- Unreported Judgment
SUPREME COURT OF QUEENSLAND
GM Homes (Australia) Pty Ltd & Anor v Australian Securities and Investments Commission  QSC 149
GM HOMES (AUSTRALIA) PTY LTD (ACN 167 700 610)
GLEN SEAN MILLER
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Supreme Court of Queensland
3 June 2020
22 May 2020
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – SEPARATE DECISION OR DETERMINATION OF QUESTIONS AND CONSOLIDATION OF PROCEEDINGS – SEPARATE DECISION OR DETERMINATION – GENERALLY – where the plaintiffs sue in defamation – where the defendant seeks a preliminary determination under r 483 of the UCPR – whether the words published convey any of the imputations pleaded to an ordinary reasonable reader – whether the words published convey any of the imputations pleaded to persons with special knowledge – whether certain paragraphs of the statement of claim be considered independently
J Faulkner for the plaintiff
R Anderson QC with T Senior for the defendants
HW Litigation for the plaintiff
HWL Ebsworth for the defendants
The plaintiffs sue in defamation. The pleadings have closed but disclosure has not taken place. The defendant applies pursuant to r 483(1) of the UCPR. It seeks a preliminary determination that none of the words it published in fact conveyed any of the imputations pleaded by the plaintiffs in the proceeding. As a consequence it claims judgment. As an alternative, it asks that if I find that some of the imputations pleaded are in fact conveyed by the words it published, the proceeding should only continue in relation to those imputations and should otherwise be dismissed.
It is admitted on the pleadings that throughout the course of 2016 the second plaintiff was an authorised representative of Austplan Pty Ltd, an Australian financial services licensee. The plaintiffs say that between 2017 and March 2019 ASIC investigated their conduct. ASIC on the other hand says that in March 2017 it began a surveillance operation in relation to Austplan; became aware that the plaintiffs referred clients to Austplan, and as a consequence, from February 2019 until October 2019, investigated the affairs of the plaintiffs. It is common ground on the pleadings that the investigation into the plaintiffs’ activities has finished and that no action was taken by the defendant against the plaintiffs as a result of the investigation.
Publications and Imputations
On 25 October 2018 ASIC issued a media release in the following terms:
“18-323MR ASIC to cancel Austplan’s AFS licence
ASIC will cancel the Australian financial services (AFS) licence of Austplan Pty Ltd (Austplan) effective from 25 November 2018 by agreement with the licensee.
ASIC was concerned about Austplan’s ability to do all things necessary to ensure the advice provided by its representatives was compliant. Its surveillance found deficiencies in the financial services provided by a number of Austplan representatives, including their failure to act in the best interest of their clients in relation to establishing self-managed superannuation funds (SMSF).
Austplan also received client referrals from GM Homes (Australia) Pty Ltd, a building and mortgage business, which is not licensed to provide financial advice or any other financial service.
As part of the cancellation Austplan is required to comply with conditions such as maintaining its current Professional Indemnity insurance policy until the cancellation takes effect (25 November 2018) and its membership of Australian Financial Complaints Authority (AFCA) until all consumer complaints have been resolved. Austplan will also have to submit the required financial statements with ASIC and retain all materials relating to personal advice provided by its representatives.
ASIC is continuing to make enquiries in relation to the advice provided.
ASIC’s Deputy Chair Peter Kell said, ‘AFS licensees have an obligation to ensure that their representatives are adequately trained and competent to provide financial services that are in their clients’ best interest. ASIC will take action where we see licensees not properly supervising their representatives.’
‘SMSFs are not right for everyone. We encourage consumers to think carefully about investing in property and do their research before they set up an SMSF,’ he said.
ASIC’s MoneySmart website provides consumers with information to consider before using an SMSF to invest in property.” (underlining in the original)
The first plaintiff pleads that this publication contained the imputations that the first plaintiff:
was knowingly involved in the failure of Austplan to act in the best interests of its clients;
was providing financial advice or other financial services when it was not licensed to do so;
by providing financial advice or other financial services to its clients in circumstances where it was not licensed to do so, the first plaintiff was acting unlawfully;
was not acting in the best interests of its clients in that it was engaged in conduct directly, or (with Austplan) was a participant in conduct, whereby Self‑Managed Superannuation Funds (SMSFs) were being recommended to the first plaintiff’s clients as an investment vehicle in circumstances where an SMSF was not appropriate for those clients; and
was involved in conduct whereby it was seeking financial gain by improper means having regard to the matters set out in sub-paragraphs (a) to (d) above.” (emphasis in the original)
On 31 May 2019 the defendant issued a second media release in the following terms:
“19-123MR Gold Coast financial adviser banned for five years
ASIC has banned Gold Coast adviser Daniel John Renneberg from providing financial services for five years after a surveillance found that he had failed to act in the best interests of his clients.
ASIC reviewed the advice Mr Renneberg had provided to 15 of his clients while he was an authorised representative of Austplan Pty Ltd.
On reviewing the files, ASIC found that Mr Renneberg received referrals from GM Homes Australia Pty Ltd (GM Homes) to help their clients establish self-managed superannuation funds (SMSFs) to purchase an investment property.
ASIC found that Mr Renneberg had not provided the clients appropriate financial advice or acted in their best interests. He had advised some clients to set up SMSFs with limited recourse loan arrangements that were completely unsuitable and placed his clients in a vulnerable financial position.
Mr Renneberg completely failed to consider his clients’ needs, objectives and circumstances. Mr Renneberg also failed to give his clients statements of advice that set out the advice he provided and the information on which he based his advice.
ASIC Commissioner Danielle Press said, ‘SMSFs are not for everyone and using an SMSF to borrow money and buy a property is a high-risk strategy. ASIC will be looking very carefully at advisers who recommend this strategy and taking swift action where we see problems.
‘Financial advisers must not rely solely on client direction when establishing an SMSF. They must adequately demonstrate why an SMSF is appropriate and why it is in their clients’ best interests.
‘ASIC expects financial advisers to use their skills, expertise and judgement in determining whether an SMSF is indeed appropriate for their clients’ personal circumstances and needs,’ Ms Press said.
An SMSF comes with a lot of responsibility and involves significant time and effort and may be suitable if consumers have extensive knowledge of financial and legal matters. They also need to consider their legal responsibilities and the tax implications when deciding to establish an SMSF.
ASIC’s MoneySmart website provides useful information for consumers about SMSFs and important questions to ask before setting up an SMSF. Consumers can also find out more about what to do if their adviser has been banned.
Mr Renneberg has the right to seek a review of ASIC’s decision before the Administrative Appeals Tribunal.
An ASIC surveillance of Austplan Pty Ltd found deficiencies in the financial services provided by a number of its representatives. ASIC was concerned about Austplan’s ability to do all things necessary to ensure the advice provided by its representative complied with the law. Austplan’s Australian financial services (AFS) licence was cancelled by agreement with ASIC on 25 November 2018. (MR18-323).
Mr Renneberg was an authorised representative of Austplan (from 1 March 2015 to 5 June 2018) and its sole director when Austplan’s AFS license was cancelled. He was previously an authorised representative of Professional Investment Services Pty Ltd (from 11 April 2006 to 14 May 2010).” (underlining in the original)
The first plaintiff pleads that this second publication contained imputations that the first plaintiff:
was knowingly involved in the failure of Mr Renneberg to act in the best interests of clients;
was involved in the unlawful conduct of Mr Renneberg whereby his licence was cancelled by the defendant for 5 years;
was not acting in the best interests of its clients in that it was engaged in conduct with Mr Renneberg, whereby SMSFs were being recommended to its clients as an investment vehicle in circumstances where an SMSF was not appropriate for those clients; and
was involved in conduct whereby it was seeking financial gain by improper means having regard to the matters set out in sub-paragraphs (a) to (c) above.”
True Innuendo case
In relation to both sets of imputations the plaintiff pleads the following under the heading “True Innuendo”:
“12. Further, or in the alternative, the defamatory imputations referred to in the preceding paragraph were conveyed as a consequence of true innuendo having regard to the knowledge that industry participants, clients, including potential, existing and past clients, had of the following matters:
the allegations in paragraph 5 herein; and
the nature of the first plaintiff’s business as described in paragraph 1(e) above.”
By pleading part of its case as based on true innuendo, the plaintiff says that even if the publications do not convey the imputations pleaded at paragraphs 11 and 19 of the statement of claim to an ordinary reader, they do convey them to persons with special knowledge. In this regard paragraphs 12 and 20 of the statement of claim rely upon the pleadings at 1(e) and 5 of that document. Paragraph 1(e) pleads that at all material times the first plaintiff conducted, and continues to conduct, the business of selling residential real estate for investment purposes. Paragraph 5 provides as follows:
“5. Between 2017 and 2018 Emma Thatcher an employee of the defendant contacted numerous clients of the first plaintiff by telephone where Ms Thatcher said words with the meaning and effect that the first and second plaintiffs were not licensed and had no right to talk to them about anything to do with financial advice.
The clients contacted include:
Elizabeth Vargiu and Carol Twining;
Graham and Jeanette Tuner;
Christopher and Lynda Stud;
Sharon and Tse-Feng Pieter Ling; and
Sarah Merchant and Glen Hitchins.
Further particulars of the first plaintiff’s clients contacted by Ms Thatcher and the content of those telephone calls will be provided once the plaintiffs’ enquiries are completed.”
Cumulative Effect of Publications
As well, at paragraph 21 of the statement of claim the plaintiffs plead:
“21. The imputations referred to in paragraphs 19 to 20 herein, either alone or coupled with the first publication, were defamatory of the first plaintiff …”
As to this last pleading it was accepted at the hearing of this matter that the underlined part of the second media release, “(MR18-323)” was a link to take internet readers to the first press release. An issue will have to be resolved as to whether or not the ordinary reader of the second press release is taken to have used the link to read the first press release as well. A further issue will be whether a reader of the type described by paragraph 20 of the statement of claim is taken to have done so.
At paragraph 2 of the statement of claim the following is pleaded as to the second plaintiff:
“2. At all material times the second plaintiff:
was and remains a director and major shareholder of the first plaintiff;
is and was identified by photograph and description within the first plaintiff’s website;
was and remains the public face of the first plaintiff;
personally meets (and met) with all clients and potential clients of the first plaintiff prior to those clients deciding whether to invest in residential property with the first plaintiff;
regularly spoke with and continues to speak to potential, existing and former clients, by telephone;
is and was solely responsible for negotiating and maintaining the first plaintiff’s commercial relationships with suppliers and builders, amongst others; and
by his qualifications, is and remains entitled to be an authorised representative of an Australian Financial Services licensee.
The second plaintiff holds the following qualifications:
Diploma of Financial Services (Finance and Mortgage Broking Manager).
Diploma of Financial Services (Financial Planning).
Diploma of Training and Assessment.”
The pleading continued in relation to the second plaintiff at paragraphs 23 to 26:
“23. The first and second publications were of and concerning the second plaintiff to any ordinary and reasonable reader of the first and second publications including those with knowledge of the matters identified in paragraph 2 and the matters referenced in paragraph 5 herein.
Those with such knowledge include industry participants and past, existing or potential clients of the first plaintiff and generally members of the second plaintiff’s social or business circle.
- Further, it is to be inferred that many members of the public generally had knowledge of the matters alleged in paragraph 2 because:
of the breadth of the first and second publications as:
they were published by the defendant as a media release;
any person undertaking a Google search of the first plaintiff will be alerted immediately to the publications and the association with the second plaintiff;
the publications were further published by media outlets identifying the first plaintiff.
The plaintiff refers to paragraphs 9, 10, 17 and 18 herein.
because of the ordinary ‘grapevine’ effect.
Defamatory imputations against the second plaintiff
- The first and second publications contained the following defamatory imputations in respect to the second plaintiff to an ordinary and reasonable reader and/or such a reader with the knowledge referred to in paragraphs 2, 5, 23 and 24 herein:
the second plaintiff was responsible for, or conducted the business affairs of the first plaintiff, in a manner that was not in the best interests of its clients;
the second plaintiff was involved in or associated with unlawful conduct including the provision of financial advice or other financial services without a licence;
the second plaintiff was involved in or associated with unlawful conduct referred to in the preceding sub‑paragraphs for financial gain; and
the second plaintiff was not a decent and honest businessperson.
- Further, or in the alternative, the defamatory imputations referred to in the preceding paragraph were conveyed as a consequence of true innuendo having regard to the knowledge that industry participants and potential, existing and past clients, had of the following matters:
the allegations in paragraphs 2 and 5 herein; and
the nature of the first plaintiff’s business described in paragraph 1(e) above.”
Defendant’s Pleaded Case
The defendant denies that the imputations pleaded at paragraphs 11 and 19 of the statement of claim were capable of conveying, or in fact conveyed, the imputations pleaded.
In the alternative, the defendant alleges that its publications were justified because the meanings pleaded at paragraphs 11(a)-(e) and 19(a)-(d) “were true in substance and in fact at common law and are substantially true in substance and in fact pursuant to section 25 of the Defamation Act (Qld)”.
Further in the alternative, the defendant says that the media releases were published on occasions of qualified privilege at common law and pursuant to s 30 of the Defamation Act 2005 (Qld).
I accept that the defendant’s establishing those alternative defences at trial, particularly the defence of justification, will involve considerable factual evidence as the defendant endeavours to prove the concerns which led to its cancelling the financial services licences of Austplan and Mr Renneberg, and to prove the involvement of the plaintiffs in the activities of Austplan and Mr Renneberg.
The defence also denies the allegations made at paragraphs 12 and 20 of the statement of claim. That is, it denies the first plaintiff’s true innuendo case.
As to paragraph 5 of the statement of claim, the defendant admits that Ms Thatcher contacted and interviewed five of the 10 people whom the plaintiff particularises and denies that Ms Thatcher said words to the effect pleaded.
As to the allegations concerning the second plaintiff, the defendant denies that the publications identified the second plaintiff to the ordinary reasonable reader. The defendant denies the imputations pleaded at paragraph 25 of the statement of claim were capable of being conveyed, or were in fact conveyed, to any ordinary reasonable reader. The defendant denies the alternative part of the second plaintiff’s claim based on true innuendo.
It is apparent from the reply that there will be a factual contest as to many of these matters.
Defendant’s Proposal for a r 483 Separate Determination
I note that the plaintiffs do not ask for a jury trial.
The defendant proposes that the separate determination would decide whether or not, as a matter of fact, the imputations pleaded at paragraphs 11, 19 and 25 of the statement of claim conveyed any of the pleaded imputations. The defendant’s proposal was that the only material which the Court would have regard to in determining the separate questions pursuant to r 483(1) would be the pleadings and the media releases in which the imputations are said to be made.
The parties agreed that Wagner v Harbour Radio Pty Ltd correctly stated the law as to when an imputation will be conveyed by words alleged to be defamatory. The relevant part of that judgment is as follows:
“ The parties are agreed as to the principles to be applied in determining the natural and ordinary meaning of the words. These principles are well established. The natural and ordinary meaning of the words complained of is the meaning which an ordinary listener would give to the words. The Court must therefore assume the role of the ordinary reasonable listener. The relevant question is whether the ordinary reasonable listener would have understood the matters complained of in the defamatory sense pleaded. This is not simply the literal meaning of the words, but also extends to any implied or inferred or indirect meanings. No evidence is admissible on the issue of meaning. It is to be determined objectively, by reference to the hypothetical construct of the ordinary reasonable listener, who is taken to glean the single natural and ordinary meaning of each distinct charge conveyed by the broadcast. The meaning that a defendant intended to convey is irrelevant. So too is the manner in which the publication was actually understood. How the ordinary reasonable listener determines meaning is “a matter of impression”.
 The relevant principles, including the attributes and characteristics of the ordinary reasonable listener, were identified by Hunt CJ at CL in Amalgamated Television Services Pty Ltd v Marsden as follows:
the ordinary reasonable reader is a person of fair average intelligence, who is neither perverse, nor morbid or suspicious of mind, nor avid for a scandal;
that person does not live in an ivory tower but can and does read between the lines in the light of that person’s general knowledge and experience of worldly affairs;
the mode or manner of publication is a material matter in determining whether the imputation is conveyed;
the more sensational a publication, the less likely it is that the ordinary reasonable person will read it with the degree of analytical care which may otherwise have been given to a less sensational publication;
the ordinary reasonable person considering such a publication is understandably prone to engage in a certain amount of loose thinking;
a wide degree of latitude is given to the capacity of the matter complained of to convey particular imputations where the words published are imprecise, ambiguous, loose, fanciful or unusual;
these considerations, and more, apply to matter published in a transient form, particularly in the electronic media; the reader of a written document has the opportunity to consider or to re‑read the whole document at leisure and to check back on something, and in doing so change the first impression, but the listener or viewer has no such opportunity; and
the ordinary listener must be assumed to have heard and seen the whole of the program, but he or she may not have devoted the same degree of concentration to each part of the program as would have been given to a written article – “particularly, I would say, where it is the radio” – and may have missed the significance of the existence, early in a program, of a qualification of a statement made later in the same material.” (footnotes omitted)
The defendant submitted that as no evidence was to impinge upon the Court’s task of determining what an ordinary reasonable listener would understand by the words relied upon by the plaintiffs, the question of whether or not the pleaded imputations here were in fact conveyed was one well suited to a determination pursuant to r 483(1) without hearing any evidence.
The situation as to the plaintiffs’ case based on true innuendo was a little more difficult. While paragraph 1(e) of the statement of claim is admitted on the pleadings, the allegations at paragraph 5 are contested in significant part. So far as the second plaintiff is concerned, so too are the allegations at paragraph 2 of the statement of claim. What the defendant proposed in relation to this difficulty was that, for the purpose of the r 483(1) application only, the defendant would admit the facts pleaded in these paragraphs.
The defendant submitted that its approach meant that there were no contested facts on its application and that, should parts of the plaintiffs’ case survive, no findings of credit would have been made about any witness who might give evidence at a trial. If judgment were given against the plaintiffs on all of the imputations, or alternatively on imputations such as those pleaded at 11(a), 11(d), or 19(a)-(c), the litigation would be considerably shortened: the time-consuming and expensive part of the litigation associated with the defendant’s plea of justification would be avoided. The defendant, in effect, submits that the alternative to a preliminary determination pursuant to r 483(1) is a lengthy trial involving considerable factual evidence, where the plaintiffs’ case, at least as revealed by the pleadings, seems weak.
All of that may be accepted, and I think it might also be accepted that the pleadings at 11(a), 11(d) and 19(a)-(c) appear to be the weakest part of the plaintiffs’ case. It may well be that the only good case the plaintiffs have in relation to these allegations is based on true innuendo, and even then, there appear to be difficulties with the plaintiffs’ case.
Notwithstanding all these matters I am uneasy about proceeding under r 483(1) in this case. Were it not for the true innuendo case, I would feel more confident to do so. It is true that on an application in the nature of a demurrer a court will assume facts in a pleading are true for the purpose of the application. I am not prepared to do so as the defendant asks me to here. The facts which the defendant asks me to assume for the purpose of this application are fairly briefly pleaded. It may be that a trial judge has a different qualitative understanding of the true innuendo case after hearing evidence. It may also be, as the plaintiffs’ counsel postulated, that disclosure by the defendant as to its investigations into the plaintiffs, and into Austplan and Mr Renneberg, will give the plaintiffs documents which bolster or change its true innuendo case.
To give judgment on the true innuendo points now would be to do so without the plaintiffs having the advantage of disclosure and without hearing evidence. I am not prepared to finally determine the plaintiffs’ rights on that basis. I note the cases as to r 483(1) and its analogues refer to the caution with which the power ought to be exercised, and the need for a high degree of clarity in the points which are to be determined.
It did occur to me during the hearing of this application that perhaps I could adjourn this application; make orders for disclosure limited to the true innuendo points, and let the parties revisit matters once that had occurred. Having considered the matter more fully, I am not disposed to take this course; the matter would still have to be decided on an artificial basis where the Court acted on pleaded allegations, not evidence. In my view, it would be unjust to do so.
Once the point is reached where the true innuendo points should not be determined separately pursuant to r 483(1), it is not convenient to determine the other points. There will not be any substantial cost savings in circumstances where the true innuendo points must run to trial in the ordinary course, and there is a danger that there might be inconsistent ultimate determinations of the same or similar points.
Lurking behind some of my thinking in this case, and I suspect the defendant’s decision to apply to the Court for relief which might finally put an end to the proceeding, rather than engage in attacks on the pleading, is the impression that the plaintiffs’ case is not completely articulated in its current pleading – see the last line to the particulars at paragraph 5 of the statement of claim (above). Counsel for the plaintiffs said on the hearing of this application that his clients’ pleadings might well be amended. That is an unimpressive position to take, particularly where the plaintiffs were given more than two months’ notice of the hearing of this application. Nonetheless, I think it would be wrong to let poor pleading and failure to promptly progress the action contribute to the consequence where the plaintiffs’ rights are finally determined, rather than having their usual consequence in interlocutory orders.
It was submitted on behalf of the defendant that paragraphs 11(e) and 19(d) should be considered independently of all the other points made on behalf of the defendant and that they were untenable and not pleaded in proper form. Counsel for the plaintiffs did not understand prior to the hearing that the viability of these paragraphs was raised as a separate point, and it is not clear from either the application or the correspondence exhibited to Court Document 15. They are dealt with separately in the written outline of argument for the defendant – paragraph 29, where it is submitted that they ought to “immediately be struck out”. If the term “struck out” is being used in the sense explained in relation to paragraph 3 of the application, I would refrain from making that order pursuant to r 483(1) because they are a small and inter‑related part of the causes of actions advanced by the plaintiffs. If the term “struck out” is being used to indicate that there ought to be an interlocutory order in relation to the pleadings, I am not of the view that the plaintiffs were on notice about this, having regard to the relief sought in the application; the correspondence exhibited to Court Document 15, and the difficulties in interpreting paragraph 3 of the application and paragraphs 29, 30(a) and 30(b) of the submissions.
For the above reasons I dismiss the application. I will hear the parties as to costs. I will also hear the parties as to whether or not the matter ought to be placed on Justice Applegarth’s supervised case list, having regard to some of the matters canvassed above.
For clarity, although paragraph 3 of the application asks that various paragraphs of the statement of claim “be struck out”, senior counsel for the defendant explained on the hearing of this application that he was not making any interlocutory application to strike out pleadings; the application used the words “be struck out” as a reference to final relief equivalent to that part of the plaintiffs’ case being dismissed on a final basis.
Paragraph 4(c)(i) of the defence and paragraph 4(d)(i) of the reply.
Paragraph 4 of the statement of claim; paragraph 4 of the defence, and paragraph 4 of the reply.
Paragraph 20 of the statement of claim is in identical terms.
Paragraphs 11(b) and 19(b) of the defence.
Paragraphs 11(a) and 19(a) of the defence.
Paragraphs 11(b) and 19(b) of the defence.
Paragraphs 12 and 20 of the defence.
Paragraphs 5, 12 and 20 of the defence.
Paragraph 23 of the defence.
Paragraph 25 of the defence.
Paragraph 26 of the defence.
See s 20 Defamation Act 2005 (Qld) and r 472 of the UCPR.
These were exhibited to the affidavit of Mr Coyle sworn 27 March 2020 and read on this application.
 QSC 201, - per Flanagan J.
I see from Exhibit Bundle 3 to Court Document 15 that the application was foreshadowed on 11 March 2020 and that the parties were agreed between them as to suitable dates by 23/3/2020 – see Exhibit Bundle pages 9 and 14 to Court Document 15. All of this was well before I made an order by consent in the Applications jurisdiction on 20 April 2020. That order contained a paragraph to the effect that orders of 16 January 2020, “be stayed pending the resolution of [this] application”. In fact there were no orders made on 16 January 2020. The Resolution Registrar made orders on 14 February 2020, and presumably that was what the person who drafted the order presented to me had in mind. It seems that the above paragraph ought not to have been presented to me as part of a consent order in Applications, for in fact the parties were in breach of the Resolution Registrar’s order of 14 February 2020 and there was in substance nothing to stay, for the times limited by that order for the parties to take steps had passed. In any event, the order of the Resolution Registrar did not limit times during which amended pleadings could be filed, or times in which disclosure could take place. All that is a long way of saying that there was nothing in the submission made by the plaintiffs’ counsel that he could not attend to amendments to his pleading while awaiting the hearing of this application. And of course, even if he had in fact been prohibited from filing a new pleading, he could have presented a new draft at the hearing of the application.
- Published Case Name:
GM Homes (Australia) Pty Ltd & Anor v Australian Securities and Investments Commission
- Shortened Case Name:
GM Homes (Australia) Pty Ltd v Australian Securities and Investments Commission
 QSC 149
03 Jun 2020
No Litigation History