Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Prince v Malouf [2014] NSWCA 12
• Hearing dates: 19 and 20 February 2013
• Decision date: 12 February 2014
• Before: McColl JA; Basten JA; Ward JA

Decision

(1) Allow the appeal in part and set aside the orders made in the District Court on 9 December 2011 in favour of the respondent.

(2) In place thereof, give judgment for the respondent in an amount of $20,000, to take effect from 9 December 2011, but otherwise dismiss the appeal.

(3) Order that the respondent repay to the appellant an amount of $118,500 with interest calculated from the date on which the judgment sum was paid until the date of repayment.

(4) Uphold the cross-appeal with respect to the conveying of imputation (c) in relation to the fourth matter complained of, but otherwise dismiss the cross-appeal.

(5) Set aside the costs order made on 14 December 2011.

(6) No order as to the costs of the trial.

(7) Order the respondent to pay 75% of the appellant's costs of the appeal and cross-appeal.

(8) Grant the respondent a certificate under the Suitor's Fund Act 1951 (NSW).

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: APPEAL - defamation proceedings before judge alone - challenge to fact-finding - finding as to state of mind of publisher - advantage of trial judge hearing evidence - objective factors tending both ways - no basis for interference; DEFAMATION - defences - qualified privilege - whether moral or legal duty to publish - whether recipients had an interest in receiving communications - whether publication motivated by malice - honest opinion - whether conduct reasonable - whether opinion based on facts; DAMAGES - general and special damages - whether general damages manifestly excessive - whether special damages proved - whether aggravated damages appropriate
• Legislation Cited: Defamation Act 2005 (NSW), ss 18, 27, 31; Sch 1, item 27; Health Administration Act 1982 (NSW), ss 20E, 20F, 20J; Div 6B, Pt 2; Supreme Court Act 1970 (NSW), s 75A; Uniform Civil Procedure Rules 2005 (NSW), r 14.30
• Cases Cited: Adam v Ward [1917] AC 309; Aktas v Westpac Banking Corporation Ltd (No 2) [2010] HCA 47; (2010) 241 CLR 570; Amalgamated Television Services Pty Ltd v Marsden [1998] NSWSC 4; (1998) 43 NSWLR 158; Andreyevich v Kosovich (1947) SR (NSW) 357; Baird v Wallace-James (1916) 85 LJPC 193; Bar-Mordecai v Rotman [2000] NSWCA 123; Bashford v Information Australia (Newsletters) Pty Ltd [2004] HCA 5; (2004) 218 CLR 366; Beach v Freeson [1972] 1 QB 14; Bennette v Cohen [2009] NSWCA 60; [2009] Aust Torts Rep 82-002; Blackshaw v Lord [1984] QB 1; Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32; 86 ALJR 1044; Breen v Williams [1996] HCA 57; (1996) 186 CLR 71; Cassell & Co Ltd v Broome [1972] AC 1027; Channel Seven Sydney Pty Ltd v Parras [2002] NSWCA 202; [2002] Aust Torts Rep 81-675; Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1; Crampton v Nugawela [1996] NSWSC 651; (1996) 41 NSWLR 176; Cush v Dillon; Boland v Dillon [2011] HCA 30; (2011) 243 CLR 298; David Syme & Co v Canavan [1918] HCA 50; (1918) 25 CLR 234; Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716; Fox v Percy [2003] HCA 22; (2003) 214 CLR 118; Gibbons v Duffell [1932] HCA 26; (1932) 47 CLR 520; Gipps v McElhone (1881) 2 LR (NSW) 18; Grappelli v Derek Block (Holdings) Ltd [1981] 2 All ER 272; [1981] 1 WLR 822; Gray v Chilman [1935] SASR 260; Greek Herald Pty Ltd v Nikolopoulos [2002] NSWCA 41; (2001) 54 NSWLR 165; Gross v Weston [2007] NSWCA 1; (2007) 69 NSWLR 279; Guise v Kouvelis [1947] HCA 13; (1947) 74 CLR 102; Hayward v Thompson [1982] QB 47; Hebditch v Macllwaine [1894] 2 QB 54; Hough v London Express Newspaper Ltd [1940] 2 KB 507; Jones v Skelton [1964] NSWR 485; (1963) SR (NSW) 644; [1963] 1 WLR 1362; Marshall v Megna [2013] NSWCA 30; Mirror Newspapers Ltd v World Hosts Pty Ltd [1979] HCA 3; (1979) 141 CLR 632; Morgan v Odhams Press Ltd [1971] 2 All ER 1156; [1971] 1 WLR 1239; Morris v Newcastle Newspapers Pty Ltd (1985) 1 NSWLR 260; Mowlds v Fergusson [1940] HCA 38; (1940) 64 CLR 206; Reader's Digest Services Pty Ltd v Lamb [1982] HCA 4; (1982) 150 CLR 500; Roberts v Bass [2002] HCA 57; (2002) 212 CLR 1; Rogers v Whittaker [1992] HCA 58; (1992) 175 CLR 479; Rookes v Barnard [1964] AC 1129; Slim v Daily Telegraph Ltd [1968] 2 QB 157; Spencer v Bamber [2012] NSWCA 274; State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In liq) [1999] HCA 3; (1999) 73 ALJR 306; Steele v Mirror Newspapers Ltd (1974) 2 NSWLR 348; Sutton v Plumridge (1867) 16 LT 741; Tai v Hatzistavrou [1999] NSWCA 306; Taylor v Warren (1868) 2 SALR 43; Todorovic v Moussa [2001] NSWCA 419; (2001) 53 NSWLR 463; Toogood v Spyring (1834) 1 C M & R 181; 149 ER 1044; Triggell v Pheeney [1951] HCA 23, (1951) 82 CLR 497; Universal Communication Network Inc t/as New Tang Dynasty v Chinese Media Group (Aust) Pty Ltd [2008] NSWCA 1; (2008) Aust Torts Rep ¶81-932; Vlasic v Federal Capital Press of Aust Pty Ltd (1976) 9 ACTR 1; Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531; Watt v Longsdon [1930] 1 KB 130
• Texts Cited: Milmo and Rogers, Gatley on Libel and Slander (11th ed, 2008 Sweet & Maxwell)
• Category: Principal judgment
• Parties: Stephen Thomas Prince (Appellant/Cross-Respondent); John Joseph Malouf (Respondent/Cross-Appellant)
• Representation: Counsel: TK Tobin QC with PD Herzfeld (Appellant/Cross-Respondent); ATS Dawson SC with Ms A Rao (Respondent/Cross-Appellant); Solicitors: Walters Solicitors (Appellant/Cross-Respondent); McCormick's Law & Consulting (Respondent/Cross-Appellant):
• File Number(s): CA 2012/074304
• Publication restriction: On 20 February 2013, pursuant to s 7 of the Court Suppression and Non Publication Orders Act 2010 (NSW) and on the ground referred to in s 8(1)(e) the Court made the following order: That there be no publication of any information tending to reveal the identity of any patient referred to in these proceedings.

Decision under appeal

• Jurisdiction: 9101
• Date of Decision: 2011-12-09 00:00:00
• Before: McLoughlin SC DCJ
• File Number(s): DC 2008/317910

HEADNOTE

[This headnote is not to be read as part of the judgment]

The parties are ear, nose and throat (ENT) surgeons. In March 2006, the appellant, Dr Prince, had been for some time the only ENT Visiting Medical Officer at Grafton Base Hospital (the "hospital"). The respondent, Dr Malouf, had his professional practice elsewhere but had operated as an ENT locum surgeon at the hospital during January 2006. As at March 2006, the hospital had arranged for Dr Malouf to carry out further operating lists that month.

In March 2006 Dr Prince sent a series of letters, some to persons involved in various capacities in the administration of the hospital (the "Collie, Wickham and Terrey letters"), one sent to a number of patients on the hospital's ENT waiting list (the "letter to patients"). The letters referred, among other things, to concerns as to the post-operative care of patients on whom the hospital was proposing Dr Malouf should conduct surgery. Dr Prince also sent copies of the Collie and Wickham letters to officers of the insurance fund providing insurance cover for public hospitals (the "TMF"), to his professional indemnity insurer ("UMP"), as well as to the Australian Medical Association (the AMA).

Dr Malouf brought proceedings in the District Court against Dr Prince seeking damages for defamation in respect of the letters. The trial judge found in his favour in respect of only the letter to patients and, further, only in respect of two imputations he found had been conveyed by that publication, and not a third pleaded by Dr Malouf. As to the Collie, Wickham and Terrey letters, Dr Malouf failed to establish his claim, because, while his Honour found that the pleaded imputations had been conveyed and were defamatory of Dr Malouf, he also found that the defence of common law qualified privilege was made out and was not defeated by malice on the part of Dr Prince. The trial judge also rejected Dr Prince's defence of honest opinion. His Honour gave judgment for Dr Malouf in the sum of $138,500 in relation to the letter to patients.

Dr Prince appealed from the judgment against him in respect of the letter to patients. Dr Malouf filed a notice of contention supporting what he claims should have been the rejection by the primary judge of the defences relied on by Dr Prince in respect of the letter to patients, on the ground that his allegation that the publication was actuated by malice should have been upheld. He also cross-appealed from the finding that the first, second and third matters complained of were published on an occasion of common law qualified privilege, claiming that the primary judge should have found Dr Prince was actuated by malice in publishing each letter (including the letter to patients). He also challenged the finding that the letter to patients did not convey one of his pleaded imputations.

The principal issues raised by the appeal, notice of contention and cross-appeal were:

(i) what imputations were conveyed by the letter to patients;

(ii) whether the defence of common law qualified privilege was made out in respect of each of the first four matters complained of;

(iii) whether the defence of statutory qualified privilege was made out with respect to the letter to patients;

(iv) whether the primary judge erred in not finding that the conduct of Dr Prince in publishing the letter to patients was reasonable in the circumstances;

(v) whether Dr Prince was actuated by malice in publishing each of the four matters complained of;

(vi) whether the primary judge erred in rejecting the defence of honest opinion in respect of the letter to patients;

(vii) damages

Held by the Court allowing the appeal and cross-appeal in part:

As to issue (i)

(a) The trial judge did not err in finding that the letter to patients conveyed imputations (a) and (b), but did err in finding that imputation (c) was not conveyed.

Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716; Amalgamated Television Services Pty Ltd v Marsden [1998] NSWSC 4; (1998) 43 NSWLR 158; Greek Herald Pty Ltd v Nikolopoulos [2002] NSWCA 41; (2001) 54 NSWLR 165 applied

As to issue (ii) and (iii)

(b) The publication of the Collie, Wickham and Terrey letters and the letter to patients, and the publication of copies of the Collie and Wickham letters to the TMF took place on an occasion of common law qualified privilege.

Bashford v Information Australia (Newsletters) Pty Ltd [2004] HCA 5; 218 CLR 366; Cush v Dillon; Boland v Dillon [2011] HCA 30; (2011) 243 CLR 298; Bennette v Cohen [2009] NSWCA 60; [2009] Aust Torts Rep ¶82-002; Marshall v Megna [2013] NSWCA 30; Guise v Kouvelis [1947] HCA 13; (1947) 74 CLR 102; Andreyevich v Kosovich (1947) 47 SR(NSW) 357; Toogood v Spyring (1834) 1 Cr M & R 181; 149 ER 1044 applied

(c) The publications of copies of the Collie and Wickham letters to the AMA and the UMP did not occur on an occasion of common law qualified privilege.

As to issues (iv), (v) and (vii)

(d) Having regard to the decision that the letter to patients attracted common law qualified privilege, it is unnecessary to consider statutory qualified privilege (which includes the issue of reasonableness) or honest opinion which were only relied upon on appeal in defence to that publication.

As to issue (vi)

(e) The primary judge did not err in concluding that Dr Prince was not actuated by malice in publishing the Collie, Wickham and Terrey letters, the letter to patients and in publishing copies of the Collie and Wickham letters to the TMF.

Roberts v Bass [2002] HCA 57; (2002) 212 CLR 1; Cush v Dillon; Boland v Dillon [2011] HCA 30; (2011) 243 CLR 298 applied

As to issue (viii)

(f) Damages in respect of the publications to the AMA and UMP should be awarded in the sum of $20,000.

Judgment

1 THE COURT: In March 2006 the appellant, Dr Stephen Prince, wrote a number of letters which the respondent, Dr John Malouf claimed were defamatory of him. Dr Malouf commenced proceedings in the District Court, which were successful in part. On 9 December 2011 McLoughlin DCJ gave judgment for Dr Malouf for damages in the sum of $138,500. Dr Prince appealed against the findings that a letter sent to a number of patients was defamatory of Dr Malouf and not protected by qualified privilege. Dr Malouf cross-appealed with respect to his unsuccessful claims.

INDEX TO REASONS

(1)	Summary		[2]
(2)	Background		[15]
(3)	Imputations
	(a)	first matter complained of - Collie letter	[38]
	(b)	second matter complained of - Wickham letter	[46]
	(c)	third matter complained of - Terrey letter	[51]
	(d)	fourth matter complained of - letter to patients	[55]
	(e)	defences	[63]
(4)	Issues on appeal		[67]
(5)	The disputed conversation of 3 March 2006		[74]
(6)	The letter to patients
	(a)	the issues	[90]
	(b)	appellate function - finding as to imputations	[98]
	(c)	identification	[102]
	(d)	evidence relevant to whether imputations conveyed	[112]
	(e)	was imputation (a) conveyed?	[116]
	(f)	was imputation (b) conveyed?	[120]
	(g)	was imputation (c) conveyed?	[123]
(7)	Common law qualified privilege
	(a)	general principles	[128]
	(b)	the issues	[137]
	(c)	the redacted sentence (ground 6)	[142]
	(d)	end of the patient-doctor relationship	[148]
	(e)	occasion of qualified privilege - letter to patients	[155]
	(f)	occasion of qualified privilege - Collie, Wickham letters	[167]
	(g)	occasion of qualified privilege - publication to third parties	[182]
	(h)	occasion of qualified privilege - Terrey letter	[195]
	(j)	conclusions - qualified privilege	[199]
(8)	Malice
	(a)	the issues	[200]
	(b)	findings of trial judge	[201]
	(c)	application of incorrect test	[212]
	(d)	inconsistent findings	[223]
(9)	Statutory qualified privilege; honest opinion		[247]
(10)	Damages
	(a)	assessed damages	[248]
	(b)	aggravated damages	[250]
(11)	Costs
	(a)	trial	[255]
	(b)	appeal and cross-appeal	[258]
(12)	Orders		[259]

(1) Summary

2 Each of the parties is an ear, nose and throat (ENT) surgeon. In March 2006, Dr Prince was, and had been for some time, the only ENT Visiting Medical Officer at Grafton Base Hospital ("the hospital"). Dr Malouf had his professional practice elsewhere but had operated as an ENT locum surgeon at the hospital during January 2006. As at March 2006, the hospital had arranged for Dr Malouf to carry out further operating lists that month and there had been discussions as to him carrying out additional operating lists in April and/or May 2006.

3 The dispute between Dr Prince and Dr Malouf related to the sending by Dr Prince, in March 2006, of a series of letters. Some of the letters were to persons involved in various capacities in the administration of the hospital. One was sent to a number of patients on the hospital's ENT waiting list. The letters referred, among other things, to concerns as to post-operative care of patients for whom surgery by Dr Malouf was then proposed by the hospital. Some of the letters were copied to officers of the insurance fund providing insurance cover for public hospitals and to Dr Prince's insurer, as well as to the Australian Medical Association (the AMA) and to a representative of the medical staff at the hospital, Dr Leaver.

4 Dr Malouf contended that the letters contained statements defamatory of him. He brought proceedings in the District Court against Dr Prince seeking damages for defamation and, in respect of a further letter sent by Dr Prince, also in March 2006, to the Health Care Complaints Commission, damages for misleading and deceptive conduct. The claims in defamation were governed by the Defamation Act 2005 (NSW).

5 The proceedings were heard by McLoughlin SC DCJ (without a jury) over some 29 hearing days, in the period from 15 November 2010 to 14 September 2011. His Honour delivered oral reasons for judgment on 9 December 2011. Of the four matters in respect of which damages for defamation were sought, his Honour ultimately found for Dr Malouf only on the fourth matter complained of (the letter to patients) and only in respect of two imputations he found had been conveyed by that publication, and not a third pleaded by Dr Malouf. There was a dispute, which the primary judge resolved in Dr Malouf's favour, as to whether the patients to whom Dr Prince sent the offending letter were properly to be described as "his" patients, in the sense of being in a subsisting doctor/patient relationship, and as to the significance of any such relationship for the claim as pleaded.

6 As to the first three letters, Dr Malouf failed to establish his claim in defamation, because, while his Honour found that the pleaded imputations had been conveyed and were defamatory of Dr Malouf, his Honour also found that the defence of common law qualified privilege was made out and was not defeated by malice on the part of Dr Prince.

7 His Honour gave judgment for Dr Malouf in the sum of $138,500 in relation to the letter to patients. The judgment sum comprised general damages of $100,000, special damages of $25,000 for economic loss and interest of $13,500. His Honour did not accept Dr Malouf's claim for aggravated damages. In a later costs judgment, delivered on 14 December 2011, the judge ordered that Dr Prince pay 95% of Dr Malouf's costs, to be assessed on the ordinary basis up to 18 January 2008 and thereafter on an indemnity basis, having regard to an offer of compromise that had been made by Dr Malouf on 17 January 2008. The 5% reduction reflected Dr Malouf's lack of success in respect of the discrete claim of misleading and deceptive conduct in relation to the fifth matter complained of, being the letter to the Health Care Complaints Commission. There was no challenge by Dr Malouf with respect to the costs order, or to the rejection of the claim of misleading and deceptive conduct.

8 Dr Prince appealed from the judgment against him in respect of the fourth matter complained of ("the letter to patients"). He contended that he should have succeeded on one or more of the defences of common law qualified privilege, statutory qualified privilege or honest opinion. Dr Prince also challenged the quantum of the awards made for general and special damages, if his appeal on liability were to prove unsuccessful.

9 Dr Malouf filed a notice of contention supporting the rejection by the primary judge of the defences relied on by Dr Prince in respect of the letter to patients, on the ground that his allegation that the publication was actuated by malice should have been upheld.

10 Dr Malouf cross-appealed from the finding that the first, second and third matters complained of were published on an occasion of common law qualified privilege. In short, he claimed the primary judge should have found Dr Prince was actuated by malice in publishing each letter (including the letter to patients). He also challenged the finding that the letter to patients did not convey one of his pleaded imputations.

11 In summary, for the reasons set out below, the Court has concluded that:

(i) in relation to the fourth matter complained of:

(a) imputation (c) (which was concededly defamatory) was conveyed; but

(b) the publication occurred on an occasion of common law qualified privilege, and

(c) the publication was not actuated by malice,

hence the defence of qualified privilege was made out;

(ii) the challenge to the dismissal of the defence of honest opinion need not be addressed;

(iii) in relation to the first two matters complained of, the publications to the AMA and the UMP did not occur on an occasion of common law qualified privilege (and hence the defence of qualified privilege was not made out);

(iv) the cross-appeal with respect to lack of malice should be dismissed.

12 It follows from these findings that damages must be reassessed, limited to the publications to the AMA and the UMP of the first two matters complained of. General damages should be awarded in the sum of $20,000.

13 The order for costs of the trial must be set aside and the discretion re-exercised. There should be no order as to the costs of the trial.

14 On the basis of the findings of the trial judge as to liability, no interference with the award of general damages would have been warranted, nor with the decision not to award aggravated damages. Had his Honour's liability findings been upheld, the quantum of the special damages would have been increased. On the basis of the trial judge's findings on liability and quantum, there would have been no interference with the award of indemnity costs. The appellant's independent challenges in those respects would have been dismissed.

(2) Background

15 In late 2005, following a governmental directive in relation to the clearance of long wait public waiting lists, not limited to ENT waiting lists, the North Coast Area Health Service (NCAHS), which was the body that administered the hospital, took steps to schedule additional ENT surgery lists in January 2006.

16 Dr Prince was the only permanent ENT surgeon appointed to the hospital at the time and was taking leave during January 2006. The patients on the hospital's ENT surgical waiting list had all been placed on that list on Dr Prince's recommendation. Dr Prince's practice was to explain the relevant recommended surgical procedures to patients. He gave evidence that in several cases his patients had sought assurances that he would personally perform the surgery. He also said that he had in a large number of cases given patients assurances that he would be responsible for and would provide post-operative follow-up care: Tcpt, 19/04/11, p 678.

17 Dr Prince was informed by the hospital in late November 2005 that Dr Malouf was to be engaged to perform additional ENT surgical lists the following January. Dr Prince advised the hospital that he did not object to this arrangement for "public patients" on the waiting list, on the understanding that Dr Malouf would be responsible for any post-operative care of the patients, treatment of any complications resulting from the surgery and ongoing treatment of their conditions. The significance of this proviso was that Dr Malouf was not based in the Grafton area and hence arrangements would need to be made for patients' post-operative care taking that into account.

18 The hospital's director of medical services, Dr Jean Collie, responded to Dr Prince by letter dated 19 December 2005, that the patients to be operated on in the January lists by Dr Malouf had all "been selected on the basis that they are unlikely to have medium term complications or to require ongoing treatment". Dr Prince relied on this statement as support for the proposition that his later concern as to patients' post-operative treatment was valid because, notwithstanding the basis on which it was said the January patients had been selected, one of the January patients had needed follow-up care after the surgery and another had had post-operative difficulties.

19 The January ENT lists were conducted by Dr Malouf, operating as a locum surgeon at the hospital. Dr Prince had no concerns as to Dr Malouf's surgical skills and there was no suggestion that any need for post-operative care in respect of the January patients was due to any lack of skill or competence in the conduct of the surgery.

20 The NCAHS then decided to schedule additional operating lists for ENT surgery to be conducted at the hospital in March and April 2006. Dr Prince's availability to perform additional surgical lists in those months was initially the subject of an enquiry made by a senior nursing unit manager, Ms Simpson, in February 2006. She reported Dr Prince's response in an email to the hospital's executive officer (Mr John Wickham), saying that Dr Prince would not undertake additional lists until his contract talks with the hospital had taken place. Dr Prince appears to have taken umbrage at the request being made in such an informal way, this being part of the complaints he later raised as to the conduct of the hospital in relation to the additional March lists.

21 At that time there had been a relatively long-standing dispute (going back to 2002) between Dr Prince and the NCAHS as to his contractual arrangements; in particular as to the rate of pay for operations performed at the hospital. Dr Malouf contended that this was the primary motivation for sending the various letters in March 2006 and that malice had been established because they had been sent for a purpose or motive foreign to any occasion of qualified privilege which may have attached to their publication. Dr Prince disputed these contentions.

22 As initially pleaded, the allegation of malice was based on the claim that Dr Prince was in a position to derive a pecuniary benefit from damage done to Dr Malouf, on the basis that reassessment by the hospital of the use of Dr Malouf as a locum would result in the allocation of more ENT waiting list patients to Dr Prince in the future (par 37 in the statement of claim; par 20 in the further amended statement of claim). In Dr Malouf's reply, however, the improper purpose was particularised as including (at 3(c)(v)) the purpose of forcing the hospital to "capitulate to [Dr Prince's] financial and other demands in relation to his contract for the provision of ENT services to [the hospital]".

23 By letter dated 2 March 2006, Dr Collie informed Dr Prince that Dr Malouf had agreed to carry out additional operating lists in order to reduce Dr Prince's elective surgery waiting times for long wait public patients.

24 By this time, Dr Prince said (and his Honour accepted) he had concerns both as to Dr Malouf's pre-operative and post-operative care of patients. As to pre-operative care, because Dr Malouf had not sought Dr Prince's patients' histories before he conducted the January lists and because Dr Prince believed Dr Malouf would not have been able to arrange pre-operative audiograms through the public health system in the time available before the operations, Dr Prince had concluded that Dr Malouf had operated on patients in January without having obtained their clinical history or audiograms.

25 As to post-operative care, Dr Prince's concern was that Dr Malouf had not made proper arrangements for the follow-up of the January patients after their surgery. Dr Prince said that, in around February 2006, a "significant" number of the 23 patients who had been operated on by Dr Malouf in the January lists had called his surgery to ask for appointments to see him: Tcpt, 20/04/11, p 718. Dr Prince concluded from this, from the manner in which Dr Malouf had dealt with the referral of one particular patient and from a second-hand report from his wife (a general practitioner) as to the treatment of another patient, that no follow-up arrangements had been made by Dr Malouf for the January patients. Dr Prince regarded that as unsatisfactory. His view, accepted by his Honour at [74], was that all surgeons should provide follow-up care for all patients on whom they operated. Dr Prince's concern in this regard seems to have related largely, though not exclusively, to tonsillectomy patients who might suffer post-operative bleeding.

26 As it transpired, Dr Prince's concerns as to Dr Malouf's pre-operative care of the January patients were unfounded. Dr Malouf had consulted with the relevant patients to obtain their clinical histories and had arranged for audiograms of ear surgery patients through his own private audiology practice prior to surgery on those patients. The position in relation to Dr Malouf's post-operative care was less clear-cut. His Honour found that there was some basis for Dr Prince's stated concerns as to the post-operative follow-up arrangements for patients on whom Dr Malouf had performed surgery. However, his Honour phrased this finding in different ways.

27 In summary, his Honour accepted that a number of the January patients had contacted Dr Prince's surgery in about February 2006 for post-operative appointments and that Dr Prince and another ENT surgeon, Dr O'Neill, considered it necessary for follow-up appointments to be made with surgeons, not general practitioners. On the appeal, Dr Malouf took issue with the use of information obtained by Dr Prince after sending the letters in order to justify retrospectively concerns as to post-operative care at the time the letters were sent.

28 In her letter of 2 March 2006, Dr Collie informed Dr Prince that Dr Malouf would instruct a particular general surgeon, in theatre, in the technique of stemming a secondary haemorrhage. Dr Collie said that was to be done in order to permit Dr Malouf to undertake tonsillectomies safely. Dr Prince regarded this to be an unsatisfactory arrangement to deal with his concern as to the post-operative care available in the event of a post-tonsillectomy bleed; referring to this in his correspondence with the hospital as a "crash course". His Honour expressed the view that the proposal by Dr Malouf and the hospital to train a general surgeon in this way was inadequate having regard to the potential risks, although remote, as sequelae of such surgery: at [74].

29 After receipt of the 2 March 2006 letter, Dr Prince contacted both Dr Collie and Mr Wickham. In his affidavit he made no reference to any enquiries in those conversations as to Dr Malouf's arrangements for pre- or post-operative care of patients. In cross-examination, however, Dr Prince said that he had "discussed the follow up" with Dr Collie (Tcpt, 20/04/11, p 714) and had told her he had been contacted by "a whole lot of [the January patients] saying that there hadn't been follow-up". Dr Prince said that Dr Collie had told him that "they were looking at arrangements to put in place for follow-up", though she had said she was not sure what they were. Therefore, before speaking to Dr Malouf, Dr Prince had been told that the hospital was addressing that issue.

30 Dr Prince then had a telephone conversation with Dr Malouf on 3 March 2006. The precise content of that conversation, and who initiated it, was in dispute. However, it was not disputed that, in the course of that conversation, Dr Malouf rejected a suggestion or request by Dr Prince that he not carry out the additional operating lists at the hospital and that Dr Prince had referred to a contractual dispute he had with the hospital. Dr Prince concluded, from that conversation, that Dr Malouf was interested only in money and not the patients. Dr Prince accepted that he did not raise the issue of follow-up care with Dr Malouf in that conversation.

31 As is apparent from other correspondence, Dr Prince also considered that the hospital was seeking to undermine his position in the contract dispute by engaging Dr Malouf to carry out the additional lists. Dr Prince submitted that because of the "severe difficulties" he had with the hospital in relation to the contractual dispute, what Dr Malouf had said in the 3 March conversation was a "conversation stopper" and left him just "flabbergasted" and "struck dumb"; and therefore it was reasonable for him not to make any further enquiries before publishing the letters critical of Dr Malouf.

32 In the following days, Dr Prince wrote the offending letters being:

(i) a letter dated 6 March 2006 to Dr Collie (the first matter complained of), which Dr Prince copied to two insurers (the Treasury Managed Fund and United Medical Protection) and to the AMA (the "Collie letter");

(ii) a letter dated 6 March 2006 to Mr Wickham (the second matter complained of), which Dr Prince copied to the same people as the Collie letter (the "Wickham letter");

(iii) a letter dated 10 March 2006 to Dr Andrew Terrey, the Chairman of the Medical Quality Committee at the hospital (the third matter complained of), which letter was copied only to Dr Collie (the "Terrey letter"); and

(iv) a standard form letter sent on or about 14 March 2006 to somewhere between 50 and 100 patients, or parents of patients, described as "long wait" patients on the hospital's ENT surgery waiting list, (the fourth matter complained of - the "letter to patients").

33 Dr Prince also wrote on 14 March 2006 to the Health Care Complaints Commission, complaining of the conduct of Dr Malouf, which he described as constituting "professional misconduct", and of the conduct of the "[e]xecutive" of the hospital, a Mr Crawford. This was the fifth matter complained of and the subject of the claim in relation to misleading and deceptive conduct. Although no challenge is made to his Honour's rejection of the misleading and deceptive conduct claim, and it is accepted that this letter was the subject of absolute privilege, Dr Malouf contended that this letter was relevant when considering whether Dr Prince was motivated by malice in sending the first four letters.

34 Dr Malouf performed the surgery in the additional March lists but withdrew from the arrangements that had been discussed with Dr Wickham for him to undertake the additional April, or later, lists, after he became aware of the letters.

35 By the end of April 2006, the hospital's long wait ENT surgical waiting list had been cleared, Dr Prince having conducted additional lists in April. Meanwhile, Dr Collie, had responded to the Collie letter on 20 March 2006, advising Dr Prince that Dr Malouf had reviewed all patients and that audiology testing had been carried out on all patients requiring ear surgery in January before conducting the January lists; and commenting, seemingly by way of response to Dr Prince's criticism as to Dr Malouf's post-operative care, on Dr Prince's own post-operative care arrangements. Dr Prince responded to this letter on 22 March 2006, justifying his own post-operative treatment of patients.

36 On 3 April 2006 and 4 April 2006 respectively, Dr Prince formally withdrew the complaints about Dr Malouf that had been made to Dr Terrey and to the Health Care Complaints Commission. In October 2007 he made, through his solicitors, an offer of amends to Dr Malouf.

37 The trial judge found (at [102]) that Dr Prince had written the letters in circumstances where: (i) the surgery that had been conducted in January had been conducted on Dr Prince's patients; (ii) Dr Prince was the Visiting Medical Officer ENT surgeon at the hospital; (iii) Dr Prince had not been asked for his notes relating to each patient and had assumed, incorrectly, that no audiograms had been carried out on those patients that required them; (iv) no follow up arrangements had been made for "many" of the patients; and (v) Dr Prince perceived that he had a duty in those circumstances "to inform the recipients of the correspondence of the factual matters which he believed to be correct and in part his opinion that resulted therefrom".

(3) Imputations

(a) first matter complained of - Collie letter

38 This letter was written on 6 March 2006 in reply to Dr Collie's letter of 2 March 2006 informing Dr Prince that Dr Malouf had agreed to assist in the reduction of Dr Prince's elective surgery waiting lists. Dr Prince wrote:

"First I would make some observations in regard to the use of Dr Malouf as a Locum Surgeon during January 2006. I view his management of a number of patients on these lists as having been substandard. I specifically find it unacceptable practice to carry out a major ear operation on a patient being unaware of his/her clinical history or the audiological status on either the operated or unoperated ear. These patients require extensive postoperative follow-up to ensure that their outcome is optimised. One particular patient on those lists, having a fairly minor procedure, will require future further extensive follow-up and this has not been adequately catered for by Dr Malouf.

I had not made much of this prior to this occasion as I was under the impression that these locum ENT lists during January were to be a one-off affair. Now that I am aware that a further eight lists are proposed, I must strongly voice my opposition to them.

Again I find it totally inappropriate that major ear cases are carried out by a Surgeon who is totally unaware of the patient's past history and has no access to or is unaware of his/her hearing status prior to surgery. The follow-up of these patients is not a minor affair as there are significant potential postoperative complications in major ear surgery in the short, medium and long term.

I also find it very disturbing that the hospital would propose a crash course in ENT postoperative haemorrhage control as their plan of management for any potential postoperative haemorrhage.

I believe that the arrangements which have been proposed and put in place by Grafton Base Hospital fall far short of what would be considered a reasonable and accepted standard of care of patients in a public hospital in New South Wales."

39 A copy of the Collie letter was sent by Dr Prince to various other people. First, it was sent to Mr Ron Buckett, the area claims officer of a Government managed fund, the Treasury Managed Fund ("the TMF"), which provides insurance for public hospitals and doctors working within those hospitals, under cover of a letter referring to "a potential problem of liability at Grafton Base Hospital and to seek ... advice". The advice sought by Dr Prince included advice as to his position in the event of any "negative outcome", complaint or legal action arising from surgery carried out by Dr Malouf as locum and as to whether he was obliged to warn his patients of his concerns. Dr Prince did not wait for, or receive, any such advice before he proceeded to send the letter to patients.

40 Secondly, the Collie letter was copied to Ms Versace, a medico-legal adviser at United Medical Protection ("UMP"), under cover of a letter in which Dr Prince expressly sought assistance in his "contract dispute" with the hospital. UMP was the entity with which Dr Prince had private professional indemnity insurance cover. Dr Prince did not receive any advice from UMP before proceeding to write the letter to patients.

41 Thirdly, the letter was copied to Ms Davies, an officer at the AMA. According to Dr Prince, the letter was sent at her request. Dr Prince's interest in sending the letter to the AMA seems to have been to assist it in representing him in his contractual dispute with the hospital.

42 Finally, the letter was copied to Dr Leaver, the Secretary of the Medical Staff Council at the hospital, who when wrote to the hospital complaining as to the treatment of Dr Prince in no uncertain terms.

43 Dr Malouf pleaded that the Collie letter conveyed the defamatory imputations that he:

"(a) managed a number of patients at the Grafton base hospital in a substandard way;

(b) performed major ear operations on patients without adequately investigating those patients prior to surgery;

(c) failed to cater adequately for follow up care for patients he had operated on;

(d) is an incompetent surgeon; and

(e) is a danger to his patients."

44 It could hardly be (and was not) disputed that the Collie letter referred to Dr Malouf since it named him in the opening paragraph and there was no other surgeon that the hospital had sought to engage for the additional eight lists to which the letter referred. Dr Prince did not dispute the allegation that the Collie letter conveyed imputations (a), (b) and (c). Dr Prince also conceded that, if found to have been conveyed, all of the imputations pleaded as having been conveyed by the Collie letter were defamatory.

45 His Honour found (at [51]) that all of the pleaded imputations were conveyed and each was defamatory.

(b) second matter complained of - Wickham letter

46 The second letter, dated 6 March 2006, was sent to Mr Wickham, the Executive Officer of the hospital. This letter was also copied to the same recipients within the TMF, UMP, AMA and to Dr Leaver.

47 In this letter, Dr Prince complained that the first indication he had received that the NCAHS was considering and had arranged for a locum to operate on ENT waiting list patients during April was the letter from Dr Collie of 2 March 2006 and his subsequent conversations with Dr Wickham and Dr Collie on 3 March 2006. He also complained that similar arrangements had been made without consultation with him in November 2005; stated that he had had no communication, written or verbal, with either Mr Wickham or Dr Collie with regard to extraordinary lists for waiting list reduction in either March or April; expressed the opinion that at the very least simple courtesy would have dictated some form of communication before arrangements for a locum were finalised, noting that "all of the patients on the ENT waiting list [had] been booked by [him]"; and stated that he regarded Mr Wickham's handling of the matter as "appallingly improper".

48 Dr Prince recorded in that letter his availability for extra ENT lists in April, but said that he was not available for extra lists in March due to previous practice commitments. He went on as follows:

"No proper arrangements have been made to adequately follow patients up after locum surgery. No suitable protocol is in place to manage possible complications and/or negative outcomes from locum surgery. It is an extremely dangerous and probably negligent Health Service attitude to suggest that a General Surgeon be given a crash course to cover management of postoperative ENT bleeding.

I categorically regard the use of an 'Operate and Forget' locum surgeon to reduce the ENT waiting list as being substandard and potentially negligent.

...

All of the patients on the ENT waiting list have been seen, investigated and assessed by me. Their surgery has been recommended and explained by me. Only in extraordinary circumstances should another surgeon be called to do their operations.

...

The Health Service is compromising patient care for political expediency.

I view your handling of this matter of locum ENT surgery as an attempt to make my position at Grafton Base Hospital untenable and as a clumsy and ill-conceived attempt to force my resignation."

49 Dr Malouf alleged that the Wickham letter conveyed the defamatory imputations that he:

"(a) failed to make proper arrangements to adequately follow patients up after he performed surgery on them exposing them to the risk of complications and/or negative outcomes;

(b) is a danger to his patients;

(c) is a negligent surgeon;

(d) is an "operate and forget" locum surgeon."

50 There is an obvious overlap between imputations (a)-(c) in this letter and the corresponding imputations (c)-(e) in the Collie letter. His Honour found that all the pleaded imputations had been conveyed: at [35], [36], [38] and [39]. Dr Prince accepted that, if conveyed, all but imputation (d) were defamatory; his Honour concluded that imputation (d) was also defamatory: at [50]. This finding is not challenged.

(c) third matter complained of - Terrey letter

51 The third letter, dated 10 March 2006, was sent to Dr Andrew Terrey; a copy was sent to Dr Collie. The letter relevantly stated:

"I am writing to express my concerns about the management of a number of patients who had surgery carried out between 9 and 13 January 2006 by Dr John Malouf as part of the ENT waiting list reduction strategy currently in place by the Administration at Grafton Base Hospital.

By way of general comments, there were some 26 operations carried out. These patients had a quick and rudimentary assessment prior to surgery and, as I understand, new consents were obtained. The operating surgeon had no access to any of the previous clinical notes or investigations on these patients. The operations were carried out on the basis that no or minimal postoperative follow-up would be required."

52 Dr Prince then went on to express concerns with regard to seven patients who were operated on in this list. In relation to the first two patients, Dr Prince stated that they raised a number of issues "including the need for follow-up, particularly in [respect of] Aboriginal patients to ensure that the optimum management is carried out". Dr Prince said that the follow-up of one was grossly inadequate; and that there was no follow-up by the operating surgeon in relation to the other. Of the next four patients, Dr Prince said that it was mandatory that the operating surgeon be aware of the hearing status in both the operated and non-operated ear prior to undertaking any such surgery and, in his belief, Dr Malouf had no access to any audiometric assessment of any of these patients and had not followed them up post-operatively. As to the final patient, Dr Prince noted that his information was second-hand, by inference received from Dr Prince's wife who was the patient's general practitioner, but said that it raised an issue as to Dr Malouf's treatment of post-operative bleeding. The letter then concluded:

"I have concerns about the management of this waiting list reduction in general but I have specific concerns about the above seven patients. I would be grateful if your Committee could look into this matter."

53 Dr Malouf alleged that this letter conveyed defamatory imputations that he:

"(a) failed to assess adequately 26 patients he operated on before performing those operations;

(b) is an incompetent surgeon;

(c) negligently treated seven patients;

(d) is a danger to his patients;

(e) failed to recognise the special needs of Aboriginal patients;

(f) treats his patients in an uncaring manner."

54 Again, there is some overlap between imputations (a) - (d) and the corresponding imputations in the first two letters. His Honour found that each of the pleaded imputations was conveyed - at [40] - and, which was not disputed by Dr Prince, that each was defamatory: at [51].

(d) fourth matter complained of - letter to patients

55 On about 14 March 2006 Dr Prince sent a letter in standard form to patients or parents of patients who were on the long wait ENT surgery waiting list. Between 50 and100 letters were sent to such persons, around 20 of whom were offered places on the additional March surgery lists.

56 The text of the letter was as follows:

"I am writing to you concerning the ENT waiting list at Grafton Base Hospital.

I have recommended that you undergo ENT surgery and realise that you may have now been waiting some time to have this carried out.

You may be contacted soon by Grafton Base Hospital and offered surgery by another doctor.

The hospital has arranged for another surgeon to carry out extra operations. I have no part in these arrangements but I have significant concerns regarding the post-operative care of some patients who had surgery on this basis earlier in the year.

Whether or not you choose to have another surgeon operate on you is of course totally your own choice.

If you have any concerns I would be happy to discuss this matter further with you." (Emphasis added.)

57 It was not disputed that the hospital's ordinary procedure was to send waiting list patients a letter prior to their scheduled operation, giving details of the scheduled surgeon, procedure and date of procedure. Dr Malouf contended that recipients of such a letter from the hospital would have understood the reference in Dr Prince's letter to "another surgeon" to be a reference to him.

58 Dr Malouf alleged the letter conveyed defamatory imputations that he:

"(a) does not provide adequate post-operative care for his patients;

(b) is a danger to patients;

(c) cannot be trusted to provide proper treatment to his patients."

59 The primary judge found (at [51]) that imputations (a) and (b) were conveyed by the letter and, as was accepted by Dr Prince, were defamatory. However, his Honour found that imputation (c) was not conveyed by the publication: at [46]. Dr Malouf contested this finding.

60 As to imputation (a), his Honour found (at [42]) that the statement in the letter in relation to post-operative care referred not only to the hospital, but also to the surgeon who would be understood by the ordinary person to be the one whose obligation it would be to carry out the post-operative care. Accordingly he concluded the imputation was conveyed.

61 As to imputation (b), his Honour repeated the earlier finding that he had made in relation to similar imputations in other letters. He had said that the meaning a layman would give to the language used was "such as to convey an imputation that [Dr Malouf] was likely to cause harm or injury to his patients but not that their lives [were] in danger": at [32]. His Honour referred to Crampton v Nugawela [1996] NSWSC 651; (1996) 41 NSWLR 176 at 183, where Mahoney ACJ considered that it was not fatal that the pleading of an imputation did not state with complete accuracy the imputation in the published material.

62 As to imputation (c), his Honour accepted that the reference clearly related to Dr Malouf "he being the only other surgeon who would have been referred to in any correspondence to [sic] hospital": at [46]. However, apart from stating that, in his view, "the imputation is not made out; the ordinary person would not view that as the meaning of the words used by Dr Prince", his Honour gave no reasons for his conclusion that the imputation was not conveyed.

(e) defences

63 The primary judge found the defences of common law qualified privilege and statutory qualified privilege made out in respect of the publication of the first three matters complained of, but rejected the defences in relation to the fourth matter complained of.

64 His Honour held (at [104]) that despite Dr Prince's failure to make inquiries about the treatment regime in place at the hospital during January 2006, the appellant had a moral duty to inform persons who needed to consider his concerns about the patients' treatment and care. Furthermore, his conduct was not actuated by malice, contrary to Dr Malouf's submission that a contractual dispute with the hospital was the dominant motive for Dr Prince's conduct: at [74] - [80]. Thus his Honour found:

(a) in relation to the first matter complained of, the appellant had a moral duty to convey his concerns to Dr Collie and she had a reciprocal duty in her capacity as Director of Medical Services to receive and consider these concerns;

(b) in relation to the second matter complained of, the appellant had a moral duty to convey his concerns to Mr Wickham and he had a reciprocal interest in receiving such information:[107] (p 57);

(c) in relation to the third matter complained of, the appellant had a moral duty to convey his concerns to Dr Terrey and he had a reciprocal interest in receiving such information in his capacity as Chairman of the Medical Quality Committee;

65 However, in relation to the fourth matter complained of, the defence of common law qualified privilege was rejected: at [109]. His Honour held that Dr Prince made no inquiries as to which of the patients had been included in proposed lists for surgery and that there was no duty to inform patients at large. Furthermore, his Honour referred to the unsettling effect of this correspondence on the patients. Therefore, Dr Prince's moral duty was held to have ceased after informing Dr Collie, Mr Wickham and Dr Terrey.

66 Finally, his Honour rejected the following defences:

(a) honest opinion pursuant to s 31 of the Defamation Act and fair comment at common law, on the basis that all imputations were statements of fact rather than opinion: at [41].

(b) an offer to make amends pursuant to s 18 of the Defamation Act, holding that the apology made was not sufficient and was not made within a reasonable time: at [80] - [81].

(4) Issues on appeal

67 The primary judgment, delivered orally, was 95 pages long. It was clearly revised after delivery. Paragraph numbers appear only in parts of the reasons. Reference will be made to the pages of the judgment, where there are no paragraph numbers.

68 On the appeal, the parties' written submissions (in chief and reply) totalled 150 pages. Oral argument occupied two days. It is not possible practically to recount in detail the arguments advanced on each side in their voluminous documents. The substance of the complaints will be addressed.

69 The appeal, notice of contention and cross-appeal raised the following groups of issues for consideration:

(i) what imputations were conveyed by the fourth matter complained of (appeal grounds 1-2; cross-appeal ground 1);

(ii) whether the defence of common law qualified privilege was made out in respect of each of the first four matters complained of (appeal grounds 3-6; cross-appeal grounds 2-4);

(iii) whether Dr Prince was motivated by malice in publishing each of the four matters complained of (cross-appeal grounds 5-7; notice of contention ground 1);

(iv) damages (appeal grounds 11-12; cross-appeal grounds 8-9); and

(v) costs (appeal ground 13).

70 Dr Prince also contended that his Honour erred:

(i) in rejecting the defence of statutory qualified privilege with respect to the letter to patients (appeal ground 7);

(ii) in finding that the recipients of the letter to patients had no interest or apparent interest in receiving that communication (appeal ground 8);

(iii) in not finding that the conduct of Dr Prince in publishing the letter to patients was reasonable in the circumstances (appeal ground 9); and

(iv) in rejecting the defence of honest opinion (Defamation Act, s 31(1) and (5)) in respect of the fourth matter complained of (appeal ground 10; notice of contention ground 2).

71 With respect to (i)-(iii), because the defence of common law qualified privilege should be upheld in relation to the letter to patients, it is not necessary to address these grounds.

72 With respect to (iv), the relevant ground of appeal only raised the defence in relation to the letter to patients, which, it is held below, was protected by common law qualified privilege. The defence was not relied on in relation to the only remaining basis of liability (the publication to the AMA of the Collie and Wickham letters) and need not be addressed.

73 There were two additional discrete issues raised. The first concerned the content of the conversation between the parties on 3 March 2006. Although primarily relevant to the issue of malice, because the conversation preceded the sending of the letters it is convenient to address it next. The second issue related to a finding made by the trial judge in delivering his oral reasons which was removed from the edited judgment. It was referred to by the parties as "the redacted sentence". It was relevant to the relationship between Dr Prince and the recipients of the letter to patients. It will be addressed in the course of considering the defence of qualified privilege.

(5) The disputed conversation of 3 March 2006

74 Chronologically, the first issue raised on the appeal was Dr Malouf's challenge to his Honour's findings in relation to the 3 March 2006 telephone conversation. The telephone conversation between Dr Prince and Dr Malouf provided an element of context to the letters. However, there was a dispute as to the content of the conversation, the resolution of which was (according to Dr Malouf) significant with respect to the rejection by the trial judge of his claim that Dr Prince acted with malice. Dr Malouf claimed that Dr Prince had threatened to harm his reputation as a doctor, and that the threat demonstrated malice sufficient to defeat the common law defence of qualified privilege.

75 The account of the conversation given by Dr Malouf was that Dr Prince had told him that he was "having a battle with the Health Service"; had asked what he, Dr Malouf, was being paid to do the lists; had asked Dr Malouf not to come down to Grafton to do the lists; and had told Dr Malouf that if he did come down to Grafton, Dr Prince would "bad mouth" him to his colleagues "and it will end up in Court".

76 Dr Prince's version, which his Honour "in general terms" accepted (Judgment, p 53), was that it was Dr Malouf who had asked about pay rates; that he, Dr Prince, had said he was "having a dispute with the hospital at the moment" and (at p 51) that it was "not helpful" if Dr Malouf came down at the moment; that, when asked about the patients, Dr Malouf had said "[w]hat about the patients? I need the money"; and that, in response to a question by Dr Prince to the effect that "[w]hat would our colleagues think if I told them that you're only doing it for the money", Dr Malouf had said "I already know what a bad opinion my colleagues have of me, nothing you would say would make it any worse".

77 In the critical respect, namely whether there was a threat by Dr Prince to injure Dr Malouf's reputation, the competing versions are broadly similar. Even on Dr Prince's version there was an implicit threat by him to tell colleagues something that Dr Prince clearly thought would, or did, reflect badly on Dr Malouf.

78 The trial judge found that, as at 3 March 2006, Dr Prince was angry over a number of issues, including that (i) there had been no discussion (as to the locum arrangements or additional lists) between Dr Collie, Dr Wickham and himself; (ii) his contract dispute with NCAHS; (iii) his concern about the care that had been given to the patients in the January lists conducted by Dr Malouf; (iv) his concern about the "politicisation" of listed patients; and (v) his concern at Dr Malouf coming again to operate on the waiting list because of his view as to what had occurred in the January list: Judgment, p 53. The judge further found that, as a result of those matters, Dr Prince was angry and this "added to his belief that [Dr Malouf] had made some comment in relation to which he interpreted [that Dr Malouf was] more concerned about money than patients".

79 However, his Honour did not accept that Dr Prince had in fact said to Dr Malouf the words ascribed to him, namely that he would "bad mouth" Dr Malouf to colleagues and they would "end up in Court". His Honour noted Dr Malouf's concession that he had made some comment in terms similar to those which Dr Prince said he had used, namely that "I already know what a bad opinion my colleagues have of me, nothing you could say would make it any worse", but that Dr Malouf said that he had made such a comment "tongue in cheek". His Honour considered it to be highly improbable that a "tongue in cheek" comment, of the kind that Dr Malouf conceded he had made, would have been made in response to the "bad mouth" statement that Dr Malouf said Dr Prince had made to him. He said:

"When one looks at the logical sequence of [the] conversation, the demeanour of the witnesses and although the defendant was, in my view, at the time emotionally upset and to some degree no doubt angry with the hospital, he withstood the cross-examination well and maintained, notwithstanding the vigour and thoroughness and often being put to him that he was liar in cross-examination, I accept his evidence as to the conversation in general terms."

80 That conclusion was based not only on the logical sequence of the 3 March 2006 conversation, but also on the demeanour of both doctors and, in particular, the way in which Dr Prince had withstood vigorous challenge to his evidence in cross-examination. The advantage of the trial judge in assessing the evidence of the witnesses in relation to this conversation should not be underestimated.

81 Dr Malouf submitted that his Honour's reasoning in relation to this conversation flowed from a mistaken view of the logic of the conversation and was contradicted both by contemporaneous records and by the unchallenged evidence of Dr Malouf's wife as to what Dr Malouf told her Dr Prince had said on the day of the conversation. Dr Malouf asked this Court to make a finding that the 3 March 2006 conversation occurred as Dr Malouf said it did.

82 As to the logic of the conversation, Dr Malouf pointed to the evidence that he initiated the call in response to a telephone message from Dr Prince (that being the evidence of his secretary); that Dr Malouf's version of other things he claimed were said by Dr Prince accorded with Dr Prince's admittedly critical view at the time of Mr Crawford, the Chief Executive Officer of the NCAHS (Tcpt, 09/05/11, pp 1303-1305), and submitted that it is more logical that it was Dr Prince, rather than Dr Malouf, who raised the question of rates of pay for the additional lists in this conversation. The last point may be accepted. Those matters, however, would be consistent with either version of the alleged threat to "bad mouth" Dr Malouf.

83 Dr Malouf also referred to a draft letter that he had prepared, addressed to Dr Terrey, on 24 March 2006 and an email sent by him to Mr Wickham on the same day as the conversation. The draft letter, though not sent, was provided to Dr Collie and it records Dr Prince as having:

"... informed me during the course of this conversation that he would bad mouth me to my colleagues and if I can say one thing for him in his favour, he is true to his word."

84 The email to Mr Wickham did not refer to the "bad mouth" statement but supported Dr Malouf's version as to the way in which the topic of remuneration was raised.

85 Dr Malouf's wife gave an account of what her husband told her about the telephone conversation which is consistent with Dr Malouf's evidence. She was not cross-examined. His Honour made no reference to this evidence. Dr Malouf pointed to the fact that Dr Prince went on to do precisely what Dr Malouf said he had foreshadowed (that is, to harm Dr Malouf's reputation) and to the lack of any reference to this conversation in the March 2006 letters to Dr Collie, Mr Wickham and Dr Terrey, which he submitted would be glaringly improbable if the conversation had occurred as Dr Prince said it did.

86 Dr Prince pointed to various matters raised in the cross-examination of Dr Malouf, such as the incorrect date he originally ascribed to the conversation - an error which it was suggested had been calculated to convey the false impression to Dr Terrey that he had been pressured not to perform the January lists - and inconsistencies in Dr Malouf's own evidence, which must have informed his Honour's consideration of which version of events was the more likely.

87 The crux of the conversation, for present purposes, was not who asked whom about rates of pay, or whether Dr Malouf had correctly attributed to Dr Prince a critical view of Mr Crawford; it was as to whether Dr Prince had expressly threatened to "bad mouth" Dr Malouf or to harm his reputation. It is quite conceivable that this was the impression Dr Malouf had formed from what he had heard said but that, as his Honour found, Dr Prince had not used those particular words and that, when recounting the conversation to his wife and in the draft letter to Dr Terrey, Dr Malouf was paraphrasing what he believed had been said to him.

88 The trial judge had the considerable advantage of seeing the witnesses. He was not satisfied that the words "bad mouth" had been used, based at least in part on how Dr Prince had responded to the cross-examination in relation to this and no doubt other matters. His Honour obviously accepted that Dr Prince was truthful and reliable when he denied using such words. The evidence of Dr Malouf's wife warranted no different conclusion; her evidence was consistent with Dr Malouf having interpreted what Dr Prince said as a threat to "bad mouth" him and did not require explicit rejection. This Court should not interfere with that finding. The significance of the proposed finding, which Dr Malouf maintained was not necessary for his challenge to the finding as to lack of malice, is addressed below.

89 The judge's conclusion in relation to this conversation was not contrary to compelling inferences or glaringly improbable having regard to the contemporaneous material, objectively established facts and the apparent logic of events (in the sense explained in Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [22], [27], [29], [33], referring to State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In liq) [1999] HCA 3; (1999) 73 ALJR 306). Dr Malouf's challenge to his Honour's findings about the 3 March 2006 conversation is rejected.

(6) The letter to patients

(a) the issues

90 The trial judge found that the letter to patients conveyed the imputations that Dr Malouf does not provide adequate post-operative care for his patients; and Dr Malouf is a danger to patients. However, he found the further imputation that Dr Malouf cannot be trusted to provide proper treatment to his patients, was not conveyed.

91 Dr Prince contended that his Honour erred in finding that imputations (a) and (b) were conveyed (appeal ground 1) and erred in having regard, when determining whether those imputations were conveyed, to the evidence of recipients' reactions to the information in the letter (appeal ground 2).

92 Dr Malouf contended that his Honour erred in failing to find that imputation (c) was conveyed and was defamatory of him (cross-appeal ground 1).

93 Dr Prince submitted that his Honour erred in two respects in making the finding as to imputation (a). First, as to identification, he argued that his Honour erred in finding that, although Dr Malouf was not named in the letter, the reference to concerns as to post-operative care earlier in the year was reasonably to be understood as a reference to him. Dr Prince contended that his Honour did so on the basis that three patients gave evidence that they had presumed him to have been the surgeon involved in the surgery earlier that year, but that this was not a presumption or inference the letter invited the reader to make. He argued that the judge's reliance on such evidence offended the principle that the words themselves must be capable of being understood by the ordinary reasonable reader to refer to the plaintiff.

94 Secondly, Dr Prince submitted that even if the letter did identify Dr Malouf, it did not convey the imputation that he did not provide adequate post-operative care but, rather, expressed concern as to the care provided by the hospital and, in any event, did not go so far as to say that Dr Malouf did not provide adequate post-operative care for "all" patients.

95 Dr Malouf's primary response was that at trial Dr Prince conceded, or at least did not contest, that the letter to patients identified him as at least one of its subjects. Further he submitted that identification was established in any event because there was evidence that recipients of the letter to patients received a letter from the hospital advising of an appointment for them for surgery in the March lists to be performed by Dr Malouf.

96 Dr Prince accepted in his reply submissions and in oral argument on appeal that he had conceded at trial that persons who received the hospital's letter would have understood the reference in the letter to patients to "another surgeon" to be to Dr Malouf, but said the real issue at trial was as to the meaning of the letter.

97 It is not apparent from the course of submissions that there was any real identification issue left to deal with, but as that complaint was not clearly abandoned it, and the complaint about the finding that imputation (a) was conveyed, will be addressed.

(b) appellate function - finding as to imputations

98 The question whether a publication conveys imputations concerning a person is a two stage inquiry. First, a question of law, calling for decision by the judge, is whether words which are complained of are capable of conveying a defamatory meaning; secondly, if the words are so capable then it is a question for the tribunal of fact to decide as to whether the words do, in fact, convey a defamatory meaning: Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 79 ALJR 1716 at [9] per Gleeson CJ, McHugh, Gummow and Heydon JJ, quoting Jones v Skelton [1964] NSWR 485 at 491; (1963) SR (NSW) 644; [1963] 1 WLR 1362 at 1370 - 1371.

99 The appeal was conducted by both parties on the premise that the letter to patients was capable of conveying the defamatory meanings and the issue was whether the judge, as the tribunal of fact, correctly decided that the relevant imputations were conveyed. Although the pleader did not expressly so state, it is apparent that the imputations were pleaded as arising from the natural and ordinary meaning of the matter complained of, there having been no pleading of a true innuendo. The "natural and ordinary meaning" of a publication in the law of defamation includes "inferences and conclusions which the ordinary man draws from the words used [and] 'a certain amount of loose thinking' ": Mirror Newspapers Ltd v World Hosts Pty Ltd [1979] HCA 3; (1979) 141 CLR 632 at 641, per Mason and Jacobs JJ.

100 Accordingly, to determine whether the imputations were conveyed the judge had to consider whether ordinary reasonable readers would have understood the matter complained of, when read as a whole, in the defamatory sense pleaded: Favell v Queensland Newspapers Pty Ltd at [9]; Amalgamated Television Services Pty Ltd v Marsden [1998] NSWSC 4; (1998) 43 NSWLR 158 at 164 - 167, per Hunt CJ at CL (with whom Mason P and Handley JA agreed); Greek Herald Pty Ltd v Nikolopoulos [2002] NSWCA 41; (2001) 54 NSWLR 165 at [26] - [27], per Mason P (Wood CJ at CL agreeing). The mode or manner of publication is a material matter in determining whether an imputation is capable of being, or is in fact, conveyed, with the reader of a book (or, as in this case, a letter) assumed to read it with more care than he or she would read a newspaper or a transient publication: Amalgamated Television Services v Marsden at 165, per Hunt CJ at CL (Mason P and Handley JA agreeing); Morgan v Odhams Press Ltd [1971] 2 All ER 1156; [1971] 1 WLR 1239 at 1163, per Lord Reid; at 1170, per Lord Morris; at 1184, per Lord Pearson. The court "will reject those meanings which can only emerge as the product of some strained or forced or utterly unreasonable reading": Jones v Skelton (1963) SR (NSW) 644 at 650.

101 There were no submissions as to the approach an appellate court should take in reviewing a trial judge's conclusion as to whether or not an imputation was conveyed. On an appeal from a judge's determination as to whether ordinary reasonable readers would have understood the matter complained of, when read as a whole, in the defamatory sense pleaded, this Court is in as good a position as the trial judge to decide on the proper inference to be drawn from the publication. Accordingly while, of course, giving respect and weight to the primary judge's conclusion, if the appellate court forms the view that that conclusion is erroneous, it will not shrink from giving effect to its own conclusion: Supreme Court Act 1970 (NSW), s 75A; Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531 at 551, per Gibbs ACJ, Jacobs and Murphy JJ; Fox v Percy at [25], per Gleeson CJ, Gummow and Kirby JJ; at [87], per McHugh J.

(c) identification

102 It is an essential element of a claim in defamation that the plaintiff prove that the published statements were made "of and concerning" him or her: Steele v Mirror Newspapers Ltd (1974) 2 NSWLR 348 at 371 per Samuels JA. The test of whether words that do not specifically name the plaintiff refer to him or her is whether the words are "such as reasonably in the circumstances would lead persons acquainted with the plaintiff to believe that he was the person referred to": Steele at 371, applying David Syme & Co v Canavan [1918] HCA 50; (1918) 25 CLR 234 at 238 per Isaacs J: see also Universal Communication Network Inc t/as New Tang Dynasty v Chinese Media Group (Aust) Pty Ltd [2008] NSWCA 1; (2008) Aust Torts Rep ¶81-932 at [43] per McColl JA (Mason P and Young CJ in Eq agreeing).

103 Where identification is in issue, it is common but not essential that witnesses are called who say that they made the requisite link between the defamatory material and the plaintiff: Vlasic v Federal Capital Press of Aust Pty Ltd (1976) 9 ACTR 1 at 10 per Blackburn J; Channel Seven Sydney Pty Ltd v Parras [2002] NSWCA 202; [2002] Aust Torts Rep ¶81-675 at [52] per Mason P (Handley JA and Ipp AJA agreeing).

104 Dr Malouf's case at trial was that recipients of the letter to patients, who also received a letter from the hospital stating that an appointment had been made for surgery in the March lists by Dr Malouf, would have understood the reference to "another surgeon" to be to him. There was evidence at trial that about twenty people fell into that class. (The letter from the hospital was dated "16 May 2006", but it was accepted in argument that that must have been a typographical mistake and should be read as "16 March 2006", bearing in mind it was advising of surgery to be performed in March.) The appellant did not take issue with identification having been established on the basis of a letter which post-dated the letter to patients, a concession presumably based on the near contemporaneity of the two letters: cf Grappelli v Derek Block (Holdings) Ltd [1981] 2 All ER 272; [1981] 1 WLR 822 at 825, 831; Hayward v Thompson [1982] QB 47 at 60, 67 - 68.

105 What took place at trial on the identification issue was as follows. During the course of evidence there was discussion concerning the fact that the letter to patients did not expressly refer to Dr Malouf: Tcpt, 09/08/11, p 1514(20). In the course of that discussion, counsel for Dr Prince conceded that "given that ... certain patients understood that subsequent reference to Dr Malouf that then an imputation or the identification of Dr Malouf arises and is relevant to the issue of whether the imputation arises in context of imputation (a) in the fourth letter": Tcpt, 09/08/11, p 1514(38). He added that the letter did not go so far as to say that Dr Malouf did not provide adequate post-operative care for all his patients (a submission which appeared to go only to the meaning of the letter). Other than as noted above, counsel for Dr Prince did not seek to be further heard on the imputations.

106 The primary judge noted that identification was conceded in relation to the letter to patients: Tcpt, 09/08/11, p 1516(5). There was debate between Dr Malouf and the primary judge as to whether, in the Wickham letter, the other imputations were just an attack on the hospital system, following which, his Honour confirmed that the concession by Dr Prince was that annexure D1 (the letter to patients) related to Dr Malouf: Tcpt, 09/08/11, p 1516(33). Subsequently, in the course of final submissions, Dr Prince again conceded that he did not take issue with the fact that Dr Malouf was the person referred to in the letter to patients: Tcpt, 15/11/10, p 10 (28-36), Tcpt, 15/11/10, p 21(49); Tcpt, p 22(1-4).

107 On appeal, Dr Prince accepted he had made the concessions referred to, but disputed their ambit. He submitted that there was no concession that the reference to "significant concerns" regarding post-operative surgery earlier in the year would have conveyed to the recipients that Dr Malouf had been the surgeon who conducted that surgery. He argued that the only concession made at trial was that the reference to "another surgeon", in the sentence "[t]he hospital has arranged for another surgeon to carry out extra operations", would be understood to be a reference to Dr Malouf by those recipients of the letter who also received a letter from the hospital stating that an appointment had been made for surgery in the March lists by Dr Malouf.

108 The trial judge did not refer to the identification concession in his reasons. However he referred (at [41]) to Dr Prince's submission that that part of the letter to patients dealing with post-operative care was a complaint about the hospital and not a criticism of Dr Malouf. His conclusion that imputation (a) was conveyed was arguably either a compendious finding as to identification and meaning, or one which failed to address identification - no doubt because of the exchanges set out above.

109 Dr Malouf correctly submitted that identification was conceded at trial. That that is so, is apparent from the exchanges referred to above, the primary judge's noting of the concession as unlimited in scope and the fact that his Honour did not expressly deal with identification in his reasons. It was not open on appeal for Dr Prince to resile from that concession. Identification was not in issue at the trial.

110 Even if it were now open to Dr Prince to raise the question of identification, an ordinary reasonable reader of the letter would understand the references to a prospective offer of surgery by "another doctor", to be carried out by "another surgeon" and to "patients who had surgery on this basis earlier in the year" as referring to the one doctor who was to perform the proposed surgery and who had carried out such surgery previously. Contrary to Dr Prince's submission, that conclusion flowed from the words of the letter.

111 Finally, when it is accepted, effectively, that recipients of the letter to patients also knew that Dr Malouf was the surgeon the hospital was proposing should carry out their surgery in March, identification was readily established.

(d) evidence relevant to whether imputations conveyed

112 Dr Prince complained that the trial judge impermissibly used evidence of the reaction by some patients following receipt of the letter as "evidence of the defamatory imputations being conveyed as alleged": at [109]. Although, as Dr Malouf correctly noted, the reference to patients' reactions was made in the context of considering qualified privilege, and not defamatory meaning, read literally, he submitted, the judge had treated the reaction of some of the patients to the information contained in the letters as evidence that the defamatory imputations were being conveyed.

113 If that is how his Honour's reasons should be understood, that approach was incorrect. Evidence from those to whom the words were published as to what they actually understood them to mean is irrelevant in a case where the imputations are said to be conveyed by the natural and ordinary meaning of the publication: Hough v London Express Newspaper Ltd [1940] 2 KB 507 at 515, per Goddard LJ; Slim v Daily Telegraph Ltd [1968] 2 QB 157 at 172-173 per Diplock LJ; Reader's Digest Services Pty Ltd v Lamb [1982] HCA 4; (1982) 150 CLR 500 at 505-506, per Brennan J.

114 However, it is not clear from the statement at [109] whether his Honour was addressing any particular imputation when he made the comment that the reactions evidenced the defamatory imputations being conveyed as alleged, as opposed to referring to them generally. It seems improbable that he took the reaction of recipients of the letter to patients into account in determining that the imputations were conveyed. His Honour had correctly directed himself (at [22] - [26]) as to the legal principles to be applied in determining the issue. There was no suggestion in the following passages of his reasons in which he considered the imputations that he took actual reactions into account, rather than applying the correctly stated principles. The reference to the reaction by some patients following receipt of the letter was made much later in his Honour's reasons when he was dealing with the defence of qualified privilege in relation to the letter to patients. Bearing in mind that the reasons were delivered orally and dealt sequentially with the issues, the later reference did not taint his Honour's earlier conclusion that the imputations were conveyed by the letter.

115 In any event, as appears below, this Court is satisfied that imputations (a) and (b) were conveyed by the letter to patients. The discussion proceeds on the basis that Dr Malouf established that the letter was published of and concerning him.

(e) was imputation (a) conveyed?

116 Turning to the imputations, Dr Prince submitted that the trial judge erred in finding that the letter to patients conveyed imputation (a) (that the plaintiff does not provide adequate post-operative care for his patients). He argued that the letter to patients conveyed an expression of significant concern regarding the previous post-operative care of some patients, but did not convey that this was attributable to any inadequacy on the part of Dr Malouf, as opposed to the hospital; nor did it convey that the post-operative care provided by Dr Malouf to all his patients was inadequate.

117 The ordinary reasonable reader of the letter would read it as conveying a warning to patients about the proposal they were about to receive that Dr Malouf carry out the surgery Dr Prince had recommended. The reference to the hospital having had surgery conducted on the same basis earlier that year would reasonably have been understood to refer to Dr Malouf having conducted that surgery, while Dr Prince's expressions of concern regarding the post-operative care of some patients would reasonably have been understood to refer to Dr Malouf's ministration to his patients' post-operative needs. It may also have been understood to refer to the hospital's provision of post-operative care because the author was indiscriminate as to whose post-operative care concerned him. However, the fact that the sting of the letter may have hit two targets did not mean the reasonable reader would not conclude Dr Malouf was one of them: Jones v Skelton (at 650). Further, the reference to "significant concerns" clearly conveyed a warning of inadequate treatment: indeed that was the sting of the whole letter. The ordinary reasonable reader could be expected to read between the lines and conclude that Dr Prince would only have written the letter if the post-operative treatment was likely to be a cause for concern.

118 Dr Prince's submission that imputation (a) fails because it is expressed to apply to all, as opposed to some, of Dr Malouf's patients should also be rejected. It involves an impermissible attempt to determine the meaning of the letter; the court's function is to decide whether or not the ordinary reasonable reader would understand the letter in the sense complained of: Jones v Skelton at 651.

119 The ordinary reasonable reader would so understand the letter to patients. The imputation was not expressed as applying to all Dr Malouf's patients, but it was expressed to apply to his patients. That class was sufficiently identified in the letter as those on whom he had operated earlier that year and those upon whom he was about to operate. All the former class were his patients, even if they were not all of his patients. The distinction is subtle, but significant. The primary judge did not err in finding that imputation (a) was conveyed by the letter to patients.

(f) was imputation (b) conveyed?

120 Dr Prince argued that the imputation found to have been conveyed was, in effect, that at all times and for all patients, or at least as a matter of course and for many patients, Dr Malouf presented a danger. He submitted that the cautious tone of the letter did not convey an imputation in such "extreme terms". Dr Prince contended that the error made by the trial judge, in relying on evidence of patients' reactions to the letter, undermined his Honour's conclusion in relation to imputation (b). The latter complaint has been dealt with above.

121 The judge's conclusion that the letter to patients conveyed the imputation that Dr Malouf was a "danger to patients" in the sense in which his Honour used that phrase (see [61] above) was correct. The letter to patients was written by a specialist, and, indeed, by the specialist who had recommended ENT surgery to the recipients in the first place. He was advising them to elect between surgery by him and surgery by Dr Malouf, about the adequacy of whose post-operative care he said he had significant concerns.

122 The ordinary reasonable reader of the letter would conclude that Dr Prince would not have sent the letter had he not had a serious reason to do so and, therefore, that there must be a serious risk of harm (that is to say a danger) to those who participated in the surgery the hospital was about to offer. For the reasons given in relation to imputation (a), it is not open to Dr Prince to interpret the imputation. Again, the imputation does not refer to all patients, but merely to "patients". Dr Prince's challenge is misconceived. The primary judge did not err in finding that imputation (b) was conveyed by the letter to patients.

(g) was imputation (c) conveyed?

123 Dr Malouf challenged the finding that this imputation (that he cannot be trusted to provide proper treatment to his patients) was not conveyed by the letter to patients. He submitted that the judge gave "no reasons" for so concluding and erred in not dealing with the imputation as pleaded. As to the first complaint, Dr Prince accepted that his Honour did not set out the basis for his rejection of imputation (c), but nevertheless maintained that it was properly rejected.

124 As to the second complaint, the trial judge correctly stated the pleaded imputation (c) at [44]. However, at [46] his Honour referred to this imputation as being "[t]hat Dr Malouf does not provide proper treatment and cannot be trusted to do so", immediately before going on to state, without reasons, his opinion that the imputation was not made out. Dr Malouf submitted that the unstated reason for rejecting imputation (c) was that the judge considered whether the letter conveyed an imputation as to the actual treatment given by Dr Malouf, which was not what was pleaded.

125 Whether or not that is the explanation for the finding, the conclusion that imputation (c) was not conveyed cannot stand in light of the earlier findings in relation to imputations (a) and (b). A surgeon who does not provide adequate post-operative care for his or her patients, and is a danger to them in the sense of exposing them to the risk of harm of a negative outcome, is necessarily a surgeon who cannot be trusted to give proper treatment to his or her patients. In a sense, imputation (c) is of the nature of a rhetorical imputation which does not differ in substance from imputations (a) and (b) (cf Uniform Civil Procedure Rules 2005 (NSW), r 14.30), use of which should be eschewed: see Morris v Newcastle Newspapers Ltd (1985) 1 NSWLR 260 at 272 per Hunt J. However, Dr Prince did not take this point on appeal and it need not be pursued.

126 The ordinary reasonable reader would read the letter to patients as conveying imputation (c). Indeed, that conclusion necessarily follows, once it is accepted that the letter conveyed imputations (a) and (b). His Honour erred in concluding otherwise: this challenge by Dr Malouf is therefore made out.

127 Accordingly, appeal grounds 1-2 should be rejected and cross-appeal ground 1 upheld.

(7) Common law qualified privilege

(a) general principles

128 The defence of common law qualified privilege has two main elements: first, the defamatory publication must be made on an occasion of qualified privilege and, secondly, the privilege will be overcome (that is to say the defence will not be made good) if the publication were actuated by "malice".

129 To establish the defence, it is necessary, as Jordan CJ explained in Andreyevich v Kosovich (1947) 47 SR(NSW) 357 at 363, that a publisher should demonstrate by evidence "that both the givers and the receivers of the defamatory information had a special and reciprocal interest in its subject matter, of such a kind that it was desirable as a matter of public policy, in the general interests of the whole community of New South Wales, that it should be made with impunity, notwithstanding that it was defamatory of a third party". (This passage was cited with approval in Bashford v Information Australia (Newsletters) Pty Ltd [2004] HCA 5; 218 CLR 366 at [140] (Gummow J) and, albeit in dissent, by McHugh J at [55].) It is also necessary that the defamatory imputations be "sufficiently connected to the privileged occasion" (Bashford at [27] or "germane and reasonably appropriate to the occasion" (Adam v Ward [1917] AC 309 at 321). As the latter case demonstrates, however, it is not essential that the imputations be central to the matter being communicated: see Cush v Dillon; Boland v Dillon [2011] HCA 30; (2011) 243 CLR 298 at [20]-[21].

130 The privilege is described as qualified privilege, because it does not apply if the plaintiff establishes that the defendant used the occasion for some purpose or motive foreign to the duty or interest that protects the making of the statement: Roberts v Bass [2002] HCA 57; (2002) 212 CLR 1 at [62], per Gaudron, McHugh and Gummow JJ. Proof of a foreign purpose or motive operative in (or actuating) the publication of the matter complained of is evidence of malice which defeats the defence: Roberts v Bass at [75] ff.

131 The fact that a defamatory imputation is not "sufficiently connected to the privileged occasion" is not, of itself, evidence of malice. As French CJ, Crennan and Kiefel JJ explained in Cush v Dillon (at [25] - [26]), the "inquiry which precedes that of actual malice is undertaken in order to determine the boundaries of the privilege, by reference to the duty or interest which gave rise to it". That inquiry includes determining whether a defamatory imputation is "sufficiently connected to the privileged occasion". It "is not to be confused with an inquiry as to whether a person was actuated by malice in using exaggerated words": Cush v Dillon at [25].

132 It is important to emphasise, in the light of Dr Malouf's submissions referred to below, that lack of belief in the truth of, or inaccuracy in, the matter complained of does not mean the publication did not occur on an occasion of qualified privilege. The absence of such belief or inaccuracies may be relevant to the question whether what was published was "sufficiently connected to the privileged occasion". The overriding question is whether the publication was "fairly warranted by any reasonable occasion or exigency, and honestly made": Toogood v Spyring (1834) 1 C M & R 181 at 193; 149 ER 1044 at 1050, per Parke B; Cush v Dillon at [18]; see also at [27] per French CJ, Crennan and Kiefel JJ; at [52] per Gummow, Hayne and Bell JJ referring to Bashford at [27] - [30], [126] and [199].

133 In Bashford at [10], the plurality (Gleeson CJ, Hayne and Heydon JJ) explained that the principles to be applied in determining whether the publication of matter about which complaint is made occurred on an occasion of qualified privilege are stated at a very high level of abstraction and generality and that (footnotes omitted):

" 'The difficulty lies in applying the law to the circumstances of the particular case under consideration'. Concepts which are expressed as 'public or private duty, whether legal or moral' and 'the common convenience and welfare of society' are evidently difficult of application. When it is recognised, as it must be, that 'the circumstances that constitute a privileged occasion can themselves never be catalogued and rendered exact', it is clear that in order to apply the principles, a court must 'make a close scrutiny of the circumstances of the case, of the situation of the parties, of the relations of all concerned and of the events leading up to and surrounding the publication'." (Emphasis added.)

134 As McHugh J said in Bashford at [54], in dissent, but repeating established principles - see Guise v Kouvelis [1947] HCA 13; (1947) 74 CLR 102 at 116 per Dixon J:

"In determining whether the occasion was privileged, the court examines all the circumstances of the case. They include the nature of the defamatory communication, the status or position of the publisher, the number of recipients and the nature of any interest they had in receiving it, and the time, place and manner of, and reason for, the publication. After considering these matters, the court makes a judgment as to whether the publisher had a duty or interest that justified making the publication and whether the recipients, or some of them, had a duty to receive or interest in receiving it. Evaluating these questions of duty and interest usually involves questions of public policy."

135 The first inquiry is thus whether the publication was an occasion of qualified privilege, the second whether the defamatory statement was relevant to it. As Campbell JA explained in Bennette v Cohen [2009] NSWCA 60; [2009] Aust Torts Rep ¶82-002:

"[207] ... It seems uncontroversial that the notion of the public interest operates as a means of limiting the sorts of reciprocal duty or interest that can give rise to qualified privilege. However one does not enquire whether the particular statement that was defamatory was made in circumstances such that the reciprocal interest of the maker and recipient of the statement was such that the making of that statement itself advanced the welfare of society and the public interest. Rather, the requirement of public interest, for the existence of qualified privilege operates at a higher level of generality, that the duty or interest of both maker and recipient is such that it is in the public interest that a person should be free to make that type of statement in the type of circumstances where the particular statement in question was made.

...

[209] The caselaw ...bears out that it is by reference to the type of communication involved in the defamatory utterance, rather than the particular defamatory utterance itself, that the public interest is to be gauged. In Toogood v Spyring Parke B said (at 193; 1050):

'... such communications are protected for the common convenience and welfare of society ...' " (Emphasis added.)

136 These views were adopted by Beazley JA in Marshall v Megna [2013] NSWCA 30 at [92]-[93], a passage in which Allsop P and Hoeben JA concurred, subject to the separate expression by the President at [6]. Allsop P there stated, after setting out the passage from Andreyevich cited above at [129]:

"The word 'interest' is used in the broad popular sense, referring not to a matter of gossip or curiosity, but to a matter of substance beyond mere news value. The interest is to be definite, not vague or insubstantial, though it may be direct or indirect. It must be 'of so tangible a nature that for the common convenience and welfare of society it is expedient to protect it': Howe v Lees [1910] HCA 67; 11 CLR 361 at 377 and 398; Andreyevich at 363-364."

(b) the issues

137 Dr Prince contended that his Honour erred in his findings in relation to the letter to patients, in:

(i) rejecting the defence of common law qualified privilege (appeal ground 3);

(ii) finding that Dr Prince did not have the requisite duty to publish the letter to patients (appeal ground 4);

(iii) finding that the recipients of the letter to patients had no interest in receiving that communication (appeal ground 5); and

(iv) finding, in a redacted sentence, that at the time of publishing the letter to patients its recipients were no longer the patients of Dr Prince and so had no interest in receiving the communication (appeal ground 6).

138 Dr Malouf, on the other hand, maintained that his Honour did not err with respect to the letter to patients, but did err in finding that each of the Collie, Wickham and Terrey letters was published on an occasion of qualified privilege (cross-appeal grounds 2-4). In respect of each of the four publications, therefore, the establishment or otherwise of the defence of qualified privilege at common law, preserved by s 24 of the Defamation Act, was in issue.

139 As will be elucidated further below, with respect to the first three letters, which were primarily addressed to those responsible for the administration of the hospital, the occasion of qualified privilege, that is to say, the reciprocity of, in this case, interests (Adam v Ward [at 334) was tolerably clear. Dr Malouf's principal place of practice was some distance from the hospital. Bearing that fact in mind, a bona fide expression of views as to whether such a surgeon, operating by way of locum, was in a position or likely to be able to, or in fact would, offer adequate post-operative care was clearly a matter of interest (in the relevant sense) both to the regular surgeon who had a relationship with many (if not all) of the patients who were to be operated on by the locum, and to the administrators of the hospital. (The principal objections of the respondent to the finding of qualified privilege with respect to these letters will be discussed below, with particular reference to the provision of copies to certain third parties.) The real contest in relation to qualified privilege related to the standard form letter sent to Dr Prince's patients.

140 The subject matter of the letter to the patients was the arrangements being made by the hospital for them possibly being operated upon by a different surgeon. It is clearly for the welfare of society to recognise that the surgeon who had first seen patients, diagnosed their condition and prescribed surgery as the appropriate treatment, has a relevant duty or interest to communicate his views about the alternative treatment proposed, and that the patients would have a reciprocal interest in being informed of his views.

141 On the basis that an occasion for such a communication has arisen, there will be an entirely separate question (directed to malice) as to whether Dr Prince used the occasion for some purpose or motive foreign to the interest that protects the making of the statement. Dr Malouf's case on malice differed as between the letters to the hospital and the letter to the patients. With respect to the letters to officers of the hospital, Dr Malouf contended that Dr Prince's dominant purpose was to protect his position with respect to ongoing contractual negotiations with the hospital. Insofar as the letter to the patients was concerned, Dr Malouf's case was that Dr Prince was seeking to promote his own financial interests by ensuring that the patients stayed on his lists and did not accept offers of treatment by a locum. That financial motive, however, was of a different kind to the motive ascribed by Dr Malouf to the letters addressed to the hospital officers. Again, it will be necessary to address in more detail the submissions for Dr Malouf in support of the view that qualified privilege was destroyed in respect of each publication by malice.

(c) the redacted sentence (ground 6)

142 Dr Prince's case on whether the letter to patients was published on an occasion of qualified privilege depended in part on the significance of a sentence apparently excised from his Honour's oral reasons when they were revised after they were delivered. It was common ground on appeal that this had occurred (Tcpt 19/02/13, p 1) but the parties differed as to its significance. Dr Prince contended that the redacted sentence was wrong both in fact and in law, was inappropriately redacted and undermined his Honour's reasoning as to the letter to patients. Dr Malouf contended the finding was consistent with the evidence at trial.

143 The first question is whether the redacted sentence should be treated as part of the primary judge's reasons for decision. Placed in context, the redacted sentence (italicised below) read as follows:

"One only has to have regard to the contents of the letter, the observations contained within Mr Crawford's letter of 18 April, the contact between patients and Dr Prince's room and to the witnesses called by the plaintiff, that there was a dramatic unsettling of a number of persons who received this correspondence. Whilst that has no relevance to the question of reciprocity of interest, it gives a general overview of the response.

In my view once these patients were removed from Dr Prince's waiting list, they no longer were his patients.

Any communication to patients at large, such as this letter, should have been written without the imputations complained of, if at all, and the fact that some reacted in the manner as described is evidence of the defamatory imputations being conveyed as alleged.

Any duty to receive by such patients does not, in my view, go to the concerns of Dr Prince regarding the post-operative care of earlier patients."

144 In Todorovic v Moussa [2001] NSWCA 419; (2001) 53 NSWLR 463 at [46], Beazley JA (Powell JA and Sperling J agreeing) explained that the test for determining whether an alteration to a judgment in a civil proceeding was permissible, was whether the change was one of substance. The question is whether the revision alters the substance of the reasons that were given orally or the orders which they sustain: Bar-Mordecai v Rotman [2000] NSWCA 123 at [193].

145 In Spencer v Bamber [2012] NSWCA 274 at [8]-[9], [13] (Basten JA); at [137]-[154] (Campbell JA) this Court considered circumstances in which there had been an amendment to the judgment after delivery of ex tempore reasons and when such a revision was impermissible and should be corrected on appeal. The Court confirmed that the test was an objective one, requiring consideration as to whether the revision altered the substance of what had been stated. At [141], Campbell JA (with whose statements of principle Basten JA, with one qualification, and Macfarlan JA agreed), stated that when reasons are given at the time orders are pronounced, the principles of open justice require that the reasons should be taken to be in substance those that the judge expresses.

146 Dr Prince submitted that the redaction of the sentence in this case did impermissibly alter the substance of his Honour's reasons, since the impact of the redacted sentence was that his Honour then approached the question of duty and interest in relation to the letter to patients on the wrong assumption that Dr Prince and the recipients of the letter were no longer in a doctor/patient relationship once they had been removed from the waiting list.

147 It was not disputed that the sentence was included in the reasons when delivered orally. The conclusion that the letter was written "to patients at large" seems logically to follow from the conclusion that the letter was sent to persons who were no longer Dr Prince's patients. Therefore, the redaction did alter the substance of the reasons by omitting a step in the reasoning. This Court should proceed on the basis that the redacted sentence formed part of the reasons for the trial judge's conclusion that the letter to patients was not published on an occasion of common law qualified privilege.

(d) end of the patient - doctor relationship

148 Dr Prince submitted that the view expressed in the redacted sentence, that the recipients of that letter were no longer his patients, was incorrect. Reliance for this submission was placed on the statement of Priestley JA in Tai v Hatzistavrou [1999] NSWCA 306 at [76] that:

"the relationship between doctor and patient, once established, cannot be ended at the mere will of the doctor but lasts until treatment is no longer required or the relationship is dissolved by consent or reasonable notice is given by the doctor to the patient so the patient may have an opportunity to engage the services of another doctor."

149 Dr Malouf submitted that his Honour's reasoning proceeded, properly, on the basis that the communication was akin to a communication to patients at large. He argued that this followed from the fact that Dr Prince simply speculated that the patients to whom he sent the letter in question would be offered the choice of surgery by Dr Malouf and therefore the communication was inconsistent with the existence of any "special and reciprocal interest" between Dr Prince and the patients in the subject matter of the communication (referring to the passage from Andreyevich v Kosovich at 363, set out above). Hence, he submitted, his Honour correctly concluded that Dr Prince had no duty to communicate to potential future patients and they had no interest in receiving communications concerning Dr Prince's concerns about the post-operative care of patients from the January lists.

150 Dr Malouf supported the factual conclusion as consistent with Dr Prince's evidence that he told Dr Collie on 24 November 2005 that he did not "own the patients"; Dr Malouf's evidence that patients on the public waiting list could not be said to be anyone's patients in particular; and the fact that the then NCAHS consent form for surgery expressly recorded that "another doctor may perform the procedure/treatment". Dr Malouf also pointed to the evidence of Dr Prince in cross-examination, when challenged on his assertion that he could not have accessed the patient files before publication of the matters complained of in order to check his facts, to the effect that the hospital's medical records system would have shown those patients as being patients of Dr Malouf, not of him.

151 However, the difficulty with that submission is that the patients to whom Dr Prince was referring in cross-examination were the January patients, who had by that time signed consents for surgery to be performed by Dr Malouf. Consistent with Dr Prince's case, any doctor/patient relationship with the January patients had by then come to an end. The same logical difficulty applies to the weight sought to be placed by Dr Malouf on Dr Prince's refusal to see the January patients without a new referral, since on Dr Prince's case they were no longer "his" patients.

152 Further, Dr Malouf's case was that the letter to patients identified him to those recipients who were informed by the hospital that an appointment had been made for them in the March lists with Dr Malouf. It was thus contended that the letter could have been defamatory of Dr Malouf only when published to patients who were offered surgery in the March lists and that these were the very patients who had an interest in learning of Dr Prince's concerns as to post-operative care.

153 In any event, whatever Dr Prince considered might be the case as to the subsistence or otherwise of a doctor/ patient relationship, this would not determine the correctness or otherwise, as a matter of law, of the proposition that the transfer by the hospital of patient names from Dr Prince's waiting list to Dr Malouf's surgical list would of itself (i.e., without the signing of patient consents) have been sufficient to bring any subsisting doctor/patient relationship involving Dr Prince to an end.

154 Because the patients to be operated on in the March (or later) lists had not signed the hospital consent forms prior to receiving Dr Prince's letter, it was not established that at the time the letter to patients was sent, the recipients were no longer in a doctor/client relationship with Dr Prince. That relationship was a matter to be taken into account in assessing whether the circumstances in which the letter to patients was written were such as to give rise to an occasion of qualified privilege.

(e) occasion of qualified privilege - letter to patients

155 Dr Prince asserted (appeal ground 4) he had both a legal and a moral duty to send the letter to patients on the ENT waiting list to inform them of his concerns about potential risks to their health and welfare arising from the follow-up care proposed to be provided by Dr Malouf and the hospital.

156 The legal duty was articulated as being a concurrent duty in tort and contract of the kind recognised in Rogers v Whittaker [1992] HCA 58; (1992) 175 CLR 479 and Breen v Williams [1996] HCA 57; (1996) 186 CLR 71. It was contended that this legal duty persisted until the discharge of the surgeon/patient relationship, which did not occur, relevantly, until a patient had consented to treatment by another surgeon.

157 The moral duty was articulated as a duty on the part of a doctor to inform those persons who have sought and obtained that doctor's professional advice, and who have relied on that advice in consenting to medical treatment, of potential risks to their health arising from the proposed treatment of which the doctor is aware. Persons who cause another to be in a position of risk of physical harm owe at least a moral duty to warn of that risk.

158 Dr Malouf submitted that the appellant sought to mount a new case on "duty" on the appeal, impermissibly because had the "new" legal duty been raised at trial, it would have been open to Dr Malouf to explore the precise nature of the relationship between a person on a public hospital waiting list and the doctor who had placed him or her on that list; between that patient and the area health service or the hospital, and the effect of the consent form signed by patients when listed for surgery permitting the hospital to assign a surgeon in its discretion. This case not having been raised at trial it was submitted that it could not be raised now: Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1.

159 In his pleading, Dr Prince particularised the alleged duty to publish the offending letters by reference to Standard 2 of the then NSW Medical Board Code of Professional Conduct. Particular (ii) under the heading "Qualified Privilege" in the further amended defence filed on 19 November 2011 was as follows:

"(ii) The defendant published the matters complained of for the information of the recipients of each of those matters complained of and had a social and/or moral duty to publish those matters complained of to those recipients. Further the defendant had a legal or professional duty to publish those matters complained of to those recipients in accordance with the then NSW Medical Board Code of Professional Conduct, Standard 2 ..."

160 The professional and ethical obligations there set out included, among others, obligations of (ii) providing honest assessment of the performance of colleagues; (iii) maintaining trust with patients through the practitioner's interaction with patients; (x) ensuring other practitioners do not place patients at risk through their health, behaviour, conduct or performance; and (xi) reporting adverse events relating to the professional performance or conduct of colleagues.

161 Although Dr Prince himself seemed to rely on principle (ii) as supporting the duty to inform, on appeal his counsel also placed reliance on principles (x) and (xi) and emphasised that the pleading was that the duty to act was "in accordance with", but not limited to, the Code. He also referred to the New South Wales Health Code of Conduct in support of this submission.

162 Although the particularisation in the pleading was not simply a "social and/or moral" duty but also a "legal or professional" duty, the legal or professional duty articulated on appeal went beyond that particularised in the pleading and any such duty should have been clearly pleaded. However, nothing turns on this. It is not necessary to deal with the case on any basis outside the pleaded duty or interest. For the reasons that follow, the occasion for publication of the letter to the patients was made good.

163 Dr Prince submitted that his Honour posed the wrong legal test in determining whether there was a duty on his part to publish the letter to patients, pointing to the trial judge's conclusion (at [109]) that Dr Prince had no duty to inform such patients of "the matters contained within the imputation" (our emphasis). Dr Prince submitted that the specific imputations conveyed are not relevant to the enquiry as to whether there was a duty to publish the matter concerned. In that he was correct.

164 On the basis that the legal duty case at trial was one limited to a duty arising under the relevant Code of Professional Conduct, Dr Malouf submitted that there can have been no duty to publish the letter to patients. He submitted that the failure to make proper enquiries amounted to a breach of clause 9.2(b) of the Code and that the sending of the letter amounted to a failure to maintain trust with patients in breach of principle (iii) of Standard 2. Dr Malouf pointed to the acceptance by Dr Prince in cross-examination of his obligation under the Code to make enquiries before making allegations of this kind and that the publication of this letter damaged the trust that patients reposed in Dr Malouf. However, a failure to make inquiries does not preclude a finding that a publication was made on an occasion of qualified privilege.

165 As to the asserted moral duty, Dr Prince submitted that it would be expected by those of ordinary intelligence and moral principle (using the terminology in Mowlds v Ferguson [1940] HCA 38; (1940) 64 CLR 206 at 220) that he would inform the patients on the ENT waiting list, with whom he had a pre-existing relationship and to whom he had given advice in relation to the recommended surgery and explanation as to the post-operative care he would provide, of the changed state of affairs with respect to post-operative care in circumstances where he had a genuine concern that this gave rise to a risk of harm.

166 Dr Prince's submissions should be accepted. As a matter of public policy, it was in the general interests of the whole community, that qualified privilege should attach to the occasion of such a communication, given that the recipients of the letter were still Dr Prince's patients. The defamatory statements were sufficiently connected to the occasion of qualified privilege as to fall within the scope of the defence.

(f) occasion of qualified privilege - Collie, Wickham letters

167 Dr Malouf contended (cross-appeal grounds 2-4) that none of these letters was published on an occasion of qualified privilege. This conclusion was said to follow on the basis that: (i) Dr Prince had no concerns about Dr Malouf's skill or competence as a surgeon; (ii) Dr Prince spoke from a position of authority as an ENT surgeon of considerable experience; and (iii) Dr Prince did not make the proper enquiries to determine whether his concerns were well-founded. The first submission did not recognise a distinction between skills as a surgeon and provision of post-operative care. The second and third submissions required a factual basis.

168 Dr Malouf submitted that his Honour did not undertake the close scrutiny required to be undertaken of the circumstances for each publication, noting that each of the first three matters complained of was published to a number of recipients (citing Guise v Kouvelis). Detailed submissions were made by Dr Malouf as to the circumstances that he said the trial judge should have taken into account.

169 Broadly, Dr Malouf relied on: (i) the directive issued in mid 2005 by the NSW Government to reduce long wait waiting lists in public hospitals; (ii) the contractual dispute between Dr Prince and the hospital as to the rate at which he should be paid; (iii) the performance by Dr Malouf of additional operating lists in January 2006; and (iv) what occurred in March 2006 in relation to the proposal that there be additional operating lists in that month and in April 2006 and in relation to the contractual dispute between Dr Prince and the hospital. Dr Prince took issue with these matters. To some extent, the differences between the parties were as to the perception to be placed on particular factors. Broadly, Dr Prince did not cavil with the fact that the publications occurred against the backdrop of the attempt by the hospital to clear the ENT waiting lists and did not contend that he had no contractual dispute with the hospital.

170 The trial judge did have regard to such contextual matters. He simply did not accept that Dr Prince's predominant motive was as Dr Malouf contended, to pursue the contractual dispute, rather than communicate genuine concerns about patient welfare. In that regard he had the benefit of seeing and hearing both of the witnesses. Dr Malouf did not identify any appellable error in his Honour's finding in this respect.

171 Dr Malouf submitted that any duty on the part of Dr Prince cannot have extended to passing on concerns as to untested assumptions or second-hand information. Before any moral or other duty could have arisen, he said Dr Prince was obliged to have made appropriate enquiries as to whether there was a proper basis for those concerns, referring to Blackshaw v Lord [1984] QB 1.

172 Dr Malouf further submitted that hospital management had no interest in receiving uninformed allegations from a senior surgeon about a colleague when that surgeon had had ample opportunity to verify the facts and had made no attempt to do so; and that none of the recipients of the letters had an interest in receiving communications of speculative assertions based on untested and unlikely assumptions. He referred to what was said in Aktas v Westpac Banking Corporation Ltd (No 2) [2010] HCA 47; (2010) 241 CLR 570 by French CJ, Gummow and Hayne JJ at [40], to the effect that, when faced with a defence based on qualified privilege, one needs to identify whether, as a matter of public policy, it is in the general interests of the whole community that qualified privilege should attach to the occasion of such a communication. However, that remark was made in the context of their Honours' observation that "to focus upon notions of 'mistake'" in the making of the defamatory publication distracts attention from the need to identify whether the public policy referred to in the preceding sentence has been established.

173 Dr Malouf pointed to the trial judge's findings to the effect that Dr Prince had misled himself or had relied on his own flawed thought processes to reach an erroneous conclusion (at [116]), albeit that there his Honour was referring to errors as to the pre-operative care of the January patients. While reliance was placed on Dr Prince's agreement in cross-examination that his concerns were no more than speculation based on untested and unlikely assumptions (Tcpt, 02/05/11, p 931), this was a reference to the allegation that Dr Malouf had performed major ear surgery on patients without a pre-operative audiogram. This was not an admission relating to the concerns Dr Prince held as to post-operative care.

174 Nevertheless, his Honour's findings as to lack of enquiry did, at [122] appear to extend to post-operative concerns. There, when considering the question of malice, his Honour said that:

"... we are dealing here with a professional person having concerns about the standards of pre- and post-operative care provided by another ENT surgeon when there was a total failure by the defendant to make the inquiry as to the truth or otherwise of the defamatory material before he published."

175 Emphasis was placed on the findings by the trial judge that: (i) Dr Malouf carried out surgery on waiting list patients in January 2006 without complaint from Dr Prince: at [101(n)]; (ii) in February 2006, Dr Prince refused to operate on waiting list patients because of the contract dispute ([101(o)]); (iii) on 2 March 2006, Dr Prince found out that Dr Malouf had been engaged to perform that surgery instead: at [101(p)]; (iv) on 3 March 2006, Dr Prince rang Dr Malouf and told him it was not helpful for Dr Malouf to come to Grafton because of Dr Prince's contract dispute: at [101(q)]; (v) Dr Prince was angry and had failed or refused to make any inquiry at all at the time he wrote the correspondence: at [101(q)].

176 Dr Malouf further submitted that his Honour's finding of moral duty to publish was made without reference to the following matters: (i) the "opportunistic" way in which Dr Prince restarted the contractual pay dispute; (ii) the fact that it was Dr Prince's refusal to operate which led to the hospital engaging Dr Malouf to perform further waiting list surgery in March 2006; (iii) Dr Prince's lack of complaint or action about any matter concerning Dr Malouf until after 2 March 2006, despite the matters set out by his Honour at [102(c)-(e)]; (iv) the significance of the contractual pay dispute in explaining Dr Prince's conduct and the almost complete absence of information in Dr Prince's possession at the time of publication to support the allegations he made about pre-operative and post-operative care. It was submitted that these circumstances, taken with his lack of enquiry, meant that Dr Prince had no duty to publish his letters and the recipients had no interest in receiving them. This is said to be especially the case in circumstances where their publication was in breach of the Code of Professional Conduct.

177 Dr Prince contended that each of Dr Collie and Mr Wickham was in a position to address the concerns he had raised and that his actions were consistent with the NSW Medical Board Code of Professional Conduct in reporting conduct that he believed involved departures from accepted standards of practice and a clear potential for harm to patients.

178 Dr Prince drew an analogy between this case and cases where a complaint is made by one person to his superior about misconduct by another person for whom the superior has responsibility (referring to Sutton v Plumridge (1867) 16 LT 741; Watt v Longsdon [1930] 1 KB 130; Gibbons v Duffell [1932] HCA 26; (1932) 47 CLR 520 at 524-525) and to cases concerning complaints about the performance of duties by persons which may affect the public (referring to Taylor v Warren (1868) 2 SALR 43; Gipps v McElhone (1881) 2 LR (NSW) 18; Baird v Wallace-James (1916) 85 LJPC 193; Gray v Chilman [1935] SASR 260; and to Milmo and Rogers, Gatley on Libel and Slander (11th ed, 2008) at [14.58], [14.32]).

179 It was further submitted by Dr Malouf that Dr Prince, having refused to be involved in additional waiting list reduction surgery until his contractual dispute had been addressed, could not have had a moral duty then to publish the Collie, Wickham and Terrey letters without first communicating his concerns to Dr Malouf or making appropriate enquiries.

180 That poses the wrong question. If he genuinely believed that there were risks to patients from inadequate post-operative care, the fact that he may not himself have been prepared to undertake the lists is irrelevant. In any event Dr Prince disputed the suggestion that he refused to operate; rather, he said, he refused to undertake additional lists for a time.

181 The trial judge did not err in finding there was a corresponding duty/interest to publish/receive the information as between Dr Prince and each of Dr Collie and Mr Wickham. As a matter of public policy, it is in the general interests of the community that qualified privilege should attach to a communication by the surgeon operating at a hospital of his concerns in relation to the pre- or post-operative care of patients he had advised to undergo surgery at the hospital. The positions held by each of Dr Collie and Mr Wickham at the hospital gave them both a duty and an interest to receive the communications; Dr Collie, as Director of the hospital, being responsible for arranging the contracts between the hospital and the surgeons and being the person who had liaised with Dr Prince about the locum arrangements for surgery in early-mid 2006; Mr Wickham, as Executive Officer of the NCAHS, being involved in organising those surgery lists.

(g) occasion of qualified privilege - publications to third parties

182 The above does not address the position of all the recipients of the Collie and Wickham letters, namely the TMF, UMP and the AMA. His Honour found (at [105]) that those recipients had an interest in receiving the Collie and Wickham letters because of "the potentiality of [a] claim".

183 Dr Malouf submitted that there was no evidence of any claim against Dr Prince, nor of any circumstances of which Dr Prince was aware that might give rise to a claim against Dr Prince by a patient following surgery conducted by Dr Malouf, and that the nature of the potential claim or claims was not articulated. However, the Collie and Wickham letters were sent to TMF under cover of a letter notifying a "potential problem of liability" at the hospital based on operations by Dr Malouf as a locum, arising out of a failure to provide proper post-operative, care and seeking advice.

184 As to the TMF, Dr Malouf submitted that there was no evidence that a claims officer could have given Dr Prince legal advice about his position in the event that a claim was made against him, and no reason why such a person should have been given the Collie and Wickham letters. He submitted that Dr Prince should not now be permitted to raise evidence as to the TMF's role since, if raised at trial, it might have been met by evidence, though it is not clear what evidence was contemplated. Dr Malouf pointed to Dr Prince's concession that the claims officer had no relevant power to do anything and submitted that there was no basis for the conclusion that the claims officer had an interest in receiving those communications.

185 The evidence explained the position of the TMF, namely that it is the insurer for claims made against public hospitals in New South Wales and doctors working within those hospitals. Dr Prince gave evidence that he wrote to seek advice as to his position and because he believed he was obliged to notify the TMF of potential claims: Tcpt, 10/05/11, pp 1391(30)-1393(5). He further submitted that reporting to the TMF was consistent with the Code of Professional Conduct.

186 Whether Dr Prince had correctly formulated a concern as to his or the hospital's potential liability, or had chosen the right person from whom to seek the advice, is not of central concern; he had an interest in seeking advice as to his own position and the TMF had a corresponding interest in receiving information about potential claims for which it might have a liability as insurer, whether or not those claims might ultimately prove to be well-founded in law or in fact. There was a reciprocal duty and interest in relation to the publication to the TMF.

187 As to the UMP, Dr Malouf submitted that there was no evidence, and no reasoning, to support the conclusion (at [105]) that the UMP had an interest, based on the potentiality of claim, to receive the communications in question. He noted that clause 2.9 of the Code advises doctors to seek advice to help to decide whether, and how, to bring clinical issues to the attention of authorities and that, by the time Dr Prince wrote to the UMP, Dr Prince had already sent the Collie and Wickham letters to those addressees.

188 Dr Prince stated that the further amended statement of claim did not plead or particularise the publication to the UMP nor did it claim any relief upon such publication. Nevertheless, the case was run on the basis that that publication was in issue. Dr Prince further maintained that he had an interest in communicating with his insurer and that reporting to the UMP was consistent with the Code. He accepted that his Honour did not make an express finding to this effect in relation to the Wickham letter, but submitted that it is apparent that this was intended: at [107]. Dr Prince thus submitted that UMP's interest was because of the possibility of a claim against him based on the circumstances which were the subject matter of the correspondence which UMP had requested, including the Collie and Wickham letters.

189 Dr Prince's submissions should not be accepted. The fact that, Dr Prince sent the Collie and Wickham letters to UMP under cover of a letter dated 7 March 2006 in which he sought UMP's assistance in relation to the contract dispute he was having with the NCAHS does not accord with his claimed motive. But even accepting that motive, no reasonable basis was established for the belief that anyone would be able to make a claim against Dr Prince in professional negligence, arising out of surgery undertaken by Dr Malouf, as proposed by the hospital, to which Dr Prince's insurance with UMP would respond. Accordingly, there was no occasion for the publication of the letters to UMP attracting qualified privilege.

190 With respect to publication to the AMA, Dr Prince referred to his evidence in cross-examination that he forwarded a copy of his correspondence with the UMP to the AMA at Ms Davies' request. He had contacted her about the contract dispute and had been advised both to contact the UMP, and, in turn, to send the AMA all the material in relation to the dispute: Tcpt, 21/04/11, pp 776(37)-777(2). However, that request for the letters did not, without more, establish a relevant interest to receive them.

191 Dr Prince submitted that he had an interest in communicating his concerns to his professional body. He noted that the judge accepted that the position in relation to communication with the AMA was the same as that relating to UMP: at [105], [107]. Dr Prince submitted that the reciprocity of duty and interest in relation to the AMA was further evidenced by the fact that the AMA "took up" Dr Prince's case, that is to say, his contractual dispute, with the hospital and the NCAHS.

192 Those matters, however, demonstrate precisely why the AMA did not have the requisite interest to receive allegations about Dr Malouf. The allegations in question were separate from the matters the subject of the contractual dispute. It is difficult to see any relevant reciprocal interest on the part of the AMA in receiving the communications. The reason for sending the material to the AMA seems to have been confined to its role in assisting Dr Prince in his contract dispute with the hospital. That dispute was not one to which the allegations Dr Prince made against Dr Malouf had any relevance. It was not, as a matter of public policy, in the general interests of the whole community that qualified privilege should attach to the occasion of such a communication.

193 Thus, as to the third parties who received copies of the Collie and Wickham letters, there was a sufficient interest on the part of the TFM to receive the information contained in those letters. Dr Prince communicated with its officer in relation to the possibility of a claim. Even if that potentiality was not likely to have eventuated and even if he had not chosen the best person capable of providing the advice he was seeking, the fact that he sought advice from the insurer for claims against public hospitals in New South Wales and doctors working within those hospitals in connection with a possible claim was sufficient to establish reciprocity of interest.

194 Therefore, the trial judge erred, but only in finding common law qualified privilege in relation to the publication of the Collie and Wickham letters to the AMA and the UMP.

(h) occasion of qualified privilege - Terrey letter

195 As to the Terrey letter, Dr Malouf pointed to his Honour's observation (at [108]) that there was no real evidence as to what powers the Medical Quality Committee had to investigate, discipline or give direction. Dr Malouf argued that his Honour erred in inferring that Dr Terrey had an interest in receiving the letter solely from the face of the letter. He pointed to the acceptance by Dr Prince in cross-examination that the Medical Quality Committee did not investigate and had no relevant power to do anything. Dr Malouf observed that s 20F(1) of the Health Administration Act 1982 (NSW) provides that a Committee does not have authority to conduct an investigation relating to the competence of an individual in providing services. In those circumstances he submitted that his Honour had no basis to find that there was an interest on the part of Dr Terrey to receive the communications in question (citing Hebditch v Macllwaine [1894] 2 QB 54; Beach v Freeson [1972] 1 QB 14).

196 Dr Prince gave evidence about the function of the Committee: Tcpt, 19/04/11, pp 650(32)-651(10); 10/05/11, pp 1385(50)-1387(12). The Committee is constituted pursuant to Div 6B of Pt 2 of the Health Administration Act. Its statutory functions are "to assess and evaluate services provided by one or more prescribed establishments (whether or not provided by the establishment which established the committee), to report and make recommendations concerning those services and to monitor the implementation of its recommendations": s 20E(2)(b).

197 Dr Prince noted that the actions of the Committee and its members taken in good faith are protected by qualified privilege pursuant to s 20J of the Health Administration Act and submitted that this supported his argument that information provided to the Committee in good faith so that it may perform its functions is also protected by qualified privilege.

198 Given the functions of the Committee, it was immaterial whether the Committee could have done anything by way of disciplining Dr Malouf or could, without the involvement of others (such as Dr Collie) alter the way in which the March lists were to be conducted. It could clearly play a role in investigating the matters Dr Prince's correspondence highlighted, insofar as they related to the services the NCAHS provided, and, if appropriate, recommend changes to those services. Dr Terrey chaired the Committee and, accordingly, was the appropriate recipient of Dr Prince's correspondence which, it can be inferred, he would then have distributed to the Committee for further investigation. Accordingly, the Committee's functions, and his supervisory role, constituted an adequate basis for a finding that there was a reciprocal duty or interest on his part in receiving the Terrey letter.

(j) conclusions - qualified privilege

199 The result of the foregoing analysis with respect to common law qualified privilege has concluded that:

(a) the publication of each of the Collie, Wickham and Terrey letters to the recipients addressed in those letters occurred on occasions of qualified privilege;

(b) the publication of the Collie and Wickham letters to the TMF occurred on an occasion of qualified privilege;

(c) the publication of the Collie and Wickham letters to the AMA and UMP did not occur on an occasion of qualified privilege;

(d) the publications of the letter to patients to the recipients of those letters occurred on an occasion of qualified privilege.

To reach a conclusion as to the defence of common law qualified privilege, it is now necessary to turn to the question of malice.

(8) Malice

(a) the issues

200 Dr Malouf contended (cross-appeal grounds 5-7; notice of contention ground 1) that the trial judge erred in failing to find that Dr Prince was actuated by malice in publishing each of the matters complained of. The challenge was threefold. First, he contended that his Honour applied the wrong test when determining this question, by approaching the matter on the basis that, without wilful blindness, malice could not be established. Secondly, he contended that his Honour failed to distinguish between and address each of the alternative cases that he ran in relation to malice. He argued that this led his Honour to apply only one test when determining this question, namely that malice could not be established without wilful blindness. This meant his Honour failed to consider the other two ways he put his malice case, namely, (a) that Dr Prince knew certain matters in the matters complained of were false and hence could not have been motivated by a proper purpose in their publication and (b) that Dr Prince's recklessness, taken with other matters, established malice. Thirdly, he contended that the refusal to find malice was contradicted by Dr Prince's admission that he did not believe in the truth of the key allegation that pre-operative audiograms were not done; that his Honour did not address this issue; and that the evidence of what Dr Prince actually knew at the time of publication contradicted the finding that Dr Prince believed in the truth of his allegations and demonstrated knowledge of falsity.

(b) findings of trial judge

201 At trial Dr Malouf submitted that concern for the welfare of his patients was not the predominant motive for the publication by Dr Prince of the relevant letters: at [122]. As to the Collie and Wickham letters, his Honour did not accept that Dr Prince knew of the falsity of the allegation that Dr Malouf had not assessed the patients preoperatively and had operated without audiograms: at [122]. Dr Malouf had argued for such a conclusion because the 2 March 2006 letter from Dr Collie had indicated that each patient would be asked to give approval before transfer from Dr Prince's list, meaning that each patient would be seen by Dr Malouf before surgery. His Honour, however, concluded that Dr Prince honestly believed all of the matters contained within the Collie letter: at [122].

202 His Honour also accepted (at [122]) that the expression "Operate -and -Forget" in the Wickham letter was an opinion that was honestly held by Dr Prince and that there was some basis for him coming to that view because of the failure to provide proper follow-up for a large number of patients and having regard to the evidence of Dr O'Neill. Similarly, his Honour considered there was some basis for the concern Dr Prince expressed as to the post-operative care of patients, because of the evidence that there was follow-up for only five patients: at [122].

203 As to the Terrey letter, his Honour accepted that Dr Prince had been reckless in relation to the comments about pre-operative investigation but again found that Dr Prince honestly believed the statements as to post-operative follow-up.

204 While accepting that the contractual dispute was, to some degree, in Dr Prince's mind, the trial judge did not accept that the contractual dispute was either the predominant, or a significant contributing, factor for the correspondence. Rather, his Honour considered that it was "a contributor to his emotional response and that way it allowed him to conduct himself in a manner which was inadvisable" and said (at p 75) that:

"Leaving [aside] the question as to whether it was established that that was reckless to the point of wilful blindness, I am of the view that whilst it was recklessness to which I have referred, that it was a publication in which the defendant believed and that the predominant purpose was not the furtherance of the contractual dispute but there was significant concern for patient care coupled with the other matters to which I have referred."

205 Thus, while the judge concluded that the failure by Dr Prince to make enquiry as to pre-operative investigation showed recklessness on his part, he did not accept that this amounted to wilful blindness: at [122]. (His Honour did not accept that the statement as to pre-operative procedures was withdrawn immediately the true position was known.)

206 The judge referred to Dr Prince's evidence in cross-examination that he was the person responsible for the patients being on the waiting list and had a responsibility to say something if he was concerned that the hospital was doing the wrong thing: at [122]. He accepted that Dr Prince believed that he had such a responsibility, but also noted that there was a significant failure to enquire.

207 As to whether the failure to enquire was limited to enquiries as to pre-operative care, his Honour said that while Dr Prince's reaction to Dr Malouf's comment as to money in the 3 March conversation might have contributed to Dr Prince's failure to make enquiries of Dr Malouf:

"... we are dealing here with a professional person having concerns about the standards of pre- and post-operative care provided by another ENT surgeon when there was a total failure by the defendant to make the inquiry as to the truth or otherwise of the defamatory material before he published."

208 He concluded (at [122]):

"The matters complained of [to] which I have held that qualified privilege prevails, being the first, second and third, were all to persons of authority within the Grafton Base Hospital and couched in language which one would have expected to be used should the complaint have been a proper one. ... [T]here was a complete failure to make any relevant inquiry as to what the pre-operative arrangements have been before the January surgery, and whether any ear surgery was proposed in March ... I am of the view that the failure to make such inquiry was totally inappropriate. Whilst it may be inexcusable that does not necessarily mean that the defendant was wilfully blind.

I am not of the view that the defendant failed to make the inquiry because he didn't want to know what he would be told. He failed to make the inquiry because he even led himself to a conclusion which was erroneous in that the proper audiological testing had not been carried out. The defendant's view as to the post-operative follow up was also important to him in coming to his conclusions and was no doubt fuelled with the other matters to which I have referred in his failure to make proper inquiry."

209 His Honour further said:

"There are a number of factors to which I have referred that lead the defendant to publish and it was a combination of those, as I have said, which brought it about. Whilst the failure to inquire either of the plaintiff or any of the personnel or the patients as such, it is a serious omission before publishing such material, I am not satisfied that it amounts to the wilful blindness required bearing in mind my view of the conversation that took place between the parties on the telephone on 3 March 2006, and the factual support that is gleaned from Dr O'Neill's evidence in relation to the allegation of failure to provide proper follow up which was material available to the defendant in some form at the time of publication. For [from?] those matters I am not satisfied the plaintiff has established malice and in relation to imputation[s], which in my view attract the defence of qualified privilege, those defences stand as malice has not been established."

210 In summary, the primary judge rejected Dr Malouf's argument that Dr Prince published the letters for a purpose foreign to the occasion of qualified privilege. While he accepted that Dr Prince had failed to make inquiries in a manner which constituted a "serious omission", that omission did not constitute wilful blindness in the sense of recklessness which establishes knowledge of falsity: Gross v Weston [2007] NSWCA 1; (2007) 69 NSWLR 279 at [52].

211 Accordingly his Honour held that malice was not established.

(c) application of incorrect test?

212 The trial judge noted (at [121]) the principles concerning malice articulated in Roberts v Bass where the plurality (Gaudron, McHugh and Gummow JJ) stated::

"[79] ... malice means a motive for, or a purpose of, defaming the plaintiff that is inconsistent with the duty or interest that protects the occasion of the publication. ...

...

[84] In exceptional cases, the sheer recklessness of the defendant in making the defamatory statement, may justify a finding of malice. In other cases, recklessness in combination with other factors may persuade the court that the publication was actuated by malice. In the law of qualified privilege, as in other areas of the law, the defendant's recklessness may be so gross as to constitute wilful blindness, which the law will treat as equivalent to knowledge. ...

...

[103] Carelessness of expression or carelessness in making a defamatory statement never provides a ground for inferring malice. The law of qualified privilege requires the defendant to use the occasion honestly in the sense of using it for a proper purpose; but it imposes no requirement that the defendant use the occasion carefully. Even irrationality, stupidity or refusal to face facts concerning the plaintiff is not conclusive proof of malice although in 'an extreme' case it may be evidence of it. And mere failure to make inquiries or apologise or correct the untruth when discovered is not evidence of malice."

213 His Honour also referred (at [122]) to Hunt AJA's summary in Gross v Weston at [52], of the propositions arising from Roberts v Bass, relevantly as follows:

"Recklessness in the publication of the matter complained of does not establish knowledge of its falsity unless it amounts to wilful blindness on the part of the defendant which the law equates with knowledge.

214 Undoubtedly an intention to harm resulting from ill-will constitutes "malice" in the ordinary sense of the word. However, the term has a broader meaning in this context. The nature of "malice" sufficient to defeat a defence of qualified privilege is found in inconsistency with the public purpose for which the privilege is accorded. Thus it may be described as an "improper purpose" or a motive "foreign to" the permitted purpose. What has caused confusion at times is the distinction between the concept itself and the evidence relevant for making a finding of malice, a confusion hinted at in the submissions of Dr Malouf. Because that which must be established is the state of mind which "actuated" the publication, the relevant evidence must focus on the motivation of the publisher at the time of publication. Thus, as explained by the joint reasons in Roberts v Bass at [76], "proof that the defendant knew that a defamatory statement made on an occasion of qualified privilege was untrue is ordinarily conclusive evidence that the publication was actuated by an improper motive".

215 It is undoubtedly true that an improper purpose may be inferred from more equivocal evidence as to the state of knowledge or belief as to the accuracy of the publication, depending on the circumstances in which the publication was made. Often much will depend on the purpose or motive relied on by the plaintiff. A history of bad blood between the parties may more readily lead to an inference of improper purpose than a case where such a history is entirely absent. There is no reason to conclude in the present case that the trial judge failed to focus on the critical issue, namely what actuated the publication of the defamatory statements.

216 The trial judge recognised that the key question concerned potential mixed motives. He focussed on the failure of Dr Prince to make appropriate inquiries, a factor which was undoubtedly capable of revealing an improper actuating purpose, without being satisfied that it did.

217 The judge rejected the submission that Dr Malouf had been "warned off" coming to the hospital, although accepting that it was suggested by Dr Prince that he not come down to do the additional lists. His Honour was satisfied that the allegations made in relation to pre-operative care were false but was not satisfied that Dr Prince knew that to be the case; he accepted that there was some basis for the allegations in relation to post-operative care, as noted earlier.

218 Dr Prince submitted that his Honour's finding of recklessness, in this context, did not go so far as required for a finding of malice in that it was a finding of carelessness or negligence and not a finding that denoted that Dr Prince had no positive belief in the truth of the statements. However, there was no contextual or linguistic basis to support the conclusion that his Honour used the term "reckless" other than in the sense that this adjective is commonly used, i.e., to mean indifference to the truth or falsity of a statement or as to the outcome of an action. His Honour then posed the question as to whether that recklessness amounted to wilful blindness - the second way that the case on malice was put by Dr Malouf.

219 The trial judge neither misunderstood nor misapplied the test for malice, having regard to the fact that he expressly considered (at p 72) the possibility that recklessness, when present with other evidence is relevant to whether the defendant had an improper motive which actuated the publication. Such an approach was supported by the plurality's recognition in Roberts v Bass, at [87], that while "recklessness, short of wilful blindness, is not enough to destroy the privilege" where recklessness is "accompanied by some other state of mind ... [such as] anger, hatred, bias or unreasoning prejudice" which actuated the publication, express malice is established. His Honour rejected Dr Malouf's submission that Dr Prince had actual knowledge of the falsity of the matters complained of. He also found (at p 80) that while Dr Prince's failure to inquire either of Dr Malouf, "or any of the personnel or patients as such" was "a serious omission before publishing such material", he was not satisfied it amounted to wilful blindness in any relevant sense.

220 Dr Malouf's second challenge to the malice finding was that the trial judge failed to consider the alternative ways he put this case: first, that Dr Prince knew certain of the matters complained of were false and hence he could not have been motivated by a proper purpose in their publication and, secondly, that recklessness with other factors is an indicium of improper purpose). However, it is clear from his reasons that the trial judge did address, but dismissed, both cases. As to the former, his Honour rejected the submission that Dr Prince had actual knowledge of falsity; indeed he concluded Dr Prince did believe what he published and, accordingly concluded malice was not established in that respect: see Judgment, p 69, 72, 75-76.

221 The trial judge also rejected the second way Dr Malouf put the recklessness case. Although his reasons on this issue are somewhat diffuse, it is apparent that he concluded that he could not discern any other state of mind which actuated the publication of the matters complained of which, taken with Dr Prince's recklessness, could constitute malice: see Judgment at 69, 70, 72, 75-76. Rather his Honour concluded (see p 75) that the predominant purpose for Dr Prince writing the matters complained of was a significant concern for patient care and not the contractual dispute with the hospital.

222 The third basis (recklessness as an indicium of improper purpose) tended to overlap with the second; nevertheless, the trial judge considered it, but dismissed it: see Judgment, pp 69, 72, 75-76.

(d) inconsistent findings

223 The third ground of challenge invited this Court to revisit the factual findings relevant to malice. This was put in a variety of ways: (i) that his Honour's other findings were consistent only with malice; (ii) that the finding as to lack of malice was contradicted by contemporaneous evidence; and (iii) that the finding as to lack of malice was contrary to the evidence. (These propositions involved repetition and overlapped.) There was also a challenge to the trial judge's findings as to the credit of Dr Prince.

224 First, Dr Malouf maintained that certain findings in relation to Dr Prince's state of mind warranted a finding of malice. The findings on which he relied were that (i) Dr Prince was angry and highly emotional because of the contract dispute and that this "allowed him to conduct himself in a manner which was inadvisable" by publishing the letters without proper enquiry; (ii) Dr Prince's failure to enquire was significant, totally inappropriate, a serious omission and inexcusable; (iii) Dr Prince went too far in accusing Dr Malouf of "professional misconduct", as he did in the letter to the Health Care Commission and elsewhere; and (iv) Dr Prince did so because of a failure to make proper enquiries. It was submitted that those findings were inconsistent with the finding that patient care was Dr Prince's predominant motive in publishing the respective letters.

225 Dr Malouf pointed to Dr Prince's acceptance that (i) his state of mind had led to his correspondence being "emotive" and being published without proper research into the allegations he made about Dr Malouf (Tcpt, 10/05/11, p 1370); (ii) if he had had a "clearer head", he would have made enquiries of the hospital staff and contacted Dr Malouf and regretted not doing so (Tcpt, 10/05/11, p 1372); (iii) he went "too far" in accusing Dr Malouf of professional misconduct (Tcpt, 20/04/11, p 765); (iv) his allegations were based primarily on assumptions (Tcpt, 20/04/11, p 764; 21/04/11, p 847; 02/05/11, p 931) and were sometimes contradictory of each other (Tcpt, 21/04/11, p 839); (v) he did not check his facts before writing the matters complained of (Tcpt, 03/05/11, p 960); and (vi) he should have qualified the allegations he made in his letters about Dr Malouf (Tcpt, 10/05/11, p 1412).

226 The above submissions, at least in part, drew no distinction between the cause of Dr Prince's emotional state when he published the letters and the motivation for the publication of those letters. A finding that Dr Prince acted emotionally does not mean that Dr Prince was motivated by an improper purpose. Dr Prince's emotional state may have made him more quick to criticise the conduct of Dr Malouf or to be more intemperate in the tone of the communications to the hospital administration, but it does not mean that Dr Prince did not, as his Honour found, have genuine concerns as to patient care if Dr Malouf were to conduct the additional lists.

227 The judge's findings (at p 75) that the contractual dispute was "to some degree ... in his mind", "was a contributor to Dr Prince's emotional response and ... allowed him to conduct himself in a manner which was inadvisable", were not inconsistent with the finding that the contractual dispute was not the predominant motive for the publications.

228 As to the reliance placed on the statement in the letter to the Health Care Complaints Commission that Dr Malouf's actions constituted professional misconduct, as evidence of Dr Prince's state of mind, consistent with the use of the same term in a draft letter to the Medical Board, Dr Prince submitted that such a statement could not be used to establish malice in relation to the four publications, on the basis that this was a communication made under absolute privilege pursuant to s 27 of the Defamation Act, Sch 1, item 27. That would not necessarily prevent the letter being used as evidence of malice in relation to another publication. However, he also submitted, and the transcript supported such a submission, that his concession as to the incorrect use of the term "professional misconduct" was made by reference to the distinction between that and "unsatisfactory professional conduct", Dr Prince maintaining his view as to the latter (Tcpt, 20/4/11, pp 764(40)-765(13)). That evidence did not support a conclusion of malice by reference to the motive relied on by Dr Malouf.

229 Secondly, Dr Malouf submitted that the finding of dominant motive and lack of malice was contrary to (and contradicted by) the evidence, referring to (i) Dr Prince's statement that he did not know whether the statement made as to the use or otherwise of pre-operative audiograms was true (Tcpt, 21/04/11, p 832); (ii) the disavowal by Dr Prince of any concern about Dr Malouf's ability as a surgeon or the quality of the surgery he performed at the hospital (Tcpt, 19/04/11, p 664; 04/05/11, p 1090); and (iii) the acceptance by Dr Prince of the proposition that he went too far in accusing Dr Malouf of professional misconduct in his letter to the Health Care Commission (Tcpt, 20/04/11, p 765). This submission was, in large part, a reformulation of the first.

230 Dr Malouf submitted that Dr Prince must have known that the pre-operative care allegations were false, referring to the analysis of evidence set out in Schedule B to his written submissions that was said to establish that: (i) Dr Prince had been told that Dr Malouf would see every patient pre-operatively; (ii) Dr Prince had more reason to believe that Dr Malouf had access to audiometry before surgery than to believe that he did not, since he knew Dr Malouf had his own audiology practice; (iii) it was inherently unlikely that any ENT surgeon would operate on an ear patient without an audiogram; (iv) as at 10 March 2006, he had information from a patient that Dr Malouf had offered her an audiogram before surgery; and (v) Dr Prince failed to make any enquiry to establish whether audiograms had been performed before surgery in January, despite talking to Dr Collie, Mr Wickham and Dr Malouf on 3 March 2006 before publishing his first letter on 6 March 2006 and seeing two ear patients in his rooms on 9 March 2006 on whom Dr Malouf had performed surgery in January, both of whom had audiograms before surgery but as to which no enquiry was made during the consultation on 9 March 2006.

231 Further, Dr Malouf took issue with the finding (at [122]) that the existence of a number of patients who had an appointment to be seen by Dr Malouf in the weeks after surgery gave Dr Prince a basis for his concern as to post-operative care. Dr Malouf submitted that Dr Prince did not have that information at the time of publication, a point which derogated from the last complaint above in relation to the patients seen on 9 March.

232 Dr Malouf criticised the judge's reasoning in concluding that there was, objectively, a proper basis for concern about arrangements for the post-operative care of patients; and that his Honour proceeded on the basis of that conclusion to accept that Dr Prince believed in the truth of that allegation at the time it was made (referring to the analysis at [115], [122]). Dr Malouf submitted that his Honour there relied on his own view that the post-operative care arrangements were not ideal and that this was a retrospective justification for the publication. He submitted that what should have been considered was the state of Dr Prince's knowledge at the time of publication in order to determine whether Dr Prince had any basis to make the allegations.

233 Insofar as his Honour reached the conclusion as to the adequacy of post-operative arrangements on the basis of the evidence of Dr O'Neill, Dr Malouf contended that his Honour erred. First, he submitted that Dr O'Neill was not called as an expert witness and therefore his evidence went no further in this regard than his own experience of post-operative care arrangements for his patients. Secondly, he submitted that the only evidence relevant to determining Dr Prince's state of mind was the information Dr Prince had at the time of publication. Dr O'Neill's opinion was not shown to have been known to Dr Prince at that time.

234 Dr Malouf submitted that Dr Prince's evidence that his concern derived from information he had about or from individual patients could not be sustained; nor could his evidence that his concern derived from phone calls from January patients. He further submitted that Dr Prince's concern for post-operative arrangements for tonsillectomy patients was exaggerated, since his own management of tonsillectomy patients at the hospital did not address the risks the subject of his criticism of both Dr Malouf and the hospital.

235 Reliance was placed on the following evidence that the dominant motivation for publication of the offending letters was the contractual dispute with the hospital: (i) in the 3 March telephone conversation Dr Prince had asked Dr Malouf not to operate at the hospital because it would disadvantage him in the contractual pay dispute; (ii) Dr Prince's own correspondence in March 2006 asserted that the engagement of Dr Malouf by the hospital was part of the hospital's strategy against him in the contractual pay dispute; (iii) Dr Prince's evidence that he believed the hospital and NCAHS were trying to force him out and would do anything to ensure that he "did not win" the dispute (Tcpt, 06/05/11, p 1263) and that he saw the hospital bringing in Dr Malouf as an attempt by it to isolate him in the contract dispute (Tcpt, 06/05/11, p 1253).

236 Reliance was also placed on various other matters as indicia of malice: (i) the disputed threat made by Dr Prince in the 3 March 2006 conversation to defame Dr Malouf (which his Honour did not accept had been made in the terms contended for by Dr Malouf); (ii) the tone and language of the letters and, in particular, the use of the term "operate and forget" locum surgeon; (iii) Dr Prince's stated intention to publish the matters complained of widely; and (iv) the making by Dr Prince of particular notes in patient files that were critical of Dr Malouf (Tcpt, 21/04/11, p 851; 10/05/11, p 1345-1352).

237 Dr Prince cavilled with the factual foundation for a number of the above submissions. For example, he submitted that Dr Prince had not threatened to withdraw his services when made aware of the pressure on the hospital to reduce the ENT waiting list in November 2005 and did not object to, or take steps to prevent, the engagement of Dr Malouf for the January lists. He further submitted that he did not threaten to withdraw his services in 2005-2006 - rather, he indicated that he was not prepared to do more than his normal lists in March 2006. He took issue with the suggestion that he had threatened to withdraw his services in 2002 to improve his bargaining position in the contractual dispute; rather, he said that he suspended his elective surgical lists at the hospital on 23 December 2002 because of the hospital's refusal to participate in a mediation and noted that he did not ultimately withdraw his services - instead he commenced proceedings in relation to the dispute in the Industrial Commission. (What happened in 2002 can have had little bearing on the issues in 2006.)

238 There are different characterisations that might equally be placed on Dr Prince's conduct in sending the letters: as Dr Malouf contended, that he was seeking to gain an advantage in the contractual dispute, or, as Dr Prince contended, that he had genuine concerns as to the adequacy of Dr Malouf's pre- and post-operative care of patients in the January lists. Dr Prince's statement that it would be better, in the context of his contractual dispute, for Dr Malouf not to come to the hospital was consistent with the purpose for sending the letters that was pressed by Dr Malouf. On the other hand, as Dr Prince submitted, if the contractual dispute had been the predominant motivation then there would have been no reason not to withdraw the complaints on 24 March 2006, when a temporary accommodation was reached with the NCAHS, but that this did not occur until Dr Prince had reviewed the detailed response from Dr Collie in her letter of 30 March 2006.

239 There was substance in Dr Malouf's submission that the judge should have relied upon what Dr Prince knew at the time, not on ex post facto evidence purporting to attack the competence of Dr Malouf, such as Dr O'Neill's evidence. However, as Dr Prince submitted, all but one of the telephone calls to the surgery occurred before the letter to patients was sent.

240 Finally, Dr Malouf submitted that if the findings in relation to malice are properly to be understood as based on an acceptance of Dr Prince as a witness of credit, then his Honour wrongly overlooked the substantial attack made on Dr Prince's credit at trial on several bases including: (i) his evidence about certain patients; (ii) his inconsistent evidence about his selection of patients to whom to write and his contradictory sworn answer to interrogatories; (iii) incorrect evidence about contact with another patient; (iv) his denial, said to be contradicted by objective evidence, that he had refused to operate in the context of the past contractual dispute in 2002 (Tcpt, 19/04/11, p 642; cf Tcpt, 05/05/11, p 1196); (v) the denial, contradicted by evidence accepted by his Honour, that he had refused to undertake further waiting list reduction surgery when asked in February 2006 (Tcpt, 03/05/11, pp 986-987; cf [101(o)]); (vi) inconsistent evidence regarding to whom he had shown the matters complained of, and his responses when questioned about that topic (cf Tcpt, 21/04/11, pp 783-785); (vii) his evidence about the two page database notes in which he was critical of Dr Malouf's treatment of every patient (Tcpt, 05/05/11, p 1112; cf p 1117); and (viii) the admission (which Dr Prince disputed) as to a made up explanation for why he had not mentioned his conversation with Mr Wickham in his affidavit (Tcpt, 05/05/11, p 1206).

241 While it is true that these matters, which themselves involved disputed evidence, were not expressly addressed in the discussion as to credit, in a lengthy trial, with extensive cross-examination, it may be accepted that the trial judge's conclusion on credit was impressionistic: the failure to make and rely upon findings of the kind raised by Dr Malouf did not bespeak error. Clearly, absent error, this Court could not usefully address these matters.

242 As to the conduct of the proceedings, Dr Malouf relied (i) on the initial maintenance, and later abandonment, of the defence of substantial truth; (ii) what he contended was an accusation of racism by Dr Prince against him (Tcpt, 02/05/11, pp 879, 893, 889); and (iii) the persistence in Dr Prince's submissions on appeal of what was referred to as the "pseudo-medical negligence" case and the proposition that Dr Malouf suffered no great hurt. As to those matters, maintenance of a truth defence itself would not be consistent with knowledge of the falsity of that which was claimed to be true and there might be a number of forensic reasons for its abandonment. Of itself, it does not reveal malice at the time of publication of the letters. The accusation of racism was denied, although it was conceded that there had been an allegation that Dr Malouf had treated Aboriginal patients differently - an allegation that his Honour found to be defamatory and untrue.

243 The "pseudo-medical negligence case" was a reference to the allegations made as to the risks that Dr Prince considered would flow from inadequate post-operative care. Since both parties appear to have spared no efforts to raise issues in support of their respective positions or to counter the other's case, it is difficult to see that the tender at trial of the confidential patient notes bespoke malice in relation to the publications in question. As to the submissions that were dismissive of any great hurt suffered by Dr Malouf as a result of the publications, this was in fact the conclusion reached by his Honour and again did not bespeak malice at the time of publication.

244 The difficulty with these submissions is that much of the factual background was capable of interpretation consistently with one or other of the contentions and, therefore, it is not possible to say that the judge's conclusion as to lack of malice is not consistent with the factual findings made; nor is it possible to say that it is glaringly improbable having regard to the contemporaneous facts and logic of events. It is impossible, having regard to his Honour's reasons, not to accept that his Honour relied, when rejecting the contention of malice, on Dr Prince's evidence as a witness in the proceedings and the manner in which he responded to challenge in cross-examination on critical parts of the case.

245 Dr Prince maintained that resolution of the claim as to malice, or improper purpose, required a finding as to his state of mind at the time he wrote the relevant letters and that the judge's findings in this regard should not be disturbed. Reference was made to what was said by Heydon J in Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32; 86 ALJR 1044 at [141]:

"The assessment of a witness's mental processes is an assessment of that witness's state of mind. It is pre-eminently a matter in which a trial judge has a considerable advantage over an appellate court. In the course of his great speech in Nocton v Lord Ashburton, Viscount Haldane LC said:

'it is only in exceptional circumstances that judges of appeal, who have not seen the witness in the box, ought to differ from the finding of fact of the judge who tried the case as to the state of mind of the witness.' "

246 Dr Prince emphasised that he consistently denied that in sending the letters he was motivated by the contractual dispute: Tcpt, 21/04/11, pp 777(40)-(46), 782(46)-783(34); 20/04/11, p 724(39)-(48), 03/05/11, p 959(5)-(16), 06/05/11, pp 1244(40)-1245(29), p 1253(30), pp 1262 (30)-1266(31); 09/05/11, pp 1302(26)-1308(30), pp 1312(8)-1314(21), pp 1326(14)-1327(50). While there was a basis on which Dr Prince's intention in publishing the letters could have been seen as consistent with him being principally motivated by the improper purpose of furthering his own position in the pay dispute, and the timing of the letters suggested that his motivation was not the altruistic one of warning hospital and patients of his "significant concerns", the trial judge's acceptance of Dr Prince's evidence to the contrary has not been demonstrated to be inconsistent with incontrovertible facts and should not be overturned. The challenge to his Honour's factual findings as to malice does not meet the Fox v Percy standard in a case such as this where the assessment of the respective witnesses' credit was highly relevant.

(9) Statutory qualified privilege; honest opinion

247 The conclusion that the letter to patients attracted common law qualified privilege, renders it unnecessary to consider statutory qualified privilege (which includes the issue of reasonableness) or honest opinion, which on appeal were only relied upon as defences in relation to that publication.

(10) Damages

(a) assessed damages

248 Although there were challenges by both parties to the assessment of damages, these need not be considered. Given the findings as to liability, the assessment must, in any event, be set aside.

249 The remaining head of liability involves the publication of the first two letters to the AMA and UMP. These publications would not warrant any amount on account of special damages. There should be a modest award of general damages. An appropriate figure is $20,000.

(b) aggravated damages

250 His Honour was not satisfied that Dr Malouf had made out a case for aggravated damages. Dr Malouf submitted that, in so holding, the trial judge erred and that this Court should make such an award: cross-appeal ground 9. Given the findings made above as to liability, this issue does not arise. However, against the possibility that the Court is wrong in its conclusion as to liability, this ground should be addressed.

251 Dr Malouf placed emphasis on the following: (i) the contention that the defamatory imputations were false to Dr Malouf's knowledge, relying upon the lack of dispute that the pleaded imputations were untrue, as confirmed by Dr Prince's apologies and withdrawal of the defence of truth; (ii) the contention that the publications were motivated by malice (which has not been upheld); (iii) the language and tone of the letters; (iv) the pleading of the defence of justification, which was said to be improper, unjustifiable and lacking in bona fides; (v) the failure by Dr Prince to make any enquiry of Dr Malouf or of Dr Collie or Mr Wickham in relation to his concerns prior to publication of the letters; (vi) the cross-examination of Dr Malouf to suggest that he was not in fact hurt by the publication of the letters (Tcpt, 26/11/10, p 539); (vii) the tender of four volumes of patient records (which it was said contained untrue defamatory statements about Dr Malouf's treatment of patients and went to no issue in the proceedings); (viii) what was characterised as an allegation of racism made by Dr Prince (in the Terrey letter - Tcpt, 02/05/11, pp 878-879 - and patient database notes - Tcpt, 02/05/11, p 879) with no proper basis and in circumstances where Dr Prince was aware of Dr Malouf's longstanding commitment to Aboriginal patients; and (ix) other defamatory publications published by Dr Prince at the same time as the matters complained of as particularised in the reply.

252 Dr Malouf submitted that the repeated submission that Dr Malouf suffered no hurt to his feelings, and Dr Prince's persistence in what Dr Malouf termed the "pseudo-medical negligence case", warranted recognition in an award of aggravated damages. Dr Malouf pointed to the 24 March 2006 draft letter to Dr Terrey as clear support for the hurt to Dr Malouf's feelings.

253 Dr Prince relied upon his earlier submissions, and the trial judge's finding that Dr Malouf did not necessarily suffer a "great hurt", to resist this challenge. As to the tender of the patient records, he submitted that these were extensively referred to through the trial. He further noted that Dr Malouf did not particularise any allegation of racism as a basis for an award of aggravated damages and that Dr Prince denied making any allegation of racism. Dr Prince submitted that the conduct of the proceedings by him was in no way improper, unjustifiable or lacking in bona fides, referring to Triggell v Pheeney [1951] HCA 23; (1951) 82 CLR 497.

254 The judge's refusal to award aggravated damages with respect to the imputations upheld did not miscarry, having regard to the principles articulated in Cassell & Co Ltd v Broome [1972] AC 1027, per Lord Reid and what was said by Lord Devlin in Rookes v Barnard [1964] AC 1129 at 1221. His Honour was in the best position to assess matters such as the conduct by the respective parties of the proceedings and the hurt to Dr Malouf's feelings. He awarded a not insubstantial sum for general damages. No adequate basis was established to interfere with the decision not to award aggravated damages: it follows that this Court would not have interfered if it had upheld the claims as to liability.

(11) Costs

(a) trial

255 On 17 January 2008 Dr Malouf offered to settle the proceedings for the sum of $100,000 "plus costs as agreed or assessed". The trial judge awarded costs in favour of Dr Malouf, including indemnity costs from 18 January 2008. However, as Dr Malouf has not bettered the offer of compromise made on that day, he is not entitled to indemnity costs. The costs order must, as a consequence of the outcome of the appeal, be set aside.

256 Although Dr Malouf has succeeded on one element of his claim in defamation, he has failed on most. On the other hand, Dr Prince also failed with respect to many issues raised at trial. Further, it is apparent from the material before the Court that both parties bore some responsibility for the extraordinary length of the trial (29 days) which was not warranted on any rational analysis of the issues involved. It must have been apparent well before the trial was over (and perhaps before it started) that the costs incurred would far exceed any likely judgment, regardless of the vicissitudes of litigation. Apart from the offer of compromise made by Dr Malouf, there was a belated offer of amends (made on 16 October 2007) by Dr Prince, including a payment of $10,000 and a meagre amount for costs.

257 In the circumstances, the appropriate course is to make no order as to the costs of the trial.

(b) appeal and cross-appeal

258 With respect to the appeal, Dr Prince has had a large degree of success, though he has not succeeded on all the issues raised. In part, that is because a number of issues were not reached in the event. In the circumstances, Dr Malouf should pay 75% of Dr Prince's costs of the appeal and cross-appeal.

(12) Orders

259 The following orders should be made:

(1) Allow the appeal in part and set aside the orders made in the District Court on 9 December 2011 in favour of the respondent.

(2) In place thereof, give judgment for the respondent in an amount of $20,000, to take effect from 9 December 2011, but otherwise dismiss the appeal.

(3) Order that the respondent repay to the appellant an amount of $118,500 with interest calculated from the date on which the judgment sum was paid until the date of repayment.

(4) Uphold the cross-appeal with respect to the conveying of imputation (c) in relation to the fourth matter complained of, but otherwise dismiss the cross-appeal.

(5) Set aside the costs order made on 14 December 2011.

(6) No order as to the costs of the trial.

(7) Order the respondent to pay 75% of the appellant's costs of the appeal and cross-appeal.

(8) Grant the respondent a certificate under the Suitor's Fund Act 1951 (NSW).

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Decision last updated: 12 February 2014