Supreme Court New South Wales

• Medium Neutral Citation: Hall v TCN Channel Nine Pty Ltd [2014] NSWSC 1604
• Hearing dates: 11 November 2014
• Decision date: 14 November 2014
• Before: McCallum J

Decision

Plaintiff's application to amend the further amended statement of claim allowed

• Catchwords: DEFAMATION - pleadings - plaintiff's application to amend - whether plaintiff entitled to adopt defendant's contextual imputations - pleading alternatives as contextual imputations - whether amendment would cause prejudice to defendant - whether refusal to allow amendment would cause injustice to plaintiff
• Legislation Cited: Defamation Act 2005; Defamation Act 1974
• Cases Cited: Besser v Kermode [2011] NSWCA 174; reported as Fairfax Media Publications Pty Ltd v Kermode (2011) 81 NSWLR 157; Holt v TCN Channel Nine [2014] NSWCA 90; Kelly v Fairfax Media Publications Pty Ltd (No 2) [2014] NSWSC 166; McMahon v John Fairfax Publications Pty Ltd [2010] NSWCA 307; Waterhouse v The Age Company Limited [2012] NSWSC 9
• Category: Interlocutory applications
• Parties: David Hall (plaintiff); TCN Channel Nine Pty Ltd (first defendant); Nine Network Australia Pty Ltd (second defendant)
• Representation: Counsel: S Chrysanthou (plaintiff); M Richardson (defendants); Solicitors: Kalantzis Lawyers (plaintiff); Johnson Winter Slattery (defendants)
• File Number(s): 2013/342926
• Publication restriction: None

Judgment

1 HER HONOUR: These are proceedings for defamation arising out of the broadcast of a segment on the television programme "A Current Affair" on Channel Nine in November 2012. This judgment determines an application by the plaintiff to amend his pleadings.

2 The application raises an interesting question as to the entitlement of a plaintiff to adopt a defendant's contextual imputations. The proceedings were commenced by statement of claim filed 13 November 2013. Before that process was served on the defendants, the plaintiff, by leave, filed an amended statement of claim (dated 30 April 2014). Following the notification of some objections to that pleading, the plaintiff agreed to make further amendments, filing a further amended statement of claim on 7 July 2014. That is the current pleading of the plaintiff's claim.

3 The defendants' defence to the further amended statement of claim pleaded defences of justification under s 25 of the Defamation Act 2005 and contextual truth under s 26 of the Act. That pleading was amended in response to objections notified by the plaintiff, resulting in the filing of an amended defence on 17 October 2014.

4 The amended defence specifies four contextual imputations (referred to as contextual imputations A, B, C and D). By this application, the plaintiff seeks to amend his pleading so as to include contextual imputations A, C and D as additional imputations of which he complains.

5 It is common ground between the parties that the effect of the amendment will be to preclude the defendants from relying upon those three imputations as contextual imputations. Section 26 of the Defamation Act provides:

"26 Defence of contextual truth

It is a defence to the publication of defamatory matter if the defendant proves that:

(a) the matter carried, in addition to the defamatory imputations of which the plaintiff complains, one or more other imputations ( "contextual imputations" ) that are substantially true, and

(b) the defamatory imputations do not further harm the reputation of the plaintiff because of the substantial truth of the contextual imputations. If the amendment is allowed, the imputations presently specified as contextual imputations A, C and D will become imputations of which the plaintiff complains and, accordingly, no longer fall within the scope of possible imputations within the meaning of the section."

6 If the plaintiff is allowed to adopt some of the defendants' contextual imputations, those imputations will become "imputations of which the plaintiff complains" and will accordingly not be carried "in addition to" those imputations within the meaning of s 26.

7 Although the application to amend sought the inclusion of three new plaintiff's imputations, the argument focussed primarily on two of those, for reasons I will explain. The plaintiff's imputations (h) and (i) are:

"(h) The plaintiff had so conducted himself in the conduct of his building business that the Department of Fair Trading refused to renew his building license;

(i) The plaintiff fraudulently represented that he was a licenced builder and took money for building work when he in fact had been banned by the Department of Fair Trading."

8 The proposed new imputations are imputations (b), (d) and (g) as follows:

"(b) The plaintiff had so conducted the business of his company the Extension Factory, that the Department of Fair Trading refused to renew its building licence;

(d) The plaintiff fraudulently represented that his company the Extension Factory retained a building licence, and continued to take money for building work when in the Department of Fair Trading had refused to renew the company's building licence in July 2012;

(g) The plaintiff conducted the business of his company the Extension Factory in such a highly dubious manner that it collapsed and was unable to meet its obligations to customers."

9 It may be observed that the plaintiff's existing imputation (h) is almost exactly the same as the proposed new imputation (b) except that the existing imputation refers to a refusal by the Department of Fair Trading to renew the plaintiff's building licence whereas the proposed new imputation refers to its refusal to renew the building licence of the plaintiff's company, the extension factory.

10 Similarly, the existing imputation (i) is almost identical to proposed new imputation (d) except that the existing imputation refers to the plaintiff's having been banned by the Department whereas proposed new imputation (d) refers to the Department's having refused to renew the company's building licence on a particular date.

11 Mr Richardson, who appears for the defendants, opposed the application to amend. With his customary frank and helpful approach, he acknowledged the simple objective of either being rid of the plaintiff's existing imputations (h) and (i) or having a defence of contextual truth to those imputations, the difficulty for the defendants being that the plaintiff's imputations are not literally true. The particulars of truth in support of the contextual imputations make plain that the case the defendants will seek to make at trial is that it was the plaintiff's company, and not the plaintiff personally, which held the relevant building licence before the Department of Fair Trading refused its renewal in July 2012. Those particulars could (in my view) also be relied upon to establish that the plaintiff's existing imputations are substantially true (which would found a defence under s 25) but it may be accepted that they are more accurately directed to establishing the contextual imputations.

12 Mr Richardson submitted that the distinction between the position of the plaintiff and that of his company is made clear in the matter complained of. Accordingly, he responded to the amendment application with four contentions:

(a) that the plaintiff's existing imputations (h) and (i) are incapable of arising and should be replaced with the proposed new imputations (b) and (d) (which would remove the defendant's objection to the amendment);

(b) that, if the plaintiff's existing imputations (h) and (i) are capable of arising, they are inconsistent with proposed new imputations (b) and (d) respectively and should accordingly be allowed to be relied upon only as alternatives;

(c) that, in the event that the two proposed pairs of imputations are alternatives, the defendants should be permitted in each case to plead the alternative as a contextual imputation;

(d) that the proposed amendment should otherwise be disallowed.

13 Ms Chrysanthou, who appears for the plaintiff, did not oppose that expansion of the issues raised by her application.

Capacity

14 The broadcast opens with the following introductory remarks by the presenter, Tracy Grimshaw:

"Well decks, awnings and granny flats, David Hall claimed to be a one stop shop for anyone wanting to renovate and the couples you are about to meet wish they never hired him."

15 The next relevant passage features footage of David Hall with the word "BANNED" in bold red print across the image of his face, accompanied by the following words stated by the journalist, Justin Armston:

"This is David Hall, failed businessman and now "banned" from holding a building licence for two years. He's made a lot of people very angry."

16 As submitted by Ms Chrysanthou, in the material that follows there is considerable focus on David Hall personally.

17 At paragraph 10 of schedule A to the Statement of Claim, the reporter says:

"A Current Affair has uncovered a trail of destruction left by a man whose actions caused by the collapse of his building company "the Extension Factory" were highly dubious."

18 Following interviews with disgruntled customers, the journalist reports (at paragraph 24):

"Now Fair Trading became so concerned about the Extension Factory that it refused to renew the company's building licence in July.

But according to Saul and other customers, that didn't take David Hall from taking payments and promising work".

19 Mr Richardson submitted that it is clear from those passages that the action taken by the Fair Trading Department of refusing to renew the building licence related to the company, the Extension Factory, not the plaintiff individually. He submitted that the only way in which the plaintiff's existing imputations (h) and (i) can arise is by blurring the distinction between the man and the company, a distinction Mr Richardson submitted is perfectly clear in the broadcast.

20 In my view, there is considerable force in Mr Richardson's submissions. Regrettably, however, I think that is an issue on which reasonable minds could differ and accordingly it is a question I must leave to the jury. I think I must accept, as submitted by Ms Chrysanthou, that the distinction a lawyer would readily draw between the two separate legal entities (the man and the company) is one which would not necessarily be drawn by the ordinary reasonable viewer of the matter complained of.

Inconsistency

21 In my view, however, there is force in Mr Richardson's submission that the ordinary reasonable viewer could not take both the plaintiff's imputations and the defendant's contextual imputations as separate meanings arising at the same time. The only reason the plaintiff's meanings are capable of arising is that the viewer may conflate the individual and the corporate entity. One could not, in the face of what is said in paragraph 24 of the schedule (set out above), think that the Fair Trading Department had made two separate decisions, refusing to renew both the company's licence and the plaintiff's licence. That is the only context in which the plaintiff is accused of continuing to take payments.

22 Accordingly, I am satisfied that the plaintiff should be permitted to rely upon imputations (h) and (b) only as alternatives to each other. Similarly, the plaintiff should be permitted to rely on imputations (i) and (d) only as alternatives to each other.

Pleading alternatives as contextual imputations

23 The third issue raised by Mr Richardson is whether the defendants should be permitted in each case to plead the alternative as a contextual imputation. Ms Chrysanthou reminded me that I considered that issue in Kelly v Fairfax Media Publications Pty Ltd (No 2) [2014] NSWSC 166 at [7] to [18].

24 It is appropriate to repeat the conclusion I reached in that case (the following is drawn almost verbatim from my judgment in Kelly). I considered the remarks of McColl JA in Besser v Kermode [2011] NSWCA 174; reported as Fairfax Media Publications Pty Ltd v Kermode (2011) 81 NSWLR 157. That decision established that, under the 2005 Act, it is not permissible for a defendant to "plead back" the plaintiff's imputations as contextual imputations (a course that was available under the Defamation Act 1974). However, the decision left open the question whether, where a plaintiff pleads one imputation as an alternative to another, it may be permissible for a defendant to plead the alternative imputation as a contextual imputation. McColl JA said (at [90] to [91]):

Mr McHugh raised a second pleading argument which was, in effect, a complaint about the manner in which the primary judge dealt with the respondent's "alternative imputations" (see [11] and [12] above). Her Honour (at [58]) held the respondent only complained of one imputation, even though he had pleaded an alternative in each case. Accordingly she concluded that it was not possible, for the purposes of the s 26 contextual truth defence, to set up the alternative imputations pleaded by the plaintiff against one another. Her Honour's reasoning, as I understand it, was that even though a plaintiff pleads alternative imputations, only one of which it will ultimately rely on if it persuades the jury it was conveyed, the other imputation remains a plaintiff's imputation and cannot, accordingly, be "in addition to" as s 26 requires.

It may be that there is a flaw in her Honour's reasoning in this respect. If a jury finds that one imputation is conveyed, and as a result the plaintiff does not rely on an alternative imputation, it is arguable that the alternative imputation is no longer one "of which the plaintiff complains". If so, it is also arguable that it is open to the defendant to plead a s 26 defence in a manner which contingently "adopts" (and seeks to establish the substantial truth of) the alternative imputation which otherwise did not further come under the jury's consideration. While the practical utility of such a course for a s 26 defence, in circumstances where it might be thought the jury had found in the plaintiff's favour on a more serious imputation, might be debatable, it may be that s 26 permits such a course. However, her Honour did not express a concluded view, and nor do I.

25 In Kelly I said that, uninformed by authority, I would have held that an alternative or fallback imputation is one of "the defamatory imputations of which the plaintiff complains" within the meaning of s 26, or else is taken to be subsumed within the imputations of which the plaintiff complains. I thought that may have been the premise of the primary judge's ruling in Kermode referred to in the remarks of McColl JA set out above.

26 However, although McColl JA's view to the contrary was expressed tentatively and was not part of the ratio in Kermode, I considered that it would be inappropriate for me as a puisne judge to proceed on an understanding of the statute different from that evidently approved unanimously in a decision of the Court of Appeal. Accordingly, in Kelly, I considered that I should determine the issue on the basis suggested by Ms Chrysanthou in reply, namely, by determining the question whether the particular alternative imputation relied upon by the plaintiff was capable of meeting the requirement of the section that it be an "other" imputation conveyed by the matter complained of "in addition to" the plaintiff's primary imputations. That course proceeded on the assumption (with which I did not agree but which I considered I was effectively bound to make) that the course adopted by the defendants was open as a matter of law.

27 Applying the same approach in this case, it would follow that the approach contended for by Mr Richardson is open, in that the defendants are not precluded as a matter of law from pleading a plaintiff's alternative imputation as a contextual imputation. However, it remains necessary to determine whether the alternative imputation is capable of arising "in addition to" the plaintiff's imputations.

28 I do not think in either case one imputation in the pair is capable of meeting the requirement of being an "other imputation" carried "in addition to its alternate. As explained by McColl JA in Kermode at [78], a defence under s 26 must defeat the whole cause of action (that is, all of the plaintiff's stings). But I do not see how, logically, the occasion for reliance upon either alternate as a contextual imputation can arise. That is because, unlike the example considered by McColl JA in Kermode at [91], the relevant pairs of imputations in the present case are true alternatives, in my view. McColl JA considered the issue by reference to the example of a more serious imputation with a less serious alternative - that is not this case. The classification of the alternative imputations here, in my view, is binary.

29 Logically, if the jury accepts (for example) plaintiff's imputation (h), they could not logically find that (b) was also conveyed in addition to (h). That was the very point of Mr Richardson's second contention. If they reject (h), they will be asked to consider (b) as an alternative (in the plaintiff's case), in which event it would be one of the imputations of which the plaintiff complains (and therefore not be capable of being an other imputation in addition to those of which the plaintiff complains). Accordingly, it seems to me that where two imputations are true alternatives (that is, where the classification is binary), it is not logical to allow a defendant to set up the plea of the kind left open by McColl JA in Kermode at [91].

Should the plaintiff have leave to amend?

30 Accordingly, it is necessary to consider whether the plaintiff should have leave to amend his pleadings so as to adopt the defendants contextual imputations. In opposing that course, Mr Richardson relied upon the decision of Nicholas J in Waterhouse v The Age Company Limited [2012] NSWSC 9. In that case, his Honour regarded the loss of the defence under s 26 by the appropriation of the contextual imputations to be a powerful consideration in the exercise of the discretion. His Honour said (at [29]):

If the amendment was permitted the defendants would be deprived of the right to have the issue of harm under s 26 determined by the jury. In my opinion, such a result would work a grave injustice to them in these proceedings.

31 His Honour further held that the plaintiff would suffer no injustice by the refusal of leave, having had a full opportunity to identify and plead those defamatory meanings which harmed his reputation and hurt his feelings. In that context, his Honour referred to the remarks of Giles JA in McMahon v John Fairfax Publications Pty Ltd [2010] NSWCA 307 at [49] where his Honour referred to the importance of "getting the framing of imputations right the first time, at risk of refusal to amend at a later time".

32 In the present case, the plaintiff adduced evidence, which was not disputed, to the effect that counsel briefed in the matter had formed the view that the plaintiff's imputations as contained in the amended statement of claim were the only defamatory imputations capable of arising from the matter complained of concerning the plaintiff. Counsel did not, in amending the imputations, seek to draw any distinction between the allegations as against the plaintiff personally and those against the company the Extension Factory. The position of the solicitor on the record was the same when he drew the original imputations.

33 It was only upon considering the contextual imputations that the distinction became apparent.

34 The plaintiff further relied upon the prejudice of disallowing the amendment arising from the decision of the Court of Appeal in Holt v TCN Channel Nine [2014] NSWCA 90. In that case, Macfarlan JA (with whom Gleeson JA and Sackville JA agreed) held that the plaintiff was not entitled to an award of damages for contextual imputations found to be carried by the matter complained of but not proved true. His Honour said at [23]:

It was open to Mr Holt to "adopt" the respondents' pleaded contextual imputations by himself pleading them against the respondents [with a reference to the passages of Kermode considered above] but he did not do so. It would be a subversion of the litigious process for him to be awarded damages in respect of conduct of the defendants of which he did not complain.

35 I confess I have not found this issue easy to determine. On the one hand, it seems unsporting to pull the contextual truth rug from underneath the defendants' feet. On the other hand, I accept, as submitted by Ms Chrysanthou, that there is no property in an imputation. Leaving aside the apparent unfairness of depriving the defendants of an aspect of their defence, the application to amend at this point would readily be granted in accordance with accepted principle.

36 In that context, I have also had regard to my view that, although the plaintiff's original imputations and the adopted contextual imputations technically meet the requirement of differing in substance, I would consider that, on the strength of the particulars provided in the amended defence, the defendants have a respectable prospect of persuading the jury that even the plaintiff's original imputations are substantially true.

37 In all the circumstances, I am persuaded that the plaintiff ought to be allowed to amend in the manner foreshadowed in the second further amended statement of claim. I will hear the parties as to costs.

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Decision last updated: 24 November 2014