation) this should have been put before the jury, as issues of publication are a matter for the jury. I note Mr Hale SC advised me from the bar table that the true innuendo particulars were the subject of admission and also of some evidence at the Section 7A trial.

18. A defendant who wants to rely upon material that is not in the matter complained of could insert such extra material if it had been published by the defendant himself (Pioneer at [269D]; Vajda v Bardy (Supreme Court of NSW, Levine J, 21 October 1994) but that has not been proposed here and in view of the jury's finding it is no longer possible. Unless the defendant can satisfy me that he is relying on the same true innuendos that the plaintiff is relying upon, contextual imputations with different true innuendos must be struck out. This means that careful attention must be paid to the plaintiff's true innuendos. If the plaintiff's true innuendos are capable of including the defendant's true innuendos then the defendant's true innuendos, although phrased differently and giving rise to a different emphasis, are just as capable of being conveyed as the plaintiff's because they rely upon the same substratum of fact.

19. Thus, by reason of broadness of part the plaintiff's true innuendos, the true innuendos of the defendant may be capable of surviving because they do in fact arise from the same factual material as the plaintiff's true innuendo.

20. I now turn to a consideration of each of the true innuendos pleaded to the publications made by the defendant to journalists at the Financial Review and Australian.

2.1 The publications to which the contextual imputation is pleaded: the Financial Review publication

21. The text of this publication was as follows:

"The internal NRMA inquiry should be seen for what it is: a gross abuse of natural justice. The inquiry has not been about corporate governance but about Nick Whitlam."

22. The imputation found by the jury was:

13(a) The Plaintiff, the chairman of NRMA Insurance, had procured NRMA Insurance to conduct a costly inquiry for the ulterior purpose of advancing his private interests.

23. This imputation arose by reason of the following extrinsic facts:

1. The plaintiff was the chairman of NRMA Insurance

2. A series of articles had been written in the Australian Financial Review outlining allegations of various irregularities in the management of NRMA Insurance

3. The plaintiff had been trying to find out the source of those articles

4. An inquiry resulting in a report by Robert McDougall QC had been commissioned by NRMA Insurance into the matter

5. The inquiry report cost more than $300,000.

2.2 The defendant's contextual imputation and extrinsic facts

24. The defendant pleads the following contextual imputation:

The plaintiff had so conducted himself as to warrant a formal inquiry to ascertain whether he was guilty of wrongful conduct as a director.

25. The defendant pleads the following extrinsic facts:

1. Allegations had been made against the plaintiff of incorrectly dealing with proxy votes.

2. Allegations had been made against the plaintiff of wrongdoing as a director.

3. The plaintiff was a director of NRMA Limited and NRMA Insurance.

2.3 Comparison of the extrinsic facts with each other and referring to the publication in which they appear.

1. Both sets of extrinsic facts refer to the plaintiff holding a position in NRMA Insurance, although the plaintiff describes him as "chairman" and the defendant as "director" and the defendant also refers to his position in NRMA Ltd. Thus what the plaintiff is postulating is that there would be people who know of the plaintiff as the chairman of NRMA Insurance who do not know he is also a director and/or do not know he is a director of NRMA Ltd. The context of the publication in the "series of articles" in the Financial Review (which the ordinary reasonable reader would have to have seen or read some of so as to satisfy particular (b) are not before me in this application. It would have to be a contested issue of fact for the trial for the plaintiff to determine whether or not persons who knew from this "series of articles" about the "various irregularities" in NRMA Insurance did not also know that he was a director of NRMA Insurance and/or NRMA Limited. The plaintiff cannot give such evidence from the bar table, particularly in a case where the plaintiff's corporate role in NRMA Insurance is arguably conceded in the fatally broad particular "a series of articles ... outlining allegations of various irregularities". The most the plaintiff can hope for is that the particular for NRMA Limited is unknown to the persons with knowledge of the plaintiff's extrinsic facts, but that is a disputed issue of fact best reserved for the trial.

2. The particulars of "incorrectly dealing with proxy votes" and "wrongdoing as a director" are in my view arguably caught up as simply more specific references than the plaintiff's very general "various irregularities". I note the reference to "irregularities" in the article in which the words spoken by the plaintiff appear. Those irregularities are, according to this publication, "irregularities in proxy voting" and other matters which could generally be categorised as "wrongdoing" and it is likely from the tone of the Financial Review article that these allegations appeared in the "series of articles" in particular (b) of the true innuendo particulars. In those circumstances, all persons with knowledge of the "various irregularities" referred to in the plaintiff's extrinsic facts could well, if asked, respond that the various irregularities included proxy voting irregularities and other activities which it would be fair to categorise as wrongdoing of the kind being investigated by the ASIC, namely wrongdoing as a director.

26. Thus the question of whether or not the persons with knowledge of the true innuendo pleaded by the plaintiff also knew the true innuendo pleaded by the defendant will be an issue of disputed fact at the trial. Given the likelihood that the defendant's true innuendo is encapsulated in the "series of articles" and "various irregularities" by reason of the close factual nexus I am not prepared on to strike out the pleading as hopeless: General Steels Industries Inc v Commissioner for Railways (NSW) & Ors (1964) 112 CLR 125 at [129] - [130]

3.1 The second publication to which contextual truth is pleaded: The Australian publication

27. The text of this publication was as follows:

"Shareholders are entitled to know why a ... clearly very substantial amount of money has been expended by the company, not on investigation grave revelations about the chairman's conduct, but on investigating who leaked documents which were an embarrassment to Mr Whitlam."

28. The imputations found by the jury were:

9(a) The plaintiff, the chairman of NRMA Insurance, permitted a very substantial amount of the company's money to be wasted on an internal investigation which was instigated to ascertain who leaked documents which were an embarrassment to him.

9(b) The plaintiff had gravely misconducted himself as chairman of NRMA Insurance.

29. These imputations arose by reason of the following extrinsic facts:

1. The plaintiff was the chairman of NRMA Insurance

2. Mr McDougall QC had conducted an inquiry resulting in a report which cost NRMA Insurance at least $250,000

3.2 The defendant's contextual imputations and extrinsic facts

30. The defendant pleads the following contextual imputations:

A. The plaintiff gravely misconducted himself as a company director

31. Extrinsic facts:

1. The plaintiff was a director of NRMA Limited

2. The plaintiff was a director of NRMA Insurance

3. The plaintiff was president of NRMA Limited

B. The plaintiff had gravely misconducted himself as a company director by incorrectly dealing with proxy votes.

32. Extrinsic facts:

1. (a) Allegations had been made against the plaintiff that he had incorrectly dealt with proxy votes.

C. The plaintiff had gravely misconducted himself as the chairman of NRMA

33. Extrinsic facts:

1. The plaintiff was the president of NRMA Limited

2. The president of NRMA Limited usually chairs both board meetings and meetings of members at NRMA Limited.

3. Allegations had been made against the plaintiff that the plaintiff had misconducted himself as a director.

34. It can immediately be seen that unlike the true innuendo particulars in the first publication, the true innuendo particulars selected by the plaintiff for this article are much narrower and have little common ground with the defendant's. Accordingly, the defendant's contextual imputations are not capable of arising from the matter complained of (with its parasitically attached true innuendo as found by the jury) and thus cannot fall within the very narrow band of true innuendos capable of being pleaded by a defendant.

34. I notice, in passing, the dotted lines in the quotation from the defendant, indicating this is not the whole quotation. If the defendant said more to the journalist, this may be a matter where the defendant could have sought to strike that portion in. However, now that the jury has determined the issue of publication, in my view it is res judicata and it is too late to strike in further matter.

4. The second ground: incapacity

36. The plaintiff's second ground of attack was that the contextual imputations were incapable of being conveyed. I now turn to a consideration of that issue in relation to the surviving contextual imputation which is pleaded in relation to the Financial Review:

The plaintiff so conducted himself as to warrant a formal inquiry to ascertain whether he was guilty of wrongful conduct as a director.

37. Unfortunately, this imputation suffers from a series of fatal defects of form. The clause "so conducted himself" has been the subject of criticism in a series of decisions in the Court of Appeal; the body conducting the inquiry must be identified (Sergi v ABC [1983] 2 NSWLR 669) and the word "wrongful" is not permissible because of its ambiguity and rhetorical nature (Morris v Newcastle Newspapers Pty Ltd (1985) 1 NSWLR 260).

38. Accordingly for reasons of form I strike this imputation out with leave to replead.

39. By reason of these defects the matters the subject of the plaintiff's second and third objections do not fall to be considered at this time. Whether the repleaded imputation has the requisite capacity and the ability to equal or outweigh the plaintiff's imputation (the third ground of attack by the plaintiff on these imputations) will have to be deferred to another day.

The fourth ground: requirement for particulars of truth

40. The defendant submitted that before leave should be given to amend to plead truth the particulars should be provided in advance. No authority is cited for this proposition.

41. There is no requirement in the District Court Rules that such particulars be supplied with the pleading. The old Supreme Court Rules still apply, and this means that technically there is no obligation to supply such particulars until they are ordered: Sims. v Wran [1984] 1 NSWLR 317. Accordingly, I am not prepared to make an order requiring provision of such particulars other than in an extreme case where such a plea is, from its face, likely to amount to an abuse of process.

Orders

1. Contextual imputation pleaded to the Financial Review publication struck out with leave to replead.

2. Contextual imputations pleaded to the imputations in the Australian publication struck out.

3. Defendant pay plaintiff's costs.

4. Liberty to restore in relation to order 3.

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Decision last updated: 24 September 2025