John Holland Group Pty Ltd & Anor v John Fairfax Publications Pty Ltd & Anor [2006] ACTSC 34 (21 April 2006)

Last Updated: 22 May 2006

JOHN HOLLAND GROUP PTY LTD & ANOR v JOHN FAIRFAX PUBLICATIONS PTY LTD & ANOR

[2006] ACTSC 34 (21 April 2006)

 

 

DEFAMATION - whether imputations pleaded in statement of claim capable of being conveyed by matter complained of - whether imputations pleaded capable of being defamatory.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

No SC 650 of 2005

 

 

 

Judge: Master Harper

Supreme Court of the ACT

Date: 21 April 2006IN THE SUPREME COURT OF THE )

) No SC 650 of 2005

AUSTRALIAN CAPITAL TERRITORY )

 

BETWEEN: JOHN HOLLAND GROUP PTY LIMITED

ACN 050 242 147

First Plaintiff

STEPHEN SASSE

Second Plaintiff

 

AND: JOHN FAIRFAX PUBLICATIONS PTY LTD

ACN 003 357 720

First Defendant

ELIZABETH KAZI

Second Defendant

 

ORDER

 

Judge: Master Harper

Date: 21 April 2006

Place: Canberra

 

THE COURT ORDERS THAT:

 

1. The plaintiff have leave to amend paragraph 8(a) of the Amended Statement of Claim by deleting the word "which" and substituting the words "in that it".

2. The application made by Notice of Motion dated 12 January 2006 on behalf of the defendants be dismissed.

3. The defendants pay the plaintiffs' costs of that application.

1. The plaintiffs in this action claim that each of them has been defamed in an article written by the second defendant and published by the first defendant in the Australian Financial Review on 5 August 2005. The defendants have applied for orders that a number of pleaded imputations be struck out. If the application is fully successful, the first plaintiff's claim will fall in its entirety. The defendants assert that some of the pleaded imputations are not capable of being defamatory, and that others are not capable of arising from the article; some are said to fall into both categories.

2. The article read as follows:

TEST OF BOSSES' RIGHTS TO SPY

Elizabeth Kazi

The John Holland Construction Group said it would reprimand its industrial relations manager for aggressive surveillance against an employee that included spying on his home, monitoring confidential emails and chasing bank records.

The company not only sent a private investigator to tail senior manager Robert Serventi, it monitored employees' emails, including confidential correspondence with lawyers on whether to take redundancy. It also hired an auditor to check up on his bank records and organised covert surveillance of his home.

The revelations were made in a case before the Federal Court in Sydney last week. The breach of contract case, which has been adjourned until September, is also likely to test the limits of a company's right to conduct covert surveillance of its employees.

Mr Serventi, formally general manager of a division of Transfield Constructions, and later of Grid-Comm, is suing John Holland Group and its managing director, William Wild, for damages of about $1 million for misrepresentation and breach of contract.

Mr Serventi was sacked in October 2003 because of the alleged inappropriate use of a company car, using a company employee to work on his own personal residence and hiring his son as a project manager.

He told the court, however, he had voiced concerns to Mr Wild about working with general manager of industrial relations Stephen Sasse. Mr Sasse started investigating Mr Serventi around August 2003, because the company was considering restructuring Mr Serventi's position.

According to court testimony, Mr Sasse organised the surveillance of Mr Serventi's emails, including independent legal advice on his dispute with the company.

Mr Sasse later sent a fax to his solicitors saying he monitored employees' emails if he suspected they were being "mischievous".

Mr Serventi's barrister, Arthur Moses, argued that Mr Sasse's behaviour was "nothing short of disgraceful and contrary to appropriate standards that would be expected of a public company".

When Mr Wild was cross-examined by Mr Moses, he conceded it would be a breach of the company's code of ethics, protecting an individual's right to privacy, to access an employee's emails.

Mr Wild told the court steps would be taken to reprimand Mr Sasse for his behaviour.

But Mr Wild declined to make any comment to The Australian Financial Review on whether any action had yet been taken.

3. The article was illustrated by a photograph of an unidentified female who appeared to be working at a computer on a desk against a wall, with a number of adjoining screens at the top of the wall angled towards her. The screens appeared to be displaying a number of different internal views within a building, consistently with their being views from surveillance cameras. The caption to the photograph read "The company agrees the email checks breached its own code" and included an acknowledgement of the name of the photographer.

4. The challenged imputations are set out in paragraphs 8 and 9 of the Statement of Claim in its present amended form, which are in the following terms:

8. The matter complained of was defamatory of the first plaintiff in its natural and ordinary meaning and in such meaning conveyed imputations defamatory of him.

Particulars of imputations

a) The first plaintiff was a dishonourable company which sent a private investigator to tail Robert Serventi, monitored his confidential emails and chased his bank records;

b) The first plaintiff employed as its general manager of industrial relations, the second plaintiff, who in relation to the surveillance of Robert Serventi conducted himself in a disgraceful manner and contrary to the appropriate standards expected of a public company;

c) The first plaintiff's monitoring of its employee Robert Serventi's emails breached its own code of ethics which protected the right of employees to privacy;

d) The first plaintiff permitted the second plaintiff to undertake an aggressive investigation into Mr Serventi including spying on his home, checking his bank records and monitoring his confidential emails, merely because the first plaintiff wished to restructure Mr Serventi's position; and

e) The first plaintiff employed as its general manager of industrial relations a man who spied on John Holland's employee Mr Serventi's emails for a reason as spurious as his own suspicion that Mr Serventi was behaving "mischievously".

9. The matter of complained [of] was defamatory of the second plaintiff in its natural and ordinary meaning and in such meaning conveyed imputations defamatory of him.

Particulars of imputations

a) The second plaintiff's conduct as the general manager of industrial relations for the first plaintiff was such as to warrant a reprimand from his employer for the aggressive surveillance of Robert Serventi which included spying on his home, monitoring his confidential emails and chasing his bank records;

b) The second plaintiff's behaviour as the general manager of industrial relations for the first plaintiff in relation to the surveillance of Robert Serventi was disgraceful and contrary to appropriate standards that would be expected of a person in his position at a public company;

c) The second plaintiff in his position as the general manager of industrial relations for the first plaintiff, organised monitoring of the first plaintiff employee Robert Serventi's emails which breached the first plaintiff's own code of ethics protecting the right of employees to privacy;

d) The second plaintiff in his position as the general manager of industrial relations for the first plaintiff conducted an aggressive investigation into Mr Serventi including spying on his home, checking his bank records and monitoring his confidential emails merely because the first plaintiff wished to restructure Mr Serventi's position; and

e) The second plaintiff in his position as the general manager of industrial relations for the first plaintiff, spied on John Holland's employee Mr Serventi's emails for a reason as spurious as his own suspicion that he was behaving "mischievously".

5. There was some argument on the hearing of the application as to whether paragraph 8(a) was ambiguous. This was resolved by my offering the plaintiff leave to amend the paragraph to remove the potential ambiguity. The proposal was acceptable to counsel for all parties, and I formally grant leave to amend paragraph 8(a) by deleting the word "which" and substituting the words "in that it". I proceed to deal with the present application on the footing that the amendment has been made, so that paragraph 8(a) now reads:

The first plaintiff was a dishonourable company in that it sent a private investigator to tail Robert Serventi, monitored his confidential emails and chased his bank records;

6. In the Notice of Motion by which the application was brought, the defendants challenged paragraphs 8(a), (b), (d) and (e), and paragraphs 9(d) and (e) of the Amended Statement of Claim. On hearing, I granted leave to counsel for the defendants to include a challenge to paragraph 9(c), so that all imputations asserted in respect of the first plaintiff were placed in issue.

7. The submission of the defendants in relation to paragraph 8(a) is that the imputation is not capable of arising, it being clear from the first paragraph of the article that the company does not approve of Mr Sasse's conduct and expresses its intention to reprimand him for it. For the imputation to arise in relation to the company, it is submitted that some material in the article suggesting participation or approval by the company would be required.

8. The imputation set out in paragraph 8(b) is said to be incapable of being defamatory of the company, because it does not attribute any defamatory act or condition to the company. The only act referred to is the employment of Mr Sasse. The sting of the imputation is against Mr Sasse in respect of his conduct, which the article makes clear is his own conduct and not that of the company. (Paragraph 8(b) might also be said to be ambiguous, to the extent that the word "employed" could be interpreted as referrable to the original engagement by the company of Mr Sasse as general manager of industrial relations. Alternatively it could be interpreted as meaning the continuing employment of Mr Sasse in that capacity during the whole period of his time with the company, including the period when he engaged in the conduct described in the article. For the purpose of the present application I take the word "employed" to be used in the latter sense.)

9. The objection of the defendants to paragraph 8(c) is that it is plain from the article that the monitoring of Mr Serventi's emails was being conducted by Mr Sasse and not by the company. Hence the breach of the company's code of ethics was a breach by Mr Sasse and not a breach by the company itself: no reasonable reader could conclude otherwise. The pleaded imputation is thus incapable of arising.

10. It is further submitted on behalf of the defendants that the imputation contained in paragraph 8(d) is not capable of arising. The significant feature of the imputation is the notion of permission by the company to Mr Sasse to undertake the impugned conduct. Counsel for the defendants submits that nothing in the article supports the assertion that the company permitted Mr Sasse to engage in the conduct. On the contrary, the article conveys quite the opposite state of affairs, that the company when informed of the conduct expressed its disapproval of it and resolved to reprimand Mr Sasse.

11. The defendants attack paragraph 8(e) on the same basis as 8(b): the mere fact of employing Mr Sasse, counsel submits, is incapable without more of being defamatory.

12. Counsel for the defendants does not take issue with paragraphs 9(a), (b) and (c). Paragraph 9(d) is challenged as being incapable of being defamatory. It is submitted that there is nothing defamatory in stating that a person conducted an aggressive investigation per se, nor is there anything defamatory in the reason given. Accordingly the paragraph does not attribute any defamatory act or condition to Mr Sasse. The word "merely" may suggest that the reason for the investigation was insufficient: there is nothing in the article to support this. The imputation pleaded would not be capable of arising even if it were capable of being defamatory.

13. Counsel for the defendants finally submits that the imputation in paragraph 9(e) is not capable of being defamatory of the second plaintiff, Mr Sasse. It is not clear what defamatory act or condition it asserts against him. If there is an identifiable sting in the imputation, it may be that the reason for Mr Sasse's behaviour was "spurious". Counsel submits that doing something for a spurious reason is not likely to lead ordinary right-thinking members of the community to think less of a person.

14. The principles applicable to the present application are summarised in a recent decision of Crispin J, Icon International Communications Pty Ltd v Nationwide News Pty Ltd [2005] ACTSC 110. I shall paraphrase and summarise them briefly.

15. In exercising the discretion to strike out imputations, the court must approach the task with great caution. If it is possible that reasonable minds may differ on whether or not the matter complained of is capable of conveying a defamatory meaning, this is a strong reason for refusing the application: Favell v Queensland Newspapers Pty Ltd [2005] HCA 52.

16. Material is capable of conveying the pleaded defamatory imputation if a jury, properly instructed, could reasonably come to the view that the words were defamatory of the plaintiff in the manner alleged: Bik v Mirror Newspapers Ltd [1979] 2 NSWLR 679 at 681. The question to be determined is what the words used would convey to the ordinary man. The words are not to be construed in the legal sense. The ordinary man is not inhibited by a knowledge of the rules of construction, and reads between the lines in the light of his general knowledge and experience. Ordinary men and women have different temperaments and outlooks. Some are unusually suspicious and some are unusually naïve. The task of the court is to envisage readers between these two extremes and to ask what is the most damaging meaning those readers would put on the words in question. The natural and ordinary meaning of the words includes the meaning which the ordinary man or woman would infer without special knowledge, including, beyond the words themselves, what the ordinary man or woman would infer from them: Lewis v Daily Telegraph Ltd [1964] AC 234 per Lord Reid at 258-259.

17. The ordinary reader has been described as a "reasonable reader, a "right-thinking member of society", an "ordinary man, not avid for scandal" and a "reader of average intelligence". The ordinary reader is assumed not to have any special knowledge, and not to be unusually suspicious or cynical on the one hand, or naïve and gullible on the other: Chakravarti v Advertiser Newspapers Ltd [1998] HCA 37; [1998] 193 CLR 519 per Kirby J at para [134.1].

18. In considering whether a pleaded imputation is capable of being conveyed, a wide degree of latitude will be attributed to the capacity of the ordinary reasonable member of society to draw adverse imputations where the language employed has been imprecise, ambiguous or loose, but a strained or forced or utterly unreasonable interpretation will be rejected. The nature of the publication may be relevant: the reader of a non-sensational article will be taken to apply a greater degree of analytical focus than the reader of a sensational publication: John Fairfax Publications Pty Ltd v ACP Publishing Pty Ltd [2005] ACTCA 12.

19. Whether or not an imputation is capable of arising, and whether or not an imputation is capable of being defamatory, are both questions of law, to be determined prior to the consideration of the factual issues: a distinction of greater significance in jurisdictions where factual issues in defamation proceedings are still determined by juries.

20. The submissions of counsel for the plaintiffs require one to focus on the appearance of the article as printed, including its headline, photograph and caption. The second paragraph of the article refers to the company in specific terms as having "... sent a private investigator to tail ... [Mr] Serventi, ... monitored employees' emails, including confidential correspondence with lawyers, ... hired an auditor to check up on [Mr Serventi's] bank records and organised covert surveillance of his home." Further, the caption to the photograph can be read as an assertion against the company direct of improper conduct. The article in its fourth-last paragraph quotes counsel for Mr Serventi in the Federal Court proceedings as arguing that Mr Sasse's behaviour was "nothing short of disgraceful and contrary to appropriate standards that would be expected of a public company." (my italics) Finally, in the third-last paragraph of the article, the managing director of the company, Mr Wild, is reported as having conceded in cross-examination that it would be a breach of the company's code of ethics to access an employee's emails. Counsel for the plaintiffs submits that these portions of the article directly target the company.

21. Counsel for the plaintiffs also submits that defamatory reflections on a director or officer of a company are capable of amounting to a defamatory reflection on the company itself. In support of this proposition, the plaintiffs rely on two decisions: Bargold Pty Ltd v Mirror Newspapers Ltd [1981] 1 NSWLR 9, a decision of Hunt J; and National Roads and Motorists Association Ltd v Nine Network Australia Pty Ltd (Supreme Court of the Australian Capital Territory, 17 May 2002, unreported) a decision of Connolly J when Master. I am not persuaded that either of those decisions is helpful for present purposes. In Bargold, the plaintiff company was a private company controlled by Mr Alexander Barton and his son Mr Thomas Barton. Hunt J made it clear that an imputation concerning a director or officer of a company could reflect on the company itself, depending on the part that the director or officer played in the operations of the company and the extent to which the one was identified with or considered to be the alter ego of the other.

22. Master Connolly's decision in the NRMA case was based upon a somewhat different factual background. His Honour held that the question was whether a reasonable hypothetical reader or viewer would equate the conduct and reputation of the company with that of the named director whose conduct was impugned. On the facts of the case, the Master held that an allegation of bribery and blackmail against a director was capable of being defamatory of the company.

23. It seems to me that the present circumstances are very different. I take judicial notice of the fact that the first plaintiff is a large public company, and that Mr Sasse, though the holder of a senior management position, was far from the alter ego of the company. Had the offending conduct been that of the managing director, Mr Wild, it might have been a different story. But Mr Sasse was, in my view, too far removed from control of the company for allegations of misconduct on his part to be capable, of themselves, of being defamatory of the company.

24. Counsel for the plaintiffs acknowledged that an article which makes defamatory assertions about a company or individual may be found not to have been defamatory if it subsequently makes clear that the assertions have proved to be untrue or unfounded; the present case was not, however, one which taken as a whole contained a complete rebuttal of the disparaging allegations: where there was an antidote which removed or neutralised the initial bane. It seems to me that this analysis is correct.

25. As to paragraph 8(a), I am strongly influenced by the second paragraph of the article in coming to the view that the imputation contained in it is capable of arising. The author of the article chose to attribute the conduct described in the second paragraph to the company itself rather than to Mr Sasse. Nothing in the rest of the article adequately counteracts the assertion in the second paragraph. The imputation pleaded in paragraph 8(a) is undoubtedly capable of being defamatory.

26. I am also satisfied that the imputation pleaded in paragraph 8(b) is capable of arising from the article, reading it, as I have previously explained, as referable to the continuing employment by the company of Mr Sasse and not to his initial engagement. The article asserts that Mr Sasse commenced his investigation of Mr Serventi because the company was considering restructuring Mr Serventi's position. "Restructuring" might mean many things but the ordinary reader would be highly likely to read it as referring to a corporate intention to dispense with Mr Serventi's services entirely. The article in no way suggests that Mr Sasse was acting other than in what he saw to be the interests of the company, nor does it suggest that the company was quick to distance itself from his behaviour or objectives. On the contrary, a reader would gain the impression that the company saw Mr Sasse's behaviour as far less serious than that of Mr Serventi.

27. The imputation pleaded in paragraph 8(c) is perhaps a little more difficult, and might not arise if the article were limited to its text. However, the photograph and caption form part of the published matter and the caption is worded in such a way as to convey the meaning that the company itself was in breach of its code of ethics. I am satisfied that the imputation arises and is capable of being defamatory.

28. Paragraph 8(d) contains two elements: firstly, the concept of permission by the company to Mr Sasse to investigate Mr Serventi; and secondly, the reason for the investigation and the reason the permission was given: the company's wish to restructure Mr Serventi's position. A reading of paragraph 8(d) suggests that there may be circumstances which would justify an aggressive investigation (such as, perhaps, evidence pointing towards dishonesty) but that an aggressive investigation could never be seen as justifiable in the context of a desire to abolish a position and dispense with an employee's services. Seen in this way, it seems to me that the imputation does arise from the article. It is unquestionably capable of being defamatory.

29. Paragraph 8(e) is in some respects in a similar category to paragraph 8(d). It is argued to arise in particular from the paragraph of the article which reads:

Mr Sasse later sent a fax to his solicitors saying he monitored employees' emails if he suspected they were being "mischievous".

Counsel for the plaintiffs submits that the author's use of the word "mischievous" in inverted commas is a "dig" at both Mr Sasse and the company, being presented as a frivolous non-reason. In other words, the author is conveying the message that Mr Sasse reserved to himself the right to monitor emails of his fellow employees at his own whim. Counsel for the defendants, on the other hand, submits that the word "mischievous" is quoted in inverted commas simply because it is a direct quote from the fax which, a reader would infer, was in evidence in the Federal Court action to which the article relates.

30. I am more inclined to the interpretation put upon the quote by counsel for the plaintiffs. It seems to me that the ordinary reader would read the paragraph similarly. In these circumstances, I agree that the imputation is capable of arising. For the same reason, it seems to me capable of being defamatory.

31. The defendants do not take issue with paragraphs 9(a), (b) and (c), particulars of imputations pleaded in respect of the second plaintiff. Counsel for the defendants objects to paragraphs 9(d) and (e), generally on the same basis and for the same reasons as paragraphs 8(d) and (e). For the same reasons, I am satisfied that the imputations pleaded in both those paragraphs are capable of arising and of being defamatory.

32. I am reinforced in my conclusions as to the manner in which the ordinary reader would read the article by the last paragraph, which immediately follows the statement that Mr Wild told the court that steps would be taken to reprimand Mr Sasse for his behaviour. The last paragraph reads:

But Mr Wild declined to make any comment to The Australian Financial Review on whether any action had yet been taken.

33. It seems to me that this paragraph is calculated to give the ordinary reader the impression that at the time of publication, the company had not reprimanded Mr Sasse, and that it was unlikely to do so, or at least unlikely to deliver a reprimand which would be taken seriously on either side. Counsel for the defendants submits that the ordinary reader would take account of the fact that Mr Wild may still have been under cross-examination when spoken to by the author and subject to the constraints which that involves. Alternatively, the ordinary reader would be aware that Mr Wild was under no obligation to make any comment and may perfectly reasonably have decided not to engage in any discussion with a journalist about the case. Whilst I accept that some readers might have read the concluding paragraph with such factors in mind, it seems to me that they would be likely to be in a minority and that the typical ordinary reader would read the paragraph as suggesting that what Mr Wild had told the court about the proposed reprimand was not to be taken particularly seriously.

34. The application by the defendants has been unsuccessful in respect of each of the pleaded imputations. The application will be dismissed with costs.

I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Master Harper.

 

Associate:

Date: 21 April 2006

Counsel for the plaintiffs: Mr M F Richardson

 

Solicitor for the plaintiffs: Colquhoun Murphy

 

Counsel for the defendants: Mr A T S Dawson

 

Solicitor for the defendants: Phillips Fox

 

Date of hearing 24 February 2006

 

Date of judgment 21 April 2006