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Federal Court of Australia |
Last Updated: 25 February 1999
TRADE PRACTICES - distribution of a letter written by a third party - allegation that letter contained a material misstatement of fact - whether act of distribution was misleading or deceptive conduct.
DEFAMATION - whether defence of qualified privilege available - presence of malice.
DAMAGES - lack of evidence of actual loss - Court's duty in such circumstances.
Trade Practices Act 1974 (Cth) ss 5, 52, 82, 75B
Duncan & Neill on Defamation 2nd Ed
The Law of Defamation in Australia and New Zealand: Michael Gillooly
Bargold Pty Ltd v Mirror Newspapers Ltd [1981] 1 NSWLR 9 applied
South Hutton Coal Co v North-Eastern News Association Ltd [1894] 1QB 133 applied
Adam v Ward (1917) AC 309 applied
Sticart v Bell [1891] 2 QB 341 cited
Horrocks v Lowe [1975] AC 135 followed
Stephens v West Australian Newspapers Ltd [1994] HCA 45; (1993-94) 182 CLR 211 followed
Lewis v Daily Telegraph (1964) AC 234 cited
Australian Broadcasting Corporation v Comalco Ltd (1986) 12 FCR 510 followed
Andrews v John Fairfax & Sons Ltd (1980) 2 NSWLR 225 not followed
D & L Caterers Ltd v D'Ajou (1945) KB 364 referred to
Barnes & Co Ltd v Sharpe [1910] HCA 26; (1910) 11 CLR 462 referred to
Enzed Holdings Ltd v Wynthea Pty Ltd [1984] FCA 373; (1984) 57 ALR 167 cited
Petera Pty Ltd v EAJ Pty Ltd [1985] FCA 277; (1985) 7 FCR 375 followed
HUNT AUSTRALIA PTY LTD (ACN 002 194 587) v DAVIDSONS' ARNHEMLAND SAFARIS PTY LTD (ACN 009 650 622), MAXWELL JOHN DAVIDSON and PHILIPPA JANE DAVIDSON
DG 14 OF 1995
O'LOUGHLIN J
ADELAIDE (HEARD IN DARWIN)
24 FEBRUARY 1999 IN THE FEDERAL COURT OF AUSTRALIA BETWEEN: Applicant AND: (ACN 009 650 622)
First Respondent
MAXWELL JOHN DAVIDSON
Second Respondent
PHILIPPA JANE DAVIDSON
Third Respondent JUDGE:
NORTHERN TERRITORY DISTRICT REGISTRY DG 14 OF 1995
HUNT AUSTRALIA PTY LTD (ACN 002 194 587)
DAVIDSONS' ARNHEMLAND SAFARIS PTY LTD
O'LOUGHLIN J DATE OF ORDER: 24 FEBRUARY 1999 WHERE MADE: ADELAIDE (HEARD IN DARWIN)
THE COURT ORDERS THAT:
1. There be judgment for the applicant against the first and third respondents in the sum of $20,000.00.
2. That the claims against the second respondent be dismissed.
3. That further consideration of the proceedings be adjourned to a date to be fixed.
4. That any party be at liberty to relist the matter for further hearing upon first giving to all other parties seven days notice in writing.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
|
IN THE FEDERAL COURT OF AUSTRALIA | |
| NORTHERN TERRITORY DISTRICT REGISTRY | DG 14 OF 1995 |
|
BETWEEN: | HUNT AUSTRALIA PTY LTD (ACN 002 194 587)
Applicant |
|
AND: | DAVIDSONS' ARNHEMLAND SAFARIS PTY LTD
(ACN 009 650 622) First Respondent
MAXWELL JOHN DAVIDSON Second Respondent
PHILIPPA JANE DAVIDSON Third Respondent |
JUDGE:
O'LOUGHLIN J DATE: 24 FEBRUARY 1999 PLACE: ADELAIDE (HEARD IN DARWIN)
1 The litigants in this action are safari and hunting tour operators, carrying on business in the Northern Territory of Australia. The applicant has sued the respondents claiming damages for misleading or deceptive conduct; it also claims damages for defamation. Liability has been denied. Originally, there was a cross-claim on file which contained allegations of misleading or deceptive conduct; that was withdrawn however.
2 The applicant is Hunt Australia Pty Ltd ("Hunt Australia"), the corporate trustee of the R & K Penfold Family Trust ("the trust"). The company and trust constitute the structure that is used by Mr Bob Penfold who is its driving force. The company does not carry on any business in its own right other than that of a trustee. Thus any reference to "a business" or "the business" in relation to the applicant in this matter is a reference to the business of the trust as conducted on its behalf by the company. The principle operations of the business involve the organisation and operation of safari and hunting tours. Those tours, depending on their location, are either conducted by Mr Penfold or other employees of the business or are subcontracted out to other tour guides. The majority of Hunt Australia's clients come from Europe and the USA. Some hunts are booked directly by clients but, mostly, bookings are made through agents in the home country of the client. The hunting season in the Northern Territory is, because of the weather, seasonal. It traditionally runs from 1 May to 30 September each year. In addition to the Northern Territory, Hunt Australia has also conducted hunts in New Zealand and New Caledonia.
3 The respondents are Max and Philippa Davidson and their company, Davidsons' Arnhemland Safaris Pty Ltd ("Davidsons' Arnhemland"). Their business is in direct competition in the Northern Territory with that of Hunt Australia but it is a smaller operation. Mr and Mrs Davidson share the workload; she attends to correspondence, administration and all office work; he is out in the field, conducting tours and hunts and supervising the outdoor activities. After listening to their evidence, I formed the opinion that Mr Davidson is only too happy to leave "the office work" to his wife; his interests lay in the tours and hunts that he organised.
4 Both Mr Penfold and Mr Davidson have carried on their respective businesses for many years and, at one stage, they enjoyed a happy business relationship; each had operated tours and hunts for the other on a subcontract basis. However, there was a severe falling out between the parties in 1994. Since then, each side has heaped abuse upon the other, making accusations of unethical conduct, of poor quality services and so on. It will be necessary, in due course, to explore some of these accusations and counter accusations in detail, but it will be sufficient, in my opinion, to limit my findings to certain core issues that go to matters of credit. I will, where possible, avoid reference to the enormous amount of unsubstantiated hearsay that counsel allowed to pass unchallenged.
The Davidsons' first letter
5 As I have indicated, there was intense hostility between Mr Penfold on the one part and Mr and Mrs Davidson on the other part in late 1994. In that climate of hostility, Mrs Davidson wrote the Honourable Barry Coulter MLA, the Minister for Tourism in the Northern Territory Government ("the Minister") by letter dated 2 December 1994 (Ex A76) ("the Davidsons' first letter") in these terms:
"Dear Barry,
Owing to problems created overseas and in Australia by Mr Bob Penfold of Hunt Australia, we request your assistance in clarifying who are the legal, respected Safari Operators in the Northern Territory particularly in reference to those licensed to operate in Arnhemland on Buffalo and Banteng.
As blatant lies have been spread by Mr Penfold is (sic) having an adverse affect on the tourism in general in the Northern Territory and making the whole industry look unprofessional.
We would appreciate if you could write letters to Safari Club International and ask them to pass this information onto ALL of their chapters in the U.S.A. and Europe. Mr Bernard Higgins from the Northern Land Council office in Darwin is in agreeance with the above request and has offered any assistance i.e. clarification of operators working under licence with the Northern Land Council.
As the Safari Club International convention is on in late January early February, 1995 we would appreciate your earliest attention to this matter. The address for S.C.I. is as follows:
The President,The Minister's letter
D. Patrick Bollman,
Safari Club International,
4800W. Gates Pass Road,
Tuscon. Arizona 85745
FAX NO: 00111 602 622 1205.
Kind regards
(signed) Philippa Davidson
Max and Philippa Davidson"
6 The Minister, upon receiving the Davidsons' first letter, referred the matter to the Northern Territory Tourist Commission for advice and for the preparation of a draft letter. The Commission, in turn, referred the matter to Mr Bernard Higgins of the Northern Land Council in order to get verification of the identity of the business houses who enjoyed licences or permits from the Council. In due course, the Minister was supplied with a draft of a letter to Mr Bollman and that draft formed the body of the letter that was eventually despatched to Mr Bollman under the hand of the Minister.
7 By letter dated 23 December 1994 (Ex A85) ("the Minister's letter") the Minister wrote Mr Bollman of Safari Club International as requested in the Davidsons' first letter, saying:
"Dear Mr Bollman
1 There has been concern expressed by some Safari Hunting Operators in
2 the Northern Territory as to who is officially licensed to operate in
3 Arnhemland and for hunting Banteng on Coburg Peninsula in the Gurig
4 National Parks. To avoid any possible misinformation within the world
5 hunting circles, I would like to take this opportunity to clarify the current
6 situation. I hope you will be able to pass this on to all your chapters in
7 the USA and Europe.
8 Arnhemland is Aboriginal owned land and the Northern Land Council
9 administrates all land use issues on behalf of the traditional owners. The
10 hunting rights for any safari hunting operations on these land are
11 currently held by the following operators:
12 Wimray Safaris - Mr Noel Bleakley
13 Davidsons' Arnhemland Safaris - Mr Max Davidson
14 Territory Buffalo Safaris - Brenton Hurt
15 Access Northern Australia - Francois Giner
16 There are two further operators presently being considered by the
17 Northern Land council for operations in 1995:
18 Roper River Safaris - Grant Angel
19 Illiwan Safaris - Mathew Kelman
20 Gurig National Park is a jointly managed Park between the Conservation
21 Commission of the Northern Territory and traditional Aboriginal owners.
22 It is the only area in Australia offering Banteng hunting and the Gurig
23 Board of Management has granted licenses to the following three operators:
24 Wimray Safaris - Mr Noel Bleakley
25 Davidsons' Arnhemland Safaris - Mr Max Davidson
26 Territory Buffalo Safaris - Brenton Hurt
27 Mr Bob Penfold from Hunt Australia has currently no rights to operate
28 in either of these two areas, which can only be accessed through the
29 above bona fide licensed hunting safari operators.
30 We welcome visitors from all parts of the world to enjoy our unique
31 remote natural environment and Aboriginal culture in the Top End of the
32 Northern Territory, and extend our warmest invitation to members of
33 your organisation for future visits.
34 Yours sincerely
35 Barry Coulter"8 On the same day, 23 December 1994, the Minister wrote Mr & Mrs Davidson (Ex A(R)65) enclosing a copy of his letter to Mr Bollman.
The applicant accepts that the Minister's letter correctly states that:
" Arnhemland is Aboriginal owned land and the Northern Land Council administrates all land issues on behalf of the traditional owners;Mr Penfold's reaction to the Minister's letter
a system exists under which persons are "officially licensed to operate" safaris and hunting expeditions in Arnhemland and the Gurig National Park;
appropriate persons are therefore able to enjoy "hunting rights for any safari hunting operations."
9 Mr Penfold learnt about the Minister's letter and its contents. As he considered that it was factually inaccurate, he consulted his then solicitor who wrote the Minister on 21 February 1995. That letter has not been tendered in evidence but the Minister's response (Ex A93) dated 27 February 1995 adequately explains the premise upon which the Minister had operated. He wrote to Mr Penfold's solicitor:
"Dear Mr James
I refer to your letter dated 21 February 1995.
The purpose of my letter of 23 December 1994 to Mr Bollman of Safari Club International was to advise him concerning persons officially licensed to operate in Arnhemland and for hunting Banteng on Cobourg Peninsula in the Gurig National Park in the Northern Territory. This is clear from my opening remarks.
In relation to Mr Penfold, it was my intention only to identify that he was not currently licensed to operate in either of these areas. I am not aware of whatever other commercial arrangements Mr Penfold might have in place and I am unable to comment on them.
I advise that I did not ask Davidsons' Arnhemland Safaris Pty Ltd to circulate my letter or to pass on the information as to licensed operators contained in it. You will note from my letter to Mr Bollman that it was he whom I asked to pass on the information as to licensed operators to the chapters of Safari Club International in the USA and Europe.
I enclose a copy of a further letter to Mr Bollman, which I trust clarifies the position."10 The Minister's contemporaneous letter to Mr Bollman (also Ex A93) contained the following passage:
The Minister's evidence
"The purpose of my letter was to advise you concerning persons officially licensed to operate in Arnhemland and for hunting Banteng on Cobourg Peninsula in the Gurig National Park in the Northern Territory. In relation to Mr Penfold, it was my intention only to identify that he was not currently licensed to operate in either of these areas."
11 Under cross-examination, the Minister, who was called as part of the applicant's case, agreed that the view that he had formed about Mr Penfold and the way that he and his company conducted their business operations came within his functions as the responsible Minister - he being charged with a public duty to foster the interests of tourism in the Northern Territory. He also agreed that it was within the public interest that there be "frank disclosure of views and concerns to the Minister responsible" including matters that touch "on the reputations of tour operators".
12 The Minister further said that, in addition to what the Davidsons had written, and based on other information that was available to him, he had formed the opinion that Mr Penfold was holding himself out as a safari operator who was licensed to conduct safaris in Arnhemland and in the Gurig National Park on Coburg Peninsula. That opinion was not tested and I make no findings about its accuracy, but I do find that, as a matter of probability, it explains why the Minister made specific reference to Mr Penfold in his letter to Mr Bollman. The Minister expressed himself simply and accurately in his evidence when he said:
The Davidsons' second letter
"It's a very simple question; you either are licenced or you're not licenced, and Mr Penfold was not licensed."
13 Mr and Mrs Davidson were absent from Darwin over the Christmas-New Year period of 1994-1995. When they returned, Mrs Davidson read the letter that the Minister had sent her and the enclosed copy of his letter to Mr Bollman. She then photocopied the Minister's letter to Mr Bollman and distributed copies to selected members of the safari and hunting industry. An example of the distribution by Mrs Davidson of the Minister's letter is Ex A87, a facsimile transmission dated 15 January 1995 ("the Davidsons' second letter") from her to Mr Michael Anderson of "Diana Jagd-und Angelreisen". "Diana" is the name of a business house in the safari and hunting industry and was accepted by both parties as one of the largest safari and hunting tour agents in Europe; it had also acted as an agent for Hunt Australia for a time until there was a falling out between the parties.
14 In that transmission to Diana, Mrs Davidson said:
"Dear Michael
I am writing to inform you Max and I will be at the Hunting Show in Dortmund from Monday 23rd January. We leave Darwin next Friday to travel over there. We thought if you will be there that we will be able to meet each other and you can see what we have to offer in our camps.
I also have a letter from the Minister for Tourism here in the Northern Territory and he has asked us to pass on the information contained in this letter to you.
We still have openings for this year for hunters in all our camps. If you require our price for 1995 please let me know.
Looking forward to seeing you if you are in Dortmund.
Kindest regards,
(signed) Philippa Davidson"15 I find that a copy of the Minister's letter to Mr Bollman (Ex A85) formed part of that transmission.
16 Mrs Davidson in cross-examination also agreed that, in addition to sending it to "Diana", she faxed a copy of the Minister's letter to other agents in Europe and in the United States. The statement in the Davidsons' second letter to "Diana" that the Minister had "asked us to pass on the information contained in this letter to you" was patently false. Mrs Davidson knew that it was false; it was a deliberate attempt on her part to undermine Hunt Australia, her company's competitor. I formed a most unfavourable impression of Mrs Davidson as a result of her evidence about the Davidsons' second letter. It is obvious to me that it had the two-fold purpose of attempting to get business from "Diana" and of harming Hunt Australia's business at the same time. She grudgingly admitted to the former but steadfastly denied the latter. She admitted that the Minister had not asked her to pass on the information that was contained in his letter but when asked to explain why she had made that statement, she could offer no explanation. The answer is obvious: it was a falsehood deliberately made with the intention of causing harm to Mr Penfold and his business but she could not bring herself to admit it.
17 In the Davidsons' second letter, there is a reference to a "Hunting Show in Dortmund"; that was in the nature of a trade exhibition which attracted safari and hunting tour operators and booking agents from around the world. It was held in mid January 1995 and Mr and Mrs Davidson attended it. Mr Penfold did not attend at Dortmund, but his European agent, Mr Klaus Lessenich, who was called as a witness for the applicant, did attend. I will discuss his evidence later in these reasons. Mrs Davidson was insistent that she and her husband did not take copies of the Minister's letter to Dortmund for the purpose of distributing copies to people in the safari and hunting industry. She said that they took three copies of the letter but when asked why that number of copies was taken she said that she could not remember. Her husband's evidence on this subject was equally ambivalent. I must reject their evidence. I find that they deliberately took copies of the letter for the express purpose of distributing it in the hope of thereby damaging the business of Hunt Australia and Mr Penfold.
18 The applicant claims damages against Davidsons' Arnhemland and Mr and Mrs Davidson pursuant to s 52 and s 82 of the Trade Practices Act (Cth) ("the TPA"). It pleaded that the Minister's letter contained "material" that was "misleading or deceptive". To understand the applicant's case against the respondents under the TPA it is best to quote from the amended statement of claim:
"12 During January 1995 the Respondents either gave copies of the Minister's letter or showed copies of the Minister's letter to more than three people in person.
PEOPLE KNOWN TO HAVE BEEN SHOWN THE MINISTER'S LETTER
12.1 At Dortmund in Germany, Noel Bleakley and Klaus Lessenich.
12.2 In Darwin, Simon Kyle-Little.
13 Further, in January 1995 at the Hunting Show in Dortmund in Germany the Respondents showed copies of the Minister's letter to a number of people whose names are not known but who were booking agents for or potentially consumers of safari tours in the Northern Territory.
14 Through the natural and likely dissemination of such important consumer information, the reference to the Applicant in the Minister's letter became widely known to the safari tour booking agents and within the section of the public who were potentially consumers of safari tours.
15 The Minister's letter contained words to the effect that:
15.1 hunting in Arnhemland and for Banteng on Coburg Peninsula in Gurig National Park could only be accessed through bona fida licensed hunting safari operators (lines 3, 4, 29 and 30) (sic: the reference should have been to lines 3, 4, 27 and 28)
15.2 Penfold and the Applicant could not be engaged by consumers to access hunting in Arnhemland and for banteng on Coburg Peninsula in Gurig National Park (lines 3, 4, 28, 29 and 30).
16 The said words were misleading and deceptive or likely to mislead and deceive in that Penfold and the Applicant were in fact eligible to arrange and capable of arranging access to hunting both in Arnhemland and for banteng on Coburg Peninsula in Gurig National Park.
PARTICULARS
No legislative provision applicable to entry into or hunting in Arnhemland or on Coburg Peninsula prohibited the Applicant or Penfold from arranging access to hunting in those areas.
17 Davidsons' second letter referred to the Minister's letter as follows:
"I also have a letter from the Minister for Tourism here in the Northern Territory and he has asked us to pass on the information contained in this letter to you."
18 The said words were misleading and deceptive or likely to mislead and deceive in that the Minister had made no such request of any of the Respondents.
19 Consequently, by publishing the Minister's letter individually and in conjunction with publishing Davidsons' second letter, the Respondents engaged in conduct which was misleading and deceptive or likely to mislead and deceive and a contravention of section 52 of the TPA."19 It must be noted that, notwithstanding these allegations - pars 15 and 16 in particular - Hunt Australia did not name the Minister as a respondent in these proceedings.
20 Pursuant to section 75B of the TPA, the Second and Third Respondents were guilty of the said breaches of section 52 of the TPA by the First Respondent in that they aided, abetted, counselled and procured the said breaches.
PARTICULARS 20.1 The Second and Third Respondents in their capacities as directors of the First Respondent authorised the conduct.
20.2 The Second and Third Respondents personally published the Minister's letter at Dortmund and by facsimile transmission.
20.3 The Third Respondent personally published Davidson's second letter by facsimile transmission."
Subsection 5(3) of the TPA
20 Sub-section 5(1) of the TPA states that certain provisions of the Act (including Part V of which s 52 forms part) extend "to their engaging in conduct outside Australia by" Australian corporations and citizens. However, for an applicant to rely on such conduct it is necessary that it obtain the consent of the Minister under subs 5(3) of the Act:
21 The Minister for Financial Services and Regulations gave his consent to Hunt Australia relying upon conduct alleged to have been engaged in outside Australia (in Germany) by the three respondents, Mr & Mrs Davidson and their company. The consent, Ex AD6, was expressed to be for the purpose of claims under s 82 of the Act and the alleged conduct was said to be that described and particularised in par 12 and 13 of the amended statement of claim, a copy of which was annexed to the form of consent. Those were the paragraphs in which it was alleged that the respondents either gave or showed copies of the Minister's letter to persons at Dortmund.
"(3) Where a claim under section 82 is made in a proceeding, a person is not entitled to rely at a hearing in respect of that proceeding on conduct to which a provision of this Act extends by virtue of sub-section (1) or (2) of this section except with the consent in writing of the Minister."
22 By letter dated 29 January 1998 Messrs Cridlands, the solicitors for the respondents wrote Messrs Halfpennys, who were then the solicitors for the applicant, noting that the application for the Minister's consent had been limited to the conduct alleged in pars 12 and 13 of the amended statement of claim. The letter went on to say:
23 Paragraph 11 of the statement of claim reads as follows:
"We inquire as to whether the applicant is continuing its claim in relation to pars 11, 19 and 20 of the amended statement of claim. If so, we put you on notice that we consider that these paragraphs also contain allegations of conduct which occurred outside of Australia and therefore requires the consent of the Minister."
24 There then followed particulars of the alleged recipients of the Minister's letter.
"On or about 15 January 1996 (sic) the respondents made at least five facsimile transmissions of a copy of the Minister's letter to booking agents for safaris tours to the Northern Territory. On or about the same day the respondents wrote a letter which accompanied at least two of the transmissions of the Minister's letter (Davidsons' second letter). The contents of Davidsons' second letter are set out in the second schedule to the statement of claim."
25 I do not consider that there is any substance in the respondents' complaint. The actions that are referred to in par 11 of the statement of claim occurred in Australia hence it was not necessary to obtain Ministerial consent. As to the contents of pars 19 and 20, I am of the opinion that they do not plead conduct: par 19 pleads a consequence of the impugned conduct and par 20 explains why Mr and Mrs Davidson should be responsible for the conduct of their company.
The case for the applicant - Mr Penfold's evidence and character
26 For the applicant to succeed it must prove conduct that was misleading or deceptive; it must also prove that the contents of the Davidsons' first letter were defamatory. Having regard to the way in which it presented its case, that means that the issue of misleading or deceptive conduct can be determined by having regard to the contents of the two letters in question - the Minister's letter and the Davidsons' second letter. Their contents plus some additional evidence about licences and permits (most, if not all, of which was uncontested) and Mrs Davidson's admission that the Minister did not ask that his letter be distributed is sufficient to resolve this issue. In particular, little, if any, evidence from Mr Penfold is required. The case in defamation is likewise relatively straightforward in the sense that little evidence of a contentious nature from Mr Penfold is needed. However if the applicant were to be successful in proving misleading or deceptive conduct against the respondents - or any one or more of them - then Mr Penfold's evidence would be of the utmost importance; for it was through his evidence that the applicant sought to prove that it had suffered damages and the extent of those damages. The same general observation may be made with respect to damages that might flow in the event of a finding that the Davidsons' first letter was defamatory.
27 The case for the applicant was therefore centred upon the evidence of Mr Penfold; he received some marginal support from two other members of the hunting and safari industry, Mr Noel Bleakley and Mr Simon Kyle-Little, but his attempt to gain support from his European agent, Mr Klaus Lessenich was, as events transpired, unsuccessful. I will deal with the evidence of those men after I have set out my reasons for coming to the conclusion that I cannot rely on the evidence of Mr Penfold.
28 During the course of his cross-examination, it became clear that Mr Penfold has had a long history of antagonism towards the Northern Land Council. I do not consider that it is necessary to assess whether that antagonism was justified or not but it is desirable to mention two incidents for they are typical of Mr Penfold's character. The Council had seen fit to deny Mr Penfold and his company a licence or permit to carry on business on land for which the Council was responsible, so Mr Penfold attempted to use a young man, Grant Robinson, as a "front". He had Mr Robinson write to the Council and the Jawoyn Association seeking permits in his (Robinson's) name. One more example will be sufficient for present purposes. The respondents' witness, Mr Bernard Higgins, gave evidence that he was employed by the Council. His duties included the issuing of licences, after consultation with the traditional owners, to operate in Aboriginal lands. Mr Higgins said that a traditional owner had complained that an unauthorised vehicle had been observed on Aboriginal land. Mr Higgins found, from a motor vehicle search, that it was registered to Mr Penfold. Mr Higgins wrote Mr Penfold; it was not a conciliatory letter: in fact it threatened prosecution. Despite the officious nature of the letter, Mr Penfold's response was absurd. He wrote in a letter dated 25 August 1993:
29 That letter was written by a person who was seeking, and continues to seek, licences to conduct safari and hunting operations on Aboriginal lands to the officer in the statutory corporation who is primarily involved in the decision to grant - or not grant - those licences. It is not surprising that outbursts of rude, childish petulance such as this have turned the Council against Mr Penfold. Mr Higgins in his witness proof, states the position with more delicacy:
"I do not apologise for the long delay in reply, as when I first received your letter I wanted to immediately drive to Darwin and punch you very hard in the nose. I thought that I should delay my action and cool off for a time. You are lucky that I did.
I have never had such a disgusting letter or experienced such anger at receiving a letter from anyone ever before.
I am staggered that any business would employ such a pathetic person to negotiate business on their behalf.
You have obviously never had any business experience or training and you must not have had any parental guidance in the matters of prudence or manners.
I am disgusted and totally offended by your letter and remarks contained there in."
30 The depth of the enmity is extreme. For example, Mr Higgins volunteered in evidence that recently the Council had refused to renew a licence in favour of Mr Bleakley's "Wimray Safaris" because the Council had formed the opinion that "Wimray Safaris" had become a "shell" for Hunt Australia. Mr Higgins' evidence about Mr Penfold and his conduct was of little assistance in resolving the issues before the Court. It was obvious that Mr Higgins disliked Mr Penfold; he conceded that he had a low opinion of him. The rest of his evidence was, in the main, all hearsay. I have no doubt that Mr Higgins believed everything bad that he had heard about Mr Penfold but whilst the information that he received might explain his attitude towards Mr Penfold it cannot be received in a court of law as evidence of the truth of that information.
"The current Resolution from Full Council is to the effect that the NLC will not direct any Land Trust in the area of its responsibility to enter into any agreement for the grant of an interest in (or any other right in respect of) land to Bob Penfold, Hunt Australia Pty Ltd or any company or business, his family members or Hunt Australia Pty Ltd, holds an interest."
31 Two matters of significance only emerged from Mr Higgins' evidence. In the first place, he was the witness through whom Mr Penfold's letter of 25 August 1993 was tendered. That letter and its contents are tangible evidence of Mr Penfold's blind aggressiveness; it is beyond his ability to contemplate an opinion other than his own. It has been his perverse dogmatism that has led him into this costly litigation. In the preparation for trial he steadfastly failed to make proper discovery, suffering, as a result, an order for indemnity costs.
32 The second matter of significance is that the position has become so extreme that Mr Penfold, his family, his company and any business associated with him have been totally banned by the Council. I find that Mr Penfold's difficulties with the Council (which occurred long before 1994-1995) have had a material and adverse effect on his business because of his inability to obtain licences or permits to operate in lands (such as Arnhemland) over which the Council either has control or influence. The Davidsons are in no way responsible for those difficulties.
33 Mr Penfold has the capacity to be devious. An example of this characteristic surfaced during the course of the trial. In a transmission dated 21 October 1997 to Mr Lessenich, Mr Penfold wrote advising that it was he who had cancelled the contract with "Diana". However, he then went on to say:
34 Under cross-examination, Mr Penfold conceded that it was he who cancelled the contract with "Diana" and so it is not a case of him having given false evidence. Nevertheless, one views with concern statements such as that quoted above.
"Because Davidsons are saying that Diana fired me and contracted them to replace me, I am now able to state that they fired me due to the ministers letter. Ha ha. I can say that Davidsons letter had the desired effect of changing Diana business from Penfold to them."
35 My assessment of Mr Penfold, after having had the advantage of observing him during the course of his cross-examination, is that he is a dogmatic man with a very aggressive personality. I can easily understand that he would be a person who offends others easily and without concern for those whom he offends.
The Export Market Development Grant scheme
36 The respondents tendered a bundle of documents that they had located in the applicant's papers during the discovery process. The object of the tender was to prove that Mr Penfold and his company had made fraudulent claims for grants of money under the Export Market Development Grant scheme ("the EMDG scheme"). Several of these documents were prima facie incriminating and warranted an explanation. In some cases that explanation was not forthcoming; in other cases it was unacceptable.
37 Examples of claims that had been made and which were allegedly false included the following:
Doctor Rudolph
38 It was put to Mr Penfold in cross-examination - and he agreed - that his company was obliged to refund to a client, Dr Rudolph, an amount of $1300. He was asked whether he had instructed the booking agent, "Diana", to make that payment to Dr Rudolph and to add the payment to the amount that Hunt Australia was to pay to "Diana" in respect of its "Road Show Account". At first, Mr Penfold replied that he did not know. Later he agreed that he had made that request to "Diana". It was put to Mr Penfold that he asked "Diana" to include the $1300 in "Diana's" account for payment so that Hunt Australia would be able to claim the whole amount of "Diana's" account (including the $1300) on the EMDG scheme; his answer was "I wouldn't think so".
39 Exhibit RD35 was put to Mr Penfold in cross-examination. He was asked whether he accepted that it was a document that included "Diana's charge for the Road Show Account". He agreed. He also agreed that the amount of the account, $4,231, included the item of $1,300 that Diana had paid to Dr Rudolph. It was then put to him that, if a claim had been made for that amount on the EMDG scheme, the claim would have included the amount paid by way of a refund to Dr Rudolph. Mr Penfold replied that that could have happened if "the people who put the claim together didn't break" the amount down. He said the people who attended to the application for the refund were his "accountants and secretaries". I was not impressed by Mr Penfold's answers; I am satisfied that he knew, at the time when he gave his evidence, that the refund to Dr Rudolph was incorrectly claimed against the EMDG scheme; I do not, however, know the state of his knowledge at the time when the application for the grant was made.
Mr Dave Leonard
40 On 27 February 1995, Mr Penfold wrote to a Mr Dave Leonard of Alaska, USA, informing him that he wished to sell the Northern Territory section of his company's business and inquiring whether Mr Leonard knew of "anyone who wants to get into the business". In the course of giving information to Mr Leonard about the business, Mr Penfold wrote that his company had made a profit of $AUD175,000 each year over the last three years. He also wrote:
"I get 50% rebate from the Australian Government for cost of my international promotions which includes all overseas trips, conventions, etc."41 Mr Leonard presumably expressed his interest as a likely purchaser for there was a meeting involving him, Mr Penfold and Mr Gerard Abrams of Lawler Davidson Pty Ltd, the applicant's accountants, on 9 June 1995. On 24 June 1995, Mr Penfold wrote Mr Rusty Reed of Alaska Hunting Consultants, Anchorage Alaska, asking him to pay Mr Leonard before 28 June $5000 "for his travel expenses to Australia". In a postscript Mr Penfold wrote:
"PS Rusty please record this US$5000 as paid on 28-6-1995 so I can claim it in 1994/1995 tax year.
If you date the payment after that date I cannot claim the refund until October 1996."42 On 17 August 1995, Mr Penfold wrote Mr Leonard asking him to send to Mr Penfold a facsimile transmission bearing a date in the preceding March. Mr Penfold then dictated in his transmission the terms of the communication that he wanted Mr Leonard to transmit. It was as follows:
"Dear Bob,
Thank you for your invitation to represent Hunt Australia during my hunt tour promotions in the future.
To properly represent you I need to fly down to Australia and visit each of your Northern Territory hunting camps, to take photos and to familiarise myself with all of the Australian operations.
The out of pocket expenses for me to do this will be US $5,000.
I will provide all of the cameras, film, time and all of the cost of preparing the promotions display if you will pay the out of pocket expenses, airlines, hotels etc.43 Presumably Mr Reed did not comply with Mr Penfold's earlier instruction to forward Mr Leonard $5000 by 28 June for Mr Penfold concluded his transmission of 17 August to Mr Leonard in these terms:
I look forward to your reply"
44 These documents raise matters that call for an answer!
"When I get this fax from you dated March, 95 I will send you and Rusty instructions for Rusty to give you the cheque for US $5,000 dated 26 June, 95."
45 For what purpose was the applicant paying $5000 to Mr Leonard? Was it to pay his travelling expenses to Australia to view the operations of the applicant as an intended agent or as an intended purchaser? If it was because Mr Leonard was intending to become the applicant's agent, then arguably, it might be that the applicant was entitled to make a claim for a grant equal to 50 per cent of the amount of the claim. On the other hand, if Mr Penfold agreed to have his company pay Mr Leonard $5000 to visit Australia and examine the company's operations as an intending purchaser, then such expenses would, most likely, be items of capital expenditure and as such they would not be the subject of a claim under the EMDG scheme. Among the documents that were tendered by the applicant through its expert accounting witness, Mr McLean, is a file note on the letter head of the applicant (Ex AF4). It identifies Mr Leonard as the applicant's agent. The note then contains the following information:
"Dave is a highly successful marketeer and promoter of hunting tours primarily in the north central USA.
He wished to expand his business into worldwide sales and promotions so I convinced him that if he was looking for South Pacific operations to represent then I would do a deal with him to ensure that he would only represent Hunt Australia in his South Pacific sales ventures.
We arranged to pay him US $5,000 for his flight expenses and to host him for a period of time in New South Wales and in the Northern Territory so he could take all of his photos and gather operational procedures and an overview of what he would sell.
Dave has now been to Australia and has already informed us that he has sold 10-12 buffalo hunts for us in the Northern Territory for 1996.
EXPENSES: 1995
Provisions
43 days x $42 $1,806-00
EXPENSES: 1996
Provisions
49 days x $42 $2,058-00
Airfares paid by Rusty
Reed, our Alaskan Banker
US $5,000 .73= AUS $6,849-00
$8,907-00"
46 That file note was annexed to a formal application for a grant under the EMDG scheme and the amount claimed was $AUD8907.00.
47 On this basis it is probable that Hunt Australia was not entitled to claim a refund under the EMDG scheme in respect of this amount until the 1996 financial year whereas in fact the claim was made in respect of a payment allegedly made in the 1995 financial year.
Hunting Consortium
48 "Hunting Consortium" was a European agent which acted from time to time for Hunt Australia. Mr Penfold, under cross-examination, agreed that in February 1995 he wrote "Hunting Consortium" asking it to submit to Hunt Australia an all inclusive account styled "Mr Penfold costs of promotions, advertising and display booth rental" but asking that the amount of the bill include the costs of Mr Penfold's hotel room at Erding (the city in Germany where a hunting exhibition had been held).
49 Mr Penfold wrote: (Ex RD19)
50 Mr Penfold wrote a similar letter to Michael Anderson of "Diana" (Ex RD29) asking him to include the cost of Mr Penfold's accommodation in "Diana's" account for promotional expenses.
"I am now able to claim a partial refund from our government on money I spend on international promotions and advertising. I can claim the cost of booth hire etc but not food or accommodation.
I would like you to send me an all inclusive account "Cost of promotions, advertising and display booth rental" and include the cost of my hotel room at Erding."
51 Mr Penfold acknowledged that accommodation and meal costs could not be claimed under the EMDG scheme. It was put to him that he made this request of "Hunting Consortium" so that he could be armed with an account that would permit him to make a false claim on the EMDG scheme. He would not agree. He said by way of answer that he had entered into some advertising arrangements with Mr Kern of "Hunting Consortium"; Mr Kern had paid for the advertising and Hunt Australia had to reimburse him. The account for the advertising was about the same as the costs of Mr Penfold's accommodation. Mr Penfold's answer, which was nonsensical, was that:
52 His answer does not explain how and when the balance of the money owing to "Hunting Consortium" (whether it be for advertising or the hotel room) was to have been paid. Ultimately Mr Penfold was forced to concede that he had been responsible for presenting incorrect documentation to the EMDG authorities even though he maintained that the quantum of the claim that was made remained correct.
". . . he (Kern) had had the accounting in Germany and his current office was in USA. He said that to get the extra accounting he would have to contact his office in Germany so I just said: "well, if you just call it the same value as the room that would be pretty close between the two of us and it would save uplifting a second set of accounts to the advertising"."
Mr Berry and the tents
53 On 20 March 1995, Mr Penfold wrote his company's employee in New Zealand, Mr John Berry in these terms:
54 The apparent interpretation of this letter is that the tents that Mr Berry was to supply would cost $10,000 and Hunt Australia would pay for them by purportedly increasing Mr Berry's two quarterly fees correspondingly. That proposition was put to Mr Penfold but he denied it. He was asked to explain what his letter meant. He answered:
" ...
5. In the quarters April/June and July/September we will pay you an increase of NZ $5000.00 (in each of those quarters) to cover the cost of the tents.
This will effectively bring your official annual fees up from NZ $25 000.00 to NZ $30 000.00 for 94/95 and 95/96 for my export development claim. We will have to get letters back and forward from you and me to increase your consultants fee.
Send me a letter:
To R Penfold
Dear Bob,
Due to the expanding nature of my areas of responsibility in promoting Hunt Australias Australia based operation, I would like to increase my annual fee by NZ $5000.00.
The areas of expansion include your new expanded promotions push into Mexico and Canada, expanded area of responsibility across the southern states of USA, Florida, Louisiana, Texas and lower California.
These new operations are very time consuming both in preparation, servicing time spent in USA and follow up procedures required to capitalise on the advertising effort.
Would you kindly advise that this will effectively increase our annual fee from NZ $25 000.00 to NZ $30 000.00 per annum.
We would appreciate it if you would include this increase in the last quarterly payment due before June 30 1995.
We look forward to expanding your business through our extra activities and hope that you get good value from the expanded exposure in the future.
..............................
Or something to this effect !
Regards
BOB"
55 After a brief interchange between counsel and witness Mr Penfold continued:
"Yes, that's right. Yes, well, I mean, you want me to answer questions here without an explanation and I can't answer those questions without giving you comprehensive explanation."
56 At that stage I intervened saying:
"You're asking me to misrepresent things. You won't give me the chance to explain. You want me to give - you want me to give the court impression that something's wrong here. You won't let me explain what the truth of the matter is."
57 The question was asked of Mr Penfold once again - "what is the meaning of paragraph 5?" His answer was:
"Mr Penfold, I have told you once before, I will tell you once again, but it will be the last time. Your counsel, Mr Spargo, will have the right to clear up any issues of concern to you during the course of re-examination. Mr Kennedy is entitled to ask you questions, you are obliged to answer those questions unless proper objection is taken by your counsel. . . ."
58 Mr Penfold then agreed that the purpose of him asking Mr Berry for the letter was to justify Hunt Australia obtaining a refund through the EMDG scheme in respect of Mr Berry's annual fee. I cannot accept Mr Penfold's evidence on this subject. It lacks credibility.
"It means that I've got the pressure on John to provide the tents."
"Q And is unrelated, do you say, to the annual increase of NZ$5000 referred to in the draft letter?
A That's right.
Q So that there is no connection, you say, between the tents and Mr Berry's increased fee? - That's right.
Oxpecker Enterprises Inc
59 In August 1995 Mr Penfold wrote to his American agent, Mr Rusty Reed, asking Mr Reed to pay a debt that was due by Hunt Australia for advertising to Oxpecker Enterprises Inc. He agreed that he asked Mr Reed to submit an account to Hunt Enterprises in respect of the payment so that the payment could be made the subject of a claim under the EMDG scheme. He also agreed that he asked Mr Reed to assert that the Oxpecker debt had been paid prior to the preceding June 30. Mr Penfold acknowledged that payments by way of grants under the EMDG scheme were paid annually in about March in respect of claimable payments made in the preceding financial year. Exhibit RD45 was the account showing a debt of $540 which Mr Penfold said covered the cost of advertising in the months of April, May and June 1995. It was put to him that the account was not submitted to him until July, but he replied that he had earlier received an account in February when he had originally ordered the advertising; it was his explanation that the July account was raised because Mr Reed, contrary to earlier instructions, had not paid the account, even though he had the money available to make payment on behalf of Hunt Australia. Mr Penfold insisted that Hunt Australia had sent the money to Rusty Reed to cover Oxpecker's advertising costs before 30 June but he was forced to concede that Oxpecker Enterprises were not paid until after 30 June.
Mr Berry
60 On 8 March 1996 Mr Penfold wrote Mr Berry (Ex RD40) in these terms:
"Dear John,61 Mr Penfold's explanation was that he had had a telephone conversation with Mr Berry in about November 1995 in which Mr Berry had given him the information about costing that was set out in Mr Penfold's letter.
re Export Development Grant I need a fax from you as soon as possible dated November 1995.
`Dear Bob,
I have calculated the cost of running the camps in the Northern Territory and divided the cost by the number of `man days' and I find that your actual cost to have a person in any Northern Territory camp is AUST $42-00 per person per day.
Other data requested will follow shortly.
Signed John Berry.'"
62 Mr Penfold went on to say that his accountants had advised him that the detail was required in writing. Hence, so he said, he contacted Mr Berry asking that Mr Berry give him written advice under a November dateline. He admitted that it was his intention to present the document to the EMDG scheme as a basis for a refund. But he maintained, notwithstanding the incorrect date, that it was not a false document. He said:
63 I am not satisfied with this explanation. It seems to me that it was a deliberate attempt to "back-date" a claim for a refund. However, it is not possible to determine what, if anything, was to be achieved by any such "back-dating" as the events all occurred in the same financial year.
"They asked us how we worked the daily rate for camps in the Northern Territory and John Berry did the account on it and I had to get John Berry to put that in writing to satisfy them that's how we had worked it out."
Klaus Lessenich
64 Mr Klaus Lessenich, the European agent for Hunt Australia, gave evidence on behalf of the applicant. Mr Lessenich, an Austrian national, is the manager of "Australien - Reisen Lessenich", a tourist agency carrying on business in Germany. His firm specialises in travel to Australia, New Zealand and the South Pacific. He has known and dealt with Mr Penfold since about 1980 and obviously has a high opinion of him. Mr Lessenich was highly supportive of Mr Penfold and shared Mr Penfold's dislike of Mr Davidson. In fact, he was prepared to collude with Mr Penfold in the preparation of his witness proof to such an extent that I cannot proceed upon the premise that his evidence is wholly independent.
65 Mr Lessenich said that he attended the Exhibition in Dortmund in January 1995 and that his firm shared a display stand with another business house. He said that he saw at the show - and before it - copies of the Minister's letter to Mr Bollman. In his witness proof he described the letter in these terms:
66 Mr Lessenich said that he saw Mr Davidson at the Dortmund Fair and that he got close enough to him to see him distributing an unspecified number of copies of the Minister's letter to various people. Subsequent events have revealed that that evidence was false.
"The letter said that Bob Penfold had "no rights to operate" in either of Arnhemland or Coburg Peninsula, and that safaris could only be "accessed" through other "licensed hunting safari operators"."
67 Mr Lessenich said that, at the Exhibition, he spoke with agents associated with the Australian safari industry and "they all seemed to have heard about or read" the Minister's letter. He further claimed that his firm "did not get a single booking for hunting in Australia for the 1995 season". In the preceding year the value of hunts (not including airfares and accommodation) had been $US170,000 and in the year before that it had been $US250,000.
68 No primary records were tendered to corroborate Mr Lessenich's figures and I am not prepared to make findings that his figures are accurate. I do however accept the effect of his evidence that the business that his firm had placed with the applicant in 1993 and 1994 was within a range of the figures that he mentioned; I also find that he was not able to place any business with the applicant in 1995.
69 Although Mr Lessenich knew that neither Mr Penfold nor his company held licences or permits to operate in Arnhem Land and the Coburg Peninsula, I find that he nevertheless regarded the Davidsons' conduct in distributing the Minister's letter as offensive to the interests of his firm.
70 One of the difficulties in the prosecution of this case was the failure on the part of the applicant to make proper discovery. The case initially was called on for hearing on 3 November 1997, five days having been set aside for it. That period of time had been fixed as a result of counsels' estimates of the amount of time that would be required for the trial. Towards the end of that five-day period, counsel for the respondent moved for an order for summary dismissal on the grounds of the repeated failure of the applicant to make proper discovery. That application was not rejected but it was held over so that the applicant might have the opportunity to consider its position in light of the respondents' complaints. In the meantime, Mr Lessenich had given his evidence and had returned to Europe. When the matter resumed on 24 February 1998, (a further four days having been set aside to conclude the trial) I was informed from the bar table that, in the interim, a further 10,000 pages of documents had been discovered and some 6,000 pages copied. One document that had come to the attention of the respondents as a result of this further discovery was a memorandum from Mr Lessenich to Mr Penfold dated 30 October 1996 in which Mr Lessenich queried the evidence that he should give with respect to his observations of Mr Davidson at the Dortmund Fair. During his evidence in the preceding November he had said that he stood close by Mr Davidson and observed him distributing copies of the Minister's letter. In stark contrast to that evidence, Mr Lessenich said in his memorandum to Mr Penfold of 30 October 1996:
71 In one sense, it is not a matter of importance because it is quite clear from other evidence that Mr Davidson did distribute copies of the Minister's letter: see for example the independent evidence of Mr Bleakley. On the other hand, it is of extreme importance in that it satisfies me that Mr Lessenich's evidence cannot be relied on.
"It is true that I saw Max talking with clients and saw that he has given sheets of paper to them and I believe that he has given a copy of this letter to some people. But in case I would say to the Court that I have seen that between these papers have been the letter then I would take the risk that Max's barrister would say that the distance between the two bothes (sic: probably "booths") was about 12m and that it was not possible to see that the letter was between these papers and similar things that Max has given his hunting informations to visitors only and so on. So I think it would be better not to mention this point, because it would give them the possibility to say many things against it."
72 On the same day, 30 October 1996, Mr Penfold sent a facsimile transmission to Mr Lessenich actually directing Mr Lessenich as to the evidence that he should give. Mr Penfold said in his transmission:
Noel Bleakley and Wimray Safaris
"You should say somewhere that you saw Max handing out papers to people who had been in your booth just before at Dortmund and that you assumed that they were copies of the letter as Max was telling everyone that he was under instructions from the Minister to distribute the letter on his behalf. (You have that in writing direct from Max)."
73 Mr Noel Bleakley, who gave evidence on behalf of the applicant, is a safari and hunting tour operator who has carried on his business in the Northern Territory. He said that he specialises in trophy hunting and fishing. As stated in the Minister's letter, he was one of only three people who was then licensed to hunt Banteng on the Coburg Peninsula and one of four people licensed to conduct safari hunting operations in Arnhemland. Mr Bleakley has known both Mr Penfold and Mr Davidson for many years. Mr Bleakley's evidence, which was unchallenged, was that in January 1995, Davidsons' Arnhemland Safaris Pty Ltd faxed him a copy of the Minister's letter. In his witness statement, Ex A157, Mr Bleakley stated that he attended the Dortmund Fair and that whilst he was there "several people approached me and asked me about the Minister's letter."
74 Mr Bleakley also gave evidence that in about August 1994, Hunt Australia had entered into a contract with him whereby Wimray Safaris would provide hunting operations for Hunt Australia on the Coburg Peninsula and in Arnhemland. The first such hunt was conducted by Mr Bleakley in August 1994 and that arrangement has been on-going to the time when Mr Bleakley gave his evidence. This evidence was lead by the applicant for the purpose of establishing that Hunt Australia, contrary to the assertion in the Minister's letter, was able to "access" the Coburg Peninsula and Arnhemland. Mr Bleakley was not questioned about the refusal of the Council to renew his licence but as he gave evidence in February 1998 and Mr Higgins gave evidence in the following December it could be that the refusal occurred after he had given his evidence.
Simon Kyle-Little
75 Mr Simon Kyle-Little, another safari and hunting tour operator, also gave evidence on behalf of the applicant. His evidence was directed towards establishing that the Davidsons were antagonistic towards Mr Penfold. In evidence in chief he recounted an incident that occurred in the Davidsons' home sometime in 1994. He said that during a conversation with Mr and Mrs Davidson, Mr Penfold was referred to. His evidence was:
76 On another occasion, according to the evidence of Mr Kyle-Little, Mr Davidson spoke disparagingly of Mr Penfold in the presence of Mr Kyle-Little and others saying, inter alia, that he was a "useless operator". This evidence was not challenged in cross-examination.
"Philippa said to me that Bob Penfold was slow in paying the money and I recall hearing this conversation clearly and she said that they were having trouble in getting the money out of him ... she continued on and said: "look, we're sick of him and we're going to get him" ..."
77 Neither Mr nor Mrs Davidson denied these incidents; they separately said that they could not remember them. I accept Mr Kyle-Little's evidence. As I have earlier said, it is abundantly clear that each side is highly antagonistic towards the other and these two incidents are minor examples of the Davidsons' antipathy towards Mr Penfold.
Character evidence
78 Mr Spargo, counsel for the applicant, sought leave to tender affidavits from Warren Kenneth Parker and Andrew Oldfield. Both men are citizens of the United States of America; Mr Parker is a past president of the Safari Club International and both he and Mr Oldfield have hunted extensively with Mr Penfold. Mr Parker described him as a person of "high integrity and honesty and a professional guide of the highest quality". Mr Oldfield said that he has never found anyone "as honest as and as trustworthy as Mr Penfold". Counsel for the respondents, Mr Kennedy, opposed the tender of these affidavits. As neither counsel was then ready to address full argument, it was agreed that the two affidavits would be received de bene esse with leave being reserved to counsel to present written submissions on the issue of admissibility as part of their closing submissions.
79 In opposing the tender, Mr Kennedy made it clear that he was not taking the point that neither deponent was available for cross-examination. His submission centred upon the issue of relevance. As to that, it seems to me that the question of Mr Penfold's character and integrity has been opened up as part of the respondent's case. Mr Davidson referred to "our concerns with Penfold"; he said that he was aware that there was a dispute between the Northern Land Council and Mr Penfold. Mrs Davidson was even more critical of Mr Penfold, as was Mr Higgins of the Council.
80 I am prepared to accept the expressions of opinion contained in the affidavits of Messrs Parker and Oldfield for I can accept that, in the context in which they worked with Mr Penfold, they saw him in an environment which materially differed from the environment of the courtroom. I have no doubt that Mr Penfold is a highly successful big game hunter, safari tour operator and tour guide. Even the Davidsons grudgingly admitted to this as did their accountant, Mr Borsak. I can accept that, when he is out in the field, Mr Penfold is in a domain in which he is not only familiar but highly competent. However, that does not mean that he is not, as I have found him to be, aggressive, devious and single minded. He remains a man who works to the principle that the end justifies the means. It is for these reasons that I am unable to rely on his evidence except in relation to matters that are uncontentious.
TPA cause of action - Conclusion
81 The questions that must be resolved are first, whether there was an error of material importance in the Minister's letter and secondly, if so, whether the conduct of the Davidsons, in distributing the letter, caused damage to the applicant.
82 In my opinion, even though the falsity in the Davidsons' second letter is obvious, the applicant's claim against the respondents under the TPA is without foundation and can be disposed of summarily. In subpar 15.1 of the statement of claim it is alleged that the Minister's letter "contained words to the effect" that hunting in Arnhemland and for banteng on the Coburg Peninsula "could only be accessed through bona fide licensed hunting safari operators." But the words in the Minister's letter which, in my opinion, are vital in the determination of this case are the opening words: "there has been concern expressed by some...as to who is officially licensed to operate in Arnhemland and for hunting banteng on Coburg Peninsula ..." (emphasis added); they appear in lines 2 and 3. The following passage in lines 27 to 29
has to be read in conjunction with the Minister's opening word.
"Mr Bob Penfold from Hunt Australia has currently no rights to operate in either of these two areas, which can only be accessed through the above bona fide licensed hunting safari operations."
83 The respondents admitted that the Minister's letter contained "words to the effect" alleged in subpar 15.1. However, they denied the allegation that followed in subpar 15.2. That was the subparagraph in which the applicant pleaded that the Minister's letter contained "words to the effect" that:
84 In response to a request for further and better particulars of how the words in the Minister's letter were said to have been misleading or deceptive or likely to mislead or deceive the applicant answered as follows:
"Penfold and the applicant could not be engaged by consumers to access hunting in Arnhemland and for banteng on Coburg Peninsula in Gurig National Park."
85 The dispute between the parties under the TPA has been caused by the applicant's inaccurate interpretation of the word "accessed" as used by the Minister in the sentence:
"The words complained of were misleading and were likely to mislead in that they falsely conveyed that the Applicant and Penfold could not be engaged by consumers to access hunting in Arnhemland and on Coburg Peninsula. In fact, the Applicant and Penfold could be so engaged. On the basis of this error, the words had the effect of causing both safari tour booking agents and the section of the public who were potentially consumers of safari tours to shun the Applicant when considering purchasing safari tours in the Territory. The words were deceptive and were likely to deceive in that they purported to carry the authority of a relevant Government Minister, a source which would be given considerable weight by safari tour booking agents and the section of the public who were potentially consumers of safari tours. The words were likely to deceive such persons to the extent that they would not trade with the Applicant."
86 It is, in my opinion, clear from this sentence that the Minister is using, perhaps inartistically, the derivative of the word "access" as synonymous with the word "operate". His opening sentence makes it abundantly clear that he is directing the reader's attention to the identity of the persons who are "officially licensed to operate".
"Mr Bob Penfold from Hunt Australia has currently no rights to operate in either of these two areas, which can only be accessed through the above bona fide licensed hunting safari operators."
87 I take the word "operate" and, hence, the word "access" to mean having a physical presence and a physical involvement; that is, if a business house is represented by its proprietor or its employees in the pursuit of a hunt in the chosen area, then it can be said that it is operating in and has access to that area. If, on the other hand, a business house in Darwin did not have a licence to operate (in the sense so described) the lack of a licence would not necessarily prevent it from carrying on a business where it organises hunting tours through the medium of licensed tour operators. The first person could be called a tour organiser and it might arguably be said of him or her that they had access to the areas, but in that context, it could not be said that they were licensed to operate or conduct tours or hunts in the area. When the Minister's letter is read in its entirety it becomes quite clear in my opinion that the Minister's letter is only directed towards those businesses holding licences to operate or conduct hunting tours. Neither Mr Penfold nor his company held any such licence at the time of the Minister's letter. Read in isolation, it might be said that it was incorrect for the Minister to write that Mr Penfold and Hunt Australia "has currently no rights to operate" in Arnhemland and the Coburg Peninsula for they might be able to "operate" as an employee or a sub-contractor to one of the licensed operators (the evidence is not clear on that point). But such an interpretation of the letter would be wrong, for the letter must be read in its entirety and the offending passage must be read in context as part of the whole letter. What the Minister said was accurate in all respects: only licensed operators can operate and access the two areas and neither Mr Penfold nor his company held the requisite licences. I hold that the contents of the Minister's letter were accurate in all aspects.
88 The Minister was not asked to explain why he considered it necessary to make specific reference in his letter to Mr Penfold, but he did say that he made no attempt to contact Mr Penfold before distributing his letter. I gained the impression that the Minister knew of Mr Penfold in the tourist trade and I also gained the impression that Mr Penfold did not enjoy the best of reputations in the eyes of the Minister. However, this subject was not explored in sufficient depth to warrant findings one way or the other. It is sufficient to note that it was obvious that Mr Penfold did not enjoy the confidence of the Minister. The Minister said, in answer to a question put to him in cross-examination, that:
89 The Minister added that his opinion was a view held by him as the responsible Minister and he agreed that it was a view that he held "independently and before any issue was raised" with him by the Davidsons.
"I had formed the opinion that he may not be operating in the best interests of the safari business in the Northern Territory." (T 10)
90 I have come to the conclusion therefore that there was nothing in the Minister's letter that was misleading or deceptive or that was likely to mislead or deceive. Properly understood, the Minister's letter was an accurate statement of the position relating to licensed safari tour operators in Arnhemland and the Coburg Peninsula.
91 There can be no doubt that Mrs Davidson engaged in misleading or deceptive conduct when she wrote in the Davidsons' second letter that she had been "asked to pass on the information" by the Minister. That was a deliberate and knowingly false statement: it was a lie. But although that misleading and deceptive conduct is part of the charge against the respondents, the applicant has pegged its cause of action primarily on the conduct of the respondents in distributing the Minister's letter.
92 If, as I have found, the contents of the Minister's letter did not constitute a material misstatement of fact then a progression of findings must follow. First, the conduct of the respondents in distributing the Minister's letter cannot amount to misleading or deceptive conduct; secondly even though it was a lie to state that the Minister had asked the respondents to pass on the information in his letter, that falsity cannot sound in damages. That proposition can be established by the simple proposition that the respondents were able, with impunity, to distribute copies of the Minister's letter to whomsoever they pleased. To say at the time of distribution that they did so at the request of the Minister did not, despite its falsity, entitle the applicant to an award of damages.
Defamation
93 Hunt Australia complains that, in its natural and ordinary meaning, the Davidsons' first letter was defamatory of it in that the letter meant and was understood to mean that:
* Hunt Australia was operated by a liar whose lies were "destructive of the Northern Territory tourism industry"; and
* Hunt Australia was not "a legal respected safari operator" in the Northern Territory.
94 The applicant further complains that as a result of the publication of the Davidsons' first letter, the applicant has been injured in its reputation and has suffered and will continue to suffer loss and damages.
95 A defamatory publication concerning a director or officer of a company can, depending upon the involvement of that director or officer in the organisation of the company, reflect upon the company itself: Bargold Pty Ltd v Mirror Newspapers Ltd [1981] 1 NSWLR 9 at 10 - 11 per Hunt J; South Hutton Coal Co v North-Eastern News Association Ltd [1894] 1QB 133 at 141.
96 Each of the respondents deny that the Davidsons' first letter was defamatory of the applicant. They maintained that the words complained of do not and were not understood to bear the meanings that are set out in the statement of claim and which are summarised above. In addition, they denied that the applicant has been injured in its reputation and that it has suffered any loss or damage by reason of the publication of the words complained of. The respondents have also raised a defence of qualified privilege. Relying upon the admitted fact that the Minister was, at all material times, the person who held the office and performed the functions of Minister for Tourism in the government of the Northern Territory, the respondents based their plea upon the premise that the applicant and the respondents were all involved in the tourism industry of the Northern Territory. They then submitted that the words complained of were communicated by the respondents to the Minister in order:
* to bring matters of concern to the tourism industry to the attention of the relevant Minister; and
* to enlist the Minister's assistance in clarifying who were licensed to operate safari tours.
97 The respondents therefore maintained that the Minister had an interest in receiving and the respondents had an interest in communicating the words complained of.
98 The Davidsons' first letter states that:
* problems have been created overseas and in Australia by Mr Bob Penfold of Hunt Australia
* blatant lies have been spread by Mr Penfold
99 At the end of the day the respondents failed to lead any evidence that would be capable of justifying either of these statements. I repeat that there is extreme antagonism between the parties. I have no doubt that Mrs Davidson, in particular, has allowed this antagonism to cloud her judgment; she sees nothing good in Bob Penfold: everything about him is bad.
QUALIFIED PRIVILEGE
100 The respondents have claimed that the offending words in the Davidsons' first letter were published on an occasion of qualified privilege. The basis upon which they advanced their defence is the status of the addressee as the Minister for Tourism and their own status (together with that of Hunt Australia) as participants in the tourism industry in the Northern Territory.
101 The statements to which the common law defence of qualified privilege applies, include a statement that has been made in pursuance of a legal, social or moral duty to a person who has a corresponding duty or interest to receive them: Adam v Ward (1917) AC 309 at 334 per Lord Atkinson. It also extends to a statement that has been made for the protection or furtherance of an interest to a person who has a common or corresponding duty or interest to receive them. What is published in good faith on such occasions is published on a privileged occasion. It is not actionable even though it be defamatory and turns out to be untrue. There are other statements to which the defence can attach but I think that the two that I have mentioned are the only ones that could have any application in this case: see Duncan & Neill on Defamation 2nd Ed par 14.01. In Sticart v Bell [1891] 2 QB 341 at 350 Lord Lindley defined a moral duty as "a duty recognised by English people of ordinary intelligence and moral principle, but at the same time not a duty enforceable by legal proceedings, whether civil or criminal": see The Law of Defamation in Australia and New Zealand: Michael Gillooly; p 171. In Horrocks v Lowe [1975] AC 135 at 149 Lord Diplock offered the following explanation:
102 These statements accord with the law in Australia: see Stephens v West Australian Newspapers Ltd [1994] HCA 45; (1993-94) 182 CLR 211 at 238 per Brennan J:
". . . in all cases of qualified privilege there is some special reason of public policy why the law accords immunity from suit - the existence of some public or private duty, whether legal or moral, on the part of the maker of the defamatory statement which justifies his communicating it or of some interest of his own which he is entitled to protect by doing so. If he uses the occasion for some other reason he loses the protection of the privilege.
So, the motive with which the defendant on a privileged occasion made a statement defamatory of the plaintiff becomes crucial. The protection might, however, be illusory if the onus lay on him to prove that he was actuated solely by a sense of the relevant duty or a desire to protect the relevant interest. So he is entitled to be protected by the privilege unless some other dominant and improper motive on his part is proved. "Express malice" is the term of art descriptive of such a motive. Broadly speaking, it means malice in the popular sense of a desire to injure the person who is defamed and this is generally the motive which the plaintiff sets out to prove. But to destroy the privilege the desire to injure must be the dominant motive for the defamatory publication; knowledge that it will have that effect is not enough if the defendant is nevertheless acting in accordance with a sense of duty or in bona fide protection of his own legitimate interest.
The motive with which a person published defamatory matter can only be inferred from what he did or said or knew. If it be proved that he did not believe that what he published was true this is generally conclusive evidence of express malice, for no sense of duty or desire to protect his own legitimate interest can justify a man in telling deliberate and injurious falsehoods about another, save in the exceptional case where a person may be under a duty to pass on, without endorsing, defamatory reports made by some other person."
103 I accept the Minister's evidence that he received the Davidsons' first letter and reacted to it in his public capacity as a Minister of the Crown holding the portfolio that embraced the tourism industry. It is trite, but it needs to be said that the litigants in these proceedings are and were, at all material times, members of that industry. I also accept that the Minister, in that capacity, had a duty to receive and to deal with correspondence from a member of the tourism industry about another member of the same industry. In other words, the broad foundations for the defence of qualified privilege exist with respect to the publication of the Davidson's first letter.
"The occasion of privilege which "prevents the inference of malice" depends on the subject and circumstances of the publication, not on the state of mind of the defendant. If the defamatory matter be published on a privileged occasion, the onus shifts to the plaintiff to prove malice in the defendant. If malice be proved, the privilege ceases to be an effective defence."
104 The applicant did not file a reply; hence it did not raise the issue of express malice on the pleadings. This has lead the respondents to submit that it is not now open to the applicant to deny the defence of qualified privilege. I am not prepared to accept that submission; the issue of malice was alive at a very early stage in these proceedings. It was self-evident that it was the applicant's answer to the defence. This case started in November 1997, continued in February 1998 and only came to an end in December 1998. If the respondents were embarrassed or prejudiced by the absence of a reply they had ample opportunity to say so; it is significant that the submissions of counsel for the respondents do not suggest embarrassment or prejudice.
105 It was submitted on behalf of the respondents that Hunt Australia and Mr Penfold engaged in a blatant lie by composing and distributing certain advertising material. That material comprised a photograph of Mr Penfold and another man and a dead buffalo. The presentation gave the appearance of a very large beast having been shot in the wild. The respondents' case was, however, that this particular animal had not been shot in the wild: it had been a penned animal and had been shot whilst penned but photographed in such a way as to disguise that fact. Even accepting the respondents' case at its highest, I fail to see how such an activity could justify a statement that Mr Penfold was spreading blatant lies that were having "an adverse affect" on the tourism. If the photograph had been used improperly to claim some reward or to obtain some recognition of (say) a record, then it might be said that the use of the photograph was a blatant lie and, perhaps, such conduct might have had some adverse effect. But the staged composition of a photograph for general publicity purposes is an entirely different matter. It could not be said that it was false because Mr Penfold did not hunt buffalos; he did. It might be said of him that it was not the act of a sportsman to shoot a defenceless animal in a paddock but his lack of sporting ethics was not the issue. The issue that the respondents tried to establish was that a staged photograph for advertising and publicity purposes constituted not only a blatant lie, but a blatant lie that was having an adverse affect on tourism and the hunting industry. I reject that proposition as an attempt to justify an unjustifiable libel.
106 In an attempt to sweep away any suggestion of malice on the part of Mrs Davidson, it was submitted that it was Mr Higgins of the Northern Land Council who had suggested to Mrs Davidson that she write the letter to the Minister and that it would not be credible to attribute any malice to Mr Higgins. There are two answers to this submission. The first is that Mr Higgins played no part in the composition of the letter nor in its choice of language; the second is that although Mr Higgins did not like Mr Penfold and regarded him as a cause of trouble he did not act with malice. For different reasons both Mr Higgins and Mrs Davidson wanted to get rid of Mr Penfold but, in the case of Mrs Davidson she was actuated by spite and express malice.
107 I reject any suggestion that Mrs Davidson wrote the Davidsons' first letter in order to bring matters of concern to the tourism industry to the attention of the Minister. Her dominant purpose in writing the letter was to cause harm to her competitor. It was her "payback":
108 Save for their own statements, the respondents adduced no evidence that there were matters of concern to the tourism industry as a result of Mr Penfold's conduct. Mr Higgins' evidence was concerned with the reaction of the Northern Land Council and Aboriginal people to Mr Penfold - not with the tourism industry.
"... because we'd had stories spread around about us that we were broke and we didn't have any professional guides and we were going into bankruptcy which was lies"
109 Mrs Davidson, during the course of her evidence, claimed that the blatant lies that had allegedly been spread by Mr Penfold not only had an adverse effect on tourism in general, but also on the business of Davidsons' Arnhemland Safaris Pty Ltd. She was pressed in cross-examination to identify and particularise those blatant lies. Her answers were a mixture of hearsay and confusion. When asked to give an example of the "blatant lies", she responded that clients had said to her that Mr Penfold had said to them that the camp and the equipment was his and that the guides had been trained by him; (this was at a time when Mr Penfold was doing subcontract work for the Davidsons in their camp, with their equipment and their guides). When asked to explain how such statements (if indeed they had been made) would cause harm to her business she was unable to give an answer. Ultimately she acknowledged that they were merely a source of irritation and annoyance. She then said that other "blatant lies" were stories that "we" had no professional guides, that "we" were broke and that her husband was in ill health. Under further cross-examination it was established that these stories came from a client in America via their American agent. The American agent had said that an unnamed person, a South Pacific operator, had made the statements at the Erding Exhibition in Germany. Later, the agent allegedly told the Davidsons that the only South Pacific operator at the Erding Exhibition was Mr Penfold. Obviously Mrs Davidson was prepared to accept, without question, that Mr Penfold had made these statements (all of which he denied). However, it transpired that the Erding Exhibition was in April 1995 some five months after she had written her letter to the Minister. Hence the "blatant lies" to which she referred in her letter could not have included any of these hearsay statements that allegedly emanated out of the Erding Exhibition.
110 Mrs Davidson also said in evidence that she was told (second hand) of an advertisement or brochure in the German language that related to Mr Penfold's business; her understanding was that the advertisement claimed that he "had" five million hectares in Arnhem Land and that he was the only operator in that area. When pressed about the advertisement, Mrs Davidson at first said it was another example of a "blatant lie". Later, however, she acknowledged that there were occasions when European agents sometimes made mistakes and that her company had been the victim of such a mistake. She conceded that the advertisement relating to the five million hectares might have been caused by a European agent, in which case it would not be correct to say that it was another example of a "blatant lie" told by Mr Penfold.
111 As further examples of "blatant lies", Mrs Davidson gave evidence, without objection, of statements attributable to two men. A man called Steve Fullerton used to work for the applicant. Mr Fullerton allegedly told Mrs Davidson that Mr Penfold had said that the Davidsons did not have professional guides. Mrs Davidson also claimed that another man, Brenton Hurd, had said that Mr Penfold had said that the guides, camps and the equipment belonged to Hunt Australia. Neither Mr Fullerton nor Mr Hurd were called as witnesses by the respondents to verify these statements and no satisfactory explanation was proffered for their absence.
112 Mrs Davidson tendered, on the subject of "blatant lies", a document that Mr Penfold had handed her; it was part of a letter that he had written to the controlling board of the Gurig National Park saying that Davidsons' Arnhem Land Safaris Pty Ltd and Wimray were "no good" and that Hunt Australia should be given a licence to operate in the Gurig National Park. Such a letter must, however, be dismissed as the "puffing" of a competitor who is looking for business.
113 In short, the evidence of Mrs Davidson on the subject of the alleged "blatant lies" was wholly unacceptable. She was prepared to react to rumour and gossip in the hope that she would cause harm to a business competitor. The evidence that was adduced by the respondents did not establish that Mr Penfold had made any statements to any person on any occasion that could possibly be classified as "blatant lies".
114 If the defence of qualified privilege was available in the circumstances of this case to private persons relative to the conduct of another private person, as to which I have reservations, the respondents have failed, as a matter of fact, to establish it. Their complaints were based on rumour and hearsay which they made no effort to substantiate. They made no attempt to call any corroborating evidence; their evidence was unacceptable; the whole of their case was actuated by spite and malice against Mr Penfold. That this is so is emphasised by the deliberately false statement in the Davidsons' second letter to Diana that the Minister "has asked us to pass on the information." It should be acknowledged that Mrs Davidson, as the author of the letter, wanted to believe anything bad that she heard about Mr Penfold but she was recklessly indifferent to the real issue - which was whether Mr Penfold was spreading blatant lies that were "having an adverse affect on tourism in general in the Northern Territory and making the whole industry look unprofessional".
115 I am satisfied that the Davidson's first letter defamed Hunt Australia by its references to Mr Penfold; he is not only the managing director of his company, he is its "alter ego"; he and his company are so closely linked in the safari and hunting industry that they are identified as one and the same. It is for these reasons that an attack on the character and integrity of Mr Penfold is an attack on the character and integrity of Hunt Australia.
116 A fair and reasonable reading of the letter can leave no doubt in anyone's mind: it has the clear effect of identifying "Mr Penfold of Hunt Australia" as a liar. That could only mean that Hunt Australia was controlled and operated by a liar. The problem is then further compounded because the letter proceeded to state the effect of the lies - they were "having an adverse affect on the tourism in general in the Northern Territory and making the whole industry look unprofessional". I agree with the submission of Mr Spargo, counsel for the applicant: the clear reference was that Mr Penfold and Hunt Australia were a danger to the well being of the tourism industry in the Northern Territory. This section of the letter would have had the tendency to lower Hunt Australia in the estimation of the Minister by making the Minister think of its managing director as a liar.
117 The imputation that has been pleaded in par 7.1 of the statement of claim is that:
118 The respondents have denied this imputation, saying that the allegation with respect to the impact of Mr Penfold's conduct on the safari industry (ie, that it is having an "adverse affect") is significantly less severe than "destructive" (that being the word pleaded in par 7.1 of the statement of claim). Whilst I agree with this submission, I do not see that it is of assistance to the respondents, save on the question of the quantification of damages. In my assessment, the respondents have to answer first, for the false accusation that Hunt Australia was controlled and operated by a blatant liar and then secondly for the assertion that the lies were having an adverse effect on the tourism industry.
"The applicant was operated by a liar whose lies were destructive of the Northern Territory tourism industry."
119 The applicant also complained about the presence of the words "the legal, respected Safari Operators in the Northern Territory." It was submitted that there was a clear inference that Hunt Australia was not a "legal respected Safari Operator." I do not agree. That phrase did not stand in isolation in the Davidsons' first letter; it is to be read with the words that followed immediately after:
120 Asking a question in those terms cannot be construed as stating or inferring that Hunt Australia or Mr Penfold or both of them are not "legal respected Safari Operators."
"particularly in reference to those licensed to operate in Arnhemland on Buffalo and Banteng."
Mr Davidson's involvement
121 It is of course clear that Mrs Davidson wrote the first Davidsons' letter to the Minister; she has admitted this. It is also clear that, in so writing, she was doing so in her capacity as a director and a senior executive officer of Davidsons' Arnhemland Safaris Pty Ltd. But, somewhat surprisingly, it was Mr Davidson's evidence that he did not participate in the composition and submission of the letter and, indeed, was unaware that his wife had sent it. In his witness proof he said at par 14:
122 He said that his wife had not discussed the matter with him prior to her writing the letter and he could not recall that she even told him subsequently that she had written the letter. In his oral evidence Mr Davidson reaffirmed the fact that the first Davidsons' letter was written without his knowledge and Mrs Davidson supported her husband's evidence. He became aware of the Minister's letter and he acknowledged that he took copies of it with him to the Dortmund exhibition. He also said in his evidence that he did not know that his wife had written the second letter to Michael Andersen of "Diana". At first, in seemed strange that he would be unaware of the existence of such significant letters, but as his and his wife's evidence unfolded it became apparent to me, and I find, that Mr Davidson was telling the truth. He, like his wife, was antagonistic towards Mr Penfold but, as I have earlier said, he left all matters of correspondence and administration to her; he did not distance himself from his wife with respect to her conduct in writing the letters, but I find that he was not a party to the decision to write either of them. In those circumstances I find that the applicant has no cause of action in defamation against Mr Davidson.
"I cannot remember exactly when but at some point around this time I learned that Philippa had written a letter to the Minister, at the request of Bernard Higgins, requesting a letter to clarify the situation in Arnhemland. When we returned from Sydney a letter from the Minister was waiting for us which enclosed a copy of the letter sent to Mr Bollman regarding who were the officially licensed operators in Arnhemland."
Damages for Defamation
123 Lord Reid in Lewis v Daily Telegraph (1964) AC 234 at 262 said:
124 That view has been adopted in Australia: Australian Broadcasting Corporation v Comalco Ltd (1986) 12 FCR 510 at 560 per Smithers J and at 599 per Pincus J. In that case the Full Court reject the views of Mahoney JA in Andrews v John Fairfax & Sons Ltd (1980) 2 NSWLR 225; in the latter case his Honour had held, in effect, that a defamed company could recover damages for injury to its reputation as such, not merely for injury to trade reputation or goodwill.
"A company cannot be injured in its feelings, it can only be injured in its pocket. Its reputation can be injured by a libel but that injury must sound in money. The injury need not necessarily be confined to loss of income. Its goodwill may be injured."
125 In this case, the publication of the defamatory material was limited. The letter was addressed to and only forwarded to the Minister - although it is logical to assume that his advisers would also have been made aware of it and its contents. But the matter of significance is that, unlike the Minister's letter and the Davidsons' second letter, the Davidsons' first letter was not circulated to members of the safari and hunting industry. It is true, as counsel for the respondents submitted, that the Minister in the course of his evidence made it clear that he did not hold Mr Penfold in high esteem. Whilst that is a matter that is to be taken into consideration it does not absolve Mrs Davidson and her company from blame. Whatever the Minister may have thought of Mr Penfold and his company before receiving the letter, the probabilities are that he would have thought less of them after reading the letter.
126 The respondents submitted that the comment that Mr Penfold had been spreading blatant lies was not a comment that was related to the conduct of the company's business. As authority for this proposition they relied upon the remarks of Lord Goddard in the Court of Appeal in D & L Caterers Ltd v D'Ajou (1945) KB 364 at 366:
127 In that case the allegation was that the corporate plaintiff had been carrying on a restaurant business in contravention of rationing regulations by purchasing food on the black market; clearly that was an allegation that impacted on the plaintiff in its corporate capacity. Contrary to the respondents' submissions, I have no doubt that it would be most harmful to a company's business if it was the victim of false statements that it was operated and controlled by a man who spread blatant lies about the industry in which the company operated.
"If one said of a company "It is a murderer" or "it is a forger," I have no doubt that the company could not bring an action, because a company cannot forge, a company cannot murder, so that in the ordinary way it would not be actionable to write something of a company which might be actionable in the case of individuals, unless what is written reflects on the company in the way of its business."
128 There was, as the accounting evidence verifies, a substantial downturn in the business of Hunt Australia in the 1995 and 1996 financial years. However, the applicant has failed to connect the defamatory statements to that downturn. There is no evidence that the Davidsons' first letter went beyond the Minister and his advisers. In particular there is no evidence that it was distributed within the hunting industry.
129 In my opinion there is no evidence before the Court to prove any actual damage that was suffered by Hunt Australia as a result of the publication of the Davidsons' second letter. However, the absence of such evidence does not oblige or entitle me to refrain from awarding damages "for the mere risk of financial harm": Australian Broadcasting Commission v Comalco (see above) 604 per Pincus J; see also Barnes & Co Ltd v Sharpe [1910] HCA 26; (1910) 11 CLR 462. In my opinion, the limited extent of the publication, coupled with the lack of evidence about any actual loss suffered means that the award of damages should not be overly generous; on the other hand, one cannot overlook the serious nature of the libel. It was addressed to the Minister of the Crown who had the ultimate responsibility for the industry in which the applicant carries on business. I have concluded that an amount of $20,000 would be sufficient to constitute recognition of the nature of the defamatory statement and the identity of the party to whom it was made. There will be a judgment in that sum in favour of the applicant against Mrs Davidson and her company.
Damages - Trade Practices Act
130 Should my finding that the respondents did not engage in misleading or deceptive conduct in breach of the s52 of the TPA be overturned on appeal, I set out hereunder my assessment of the damages that, in my opinion, the applicant would be entitled to receive. Mr Penfold claimed that the distribution of the Minister's letter was the cause of his company's loss of business, but for the reasons that I have given, I cannot rely on Mr Penfold's evidence. There was evidence of the existence of, at least, seven other factors that would have affected the profitability of the business of Hunt Australia in the 1995 and subsequent financial years. I accept that evidence in preference to the evidence of Mr Penfold. Those factors must be identified and allowance must be made for their existence and effect on Hunt Australia's business.
131 The first of them related to Mr Penfold's amazing outburst about German hunters. The respondents tendered a document on the letterhead of the applicant. It was undated but from its contents it was obviously written in mid to late 1994. It was a master piece of negative public relations. It was identified as a "notice to agents" and it nominated the applicant's "new policies on boar hunting". It amounted to an unrestrained attack on German nationals. After stating that from 1995 the company will not accept parties of German hunters "of more than four hunters at a time", the notice went on to say:
"Our problems encountered with the German hunters stem from one or more of the party being poor hunters, inexperienced hunters or incompetent shots. They tend to spread discontent and blame us or claim the guides are incompetent. They never laugh at themselves and admit how many opportunities they missed or how many big boars they wounded and lost.
They spread discontent in their own language which we cannot understand or counter. This tends to reduce the quality of the experience that has been had by competent and successful hunters in the party in the minds of those successful hunters."Whether the contents of this notice were accurate or not is immaterial. The fact is that such a document would have been regarded as highly offensive to a German national - I cannot accept the evidence of Mr Lessenich to the contrary. One would not be surprised if, after reading it, a potential client from Germany took his or her business elsewhere. This heavy handed approach about German clients is also apparent in Mr Penfold's letter to "Diana" dated 16 September 1994. The following passages from that letter speak for themselves:
"The problem most revolves around the mentality of the German clients. They all believe that they are experienced and expert hunters and expert shots whereas in reality they are generally pretty hopeless.
...
One fact that I have observed is that your clients deliberately lie to you to cover their own failures. They are not good sportsmen and will not accept that they are incompetent.
...
Now you suggest that he has some kind of claim on our incompetence. Rubbish!"
...
You had better congratulate your Dr Rudolph on getting home alive. Each guide who guided him in New Zealand, New Caledonia and Australia wanted to shoot him by the second day of each hunt. He was apparently the most arrogant and disgusting man any of the guides have ever encountered."It may be that each statement was justified, but such a letter is not likely to engender good relations. If, as has been complained, the business of the applicant diminished in 1995 and thereafter, letters such as that of 16 September 1994 must be accepted as playing some part in that diminution.
132 The second matter to consider was the issue of increasing competition in the industry. There was correspondence between Mr Penfold and Mr Lessenich in November 1996 in which Mr Penfold noted that buffalo hunting had become increasingly difficult over the years. He wrote:
In that same exchange of correspondence, Mr Lessenich commented that Mr Davidson was having a detrimental effect on his business. This is almost two years after the distribution of the Minister's letter and it seems to me that it was written more in recognition of Mr Davidson as a competitor than as a complaint of the consequences of the distribution of the Minister's letter. It was also in November 1996 that Mr Lessenich wrote to Mr Penfold telling him that "the contentment of our clients went down and down...". This cannot be sheeted home to the Davidsons. If Hunt Australia's clients were not contented, it had only itself to blame.
"...but there are so many hunters now with really cheap prices, poor hunting, old worn Toyotas, no service and not good food that are in the market in Australia and New Zealand today that I cannot compete with that. I will have to work very hard for less yield than former times in the future."
133 A third factor that should not be overlooked is the evidence that there was a downturn of business generally in the hunting industry in Europe in 1996. That factor, and the absence of Mr Penfold at the 1995 Dortmund Exhibition, coupled with the presence of Mr and Mrs Davidson plus Mr Bleakley and Mr Kyle-Little as direct competitors, are all matters to be weighted in the balance.
134 I turn now to the fourth factor; it is probable that there had been a dissemination of the Minister's letter worldwide through the various international chapters of the Safari Club International. The Minister's letter was addressed to the President of the Club with a clear invitation that he distribute it to his members. Although there is no evidence, one way or the other, that establishes that Mr Bollman, the President, did distribute the letter and there is no evidence of the extent of any such distribution, I do not think that the lack of such evidence is a complete end to the matter. In my opinion it would be proper, having regard to the identity of the author, the subject matter of the letter, the identity and role of the addressee, coupled with the invitation to distribute, to find that there was a reasonable measure of distribution. I cannot, however, beyond that, make any findings as to the extent of the distribution. I can only proceed upon the premise that it is a matter to be taken into consideration. If the Minister's letter did, as a matter of fact - and contrary to my finding - contain a material misstatement of fact, then, even though the respondents - again contrary to my finding -may have engaged in misleading or deceptive conduct in distributing the Minister's letter, they do not have to take any responsibility for the dissemination of that letter by the Safari Club International even though it was their express wish to the Minister that he write Mr Bollman and that he ask him "to pass this information on to all of their chapters in the USA and Europe." There is no mandate for inferring that the respondents were in any way involved in the composition of the Minister's letter. If there was a material error in the Minister's letter, the Davidsons cannot be held responsible for its existence in the letter or for the distribution of the letter by a third party over whom they had no control; their faulty conduct is limited to their act of distributing the letter knowing that it contained a material error.
135 Fifthly, it must be remembered that Hunt Australia never did have licences to operate in Arnhemland or on the Coburg Peninsula. A useful summary of the activities of the applicant can be obtained from a letter that Mr Penfold wrote to the Gurig Peninsula Sanctuary Board seeking a licence. He said of his company:
These are station properties or areas in the Northern Territory, but they are not part of Arnhemland or the Coburg Peninsula. He added further details about his company's activities saying:
"We presently operate hunting safaris at Mountain Valley, Mainoru, Urapunga, Dorisvale, Bradshaw, Waterloo, Goulbourn Island and North East Island in the Northern Territory."
The distribution of the Minister's letter would, at its worst, dissuade those hunters who were intending to hunt in Arnhemland and/or the Coburg Peninsula from retaining the services of Hunt Australia for those hunts. It would not necessarily have dissuaded others whose hunting activities were intended for places other than Arnhemland and the Coburg Peninsula.
"We conduct around thirty buffalo hunts each year, goat hunts on Goulbourn Island, Moluccan Rusa Deer hunts at North East Island, around 40-50 boar hunts, 20-30 camel hunts and around 30-40 donkey reduction hunts each year in the Northern Territory."
136 The remaining two factors would not have had a direct effect on the number of Europeans who might have otherwise intended to book the services of Hunt Australia, but they would have had some effect, at large, on the company's operations. The first of these, the sixth factor, concerned Mr Penfold's health. In late 1995, Mr Penfold distributed a five page report (Ex R8) addressed to "all guides, contractors and staff". The report highlighted the activities of Hunt Australia for the 1995 season. The report is significant for what it contains and for what it does not contain. It was quite extensive in its detail but it made no mention of the Minister's letter or of the conduct of the Davidsons in distributing the Minister's letter, nor did it make any reference to any adverse consequences flowing to Hunt Australia as a result of the letter and its distribution. The report did, on the other hand, make mention of Mr Penfold's "minor heart attack" in July 1995, an illness which, according to his oral evidence, was subsequently diagnosed as something other than a heart attack. Nevertheless, the report made it clear that his illness had a measurable impact upon the activities of the company. Subject to the problems concerning his health, the report was otherwise glowing in its contents with respect to the activities of the company's business. Allowing for puffing, and allowing for encouragement to staff, one cannot help but be influenced by statements such as :
And
"Generally the organisation and the hunts went very well with a huge number of record book animals and several new records being taken by our clients."
"All in all we had a record year."And
"We have so many bookings for New Caledonia to 1996 that we need to expand our operation there."And
"We are setting up operations on several new properties in NT in 1996 and expanding the operations in all of our present areas."
137 The seventh factor was the reaction of the applicant's banker. On 29 November 1996, Mr Penfold wrote to "Brockie"; he referred to the tragedy at Port Arthur in April of that year when so many innocent people were murdered by Martin Bryant. He then wrote:
138 The evidence does not contain the detail that would be necessary to make any calculations of the likely effect that these seven factors might have had on the applicant's business and the obvious downturn in the number of European clients in the 1995 and subsequent years; and, of course, some of the factors would have had greater significance than others. For example, Germany was the primary source of clients and the number of clients fell from eighteen in 1994 to six in 1995: (Ex AD12). Was this caused, in whole or in part, by Mr Penfold's extraordinary outbursts in his correspondence or was it caused by the respondents' distribution of the Minister's letter? The court is faced with a herculean task in striving to attribute cause to effect. Nevertheless there is a duty to quantify loss even if such a calculation involves a degree of speculation: Enzed Holdings Ltd v Wynthea Pty Ltd [1984] FCA 373; (1984) 57 ALR 167. I think that it is more probable than not that a European agent would have reacted to Mr Penfold's correspondence by turning its German hunters to other guides. I think that, to a degree, each of these factors had some adverse effect on the applicant's business; they played some part, either in reducing the number of European hunters who engaged Hunt Australia in the 1995 and subsequent financial years or in the case of Mr Penfold's illness and his bank's reaction, they otherwise impacted on the business. Doing the best I can, I would attribute two-thirds of any losses that the applicant suffered to these extraneous factors.
"Coincidentally since that time I have had a major downturn in business.
My bank interpreted that the following gun debate had crippled me and that I was heading for bankruptcy so without notice stopped me operating.
They stopped all of my lease payments on my Toyotas and my aeroplane and stopped payment to all of my staff etc.
Their instructions without warning was `Close down. Stop operating'."
139 Counsel for the applicant, in his written submissions, put the proposition that damages "should be awarded by having regard to the applicant's loss of business which can only be reasonably attributed to the conduct of the respondents." I do not agree that the loss "can only be attributed" to the respondents' conduct. I have listed seven other factors that would have had some adverse effect. All these matters, coupled with the poor impression that Mr Penfold created during his evidence, has had a material effect on my approach to his counsel's submissions that the business of the applicant suffered a downturn as a result of the distribution of the Minister's letter.
140 Mr Peter James McLean, a chartered accountant, was called as an expert witness by the applicant in support of the applicant's claims for damages. Although aspects of Mr McLean's evidence and opinion were challenged, his competence to give evidence was not. For the purpose of these proceedings Mr McLean prepared a report; it was tendered as an annexure to his witness proof Ex AF1. Mr McLean stated that, for the purposes of his report, he relied upon the following sources of information:
* The applicant's profit and loss statements and balance sheets for the financial years 1991 to 1996 inclusive.
* Accounting working papers for the 1995 and 1996 financial years (which included a review of bank statements, bank reconciliations and debtor and creditor listings).
* Correspondence from Mr Lessenich.
* The applicant's plan for expansion as related to him by Mr Penfold.
* The hunt statistics that were supplied to him by Mr Penfold
141 It was the case for the applicant that in 1989 it resolved upon the implementation of a business expansion plan. According to the report of Mr McLean, the "expansion commenced in 1990 and continued until early 1996, only being stopped by the downturn in the trust's hunt sales in the 1995 and 1996" calendar years. The plan contemplated the following growth in hunts:
"Calendar Year No. of Northern Territory % Increase over
Hunts previous year
1992 30 20%
1993 40 33%
1994 60 50%
1995 80 33%
1996 100 25%
1997 125 25%
1998 150 20%
1999 175 17%
2000 200 14%"
142 Mr Alison, a witness for the applicant, a former big-game hunter and author, and presently a journalist specialising in the hunting field, thought that these figures would have been achievable, as did Mr McLean. But Mr Alison did not have an accounting background and Mr McLean was forced to concede that in any new business there can be an explosive growth in the first few years followed by a plateau unless, of course, management is able to inject some new, revitalising element.
143 I can see no justification for converting such calculations of future growth (which may well represent Mr Penfold's genuine beliefs) into accepted facts. Take for example the 1997 calendar year: Mr Penfold's projection was that his business would have conducted 125 hunts in that calendar year. But there is no evidence before the Court as to the number of hunters operating in the Northern Territory in that year or the total number of hunts conducted. There is no evidence that would allow a Court, with confidence, to make a finding that this projection bore any relationship to reality. There is no evidence generally about the state of the hunting industry. Are the number of hunters increasing? Are the total number of hunts increasing or decreasing? Having regard to the delays that took place in completing this trial, the court could have been informed of the number of hunts that were conducted in the 1997 and 1998 seasons so as to observe whether there had been an increase or a decrease in the number of clients. The failure to give that evidence suggests, as a matter of probability, that earlier adverse affects were beginning to wain. These are the reasons why I would not be prepared to use those projections as a basis for the calculation of the applicant's alleged losses.
144 On the other hand, it is to be acknowledged that the applicant did implement an aggressive marketing plan and it did make extensive commitments to the purchase of additional equipment. In addition to increasing, gradually, expenditure on advertising and promotion, the business acquired additional vehicles, camp equipment and an aeroplane. It has not been suggested that any of that expenditure was other than beneficial. Thus, from having only one camp in 1991, the business built up to four camps by 1994. I accept Mr McLean's assessment that the business followed its expansion plan and that the results up to the end of the 1994 hunting season were largely consistent with its program. These capital costs were, of course, part of a preordained expansion program; they had nothing to do with the distribution of the Minister's letter.
145 Mr McLean said that the methodology used by him in the preparation of his report involved the comparison of projected Northern Territory hunts for the 1997 and subsequent years with:
* The actual hunts undertaken prior to the distribution of the Minister's letter.
* The actual hunts undertaken since the distribution of the Minister's letter.
146 The information that can be extracted from the company's annual accounts, whilst of assistance, is, to a degree, difficult to analyse. The hunting season straddles the end of the financial year, but the company's financial accounts have been prepared on the traditional financial year. Mr McLean said in his report (par 2.1.3) "If hunts are not viewed on a Calendar Year basis, but rather a financial year basis, the financial year results will show wide fluctuations in turnover (and therefore profitability) simply because more of the hunts in that particular Hunting Season were held in July, August or September rather than May or June". It should also be noted that deposits in advance were recorded as income when received. Therefore deposits were not necessarily taken into account in the financial year in which the hunts were undertaken. It was put to Mr McLean that the special preparation of a set of calendar year accounts would have been of material assistance in calculating the applicant's losses, but he answered, somewhat surprisingly in my opinion, that his client did not consider that the cost warranted it. Even so, the tour fees for hunts received during those financial years are of some interest. They are set out in Annexure 2 to Mr McLean's report and are as follows:
|
"1991 | 1992 | 1993 | 1994 | 1995 | 1996 | |
| Tour fees received |
$368,008 |
$407,325 |
$514,658 |
$403,798 |
$573,062 |
$420,503" |
147 If tour fees were affected by the Minister's letter one might have expected some effect to appear in the 1995 financial year and, certainly in the 1996 year. In fact, the 1995 year showed a substantial increase in gross receipts, and even though there was a material drop in the 1996 year, its gross still exceeded the 1994 year. Care must be taken before drawing any conclusions from these figures. A complicating factor in this exercise is that Hunt Australia drew its clients from a variety of sources and for a variety of purposes; its clients from Europe who wanted to hunt in Arnhemland and the Coburg Peninsula formed only a part of its business. It should also be noted that the company enjoyed high gross receipts in the 1993 year which was followed by an unexplained drop of about 15 per cent in the 1994 year. No pattern can be discerned from these figures except to say that the "high" of 1993 was followed by a "low" in 1994 and a "high" was enjoyed in 1995 only to be followed by a "low" in 1996. One is not able to say, on the basis of these gross receipts, that the company suffered a material drop in gross receipts which can be identified as abnormal or unusual or inconsistent with the company's financial history.
148 The company profit and loss accounts show that it suffered a loss for the first time in the 1996 financial year. The following information, extrapolated by Mr McLean from the accounts, shows the comparative position:
|
"1991 |
1992 |
1993 |
1994 |
1995 |
1996 | |
|
GROSS PROFIT | $144,895 | $154,140 | $192,798 | $144,808 | $268,203 | $155,245 |
| TOTAL EXPENSES | $104,229 | $101,105 | $122,247 | $100,191 | $235,213 | $197,943 |
| PROFIT BEFORE OWNERS BENEFITS & ABNORMAL ITEMS |
$40,666 |
$53,035 |
$70,551 |
$44,617 |
$32,990 |
$-42,698" |
149 In both the 1995 and 1996 financial years the company spent extensively on advertising and travelling expenses. Those expenses amounted to $109,697 and $69,348 and are to be compared with $19,077 in the 1994 year. An item of expense described as "Professional fees" increased from $3,650 in the 1994 year to $10,578 and $7,777 in the 1995 and 1996 years. Another big increase occurred in "Depreciation and amortisation" where the figures grew from $14,384 through $19,378 to $34,513 in the 1996 year. The 1996 year also saw a huge increase in the costs of "interest". From figures of about $13,400 in both 1994 and 1995, it grew to $31,892. It is not to be thought, from the summaries of these figures, that they explain why profits of $44,617 and $32,990 dropped to a loss of $42,698 in the 1996 financial year. But they do show that there were identifiable "business causes", contributing in varying degrees to that loss. I have used the term "business causes" because there is no sufficient evidence to suggest that these expenses were other than normal expenses incurred in the running of a business. Subject to an item of increased advertising costs, there was nothing to suggest that the conduct of the respondents was, in any way, responsible for these expenses.
150 Exhibit AD12, which was tendered by consent, contains details of the agreed numbers and names of European hunters who hunted with Hunt Australia in the 1993, 1994, 1995 and 1996 seasons. In tendering this document, Mr Spargo, counsel for the applicant, identified that the applicant was limiting its claim for damages to losses suffered as a result of the loss of clientele from Europe. The applicant did not pursue any claim for damages arising out of any loss of clientele from North America or other countries. The information derived from Ex AD12 shows that clients of Hunt Australia from Europe in the four years in question were:
|
1993 | 1994 | 1995 | 1996 |
| 17 | 30 | 16 | 13 |
151 Based on a figure of 30 European hunters for 1994 there was undoubtedly a drop off in 1995 and 1996 and, if I am to assume that the Minister's letter contained a material error which caused a loss of clientele to the applicant, then that loss will be one third of the actual losses suffered by the applicant.
152 Mr McLean's calculations, which were not challenged, were that, on average, a hunt in the Northern Territory conducted for a European client generated income, net of commission to the overseas agent, of AUD$7,560; his calculations of other costs left the applicant with a net return of $3,477 per hunt. A comparison of the number of hunts in the 1994 and 1995 seasons shows a drop of fourteen. A loss of fourteen hunts in a year would mean a loss to the company of $48,678. These figures were not disputed by the respondents. I would think that a reasonable approach would be to start with the reduced number of hunts in 1994 but to recognise the applicants' implied concession that the 1994 figure might have been abnormally high; I will therefore make an arbitrary reduction of two hunts or $6,954, reducing the base figure from $48,678 to $41,724; I will use that as a commencing figure. That figure must then be reduced by two-thirds to (say) $13,900. As the following year (the 1996 year) showed a further drop, it is necessary to increase the size of the likely loss. For that year I would allow a third of an additional three hunts or $3,477 or, say, $17,380. These losses total $31,280.
153 It is not disputed that the applicant incurred substantial additional advertising expenses amounting to $87,610 in the 1995 and 1996 financial years; its objective in incurring these additional expenses was said to be a matter of necessity in order to find other markets to compensate for the lost markets in Europe. But, as I have found that there were other factors, disassociated from the respondents, that would have played some part in the downturn of the applicant's business, it is necessary for consistency, to apply the same discount factor to those additional expenses. In addition, it is clear from the evidence that the additional advertising expenses would have been the subject of a grant of $0.50 in the dollar under the EMDG scheme. Hence the actual loss to the applicant is to be calculated by discounting the expenditure of $87,610 by two-thirds and then further reducing that result by a half; this gives a figure (rounded off to the nearest $1000) of $15,000. This figure makes no allowance for the results of the advertising program. The evidence that was led does not establish whether the program was successful or not. However, based on the overall loss in the 1996 year, I feel that discounting the claim to $15,000 is sufficient to cover this unknown factor. This would therefore quantify the applicant's losses at $46,280. Allowing a factor for interest I would increase that sum to $56,280.
154 For completeness I should record that I have made no allowance for losses beyond 1996. Originally the applicant claimed a substantial sum for future losses but, in his final submissions, counsel for the applicant quantified the applicant's claim by limiting it to the 1995 and 1996 financial years and the increased advertising costs. I consider that the applicant was correct to so limit its claim. If the distribution of the Minister's letter did have any adverse effect on the applicant's business, that adverse effect would have ceased by the end of the 1996 season.
155 Mr Robert Borsak, a certified public account and an active member of the South Pacific Chapter of the Safari Club International was called as an expert accounting witness on behalf of the respondents. Mr Borsak is a Certified Practicing Accountant; he has practiced his profession in excess of twenty years. He is also a big game hunter, and at one time, was on the committee of the Safari Club International. He was engaged by the respondents to assist as an expert accounting witness. Mr Borsak was of the opinion that it was necessary to make an examination of Hunt New Zealand Safaris Ltd and NT Outback Safaris Pty Ltd, two other companies that were owned and controlled by Mr Penfold. Mr Borsak said that his initial investigations pointed to there being joint marketing activities on behalf of the three companies, together with a mixing of funds and a sharing of expenses; he felt it would be essential to make an individual assessment of the activities of each of the three companies. He was, in many areas, critical of the annual accounts that had been prepared in the name of the applicant. In particular, he claimed that he had investigated an amount of material, including material that had only been discovered by the applicant in January 1998, and had come to the conclusion from his vouching that the accounts of the applicant company were not a true and fair representation of the company's affairs. He said that he had examined the contents of the "Red Book", a book maintained by the applicant that was said to contain lists setting out the names and details of all hunters and all hunts; he also examined the company's annual accounts and tax returns; they also contained lists setting out the names and details of hunts and hunters. It was Mr Borsak's evidence that the two lists did not match and that, as a result, there appeared to be understatements of income by the company in each of the financial years concluding on 30 June 1994, 1995 and 1996. Mr Borsak calculated the likely amount of the understatements in US dollars and then converted them to Australian dollars using a standard exchange rate of 70c to the $1. On that basis Mr Borsak said that there had been understatements of income in the following years of the following amounts:
Financial year Amount of
ending 30 June understatement AUD $
(approximately)
1994 $ 49,000
1995 $ 50,000
1996 $ 65,000
$164,000
156 According to Mr Borsak, the moneys that represented the omitted income were moneys that the company's American Agent, Mr Rusty Reed, had collected on behalf of the applicant and had retained for its benefit. He said that he had looked for entries to explain why this income had not been brought to account in Australia but he could not find any. On the other hand, Mr Borsak was satisfied that all expenses that had been incurred by Mr Reed on behalf of the applicant had been brought to account as deductions in its accounts and tax returns.
157 Mr Borsak also stated in his evidence that he had attempted, by an examination of the discovered financial records, to verify the claims that had been made on behalf of the applicant in the Export Market Development Grant Scheme. It was his claim that there were anomalies that he could not reconcile. He explained that his opportunity to examine the financial records of the applicant had been limited to the two days preceding the day on which he gave his evidence and he allowed for the possibility that given more time, he might have ascertained more information on this subject.
158 Mr Borsak first gave evidence during February 1998 with respect to the investigations that he had carried out into the financial accounts of the Hunt Australia Group. However, as I have said, he made it clear that he had had insufficient time to complete his investigations and to finalise his opinions; he said that this was because of the lateness of the discovery that had been made by the applicant. He was, on the other hand, aware that the litigation would not be concluded in February and that it would be adjourned over to be concluded in November or December 1998. Such a period of time would, I find, have given Mr Borsak ample time within which to conclude his investigations and formulate his opinions. When the matter resumed and Mr Borsak gave evidence on 1 and 2 December 1998, he acknowledged that he personally had not made any further investigations into the financial records of the Hunt Australia Group. He did say, however, that an independent firm of chartered accountants in Darwin had been retained for the purpose of that investigation. However, for reasons that were not explained to the Court, those accountants did not complete their brief. As a result, much of the allegations against the applicant and Mr Penfold with respect to his group's accounts have not been made out despite the respondents having had ample opportunity to do so. I have not therefore based any of my findings on Mr Borsak's evidence. Nevertheless, it seems to me that, independently of the evidence of Mr Borsak, there is evidence of incorrect claims having been made in the name of the applicant for grants under the EMDG scheme. The responsibility of the Court in such circumstances was considered by Wilcox J in Petera Pty Ltd v EAJ Pty Ltd [1985] FCA 277; (1985) 7 FCR 375 at 380. His Honour said:
I propose to follow the decision of Wilcox J. There will be an order directing the Principal Registrar of the Court to forward to the Attorney-General a copy of these reasons for judgment; the Registrar is also directed to make available, if requested, the transcript of evidence, the exhibits and any other material that is in the possession or under the control of the Court. For that purpose there will be a further order that the exhibits and other material are not to be uplifted without the consent of the Court.
"The position of a court, in a case where such a situation comes to notice in the course of a hearing between parties other than the revenue authority, has been discussed in a number of reported decisions. Those decisions are collected in a recent judgment of Lindenmayer J of the Family Court of Australia in In the Marriage of P [1985] FLC 79,911. After referring to authority his Honour, at 79,921, expressed the view that "as far as English law is concerned, the courts invested with the judicial power of the sovereign have considered themselves bound by certain duties, including the duty to protect the revenue of their sovereign, and that this duty has flowed on to the Supreme Courts of the Australian States". For reasons he gave, he concluded that there existed a similar duty by a federal court in relation to the revenue of the Commonwealth. At 79,925 he said that the "duty extends to requiring the court to take such steps as it is able to take to ensure that the revenue laws of the Commonwealth are not defrauded or evaded by litigants or others who come before it". In the result he directed that the papers in the case before him be referred to the Attorney-General.
I agree with the view expressed by Lindenmayer J. It is, I think, the duty of the Court to draw the facts revealed by the evidence in this case to the executive branch of government for such action by it as may be thought appropriate. I propose to direct the Principal Registrar of the Court to forward to the Attorney-General a copy of these reasons for judgment and of the evidence of Dr Jackson and to make available, as may be required, the full transcript of proceedings and the exhibits for inspection by any officers authorised in that behalf by the Attorney-General or by the Commissioner of Taxation."
The cross-claim and costs
159 A cross-claim that had been filed by Davidsons' Arnhemland against Hunt Australia and Mr Penfold was withdrawn when the matter was called on for trial on 3 November 1997. In it, Davidsons' Arnhemland had alleged three instances of misleading or deceptive conduct. First, it claimed that the cross-respondents had caused Hunt Australia's European agents to advertise, in Europe, that Hunt Australia "can conduct hunts for Banteng at Coburg Peninsula and for Buffalo in Arnhemland". Secondly, it claimed that Hunt Australia's servants or agents had, by words or conduct, led clients of Davidsons' Arnhemland to believe that hunting camps belonging to Davidsons' Arnhemland were owned and operated by Hunt Australia. The final claim was that Mr Penfold, as an agent for Hunt Australia, said at Erding, Germany, at a Hunting Exhibition that Davidsons' Arnhemland had no licence to hunt Banteng, he had no qualified guides, was in financial difficulty and that Mr Davidson had health problems. Notwithstanding the withdrawal of the cross-claim, Mrs Davidson persisted with most of these complaints when giving evidence but, for one reason or another failed to establish any of them. Prima facie, Hunt Australia and Mr Penfold would be entitled to an order for costs on the cross-claim, but I do not see why there would be an order for indemnity costs as sought by their counsel. In any event, I wish to hear the parties on the subject of costs at large. The applicant has succeeded in its defamation suit (but not against Mr Davidson) and it has failed in its action under the TPA. Several costs orders have already been made and it might be in the interests of all parties if the subject of costs were addressed at large, rather than in a piece-meal fashion. For example, is this a case for fixing a gross sum under O 62 r 4 and, if so, who would be the successful party? These matters can be explored after the parties have had an opportunity to reflect on my decision.
|
I certify that the preceding one hundred and fifty-nine (159) numbered paragraphs are a true copy of the Reasons for Judgment herein
of the Honourable Justice O'Loughlin. |
Associate:
Dated: 24 February 1999
|
Counsel for the Applicant: | Mr M Spargo |
| Solicitors for the Applicant: | Ward Keller |
| Counsel for the Respondents: | Mr Glisson QC with Mr Kennedy (up to and including 26/2/98)
Mr Kennedy appears on his own from 30/1198 to 4/12/98 |
| Solicitors for the Respondents: | Cridlands |
| Date of Hearing: | 3 - 7 November 1997
24 - 26 February 1998 30 November 1998 1 - 4 December 1998 |
| Date of Judgment: | 24 February 1999 |
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