Cranson v New Zealand Trainers' Association Inc Ca225/99

[2000] NZCA 423

IN THE COURT OF APPEAL OF NEW ZEALAND  CA 225/99

BETWEEN      RONALD CRANSON

Appellant

ANDNEW ZEALAND TRAINERS’ ASSOCIATION INC

Respondent

Hearing:  29 February 2000

Coram:Gault J Henry J Thomas J

Appearances:             J J Cleary for Appellant

M J Koppens and R J Gordon for Respondent

Judgment:                 22 March 2000

JUDGMENT OF THE COURT DELIVERED BY THOMAS J

Introduction

[1]    The appellant, Mr Cranson, originally brought a proceeding in defamation against a Mr Johnson as first defendant, and the respondent in this appeal, the New Zealand Trainers Association Incorporated (“the Association”) as the second defendant. Prior to the hearing of the proceeding in the District Court, Mr Johnson settled the claim against him. An apology was read to the Court and Mr Johnson’s claim was struck out with no order for costs. Mr Cranson then proceeded against the Association alone.

[2]    Mr Cranson obtained judgment against the Association in the sum of $20,000 as damages, together with costs and disbursements of $2,837.

[3]    The Association appealed to the High Court and the appeal was heard by a Full Court. In a judgment delivered on 22 March 1999, the Court allowed the  appeal.

[4]Mr Cranson obtained leave to appeal to this Court on 23 August 1999.

The background facts

[5]    Mr Cranson employed Mr Johnson to train his horse, “Perfect Lad”. Up until January 1995, he paid Mr Johnson promptly for his services. But he became dissatisfied with Mr Johnson’s work and, on receipt of a final account for $639, paid him only $400. Mr Johnson was not prepared to let the matter rest and sought the assistance of the Association to recover the unpaid balance from Mr Cranson. The Association wrote to Mr Cranson on 27 March 1995. The letter includes the following paragraphs:

Please advise this Association within seven days if you dispute the amount due to Mr Johnson or have any submission to make on your behalf. This information is required in writing and should be supported by all relevant documentation. Should this account not be disputed we require full payment to be made or we will have no alternative but to institute legal proceedings.

A further consequence of non payment is inclusion of your name as a defaulter in the Trainers’ Association newsletter. This newsletter is  not only sent to all members of our Association, but also to the New Zealand Racing Conference and all Racecourse Inspectors.

To avoid instigation of further action as outlined above, please forward payment within seven days to Mr Johnson.

The letter was signed by a Mrs Cooper, the Executive Officer of the Association.

[6]    Mr Cranson at once rang Mrs Cooper. He informed her that he disputed the amount due to Mr Johnson and outlined the reasons why. At the Association’s instigation, Mr Johnson referred the dispute to the Disputes Tribunal. Without going into the merits, the Tribunal delivered a short decision in Mr Johnson’s favour on   21 June 1995. Essentially, it held that Mr Cranson should have raised his concerns with Mr Johnson much earlier than was the case.   It directed Mr Cranson to pay    Mr Johnson $239.50 within 28 days of its decision.

[7]    Mr Cranson paid the sum stipulated by the Tribunal on the 27th day following the judgment. But he initially failed to sign the cheque.  This omission  was drawn to his attention by Court staff who posted the cheque back to him.        Mr Cranson then signed the cheque and returned it to the Court. Payment was completed  on  2  August  1995.  The  learned  District  Court  Judge  found  that   Mr Cranson’s failure to sign the cheque was merely an oversight and that it had been immediately rectified when drawn to his attention.

[8]    Notwithstanding that it  knew  of  the  dispute  between  Mr  Cranson  and  Mr Johnson and that the outstanding sum had been paid, the Association published Mr Cranson’s name in the September issue of its Newsletter, “NZ Trainer”, in these terms:

COLLECTION LIST

The following clients have been referred to the Association as poor credit risks:

CLIENTS NAME	ADDRESS	REFERRED BY TRAINER
D Richards	Sydney	D Walsh
R Cranson	Waikanae	M Johnson

If you have any enquiries regarding the credit-worthiness of potential clients, or wish to register a defaulting owner on the “HOTLINE”, simply call Maurice Cole on [phone].

The Trainers’ Association will continue to attempt to gain the assistance of the New Zealand Racing Conference so that defaulting owners would not be able to start their horses until the debt is paid.

[9]    On being challenged by Mr Cranson, the Association explained its position to his solicitor in a letter dated 29 September 1995. This letter stated:

The debt-collection service provided by the Trainers’ Association is provided to our members to assist in the collection of bad debts. The letters utilised and the procedure for inclusion in our newsletter, the NZ Trainer, have been thoroughly checked to ensure they comply  with legal requirements.

The letter also referred to the earlier letter of 27 March in which the Association had advised Mr Cranson that a further consequence of non payment was the inclusion of Mr Cranson’s name as a defaulter in the NZ Trainer.

It continued:

Mr Cranson telephoned me on 30 March 1995 advising that he was disputing the claim. I then advised Mr Johnson of this and sent the necessary forms to lodge with the Disputes Tribunal.

We received a letter on 3 September 1995 from Mr Johnson advising that the Disputes Tribunal found in his favour. Despite this, Mr Cranson had still refused to make payment and a Court Bailiff was required to obtain the money. Mr Johnson also requested that Mr Cranson’s name was included in the NZ Trainer newsletter.

…

It is not intended to include Mr Cranson’s name in any further NZ Trainer newsletters. The next issue will be published in December 1995. We do not consider it is necessary to publish a withdrawal or apology.

[10]   In the proceeding in defamation which followed Mr Cranson alleged that the publication was false and malicious. He claimed that the NZ Trainer “has a wide circulation in the racing industry”.  Damages were sought in the sum of $20,000.  The Association admitted publishing the defamatory words but pleaded truth by way of defence. It then raised the defence of qualified privilege in these terms:

23. THAT the occasion of publication referred to  …  was  one covered by qualified privilege. There was no malice in the publication on the part of the second defendant.

Finally, it claimed that the publication constituted the expression of an honest opinion that Mr Cranson did not pay his debt to Mr Johnson as it fell due and that a duly constituted Tribunal found that the debt claimed by Mr Johnson was properly payable.

[11]   Mr Cranson’s solicitors did not serve a notice on the Association alleging ill- will or improper motive as required by s 41 of the Defamation Act 1992 if such allegations were to be pursued.

[12]   In the course of the hearing it became clear that the defences of truth and honest opinion could not succeed. They were abandoned. In particular, it was accepted that a “Court bailiff” had not been required to intervene in order to obtain payment of the money. Qualified privilege became the sole defence.

[13]   The Association called only one witness, a Ms McCarty, the present Chief Executive Officer of the Association. She had not, however, been employed by the Association when the incident occurred. Mrs Cooper, the Chief Executive Officer at the time, was available to give evidence, but she was not called upon to do so.

[14]   In brief, the District Court Judge held that the defence of qualified privilege failed on two grounds. In the first place, the Association had not established a  factual basis for a duty to publish the information. Having canvassed the evidence, the learned Judge concluded:

I am … not satisfied that the second defendant has discharged the  onus of proof on it, of establishing the factual basis for any duty to speak out against the plaintiff as it did in its newsletter.

In the second place, the learned Judge held that the information was published to a wider audience than was necessary.

[15]   The learned Judge noted that the Newsletter was available not only to trainers, but also to the Racing Conference, Racecourse Inspectors and “anyone else who might receive the [Association]’s newsletter”.

[16]   The Full Court reversed the District Court’s decision taking the view that the circumstances of qualified privilege had been established. In brief, it held that the exchange of credit information between members of an association for the purpose of protecting their business attracts privilege, even where the association is not required by its rules to publish such information. Further, it considered that the racing industry must be taken to have a common interest in receiving information about participants who did not pay their dues. The publication therefore did not exceed the bounds of the privilege.

The appeal is allowed

[17]   We propose to allow the appeal, but we do not intend to address all the various issues which were raised and argued by counsel. It is unnecessary to do so.  It was common ground before us that the critical question was whether the publication was made in circumstances which attract the defence of qualified

privilege. We consider that the conclusion that the Association, having the burden of proof, had failed to establish the factual basis for the defence is unavoidable. To our mind Mr Cranson must succeed in this appeal simply because the Association did  not identify in evidence the circumstances which would attract the defence of qualified privilege.

[18]   The deficiency began with the pleading. Bullen & Leake and Jacob’s Precedents of Pleadings (12th Ed – 1975) makes it plain that the circumstances said to give rise to qualified privilege generally must be expressly pleaded. The authors state (at p 1174):

Pleading. The defence of qualified privilege must be expressly pleaded. In pleading privilege it is not enough to state generally that the defamatory matter was a privileged communication. The facts and circumstances raising the privilege should, unless they appear on the face of the Statement of Claim, be stated in the Defence in a concise form so that the ground on which the privilege is claimed may appear.

There is no such pleading in the statement of defence in this case.

[19]   The deficiency was not then corrected in evidence. There are some general references in Ms McCarty’s evidence to the Association, the Racing Conference and the Inspectors. But the evidence falls far short of establishing the circumstances which would give rise to the defence of qualified privilege. For example, there was no evidence as to what restrictions there were on membership of the Association, its numbers, or the extent or limits (geographically or otherwise) to distribution of its Newsletter. Importantly, the necessary legitimate interest of the Racing Conference or of the racecourse inspectors in being informed of defaulting owners was not established. Nor were the Rules of Racing produced in evidence. The only relevant evidence from Ms McCarty is contained in the following passage of the transcript.

Q. And what interest does the Racing Conference have in such matters?

A. Well all of our trainers obtain their licences through the New Zealand Racing Conference. They operate under the Rules of Racing administered by the Racing Conference so the Racing Conference you could say is the governing body of trainers and thus the race course inspectors also have an involvement there as well ensuring that our people do their job correctly as well.

[20]   Mr Koppens, who appeared for the Association, pointed in argument to the wording of the Newsletter itself which purports to include a “collection list” of those persons who have been referred to the Association as “poor credit risks”. But of itself, the publication does not establish the circumstances which would allow the Court to conclude that the publication was one which the Association was under a duty to communicate and the recipients of the Newsletter had a corresponding interest in receiving. That is insufficient to establish circumstances which would allow the Court to conclude that the publication was protected. This evidential void is fatal to the Association’s plea of qualified privilege.

[21]   The fact that we have resolved this appeal on this short point does not mean that we endorse the findings of law of either the Judge in the District Court or the Full Court in the High Court. It would, however, be unwise to deal with those issues on an obiter basis. They must remain open.

[22]   The appeal is therefore allowed. The judgment and order for costs of $2,837 in the District Court is reinstated. The order for costs against the appellant in the High Court is quashed, and the respondent is now ordered to pay the following costs:

(a) costs in the High Court of $3,500 together with disbursements, as fixed by the Registrar; and (b) costs on the appeal of $5,000, together with disbursements, as fixed by the Registrar.

Solicitors

Kirkeby & Co, Levin for Appellant Wynyard Wood, Auckland for Respondent