Xenophon v Lucas No. DCCIV-99-1306
[2001] SADC 187
•21 December 2001
XENOPHON V LUCAS
[2001] SADC 187
Judge Kitchen
Civil
In the proceedings initiating this action the plaintiff claims damages for defamation.
On 17th November, 2000 an order was made pursuant to DCR 75.02, that before the trial of any other issues in the action, the “questions” raised by paragraph 21.1A of the Reply be disposed of; that paragraph pleads that paragraph 38 of the Defence is an abuse of process.
The question arises in this way.
In December 1998 a document, sometimes referred to as a flyer and sometimes referred to as a newsletter, (I will refer to it as the newsletter) was sent to the electors for the House of Assembly seat of Bragg. It was on the letterhead of the Treasurer. The defendant, a member of the Legislative Council, held that position. The plaintiff was and is a member of the Legislative Council. The first paragraph of the document reads:
“In one day of parliament, independent MLC Nick Xenophon inflicted more damage on the South Australian economy and your future than John Bannon and Tim Marcus-Clarke combined.”
It goes on to refer to an impending national electricity market and sets out what are stated to be the financial detriments to South Australia were the State owned entities ETSA and Optima not sold or leased, and the benefits to be derived if they were. It concludes:
“In one day Mr Xenophon wiped out that critical opportunity and has condemned all South Australians to a difficult future of debt and financial risk.”
The full text of the newsletter is set out in Annexure A to these reasons.
On 25th January, 1999 the defendant published a document which was also sent to the electors of Bragg; that document reads:
“Late last year a newsletter on the Treasurer’s letterhead was distributed which included commentary on the parliamentary debate over the possible sale of ETSA.
Independent MLC Nick Xenophon has complained about a number of claims made in the newsletter.
The Treasurer acknowledges that at the time the newsletter was distributed, Mr Xenophon had not actually voted on the ETSA legislation and that therefore it was incorrect to talk of damage already inflicted on the South Australian economy.
The Treasurer also acknowledges that the newsletter could be read to infer that Mr Xenophon was solely responsible for the possible defeat of the ETSA sale legislation. This is incorrect and unfair to Mr Xenophon as the Labour Party and Australian Democrats must also accept their share of responsibility.
The Treasurer therefore withdraws and apologises for any imputation that Mr Xenophon was solely responsible for any defeat of the ETSA legislation and any subsequent damage to the South Australian economy.
Mr Xenophon also claimed that the following four statements in the newsletter were untrue:
1. Interstate, some fifty percent of Power customers change companies as soon as they are offered a new supplier in the competitive worlds of the National Electricity market.
2. No wonder NSW is as desperate to remove its power utilities from public ownership as we are.
3. If we were able to sell or lease at this point we could make a large dent in the State’s more than $7 billion in net debts.
4. And just as important, almost cancel out much of the $2 million dollars a day we are paying in interest on that debt.
The Treasurer does not agree with Mr Xenophon’s claims on these four statements and several other matters not referred to above and is not prepared to withdraw them.”
The plaintiff issued proceedings in the Magistrates Court on 11th February, 1999 claiming damages not exceeding $20,000 alleging he had been defamed in the newsletter, allegedly published by the defendant and Mr Graham Alexander Ingerson a member of the House of Assembly (“the first proceedings”).
On 19th March, 1999 Minter Ellison, solicitors for the defendant and Mr Ingerson, sent a facsimile to Xenophon & Co, solicitors for the plaintiff, which reads:
“The defendants consent to judgment for the amount claimed of $20,900.
A cheque will be provided shortly.
As the defendants are consenting to judgment for the full amount claimed, we note that this matter is therefore resolved.”
No defence was filed in the first proceedings; the plaintiff did not sign judgment against the defendant or Mr Ingerson.
Between 19th March, 1999 and 22nd March, 1999 the defendant, in interviews by newspaper, radio and television reporters made statements which, the plaintiff claims, firstly asserted that parts of the allegedly defamatory contents of the newsletter were true, and secondly defamed him by words the natural and ordinary meaning of which conveyed that the plaintiff was happy to take taxpayers money for his own purposes and if he had any decency he would pay the money (the proceeds of the settlement of the first proceedings) to charity.
On 21st April, 1999 Minter Ellison sent to Xenophon and Co. a cheque for $20,900 and wrote “Would you please confirm that action number 3341 of 1999 is now finalised”. That was the action number of the first proceedings.
On 6th May, 1999 the plaintiff issued in the Magistrates Court proceedings against the defendant claiming damages for the allegedly defamatory statements made by the defendant in March 1999. Those proceedings were transferred to and are now before this court (“the present proceedings”).
In his amended Defence filed in this court the defendant pleaded (in paragraph 38) among other matters, that:
“… insofar as the plaintiff pleads that the defendant has adopted certain comments made by him and published in or about the second week of December 1998 … the defendant says that insofar as those words consist of statements of fact they were true in substance and in fact, and insofar as they consisted of expressions of opinion, they were fair comment on matters of public interest…” (“the rolled up plea”)
In the Reply to the amended Defence, the plaintiff pleaded (paragraph 21.1A) inter alia that paragraph 38 of the amended Defence:
“… is an abuse of process that the defendant seeks to now defend the original publication pleaded in paragraph 4 of the Particulars of Claim, he having consented to judgment on that publication …”
asserting that the rolled up plea was available to but not pleaded by the defendant in the first proceedings and to now seek to advance that plea in the present proceedings is an abuse of process and further asserting that “the defendant is issue estopped from pleading the “rolled up plea” in respect of the original publication or alternatively the principle of “res judicata” applies to preclude the defence.”
By reason of the fact that in the first proceedings a defence was not filed and the plaintiff did not sign judgment those proceedings were automatically dismissed on 20th March 2000 pursuant to Rule 28 of the Magistrates Court (Civil) Rules, that dismissal having effect as a judgment but not as a final judgment.
On 16th February, 2001 the plaintiff applied to the Magistrates Court in the first proceedings for orders that the dismissal of those proceedings be set aside and that judgment be entered for the plaintiff in the sum of $20,900. On the hearing of the application the Magistrates Court re-instated the action but declined to enter the judgment sought by the plaintiff and directed that the file be marked “Settled by the Defendant paying the amount of the claim and party and party costs on summons”. The plaintiff appealed to the Supreme Court against the order. On 18th May 2001 the Supreme Court (Perry J) allowed the appeal and substituted an order that “Judgment be entered for the plaintiff against the defendant in the sum of $20,900 inclusive of costs”.
In paragraph 3.7 of the Defence the defendant pleaded that the first proceedings could not be successfully defended; by his Reply the plaintiff admitted that as a fact.
Mr Heywood-Smith who appeared for the plaintiff in the present proceedings submitted that the rolled up plea by the defendant was a defence which the defendant could have advanced in the first proceedings and that by the judgment entered in the first proceedings the defendant is either estopped from raising such a defence as an issue or, contending that it was unreasonable for the defendant not to have raised it in the first proceedings, he should not be permitted to now raise it in the present proceedings (relying on Port of Melbourne Authority v Anshun (1981) 147 CLR 589). The plaintiff also contends that the principle of res judicata applies.
In Blair v Curran (1939) 62 CLR 464 Dixon CJ wrote, at 532:
“The distinction between res judicata and issue-estoppel is that in the first the very right or cause of action claimed or put in suite has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is necessarily decided by the prior judgment, decree or order”.
The first proceedings concerned the newsletter. The present proceedings claim that in March 1999 the defendant made statements by which he, in effect, again “published” the substance of parts of the newsletter which were defamatory of the plaintiff. The occasion, the nature and the manner of the publication in the newsletter were different from that on which the plaintiff now relies and in my opinion the principle of res judicata does not apply; as I apprehend Mr Heywood-Smith tacitly acceded to that, basing his concluding submissions upon issue-estoppel or the principles in Anshun’s case.
In relation to issue estoppel, Debelle J in Milojevic v ROH Industries Pty Ltd (19991) 56 SASR 78 wrote (at page 83):
“As Dixon J observed (in Blair v Curran) it is not every fact which might have been in controversy in the prior litigation which attracts the operation of the rule. The estoppel is confined to ultimate facts, it does not extend to evidentiary facts. There can be no estoppel unless what is put forward it inconsistent with a former finding or decision… Estoppel extended only to setting up in a subsequent action a defence which was necessarily and with complete precision decided by the previous judgment. In his reasons for judgment in Brewer v Brewer (supra at 14-15 ), Fullagar J (with whom Dixon CJ agreed) cited with approval dicta in earlier English decisions to the effect that a defendant is not precluded from setting up a defence in a second action because he did not avail himself of the opportunity of setting it up in the first action. The last observation must be read in the light of the decision of the High Court in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. It might now be better expressed by saying a defendant is not precluded from setting up a defence in a second action which he could not reasonably have been expected to have set up in the first action …”
See also Mitsubishi Motors of Australia v Harbord (1997) 69 SASR 75 in which Doyle CJ (with whom Matheson and Olsson JJ concurred) said at page 92 he agreed with what Debelle J wrote in the second part of the passage I have set out.
To determine what is necessarily decided by a judgment by consent it is proper and essential to examine the record of the proceedings: Isaacs v Ocean Accident and Guarantee Corporation Ltd (1958) SR (NSW) 69. Where a judgment is entered by default the same examination is required Kok Hoong v Leong Cheong Kweng Mines Ltd (1964) AC 993. In the first proceedings no defence was filed; therefore no defence of fair comment was raised in those proceedings or determined by the judgment in them. Even if, contrary to my view, the default judgment necessarily and fundamentally rests on there being no defence to the defamatory imputations in the newsletter, whether fair comment or otherwise, any such conclusion is to be confined to the very publication, the subject of the first proceedings, viewed as a whole. In the present proceedings however the defendant is not sued for the publication of the newsletter but for making statements in which he allegedly ‘adopted’ or repeated some, but not all, of the subject matter in the newsletter. . Those later statements by the defendant gave rise to a new, different cause of action against him to which he has entered the rolled up plea. In my opinion that plea is not inconsistent with the judgment in the first proceedings or that “which was necessarily and with complete precision” decided by it. Accordingly there is no issue estoppel.
The question, therefore, is whether the defendant is to be prevented from raising the defence of fair comment on the grounds it “… was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it”. Anshun’s case supra per Gibbs CJ, Mason and Aickin JJ at 598.
It is common ground that the newsletter was defamatory of the plaintiff and that issue was determined by the judgment in the first proceedings. The rival contentions are:
1.For the plaintiff – that because the newsletter does not expressly or implicitly assert or identify as a fact that the plaintiff had voted in the parliament, and, it is urged, there being no necessity for the defendant in order to rely on the defence of fair comment in the first proceedings to prove the plaintiff had voted, then the defendant’s resiling from and apology for such an assertion in the context of repeating the substance of the newsletter, is irrelevant; accordingly the issue of fair comment, now raised by the defendant, being available in the first proceedings but not pleaded the defendant cannot raise it in the present proceedings.
2.For the defendant –
(a) that the defendant having pleaded (para. 3.7 of the Defence) and the plaintiff having admitted (para. 1.3 of the Reply) that the first proceedings could not be successfully defended, it is common ground that neither fair comment nor any other defence was available to be advanced by the defendant, therefore the principles in Anshun cannot be applicable.
(b) it being fundamental to the defence of fair comment that the comment be upon or with reference to true facts either clearly stated in or sufficiently indicated for the purposes of the newsletter, then unless the defendant could prove in the first proceedings that the plaintiff had voted in the parliament upon the legislation, the defence of fair comment could not be made out: that is the conduct of the plaintiff “in one day” of parliament, short of voting upon the legislation, could not be a basis to justify the defendant’s comments in the newsletter.
In Kemsley v Foot (1952) AC 345 at 357-358 Lord Porter, with whom Lord Tucker expressly agreed (at p.372), said:
“In a case where the facts are fully set out in the alleged libel, each fact must be justified and if the defendant fails to justify one, even if it be comparatively unimportant, he fails in his defence. Does the same principle apply where the facts alleged are found not in the alleged libel but in particulars delivered in the course of the action? In my opinion, it does not. Where the facts are set out in the alleged libel, those to whom it is published can read them and may regard them as facts derogatory to the plaintiff; but where, as here, they are contained only in particulars and are not published to the world at large, they are not the subject matter of the comment but facts alleged to justify that comment.
In the present case, for instance, the substratum of fact upon which comment is based is that Lord Kemsley is the active proprietor of and responsible for the Kemsley Press. The criticism is that that press is a low one. As I hold, any facts sufficient to justify that statement would entitle the defendants to succeed in a plea of fair comment. Twenty facts might be given in the particulars and only one justified, yet if that one fact were sufficient to support the comment so as to make it fair, a failure to prove the other nineteen would not of necessity defeat the defendants’ plea.”
McHugh J in Pervan v North Queensland Newspaper Co Ltd (1992-1993) 178 CLR 309 wrote, at p.341-342:
“Fair comment in the Kemsley situation is very different from what may be called the conventional case of fair comment. In the conventional case, the basis of the comment appears in the publication. The reader is able to judge whether the facts justify the comment. Once the defendant proves the facts which are the basis of the comment, that person is entitled to the benefit of the defence unless the opinion expressed by the defendant was not honestly held. But in a situation such as that in Kemsley, the reader does not know what facts were the basis of the comment. Unless litigation ensues, the reader will never know what particular facts the defendant had in mind. Moreover, as the second passage from the speech of Lord Porter makes plain, the defence may succeed even though some or most of the “facts” which the defendant had in mind were untrue.
If the facts forming the basis of the comment always had to be drawn to the reader’s attention, effective comment on many subjects would be frustrated. No doubt, it is for this reason that the common law provides for a defence of fair comment if the subject matter or “substratum of fact” of the comment is sufficiently indicated without requiring that the particular facts justify the comment be set out or indicated. The plaintiff’s protection is found in the rule that the defence will fail unless the defendant proves the truth of sufficient facts to justify the comment.”
In the newsletter published by the defendant, the first paragraph is
“In one day of parliament, independent MLC Nick Xenophon inflicted more damage on the South Australian economy and your future than John Bannon and Tim Marcus-Clarke combined.”
Mr Harris QC, for the defendant, submitted that although the newsletter did not state, either in that paragraph or elsewhere, that the plaintiff had voted upon the legislation, nevertheless a substratum of fact was sufficiently stated upon which the defendant could have defended the comment in the publication as being fair, provided the defendant could have proved a vote had occurred; the defendant believed, but it was not the fact, there had been a vote and that being the case he could not honestly believe his comment was fair therefore the first proceedings could not be defended.
The relevant “publications’ upon which the plaintiff relies as being a repetition by the defendant of the defamatory words in the newsletter are those set out in paragraphs 12, 17, 26 and 29 of the Statement of Claim, as to each of which the defendant pleads fair comment on a matter of public interest, the public interest being particularised to include “The conduct and policies of the plaintiff as a member of the Legislative Council”. That particular is not limited to the conduct of the defendant on any one day, so it is open to the defendant to bring in evidence relevant to that plea not confined to a particular day. On the other hand, in the first proceedings the defendant, in my opinion, would have been limited to identifying the plaintiff’s conduct on one day in the parliament as the fact upon which any plea of fair comment could have been based.
In my view the plea of fair comment raised by the defendant in these proceedings, in its particularity and breadth, was not open to the defendant in respect of the publication the subject of the first proceedings.
I therefore rule that the plea in paragraph 38 of the defence is not an abuse of the process of the court
ANNEXURE A
“Treasurer
Hon. Rob Lucas BSc Bec MBA MLC
In one day of Parliament, Independent MLC Nick Xenophon inflicted more damage on the South Australian economy and your future than John Bannon and Tim Marcus-Clark combined.
That is because selling or leasing our power utilities is not a choice, it is a necessity - a critical necessity for two reasons – financial risk to you the taxpayers, and the ability to finally reduce our debt levels and massive interest payments on that debt.
In the next few months you will be able to see very starkly the damage Mr Xenophon has done. The National Electricity Market which begins here on 13th December has removed the long time monopoly of ETSA and Optima. For the first time they will have to fight for customers against the biggest companies from interstate and overseas. Until now, you have been their captive customers.
The signs are not encouraging. Interstate, some 50 per cent of power customers change company as soon as they are offered a new supplier in the competitive world of the National Electricity Market. Already more than 20 power companies have sought licences to operate within out State. And with our industry demanding cheaper power, the power market is about to become a very cut throat sector to operate in. It’s a simple equation – less customers, less profits, equal far less return to the State from those still State owned entities.
Less return to the Government is a significant concern which will affect you directly as we have less money for services. In NSW where power utilities have been operating in State ownership within the national market for some time now the competition has seen their profits crash. That State’s Auditor-General has publicly voiced his concern as hundred of millions of dollars disappear from the State’s budget. No wonder NSW is as desperate to remove its power utilities from public ownership as we are.
Then there’s our debt. The time to sell or lease ETSA and Optima is when they are worth something. They are worth a lot of money today. When the national market starts it is highly likely their value will have slumped in line with the profits and their effectiveness in the national market. Then we will be left with assets returning little and worth even less. If we were able to sell or lease at this point we could make a large dent in the State’s more than $7 billion in nett debt and make headway in dealing with our more than $4 billion unfunded superannuation liabilities. And just as important, almost cancel out much of the $2 million a day we are paying in interest on that debt. That money could be used where it is most needed, in schools, hospitals, roads and police.
In one day Mr Xenophon wiped out that critical opportunity and has condemned all South Australians to a difficult future of debt and financial risk.”
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