FEDERAL COURT OF AUSTRALIA Bond v Barry [2007] FCA 2034 APPEAL – application for leave to appeal – interlocutory judgment of dismissal pursuant to Federal Court of Australia Act 1976 (Cth) s 31A – points of substance – misleading or deceptive conduct – media exemption – construction of s 65A(1)(a) and s 65A(1)(a)(vi) of the Trade Practices Act 1974 (Cth) – whether supply by freelance journalist to newspaper company pursuant to contract a "publication" – whether assuming "publication" the matter published was "in connection with" the supply or possible supply of goods or services – whether decision attended with sufficient doubt – leave granted. Trade Practices Act 1974 (Cth), ss 52, 65A Fair Trading Act 1987 (WA), ss 1, 74 Fair Trading Act 1987 (NSW), s 42 Broadcasting Services Act 1992 Federal Court of Australia Act 1976 (Cth), s 24(1A), 31A Australian Competition & Consumer Commission v Seven Network Ltd [2007] FCA 1505 discussed Decor Corporation and Another Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 cited Ian Duncan v Secretary, Department of Family and Community Services [2007] FCA 507 cited Dunstan v Orr [2007] FCA 873 cited Yap v Granich & Associates [2001] FCA 1735 cited ALAN BOND AND LESOTHO DIAMOND CORPORATION PLC v PAUL BARRY, NEWS DIGITAL MEDIA PTY LTD, NATIONWIDE NEWS PTY LTD, NEWS LIMITED AND NEIL LAURENCE BREEN WAD 192 OF 2007 GILMOUR J 18 DECEMBER 2007 PERTH IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY WAD 192 OF 2007 BETWEEN: ALAN BOND First Applicant LESOTHO DIAMOND CORPORATION PLC Second Applicant AND: PAUL BARRY First Respondent NEWS DIGITAL MEDIA PTY LTD Second Respondent NATIONWIDE NEWS PTY LTD Third Respondent NEWS LIMITED Fourth Respondent NEIL LAURENCE BREEN Fifth Respondent JUDGE: GILMOUR J DATE OF ORDER: 18 DECEMBER 2007 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The applicants have leave within 7 days of the date of these Orders to appeal from the interlocutory judgment of the Honourable Justice French delivered on 21 September 2007 on the grounds set out in the Amended Draft Notice of Appeal filed in support of the application. 2. Costs be costs in the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY WAD 192 OF 2007 BETWEEN: ALAN BOND First Applicant LESOTHO DIAMOND CORPORATION PLC Second Applicant AND: PAUL BARRY First Respondent NEWS DIGITAL MEDIA PTY LTD Second Respondent NATIONWIDE NEWS PTY LTD Third Respondent NEWS LIMITED Fourth Respondent NEIL LAURENCE BREEN Fifth Respondent JUDGE: GILMOUR J DATE: 18 DECEMBER 2007 PLACE: PERTH REASONS FOR JUDGMENT 1 The applicants seek leave to appeal from the interlocutory judgment of French J delivered on 21 September 2007. The proposed appeal challenges the construction, in certain respects, placed by the Court upon s 65A of the Trade Practices Act 1974 (Cth) (the Act): the so-called 'media safe harbour'. BACKGROUND 2 The following background is derived from the reasons for judgment of French J: paras [1]-[3], [5]-[11], [14] and [18]. 3 In June 2007 an article appeared in The Sunday Telegraph newspaper in New South Wales and in The Sunday Times newspaper in Western Australia which concerned Mr Alan Bond and a diamond mining company, Lesotho Diamond Corporation Plc (Lesotho Diamond) which operates in the Kingdom of Lesotho in South Africa. The article reported on the relationship between Mr Bond and the company, its shareholders, executive and two chairmen of its board and his conduct as its consultant. The article was written by a freelance journalist, Mr Paul Barry. It was published by Nationwide News Pty Ltd (Nationwide News). It also appeared on a website "News.Com" operated by News Digital Media Pty Ltd (News Digital). The companies are members of the News Group of companies which includes News Limited. 4 Mr Bond and Lesotho Diamond commenced proceedings against Mr Barry, the companies and the editor of The Sunday Telegraph, Mr Breen. They said Mr Barry had contravened provisions of the Fair Trading Acts 1987 of Western Australia and New South Wales and of the Actwhich prohibit misleading or deceptive conduct. They said Mr Breen has also contravened s 52 of the Act. They sued the companies as accessories in those contraventions. 5 Mr Barry, Mr Breen and the News Group companies said that, regardless of the merits of the complaints about Mr Barry's article, these proceedings could not succeed. They said that they were exempted from the application of the relevant provisions of the Actand the Fair Trading Acts by a specific section in each which creates a media safe harbour. They moved to dismiss the proceedings under s 31A of the Federal Court of Australia Act 1976 (Cth) on the basis that there is no reasonable prospect of success. French J concluded that the proceedings had no reasonable prospect of success and should be dismissed with costs. 6 Lesotho Diamond is incorporated under the laws of Gibraltar. It holds mining leases in Kao in the Kingdom of Lesotho in South Africa. It is the developer of a prospective diamond mine in the area covered by the licences. Alan Bond is a consultant to the company. 7 Paul Barry carries on business as a freelance journalist in Australia and other places. Between the middle of May 2007 and 1 June 2007 Mr Barry researched and wrote an article about Mr Bond and Lesotho Diamond. He did so under an oral agreement with the editor of The Sunday Telegraph, Mr Neil Breen. By that agreement, according to the defence, he was paid $15,000 and his travel expenses to England and South Africa. Mr Barry sent the text of the article by emails to Mr Breen. 8 The Sunday Telegraph is a weekly newspaper published by Nationwide News. That company publishes a number of newspapers nationally and in different States of Australia. It publishes The Sunday Telegraph in New South Wales and the weekly newspaper known as "The Sunday Times" in Western Australia. It also publishes the daily newspaper known as "The Daily Telegraph" in New South Wales. 9 After receiving the emails from Mr Barry, Mr Breen is alleged to have sent the substance of the article to the editors of other newspapers published by Nationwide News. In any event the article was published by: 1. News Digital on its website "News.Com" from 3 June 2007. 2. Nationwide News as the cover story in The Sunday Times of 3 June 2007 under the heading "Bond the $1B Man". 3. Nationwide News in The Sunday Telegraph of 3 June 2007 under the heading "The greed that won't let Alan Bond rest – Special Investigation – America's Cup hero and convicted fraudster poised to become oil and diamond billionaire". 10 Mr Bond and Lesotho Diamond said that Mr Barry's conduct was in trade or commerce in respect of the supply of "goods or services" in Western Australia and New South Wales as he wrote the article for the purposes of selling the copyright in it and to authorise the publication which occurred. They also said that his conduct in writing the article for publication in Western Australia and in New South Wales was misleading or deceptive or likely to mislead or deceive in contravention of s 10 of the Fair Trading Act 1987 (WA) and s 42 of the Fair Trading Act 1987 (NSW) respectively. 11 Insofar as Mr Barry's conduct involved writing the article for publication on the worldwide web and sending it by email he is said to have contravened s 52 of the Act. Mr Bond and Lesotho Diamond relied upon the extended application of the Act to individuals using telephonic services (s 6(3)(a)). Similarly, Mr Breen is said to have contravened s 52 by sending the article by email to other editors. 12 News Digital and News Limited are alleged to have "aided and abetted" Mr Barry to contravene s 52 of the Act by publishing the article on the internet and authorising its publication. By publishing the article in The Sunday Times newspaper, Nationwide News is said to have been "involved", within the meaning of s 74 of the Fair Trading Act (WA), in Mr Barry's contravention of s 10 of that Act. It is also alleged that Nationwide News was involved in his contravention of the Fair Trading Act (NSW) by publishing the article in The Sunday Telegraph. The media safe harbour defence 13 By their amended defence the respondents admitted all the allegations relevant to their identities and the nature of the businesses which they carry on. They admitted that Mr Barry researched and wrote the article referred to and sent it by email to Mr Breen. They pleaded in the defence the terms of Mr Barry's engagement by Mr Breen. They did not admit that Mr Breen sent the substance of the article by email to other editors of newspapers published by Nationwide News. What they said, however, was that the article published by The Sunday Telegraph was accessed through the internal communications systems of Nationwide News and used as the template for the article published in The Sunday Times. 14 In [11] and [11A] of the defence, the respondents invoked the media safe harbour defence as follows: 11. Further, and in the alternative, if (which is denied) the Article, or the text of what was submitted by the First Respondent was misleading or deceptive, in contravention of section 52 of the Trade Practices Act 1974 (Cth) (or section 10 of the Fair Trading Act (WA) ('FTA (WA)') (or section 42 of the Fair Trading Act (NSW) ('FTA (NSW)') as pleaded in paragraphs 13, 14, 15 and 16 of the Amended Statement of Claim, then the Respondents say that the First Respondent prepared and submitted the text of the Article as a prescribed publication of matter and as a prescribed information provider, in the course of his business as a freelance journalist with the consequence accordingly that the First Respondent is exempted from liability under the TPA or FTA (WA) or FTA (NSW) by application of the provisions of section 65A of the TPA and/or section 63 of the FTA(WA) and/or section 60 of the FTA (NSW). 11A. Further, the Respondents repeat paragraph 11 of their Defence above mutatis mutandis as regards the assertion of misleading or deceptive conduct contrary to section 52 of the TPA, as against the Fifth Respondent as Editor of The Sunday Telegraph and rely upon the protective application in his favour of section 65A of the TPA. STATUTORY FRAMEWORK – THE MEDIA SAFE HARBOUR 15 A media safe harbour is created by s 65A which provides: (1) Nothing in section 52, 53, 53A, 55, 55A or 59 applies to a prescribed publication of matter by a prescribed information provider, other than: (a) a publication of matter in connection with: (i) the supply or possible supply of goods or services; (ii) the sale or grant, or possible sale or grant, of interests in land; (iii) the promotion by any means of the supply or use of goods or services; or (iv) the promotion by any means of the sale or grant of interests in land; where: (v) the goods or services were relevant goods or services, or the interests in land were relevant interests in land, as the case may be, in relation to the prescribed information provider; or (vi) the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with: (A) a person who supplies goods or services of that kind, or who sells or grants interests in land, being interests of that kind; or (B) a body corporate that is related to a body corporate that supplies goods or services of that kind, or that sells or grants interests in land, being interests of that kind; or (b) a publication of an advertisement. (2) For the purposes of this section, a publication by a prescribed information provider is a prescribed publication if: (a) in any case – the publication was made by the prescribed information provider in the course of carrying on a business of providing information; or (b) in the case of a person who is a prescribed information provider by virtue of paragraph (a), (b) or (c) of the definition of prescribed information provider in subsection (3) (whether or not the person is also a prescribed information provider by virtue of another operation of that definition) – the publication was by way of a radio or television broadcast by the prescribed information provider. (3) In this section: … prescribed information provider means a person who carries on a business of providing information and, without limiting the generality of the foregoing, includes: (a) the holder of a licence granted under the Broadcasting Services Act 1992; and (aa) a person who is the provider of a broadcasting service under a class licence under that Act; and (ab) the holder of a licence continued in force by subsection 5(1) of the Broadcasting Services (Transitional Provisions and Consequential Amendments) Act 1992; and (b) the Australian Broadcasting Corporation; and (c) the Special Broadcasting Service Corporation. relevant goods or services, in relation to a prescribed information provider, means goods or services of a kind supplied by the prescribed information provider or, where the prescribed information provider is a body corporate, by a body corporate that is related to the prescribed information provider; … REASONING AT FIRST INSTANCE 16 Section 65A exempts from the application of s 52 "a prescribed publication of matter by a prescribed information provider". The exemption under s 65A applies only to a "prescribed publication of matter". That is a publication by the prescribed information provider "in the course of carrying on a business of providing information". [37] 17 The first question was whether a freelance journalist who supplies a news article to a media organisation under a contract to do so, is excluded from the exemption in s 65A. Put another way, was the transmission by a freelance journalist to a media outlet of an article for publication itself a "publication", for the purposes of s 65A(1)(a). 18 The applicants had argued that the words "publishing" and "publication" are "fundamental expressions meaning making available to the public" and that the emails from Mr Barry could not be so characterised. 19 French J disagreed on the basis that the ordinary and natural meaning of "publication" includes transmission of a news article to a media organisation for publication to the world at large. [39] 20 The second question was, assuming the emails to be publications within the meaning of s 65A, whether they were publications "… in connection with … the supply … of goods or services … where the publication was made … pursuant to a contract … with a person who supplies goods or services of that kind": s 65A(1)(a)(i) read with s 65A(1)(a)(vi)(A)). It was submitted that in such a case the freelance journalist supplies services, being "journalist services preparing newspaper articles or articles for inclusion in news services" [41]. 21 French J considered such an argument to be untenable [42], and found that: (a) the transmission by a freelance journalist of a news article to a newspaper or other media outlet with whom he or she has a contract to supply such services, is not a publication of matter "in connection" with the supply of such services; (b) the exclusion of publications "in connection with … the supply or possible supply of goods or services" refers to a publication the content of which has some relationship to the supply of the goods or services in question; and (c) the provision of a journalistic service by transmission of an article about alleged corporate misdeeds is not a publication in connection with the supply of journalistic services (emphasis added). 22 His Honour concluded that the publications which are protected by s 65A include the transmission of information or articles by freelance journalists to media organisations because absent such coverage, media organisations could be exposed to liability as accessories for publishing articles prepared for publication by freelance journalists in contravention of s 52 or the equivalent provision of the relevant Fair Trading Act, which would be a major and unintended gap in the coverage of the exemption and completely at odds with its purpose. [43] 23 For these reasons, the action was held to have "no reasonable prospect of success" and was dismissed under s 31A of the Federal Court of Australia Act 1976 (Cth). French J held that there was no reasonable room for debate about the construction of s 65A that would leave room for Mr Bond and Lesotho Diamond to establish liability on the part of any of the respondents. AMENDED DRAFT NOTICE OF APPEAL 24 The Amended Draft Notice of Appeal is in the following terms. 1. His Honour erred in fact and in law in concluding in his reasons for decision at paragraphs 39 and 40 that the communication by way of e-mail transmission of a proposed or draft news article by a freelance journalist to the editor of a media organisation was not a 'publication' within the meaning of section 65A of the Trade Practices Act 1974(Cth). 2. His Honour ought to have held that that there was a 'reasonable prospect' of establishing within the meaning of section 31A of the Federal Court of Australia Act 1976 (Cth) that: 2.1 The e-mail communication was a confidential communication between the parties; 2.2 The e-mail communication was kept confidential and not disclosed to third parties; 2.3 Absent disclosure of the e-mail communication to the public, or a limited section of the public, there was no 'publication' of the e-mail communication within the meaning of section 65A of the Trade Practices Act 1974 (Cth). 3. Further, His Honour erred in fact and in law in concluding in his reasons for decision at paragraph 42 that the exclusions from s 65A of the Trade Practices Act 1974 (Cth) provided for in s 65A(1)(a)(i) read with s 65A(1)(a)(vi)(A) in respect of publications 'in connection with ... the supply or possible supply of goods or services' did not apply unless the content or text of the publication has some relationship to the supply of the goods or services in question. 4. His Honour ought to have concluded that there was a 'reasonable prospect' of successfully establishing within the meaning of s 31A of the Federal Court of Australia Act 1976 (Cth) that: 4.1 The words 'in connection with' in s 65A(1)(a) of the Trade Practices Act 1974 (Cth) are words of wide import which encompass, but are not restricted to, the content or text of the publication itself; 4.2 The First Respondent's communication of the article to the Third Respondent was made in connection with a contract between those parties for the supply of journalistic services of preparing newspaper articles or articles for inclusion in news services, and was therefore not exempt from the operation of s 52 and related provisions of the Trade Practices Act 1974 (Cth). 25 In summary, these grounds challenge the findings made in relation to the two questions to which I have referred. GRANT OF LEAVE 26 An order dismissing an action following the striking out of a statement of claim as disclosing no reasonable cause of action is interlocutory in nature. Leave to appeal is required pursuant to s 24(1A) of the Federal Court of Australia Act 1976 (Cth). The decision whether to grant leave or not involves an exercise of judicial discretion. 27 The judgment, whilst interlocutory, is one on points of substance and not merely practice or procedure. A distinction is drawn between these: Yap v Granich & Associates [2001] FCA 1735 at [6]; Dunstan v Orr [2007] FCA 873 at [6]; see also Visy Industries Holdings Pty Limited v Australian Competition and Consumer Commission [2007] FCAFC 147 at [39] per Lander J with Moore J concurring. In a case where judgment has the practical effect of finally determining a party's rights, a prima facie case exists for granting leave to appeal: Ian Duncan v Secretary, Department of Family and Community Services [2007] FCA 507 at [18]. 28 In this case, the practical effect of the decision prevents the first and second applicants from ever pursuing a claim for damages for breach of s 52 of the Act (and equivalent provisions in the Fair Trading Acts) arising out of the conduct referred to in the applicants' statement of claim. 29 There is an important issue at stake, namely, the scope and proper interpretation of the 'media safe harbour' provisions of s 65A of the Act. The issues raised in the proposed appeal are important and have not previously been considered by an appellate court. 30 Counsel for the applicants referred to a recent decision of the Court concerning s 65A: Australian Competition & Consumer Commission v Seven Network Limited [2007] FCA 1505. It was delivered on 5 October 2007 (the day that the applicants filed and served their submissions in support of this application). It was submitted that, in this decision, Bennett J at [77] and [80] had placed a different construction upon s 65A to that of French J at [42] and that on the construction of the section adopted in the Seven Network decision, it is arguable that the applicants' case has reasonable prospect of success. 31 However, the judgment in Seven Network does not immediately assist the present applicant. In that case, the necessary elements of s 65A(1)(a)(i) and (iii) which in turn lead to a consideration of s 65A(1)(a)(vi) were not in dispute, [70]. Bennett J was concerned with the inter-relationship between the "matter" in s 65(1)(a) and the "contract, arrangement or understanding" in s 65A(1)(a)(vi). 32 That was not the position in this case. French J concluded that the transmission by a freelance journalist of a news article to a newspaper or other media outlet with whom he or she has a contract to supply such services was not a publication of matter "in connection" with the supply of such services. Thus the necessary element under s 65A(1)(a)(i) was held not to have been made out. 33 Nonetheless I propose to grant leave. Section 65A is an important statutory provision. Its interpretation is not without difficulty. Bennett J said, in Seven Network at [92], that the "drafting of the section is not a model of clarity". I respectfully agree. It has ramifications beyond the protection, if any, available to freelance journalists. Its reach ought to be considered by a Full Court. Although I have accorded the matter little weight, I note that an appeal has been lodged in the Seven Network case. To that extent therefore s 65A will be the subject of reconsideration by a Full Court which may then examine the section as a whole. 34 The construction placed on the provision by French J has considerable force. However in all of the circumstances I am persuaded that there is sufficient doubt in respect to the decision to warrant it being reconsidered by the Full Court. Certainly, substantial injustice would follow if leave were refused, assuming the decision to be wrong: Decor Corporation and Another Pty Ltd v Dart Industries Inc (1991) 33 FCR 397. 35 Accordingly, I will grant the applicant leave within 7 days of the date of these Orders to appeal from the interlocutory judgment of the Honourable Justice French delivered on 21 September 2007 on the grounds set out in the Amended Draft Notice of Appeal filed in support of the application. Costs of the application will be costs in the appeal. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. Associate: Dated: 18 December 2007 Counsel for the Applicant: Mr M Bennett Solicitors for the Applicant: Lavan Legal Counsel for the Respondent: Mr K Martin QC Solicitors for the Respondent: Edwards Wallace Lawyers Date of Hearing: 4 December 2007 Date of Judgment: 18 December 2007