DOUGLASS v JOHN FAIRFAX and SONS LIMITED [1989] NSWCA 67

DOUGLASS v JOHN FAIRFAX and SONS LIMITED SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

Hope, CLARKE and MEAGHER JJA 6 February 1988, 27 February 1989 [1989] NSWCA 67

Defamation — imputations — separate trial as to capacity of publication to convey — whether imputations of fact available as opposed to imputations of suspicion — whether imputations as to impropriety available as opposed to imputations as to incompetence — leave to appeal granted and appeal allowed. ORDERS (1) Leave to appeal granted; (2) Appeal allowed; (3) Summons dismissed save as regards order of Hunt J as to the amendment of imputations (iv) and (v); (4) Costs of separate tria' to be appellant's costs in the proceedings. (5) Respondent to pay the costs of the summons and of the application for leave to appeal and the appeal.

Hope, Clarke and Meagher JJA John Fairfax and Sons Limited (Fairfax) publishedon p 29 of the "Business" section (the front page of that section) of the Sydney Morning Herald of 15 August 1988 a photograph of the plaintiff beside which, in prominent letters, was printed:-

"Ts this Sydney broker's future under a cloud? CBD Page 30."

On p 30 at the head of the CBD reports the following appeared:-

"Douglass diplomatic as Potters ponders

The meteoric rise to fame of Potter Partners' Sydney chief Rob Douglass appears to have come to an abrupt halt.

The much-loved Douglass has not been seen in the office since last Tuesday night and it is understood that negotiations currently are under way about his future within the firm.

A call to the outfit's Sydney bunker on Friday drew a cautious response from a minion who advised CBD to ring Melbourne.

But the Melbourne hierarchy refused to answer any questions concerning the former merchant banking whiz or comment on the speculation that he had left the firm.

The diplomatic Douglass has been in the top Sydney job for some 15 months and presided over the outfit's planned move to Grosvenor Place and then the decision to hold fire. His role within the firm was never clearly defined, given that the Bleak City head office made most of the administrative decisions, although he was responsible for developing new business in Sydney. Before his stint at Potters, Douglass spent two years in the top job at Westpac offshoot Partnership Pacific and was charged with taking the firm into the top ranks of the merchant banking world.

In an attempt to catapult Partnership Pacific into the big league, Douglass was often spied busily charging between airports - a habit that earned him the quaint nickname of 'The Bull' among some of the lower ranking members of the firm.

When Potter Partners lured him away to head its Sydney office, it is understood Partnership Pacific made him an offer he just had to refuse."

The plaintiff instituted proceedings in defamation which, it would appear, were initially based upon the photograph and associated words on p 29. On 23 September 1988 Yeldham J ordered that the statement. of claim be struck out but

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granted leave to file an amended statement of claim which was based on the material on p 30 as well as the material on p 29. An amended statement of claim was filed in which the plaintiff pleaded these imputations:-

" (i) The plaintiff had so conducted himself as to be in disgrace.

(ii) The plaintiff had so conducted himself as to be discredited with those with whom he associates in a work capacity.

(iii) The plaintiff's reputation had been discredited.

(iv) The plaintiff had so acted as to give rise to a suspicion that his reputation amongst those with whom he worked was discredited.

(v) The plaintiff had so acted as to give rise to a reasonable suspicion that he had been discredited and was unfit to work as a stockbroker.

(vi) The plaintiff had acted so as to reasonably give rise to a suspicion that he acted improperly."

A separate trial was held before David Hunt J as to the capacity of the matter complained of to convey these imputations. ThiS separate trial was held, by consent, pursuant to Supreme Court Rules pt 31 r2. Hunt J ordered that imputations (iv) and (v) should go to the jury but in these amended forms:

"(iv) The plaintiff had so acted as to give rise to a reasonable suspicion that his reputation amongst those with whom he worked was discredited.

(v) The plaintiff had so acted as to give rise to a reasonable suspicion that he had been discredited."

His Honour ordered that imputations (i), (ii), (iii) and (vi) should not go to the jury. The plaintiff has sought leave to appeal from his Honour's order that the latter imputations should not go to the jury. At the hearing of the application it was agreed that if the Court decided to grant leave to appeal the hearing should be treated as having also been the hearing of the appeal.

In his reasons Hunt J discussed a number of matters relating to the imputations, but of these the most important were whether it would be reasonably open to a jury to conclude that Potters had made a decision that the plaintiff was in disgrace or was discredited, or whether that decision had not yet been made but that the matter was being considered and the plaintiff was only under suspicion. His Honour concluded that it would not be reasonably open to a jury to conclude that a decision had been made on the relevant matters, and accordingly ordered that the first three imputations should not go to the jury. His Honour also concluded that in the context of the whole of the published material it would not be reasonably open to a jury to conclude that the plaintiff was suspected of having acted improperly rather than incompetently, and it was for this reason that his Honour ordered that the sixth imputation should not go to the jury.

In arriving at the first of these conclusions his Honour quite properly pointed out that the material on p 29 was in the form of a question and that this question was answered "Yes" on p 30. His Honour then said that the meaning of the expression "under a cloud" was not stated expressly, but he concluded from the language of the material that a jury could not reasonably conclude that any decision had been made on the relevant issue. The plaintiff was under suspicion but he was not in disgrace nor (inferentially) had he been discredited.

In arriving at this conclusion his Honour said that he did not intend to rely upon any argument that the ordinary reasonable reader is not permitted to seize upon the worst of a number of possible interpretations simply because there is a less serious interpretation available. As his Honour pointed out, it is well settled that a defamatory interpretation will not be precluded from going to the jury merely because an innocent or less serious interpretation is also available. His

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Honour suggested that an argument to the contrary had been given new life by this Court in its decision in John Fairfax and Sons Limited v Lukin (unreported; 4 July 1988). With respect to the learned judge we do not think that this is what was intended in his reasons in that case by Samuels JA, with which, relevantly, McHugh and Clarke JJA agreed. It would seem that his Honour was saying that the existence of an innocent interpretation may be relevant in determining whether a defamatory interpretation is reasonably open. Perhaps this is confirmed by the circumstance that in John Fairfax and Sons Limited v Foord (1988) 12 NSWLR 706 Clarke JA at 722 explicitly affirmed the principle which we have said is well settled. Lukin was argued on 22 and 23 February 1988 and the decision was handed down on 6 July 1988. Foord was argued on 2 and 3 March 1988 and the decision was handed down on 27 May 1988. It is quite unlikely that Clarke JA, who was party to both decisions, would have changed his mind about the matter between May and July without in some way dealing with what was said in Foord.

Returning then to the question to be resolved, would it be reasonably open to a jury to conclude that a decision had been made about the plaintiff with the result that he was in disgrace, or was discredited in the ways referred to in the second and third imputations.

Hunt J, having referred to the parts of the material which might, without more, have made such a conclusion reasonable, such as the statement that the plaintiff's meteoric rise to fame appeared to have come to an abrupt halt, referred to other parts of that material which in his opinion precluded such an interpretation, or made it unreasonable. He pointed out that Potters were said to be pandering and that negotiations were said to be underway about the plaintiff's future within the firm. These statements, his Honour concluded, suggested that the plaintiff's future had not been decided at that stage and that he was under a cloud in the sense that he was under suspicion, but not that he was in disgrace. His Honour went on to say that of the three parts of the material upon which the plaintiff replied two were equivocal, that the context pointed to incompetence rather than impropriety as being the matter about which any decision would have to be made, and that despite the words relating to, for example, the plaintiff's meteoric rise to fame coming to an abrupt halt, the context also made this language reasonably consistent only with suspicion and with no decision having been made at that stage.

With respect to the learned judge, his conclusion would appear to be based upon an assumption that the abrupt halt of the plaintiff's meteoric rise to fame and the other matters mentioned in the first four paragraphs of the article, together with the question whether the plaintiff was under a cloud, involved only one decision, namely, a decision encompassing both whether any suspicion had, upon investigation, been confirmed, and what course of action should be adopted in respect of the plaintiff as a result of a decision in that regard. As it seems to us a jury might reasonably reject that assumption, and conclude that two decisions were involved. The first decision would be whether the plaintiff was in fact guilty of the acts or omissions of which he was suspected, and the second decision, the first having been made adversely to the plaintiff, would concern what action Potters should take in respect of the plaintiff. On this assumption, what was said in the article was wholly consistent with the making of a decision by Potters on the first question, adverse to the plaintiff, and the decision still to be made being the one as to the course of action which Potters were to take in respect of the plaintiff. The statements that the plaintiff's meteoric rise appeared to have come

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to a halt, and that negotiations were currently under way about his future within the firm, could in our opinion reasonably be interpreted as meaning that Potters had decided that the plaintiff was "guilty" but were still considering "penalty". The language of the article takes it outside the principles applied in Mirror Newspapers Limited v Harrison (1982) 149 CLR 293.

The result could thus be that, while one possible interpretation of the material was that the plaintiff was under suspicion of being guilty of the relevant acts or omissions, another reasonable conclusion could be that Potters had decided that he was guilty of those acts or omissions and were still "pondering" or "negotiating about" what course of action they should take in relation to the plaintiff and his position with and work for Potters.

In relation to imputation (vi) Hunt J concluded that there was nothing in the matter complained of worse than a suggestion of incompetence and that there was nothing to suggest impropriety. Again, with respect to the learned judge, we have concluded that it would be reasonably open to a jury to interpret the material as saying that the plaintiffs action had given rise to a reasonable suspicion that he had acted improperly. There is no doubt that without any antidote to the bane, the "cloud" referred to on p 29 and the statements in the first four paragraphs of the material on p 30, and in particular the statement in the first paragraph on that page, reasonably leave open that interpretation. They suggest, among other things, a sudden and adverse change in the attitude of Potters to the plaintiff which changed him from being a "much loved" executive within the Potters' organisation to a person whose future with that firm very much in doubt, that future being the subject of pondering and negotiations.

The learned judge relied on material in the article on p 30 which he concluded pointed to incompetence rather than impropriety. Some of these matters related to what he had done for Potters but others related to what he had done when employed in the "top job" in Partnership Pacific. In our opinion these matters do not constitute such an antidote as to preclude a reasonable jury from deciding that the bane remained.

As it seems to us, in the circumstances in this case, the questions which the challenge to the imputations raise are most properly to be left to the decision of a jury. We accordingly grant leave to appeal, allow the appeal and dismiss the summons save insofar as his Honour ordered the amendment of imputations (iv) and (v). All six imputations, with the amendments directed by his Honour, should go to the jury. The costs of the separate trial should be the plaintiff's costs in the proceedings and the respondent should pay the costs of the summons and the appeal.

We should add that because the Court has decided to grant leave in this case it should not be thought that the Court will, if faced with future applications for leave to appeal from judgments deciding, on a separate trial under SCR Pt31 r2, that a publication is, or is not, capable of supporting pleaded imputations, approach the question whether leave should be granted without regard to those considerations in favour of refusing leave and allowing the trial to proceed even if an arguable case of error is established.

Some of these considerations were discussed in Foord (p 728) but there it was accepted that where the parties have consented to the separate trial of an issue it may be appropriate to grant leave in order that the Court should resolve which imputations should be submitted for consideration by the jury. Since that decision there has been a constant stream of applications for leave to appeal from decisions that the published material supported, or failed to support, as the case

UFRDUGLASS v JOHN FAIRFAX and SONS LIMITED (Hope, Clarke and Meagher JJA) 5

may be, certain of the imputations pleaded. One example is Lukin, in which McHugh JA (as he then was) expressed the opinion that as a general rule where a defendant sought leave to appeal against a Pt31 r2 order leave should be refused.

Having considered what was said in both Foord and Lukin and the disadvantages of a separate trial on the issue of capacity we are of opinion that, whether or not the parties consent to that trial, the Court should not, as a general tule, grant leave to appeal simply because the ruling is prima facie erroneous. Some further reason will need to be shown in order to secure the grant of leave. Examples are given by McHugh JA in Lukin, both in the case of a defendant/Applicant, and perhaps more importantly, in the case of a plaintiff/applicant.

No doubt there are cases in which a separate trial of the issue of capacity to convey pleaded imputations may be highly desirable. If so then that fact will be a relevant consideration on a leave application. But the delay, extra cost and burden on the court system occasioned by the separate ventilation of this issue at both first instance and the appellate level strongly support a stricter approach by this Court in the future.

Counsels for appellant: R Gyles QC and M Holmes Solicitors for appellant: Bradfield and Scott Counsels for respondent: WH Nicholas QC and D Caspersonn

Solicitors for respondent: Mallesons Stephen Jaques