Ballina Shire Council v Ringland [1999] NSWSC 11

New South Wales Supreme Court CITATION : Ballina Shire Council v Ringland [1999] NSWSC 11 CURRENT JURISDICTION : Common Law Division FILE NUMBER(S) : 11565/93 HEARING DATE(S) : 14/11/97; 24-28/11/97; 2-3/12/97 JUDGMENT DATE : 3 February 1999

PARTIES : The Council of the Shire of Ballina (plaintiff/ cross-defendant) William Ringland (defendant/ cross-claimant) JUDGMENT OF : Hidden J

COUNSEL : A. B. Shand QC/ B.E. Kinsella (plaintiff) C. A. Evatt/ J.C. Gibson (defendant) SOLICITORS : W. J. Grace & Co (plaintiff) McKenzie Cox (defendant) CATCHWORDS : Tort: injurious falsehood - element of damage; Abuse of process DECISION : Claim and cross-claim dismissed

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THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

HIDDEN J

Wednesday, 3 February 1999

11565/93 - THE COUNCIL OF THE SHIRE OF BALLINA v WILLIAM RINGLAND

Reasons for judgment

1 HIS HONOUR: In the early 1980's the sewerage system of the Shire of Ballina, on the far north coast of New South Wales, was extended to the town of Lennox Head. It included an ocean outfall at Skennar's Head, a little to the south of the town. The system was, and remains, the responsibility of the plaintiff, the Ballina Shire Council. At the time it was introduced it provided for the treatment of sewage, which is mostly in liquid form, in three stages. The primary stage was a screening process by which larger solids were removed and disposed of. The secondary stage was a sedimentation process whereby the heavier material was separated and drawn off. The tertiary stage involved the detention of the remaining liquid in a pond to break down bacteria and viruses. The resulting effluent was a clear liquid which was discharged into the ocean through the outfall. 2 The sewerage system at Lennox Head was put in place following a report of the then shire engineer, Mr Peter Thorpe, prepared in October 1981. That report was widely disseminated. It was the subject of publicity in the local press and a public meeting, also in October 1981. Copies were available at the Council chambers and were supplied to various libraries, schools and clubs in the shire. It will be necessary to refer later to part of that report. 3 By 1990 it was clear that, due to population growth, the shire's sewerage system, including that at Lennox Head, needed to be upgraded. Engineers were commissioned to examine how this might be done, and they produced a report which recommended six options as the most feasible. Over the next two years the Council engaged in wide community consultation about the matter. Brochures were sent to the residents explaining the six options and setting out the advantages and disadvantages (including the cost) of each of them. A number of public meetings were held and the matter was aired in the local press. 4 The Council favoured an augmentation of the sewerage system which retained the outfall at Skennar's Head, but reused as much of the effluent as possible for irrigation of the golf course and some playing fields in the Ballina area. It was also proposed that the treatment of the sewage be supplemented by ultraviolet disinfection of the effluent. A poll of the residents disclosed that the majority favoured the continued use of the outfall, with or without the reuse of some of the effluent for irrigation. In due course an environmental impact statement was prepared and made available to the public, and submissions about the proposed development were invited. 5 Among those who took a lively interest in these developments was the defendant, Mr Bill Ringland. He is an elderly man who, in the early 1980's, retired with his wife to a small property at Brooklet, about 15 kms from Ballina. He is a keen swimmer and, clearly, has derived great enjoyment from the beautiful coastline in the area. In the late 1980's he joined the Ballina Environment Society Inc, a body with a small membership, and he later became its president. The issue of the sewerage augmentation led to the formation of an allied organisation called the Clean Seas Coalition, of which he was the chairman, and which included amongst its members Mr Ian Cohen MLC and a Byron Bay resident, Mr John Whiting. These groups made public their opposition to the ocean outfall, advocating methods of disposal which would reuse the whole of the effluent. Publicity included statements by the defendant and Mr Cohen. 6 The Council adopted the procedure appropriate for a development application and the Ballina Environment Society lodged an objection to it. In September 1992 the development was approved, subject to certain conditions. The Environment Society appealed against this decision to the Land and Environment Court. The parties agreed to mediation, which led to a deed of agreement of 26 March 1993 enabling the development to proceed, subject to certain further conditions. Those additional conditions are not relevant for present purposes. What is significant is that the agreement accepted that the augmented sewerage system would retain the ocean outfall. The deed was signed on behalf of the Ballina Environment Society by the defendant as its president. He was present throughout the mediation but, because he did not have the necessary expertise, he was not part of the Society's negotiating team. 7 On 1 April 1993, the Clean Seas Coalition issued a press release. That document is the centrepiece of the plaintiff's case. It invited the reader to contact the defendant, Mr Cohen or Mr Whiting for further information. It opened by applauding the Ballina Environment Society for its pursuit of the outfall issue in the Land and Environment Court "in the public interest". It described the agreement reached as a result of the mediation as "a landmark for public participation", but added that the Coalition considered it to be "just the beginning, not an end in itself". It then attributed the following words to the defendant: Whilst we are pleased with the gains made, all groups in our Coalition recognise that the agreement did not go far enough. The output of the Lennox Head outfall will be increased against the will of the ocean users. This means greater pollution. Sewage is and will continue to be pumped out surreptitiously at night and during storms. Our organisation never has had (sic) and never will accept the efficiency of ultraviolet treatment. We are heartened that the Ballina Council has agreed to consult with the community. 8 The document went on to record that the "first post-mediation meeting" unanimously supported the eventual closure of the outfall. Criticism of the adequacy of the system proposed by the Council was attributed to Mr Cohen, who described the ultraviolet disinfection as "substandard", and urged the pursuit of other methods of disposal which would involve reuse of the effluent. The document asserted the continuing opposition of the Coalition to the concept of ocean outfalls, which it described as "obsolete and obscene". It concluded by announcing that a meeting of the local community about the issue would be called "due to ongoing public interest". 9 The plaintiff fastens upon the assertion in the passage attributed to the defendant that "sewage is and will continue to be pumped out surreptitiously at night and during storms". This is said to be false in two respects. To understand the plaintiff's case, it is necessary to ascertain the precise meaning of words commonly used in connection with the disposal of household and industrial waste. The way in which these words are used by experts in the field is consistent with the meanings attributed to them in the Shorter Oxford English Dictionary and the Macquarie Dictionary. 10 "Sewage" is defined in the Macquarie Dictionary as "the waste matter which passes through sewers". It was accepted by the parties that it means the refuse which emanates from domestic or commercial premises in its untreated form. "Sewer" means the conduit or system of pipes for carrying off that refuse. "Sewerage" means the system of removal of waste matter through sewers. "Effluent" means the outflow produced through the treatment of sewage. 11 The plaintiff's claim is that the defendant in the press release asserted falsely that the Council was involved in the discharge of untreated refuse into the ocean, and was doing so surreptitiously, that is, in such a way as to conceal its activity from the residents of the area. These assertions, it is said, are very injurious to the standing and reputation of the Council and have caused it financial loss. 12 The press release led to an article on 2 April in the local newspaper, The Northern Star, under the heading "Sewage Will Still Flow Into Sea, Group Says". It included the relevant parts of the passage attributed to the defendant: in particular, the reference to sewage being pumped out surreptitiously at night and during storms, and the Coalition's refusal to accept the efficiency of ultraviolet treatment. This led the shire president, Mr Keith Johnson, to call a special meeting of the Council, which took place on 7 April. The expenses of that meeting are essential to the plaintiff's claim, and I shall return to that matter in due course. 13 At the meeting it was resolved that the defendant "and representatives of the Clean Seas Coalition" be requested to issue a retraction of the offending part of the article and, should there be no satisfactory response, proceedings be instituted for defamation. It was also resolved that Mr Johnson should negotiate a suitable retraction from the newspaper itself. On 13 April the Council's solicitors wrote to the defendant, requesting that he publish in the newspaper an apology which was set out in the letter, but none was forthcoming. However, on 10 April the newspaper itself published an apology, acknowledging that the Council was not engaged in the covert discharge of "raw sewage" into the ocean and questioning the motives of the Clean Seas Coalition in making such an allegation. The article added that "the press release can only be assumed to be aimed at discrediting the council, without justification." 14 In May 1993 the Council issued a statement of claim against the defendant seeking damages for defamation and, in the alternative, injurious falsehood. The defendant filed a cross-claim seeking damages for abuse of process. At an early stage of the proceedings, Levine J submitted certain questions for the determination of the Court of Appeal, which considered whether, in the circumstances of the case, any of the causes of action pleaded would lie: Ballina Shire Council v Ringland (1994) 33 NSWLR 680. The Court was comprised of Gleeson CJ, Kirby P and Mahoney JA. By majority (Gleeson CJ and Kirby P), it was held that defamation did not lie, as a popularly elected local government authority could not sue in defamation in respect of material reflecting upon the performance of its functions. However, it was held that the other causes of action could be pursued: as to injurious falsehood, again by majority (Gleeson CJ and Mahoney JA), and as to abuse of process, by the whole Court. 15 Perceiving that any damages which the Council might recover would be very modest, Gleeson CJ expressed the hope that "serious consideration will be given to the utility of these proceedings"(at 694). Apparently, any such consideration did not dissuade the Council from pressing on. Hence the proceedings before me. The Council sues Mr Ringland for injurious falsehood, seeking as special damage the expenses of the meeting to which I have referred, together with exemplary damages. (A claim for aggravated damages was not pursued at the hearing.) Mr Ringland resists the Council's claim and cross-claims for abuse of process, seeking compensatory and punitive damages. 16 It seems that the press release was drafted by Mr Cohen, but the three men had discussed it and the defendant approved of its terms. The source of the assertion that sewage was being pumped out at the ocean outfall surreptitiously at night and during storms was a passage from the 1981 report of the shire engineer, Mr Peter Thorpe, to which I have referred earlier. At page six of that report, having described the process of treatment of the sewage, the author continued: The effluent is pumped from the aeration lagoon to the proposed ocean outfall to discharge below low-water mark into deep water. The pumps and pipeline from the aeration lagoon to the ocean have been sized to pump the daily discharge during the hours of darkness or storm conditions. This consideration has been made to avoid evidence of local discolouration occurring when fresh water joins saltwater and to eliminate the possibility of contact of swimmers with the treated effluent. 17 It is the defendant's case that the passage in the press release upon which the Council relies is not false or, at least, was believed by him to be true. In evidence, he said that he understood the word "sewage" to mean material emanating from "sewerage pipes", so as to embrace effluent. To him, he said, the word "surreptitiously" meant "doing something Council didn't want observed" because it was "embarrassed by it". He saw "secret" as a stronger word than "surreptitious". It was his case that the process of discharge of effluent through the outfall "during the hours of darkness or storm conditions", as described in Mr Thorpe's report, could properly be labelled surreptitious, as he understood the term. Injurious falsehood 18 When this matter was before it, the Court of Appeal considered the nature of the tort of injurious falsehood: (1994) 33 NSWLR 680 per Gleeson CJ at 692-4, Kirby P (as his Honour then was) at 711-12 and Mahoney JA at 733. Gleeson CJ described it in this way (at 692): An action for damages for injurious falsehood, which is in some respects like, and in other respects unlike, an action for defamation, will lie in certain circumstances where one person maliciously publishes a false statement about or affecting another, and where actual damage has resulted. 19 The Chief Justice referred to the discussion of the tort in Fleming, The Law of Torts (8th edition) and Gatley on Libel and Slander (8th edition): see now the 9th edition of Gatley, chapter 20. 20 Kirby P defined it thus (at 711): The tort of injurious falsehood consists of the publication of false statements concerning a plaintiff or his property, calculated to induce others not to deal with him causing financial harm: see J G Fleming, The Law of Torts, 8th ed (1992) at 711. The tort resembles defamation. Falsity is not presumed but must be affirmatively established by the plaintiff. So must financial harm. 21 The damage claimed normally arises from the disparagement of the plaintiff's property or business, although it may be that the action has a wider scope: Gleeson CJ at 693, Gatley (9th ed), paragraph 20.4. I shall return to the question of damage, as it appears to me to be determinative of the Council's claim in this case. 22 In deciding whether the statement complained of is false, regard must be had to the ordinary meaning of the words used. As in defamation, the question is what would those words convey to the ordinary reader: Gatley, paragraph 20.5. Of course, particular words must not be divorced from their context. 23 Here, if the words "sewage" and "surreptitiously" in the press release are afforded their dictionary meanings, the impugned statement is undoubtedly false. Counsel for the defendant did not submit to the contrary. It is not suggested that the Council ever discharged untreated waste from the ocean outfall, or had any intention of doing so. The word "surreptitious" is defined in the Macquarie dictionary to mean "obtained, done, made, etc, by stealth; secret and unauthorised; clandestine". It is not suggested that the discharge of effluent from the outfall in the manner described in the Thorpe report could fairly be characterised in that way. 24 However, it was submitted on behalf of the defendant that falsity was not established when the sentence was read in the context of the press release as a whole. Immediately after that sentence the document continues: "Our organisation never has had and never will accept the efficiency of ultra violet treatment." What follows amounts to a criticism of the system of treatment of the sewage, as it existed and as it was proposed, rather than an assertion that untreated waste was being discharged into the ocean. 25 There is some force in the argument that, in those circumstances, a reader would not have taken the word "sewage" to mean untreated waste. Clearly, the word is frequently used imprecisely in everyday parlance. Often one hears the expression "raw sewage" but, by its dictionary definition, all sewage is necessarily "raw". The adjective is mere surplusage. More significantly, the expression "raw sewage" is to be found in some of the Council's own documents, including a pamphlet about the proposed sewerage augmentation circulated to householders in 1991 (Exhibit E). Indeed, Mr Thorpe's report, having correctly defined "sewage" on page three, refers to "raw sewage" on page five. If the defendant understood the word "sewage" to encompass treated waste, it is obvious that he was not alone in that belief. 26 Similarly, it was submitted that a reader would not have been misled by the use of the word "surreptitiously". At most, it was said, this was an exaggerated description of the manner in which effluent was discharged from the outfall and the rationale behind it. The Thorpe report stated that the purpose of discharge during the hours of darkness or during storms was to eliminate contact with swimmers. In evidence, the shire president, Mr Johnson, said that he understood that this course was adopted also to anticipate community concern about discolouration of the water which might result from the discharge. 27 That said, the Council has presented an arguable case that the impugned sentence in the press release is false. It faces a more formidable task, however, in establishing malice on the part of the defendant. That element is succinctly expressed in Gatley (supra), chapter 20.7: "…the defendant will be guilty of malice if (a) he knows that the statement is untrue or is reckless as to its truth or (b) he is actuated by some improper motive. The first will be virtually conclusive as to malice." To the same effect, albeit in a somewhat different context, is the explanation of the term by Lord Diplock in Horrocks v Lowe [1975] AC 135 at 149-51. 28 The Council's primary submission was that the defendant knew the statement to be untrue or, at least, was reckless as to its truth. A vigorous attack on his credibility was mounted in cross-examination, directed particularly to his evidence of his understanding of the words "sewage" and "surreptitiously". As to "sewage", he was taken to documents of the Ballina Environment Society, and to a letter which he himself had written to the local newspaper, in which treated waste was correctly described as "effluent". 29 The Council also relied, circumstantially, on other evidence said to be inconsistent with the defendant's belief in the truth of what was asserted and, in any event, demonstrative of his being actuated by an improper motive. The press release was said to be at odds with the agreement which had been reached between the Council and the Ballina Environment Society, following the mediation in the Land and Environment Court. It was suggested that it was the defendant's realisation of this which led to the issue of the press release under the banner of the Clean Seas Coalition. According to the defendant, he was aware of the Thorpe report well before the mediation. That being so, it was asked, why had he not raised this issue before the agreement was reached? 30 Although Mr Cohen was the draughtsman of the press release after discussion of its terms, he was not called as a witness by the defendant. For the Council it was submitted that I should draw an inference in accordance with Jones v Dunkel (1959) 101 CLR 298. 31 On the question of malice I consider that the Council's case is far from compelling. The defendant did not always fare well in cross-examination, and at times was defensive to the point of obstruction. Nevertheless, my impression was of a man whose demeanour was influenced by a firm, perhaps stubborn, belief in his cause, rather than someone who was being deliberately untruthful. 32 His evidence of his understanding of the scope of the word "sewage" is plausible enough, for the reasons I have outlined above. I am more sceptical about his evidence of the use of the word "surreptitious". The dictionary definition of that word is widely understood in the community and, as it was used in the press release, there is no denying its pejorative flavour. Nevertheless, I incline to the view that it was intended as something of a dramatic flourish for the purpose of vigorous political discourse and that, in the circumstances, its use falls short of demonstrating malice. Nor would I readily infer malice from the fact that the press release was issued shortly after the mediation agreement. If I had to determine the matter, I would not find that element proved. 33 At the end of the day, however, I find it unnecessary to express any firm conclusion on the questions of falsity and malice. The Council must also establish actual damage, and I have concluded that on this element its claim founders as a matter of law. This is because the wrong which the action is designed to remedy is the interference in relations, whether commercial or otherwise, between the plaintiff and persons other than the defendant. I have referred earlier to the statement of Kirby P, derived from Fleming, that the tort "consists of the publication of false statements concerning a plaintiff or his property, calculated to induce others not to deal with him…". McGregor on Damages (16th ed) states at paragraph 1942: The tort of injurious falsehood, developing through slander of title and slander of goods, makes actionable any false statement made maliciously about the plaintiff to third parties with the result that they act so as to cause damage to the plaintiff. 34 Gatley, at paragraph 20.4 (referred to above), states that the "falsehood must be communicated to third persons since the tort consists of interference with the plaintiff's relations with those persons". 35 The cases to which I have been referred bear these statements out, as each of them involved a claim of that kind. Two cases referred to by Gleeson CJ (at 692-3) provide examples. In Barrett v Associated Newspapers Ltd (1907) 23 TLR 666, the plaintiff's claim was founded upon an article alleging that a house which he let to tenants was haunted. Publication of the article, as Gleeson CJ put it, "was unlikely to assist his earnings as a landlord". In Ratcliffe v Evans [1892] 2 QB 524, the plaintiff alleged a loss of business as an engineer and boilermaker following a publication to the effect that he had ceased trading. I was referred in argument to Joyce v Sengupta (1993) 1 WLR 337, in which the plaintiff alleged that her employment prospects had been damaged by a publication adverse to her reputation as a maidservant: see the judgment of Sir Donald Nicholls V-C at 341 and 346. See also Procor Ltd v United Steelworkers of America (1989) 65 DLR (4th) 287, where the plaintiff company alleged that false statements had led to action being taken against it by Canada Customs. 36 No such claim is made by the Council in this case. As I have said, the only actual damage claimed is the expenses of the special Council meeting of 7 April 1993. It is not suggested that that meeting was called as a result of public outcry following the article in the local newspaper. Nor is it suggested that the publication affected in any way the Council's dealings with any corporation or person other than the defendant himself. 37 This issue was raised, but not decided, in the Court of Appeal. Gleeson CJ (at 694) and Mahoney JA (at 733) left the question open, considering that it should be decided in the light of the evidence at the trial. Kirby P found it unnecessary to decide the matter as he was of the view that the action was not available to the Council in any event. However, after referring to the costs of the special meeting, his Honour did say this much (at 712): I am extremely doubtful that such costs, which were incurred after the wrong alleged and in the course of the ordinary activities of the Council as a local authority, constitute "special damages" within the requirements of the tort. 38 I respectfully share his Honour's doubts. Indeed, I am satisfied that the expenses of the meeting do not amount to actual damage of the kind which might give rise to an action for injurious falsehood. Accordingly, the Council's claim fails. Abuse of process 39 The defendant's cross-claim for abuse of process was directed at the proceedings as the Council had instituted them, including the claim for defamation which the Court of Appeal held was not available to it. The cross-claim alleges that the proceedings are an abuse because they were "instituted and continued for the real and improper purpose of interfering, embarrassing, hindering and blackmailing" the defendant in the carrying out of his duties as the president of the Cleans Seas Coalition: in particular, his investigation of the Council's activities in relation to the outfall, his appraisal and (where necessary) criticism of those activities, and his exercise of "his right and privilege of freedom of speech". The statement of claim is said to have been issued for those purposes, and not for the purpose of vindicating the Council's reputation or obtaining damages. 40 Put shortly, the cross-claim alleges that the Council's real purpose in bringing the proceedings was to silence the defendant. His evidence was that that had been their effect. That it was their purpose is said to be inferred from evidence given by Mr Johnson in cross-examination, together with the circumstances of the institution and continuation of the proceedings. 41 It may well be that for some time the Council had perceived the defendant (and other members of the Clean Seas Coalition) as a thorn in its side. In an article in the local newspaper of September 1992 Mr Johnson was quoted as describing the Coalition as a "small, but vocal anti-outfall group", which had expressed "a continual, obsessive and illogical opposition to Ballina's plans to upgrade effluent quality". He went on: Despite their claims to have solutions to effluent disposal, they have yet to put forward one practical, affordable solution. Instead, they have simply repeated slogans, abused the Council, and dreamed up bogey-man horror stories. 42 In evidence, Mr Johnson conceded that by those comments he had "over reacted a little" to public statements attributed to the defendant at that time. However, he denied any ill-feeling towards the defendant, saying that a strong response was called for in the circumstances. 43 Mr Johnson said that he called the special meeting of Council after the newspaper article on 2 April 1993 because he wanted to determine "a course of action that could get the public record straight". He saw the article as having the potential to frustrate the Council's work in informing the public about the proposed sewerage augmentation, in which "a huge amount of time, effort and money" had been invested. It was for the same reason that the statement of claim was issued. Although the newspaper had published an apology and a retraction, he sought a "withdrawal by the people who made the assertion". He added, "We wanted the Clean Seas Coalition and Mr Ringland to do a reversal of their statement and point out the statements they made were in fact incorrect". 44 The proceedings were instituted, he said, "to vindicate the Council's standing in the public eye". They were not brought to make the defendant pay damages or costs. He denied that their purpose was to silence the defendant. He said: We didn't want silence, we in fact wanted a retraction. … … What we were trying to do was to get him to stick to fair and reasonable comments and we were trying to get him to realise that there was a point beyond which one, if you like, ought not to go in terms of the public debate and that point being to make statements which were clearly false and which we believed Mr Ringland knew to be false. 45 Asked if he had instructed the Council's solicitors to proceed with the injurious falsehood claim after the Court of Appeal decision, he said, "No, we let that stand. We didn't instruct or de-instruct …." He added, however, that the solicitors were to attempt to negotiate "a reasonable settlement" with the defendant, whereby the outstanding claim and cross-claim would be dropped "without either party accepting liability." Obviously, any such negotiation was unsuccessful. 46 To establish the tort of abuse of process, the defendant must prove that the Council instituted these proceedings for a purpose or to effect an object beyond that which the legal process offers: Williams v Spautz (1992) 174 CLR 509 in the joint judgment at 523. The nature of the tort was examined in the judgments in that case, as it had been by the Court of Appeal in Hanrahan v Ainsworth (1990) 22 NSWLR 73: see the judgments of Kirby P at 93-7, Mahoney JA at 98-9 and Clarke JA at 107-23. The Court of Appeal in the present case foreshadowed that the elements of the tort may need to be examined with some refinement, in the light of a matter considered in the judgments in both those cases: see Gleeson CJ at 695-6, Kirby P at 712-3 and Mahoney JA at 733-4. However, as the evidence has unfolded, I do not consider it necessary to do so. 47 It is well established that a party alleging that proceedings are an abuse of process bears a heavy onus: Williams v Spautz in the joint judgment at 529; Hanrahan v Ainsworth, per Kirby P at 95. Here, the defendant sets out to prove no less than that the Council instituted these proceedings, and continued them, for the predominant purpose of silencing him as a public critic of the sewerage proposal. That is denied by Mr Johnson, whom I found to be an honest witness. It is not inconsistent with that position that Mr Johnson's interest in the proceedings was the vindication of the Council's position and a retraction by the defendant of the statements complained of, rather than the recovery of damages. Protection of the plaintiff's reputation is a legitimate aim of an action not only in defamation but also in injurious falsehood: Joyce v Sengupta (supra) at 343. Of course, the fact that the defendant abandoned the public arena after being served with the statement of claim, while relevant, is by no means determinative. 48 Mr Johnson's responses in cross-examination and the circumstances of the Council's institution and prosecution of the proceedings, even viewed in combination, do not fairly give rise to the inference of improper purpose for which the defendant contends. Reasonable minds might differ as to whether the proceedings were an appropriate response to the publication for which the defendant was responsible, particularly after the decision of the Court of Appeal. However, they have not been shown to be an abuse of process. 49 As it happens, the issue of special damage arose also in relation to the cross-claim. I heard argument about whether special damage need be proved and, if so, whether it had been in this case. In the light of my finding on the main issue, that is a question which I need not resolve. 50 Accordingly, the defendant's cross-claim also fails. Before pronouncing formal orders, I shall hear the parties on costs.