Bond v Barry [2008] FCAFC 115 (23 June 2008)

TRADE PRACTICES – appellants claimed email of article from the first respondent, a freelance journalist, to media organisation was misleading and deceptive and not protected by the media safe harbour defence – primary judge found no reasonable prospects of success and summarily dismissed the application – proper construction of s 65A of the Trade Practices Act 1974 (Cth) – ‘publication’ includes communication of prescribed information from freelance journalist to media organisation – exception to media exemption in s 65A(1)(a)(i) of the Trade Practices Act – article covering corporate misdeeds not relevantly "in connection with" the provision of journalistic services – decision of primary judge affirmed

Federal Court of Australia Act 1976 (Cth) s 31A
Trade Practices Act 1974 (Cth) ss 52, 65A

Advanced Hair Studio Pty Ltd v TVW Enterprises Ltd (1987) 18 FCR 1 referred to
Australian Ocean Line Pty Ltd v West Australian Newspapers Ltd [1983] FCA 66; (1983) 66 FLR 453 referred to
Carlovers Carwash Ltd v Sahathevan [2000] NSWSC 947 applied
Channel Seven Brisbane Pty Limited v Australian Competition & Consumer Commission [2008] FCAFC 114 distinguished
General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 referred to
Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd [1984] FCA 180; (1984) 2 FCR 82 referred to
Horwitz v Grahame Books Pty Ltd (1987) 8 IPR 25 referred to
J F Keir Pty Limited v Sparks [2008] FCA 611 referred to
Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited [2008] FCAFC 60 discussed
TCN Channel Nine Pty Ltd v Ilvariy Pty Ltd [2008] NSWCA 9 applied
Universal Telecasters (Qld) Ltd v Ainsworth Consolidated Industries Ltd [1983] FCA 195; (1983) 78 FLR 16 referred to
Universal Telecasters (Qld) Ltd v Guthrie (1978) 32 FLR 360 referred to
Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661 referred to

ALAN BOND AND LESOTHO DIAMOND CORPORATION PLC v PAUL BARRY, NEWS DIGITAL MEDIA PTY LIMITED (ACN 000 529 457), NATIONWIDE NEWS PTY LIMITED (ACN 008 438 828), NEWS LIMITED (ACN 007 871 178) AND NEIL LAURENCE BREEN
WAD 192 OF 2007

SUNDBERG, JACOBSON & LANDER JJ
23 JUNE 2008
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAD 192 OF 2007

BETWEEN:	ALAN BOND First Appellant LESOTHO DIAMOND CORPORATION PLC Second Appellant
AND:	PAUL BARRY First Respondent NEWS DIGITAL MEDIA PTY LIMITED (ACN 000 529 457) Second Respondent NATIONWIDE NEWS PTY LIMITED (ACN 008 438 828) Third Respondent NEWS LIMITED (ACN 007 871 178) Fourth Respondent NEIL LAURENCE BREEN Fifth Respondent

JUDGE:	SUNDBERG, JACOBSON & LANDER JJ
DATE OF ORDER:	23 JUNE 2008
WHERE MADE:	SYDNEY

2. The appellants pay the costs of the proceedings.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAD 192 OF 2007

BETWEEN:	ALAN BOND First Appellant LESOTHO DIAMOND CORPORATION PLC Second Appellant
AND:	PAUL BARRY First Respondent NEWS DIGITAL MEDIA PTY LIMITED (ACN 000 529 457) Second Respondent NATIONWIDE NEWS PTY LIMITED (ACN 008 438 828) Third Respondent NEWS LIMITED (ACN 007 871 178) Fourth Respondent NEIL LAURENCE BREEN Fifth Respondent

JUDGE:	SUNDBERG, JACOBSON & LANDER JJ
DATE:	23 JUNE 2008
PLACE:	SYDNEY

1 This appeal raises two questions of construction of the media safe harbour defence contained in s 65A of the Trade Practices Act 1974 (Cth).

2 Mr Paul Barry is a freelance journalist. He researched and wrote an article about Mr Alan Bond and Lesotho Diamond Corporation PLC ("Lesotho") which he communicated by email to Mr Neil Breen, the editor of the Sunday Telegraph. The article was published in that newspaper, and in other newspapers, and on a website, all of which are owned or operated by companies within the News Group.

3 The article appeared under bold headlines with photographs of Mr Bond. There were various headlines including "Bond the $1B Man" and "The greed that won’t let Alan Bond rest – special investigation – America’s Cup Hero and convicted fraudster poised to become oil and diamond billionaire".

4 Mr Bond and Lesotho claimed that Mr Barry engaged in conduct that was misleading or deceptive, in contravention of s 52 of the Act, by sending the draft article to Mr Breen, who is said to have contravened s 52 by sending the article by email to other editors: see also s 6(3) of the Act. The corporate respondents are said to have been knowingly involved, or to have aided and abetted, the contravention.

5 The learned primary judge, French J, found that the transmission of the article by the email from Mr Barry was protected by the exemption from liability for contravention of s 52 which is contained in s 65A of the Act. His Honour was of the view that there was no reasonable room for debate about the construction of s 65A which would have enabled Mr Bond and Lesotho to establish that the transmission of the article by Mr Barry fell outside the exemption granted by that section: see Bond v Barry [2007] FCA 1484 at [46].

6 His Honour also held that the alleged intra-group transmission of the article by Mr Breen was covered by the exemption, as he was an employee of a prescribed information provider within s 65A: see at [45] of his Honour’s reasons.

7 French J concluded that the application filed by Mr Bond and Lesotho had no reasonable prospects of success. He ordered that the application be dismissed pursuant to
s 31A of the Federal Court of Australia Act 1976 (Cth). Leave to appeal from his Honour’s judgment, which was interlocutory, was given on 18 December 2007 by Gilmour J.

8 The first question of construction of s 65A which arises is whether the email from Mr Barry was a "prescribed publication" so as to enliven the exemption from liability granted by that section. This question turns on whether the email was a publication for the purposes of that section. Counsel for Mr Bond and Lesotho contends that the email was a private communication which was not encompassed by the ordinary meaning of "publication" which involves the concept of dissemination to the public.

9 The second question is whether the email was a publication of a matter "in connection with" the supply or possible supply of goods or services where the publication was made on behalf of or pursuant to an arrangement with a person who supplies goods or services of the kind referred to in s 65A(1)(a)(vi)(A).

10 This question focuses upon the limitation of the scope of the media safe harbour defence or exemption and seeks to rely upon the limitation to that exemption which is found in s 65A(1)(a)(i) and s 65A(1)(a)(vi)(A).

11 A further question which arises on the appeal is whether the primary judge was correct in concluding that Bond and Lesotho had no reasonable prospects of success on the issues of construction of s 65A. This issue raises the proper approach to the construction and operation of s 31A of the Federal Court Act.

The form of the proceeding before the primary judge

12 The primary judge had before him a motion for dismissal of the proceedings under
s 31A(1) of the Federal Court Act as against Mr Barry, and the corporate respondents. The motion was filed on 15 August 2007. Mr Bond and Lesotho filed an amended application and an amended statement of claim on 13 September 2007. The amendments, inter alia, added Mr Breen as a respondent.

13 The Notice of Motion does not appear to have been amended but it proceeded on the basis that Mr Breen joined with Mr Barry and the corporate respondents in moving for a dismissal.

14 The motion was determined on the pleadings which consisted of the Amended Statement of Claim and an amended defence.

15 The primary judge set out the factual narrative underlying the proceedings which he derived from the Amended Statement of Claim. It is unnecessary to repeat in full the details set out by his Honour. No challenge was made to the factual narrative.

16 The salient portions of the factual narrative may be stated briefly. Mr Barry researched and wrote the article between the middle of May 2007 and 1 June 2007. He did so under an oral agreement with Mr Breen.

17 Mr Barry sent the text of the article to Mr Breen by emails on or about 31 May 2007 and 1 June 2007. On receipt of the emails, Mr Breen is alleged to have sent the substance of the article by email to other editors of newspapers published by Nationwide News Pty Ltd.

18 The article was published in the Sunday Telegraph on 3 June 2007 and in other News Group media on the same day.

19 A copy of the article was annexed to the Amended Statement of Claim. The annexure appears to consist of two separate articles but counsel for Mr Bond and Lesotho informed us that no point was taken about this. Thus, the matter proceeded on the basis that Mr Barry’s emails contained the whole of the material contained in the "article" annexed to the Amended Statement of Claim.

20 Mr Bond and Lesotho allege that the article was misleading and deceptive because it contained eight false statements. We do not propose to repeat them but they include a statement that Mr Bond had fallen out with almost all of his fellow shareholders in Lesotho and a statement that:

21 The claims of misleading and deceptive conduct and accessorial liability are made under the Act and the corresponding provisions of the Fair Trading Act 1987 (NSW) and the Fair Trading Act 1987 (WA).

22 The Amended Defence contains an admission that Mr Barry researched and wrote the article. It pleads the terms of his engagement by Mr Breen including the remuneration paid to Mr Barry.

23 The allegations of misleading and deceptive conduct and accessorial liability are denied.

24 Mr Barry and Mr Breen invoked the media safe harbour defence in [11] and [11A] of the amended defence which, we will reproduce as follows:

26 Section 65A (2) provides, relevantly, that for the purposes of the section, a publication by a prescribed information provider is a prescribed publication if:

27 The term "prescribed information provider" is defined in s 65A(3). Relevantly, it means a person who carries on the business of providing information.

29 For the purposes of s 31A a proceeding need not be hopeless or bound to fail for it to have no reasonable prospects of success: s 31A(3).

30 Section 31A(4) provides that the section does not limit any powers that the Court has apart from this section.

31 The learned primary judge referred to the Second Reading Speech for the Bill which introduced the new s 65A of the Act in 1984 in response to a number of decisions of the Court which had suggested that a newspaper publisher may be taken to have contravened s 52 of the Act if an article contained inaccurate information.

32 His Honour was of the view at [35] that a person such as Mr Barry, who carries on business as a freelance journalist is plainly within the class of persons described in s 65A as a "prescribed information provider". He cited the decision of Levine J in Carlovers Carwash Ltd v Sahathevan [2000] NSWSC 947 at [36] as authority for this proposition.

33 As French J observed at [37], the exemption granted to a prescribed information providers in s 65A, applies only to a "prescribed publication of matter". The question which therefore arose was whether the transmission by a freelance journalist to a media organisation of an article for publication, itself constitutes publication.

34 His Honour said at [38] that, consistently with the dictionary definition of "publish", the meaning of the word "publication" involves the concept of dissemination to the public. His Honour said at [39]:

In my opinion, however, the ordinary and natural meaning of "publication" includes transmission of a news article to a media organisation for publication to the world at large.

35 His Honour went on to say at [40] that to exclude from the exemption granted in s 65A the supply of information by freelance journalists to a media organisation would, at least in part, defeat the purpose of the section as revealed in the Second Reading Speech. He said:

36 The remaining question of construction for his Honour was whether a freelance journalist who supplies a news article to a media organisation under a contract to do so is excluded from the exemption in s 65A.

37 His Honour rejected as untenable the construction proposed by Mr Bond and Lesotho. They submitted that Mr Barry, as a freelance journalist supplied services which fell within the limitation on the exemption contained in s 65A(1)(a)(i) read with s 65A(1)(a)(vi)(A).

39 His Honour also observed at [43] that in the absence of the exemption for the transmission of information or articles by a freelance journalist to media organisations, there would be a major and unintended gap in the ambit of the exemption "completely at odds with its purpose". This is because media organisations would be exposed to the risk of liability as accessories for publishing articles prepared for publication of freelance journalists containing material that may be misleading or deceptive.

40 As we said earlier, his Honour considered that the claims against Mr Barry and Mr Breen had no reasonable prospects of success. He accepted at [46], that summary disposition under s 31A of the FCA is to be approached with caution. But his Honour said:

41 As the learned primary judge observed at [30], s 65A was enacted in 1984 in response to concerns that news media may be liable for incorrect news reports under s 52 of the Act. He cited three decisions of Full Courts of the Federal Court and one of a judge of the Court sitting at first instance, which provided the source for these concerns.

42 The Full Court decisions were Universal Telecasters (Qld) Ltd v Guthrie (1978) 32 FLR 360; Universal Telecasters (Qld) Ltd v Ainsworth Consolidated Industries Ltd [1983] FCA 195; (1983) 78 FLR 16 and Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd [1984] FCA 180; (1984) 2 FCR 82. The first instance judgment was a decision of Toohey J in Australian Ocean Line Pty Ltd v West Australian Newspapers Ltd [1983] FCA 66; (1983) 66 FLR 453.

43 In Advanced Hair Studio Pty Ltd v TVW Enterprises Ltd (1987) 18 FCR 1 at 6-10, French J set out in some detail the extraneous material that revealed the genesis and purpose of s 65A. This included a consideration of the authorities of the Court referred to in the previous paragraph and an excerpt from the Second Reading Speech.

44 It is convenient to cite an extract from those parts of the Second Reading Speech which were reproduced by French J in Advanced Hair Studio at 9-10, as follows:

Recent decisions of the Federal Court have suggested that a newspaper publisher may be taken to have engaged in conduct that is misleading or deceptive for the purposes of section 52 of the Trade Practices Act if the newspaper contains inaccurate information...

New section 65A will operate to exempt the media and other persons who engage in businesses of providing information from the operation of those provisions of Division 1 of Part V of the Trade Practices Act which could inhibit activities relating to the provision of news and other information...

These provisions ensure that information providers are not exempt from the consumer protection provisions of the Trade Practices Act in respect of the provision of information where they have what might be regarded as a commercial interest in the content of the information. In such cases, information providers must take the same responsibility for the accuracy of information as any other person who publishes information in trade or commerce...

45 The decision of French J at first instance was explained and distinguished in the NSW Court of Appeal in TCN Channel Nine Pty Ltd v Ilvariy Pty Ltd [2008] NSWCA 9. Importantly, Spigelman CJ (with whom Beazley JA and Hodgson JA agreed), did so in a way which accepted the correctness of the decision, at least insofar as it dealt with the construction of "publication" in s 65A.

46 As Spigelman CJ observed at [53], the communication of a draft article by a journalist to a media organisation is one step removed from the act of publication; the protection of s 65A would be virtually non-existent if a journalist, who would usually be an employee of, and indemnified by, the publisher, could be successfully sued for supplying an article, the publication of which was protected.

The focus of the section upon "publication of matter"... "in the course of carrying on a business of providing information" indicates that there should exist, as there was in Bond v Barry, a close correspondence, perhaps even identity, between the "matter" published and the information "provided" by the business ...

48 We respectfully adopt the remarks of Spigelman CJ in the TCN Channel Nine case. In our view they are plainly correct and provide a complete answer to the submission put on behalf of Mr Bond and Lesotho.

49 There is no conceptual or policy justification for drawing a distinction between a freelance journalist submitting an intended news item and the submission by an employee of a media organisation who provides a draft proposed news item or commentary to his or her editor for evaluation with a view to publication.

50 The attempt by counsel for Mr Bond and Lesotho to characterise the email as of a "private" nature or as a "confidential" communication ignores the real world in which the mass publication of articles by media organisations takes place.

51 Furthermore, the submission is contrary to the basis on which Levine J approached the construction of s 65A in Carlovers. As with the present case, that case was concerned with the communication of material by email from a freelance journalist to a newspaper: see Carlovers at [10]-[13], [17] and [42].

52 Levine J assumed, without deciding, that the emails constituted a publication for the purpose of s 60 of the Fair Trading Act 1987 (NSW), which is the statutory equivalent of s 65A of the Act. He said at [36] that when a freelance journalist provides material to a media organisation with a view to publication, the journalist can be described as a "prescribed information provider".

53 It is implicit in this that Levine J proceeded on the same footing as was later stated in the TCN Channel Nine case, in relation to the correspondence between the "matter" published by the media organisation and the information provided by the journalist.

55 In our decision in Channel Seven Brisbane Pty Limited v Australian Competition & Consumer Commission [2008] FCAFC 114, handed down today, we dealt with the proper construction of s 65A(1)(vi)(A). We held at [53] of the reasons for judgment in that case that this subsection refers to a person who supplies goods and services of a kind supplied by the prescribed information provider who seeks the benefit of the exemption.

56 As Gilmour J observed at [32] of his reasons on the leave application (Bond v Barry [2007] FCA 2034), the issue which arose in Seven Network raised a different question from the one which was dealt with by French J. This is because his Honour considered that the publication of Mr Barry’s email was not a publication of a matter "in connection with" the supply of services the subject of the contract between the journalist and the media organisation.

57 That is to say, the issue before the primary judge, and the issue before us on appeal, falls to be considered in relation to the opening words of s 65A(1)(a)(i) without considering whether the next step in the application of s 65A(1)(a), namely sub-para (vi)(A), was satisfied.

58 Counsel for Mr Bond and Lesotho referred to authorities for the proposition that the words "in connection with" are of wide import. This may be accepted, but the meaning of the phrase depends upon the statutory context in which it appears.

59 We reject the submission on behalf of Mr Bond and Lesotho that the publication of the emails by Mr Barry was in connection with the supply of journalistic services pursuant to a contract with the media organisation which supplied services of the same kind, namely the preparation and publication of newspaper articles. We do so for three reasons.

60 First, it is contrary to the basis which underlies the decision of the New South Wales Court of Appeal in the TCN Channel Nine case and of Levine J in Carlovers.

61 It is also contrary to the observations of Wilcox J in Horwitz v Grahame Books Pty Ltd (1987) 8 IPR 25 at 29. The relevant passage was cited by French J in Advance Hair Studies at 10-11. French J expressed his agreement with the remarks of Wilcox J at 11 of his judgment in Advanced Hair Studio.

62 Second, it is contrary to our decision in Channel Seven Brisbane, handed down today.

63 Third, it is contrary to common sense and to the plain purpose of the exemption. As the primary judge said at [42], the provision of journalistic service by transmission of an article about alleged corporate misdeeds is not a publication in connection with the supply of journalistic services. Rather, what is being provided by the journalist is the primary content of the published matter.

64 We agree with the primary judge that the approach urged on the Court by the appellants is untenable.

65 There is one further issue which arose in argument and with which we propose to deal. The learned primary judge considered at [43] of his reasons that unless s 65A is construed in the manner he suggested, there would be a major and unintended gap in the coverage of the exemption which would be completely at odds with the purpose of the section.

66 Whilst we agree with the primary judge that in the ordinary case, the transmission by a freelance journalist of a news article to a media organisation will fall within the exemption granted in s 65A, we do not consider that in those circumstances the media organisation would be exposed to the risk of accessorial liability under the principles stated in Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661, merely by receiving and publishing the publication from the journalist.

67 When the media organisation publishes the article to the world at large, it is protected by s 65A. But it is difficult to see how the media organisation could be said to have knowledge of the essential elements of a contravention of s 52 of the Act so as to have accessorial liability within Yorke v Lucas. This would require knowledge of the falsity of statements made by the journalist.

68 It may be possible in an unusual case that a media organisation would have advance knowledge of a false statement from a journalist. Also, electronic publications remain online continuously, so that statements received from a journalist may continue to be published online after the media organisation has been informed of the "falsity" of the statements. However, bearing in mind the difficulties of establishing the requisite degree of knowledge within York v Lucas, we do not think that these examples inform the construction of s 65A.

69 Notably, in the course of his argument, Mr Bennett eschewed any claim of accessorial liability under Yorke v Lucas, notwithstanding that such an allegation was made in the statement of claim.

70 In conclusion therefore, we are of the view that the risk of accessorial liability upon a media organisation, in a case such as this, is not a matter that bears upon the construction of s 65A which we have adopted.

No triable issue: s 31 of the Federal Court Act

71 The proper approach to an application for summary disposal of a proceeding under s 31A of the Federal Court Act was considered by a Full Court in Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited [2008] FCAFC 60.

72 In that case Finkelstein J, at [23] considered that where a question of law arises, the judge should conduct an inquiry into the merits of the question to decide whether it is sufficiently strong to warrant a trial. Rares J at [74] was of a similar view. Both judges were of the view that the Court has a discretion to determine the question of law.

73 Gordon J at [128]-[131] was of a different view. She said that the existence of a real issue of law does not necessarily preclude summary judgment because the Court can usually hear and determine a disputed point of law expeditiously, without the need for a trial. Graham J has expressed his disagreement with this: J F Keir Pty Limited v Sparks [2008] FCA 611 at [12] and [52].

74 We do not need to decide which of the competing views expressed in Jefferson Ford is correct. On any view, the learned primary judge considered that there was no room for debate about the questions of construction of s 65A on which it was necessary for Bond and Lesotho to succeed so as to avoid summary judgment.

75 Indeed, his Honour went further than was required under s 31A by applying the standard expressed in General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 130 (although without expressly referring to that case), holding that the appellants’ proposed construction of "in connection with" was untenable.

76 We agree with the primary judge’s construction of both the questions that arose under s 65A. It is sufficient to say that we also agree with his Honour that there was no room for debate about either question.

Orders

77 The disposal of the claims of primary liability against Mr Barry and Mr Breen left no basis for any claim of accessorial liability against the corporate respondents.

78 It follows from what we have said above that the appeal must be dismissed with costs.

I certify that the preceding seventy-eight (78) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.

Counsel for the Appellant:	M Bennett

Solicitor for the Appellant:	Lavan Legal

Counsel for the Respondent:	K J Martin QC with C Galati

Solicitor for the Respondent:	Edwards Wallace

Date of Hearing:	23 May 2008

Date of Judgment:	23 June 2008

Federal Court of Australia - Full Court

Bond v Barry [2008] FCAFC 115 (23 June 2008)