GWA Pty Ltd v Russo[1997] QDC 1

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REASONS FOR JUDGMENT - McGILL S.C., D.C.J..

Delivered the 23rd day of January 1997

In this matter there is before me an application by the plaintiff for an order that the first and second defendants make discovery, and an application on the part of the defendants for an order that the plaint be struck out as failing to disclose a reasonable cause of action. Although the application for discovery was filed first, in my opinion it is appropriate to consider first the defendants' application.

Course of Action

By a plaint filed on 12th January 1993 the plaintiff claimed against two defendants the sum of $200,000 as damages for defamation including aggravated and exemplary damages, with interest and costs. An entry of appearance and defence was filed on 8th March 1993 on behalf of both defendants, which prompted a request for further and better particulars which particulars were provided on 11 May 1993. Meanwhile on 4 May 1993, the defendants' solicitors had asserted in correspondence that the plaint did not disclose a reasonable cause of action because the alleged defamatory matter could not be said to refer to the plaintiff and the plaint did not suggest any basis on which it could be said to do so. In response the plaintiff filed an amended plaint on 17 May 1993, although in a covering letter it was asserted that the amendment was unnecessary.

After that the plaintiff took no step until 9 April 1996 when notice of intention to proceed was served, and a further amended plaint was then filed on 14 May 1996. On 13 August 1996, a further further amended plaint was filed, together with a reply, and on 16 August 1996 the plaintiff's solicitors first sought discovery. It appears that concern about the wide scope of discovery, which was at least arguably relevant in relation to these proceedings, has reactivated the defendants' concern about the issue of whether the current version of the pleading discloses a cause of action: see affidavit of Susan Forrest filed 1 October 1996, para. 16.

The Current Pleading

The plaint alleges that a company, Johnson Farm Management Limited, was managing what are described as “investment projects” known as the Corindi Blueberry Farm and Red Claw Projects which were offered to the public as a means of investing in primary production by acquiring units in limited partnerships. A company, Rural Finance Pty. Ltd., provided loans to the majority of such investors, and had as its agent an employee of Johnson Farm Management Limited, which suggests that the loans may have been offered as part of a package to potential investors. According to para. 3(d) of the plaint, “Certain of the loans to investors” were agreed to be made on terms that the investor's obligation to repay other than from income earned from investment in the project was to be limited to one payment of interest payable on 30 June 1989 and two repayments of capital payable on 30 September and 31 December 1989. These are obviously not conventional finance arrangements, and even when filtered through the medium of this pleading, I believe I can detect a faint odour of tax avoidance about them; but it may be that I am unduly cynical about these things.

It is alleged that among those who were able to borrow funds on such unconventional terms were a group of borrowers who were officers, shareholders or employees of the plaintiff or were companies associated with the plaintiff, and who are described as “the Brisbane based investors”. This group are alleged in para. 5 to have been known and referred to by, inter alia, the other investors in the project as “The GWA Group of borrowers”, “the GWA Pty. Ltd. Group of borrowers”, and “the Brisbane based borrowers”. It is alleged that the plaintiff was not itself such an investor.

The second defendant is alleged to be a company carrying on the business of general financing and to have purported to take an assignment from Rural Finance Pty. Ltd. of all of that company's right title and interest to loans made by it to investors in the projects, presumably including the loans referred to in para. 3(d) and to have subsequently demanded of the group known as “The Brisbane based borrowers” that they repay their loans in full together with interest, in effect asserting that the special provisions alleged in para. 3(d) of the plaint were not part of the contracts of loan.

It is alleged that by letter dated 1st October 1992 from the first defendant as managing director of the second defendant to one Anthony Johnson, the defendants published “of and concerning the plaintiff” certain words which are set out in the pleading and are alleged to have been defamatory of the plaintiff. It is alleged that certain references in the passage quoted, only one of which corresponds to the collective expressions referred to in para. 5, were a basis by which “the matter complained of....was reasonably understood by readers thereof to refer to the plaintiff.” If one only read that far in the pleading, there was no basis for suspecting that there was any relevant reader apart from Anthony Johnson (the managing director of Johnson Farm Management Limited). But later in the pleading there is an allegation that “the matter complained of was circulated throughout each State and Territory of Australia to investors in the projects” although no allegation as to by whom that was done. It is alleged that the words were published by the defendants knowing them to be untrue, recklessly and with indifference to their truth or falsity, and to injure the reputation of the plaintiff.

Approach to the Application

There is jurisdiction under Rule 109 to strike out a plaint which discloses no reasonable cause of action. The exercise of the jurisdiction summarily to dismiss a plaintiff's claim in a defamation action was discussed by Hunt J. in Monte v. Mirror Newspapers Ltd. [1979] 2 N.S.W.L.R. 633 at pp. 669-675 where the authorities were considered in some detail. His Honour concluded that a statement of claim for defamation should not be struck out unless the claim made was obviously untenable, applying the test set out in General Steel Industries Inc. v. Commissioner for Railways (1964) 112 C.L.R. 125 at 129. His Honour's approach was that matters going to the merits of the plaintiff's claim, including questions of law, should not be decided in a summary way prior to the trial, but should be determined by the trial Judge at the appropriate time during the trial, unless an order was made under the Rules for the determination in advance of the trial of a separate question of law. The approach in Monte (supra) has been applied in Queensland: Vasta v. Queensland Newspapers Pty. Ltd. [1991] 2 Qd.R. 354.

There is no procedure for demurrer under the District Court Rules, and I do not consider the hearing of an application under Rule 109 should be treated as the equivalent of the determination in advance of the trial of a separate question of law. I am therefore attempting to apply the approach adopted in Monte (supra). Accordingly questions of law should not be decided adversely to the plaintiff on the hearing of such an application unless a view of the law favourable to the plaintiff is clearly wrong.

As the decision in Monte (supra) illustrates, however, the one aspect of the law which does have to be decided on and is appropriately enforced by an application of this nature is the law in relation to sufficiency of pleading. A claim which is bad in point of pleading should be struck out, but on the basis that the plaintiff will be given leave to replead. As to the significance of striking out a pleading with leave to replead on the ground that the plaintiff's case is defective in point of pleading, see also Turner v. Bulletin Newspaper Co. Pty. Ltd. (1974) 131 C.L.R. 69 at 74 per Barwick C.J. and 97-98 per Jacobs J.

A preliminary point of interpretation of the pleading.

I have some difficulty in relation to this matter by the circumstance that the pleading alleges in para. 11 merely that the matter alleged to be defamatory to the plaintiff was published to Anthony Johnson, but para. 14 alleges that:

It is not alleged that that was done by the defendants or either of them. Under the Criminal Code s. 370 it is publication of defamatory matter which is made unlawful. Accordingly in my opinion it is a necessary allegation that the relevant publication of the defamatory matter was by the defendants, or that, because of facts which should be expressly pleaded, circumstances exist such that the defendants were responsible for the publication by others.

Under the common law the person who originally publishes a libel or slander is prima facie not liable for an unauthorised repetition or republication, which is not the necessary, natural or probable consequence of the original publication: Gatley on Libel and Slander 8th ed 1981 para. 266. In paragraph 267 three categories of cases are stated as situations where the original publisher is liable in respect of republication:

Whether or not this was also the test in Queensland at the relevant time, it seems to me that facts relevant to liability for republication should be expressly pleaded. See for example the express pleading of allegations in relation to republication in Bullen & Leake & Jacob's Precedents of Pleading 13th ed 1990 p. 633 no. 407.

In the present case it is not alleged that the publication in para. 14 was by the defendants or either of them, nor are facts alleged on the basis of which it is arguable that the defendants are liable in respect of that publication. Accordingly in my opinion para. 14 is irrelevant surplusage, and the pleading as it stands alleges that the defamatory publication was made only to Anthony Johnson “The presence of redundant and irrelevant material in a pleading is embarrassing to the fair trial of the action.” - Vadic v The Ballarat News Pty Ltd [1981] V.R. 213 at 219.

The issues as to whether the defamatory matter identifies the plaintiff, and whether it is capable of being defamatory of the plaintiff, have to be considered in the light of this interpretation of the pleadings. I strongly suspect however that this is not what the pleader intends, and that in due course the pleading will be amended so as to seek to make the defendants liable in respect of the publication to the investors. The wording of paragraph 12 is inappropriate on the pleading as it stands given that the only relevant reader was Anthony Johnson, and this suggests that the pleading was thought by the pleader to have a wider scope than it seems to me it really has. Accordingly I shall, where appropriate, address some remarks to the considerations applicable to a pleading on that basis.

Identification of the Plaintiff

The plaintiff is not identified anywhere in the material set out in para. 11 of the plaint as constituting the defamatory statement. Paragraph 12 alleges that, by reference to various expressions within that material, that it was reasonably understood by readers there of to refer to the plaintiff. If the effect of para. 12 is to allege that readers understood that the expressions “group of privileged borrowers”, “privileged borrowers”, “the Brisbane based borrowers” and “defaulting Redclaw borrowers” was descriptive of a group which was reasonably understood to include the plaintiff, so that the allegation is that the plaintiff was defamed because all members of the group were defamed, then the claim is bad on its face. This is because it is expressly pleaded in para. 8 that the plaintiff was not one of the “Brisbane based borrowers” which is a group of borrowers identified in the pleadings and apparently the group sought to be identified by the expressions which I have just quoted. If the plaint is based on the proposition that a person is defamed by the making of a defamatory statement in respect of the members of a group to a person who mistakenly believes that the plaintiff is a member of that group, then it is clearly bad in law, as it is well established that ordinarily a defendant cannot be made liable for an identification made by a reader on the basis of an erroneous belief in the existence of the particular extrinsic fact upon which the plaintiff relies to establish identification: Mirror Newspapers Limited v. World Hosts Pty. Ltd. (1979) 141 C.L.R. 632 at 642; Abbott v. TCN Channel 9 Pty. Ltd. (1987) Aust.Torts Reports # 80-138 at 69,078 per Hunt J. The expression “The Chairman of the Brisbane based investors” is perhaps in a different category, but plainly it does not identify the plaintiff which is a company. Even if a company can in certain circumstances occupy the position of “Chairman” of something, it is plain from the context that the reference is to an individual. Clearly therefore the plaint cannot be alleging that the plaintiff has a cause of action because it is one of a group and all members of the group were defamed by the publication. It is therefore not necessary to consider the question, which may be a difficult one, of whether in these circumstances the effect of making a defamatory statement about a group of individuals is to give each of them a right to sue.

In Abbott, Hunt J. went on to note at p. 69,079 that there may exist certain circumstances where a plaintiff may rely on a mistaken belief on the part of the person to whom the defamatory material was published as establishing identification of the plaintiff as a person defamed. One obvious example is where the material alleged to be defamatory itself wrongly identifies the plaintiff as a member of the group, the members of which have been defamed. It is not necessary to consider in detail these exceptions to the general proposition because no attempt is made in this pleading to rely on any of them.

If the plaintiff were the promoter of the scheme which embodied as an element of it the special arrangement with regard to repayment of certain loans alleged in para. 3(d) of the plaint, the pleading would be rather easier to follow, but that is not alleged. Nevertheless it seems to me that the thrust of the plaintiff's case is one of guilt by association: because this group of investors was said to have engaged in various nefarious activities, the plaintiff, a company in which the misbehaving investors were officers, shareholders, employees or associated companies, might have been thought by Mr. Johnson (and perhaps following amendment by some of the investors in the project) to have been itself involved in the wrongdoing. If an allegation that an employee of a company is bankrupt is capable of being defamatory of the company - Mirror Newspapers Ltd. v. World Hosts Pty. Ltd. (supra) - then it seems to me that a case along the lines that I have indicated is not so utterly untenable as to justify being struck out on the application of the test to which I have referred. Nevertheless, it is necessary to consider what the applicable law would require for such a case to be made out and what it is necessary to plead in order to allege such a case.

Where the words published do not on their face contain material which is defamatory, or defamatory in a particular sense, and only bear that imputation because of the existence of extrinsic facts (a true innuendo), the statement of claim should plead the innuendo and the extrinsic facts upon which it depended: Mirror Newspapers Ltd. v. World Hosts Pty. Ltd. (supra) at p. 641. It is also necessary to plead that the extrinsic facts were known to those to whom the defamatory material was published: Composite Buyers Ltd. v. Clarke [1988] 2 Qd.R. 602 at 607. A situation where the matter of identification of the plaintiff with the defamatory matter is not apparent on its face, and it is necessary to prove extrinsic facts to show that the material was defamatory of the plaintiff, is not an example of a true innuendo. In Vadic (supra) the view was expressed that the proof of extrinsic facts in order to show identification without alleging an extended meaning of the alleged defamatory words is not an example of a true innuendo: p. 217. However, the law is the same as to what must be shown at the trial. The matter is discussed by the High Court in World Hosts at p. 639:

The Court went on to consider an exception which is not applicable in the present case. One might have been forgiven for thinking that the extrinsic facts which were necessary to identify the plaintiff were material facts which ought to be pleaded. Whether that was so was said by the Full Court in Composite Buyers Ltd. v. Clarke (supra) at p. 605 to be a matter which it was not necessary to decide, referring to the decision of the High Court in Turner v. Bulletin Newspaper Co. Pty. Ltd. (1974) 131 C.L.R. 69 and the decision of Hunt J. in Dawson Bloodstock Agency Pty. Ltd. v. Mirror Newspapers Ltd [1979] 2 N.S.W.L.R. 733. In the latter case, His Honour at pp. 735-7 discussed differing views on the authorities as to whether or not extrinsic facts necessary for the identification of the plaintiff were material facts which had to be pleaded, and noted the line of authorities in England culminating in Fullam v. Newcastle Chronicle and Journal Ltd. [1977] 1 W.L.R. 651 to the effect that they were. Nevertheless His Honour concluded that the issue had been settled, so far as Australia was concerned, by a statement in the High Court by Barwick C.J., with whom two of the other members of the Court agreed, in Turner v. Bulletin Newspaper Co. Pty. Ltd. (supra) and that the effect of that decision was that an allegation that “the defendant published the following matter of and concerning the plaintiff” is a sufficient allegation of the material fact of publication, in accordance with the authority of Turner (at p. 80). For such an allegation there should, however, be subscribed particulars of the extrinsic facts relied upon to identify the plaintiff in the matter complained of.” The position appears to be, therefore, that the extrinsic facts need to be pleaded, but by way of particulars rather than by way of separate material facts. I believe I should follow the view of Hunt J. that the matter was settled by the decision of the High Court in this regard. In the present case, para. 11 alleges that by the letter the defendants “published of and concerning the plaintiff the following words” and on that authority that is a sufficient allegation of that material fact, although particulars should be given of the extrinsic facts relied upon to identify the plaintiff. It may be that in the present case those particulars would do no more than repeat the facts alleged in paras. 4, 5, 6 and 12 of the plaint, but nevertheless in my opinion, the defendants are entitled to be made aware by proper particulars of exactly what facts are relied upon by the plaintiff as showing the existence of the necessary connection.

I consider that it is also necessary to prove that the defamatory material was published to someone who knew those extrinsic facts, that is to say, to someone who knew that it was published of and concerning the plaintiff. In Kendell v. The North Queensland Newspaper Co. Ltd. (Appeal No. 70 of 1991, Court of Appeal, 13 May 1992, unreported) the Court of Appeal held that, in circumstances where it was necessary to prove an extrinsic fact in order to demonstrate that material published in the newspaper identified the plaintiff, it was necessary to confine the relevant persons to whom it could be alleged that the plaintiff had been defamed to persons who knew of that extrinsic fact and so were able to make the necessary identification. In pp. 7 and 8 of the Reasons for Judgment, the Court said:

It seems to me that the effect of this passage is to indicate that it is necessary to plead that the extrinsic fact necessary for the identification of the plaintiff as the person defamed was known to the person or persons to whom the defamatory matter was published. In the present case that was, on the face of the pleading as it stands, Anthony Johnson.

The plaintiffs allege in paragraph 12 that the matter complained of was reasonably understood by readers thereof to refer to the plaintiff, and in para. 13 that the matter complained of meant and was understood to mean and conveyed the imputations about the plaintiff that are set out in that paragraph, but these are conclusions which would follow if the material had in fact been published to a person or persons who had knowledge of the necessary extrinsic fact. In circumstances where the pleading does not particularise the extrinsic facts relied upon as establishing that the matter complained of was published of and concerning the plaintiff, in my opinion it is unsatisfactory simple to allege as a consequence that the plaintiff was defamed. I do not consider therefore that paragraphs 12 and 13 are sufficient as a plea of knowledge. I consider that my approach to paras. 12 and 13 is consistent with the approach adopted by Marks J. in Vadic v The Ballarat News Pty Ltd [1981] V.R. 213 to the paragraphs of the statement of claim he was there considering: see in particular p. 216.

The pleading should allege specifically the particulars relied on, and should allege expressly that those facts (or sufficient of them to enable the connection with the plaintiff to be made) were known to the person or persons to whom the defamatory material was published. The present pleading does not do that, and in my opinion therefore it is defective in point of pleading and should be struck out as failing to disclose a cause of action, but on the basis that leave is given to replead as the plaintiff may be advised.

The plaintiff is a company.

There is one other matter I might mention. The plaintiff is a company. No point was taken before me that a company cannot be a plaintiff in a defamation action in Queensland. It appears to be established that, at common law, a trading corporation may be defamed by words which reflect on the trading reputation of the company, but that a company cannot sue either for libel or slander unless it is defamed in the way of its business: Gatley para. 954. A non-trading corporation may be defamed in respect of matters which tend to affect its property or financial position: para. 957. In Ballina Shire Council v. Ringland (1994) 33 N.S.W.L.R. 680, it was said by Kirby P. to be established in New South Wales that a trading corporation could be a plaintiff, referring to Andrews v. John Fairfax & Sons Ltd. [1980] 2 N.S.W.L.R. 225. That was a decision of the Court of Appeal and only Mahoney J.A. (as he then was) discussed the question of whether as a matter of principle a corporation could be a plaintiff: page 255. The other two members of the Court assumed that a corporation could be a plaintiff, since they upheld an award of damages in favour of one. His Honour's discussion does not however contain any reference to the relevant provisions of the applicable New South Wales legislation on defamation.

In Queensland the relevant legislation at the time was the Criminal Code. The provisions of the Criminal Code dealing with defamation were relocated to the Defamation Act (1889) by the Criminal Code (1995) s. 495(2), but that does not affect this action. It is not clear to me from a consideration of the terms of s. 366 that a corporation can be defamed in Queensland, since that section refers to a “person” in terms which, on their face, suggest that it is confined to a person who can be described as “living or dead” or who could have a family, neither of which is a language naturally applicable to a corporation. The wording suggests to me a context which would indicate that the ordinary interpretation of the term “person” as including a corporation does not apply in this section. If the term “person” in s. 366 were confined to a natural person, an imputation concerning a corporation would not be within s. 336 and hence publication of such matter would not be made unlawful by s. 370. In Queensland the question whether published matter is defamatory depends solely on whether it comes within the words of the statute, whether or not it would have been actionable as libel or slander at common law: The Hall-Gibbs Mercantile Agency Ltd. v. Dun (1910) 12 C.L.R. 84.

I have not been able to find any reported case where the question of whether a company can be a plaintiff in a defamation action in Queensland has actually been considered and decided, although there are cases, such as Composite Buyers Ltd. v. Clarke (supra), where it has obviously been assumed that such a thing is possible. The same assumption seems to be made in the High Court in Mirror Newspapers Ltd. v. World Hosts Pty. Ltd. (supra), dealing with the similar terms of the Defamation Act 1958 (N.S.W.), and in Barnes & Co. Ltd. v. Sharpe (1910) 11 C.L.R. 462 where it may be of some significance that Sir Samuel Griffith assumed that the principle in South Hedden Coal Co. v. North Eastern News Association [1894] 1 Q.B. 133 applied in Queensland. That case held that it was defamatory of a company which was in business to impute to it that it had been a party to a conspiracy to injure those with whom it traded, even though as a company it could not be charged with an offence of conspiracy under the Criminal Code of Queensland. The possibility of extending the protection of defamation if the company was not engaged in any form of business or trading activity was touched on by Smith J. in Anderson v. Church of Scientology Inc. [1981] W.A.R. 279, but without any discussion of the terms of the Statute, and His Honour and other members of the Court assumed that the incorporated association in that case could be a plaintiff. That case is of interest because it emphasises the need for care in determining whether an alleged defamatory imputation is in fact an imputation against the company, as distinct from the persons who are behind it or in fact responsible for particular acts in relation to it. The corporate plaintiff cannot sue in respect of imputations of impropriety on the part of the individuals who comprise it. Notwithstanding the remarks of Mahoney J.A. (supra), I do not regard it as self-evident that a corporation should be able to sue for defamation, but the point was not raised in argument before me and it is not necessary for me to decide it.

Conclusion

In my opinion therefore the plaint as it stands is defective in point of pleading and should be struck out, but with liberty to the plaintiff to replead as the plaintiff may be advised. I propose further to give directions that:

1. 1.
   The plaintiff file any amended plaint within 28 days of today.

1. 2.
   The defendants file any amended entry of appearance and defence in response within 56 days of today.

1. 3.
   The plaintiff file any amended reply within 70 days of today.

With regard to costs, although the application did not result in the summary determination of the action on its merits in a manner favourable to the defendants, the plaint was found to be defective in point of pleading and has been struck out, and accordingly I think the plaintiff should pay the defendants' costs of and incidental to this application to be taxed.

With regard to the summons for discovery, in view of the circumstance that the action will have to be repleaded, it is clearly now premature to order discovery. After the pleadings are closed a further notice requiring discovery can be given. What will then have to be discovered will depend on the terms in which the pleadings are then framed. Accordingly the plaintiff's summons is dismissed.

With regard to the costs of that summons, it was filed on 18th September 1996. The notice requiring discovery on oath was forwarded with a letter dated 16th August 1996. An amended plaint having been filed on 13th August 1996, this gave little opportunity to the defendants to consider filing an amended entry of appearance and defence in response. After that on 6th September the plaintiff gave notice that unless an affidavit was forthcoming within seven days an application would be made to the court. In response the defendants' solicitors advised that they were currently in the process of finalising discovery “which we expect to have to you in the next month or so”. The summons for discovery was filed six days later. Although it does not appear that the defendants gave notice prior to 18th September 1996 that they were renewing the attack upon the pleading originally foreshadowed in 1993, so the application for discovery cannot be regarded as premature on the ground that there was a dispute currently about the pleadings, in my opinion in circumstances where plaintiff has taken some three and half years to deliver a notice requiring discovery on oath after the time when it could have first been delivered, making an application one month after the notice was delivered and a week after the defendants' solicitors had advised that they expected to have the affidavit in a month or so was in my view inappropriate and premature, particularly where the scope of discovery may well be extensive. The plaintiff should not dawdle for several years and then demand a high speed response from the defendants. Furthermore I consider that parties should attempt wherever possible to resolve interlocutory matters between themselves without recourse to the Court, and I do not think that the point had been reached where it was reasonable for this application to be made. Accordingly I order the plaintiff to pay the defendants' costs of and incidental to the summons of 18th September 1996 to be taxed.

In case it becomes necessary for the purposes of an application under the Appeal Costs Fund Act, I should say that, with the exception of Vadic v The Ballarat News Pty Ltd (supra), none of the authorities which I have cited in the course of these reasons, and few of the propositions of law on which I have relied, were referred to in the course of argument before me. This incidentally is one of the reasons why it has taken me upwards of three months to deliver judgment in this matter. Another factor contributing to the delay is that, because of my respect for counsel whose name appears on the further further amended plaint (and who did not argue the application), I was reluctant to arrive at a conclusion that the pleading was defective without attempting by some measure of research to gain some familiarity with the principles of law applicable in this area of the law.