CATO v MANAIA MEDIA LIMITED [2019] NZCA 661

CATO v MANAIA MEDIA LIMITED [2019] NZCA 661 [18 December 2019]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA169/2019[2019] NZCA 661BETWEEN KRISTIN PIA CATOAppellantAND MANAIA MEDIA LIMITEDFirst RespondentAND ROWAN DIXONSecond RespondentAND JANE THOMPSONThird RespondentHearing: 14 November 2019Court: Wild, Whata and Katz JJCounsel: S J Mills QC and E D Nilsson for AppellantS A McKenna and F A King for RespondentsJudgment: 18 December 2019 at 3.00 pmJUDGMENT OF THE COURTA The appeal is allowed.B The defamatory meanings pleaded in the appellant's first amendedstatement of claim at [11(a)(ii)–(iii)], [11(b)–(d)] to the extent they rely on[11(a)(ii)–(iii)], and all the meanings pleaded in [11(e)–(f)] are reinstatedand may be pleaded by the appellant in her statement of claim.C The respondents are jointly and severally liable to pay the appellant oneset of costs for a standard appeal on a band A basis and usualdisbursements. We certify for second counsel.D The respondents are jointly and severally liable to pay the appellant oneset of costs of $4,000 on their abandoned cross-appeal.____________________________________________________________________REASONS OF THE COURT(Given by Wild J)Introduction[1] This is an appeal from part of an admirably succinct judgment delivered byHinton J in the Auckland High Court on 13 March 2019.1 The Judge held that two ofthe meanings pleaded in the statement of claim in a defamation proceeding were notavailable.2 This appeal is against that part of the ruling.[2] A cross-appeal was also brought. It has now been abandoned, so we need dealonly with the costs of that cross-appeal.Background[3] Early in 2017 a senior New Zealand show jumping team toured Australia.Subsequently, members of the team made complaints to Equestrian SportsNew Zealand (ESNZ) against another member of the team, Katie Laurie, andMs Laurie's father, Jeff McVean, who was the team's chef d'equip.[4] ESNZ convened a Judicial Committee to consider the complaints.That Committee directed the parties to try and settle the complaints at mediation.The parties were successful in doing that, including agreeing to the publication of astatement recording the fact of the settlement and the steps agreed to by Mr McVeanand Ms Laurie. The statement records that the details of the settlement were otherwiseconfidential.[5] The appellant Ms Cato is a barrister. She acted for the complainants inthe mediation. On 30 November 2017, Ms Cato released the agreed statement to1 Cato v Manaia Media Ltd [2019] NZHC 440.2 At [48]–[50].iSpyHorses and Show Circuit magazine, two equestrian media outlets whichthe appellant says have large online followings. The statement was not released toNZ Horse & Pony, which the respondents assert is this country's "highest-selling andmost long-standing" equestrian publication. The first respondent is the publisher ofNZ Horse & Pony, the second respondent the editor and the third respondent the authorof the article detailed in the next paragraph.[6] Following Ms Cato's release of the statement, for six days from 3–9 December2017, NZ Horse & Pony posted on its website an article entitled What goes on tour,doesn't stay on tour. We summarise the article in [15] and following below, and willrefer to parts of it in more detail later in this judgment. Ms Cato considered the articledefamed her by suggesting she had acted unethically and unprofessionally in releasingthe statement, without authority and instructions, "practically exclusively" tothe iSpyHorses site, which is operated by her mother.[7] From the outset, the respondents' position was — and remains — thatthe NZ Horse & Pony article was about ESNZ's disciplinary process and was "notabout the plaintiff at all".3 Consequently, attempts to resolve the matter wereunsuccessful.[8] The appellant then commenced, on 22 December 2017, a proceeding againstthe respondents alleging the article defamed her and claiming damages. She pleadedthat the article conveyed various defamatory meanings. She applied to the High Courtfor a conference for the purposes of the Court making recommendations under ss 26and 27 of the Defamation Act 1992 (under those provisions the court may recommendpublication of a correction). She also applied, under r 10.15 of the High Court Rules2016, for orders determining whether the article was capable of bearing the pleadeddefamatory meanings. The application for recommendations under ss 26 and 27 wassubsequently withdrawn, so Hinton J dealt only with the application to determinewhether the pleaded defamatory meanings were available. It is part of the judgmenton that application which is the subject of this appeal.3 Respondent counsel's words in their written submissions to us.Are pleaded meanings available? — the law[9] The Judge's summary of the principles is not contested. We can thussummarise, stating the principles in a case specific way. First, whether the article iscapable of bearing the defamatory meanings pleaded by Ms Cato was a matter of lawfor Hinton J to determine. Whether the article in fact carries those meanings will be adecision for the fact-finder at trial.[10] Second, the test for the Judge was whether an ordinary, reasonable personcould regard the article as bearing the pleaded meanings. Having read the article,could an ordinary person, as a matter of impression, carry away the pleaded meaningin their mind?[11] Third, the impression an ordinary person might carry away depends, not juston the words of the article, but also on its tone. If the article invites suspicion,defamatory imputations will more readily arise. An author "who wants to [write] atlarge about smoke may have to pick his words very carefully if he wants to excludethe suggestion that there is also a fire".4[12] Fourth, the fact that the article may have been mainly or partly directed atESNZ and its disciplinary process, did not prevent the article from also carryingimputations defamatory of Ms Cato.[13] Fifth, the threshold for the Judge to strike out defamatory meanings pleaded byMs Cato is high.The article[14] The article is a piece of investigative journalism into the complaints to ESNZ,its complaints process, and the outcome.4 Lewis v Daily Telegraph Ltd [1964] AC 234 (HL) at 285 per Lord Devlin.[15] Mr Mills QC is justified in submitting that the article, from the outset, suggestshidden relationships and agendas, the potential for future legal action, and invitessuspicion and speculation. The article starts:The fallout from the senior show jumping team's six-week tour to Australiatakes some further turns; we endeavour to unravel the sagaThis is a very complicated story. It is complicated because there are so manypeople involved, many with relationships and agendas that are not initiallyobvious. It involves legal processes and it potentially involves future legalaction. [16] The article describes the tour and the concerns that ensued. It records themaking of complaints and ESNZ's concerning of a Judicial Committee to considerthese. Next the article refers to a complaint by ESNZ to NZ Horse & Pony about itspublication in July 2017 of an article about the complaints being investigated byESNZ's Judicial Committee. That July 2017 article is set out in full. There is anaggrieved tone in this part of the article, which then notes that NZ Horse & Ponyreceived from ESNZ "no word of the Judicial Committee's progress". These passages,central to Ms Cato's claim, then follow:Out of the blue, there was progress of sorts this week, when iSpyHorses, awebsite-based business that specialises in advertising horses for sale,published on its Facebook page a piece with the headline: KATIE LAURIEAPOLOGIZES (sic) FOR CONDUCT and a link to their website 'blog' forthe story. At the end of the story there was a note as follows: "The statementpublished is exactly what was agreed to be published by the parties to themediation. It was released to the media in this form. The final paragraph isa statement issued by the lawyer for the complainants (as indicated).iSpyHorses has simply published the document in its exact form."The statement was an unusual one for many reasons, not just for the note atthe end and the fact the lawyer wasn't named, but that it was posted onthe iSpyHorses' site practically exclusively despite it saying it was released tothe media. Being the highest-selling and most long-standing equestrianmagazine in New Zealand, you would think NZ Horse & Pony would havebeen included and have been sent a copy. But no. Instead, we were mentionedin the release, which was in itself unusual. We decided to take a closer look.[17] Mr Mills pointed out that NZ Horse & Pony knew the statement was endorsedby ESNZ and that the statement recorded that it was "exactly what was agreed to bepublished by the parties to the mediation". Further, although NZ Horse & Pony knewMs Cato was the lawyer who had released the article, he submits readers are invitedto speculate as to why her identity was not disclosed. Mr Mills contended thatNZ Horse & Pony stated the release was "practically exclusively" to iSpyHorses,despite NZ Horse & Pony knowing that the statement had also been released to andpublished by Show Circuit. He submitted the description of iSpyHorses as a business"that specialises in advertising horses for sale" is deliberately disparaging.Further, Mr Mills submitted readers are invited to speculate as to why the statementwas not released to NZ Horse & Pony, although the statement itself criticises NZ Horse& Pony for earlier incorrectly reporting that the complaints to ESNZ were against allof the show jumping team.[18] There follows further discussion about the statement. After stating that itseemed most irregular that the statement was not released by ESNZ itself, the authorsstate "[a]nd that is where the plot started to thicken again." The article then sets outquestions put by NZ Horse & Pony to ESNZ and the latter's responses including:Is the statement itself a breach of the confidentiality clause of the mediation?That is a matter for the parties involved.[19] Following those questions and answers there is this passage:We understand that the statement on the iSpyHorses website was released bythe complainants' lawyer, Kristin Cato (aka Kristin Manson), but have not yethad this confirmed. We know that Kristin is the daughter of the iSpyHorsesfounder/director Heather Cato. We have approached both Heather and Kristinfor confirmation and comment, but have had no response from either of themto our requests for clarification. From Kristin's Linked-In profile, we haveestablished that she has been a crown prosecutor and is now a barrister.Her legal background is obviously extensive.[20] Mr Mills submitted that paragraph invites readers to infer that Ms Catoinappropriately released the statement to iSpyHorses, and not to NZ Horse & Pony,because her mother controlled the former. Further speculation is, in Mr Mills'submission, encouraged in a subsequent paragraph:As could be expected, the post was shared among the equestrian community,and there were a large number of comments made, some of them defamatory.There were many questions asked, plenty of people were quick to condemnthe parties involved, and others pointed out there must [be] more to the storythan what was released.The struck-out imputationsThe conflict of interest imputations[21] The imputations the Judge struck out are "natural and ordinary" or so-called"tier one" meanings. They were in [11] of the first amended statement of claim:(a) The plaintiff had acted unethically in acting as counsel forthe complainants in the dispute that is the subject of the Article by:(i) Being responsible for releasing a statement that is damagingto the reputations of Mr McVean and Ms Laurie;(ii) Misusing her position as a lawyer for the complainants tobenefit her family by releasing the statement to iSpyHorses, amedia outlet controlled by her mother, when the statementwould have received wider and more effective publicity forthe vindication of her clients if it had been released toHorse and Pony.(iii) Hiding that misuse of position by not identifying herself inthe statement, or disclosing her relationship with the founderand director of iSpyHorses.(b) The plaintiff had acted unprofessionally or otherwise improperly inher capacity as a lawyer for the reasons set out in (a)(i)–(iii) above.(c) There are grounds to suspect that the plaintiff has acted unethically inher capacity as a lawyer for the reasons set out in (a)(i)–(iii) above.(d) There are grounds to suspect that the plaintiff has actedunprofessionally or otherwise improperly in her capacity as lawyer forthe reasons set out in (a)(i)-(iii) above.(e) There are grounds to suspect that the plaintiff has acted unethically inher capacity as a lawyer by breaching confidentiality provisions in amediation or settlement agreement by releasing the statement withoutthe consent of her clients and/or other parties to the dispute.(f) There are grounds to suspect that the plaintiff has actedunprofessionally or otherwise improperly in her capacity as a lawyerby breaching confidentiality provisions in a mediation or settlementagreement by releasing the statement without the consent of herclients and/or other parties to the dispute.[22] First, the Judge agreed that these paragraphs are capable of being read assuggesting that Ms Cato had used her position as counsel for the complainants torelease the statement to her mother's media outlet iSpyHorses, when release toNZ Horse & Pony would have achieved wider and more effective publicity forMs Cato's clients.5 But then the Judge said this:[34] However, I do not consider that the ordinary reasonable person wouldcarry away in their head that the plaintiff was "misusing" her position as alawyer for the complainants, or acting unethically, unprofessionally, orimproperly in releasing the statement to iSpyHorses and not releasingthe statement to Horse & Pony. The pleadings made in this regard seem tome to be stretching a point. It would be clear to the reader that the partiesinvolved in the mediation were key players in the New Zealand equestrianscene and knew of the available publications. There is no suggestion thatthe plaintiff was acting without her clients' instructions, and nor would thathave been possible because the means of publication used (and not used)would have been clear to her clients. Members of the public would not see alawyer or their clients as having to be impartial between different mediaoutlets.[35] Materially, the sense I gain from the article as a whole, and that Iconsider the reasonable reader would gain, is that Horse & Pony, or at leastthe author, are not on-side with the plaintiff's clients. The reader would thinkit understandable that the plaintiff/her clients did not release the settlementstatement to Horse & Pony, and released it to other media.(Emphasis added.)[23] Accordingly, the Judge struck out the defamatory meanings pleaded in[11(a)(ii)–(iii)] and, to the extent they relied on [11(a)(ii)–(iii)], also the pleadedmeanings in [11(b)–(d)].[24] For the respondents, Mr McKenna submitted that [34]–[35] of the High Courtjudgment correctly apply the first part of the test for defamatory meanings; that is,whether the article could carry the pleaded defamatory imputations, and not the secondpart of the test — does it in fact carry those meanings.[25] We are not persuaded by this submission. We respectfully disagree withthe Judge's conclusion that that the article is not capable of bearing the pleaded"conflict of interest" defamatory meanings. Ordinary, reasonable readers of the articlecould, in our view, be left with the impression that Ms Cato had misused her positionas counsel for the complainants, and had acted unethically or unprofessionally in andabout release of the statement to iSpyHorses and not to NZ Horse & Pony.5 Cato v Manaia Media Ltd, above n 1, at [33].[26] Mr Mills submitted three errors may have combined to lead the Judge to herconclusion. The first two errors emerge from [34]–[35] of the High Court judgment,which we have set out in [22] above. The first is the Judge's use of the word "would"where we have emphasised it in those two paragraphs. The question for the Judge waswhether ordinary, reasonable readers could interpret the article in the way alleged.How such readers would interpret it is a question for trial. However, we are notpersuaded that the Judge lost sight of the proper test, because she correctly statedthe test at [37] of her judgment: whether "the article is capable of bearingthe defamatory meaning pleaded". So we do not accept this first criticism.[27] Mr Mills' second alleged error does, however, resonate with us. In [34] ofthe High Court judgment, Hinton J attributes to ordinary, reasonable readers ofthe article knowledge that:(a) the participants in the mediation knew of available equestrianpublications, and knew which ones would most effectively distributethe statement they had agreed to make; and(b) lawyers are bound to act on a client's instructions.[28] We accept Mr Mills' submission that it cannot be assumed these are matters ofcommon knowledge — that is, matters "which any intelligent reader may beexpected to know".6 As to the first, there is no obvious basis for attributing thatknowledge to ordinary readers, and it is difficult to reconcile with the surpriseexpressed in the article that the statement was published "practically exclusively" byiSpyHorses. The second matter may well be known amongst among the legalfraternity, but not we think to ordinary readers. Or at least, it cannot be assumed theywould know this.[29] We also agree with Mr Mills that the Judge appears not adequately to havefactored in the tone of the article as a whole. We referred in [11] above toLord Devlin's caution to authors who, by putting smoke in the air, risk suggesting thatthere is also a fire. We think the article does just that, included in relation to6 Fox v Boulter [2013] EWHC 1435 (QB) at [16].the propriety of Ms Cato's professional conduct. Mr Mills drew our attention tothe following passage in the Privy Council's judgment in Jones v Skelton:7The concluding words of the publication complained of were: "It is beyondunderstanding. Or is it?" Their Lordships consider that it was open to a juryto decide that reasonable readers would conclude that the plaintiff had broughtimproper influence (short of corruption) to bear upon his fellow councillors.The question mark might convey to the reasonable reader the thought and themeaning that there had been some impropriety. The reader, a jury mightconclude, was invited to adopt a suspicious approach and so to be guided tothe real explanation of what had taken place — an explanation whichthe writer of the letter did not care or did not dare to express in direct terms.It was therefore open to a jury to decide that a reasonable reader wouldconclude that the plaintiff had brought improper influence (short ofcorruption) to bear upon his fellow councillors.[30] Mr Mills submitted this paragraph is almost a submission he could make aboutthe article in NZ Horse & Pony. For example, having set out a comment posted byMs Cato on iSpyHorses' Facebook page, the article continues:The obvious question from that statement is that if ESNZ was not a party tothe complaints (and it was, according to the May 31 announcement onthe ESNZ website), why was the Judicial Committee formed in the first place,and who actually received the complaints to start with? What is ESNZ's rolein managing this sort of complaint and protecting the reputation ofthe organisation, and indeed the sport of show jumping itself?[31] Those unanswered questions, but also the whole tone of the article, could leaveordinary, reasonable readers with the impression that:(a) Ms Cato arranged for the statement to be published"practically exclusively" on her mother's iSpyHorses website, and, tothe exclusion of NZ Horse & Pony, in order to give her mother anexclusive story.(b) Distributing the statement to "key equestrian media" (NZ Horse &Pony) where it would be widely read would have been in the bestinterests of Ms Cato's clients.7 Jones v Skelton [1963] 1 WLR 1362 (PC) at 1372.(c) Ms Cato sought to hide the connection between herself and iSpyHorsesby not identifying herself in the statement.[32] Were these allegations true, they would amount to a breach by Ms Cato of herethical and professional obligations to act in the best interests of her clients and toavoid conflicts of interest.[33] Mr Mills supported the availability of the imputation that Ms Cato had aconflict of interest by referring to a post on the NZ Horse & Pony Facebook page.The commentator wrote "Omg the bit about iSpyHorses — conflict of interest(the daughter of iSpyHorses' owner was the lawyer!)". Mr Mills advised us that thispost was read to the Judge during the hearing, and the respondents have not sincedenied that it was posted on the NZ Horse & Pony Facebook page.[34] In submissions before us there was mention of "bane" and "antidote".As this Court noted in New Zealand Magazines Ltd v Hadlee (No 2), these expressionswere first used by Baron Alderson almost 200 years ago in Chalmers v Payne.8[35] Mr Mills submits that the "bane" (or poison) in the article is that Ms Catopreferred her mother's interests over those of her clients, and then sought to hide that.Mr McKenna rejects any such bane but, if it is there, he submits the followingparagraph of the article provides an "antidote":"The lawyers for the McVeans have always knows [sic] this connection andthere is no issue has been raised [sic] from their perspective. And it accordswith the agreement reached in mediation. ESNZ have already corrected theirstatement which you haven't picked up on. They will be releasing moreinformation next week apparently. But there is no requirement for them toapprove the agreement that has been reached independently by the parties.ESNZ is not a party to this agreement nor was it a party to the complaints."[36] We do not accept that. A claimed antidote must be complete or, as it was putin Morosi v Broadcasting Station 2GB Pty Ltd; "destructive of the ingredients fromwhich the bane has been brewed".9 Although the paragraph at [35] above sets outMs Cato's statement, including her assertion that Mr McVean and Ms Laurie knew of8 New Zealand Magazines Ltd v Hadlee (No 2) [2005] NZAR 621 (CA) at 627; and Chalmers vPayne (1835) 2 CrM & R 156, 150 ER 67 (Exch) at 159.9 Morosi v Broadcasting Station 2GB Pty Ltd [1980] 2 NSWLR 418 (NSWCA) at 420.her connection with the iSpyHorses founder, nowhere does the article accept thatMs Cato's release of the statement was proper.Breach of confidentiality meanings[37] The Judge upheld these meanings, save that she said:10 except that I do not consider the article suggests the settlement statementhas been released by the plaintiff without the consent of her clients.[38] In accepting this pleaded meaning, we consider the Judge again imputed toreasonable, ordinary readers of the article knowledge that lawyers invariably followtheir clients' instructions. For the reasons set out in [27]–[28] above, we considerthe Judge erred in doing this and that she ought not to have struck out this pleadedmeaning.Result[39] The appeal is allowed.[40] The defamatory meanings pleaded in the appellant's first amended statementof claim at [11(a)(ii)–(iii)], [11(b)–(d)] to the extent they rely on [11(a)(ii)–(iii)], andall the meanings pleaded in [11(e)–(f)] are reinstated and may be pleaded bythe appellant in her statement of claim.Costs[41] The respondents are jointly and severally liable to pay the appellant one set ofcosts for a standard appeal on a band A basis and usual disbursements. We certify forsecond counsel.Costs of the abandoned cross-appeal[42] As mentioned, the respondents' cross-appealed the judgment of Hinton J, buthave since abandoned that cross-appeal.10 Cato v Manaia Media Ltd, above n 1, at [47].[43] The appellant seeks costs in respect of that abandoned cross-appeal.Having considered the opposing written submissions, we allow the appellant costs of$4,000. That is an uplift of about 20 per cent on scale, reflecting that there is substancein each of the three points made by the appellant. But we intend it also to acknowledgethe difficulties outlined by the respondents.Solicitors:Lee Salmon Long, Auckland for AppellantGrantham Law Ltd, Hamilton for Respondents