Tyndall Funds Management (NSW) Limited v Mesh and Anor [1999] NSWSC 67 (17 February 1999)

Last Updated: 18 February 1999

NEW SOUTH WALES SUPREME COURT

CITATION: Tyndall Funds Management (NSW) Limited v Mesh & Anor [1999] NSWSC 67

CURRENT JURISDICTION: Common Law

FILE NUMBER(S): 16709 of 1991

HEARING DATE{S): 17 December 1997

6 February 1998

20 February 1998

2 April 1998

JUDGDMENT DATE: 17/02/1999

PARTIES:

TYNDALL FUNDS MANAGEMENT (NSW) LIMITED (previously known as GLOBAL FUNDS MANAGEMENT (NSW) LIMITED)

(Plaintiff)

v

PAMELA ANN MESH

(First Defendant)

HARI BHAGAT

(Second Defendant)

JUDGMENT OF: Levine J

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:

Mr A Henskens

(Plaintiff)

Mr C Evatt

Ms J Gibson

Mr M Rollinson

(Defendants)

SOLICITORS:

Cowley Hearne

(Plaintiff)

CATCHWORDS:

Particulars of defence of comment and qualified privilege

mitigation of damages

contextual imputations

capacity

form

ACTS CITED:

Defamation Act 1974 (as amended)

DECISION:

See paragraph 52

JUDGMENT:

- 19 -

DLJ : 3

THE SUPREME COURT

OF NEW SOUTH WALES

COMMON LAW DIVISION

DEFAMATION LIST

No. 16709 of 1991

JUSTICE DAVID LEVINE

WEDNESDAY 17 FEBRUARY 1999

TYNDALL FUNDS MANAGEMENT (NSW) LIMITED

(previously known as GLOBAL FUNDS MANAGEMENT

(NSW) LIMITED)

(Plaintiff)

v

PAMELA ANN MESH

(First Defendant)

HARI BHAGAT

(Second Defendant)

JUDGMENT (Particulars of defence of comment & qualified privilege - mitigation of damages - contextual imputations - capacity - form)

1 This matter (and accompanying litigation, matter numbers 20701/94, 20929/94 and 20930/94) has been the subject of judgments and orders as follows: Dowd J 27 November 1995; Levine J 30 November 1995; Studdert J 5 June 1996; Levine J 29 August 1997. The background and general nature of the litigation is usefully set out by Studdert J in his judgment.

2 By Notice of Motion filed on 4 December 1997 the applicant seeks relief essentially in the nature of the defendants' defences being struck out in whole or in part, or alternatively, that the defendants supply further and better particulars. All relevant documentary material is contained in a folder (which regrettably had to be supplied twice by the solicitors for the plaintiffs, the first having gone astray in the Registry) which folder is MFI "A" and which will be returned to the solicitors for the plaintiff with a direction that it be kept intact.

3 The Notice of Motion was filed, as a I understand it, consequent upon the defendants failing to satisfy the solicitors for the plaintiff in their response to a letter of 3 December 1997 which comments upon and protests about various aspects of the defendants' pleadings.

4 I shall deal with the matters of complaint in the same order as is set out in that letter, which order was followed by Mr Henskens of Counsel for the plaintiff.

5 The particulars of the "proper material for comment" provided in the defendants' letter of 10 November 1997 are inadequate. The defendants, insofar as they rely upon statements of fact in the matters complained of as constituting proper material for comment, should set out from the matters complained of what they assert to be those statements of fact and what it is about them that makes them "proper" material for comment.

6 The nature and purpose of the particulars required in support of a defence of comment have been dealt with by Hunt J in Sims v Wran (1984) 1 NSWLR 317 at 322C-326E.

7 Insofar as it is contended for the plaintiff that to the extent that the defendants are asserting that all the matters complained of contain statements of fact then, by definition, a concession is being made by the defendants that none of the matters complained of contain comment, I must say I find myself in disagreement. The nature of the defence of comment has recently and most usefully been clarified by Priestley JA in New South Wales Aboriginal Land Council v Perkins (Court of Appeal, unreported, 20 November 1998) at pages 6-7.

8 The response for the defendants by reference to the particulars set out under (10) on page 10 of the Defence and to the defendants' letter of 16 December 1997 is inadequate.

9 The defendants' will be ordered to supply proper particulars, in accordance with these reasons, of their defence of comment, within 28 days.

10 The defendants' rely upon the defence of qualified privilege as provided by s 22 of the Defamation Act, 1974 and at common law. In the exchange of correspondence in MFI I complaint is made as to the inadequacy of the particulars provided by the defendants in support of this plea. The purpose of particulars is clear: a party must be made aware of the nature of the case that party is called upon to meet (Sims v Wran (supra) at 321D and authorities therein referred to). In the same case at pages 326F-328A Hunt J sets out the nature and purpose of particulars of a defence of qualified privilege particularly under s 22 (see also Konstantidis v Foreign Media Pty Limited & Ors; Konstantinidis v Foreign Language Publications Pty Limited (Levine J, unreported, 8 August 1997). It is argued for the defendant that the particulars set out at pp 9-10 of the Defence together with the material contained in the correspondence is sufficient. Clearly, as to the former, it hardly can be argued that the material provided is of sufficient particularity when particulars (b)(iv), (v) and (vi) are conditional. The plaintiff is entitled to particulars of the facts, matters and circumstances upon which the defendants' rely in establishing each component of the defence whether it be under s 22 or at common law. The plaintiff is not entitled to the evidence that the defendant would lead in support of those facts, matters and circumstances. The plaintiff's solicitors in their letter of 21 October 1997 paragraph 3(b) and (c), in effect, make the request in the usual terms. That they were entitled so to do is clear from the deficiency in the particulars appended to the pleadings to which I have referred. The material in the defendants' correspondence does advance their case to some extent but not, and in this I agree with Mr Henskens, sufficiently to expose the case either under s 22 or at common law which the defendants' intend to litigate. The material is to some extent argumentative.

11 The exercise in supplying particulars should be as simple as the exercise in requesting them. The form of request to which I have referred above should facilitate the provision of succinct and clear enunciation of the defendants' case. This the defendants' will be required to. I will not however order, at this stage, that the defendants' identify by name each recipient of the subject publication. However the nature of the communications is such that the plaintiff is entitled in relation to the components of the statutory defence and the particular bases of the defence at common law which have been identified, to the identification of a "class of recipients" with some precision.

12 Accordingly, the defendants will be ordered within 28 days and in accordance with these reasons, to provide further and better particulars of the defences of qualified privilege under s 22 and at common law in accordance with the plaintiff's solicitor's request dated 21 October 1997.

13 In relation to particular (ii) in the particulars of Mitigation of Damages appended to the Defence, "the bad reputation of the plaintiffs", I am satisfied that the particulars provided are sufficient. They are probably more than sufficient. The evidence by which the defendants propose to prove that in the relevant area the plaintiff had a bad reputation is something that will be forthcoming at trial.

14 Particular (iii) "truth of the imputations": the defendants have not pleaded truth pursuant to s 15. If they propose to do so they shall have to, absent the plaintiff's consent, formally move the Court for leave, in which eventuality, no doubt full and proper particulars will be part of the documentation in support of the motion.

15 As to particular (iv) the plaintiff is entitled to the facts, matters and circumstances relied upon in support of the truth of the contextual imputations. It is to be noted that the defendants have deferred providing those on the basis that the availability of the contextual imputations is in question. I shall deal with that below.

16 As to particular (v) the "conspiracy": this is on its face an egregiously embarrassingly particular and I will order it to be struck out. If the defendants persist in making an allegation of this kind they will have to formally seek leave to amend and in doing so make it quite clear how it is contended that a properly particularised conspiracy is a matter that can affect, in a properly particularised way, the damages to which the plaintiff is entitled.

17 As to particular (vi) "abuse of process": I strike this out. The defendants' application to Studdert J in this regard failed, and in this action there being no attempt separately to plead abuse of process as a cause of action, this particular is also embarrassing. If the defendants propose to pursue it then the same approach will have to be adopted as I have referred to in relation to particular (v).

18 As to particular (vii), "false claims": this particular will be struck out as embarrassing. No information hitherto provided really clarifies what is intended by this allegation under the heading of "Mitigation of Damages"; insofar as the plaintiff is claiming general and special damages, that will be an issue for the plaintiff to prove. The "falsity" of any claim for special damages, for example, may well be exposed in evidence. This particular is embarrassing.

19 As to particulars (viii) and (ix): "delay in prosecuting the claim" and "delay in supplying proper particulars" I do not propose to strike these out. The defendants have given notice to the plaintiff that presumably they will propose to adduce evidence in proper form as to delay and seek to argue that that delay does not conform with the usual reasons why an action for defamation is instituted. The plaintiff however is entitled to particulars of the facts, matters and circumstances relied upon by the defendants in asserting that there was "delay" in both cases and the defendants will be ordered to provide those particulars within 28 days.

20 As to particular (x) relating to the initiation of proceedings on 12 December 1991 and the parties then named and an alleged breach of SCR Pt 21 r 2, I am not in the position on any of the information available to determine how this can conceivably operate to the diminution of any damages to which the plaintiff is entitled. This is an embarrassing particular and will be struck out. Again if the defendants assert that they can make a case in relation to these events "in mitigation of damages" then they will formally have to seek leave to amend the defence properly to particularise such a claim (see my comments in relation to particulars (v) and (vi) above).

21 Complaint is made by the plaintiff concerning the defendants' contextual imputations, the complaints relating to form, difference in substance and capacity.

22 The Amended Statement of Claim (filed on 15 July 1996) pleads five publications.

23 The plaintiff contends that the first publication gives rise to the following imputation:

"3(a) the plaintiff has acted in breach of its duties as manager of the Estate Mortgage Trusts by making recommendations to the unit holders which were contrary to their interests in order to advance the interests of one of its own shareholders, namely, Mercantile Mutual".

24 The defendants contend that the matter complained of conveys the following contextual imputations:

"14(a)...

(i) The plaintiff has been incompetent in the management of the Estate Mortgage Trusts or one or more of them.

(ii) The plaintiff has been negligent in the management of the Estate Mortgage Trusts or one or more of them.

(iii) The plaintiff is dishonest.

(iv) The plaintiff has been deceitful in the management of the Estate Mortgage Trusts or one or more of them.

(v) The plaintiff has received or will receive excessive fees for or in respect of the management of the Estate Mortgage Trusts or one or more of them.

(vi) The plaintiff has acted and has continued to act for the benefit of a third party in the management of the Estate Mortgage Trusts in breach of their obligations.

(vii) The plaintiff improperly wants to turn the unit holders investment into a sharemarket driven investment so that it can continue to receive excessive fees.

(viii) The plaintiff improperly wants the Trusts listed on the share market in order to receive high management fees.

(ix) The plaintiff unjustifiably opposes the proposals made by or on behalf of the first defendant as set out in annexure `A'.

(x) the plaintiff has acted unreasonably in opposing the first defendant's proposals set out in annexure `A'".

25 In Hall & Anor v Nationwide News Pty Limited (unreported, 5 November 1998) I held essentially that a defendant is bound by the same rules as to precision and difference in substance in pleading contextual imputations as is a plaintiff in pleading imputations as causes of action.

26 A mere glance at these ten contextual imputations exposes each to be defective in form as contravening the principles in Drummoyne Municipal Council v The Australian Broadcasting Corporation (1990) 21 NSWLR 135 and Ma Ching Kwan & Anor v John Fairfax Publications Pty Limited (Court of Appeal, unreported, 30 July 1998). None of the contextual imputations asserts in the requisite sense the act or condition of the plaintiff corporation; (i) and (ii) are rolled up; (iii) is embarrassingly vague; (iv) does not identify the "deceit"; (v) and (vi) are rolled up; (vii) and (viii) use the word "improperly"; (ix) and (x) are vague and embarrassing by reason of the use of "unjustifiably" and "unreasonably" and by referring something described as "annexure `A'".

27 The defendants should give very careful consideration to all issues relating to the pleading of contextual imputations not the least being the number thereof, and certainly to the "capturing" precisely of a relevant act or condition of the corporate plaintiff that does not offend against the rule that the contextual imputation must differ in substance from the imputation pleaded by the plaintiff.

28 The plaintiff with respect to the second matter complained of pleads that it conveys the following imputations:

"5(a) the plaintiff acted contrary to its duties as manager of the Estate Mortgage Trust by concealing the availability of a legal claim available to the trusts from the unit holders for the purpose of securing financial advantage to itself;

(b) the plaintiff has acted in breach of its duty as manager of the Estate Mortgage Trusts by attempting to prevent an audit of the trusts' accounts in order to conceal its own misconduct as manager".

29 The defendants plead the following contextual imputations:

"15(a) ...

(i) The plaintiff has acted or will act in its own self interest to the detriment of the Estate Mortgage Trust.

(ii) The plaintiff is dishonest.

(iii) The plaintiff has been deceitful in the management of the Estate Mortgage Trusts.

(iv) The plaintiff's true intentions are to ensure payments to itself of excessive fees at the expense of unit holders.

(v) The plaintiff improperly wants an increase in remuneration to the excessive amount of $4 million.

(vi) The plaintiff has improperly failed to disclose to unit holders that they will be worse off if they vote yes to resolution F propose by the plaintiff.

(vii) The plaintiff improperly opposed an audit and may have something to hide.

(viii) The plaintiff engages in trickery to obtain more powers from unit holders.

(ix) The plaintiff unjustifiably opposes the proposals made by or on behalf of the first defendant as set out in annexure `B'.

(x) the plaintiff has acted unreasonably in opposing the first defendant's proposals as set out in annexure `B'".

30 Again the same position applies to these ten contextual imputations which I propose to strike out.

31 In relation to contextual imputation (viii) which did receive some particular attention in the course of submission, the matter complained of does refer to a "clever trick"; this does not save the contextual imputation as to form. Where the matter complained of identifies that which it also describes as a "trick", a contextual imputation, subject to any other consideration as to form or difference in substance, should "capture" the conduct and its description.

32 As to the third matter complained of the plaintiff pleads that it conveys the following imputations:

"7(a) The plaintiff has acted in breach of its duties as manager of the Estate Mortgage Trust by exercising its power as manager for the sole purpose of securing financial advantage to itself".

33 The defendants plead the following contextual imputations:

"16(a)...

(i) The plaintiff is seeking excessive fees from the Estate Mortgage Trusts.

(ii) The plaintiff is insolvent.

(iii) The plaintiff is not competent to manage the Estate Mortgage Trusts.

(iv) The plaintiff is planning to retain excessive fees at the expense of unit holders who will get nothing.

(v) The plaintiff proposes to lock up unit holders funds in perpetuity with a stock market listing in order to obtain excessive fees while the unit holders get nothing.

(vi) The plaintiff looks after itself at the expense of unit holders.

(vii) The plaintiff is dishonest.

(viii) The plaintiff saved itself from financial disaster by acting as Manager of the Trusts and gaining access to excessive fees.

(ix) The plaintiff unjustifiably opposes the proposals made by or on behalf of the first defendant as set out in annexure `C'.

(x) The plaintiff has acted unreasonably in opposing the first defendant's proposals as set out in annexure `C'".

34 With respect to these contextual imputations, I hold that (ii) is incapable of arising; (i), (iv)and (vi), in my view, encapsulate only what already is contained in the plaintiff's imputation and they are struck out. Contextual imputations (viii), (ix) and (x) are struck out, the first by reason that it really does not differ in substance from that pleaded by the plaintiff, and the last two being egregiously defective in form.

35 I will allow proposed contextual imputation (v) to go the jury.

36 As to contextual imputation (vii) I will strike this out as being vague and embarrassing and otherwise defective in form.

37 As to the fourth matter complained of the plaintiff alleges it conveys the following imputation:

"9(a) the plaintiff has breached it duties as manager of the Estate Mortgage Trusts by failing to pursue e legitimate legal claim pm behalf of the trust".

38 The defendants contend that it conveys the following contextual imputations:

"17(a) ...

(i) The plaintiff was nearly bankrupt when it took over the Trust as Manager and is reliant on Estate Mortgage to provide it with an income.

(ii) The plaintiff charges excessive fees".

39 With respect to each of these contextual imputations I am satisfied that it arises and differs in substance from that pleaded by the plaintiff and is not defective in form.

40 Accordingly, contextual imputation 17(a)(i) and (ii) will go to the jury.

41 As to the fifth matter complained of the plaintiff contends that it conveys the following imputation:

"11(a) The plaintiff has engaged in corruption in acting as manager of the Estate Mortgage Trusts".

42 The defendants contend that it conveys the following contextual imputations:

"18(a) ...

(i) The plaintiff is a corrupt organisation in the sense that it has been made bad by errors.

(ii) The plaintiff is a corrupt organisation in the sense it is without integrity.

(iii) The plaintiff is a corrupt organisation in the sense it is dishonest.

(iv) The plaintiff permits itself to be managed by a director who is unscrupulous.

(v) The plaintiff connived with the Trustees to fetter the Chairman (Sir Laurence Street) for its own advantage".

43 It is to these contextual imputations that the principles in Drummoyne (supra) are particularly applicable. The publication as pleaded is short and the contextual imputations (i), (ii) and (iii) are captured by the clearly capable of being conveyed imputation pleaded by the plaintiff.

44 Contextual imputations 18(a)(i), (ii) and (iii) will be struck out.

45 After much consideration I am of the view that contextual imputations 18(a)(iv) and (v) are capable of being conveyed, are not defective in form and thus shall go to the jury.

46 The remaining matter appears to be the objection taken to paragraph 10 of the Defence.

47 Paragraph 10 is in the following terms:

"The first defendant admits writing the letter begin Schedule `E' of the ASC but says the letter was explained, qualified and added to by the first defendant's last fax to Sir Laurence Street and a fax of Graham Sackley of 10 December 1991 and that these two documents must be read with the letter in Schedule `E' and the plaintiff should be required to plead and set them out in the ASC. Otherwise the first defendant does not admit the matters set out in paragraph 10 of the ASC".

48 The matter complained of is constituted by a letter from Hari Bhagat to Sir Laurence Street dated 10 December 1991. It refers to "the views expressed by Graham Sackley in his fax of today to you".

49 The plaintiff took the position that the matters pleaded in paragraph 10 were embarrassing and Mr Evatt for the defendants took up the suggestion that he nunc pro tunc make an application to "strike in" the two documents referred to (Gordon v Amalgamated Television Services Pty Limited (1980) 2 NSWLR 410; Burrows v Knightley (1987) 10 NSWLR 651).

50 In the original letter requesting particulars dated 21 October 1997 from the plaintiff's solicitors to Mr Bhagat the first request was for a copy of each of the documents referred to in paragraph 10. Unfortunately none of the material I have appears to expose to me the enclosures referred to in Mr Bhagat's letter of 10 November 1997 in which he said that those particular were "enclosed". The correspondence annexed to an affidavit (which was not read) of April Gillian Mountfort alas, does not contain the material. This does not render my task impossible. The matter simply can be resolved. Paragraph 10 in the Defence is an embarrassing pleading which cannot be cured by an application of the kind Mr Evatt sought to make. I strike out paragraph 10. If the defendants are of the view that in accordance with established principle (see the cases cited above) the plaintiff should have pleaded a communication from another person other than the defendants but to the same recipient and on the same date, and a communication from the defendants to the same recipient a week later then the defendants should, in a manner more formal, move the Court and make detailed submissions. I am not persuaded, presently, however, on the face of that which purports to be set out in paragraph 10 of the Defence, that a case for a "strike in" has been made. I have only ruled that paragraph 10 is embarrassing as a pleading.

51 It is clear that the plaintiff has succeeded predominantly and costs will be awarded accordingly.

52 The formal orders are:

1. The defendants are to provide proper particulars of the defence of comment, in accordance with these reasons, in response to the request therefor in the plaintiff's solicitors' letter of 3 December 1997, within 28 days.

2. The defendants are to provide proper further and better particulars in accordance with these reasons of the defences of qualified privilege, within 28 days.

3. Particulars (v), (vi) and (x) of the particulars of Mitigation of Damages are struck out.

4. The defendants are to provide proper further and better particulars of particulars (viii) and (ix) of Mitigation of Damages, within 28 days.

5. Contextual imputations 14(a)(i) - (x) inclusive are struck out.

6. Contextual imputations 15(a)(i) - (x) inclusive are struck out.

7. Contextual imputations 16(a)(ii) is incapable of being carried.

8. Contextual imputations 16(a)(i), (iv), (vi), (viii), (ix) and (x) are struck out.

9. Contextual imputations 17(a)(i) and (ii) will go to the jury.

10. Contextual imputations 18(a)(i), (ii) and (iii) are struck out.

11. Contextual imputations 18(a)(iv) and (v) will go to the jury.

12. Paragraph 10 of the Defence is struck out.

13. The defendants are to pay the plaintiff's costs.

14. The defendants have leave to file an Amended Defence within 28 days, save as to the matters referred to in paragraphs 14 and 50 of these reasons.

15. At the expiry of 28 days liberty to restore to the Defamation List on 3 days notice.

LAST UPDATED: 17/02/1999