Supreme Court New South Wales

• Medium Neutral Citation: Born Brands Pty Ltd v Nine Network Australia Pty Ltd (No. 6) [2013] NSWSC 1651
• Hearing dates: 21-25 October, 28-30 October 2013
• Decision date: 12 November 2013
• Before: Adamson J

Decision

(1) Judgment for the defendants.

(2) Subject to any application for a different order being made in writing within 7 days, order the plaintiffs to pay the costs of the proceedings.

• Catchwords: DEFAMATION- cause of action- corporate plaintiff not established excluded - imputations- whether carried- identity of natural plaintiffs irrelevant to Broadcast- whether defamatory- no injury to plaintiffs' reputation as distinct from goods- defences- justification- truth- evidence of all contextual imputations to be weighed against imputations not proved true- qualified privilege- when available to mass media- damages- special damages- whether attributable to matter complained of; EVIDENCE- findings as to credit- witness advocate for own cause; TORTS- injurious falsehood- relevant counterfactual to assess damages; WORDS AND PHRASES- meaning of 'falsely'- synonymous with 'incorrectly'
• Legislation Cited: Defamation Act 1974; Defamation Act 2005, s 8, s 9, s 9(2), s 9(2)(b), s 9(3), s 25, s 26, s 35, s 36; Evidence Act 1995, s 79
• Cases Cited: Adam v Ward [1917] AC 309; Amalgamated Television Services v Marsden (1998) 43 NSWLR 158; Associated Newspapers Limited v Dingle [1964] AC 371; Attrill v Christie [2007] NSWSC 1386; Bashford v Information Australia (Newsletters) Pty Ltd [2004] HCA 5; 218 CLR 366; Born Brands Pty Limited v Nine Network Australia Pty Limited (No. 4) [2013] NSWSC 1649; Born Brands Pty Limited v Nine Network Australia Pty Limited (No. 5) [2013] NSWSC 1650; Bowin Designs Pty Limited v Australian Consumers Association [1996] FCA 1070; Chappell v Mirror Newspapers Limited (Unreported, Court of Appeal, 14 June 1984); Chakravarti v Advertiser Newspapers Limited [1998] HCA 37; 193 CLR 519; Clark v Molyneux (1877) 3 QBD 237; Fairfax Media Publications Pty Limited v Kermode [2011] NSWCA 174; 81 NSWLR 157; Gates v City Mutual Life Assurance Society Limited [1986] HCA 3; 160 CLR 1; Greek Herald Pty Limited v Nikolopoulos [2002] NSWCA 41; 54 NSWLR 165; Heartcheck Australia Pty Limited v Channel 7 Sydney Pty Limited [2007] NSWSC 555; Hepburn v TCN Channel Nine Pty Limited [1984] 1 NSWLR 386; Horrocks v Lowe [1975] AC 135; John Fairfax Publications Pty Limited v Blake [2001] NSWCA 434; 53 NSWLR 541; Lange v Australian Broadcasting Corporation [1997] HCA 25; 189 CLR 520; McCormick v John Fairfax & Sons Limited (1989) 16 NSWLR 485; McMahon v John Fairfax Publications Pty Limited (No. 6) [2012] NSWSC 224; Mizikovsky v Queensland Television Limited [2013] QCA 68; Orion Pet Products Pty Limited v Royal Society for the Prevention of Cruelty to Animals (Vic) [2002] FCA 860; 120 FCR 191; Palmer Bruyn & Parker Pty Limited v Parsons [2001] HCA 69; 208 CLR 388; Pamplin v Express Newspapers Ltd (No. 2) [1988] 1 WLR 116; Radio 2UE Sydney Pty Limited v Chesterton [2009] HCA 16; 238 CLR 460; Redeemer Baptist School Limited v Glossop [2006] NSWSC 1201; Roberts v Bass [2002] HCA 57; 212 CLR 1; Stephens v West Australian Newspapers Limited [1994] HCA 45; 182 CLR 211
• Category: Principal judgment
• Parties: Born Brands Pty Ltd (First Plaintiff); Hayley Birtles-Eades (Second Plaintiff); Sally Birtles (Third Plaintiff); Nine Network Australia Pty Ltd (First Defendant); Gabriella Rogers (Second Defendant); Georgie Gardener (Third Defendant)
• Representation: Counsel: CA Evatt and RKM Rasmussen (Plaintiffs); TD Blackburn SC and ATS Dawson (Defendants); Solicitors: Beazley Singleton Lawyers (Plaintiffs); Johnson Winter and Slattery (Defendants)
• File Number(s): 2011/115199
• Publication restriction: Nil

Judgment

Introduction

1 By amended statement of claim filed on 14 June 2012 the plaintiffs claim damages for defamation and injurious falsehood arising from a television broadcast aired by Channel 9 on 1 October 2010 (the Broadcast) concerning the risks associated with certain baby devices. Approximately 600,000 people in New South Wales and parts of Queensland viewed it. The plaintiffs claim damages, including aggravated damages. The Defamation Act 2005 (the Act) applies. The first plaintiff (Born Brands) claims special damages to compensate it for loss of profits alleged to have been caused by the publication. As Born Brands is the only plaintiff which has adduced evidence relevant to actual loss, I assume that the claim for damages for injurious falsehood is brought by it alone.

The Facts

The genesis of Babywedge, its development, manufacture and promotion

2 The second plaintiff, Hayley, gave birth to her first child, Blade, in August 2006. He had trouble with digestion which Hayley was told was due to severe infant reflux and colic. He would vomit. His sleeping was difficult and disturbed. It was suggested to Hayley that she should elevate Blade's head by placing telephone books under the wheels of his cot or put rolled up towels in his cot.

3 Hayley's experience with Blade led her, together with her sister Sally, the third plaintiff, to design a product to alleviate his symptoms. She and Sally conducted research into appropriate materials for such a product, tested various prototypes on Blade and spoke to manufacturers, including foam manufacturers. As a result of their research, testing and investigations, they designed a product that they named Babywedge which Hayley believed was responsible for controlling Blade's reflux and colic.

4 They decided to establish a business by selling Babywedge to parents and carers of babies who suffered from colic and reflux. In 2008 they established a company which later became Born Brands. They financed the development of the business through lines of credit and borrowings from their parents. Later Hayley and her husband sold their home in order to fund the business.

5 Hayley's second child, Ripley, who was born in March 2008, also suffered from reflux. Ripley was put in the Babywedge from birth. Hayley's third child, Chilli, was born in April 2010. She, too, suffered from colic and was put in a Babywedge from birth until the age of 19 months.

6 In May 2008, Hayley and Sally launched Babywedge at the Parenting, Babies and Children's Expo in Sydney. They sold 330 units during the three-day expo.

7 In September 2008 the plaintiffs, through their public relations agent known as "Little Miss Stella", promoted Babywedge by sending out information and a copy of a promotional book entitled "Babywedge Book" to various media outlets.

8 They obtained favourable publicity for Babywedge, including on Channel 9. As a result of their submission of a press release to the defendants, the plaintiffs were offered a news segment on Brisbane Extra in October 2008. In March 2009 Babywedge was featured on the Kerri-Anne Kennerly programme. The plaintiffs also secured unpaid endorsements from Dannii Minogue and Sophie Faulkner, whom they regarded as well-known Australian celebrities, who had also used the product.

9 On 21 July 2009 an Australian Register of Therapeutic Goods certificate was issued in respect of Babywedge in the product category "medical device included Class 1" (the TGA certificate). The certificate was issued to Babywedge Pty Limited, the former name of Born Brands, in respect of Babywedge. The certificate identified its purpose as follows:

Babywedge is an elevation and stabilisation support pillow for mother and baby. The Babywedge mother and infant pillow is intended to elevate a baby to assist in providing pain relief from reflux or colic. It can also be used by women for back support in the last trimester of pregnancy and for breastfeeding.

10 Originally the Babywedges were made in Australia but, as costs increased, the plaintiffs sought an overseas manufacturer. There was a gap in production in early 2010 which resulted in a drop in sales. New stocks of Babywedge were obtained in June 2010.

11 The Babywedges were originally made in orange. They were also available in lime green. Prior to the Broadcast other colours were also available.

The US warning

12 On 29 September 2010, the US Consumer Product Safety Commission (CPSC) issued a news release (the US warning) which read in part as follows:

UNITED STATES CONSUMER PRODUCTS SAFETY COMMISSION

RELEASE NUMBER 10-358

September 29, 2010

The US Consumer Product Safety Commission (CPSC) and the U.S. Food and Drug Administration (FDA) today warned consumers to stop using infant sleep positioners. Over the past 13 years, CPSC and the FDA have received 12 reports of infants between the ages of 1 month and 4 months who died when they suffocated in sleep positioners or became trapped and suffocated between a sleep positioner and the side of a crib or bassinet.

Most of the infants suffocated after rolling from a side to stomach position. In addition to the reported deaths, CPSC has received dozens of reports of infants who were placed on their backs or sides in sleep positioners, only to be found later in potentially hazardous positions within or next to the sleep positioners.

"The deaths and dangerous situations resulting from the use of infant sleep positioners are a serious concern to CPSC, " said CPSC Chairman Inez Tenenbaum. "We urge parents and caregivers to take our warning seriously and stop using these sleep positioners, so that children can have a safer sleep."

The two main types of infant sleep positioners are flat mats with side bolsters or inclined (wedge) mats with side bolsters.

Both types of sleep positioners typically claim to help keep infants on their backs and reduce the risk of Sudden Infant Death Syndrome (SIDS). The FDA has never cleared an infant sleep positioner to prevent or reduce the risk of SIDS. In addition, CPSC and the FDA are unaware of any scientific studies demonstrating that infant positioners prevent SIDS or are proven to prevent suffocation or other life-threatening harm.

"To date, there is no scientifically sound evidence that infant sleep positioners prevent SIDS," said Dr. Joshua Sharfstein, FDA Principal Deputy Commissioner and a pediatrician. "We want to make sure parents, health care professionals, and childcare providers understand the potential risk of suffocation and stop using infant sleep positioners."

Sleep positioners also typically claim to do one or all of the following: aid in food digestion to ease colic or the symptoms of gastroesophageal reflux disease (GERD); and prevent flat head syndrome (plagiocephaly). In light of the new safety data, FDA believes any benefit from using these devices to ease GERD or prevent plagiocephaly is outweighed by the risk of suffocation.

CPSC and the FDA are warning parents and child care providers to:

STOP using sleep positioners. Using a positioner to hold an infant on his or her back or side for sleep is dangerous and unnecessary.

NEVER put pillows, infant sleep positioners, comforters, or quilts under a baby or in a crib.

ALWAYS place an infant on his or her back at night and during nap time. To reduce the risk of SIDS, the American Academy of Pediatrics recommends placing infants to sleep on their backs and not their sides.

13 The Food and Drug Administration (FDA) issued a Consumer Health Information sheet dated September 2010 that referred to the US warning. This document was accessible in Australia through the SIDS and KIDS website, which contained a link to the pdf. version of the information sheet.

The Broadcast

14 The Broadcast was a short item on the news, taking about a minute, and concerned the US warning. It referred to the dangers of so-called sleep-positioners. A number of such sleep positioners was shown, including Babywedge. Consumers who were familiar with the bright orange of the Babywedge product would have regarded it as one of the products covered by the US warning.

15 The transcript of the Broadcast is set out below together with a description of some of the visual images that accompany the spoken words. The left hand column does not correspond exactly with the transcript that was tendered and marked exhibit A (which is also annexure "A" to the amended statement of claim) in that the transcript tendered is in error as to the gender of the unidentified speakers.

Spoken words	Visual imagery
1. Georgie Gardener: A baby product said to reduce the threat of sudden infant death syndrome is being withdrawn from sale in the United States and Britain but is still available here in Australia. It's feared that the sleeping aid may be doing more harm than good.	Presenter with harbour bridge in background.
2. Gabriella Rogers: This is the type of product that's being used in Australia and raising alarm bells overseas. It's supposed to promote safe sleeping but in the US, it's been linked to 12 deaths since 1997.	The orange Babywedge is shown and described as "the type of product that is being used in Australia and raising alarm bells". Woman places baby in Babywedge.
3. Unidentified woman: . . .appalling, they shouldn't be available if they're proved to be linked with stuff like that.	Older and younger woman shown; younger woman is speaking.
4. Second unidentified woman: . . . I really didn't think that those sleeping aids would be a problem for us because they seem to inhibit the rolling action.	Another woman shown speaking; mimes rolling action.
5. First unidentified man: One would hope that if this has been tested in America and found to be a problem the surely we should be looking at it over here.	Man holding baby in pouch on his front while being interviewed. Woman beside him.
6. Rogers: The sleep aid is commonly used for babies under six months to stop them rolling on to their stomach but US Government agencies say the product can cause a child to suffocate. Australia's consumer watchdog, the ACCC say it's not aware of any deaths from these devices locally but discussions are underway with US authorities before any action is considered here. While the products are being pulled from shelves overseas, major Australian retailers say they haven't received any complaints.	An orange Babywedge is shown. The journalist refers to the sleep aid being commonly used for babies under six months to stop them rolling onto their stomachs. The "Baby Snuggler", "Little Lamb" and "Safe and Sound" packaging with visible names are shown on the screen. When the journalist refers to the US government agency's statement that the product can cause a child to suffocate, the "Little Lamb" product is shown, but not the Babywedge. The Babywedge is, however, shown with other products where the journalist refers to the products being pulled from shelves. Babywedge is shown once in its clear plastic packaging, but its name is not legible.
7. Ros Richardson: There does have to be a much closer watch on the products that are out there.	Ros Richardson in child's room.
8. Rogers: Ros Richardson from SIDS and KIDS says parents don't need gimmicks to promote safe sleeping, just keep it simple.	As the words 'gimmicks to promote safe sleeping' are heard, the orange Babywedge is shown in a cot.
9. Richardson: There's no bumpers, there's no soft and puffy bedding and there is nothing other than the essential items that need to be in your cot. And that's the best way of reducing SIDS for your baby.	Shows an empty cot.
10. Rogers: Gabriella Rogers, Nine News.

16 Babywedge is not named in the Broadcast. Nor is there any reference to any of the plaintiffs. The Babywedge is, however, shown and would, in my view, be recognisable to those familiar with it by its shape and orange covering.

17 The programme delivers the message that baby devices such as the ones depicted are potentially dangerous and US agencies have recommended that they be withdrawn because of the risk of suffocation.

18 It is common ground that the defendants did not contact the plaintiffs for comment prior to the televising of the Broadcast. The defendants have not apologised to the plaintiffs for the Broadcast.

After the Broadcast

19 Hayley gave evidence that she received between 30 and 40 telephone calls from customers in the four-month period following the Broadcast, some of whom asked for refunds and many of whom wanted to discuss the Broadcast and find out whether Babywedge was dangerous. Subsequently she removed her telephone number from the website to avoid receiving such calls.

20 About 15 or 20 people spoke to Sally either by phone or in person in the two months following the Broadcast about what they understood to be the dangers of Babywedge.

21 About 10 people who wanted to know about Babywedge approached Jennifer Birtles, Sally and Hayley's mother, by telephone and in person after the Broadcast. She told her daughters about these calls. They were both devastated. Mrs Birtles described the effect of the Broadcast in the following exchange:

Q. What did you observe about Sally?

A. That she was devastated. She had put her heart and soul into this product, as had Hayley, and it was sailing along amazingly well. Everything was going fantastic and then suddenly overnight, bang, gone, thanks.

22 Hayley attended an expo shortly after the Broadcast at which she was approached and asked whether Babywedge was dangerous. Similar comments were made at an expo in Melbourne for wholesalers in early 2011. She could not recall the details of other expos that she attended after the Broadcast.

23 The Broadcast itself and the reaction to it from customers and others caused Hayley and Sally hurt and upset. Hayley explained her response in chief as follows:

Q. What was your reaction to all these things?

A. As a business person, embarrassed and ashamed and as a mother and a normal person, upset and devastated.

24 The plaintiffs no longer made Babywedges in orange after the Broadcast in an attempt, as Hayley explained, to "get away from the bad publicity". A white Babywedge, which was manufactured in China, went onto the market on 2011. There were two examples of Babywedge in evidence: one that was orange and the other that was white. It was common ground that the orange Babywedge was of the type depicted in the Broadcast. Although there were some distinctions between them, the plaintiffs accepted that, apart from the colour, the Babywedges that had been made in Australia were substantially identical to those manufactured overseas.

25 Publicity was given to the US warning in other media, both in Australia and elsewhere, including in the Daily Mail and the Guardian in the UK. On 1 October 2010, the US warning was the subject of a report on ABC Radio National's AM programme and news articles appeared in the Sydney Morning Herald, the Courier Mail in Brisbane.

26 I accept Sally's evidence that she did not need to "chase up" the US warning because it was sent to her, and presumably Hayley, by the public relations company. I accept Sally's evidence that she does not read any newspapers or listen to the radio and Hayley's evidence that, although she lives in Queensland she does not read the Courier Mail. I do not, however, accept that others, including their public relations agent, did not draw at least some of the articles referred to above to their attention.

27 On 25 November 2010 the SIDS and KIDS website, which was hyperlinked to the Babywedge website, reported on the US warning in a report that commenced as follows:

INFANT SLEEP POSITIONERS

Deaths prompt CPSC, FDA warning on infant sleep positioners

Washington, D.C. - The U.S. Consumer Product Safety Commission (CPSC) and the U.S. Food and Drug Administration (FDA) today warned consumers to stop using infant sleep positioners. Over the past 13 years, CPSC and the FDA have received 12 reports of infants between the ages of 1 month and 4 months who died when they suffocated in sleep positioners or became trapped and suffocated between a sleep positioner and the side of a crib or bassinet.

28 On 22 November 2012 further publicity was given to the US warning and to a further death in the US which was said to result from a sleep positioner (bringing the total from 12 to 13) in the Age in Melbourne, the Brisbane Times, The Advertiser, The Herald Sun and the Australian.

Defamation claim

The pleadings

29 Born Brands alleges that it was an excluded corporation within the meaning of s 9 of the Act and, therefore, not disentitled to bring a claim in defamation. The defendants do not admit the allegation.

30 The plaintiffs rely on the following four imputations, each of which was alleged to have been carried about each of them:

(a) The plaintiffs sold and offered for sale a baby product known as Babywedge which had been subject to recall.

(b) The plaintiffs sold and offered for sale a potentially dangerous product known as Babywedge which could harm or even kill babies.

(c) The plaintiffs sold and offered for sale a potentially dangerous product known as Babywedge which is supposed to promote safe sleeping but has been linked to 12 deaths in the United States.

(d) The plaintiffs sold and offered for sale a baby product known as Babywedge which should be pulled from shelves because they could cause a child to suffocate.

31 The pleading alleges each imputation separately in respect of each plaintiff. Accordingly, what I have described above as imputation (a) is, in the pleading, imputation (a) in respect of the first plaintiff, imputation (e) in respect of the second plaintiff and imputation (i) in respect of the third plaintiff. However, as no distinction was drawn between the plaintiffs in the course of the hearing for the purposes of the imputations, I shall use the shorthand set out above.

32 By a defence filed on 9 July 2012, the defendants admit the Broadcast but deny that any of the imputations alleged were carried or were capable of being carried. They rely on the defence of justification in respect of imputations (b), (c) and (d).

33 They also rely on two contextual imputations and allege that by reason of their substantial truth, publication of so many of the relevant plaintiff's imputations as are not found to be substantially true did not further harm the reputation of each of the plaintiffs. The contextual imputations are:

(i) the plaintiffs sold and offered for sale a baby product known as Babywedge which should be subject to recall because it was a type of product that could harm or even kill babies.

(ii) the plaintiffs sold or offered for sale a baby product known as Babywedge which falsely promoted safe sleeping for babies but in fact could harm or kill babies.

34 The defendants provided the following particulars of justification and contextual truth:

(a) The plaintiffs sold and offered for sale a baby product known as "Babywedge";

(b) The Babywedge product was a sleep positioner which was represented by the plaintiffs as preventing a baby from rolling over in the baby's sleep;

(c) The Babywedge product was a potentially dangerous product in that it could cause a baby to:

(i) become suffocated in the Babywedge product itself;

(ii) suffocate between the Babywedge product and the side of a crib or bassinet;

(iii) become caught in a potentially hazardous position within or next to the Babywedge product.

(d) Further, notwithstanding that there was no scientifically sound evidence that infant positioners such as the Babywedge product could prevent Sudden Infant Death Syndrome (SIDS), the plaintiffs falsely represented and promoted their Babywedge product as being a product that could assist in the prevention of SIDS and thereby promote safe sleeping for babies.

(e) Further, on or about 29 September 2010 the United States Consumer Product Safety Commission (CPSC) warned consumers to stop using infant sleep positioners because the CPSC and the United States Food and Drug Administration had received twelve reports of infants between the ages of one month and four months who died when they suffocated in sleep positioners, or became trapped and suffocated between a sleep positioner and the side of a crib or bassinet. The sleep positioners referred to included sleep positioners of the type sold and offered for sale by the plaintiffs.

(f) In the circumstances, the plaintiffs' Babywedge product was a potentially dangerous product which could harm or even kill babies and should be withdrawn from sale in Australia because the product could cause a child to suffocate and thereby harm or kill babies who used the product.

35 The defendants also rely on qualified privilege at common law and provide the following particulars:

(a) Insofar and to the extent that publication by the defendants is established by the plaintiffs as alleged, the defendants published the matter complained of for the information of the public or a substantial portion of it and had a social or moral duty to publish the matter complained of to the recipients or a substantial portion of them by reason of the danger baby sleeping devices such as the "Babywedge" pose to babies.

(b) The recipients of the matter complained of or a substantial portion of them had a reciprocal interest in receiving the communication.

36 In reply, the plaintiffs allege that in publishing the Broadcast the defendants were actuated by express malice. The particulars of malice relied upon are:

(a) wrongful failure of the defendants to contact or speak to the plaintiffs prior to publication in order to obtain their explanation and reasons for the safety of their product.

(b) The defendants knew that the words spoken by them during the broadcast were false or in the alternative were so recklessly indifferent to their truth or falsity as to amount to knowledge of falsity. This knowledge is to be inferred from the following:

(i) The defendants knew that the ACCC was not aware of any deaths from the Babywedge in Australia;

(ii) The defendants knew that major retailers in Australia had received no complaints in respect of the Babywedge;

(iii) The defendants made no enquiries of the Plaintiffs to determine the truth or falsity of the allegations that it was linked to the deaths of infants in the US, had been withdrawn from sale in the United States and Britain and can cause a child to suffocate;

(iv) If the defendants had contacted the Plaintiffs they would have discovered that the Babywedge had not been withdrawn from sale in the United States and Britain, that it was not linked to the deaths of infants and could not cause them to suffocate;

(v) The defendants made no enquiries of US or British authorities as to the allegations that the Babywedge had been withdrawn from sale in those countries or had been linked to the deaths of infants or could cause a child to suffocate;

(vi) If the defendants had made enquiries of the US and British authorities they would have discovered that the Babywedge had not been withdrawn from sale in the USA and Britain and that it was not linked to the deaths of infants nor was it likely to cause a child to suffocate;

(vii) The defendants gratuitously inserted an image of the Babywedge into a programme with which it had no proper connection;

(viii) The defendants gratuitously inserted an image of the Babywedge into a programme with which it had no proper connection

(viii) The defendants' conduct amounted to wilful blindness.

(c) The second and third defendants had a desire to injure the reputation of the Babywedge and thereby the Plaintiffs' business. This is to be inferred from the following:

(i) The defendants were journalists of some experience in television broadcasting;

(ii) The defendants produced an interview which they knew would be for broadcast to a wide viewing audience on Channel Nine Television;

(iii) The Defendants knew when they filmed the Babywedge that it was distinctive in shape (large with two foam cylinders on each side) and colour (bright orange);

(iv) The defendants displayed several images of the Babywedge during the broadcast that rendered it easily identifiable to viewers of the broadcast;

(v) The defendants gratuitously inserted an image of the Babywedge into a programme with which it had no proper connection;

(vi) The defendants combined spoken words and displayed images of the Babywedge (as alleged above) which imputed that the Babywedge was linked to the deaths of infants in the US, had been withdrawn from sale in the United States and Britain and can cause a child to suffocate which the defendants knew were untrue (as alleged in particular (a) above) and/or were recklessly indifferent to the truth of such allegations' and/or were wilfully blind to the truth.

Whether Born Brands has a cause of action for defamation by reason of its being an excluded corporation

37 The first question for determination is whether Born Brands has a cause of action in defamation.

38 Section 9 of the Act relevantly provides:

(1) A corporation has no cause of action for defamation in relation to the publication of defamatory matter about the corporation unless it was an excluded corporation at the time of the publication.

(2) A corporation is an excluded corporation if:

. . .

(b) it employs fewer than 10 persons and is not related to another corporation,

and the corporation is not a public body.

(3) In counting employees for the purposes of subsection (2) (b), part-time employees are to be taken into account as an appropriate fraction of a full-time equivalent.

39 Born Brands did not adduce evidence directed at establishing, relevantly, that it employed fewer than 10 persons or that it is not related to any other corporation. For the reasons given in Born Brands Pty Limited v Nine Network Australia Pty Limited (No. 5) [2013] NSWSC 1650 I refused leave to the plaintiffs to adduce further evidence to establish that Born Brands was an excluded corporation. Nonetheless Born Brands submitted that the evidence was sufficient to establish that matter notwithstanding my refusal of leave to re-open.

40 In Redeemer Baptist School Limited v Glossop [2006] NSWSC 1201 (Redeemer Baptist) Nicholas J at [22] construed the word "employs" in the statutory predecessor to s 9(2)(b) to mean "to use the services of a person" or "to make use of a person". His Honour said at [23]:

It follows, in my opinion, that the nature of the arrangement or understanding under which a person provides services, and whether or not the arrangement or understanding is legally enforceable, and whether or not the person is paid for the services or is a volunteer, are irrelevant considerations. The only relevant issue is whether or not, as a matter of fact, the number of persons whose services the corporation used in its business at the time of publication is fewer than 10.

41 Section 9(2)(b) of the Act arose for consideration in Heartcheck Australia Pty Limited v Channel 7 Sydney Pty Limited [2007] NSWSC 555 (Heartcheck) although the issue to be determined related to the second limb, namely whether the plaintiff company was related to another corporation. Grove J did not have to consider the correctness of Nicholas J's interpretation as to the first limb of s 9(2)(b). Nonetheless his Honour said at [7]:

Were it necessary to express a conclusion, I would be of the same view as Nicholas J in Redeemer Baptist School v Glossop [2006] NSWSC 1201 that the relevant issue is whether or not, as a matter of fact, the number of persons whose services the corporation used in its business were fewer than ten.

42 Born Brands did not challenge the correctness of Redeemer Baptist or Heartcheck.

43 The evidence of Hayley and Sally and Cory Birtles-Eades, Hayley's husband, and Jennifer Birtles, Hayley and Sally's mother, revealed that there was a number of persons whose services were used by Born Brands: the second and third plaintiffs; their parents, who displayed the Babywedge at the premises of their car repair business; Cory, who sold Babywedge at work to colleagues; Manuel Nordhoff, who provided IT support until there was a falling out with him; Tnisha Solanki, a personal assistants to Hayley; Jacquie Mync, a marketing assistant; Sophie Faulkner, Dannii Minogue and Pinky McKay who endorsed the product. There was also a reference to public relations firms, Little Miss Stella and Power PR.

44 The defendant identified further persons to whom, or corporations to which, Born Brands paid amounts as revealed by Annexure 7 to the report of Mr Hughes, the expert accountant relied upon by the plaintiffs. The evidence does not establish whether in so far as persons or entities received money from Born Brands, they did so because they provided services to Born Brands and ought be regarded as employees within the meaning of s 9(2).

45 Born Brands submitted that Sophie Faulkner, Dannii Minogue and Pinky McKay could not be regarded as employees within the meaning of s 9(2) since their role was to endorse the product and they were not paid. Born Brands also submitted that it ought be inferred from the evidence that it used the services of fewer than 10 persons. It relied on s 9(3) of the Act and submitted that even if there were persons whose services were used by Born Brands, the only people who worked full-time in the business were Hayley and Sally. The plaintiffs also relied on the relatively paltry amount recorded as having been paid in wages in the relevant period. They submitted that the sum recorded as having been paid as "Consultants Fees" ought not necessarily be regarded as referable to monies paid to persons providing services to the company.

46 The difficulty with the plaintiff's submission is that no evidence was given by either Hayley or Sally that the names mentioned in the evidence comprised the sum total of the persons who provided services to Born Brands. Nor was there any evidence as to the hours per week that each person devoted to Born Brands' business, whether paid or unpaid.

47 Furthermore there was no evidence that Born Brands was not related to another corporation. That there was no mention of any other corporation is not sufficient for me to infer that there was none.

48 In my view, Born Brands has not discharged the onus of establishing that it is an excluded corporation. Accordingly, Born Brands has no cause of action for defamation. There is, however, no statutory impediment to its bringing a claim in damages for injurious falsehood which will be considered further below.

49 Further references to the plaintiffs in the reasons relating to the defamation claim ought, accordingly, be read as a reference to Hayley and Sally and not to Born Brands.

Identification of the plaintiffs

50 The defendants concede that at least one person in Queensland saw the matter complained of and identified the plaintiffs.

51 This concession is sufficient to establish this element in the plaintiffs' claim for defamation. It arises further when damages are addressed. However, I accept that at least some of the persons in New South Wales who had previously purchased Babywedge or attended the expos or seen the advertising material, would have seen the Broadcast and identified Babywedge and the plaintiffs.

Whether each of the imputations was carried

52 The first question is whether the each of the plaintiffs' imputations was carried by the Broadcast. The plaintiffs bear the onus.

53 Whether each of the imputations was carried is to be determined by reference to whether the ordinary reasonable viewer would have understood the Broadcast in the sense contended for by the plaintiffs, or whether the defamatory meaning (the imputations) would have been carried to the ordinary reasonable viewer: Amalgamated Television Services v Marsden (1998) 43 NSWLR 158 at 161- 165 per Hunt CJ at CL. Mr Evatt accepted that the ordinary reasonable viewer would have to be one who knew that the plaintiffs made and supplied Babywedge; in other words, the class of ordinary reasonable viewers is confined to those who identified the plaintiffs in the Broadcast.

54 Whether the imputations were carried depends in part on the circumstances of publication since they will affect the ordinary reasonable viewer. Relevant factors include: whether the publication was transient, such as a broadcast, or permanent, such as a book; whether the Broadcast was sensational; and the degree of attention that the ordinary reasonable viewer might give to the Broadcast.

55 The Broadcast was a very short news item that juxtaposed scientific information with emotional and emotive vignettes from concerned bystanders. Several products were shown. No brand was named. The ordinary reasonable viewer of the Broadcast would, in my view, be unlikely to be devoting his or her full attention to the words and images and may well be doing another activity in addition, possibly connected with the preparation or serving of the evening meal.

56 The defendants accepted that message carried by the Broadcast was that baby devices such as the ones depicted are potentially dangerous and US agencies have recommended that they be withdrawn because of the risk of suffocation. Those ordinary reasonable viewers who identified the Babywedge depicted in the programme would, accordingly, have at least received the message that Babywedge was potentially dangerous and that US agencies have recommended that similar devices have been withdrawn because of the risk of suffocation.

57 However, the question whether the imputations were carried depends on whether it would occur to the ordinary reasonable viewer who recognised the Babywedge product that pejorative imputations were being made that reflect personally on the plaintiffs.

58 I am not satisfied that it would. There are several examples of sleeping devices, including Babywedge, depicted in the Broadcast. That several examples of the type of product that the research has revealed to be dangerous were displayed on the Broadcast is a powerful indication that the focus of the segment was on the danger of the type of products, and their common features, rather than their individual features or brands, of which there was no mention.

59 In my view, the reason there was no mention of the makers and sellers of the sleeping devices in the context of the Broadcast was that no criticism was made of them, either individually or collectively. Their identity was effectively irrelevant to the message conveyed. In my view, the matters referred to below as to why the imputations are not defamatory also explain why the imputations linking the plaintiffs with the Babywedges are not carried.

60 The reasons set out above apply generally to imputations (a) to (d). There is a further matter that concerns imputation (a) alone. Imputation (a) includes the words "subject to recall". There is no reference in the Broadcast to the products being subject to recall. For the reasons given below as to the distinction between imputation (d) and contextual imputation (i), I consider the recall of a product to be fundamentally different from its withdrawal from sale. Therefore, even apart from my reasons finding none of the imputations was carried, there is a further reason for my view that imputation (a) was not carried.

61 I am not satisfied that any of the imputations alleged were carried.

Whether the imputations found to be carried were defamatory of each of the plaintiffs

62 I propose to consider the further questions posed although no answer is, strictly speaking, required, in case the matter goes further since some of my findings may reflect the advantage enjoyed by a trial judge of seeing and hearing witnesses.

63 Whether any of the imputations is defamatory is to be determined by reference to the general law: s 6 of the Act. At common law, an imputation is defamatory if it tends to lead an ordinary reasonable viewer to think less of the plaintiff: Radio 2UE Sydney Pty Limited v Chesterton [2009] HCA 16; 238 CLR 460 (Radio 2UE v Chesterton) at [5] per French CJ, Gummow, Kiefel and Bell JJ. Whether an imputation is defamatory must be construed in the context of the matter complained of as a whole: Greek Herald Pty Limited v Nikolopoulos [2002] NSWCA 41; 54 NSWLR 165 at [26]- [27] per Mason P, Wood CJ at CL agreeing.

64 The plaintiffs submitted that to broadcast that someone sold or offered for sale a dangerous product or one that should be pulled from the shelves or recalled was plainly defamatory since the selling or offering for sale of a dangerous product would inevitably cause the ordinary reasonable viewer to think less of the seller or the person who caused the product to be sold or offered for sale. The plaintiffs analysed the messages conveyed by Broadcast as follows:

(1) Baby products of the kind shown on the Broadcast had been linked to deaths.

(2) The Babywedge was one of the products shown on the Broadcast.

(3) The plaintiffs sold or caused to be sold Babywedge.

(4) Therefore the Broadcast carried the imputation that the plaintiffs sold and offered for sale a potentially dangerous product that could harm or even kill babies.

65 The defendants relied on the substantial and important distinction between a statement about a person's business or goods on the one hand and a defamatory statement that reflected poorly on the person's reputation on the other: Radio 2UE v Chesterton at [11]. The law provides a remedy for the former in the tort of injurious falsehood and for the latter in an action for defamation. In order to be defamatory, the statement must reflect adversely on the plaintiffs' business reputation and not merely on the business: Radio 2UE v Chesterton at [32].

66 The defendants submitted that the fundamental impression created by the programme was that the danger posed by the product had only recently been identified and that the issue of the warning that they not be used as sleeping devices amounted to "news" because it represented new, that is, previously unknown, information. They relied on the use of the present tense in the Broadcast in such phrases as:

"raising alarm bells overseas"

"being withdrawn from sale in the United States and Britain"

"discussions are underway with the US authorities before any action is considered here"[Emphasis added]

67 I do not accept that the ordinary reasonable viewer would engage in the syllogistic process set out above for which the plaintiffs contended, when viewing a Broadcast of such short duration which contained general statements about sleeping devices of various unidentified brands. I consider that, implicit in the Broadcast, was the proposition that it was necessary to warn parents and carers of babies and infants about the potentially fatal consequences of using devices in circumstances where such devices, which may well be effective to alleviate the symptoms of reflux and colic, are apparently innocuous, if not benign.

68 There is no suggestion in the Broadcast that the makers of these various products had any knowledge, appreciation, or even inkling that they could be dangerous. Indeed, Mr Evatt expressly conceded as much when he said, in support of his submission, that contextual imputation (ii) was not carried:

". . . nowhere on the programme do they say that the manufacturers or suppliers of this product knew that what they were promoting was false, even if the programme does say they promoted safe sleeping for babies that in fact could harm babies."

69 In these circumstances I do not consider that the ordinary reasonable viewer who identified the plaintiffs would think less of them as a result of the Broadcast. The research showed that there had been 12 deaths in a period of 13 years in the United States which had been linked to such devices. The comparative rarity of the occurrence, having regard to the population of the United States (of the approximate magnitude of which it can be expected the ordinary reasonable viewer would be aware), is a powerful indication that the potential dangers of such devices would not be apparent to their manufacturers or vendors, much less to parents and carers of the babies and infants who were placed in them. The products depicted in the Broadcast are, in my view, at the opposite end of the spectrum from, for example, an inadequately tested drug or a device that by its nature carries with it a risk of harm, that would be apparent to a prudent manufacturer or seller.

70 For these reasons, I do not consider that any of the imputations, even had they been carried, were defamatory of the plaintiffs.

Defences to the claim in defamation

Justification: s 25 of the Act

71 Justification is pleaded as a defence to imputations (b), (c) and (d). It appears to be accepted that no defence of justification is available with respect to imputation (a) since the Babywedge was not, at the time of the Broadcast, subject to recall.

72 It is common ground that Born Brands offered for sale and sold Babywedge and that Hayley and Sally caused it to do so. The issue to be determined is whether Babywedge is a potentially dangerous product that could harm or even kill babies.

73 The defendants relied on the opinion of Professor Byard to establish this matter. Professor Byard is an expert with substantial experience in attending death scenes of infants who have died and investigating the causes of such deaths. He is the Marks Chair of Pathology in anatomy and pathology at the University of Adelaide Medical School. The plaintiffs accepted that Professor Byard was expert on SIDS and accidental infant childhood suffocation.

74 Professor Byard identified the presence of the bolsters as a significant feature of Babywedge that put it in the class of sleeping devices to which the US warning was directed. He said that although the device that permitted a baby or infant's head to be elevated could relieve the symptoms of reflux and colic by using gravity to prevent partially digested sustenance rising to the oesophagus, it was dangerous to allow a child to sleep in the device because of the risk of suffocation posed by the bolsters.

75 Professor Byard explained that babies and infants are particularly susceptible to suffocation in circumstances where there is pressure on their noses and mouths. He said:

"Light pressure over the mouth and nose of infants from a pillow or bolster in the tough can easily occlude the upper airway and leave no markings".

76 He instanced a case of an infant who would stop breathing when held by his grandmother and pressed against her clothing after feeding. This susceptibility explains why, according to Professor Byard, it is desirable that babies and infants sleep on their backs in uncluttered cots rather than on their fronts where their breathing could be compromised by pressure from a mattress.

77 Professor Byard opined that while the base of Babywedge was unobjectionable as a mattress, the bolsters were potentially dangerous when a baby or infant fell asleep in the device. He further explained the reasons for his view about the dangers posed by "troughs" in following exchange on the voir dire conducted by Mr Evatt which became evidence in the proceedings:

Q. But a trough means, does it not, an unbroken Ushape or Vshape? If there is a gap that wouldn't be a trough. If there is a gap between the bolsters in the Baby Wedge mattress that would not be a trough?

A. I probably created this problem, your Honour, by using the term "trough". What I mean is somewhere a baby can be trapped where there be an air accumulation, carbon dioxide accumulation, overheating, or pressure against the nose and mouth. And it doesn't take much pressure for some babies, for them to suffocate.

Q. There would be no chance of suffocation if the baby could breathe between the bottom of the bolster and the top of the mattress?

A. Well, depends. I'm not convinced that that is actually a very good air passage. Also, the baby could easily be up against the bolster and bring up stomach contents because these kids do have reflux and that would make it really quite nasty, even if the baby's nose was stuck into this gap I still thinks it seals off because it presses down on the outside.

78 Professor Byard was asked in re-examination to explain what he meant by "nasty", to which he responded:

The reflux is just an additive factor. So if you have a baby who's into the bolster or into the trough and they reflux stomach contents up that tends to make the cloth damp which would make it less permeable so it's harder to breath. Also stomach contents are sometimes sticky so they can stick to cloth to the baby's face.

79 Mr Evatt also put to Professor Byard that the design of Babywedge was such that the bolsters were intended to go under the arms of the baby or infant and that therefore the child's head would not be between the bolsters at all. Professor Byard responded:

One of the interesting things about babies, your Honour, I've seen videos at meetings that paediatricians have taken and they move around in their beds more than I move around during the day. They're incredibly, particularly when they're five or six months, they are very able to actually move from one end of the cot to another. They're like possums going down small holes.

80 The plaintiffs sought to impugn Professor Byard's evidence with a view to defeating the defence of justification.

81 First, the plaintiffs relied on their own evidence as to the safety of the product and the lengths to which they went to design and manufacture it. Mr Evatt, correctly in my view, accepted that neither Hayley nor Sally was expert in the qualities of the respective materials or the risk of Sudden Infant Death Syndrome (SIDS). Mr Evatt did not submit that either Hayley or Sally had relevant expertise for the purposes of s 79 of the Evidence Act 1995 to express opinion evidence. Neither had any medical or paediatric qualifications. For the reasons given in Born Brands Pty Limited v Nine Network Australia Pty Limited (No. 4) [2013] NSWSC 1649 I refused to allow Hayley or Sally's assertions of the falsity of the imputations to prove their falsity, as distinct from their belief in their falsity.

82 Secondly, the plaintiffs submitted that although Professor Byard was expert in baby mats with fixed bolsters, he was not familiar with Babywedge until he had been provided with one for the purposes of this case. Furthermore he had not conducted any tests on the item, apart from trying to breathe through it himself in defendants' counsel's chambers before giving evidence. Mr Evatt relied on passages from his cross-examination of Professor Byard in which Professor Byard referred to the absence of tests on such a product and his suggestions that some might be performed to ascertain whether the design affected the risk.

83 I do not consider this submission to provide any substantial basis for not accepting Professor Byard's evidence. The facility or otherwise of an adult's capacity to breathe through open foam can only be a guide to whether a baby or infant can do so. I accept that if an adult cannot breathe through open foam, or has difficulty so doing, then one can infer that an infant would not be able to breathe through such material or would have even greater difficulty than an adult. However, if an adult can breathe through open foam, then I would not infer that a baby or infant could do so.

84 I accept Professor Byard's opinion that babies and infants are susceptible to suffocation when there is pressure against their noses or mouths. I also accept Professor Byard's opinion that fabrics and other materials that may be permeable when dry tend to become impermeable when wet. This is of particular significance for babies and infants who may be inclined to dribble or vomit or otherwise exude moisture through their mouths or noses and thereby moisten the fabric in the vicinity of these orifices, thereby rendering otherwise permeable fabric impermeable.

85 Thirdly, the plaintiffs sought to distinguish Babywedge on four bases from these admittedly dangerous products: first, that the mat and bolsters are made of open cell foam; secondly, that the bolsters on Babywedge are not fixed; thirdly, that the Velcro that attaches the bolster to the mat is perpendicular to the bolster; and fourthly, that there is a space between the bolster and the mat, at least at points where it is not attached to the Velcro which means that the "trough" is not sealed. They submitted that Professor Byard's evidence did not cover these characteristics. They also contended that unless regard was had to the various so-called baby devices that were covered by the FDA warning, and the distinctions between them and the Babywedge, the conclusion could not be drawn that the Babywedge was dangerous for babies and, accordingly, I ought not find that the defence of justification was made out.

86 In support of this submission, Mr Evatt emphasised the following passage in one of the publications relied upon by Professor Byard, a paper published on 23 November 2012 by the Centers for Disease Control and Prevention (CDCP):

"Some specific ISPs [infant sleep positioners] have been cleared by the FDA for the management of gastroesophageal reflux or plagiocephaly (asymmetry of the skull)."

87 The footnote to this proposition contained a single reference. The publication said to authorise the proposition was the document issued by the FDA in September 2010 described as "Consumer Health Information" entitled "Infant Sleep Positioners Pose Suffocation Risk". The only passage in that document that refers to approval of such items is:

"Although in the past FDA has approved a number of this products for GERD [gastroesophageal reflux disease] of flat head syndrome, new information suggests the positioners pose a risk of suffocation.

As a result, FDA is requiring makers of FDA-cleared sleep positioners to submit data showing the products' benefits outweigh the risks. FDA is also requesting that these manufacturers stop marketing their devices while FDA reviews the data."

88 When one reads the CDCP document together with the FDA document, one appreciates that the sentence in the CDCP document, while historically true, does not override the health concerns about infant sleep positioners, since the FDA clearance pre-dated the "new information" that is the subject of the FDA document and the US warning. The sentence in the CDCP document does not provide any warrant for not accepting Professor Byard's opinion, or indeed for reaching a conclusion that infant sleep positioners are other than potentially dangerous because of their common features identified by Professor Byard.

89 Professor Byard explained the way in which he approached his task of giving an expert opinion as to the matters asked of him by the defendants' solicitors as follows:

". . . I was really trying to go back to first principles because there are so many different devices. The first principles are that when you have bolsters and you have troughs and you have soft surfaces and you have cloth over foam these are all potential problems that can cause accidents and deaths."

90 Professor Byard eschewed the relevance of dissection of the differences between sleep positioners and reiterated what I accept to be the principle that underlies the reason such devices are dangerous in the following terms:

" . . Well as I said, we can argue point by point with different devices that differ in their structure but the principle is the same; you have a soft bolster with a trough and a cotton covering that could get wet."

91 When Mr Evatt put the alleged "feature" (the detachable bolster with a space between it and the mat) to Professor Byard, he agreed that one could put one's finger through the gap.

92 The following exchange is sufficient to demonstrate the limits of what Mr Evatt managed to extract from Professor Byard on the topic:

Q. At the end of that second paragraph, I take it you didn't make any tests on Baby Wedge as to the likelihood or unlikelihood of a trough which could lead to suffocation?

A. The reason I didn't is it was an observation, I could see the trough and I know that troughs are dangerous.

Q. Yes, but surely an attached trough, sorry an attached bolster causing a trough would not be the same as an unattached bolster?

A. As I said I think we can't say that because when I look at the attachment, if a baby is in the trough and pushes this to the side because their face is there, it actually seals off on the other side, so I think that would need to be looked at.

Q. Need to be looked at, how do you mean?

A. I think if you were going to make an assertion that there is no that there is an air space under it, you will have to test it.

Q. Who would test it?

A. Consumer Affairs, I think, Australian Standards, people like that. Possibly Kidsafe, an organisation could recommend people.

Q. But that's not in your field?

A. No.

93 I accept the defendants' submission that all but the first so-called distinguishing feature relied upon by Mr Evatt were, in substance, forensic inventions generated by the plaintiffs' need to discredit Professor Byard and counter his opinions, notwithstanding the lack of expert evidence to support their assertions. Both Hayley and Sally gave evidence by way of statements which were supplemented by oral evidence. There was no reference in their evidence to the alleged significance of the space between the bolster and the mat in between the Velcro, as providing a further opportunity for a baby or infant to breathe. Nor was there any expert evidence that this was possible in any event.

94 In the statement which was to cover her evidence in chief, all that Hayley said relevantly, of the bolsters:

"The hug me bars on the Babywedge are detachable . . . "

95 There was no mention in Hayley's statement in chief of the gaps between the Velcro which permitted a finger to be inserted. Had this matter been a relevant design feature, as distinct from a forensic ploy, one might have expected it to be mentioned, particularly as other distinctions between the Babywedge and other products are specifically addressed, including in the following paragraph:

"Unlike the Babywedge, sleep positioners often contain harnesses, excess covering and head pillows. The Nap Nanny, for example, has harness rings which can become detached and cause choking."

96 Any reference to the space between Velcro fasteners is conspicuous by its absence in Hayley's statement in reply where she gives evidence as to the following matters, which I allowed as relevant only to her belief:

"An important feature of Babywedge is that all components are made of special material through which even a very young baby can breathe. If a baby's mouth or nose lies against the base of bolsters then the baby can still breathe through the material."

"Even if the baby was lying face down the baby can still breathe through the mouth and/or nose through the base or even the bolster."

"In any event the bolsters and the mattress are made of material which the baby can breathe through no matter what position it is in. Even if the baby's mouth, face and nose was lying on the mattress the baby can still breathe through the material."

97 Further, I am not disposed to accept Hayley's protestations with respect to her concern about the risk of suffocation or her evidence that purchasers were advised not to leave a child out of sight or unattended in a Babywedge. In particular I do not accept Hayley's evidence that, at Expos she attended to promote the product, she demonstrated at least fifty times a day that she could breathe through the Babywedge. This evidence is substantially at odds with what appears from the advertising material to be the principal selling point of Babywedge: that it alleviates the symptoms of reflux and colic so that the baby or infant can sleep, thereby permitting the carer either to sleep or to have some respite. The promotional material contemplates that Babywedge will be used by babies and infants with breathing difficulties.

98 Further, the plaintiffs submitted that the effect of the TGA certificate was that the Babywedge was safe and that the certificate was sufficient not only to undermine Professor Byard's opinion but also to defeat the defence of justification for the purposes of defamation and to prove the falsity of the statements for the purpose of the injurious falsehood claim. As I understood Mr Evatt's submission, he contended that although Babywedge had been approved for the treatment of reflux, the TGA must be taken to have realised that babies would be likely to sleep on it and therefore it follows from the fact that the TGA did not issue a prohibition on its being used as a sleeping device that it is a safe sleeping device.

99 The defendant contended, in my view correctly, that the certificate did not refer to sleeping and that it could not be taken that the TGA had approved of the device as a sleeping positioner. I regard Mr Evatt's submission to the contrary as, at best, a non sequitur.

100 In my view, the TGA certificate does not take the determination of the issues in the case beyond the evidence otherwise adduced. Professor Byard accepted that the Babywedge was a useful device to provide relief for reflux and colic since it elevated the baby's head. He considered that Babywedge was not unsafe as long as the baby was not allowed to fall asleep while in the device. The TGA certificate does not indicate, expressly or by implication, to the contrary.

101 There was a further basis on which the plaintiffs' contended the Babywedge was not dangerous, which is allied to the relevance of the TGA certificate and the proposition that the plaintiffs were acutely concerned about the risk of suffocation. The further basis was that the plaintiffs contended that Babywedge was not in fact either a "sleep positioner" or a "sleeping aid". The plaintiffs expressly conceded in these proceedings that putting babies on a mat with fixed bolsters can lead to the risk of suffocation and therefore, presumably, that mats with fixed bolsters are potentially dangerous products that could harm or even kill babies. However they submitted that, because they advised parents never to leave children unattended in Babywedge and because it was not promoted as a sleeping device, it was not dangerous.

102 The principal difficulty with this submission is that it is at odds with the evidence in the statements of the plaintiffs and also with their promotional material. There was extensive cross-examination of Hayley on this topic, which was effective to impugn her credibility. I have addressed her credibility and that of Sally separately at the conclusion of these reasons.

103 I am satisfied, for the reasons given by Professor Byard, that Babywedge is relevantly indistinguishable from the sleeping devices the subject of the US warning. On the basis of his opinion I do not accept that any of the so-called points of distinction on which Mr Evatt relied were material.

104 There is an additional matter to be addressed that relates to imputation (c). The plaintiffs are, subject to the requirements of procedural fairness, not bound by the precise imputations pleaded. The tribunal of fact may find for the plaintiff on a nuance or variation of the imputation, or an imputation not substantially different, or one of lesser seriousness: Chakravarti v Advertiser Newspapers Limited [1998] HCA 37; 193 CLR 519 (Chakravarti) at [22]-[24] per Brennan CJ and McHugh, [51]-[60] per Gaudron and Gummow JJ and [139] per Kirby J. The same principle applies to defendants in that a defendant is entitled to justify a nuance or variation of the plaintiff's defamatory meaning, or one less serious than the plaintiff's meaning, subject to the requirements of fairness.

105 The defendants submitted that, they are entitled to justify imputation (c) although the Babywedge itself is not one of the devices that has been linked to 12 deaths in the United States, on the basis that it is a device of the kind or kinds of devices that have been linked to such deaths. The defendants argued that there was no difference in substance between those two statements since the pejorative nature of the sting was substantially the same.

106 In the alternative, the defendants contended that imputation (c) was in terms true since the "link" referred to in (c) was satisfied by the substantial similarity between the Babywedge and the devices implicated in the deaths of the 12 babies and infants.

107 I accept the defendants' submission that there is no material difference between imputation (c) as pleaded and an imputation that Babywedge is a device of the kind linked to such deaths. On this basis I find imputation (c) to be true.

108 I am satisfied that, had the imputations alleged been carried, and had they been defamatory, the defendants have justified (b), (c) and (d) by proving each of them to be true.

Contextual imputations

109 The plaintiffs submitted that contextual imputation (i) is no different from imputation (d) and therefore does not qualify as a contextual imputation.

110 Section 26 of the Act requires that a contextual imputation differ from a plaintiff's imputation, in order to qualify as such, since it must be another imputation "in addition to the defamatory imputations of which the plaintiff complains": see also Fairfax Media Publications Pty Limited v Kermode [2011] NSWCA 174; 81 NSWLR 157 at [81] per McColl JA, Beazley and Giles JJA agreeing. A contextual imputation cannot be the same in substance as a plaintiff's imputation or one which differs from a plaintiff's imputation only in nuance or degree.

111 I accept the defendants' submission that contextual imputation (i) is, in substance, different from plaintiffs' imputation (d) because contextual imputation (i) contains the concept that the product "should be subject to recall", whereas plaintiffs' imputation (d) contains the concept "should be pulled from the shelves". The former concept is apposite to the actions of a government agency or the manufacturer of a product, whereas, the latter concept is apposite to the actions of a retailer who no longer wishes to stock a product because it is no longer regarded as a desirable or beneficial product. Accordingly, the difference is significant.

112 In my view contextual imputation (i) is not carried by the programme, essentially for the same reasons as I have found that the plaintiffs' imputations were not carried. One of the messages carried by the Broadcast to those viewers who identified the Babywedge product on the screen was that Babywedge is the type of product that should be subject to recall because it was the type of product that could harm or even kill babies. Contextual imputation (i), however, includes the concept that "the plaintiffs sold and offered for sale a product . . ." This concept is not, in my view, carried by the Broadcast at all since, for the reasons given above, the Broadcast is concerned with the products, not their vendors.

113 Had I found contextual imputation (i) to have been carried, for the reasons given above in respect of the plaintiff's imputations, I would have found that it was not defamatory but that it was, on the basis of Professor Byard's opinion, true. The tenor of the programme is that products such as the Babywedge are dangerous and should not be available and therefore "should be subject to recall".

114 The plaintiffs submitted that the word "falsely" in contextual imputation (ii) meant "knowingly falsely". In other words the plaintiffs submitted that it should be construed as if it included the additional words in italics below:

"the plaintiffs sold or offered for sale a baby product known as Babywedge which falsely to their knowledge promoted safe sleeping for babies but in fact could harm or kill babies."

115 The plaintiffs also submitted that "falsely" meant "wrongfully" and that contextual imputation (ii) ought be struck out on that basis because the adverb "wrongfully" imputes to conduct, as Hunt J said in McCormick v John Fairfax & Sons Limited (1989) 16 NSWLR 485 at 494:

"an unspecified degree of culpability of an undefined character, ranging . . . from mere carelessness to fraud or dishonesty."

116 I do not accept these submissions. In my view, the word "falsely" in contextual imputation (ii) is a synonym for "incorrectly". Contextual imputation (ii) does not impute knowledge of falsity to the plaintiffs. The word "falsely" is not, in this context, a synonym for "wrongfully". In my view, the vice in "wrongfully" identified by Hunt J in the passage set out above is absent from the word "falsely" in the contextual imputation. I do not consider there to be any uncertainty about the word "falsely" in the context of contextual imputation (ii).

117 Had I found contextual imputation (ii) to have been carried, for the reasons given above in respect of the plaintiff's imputations, I would have found that it was not defamatory but that it was true. The tenor of the programme is that products such as the Babywedge, which are promoted as sleeping devices that are safe for babies, are in fact dangerous in that they could harm or kill babies because of the risk of suffocation.

The relevant tests for the relative effect of contextual imputations and plaintiffs' imputations

118 The next step is to assess what may broadly be described as the effect of the contextual imputations as compared with the plaintiffs' imputations.

119 There are two issues between the parties as to what this task entails. The first is whether, as the plaintiffs submitted, all the plaintiffs' imputations ought be weighed in the balance or, as the defendants submitted, only those not proved to be true. The second is whether both the contextual imputations ought be weighed against each plaintiffs' imputation separately, as the defendants contended, or whether all they ought be weighed against the plaintiffs' imputations taken as a whole, as the plaintiffs contended.

120 As to the first issue, the plaintiffs relied on Mizikovsky v Queensland Television Limited [2013] QCA 68 (Mizikovsky) in which the Queensland Court of Appeal held that in weighing up the relative effect of plaintiffs' imputations and contextual imputations, the jury should take into account all of the imputations complained of by the plaintiff, including those which the jury found to be substantially true. With great respect to the Queensland Court of Appeal, I do not consider this construction of s 25 and s 26 to be the correct one.

121 The Mizikovsky construction would seem both to promote and reward the pleading by a plaintiff of imputations that could be proved to be true by way of anticipatory self-defence in order to prevent a defendant from pleading such imputations as contextual imputations and to load the scales in the plaintiff's favour for the purposes of s 26. Statutory provisions must be read in context and so as not to produce absurd or unintended consequences. I prefer the alternative construction found by McCallum J in McMahon v John Fairfax Publications Pty Limited (No. 6) [2012] NSWSC 224.

122 The defendants submitted that the next question for determination is whether they have established that, by reason of the combined effect of the substantial truth of the contextual imputations (if more than one), the publication of the imputations not proved to be true did not further injure the reputation of the plaintiff.

123 I accept Mr Blackburn's submission that, when the matter has reached the stage of a trial, the relevant comparison is with the evidence in support of the truth of the contextual imputations, rather than the particulars. References to "facts, matters and circumstances" said to establish the truth of the contextual imputations in cases such as John Fairfax Publications Pty Limited v Blake [2001] NSWCA 434; 53 NSWLR 541 at [5] per Spigelman CJ are apposite only where the matter for determination (such as an application for leave to amend the pleading to add contextual imputations) is to be determined in advance of the evidence.

124 I was not, however, persuaded that, in the event that I had to carry out the comparative task required, the evidence in support of the contextual imputations ought be weighed against the plaintiffs' imputations taken individually, rather than taken collectively. I consider that what Hunt J said in Hepburn v TCN Channel Nine Pty Limited [1984] 1 NSWLR 386 at 397 was a necessary corollary of the 1974 Act which provided that each imputation was a separate cause of action. In these circumstances it would not be correct to collate all the separate causes of action and consider them together. However, under the present 2005 Act the cause of action is the matter complained of even if more than one defamatory imputation is carried by the matter: s 8. There does not, accordingly, seem to be any reason why the evidence of all of the contextual imputations ought be weighed separately against those of the imputations not proved to be true.

125 The only one of the plaintiff's imputations that has not been justified by truth is imputation (a). Both of the contextual imputations have been shown to be true. Accordingly the correctness of Hepburn in the context of the 2005 Act does not arise for determination in the instant case since there is only one plaintiff's imputation to be considered in the weighing exercise.

126 In my view, imputation (a) cannot further injure the plaintiffs' reputations. Whether a product has been subject to recall is inconsequential if the evidence establishes that it should be subject to recall because it represents a risk of harm or death to babies or infants and is incorrectly promoted as conducive to safe sleeping.

127 I do not, however, consider the difference in approaches between Mizikovsky and McMahon on the one hand, and Hepburn and the alternative approach which I prefer on the other, to produce different results in the instant case. The evidence that I have found proved the truth of the contextual imputations is the same as the evidence that I found proved the truth of plaintiffs' imputations (b), (c) and (d). I do not consider there to be anything in the plaintiffs' imputations, even if they are taken as a whole and even if each one is weighed in the balance, that could cause injury to the plaintiffs' reputations over and above the evidence relied upon to prove the truth of the contextual imputations. Professor Byard's evidence, for the reasons given above, proves the truth of all imputations, whether plaintiffs' or contextual, apart from plaintiff's imputation (a).

128 Accordingly, the debate may be significant in other cases but it is arid in the instant case.

Qualified privilege

129 On the findings I have made above, the defendants have succeeded in defeating the plaintiffs' claim. They therefore do not need the defence of qualified privilege. However, the availability of qualified privilege is a question of fact and degree: Bashford v Information Australia (Newsletters) Pty Ltd [2004] HCA 5; 218 CLR 366 (Bashford) at [10] per Gleeson CJ, Hayne and Heydon J. Accordingly I consider myself to be obliged to determine the question in any event, in case the matter goes further.

130 It is the occasion upon which the defamatory material is published, not the material itself, which is privileged. As Lord Aktinson said in Adam v Ward [1917] AC 309 at 334 an occasion of qualified privilege is:

". . . an occasion where the person who makes a communication has an interest or a duty, legal, social, or moral, to make it to the person to whom it is made, and the person to whom it is so made has a corresponding interest or duty to receive it. This reciprocity is essential."

131 The defence, by definition, protects the publication, and therefore the publishers, of material that is both defamatory and untrue. It is a defence to the whole matter complained of.

132 In Bashford, the majority at [22] and [27] posed the following questions:

(1) Was there that reciprocity of duty or interest between maker and recipient of the matter complained of which would make the occasion of its communication privileged?

(2) What legal, social or moral duties or interests were engaged between publisher and the persons to whom the matter complained of was published?

(3) Was the matter that defamed the plaintiff sufficiently connected to the privileged occasion to attract the defence?

133 In Lange v Australian Broadcasting Corporation [1997] HCA 25; 189 CLR 520 (Lange) the High Court held that the Commonwealth Constitution protects that freedom of communication between people concerning political or governmental matters which enables the people to exercise free and informed choice as electors. It was in that context that the Court found that the categories of qualified privilege included an occasion of a communication to the public at large, including through the mass media on a governmental or political matter and imposed a requirement that the publisher establish that its conduct in publishing the matter was reasonable.

134 The plaintiffs submitted that there was no precedent for extending the defence of qualified privilege to include a publication to the public at large by a mass media outlet beyond the circumstances in Lange. Mr Evatt submitted that the only circumstances in which the general public has a reciprocal interest in receiving information for the purposes of qualified privilege was in respect of governmental and political matters. He relied on Lange as confining the privilege to those circumstances. Mr Evatt sought to distinguish Bowin Designs Pty Limited v Australian Consumers Association [1996] FCA 1070 (Bowin Designs) on the basis that in that case there was a group of subscribers to Choice magazine who had an interest in receiving the information about the heaters that were said to be defective and in respect of which a warning was thought to be required.

135 The defendants submitted that although the public at large might have viewed the Broadcast, the matter complained of was only published to those in the television audience who identified not only the Babywedge product but also the plaintiffs. This audience would be likely predominantly to comprise existing owners of Babywedges and persons who knew the plaintiffs. These persons had an interest in knowing that the product they had purchased or used carried with it a risk of harm to babies and infants who were placed in a Babywedge.

136 The defendants relied on Bowin Designs and in particular the following passage from the judgment of Lindgren J:

In my view, because the use of gas heaters is so widespread and undiscriminating, members of the public generally had an interest in being warned of the defect and of the fire danger present in the use of the heaters. That interest was personal and private to each member of the public, although shared by all. The warning could be given effectively only by notification to the general public. In such a case the rationale underlying the qualified privilege defence is satisfied; cf Brown v Croome [1817] EngR 217; (1817) 2 Stark 297 at 301 [1817] EngR 217; (171 ER 652 at 653); Allbutt v The General Council of Medical Education and Registration (1889) 23 QBD 400; Adam v Ward [1917] AC 309; Loveday v Sun Newspapers Ltd [1938] HCA 28; (1938) 59 CLR 503; Dunford Publicity Studios Ltd v News Media Ownership Ltd [1971] NZLR 961; Stephens, supra, at 261-270 (McHugh J).

137 Although the passage set out above appears to provide some support for the wider application of the defence of qualified privilege, I am not persuaded that, on closer analysis, it extends the defence beyond that category recognised by McHugh J in Stephens v West Australian Newspapers Limited [1994] HCA 45; 182 CLR 211 (Stephens) at 263. McHugh J referred to cases that showed that the proprietor of a mass media outlet is entitled to the defence when it publishes statements made by a third person in discharge of that person's interest or duty to inform the general public about a matter. In Bowin Designs Lindgren J was satisfied that:

". . . the ACA [Australian Consumer Association] had moral and social duties to alert the owners of MS12 heaters manufactured before August 1989 of the defence and of its potential to cause fire, and thus injury to the person and damage to property by means of its "Choice" magazine.

138 Bowin Designs has not been authoritatively considered. It was referred in Bashford by McHugh J in a dissenting judgment in which his Honour considered that Lindgren J had erred in upholding the claim of privilege

139 In my view, Bowin Designs does not establish the wider proposition for which the defendants contended. Although the owners or putative owners of Babywedge had the requisite interest in receiving the information, I do not consider that the defendants had a corresponding duty to impart it to them, at least in so far as the authorities have defined the relevant duty. Although it would appear to be an unexceptional proposition that a media outlet had a social and moral duty to inform the public of matters affecting the health and safety of its most vulnerable members, this proposition is not supported by the authorities, which require that the publisher itself have a particular duty, or that the publisher be informing the public of what someone who has such a duty has said.

140 Had the defendants reported a statement by, for example, the Commonwealth Medical Officer, or the Minister for Health, informing the public about the dangers of sleep positioners, it would be arguable, on the basis of the principle identified by McHugh J in Stephens, that the defendants would be entitled to the defence of qualified privilege. As McHugh J said in Stephen at 263 the privilege is lost merely because persons having no interest in receiving the communication see it. However, this is not what occurred in the instant case. It was not suggested that the US CPSC had a duty to warn people outside the US of the dangers of sleep positioners.

141 I am therefore not satisfied that, on the current state of the law, the defence of qualified privilege is available to a mass media outlet which publishes matters of undoubted public interest to those who have the requisite interest in obtaining it, unless it reports what a third person has a duty to impart. A mass media outlet, by its nature, has the power, but not, as the law presently stands, the relevant requisite social or moral duty, to impart such information and therefore its broadcast of such information is not, without more, an occasion that attracts qualified privilege.

Express malice

142 Because I have not found the defence of qualified privilege to be made out, the following findings are made for completeness although it is not necessary to decide whether the defence, if made out, would have been defeated.

143 Qualified privilege can be destroyed only by proof of an improper motive that actuates the publication: Roberts v Bass [2002] HCA 57; 212 CLR 1 at [76] per Gaudron, McHugh and Gummow JJ. Mere failure to make enquiries, without more, does not establish improper motive: Roberts v Bass at [84].

144 In Horrocks v Lowe [1975] AC 135, Lord Diplock said at 149:

It [the qualified privilege] is lost if the occasion which gives rise to it is misused. For in all cases of qualified privilege there is some special reason of public policy why the law accords immunity from suit - the existence of some public or private duty, whether legal or moral, on the part of the maker of the defamatory statement which justifies his communicating it or of some interest of his own which he is entitled to protect by doing so. If he uses the occasion for some other reason he loses the protection of the privilege.

145 Because improper motive is the relevant matter, the question is whether the defendant acted from a desire to discharge the legal, social or moral duty that gave rise to the qualified privilege. The answer to that question is not determined by inquiring whether the defendant acted in the belief that the statements made were true: Clark v Molyneux (1877) 3 QBD 237 at 249-250 per Cotton LJ, approved in Roberts v Bass at [82]. So, for example, if a defendant fabricated some of the statements made, it could hardly be concluded that he or she acted from a desire to discharge his or her legal duty to publish them.

146 As referred to above in the summary of the pleadings, the plaintiffs allege that in publishing the Broadcast the defendants were actuated by express malice, on three grounds:

(1) they did not contact the plaintiffs before the Broadcast;

(2) the defendants knew that the words spoken in the Broadcast were false or that they were recklessly indifferent to their truth or falsity.

(3) the defendants desired to injure the plaintiffs.

147 As to the first ground I do not consider there to be any proper basis that the defendants were actuated by any improper motive in not contacting the plaintiffs before the Broadcast. The US warning was issued on 29 September 2010. I infer from the time difference between the US and Eastern Standard Time that the Broadcast was televised not long after the US warning was issued. I infer that the reason for its urgent publication was that the defendants considered that it was a matter of which the public ought be aware as soon as possible. The US warning itself was in emphatic terms that enjoined parents and child care providers to stop using sleep positioners and "never" to put such items under a baby or in a crib.

148 As to the second ground, I do not consider there to be any basis for the allegation that the defendants knew or believed the statements to be false or were wilfully blind as to their truth or falsity. The provenance of the US warning was a powerful indication as to its reliability. Furthermore the nature of the findings was such that they could not readily be investigated or challenged since they were discerned from deaths within a substantial population over 13 years. Nor was the Australian experience any indication of any unreliability in the US results, having regard to the substantial disparity in populations.

149 As to the third ground, it is without foundation. The plaintiffs' subjective belief, which appears to have been derived from earlier appearances on the defendants' channels, that the defendants supported them without qualification and would not do anything to harm them, betrayed an exceptional degree of self-centredness. Hayley explained her point of view in her evidence in chief:

Q. Do you attach any significance to the fact that this programme went to air on Channel Nine?

A. Obviously they had always supported us, in the past we he had been on Channel Nine Extra and KerryAnne, and had great results and always had what we thought was their support, so it was not that great when we saw it on Channel Nine.

150 In my view, in publishing the Broadcast, the defendants were doing what they considered they were obliged to do, having regard to their capacity to communicate with many of the very people whom they considered needed to know the information imparted. I doubt that they would have given the plaintiffs themselves a second thought, since they were concerned about baby devices as a category, and their potential for harm, as opposed to who might happened to have made and sold them.

151 Had I found that the Broadcast was an occasion of qualified privilege I would not have found it to have been defeated by express malice. There is, in my view, no basis on which I could find that the defendants acted from an improper motive.

Damages for defamation

152 The claim for special damages is a claim by Born Brands. Otherwise the plaintiffs' claim is for general compensatory damages for non-economic loss. Part 4 of Division 3, of the Act governs the award of such damages. Such damages serve three purposes:

(1) Consolation for the personal distress and hurt caused to the plaintiffs by the publication;

(2) Reparation for the harm done to the plaintiffs' personal and business reputation; and

(3) Vindication of the plaintiffs' reputation.

153 The plaintiffs relied on the absence of an apology but otherwise did not rely on any aspect of the defendants' conduct from the televising of the Broadcast until judgment.

154 General compensatory damages are limited by s 35 of the Act to $355,000, which is understood to state the outer limit for this head of damages in defamation matters. The correct approach is to place the defamation in a range: Attrill v Christie [2007] NSWSC 1386 per Bell J at [44]. Malice is to be disregarded except in so far as it affects the harm suffered by the plaintiffs: s 36 of the Act.

155 The defendants are entitled to rely in mitigation of damages on the evidence that was adduced in support of the defence of justification, even if that plea fails: Pamplin v Express Newspapers Ltd (No. 2) [1988] 1 WLR 116 at 120A-120E, per Neill LJ.

156 The evidence established that Hayley and Sally were devastated by the Broadcast. They lost weight and had marital difficulties as a result. Their confidence diminished and they became withdrawn. Sally was so affected that she left the running of the litigation to Hayley because she found it too distressing to deal with it. Their subjective responses are relevant to the aspect of compensatory damages associated with hurt to feelings.

157 The real issue between the parties is the cause of the hurt and upset. The plaintiffs submit that the imputations carried by the Broadcast caused the hurt and upset. The defendants submitted that a substantial part of the hurt to feelings suffered by the plaintiffs was caused by the adverse publicity directed at sleep positioners generally, rather than the imputations carried, if at all, by the Broadcast. The defendants also submitted that the plaintiffs were upset because they had unwittingly created a product that had been found to be dangerous and which they had used, without mishap, on their own children.

158 The assessment of damages depends in part on my assessment of Hayley and Sally's evidence. I have found both to be unsatisfactory witnesses for reasons given above as well as separately at the conclusion of these reasons.

159 The effect of the adverse publicity about sleep positioners was addressed in the evidence of both Hayley and Sally. In Hayley's statement in chief she said:

"The Babywedge is not a sleep positioner."

160 Hayley reiterated her position as follows when the adverse publicity regarding sleep positioners was put to her as being the substantial cause of her "hurt to feelings" rather than the imputations said to have been carried by the Broadcast.

"I don't know if there has been any unfavourable reports because I've never really considered our product as a sleep positioner."

161 When the proposition was put to her again, she brought the hurt squarely back to the defendants in the following exchange:

Q. Can I suggest to you that the evidence you've given about your indignation and your upset and your hurt a large part of that indignation and upset and hurt is the knowledge or your suspicion that your product is being undermined by all this bad publicity?

A. No, undermined by Channel Nine. They knew who I was, who I [we] were, who I am, and they did not contact me, that's what upsets me.

162 I do not accept this answer. In my view, Hayley appreciated that the Broadcast itself was harmful to her product and that it was unlikely that any parent or child carer who saw it and appreciated its message would purchase any such baby device. Hayley later referred to the "massive differences" between Babywedge and the other products the subject of the US warning. In my view, Hayley's steadfast refusal to accept that she was concerned about the adverse publicity because she knew that the public might not differentiate her product, the Babywedge, from the other products was disingenuous. Babywedge was promoted as a sleep positioner. Much of the material on the website and the promotional material was directed at promoting its capacity to allow babies and infants with reflux and colic to sleep. In my view, she knew full well that the message conveyed by the Broadcast applied to all sleep positioners, of which Babywedge was one.

163 Sally's response was similar to Hayley's. She, too, denied that she was concerned about the adverse publicity and explained that this was because Born Brands had a "different product" "which alleviated all of these problems". I do not accept this evidence.

164 In my view, the hurt to feelings that the plaintiffs suffered was principally as a result of their realisation that the product that they had designed, manufactured and sold, and which they hoped would be the basis of a profitable business, was not relevantly distinguishable from products the subject of the US warning.

165 Had I found the imputations carried and had I found harm to the plaintiffs' reputation notwithstanding the truth of imputations (b), (c) and (d) and notwithstanding the contextual imputations, the plaintiffs would be entitled to damages for harm to their personal and business reputations and vindication, as well as hurt to feelings set out above. However, it is relevant to the assessment of such damages that the imputations, had they been carried, were only carried to relatively small proportion of the viewers of the Broadcast: only those persons who identified the plaintiffs as the sellers of the Babywedge product shown fleetingly in the Broadcast.

166 Had the defendants been liable for damages I would have assessed damages at $15,000 for each of Hayley and Sally. As Born Brands is an excluded corporation it is not entitled to an award. Had it been entitled to an award, I would have assessed its general damages at $10,000 since it is not entitled to any component for hurt to feelings since, as a corporation, it has none.

167 Aggravated damages may be awarded in circumstances where the defendants have conducted themselves unjustifiably, improperly or in some other way that is lacking in bona fides. The plaintiffs claim to be entitled to aggravated damages on the basis of the plaintiffs' knowledge of the falsity of the imputations.

168 Although I accept that the plaintiffs believed in the falsity of the imputations, they have failed to prove that any are in fact false. There is no evidence of the falsity of imputations (b), (c) and (d) because I have rejected the plaintiffs' evidence as to falsity except as to their belief: Born Brands Pty Ltd v Nine Network Australia Pty Ltd (No. 4) [2013] NSWSC 1649 and the TGA certificate does not constitute any evidence of such falsity. In any event I have found the imputations to have been justified because they are true, on the basis of Professor Byard's evidence. Accordingly the claim for aggravated damages fails.

Special damages

169 As referred to above, the claim for special damages is brought only by Born Brands. Had Born Brands established that it was an excluded corporation and had the defendants been liable to it in defamation, it would be entitled to special damages if it could prove that it suffered financial loss as a result of the imputations carried. It is sufficient for Born Brands to prove a general loss of business attributable to the defamation.

170 It is not necessary that Born Brands adduce evidence from a particular customer or the loss of a particular sale in order to prove its loss. It can establish a claim for special damages on the basis of a general loss of business.

171 Since Born Brands' claim depends on identification, the loss of business said to arise from the defamation of Born Brands must be shown to have been among people who were able to identify it.

172 I reject Mr Evatt's submission that the evidence of bad publicity was not relevant to damages. He relied on the uncontentious proposition for which Associated Newspapers Limited v Dingle [1964] AC 371 (approved in Chappell v Mirror Newspapers Limited (Unreported, Court of Appeal, 14 June 1984)) stands: that publication of the same libel is irrelevant in mitigation of general damages. The evidence of adverse publicity concerning the US warning and sleep positioners is relevant and admissible on the question whether Born Brands can discharge the onus of proving causation of special damages for the purposes of the claim for damages in defamation and actual loss for the purposes of the claim for damages for injurious falsehood.

173 It may be accepted that at least some of the people who had bought Babywedges, or considered buying them, or seen them on the Internet, or at expos or through friends or associates, identified Born Brands and decided not to buy a Babywedge, or another Babywedge, as a result of the Broadcast. But I do not consider that to be enough to establish special damage in the instant case. The Broadcast was generally critical of all such baby devices and sleep positioners because it reiterated the US warning which was in general terms about the dangers of such products. If the real and substantial cause of the loss of sales following the Broadcast was the criticism of sleep positioners generally, rather than the identification of Babywedge, Born Brands has not proved its claim.

174 Two accounting experts were called in respect of Born Brands' claim for special damages and its claim for damages for injurious falsehood. Mr Hughes was called by the plaintiffs and Mr Potter was called by the defendants. Both of these experts analysed financial information provided by Born Brands with a view to assessing any loss of profits following the Broadcast. These experts do not assist in determining the issue of causation identified above since the exercise they performed was, in substance based on a comparison between "before" the Broadcast and "after" the Broadcast.

175 Mr Hughes adopted the following approach to his calculation of loss suffered by Born Brands as a result of the Broadcast. He used as his base figure the sales figures for the period June 2010 to September 2010. Although he was aware that this period followed a severe stock shortage occasioned by the need to wait for stock from the new overseas manufacturer, he made no allowance for any increased demand that might be caused by the earlier lack of supply. He applied a rate of profit of 81% which he had calculated by reference to an earlier period. He applied a lower figure for advertising and promotion expenses than the $50,000 which had been incurred in the financial year ended 30 June 2010, being the last full financial year prior to the Broadcast. He did not apply a figure for insurance commensurate with the level of such expenditure in previous years. He applied a discount figure of 15-20%, rather than the 50% applied by Mr Potter. On this basis he assessed Born Brands' loss following the Broadcast to be $236,248.

176 By contrast, Mr Potter adopted the following approach. He calculated hypothetical future sales for three financial years from 1 July 2010, based on actual sales of $97,988 achieved in the year ended 30 June 2009, being the last full financial year of trading prior to the stock shortage. He then subtracted the sales that actually occurred and worked out the net profit to arrive at a figure for the difference which ranged from a high of $39,632 to a low of ($11,000), or nil, since there cannot be a negative loss. Mr Potter expressly disregarded adverse publicity as a causative matter, except when expressing an opinion about the value of the business which he assessed as having a nil value as a consequence.

177 The principal difference between Mr Hughes' and Mr Potter's assessments of loss is the starting figure for expected sales. I am unable to accept Mr Hughes' selection of the starting figure. In my view, the period Mr Hughes has selected to carry into the future to assess loss, if any, is not soundly based. Since it followed a stock shortage, the level of sales is likely to be, in my view, artificially high and not maintainable. I prefer Mr Potter's approach, which is to base future sales on a past period which is more likely to be realistic, and therefore maintainable. I also consider that Mr Hughes' assessment has produced an inflated figure since he has not made sufficient allowance for advertising expenses. The evidence is not sufficient to establish that, without substantial expenditure on advertising, Born Brands would have been able to maintain its past level of sales.

178 I accept Mr Potter's assessment that there has been no loss, based on expected sales in accordance with actual sales for the year ended 30 June 2009. Accordingly, since the first plaintiff has failed to prove that it suffered any loss following the Broadcast it has failed to prove that it suffered any loss as a result of the Broadcast, much less that it has suffered loss as a result of the carrying of any defamatory imputations by the Broadcast to persons who identified the Babywedges as being Born Brands' product.

179 Accordingly, I reject Born Brands' claim for special damages.

Claim in injurious falsehood

Elements of the tort of injurious falsehood

180 The elements of the cause of action in injurious falsehood are:

(1) A false statement of or concerning the plaintiff's business or property.

(2) Publication of the false statement by the defendants to a third person.

(3) Malice on the part of the defendants.

(4) Proof by the plaintiff of actual damage, which may include general loss of business suffered as a result of the statement.

(Palmer Bruyn & Parker Pty Limited v Parsons [2001] HCA 69; 208 CLR 388 per Gleeson CJ at [1]; Gummow J at [52], Kirby J at [104]; Hayne J at [154]; Callinan J at [192]).

181 Because actual damage is required and there is no evidence that any plaintiff apart from Born Brands has suffered actual loss, I assume that the claim is only made by Born Brands.

Statements made concerning Born Brands' goods

182 Born Brands relied on the whole of the Broadcast but the particulars of falsity appear to have been drawn with some to the imputations pleaded in the defamation claim. I assume that Born Brands relies on statements which are the opposite of the particulars of falsity it has provided in its amended statement of claim. On this basis the statements relied upon are:

(a) The baby product "Babywedge" was dangerous and unsafe for babies to use; had been linked to deaths; should not be available for purchase in Australia; should be pulled from sales shelves; requires a much closer watch; is a gimmick to promote safe sleeping.

(b) The Plaintiffs made, sold and offered for sale a potentially dangerous product (to wit Babywedge) which could harm or even kill babies.

(c) The Plaintiffs made, sold and offered for sale a baby product (to wit Babywedge) which was supposed to promote safe sleeping but has been linked to twelve deaths in the United States.

(d) The Plaintiffs made, sold offered for sale a baby product (to wit Babywedge) which should be pulled from shelves because they could cause a child to suffocate.

183 I am satisfied that the first of the statements was made and that it concerned the plaintiff's goods. For the reasons given in respect of the defamation claim, I do not accept that any of statements (b), (c) or (d) was made.

Falsity of the statements

184 There is no evidence of the falsity of statement (a) since I have rejected the evidence given by the second and third plaintiffs evidence as to falsity except as to their belief: Born Brands Pty Ltd v Nine Network Australia Pty Ltd (No. 4) [2013] NSWSC 1649. Their belief in the falsity of the statement is not relevant to the injurious falsehood claim.

185 Even had I allowed Haley's and Sally's evidence on this matter without limitation, I would nonetheless have preferred the evidence of Professor Byard for the reasons given above with respect to the defence of justification.

186 Accordingly the plaintiffs have failed to prove that the only statement that I consider was made was false.

Publication

187 I am satisfied that such statement as was made, was made to a third person.

Malice

188 It was common ground that although there may be differences between malice for the purposes of a claim in injurious falsehood and malice for the purposes of a claim in defamation, there was no material difference in the present case. Accordingly for the reasons given above in relation to the defamation claim there is no evidence of malice.

189 Further, I am not satisfied that the defendants were careless in failing to contact the plaintiffs before televising the Broadcast since I consider that the terms of the FDA warning were sufficient to apply the Babywedge and the potentially fatal consequences of using such a product warranted the urgency with which the Broadcast followed the issue of the FDA warning. However, even had I considered the defendants' omission to contact the plaintiffs to request comment on the FDA warning before the Broadcast went to air to be careless, this would not have amounted to malice: Orion Pet Products Pty Limited v Royal Society for the Prevention of Cruelty to Animals (Vic) [2002] FCA 860; 120 FCR 191 at [220] per Weinberg J.

Actual damage

190 Actual damage is the gist of the cause of action for injurious falsehood. The cause of action is, as Gummow J said in Palmer Bruyn & Parker Pty Limited v Parsons at [59], akin to an action in deceit. Damages are awarded in tort with the object of placing the plaintiff in the position in which it would have been had the tort not been committed: Gates v City Mutual Life Assurance Society Limited [1986] HCA 3; 160 CLR 1at 12 per Mason, Wilson and Dawson JJ.

191 It follows that, had I found the defendants liable to Born Brands for the tort of injurious falsehood, I would have awarded damages to compensate Born Brands for the loss suffered as a result of the (putatively false) statements. The alleged injurious falsehood was, in substance, that Born Brands' product was dangerous, could kill babies, should be recalled and had been linked to 12 deaths in the United States. Had there been no depiction of the Babywedge in the Broadcast, there would have been no tort of injurious falsehood committed by the defendants against Born Brands. In order to assess damages for injurious falsehood, it is necessary, in my view, to posit a counterfactual that removes the putative tort from the Broadcast but does not remove the Broadcast as a whole.

192 I am not satisfied to the relevant standard that Born Brands has suffered any loss as a result of the depiction of Babywedge in the Broadcast that would not have been suffered in any event as a result of the balance of the Broadcast and the attendant publicity warning the public about the dangers of sleep positioners. I do not accept that a potential purchaser or user of Babywedge would have desisted from the purchase or use as a result of the depiction of the precise product but would not have desisted in any event as a result of the balance of the Broadcast. In my view, such persons would have considered that Babywedge fitted the description of baby devices in respect of which the defendants were warning.

193 Accordingly the claim for damages for injurious falsehood fails.

Credibility of witnesses

194 In the reasons that follow the credibility of Hayley and Sally will be addressed since the defendants attacked their credibility for the purposes of impugning their evidence about hurt to feelings and also their evidence about the development of the Babywedge and the significance of its features, which I have already addressed, in part, above.

Hayley Birtles-Eades

195 Hayley gave evidence in chief that before the Broadcast all of the Babywedges that were sold were orange. The Babywedge depicted in the Broadcast was orange. She was cross-examined about an entry on the Babywedge website dated June 2009 which read:

NEW pomegranate and blueberry babywedge covers available now.

Just arrived- pomegranate and blueberry babywedge covers!

196 Hayley became argumentative when it was put to her that the Babywedge was probably displayed in available colours other than orange and would not agree with the proposition. She was adamant the plaintiffs used orange and that this was "strategic". She did, however agree that, prior to the Broadcast, the Babywedge website contained the statement:

"Babywedge currently available in two distinct colours with new colours arriving soon. Orange, lime and pomegranate."

197 Hayley gave oral evidence in chief that she was with her mother, Jennifer Birtles when the Broadcast was televised:

Well, I heard her [Ms Birtles] scream from the next room and she came and got me. I was working in the office next door and we both watched it together on Foxtel, we played, rewind, Channel Nine, she paused the show and rewound it.

198 This evidence is inconsistent with the evidence in Hayley's statement signed on 29 August 2013, but which, according to her, was prepared at a much earlier time, although signed on 29 August 2013 in which she gave the following version:

"I first became aware of the matter complained of when my mother telephoned me and told me that Channel 9 had broadcast an item saying that the Babywedge had been linked to the deaths of babies over the past few years.

I searched the Internet and found the matter complained of on the Nine MSN website."

199 It was put to her that her evidence in her statement was unreliable. She did not directly agree with Mr Blackburn's description, and explained that it was a mistake. She said:

" . . . it was just a very confusing time and it actually turned out she called somebody else."

200 It was my impression that Hayley did not have any actual recollection of how she became aware of the Broadcast and had reconstructed what had occurred by speaking with her mother and giving oral evidence accordingly.

201 When asked about the points of differentiation between Babywedge and the products the subject of the US warning, Hayley's answer in the following exchange is instructive:

Q. . . . In terms of its safety for babies, how do you say that would differentiate it in the public mind from all those products that are the subject of the warnings?

A. My flawless record, no history of any harm, illness death, actual, ever on the product that I have produced.

202 Hayley's approach of personalising both Channel 9's response (they were for me and now they are against me) and her attitude to the public perception (I have a flawless record) may be a reflection of the way she apprehended events. It does not, however, fit with the case that Mr Evatt constructed, and in particular with the proposition that the principal distinguishing factor is the space between the bolster and the mat. This does not affect Hayley's credibility as much as it affects the credibility of the plaintiff's case.

203 At several points in her evidence, Hayley demonstrated a facility with the Internet, its use as a research and marketing tool and the terminology and acronyms associated with it. I am satisfied that she was aware that the date that appears on the bottom of a print out of a web page is the date on which the page is downloaded, as distinct from the date on which the page first appeared on the internet. To the extent to which she disavowed such knowledge I consider her to be disingenuous.

204 Hayley was cross-examined about when she became aware of the US warning. I consider that when this occurred she was acutely aware of the argument that she apprehended that would be put against the claim for damages for hurt to feelings: that what hurt her was the adverse publicity directed generally at sleep positioners by reason of the US warning, rather than any imputations concerning Babywedge itself. She was adamant that she had not seen the US warning or the information sheet until the defendants had given it to her for the purposes of the proceedings.

205 As the cross-examination continued, Hayley appeared to realise the implausibility of her previous answer and maintained that she "honestly" could not remember. I do not accept her answer. The following exchange illustrates her combative and forensic approach to giving evidence, which, together with her other evidence, led me to the conclusion that her answers were not reliable unless otherwise corroborated or against interest.

Q. You became aware that the Food and Drug Administration in the United States had issued some kind of warning about sleeping aids or sleep positioners, you became aware of that from the Channel Nine broadcast?

A. Yes.

Q. Well, wasn't the first thing you did, Miss BirtlesEades, to go and seek out that warning; is your answer that you don't remember?

A. It's also three years ago and it's something that, like, I had already taken into consideration, I'm very familiar with my product. It was heavily designed, very thought out of and the things that they were suggesting had already been addressed in the design of my product.

206 Later in the cross-examination she admitted that she had read the US warning "quite soon after" the Broadcast when it was provided to her by her public relations agent.

207 When Hayley was cross-examined about statements on the Babywedge website that did not fit with the case, as she understood it to be, she sought to blame others. For example she said:

"I don't know [whether the website mentioned open cell foam] because I haven't written all the copy. I have marketers. "

208 Hayley was cross-examined about an extract from the Babywedge website which referred to the bolsters as "sleeping bolsters". Hayley at that time maintained her refusal to acknowledge that the Babywedge was a sleep positioner. Her response was:

I did not write that and my website was hacked at that point and I have evidence of that. I didn't write that.

209 She insisted that the passage was no longer on the website, although she could not say when it had been removed. The passage was, however, downloaded on 18 October 2013, five days before she was asked the question. I do not accept her evidence of hacking. The timing and opportunism of her answers demonstrated to me that Hayley had a real concern about her product being a sleep positioner and she appreciated that the US warning applied to it.

Sally Birtles

210 Sally seemed to regard her role in the witness box as an advocate for the plaintiffs' case rather than as a witness obliged to answer questions truthfully. She took the opportunity on many occasions to make the case by giving unresponsive answers to questions asked of her both by Mr Evatt and also by Mr Blackburn. For example, Mr Evatt asked her about demonstrations she and Hayley performed at expos to show that she could breathe through the foam. When asked whether she also breathed through the two bolsters she said:

A. Yes, keeping in mind we always advise that the baby should never be left unattended.

211 I do not accept this evidence. Further, when it was put to her in cross-examination that she gave that advice because there was a risk of suffocation from the use of the Babywedge she did not agree, although she did agree that the risk of suffocation was a major concern.

212 In my view, both Hayley and Sally regarded Babywedge as a sleep positioner and intended it to serve that purpose. They gave evidence to the contrary because they were concerned to counter the argument that their product belonged to the category of devices the subject of the US warning and that it was the Broadcast as a whole rather than any putative defamatory imputations that had hurt and upset them.

213 I do not accept either Hayley or Sally as reliable witnesses, although they may well have been telling the truth as they now believe, or would like, it to be. Their responses impressed me as tactical and forensic, rather than truthful or reliable.

Conclusion

214 The defendants have succeeded in defeating the claims of each of the plaintiffs. Accordingly, there should be judgment in their favour.

215 The ordinary rule is that costs follow the event. However, as I have not heard from the parties on costs I will make provision in the order for an application to be made within seven days of the date of these reasons, if a different order is sought.

Orders

216 The orders I make are:

(1) Judgment for the defendants.

(2) Subject to any application for a different order being made in writing within 7 days, order the plaintiffs to pay the costs of the proceedings.

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Decision last updated: 13 November 2013