Aboriginal Nations Pty Limited v John Fairfax Publications Pty Limited & Anor [1998] ACTSC 79 (14 August 1998)

Last Updated: 13 October 1999

Aboriginal Nations Pty Limited v John Fairfax Publications Pty Limited & Anor [1998] SCACT 79 (14 August 1998)

CATCHWORDS

PRACTICE & PROCEDURE - Defamation proceedings - Interlocutory application - Application to strike out certain imputations set out in the Statement of Claim - Whether words complained of referring to individuals are reasonably capable of a defamatory meaning actionable by a corporation - Test to be applied is that of an ordinary reasonable reader.

No. SC 278 of 1997

Coram: Master T Connolly

Supreme Court of the ACT

Date: 14 August 1998

IN THE SUPREME COURT OF THE )

) No. SC 278 of 1997

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: ABORIGINAL NATIONS PTY

LIMITED

Plaintiff

AND: JOHN FAIRFAX PUBLICATIONS

PTY LIMITED

First Defendant

AND: WEST AUSTRALIAN

NEWSPAPERS LIMITED

Second Defendant

ORDER

Judge Making Order: Master T Connolly

Where Made: Canberra

Date of Order: 14 August 1998

THE COURT ORDERS THAT:

1. Paragraphs 5 and 7 of the Statement of Claim filed herein be struck out.

1. This is an application by way of Notice of Motion to strike out certain imputations in the Statements of Claim in defamation proceedings brought by the plaintiff, a corporation, against the two defendants, who both publish a daily newspaper.

2. The matter complained of is an article published in the Sydney Morning Herald and the West Australian on 14 September 1997. The text of the matter complained of is attached to the Statement of Claim in the form of Schedule A (the Sydney Morning Herald story) and Schedule B (the West Australian story). The articles are substantially similar, but the Sydney Morning Herald Story is headlined "Police Investigate Aboriginal Film" while the West Australian story is headlined "Conflict Found in TV deal." The significance of the headline will be addressed later in these reasons.

3. The articles state that an internal investigation conducted by the Australian Broadcasting Corporation found a "conflict of interest" in relation to the commissioning of a documentary film, and that the Australian Federal Police have been called in to investigate the allegation. The article states that two named individuals who were at the time ABC employees approached their boss, who was the executive producer of the Indigenous Program Department, and proposed that the ABC buy a documentary film produced by the present plaintiff company. The two named individuals are described as "part owners" of the plaintiff company.

4. There are broadly two categories of imputation which are sought to be struck out in the present application. The first, which is pleaded in paragraph 5 of the Statement of Claim in relation to the first defendant and paragraph 7 of the Statement of Claim in relation to the second defendant, is that the matter complained of imputes that the plaintiff company was a party to a conflict of interest, had dishonestly profited from a sale and had engaged in criminal conduct or conduct warranting police investigation. The second, which is pleaded in paragraph 8 of the Statement of Claim, is that the matter complained of imputes that the plaintiff company, which conducts its business on the basis that it is a non profit organisation for the purposes of advancing an awareness of Aboriginal culture, was used for the private profit of individual shareholders rather than for the benefit of the Aboriginal community generally.

5. The defendants argue that the imputations in paragraphs 5 and 7 should be struck out because the matter complained of goes to the conduct of the named individuals, and that the conflict of interest which is alleged to have occurred involves those individuals. Any defamatory imputation, it is argued, is a matter for the named individuals, and not the corporate plaintiff which the individuals are said to be "part owners" of. It is common ground that the named individuals have indeed commenced defamation proceedings in the Supreme Court of New South Wales, and indeed an application to cross vest the present proceedings to that Court was rejected by Chief Justice Miles (Aboriginal Nations Pty Ltd v John Fairfax Publications Pty Ltd & Another [1998] SCACT 27).

6. It is of course an appropriate procedure to seek an order at an early stage in proceedings as to whether the words complained of by a plaintiff in a defamation case are reasonably capable of a defamatory meaning. The test to be applied is that of an ordinary reasonable reader, and it is important to bear in mind the test set down by Mason J in Mirror Newspapers v Harrison [1982] HCA 50; (1982) 149 CLR 293 at 301

"A distinction needs to be drawn between the reader's understanding of what the newspaper is saying and judgments or conclusions which he may reach as a result of his own beliefs and prejudices. It is one thing to say that a statement is capable of bearing an imputation defamatory of the plaintiff because the ordinary reasonable reader would understand it in that sense, drawing on his own knowledge and experience of human affairs in order to reach that result. It is quite another thing to say that a statement is capable of bearing such an imputation merely because it excites in some readers a belief or prejudice from which they proceed to arrive at a conclusion unfavourable to the plaintiff. The defamatory quality of the published material is to be determined by the first, not by the second, proposition. Its importance for present purposes is that it focuses attention on what is conveyed by the published material in the mind of the ordinary reasonable reader."

7. The ordinary reasonable reader has been further described by Hunt CJ at CL (with whom Mason P and Handley JA agreed) in Amalgamated Television Services Pty Ltd v Marsden (1998) 43 NSWLR 158 at 165.

"The ordinary reasonable reader (or listener or viewer) is a person of fair average intelligence (Slayter v Daily Telegraph Newspaper Co Ltd [1908] HCA 22; (1908) 6 CLR 1 at 7) who is neither perverse (ibid at 7), nor morbid or suspicious of mind (Keogh v Incorporated Dental Hospital of Ireland [1910] 2 Ir R 577 at 586), nor avid for scandal (Lewis v Daily Telegraph Ltd [1964] AC 234 at 277). That person does not live in an ivory tower but can and does read between the lines in the light of that person's general knowledge and experience of worldly affairs."

8. The defendants argued that I should find the law to be broadly as stated by the authors of Browns The Law of Defamation in Canada, Carswell (2^nd ed) 1994 pp1195-6 where the learned author states

"The rule generally is that a corporation cannot maintain an action for defamation personal to one of its stockholders, officers or members. Where the defamatory matter reflects solely upon an officer or director, the company has no standing to complain of the defamation. The corporation itself must be the subject of the charge of impropriety. This is true even though the corporation's standing in the community has been diminished and it has been injured by the remarks. However, there are occasions where personal accusations against an officer, director or employee may be defamatory of the corporation as well. Whether that is the case depends `upon the part that the director or officer is alleged to have played in the operations of the company and upon the extent to which the one is identified with or considered to be the alter ego of the other' (per Hunt J Bargold Pty Ltd v Mirror Newspapers Ltd [1981] 1 NSWLR 9 at 11). The question is whether the persons to whom an article refers and the corporation are so closely identified in the public mind that the accusation would be understood to be defamatory of the corporation."

I am satisfied that this provides an adequate statement of the law.

9. Taking all of the above into account, I am satisfied that the matters complained of are not capable of being read by the ordinary reader as saying anything defamatory about the plaintiff company, as opposed to the named individuals.

10. In forming this view I note that what is alleged in the matter complained of is a conflict of interest which it is alleged the named individuals had in urging the purchase of a film by their then employer, without divulging to that employer that they were part owners of the company selling the film. To the extent that the matters complained of suggest an impropriety, it seems to me that it was an impropriety by the named individuals, as employees, in proposing a sale to their employer without divulging their status as part owners of the company. To take an analogy, if it was alleged that a public official (such as a Minister of the Crown or a judicial officer) had a "conflict of interest" because they were involved in a decision involving (say) a bank while holding shares in the bank, the defamation would surely be actionable only by the individual, and not the bank. In the present matter all that is said is that the named individuals are part owners of the plaintiff company. The extent of their ownership is unknown, as is the extent, if any, of their control. It seems to me that the present plaintiff can in no way be said to be the "alter ego" of the named individuals against whom the conflict of interest allegations have been made.

11. I should refer at this point to the alleged significance of the headline in the Sydney Morning Herald article. Counsel for the plaintiff argued that the headline "Police Investigate Aboriginal Film" was of particular significance and would lead the ordinary reader to find that the body of the article referred to, and made imputations defamatory of, the plaintiff company, Aboriginal Nations Pty Ltd. I am satisfied that in deciding whether the material complained of can bear the imputations claimed, the whole of the article must be considered. That is to say, to adopt the words of Glass JA in World Hosts Pty Ltd v Mirror Newspapers Ltd [1976] 1 NSWLR 712 at 725,

"...the legal effect of a headline cannot be judged in isolation, but must be considered together with matters appearing in the body of the report which qualify or explain it. The jury cannot be asked by the plaintiff to disregard what the defendant is entitled to have them consider. A headline which, standing alone, was capable of being defamatory was held not to be so capable having regard to the qualifying material appearing in the body of the report. In this Court the general proposition has been laid down that, in considering whether words are capable of bearing a defamatory meaning, regard must be paid to the entirety of the report in which they appear, and in particular to any passages which materially alter or qualify the complexion which the imputation would otherwise bear."

12. Taking the headline together with the whole of the article as published in the Sydney Morning Herald, it seems to me clear that the investigation would be taken by the ordinary reader to be an investigation into the conflict of interest alleged in the named individuals arising from their involvement in arranging with their then employer, the ABC for the ABC to purchase a film produced by a company in which they had a financial interest as part owners. For the reasons stated above I find that to the extent that the material complained of is capable of being defamatory, it is defamatory of the named individuals and not the plaintiff company.

13. It follows that I find that paragraphs 5 and 7 of the Statement of Claim are not capable of sustaining the defamatory meanings claimed against the plaintiff, and I should strike these paragraphs out.

14. The defendants argued that the same reasoning would apply to paragraph 8 of the Statement of Claim, which pleaded a true innuendo. However, in the course of argument counsel conceded that there was an appreciable difference between the matters pleaded in paragraph 8 and paragraphs 5 and 7. What is pleaded in paragraph 8 is that the plaintiff engaged in a deception of members of the public in allowing itself to be used for the profit of individual shareholders and not for the benefit of the Aboriginal community whilst claiming that it was being conducted altruistically for the benefit of the Aboriginal community in general. This, it seems to me, goes directly to the interests of the company, and properly pleads that the material complained of is defamatory of the company. It does not rely on the alleged defamation of named individuals who are shareholders in the company, but goes directly to the interests of the company. I thus find that the matter pleaded in paragraph 8 is capable of being defamatory of the company, as opposed to the named individuals.

15. Counsel for the plaintiff correctly conceded that there is authority that a Court will in general be reluctant to deal with an application made prior to a final hearing that a true innuendo be struck out or otherwise summarily disposed of (Love v Mirror Newspapers Ltd [1980] 2 NSWLR 112 at 123-4, Searle v Mirror Newspapers Ltd [1974] 180 at 187). Given this approach, and the fact that I am satisfied that the true innuendo pleaded does relate properly to the plaintiff company in its own capacity rather than in a derivative capacity from that of the named individuals, I am not satisfied that I should strike out paragraph 8 of the Statement of Claim.

16. The parties asked that they be given leave to present written submissions on the question of costs following the publication of my order and reasons, and this seems an appropriate course.

I certify that this and the six (6) preceding pages are a true copy of the Reasons for Judgment herein of the Master, Mr T Connolly.

Associate:

Date: 14 August 1998

Counsel for the Plaintiff: Mr P W Gray

Instructing Solicitors: Snedden Hall & Gallop

Counsel for the First Defendant: Mr A Leopold

Instructing Solicitors: Freehill Hollingdale & Page

Counsel for the Second Defendant: Mr A Leopold

Instructing Solicitors: Allen Allen & Hemsley

Dates of hearing: 31 July 1998

Date of judgment: 14 August 1998